As filed with the Securities and Exchange Commission on March 24, 2022.
Registration Statement No. 333-262058
UNITED STATES
SECURITIES AND EXCHANGE COMMISSION
Washington, D.C. 20549
Amendment No. 1 to
Form S-4
REGISTRATION STATEMENT
UNDER
THE SECURITIES ACT OF 1933
NORTH MOUNTAIN MERGER CORP.
(Exact Name of Registrant as Specified in Its Charter)
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Delaware
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6770
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85-1960216
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(Jurisdiction of Incorporation or Organization)
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(Primary Standard Industrial Classification Code Number)
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(I.R.S. Employer Identification Number)
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767 Fifth Avenue, 9th Floor
New York, NY 10153
Telephone: (646) 446-2700
(Address, including zip code, and telephone number,
including area code, of Registrant’s principal executive offices)
Charles B. Bernicker
Chief Executive Officer
North Mountain Merger Corp.
767 Fifth Avenue, 9th Floor
New York, NY 10153
Telephone: (646) 446-2700
(Name, address, including zip code, and telephone
number, including area code, of agent for service)
Copies to:
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Jeffrey D. Marell
Raphael M. Russo
Michael Vogel
Paul, Weiss, Rifkind, Wharton & Garrison LLP
1285 Avenue of the Americas
New York, NY 10019
(212) 373-3000
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Tamar Donikyan
Kirkland & Ellis LLP
601 Lexington Avenue
New York, New York 10022
Telephone: (212) 446-4800
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Approximate date of commencement of proposed sale to the public:
As soon as practicable after this registration statement becomes
effective and on completion of the business combination described in the enclosed proxy statement/prospectus.
If the securities being registered on this Form are to be 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 an emerging growth company. See the definitions of “large accelerated filer,” “accelerated filer,” “smaller reporting company” and “emerging growth company” in
Rule 12b-2 of the Exchange Act.
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Large accelerated filer ☐
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Accelerated filer ☐
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Non-accelerated filer ☒
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Smaller reporting company ☒
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Emerging growth company ☒
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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 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 of 1933, or until this registration statement shall become effective on such date as the Commission, acting pursuant to said Section 8(a), may determine.
The information in this preliminary proxy statement/prospectus is not complete and may be changed. These securities described herein may not be sold
until the registration statement filed with the U.S. Securities and Exchange Commission is declared effective. This preliminary proxy statement/prospectus is not an offer to sell these securities and it is not soliciting an offer to buy these
securities in any jurisdiction where the offer or sale is not permitted.
PRELIMINARY PROXY STATEMENT/PROSPECTUS
SUBJECT TO COMPLETION, DATED MARCH 24, 2022
North Mountain Merger Corp.
767 Fifth Avenue, 9th Floor
New York, NY 10153
Dear North Mountain Merger Corp. Stockholders:
On December 9, 2021, North Mountain Merger Corp., a Delaware
corporation (“North Mountain”), North Mountain Merger Sub Inc., a Delaware corporation and a direct, wholly owned subsidiary of North Mountain (“Merger Sub I”), North Mountain Merger Sub II, LLC, a Delaware limited liability company and a
direct, wholly owned subsidiary of North Mountain (“Merger Sub II” and together with Merger Sub I, the “Merger Subs”), and Corcentric, Inc., a Delaware corporation (“Corcentric”), entered into an Agreement and Plan of Merger (the “Merger
Agreement”), pursuant to which Merger Sub I will merge with and into Corcentric (the “Initial Merger”), with Corcentric surviving the Initial Merger as a wholly owned subsidiary of North Mountain (the “Initial Surviving Company”) and
immediately following the Initial Merger, the Initial Surviving Company will merge with and into Merger Sub II (the “Subsequent Merger” and together with the Initial Merger, the “Mergers”), with Merger Sub II surviving the Subsequent Merger as
a wholly owned subsidiary of North Mountain. We refer to the Mergers and the other transactions described in the Merger Agreement collectively hereafter as the “Business Combination”.
Each share of Corcentric common stock, par value $0.001 per share
(the “Corcentric Common Stock”) that is issued and outstanding immediately prior to the effective time of the Initial Merger (other than shares owned by Corcentric as treasury stock, dissenting shares and shares of Corcentric restricted stock)
will be converted into the right to receive (i) the Per Share Stock Consideration (as defined below in “Frequently Used Terms”), (ii) any cash payable in lieu of fractional shares pursuant
to the terms of the Merger Agreement and (iii) the contingent right to receive a number of shares of North Mountain Class A Common Stock, par value $0.0001 per share (“North Mountain Class A Common Stock”), following the closing of the Business
Combination (the “Closing”) (such shares, the “Earnout Shares”) in accordance with the terms of the Merger Agreement.
Each share of Corcentric Series A preferred stock, par value $0.001
per share (the “Corcentric Preferred Stock”) that is issued and outstanding immediately prior to the effective time of the Initial Merger (other than shares owned by Corcentric as treasury stock, dissenting shares and the Cash Consideration
Shares (as defined below)) will be converted into the right to receive (i) a number of newly issued shares of North Mountain Class A Common Stock equal to the product of (A) the Per Share Stock Consideration, multiplied by (B) the number of
shares of Corcentric Common Stock that such share of Corcentric Preferred Stock would be converted into if converted in accordance with the terms of Corcentric’s certificate of incorporation immediately prior to the effective time of the
Initial Merger, (ii) any cash payable in lieu of fractional shares pursuant to the terms of the Merger Agreement and (iii) the contingent right to receive a number of Earnout Shares following the Closing in accordance with the terms of the
Merger Agreement.
Each share of Corcentric Preferred Stock expressly identified as
receiving merger consideration in the form of cash pursuant to the terms of the Merger Agreement (each such share of Corcentric Preferred Stock, a “Cash Consideration Share”) will be converted into the right to receive an amount of cash,
without interest, equal to the product of (i) the Per Share Merger Consideration Value (as defined below in “Frequently Used Terms”), multiplied by (ii) the number of shares of Corcentric
Common Stock that such share of Corcentric Preferred Stock would be converted into if converted in accordance with the terms of Corcentric’s certificate of incorporation immediately prior to the effective time of the Initial Merger with the
aggregate amount of cash payable in respect of the Cash Consideration Shares not to exceed $120,000,000 (the “Total Cash Consideration Amount”).
See the section entitled “Proposal
No. 2—The Business Combination Proposal” on page 90 of the attached proxy statement/prospectus for further information on the consideration payable to stockholders of Corcentric.
In connection with the execution of the Merger Agreement, North
Mountain entered into separate subscription agreements (the “Subscription Agreements”) with several investors (the “PIPE Investors”), pursuant to which (i) the PIPE Investors have agreed to purchase, and North Mountain has agreed to sell to the
PIPE Investors, an aggregate of 5,000,000 shares of North Mountain Class A Common Stock, for a purchase price of $10.00 per share and at an aggregate purchase price of $50,000,000 and (ii) North Mountain has agreed to transfer to the PIPE
Investors one-half of one warrant for each share of North Mountain Class A Common Stock purchased (the “PIPE Financing”).
North Mountain, North Mountain LLC (our “Sponsor”) and Corcentric
have agreed pursuant to the terms of the Share Vesting and Warrant Surrender Agreement (as defined below in “Frequently Used Terms”) that, in connection with and effective immediately prior
to the consummation of the Business Combination, (i) our Sponsor will surrender to North Mountain 4,145,000 private placement warrants to purchase shares of North Mountain Class A Common Stock sold in a private placement to our Sponsor that
occurred simultaneously with the completion of the IPO (the “Private Placement Warrants”), a portion of which will be transferred and delivered to the PIPE Investors in the amounts set forth in and pursuant to the Subscription Agreements
(including any Subscription Agreements entered into after the date of the Share Vesting and Warrant Surrender Agreement) and the remainder of which will be cancelled by North Mountain upon the Closing, in exchange for 1,400,000 newly issued
shares of North Mountain Class A Common Stock (the “Warrant Shares”) and (ii) at the Closing, all shares of North Mountain Class B common stock, par value $0.0001 per share (“North Mountain Class B Common Stock”) held by the Sponsor (or shares
of North Mountain Class A Common Stock issued or issuable upon conversion thereof) and all Warrant Shares will become unvested. An aggregate of 2,603,126 of the shares of North Mountain Class B Common Stock and Warrant Shares will vest
immediately following the Closing. The remaining shares of North Mountain Class B Common Stock and Warrant Shares will vest in two equal tranches of 1,051,562 shares if the stock price level is greater than or equal to $12.50 per share (the
“$12.50 Share Price Milestone”) or $15.00 per share (the “$15.00 Share Price Milestone”), in each case for 20 trading days within any consecutive 30-trading day period within five years of the Closing, subject to equitable adjustment to reflect
any subdivision, stock split, stock or cash dividend, reorganization, combination, recapitalization or similar transaction with respect to the North Mountain Common Stock. In addition, the shares subject to the $12.50 Share Price Milestone or
the $15.00 Share Price Milestone will accelerate vesting upon certain acceleration events, including a change of control of New Corcentric (as defined below in “Frequently Used Terms”). Any
shares subject to vesting pursuant to the Share Vesting and Warrant Surrender Agreement will be surrendered to the extent such shares remain unvested following the five year anniversary of the Closing.
North Mountain units, North Mountain Class A Common Stock and
public warrants are currently listed on the Nasdaq Capital Market, under the symbols “NMMCU,” “NMMC,” and “NMMCW,” respectively. North Mountain has applied to continue the listing of North Mountain Class A Common Stock and public warrants on
the Nasdaq Capital Market under the symbols “ ” and “ ,” respectively, upon the Closing. At the Closing, each unit will separate into its components consisting of one share of North Mountain Class A Common Stock and one half of one redeemable
warrant and, as a result, will no longer trade as a separate security. Following the Closing, North Mountain intends to change its name to “Corcentric, Inc.”
North Mountain cordially invites you to attend a special meeting of
stockholders (the “special meeting”) to consider matters related to the proposed Business Combination. North Mountain and Corcentric cannot complete the Business Combination unless North Mountain’s stockholders consent to the approval of the
Merger Agreement, the Business Combination and the transactions contemplated thereby, including the issuance of North Mountain Class A Common Stock to be issued as the merger consideration. North Mountain is sending you this proxy
statement/prospectus to ask you to vote in favor of these and the other matters described in this proxy statement/prospectus in order to obtain stockholder approvals of the proposals necessary to complete the Business Combination, and these
proposals are described in this proxy statement/prospectus.
The special meeting will be held on , 2022, at 10 a.m.,
Eastern time, via a virtual meeting. In light of the novel coronavirus (referred to as “COVID-19”) pandemic and to support the well-being of North Mountain’s stockholders and partners, the special meeting will be completely virtual. You may
attend the special meeting and vote your shares electronically during the special meeting via live webcast by visiting . You will need the 16-digit meeting control number that is printed on your proxy card to enter the special meeting. North
Mountain recommends that you log in at least 15 minutes before the special meeting to ensure you are logged in when the special meeting starts. Please note that you will not be able to attend the special meeting in person.
As described in this proxy statement/prospectus, certain
stockholders of Corcentric are parties to a support agreement with North Mountain whereby such stockholders agreed to vote all of their shares of Corcentric Common Stock and/or Corcentric Preferred Stock, as applicable, in favor of approving
the Business Combination.
The Corcentric board of directors has unanimously approved the
Merger Agreement and the transactions contemplated thereby and recommends that Corcentric stockholders consent to adopt and approve in all respects the Merger Agreement and the transactions contemplated thereby.
After careful consideration, the North Mountain Board has
unanimously approved the Merger Agreement and the other proposals described in this proxy statement/prospectus, and the North Mountain Board has determined that it is advisable to consummate the Business Combination. The North Mountain Board recommends that you vote “FOR” the proposals described in this proxy statement/prospectus (including each of the sub-proposals).
North Mountain is providing the accompanying proxy
statement/prospectus and proxy card to you in connection with the solicitation of proxies to be voted at the special meeting and at any adjournments or postponements of the special meeting. Your vote
is very important. If you are a registered stockholder, please vote your shares as soon as possible by completing, signing, dating and returning the enclosed proxy card in the postage-paid envelope provided. 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.
More information about North Mountain, Corcentric and the Business
Combination is contained in this proxy statement/prospectus. North Mountain and Corcentric urge you to read the accompanying proxy statement/prospectus, including the financial statements and annexes and other documents referred to herein,
carefully and in their entirety. In particular, you should carefully consider the matters discussed under “Risk Factors” beginning on page 41 of this proxy
statement/prospectus.
TO EXERCISE YOUR REDEMPTION RIGHTS, YOU MUST ELECT TO HAVE NORTH
MOUNTAIN REDEEM YOUR SHARES FOR A PRO RATA PORTION OF THE FUNDS HELD IN THE TRUST ACCOUNT AND TENDER YOUR SHARES TO NORTH MOUNTAIN’S TRANSFER AGENT AT LEAST TWO BUSINESS DAYS PRIOR TO THE VOTE AT THE SPECIAL MEETING. 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 NOT BE REDEEMED FOR CASH. IF YOU HOLD THE SHARES IN STREET NAME, YOU WILL NEED TO INSTRUCT THE ACCOUNT EXECUTIVE AT YOUR BANK OR BROKER TO WITHDRAW THE SHARES FROM YOUR ACCOUNT IN ORDER TO EXERCISE YOUR REDEMPTION RIGHTS.
On behalf of our board of directors, I thank you for your support
and look forward to the successful completion of the Business Combination.
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, 2022
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Sincerely,
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Charles B. Bernicker
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Chief Executive Officer and Chairman of the Board of Directors
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This proxy statement/prospectus is dated , 2022 and is first
being mailed to the stockholders of North Mountain on or about , 2022.
NEITHER THE U.S. SECURITIES AND EXCHANGE
COMMISSION NOR ANY STATE SECURITIES REGULATORY AGENCY HAS APPROVED OR DISAPPROVED THE TRANSACTIONS DESCRIBED IN THIS PROXY STATEMENT/PROSPECTUS OR ANY OF THE SECURITIES TO BE ISSUED IN THE BUSINESS COMBINATION, 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.
North Mountain Merger Corp.
767 Fifth Avenue, 9th Floor
New York, NY 10153
NOTICE OF SPECIAL MEETING OF STOCKHOLDERS
TO BE HELD ON , 2022
To the Stockholders of North Mountain Merger Corp.:
NOTICE IS HEREBY GIVEN that a special meeting of stockholders (the
“special meeting”) of North Mountain Merger Corp., a Delaware corporation (“North Mountain,” “we,” “our” or “us”), will be held on , 2022, at 10:00 a.m., Eastern time, via live webcast at the following address . You will need the
16-digit meeting control number that is printed on your proxy card to enter the special meeting. North Mountain recommends that you log in at least 15 minutes before the special meeting to ensure you are logged in when the special meeting starts.
Please note that you will not be able to attend the special meeting in person. You are cordially invited to attend the special meeting for the following purposes:
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Proposal No. 1 — The “Pre-Mergers Charter Amendment Proposal” — to consider and vote upon
a proposal to adopt an amendment (the “Charter Amendment”) to North Mountain’s amended and restated certificate of incorporation currently in effect (the “Existing Charter”) to amend the authorized capital stock of North Mountain to
shares, consisting of (i) shares of common stock, including shares of North Mountain Class A Common Stock, par value $0.0001 per share (“North Mountain Class A Common Stock”) and 3,306,250 shares of North Mountain Class B Common
Stock, par value $0.0001 per share (“North Mountain Class B Common Stock”), and (ii) shares of preferred stock. The full text of the Charter Amendment is attached hereto as Annex B;
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Proposal No. 2 — The “Business Combination Proposal” — to consider and vote upon a
proposal to approve and adopt the Merger Agreement, dated as of December 9, 2021 (the “Merger Agreement”), by and among North Mountain, North Mountain Merger Sub Inc., a Delaware corporation and a direct, wholly owned subsidiary of North
Mountain (“Merger Sub I”), North Mountain Merger Sub II, LLC, a Delaware limited liability company and a direct, wholly owned subsidiary of North Mountain (“Merger Sub II” and together with Merger Sub I, the “Merger Subs”), and
Corcentric, Inc., a Delaware corporation (“Corcentric”) and the transactions contemplated thereby, pursuant to which Merger Sub I will merge with and into Corcentric (the “Initial Merger”), with Corcentric surviving the Initial Merger as
a wholly owned subsidiary of North Mountain (the “Initial Surviving Company”) and immediately following the Initial Merger, the Initial Surviving Company will merge with and into Merger Sub II (the “Subsequent Merger” and together with
the Initial Merger, the “Mergers”), with Merger Sub II surviving the Subsequent Merger as a wholly owned subsidiary of North Mountain. We refer to the Mergers and the other transactions described in the Merger Agreement collectively
hereafter as the “Business Combination” (the “Business Combination”);
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Proposal No. 3 — The “Post-Mergers Charter Approval Proposal” — to consider and vote upon
a proposal to adopt the Second Amended and Restated Certificate of Incorporation (the “Proposed Charter”) in the form attached hereto as Annex C;
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Proposal No. 4 — The “Advisory Charter Proposals” — to consider and vote upon, on a
non-binding advisory basis, certain governance provisions in the Proposed Charter, presented separately in accordance with the United States Securities and Exchange Commission (“SEC”) requirements (Proposals No. 4.A through 4.E, referred
to as the “Advisory Charter Proposals”):
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Proposal No. 4.A: to reclassify the Company’s capital stock and to increase the total number of authorized shares and classes of
stock to shares, consisting of (a) shares of Common Stock, par value $0.0001 per share and (b) shares of preferred stock, par value $0.0001 per share (we refer to this as “Advisory Charter Proposal A”);
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Proposal No. 4.B: to provide with respect to any vote to increase or decrease the number of authorized shares of any class or
classes of stock (but not below the number of shares then outstanding) requires the affirmative vote of the holders of all the then-outstanding shares of capital stock of New Corcentric entitled to vote thereon, voting together as a
single class, irrespective of the provisions of Section 242(b)(2) of the DGCL (we refer to this as “Advisory Charter Proposal B”);
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Proposal No. 4.C: to provide that any amendment to New Corcentric’s bylaws will require the approval of either New Corcentric’s
board of directors or the holders of at least two-thirds (2/3) of the voting power of the voting power of New Corcentric’s then-outstanding shares of capital stock entitled to vote generally in an election of directors, voting together as
a single class; provided, however, that if the New Corcentric Board has approved such adoption, then only the affirmative vote of the holders of at least a majority of the voting power of all then-outstanding shares of New Corcentric's
capital stock entitled to vote generally in the election of directors, voting together as a single class, shall be required to adopt, amend or repeal any provision of the Proposed Bylaws (we refer to this as “Advisory Charter Proposal
C”);
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Proposal No. 4.D: to provide that exclusive jurisdiction of the Delaware Court of Chancery shall not apply to suits brought to
enforce any duty or liability under the Securities Act or the Exchange Act, or any other claim for which the federal courts have exclusive jurisdiction, and to provide further that unless New Corcentric consents in writing to the
selection of an alternative forum, to the fullest extent permitted by law, the federal district courts of the United States of America shall be adopted as the sole and exclusive forum for the resolution of claims arising under the
Securities Act, or the rules and regulations promulgated thereunder (we refer to this as “Advisory Charter Proposal D”); and
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Proposal No. 4.E: to provide certain additional changes, including, among others, those (i) resulting from the Business
Combination, including changing the post-business combination corporate name from “North Mountain Merger Corp.” to “Corcentric, Inc.” and removing certain provisions relating to North Mountain’s prior status as a blank check company and
North Mountain Class B Common Stock that will no longer apply upon the Closing, or (ii) that are administrative or clarifying in nature, including the deletion of language without substantive effect (we refer to this as “Advisory Charter
Proposal E”);
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Proposal No. 5 — The “Equity Incentive Plan Proposal” — to consider and
vote upon a proposal to approve and adopt the equity incentive award plan established to be effective after the Closing of the Business Combination;
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Proposal No. 6 — The “Employee Stock Purchase Plan Proposal” — to
consider and vote upon a proposal to approve and adopt the employee stock purchase plan established to be effective after the Closing of the Business Combination;
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Proposal No. 7 — The “Nasdaq PIPE Issuance Proposal” — to
consider and vote upon a proposal to approve, for purposes of complying with the applicable listing rules of the Nasdaq Stock Market, the issuance of PIPE Shares, the delivery of PIPE Warrants and the issuance of PIPE Warrant Shares
issuable upon exercise of the PIPE Warrants to the PIPE Investors in the PIPE Financing; and
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Proposal No. 8 — The “Adjournment Proposal” — to consider and
vote upon a proposal to adjourn the special meeting to a later date or dates, if necessary, to permit further solicitation and vote of proxies if, based upon the tabulated vote at the time of the special meeting, there are not
sufficient votes to approve one or more proposals presented to stockholders.
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Only holders of record of shares of North Mountain Class A Common Stock
and North Mountain Class B Common Stock at the close of business on , 2022 are entitled to notice of the special meeting and to vote at the special meeting and any adjournments or postponements of the special meeting. A complete list of
our stockholders of record entitled to vote at the special meeting will be available for ten days before the special meeting at our principal executive offices for inspection by stockholders during ordinary business hours for any purpose germane
to the special meeting.
Pursuant to our Existing Charter, we are providing the holders of
shares of North Mountain Class A Common Stock originally sold as part of the units issued in our initial public offering (the “IPO” and such holders, the “Public Stockholders”) with the opportunity to redeem, upon the closing of the Business
Combination (the “Closing”), shares of North Mountain Class A Common Stock then held by them for cash equal to their pro rata share of the aggregate amount on deposit (as of two business days prior to the Closing) in the trust account (the “Trust
Account”) that holds the proceeds (including interest not previously released to North Mountain to pay its regulatory compliance costs and its taxes) from the IPO and a concurrent private placement of warrants to North Mountain LLC (our
“Sponsor”). For
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illustrative purposes, based on the fair value of cash and marketable securities held
in the Trust Account as of of approximately $ million, the estimated per share redemption price would have been approximately $ . Public Stockholders may elect to redeem their shares whether or not
they are holders as of the record date and whether or not they vote for the Business Combination Proposal. Notwithstanding the foregoing redemption rights, a Public Stockholder, together with any of his, her or its affiliates or any
other person with whom he, she or it is acting in concert or as a “group” (as defined under Section 13(d)(3) of the Securities Exchange Act of 1934, as amended (the “Exchange Act”)), will be restricted from redeeming in the aggregate his, her or
its shares or, if part of such a group, the group’s shares, in excess of 15% of the outstanding shares of North Mountain Class A Common Stock sold in the IPO. Holders of North Mountain’s outstanding warrants sold in the IPO, which are exercisable
for shares of North Mountain Class A Common Stock under certain circumstances, do not have redemption rights in connection with the Business Combination. Our Sponsor, officers and directors have agreed to waive their redemption rights in
connection with the consummation of the Business Combination with respect to any shares of North Mountain Class A Common Stock they may hold. Shares of North Mountain Class B Common Stock will be excluded from the pro rata calculation used to
determine the per share redemption price. Currently, our Sponsor, officers and directors own approximately 20% of our outstanding issued and outstanding shares of North Mountain Common Stock, including all of the shares of North Mountain Class B
Common Stock. Pursuant to that certain Letter Agreement, dated as of September 17, 2020 (the “Letter Agreement”), by and among North Mountain, our Sponsor and our officers and directors, our Sponsor and our officers and directors have agreed to
vote any shares of North Mountain Class A Common Stock and North Mountain Class B Common Stock owned by them in favor of any proposed Business Combination (as such term is defined in the Letter Agreement) involving North Mountain.
We may not consummate the Business Combination unless the
Pre-Mergers Charter Amendment Proposal, the Business Combination Proposal, the Post-Mergers Charter Approval Proposal, Equity Incentive Plan Proposal, the Employee Stock Purchase Plan Proposal and the Nasdaq PIPE Issuance Proposal are approved
at the special meeting. Each of the Pre-Mergers Charter Amendment Proposal, Equity Incentive Plan Proposal, the Employee Stock Purchase Plan Proposal and the Post-Mergers Charter Approval Proposal is conditioned on the approval of the Business
Combination Proposal and the Nasdaq PIPE Issuance Proposal. The Adjournment Proposal is not conditioned on the approval of any other proposal set forth in the accompanying proxy statement/prospectus. Furthermore, the Business Combination is not
conditioned on the separate approval of the Advisory Charter Proposals (separate and apart from approval of the Pre-Mergers Charter Amendment Proposal and the Post-Mergers Charter Approval Proposal).
The North Mountain Board has unanimously approved
the Merger Agreement and the transactions contemplated thereby and recommends that you vote “FOR” the Pre-Mergers Charter Amendment Proposal, “FOR” the Business Combination Proposal, “FOR” the Post-Mergers Charter Approval Proposal, “FOR” each
of the separate Advisory Charter Proposals, “FOR” the Equity Incentive Plan Proposal, “FOR” the Employee Stock Purchase Plan Proposal and “FOR” the Nasdaq PIPE Issuance Proposal.
Your attention is directed to the proxy statement/prospectus
accompanying this notice (including the financial statements and annexes attached thereto) for a more complete description of the proposed Business Combination and related transactions and each of our proposals. We encourage you to read this
proxy statement/prospectus carefully. If you have any questions or need assistance voting your shares, please call our proxy solicitor, Innisfree M&A Incorporated, at (877) 750-5836; banks and brokers can call collect at (212) 750-5833.
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By Order of the Board of Directors,
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, 2022
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Charles B. Bernicker
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Chief Executive Officer and Chairman of the Board of Directors
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This document, which forms part of a registration statement on Form S-4
filed with the SEC by North Mountain (the “Registration Statement”), constitutes a prospectus of North Mountain under Section 5 of the Securities Act, with respect to the shares of North Mountain Class A Common Stock to be issued if the Business
Combination described below is consummated. This document also constitutes a notice of meeting and a proxy statement under Section 14(a) of the Exchange Act with respect to the special meeting at which North Mountain stockholders will be asked to
consider and vote upon a proposal to approve the Business Combination by the approval and adoption of the Merger Agreement, among other matters.
North Mountain files reports, proxy statements/prospectuses and
other information with the SEC as required by the Exchange Act. You can read North Mountain’s SEC filings, including this proxy statement/prospectus as well as the Annual Report on Form 10-K for the year ended December 31, 2021, over the
Internet at the SEC’s website at http://www.sec.gov.
If you would like additional copies of this proxy statement/prospectus
or if you have questions about the Business Combination or the proposals to be presented at the special meeting, you should contact us by telephone or in writing:
North Mountain Merger Corp.
767 Fifth Avenue, 9th Floor
New York, New York 10153
Attention: Nicholas Dermatas, Chief Financial Officer and Secretary
E-mail: ndermatas@smmergercorp.com
You may also obtain these documents by requesting them in writing or by
telephone from our proxy solicitor at:
Innisfree M&A Incorporated
501 Madison Avenue, 20th floor
New York, New York 10022
Shareholders may call toll free: (877) 750-5836
Banks and Brokers may call collect: (212) 750-5833
If you are a stockholder of North Mountain and
would like to request documents, please do so by , 2022 to receive them before the special meeting. If you request any documents from us, we will mail them to you by first class mail, or
another equally prompt means.
1
In this document:
“Adjournment Proposal” means a proposal to adjourn the special meeting
to a later date or dates, if necessary, to permit further solicitation and vote of proxies if, based upon the tabulated vote at the time of the special meeting, there are not sufficient votes to approve one or more proposals presented to
stockholders.
“Aggregate Cash Consideration” means the aggregate Per Share Cash
Consideration payable for all Cash Consideration Shares pursuant to the Merger Agreement.
“broker non-vote” means the failure of a North Mountain stockholder,
who holds his or her shares in “street name” through a broker or other nominee, to give voting instructions to such broker or other nominee.
“Business Combination” means the Mergers and the other transactions
described in the Merger Agreement.
“Business Combination Proposal” means the proposal to approve and adopt
the Merger Agreement and the Business Combination.
“Cash Consideration Shares” mean the shares of Corcentric Preferred
Stock expressly identified as receiving merger consideration in the form of cash pursuant to the terms of the Merger Agreement.
“Charter Amendment” means the amendment to the Existing Charter to be
adopted in the Pre-Mergers Charter Amendment Proposal, which is attached to this proxy statement/prospectus as Annex B.
“Closing” means the consummation of the Business Combination.
“Closing Date” means the date on which the Closing occurs.
“Code” means the Internal Revenue Code of 1986, as amended.
“Company Requisite Approval” means the written consent or affirmative
vote of (i) holders of a majority of the voting power of the outstanding shares of Corcentric Common Stock and Corcentric Preferred Stock (voting together as a single class on an “as-converted” to Corcentric Common Stock basis) and (ii) holders
of a majority of the outstanding shares of Corcentric Preferred Stock (voting together as a single class on an “as-converted” to Corcentric Common Stock basis).
“Confidentiality Agreement” means that certain Non-Disclosure
Agreement, dated as of June 26, 2021, between North Mountain and Corcentric.
“Corcentric” means Corcentric, Inc., a Delaware corporation.
“Corcentric board of directors” means the board of directors of
Corcentric.
“Corcentric Board Recommendation” means the recommendation of the
Corcentric board of directors to the Corcentric stockholders that they approve and adopt the Merger Agreement and all other transactions contemplated thereby and approve the Business Combination.
“Corcentric Business Combination Proposal” means the proposal to the
Corcentric stockholders to consider and vote upon the Business Combination Proposal to approve and adopt the Merger Agreement and the Business Combination, among other proposals.
“Corcentric Capital Stock” means Corcentric Common Stock and Corcentric
Preferred Stock.
“Corcentric Certificate of Incorporation” means the Amended and
Restated Certificate of Incorporation of Corcentric, filed with the Secretary of State of the State of Delaware on May 1, 2020.
“Corcentric Common Stock” means the shares of common stock of
Corcentric, par value $0.001 per share.
“Corcentric Outstanding Shares” means the total number of shares of
Corcentric Common Stock and Corcentric Preferred Stock (on an “as-converted” to Corcentric Common Stock basis as if such shares of Corcentric Preferred Stock were converted into shares of Corcentric Common Stock in accordance with the terms of
the Corcentric Certificate of Incorporation immediately prior to the effective time of the Initial Merger) on a fully diluted basis outstanding as of the Closing Date using the treasury method of accounting, including, without duplication, (a)
the number of shares of Corcentric Common Stock issued or issuable upon the exercise of all vested Company stock options, (b) the shares of Corcentric Common Stock underlying all vested Corcentric
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restricted stock, and (c) any other vested Equity Equivalents (as defined in the Merger
Agreement), but excluding, in all such cases, (i) unvested Corcentric stock options, (ii) shares of Corcentric Common Stock underlying Corcentric restricted stock that remain unvested as of the effective time of the Initial Merger, and
(iii) Equity Equivalents that remain unvested as of the effective time of the Initial Merger.
“Corcentric Preferred Stock” means the shares of Corcentric Series A
Preferred Stock, par value $0.001 per share.
“Corcentric Stockholder Support Agreements” means those Stockholder
Support Agreements, dated as of December 9, 2021, by and among North Mountain, Corcentric and certain of Corcentric’s stockholders.
“Corcentric Supporting Stockholders” means those certain Corcentric
stockholders that have entered into Corcentric Stockholder Support Agreements.
“DGCL” means the Delaware General Corporation Law, as amended.
“Effective Time” means the time of filing of a certificate of merger
with the Secretary of State of the State of Delaware upon consummation of the Initial Merger or such later time as may be agreed by the parties to the Merger Agreement in writing and specified in such certificate of merger.
“Employee Stock Purchase Plan Proposal” means the proposal to
approve and adopt the employee stock purchase plan established to be effective after the Closing of the Business Combination.
“Equity Incentive Plan Proposal” means the proposal to approve and
adopt the equity incentive award plan established to be effective after the Closing of the Business Combination.
“Equity Value” means one billion thirteen million dollars seventy-four
thousand four hundred eighty-four dollars ($1,013,074,484).
“Exchange Act” means the U.S. Securities Exchange Act of 1934, as
amended.
“Existing Charter” means North Mountain’s Amended and Restated
Certificate of Incorporation, dated as of September 21, 2020.
“GAAP” means U.S. generally accepted accounting principles.
“HSR Act” means the Hart-Scott-Rodino Antitrust Improvements Act of
1976, as amended.
“Initial Merger” means the merger of Merger Sub I with and into
Corcentric.
“Initial Surviving Company” means the corporation which survives the
Initial Merger as a wholly owned subsidiary of North Mountain, which shall be Corcentric.
“Investment Company Act” means the Investment Company Act of 1940, as
amended.
“IPO” means North Mountain’s initial public offering of units,
consummated on September 22, 2020.
“JOBS Act” means the Jumpstart Our Business Startups Act of 2012, as
amended.
“Letter Agreement” means the Letter Agreement, dated as of
September 17, 2020, by and among North Mountain, the Sponsor and North Mountain’s officers and directors.
“Merger Agreement” means the Agreement and Plan of Merger, dated as of
December 9, 2021, by and among North Mountain, Merger Sub I, Merger Sub II and Corcentric.
“Merger Sub I” means North Mountain Merger Sub Inc., a Delaware
corporation and a direct, wholly owned subsidiary of North Mountain.
“Merger Sub II” means North Mountain Merger Sub II, LLC, a Delaware
limited liability company and a direct, wholly owned subsidiary of North Mountain.
“Mergers” means, collectively, the Initial Merger and the Subsequent
Merger.
“Nasdaq” means the Nasdaq Capital Market.
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“Nasdaq PIPE Issuance Proposal” means the proposal to approve,
for purposes of complying with the applicable listing rules of the Nasdaq Stock Market, the issuance of PIPE Shares, the delivery of PIPE Warrants and the issuance of PIPE Warrant Shares issuable upon exercise of the PIPE Warrants to the PIPE
Investors in the PIPE Financing.
“New Corcentric” means North Mountain immediately following the
consummation of the Business Combination.
“New Corcentric Board” means New Corcentric’s board of directors
following the consummation of the Business Combination.
“New Corcentric Common Stock” means, following the consummation of the
Business Combination and approval of the Proposed Charter, New Corcentric’s common stock, par value $0.0001 per share, as authorized under the Proposed Charter.
“North Mountain” means North Mountain Merger Corp., a Delaware
corporation.
“North Mountain Board” means North Mountain’s board of directors
prior to the Business Combination.
“North Mountain Class A Common Stock” means North Mountain’s Class A
common stock, par value $0.0001 per share.
“North Mountain Class B Common Stock” means North Mountain’s Class B
common stock, par value $0.0001 per share.
“North Mountain Common Stock” means North Mountain Class A Common Stock
and North Mountain Class B Common Stock, collectively.
“North Mountain Proposals” means the proposals to be voted on at the
special meeting.
“North Mountain Record Date” means , 2022, the record date for
the special meeting.
“North Mountain Unit” means one share of North Mountain Class A Common
Stock and one half of one redeemable Public Warrant.
“North Mountain Warrant Agreement” means the warrant agreement, dated
as of September 17, 2020, by and between North Mountain and Continental Stock Transfer & Trust Company, governing the outstanding North Mountain Warrants.
“North Mountain Warrants” means the Private Placement Warrants and the
Public Warrants issued under the North Mountain Warrant Agreement, with each whole warrant exercisable for one share of North Mountain Class A Common Stock at an exercise price of $11.50.
“Per Share Cash Consideration” means an amount of cash, without
interest, equal to the Per Share Merger Consideration Value.
“Per Share Merger Consideration Value” means (i) the Equity Value
divided by (ii) the Corcentric Outstanding Shares.
“Per Share Stock Consideration” means a number of shares of North
Mountain Class A Common Stock equal to (i) the Per Share Merger Consideration Value divided by (ii) 10.
“Permitted Withdrawals” means amounts that may be withdrawn from the
Trust Account to fund North Mountain’s regulatory compliance costs and to pay its taxes.
“PIPE Financing” means (i) the sale of PIPE Shares to the PIPE
Investors, for a purchase price of $10.00 per share and an aggregate purchase price of $50,000,000 and (ii) the transfer of PIPE Warrants to the PIPE Investors, in each case, in a private placement.
“PIPE Investors” means (i) investment funds managed by Wellington
Management Company LLP, (ii) Millais Limited, an affiliate of the Sponsor and an affiliate of North Mountain and (iii) SMMC Sponsor Interests, LLC, an affiliate of North Mountain and an entity controlled by Charles Bernicker, the Chief Executive
Officer and a director of North Mountain.
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“PIPE Shares” means an aggregate of 5,000,000 shares of North
Mountain Class A Common Stock to be issued to PIPE Investors in the PIPE Financing.
“PIPE Warrants” means an aggregate of 2,500,000 warrants to be
delivered to PIPE Investors in the PIPE Financing, which warrants are currently Private Placement Warrants that will be transferred other than to a “Permitted Transferee” pursuant to Section 2.6 of the North Mountain Warrant Agreement and
therefore will become Public Warrants upon transfer to the PIPE Investors.
“PIPE Warrant Shares” means the shares of North Mountain Class A Common
Stock issuable upon exercise of the PIPE Warrants.
“Post-Mergers Charter Approval Proposal” means the proposal to adopt
the Proposed Charter.
“Pre-Mergers Charter Amendment Proposal” means the proposal to adopt
the Charter Amendment to increase the authorized shares of North Mountain Class A Common Stock and shares of preferred stock.
“Private Placement” means the sale of the Private Placement Warrants
that occurred simultaneously with the completion of the IPO.
“Private Placement Warrants” means the warrants to purchase shares of
North Mountain Class A Common Stock sold in the Private Placement to our Sponsor that occurred simultaneously with the completion of the IPO.
“Proposed Bylaws” means the proposed Amended and Restated Bylaws of
North Mountain, the full text of which is attached to this proxy statement/prospectus as Annex D.
“Proposed Charter” means the proposed Second Amended and Restated
Certificate of Incorporation of North Mountain, the full text of which is attached to this proxy statement/prospectus as Annex C.
“Public Shares” means shares of North Mountain Class A Common Stock
issued as part of the units sold in the IPO.
“Public Stockholders” means the holders of shares of North Mountain
Class A Common Stock.
“Public Warrants” means the redeemable warrants included in the North
Mountain Units sold in the IPO, each whole warrant of which is exercisable for one share of North Mountain Class A Common Stock, in accordance with its terms.
“Redemption Amount” means the aggregate amount of cash proceeds that
will be required to satisfy the redemption of any shares of North Mountain Class A Common Stock pursuant to the redemption rights of the North Mountain stockholders described in this proxy statement/prospectus (to the extent not already paid).
“Redemption Offer” means the redemption offer to be made pursuant to
the terms of the Existing Charter in respect of the redemption rights of the North Mountain stockholders described in this proxy statement/prospectus.
“SEC” means the U.S. Securities and Exchange Commission.
“Securities Act” means the U.S. Securities Act of 1933, as amended.
“Share Vesting and Warrant Surrender Agreement” means that Share
Vesting and Warrant Surrender Agreement, dated as of December 9, 2021, by and among North Mountain, Sponsor and Corcentric.
“Sponsor” means North Mountain LLC, a Delaware limited liability
company.
“Subscription Agreements” means the separate subscription agreements by
and between North Mountain and the PIPE Investors, each effective December 9, 2021, which are in all material respects similar to the Form of Subscription Agreement attached to the Merger Agreement as Exhibit A.
“Subsequent Merger” means the merger of Merger Sub II with and into
the Initial Surviving Company.
“Total Cash Consideration Amount” means one hundred twenty million
dollars ($120,000,000).
“Trust Account” means the trust account that holds a portion of the
proceeds of the IPO and the concurrent sale of the Private Placement Warrants.
5
This proxy statement/prospectus includes the trademarks and service
marks of Corcentric such as “Corcentric®” and others, which are protected under applicable intellectual property laws and are the property of Corcentric or its subsidiaries. This proxy statement/prospectus also contains trademarks,
service marks, trade names and copyrights of other companies, which are the property of their respective owners. Solely for convenience, trademarks and trade names referred to in this proxy statement/prospectus may appear without the ®
or ™ symbols, but such references are not intended to indicate, in any way, that we will not assert, to the fullest extent under applicable law, our rights or the right of the applicable licensor to these trademarks and trade names.
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Certain statements in this proxy statement/prospectus may constitute
“forward-looking statements” for purposes of the federal securities laws. Our forward-looking statements include, but are not limited to, statements regarding our, our management team’s, Corcentric’s and Corcentric’s management team’s
expectations, hopes, beliefs, intentions or strategies regarding the future. In addition, any statements that refer to projections, forecasts or other characterizations of future events or circumstances, including any underlying assumptions, are
forward-looking statements. The words “anticipate,” “believe,” “continue,” “could,” “estimate,” “expect,” “intends,” “may,” “might,” “plan,” “possible,” “potential,” “predict,” “project,” “should,” “will,” “would” and similar expressions may
identify forward-looking statements, but the absence of these words does not mean that a statement is not forward-looking. Forward-looking statements in this proxy statement/prospectus may include, for example, statements about:
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our ability to consummate the Business Combination, or, if we do not consummate the Business Combination, any other initial
business combination;
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New Corcentric’s capitalization after giving effect to the Business Combination and the expected benefits of the Business
Combination; and
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future opportunities for New Corcentric.
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These forward-looking statements are based on information available as
of the date of this proxy statement/prospectus, and current expectations, forecasts and assumptions, and involve a number of judgments, risks and uncertainties. Accordingly, forward-looking statements should not be relied upon as representing our
views as of any subsequent date, and we do not undertake any obligation to update forward-looking statements to reflect events or circumstances after the date they were made, whether as a result of new information, future events or otherwise,
except as may be required under applicable securities laws.
You should not place undue reliance on these forward-looking statements
in deciding how to grant your proxy or instruct how your vote should be cast or vote your shares on the proposals set forth in this proxy statement/prospectus. As a result of a number of known and unknown risks and uncertainties, our actual
results or performance may be materially different from those expressed or implied by these forward-looking statements. Some factors that could cause actual results to differ include:
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the occurrence of any event, change or other circumstances that could delay the Business Combination or give rise to the
termination of the Merger Agreement;
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the outcome of any legal proceedings that may be instituted against North Mountain following announcement of the proposed Business
Combination and transactions contemplated thereby;
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the inability to complete the Business Combination due to the failure to obtain approval of the stockholders of North Mountain or
to satisfy other conditions to the Closing in the Merger Agreement;
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the ability to obtain or maintain the listing of New Corcentric Common Stock on Nasdaq following the Business Combination;
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the risk that the proposed Business Combination disrupts current plans and operations of Corcentric as a result of the
announcement and consummation of the transactions described herein;
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costs related to the Business Combination; and
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other risks and uncertainties described in this proxy statement/prospectus, including those under the section entitled “Risk Factors.”
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The following questions and answers 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 may not include all the information that is important to
North Mountain stockholders. Stockholders are urged to read carefully this entire proxy statement/prospectus, including the financial statements and annexes attached hereto and the other documents referred to herein.
Questions and Answers about the Special Meeting and the Related Proposals
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Q.
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Why am I receiving this proxy statement/prospectus?
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A.
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North Mountain has entered into the Merger Agreement with Corcentric and the
other parties thereto, pursuant to which (i) Merger Sub I will merge with and into Corcentric, with Corcentric surviving the Initial Merger as a wholly owned subsidiary of North Mountain and (ii) immediately following the Initial
Merger, the Initial Surviving Company will merge with and into Merger Sub II, with Merger Sub II surviving the Subsequent Merger as a wholly owned subsidiary of North Mountain. A copy of the Merger Agreement is attached to this proxy
statement/prospectus as Annex A. North Mountain stockholders are being asked to consider and vote upon the Business Combination
Proposal to approve the adoption of the Merger Agreement and the Business Combination, among other proposals.
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North Mountain Units, North Mountain Class A Common Stock and the Public Warrants are
currently listed on Nasdaq, under the symbols “NMMCU,” “NMMC” and “NMMCW,” respectively. North Mountain has applied to continue the listing of New Corcentric Common Stock and Public Warrants on Nasdaq under the symbols “ ” and “ ,”
respectively, upon the Closing. At the Closing, each North Mountain Unit will separate into its components consisting of one share of North Mountain Class A Common Stock and one half of one redeemable Public Warrant, and therefore there will be
no Nasdaq listing of the North Mountain Units following the consummation of the Business Combination. Following the consummation of the Business Combination, all outstanding shares of North Mountain Class A Common Stock will be reclassified as
shares of New Corcentric Common Stock on a one-to-one basis.
At Closing, as a result of the Business Combination:
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a)
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each share of Corcentric Common Stock that is issued and outstanding immediately prior to the Effective Time (other than shares
owned by Corcentric as treasury stock, dissenting shares and shares of Corcentric restricted stock) will be converted into the right to receive (i) the Per Share Stock Consideration, (ii) any cash payable in lieu of fractional shares
pursuant to the terms of the Merger Agreement and (iii) the contingent right to receive a number of shares of North Mountain Class A Common Stock, following the Closing (such shares, the “Earnout Shares”) in accordance with the terms of
the Merger Agreement;
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b)
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each share of Corcentric Preferred Stock that is issued and outstanding immediately prior to the Effective Time (other than shares
owned by Corcentric as treasury stock, dissenting shares and the Cash Consideration Shares) will be converted into the right to receive (i) a number of newly issued shares of North Mountain Class A Common Stock, equal to the product of
(A) the Per Share Stock Consideration, multiplied by (B) the number of shares of Corcentric Common Stock that such shares of Corcentric Preferred Stock would be converted into if converted in accordance with the terms of the Corcentric
Certificate of Incorporation immediately prior to the Effective Time, (ii) any cash payable in lieu of fractional shares pursuant to the terms of the Merger Agreement and (iii) the contingent right to receive a number of Earnout Shares
following the Closing in accordance with the terms of the Merger Agreement; and
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c)
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each Cash Consideration Share will be converted into the right to receive an amount of cash, without interest, equal to the
product of (A) the Per Share Merger Consideration Value, multiplied by (B) the number of shares of Corcentric Common Stock that such shares of Corcentric Preferred Stock would be converted into if converted in accordance with the terms of
the Corcentric Certificate of Incorporation immediately prior to the Effective Time (with the aggregate amount of cash payable in respect of the Cash Consideration Shares not to exceed the Total Cash Consideration Amount).
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This proxy statement/prospectus and its annexes contain important information about
the proposed Business Combination and the proposals to be acted upon at the special meeting. You should read this proxy statement/prospectus and its annexes carefully and in their entirety. This document also constitutes a prospectus of North
Mountain with respect to the North Mountain Class A Common Stock issuable in connection with the Business Combination.
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Q.
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What matters will stockholders consider at the special meeting?
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A.
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The Pre-Mergers Charter Amendment Proposal—a proposal to adopt an amendment
to North Mountain’s Existing Charter to increase the authorized shares of North Mountain Class A Common Stock and shares of preferred stock.
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The Business Combination Proposal—a proposal to approve and adopt the Merger Agreement
and the Business Combination.
The Post-Mergers Charter Approval Proposal—a proposal to approve the adoption of the
Proposed Charter.
The Advisory Charter Proposals—proposals to approve, on a non-binding advisory basis,
certain governance provisions in the Proposed Charter, presented separately in accordance with SEC requirements.
The Equity Incentive Plan Proposal—a proposal to approve and adopt the equity
incentive award plan established to be effective as of the Closing of the Business Combination.
The Employee Stock Purchase Plan Proposal—a proposal to approve and adopt the
employee stock purchase plan established to be effective as of the Closing of the Business Combination.
The Nasdaq PIPE Issuance Proposal—a proposal to consider and vote upon a proposal to
approve, for purposes of complying with the applicable listing rules of the Nasdaq Stock Market, the issuance of PIPE Shares, the delivery of PIPE Warrants and the issuance of PIPE Warrant Shares issuable upon exercise of the PIPE Warrants to
the PIPE Investors in the PIPE Financing.
The Adjournment Proposal—a proposal to adjourn the special meeting to a later date or
dates, if necessary, to permit further solicitation and vote of proxies if, based upon the tabulated vote at the time of the special meeting, there are not sufficient votes to approve one or more proposals presented to stockholders.
Consummation of the Business Combination is conditioned on approval of each of the
Pre-Mergers Charter Amendment Proposal, the Business Combination Proposal, the Post-Mergers Charter Approval Proposal, the Equity Incentive Plan Proposal, the Employee Stock Purchase Plan Proposal and the Nasdaq PIPE Issuance Proposal, subject
to the terms of the Merger Agreement.
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Q.
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What will happen upon the consummation of the Business Combination?
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A.
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On the Closing Date, (i) Merger Sub I will be merged with and into
Corcentric, with Corcentric surviving the Initial Merger as a wholly owned subsidiary of North Mountain and (ii) immediately following the Initial Merger and as part of the same overall transaction as the Initial Merger, the Initial
Surviving Company will merge with and into Merger Sub II, with Merger Sub II surviving the Subsequent Merger as a wholly owned subsidiary of North Mountain. The Mergers will have the effects specified under Delaware law.
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At Closing, as a result of the Business Combination:
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a)
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each share of Corcentric Common Stock that is issued and outstanding immediately prior to the Effective Time (other than shares
owned by Corcentric as treasury stock, dissenting shares and shares of Corcentric restricted stock) will be converted into the right to receive (i) the Per Share Stock Consideration, (ii) any cash payable in lieu of fractional shares
pursuant to the terms of the Merger Agreement and (iii) the contingent right to receive a number of Earnout Shares following the Closing in accordance with the terms of the Merger Agreement;
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b)
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each share of Corcentric Preferred Stock that is issued and outstanding immediately prior to the Effective Time (other than shares
owned by Corcentric as treasury stock, dissenting shares
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and the Cash Consideration Shares) will be converted into the right to receive (i) a
number of newly issued shares of North Mountain Class A Common Stock, equal to the product of (A) the Per Share Stock Consideration, multiplied by (B) the number of shares of Corcentric Common Stock that such shares of Corcentric Preferred Stock
would be converted into if converted in accordance with the terms of the Corcentric Certificate of Incorporation immediately prior to the Effective Time, (ii) any cash payable in lieu of fractional shares pursuant to the terms of the Merger
Agreement and (iii) the contingent right to receive a number of Earnout Shares following the Closing in accordance with the terms of the Merger Agreement; and
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c)
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each share of Corcentric Preferred Stock identified as receiving merger consideration in the form of cash pursuant to the terms of
the Merger Agreement (each such share of Corcentric Preferred Stock, a “Cash Consideration Share”) will be converted into the right to receive an amount of cash, without interest, equal to the product of (A) the Per Share Merger
Consideration Value, multiplied by (B) the number of shares of Corcentric Common Stock that such shares of Corcentric Preferred Stock would be converted into if converted in accordance with the terms of the Corcentric Certificate of
Incorporation immediately prior to the Effective Time (with the aggregate amount of cash payable in respect of the Cash Consideration Shares not to exceed the Total Cash Consideration Amount).
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Following the consummation of the Business Combination, all outstanding shares of North
Mountain Class A Common Stock will be reclassified as shares of New Corcentric Common Stock on a one-to-one basis.
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Q.
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Why is North Mountain proposing the Business Combination Proposal?
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A.
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North Mountain was organized for the purpose of effecting a merger, capital
stock exchange, asset acquisition, stock purchase, reorganization or similar business combination with one or more businesses. North Mountain is not limited to any particular industry or sector.
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North Mountain received $132,250,000 from its IPO (including net proceeds from the full
exercise by the underwriters of their over-allotment option) and the sale of the Private Placement Warrants, which was placed into the Trust Account immediately following the IPO. In accordance with the Existing Charter, the funds held in the
Trust Account will be released upon the consummation of the Business Combination. See the question entitled “What happens to the funds held in the Trust Account upon consummation of the Business Combination?”
There currently are 13,225,000 shares of North Mountain Class A Common Stock issued and
outstanding and 3,306,250 shares of North Mountain Class B Common Stock issued and outstanding. In addition, there currently are 10,757,500 North Mountain Warrants issued and outstanding, consisting of 6,612,500 Public Warrants and 4,145,000
Private Placement Warrants. Each whole North Mountain Warrant entitles the holder thereof to purchase one share of North Mountain Class A Common Stock at a price of $11.50 per share. The Public Warrants will become exercisable 30 days after the
completion of a business combination, and expire at 5:00 p.m., New York City time, five years after the completion of a business combination or earlier upon redemption or liquidation. After giving effect to the provisions of the Share Vesting and
Warrant Surrender Agreement in connection with the Business Combination, there will be no Private Placement Warrants outstanding.
Under the Existing Charter, North Mountain must provide all holders of Public Shares
with the opportunity to have their Public Shares redeemed upon the consummation of North Mountain’s initial business combination in conjunction with a stockholder vote.
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Q.
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Who is Corcentric?
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A.
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Corcentric’s mission is to transform how businesses purchase, pay, and get
paid. Corcentric is a leading provider of B2B commerce solutions for enterprise and middle-market businesses. Corcentric offers a comprehensive, end-to-end software and technology-enabled suite of Source-to-Pay (“S2P”) and Order-to-Cash
(“O2C”) solutions that, together with its proprietary B2B Payments Network, empowers its customers to enable growth, optimize working capital, enhance visibility, and minimize risk. Corcentric’s solutions are delivered through a
powerful combination of cloud-based software, payments, and advisory services. Corcentric’s solutions are used by more than 2,500 customers globally across numerous industry verticals, and it has processed over $100 billion in
transaction volume on its end-to-end platform during the twelve months ended December 31, 2020. With more than 450,000 buyers and 1.4 million suppliers on its global network, Corcentric is building a preeminent hub for B2B commerce with
significant barriers to entry.
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Q.
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What equity stake will current North Mountain stockholders and Corcentric stockholders have in New Corcentric?
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A.
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It is anticipated that, upon the completion of the Business Combination,
the ownership of New Corcentric will be as follows:
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No Redemption
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50% Redemption
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Contractual
Maximum
Redemption
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Contractual Maximum
Redemption
with $125 million
Minimum Cash(1)
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Shares
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Percentage
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Shares
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Percentage
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Shares
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Percentage
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Shares
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Percentage
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Current Corcentric stockholders
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89,307,448
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79.6%
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89,307,448
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80.2%
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89,307,448
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80.8%
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89,307,448
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82.7%
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Current North Mountain stockholders
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13,225,000
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11.8%
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12,362,500
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11.1%
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11,500,000
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10.4%
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9,000,000
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8.3%
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PIPE Investors
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5,000,000
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4.4%
|
| |
5,000,000
|
| |
4.5%
|
| |
5,000,000
|
| |
4.5%
|
| |
5,000,000
|
| |
4.6%
|
|
Sponsor
|
| |
4,706,250
|
| |
4.2%
|
| |
4,706,250
|
| |
4.2%
|
| |
4,706,250
|
| |
4.3%
|
| |
4,706,250
|
| |
4.4%
|
|
Total
|
| |
112,238,698
|
| |
100%
|
| |
111,376,198
|
| |
100%
|
| |
110,513,698
|
| |
100%
|
| |
108,013,698
|
| |
100%
|
|
(1)
|
The contractual maximum redemption with $125 million minimum cash scenario assumes that Corcentric waives the minimum cash
condition.
|
North Mountain stockholders that elect not to redeem their North Mountain Class A
Common Stock will experience significant dilution as a result of the Business Combination. North Mountain public stockholders currently own approximately 80% of North Mountain Common Stock. As noted above, if no North Mountain stockholders
redeem their North Mountain Class A Common Stock in the Business Combination, North Mountain Public Stockholders will own approximately 11.8% of the total shares outstanding in New Corcentric and approximately 10.4% of the total shares
outstanding under the contractual maximum redemption scenario. North Mountain stockholders will experience further dilution to the extent any warrants that remain outstanding following the Business Combination are exercised and to the extent
any Earnout Shares are issued. Following the Business Combination, an aggregate of up to 9,112,500 Public Warrants and no Private Placement Warrants will be outstanding. Assuming all 9,112,500 Public Warrants are exercised for cash and all
5,000,000 Earnout Shares are issued, North Mountain Public Stockholders will own approximately 10.5%, 9.9%, 9.2% and 7.4% of the total shares outstanding under the no redemption, 50% redemption, contractual maximum redemption and contractual
maximum redemption with $125 million minimum cash scenarios, respectively. North Mountain stockholders who redeem their shares of North Mountain Class A Common Stock may continue to hold any Public Warrants that they owned prior to redemption,
the exercise of which would result in additional dilution to non-redeeming North Mountain stockholders. Assuming (a) all redeeming North Mountain stockholders acquired units in the IPO and continue to hold the Public Warrants that were included
in such units and (b) the contractual maximum redemption of North Mountain Class A Common Stock, 862,500 Public Warrants would be retained by redeeming North Mountain stockholders.
North Mountain has agreed to pay the underwriters in the IPO a cash fee for their
services in connection with the IPO in an aggregate amount equal to 5.5% of the gross proceeds of the IPO, with 2.0% of the gross proceeds being paid to the underwriters at the time North Mountain completed its IPO and 3.5% of the gross
proceeds (i.e., the deferred underwriting fee) being payable, and conditioned, upon consummating
11
an initial business combination. The aggregate underwriting fee is fixed at 5.5%
of the gross proceeds from the IPO and will not be adjusted based on the number of shares that are redeemed in connection with the Business Combination. The aggregate underwriting fee of $7,046,050 represents approximately 5.3%, 5.7%, 6.1% and
7.8% of the aggregate proceeds from the IPO, net of redemptions, in the no redemption, 50% redemption, contractual maximum redemption and contractual maximum redemption with $125 million minimum cash scenarios, respectively.
The numbers of shares and percentage interests set forth above reflect four different
redemption scenarios laid out below.
|
•
|
Assuming no redemption scenario: This presentation assumes that no Public Stockholders
exercise redemption rights with respect to their Public Shares.
|
|
•
|
Assuming 50% redemption scenario: This presentation assumes that
the Public Stockholders holding approximately 6.5% of the Public Shares exercise redemption rights with respect to their Public Shares, which is approximately 50% of the Public Shares assumed to be redeemed under the contractual maximum
redemption scenario. This scenario assumes that 862,500 Public Shares are redeemed for an aggregate redemption payment of approximately $8,625,000 plus a pro rata portion of interest accrued on the Trust Account.
|
|
•
|
Assuming contractual maximum redemption scenario: This
presentation assumes that the Public Stockholders holding approximately 13.0% of the Public Shares exercise redemption rights with respect to their Public Shares. This scenario assumes that 1,725,000 Public Shares are redeemed for an
aggregate redemption payment of approximately $17,250,000 plus a pro rata portion of interest accrued on the Trust Account. This contractual maximum redemption scenario is based on a minimum cash condition of $150,000,000 at Closing of
the Business Combination, consisting of Trust Account funds, PIPE Financing proceeds and all other North Mountain cash and cash equivalents less the aggregate amount of cash proceeds that will be required to satisfy the redemption of
the Public Shares and the payment of North Mountain estimated transaction expenses of $15,000,000. Corcentric shall have no right or ability to waive the minimum cash condition without the prior written consent of North Mountain (which
consent may be provided or withheld by North Mountain in its sole discretion) if such aggregate amount is less than $125,000,001.
|
|
•
|
Assuming contractual maximum redemption with $125 million minimum cash scenario:
This presentation assumes that the Public Stockholders holding approximately 32.0% of the Public Shares exercise redemption rights with respect to their Public Shares. This scenario assumes that 4,225,000 Public Shares are redeemed for
an aggregate redemption payment of approximately $42,225,000 plus a pro rata portion of interest accrued on the Trust Account. This contractual maximum redemption with $125 million minimum cash scenario is based on minimum cash of
$125,000,000 at Closing of the Business Combination and assumes that Corcentric waives the $150,000,000 minimum cash condition.
|
The presentation set forth above assumes that any performance vesting provisions
applicable to any shares of North Mountain Common Stock pursuant to the Share Vesting and Warrant Surrender Agreement are met and, unless otherwise indicated, assumes (i) that there are no exercises of any North Mountain Warrants outstanding as
of immediately prior to the Closing and (ii) no Earnout Shares have been issued. The numbers of shares and percentage interests set forth above have been presented for illustrative purposes only and do not necessarily reflect what New
Corcentric’s share ownership will be had the Business Combination occurred on the dates indicated. See “Unaudited Pro Forma Condensed Combined Financial Information.”
|
Q.
|
Who will be the officers and directors of New Corcentric if the Business Combination is consummated?
|
|
A.
|
The Merger Agreement provides that, immediately following the consummation
of the Business Combination, the New Corcentric Board will be comprised of seven members, six of which will be designated by Corcentric and one of which will be designated by North Mountain. Immediately following the consummation of the
Business Combination, we expect that the following will be the executive officers
|
12
of New Corcentric: Douglas Clark, as Chief Executive Officer and Chairman of the New
Corcentric Board; Matthew Clark, as President and Chief Operating Officer; Thomas Sabol, as Chief Financial Officer; and Mark Joyce, as Executive Vice President and Chief Accounting Officer.
|
Q.
|
What conditions must be satisfied to complete the Business Combination?
|
|
A.
|
There are a number of closing conditions in the Merger Agreement, including
that North Mountain’s stockholders have approved and adopted the Merger Agreement. For a summary of the conditions that must be satisfied or waived prior to completion of the Business Combination, see the section entitled “Proposal No. 2—The Business Combination Proposal—Conditions to Closing; Termination.”
|
|
Q.
|
What happens if I sell my shares of North Mountain Class A Common Stock before the special meeting?
|
|
A.
|
The North Mountain Record Date for the special meeting will be earlier than
the date that the Business Combination is expected to be completed. If you transfer your shares of North Mountain Class A Common Stock after the North Mountain Record Date, but before the special meeting, unless the transferee obtains
from you a proxy to vote those shares, you will retain your right to vote at the special meeting.
|
|
Q.
|
What vote is required to approve the proposals presented at the special meeting?
|
|
A.
|
The approval of the Pre-Mergers Charter Amendment Proposal requires the
affirmative vote (in person online or by proxy) of (i) the holders of a majority of the outstanding shares of North Mountain Common Stock, voting together as a single class and (ii) the holders of a majority of the outstanding shares of
North Mountain Class A Common Stock, voting separately as a single class. Accordingly, a North Mountain stockholder’s failure to vote by proxy or to vote in person online at the special meeting, an abstention from voting or a broker
non-vote will have the same effect as a vote against the Pre-Mergers Charter Amendment Proposal.
|
The approval of the Post-Mergers Charter Approval Proposal requires the affirmative vote
(in person online or by proxy) of (i) the holders of a majority of the outstanding shares of North Mountain Common Stock, voting together as a single class and (ii) the holders of a majority of the outstanding shares of North Mountain Class B
Common Stock, voting separately as a single class. Accordingly, a North Mountain stockholder’s failure to vote by proxy or to vote in person online at the special meeting, an abstention from voting or a broker non-vote will have the same effect
as a vote against the Post-Mergers Charter Approval Proposal.
The approval of the Business Combination Proposal, the Equity Incentive Plan
Proposal, the Employee Stock Purchase Plan Proposal, the Nasdaq PIPE Issuance Proposal and the Adjournment Proposal require the affirmative vote (in person online or by proxy) of a majority of the votes cast by the holders of shares of North
Mountain Common Stock, voting together as a single class, that are present or represented by proxy at the special meeting. The approval of each of the Advisory Charter Proposals, each of which is a non-binding advisory vote, requires the
affirmative vote of a majority of the votes cast by holders of North Mountain Common Stock present in person or represented by proxy and entitled to vote at the special meeting, voting as a single class. Accordingly, a North Mountain
stockholder’s failure to vote by proxy or to vote in person online at the special meeting, an abstention from voting or a broker non-vote will have no effect on the outcome of any vote on these Proposals.
Holders of all of the North Mountain Class B Common Stock (or 20% of the outstanding
shares of North Mountain Common Stock) have agreed to vote in favor of the Business Combination Proposal.
|
Q.
|
Do Corcentric’s stockholders need to approve the Business Combination?
|
|
A.
|
Yes. Following the execution of the Merger Agreement, Corcentric and certain
holders of Corcentric Capital Stock entered into the Corcentric Stockholder Support Agreements, pursuant to which, among other things and subject to the terms and conditions therein, such Corcentric stockholders agreed to vote or
provide their written consent with respect to all Corcentric Capital Stock beneficially owned by such stockholders in favor of adoption and approval of the Merger Agreement and the approval of the transactions contemplated by the Merger
Agreement, including the Business Combination, and not to (a) transfer any of their
|
13
Corcentric Common Stock and/or Corcentric Preferred Stock (or enter into any
arrangement with respect thereto) or (b) enter into any voting arrangement that is inconsistent with the Corcentric Stockholder Support Agreements. Collectively, as of December 31, 2021, the Corcentric stockholders who have entered into
Corcentric Stockholder Support Agreements held approximately 48.2% of the outstanding shares of Corcentric Capital Stock and approximately 100% of the outstanding shares of Corcentric Preferred Stock. The adoption and approval of the Merger
Agreement and the transactions contemplated thereby is subject to the approval (given in writing or by vote at a meeting) of (i) holders of a majority of the voting power of the outstanding shares of Corcentric Common Stock and Corcentric
Preferred Stock (voting together as a single class on an “as-converted” to Corcentric Common Stock basis) and (ii) holders of a majority of the outstanding shares of Corcentric Preferred Stock (voting together as a single class on an
“as-converted” to Corcentric Common Stock basis). For further information, please see the section entitled “Agreements Related to The Business Combination—Corcentric Stockholder Support Agreements.”
|
Q.
|
May North Mountain, the Sponsor, Corcentric or their respective, directors, officers or affiliates purchase
shares in connection with the Business Combination?
|
|
A.
|
Prior to or following the consummation of the Business Combination and the
other transactions contemplated by the Merger Agreement, North Mountain, the Sponsor, Corcentric and their respective directors, officers or affiliates may privately negotiate transactions or make open market purchases of shares of
North Mountain Class A Common Stock or Public Warrants, although they are under no obligation to do so. 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 North Mountain Class A Common Stock or Public Warrants in such transactions. Such a purchase would include a contractual acknowledgement that
such stockholder, although still the record holder of such shares, is no longer the beneficial owner thereof and therefore agrees not to exercise its redemption rights. In the event that our Sponsor, directors, officers or 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. Any such privately negotiated purchases may be effected at purchase prices that are in excess of the pro rata portion of the Trust Account. The purpose of such purchases of shares of North Mountain Class A Common
Stock could be to vote such shares in favor of the Business Combination Proposal and thereby increase the likelihood of obtaining stockholder approval of the Business Combination Proposal. The purpose of any such purchases of warrants
could be to reduce the number of warrants outstanding. Any such purchases of securities may result in the consummation of the Business Combination, which 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 North Mountain Class A Common Stock or Public
Warrants and the number of beneficial holders of securities may be reduced, possibly making it difficult to maintain the quotation, listing or trading of these securities on a national securities exchange.
|
|
Q.
|
How many votes do I have at the special meeting?
|
|
A.
|
North Mountain’s stockholders are entitled to one vote at the special
meeting for each share of North Mountain Class A Common Stock or North Mountain Class B Common Stock held of record as of the North Mountain Record Date. As of the close of business on the North Mountain Record Date, there were
13,225,000 shares of North Mountain Class A Common Stock outstanding and 3,306,250 shares of North Mountain Class B Common Stock outstanding.
|
|
Q.
|
What interests do North Mountain’s current officers and directors and their affiliates have in the Business
Combination and the PIPE Financing?
|
|
A.
|
The North Mountain Board and executive officers and their respective
affiliates may have interests in the Business Combination and the PIPE Financing that are different from, in addition to or in conflict with, yours. The North Mountain Board was aware of and considered these interests to the extent such
interests existed at the time, among other matters, in making their recommendation that you vote in favor of the approval of the Business Combination and the transactions contemplated thereby. These interests were considered by the
North Mountain Board when it approved the Business Combination. For further information, please see the section entitled “Proposal No. 2—The Business Combination
Proposal—Interests of North Mountain Directors and Officers in the Business Combination.”
|
14
|
Q.
|
Did the North Mountain Board obtain a third-party valuation or fairness opinion in determining whether or not
to proceed with the Business Combination?
|
|
A.
|
The North Mountain Board did not obtain a third-party valuation or fairness
opinion in connection with its determination to approve the Business Combination. The North Mountain Board believes that based upon the financial skills and background of its directors, it was qualified to conclude that the Business
Combination was fair from a financial perspective to its stockholders. The North Mountain Board also determined, without seeking a valuation from a financial advisor, that Corcentric’s fair market value was equal to at least 80% of the
net assets held in the Trust Account (net of amounts withdrawn to fund regulatory compliance costs and to pay taxes and excluding the amount of any deferred underwriting discount). Accordingly, investors will be relying on the judgment
of the North Mountain Board as described above in valuing Corcentric’s business and assuming the risk that the North Mountain Board may not have properly valued such business.
|
|
Q.
|
What happens if the Business Combination Proposal is not approved?
|
|
A.
|
If the Business Combination Proposal is not approved and North Mountain does
not consummate a business combination by September 22, 2022, or amend its Existing Charter to extend the date by which North Mountain must consummate an initial business combination, North Mountain will be required to dissolve and
liquidate the Trust Account.
|
|
Q.
|
Do I have redemption rights?
|
|
A.
|
If you are a holder of Public Shares, you may redeem your Public Shares for
cash equal to your pro rata share of the aggregate amount on deposit in the Trust Account, which holds the proceeds of the IPO, 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 North Mountain to pay its regulatory compliance costs and its taxes and for working capital purposes, upon the consummation of the Business Combination. The per share
amount North Mountain will distribute to holders who properly redeem their shares will not be reduced by the deferred underwriting commissions North Mountain will pay to the underwriters of its IPO if the Business Combination is
consummated. Holders of the outstanding Public Warrants do not have redemption rights with respect to such warrants in connection with the Business Combination. Our Sponsor has agreed to waive its redemption rights with respect to their
shares of North Mountain Class B Common Stock and any Public Shares that it may have acquired during or after the IPO in connection with the completion of North Mountain’s initial business combination. The shares of North Mountain
Class B Common Stock will be excluded from the pro rata calculation used to determine the per share redemption price. For illustrative purposes, based on funds in the Trust Account of approximately $ million on , the estimated
per share redemption price would have been approximately $ . Additionally, Public Shares properly tendered for redemption will only be redeemed if the Business Combination is consummated; otherwise holders of such shares will only be
entitled to a pro rata portion of the Trust Account (including interest but net of Permitted Withdrawals) in connection with the liquidation of the Trust Account. If the Business Combination is not consummated, North Mountain may enter
into an alternative business combination and close such transaction by September 22, 2022 (subject to the requirements of law) unless extended.
|
|
Q.
|
Is there a limit on the number of shares I may redeem?
|
|
A.
|
A Public Stockholder, together with any affiliate of his or any other person
with whom he is acting in concert or as a “group” (as defined in Section 13(d)(3) of the Exchange Act) will be restricted from seeking redemption rights with respect to 15% or more of the Public Shares. Accordingly, all shares in excess
of 15% of the Public Shares owned by a holder will not be redeemed. On the other hand, a Public Stockholder who holds less than 15% of the Public Shares may redeem all of the Public Shares held by him or her for cash.
|
|
Q.
|
Will how I vote affect my ability to exercise redemption rights?
|
|
A.
|
No. You may exercise your redemption rights whether you vote your Public
Shares for or against the Business Combination Proposal or do not vote your shares. As a result, the Business Combination
|
15
Proposal can be approved by stockholders who will redeem their Public Shares and no
longer remain stockholders, leaving stockholders who choose not to redeem their Public Shares holding shares in a company with a less liquid trading market, fewer stockholders, less cash and the potential inability to meet the listing standards
of Nasdaq.
|
Q.
|
How do I exercise my redemption rights?
|
|
A.
|
In order to exercise your redemption rights, you must, prior to 5:00 p.m.
Eastern time on , 2022 (two business days before the special meeting), (i) submit a written request to North Mountain’s transfer agent that North Mountain redeem your Public Shares for cash and (ii) deliver your stock to North
Mountain’s transfer agent physically or electronically through The Depository Trust Company (“DTC”). The address of Continental Stock Transfer & Trust Company, North Mountain’s transfer agent, is listed under the question “Who can help answer my questions?” below. North Mountain requests that any requests for redemption include the identity of the beneficial owner
making such request. Electronic delivery of your stock generally will be faster than delivery of physical stock certificates.
|
A physical stock certificate will not be needed if your stock is delivered to North
Mountain’s transfer agent electronically. In order to obtain a physical stock certificate, a stockholder’s broker and/or clearing broker, DTC and North Mountain’s transfer agent will need to act to facilitate the request. It is North Mountain’s
understanding that stockholders should generally allot at least one week to obtain physical certificates from the transfer agent. However, because North Mountain does not have any control over this process or over the brokers or DTC, it may take
significantly longer than one week to obtain a physical stock certificate. If it takes longer than anticipated to obtain a physical certificate, stockholders who wish to redeem their shares may be unable to obtain physical certificates by the
deadline for exercising their redemption rights and thus will be unable to redeem their shares.
Any demand for redemption, once made, may be withdrawn at any time until the deadline
for exercising redemption requests and thereafter until the Closing, with North Mountain’s consent. If you delivered your shares for redemption to North Mountain’s transfer agent and decide within the required timeframe not to exercise your
redemption rights, you may request that North Mountain’s transfer agent return the shares (physically or electronically). You may make such request by contacting North Mountain’s transfer agent at the phone number or address listed under the
question “Who can help answer my questions?”
|
Q.
|
What are the U.S. federal income tax consequences of exercising my redemption rights?
|
|
A.
|
For a discussion of the material U.S. federal income tax considerations for
holders of Public Shares with respect to the exercise of their redemption rights, see the section entitled “Material U.S. Federal Income Tax Considerations of the Business
Combination and the Redemption.” The consequences of a redemption to any particular stockholder will depend on that stockholder’s particular facts and circumstances. Accordingly, you are urged
to consult your tax advisor to determine your tax consequences from the exercise of your redemption rights, including the applicability and effect of U.S. federal, state, local and non-U.S. income and other tax laws in light of your
particular circumstances.
|
|
Q.
|
If I hold North Mountain Warrants, can I exercise redemption rights with respect to my warrants?
|
|
A.
|
No. There are no redemption rights with respect to the North Mountain
Warrants.
|
|
Q.
|
Do I have appraisal rights if I object to the proposed Business Combination?
|
|
A.
|
No. Neither North Mountain stockholders nor its unit or warrant holders have
appraisal rights in connection with the Business Combination under the DGCL. See the section entitled “Special Meeting of North Mountain Stockholders—Appraisal or Dissenters’
Rights.”
|
|
Q.
|
What happens to the funds held in the Trust Account upon consummation of the Business Combination?
|
|
A.
|
If the Business Combination is consummated, the funds held in the Trust
Account will be released to pay (i) North Mountain stockholders who properly exercise their redemption rights, (ii) the Aggregate Cash
|
16
Consideration and (iii) expenses incurred by Corcentric and North Mountain in
connection with the Business Combination, to the extent not otherwise paid prior to the Closing. Any additional funds available for release from the Trust Account will be used for general corporate purposes of New Corcentric following the
Business Combination.
|
Q.
|
What happens if the Business Combination is not consummated?
|
|
A.
|
There are certain circumstances under which the Merger Agreement may be
terminated. See the section entitled “Proposal No. 2—The Business Combination Proposal—Conditions to Closing; Termination” for
information regarding the parties’ specific termination rights.
|
If, as a result of the termination of the Merger Agreement or otherwise, North Mountain
is unable to complete a business combination by September 22, 2022 or obtain the approval of North Mountain stockholders to extend the deadline for North Mountain to consummate an initial business combination, the Existing Charter provides that
North Mountain 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 100% of the outstanding Public Shares, at a per share price,
payable in cash, equal to the aggregate amount then on deposit in the Trust Account, including interest not previously released to North Mountain to pay regulatory compliance costs and taxes (net of Permitted Withdrawals and up to $100,000 of
such net interest to pay dissolution expenses), divided by the number of then outstanding Public Shares, which redemption will completely extinguish Public Stockholders’ rights as stockholders (including the right to receive further liquidation
distributions, if any), and (iii) as promptly as reasonably possible following such redemption, subject to the approval of our remaining stockholders and the North Mountain Board, dissolve and liquidate, subject (in the case of (ii) and
(iii) above) to our obligations under Delaware law to provide for claims of creditors and the requirements of other applicable law. See the sections entitled “Risk Factors—Risks Related to North Mountain and the
Business Combination—North Mountain may not be able to consummate an initial business combination within the required time period, in which case it would cease all operations except for the purpose of winding up and it would redeem the Public
Shares and liquidate, in which case the Public Stockholders may only receive $10.00 per share, or less than such amount in certain circumstances, and the Public Warrants will expire worthless.” and “—North
Mountain stockholders may be held liable for claims by third parties against North Mountain to the extent of distributions received by them upon redemption of their shares.” Our Sponsor has waived any right to any liquidation
distribution with respect to the North Mountain Class B Common Stock.
In the event of liquidation, there will be no distribution with respect to outstanding
North Mountain Warrants. Accordingly, the North Mountain Warrants will expire worthless.
|
Q.
|
When is the Business Combination expected to be completed?
|
|
A.
|
It is currently anticipated that the Business Combination will be
consummated promptly following the special meeting, provided that all other conditions to the consummation of the Business Combination have been satisfied or waived.
|
For a description of the conditions to the completion of the Business Combination, see
the section entitled “Proposal No. 2—The Business Combination Proposal—Conditions to Closing; Termination.”
|
Q.
|
What do I need to do now?
|
|
A.
|
You are urged to carefully read and consider the information contained in
this proxy statement/prospectus, including the financial statements and annexes attached hereto, and to consider how the Business Combination will affect you as a stockholder. You should then vote as soon as possible in accordance with
the instructions provided in this proxy statement/prospectus on the enclosed proxy card or, if you hold your shares through a brokerage firm, bank or other nominee, on the voting instruction form provided by the broker, bank or nominee.
|
|
Q.
|
How do I vote?
|
|
A.
|
If you were a holder of record of North Mountain Common Stock on the North
Mountain Record Date, you may vote with respect to the applicable proposals in person online at the special meeting, by internet, by
|
17
phone, or by completing, signing, dating and returning the enclosed proxy card in the
postage-paid envelope provided. If you choose to vote by internet, visit http://www.proxyvote.com, 24 hours a day, seven days a week, until 11:59 p.m. Eastern Time on , 2022 (have your proxy card in hand when you visit the website). If you
choose to vote by phone, call toll-free (within the U.S. or Canada) 1-800-690-6903 (have your proxy card in hand when you call). If you choose to participate in the special meeting, you can vote your shares electronically during the special
meeting via live webcast by visiting . You will need the 16-digit meeting control number that is printed on your proxy card to enter the special meeting. North Mountain recommends that you log in at least 15 minutes before the special
meeting to ensure you are logged in when the special meeting starts.
If on the North Mountain Record Date your shares were held, not in your name, but rather
in an account at a brokerage firm, bank, dealer or other similar organization, then you are the beneficial owner of shares held in “street name” and these proxy materials are being forwarded to you by that organization. As a beneficial owner, you
have the right to direct your broker or other agent on how to vote the shares in your account. Alternatively, you may vote by telephone or over the internet as instructed by your broker, banker or other nominee. “Street name” stockholders who
wish to vote at the special meeting will need the 16-digit meeting control number included on the instructions that accompanied your proxy materials, if applicable, or to obtain a proxy form from your broker, bank or other nominee.
|
Q.
|
What will happen if I abstain from voting or fail to vote at the special meeting?
|
|
A.
|
At the special meeting, North Mountain will count a properly executed proxy
marked “ABSTAIN” with respect to a particular proposal as present for purposes of determining whether a quorum is present. For purposes of approval, an abstention or failure to vote will have the same effect as a vote against the
Pre-Mergers Charter Amendment Proposal and the Post-Mergers Charter Approval Proposal, and will have no effect on any of the other proposals.
|
|
Q.
|
What will happen if I sign and return my proxy card without indicating how I wish to vote?
|
|
A.
|
Signed and dated proxies received by North Mountain without an indication of
how the stockholder intends to vote on a proposal will be voted in favor of each proposal presented to the stockholders.
|
|
Q.
|
How can I attend the special meeting?
|
|
A.
|
You may attend the special meeting and vote your shares in person online
during the special meeting via live webcast by visiting . You will need the 16-digit meeting control number that is printed on your proxy card to enter the special meeting. If you are a beneficial owner and do not have your
16-digit meeting control number, contact your banker, broker or other nominee. Please note that you will not be able to physically attend the special meeting in person, but may attend the special meeting in person online.
|
|
Q.
|
Do I need to attend the special meeting in person online to vote my shares?
|
|
A.
|
No. You are invited to attend the special meeting in person online to vote
on the proposals described in this proxy statement/prospectus. However, you do not need to attend the special meeting in person online to vote your shares. Instead, you may submit your proxy by signing, dating and returning the
applicable enclosed proxy card(s) in the pre-addressed postage-paid envelope. Your vote is important. North Mountain encourages you to vote as soon as possible after carefully reading this proxy statement/prospectus.
|
|
Q.
|
If I am not going to attend the special meeting in person online, should I return my proxy card instead?
|
|
A.
|
Yes. After carefully reading and considering the information contained in
this proxy statement/prospectus, please submit your proxy by completing, signing, dating and returning the enclosed proxy card in the postage-paid envelope provided.
|
|
Q.
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If my shares are held in “street name,” will my broker, bank or nominee automatically vote my shares for me?
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A.
|
No. If your broker holds your shares in its name and you do not give the
broker voting instructions, under the applicable stock exchange rules, your broker may not vote your shares on any of the North Mountain
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18
Proposals. If you do not give your broker voting instructions and the broker does not
vote your shares, this is referred to as a “broker non-vote.” Broker non-votes will be counted for purposes of determining the presence of a quorum at the special meeting. Your bank, broker, or other nominee can vote your shares only if you
provide instructions on how to vote. You should instruct your broker to vote your shares in accordance with directions you provide. However, in no event will a broker non-vote have the effect of exercising your redemption rights for a pro rata
portion of the Trust Account, and therefore no shares as to which a broker non-vote occurs will be redeemed in connection with the proposed Business Combination unless the holder of these shares properly follows the procedures for redemption
described in this proxy statement/prospectus with respect to these shares.
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Q.
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May I change my vote after I have mailed my signed proxy card?
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A.
|
Yes. You may change your vote by sending a later-dated, signed proxy card to
North Mountain’s Secretary at the address listed below prior to the vote at the special meeting, or attend the special meeting and vote in person online. You also may revoke your proxy by sending a notice of revocation to North
Mountain’s Secretary, provided such revocation is received prior to the vote at the special meeting. If your shares are held in street name by a broker or other nominee, you must contact the broker or nominee to change your vote.
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|
Q.
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What should I do if I receive more than one set of voting materials?
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A.
|
You 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 your vote with respect to all of your shares.
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|
Q.
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What is the quorum requirement for the special meeting?
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A.
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A quorum will be present at the special meeting if a majority of the North
Mountain Common Stock outstanding and entitled to vote at the special meeting is represented in person online or by proxy. As of the North Mountain Record Date, 8,265,626 shares of North Mountain Common Stock would be required to
achieve a quorum.
|
Your shares will be counted towards the quorum only if you submit a valid proxy (or your
broker, bank or other nominee submits one on your behalf) or if you vote in person online at the special meeting. Abstentions and broker non-votes will be counted towards the quorum requirement. If there is no quorum, a majority of the shares
represented by stockholders present in person online at the special meeting or by proxy may authorize adjournment of the special meeting to another date.
|
Q.
|
What happens to the North Mountain Warrants I hold if I vote my shares of North Mountain Common Stock against
approval of the Business Combination Proposal and validly exercise my redemption rights?
|
|
A.
|
Properly exercising your redemption rights as a North Mountain stockholder
does not result in either a vote “FOR” or “AGAINST” the Business Combination Proposal. If the Business Combination is not completed, you will continue to hold your North Mountain Warrants, and if North Mountain does not otherwise
consummate an initial business combination by September 22, 2022 or obtain the approval of North Mountain stockholders to extend the deadline for North Mountain to consummate an initial business combination, North Mountain will be
required to dissolve and liquidate, and your North Mountain Warrants will expire worthless.
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|
Q.
|
Following the Business Combination, will North Mountain securities continue to trade on a stock exchange?
|
|
A.
|
Yes. We anticipate that, following the Business Combination, New Corcentric
Common Stock and Public Warrants will continue trading on Nasdaq under the new symbols “ ” and “ ,” respectively. The North Mountain Units will automatically separate into the component securities upon consummation of the Business
Combination and, as a result, will no longer trade as a separate security.
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19
|
Q.
|
How does the Sponsor intend to vote on the proposals?
|
|
A.
|
Our Sponsor, directors and officers have agreed to vote any shares of North
Mountain Common Stock owned by them in favor of the Business Combination, including their shares of North Mountain Class B Common Stock and any Public Shares purchased after our IPO (including in open market and privately negotiated
transactions). As of the North Mountain Record Date, our Sponsor, officers and directors beneficially own an aggregate of approximately 20% of the outstanding shares of North Mountain Common Stock.
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|
Q.
|
Who will solicit and pay the cost of soliciting proxies?
|
|
A.
|
North Mountain will pay the cost of soliciting proxies for the special
meeting. North Mountain has engaged Innisfree M&A Incorporated (“Innisfree”) to assist in the solicitation of proxies for the special meeting. North Mountain has agreed to pay Innisfree a fee of up to $20,000 in connection with the
Business Combination. North Mountain will reimburse Innisfree for reasonable out-of-pocket expenses and will indemnify Innisfree and its affiliates against certain claims, liabilities, losses, damages and expenses. North Mountain will
also reimburse banks, brokers and other custodians, nominees and fiduciaries representing beneficial owners of shares of the Public Shares for their expenses in forwarding soliciting materials to beneficial owners of Public Shares and
in obtaining voting instructions from those owners. North Mountain’s directors, officers and employees may also solicit proxies by telephone, by facsimile, by mail, on the Internet or in person. They will not be paid any additional
amounts for soliciting proxies.
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|
Q.
|
Who can help answer my questions?
|
|
A.
|
If you have questions about the stockholder proposals, or if you need
additional copies of this proxy statement/prospectus, the proxy card or the consent card you should contact our proxy solicitor at:
|
Innisfree M&A Incorporated
501 Madison Avenue, 20th floor
New York, New York 10022
Shareholders may call toll free: (877) 750-5836
Banks and Brokers may call collect: (212) 750-5833
You may also contact North Mountain at:
North Mountain Merger Corp.
767 Fifth Avenue, 9th Floor
New York, New York 10153
Attention: Nicholas Dermatas, Chief Financial Officer and Secretary
E-mail: ndermatas@smmergercorp.com
To obtain timely delivery, North Mountain’s stockholders and warrantholders must request
the materials no later than five business days prior to the special meeting.
You may also obtain additional information about North Mountain from documents filed
with the SEC by following the instructions in the section entitled “Where You Can Find More Information.”
If you intend to seek redemption of your Public Shares, you will need to send a letter
demanding redemption and deliver your stock (either physically or electronically) to North Mountain’s transfer agent prior to 5:00 p.m., New York time, on the second business day prior to the special meeting. If you have questions regarding the
certification of your position or delivery of your stock, please contact:
Continental Stock Transfer & Trust Company
One State Street Plaza, 30th Floor
New York, New York 10004
Attention: Mark Zimkind
E-mail: mzimkind@continentalstock.com
20
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 Business Combination and the proposals to be considered at the special meeting, you should read this entire proxy
statement/prospectus carefully, including the annexes. See also the section entitled “Where You Can Find More Information.”
Parties to the Business Combination
North Mountain Merger Corp.
North Mountain is a Delaware blank check company formed for the
purpose of effecting a merger, capital stock exchange, asset acquisition, stock purchase, reorganization or other similar business combination with one or more businesses. The North Mountain Units, North Mountain Class A Common Stock and the
Public Warrants are currently listed on Nasdaq under the symbols “NMMCU,” “NMMC” and “NMMCW,” respectively. The mailing address of North Mountain’s principal executive office is 767 Fifth Avenue, 9th Floor, New York, NY 10153 and the
telephone number of North Mountain’s principal executive office is (646) 446-2700.
North Mountain’s sponsor is North Mountain LLC, a Delaware limited
liability company. The Sponsor currently holds 3,306,250 shares of North Mountain Class B Common Stock and 4,145,000 Private Placement Warrants, acquired for an aggregate investment of $4,145,000 at the time of the IPO. Harbour Reach Holdings,
LLC is the managing member of the Sponsor and Mr. Michael Platt is the indirect controlling member of Harbour Reach Holdings, LLC. Messrs. Bernicker, Dermatas, Metzger, O’Callaghan and Pauls are non-managing members of the Sponsor.
Corcentric
Corcentric, Inc. is a Delaware corporation and a leading provider of
B2B commerce solutions for enterprise and middle-market businesses. Corcentric offers a comprehensive, end-to-end software and technology-enabled suite of Source-to-Pay (“S2P”) and Order-to-Cash (“O2C”) solutions that, together with its
proprietary B2B Payments Network, empowers its customers to enable growth, optimize working capital, enhance visibility, and minimize risk. Corcentric’s solutions are delivered through a powerful combination of cloud-based software, payments,
and advisory services.
Corcentric’s principal executive offices are located at 200 Lake
Drive East, Cherry Hill, NJ 08002 and its telephone number is (800) 608-0809.
The Business Combination
The Merger Agreement
The following summary provides an overview of key
aspects of the Merger Agreement. For more information about the Merger Agreement and the Business Combination and other transactions contemplated thereby, see the section entitled “Proposal No. 2—The Business Combination Proposal.” A copy of
the Merger Agreement is attached to this proxy statement/prospectus as Annex A.
At the Effective Time, by virtue of the Initial Merger and without
any action on the part of North Mountain, Merger Sub I, Merger Sub II, Corcentric or the Corcentric stockholders:
|
•
|
each share of Corcentric Common Stock that is issued and outstanding immediately prior to the Effective Time (other than shares
owned by Corcentric as treasury stock, dissenting shares and shares of Corcentric restricted stock) will be converted into the right to receive (i) the Per Share Stock Consideration, (ii) any cash payable in lieu of fractional shares
pursuant to the terms of the Merger Agreement and (iii) the contingent right to receive a number of Earnout Shares following the Closing in accordance with the terms of the Merger Agreement, as further detailed below;
|
|
•
|
each share of Corcentric Preferred Stock that is issued and outstanding immediately prior to the Effective Time (other than
shares owned by Corcentric as treasury stock, dissenting shares and the Cash Consideration Shares) will be converted into the right to receive (i) a number of newly issued shares of North Mountain Class A Common Stock, equal to the
product of (A) the Per Share Stock Consideration, multiplied by (B) the number of shares of Corcentric Common Stock that such share of
|
21
Corcentric Preferred Stock would be converted into if converted in accordance with the
terms of the Corcentric Certificate of Incorporation immediately prior to the Effective Time, (ii) any cash payable in lieu of fractional shares pursuant to the terms of the Merger Agreement and (iii) the contingent right to receive a number of
Earnout Shares following the Closing in accordance with the terms of the Merger Agreement, as further detailed below;
|
•
|
each share of Corcentric Preferred Stock expressly identified as a Cash Consideration Share in accordance with the Merger
Agreement (each such share of Corcentric Preferred Stock, a “Cash Consideration Share”) will be converted into the right to receive the Per Share Cash Consideration multiplied by the number of shares of Corcentric Common Stock that such
shares of Corcentric Preferred Stock would be converted into if converted in accordance with the terms of the Corcentric Certificate of Incorporation immediately prior to the Effective Time. In no event will the Aggregate Cash
Consideration exceed the Total Cash Consideration Amount);
|
|
•
|
each share of Corcentric Common Stock and Corcentric Preferred Stock held in the treasury of Corcentric immediately prior to the
Effective Time will be cancelled without any conversion thereof and no payment or distribution will be made with respect thereto;
|
|
•
|
each share of common stock, par value $0.001 per share, of Merger Sub I issued and outstanding immediately prior to the
Effective Time will no longer be outstanding and will thereupon be converted into and become one validly issued fully paid and non-assessable share of common stock, par value $0.001 per share, of the Initial Surviving Company and all
such shares will constitute the only outstanding shares of capital stock of the Initial Surviving Company as of immediately following the Effective Time;
|
|
•
|
each vested Corcentric stock option, to the extent then outstanding and unexercised, will automatically, without any action on
the part of the holder thereof, be cancelled, and the holder will be entitled to receive in respect of such cancelled vested Corcentric stock option (i) a number of shares of North Mountain Class A Common Stock (any cash payable in lieu
of fractional shares pursuant to the terms of the Merger Agreement) equal to the quotient obtained by dividing (A) the result of (1) the product of (x) the number of shares of Corcentric Common Stock subject to such vested Corcentric
stock option immediately prior to the Effective Time, multiplied by (y) the excess, if any, of (a) the Per Share Merger Consideration Value, over (b) the per share exercise price for the shares of Corcentric Common Stock subject to such
vested Corcentric stock option immediately prior to the Effective Time, minus (2) the applicable withholding taxes payable in respect of such cancelled vested Corcentric stock option, by (B) ten
dollars ($10) and (ii) the contingent right to receive a number of Earnout Shares following the Closing in accordance with the terms of the Merger Agreement, as further detailed below;
|
|
•
|
each unvested Corcentric stock option, to the extent then outstanding and unexercised, will automatically be converted into an
option to acquire, on the same terms and conditions as were applicable to such unvested Corcentric stock option immediately prior to the Effective Time, including applicable vesting conditions, except for terms rendered inoperative by
reason of the transactions contemplated by the Merger Agreement or for such other administrative or ministerial changes (after such conversion, each a “Rollover Option”) the number of shares of North Mountain Class A Common Stock
determined by multiplying the number of shares of Corcentric Common Stock subject to the unvested Corcentric stock option immediately prior to the Effective Time by the Per Share Stock Consideration and rounding the resulting number
down to the nearest whole number of shares of North Mountain Class A Common Stock, and the per share exercise price for the North Mountain Class A Common Stock issuable upon exercise of such Rollover Option will be determined by
dividing the per share exercise price for the shares of Corcentric Common Stock subject to the unvested Corcentric stock option, as in effect immediately prior to the Effective Time, by the Per Share Stock Consideration, and rounding
the resulting exercise price up to the nearest whole cent. The Rollover Options will also be entitled to the contingent right to receive a number of Earnout Shares following the Closing in accordance with the terms of the Merger
Agreement, as further detailed below; and
|
|
•
|
each share of Corcentric restricted stock, to the extent then unvested and outstanding, will automatically be converted into the
number of shares of restricted North Mountain Class A Common Stock, subject to the same terms and conditions as were applicable to such Corcentric restricted stock
|
22
immediately prior to the Effective Time, including applicable vesting conditions,
except for terms rendered inoperative by reason of the transactions contemplated by the Merger Agreement or for such other administrative or ministerial changes (after such conversion, “Rollover Restricted Stock”), determined by multiplying
(i) the number of shares of Corcentric Common Stock subject to such Corcentric restricted stock award immediately prior to the Effective Time by (ii) the Per Share Stock Consideration. The shares of Rollover Restricted Stock will be entitled to
the contingent right to receive a number of Earnout Shares following the Closing in accordance with the terms of the Merger Agreement, as further detailed below.
At the Second Effective Time, by virtue of the Subsequent Merger and
without any action on the part of any holder thereof, each share of common stock, par value $0.001 per share, of the Initial Surviving Company issued and outstanding immediately prior to the Second Effective Time will no longer be outstanding
and will thereupon be converted into membership interests of the Surviving Company and all such membership interests will constitute the only outstanding equity of the Surviving Company as of immediately following the Second Effective Time.
No fractional shares of North Mountain Class A Common Stock will be
issued upon the conversion of Corcentric securities. In lieu of the issuance of any such fractional shares, North Mountain has agreed to pay to each holder of Corcentric Stock or vested Corcentric stock options who otherwise would be entitled
to receive such fractional share an amount in cash, without interest, rounded down to the nearest cent, equal to the product of (i) the amount of the fractional share interest in a share of North Mountain Class A Common Stock to which such
holder otherwise would have been entitled multiplied by (ii) an amount equal to the VWAP of shares of North Mountain Class A Common Stock for the twenty trading days prior to the date that is three business days prior to the Closing.
Earnout
Following the Closing, pursuant to the terms of the Merger Agreement,
holders of (i) shares of Corcentric Common Stock and Corcentric Preferred Stock (excluding the Cash Consideration Shares) outstanding immediately prior to the Effective Time, (ii) vested Corcentric stock options outstanding and unexercised
immediately prior to the Effective Time, (iii) Rollover Options, (iv) Rollover Restricted Stock and (v) without duplication of clauses (iii) and (iv), holders of North Mountain Common Stock received in respect of Rollover Options and/or
Rollover Restricted Stock that vested and were exercised, as applicable, between the Effective Time and the relevant earn-out achievement date, will have the contingent right to receive in the aggregate, up to 5,000,000 shares of North Mountain
Class A Common Stock if, from the Closing until the fifth anniversary thereof, (x) the dollar volume-weighted average price of North Mountain Class A Common Stock is greater than or equal to $12.50 or $15.00 per share, as applicable and in each
case, for 20 trading days within any consecutive 30-trading day period or (y) a sale or change of control of North Mountain occurs (as further described in the Merger Agreement) (such shares, the “Earnout Shares”).
23
Structure of the Business Combination
The following diagrams illustrate in simplified terms the current
structure of North Mountain and Corcentric and the expected structure of New Corcentric (formerly North Mountain) upon the Closing:
Simplified Pre-Business Combination Structure
Simplified Structure Following Initial Merger
24
Simplified Structure Following Subsequent Merger
Representations, Warranties and Covenants
The Merger Agreement contains customary representations, warranties
and covenants of (i) Corcentric and (ii) North Mountain, Merger Sub I and Merger Sub II, in each case relating to, among other things, their ability to enter into the Merger Agreement and their respective outstanding capitalization.
Conditions to Closing
The consummation of the Business Combination is subject to certain
conditions, including: (i) approval by North Mountain’s stockholders and Corcentric’s stockholders, (ii) the expiration or termination of the waiting period under the HSR Act, (iii) the absence of any governmental order, statute, rule or
regulation enjoining or prohibiting the consummation of the Business Combination, (iv) the effectiveness of the Registration Statement under the Securities Act, (v) the completion of the Redemption Offer, (vi) North Mountain having at least
$5,000,001 of net tangible assets (as determined in accordance with Rule 3a51-1(g)(1) of the Exchange Act) remaining after the Redemption Offer, (vii) the receipt of the approval for listing by Nasdaq of the North Mountain Class A Common Stock
(including the Earnout Shares), PIPE Warrants and the shares of North Mountain Class A Common Stock issuable upon the exercise of the PIPE Warrants to be issued or delivered in connection with the Business Combination and the transactions
contemplated by the Subscription Agreements, (viii) the amendment of the Existing Charter in the form of the Charter Amendment, (ix) the amount of Closing Acquiror Cash (as defined in the Merger Agreement) being equal to or exceeding
$150,000,000; provided, that if the Closing Acquiror Cash is less than $125,000,001, Corcentric will have no right or ability to waive such condition without North Mountain’s prior written consent, and (x) customary bringdown conditions.
The Merger Agreement may be terminated under certain customary and
limited circumstances prior to the consummation of the Business Combination, including
|
(i)
|
by mutual written consent of North Mountain and Corcentric;
|
|
(ii)
|
by either North Mountain or Corcentric if the Closing has not occurred on or before August 9, 2022 (the “Termination Date”);
|
|
(iii)
|
by either North Mountain or Corcentric if the Business Combination has been permanently enjoined or prohibited by the terms of a
final and non-appealable governmental order or law;
|
|
(iv)
|
by either North Mountain or Corcentric if North Mountain’s stockholder approval is not obtained at the special meeting (subject
to any adjournment or recess of the meeting);
|
|
(v)
|
by Corcentric upon a breach by North Mountain, Merger Sub I or Merger Sub II, if such breach or failure gives rise to a failure
of a closing condition and cannot be cured or has not been cured within the earlier of 30 days following notice by Corcentric or the Termination Date;
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25
|
(vi)
|
by North Mountain upon a breach by Corcentric, if such breach or failure gives rise to a failure of a closing condition and
cannot be cured or has not been cured within the earlier of 30 days following notice by North Mountain or the Termination Date;
|
|
(vii)
|
by written notice from North Mountain if the Company Requisite Approval has not been obtained within four business days
following the date that the Registration Statement becomes effective; or
|
|
(viii)
|
by written notice from North Mountain if Corcentric fails to deliver executed copies of the Corcentric Stockholder Support
Agreements within twenty-four hours from the date of the Merger Agreement.
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Expense Reimbursement
In the event that the Merger Agreement is terminated by North
Mountain, in accordance with its termination rights, as a result of (i) the Company Requisite Approval not being obtained within four business days following the date that the Registration Statement becomes effective or (ii) Corcentric failing
to deliver executed copies of the Corcentric Stockholder Support Agreements within twenty-four hours from the date of the Merger Agreement, then Corcentric must pay North Mountain (as promptly as reasonably practicable and, in any event, within
two business days following such termination) an expense reimbursement amount equal to the actual reasonable and documented out-of-pocket fees and expenses incurred by North Mountain or the Sponsor in connection with the Merger Agreement, the
Business Combination and the other transactions contemplated by the Merger Agreement, but excluding any underwriting fees and discounts.
Ownership of New Corcentric After the Closing
It is anticipated that, upon the completion of the Business
Combination, the ownership of New Corcentric will be as follows:
|
|
| |
No Redemption
|
| |
50% Redemption
|
| |
Contractual
Maximum
Redemption
|
| |
Contractual
Maximum
Redemption
with $125 million
Minimum Cash(1)
|
||||||||||||
|
|
| |
Shares
|
| |
Percentage
|
| |
Shares
|
| |
Percentage
|
| |
Shares
|
| |
Percentage
|
| |
Shares
|
| |
Percentage
|
|
Current Corcentric stockholders
|
| |
89,307,448
|
| |
79.6%
|
| |
89,307,448
|
| |
80.2%
|
| |
89,307,448
|
| |
80.8%
|
| |
89,307,448
|
| |
82.7%
|
|
Current North Mountain stockholders
|
| |
13,225,000
|
| |
11.8%
|
| |
12,362,500
|
| |
11.1%
|
| |
11,500,000
|
| |
10.4%
|
| |
9,000,000
|
| |
8.3%
|
|
PIPE Investors
|
| |
5,000,000
|
| |
4.4%
|
| |
5,000,000
|
| |
4.5%
|
| |
5,000,000
|
| |
4.5%
|
| |
5,000,000
|
| |
4.6%
|
|
Sponsor
|
| |
4,706,250
|
| |
4.2%
|
| |
4,706,250
|
| |
4.2%
|
| |
4,706,250
|
| |
4.3%
|
| |
4,706,250
|
| |
4.4%
|
|
Total
|
| |
112,238,698
|
| |
100%
|
| |
111,376,198
|
| |
100%
|
| |
110,513,698
|
| |
100%
|
| |
108,013,698
|
| |
100%
|
|
(1)
|
The contractual maximum redemption with $125 million minimum cash scenario assumes that Corcentric waives the minimum cash
condition.
|
North Mountain stockholders that elect not to redeem their North
Mountain Class A Common Stock will experience significant dilution as a result of the Business Combination. North Mountain public stockholders currently own approximately 80% of North Mountain Common Stock. As noted above, if no North
Mountain stockholders redeem their North Mountain Class A Common Stock in the Business Combination, North Mountain Public Stockholders will own approximately 11.8% of the total shares outstanding in New Corcentric and approximately 10.4% of
the total shares outstanding under the contractual maximum redemption scenario. North Mountain stockholders will experience further dilution to the extent any warrants that remain outstanding following the Business Combination are exercised
and to the extent any Earnout Shares are issued. Following the Business Combination, an aggregate of up to 9,112,500 Public Warrants and no Private Placement Warrants will be outstanding. Assuming all 9,112,500 Public Warrants are exercised
for cash and all 5,000,000 Earnout Shares are issued, North Mountain Public Stockholders will own approximately 10.5%, 9.9%, 9.2% and 7.4% of the total shares outstanding under the no redemption, 50% redemption, contractual maximum redemption
and contractual maximum redemption with $125 million minimum cash scenarios, respectively.
North Mountain has agreed to pay the underwriters in the IPO a
cash fee for their services in connection with the IPO in an aggregate amount equal to 5.5% of the gross proceeds of the IPO, with 2.0% of the gross proceeds being paid to the underwriters at the time North Mountain completed its IPO and 3.5%
of the gross proceeds (i.e., the deferred underwriting fee) being payable, and conditioned, upon consummating an initial
26
business combination. The aggregate underwriting fee is fixed at 5.5% of the gross
proceeds from the IPO and will not be adjusted based on the number of shares that are redeemed in connection with the Business Combination. The aggregate underwriting fee of $7,046,050 represents approximately 5.3%, 5.7%, 6.1% and 7.8% of the
aggregate proceeds from the IPO, net of redemptions, in the no redemption, 50% redemption, contractual maximum redemption and contractual maximum redemption with $125 million minimum cash scenarios, respectively.
The numbers of shares and percentage interests set forth above
reflect four different redemption scenarios laid out below.
|
•
|
Assuming no redemption scenario: This presentation assumes that no Public Stockholders
exercise redemption rights with respect to their Public Shares.
|
|
•
|
Assuming 50% redemption scenario: This presentation assumes
that the Public Stockholders holding approximately 6.5% of the Public Shares exercise redemption rights with respect to their Public Shares, which is approximately 50% of the Public Shares assumed to be redeemed under the contractual
maximum redemption scenario. This scenario assumes that 862,500 Public Shares are redeemed for an aggregate redemption payment of approximately $8,625,000 plus a pro rata portion of interest accrued on the Trust Account.
|
|
•
|
Assuming contractual maximum redemption scenario: This
presentation assumes that the Public Stockholders holding approximately 13.0% of the Public Shares exercise redemption rights with respect to their Public Shares. This scenario assumes that 1,725,000 Public Shares are redeemed for an
aggregate redemption payment of approximately $17,250,000 plus a pro rata portion of interest accrued on the Trust Account. The contractual maximum redemption scenario is based on a minimum cash consideration of $150,000,000 at
Closing of the Business Combination, consisting of Trust Account funds, PIPE Financing proceeds and all other North Mountain cash and cash equivalents of North Mountain less the aggregate amount of cash proceeds that will be required
to satisfy the redemption of the Public Shares and the payment of North Mountain estimated transaction expenses of $15,000,000. Corcentric shall have no right or ability to waive the minimum cash condition without the prior written
consent of North Mountain (which consent may be provided or withheld by North Mountain in its sole discretion) if such aggregate amount is less than $125,000,001.
|
|
•
|
Assuming contractual maximum redemption with $125 million minimum cash scenario:
This presentation assumes that the Public Stockholders holding approximately 32.0% of the Public Shares exercise redemption rights with respect to their Public Shares. This scenario assumes that 4,225,000 Public Shares are redeemed
for an aggregate redemption payment of approximately $42,225,000 plus a pro rata portion of interest accrued on the Trust Account. This contractual maximum redemption with $125 million minimum cash scenario is based on minimum cash of
$125,000,000 at Closing of the Business Combination and assumes that Corcentric waives the $150,000,000 minimum cash condition.
|
The presentation set forth above assumes that any performance
vesting provisions applicable to any shares of North Mountain Common Stock pursuant to the Share Vesting and Warrant Surrender Agreement are met and, unless otherwise indicated, assumes (i) that there are no exercises of any North Mountain
Warrants outstanding as of immediately prior to the Closing and (ii) no Earnout Shares have been issued.
The numbers of shares and percentage interests set forth above have
been presented for illustrative purposes only and do not necessarily reflect what New Corcentric’s share ownership will be had the Business Combination occurred on the dates indicated. See “Unaudited Pro Forma
Condensed Combined Financial Information.”
Other Agreements Related to the Merger Agreement
Corcentric Stockholder Support Agreements
In connection with the execution of the Merger Agreement, the
Corcentric Supporting Stockholders executed and delivered to North Mountain support agreements, pursuant to which, among other things, such persons have agreed (a) to support the adoption of the Merger Agreement and the approval of the Business
Combination, subject to certain customary conditions, and (b) not to transfer any of their subject shares (or enter into any arrangement with respect thereto), subject to certain customary conditions. As of December 31, 2021, the Corcentric
Supporting Stockholders who had entered into Corcentric Stockholder Support Agreements collectively held approximately 48.2% of the outstanding voting power of Corcentric Capital Stock.
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For more information about the Corcentric Stockholder Support
Agreements, see the section entitled “Agreements Related to the Business Combination—Corcentric Stockholder Support Agreements.”
PIPE Subscription Agreements
In connection with the execution of the Merger Agreement, North
Mountain entered into the Subscription Agreements with the PIPE Investors, pursuant to which (i) the PIPE Investors agreed to purchase, and North Mountain agreed to sell to the PIPE Investors, the PIPE Shares, for a purchase price of $10.00 per
share and an aggregate purchase price of $50,000,000 and (ii) North Mountain agreed to transfer to each PIPE Investor one-half of one PIPE Warrant for each PIPE Share purchased, which warrants will be “Public Warrants” under the North Mountain
Warrant Agreement, in each case, in a private placement.
The Subscription Agreements are in all material respects similar to
the Form of Subscription Agreement attached to the Merger Agreement as Exhibit A. The Subscription Agreement contains customary representations and warranties of North Mountain, on the one hand, and each PIPE Investor, on the other hand.
The closing of the PIPE Financing is expected to occur substantially
concurrently with the Closing and is contingent upon, among other things, (i) at least 5,000,000 shares of North Mountain Class A Common Stock remaining outstanding immediately prior to the consummation of the Business Combination after giving
effect to the completion of the Redemption Offer, and with respect to which North Mountain has not entered into a forward purchase agreement that would obligate North Mountain to purchase the shares at a future date and (ii) customary closing
conditions and the consummation of the Business Combination. The purpose of the PIPE Financing is to raise additional capital for use by New Corcentric following the Closing.
Pursuant to the Subscription Agreements, North Mountain agreed that,
within 30 calendar days after the Closing, New Corcentric will file with the SEC (at New Corcentric’s sole cost and expense) a registration statement (the “PIPE Resale Registration Statement”) registering the resale of the PIPE Shares, the PIPE
Warrants and the PIPE Warrant Shares (collectively, the “Registrable Securities”), and New Corcentric will use its commercially reasonable efforts to have the PIPE Resale Registration Statement declared effective as soon as practicable after
the filing thereof, but no later than the earlier of (i) the 75th calendar day (or 100th calendar day if the SEC notifies New Corcentric that it will “review” the Registration Statement) following the Closing and (ii) the 10th business day
after the date New Corcentric is notified (orally or in writing, whichever is earlier) by the SEC that the PIPE Resale Registration Statement will not be “reviewed” or will not be subject to further review. Until the earliest of (i) the date on
which the Registrable Securities may be resold without volume or manner of sale restrictions (including as may be applicable to affiliates) pursuant to Rule 144 and without the requirement for New Corcentric to be in compliance with the current
public information requirements under Rule 144(c)(1), (ii) the date on which such Registrable Securities have actually been sold and (iii) the date which is two years after the closing of the PIPE Financing, except for such times New Corcentric
is permitted under the Subscription Agreements to suspend the use of the prospectus forming part of the PIPE Resale Registration Statement, New Corcentric must use commercially reasonable efforts to keep such PIPE Resale Registration Statement
effective. North Mountain also agreed that New Corcentric will file all reports and other documents required of New Corcentric to enable the PIPE Investors to resell the Registrable Securities pursuant to Rule 144.
For more information about the Subscription Agreements, see the
section entitled “Agreements Related to the Business Combination—PIPE Subscription Agreements.”
Share Vesting and Warrant Surrender Agreement
In connection with the execution of the Merger Agreement, North
Mountain entered into a Share Vesting and Warrant Surrender Agreement with the Sponsor, which provides that immediately prior to, and contingent upon, the consummation of the Closing (the “Surrender Effective Time”) (i) the Sponsor will
surrender to North Mountain 4,145,000 Private Placement Warrants held by the Sponsor prior to the Closing, a portion of which will be transferred and delivered to the PIPE Investors in the amounts set forth in and pursuant to the Subscription
Agreements (including any Subscription Agreements entered into after the date of the Share Vesting and Warrant Surrender Agreement) and the remainder of which will be cancelled by North Mountain upon the Surrender Effective Time, in exchange
for 1,400,000 newly issued shares of North Mountain Class A Common Stock (the “Warrant Shares”), subject to certain vesting conditions set forth in the Share Vesting and Warrant Surrender Agreement, (ii) at the Closing, all shares of North
Mountain Class B Common Stock held by the Sponsor (or shares of North Mountain Class A Common Stock issued or issuable upon conversion thereof) and
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all Warrant Shares will become unvested, (iii) an aggregate of 2,603,126 of the
shares of North Mountain Class B Common Stock and Warrant Shares will vest immediately following Closing and (iv) the remainder of the Sponsor’s shares of North Mountain Class B Common Stock and Warrant Shares will, at the Surrender Effective
Time, be subject to the vesting and surrender provisions set forth in the Share Vesting and Warrant Surrender Agreement, whereby 1,051,562 shares will vest upon the occurrence of the $12.50 Share Price Milestone and 1,051,562 shares will vest
upon the occurrence of the $15.00 Share Price Milestone, in each case for 20 trading days within any consecutive 30-trading day period within five years of Closing, subject to equitable adjustment to reflect any subdivision, stock split,
stock or cash dividend, reorganization, combination, recapitalization or similar transaction with respect to the North Mountain Common Stock. In addition, the shares subject to the $12.50 Share Price Milestone or the $15.00 Share Price
Milestone will accelerate vesting upon certain acceleration events, including a change of control of New Corcentric that occurs within five years of Closing. Any shares subject to vesting pursuant to the Share Vesting and Warrant Surrender
Agreement will be surrendered to the extent such shares remain unvested following the five year anniversary of the Closing.
The purpose of the Share Vesting and Warrant Surrender Agreement
is to adjust the Sponsor's economics such that, at the Closing, the Sponsor surrenders its Private Placement Warrants in exchange for the Warrant Shares and subject the newly issued Warrant Shares to the vesting conditions described herein.
Thereafter, with respect to all the Warrant Shares and North Mountain Class B Common Stock held by the Sponsor, (i) 50% will vest at the Closing, (ii) 25% will only vest if the share price of North Mountain Class A Common Stock meets or
exceeds $12.50 per share for any 20 trading days within any consecutive 30-trading day period and (iii) the remaining 25% will only vest if the share price of North Mountain Class A Common Stock meets or exceeds $15.00 per share for any 20
trading days within any consecutive 30-trading day period; provided, that, in each case, any such shares that remain unvested at the 5 year anniversary of the Closing will be automatically cancelled.
For more information about the Share Vesting and Warrant Surrender
Agreement, see the section entitled “Agreements Related to the Business Combination—Share Vesting and Warrant Surrender Agreement.”
Amended and Restated Registration Rights Agreement
In connection with the execution of the Merger Agreement, North
Mountain, the Sponsor and certain stockholders of Corcentric entered into an amended and restated registration rights agreement (the “Registration Rights Agreement”), which will become effective upon the consummation of the Business
Combination. Pursuant to the Registration Rights Agreement, North Mountain agreed to file a shelf registration statement with respect to the registrable securities under the Registration Rights Agreement within 30 days of the closing of the
Business Combination. Additionally, the Registration Rights Agreement contains certain restrictions on transfer with respect to the shares of North Mountain Common Stock held by Sponsor Holders (as defined therein) immediately following
Closing. Such restrictions begin at Closing and end on the earlier of the earlier to occur of (A) the date that is one year following the date of the Closing and (B) subsequent to the Closing, (x) if the closing price of the Common Stock equals
or exceeds $12.00 per share (as adjusted for stock splits, stock dividends, reorganizations, recapitalizations and the like) for any 20 trading days within any 30 trading day period commencing at least 150 days after the Closing (as such term
is defined in the Merger Agreement) or (y) the date on which the Company completes a liquidation, merger, capital stock exchange, reorganization or other similar transaction that results in all of the Company’s stockholders having the right to
exchange their shares of Common Stock for cash, securities or other property. Up to twice in any 12-month period, certain legacy North Mountain and Corcentric stockholders may request to sell all or any portion of their registrable securities
in an underwritten offering so long as the total offering price is reasonably expected to exceed $30,000,000 or all of such holders’ remaining registrable securities. North Mountain also agreed to provide customary “piggyback” registration
rights. The Registration Rights Agreement also provides that North Mountain will pay certain expenses relating to such registrations and indemnify the stockholders against certain liabilities.
For more information about the Registration Rights Agreement, see the
section entitled “Agreements Related to the Business Combination—Amended and Restated Registration Rights Agreement.”
Lock-up Agreements
In connection with the execution of the Merger Agreement, North
Mountain and certain Corcentric stockholders entered into Lock-up Agreements (the “Lock-up Agreements”), in the form attached to the Merger Agreement as Exhibit D. Pursuant to the Lock-up Agreements, such Corcentric stockholders have agreed
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they will not, during the period beginning as of the effective time of the Business
Combination and continuing to and including the date that is one hundred eighty (180) days after the Closing Date, directly or indirectly, offer, sell, contract to sell, pledge, grant any option to purchase, make any short sale or otherwise
dispose of any shares of New Corcentric Common Stock, or any options or warrants to purchase any shares of New Corcentric Common Stock, or any securities convertible into, exchangeable for or that represent the right to receive shares of New
Corcentric Common Stock, or any interest in any of the foregoing whether owned at the time of entry into the Lock-up Agreements or thereafter acquired (in each case, subject to certain exceptions set forth in the Lock-up Agreements). The
Lock-up Agreements will become effective upon the consummation of the Business Combination.
For more information about the Lock-up Agreements, see the section
entitled “Agreements Related to the Business Combination—Lock-up Agreements.”
Board of New Corcentric following the Business Combination
Upon the Closing, we anticipate that the New Corcentric Board will
consist of seven members, classified into three separate classes, with each class serving a three-year term; except that the Class I directors will be appointed to an initial one-year term (and three-year terms subsequently), the Class II
directors will be appointed to an initial two-year term (and three-year terms subsequently) and the Class III directors will be appointed to an initial three-year term (and three-year terms subsequently).
Our board of directors has appointed the following individuals to the
New Corcentric Board:
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Class I Directors: ;
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Class II Directors: ; and
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Class III Directors: .
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For additional details, see “Management
After the Business Combination.”
Accounting Treatment of the Business Combination
The Business Combination will be accounted for as a reverse
recapitalization because Corcentric has been determined to be the accounting acquirer under Financial Accounting Standards Board’s Accounting Standards Codification Topic 805, Business Combinations
(“ASC 805”) under both the no redemption and contractual maximum redemption scenarios. The determination is primarily based on the evaluation of the following facts and circumstances taking into consideration both the no
redemption and contractual maximum redemption scenarios:
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The pre-combination equity holders of Corcentric will hold the majority of voting rights in New Corcentric;
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Corcentric has the right to appoint a majority of directors to the Board of Directors of New Corcentric;
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Senior management of Corcentric will comprise the senior management of New Corcentric; and
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The operations of Corcentric will comprise the only ongoing operations of New Corcentric.
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Under the reverse recapitalization model, the Business Combination
will be reflected as the equivalent of Corcentric issuing stock for the net assets of North Mountain, accompanied by a recapitalization whereby no goodwill or other intangible assets are recorded.
For more information, see the section entitled “Proposal No. 2—The Business Combination Proposal—Accounting Treatment of the Business Combination.”
Appraisal or Dissenters’ Rights
No appraisal or dissenter’s rights are available to holders of shares
of North Mountain Common Stock or North Mountain Warrants in connection with the Business Combination.
North Mountain Proposals for Stockholder Approval
At the special meeting, the North Mountain’s stockholders will be
asked to separately approve the following proposals:
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The Pre-Mergers Charter Amendment Proposal—a proposal to adopt an amendment to North Mountain’s Existing Charter to increase the
authorized shares of North Mountain Class A Common Stock and shares of preferred stock.
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The Business Combination Proposal—a proposal to approve and adopt the Merger Agreement and the Business Combination.
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The Post-Mergers Charter Approval Proposal—a proposal to approve the adoption of the Proposed Charter.
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The Advisory Charter Proposals—proposals to approve, on a non-binding advisory basis, certain governance provisions in the
Proposed Charter, presented separately in accordance with the SEC requirements:
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Advisory Charter Proposal A: to reclassify the Company’s capital stock and to increase the total number of authorized shares and
classes of stock to shares, consisting of (a) shares of Common Stock, par value $0.0001 per share and (b) shares of preferred stock, par value $0.0001 per share (we refer to this as “Advisory Charter Proposal A”);
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Advisory Charter Proposal B: to provide with respect to any vote to increase or decrease the number of authorized shares of any
class or classes of stock (but not below the number of shares then outstanding) requires the affirmative vote of the holders of all the then-outstanding shares of capital stock of New Corcentric entitled to vote thereon, voting together
as a single class, irrespective of the provisions of Section 242(b)(2) of the DGCL;
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Advisory Charter Proposal C: to provide that any amendment to New Corcentric’s bylaws will require the approval of either New
Corcentric’s board of directors or the holders of at least two-thirds (2/3) of the voting power of the voting power of New Corcentric’s then-outstanding shares of capital stock entitled to vote generally in an election of directors,
voting together as a single class; provided, however, that if the New Corcentric Board has approved such adoption, then only the affirmative vote of the holders of at least a majority of the voting power of all then-outstanding shares
of New Corcentric's capital stock entitled to vote generally in the election of directors, voting together as a single class shall be required to adopt, amend or repeal any provision of the Proposed Bylaws;
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Advisory Charter Proposal D: to provide that exclusive jurisdiction of the Delaware Court of Chancery shall not apply to suits
brought to enforce any duty or liability under the Securities Act or the Exchange Act, or any other claim for which the federal courts have exclusive jurisdiction, and to provide further that unless New Corcentric consents in writing to
the selection of an alternative forum, to the fullest extent permitted by law, the federal district courts of the United States of America shall be adopted as the sole and exclusive forum for the resolution of claims arising under the
Securities Act, or the rules and regulations promulgated thereunder; and
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Advisory Charter Proposal E: to provide certain additional changes, including, among others, those (i) resulting from the
Business Combination, including changing the post-business combination corporate name from “North Mountain Merger Corp.” to “Corcentric, Inc.” and removing certain provisions relating to North Mountain’s prior status as a blank check
company and North Mountain Class B Common Stock that will no longer apply upon the Closing, or (ii) that are administrative or clarifying in nature, including the deletion of language without substantive effect.
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The Equity Incentive Plan Proposal—a proposal to approve and adopt the equity incentive award plan established to be
effective as of the Closing.
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The Employee Stock Purchase Plan Proposal—a proposal to approve and adopt the employee stock purchase plan established to be
effective as of the Closing.
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The Nasdaq PIPE Issuance Proposal—a proposal to consider and vote upon a proposal to approve, for purposes of complying with
the applicable listing rules of the Nasdaq Stock Market, the issuance of PIPE Shares, the delivery of PIPE Warrants and the issuance of PIPE Warrant Shares issuable upon exercise of the PIPE Warrants to the PIPE Investors in the PIPE
Financing.
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The Adjournment Proposal— a proposal to adjourn the special meeting to a later date or dates, if necessary, to permit further
solicitation and vote of proxies if, based upon the tabulated vote at the time of the special meeting, there are not sufficient votes to approve one or more proposals presented to stockholders.
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For more information about these proposals, see the sections of
this proxy statement/prospectus entitled “Proposal No. 1—The Pre-Mergers Charter Amendment Proposal,” “Proposal No. 2—The Business Combination Proposal,”
“Proposal No. 3—The Post-Mergers Charter Approval Proposal,” “Proposal No. 4—The Advisory Charter Proposals,” “Proposal No. 5—The Equity Incentive Plan Proposal,” “Proposal No.
6—The Employee Stock Purchase Plan Proposal,” “Proposal No. 7—The Nasdaq PIPE Issuance Proposal” and “Proposal No. 8—The Adjournment Proposal.”
Date, Time and Place of Special Meeting
The special meeting will be held on , 2022, at 10:00 a.m., Eastern
time, conducted via live webcast at the following address . You will need the 16-digit meeting control number that is printed on your proxy card to enter the special meeting. North Mountain recommends that you log in at least 15 minutes
before the special meeting to ensure you are logged in when the special meeting starts. Please note that you will not be able to attend the special meeting in person.
Record Date and Voting
North Mountain’s stockholders will be entitled to vote or direct
votes to be cast at the special meeting if they owned shares of North Mountain Class A Common Stock or North Mountain Class B Common Stock at the North Mountain Record Date. North Mountain’s stockholders are entitled to one vote for each share
of North Mountain Class A Common Stock or North Mountain Class B Common Stock that they owned as of the close of business on the North Mountain Record Date. If North Mountain’s stockholders’ shares are held in “street name” or are in a margin
or similar account, such stockholder should contact their broker, bank or other nominee to ensure that votes related to the shares beneficially own by such stockholder are properly counted. On the North Mountain Record Date, there were
13,225,000 shares of North Mountain Class A Common Stock outstanding and 3,306,250 shares of North Mountain Class B Common Stock outstanding and held by our Sponsor.
Our Sponsor has agreed to vote all of their shares of North Mountain
Class B Common Stock and any Public Shares acquired by them in favor of the Business Combination Proposal. North Mountain’s issued and outstanding North Mountain Warrants do not have voting rights at the special meeting.
Quorum and Vote Required for the North Mountain Proposals
A quorum will be present at the special meeting if a majority of the
North Mountain Common Stock outstanding and entitled to vote at the special meeting is represented in person or by proxy.
The approval of the Pre-Mergers Charter Amendment Proposal requires
the affirmative vote (in person online or by proxy) of (i) the holders of a majority of the outstanding shares of North Mountain Common Stock, voting together as a single class, and (ii) the holders of a majority of the outstanding shares of
North Mountain Class A Common Stock, voting separately as a single class.
The approval of the Post-Mergers Charter Approval Proposal requires
the affirmative vote (in person online or by proxy) of (i) the holders of a majority of the outstanding shares of North Mountain Common Stock, voting together as a single class and (ii) the holders of a majority of the outstanding shares of
North Mountain Class B Common Stock, voting separately as a single class.
The approval of the Business Combination Proposal, each of the
Advisory Charter Proposals, the Equity Incentive Plan Proposal, the Employee Stock Purchase Plan Proposal, the Nasdaq PIPE Issuance Proposal and the Adjournment Proposal require the affirmative vote (in person online or by proxy) of a
majority of the votes cast by the holders of shares of North Mountain Common Stock, voting together as a single class, that are present or represented by proxy at the special meeting.
Holders of all of the North Mountain Class B Common Stock (or 20% of
the outstanding shares of North Mountain Common Stock) have agreed to vote in favor of the Business Combination Proposal.
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For more information about these proposals, see the sections of
this proxy statement/prospectus entitled “Special Meeting of North Mountain Stockholders—Quorum and Vote Required for the North Mountain Proposals.”
Recommendation to North Mountain Stockholders
The North Mountain Board believes that each of the Pre-Mergers
Charter Amendment Proposal, the Business Combination Proposal, the Post-Mergers Charter Approval Proposal, each of the Advisory Charter Proposals, the Equity Incentive Plan Proposal, the Employee Stock Purchase Plan Proposal, the Nasdaq PIPE
Issuance Proposal and the Adjournment Proposal to be presented at the special meeting is in the best interests of North Mountain and its stockholders and unanimously recommends that its stockholders vote “FOR” each of these proposals.
North Mountain Board’s Reasons for the Approval of the Business
Combination
After careful consideration, the North Mountain Board recommends that
its stockholders vote “FOR” the approval of the Business Combination Proposal. For a description of the North Mountain Board’s reasons for the approval of the Business Combination, see the section of this proxy statement/prospectus entitled “Proposal No. 2—The Business Combination Proposal—Recommendation of the North Mountain Board and Reasons for the Business Combination.”
Interests of North Mountain Directors and Officers in the Business
Combination
When considering the North Mountain Board’s recommendation that
North Mountain’s stockholders vote in favor of the approval of the Business Combination Proposal and the other proposals presented for stockholder approval in this proxy statement/prospectus, North Mountain’s stockholders should be aware that
certain of North Mountain’s Sponsor, executive officers and directors have interests in the Business Combination and the PIPE Financing that may be different from, or in addition to, the interests of North Mountain’s stockholders. These
interests may influence North Mountain’s directors in making their recommendation that you vote in favor of the Business Combination Proposal and the transactions contemplated thereby. These interests were considered by the North Mountain
Board when it approved the Business Combination. These interests include:
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the beneficial ownership of the Sponsor and certain members of the North Mountain Board and officers of an aggregate of
3,306,250 shares of North Mountain Class B Common Stock and 4,145,000 Private Placement Warrants, which shares and warrants were acquired for an aggregate investment of $4,145,000 at the time of the IPO and would become worthless if
North Mountain does not complete a business combination by September 22, 2022, as such stockholders have waived any redemption right with respect to these shares. After giving effect to the provisions of the Share Vesting and Warrant
Cancellation Agreement, the Sponsor would own up to an aggregate of 4,706,250 shares of North Mountain Class A Common Stock (including shares subject to vesting) and no Private Placement Warrants. Such shares have an aggregate market
value of approximately $ , based on the closing price of North Mountain Class A Common Stock of $ on , 2022, the North Mountain Record Date. Because the shares of North Mountain Class B Common Stock were purchased for a
nominal amount, the Sponsor could achieve a significant positive return even if the trading price of shares of New Corcentric following the closing of the Business Combination declines significantly. Each of our officers and directors
is a member of the Sponsor. Harbour Reach Holdings, LLC is the managing member of the Sponsor and Mr. Michael Platt is the indirect controlling member of Harbour Reach Holdings, LLC;
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Millais Limited, an affiliate of the Sponsor and an affiliate of North Mountain, agreed to purchase 2,000,000 PIPE Shares and
1,000,000 PIPE Warrants for an aggregate purchase price of $20.0 million in the PIPE Financing;
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SMMC Sponsor Interests, LLC, an affiliate of North Mountain and an entity controlled by Charles Bernicker (Chief Executive
Officer and a director of North Mountain) and of which Douglas J. Pauls (a director of North Mountain) is a non-managing member, agreed to purchase 1,500,000 PIPE Shares and 750,000 PIPE Warrants for an aggregate purchase price of
$15.0 million in the PIPE Financing;
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the continued indemnification of current directors and officers of North Mountain and the continuation of directors’ and
officers’ liability insurance after the Business Combination;
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the fact that our Sponsor, officers and directors will be reimbursed for out-of-pocket expenses incurred in connection with
activities on our behalf, such as identifying potential target businesses and performing due diligence on suitable business combinations. As of January 6, 2022, North Mountain’s Sponsor and its affiliates had incurred $996 of unpaid
reimbursable expenses; and
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the fact that our Sponsor, officers and directors will lose their entire investment in us if an initial business combination
is not completed.
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Redemption Rights
Pursuant to our Existing Charter, holders of Public Shares may elect
to have their Public Shares redeemed for cash at the applicable redemption price per share calculated in accordance with our Existing Charter. For illustrative purposes, based on funds in the Trust Account of approximately $ million on ,
the estimated per share redemption price would have been approximately $ . If a Public Stockholder exercises its redemption rights, then such Public Stockholder will be exchanging its shares of North Mountain Class A Common Stock for cash and
will no longer own shares of North Mountain. Such a holder will be entitled to receive cash for its Public Shares only if it properly demands redemption and delivers its shares (either physically or electronically) to our transfer agent in
accordance with the procedures described herein. Each redemption of Public Shares by our Public Stockholders will decrease the amount in the Trust Account, which holds approximately $ million on (net of Permitted Withdrawals). See the
section entitled “Special Meeting of North Mountain Stockholders—Redemption Rights” for the procedures to be followed if you wish to redeem your Public Shares for cash.
Risk Factors
In evaluating the Business Combination and the proposals to be
considered and voted on at the special meeting, you should carefully read this proxy statement/prospectus, including the annexes, and especially review and consider the risk factors set forth under the section entitled “Risk Factors” beginning on page 41 of this proxy statement/prospectus. Among these important risks are the following:
Risks Related to Corcentric’s Business and
Industry:
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Corcentric may not sustain its current rate of growth in the future.
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Corcentric earns a substantial portion of its revenue from payment transactions and Corcentric’s growth is dependent upon the
continued acceptance, security and adoption of its payment solutions.
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Because Corcentric recognizes subscription revenues over the term of the contract, fluctuations in new sales and customer
cancellations may not be immediately reflected in Corcentric’s operating results and may be difficult to discern.
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Corcentric’s business depends substantially on its customers renewing their contracts and subscriptions and purchasing
additional subscriptions from Corcentric. Corcentric’s business could be adversely affected if its customers are not satisfied with the services provided by Corcentric and do not renew their contracts or subscriptions.
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A limited number of customer relationships are responsible for a significant portion of Corcentric’s revenue and cash flow. In
addition, Corcentric is subject to credit risk resulting from its managed accounts receivable solutions. A decrease in sales to these customers or a change in these customers’ financial condition could materially harm Corcentric’s
business and operating results.
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If Corcentric fails to adapt and respond effectively to rapidly changing technology, evolving industry standards, changing
regulations and payment methods, demand for product enhancements, new product features, and changing business needs, requirements or preferences, its products may become less competitive.
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The markets in which Corcentric participates are competitive, and if Corcentric does not compete effectively, its operating
results could be harmed.
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Corcentric may require additional capital to support the growth of its business, and this capital might not be available on
acceptable terms, if at all.
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Corcentric’s business depends, in part, on Corcentric’s relationships with third parties, including partnerships with financial
institutions, third party service providers, processing providers and other financial services suppliers. If any of Corcentric’s agreements with such financial institutions, third party service providers, processing providers, or
financial services providers are terminated, Corcentric could experience service interruptions.
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The 2022 Russian invasion of Ukraine has affected and may continue to affect Corcentric's business operations.
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Acquisitions, strategic investments, partnerships, collaborations or alliances could be difficult to identify and integrate,
divert the attention of management, disrupt Corcentric’s business, dilute New Corcentric stockholder value, and adversely affect Corcentric’s operating results and financial condition.
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If Corcentric fails to manage its growth effectively, Corcentric may be unable to execute on its plans and strategies, maintain
and grow customer adoption and use of its products and services, or adequately address competitive challenges.
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Corcentric's ability to recruit, retain and develop qualified personnel is critical to its success and growth. If Corcentric
is not able to effectively grow our sales and marketing organization, or grow an effective network of channel partners, it may be unable to increase its share of the existing markets or expand into new markets, which would inhibit its
ability to grow and increase its profitability.
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If Corcentric fails to offer high-quality customer support, or if its support is more expensive than anticipated, its business
and reputation could suffer.
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Corcentric’s private commerce network solutions strategy is in part dependent upon its ability to provide value to both buyers
and suppliers within the network. Failure to do so could have a material adverse effect on Corcentric’s business and results of operations.
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Corcentric relies on fees and rebates that it receives from its private commerce network solutions suppliers. The failure to
maintain contracts with these private commerce network solutions suppliers could adversely affect Corcentric’s business, financial condition and results of operations.
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Risks Related to Information Technology,
Cybersecurity and Intellectual Property:
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Corcentric facilitates the transfer of customer funds daily, and is subject to the risk of errors, which could result in
financial losses, damage to its reputation, or loss of trust in its brand, which would harm its business and financial results.
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If Corcentric’s security measures are breached or unauthorized access to customer data is otherwise obtained, Corcentric’s
platform or products may be perceived as not being secure, customers may reduce the use of or stop using Corcentric’s products and platform and Corcentric may incur significant liabilities.
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Corcentric’s risk management efforts may not be effective to prevent fraudulent activities by its customers, employees or other
third parties, which could expose Corcentric to material financial losses and liability and otherwise harm its business.
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If Corcentric fails to adequately protect its proprietary rights, its competitive position could be impaired and it may lose
valuable assets, generate less revenue and incur costly litigation to protect its rights.
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Corcentric may be sued by third parties for various claims including alleged infringement of its proprietary rights, which could
be costly and time-consuming to defend.
|
|
•
|
Indemnity and liability provisions in various agreements potentially expose Corcentric to substantial liability for intellectual
property infringement, data protection, and other losses.
|
Risks Related to Regulation:
|
•
|
Corcentric relies on various exemptions from licensing, and regulators may find that it has violated applicable laws or
regulations.
|
|
•
|
The regulatory environment Corcentric operates in is subject to constant change, and new regulations could make aspects of its
business as currently conducted no longer possible.
|
|
•
|
Changes to payment card networks fees or rules, or associated laws or regulations, could harm Corcentric’s business.
|
35
Risks Related to North Mountain and the Business
Combination
|
•
|
There can be no assurance that New Corcentric Common Stock will be approved for listing on Nasdaq or that New Corcentric will be
able to comply with the continued listing standards of Nasdaq.
|
|
•
|
If the Business Combination’s benefits do not meet the expectations of investors or securities analysts, the market price of
North Mountain’s securities or, following the Closing, New Corcentric’s securities, may decline. A market for our securities may not continue, which would adversely affect the liquidity and price of our securities.
|
|
•
|
Following the consummation of the Business Combination, New Corcentric will incur significant increased expenses and
administrative burdens as a public company, which could have an adverse effect on its business, financial condition and results of operations.
|
|
•
|
The North Mountain Board did not obtain a fairness opinion in determining whether or not to proceed with the Business
Combination and, as a result, the terms may not be fair from a financial point of view to the Public Stockholders.
|
|
•
|
North Mountain’s Sponsor, officers and directors have potential conflicts of interest in recommending that stockholders vote
in favor of approval of the Business Combination Proposal and approval of the other proposals described in this proxy statement/prospectus.
|
36
(in thousands, except
share and per share amounts)
The following summary unaudited pro forma condensed combined
financial information has been derived from and should be read in conjunction with the unaudited pro forma condensed combined financial information, including the notes thereto, which is included in this proxy statement/prospectus under the
section titled “Unaudited Pro Forma Condensed Combined Financial Information.” The summary unaudited pro forma condensed combined statement of operations for the year
ended December 31, 2021 combines the historical statement of operations of North Mountain and the historical consolidated statement of operations of Corcentric, giving effect to the Business Combination as if it had occurred on January 1,
2021. The summary unaudited pro forma condensed combined balance sheet as of December 31, 2021 combines the historical balance sheet of North Mountain and the historical consolidated balance sheet of Corcentric, giving effect to the Business
Combination as if it had occurred on December 31, 2021.
The summary unaudited pro forma condensed combined financial
information has been prepared to illustrate the effect of the Business Combination and has been prepared for informational purposes only. The unaudited pro forma condensed combined statements of operations are not necessarily indicative of
what the actual results of operations would have been had the Business Combination taken place on the date indicated, nor are they indicative of the future consolidated results of operations of the post-combination company. The pro forma
adjustments are based on the information currently available. Actual results may differ materially from the assumptions within the accompanying unaudited pro forma condensed combined financial information.
The unaudited pro forma condensed combined financial information
has been prepared using the assumptions below with respect to the potential redemption of North Mountain Class A Common Stock for cash:
|
•
|
Assuming no redemption scenario: This presentation assumes that no Public
Stockholders exercise redemption rights with respect to their Public Shares.
|
|
•
|
Assuming contractual maximum redemption scenario: This
presentation assumes that the Public Stockholders holding approximately 13.0% of the Public Shares exercise redemption rights with respect to their Public Shares. This scenario assumes that 1,725,000 Public Shares are redeemed for an
aggregate redemption payment of approximately $17,252 including a pro rata portion of interest accrued on the Trust Account of $2. The contractual maximum redemption scenario is based on a minimum cash consideration of $150,000 at
Closing of the Business Combination, consisting of Trust Account funds, PIPE Financing proceeds and all other cash and cash equivalents of North Mountain less the aggregate amount of cash proceeds that will be required to satisfy the
redemption of the Public Shares and the payment of North Mountain estimated transaction expenses of $15,000. Corcentric shall have no right or ability to waive the minimum cash condition without the prior written consent of North
Mountain (which consent may be provided or withheld by North Mountain in its sole discretion) if such aggregate amount is less than $125,000.
|
|
|
| |
Historical
|
| |
Pro forma
|
||||||
|
|
| |
North
Mountain
|
| |
Corcentric
|
| |
No redemption
scenario
|
| |
Contractual maximum
redemption scenario
|
|
Statement of Operations Data - For
the Year Ended December 31, 2021
|
| |
|
| |
|
| |
|
| |
|
|
Total revenue
|
| |
$—
|
| |
$153,694
|
| |
$153,694
|
| |
$ 153,694
|
|
Total direct costs of revenue
|
| |
—
|
| |
75,292
|
| |
75,292
|
| |
75,292
|
|
Operating loss
|
| |
(1,173)
|
| |
(22,203)
|
| |
(28,233)
|
| |
(28,233)
|
|
Comprehensive income (loss)
|
| |
4,990
|
| |
(33,466)
|
| |
(35,521)
|
| |
(35,953)
|
|
Basic and diluted net income (loss) per share(1)
|
| |
0.30
|
| |
(4.07)
|
| |
(0.32)
|
| |
(0.33)
|
|
Basic and diluted net income per share, Class B common
stock
|
| |
0.30
|
| |
n/a
|
| |
n/a
|
| |
n/a
|
37
|
|
| |
Historical
|
| |
Pro forma
|
||||||
|
|
| |
North
Mountain
|
| |
Corcentric
|
| |
No redemption
scenario
|
| |
Contractual maximum
redemption scenario
|
|
Balance Sheet Data - As of December 31, 2021
|
| |
|
| |
|
| |
|
| |
|
|
Total assets
|
| |
$132,693
|
| |
$468,932
|
| |
$467,704
|
| |
$ 467,704
|
|
Total liabilities
|
| |
13,503
|
| |
355,175
|
| |
402,163
|
| |
419,415
|
|
Redeemable preferred stock
|
| |
—
|
| |
109,531
|
| |
—
|
| |
—
|
|
Redeemable common stock
|
| |
—
|
| |
5,419
|
| |
—
|
| |
—
|
|
Class A common stock subject to possible redemption
|
| |
132,250
|
| |
—
|
| |
—
|
| |
—
|
|
Total stockholders' (deficit) equity
|
| |
(13,060)
|
| |
(1,193)
|
| |
65,541
|
| |
48,289
|
|
(1)
|
Net income (loss) per share is based on:
|
|
•
|
North Mountain — weighted average number of shares of North Mountain Class A Common Stock outstanding for the year ended
December 31, 2021;
|
|
•
|
Corcentric — weighted average number of shares of Corcentric Common Stock outstanding for the year ended December 31, 2021;
and
|
|
•
|
Pro forma — number of shares of Common Stock of New Corcentric expected to be outstanding after the Closing of the Business
Combination.
|
38
(in thousands, except
share and per share amounts)
The following tables set forth:
|
•
|
historical per share information of North Mountain for the year ended December 31, 2021;
|
|
•
|
historical per share information of Corcentric for the year ended December 31, 2021; and
|
|
•
|
unaudited pro forma per share information of New Corcentric for the year ended December 31, 2021 after giving effect to the
Business Combination, assuming two redemption scenarios as follows:
|
|
○
|
Assuming no redemption scenario:
This presentation assumes that no Public Stockholders exercise redemption rights with respect to their Public Shares.
|
|
○
|
Assuming contractual maximum redemption scenario: This presentation assumes that the Public Stockholders holding approximately 13.0% of the Public Shares exercise redemption rights with respect to their Public Shares. This scenario
assumes that 1,725,000 Public Shares are redeemed for an aggregate redemption payment of approximately $17,252 including a pro rata portion of interest accrued on the Trust Account of $2. The contractual
maximum redemption scenario is based on a minimum cash consideration of $150,000 at Closing of the Business Combination, consisting of Trust Account funds, PIPE Financing proceeds and all other
cash and cash equivalents of North Mountain less the aggregate amount of cash proceeds that will be required to satisfy the redemption of the Public Shares and the payment of North Mountain estimated transaction
expenses of $15,000. Corcentric shall have no right or ability to waive the minimum cash condition without the prior written consent of North Mountain (which consent may be provided or withheld by
North Mountain in its sole discretion) if such aggregate amount is less than $125,000.
|
The pro forma book value information reflects the Business
Combination as if it had occurred on December 31, 2021. The weighted average shares outstanding and net earnings per share information reflect the Business Combination as if it had occurred on January 1, 2021.
This information is only a summary and should be read in
conjunction with the historical financial statements of North Mountain and Corcentric and related notes included elsewhere in this proxy statement/prospectus. The unaudited pro forma combined per share information of North Mountain and
Corcentric is derived from, and should be read in conjunction with, the unaudited pro forma condensed combined financial information and related notes included elsewhere in this proxy statement/prospectus.
The unaudited pro forma combined net income per share information
below does not purport to represent the net loss per share which would have occurred had the companies been combined during the periods presented, nor earnings per share for any future date or period. The unaudited pro forma combined book
value per share information below does not purport to represent what the value of North Mountain and Corcentric would have been had the companies been combined during the periods presented.
|
|
| |
Historical
|
| |
Pro forma
|
||||||
|
|
| |
North
Mountain
|
| |
Corcentric
|
| |
No redemption
scenario
|
| |
Contractual maximum
redemption scenario
|
|
As of and for the Year Ended December 31, 2021
|
| |
|
| |
|
| |
|
| |
|
|
Book value per share – basic and diluted(1)
|
| |
$(0.79)
|
| |
$(0.09)
|
| |
$0.58
|
| |
$0.44
|
|
Net income (loss) per share – basic and diluted(2)
|
| |
$0.30
|
| |
$(4.07)
|
| |
$(0.32)
|
| |
$(0.33)
|
|
Net income per share, Class B common stock – basic and
diluted
|
| |
$0.30
|
| |
n/a
|
| |
n/a
|
| |
n/a
|
|
(1)
|
Book value per share is calculated as total permanent equity divided by:
|
|
•
|
North Mountain — Class A Common Stock and Class B Common Stock outstanding as of December 31, 2021;
|
|
•
|
Corcentric — Common Stock outstanding as of December 31, 2021; and
|
|
•
|
Pro forma — Common Stock of New Corcentric expected to be outstanding after the Closing of the Business Combination.
|
|
(2)
|
Net income (loss) per share is based on:
|
|
•
|
North Mountain — weighted average number of shares of North Mountain Class A Common Stock outstanding for the year ended
December 31, 2021;
|
|
•
|
Corcentric — weighted average number of shares of Corcentric Common Stock outstanding for the year ended December 31, 2021;
and
|
|
•
|
Pro forma — number of shares of Common Stock of New Corcentric expected to be outstanding after the Closing of the Business
Combination.
|
39
Ticker Symbol and Market Price
North Mountain Units, North Mountain Class A Common Stock and the
Public Warrants are currently listed on Nasdaq under the symbols “NMMCU,” “NMMC,” and “NMMCW,” respectively. The closing price of the North Mountain Units, North Mountain Class A Common Stock and the Public Warrants on December 8, 2021, the
last trading day before announcement of the execution of the Merger Agreement, was $10.29, $9.88 and $0.90, respectively. As of , 2022, the North Mountain Record Date, the closing price of the North Mountain Units, North Mountain Class A
Common Stock and the Public Warrants was $ , $ , and $ , respectively.
There is no public market for Corcentric Common Stock or Corcentric
Preferred Stock.
Dividend Policy
We have not paid any cash dividends on our shares of North Mountain
Common Stock to date and do not intend to pay cash dividends prior to the completion of the Business Combination. The payment of cash dividends in the future will be dependent upon New Corcentric’s revenues and earnings, if any, capital
requirements and general financial condition subsequent to the completion of the Business Combination. The payment of any dividends subsequent to Business Combination will be within the discretion of the New Corcentric Board. It is the present
intention of our board of directors to retain all earnings, if any, for use in our business operations and, accordingly, our board of directors does not anticipate declaring any dividends in the foreseeable future. Pursuant to the terms of that
certain Loan and Security Agreement dated as of November 15, 2018 (“Loan Agreement”) and that certain Amended and Restated Loan and Security Agreement, dated November 15, 2018 (“Revolving Facility”) as amended from time to time, neither
Corcentric nor any of its subsidiaries is permitted to declare or pay any dividends or make other payments to purchase, redeem, retire or otherwise acquire any equity interest other than pursuant to customary exceptions including, dividends on
account of equity interests pursuant to a cashless exchange and dividends subject to maximum limitations set forth in the Loan Agreement so long as the conditions set forth in the Loan Agreement are satisfied.
40
The following risk factors will apply to the
business and operations of New Corcentric following the Closing. These risk factors are not exhaustive and investors are encouraged to perform their own investigation with respect to the business, prospects, financial condition and operating
results of Corcentric and New Corcentric’s business, prospects, financial condition and operating results following the completion of the Business Combination. You should carefully consider the following risk factors in addition to the other
information included in this proxy statement/prospectus, including matters addressed in the section entitled “Cautionary Note Regarding Forward-Looking Statements,” before deciding how to vote your shares of North Mountain Common Stock. Please
see the section entitled “Where You Can Find More Information” in this proxy statement/prospectus. We and Corcentric may face additional risks and uncertainties that are not presently known to us, or that we currently deem immaterial, which may
also impair New Corcentric’s business, prospects, financial condition or operating results. The following discussion should be read in conjunction with the financial statements of Corcentric and financial statements of North Mountain and notes
thereto included elsewhere in this proxy statement/prospectus.
Corcentric may not sustain its current rate of
growth in the future.
Corcentric’s recent growth may not be indicative of its future growth,
and if Corcentric continues to grow at the current pace, it may not be able to manage its growth effectively. Corcentric’s growth also makes it difficult to evaluate its future prospects and may increase the risk that it will not be successful.
Corcentric’s revenue was approximately $153,700,000, $174,700,000
and $144,600,000 for fiscal years 2021, 2020 and 2019, respectively. Even if Corcentric’s revenue continues to increase, its growth rate may decline in the future as a result of a variety of factors, including the increasing scale of its
business. Overall growth of Corcentric’s revenue depends on a number of factors, including Corcentric’s ability to:
|
•
|
attract new customers and increase sales to Corcentric’s existing customers;
|
|
•
|
increase adoption and usage of Corcentric’s products and services;
|
|
•
|
manage the effects of the COVID-19 pandemic on Corcentric’s business and operations;
|
|
•
|
expand the functionality and scope of the products Corcentric offers;
|
|
•
|
increase the rates at which customers subscribe to and continue to use Corcentric’s products;
|
|
•
|
increase the volume of payments processed by successfully monetizing the payment opportunity in Corcentric’s current and
prospective customer base;
|
|
•
|
increase awareness of Corcentric’s brand and successfully compete with other companies;
|
|
•
|
provide Corcentric’s customers with high-quality customer support that meets their needs; and
|
|
•
|
successfully identify and acquire or invest in businesses, products, or technologies that Corcentric believes could complement or
expand its products and services.
|
Corcentric cannot guarantee that it will successfully accomplish these
objectives, which makes it difficult for Corcentric to forecast its future growth and operating results. If the assumptions that Corcentric uses to plan its business are incorrect or change in reaction to changes in Corcentric’s markets, or if
Corcentric is unable to maintain consistent revenue or revenue growth, New Corcentric’s stock price could be volatile. Corcentric’s revenue from any prior quarterly or annual periods should not be relied upon as an indication of Corcentric’s
future revenue or revenue growth or growth in its volume of payments processed.
In addition, Corcentric expects to continue to expend substantial
financial and other resources on:
|
•
|
sales, marketing and customer success, including an expansion of Corcentric’s sales organization, further developing its
channel partner network and new customer success initiatives;
|
|
•
|
Corcentric’s technology infrastructure, including systems architecture, scalability, availability, performance, and security;
|
41
|
•
|
product development, including investments in Corcentric’s product development team and the development of new products and new
functionality;
|
|
•
|
acquisitions or strategic investments;
|
|
•
|
regulatory compliance and risk management; and
|
|
•
|
general administration, including increased legal and accounting expenses associated with being a public company.
|
These investments may not result in increased revenue growth in
Corcentric’s business. If Corcentric is unable to increase its revenue at a rate sufficient to offset the expected increase in its costs, its business, financial position and operating results will be harmed, and Corcentric may not be able to
sustain Corcentric’s current rate of growth over the long term.
Corcentric earns a substantial portion of its
revenue from payment transactions and Corcentric’s growth is dependent upon the continued acceptance, security and adoption of its payment solutions.
Corcentric earns a substantial portion of its revenue from payment
transactions paid to suppliers in its networks and its growth is dependent upon the continued acceptance, security, and adoption of its payment solutions. During the fiscal year ended December 31, 2021, Corcentric earned approximately
$61,800,000 in revenue from payment transactions paid through its networks.
Although Corcentric expects businesses to continue to accept and adopt
electronic forms of payment, the adoption rates of its payment solutions could erode or grow more slowly than expected. Participants in Corcentric’s payment networks select their preferred method of payment based on their internal business rules,
preferences, or perceived value, which may change at any time. Participants may, with or without advance notice, prohibit or impose restrictions on the methods Corcentric uses to provide or deliver electronic payments that Corcentric may not be
aware of or be able to comply with, seek to negotiate reduced pricing, or charge fees in order to accept electronic payments. Certain industries and verticals are also less inclined to accept electronic forms of payment which may limit
Corcentric’s ability to successfully expand into new industries or verticals. Corcentric has experienced, and may in the future experience, fluctuations in quarterly revenue resulting from participants changing their preferred method of payment
to reduce their interchange rates.
The revenue Corcentric receives from payment transactions is also
dependent upon a number of factors, many of which Corcentric does not control, including the continued acceptance and adoption by businesses of electronic payments, transaction fees which Corcentric expects may decline over time, fees charged by
suppliers to accept electronic payments, buyer incentives, and the terms of Corcentric’s commercial agreements with third-party service providers that are involved in the payment process. Widespread adoption of new forms of electronic payments,
such as real time payments, could also negatively impact the revenue Corcentric receives from electronic payment transactions.
Because Corcentric recognizes subscription
revenues over the term of the contract, fluctuations in new sales and customer cancellations may not be immediately reflected in Corcentric’s operating results and may be difficult to discern.
Corcentric generally recognizes subscription revenues from customers
ratably over the terms of their software contracts. Most of Corcentric’s subscription revenues in any quarter are derived from the recognition of deferred revenue relating to subscriptions entered into during previous quarters. Consequently, a
decline in new subscriptions or an increase in customer cancellations in any single quarter would likely have only a small impact on Corcentric’s revenues for that quarter. However, such a decline or increase would negatively affect Corcentric’s
revenues in future quarters. Accordingly, the effect of significant downturns in sales and market acceptance of Corcentric’s platform, and potential changes in Corcentric's pricing policies or rate of customer cancellations, may not be fully
apparent from Corcentric's reported results of operations until future periods.
Corcentric may be unable to adjust its cost structure to reflect the
changes in revenues. In addition, a significant majority of Corcentric’s costs are expensed as incurred, while subscription revenues are recognized over the life of the customer agreement. As a result, increased growth in the number of
Corcentric’s customers
42
could result in Corcentric’s recognition of more costs than revenues in the earlier
periods of the terms of Corcentric’s agreements. Corcentric’s subscription model also makes it difficult for Corcentric to rapidly increase Corcentric’s revenues through additional sales in any period, as revenues from new software customers must
be recognized over the applicable subscription term.
Corcentric’s business depends substantially on
its customers renewing their contracts and subscriptions and purchasing additional subscriptions from Corcentric. Corcentric’s business could be adversely affected if its customers are not satisfied with the services provided by Corcentric and do
not renew their contracts or subscriptions.
Corcentric’s business depends on its ability to satisfy its customers
with respect to its products and platform as well as the services that are performed to help its customers use features and functions of its products. In order for Corcentric to maintain or improve its operating results and grow its revenue, it
is important that Corcentric’s customers renew their subscriptions when the initial contract term expires and add additional authorized users and additional products and services to their subscriptions. Corcentric’s customers have no obligation
to renew their subscriptions, and there can be no assurance that Corcentric’s customers will renew subscriptions with a similar contract period or with the same or a greater number of authorized users and products and services. Some of
Corcentric’s customers in the past have elected not to renew their subscription agreements with Corcentric, and Corcentric may not be able to accurately predict renewal rates.
Corcentric’s renewal rates, including its dollar-based net revenue
retention rate, may decline or fluctuate as a result of a number of factors, including Corcentric’s customers’ satisfaction with its products, its services, its customer support, its prices and contract length, the prices of competing solutions,
the results of any customer security audit of Corcentric’s platform or any other customer audit of Corcentric, mergers and acquisitions affecting its customer base, the effects of global economic conditions or reductions in its customers’
spending levels. Corcentric’s future success also depends in part on Corcentric’s ability to increase the adoption rate of its products and services for its current customers. If Corcentric’s customers do not renew their subscriptions, renew on
less favorable terms or fail to add more authorized users or additional products and services, Corcentric’s revenues may decline, and Corcentric may not realize improved operating results from Corcentric’s customer base. In addition, negative
publicity related to Corcentric's customer relationships, regardless of its accuracy, may further damage its business by affecting its ability to compete for new business with current and prospective customers.
A limited number of customer relationships are
responsible for a significant portion of Corcentric’s revenue and cash flow. In addition, Corcentric is subject to credit risk resulting from its managed accounts receivable solutions. A decrease in sales to these customers or a change in these
customers’ financial condition could materially harm Corcentric’s business and operating results.
To date, a substantial portion of Corcentric’s business has been
dependent on a limited group of relationships. For example, Corcentric's top ten customer relationships and its largest customer relationship represent 19.9% and 13.8% of its total revenue for the year ended December 31, 2021, respectively. The
contract with Corcentric's largest customer will expire on December 31, 2022 if not extended by both parties. The contract is a similar form agreement that Corcentric has with its other customers. The contract contains certain anti-competition
provisions. For example, Corcentric may not provide the same services to certain of its largest customer's competitors and may not hire or solicit any employee or contractor of its customer involved with performance of the contract for 12
months following termination. In addition, this contract can be terminated due to an uncured material breach by either party and there are no minimum purchase requirements. As a result, there may be variability in Corcentric’s results if its
relationship with this customer were to change or be lost completely. Additionally, most of Corcentric’s customers may generally terminate their respective agreements with it in each case for cause upon written notice of certain uncured
material breaches of contract by Corcentric, upon the bankruptcy or insolvency of the other party or under certain other circumstances.
Corcentric expects that a limited number of customers and relationships
will continue to account for a substantial portion of its revenue in future periods. A decrease in sales to these customers or a loss of one or more could harm Corcentric’s results of operations and financial condition.
43
In addition, because Corcentric relies on a limited number of
customers for a significant portion of its revenue, delayed payments by a few of its largest customers could result in a reduction in, and greater volatility of, its cash flow and available cash. If customers fail to pay Corcentric under the
terms of its agreements, Corcentric may be adversely affected from both the inability to collect amounts due and the cost of enforcing the terms of its contracts, including litigation.
Corcentric also depends on the creditworthiness of its customers. If
Corcentric’s customers dispute transactions, seek bankruptcy protection or pursue other similar relief and fail to pay amounts due to Corcentric, or pay those amounts more slowly, that could increase Corcentric’s credit risk and adversely affect
Corcentric’s operating results, financial position and cash flow. The recent and ongoing global COVID-19 pandemic may also increase the likelihood of these risks.
If Corcentric fails to adapt and respond
effectively to rapidly changing technology, evolving industry standards, changing regulations and payment methods, demand for product enhancements, new product features, and changing business needs, requirements or preferences, its products may
become less competitive.
The market for Corcentric’s payments and software solutions are subject
to ongoing technological change, evolving industry standards, changing regulations and payment methods, and changing customer needs, requirements and preferences. The success of Corcentric’s business will depend, in part, on its ability to adapt
and respond effectively to these changes on a timely basis, including launching new products and services. The success of any new product and service, or any enhancements, features, or modifications to existing products and services, depends on
several factors, including the timely completion, introduction, and market acceptance of such products and services, enhancements, modifications and new product features. If Corcentric is unable to enhance its platform and products, add new
payment methods or develop new products that keep pace with technological and regulatory change and changes in customer preferences and achieve market acceptance, or if new technologies emerge that are able to deliver competitive products and
services at lower prices, more efficiently, more conveniently, or more securely than Corcentric’s products, its business, operating results and financial condition would be adversely affected. Furthermore, modifications to Corcentric’s existing
platform, products, or technology will increase its research and development expenses. Any failure of Corcentric’s products and services to operate effectively with existing or future customer systems for their billing and payment systems and
third-party technologies could reduce the demand for its services, result in customer dissatisfaction and adversely affect its business.
The markets in which Corcentric participates are
competitive, and if Corcentric does not compete effectively, its operating results could be harmed.
The market for Corcentric’s software and payments solutions is
fragmented, competitive, and constantly evolving. Corcentric’s competitors range from large entities to smaller suppliers of solutions that focus on billing, invoicing solutions and/or electronic bill presentment and payment. With the
introduction of new technologies and market entrants, Corcentric expects that the competitive environment will remain intense going forward. Accounting software providers, as well as the financial institutions with which Corcentric partners, may
internally develop products, acquire existing, third-party products, or may enter into partnerships or other strategic relationships that would enable them to expand their product offerings to compete with Corcentric’s platform or provide more
comprehensive offerings than they individually had offered or achieve greater economies of scale than Corcentric. These software providers and financial institutions may have the operating flexibility to bundle competing solutions with other
offerings, including offering them at a lower price or for no additional cost to customers as part of a larger sale. In addition, new entrants not currently considered to be competitors may enter the market through acquisitions, partnerships, or
strategic relationships. As Corcentric looks to market and sell its products and services to potential customers or partners with existing solutions, it must convince their internal stakeholders that its products and services are superior to
their current solutions.
Corcentric competes on several factors, including:
|
•
|
product features, quality, and functionality;
|
|
•
|
data asset size and ability to leverage artificial intelligence to scale with its customers' business needs;
|
|
•
|
ease of deployment along with ease of integration with customers’ and partners’ application programming interfaces (API) for their
billing and payment systems as well as third-party technologies;
|
44
|
•
|
ability to automate processes;
|
|
•
|
cloud-based delivery architecture;
|
|
•
|
advanced security and control features;
|
|
•
|
brand recognition; and
|
|
•
|
pricing and total cost of ownership.
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Corcentric’s competitors vary in size, breadth, and scope of the
products and services offered. Many of Corcentric’s competitors and potential competitors have greater name recognition, more established customer relationships, larger research and development and marketing budgets, a larger global footprint and
greater resources than Corcentric. Corcentric’s competitors may be able to respond more quickly and effectively than it can to new or changing opportunities, technologies, standards and customer requirements. For example, an existing competitor
or new entrant could introduce new technology that reduces demand for Corcentric’s products or services.
For these reasons, Corcentric may not be able to compete successfully
against its current or future competitors, and this competition could result in the failure of its products and services to continue to achieve or maintain market acceptance, any of which would harm its business, operating results and financial
condition.
Corcentric may require additional capital to
support the growth of its business, and this capital might not be available on acceptable terms, if at all.
Corcentric has funded its capital requirements since inception
primarily through equity financings, credit facilities, and cash flows from operations. Corcentric’s managed accounts receivable solution is a key driver of its future growth. This solution may require substantial amounts of working capital as
new customers are onboarded. In addition to the capital requirements from growing Corcentric’s managed accounts receivable solution, Corcentric intends to continue to make investments to support its business, which may require it to engage in
equity or debt financings in addition to the funds it receives in connection with the Business Combination and the PIPE Financing to secure additional funds. However, additional financing may not be available on terms favorable to Corcentric, if
at all.
If Corcentric’s lenders reduce or terminate its access to amounts under
its credit facilities, Corcentric may not have sufficient capital to fund its working capital and other needs, and it may need to secure additional capital or financing to fund its operations or to repay outstanding debt under its credit
facilities. Corcentric cannot provide assurance that it will be successful in ensuring the availability of amounts under its credit facilities or in raising additional capital, or that any amount, if raised, will be sufficient to meet its cash
needs or will be on terms as favorable as those which have been available to it historically. If Corcentric is not able to raise additional capital when needed or if adequate funds are not available on acceptable terms, Corcentric may be unable
to invest in future growth opportunities, which could harm its business, operating results and financial condition. In addition, a recession, depression, an increase in interest rates or other sustained adverse market event could materially and
adversely affect Corcentric’s business.
Corcentric’s business depends, in part, on
Corcentric’s relationships with third parties, including partnerships with financial institutions, third party service providers, processing providers and other financial services suppliers. If any of Corcentric’s agreements with such financial
institutions, third party service providers, processing providers, or financial services providers are terminated, Corcentric could experience service interruptions.
Corcentric’s business requires Corcentric to enter into contracts and
relationships with a number of third parties, including financial institutions, processors, other financial services suppliers, technology and cloud-based hosting providers, and others. To grow its business, Corcentric will seek to expand its
relationships with its financial institution partners, processors and other financial services suppliers, and to partner with additional banks and financial institutions, processors, financial services providers and suppliers. These partners and
suppliers have contractual and regulatory requirements and conditions that Corcentric must satisfy and continue to comply with in order to continue and grow the relationships. For example, Corcentric’s financial institution partners, processors
and financial services suppliers may require Corcentric to submit to an exhaustive security audit, given the sensitivity and importance of storing their customer billing and payment data on Corcentric’s platform.
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Corcentric also provides print and mail services as part of its
billing and invoicing solutions and depends on postage and delivery through the respective countries postal service. Postage and delivery is a significant cost incurred in connection with Corcentric’s print and mail billing and invoicing
solutions. As a result of this dependence, Corcentric may be subject to shipping delays or disruptions caused by inclement weather, natural disasters, system interruptions and technology failures, labor activism, health epidemics, government
shutdowns or bioterrorism.
Corcentric also depends on banks to process transactions, including
Automated Clearing House (“ACH”) and network branded third party payment card transactions, for its customers. Corcentric has entered into agreements with banks for payment processing and related services. These agreements include significant
security, compliance, and operational obligations. If Corcentric is not able to comply with those obligations or Corcentric’s agreements with the processing banks or its credit card transaction processor are terminated for any reason, Corcentric
could experience service interruptions as well as delays and additional expenses in arranging new services, potentially interfering with Corcentric's existing customer relationships or making Corcentric less attractive to potential new customers.
If Corcentric is unsuccessful in establishing, growing, or maintaining
its relationships with partners, Corcentric’s ability to compete in the marketplace or to grow its revenue could be impaired, and Corcentric’s results of operations may suffer. Even if Corcentric is successful in its strategic relationships,
Corcentric cannot assure you that these relationships will result in increased customer usage of its platform or increased revenues.
The 2022 Russian invasion of Ukraine has
affected and may continue to affect Corcentric's business operations.
In February 2022, Russian military forces invaded Ukraine. As a
result of this war, some of the third-party contractors that Corcentric engages in Ukraine have been forced to relocate to other countries and within Ukraine, which has led to difficulties and delays in performing their work duties.
Corcentric's contractors in Ukraine primarily assist in the development of product enhancements for one of Corcentric's software solutions, and assist in providing certain related customer support services.
The conflict in Ukraine and relocation of third-party contractors
has and may continue to disrupt and delay work done by Corcentric's contractors in Ukraine. Corcentric is implementing business continuity plans, including reallocating work to contractors in other geographies within its global footprint.
However, such contractors may not be as familiar with Corcentric's software solution, which could delay Corcentric's ability to enhance its software or provide customer support. Such delays could increase Corcentric's costs, harm its
relationships with customers and adversely affect its business operations.
Corcentric has no way to predict the progress or outcome of the
military action in Ukraine or its impacts in the region as the conflict and government reactions are rapidly developing and beyond Corcentric’s control.
Acquisitions, strategic investments,
partnerships, collaborations or alliances could be difficult to identify and integrate, divert the attention of management, disrupt Corcentric’s business, dilute New Corcentric stockholder value, and adversely affect Corcentric’s operating
results and financial condition.
Corcentric has in the past acquired and may in the future seek to
acquire or invest in businesses, products or technologies that it believes could complement or expand its business, enhance its technical capabilities or otherwise offer growth opportunities. Acquisitions may disrupt Corcentric’s business, divert
its resources and require significant management attention that would otherwise be available for development of its existing business.
Corcentric may incur various expenses in identifying, investigating,
and pursuing suitable acquisitions, whether or not such acquisitions are completed. In addition, Corcentric may not successfully identify desirable acquisition targets, or if it acquires additional businesses, it may not be able to integrate them
effectively following the acquisition or effectively manage the combined business following the acquisition. Acquisitions could also result in dilutive issuances of equity securities or the incurrence of debt, as well as unfavorable accounting
treatment and exposure to claims and disputes by third parties, including intellectual property claims. A significant portion of the purchase price of companies Corcentric acquires may be allocated to acquired goodwill and other intangible
assets. If Corcentric’s acquisitions do not yield expected returns, Corcentric may be required to take charges to its operating results based on the annual or interim impairment assessment process for
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goodwill and intangible assets, which could adversely affect Corcentric’s results of
operations. Corcentric also may not generate sufficient financial returns to offset the costs and expenses related to any acquisitions. In addition, if an acquired business fails to meet Corcentric’s expectations, its business, operating results
and financial condition may suffer.
Any of the foregoing obstacles, or a combination of them, could
decrease operating margins and increase selling, general and administrative expenses in absolute terms and/or as a percentage of net sales, which could in turn negatively impact Corcentric’s financial condition and results of operations. In
addition, future acquisitions are accompanied by the risk that the obligations and liabilities of an acquired company may not be adequately reflected in the historical financial statements of that company and the risk that those historical
financial statements may be based on assumptions which are incorrect or inconsistent with Corcentric’s assumptions or approach to accounting policies. Any of these material obligations, liabilities or incorrect or inconsistent assumptions could
adversely impact Corcentric’s business, financial condition and results of operations.
If Corcentric fails to manage its growth
effectively, Corcentric may be unable to execute on its plans and strategies, maintain and grow customer adoption and use of its products and services, or adequately address competitive challenges.
Corcentric has experienced growth in its business, headcount and
operations in recent years. Corcentric anticipates that it will continue to expand its operations and headcount in the near future. This growth has placed, and future growth will place, a significant strain and demands on Corcentric’s management
and administrative, operational and financial infrastructure. Corcentric’s success will depend in part on its ability to manage this growth effectively. Although Corcentric’s business has experienced significant growth, it cannot provide any
assurance that its business will continue to grow at the same rate or at all. As Corcentric continues to grow, it must effectively integrate, develop and motivate a large number of new employees, while maintaining the effectiveness of its
business execution and the beneficial aspects of its corporate culture. In particular, Corcentric intends to continue to make directed and substantial investments to expand its research and development, sales and marketing, and general and
administrative organizations.
To effectively manage growth, Corcentric must continue to improve its
operational, financial and management controls, and its reporting systems and procedures by, among other things:
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improving Corcentric’s key business applications, processes and IT infrastructure to support its business needs;
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enhancing information and communication systems to ensure that Corcentric’s employees and offices are well-coordinated and can
effectively communicate with each other and Corcentric’s growing base of customers and partners;
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enhancing Corcentric’s internal controls to ensure timely and accurate reporting of all of its operations and financial results
and the added complexities of public company reporting; and
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appropriately documenting Corcentric’s IT systems and its business processes.
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The systems enhancements and improvements necessary to support
Corcentric’s business as it continues to scale will require significant capital expenditures and allocation of valuable management and employee resources. If Corcentric fails to implement these improvements effectively, its ability to manage its
expected growth, ensure uninterrupted operation of its platform and comply with the rules and regulations that are applicable to public reporting companies will be impaired. Additionally, failure to effectively manage growth could result in
difficulty or delays in increasing Corcentric’s customer base, increasing use by Corcentric’s customers of Corcentric’s products and services, declines in quality or customer satisfaction, increases in costs, difficulties in introducing new
features and/or other operational difficulties, any of which could adversely affect Corcentric’s business performance and results of operations.
Corcentric’s ability to recruit, retain and
develop qualified personnel is critical to its success and growth. If Corcentric is not able to effectively grow its sales and marketing organization, or grow an effective network of channel partners, Corcentric may be unable to increase its
share of the existing markets or expand into new markets, which would inhibit its ability to grow and increase its profitability.
Corcentric’s future growth and profitability depend, in part, on its
success in recruiting, retaining and developing sales professionals who can provide the necessary expertise across a broad spectrum of sales and marketing needs. The market for qualified sales and marketing personnel is competitive and
Corcentric may not
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succeed in recruiting additional personnel. Corcentric’s hires may not become as
productive as quickly as Corcentric expects, and Corcentric may be unable to hire or retain a sufficient number of qualified individuals. If Corcentric is unable to grow its sales and marketing organization, it may not be able to increase its
revenue, which could adversely affect its business, financial condition and rate of growth.
In addition to its direct sales force, Corcentric’s future growth
relies on developing an effective network of channel partners as an indirect sales channel. Corcentric’s ability to support and grow its business will depend in part on its success in building and maintaining successful relationships with its
channel partners and training them to sell Corcentric’s product offerings. If Corcentric fails to develop or maintain these relationships, the growth of its business may be adversely affected. In addition, Corcentric’s channel partners may not
successfully market and sell its products and may not devote sufficient time and resources to enable its product offerings to develop, achieve or sustain market acceptance. Any of these factors could impair Corcentric’s future growth and
profitability.
If Corcentric fails to offer high-quality
customer support, or if its support is more expensive than anticipated, its business and reputation could suffer.
Corcentric’s customers rely on its customer support services, which it
refers to as customer success, to resolve issues and realize the full benefits provided by its platform. High-quality support is also important for the renewal and expansion of Corcentric’s subscriptions with existing customers. Corcentric
primarily provides customer support over chat and email, with limited phone-based support. If Corcentric does not help its customers quickly resolve issues and provide effective ongoing support, or if its support personnel or methods of providing
support are insufficient to meet the needs of its customers, its ability to retain customers, increase adoption by its existing customers and acquire new customers could suffer, and its reputation with existing or potential customers could be
harmed. If Corcentric is not able to meet the customer support needs of its customers by chat and email during the hours that it currently provides support, it may need to increase its support coverage and provide additional phone-based support,
which may reduce its profitability.
Corcentric’s private commerce network solutions
strategy is in part dependent upon its ability to provide value to both buyers and suppliers within the network. Failure to do so could have a material adverse effect on Corcentric’s business and results of operations.
Buyers receive value from Corcentric’s solution by purchasing goods and
services at prices that are below what they could negotiate individually. Corcentric receives fees from its suppliers that are based on the total volume purchased by its buyers through its solution. In order to maintain and develop new
relationships with buyers in its private commerce network solutions, Corcentric looks for ways to reduce the prices that they pay for products and services. However, success in serving such purchasers by reducing the prices they pay suppliers for
products and services reduces the fees that Corcentric receives for processing such transactions. Moreover, since Corcentric’s fees are often based upon the percentage of dollar volume processed through its solution, Corcentric is exposed to
commodity price changes. For example, if the price of tires declines, then the amount that Corcentric earns on a fixed number of tire purchases would correspondingly decline.
In order to maintain or increase Corcentric’s revenues and margins
while implementing these strategies, Corcentric would have to increase sales volumes of existing products and services or introduce and sell new products and services in amounts sufficient to compensate for the reduced revenue effect of price
reductions. If Corcentric’s competitors in these lines of business similarly reduce or obtain lower prices for their private commerce network purchasers, it may face further challenges. A failure to successfully implement Corcentric’s price
reduction strategy could have a material adverse effect on its business, financial condition and results of operations.
Suppliers participate in Corcentric’s private commerce network
solutions by offering discounts on aggregated purchases. However, suppliers also sell directly to customers outside of Corcentric’s private commerce network solutions program, typically at higher prices. Thus, Corcentric’s suppliers have an
incentive to limit sales through its private commerce network solutions program if they can make the same sales outside of its program at higher prices.
In some cases, suppliers must approve each customer before it is
allowed to participate in Corcentric’s private commerce network solutions program. Similarly, some suppliers impose size limitations on which customers may participate in Corcentric’s private commerce network solutions program. If suppliers do
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authorize new customers to participate in Corcentric’s private commerce network
program, or increase the requirements under which new customers may join, Corcentric’s business and operating results may be harmed.
Corcentric relies on fees and rebates that it
receives from its private commerce network solutions suppliers. The failure to maintain contracts with these private commerce network solutions suppliers could adversely affect Corcentric’s business, financial condition and results of operations.
Corcentric relies heavily on its relationships with its private
commerce network solutions suppliers, which provide products and services to Corcentric’s private commerce network solutions purchasers at reduced prices. These suppliers pay Corcentric rebates calculated either as a percentage of the transaction
value under specific preferred private commerce network programs or as a pre-determined fee per transaction or item. Supplier commitment to Corcentric’s private commerce network solutions has been, and will continue to be, a crucial element of
Corcentric’s business model. There can be no assurances that Corcentric’s relationships with its suppliers will continue on existing terms or at all. A termination of any relationship or agreement with a supplier would result in the loss of fees
and rebates pursuant to Corcentric’s arrangement with that supplier, which could adversely affect Corcentric’s business, financial condition and results of operations. Moreover, since some suppliers pay Corcentric rebates calculated as a
percentage of the transaction value, Corcentric is exposed to commodity price changes.
If Corcentric cannot demonstrate to its private commerce network
solutions suppliers the ability to increase their market share or access to purchasers through Corcentric’s private commerce network solutions or other products and services, Corcentric may lose negotiating leverage with its contracted suppliers
which may result in its inability to maintain its agreements with purchasers or win new business. In addition, if Corcentric loses a relationship with a supplier, it may not be able to negotiate similar arrangements for its private commerce
network solutions purchasers with other suppliers on the same terms and conditions or at all, which could damage Corcentric’s reputation with its private commerce network purchasers and, in turn, have a material adverse effect on Corcentric’s
business, financial condition and results of operations.
If Corcentric fails to maintain and enhance its
brand, its ability to expand its customer base will be impaired and its business, operating results and financial condition may suffer.
Corcentric believes that developing and maintaining widespread
awareness of its brand in a cost-effective manner is critical to achieving widespread acceptance of its products and attracting new customers. Successfully maintaining and enhancing Corcentric’s brand will depend largely on the effectiveness of
its marketing and demand generation efforts, its ability to provide reliable products that continue to meet the needs of its customers at competitive prices, its ability to maintain its customers’ trust, its ability to continue to develop new
functionality and products, and its ability to successfully differentiate its platform and products from competitive products and services. Corcentric’s brand promotion activities may not generate customer awareness or yield increased revenue,
and even if they do, any increased revenue may not offset the expenses Corcentric incurs in building its brand. If Corcentric fails to successfully promote and maintain its brand, its business could suffer.
Corcentric’s estimates of market opportunity and
forecasts of market growth may prove to be inaccurate, and even if the market in which Corcentric competes achieves the forecasted growth, Corcentric’s business could fail to grow at similar rates, if at all.
Market opportunity estimates and growth forecasts, including those
Corcentric has generated itself, are subject to significant uncertainty and are based on assumptions and estimates that may not prove to be accurate. The variables that go into the calculation of Corcentric’s market opportunity are subject to
change over time, and there is no guarantee that any particular number or percentage of companies covered by its market opportunity estimates will purchase Corcentric’s products at all or generate any particular level of revenue for Corcentric.
Any expansion in Corcentric’s market depends on a number of factors, including the cost, performance, and perceived value associated with its platform and products and those of its competitors. Even if the market in which Corcentric competes
meets the size estimates and growth forecasted, Corcentric’s business could fail to grow at similar rates, if at all. Corcentric’s growth is subject to many factors, including its success in implementing its growth strategies, which are subject
to many risks and uncertainties. Accordingly, Corcentric’s forecasts of market growth should not be taken as indicative of its future growth.
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Corcentric will incur increased costs as a
result of operating as a public company, and its management will be required to devote substantial time to comply with its public company responsibilities and corporate governance practices.
If Corcentric completes the Business Combination and becomes a public
company, Corcentric will incur significant legal, accounting and other expenses. For example, Corcentric will be subject to the reporting requirements of the Exchange Act and will be required to comply with the applicable requirements of the
Sarbanes-Oxley Act of 2002 (“Sarbanes-Oxley Act”) and the Dodd-Frank Wall Street Reform and Consumer Protection Act of 2010 (“Dodd-Frank Act”), as well as rules and regulations subsequently implemented by the SEC and the listing requirements of
Nasdaq, and other applicable securities rules and regulations, which impose various requirements on public companies, including the establishment and maintenance of effective disclosure and financial controls and changes in corporate governance
practices. Compliance with these requirements will increase Corcentric’s legal, financial compliance and insurance costs and will make some activities more time consuming and costly. In addition, Corcentric’s management and other personnel will
divert attention from operational and other business matters to devote substantial time to these public company requirements. Corcentric cannot predict or estimate the amount of additional costs it may incur as a result of being a public company.
In addition, changing laws, regulations, and standards relating to
corporate governance and public disclosure are creating uncertainty for public companies, increasing legal and financial compliance costs, and making some activities more time consuming. These laws, regulations, and standards are subject to
varying interpretations and may evolve over time as new guidance is provided by regulatory and governing bodies. This could result in continuing uncertainty regarding compliance matters and higher costs necessitated by ongoing revisions to
disclosure and governance practices. Corcentric intends to invest resources to comply with evolving laws, regulations, and standards, and this investment may result in increased general and administrative expenses and a diversion of management’s
time and attention from revenue-generating activities to compliance activities. If Corcentric’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 their application and practice, regulatory authorities may initiate legal proceedings against Corcentric and its business may be adversely affected.
The rules and regulations applicable to public companies make it
more expensive for Corcentric to obtain and maintain director and officer liability insurance, and Corcentric may be required to accept reduced coverage. Corcentric will incur substantially higher costs to obtain coverage. These factors could
also make it more difficult for Corcentric to attract and retain qualified members of its board of directors, particularly to serve on Corcentric’s audit committee and compensation committee, and qualified executive officers.
Financial projections relating to New
Corcentric after the Business Combination may not be achieved.
In connection with the Business Combination, Corcentric prepared and
considered, among other things, internal financial forecasts and analyses for New Corcentric. These financial projections include assumptions regarding the volume of transactions on the Corcentric platform, the number of new customers added,
revenue growth and profitability assumptions from recent acquisitions, future operating costs and other assumptions regarding future performance. These financial projections were not prepared with a view to public disclosure, are subject to
significant economic, competitive, industry, regulatory and other uncertainties and may not be achieved in full, at all, or within projected timeframes. The failure of New Corcentric to achieve the projected results could have a material adverse
effect on the price of shares of New Corcentric Common Stock. Due to a variety of factors, including following the announcement of the Business Combination changes in market conditions and the effects of COVID-19, the financial projections
prepared in connection with the Business Combination may not reflect Corcentric’s management’s best expectations of Corcentric’s future financial performance as of the closing of the Business Combination.
Corcentric’s quarterly results may fluctuate
significantly and may not fully reflect the underlying performance of Corcentric’s business.
Corcentric’s results of operations and key metrics discussed elsewhere
in this proxy statement/prospectus, Monetized Transaction Volume and Dollar Based Net Revenue Retention, may vary significantly in the future and period-to-period comparisons of Corcentric’s operating results and key metrics may not provide a
full picture of Corcentric’s performance. Accordingly, the results of any one quarter or year should not be relied upon as an
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indication of future performance. Corcentric’s quarterly financial results and metrics
may fluctuate as a result of a variety of factors, many of which are outside of Corcentric’s control, as a result they may not fully reflect the underlying performance of Corcentric’s business. These quarterly fluctuations may negatively affect
the value of New Corcentric Common Stock. Factors that may cause these fluctuations include, without limitation:
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Corcentric’s ability to attract new customers;
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the addition or loss of one or more of Corcentric’s larger customers, including as the result of acquisitions or consolidations;
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the timing of recognition of revenues, including a significant portion of Corcentric’s revenues that are transaction-based and
highly recurring in nature and vary based on the number of invoices processed, payments made and payment volume;
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the amount and timing of operating expenses;
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general economic, industry and market conditions, both domestically and internationally, including any economic downturns and
adverse impacts resulting from the COVID-19 pandemic;
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the timing of Corcentric’s billing and collections;
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customer renewal, expansion, and adoption rates;
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security breaches or, technical difficulties with, or interruptions to the delivery and use of Corcentric’s products and services
on its platform;
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the amount and timing of completion of professional services engagements;
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increases or decreases in the number of users for Corcentric’s products, services and platform, or pricing changes upon any
renewals of customer agreements;
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changes in Corcentric’s pricing policies or those of its competitors;
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the timing and success of new product introductions by Corcentric or its competitors or any other change in the competitive
dynamics of Corcentric’s industry, including consolidation among competitors, customers or partners;
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extraordinary expenses such as litigation or other dispute-related expenses or settlement payments;
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sales tax and other tax determinations by authorities in the jurisdictions in which Corcentric conducts business;
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the impact of new accounting pronouncements and the adoption thereof;
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fluctuations in stock-based compensation expense;
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expenses in connection with mergers, acquisitions or other strategic transactions;
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the amount and timing of expenses related to Corcentric’s expansion to markets outside the United States; and
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the timing of expenses related to the development or acquisition of technologies or businesses and potential future charges for
impairment of goodwill or intangibles from acquired companies.
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Further, in future periods, Corcentric’s revenue growth could slow or
Corcentric’s revenues could decline for a number of reasons, including slowing demand for Corcentric’s products and services, increasing competition, a decrease in the growth of Corcentric’s overall market, or Corcentric’s failure, for any
reason, to continue to capitalize on growth opportunities. In addition, Corcentric’s growth rate may slow in the future as its market penetration rates increase. As a result, Corcentric’s revenues, operating results and cash flows may fluctuate
significantly on a quarterly basis and revenue growth rates may not be sustainable and may decline in the future, and Corcentric may not be able to achieve or sustain profitability in future periods, which could harm its business and cause the
market price of New Corcentric Common Stock to decline.
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Certain end markets that Corcentric serves are
cyclical, which can cause significant fluctuations in Corcentric’s results of operations and cash flows.
The cyclical nature of the supply and demand balance of certain end
markets that Corcentric serves, such as transportation, poses risks to Corcentric that are beyond its control and can affect its operating results. These markets are highly competitive; are driven to a large extent by end-use markets; and may
experience overcapacity, all of which may affect demand for and pricing of Corcentric’s products and solutions, and may result in volatile operating results and cash flows over Corcentric’s business cycle. Corcentric’s operations and earnings may
also be significantly affected by changes in economic activity, which depend on local, regional and global events and conditions. Additionally, the cyclical nature of these end markets could be further exaggerated or interrupted by the effects of
the COVID-19 pandemic, which in turn could significantly affect demand for Corcentric’s products and solutions.
Because Corcentric’s platform is sold to
businesses with complex operating environments, Corcentric may encounter long and unpredictable sales cycles, which could adversely affect its operating results in a given period.
Corcentric’s ability to increase revenues and achieve profitability
depends, in large part, on its ability to continue to attract mid-market and large enterprises to its platform and grow this segment of its customer base. Corcentric expects to continue to focus most of its sales efforts on these customers in the
near future. Accordingly, Corcentric will continue to face greater costs, longer sales cycles and less predictability in completing some of its sales, than would be expected from selling to a predominantly small business target customer base. A
delay in or failure to close a large sale to one or more prospective new customers could cause harm to Corcentric’s business and financial results and cause its financial results to vary significantly from period to period.
Corcentric’s typical sales cycle ranges from three to nine months. The
wide range reflects that a number of timing factors can vary significantly between prospective customers, many of which Corcentric cannot control, including:
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customers’ budgetary constraints and priorities;
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the timing of customers’ budget cycles;
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the need by some customers for lengthy evaluations; and
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the length and timing of customers’ approval processes.
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In addition, as a result of the recent COVID-19 pandemic, many
enterprises have limited travel and in person meetings and implemented other restrictions that could make the sales process more lengthy and difficult.
Mid-market and large enterprises tend to have more complex operating
environments than smaller businesses, making it often more difficult and time-consuming for Corcentric to demonstrate the value of its platform to these prospective customers. The customer’s decision to use Corcentric’s platform may also be an
enterprise-wide decision, and these types of sales require Corcentric to provide greater levels of education regarding the use and benefits of its platform, which causes Corcentric to expend substantial time, effort and money educating the
prospective customer as to the value of its platform. In addition, Corcentric has no assurance that a prospective customer will ultimately purchase any services from it at all, regardless of the amount of time or resources Corcentric has spent on
the opportunity. For example, Corcentric’s target customer may decide in the end to purchase software from one of its larger, more established competitors because they are unsure about moving forward with a newer and less well-known brand such as
Corcentric’s. As a result of the variability and length of the sales cycle, Corcentric has only a limited ability to forecast the timing of sales, and its results of operations may differ from expectations.
Corcentric buys and sells commercial trucks and
trailers, and there is no guarantee that Corcentric’s activities will be profitable.
While Corcentric typically acts as a broker for sellers of capital
equipment, in certain circumstances, Corcentric may purchase the asset outright from a customer, make necessary repairs or improvements and subsequently sell the asset. As such, Corcentric is exposed to price movements in the market for
commercial trucks and trailers. Moreover, Corcentric may have to spend money to repair or improve the asset, and there is
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no guarantee that it can recover such investments upon resale or earn a profit on its
activities. While Corcentric has not generally carried more than $6,500,000 of assets held for sale at a given time during prior years (with an average monthly carrying value of approximately $2,500,000 during the last three fiscal years) nor
held assets in inventory for longer than 120 days, if there is a downturn in the market for capital equipment, particularly commercial trucks and trailers, or if Corcentric makes an unusually large purchase of assets which it is unable to sell
quickly, Corcentric may be forced to hold its assets longer than anticipated or sell such assets at a loss.
Corcentric facilitates the transfer of customer
funds daily, and is subject to the risk of errors, which could result in financial losses, damage to its reputation, or loss of trust in its brand, which would harm its business and financial results.
For the year ended December 31, 2021, Corcentric processed
approximately $2.8 billion in payments on its platform, compared to $1.9 billion in calendar year 2020. Corcentric has grown and seeks to continue to grow, and although it maintains a multi-faceted risk management process, Corcentric’s business
is always subject to the risk of financial losses as a result of credit losses, fraud, operational errors, software defects, service disruption, employee misconduct, security breaches, or other similar actions or errors. As a provider of
invoicing, billing, cash cycle management, and payment solutions, Corcentric collects and facilitates the transfers of funds on behalf of its customers that are subject to losses, disruptions, and errors.
Moreover, Corcentric’s trustworthiness and reputation are fundamental
to its business. As a provider of cloudbased software for complex financial operations, the occurrence of any credit losses, operational errors, software defects, service disruption, employee misconduct, security breaches, or other similar
actions or errors on Corcentric’s platform could result in financial losses to Corcentric’s business and its customers, loss of trust, damage to its reputation, or termination of its agreements with customers or partners, each of which could
result in:
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loss of customers;
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lost or delayed market acceptance and sales of Corcentric’s products and services and decreased use of Corcentric’s platform;
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legal claims against Corcentric, including warranty and service level agreement claims;
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regulatory enforcement action;
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diversion of Corcentric’s resources; and
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increased insurance costs.
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Although Corcentric maintains insurance to cover losses resulting from
Corcentric’s errors and omissions, there can be no assurance that Corcentric’s insurance will cover all losses or Corcentric’s coverage will be sufficient to cover Corcentric’s losses. If Corcentric suffers significant losses or reputational harm
as a result, Corcentric’s business, operating results and financial condition could be adversely affected.
If Corcentric’s security measures are breached or
unauthorized access to customer data is otherwise obtained, Corcentric’s platform or products may be perceived as not being secure, customers may reduce the use of or stop using Corcentric’s products and platform and Corcentric may incur
significant liabilities.
Corcentric, its customers, its partners and third-party vendors and
data centers that Corcentric uses obtain and process large amounts of sensitive data, including data related to Corcentric’s customers and their transactions, as well as other data of the customers of Corcentric’s customers related to their
spending, payments, invoices, billing, and transactions. Corcentric faces risks, including to its reputation as a trusted brand, in the handling and protection of this data, and these risks will increase as Corcentric’s business continues to
expand to include new products and technologies.
Cybersecurity incidents and malicious internet-based activity continue
to increase generally, and providers of cloud-based services have frequently been targeted by such attacks. These cybersecurity challenges, including threats to Corcentric’s own information technology infrastructure or those of Corcentric’s
customers or third-party providers, may take a variety of forms ranging from stolen bank accounts, business email compromise, customer or employee fraud, account takeover, check fraud or cybersecurity attacks, which could be initiated by
individual
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or groups of hackers or sophisticated cyber criminals. A cybersecurity incident or
breach could result in disclosure of confidential information and intellectual property, or cause production downtimes and compromised data. Corcentric may be unable to anticipate or prevent techniques used in the future to obtain unauthorized
access or to sabotage systems because they change frequently and often are not detected until after an incident has occurred. As Corcentric increases its customer base and its brand becomes more widely known and recognized, third parties may
increasingly seek to compromise Corcentric’s security controls or gain unauthorized access to its customers’ data or its sensitive corporate information.
Corcentric has administrative, technical, and physical security
measures in place, and it has policies and procedures in place to contractually require service providers to whom Corcentric discloses data or who access data from Corcentric or its partners to implement and maintain reasonable privacy, data
protection, and information security measures. However, if Corcentric’s privacy protection, data protection, or information security measures or those of the previously mentioned third parties are inadequate or are breached as a result of
third-party action, employee or contractor error, malfeasance, malware, phishing, hacking attacks, system error, software bugs or defects in Corcentric’s products, trickery, process failure or otherwise, and, as a result, there is improper
disclosure of, or someone obtains unauthorized access to or exfiltrates funds or sensitive information, including personally identifiable information, on Corcentric’s systems, its service providers’ systems or its partners’ systems, or if
Corcentric suffers a ransomware or advanced persistent threat attack, or if any of the foregoing is reported or perceived to have occurred, Corcentric’s reputation and business could be damaged. Recent high-profile security breaches and related
disclosures of sensitive data by large institutions suggest that the risk of such events is significant, even if privacy, data protection, and information security measures are implemented and enforced. If Corcentric experiences security breaches
and sensitive information is lost or improperly disclosed or threatened to be disclosed, Corcentric could incur production downtime and significant costs associated with remediation and the implementation of additional security measures, may
incur significant liability and financial loss, and be subject to regulatory scrutiny, investigations, proceedings, lawsuits and penalties.
Under Corcentric’s terms of service and Corcentric’s contracts with
customers and partners, if there is a breach of sensitive data that Corcentric stores, Corcentric could be liable to the customer or partner for their losses and related expenses. Additionally, if Corcentric’s own confidential business
information were improperly disclosed, its business could be materially and adversely affected. A core aspect of Corcentric’s business is the reliability and security of its platform. Any perceived or actual breach of security, regardless of how
it occurs or the extent of the breach, could have a significant impact on Corcentric’s reputation as a trusted brand, cause it to lose existing customers or partners, prevent it from obtaining new customers or partners, require it to expend
significant funds to remedy problems caused by breaches and implement measures to prevent further breaches, such as forensics and fraud monitoring, cause production downtimes, and expose it to legal risk and potential liability including those
resulting from governmental or regulatory investigations and class action litigation. Any actual or perceived security breach at a company providing services to Corcentric or its customers could have similar effects. Further, as the current
COVID-19 pandemic continues to result in a significant number of people working from home, these cybersecurity risks may be heightened by an increased attack surface across Corcentric’s business and those of Corcentric’s partners and service
providers. Corcentric has heightened monitoring in the face of such risks, but cannot guarantee that its efforts, or the efforts of those upon whom Corcentric relies and partners with, will be successful in preventing any such information
security incidents.
Corcentric cannot assure that any limitations of liability provisions
in its contracts would be enforceable or adequate or would otherwise protect it from any liabilities or damages with respect to any particular claim relating to a security lapse or breach. While Corcentric maintains cybersecurity insurance, its
insurance may be insufficient or may not cover all liabilities incurred by such attacks. Corcentric also cannot be certain that its insurance coverage will be adequate for data handling or data security liabilities actually incurred, that
insurance will continue to be available to Corcentric on economically reasonable terms, or at all, or that any insurer will not deny coverage as to any future claim. The successful assertion of one or more large claims against Corcentric that
exceeds available insurance coverage, or the occurrence of changes in Corcentric’s insurance policies, including premium increases or the imposition of large deductible or co-insurance requirements, could have a material adverse effect on
Corcentric’s business, including its financial condition, operating results and reputation.
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Corcentric’s risk management efforts may not be
effective to prevent fraudulent activities by its customers, employees or other third parties, which could expose Corcentric to material financial losses and liability and otherwise harm its business.
Corcentric offers cloud based billing, invoicing and payment
facilitation solutions for a large number of customers. Corcentric is responsible for verifying the identity of its customers and their users, and monitoring certain transactions for fraud. Corcentric may be targeted by parties who seek to commit
acts of financial fraud using techniques such as stolen identities and bank accounts, compromised business email accounts, employee or insider fraud, account takeover, false applications, and check fraud. Corcentric may suffer losses from acts of
financial fraud committed by its customers and their users, Corcentric’s employees or third parties.
The techniques used to perpetrate fraud are continually evolving and
Corcentric may not be able to identify all risks created by new products or functionality. Corcentric’s risk management policies, procedures, techniques, and processes may not be sufficient to identify all of the risks to which it is exposed, to
enable it to prevent or mitigate the risks it has identified, or to identify additional risks to which it may become subject in the future. Furthermore, Corcentric’s risk management policies, procedures, techniques, and processes may contain
errors or Corcentric’s employees or agents may commit mistakes or errors in judgment as a result of which Corcentric may suffer large financial losses. The software-driven and highly automated nature of Corcentric’s solutions could enable
criminals and those committing fraud to steal significant amounts of money accessing Corcentric’s platform. As greater numbers of customers use Corcentric’s platform, its exposure to material risk losses from a single customer, or from a small
number of customers, will increase.
Corcentric’s current business and anticipated growth will continue to
place significant demands on Corcentric’s risk management efforts, and it will need to continue developing and improving its existing risk management infrastructure, policies, procedures, techniques, and processes. As techniques used to
perpetrate fraud on Corcentric’s platform evolve, Corcentric may need to modify its products or services to mitigate fraud risks. As Corcentric’s business grows and becomes more complex, Corcentric may be less able to forecast and less able to
manage fraud related risks. Further, these types of fraudulent activities on Corcentric’s platform can also expose Corcentric to civil and criminal liability, governmental and regulatory sanctions as well as potentially cause Corcentric to be in
breach of its contractual obligations to its customers and partners.
Interruptions or delays in the services provided
by third-party data centers or internet service providers could impair the delivery of Corcentric’s platform, and Corcentric’s business could suffer.
Corcentric hosts its platform using third-party cloud infrastructure
services. Corcentric also uses public cloud hosting primarily with Amazon Web Services (“AWS”). All of Corcentric’s products utilize resources operated by it through these providers. Corcentric therefore depends on its third-party cloud
providers' ability to protect their data centers against damage or interruption from natural disasters, power or telecommunications failures, criminal acts, and similar events. Corcentric’s operations depend on protecting the cloud infrastructure
hosted by such providers by maintaining their respective configuration, architecture, and interconnection specifications, as well as the information stored in these virtual data centers and transmitted by third-party internet service providers.
Corcentric has periodically experienced service disruptions in the past, and it cannot assure you that it will not experience interruptions or delays in its services in the future. Corcentric may also incur significant costs for using alternative
equipment or taking other actions in preparation for, or in reaction to, events that damage the data storage services it uses. Although Corcentric has disaster recovery plans that utilize various data storage locations, any incident affecting
Corcentric’s data storage or internet service providers’ infrastructure that may be caused by fire, flood, severe storm, earthquake, power loss, telecommunications failures, unauthorized intrusion, computer viruses and disabling devices, natural
disasters, military actions, terrorist attacks, negligence, and other similar events beyond Corcentric’s control could negatively affect its platform. Any prolonged service disruption affecting Corcentric’s platform for any of the foregoing
reasons could damage its reputation with current and potential customers, expose it to liability, cause it to lose customers, or otherwise harm its business. Also, in the event of damage or interruption, Corcentric’s insurance policies may not
adequately compensate it for any losses that it may incur. System failures or outages, including any potential disruptions due to significantly increased global demand on certain cloud-based systems during the COVID-19 pandemic, could compromise
Corcentric’s ability to provide its products and services in a timely manner, which could harm its ability to conduct business or delay its financial reporting. Such failures could adversely affect Corcentric’s operating results and financial
condition.
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Corcentric’s products and platform are accessed by many customers,
often at the same time. As Corcentric continues to expand the number of its customers and products available to its customers, it may not be able to scale its technology to accommodate the increased capacity requirements, which may result in
interruptions or delays in service. In addition, the failure of data centers, internet service providers, or other third-party service providers to meet Corcentric’s capacity requirements could result in interruptions or delays in access to its
platform or impede its ability to grow its business and scale its operations. If Corcentric’s third-party infrastructure service agreements are terminated, or there is a lapse of service, interruption of internet service provider connectivity, or
damage to data centers, Corcentric could experience interruptions in access to its platform as well as delays and additional expense in arranging new facilities and services.
If Corcentric fails to adequately protect its
proprietary rights, its competitive position could be impaired and it may lose valuable assets, generate less revenue and incur costly litigation to protect its rights.
Corcentric’s success and ability to compete depend in part upon its
intellectual property. Corcentric primarily relies on copyright, trade secret and trademark laws, trade secret protection and confidentiality or contractual agreements with its employees, customers, partners and others to protect its intellectual
property rights. However, the steps Corcentric takes to protect its intellectual property rights may be inadequate.
In order to protect its intellectual property rights, Corcentric may be
required to expend significant resources to monitor and protect such rights. Litigation brought to protect and enforce its intellectual property rights could be costly, time-consuming and distracting to management and could result in the
impairment or loss of portions of Corcentric’s intellectual property. Furthermore, Corcentric’s efforts to enforce its intellectual property rights may be met with defenses, counterclaims and countersuits attacking the validity and enforceability
of its intellectual property rights. Corcentric’s failure to secure, protect and enforce its intellectual property rights could seriously adversely affect its brand and its business.
Corcentric may be sued by third parties for
various claims including alleged infringement of its proprietary rights, which could be costly and time-consuming to defend.
Corcentric has in the past and may in the future become subject to
legal proceedings and claims that arise in the ordinary course of business, such as claims brought by its customers in connection with commercial disputes, employment claims made by its current or former employees, and other types of claims.
These may also include claims, suits, and other proceedings involving alleged infringement of third-party patents and other intellectual property rights. Corcentric’s competitors, as well as a number of other entities and individuals, may own or
claim to own intellectual property relating to its industry, and third parties may claim that Corcentric is infringing upon their intellectual property rights.
Corcentric may experience future claims that its platform and
underlying technology infringe or violate others’ intellectual property rights, and it is possible Corcentric may be found to be infringing upon such rights. Corcentric may be unaware of the intellectual property rights that others may claim
cover some or all of its technology, products or services. Any claims or litigation could divert management’s attention and resources, could cause Corcentric to incur significant expenses and, if successfully asserted against it, could require
that Corcentric pay substantial damages or ongoing royalty payments, prevent Corcentric from offering its products or services or require that it comply with other unfavorable terms.
Corcentric may also be obligated to indemnify its customers and
partners or to pay substantial settlement costs, including royalty payments, in connection with any such claim or litigation and to obtain licenses, modify its platform or refund fees, which could be costly. Insurance might not cover such claims,
might not provide sufficient payments to cover all the costs to resolve one or more such claims, and might not continue to be available on terms acceptable to Corcentric. A claim brought against Corcentric that is uninsured or underinsured could
result in unanticipated costs and adversely impact Corcentric’s operating results. Even if Corcentric was to prevail in a dispute, any litigation regarding intellectual property could be costly, distracting and time-consuming and could harm its
brand, business, results of operations and financial condition.
Indemnity and liability provisions in various
agreements potentially expose Corcentric to substantial liability for intellectual property infringement, data protection, and other losses.
Corcentric’s agreements with customers typically includes
indemnification provisions under which Corcentric agrees to indemnify them for losses suffered or incurred as a result of claims of intellectual property infringement, data protection, damages caused by Corcentric to property or persons, or other
liabilities relating to
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or arising from its contractual obligations. Some of Corcentric’s contracts provide for
uncapped liability and some indemnity provisions survive termination or expiration of the applicable agreement. Large indemnity or liability payments could harm Corcentric’s business, operating results and financial condition. Although Corcentric
normally limits its liability with respect to such obligations in its contracts with customers, it may still incur substantial liability, and it may be required to cease use of certain functions of its platform or products, as a result of
intellectual property-related claims. Any dispute with a customer with respect to these obligations could have adverse effects on Corcentric’s relationship with that customer and harm its business and operating results. In addition, although
Corcentric carries insurance, its insurance may not be adequate to protect it from liabilities or damages with respect to claims alleging compromises of customer data, and any such coverage may not continue to be available to Corcentric on
acceptable terms or at all.
Corcentric uses open source software in its
products, and any failure to comply with the terms of one or more of these open source licenses could negatively affect its business or subject it to litigation.
Portions of Corcentric’s platform and products utilize software
governed by open source licenses. From time to time, there have been claims challenging the ownership of open source software against companies that incorporate it into their products. There is a risk that such licenses could be construed in a
manner that imposes unanticipated conditions or restrictions on Corcentric’s ability to market its products or platform. By the terms of certain open source licenses, if Corcentric combines its proprietary software with open source software in a
certain manner, Corcentric could be required to release the source code of its proprietary software and make it available under open source licenses. In the event that portions of Corcentric’s proprietary software are determined to be subject to
an open source license, it could be required to publicly release the affected portions of its source code, or to re-engineer all or a portion of its technologies or otherwise be limited in the licensing of its technologies, each of which could
reduce or eliminate the value of its products, technologies and services.
Corcentric relies on various exemptions from
licensing, and regulators may find that it has violated applicable laws or regulations.
Corcentric is not licensed at the state or federal level as a money
transmitter, and believes that it has valid exemptions from licensure based on its business model. In the past, certain competitors have been found to violate laws and regulations related to money transmission, and they have been subject to fines
and other penalties by regulatory authorities. Regulators and third-party auditors have also identified gaps in how similar businesses have implemented anti-money laundering program. Should any state or federal regulators make a determination
that Corcentric has operated as an unlicensed money services business or money transmitter, Corcentric could be subject to civil and criminal fines, penalties, costs, legal fees, reputational damage or other negative consequences.
The adoption of new money transmitter or money services business
statutes in jurisdictions or changes in regulators’ interpretation of existing state and federal money transmitter or money services business statutes or regulations could subject Corcentric to new registration or licensing requirements. Such
changes could also limit business activities until Corcentric is appropriately licensed. There can be no assurance that Corcentric will be able to obtain or maintain any such licenses, and, even if Corcentric were able to do so, there could be
substantial costs and potential product changes involved in maintaining such licenses, which could have a material and adverse effect on Corcentric’s business.
The regulatory environment Corcentric operates in
is subject to constant change, and new regulations could make aspects of its business as currently conducted no longer possible.
Corcentric is subject to a wide variety of local, state, federal, and
international laws, rules, regulations and industry standards where it operates, which are enforced by multiple authorities and governing bodies in the United States, including the Department of the Treasury, the Federal Deposit Insurance
Corporation, the SEC, self-regulatory organizations, and numerous state and local agencies. The laws, rules, regulations, and standards applicable to Corcentric’s business are subject to changes and evolving interpretations and application,
including by means of legislative changes and/or executive orders, and it can be difficult to predict how they may be applied to Corcentric’s business and the way it conducts its operations, particularly as it introduces new products and services
and expands into new jurisdictions. Corcentric may not be able to respond quickly or effectively to regulatory, legislative, and other developments, and these changes may in turn impair its ability to offer its
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existing or planned features, products, and services and/or increase its cost of doing
business. Corcentric could also be subject to investigations and resulting liability, including governmental fines, restrictions on its business, or other sanctions. Although Corcentric has a compliance program focused on the laws, rules,
regulations and industry standards that it has assessed are applicable to its business, there can be no assurance that its employees or contractors will not violate such laws, rules, regulations, and industry standards. Any failure or perceived
failure to comply with existing or new laws, rules, regulations, industry standards or orders of any governmental authority (including changes to or expansion of the interpretation of those laws, rules, regulations, standards or orders), may:
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subject Corcentric to significant fines, penalties, criminal and civil lawsuits, forfeiture of significant assets, audits,
inquiries, whistleblower complaints, adverse media coverage, investigations, and enforcement actions in one or more jurisdictions levied by federal, state, local or foreign regulators, state attorneys general and private plaintiffs who
may be acting as private attorneys general pursuant to various applicable federal, state, and local laws;
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result in licensure and additional compliance requirements;
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increase regulatory scrutiny of Corcentric’s business; and
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restrict Corcentric’s operations and force it to change its business practices or compliance program, make product or operational
changes, or delay planned product launches or improvements.
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Government agencies may also impose new or additional rules on money
transmission, including regulations that:
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prohibit, restrict, and/or impose taxes or fees on transactions in, to or from certain countries or with certain governments,
individuals, and entities;
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impose additional customer identification and customer due diligence requirements;
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impose additional reporting or recordkeeping requirements, or require enhanced transaction monitoring;
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limit the types of entities capable of providing money transmission services, or impose additional licensing or registration
requirements;
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impose minimum capital or other financial requirements;
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limit or restrict the revenue that may be generated from money transmission, including revenue from interest earned on customer
funds, transaction fees, and revenue derived from foreign exchange;
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require enhanced disclosures to Corcentric’s money transmission customers;
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require the principal amount of money transmission originated in a country to be invested in that country or held in trust until
paid;
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limit the number or principal amount of transactions that may be sent to or from a jurisdiction, whether by an individual or in
the aggregate; and
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restrict or limit Corcentric’s ability to process transactions using centralized databases, for example, by requiring that
transactions be processed using a database maintained in a particular country or region.
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Changing regulatory requirements might render Corcentric’s products and
services obsolete or might block Corcentric from developing new products and services. This might in turn impose additional costs upon Corcentric to comply or to further develop its products and services. In addition, as Corcentric’s business and
products continue to develop and expand, it may become subject to additional laws, rules, regulations, licensing schemes, and standards. Corcentric may not always be able to accurately predict the scope or applicability of certain laws, rules,
regulations, licensing schemes, or standards to its business, particularly as it expands into new areas of operations, which could have a significant negative effect on its existing business and its ability to introduce new products and services
and pursue future plans.
If Corcentric fails to predict how a state, federal or international
regulator might apply a law or regulation potentially applicable to it, Corcentric could be subject to obligations and restrictions with respect to the investment of customer funds, reporting requirements, bonding requirements, minimum capital
requirements, and inspection by state, federal or international regulatory agencies concerning various aspects of its business. This
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could also require changes to the manner in which Corcentric conducts some aspects of
its business and cause Corcentric to be unable to obtain or maintain any such licenses or regulatory approvals. Even if Corcentric were able to do so, there could be substantial costs and potential product changes involved in maintaining such
licenses, which could have a material and adverse effect on its business. In addition, there are substantial costs and potential product changes involved in obtaining and maintaining licenses, certifications, and approvals, and Corcentric could
be subject to fines or other enforcement actions, and cease and desist orders if Corcentric is found to violate antimoney laundering, corporate governance, or license requirements. These factors could impose substantial additional costs, involve
considerable delay to the development or provision of Corcentric’s products or services, require significant and costly operational changes, or prevent Corcentric from providing its products or services in any given market.
Changes to payment card networks fees or rules,
or associated laws or regulations, could harm Corcentric’s business.
Corcentric is required to comply with Visa, Mastercard, American
Express and related payment card network operating rules in connection with its card payments services, and it acts as a Payment Facilitator under the rules of the various payment card networks, including Visa, Mastercard and American Express.
Corcentric has agreed to reimburse its service providers for any fines they are assessed by payment card networks as a result of any rule violations by Corcentric. Corcentric may also be directly liable to the payment card networks for rule
violations. The payment card networks set and interpret the card operating rules. The payment card networks could adopt new operating rules or interpret or reinterpret existing rules that Corcentric or its processors might find difficult or even
impossible to follow, or costly to implement. Corcentric also may seek to introduce other products in the future, which could entail additional operating rules. In addition, Corcentric is subject to compliance with the Payment Card Industry Data
Security Standard, a set of requirements designed to ensure that all companies that process, store, or transmit payment card information maintain a secure environment to protect cardholder data. Corcentric does not directly collect or store
payment card information; instead, it relies on a third-party payment processor to do so.
As a result of any violations of rules, regulations, new rules being
implemented, or increased fees, Corcentric could lose its ability to make payments using cards, or such payments could become prohibitively expensive for Corcentric or for its customers. If Corcentric is unable to facilitate payments using cards,
its business could be adversely affected.
Corcentric is subject to governmental regulations
related to privacy, data protection and information security, and its actual or perceived failure to comply with such obligations could harm its business by resulting in litigation, fines, penalties or adverse publicity and reputational damage
that may negatively affect the value of its business and decrease the price of New Corcentric Common Stock.
Corcentric’s customers can use its platform and products to collect,
use and store certain types of personal or identifying information regarding their employees, customers and their customers’ employees. Federal, state and foreign government bodies and agencies have adopted, are considering adopting or may adopt
laws and regulations regarding the collection, use, storage and disclosure of personal information obtained from consumers and individuals, such as compliance with the Health Insurance Portability and Accountability Act and the now in question
EU-U.S. and Swiss-U.S. Privacy Shield protections. The costs of compliance with, and other burdens imposed by, such laws and regulations that are applicable to the businesses of Corcentric’s customers may limit the use and adoption of
Corcentric’s platform and reduce overall demand or lead to significant fines, penalties or liabilities for any noncompliance with such privacy laws. Furthermore, privacy concerns may cause Corcentric’s customers’ employees to resist providing the
personal data necessary to allow its customers to use its platform effectively. Even the perception of privacy concerns, whether or not valid, may inhibit market adoption of Corcentric’s platform in certain industries.
All of these domestic and international legislative and regulatory
initiatives may adversely affect Corcentric’s ability, and Corcentric’s customers’ ability to process, handle, store, use and transmit demographic and personal information from their employees and customers, which could reduce demand for its
platform. The European Union (“EU”) and many countries in Europe have stringent privacy laws and regulations, which may affect Corcentric's handling of EU subject data. While Corcentric’s business is primarily focused on domestic United States
customers, it does have numerous customers that are multi-national in scope. In particular, the EU has adopted the General Data Protection Regulation (“GDPR”) which went into effect on May 25, 2018 and
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contains numerous requirements and changes, including more robust obligations on data
processors and heavier documentation requirements for data protection compliance programs by companies. Specifically, the GDPR introduced numerous privacy-related changes for companies operating in the EU, including greater control for data
subjects (e.g., the “right to be forgotten”), increased data portability for EU consumers, data breach notification requirements, and increased fines. In particular, under the GDPR, fines of up to 20 million Euros or up to 4% of the annual global
revenue of the noncompliant company, whichever is greater, could be imposed for violations of certain of the GDPR’s requirements. Complying with the GDPR may cause Corcentric to incur substantial operational costs or require it to change its
business practices. Non-compliance could result in proceedings against Corcentric by governmental entities, customers, data subjects or others. Corcentric may find it necessary to establish systems in the EU to maintain personal data originating
from the EU, which may involve substantial expense and distraction from other aspects of its business. In the meantime, there could be uncertainty as to how to comply with EU privacy law.
Further, on July 16, 2020, Europe’s top court, the Court of Justice of
the European Union, ruled in Schrems II (C-311/18) that the Privacy Shield, used by thousands of companies to transfer data between the European Union and United States, was invalid and could no longer be used due to the strength of United States
surveillance laws. On September 8, 2020 the Federal Data Protection and Information Commissioner of Switzerland issued an opinion concluding that the Swiss-U.S. Privacy Shield Framework does not provide an adequate level of protection for data
transfers from Switzerland to the United States pursuant to Switzerland’s Federal Act on Data Protection. Corcentric continues to use alternative transfer mechanisms including the standard contractual clauses (“SCCs”) while the authorities
interpret the decisions and scope of the invalidated Privacy Shield and the alternative permitted data transfer mechanisms. The SCCs, though approved by the European Commission, have faced challenges in European courts (including being called
into question in Schrems II), and may be challenged, suspended or invalidated. At present, there are few if any viable alternatives to the Privacy Shield and the SCCs, so such developments may necessitate further expenditures on local
infrastructure, changes to internal business processes, changes to customer facing products, or may otherwise affect or restrict sales and operations.
In addition, California enacted the California Consumer Privacy Act of
2018 (“CCPA”), which took effect on January 1, 2020, and broadly defines personal information. The CCPA has been dubbed the first “GDPR-like” law in the United States since it creates new individual privacy rights for consumers (as that word is
broadly defined in the law) and places increased privacy and security obligations on entities handling personal data of consumers or households. The CCPA requires covered companies to provide new disclosures to California consumers, provide such
consumers new ways to opt-out of certain sales of personal information, and allow for a new private right of action for data breaches.
Because the interpretation and application of many privacy and data
protection laws along with contractually imposed industry standards are uncertain, it is possible that these laws may be interpreted and applied in a manner that is inconsistent with Corcentric’s existing data management practices or the features
of its products and platform capabilities. If so, in addition to the possibility of fines, lawsuits, and other claims and penalties, Corcentric could be required to fundamentally change its business activities and practices or modify its products
and platform capabilities, which could have an adverse effect on its business. Any inability to adequately address privacy and security concerns, even if unfounded, or comply with applicable privacy and data security laws, regulations, and
policies, could result in additional cost and liability to Corcentric, governmental investigations and enforcement actions, litigation, fines and penalties, or adverse publicity, and could cause Corcentric’s customers and partners to lose trust
in it, which could have an adverse effect on its reputation and business.
Corcentric expects that there will continue to be new proposed laws,
regulations and industry standards relating to privacy, data protection, information security, marketing, and consumer communications, and it cannot determine the impact such future laws, regulations, and standards may have on its business.
Future laws, regulations, standards, and other obligations or any changed interpretation of existing laws or regulations could impair Corcentric's ability to develop and market new functionality and maintain and grow its customer base and
increase revenue. Future restrictions on the collection, use, sharing, or disclosure of data, or additional requirements for express or implied consent of Corcentric’s customers, partners, or its customers’ customers for the use and disclosure of
such information could require it to incur additional costs or modify its platform, possibly in a material manner, and could limit its ability to develop new functionality.
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Corcentric is subject to governmental laws and
requirements regarding economic and trade sanctions, anti-money laundering, and counter-terror financing that could impair its ability to compete in its markets or subject it to criminal or civil liability if it violates them.
Although Corcentric primarily currently only operates in North America
and Europe, in the future it will likely seek to further expand internationally and will become subject to additional laws and regulations, and will need to implement new regulatory controls to comply with applicable laws. Corcentric is currently
required to comply with U.S. economic and trade sanctions administered by the U.S. Department of Treasury’s Office of Foreign Assets Control (“OFAC”), and it has processes in place to comply with applicable sanctions. Corcentric is also subject
to various anti-money laundering and counter-terrorist financing laws and regulations around the world that prohibit, among other things, its involvement in transferring the proceeds of criminal activities. Corcentric’s services are also subject
to anti-money laundering laws and regulations and similar laws and regulations requiring a risk-based anti-money laundering program. Corcentric is also subject to similar contractual requirements imposed by its financial institution and payment
processor partners. Regulators in the United States and globally continue to increase their scrutiny of compliance with these obligations, which may require Corcentric to further revise or expand its compliance program.
In addition, third-parties may periodically audit Corcentric’s
anti-money laundering program. In the future, as a result of the regulations that could be deemed to apply to Corcentric’s business, Corcentric could be subject to investigations and resulting liability, including fines, restrictions on its
business, or other sanctions.
Corcentric is subject to anti-corruption,
anti-bribery, and similar laws, and non-compliance with such laws can subject it to criminal or civil liability and harm its business.
Corcentric is subject to the U.S. Foreign Corrupt Practices Act and
other anti-corruption laws. Anti-corruption and anti-bribery laws have been enforced aggressively in recent years and are interpreted broadly to generally prohibit companies, their employees, and their third-party intermediaries from authorizing,
offering, or providing, directly or indirectly, things of value to corruptly influence the recipient. Corcentric may engage with partners and third-party intermediaries to market its services and to obtain necessary permits, licenses, and other
regulatory approvals. In addition, Corcentric or its third-party intermediaries may have direct or indirect interactions with officials and employees of government agencies or state-owned or affiliated entities. Corcentric can be held liable for
the corrupt or other illegal activities of these third-party intermediaries, and of its employees, representatives, contractors, partners, and agents, even if Corcentric does not explicitly authorize such activities. Corcentric cannot assure you
that all of its employees and agents will not take actions in violation of its policies and applicable law, for which Corcentric may be ultimately held responsible. Additionally, the U.S. Foreign Corrupt Practices Act requires U.S. Issuers to
maintain internal accounting controls adequate to prevent corruption and to keep and maintain accurate books and records. Corcentric will incur costs in terms of finances and resources in order to enhance its compliance program to meet standards
applicable to U.S. Issuers, as well as to maintain and test them periodically.
Detecting, investigating, and resolving actual or alleged violations of
anti-corruption laws can require a significant diversion of time, resources, and attention from senior management. In addition, noncompliance with anti-corruption or anti-bribery laws, including the U.S. Foreign Corrupt Practices Act’s books and
records or internal controls provisions, could subject Corcentric to whistleblower complaints, investigations, sanctions, settlements, prosecution, enforcement actions, fines, damages, other civil or criminal penalties, injunctions, suspension or
debarment from contracting with certain persons, reputational harm, adverse media coverage, and other collateral consequences.
Corcentric could be required to collect
additional sales taxes or be subject to other tax liabilities that may increase the costs its customers would have to pay for its products and adversely affect its operating results.
The vast majority of states have considered or adopted laws that impose
sales tax collection obligations on out-of-state companies. States where Corcentric has a sales tax nexus may require it to calculate, collect, and remit taxes on sales in their jurisdictions. Additionally, the Supreme Court of the United States
ruled in South Dakota v. Wayfair, Inc. et al. (“Wayfair”) that online sellers can be required to collect sales and use tax despite not having a physical presence in the buyer’s state. In response to Wayfair, or otherwise, states or local
governments may enforce laws requiring Corcentric to calculate, collect, and remit taxes on sales in their jurisdictions. While Corcentric does not believe that it has any material unrecorded liability as it relates to Wayfair, Corcentric may be
obligated to collect and remit sales and use tax in states in which it has not
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historically collected and remitted sales and use tax. A successful assertion by one or
more states requiring Corcentric to collect sales taxes where it historically has not or presently does not do so could result in substantial tax liabilities, including taxes on past sales, as well as penalties and interest. The imposition by
state governments or local governments of sales tax collection obligations on out-of-state sellers could also create additional administrative burdens for Corcentric, put Corcentric at a perceived competitive disadvantage if state governments or
local governments do not impose similar obligations on its competitors, and decrease Corcentric’s future sales, which could adversely affect its business and operating results.
The COVID-19 pandemic could worsen and have a
material impact on the United States, global economies and Corcentric’s employees, customers and partners, which could adversely impact Corcentric’s business, financial condition and results of operations.
The World Health Organization has declared the outbreak of the novel
coronavirus COVID-19 a pandemic and public health emergency of international concern. In March 2020, the President of the United States declared a State of National Emergency due to the COVID-19 pandemic. In addition, many jurisdictions in the
United States limited social mobility and gathering. Many business establishments closed due to restrictions imposed by the government and many governmental authorities have closed or limited the number of persons who can attend or use most
public establishments, including schools, restaurants and shopping malls. Corcentric’s customers could be negatively impacted by a return to shelter-in-place and other similar state and local orders, the closure of manufacturing sites and country
borders. A return to these conditions would have negative implications on demand for goods, the supply chain, production of goods and transportation. If the COVID-19 pandemic persists, governments (at national, state and local levels), companies
and other authorities may implement restrictions or policies that could adversely impact business to business spending, consumer spending, global capital markets, the global economy and New Corcentric’s stock price. Although Corcentric has not
experienced significant business disruptions thus far from the COVID-19 pandemic, Corcentric saw its revenues, particularly those related to volume of gross billings, decrease year over year for certain customers.
The COVID-19 pandemic has caused Corcentric to modify its business
practices (including employee travel and cancellation of physical participation in meetings, events and conferences). The COVID-19 pandemic may also adversely impact the operations of Corcentric’s customers and partners. This direct impact of the
virus, and the disruption on Corcentric’s employees and operations, may negatively impact both Corcentric's ability to meet customer demand and its revenue and margins. Corcentric may experience delays or changes in customer demand, particularly
if customer funding priorities change.
Both the health and economic aspects of the COVID-19 virus are highly
fluid and the future course of each is uncertain. For these reasons and other reasons that may come to light if the COVID-19 pandemic and associated protective or preventative measures expand, Corcentric may experience a material adverse impact
on its business operations, revenues and financial condition as well as some of its underlying business drivers such as customer growth and payment and transaction volumes; however, the ultimate impact of the COVID-19 pandemic on Corcentric and
its business operations, revenues and financial condition is highly uncertain and subject to change. To the extent the COVID-19 pandemic adversely affects Corcentric’s business and financial results, it may also have the effect of heightening
many of the other risks described in this “Risk Factors—Risks Related to Corcentric’s Business and Industry” section.
Corcentric’s debt obligations, or its incurrence
of additional debt obligations, could limit its flexibility in managing its business and could materially and adversely affect its financial performance.
In the past, Corcentric has relied on its existing credit facilities
to provide it with adequate liquidity to operate its business. As of December 31, 2021, Corcentric had approximately $166,600,000 of long-term indebtedness (including current portion) outstanding. In addition, Corcentric is permitted under its
credit agreement to incur additional indebtedness, subject to specified limitations. Corcentric’s indebtedness could have important consequences, including the following:
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under certain of Corcentric’s existing credit facilities it must maintain certain financial covenants, which require Corcentric to
maintain a minimum cumulative adjusted EBITDA and a fixed charge coverage ratio; and Corcentric’s failure to comply with these financial covenants could result in an acceleration of its outstanding indebtedness under its credit facilities
and limit Corcentric’s ability to borrow additional amounts under such credit facilities for future requirements;
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Corcentric may have difficulty satisfying its obligations under its debt facilities and, if Corcentric fails to satisfy these
obligations, an event of default could result;
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covenants relating to Corcentric’s debt may limit its ability to enter into certain contracts or to obtain additional financing
for acquisitions, investments, working capital, capital expenditures and other general corporate activities;
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covenants relating to Corcentric’s debt may limit its flexibility in planning for, or reacting to, changes in Corcentric’s
business and the industry in which it operates, including by restricting Corcentric’s ability to make strategic acquisitions, dispose of certain assets or consolidate, merge or transfer all or substantially all of its assets;
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covenants relating to Corcentric’s debt may limit its ability to incur additional indebtedness or create or permit liens;
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Corcentric may be more vulnerable than its competitors to the impact of economic downturns and adverse developments in the
industry in which it operates;
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Corcentric is exposed to the risk of increased interest rates because certain of its borrowings are subject to variable rates of
interest;
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one of Corcentric’s credit facilities may require annual prepayments of principle based upon the amount of “excess cash flow” (as
defined in the agreement) generated by the business;
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although Corcentric has no current intention to pay any dividends, it may be unable to pay dividends or make other distributions
with respect to your investment either due to cash constraints or limitations imposed by its debt facilities; and
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Corcentric may be placed at a competitive disadvantage against less leveraged competitors, some of which are well-funded, and
shifts in the credit market may adversely affect its business.
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The occurrence of one or more of these potential consequences could
have a material adverse effect on Corcentric’s business, financial condition, operating results, cash flows, and ability to satisfy its obligations under its indebtedness. In addition, Corcentric may be unable to incur substantial additional
indebtedness in the future to support or grow its business. Although Corcentric’s credit agreement contains restrictions on the incurrence of additional indebtedness, these restrictions are subject to a number of significant qualifications and
exceptions and, under certain circumstances, the amount of additional indebtedness that could be incurred in compliance with these restrictions could be substantial. If new debt is added to Corcentric’s existing debt levels, the related risks
that it will face would increase.
In addition, Corcentric’s obligations under its senior credit facility
are secured by substantially all of Corcentric’s property. In the event of a default, Corcentric’s lenders may unilaterally exercise their rights under such security interests to the detriment of Corcentric’s business and its stockholders.
Corcentric depends on its senior management team,
and the loss of its chief executive officer, president and chief operating officer or one or more key employees, or the inability to attract and retain highly skilled employees, could adversely affect its business.
Corcentric’s success depends largely upon the continued services of its
key executive officers. In particular, Corcentric’s chief executive officer, Doug Clark, has led the company since its inception in 1996 and is critical to its vision, strategic direction, culture and overall business success. Corcentric also
relies on its leadership team in the areas of research and development, marketing, sales, services, security and compliance and general and administrative functions, and on mission-critical individual contributors in research and development.
From time to time, there may be changes in Corcentric’s executive management team resulting from the hiring or departure of executives, which could disrupt its business. Corcentric has employment agreements with some of its executive officers but
the terms allow for termination by either party at any time. The loss of one or more of Corcentric’s executive officers or key employees could have a serious adverse effect on its business.
To execute Corcentric’s growth plan, it must attract and retain highly
qualified personnel. Competition for these personnel is intense, especially for designing and developing products and software for Corcentric’s platform. Corcentric has from time to time experienced, and it expects to continue to experience,
difficulty in hiring and retaining employees with appropriate qualifications. Many of the companies with which Corcentric
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competes for experienced personnel have greater resources than it has. If Corcentric
hires employees from competitors or other companies, their former employers may attempt to assert that these employees or Corcentric have breached their legal obligations, resulting in a diversion of Corcentric’s time and resources. Certain of
Corcentric’s key employees have been with it for a long period of time and have fully vested stock options that may become valuable if they become publicly tradable. Corcentric cannot ensure that it will be able to retain the services of any
members of its senior management or other key employees or that it would be able to timely replace members of its senior management or other key employees should any of them depart. If Corcentric fails to attract new personnel or fails to retain
and motivate its current personnel, its business and future growth prospects could be adversely affected.
New Corcentric’s failure to timely and
effectively implement controls and procedures required by Section 404(a) of the Sarbanes-Oxley Act that will be applicable to it after the Business Combination is consummated could have a material adverse effect on its business.
Corcentric is currently not subject to Section 404 of the
Sarbanes-Oxley Act. However, following the consummation of the Business Combination, New Corcentric will be required to provide management's attestation on internal controls. The standards required for a public company under Section 404(a) of the
Sarbanes-Oxley Act are significantly more stringent than those required of Corcentric as a privately-held company. Corcentric expects to incur significant expenses and devote substantial management effort toward ensuring ongoing compliance with
the requirements of Section 404 of the Sarbanes-Oxley Act. Corcentric will need to hire additional accounting and financial staff with appropriate public company experience and technical accounting knowledge and maintain an internal audit
function.
Management may not be able to effectively and timely implement controls
and procedures that adequately respond to the increased regulatory compliance and reporting requirements that will be applicable after the Business Combination. If New Corcentric is not able to implement the additional requirements of Section
404(a) in a timely manner or with adequate compliance, it may not be able to assess whether its internal controls over financial reporting are effective, which may subject it to adverse regulatory consequences and could harm investor confidence
and the market price of its securities.
If Corcentric’s estimates or judgments relating
to its critical accounting policies prove to be incorrect, or if there are changes in accounting principles, its operating results could be adversely affected.
U.S. generally accepted accounting principles (“GAAP”), is subject to
interpretation by the Financial Accounting Standards Board (“FASB”), the SEC and various bodies formed to promulgate and interpret appropriate accounting principles. A change in these principles or interpretations could have a significant effect
on Corcentric’s reported operating results and financial condition and could affect the reporting of transactions already completed before the announcement of a change.
The preparation of financial statements in conformity with GAAP
requires management to make estimates and assumptions that affect the amounts reported in the financial statements and accompanying notes. Corcentric bases its estimates on historical experience and on various other assumptions that it believes
to be reasonable under the circumstances, as provided in the section titled “Corcentric’s Management’s Discussion and Analysis of Financial Condition Results of Operations—Critical Accounting Policies and
Significant Judgments and Estimates.” The results of these estimates form the basis for making judgments about the carrying values of assets, liabilities, and equity, and the amount of revenue and expenses that are not readily apparent
from other sources. Corcentric’s operating results may be adversely affected if its assumptions change or if actual circumstances differ from those in its assumptions.
Changes in Corcentric’s effective tax rate or tax
liability may adversely affect its net income and cash flow.
Corcentric’s effective tax rate could increase due to several factors,
including:
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changes in the relative amounts of income before taxes in the various jurisdictions in which Corcentric operates due to differing
statutory tax rates in various jurisdictions;
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changes in tax laws, tax treaties, and regulations or the interpretation of them, including the Tax Cuts and Jobs Act enacted in
2017, as modified by the Coronavirus Aid, Relief, and Economic Security Act enacted in 2020 (“CARES Act”);
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changes to Corcentric’s assessment about its ability to realize its deferred tax assets that are based on estimates of its future
results, the prudence and feasibility of possible tax planning strategies, and the economic and political environments in which it does business;
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the outcome of current and future tax audits, examinations, or administrative appeals; and
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limitations or adverse findings regarding Corcentric’s ability to do business in some jurisdictions.
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Any of these developments could adversely affect Corcentric’s net
income and cash flow.
Corcentric’s business could be severely harmed
by natural disasters or other catastrophes.
Significant catastrophic events such as war, acts of terrorism, natural
disasters, such as earthquakes, fire or floods, loss of power, telecommunications failures, power or water shortages, extreme weather conditions (whether as a result of climate change or otherwise), computer viruses, or global threats, including,
but not limited to, medical epidemics or pandemics (such as the COVID-19 pandemic) and other natural or manmade disasters or catastrophic events , could disrupt Corcentric’s operations and impair deployment of its solutions by its customers,
interrupt critical functions, cause Corcentric’s suppliers to be unable to meet its demand for parts and equipment, reduce demand for Corcentric’s products, prevent its customers from honoring their contractual obligations, adversely affect
Corcentric’s competitive position, increase Corcentric’s costs and expenses, require substantial expenditures and recovery time in order to fully resume operations, or otherwise harm Corcentric’s business. To the extent that such disruptions or
uncertainties result in delays or cancellations of the deployment of Corcentric’s products and solutions, Corcentric’s reputation, business and operations and operating results could be harmed. In addition, global climate change may result in
certain natural disasters occurring more frequently or with greater intensity, such as earthquakes, tsunamis, cyclones, drought, wildfires, sea-level rise, heavy rains and flooding, and any such disaster or series of disasters in areas where
Corcentric has a concentration of employees could significantly disrupt Corcentric’s operations and have a material adverse effect on its business, results of operations and financial condition.
Corcentric’s operations could also be disrupted as a result of
technological failures, such as electricity or infrastructure breakdowns, including damage to telecommunications cables, computer glitches and electronic viruses, or human-caused events such as protests, riots, labor unrest and cyberattacks. Such
events, or any natural or weather-related disaster, could lead to the disruption of information systems and telecommunication services for sustained periods. Damage or destruction that interrupts Corcentric’s provision of services could adversely
affect Corcentric’s reputation, its relationships with its clients, Corcentric’s leadership team’s ability to administer and supervise its business or it may cause Corcentric to incur substantial additional expenditure to repair or replace
damaged equipment or delivery centers. Corcentric’s operations and those of its significant suppliers and distributors could be adversely affected if manufacturing, logistics or other operations in these locations are disrupted for any reason,
such as those listed above. Even if Corcentric’s operations are unaffected or recover quickly from any such events, if Corcentric’s clients cannot timely resume their own operations due to a catastrophic event, they may reduce or terminate
Corcentric’s services, which may adversely affect its results of operations. Corcentric may also be liable to its clients for disruption in service resulting from such damage or destruction.
Corcentric’s business continuity and disaster recovery plans may not be
effective at preventing or mitigating the effects of any of the foregoing business disruptions, particularly in the case of a catastrophic event. Prolonged disruption of Corcentric’s services would also entitle its clients to terminate their
contracts with Corcentric. While Corcentric currently has commercial liability insurance, its insurance coverage may not be sufficient. Furthermore, Corcentric may be unable to secure such insurance coverage at premiums acceptable to it in the
future or at all. Any of the above factors may have a material adverse effect on Corcentric’s business, results of operations and financial condition.
Unless the context otherwise requires, all
references in this “— Risks Related to North Mountain and the Business Combination” section to “we,” “us,” or “our” refer to North Mountain.
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There can be no assurance that New Corcentric
Common Stock will be approved for listing on Nasdaq or that New Corcentric 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 Corcentric Common Stock and warrants on Nasdaq under the symbols “ ” and “ ,” respectively. New Corcentric’s continued eligibility for listing may depend on the number of North Mountain’s Public Shares that are redeemed. If, after
the Business Combination, Nasdaq delists New Corcentric’s shares from trading on its exchange for failure to meet the listing standards, New Corcentric and its stockholders could face significant material adverse consequences including:
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a limited availability of market quotations for New Corcentric’s securities;
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a determination that New Corcentric Common Stock is a “penny stock” which will require brokers trading in New Corcentric 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 Corcentric Common Stock;
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a limited amount of analyst coverage; and
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a decreased ability to issue additional securities or obtain additional financing in the future.
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If the Business Combination’s benefits do not
meet the expectations of investors or securities analysts, the market price of North Mountain’s securities or, following the Closing, New Corcentric’s securities, may decline. A market for our securities may not continue, which would adversely
affect the liquidity and price of our securities.
If the perceived benefits of the Business Combination do not meet the
expectations of investors or securities analysts, the market price of North Mountain’s securities prior to the Closing may decline. The market values of New Corcentric’s securities at the time of the Business Combination may vary significantly
from their prices on the date the Merger Agreement was executed, the date of this proxy statement/prospectus, or the date on which North Mountain’s stockholders vote on the Business Combination.
Following the Business Combination, the price of our securities may
fluctuate significantly due to the market’s reaction to the Business Combination and general market and economic conditions. An active trading market for our securities following the Business Combination may never develop or, if developed, it may
not be sustained. In addition, following the Business Combination, fluctuations in the price of New Corcentric’s securities could contribute to the loss of all or part of your investment. Prior to the Business Combination, there has not been a
public market for Corcentric’s capital stock. Accordingly, the valuation ascribed to Corcentric may not be indicative of the price that will prevail in the trading market following the Business Combination. If an active market for New
Corcentric’s securities develops and continues, the trading price of New Corcentric’s securities following the Business Combination could be volatile and subject to wide fluctuations in response to various factors, some of which are beyond New
Corcentric’s control. Any of the factors listed below could have a material adverse effect on your investment in New Corcentric’s securities and New Corcentric’s securities may trade at prices significantly below the price you paid for them. In
such circumstances, the trading price of New Corcentric’s securities may not recover and may experience a further decline.
Factors affecting the trading price of New Corcentric’s securities may
include:
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actual or anticipated fluctuations in New Corcentric’s quarterly financial results or the quarterly financial results of companies
perceived to be similar to it;
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changes in the market’s expectations about New Corcentric’s operating results;
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success of competitors;
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New Corcentric’s operating results failing to meet the expectation of securities analysts or investors in a particular period;
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changes in financial estimates and recommendations by securities analysts concerning New Corcentric or the transportation industry
in general;
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failure to meet or exceed the financial projections of New Corcentric;
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operating and share price performance of other companies that investors deem comparable to New Corcentric;
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New Corcentric’s ability to market new and enhanced products and technologies on a timely basis;
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changes in laws and regulations affecting New Corcentric’s business;
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New Corcentric’s ability to meet compliance requirements;
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commencement of, or involvement in, litigation involving New Corcentric, including litigation relating to the Business
Combination, which may be more likely as a result of the earnout provisions in the Merger Agreement;
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changes in New Corcentric’s capital structure, such as future issuances of securities or the incurrence of additional debt;
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the volume of New Corcentric Common Stock available for public sale;
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any major change in the New Corcentric Board or New Corcentric’s management;
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sales of substantial amounts of New Corcentric Common Stock by New Corcentric’s directors, executive officers or significant
stockholders or the perception that such sales could occur; and
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general economic and political conditions such as recessions, interest rates, fuel prices, international currency fluctuations and
acts of war or terrorism.
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Broad market and industry factors may materially harm the market price
of New Corcentric’s securities irrespective of New Corcentric’s operating performance. The stock market in general, and Nasdaq in particular, have experienced price and volume fluctuations that have often been unrelated or disproportionate to the
operating performance of the particular companies affected. The trading prices and valuations of these stocks, and of New Corcentric’s securities, may not be predictable. A loss of investor confidence in the market for retail stocks or the stocks
of other companies which investors perceive to be similar to New Corcentric could depress New Corcentric’s share price regardless of New Corcentric’s business, prospects, financial conditions or results of operations. A decline in the market
price of New Corcentric’s securities also could adversely affect New Corcentric’s ability to issue additional securities and New Corcentric’s ability to obtain additional financing in the future.
Following the consummation of the Business
Combination, New Corcentric will incur significant increased expenses and administrative burdens as a public company, which could have an adverse effect on its business, financial condition and results of operations.
Following the consummation of the Business Combination, New Corcentric
will face increased legal, accounting, administrative and other costs and expenses as a public company that Corcentric does not incur as a private company. The Sarbanes-Oxley Act, including the requirements of Section 404, as well as rules and
regulations subsequently implemented by the SEC, the Dodd-Frank Act and the rules and regulations promulgated and to be promulgated thereunder, Public Company Accounting Oversight Board (the “PCAOB”) and the securities exchanges, impose
additional reporting and other obligations on public companies. Compliance with public company requirements will increase costs and make certain activities more time-consuming. A number of those requirements will require New Corcentric to carry
out activities Corcentric has not done previously. For example, New Corcentric will create new board committees and adopt new internal controls and disclosure controls and procedures. In addition, expenses associated with SEC reporting
requirements will be incurred. Furthermore, if any issues in complying with those requirements are identified (for example, if we or the auditors identify a material weakness or significant deficiency in the internal control over financial
reporting), New Corcentric could incur additional costs remediating those issues, and the existence of those issues could adversely affect New Corcentric’s reputation or investor perceptions of it. It may also be more expensive to obtain director
and officer liability insurance. Risks associated with New Corcentric’s status as a public company may make it more difficult to attract and retain qualified persons to serve on the New Corcentric Board or as executive officers. The additional
reporting and other obligations imposed by these rules and regulations will increase legal and financial compliance costs and the costs of related legal, accounting and administrative activities. These increased costs will require New Corcentric
to divert a significant amount of money that could otherwise be used to expand the business and achieve strategic objectives. Activist efforts by stockholders and third parties may also prompt additional changes in governance and reporting
requirements, which could further increase costs.
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New Corcentric’s failure to timely and
effectively implement controls and procedures required by Section 404(a) of the Sarbanes-Oxley Act that will be applicable to it after the Business Combination is consummated could have a material adverse effect on its business.
Corcentric is currently not subject to Section 404 of the
Sarbanes-Oxley Act. However, following the consummation of the Business Combination, New Corcentric will be required to provide management’s attestation on internal controls commencing with New Corcentric’s annual report for the year ending
December 31, 2022 in accordance with applicable SEC guidance. The standards required for a public company under Section 404(a) of the Sarbanes-Oxley Act are significantly more stringent than those required of Corcentric as a privately-held
company. Management may not be able to effectively and timely implement controls and procedures that adequately respond to the increased regulatory compliance and reporting requirements that will be applicable after the Business Combination. If
New Corcentric is not able to implement the additional requirements of Section 404(a) in a timely manner or with adequate compliance, it may not be able to assess whether its internal controls over financial reporting are effective, which may
subject it to adverse regulatory consequences and could harm investor confidence and the market price of its securities.
In connection with the recent restatements of
North Mountain's financial statements, its management has concluded that its disclosure controls and procedures are not effective due to a material weakness in internal control over financial reporting related to its inability to properly
account for complex financial instruments. If North Mountain is unable to maintain an effective system of disclosure controls and procedures and internal control over financial reporting, it may not be able to accurately report its financial
results in a timely manner, which may adversely affect investor confidence in North Mountain and materially and adversely affect its business and financial results.
After consultation with its independent registered public accounting
firm and its management team, North Mountain's audit committee concluded that it was appropriate to restate its previously issued financial statements as described in Note 2 to North Mountain's financial statements included elsewhere in this
proxy statement/prospectus. As part of such process, it identified a material weakness in its internal control over financial reporting, relating to its inability to properly account 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 North Mountain's annual or interim financial statements will not be prevented or detected and corrected on a timely basis.
Effective internal controls are necessary for North Mountain to provide reliable financial reports and prevent fraud. North Mountain expects to take steps to remediate the material weakness, but there is no assurance that any remediation efforts
will ultimately have the intended effects.
If North Mountain identifies any new material weaknesses in the future,
any such newly identified material weakness could limit its ability to prevent or detect a misstatement of its accounts or disclosures that could result in a material misstatement of its annual or interim financial statements. In such case, it
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 its financial reporting and its
stock price may decline as a result. North Mountain cannot assure you that the measures it has taken to date, or any measures it may take in the future, will be sufficient to avoid potential future material weaknesses.
New Corcentric expects to qualify as an “emerging
growth company” within the meaning of the Securities Act, and if it takes advantage of certain exemptions from disclosure requirements available to emerging growth companies, it could make New Corcentric’s securities less attractive to investors
and may make it more difficult to compare New Corcentric’s performance to the performance of other public companies.
New Corcentric expects to qualify as an “emerging growth company” as
defined in Section 2(a)(19) of the Securities Act, as modified by the JOBS Act. If New Corcentric qualifies as an emerging growth company, it will be eligible for and intends to take advantage of certain exemptions from various reporting
requirements applicable to other public companies that are not emerging growth companies for as long as it continues to be an emerging growth company, including, but not limited to, (i) not being required to comply with the auditor attestation
requirements of Section 404 of the Sarbanes-Oxley Act, (ii) reduced disclosure obligations regarding executive compensation in New Corcentric’s periodic reports and proxy statements and (iii) exemptions from the requirements of holding a
nonbinding advisory vote on executive compensation and stockholder approval of any golden parachute payments not previously approved. As a result, New Corcentric’s stockholders may not have
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access to certain information they may deem important. If New Corcentric qualifies as
an emerging growth company, it will remain an emerging growth company until the earliest of (i) the last day of the fiscal year in which the market value of New Corcentric Common Stock that are held by non-affiliates exceeds $700,000,000 as of
June 30 of that fiscal year, (ii) the last day of the fiscal year in which it has total annual gross revenue of $1.07 billion or more during such fiscal year (as indexed for inflation), (iii) the date on which it has issued more than $1 billion
in non-convertible debt in the prior three-year period or (iv) the last day of the fiscal year following the fifth anniversary of the date of the first sale of North Mountain Class A Common Stock in the IPO. North Mountain cannot predict whether
investors will find New Corcentric’s securities less attractive because New Corcentric expects to rely on these exemptions. If some investors find New Corcentric’s securities less attractive as a result of New Corcentric’s reliance on these
exemptions, the trading prices of New Corcentric’s securities may be lower than they otherwise would be, there may be a less active trading market for New Corcentric’s securities and the trading prices of New Corcentric’s securities may be more
volatile.
Further, 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 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 an election to opt out is irrevocable. We have 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, we, 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 New Corcentric’s financial statements
with another public company which is neither an emerging growth company nor an emerging growth company which has opted out of using the extended transition period difficult or impossible because of the potential differences in accounting
standards used.
The unaudited pro forma financial information
included herein may not be indicative of what New Corcentric’s actual financial position or results of operations would have been.
The unaudited pro forma financial information included herein is
presented for illustrative purposes only and is not necessarily indicative of what New Corcentric’s actual financial position or results of operations would have been had the Business Combination been completed on the dates indicated.
Our Sponsor, officers and directors have agreed
to vote in favor of the Business Combination, regardless of how the Public Stockholders vote.
Unlike many other blank check companies in which the sponsor, officers
and directors agree to vote their founder shares in accordance with the majority of the votes cast by the Public Stockholders in connection with an initial business combination, North Mountain’s Sponsor, officers and directors have agreed to vote
any shares of North Mountain Common Stock owned by them in favor of the Business Combination, including their shares of North Mountain Class B Common Stock and any Public Shares purchased after our IPO (including in open market and privately
negotiated transactions). As of the North Mountain Record Date, our Sponsor, officers and directors beneficially owned an aggregate of approximately 20% of the outstanding shares of North Mountain Common Stock. Accordingly, it is more likely that
the necessary stockholder approval will be received than would be the case if such persons agreed to vote their shares of North Mountain Common Stock in accordance with the majority of the votes cast by the Public Stockholders.
North Mountain may not be able to consummate an
initial business combination within the required time period, in which case it would cease all operations except for the purpose of winding up and it would redeem the Public Shares and liquidate, in which case the Public Stockholders may only
receive $10.00 per share, or less than such amount in certain circumstances, and the Public Warrants will expire worthless.
The Existing Charter provides that North Mountain must complete an
initial business combination by September 22, 2022. North Mountain may not be able to complete an initial business combination by such date. If North Mountain has not completed an initial business combination prior to September 22, 2022 (or
successfully obtained stockholder approval of an extension prior to such date) it will: (i) cease all operations except for the purpose of winding up, (ii) as promptly as reasonably possible but not more than ten business days thereafter, redeem
the Public Shares, at a per-share price, payable in cash, equal to the aggregate amount then on
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deposit in the Trust Account including interest earned on the funds held in the Trust
Account and not previously released to North Mountain to pay taxes (net of Permitted Withdrawals and up to $100,000 of such net interest to pay dissolution expenses), divided by the number of then outstanding Public Shares, 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
North Mountain’s remaining stockholders and the North Mountain Board, dissolve and liquidate, subject in each case to its obligations under Delaware law to provide for claims of creditors and the requirements of other applicable law. In such
case, the Public Stockholders may only receive $10.00 per share, and the Public Warrants will expire worthless. In certain circumstances, the Public Stockholders may receive less than $10.00 per share on the redemption of their shares.
If the funds not being held in the Trust
Account are insufficient to allow North Mountain to operate at least until September 22, 2022, the completion window, it may be unable to complete an initial business combination.
The funds available to North Mountain outside of the Trust Account may
not be sufficient to allow it to operate for at least the completion window, assuming that an initial business combination is not completed during that time. North Mountain expects to incur significant costs in pursuit of its acquisition plans.
However, its affiliates are not obligated to make loans to it in the future, and it may not be able to raise additional financing from unaffiliated parties necessary to fund its expenses. Any such event in the future may negatively impact the
analysis regarding its ability to continue as a going concern at such time.
North Mountain believes that the funds available to it outside of the
Trust Account will be sufficient to allow it to operate for at least the completion window; however, it cannot assure you that its estimate is accurate. If North Mountain is unable to complete its initial business combination, its Public
Stockholders may receive only approximately $10.00 per share, or less in certain circumstances, on the liquidation of its Trust Account and the North Mountain Warrants will expire worthless.
Our Sponsor, directors, officers, advisors
and their affiliates may elect to purchase shares or warrants from Public Stockholders, which may reduce the public “float” of North Mountain Class A Common Stock.
Our Sponsor, directors, officers, advisors or their affiliates may
purchase Public 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 Public Shares
or Public Warrants in such transactions.
Such a purchase may include a contractual acknowledgement that such
stockholder, although still the record holder of North Mountain shares is no longer the beneficial owner thereof and therefore agrees not to exercise its redemption rights. In the event that North Mountain’s 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. To the extent that the redemption of Public Shares would constitute a tender offer under the Exchange Act, any purchases of Public Shares by the Sponsor and North Mountain's directors, officers and their affiliates
outside of the tender offer will be made in compliance with the rules, regulations and interpretations promulgated by the SEC with respect to such purchases. Any such purchases of North Mountain securities may result in the completion the
Business Combination, which 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 North
Mountain Class A Common Stock or Public Warrants and the number of beneficial holders of North Mountain securities may be reduced, possibly making it difficult to maintain the quotation, listing or trading of North Mountain securities on a
national securities exchange.
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If a stockholder fails to receive notice of
North Mountain’s offer to redeem the 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.
North Mountain will comply with the proxy rules when conducting
redemptions in connection with the Business Combination. Despite North Mountain’s compliance with these rules, if a stockholder fails to receive North Mountain’s proxy materials, such stockholder may not become aware of the opportunity to redeem
its shares. In addition, proxy materials that North Mountain will furnish to holders of the 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, North Mountain may require the Public Stockholders seeking to exercise their redemption rights, whether they are record holders or hold their shares in “street name,” to tender their certificates to North
Mountain’s transfer agent up to two business days prior to the vote on the proposal to approve the Business Combination, or to deliver their shares to the transfer agent electronically. In the event that a stockholder fails to comply with these
or any other procedures, its shares may not be redeemed.
The future exercise of registration rights may
adversely affect the market price of our common stock.
Certain of our stockholders will have registration rights for
restricted securities. We are obligated to register certain securities, including all of the shares of North Mountain Class B Common Stock held by our Sponsor, shares of North Mountain Class A Common Stock received by certain significant
Corcentric stockholders as part of the Business Combination and the PIPE Shares. We are obligated to (i) file a resale “shelf” registration statement to register such securities (and any shares of New Corcentric Common Stock into which they may
be exercised following the consummation of the Business Combination) within 30 days after the Closing and (ii) use commercially reasonable efforts to cause such registration statement to be declared effective by the SEC as soon as reasonably
practicable after the filing. Sales of a substantial number of shares of New Corcentric Common Stock pursuant to the resale registration statement in the public market could occur at any time the registration statement remains effective. In
addition, certain registration rights holders can request underwritten offerings to sell their securities. 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 Corcentric Common Stock.
Warrants will become exercisable for New
Corcentric Common Stock, which would increase the number of shares eligible for future resale in the public market and result in dilution to our stockholders.
Outstanding Public Warrants to purchase an aggregate of 6,612,500
shares of New Corcentric Common Stock will become exercisable on the date that is 30 days after the completion of the Business Combination. Each whole warrant, following the Business Combination, entitles the holder thereof to purchase one share
of New Corcentric Common Stock at a price of $11.50 per whole share, subject to adjustment. Warrants may be exercised only for a whole number of shares of New Corcentric Common Stock. To the extent such warrants are exercised, additional shares
of New Corcentric Common Stock will be issued, which will result in dilution to the then existing holders of New Corcentric Common Stock and increase the number of shares eligible for resale in the public market. Sales of substantial numbers of
such shares in the public market could adversely affect the market price of New Corcentric Common Stock.
Because the market price of shares of North
Mountain Class A Common Stock will fluctuate, Corcentric’s stockholders cannot be sure of the value of the merger consideration they will receive. In addition, there can be no assurance that any Earnout Shares will be issued.
The aggregate stock portion of the merger consideration that Corcentric
stockholders will receive is a fixed number of shares of North Mountain Class A Common Stock; it is not a number of shares with a particular fixed market value. See “Proposal No. 2—The Business Combination
Proposal—Consideration to be Received in the Business Combination.” The market value of North Mountain Class A Common Stock and Corcentric Capital Stock at Closing may vary significantly from their respective values on the date the
Merger Agreement was executed or at other dates, including the date on which Corcentric stockholders provide written consent to the adoption of the Merger Agreement and the transactions contemplated thereby. Because the merger consideration is
fixed and will not be adjusted to reflect any changes in the market value of shares of North Mountain Class A Common Stock or Corcentric Capital Stock, the market value of the shares of North Mountain Class A Common Stock issued in connection
with the Business Combination and the Corcentric Capital Stock converted in
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connection with the Business Combination may be higher or lower than the values of
those shares on earlier dates, and may be higher or lower than the value used to determine the exchange ratio. In addition, the number of Earnout Shares, if any, that are issued in connection with the Business Combination will not be determined
until after the Closing of the Business Combination. Accordingly, at the time of providing written consent to the Corcentric Business Combination Proposal, Corcentric stockholders will not know or be able to calculate the market value of the
shares of North Mountain Class A Common Stock they would receive as merger consideration upon the completion of the Business Combination. Stock price changes may result from a variety of factors, including changes in the business, operations or
prospects of North Mountain or Corcentric, regulatory considerations and general business, market, industry or economic conditions. Many of these factors are outside of the control of North Mountain and Corcentric.
Our Public Stockholders will experience
immediate dilution due to the issuance of shares of North Mountain Class A Common Stock to Corcentric stockholders in the Business Combination and may experience additional dilution as a consequence of certain transactions, including the issuance
of shares of North Mountain Class A Common Stock in the PIPE Financing. Having a minority share position may reduce the influence that our current stockholders have on the management of New Corcentric.
It is anticipated that, following the completion of the Business
Combination and assuming, for illustrative purposes, North Mountain’s existing stockholders, including our Sponsor, will retain an ownership interest in the range of 14.7% to 16.0% of New Corcentric under the no redemption and contractual
maximum redemption scenarios, respectively, Corcentric stockholders will own an amount in the range between 79.6% and 80.8% of the shares of New Corcentric Common Stock outstanding under the no redemption and contractual maximum redemption
scenarios, respectively, and the PIPE Investors will own an amount in the range between 4.4% and 4.5% of the shares of New Corcentric Common Stock outstanding under the no redemption and contractual maximum redemption scenarios, respectively.
These relative percentages assume that (i) that there are no exercises of any North Mountain Warrants outstanding as of immediately prior to the Closing and (ii) no Earnout Shares have been issued. In addition, to the extent that any of the
North Mountain Warrants are converted into New Corcentric Common Stock and to the extent any Earnout Shares are issued, current stockholders may experience substantial dilution. Such dilution could, among other things, limit the ability of our
current stockholders to influence management of New Corcentric through the election of directors following the Business Combination.
Neither North Mountain nor its stockholders
will have the protection of any indemnification, escrow, price adjustment or other provisions that allow for a post-closing adjustment to be made to the total merger consideration in the event that any of the representations and warranties made
by Corcentric in the Merger Agreement ultimately proves to be inaccurate or incorrect.
The representations and warranties made by Corcentric and North
Mountain to each other in the Merger Agreement will not survive the consummation of the Business Combination. As a result, North Mountain and its stockholders will not have the protection of any indemnification, escrow, price adjustment or other
provisions that allow for a post-closing adjustment to be made to the total merger consideration if any representation or warranty made by Corcentric in the Merger Agreement proves to be inaccurate or incorrect. Accordingly, to the extent such
representations or warranties are incorrect, North Mountain would have no indemnification claim with respect thereto and its financial condition or results of operations could be adversely affected.
We may waive one or more of the conditions to
the Business Combination.
We may agree to waive, in whole or in part, some of the conditions to
our obligations to complete the Business Combination, to the extent permitted by the Existing Charter and applicable laws. For example, it is a condition to our obligations to close the Business Combination that certain of Corcentric’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 our board of directors determines that it is in our stockholders’ best interest to waive any such breach, then the board may elect to waive that condition and close the Business Combination. We are not able to waive the condition that
our stockholders approve the Business Combination.
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North Mountain’s ability to successfully effect
the Business Combination and New Corcentric’s ability to successfully operate the business thereafter will be largely dependent upon the efforts of certain key personnel of Corcentric, all of whom North Mountain expects to stay with New
Corcentric following the Closing. The loss of such key personnel could negatively impact the operations and financial results of the combined business.
North Mountain’s ability to successfully effect the Business
Combination and New Corcentric’s ability to successfully operate the business following the Closing is dependent upon the efforts of certain key personnel of Corcentric. Although North Mountain expects key personnel to remain with New Corcentric
following the Business Combination, there can be no assurance that they will do so. It is possible that Corcentric or New Corcentric will lose some key personnel, the loss of which could negatively impact the operations and profitability of New
Corcentric. Furthermore, following the Closing, certain of the key personnel of Corcentric who will become the management of New Corcentric may be unfamiliar with the requirements of operating a company regulated by the SEC, which could cause New
Corcentric to have to expend time and resources helping them become familiar with such requirements.
The North Mountain Board did not obtain a
fairness opinion in determining whether or not to proceed with the Business Combination and, as a result, the terms may not be fair from a financial point of view to the Public Stockholders.
In analyzing the Business Combination, the North Mountain Board
conducted significant due diligence on Corcentric. For a complete discussion of the factors utilized by the North Mountain Board in approving the Business Combination, see the section entitled, “Proposal No.
2—The Business Combination Proposal—Recommendation of the North Mountain Board and Reasons for the Business Combination.” The North Mountain Board believes because of the financial skills and background of its directors, it was qualified
to conclude that the Business Combination was fair from a financial perspective to its stockholders and that Corcentric’s fair market value was equal to at least 80% of the net assets held in the Trust Account (net of amounts withdrawn to fund
regulatory compliance costs and to pay taxes and excluding the amount of any deferred underwriting discount).
Notwithstanding the foregoing, the North Mountain Board did not obtain
a fairness opinion to assist it in its determination. Accordingly, the North Mountain Board may be incorrect in its assessment of the Business Combination.
North Mountain does not have a specified maximum
redemption threshold. The absence of such a redemption threshold may make it possible for North Mountain to complete the Business Combination with which a substantial majority of North Mountain’s stockholders do not agree.
The Existing Charter does not provide a specified maximum redemption
threshold, except that in no event will North Mountain redeem the Public Shares in an amount that would cause its net tangible assets to be less than $5,000,001 upon consummation of the Business Combination and after payment of underwriters’ fees
and commissions (such that North Mountain is not subject to the SEC’s “penny stock” rules). As a result, North Mountain may be able to complete the Business Combination even if a substantial majority of the Public Stockholders do not agree with
the Business Combination and have redeemed their shares. In the event the aggregate cash consideration North Mountain would be required to pay for all shares of North Mountain Class A Common Stock that are validly submitted for redemption plus
any amount required to satisfy cash conditions pursuant to the terms of the Business Combination exceed the aggregate amount of cash available to North Mountain, North Mountain will not complete the Business Combination or redeem any shares, all
shares of North Mountain Class A Common Stock submitted for redemption will be returned to the holders thereof, and North Mountain instead may search for an alternate business combination.
Public Stockholders will not have any rights or
interests in funds from the Trust Account, except under certain limited circumstances. To liquidate their investment, therefore, Public Stockholders may be forced to sell their Public Shares or Public Warrants, potentially at a loss.
Public Stockholders will be entitled to receive funds from the Trust
Account only upon the earliest to occur of: (i) North Mountain’s completion of an initial business combination, and then only in connection with those shares of North Mountain Class A Common Stock that such Public Stockholder properly elected to
redeem, subject to the limitations described herein, (ii) the redemption of any Public Shares properly submitted in connection with a stockholder vote to amend the Existing Charter (A) to modify the substance or timing of North
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Mountain’s obligation to redeem 100% of the Public Shares if North Mountain does not
complete an initial business combination by September 22, 2022 or (B) with respect to any other provision relating to stockholders’ rights or pre-initial business combination activity and (iii) the redemption of the Public Shares if North
Mountain is unable to complete an initial business combination by September 22, 2022, subject to applicable law and as further described herein. In no other circumstances will a Public Stockholder have any right or interest of any kind in the
Trust Account. Holders of Public Warrants will not have any right to the proceeds held in the Trust Account with respect to the Public Warrants. Accordingly, to liquidate their investment, Public Stockholders may be forced to sell their Public
Shares or Public Warrants, potentially at a loss.
If a stockholder or a “group” of stockholders
are deemed to hold in excess of 15% of the issued and outstanding shares of North Mountain Class A Common Stock, such stockholder or group will lose the ability to redeem all such shares in excess of 15% of the issued and outstanding shares of
North Mountain Class A Common Stock.
The Existing Charter provides that a Public Stockholder, individually
or 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 an aggregate of more than 15% of the shares of North Mountain Class A Common Stock sold in the IPO without North Mountain’s prior written consent. The inability of a stockholder to redeem an aggregate of more than 15% of the shares of
North Mountain Class A Common Stock sold in the IPO will reduce its influence over North Mountain’s ability to consummate its initial business combination and such stockholder could suffer a material loss on its investment in North Mountain if it
sells such excess shares in open market transactions.
If third parties bring claims against North
Mountain, 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.
North Mountain’s placing of funds in the Trust Account may not protect
those funds from third-party claims against North Mountain. Although North Mountain has sought to have all vendors, service providers, prospective target businesses and other entities with which it does business (except its independent registered
accounting firm) execute agreements with North Mountain waiving any right, title, interest or claim of any kind in or to any monies held in the Trust Account for the benefit of the 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 North Mountain’s 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, North Mountain’s 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 North Mountain than any alternative. North Mountain is not aware of any product or service providers who have not or will not provide such
waiver other than the underwriters of its IPO and North Mountain’s independent registered public accounting firm.
Examples of possible instances where North Mountain 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 North Mountain and will not seek recourse against the Trust Account for any reason. Upon redemption of the Public Shares, if North Mountain is unable to complete its initial business combination
within the prescribed timeframe, or upon the exercise of a redemption right in connection with its initial business combination, North Mountain will be required to provide for payment of claims of creditors that were not waived that may be
brought against North Mountain within the 10 years following redemption. Accordingly, the per-share redemption amount received by Public Stockholders could be less than the $10.00 per share initially held in the Trust Account, due to claims of
such creditors. Pursuant to a letter agreement, our Sponsor has agreed that it will be liable to North Mountain 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 North Mountain has entered into a written letter of intent, confidentiality or similar agreement or business combination
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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 Public 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 North Mountain’s indemnity of the underwriters of North Mountain’s IPO against certain liabilities, including liabilities under the Securities Act. However, North Mountain has not asked the
Sponsor to reserve for such indemnification obligations, nor has North Mountain independently verified whether the Sponsor has sufficient funds to satisfy its indemnity obligations and believes that the Sponsor’s only assets are securities of
North Mountain. Therefore, North Mountain cannot assure you that the Sponsor would be able to satisfy those obligations. None of North Mountain’s officers or directors will indemnify North Mountain for claims by third parties including, without
limitation, claims by vendors and prospective target businesses.
North Mountain’s directors may decide not to
enforce the indemnification obligations of the Sponsor, resulting in a reduction in the amount of funds in the Trust Account available for distribution to the Public Stockholders.
In the event that the proceeds in the Trust Account are reduced below
the lesser of (i) $10.00 per Public Share and (ii) the actual amount per 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, in
each case net of the interest which may be withdrawn to pay taxes, and the Sponsor asserts that it is unable to satisfy its obligations or that it has no indemnification obligations related to a particular claim, North Mountain’s independent
directors would determine whether to take legal action against the Sponsor to enforce its indemnification obligations.
While North Mountain currently expects that its independent directors
would take legal action on its behalf against the Sponsor to enforce its indemnification obligations to North Mountain, it is possible that North Mountain’s independent directors in exercising their business judgment and subject to their
fiduciary duties may choose not to do so in any particular instance if, for example, the cost of such legal action is deemed by the independent directors to be too high relative to the amount recoverable or if the independent directors determine
that a favorable outcome is not likely. If North Mountain’s independent directors choose not to enforce these indemnification obligations, the amount of funds in the Trust Account available for distribution to the Public Stockholders may be
reduced below $10.00 per share.
North Mountain may not have sufficient funds to
satisfy indemnification claims of its directors and executive officers.
North Mountain has agreed to indemnify its officers and directors to
the fullest extent permitted by law. However, North Mountain’s officers and directors have agreed to waive any right, title, interest or claim of any kind in or to any monies in the Trust Account and not to seek recourse against the Trust Account
for any reason whatsoever. Accordingly, any indemnification provided will be able to be satisfied by North Mountain only if (i) North Mountain has sufficient funds outside of the Trust Account or (ii) North Mountain consummates an initial
business combination. North Mountain’s obligation to indemnify its officers and directors may discourage stockholders from bringing a lawsuit against its officers or directors for breach of their fiduciary duty. These provisions also may have the
effect of reducing the likelihood of derivative litigation against North Mountain’s officers and directors, even though such an action, if successful, might otherwise benefit North Mountain and its stockholders. Furthermore, a stockholder’s
investment may be adversely affected to the extent North Mountain pays the costs of settlement and damage awards against its officers and directors pursuant to these indemnification provisions.
If, after North Mountain distributes the proceeds
in the Trust Account to the Public Stockholders, it files a bankruptcy petition or an involuntary bankruptcy petition is filed against North Mountain that is not dismissed, a bankruptcy court may seek to recover such proceeds, and North Mountain
and its board may be exposed to claims of punitive damages.
If, after North Mountain distributes the proceeds in the Trust Account
to its stockholders, it files a bankruptcy petition or an involuntary bankruptcy petition is filed against North Mountain that is not dismissed, any distributions received by North Mountain’s stockholders could be viewed under applicable
debtor/creditor
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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 North Mountain’s stockholders. In addition, the North Mountain Board may be viewed as having breached its fiduciary duty to its creditors and/or having
acted in bad faith, thereby exposing itself and North Mountain to claims of punitive damages, by paying North Mountain’s stockholders from the Trust Account prior to addressing the claims of creditors.
If, before distributing the proceeds in the Trust
Account to the Public Stockholders, North Mountain files a bankruptcy petition or an involuntary bankruptcy petition is filed against North Mountain that is not dismissed, the claims of creditors in such proceeding may have priority over the
claims of North Mountain’s stockholders and the per-share amount that would otherwise be received by North Mountain’s stockholders in connection with North Mountain’s liquidation may be reduced.
If, before distributing the proceeds in the Trust Account to the Public
Stockholders, North Mountain files a bankruptcy petition or an involuntary bankruptcy petition is filed against North Mountain that is not dismissed, the proceeds held in the Trust Account could be subject to applicable bankruptcy law, and may be
included in North Mountain’s bankruptcy estate and subject to the claims of third parties with priority over the claims of North Mountain’s stockholders. To the extent any bankruptcy claims deplete the Trust Account, the per-share amount that
would otherwise be received by North Mountain’s stockholders in connection with North Mountain’s liquidation may be reduced.
North Mountain stockholders may be held liable
for claims by third parties against North Mountain to the extent of distributions received by them upon redemption of their shares.
Under the Delaware General Corporation Law (the “DGCL”), stockholders
may be held liable for claims by third parties against a corporation to the extent of distributions received by them in a dissolution. The pro rata portion of the Trust Account distributed to the Public Stockholders upon the redemption of the
Public Shares in the event North Mountain does not complete an initial business combination by September 22, 2022 may be considered a liquidating distribution under Delaware law. If a corporation complies with certain procedures set forth in
Section 280 of the DGCL intended to ensure that it makes reasonable provision for all claims against it, including a 60-day notice period during which any third-party claims can be brought against the corporation, a 90-day period during which the
corporation may reject any claims brought, and an additional 150-day waiting period before any liquidating distributions are made to stockholders, any liability of stockholders with respect to a liquidating distribution is limited to the lesser
of such stockholder’s pro rata share of the claim or the amount distributed to the stockholder, and any liability of the stockholder would be barred after the third anniversary of the dissolution. However, it is North Mountain’s intention to
redeem the Public Shares as soon as reasonably possible following September 22, 2022 in the event it does not complete its initial business combination and, therefore, North Mountain does not intend to comply with the foregoing procedures.
Because North Mountain will not be complying with Section 280, Section
281(b) of the DGCL requires North Mountain to adopt a plan, based on facts known to North Mountain at such time that will provide for North Mountain’s payment of all existing and pending claims or claims that may be potentially brought against
North Mountain within the 10 years following its dissolution. However, because North Mountain is a blank check company, rather than an operating company, and North Mountain’s operations are limited to searching for prospective target businesses
to acquire, the only likely claims to arise would be from North Mountain’s vendors (such as lawyers, investment bankers, etc.) or prospective target businesses. If North Mountain’s 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. North Mountain cannot assure you that it will properly assess all claims that may be potentially brought against us. As such, North Mountain’s stockholders could potentially be liable for any
claims to the extent of distributions received by them (but no more) and any liability of North Mountain’s stockholders may extend beyond the third anniversary of such date. Furthermore, if the pro rata portion of the Trust Account distributed to
the Public Stockholders upon the redemption of the Public Shares in the event North Mountain does not complete an initial business combination by September 22, 2022 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.
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North Mountain’s Sponsor, officers and
directors have potential conflicts of interest in recommending that stockholders vote in favor of approval of the Business Combination Proposal and approval of the other proposals described in this proxy statement/prospectus.
When considering the North Mountain Board’s recommendation that North
Mountain’s stockholders vote in favor of the approval of the Business Combination Proposal, North Mountain’s stockholders should be aware that certain of North Mountain’s Sponsor, executive officers and directors have interests in the Business
Combination and the PIPE Financing that may be different from or in addition to (and which may conflict with) the interests of North Mountain’s stockholders. These interests include:
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the beneficial ownership of the Sponsor and certain members of the North Mountain Board and officers of an aggregate of
3,306,250 shares of North Mountain Class B Common Stock and 4,145,000 Private Placement Warrants, which shares and warrants were acquired for an aggregate investment of $4,145,000 at the time of the IPO and would become worthless if
North Mountain does not complete a business combination by September 22, 2022, as such stockholders have waived any redemption right with respect to these shares. After giving effect to the provisions of the Share Vesting and Warrant
Surrender Agreement, the Sponsor would own up to an aggregate of 4,706,250 shares of North Mountain Class A Common Stock (under the no redemption scenario and including shares subject to vesting) and no Private Placement Warrants. Such
shares have an aggregate market value of approximately $ , based on the closing price of North Mountain Class A Common Stock of $ on , 2022, the North Mountain Record Date. Because the shares of North Mountain Class B Common
Stock were purchased for a nominal amount, the Sponsor could achieve a significant positive return even if the trading price of shares of New Corcentric following the closing of the Business Combination declines significantly. Each of
our officers and directors is a member of the Sponsor. Harbour Reach Holdings, LLC is the managing member of the Sponsor and Mr. Michael Platt is the indirect controlling member of Harbour Reach Holdings, LLC;
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Millais Limited, an affiliate of the Sponsor and an affiliate of North Mountain, agreed to purchase 2,000,000 PIPE Shares and
1,000,000 PIPE Warrants for an aggregate purchase price of $20.0 million in the PIPE Financing;
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SMMC Sponsor Interests, LLC, an affiliate of North Mountain and an entity controlled by Charles Bernicker (Chief Executive
Officer and a director of North Mountain) and of which Douglas J. Pauls (a director of North Mountain) is a non-managing member, agreed to purchase 1,500,000 PIPE Shares and 750,000 PIPE Warrants for an aggregate purchase price of
$15.0 million in the PIPE Financing;
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the continued indemnification of current directors and officers of North Mountain and the continuation of directors’ and officers’
liability insurance after the Business Combination;
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the fact that our Sponsor, officers and directors will be reimbursed for out-of-pocket expenses incurred in connection with
activities on our behalf, such as identifying potential target businesses and performing due diligence on suitable business combinations. As of January 6, 2022, North Mountain’s Sponsor and its affiliates had incurred $996 of unpaid
reimbursable expenses; and
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the fact that our Sponsor, officers and directors will lose their entire investment in us if an initial business combination is
not completed.
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These interests may influence North Mountain’s directors in making
their recommendation that you vote in favor of the Business Combination Proposal, and the transactions contemplated thereby. These interests were considered by the North Mountain Board when it approved the Business Combination.
Concentration of ownership after the Business
Combination may have the effect of delaying or preventing a change in control.
It is anticipated that, following the completion of the Business
Combination and assuming (for illustrative purposes) redemptions of the maximum possible percentage of our outstanding Public Shares and $120,000,000.00 in cash being used as consideration in the Business Combination to purchase shares of
Corcentric stockholders, such that North Mountain will have a minimum of $150,000,000 cash at Closing, North Mountain’s initial stockholders, including our Sponsor, will retain an ownership interest of 4.3% of New Corcentric, Corcentric
stockholders will own 80.8% of New Corcentric and the PIPE Investors will own approximately 4.5% of New Corcentric. As a result, Corcentric stockholders may have the ability to determine
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the outcome of corporate actions of New Corcentric requiring stockholder approval. This
concentration of ownership may have the effect of delaying or preventing a change in control and might adversely affect the market price of New Corcentric Common Stock. See the section entitled “Unaudited Pro
Forma Condensed Combined Financial Information” for further information.
We may not be able to complete the PIPE Financing
in connection with the Business Combination.
We may not be able to complete the PIPE Financing on terms that are
acceptable to us, or at all. If we do not complete the PIPE Financing, we may not be able to complete the Business Combination. The terms of any alternative financing may be more onerous to New Corcentric than the PIPE Financing, and we may be
unable to obtain alternative financing on terms that are acceptable to us, or at all. If we do not complete the PIPE Financing, and do not obtain alternative financing, we may not be able to complete the Business Combination. The failure to
secure additional financing could have a material adverse effect on the continued development or growth of New Corcentric. None of our officers, directors or stockholders is required to provide any financing to us in connection with or after the
Business Combination.
Because Corcentric is not conducting an
underwritten offering of its securities, no underwriter has conducted a due diligence review of Corcentric's business, operations or financial condition or reviewed the disclosure in this proxy statement/prospectus.
Section 11 of the Securities Act (“Section 11”) imposes liability on
parties, including underwriters, involved in a securities offering if the registration statement contains a materially false statement or material omission. To effectively establish a due diligence defense against a cause of action brought
pursuant to Section 11, a defendant, including an underwriter, carries the burden of proof to demonstrate that such party, after reasonable investigation, believed that the statements in the registration statement were free from material
misstatements and omissions. In order to meet this burden of proof, underwriters in a registered offering typically conduct extensive due diligence of the registrant and vet the registrant’s disclosures in the registration statement. Such due
diligence may include calls with the issuer’s management, review of material agreements, and background checks on key personnel, among other investigations.
Because Corcentric intends to become publicly traded through the
Business Combination rather than through an underwritten offering of Corcentric common stock, no underwriter is involved in the transaction. As a result, no underwriter has conducted diligence on Corcentric or North Mountain in order to
establish a due diligence defense with respect to the disclosures presented in this proxy statement/prospectus. If such review and analysis had occurred, it is possible that certain information in this proxy statement/prospectus may have been
presented in a different manner or additional information may have been presented at the request of such underwriter.
North Mountain may amend the terms of the Public
Warrants in a manner that may be adverse to holders of Public Warrants with the approval by the holders of at least 50% of the then outstanding Public Warrants. As a result, the exercise price of the North Mountain Warrants could be increased,
the exercise period could be shortened and the number of shares of New Corcentric Common Stock purchasable upon exercise of a Public Warrant could be decreased, all without your approval.
The Public Warrants were issued in registered form under the North
Mountain Warrant Agreement between Continental Stock Transfer & Trust Company, N.A. as warrant agent, and North Mountain. The North Mountain Warrant Agreement provides that the terms of the Public Warrants may be amended without the consent
of any holder to cure any ambiguity or correct any defective provision, but requires the approval by the holders of at least 50% of the then outstanding Public Warrants to make any change that adversely affects the interests of the registered
holders of the Public Warrants. Accordingly, North Mountain may amend the terms of the Public Warrants in a manner adverse to a holder if holders of at least 50% of the then outstanding North Mountain Warrants approve of such amendment.
Although North Mountain’s ability to amend the terms of the Public Warrants with the consent of at least 50% of the then outstanding Public Warrants is unlimited, examples of such amendments could be amendments to, among other things, increase
the exercise price of the North Mountain Warrants, convert the Public Warrants into cash or stock, shorten the exercise period or decrease the number of shares of North Mountain Class A Common Stock purchasable upon exercise of a Public
Warrant.
North Mountain may redeem your unexpired Public
Warrants prior to their exercise at a time that is disadvantageous to you, thereby making your Public Warrants worthless.
North Mountain has the ability to redeem outstanding Public Warrants at
any time after they become exercisable and prior to their expiration, at a price of $0.01 per warrant, provided that the last reported sales
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price of North Mountain Class A Common Stock equals or exceeds $18.00 per share (as
adjusted for stock splits, stock dividends, reorganizations, recapitalizations and the like) for any 20 trading days within a 30 trading-day period ending on the third trading day prior to the date on which North Mountain gives proper notice of
such redemption and provided certain other conditions are met. Historical trading prices for North Mountain Class A Common Stock have not exceeded $18.00 per share and, as such, the Public Warrants have not become redeemable by North Mountain.
If and when the Public Warrants become redeemable by North Mountain, North Mountain may not exercise its redemption right if the issuance of shares of North Mountain Class A Common Stock upon exercise of the Public Warrants is not exempt from
registration or qualification under applicable state blue sky laws or North Mountain is unable to effect such registration or qualification. North Mountain will use its best efforts to register or qualify such shares of North Mountain Class A
Common Stock under the blue sky laws of the state of residence in those states in which the Public Warrants were offered by North Mountain in its IPO. In the event that North Mountain elects to redeem the Public Warrants, North Mountain will
fix a date for the redemption and mail a notice of redemption by first class mail, postage prepaid, not less than 30 days prior to such redemption date to the registered holders of the Public Warrants to be redeemed at their last addresses as
they appear on the registration books. Any notice of redemption mailed in the manner as provided in the North Mountain Warrant Agreement will be conclusively presumed to have been duly given whether or not the holder received such notice.
Redemption of the outstanding Public Warrants could force you (i) to exercise your Public Warrants and pay the exercise price therefor at a time when it may be disadvantageous for you to do so, (ii) to sell your Public Warrants at the
then-current market price when you might otherwise wish to hold your Public Warrants or (iii) to accept the nominal redemption price which, at the time the outstanding Public Warrants are called for redemption, is likely to be substantially
less than the market value of your Public Warrants. None of the Private Placement Warrants will be redeemable by North Mountain so long as they are held by the Sponsor or its permitted transferees, and, after giving effect to the provisions of
the Share Vesting and Warrant Surrender Agreement, there will be no Private Placement Warrants outstanding.
North Mountain stockholders who redeem their
North Mountain Class A Common Stock may continue to hold any Public Warrants that they own, the exercise of which would result in additional dilution to non-redeeming North Mountain stockholders.
North Mountain stockholders who redeem their shares of North
Mountain Class A Common Stock may continue to hold any Public Warrants that they owned prior to redemption, the exercise of which would result in additional dilution to non-redeeming North Mountain stockholders. Assuming (a) all redeeming North
Mountain stockholders acquired units in the IPO and continue to hold the Public Warrants that were included in such units and (b) the contractual maximum redemption of North Mountain Class A Common Stock, 862,500 Public Warrants would be
retained by redeeming North Mountain stockholders. As a result, the redeeming North Mountain stockholders would hold Public Warrants with an aggregate market value of $ , based on the closing price on , 2022, the North Mountain Record
Date, while non-redeeming North Mountain stockholders would suffer additional dilution in their percentage ownership and voting interest of New Corcentric upon exercise of the Public Warrants held by redeeming North Mountain stockholders.
Following the Business Combination, a significant
portion of New Corcentric’s total outstanding shares will be restricted from immediate resale, but may be sold into the market shortly thereafter. This could cause the market price of New Corcentric’s Class A Common Stock to drop significantly,
even if New Corcentric’s business is doing well.
Sales of a substantial number of shares of New Corcentric Common Stock
in the public market could occur at any time. If New Corcentric’s stockholders sell, or the market perceives that our stockholders intend to sell, substantial amounts of New Corcentric Common Stock in the public market following the Business
Combination, the market price of New Corcentric Common Stock could decline significantly.
Following the Business Combination, and without giving effect to any
performance vesting provisions applicable to any shares of North Mountain Common Stock pursuant to the Share Vesting and Warrant Surrender Agreement, assuming that (i) none of the Public Stockholders exercise their redemption rights, (ii) there
are no exercises of any North Mountain Warrants outstanding as of immediately prior to the Closing and (iii) no Earnout Shares have been issued, there will be 112,238,698 shares of New Corcentric Common Stock outstanding. Of these shares, the
majority will be available for sale in the public market beginning 180 days after the date of the Closing, following the expiration of lock-up agreements entered into by certain of Corcentric’s stockholders, directors and officers in connection
with the Business Combination. North Mountain may agree to
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release these stockholders from their lock-up agreements at any time and without
notice, which would allow for earlier sales of shares in the public market. Sales of a substantial number of such shares upon expiration of the lock-up agreements, the perception that such sales may occur, or early release of restrictions in the
lock-up agreements, could cause the market price of New Corcentric Common Stock to fall or make it more difficult for you to sell your New Corcentric Common Stock at a time and price that you deem appropriate.
In addition, promptly following the completion of the Business
Combination, New Corcentric intends to file one or more registration statements registering the issuance of additional shares of New Corcentric Common Stock subject to options or other equity awards issued or reserved for future issuance under
New Corcentric’s equity incentive plans. Shares registered under these registration statements will be available for sale in the public market subject to vesting arrangements and exercise of options, the lock-up agreements described above and, in
the case of New Corcentric’s affiliates, the restrictions of Rule 144 under the Securities Act.
Additionally, certain stockholders, the PIPE Investors and holders of
Public Warrants, or their transferees, will have rights, subject to some conditions, to require New Corcentric to file one or more registration statements covering their shares or to include their shares in registration statements that New
Corcentric may file for itself or other shareholders. If New Corcentric were to register the resale of these shares, they could be freely sold in the public market. If these additional shares are sold, or if it is perceived that they will be
sold, in the public market, the trading price of New Corcentric Common Stock could decline.
The Existing Charter and the Proposed Charter
require, to the fullest extent permitted by law, that derivative actions brought in North Mountain’s or New Corcentric’s name, as applicable, against their respective directors, officers, other employees or stockholders for breach of fiduciary
duty and other similar actions may be brought only in the Court of Chancery in the State of Delaware, which may have the effect of discouraging lawsuits against North Mountain’s or New Corcentric’s directors, officers, other employees or
stockholders, as applicable.
The Existing Charter and the Proposed Charter require, to the fullest
extent permitted by law, that derivative actions brought in North Mountain’s or New Corcentric’s name, as applicable, against their respective directors, officers, other employees or stockholders for breach of fiduciary duty and other similar
actions may be brought only in the Court of Chancery in the State of Delaware except any action (A) as to which the Court of Chancery in the State of Delaware determines that there is an indispensable party not subject to the jurisdiction of the
Court of Chancery (and the indispensable party does not consent to the personal jurisdiction of the Court of Chancery within ten days following such determination), (B) which is vested in the exclusive jurisdiction of a court or forum other than
the Court of Chancery, or (C) for which the Court of Chancery does not have subject matter jurisdiction. This exclusive forum provision may limit a stockholder’s ability to bring a claim in a judicial forum that it finds favorable for disputes
with North Mountain or New Corcentric, as applicable, or any of their respective directors, officers, other employees or stockholders, which may discourage lawsuits with respect to such claims, although their respective stockholders will not be
deemed to have waived their compliance with federal securities laws and the rules and regulations thereunder. However, there is no assurance that a court would enforce the choice of forum provision contained in the Existing Charter and the
Proposed Charter. If a court were to find such provision to be inapplicable or unenforceable in an action, North Mountain or New Corcentric, as applicable, may incur additional costs associated with resolving such action in other jurisdictions,
which could harm their business, operating results and financial condition.
The Existing Charter and the Proposed Charter provide that the
exclusive forum provision will be applicable to the fullest extent permitted by applicable law. The Proposed Charter also provides that (A) the exclusive forum provision shall not apply to claims or causes of action brought to enforce a duty or
liability created by the Securities Act or the Exchange Act, or any other claim for which the federal courts have exclusive jurisdiction and (B) unless New Corcentric consents in writing to the selection of an alternative forum, to the fullest
extent permitted by law, the federal district courts of the United States will be the exclusive forum for the resolution of any complaint asserting a cause of action arising under the Securities Act.
Section 27 of the Exchange Act creates exclusive federal jurisdiction
over all suits brought to enforce any duty or liability created by the Exchange Act or the rules and regulations thereunder. As a result, the exclusive forum provision will not apply to suits brought to enforce any duty or liability created by
the Exchange Act or any other claim for which the federal courts have exclusive jurisdiction. Section 22 of the Securities Act creates concurrent jurisdiction for federal and state courts over all suits brought to enforce any duty or liability
created by the Securities Act or the rules and regulations thereunder. Accordingly, both state and federal courts have jurisdiction to entertain such claims. As
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noted above, the Proposed Charter provides that the federal district courts of the
United States will be the exclusive forum for the resolution of any complaint asserting a cause of action under the Securities Act. Due to the concurrent jurisdiction for federal and state courts created by Section 22 of the Securities Act over
all suits brought to enforce any duty or liability created by the Securities Act or the rules and regulations thereunder, there is uncertainty as to whether a court would enforce the exclusive form provision. Investors also cannot waive
compliance with the federal securities laws and the rules and regulations thereunder.
If, following the Business Combination,
securities or industry analysts do not publish or cease publishing research or reports about New Corcentric, its business, or its market, or if they change their recommendations regarding New Corcentric’s securities adversely, the price and
trading volume of New Corcentric’s securities could decline.
The trading market for New Corcentric’s securities will be influenced
by the research and reports that industry or securities analysts may publish about New Corcentric, its business, market or competitors. Securities and industry analysts do not currently, and may never, publish research on New Corcentric. If no
securities or industry analysts commence coverage of New Corcentric, New Corcentric’s share price and trading volume would likely be negatively impacted. If any of the analysts who may cover New Corcentric change their recommendation regarding
New Corcentric Common Stock adversely, or provide more favorable relative recommendations about New Corcentric’s competitors, the price of shares of New Corcentric Common Stock would likely decline. If any analyst who may cover New Corcentric
were to cease coverage of New Corcentric or fail to regularly publish reports on it, New Corcentric could lose visibility in the financial markets, which in turn could cause its share price or trading volume to decline.
Anti-takeover provisions contained in the
Proposed Charter and the Proposed Bylaws, as well as provisions of Delaware law, could impair a takeover attempt.
The Proposed Charter and the Proposed Bylaws contain provisions that
could have the effect of delaying or preventing changes in control or changes in our management without the consent of our board of directors. These provisions include:
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no cumulative voting in the election of directors, which limits the ability of minority stockholders to elect director candidates;
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the exclusive right of our board of directors to elect a director to fill a vacancy created by the expansion of the board of
directors or the resignation, death, or removal of a director with or without cause by stockholders, which prevents stockholders from being able to fill vacancies on our board of directors;
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the ability of our board of directors to determine whether to issue shares of our preferred stock and to determine the price and
other terms of those shares, including preferences and voting rights, without stockholder approval, which could be used to significantly dilute the ownership of a hostile acquirer;
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a prohibition on stockholder action by written consent, which forces stockholder action to be taken at an annual or special
meeting of our stockholders;
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the requirement that a special meeting of stockholders may be called only by the chairperson of the board of directors, the chief
executive officer or the board of directors, which may delay the ability of our stockholders to force consideration of a proposal or to take action, including the removal of directors;
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limiting the liability of, and providing indemnification to, our directors and officers;
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controlling the procedures for the conduct and scheduling of stockholder meetings;
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providing for a staggered board, in which the members of the board of directors are divided into three classes to serve for a
period of three years from the date of their respective appointment or election;
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requiring the affirmative vote of at least 66 2/3% of the voting power of the outstanding shares of capital stock of
New Corcentric entitled to vote generally in the election of directors, voting together as a single class, to amend the Proposed Bylaws; provided, however, that if the New Corcentric Board has
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approved such adoption, then only the affirmative vote of the holders of at least a
majority of the voting power of all then-outstanding shares of New Corcentric's capital stock entitled to vote generally in the election of directors, voting together as a single class shall be required to adopt, amend or repeal any provision of
the Proposed Bylaws; and
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advance notice procedures that stockholders must comply with in order to nominate candidates to the New Corcentric Board or to
propose matters to be acted upon at a stockholders’ meeting, which may discourage or deter a potential acquirer from conducting a solicitation of proxies to elect the acquirer’s own slate of directors or otherwise attempting to obtain
control of New Corcentric.
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These provisions, alone or together, could delay hostile takeovers and
changes in control of New Corcentric or changes in the New Corcentric Board and New Corcentric’s management.
As a Delaware corporation, we are also subject to provisions of
Delaware law, including Section 203 of the DGCL, which prevents some stockholders holding more than 15% of our outstanding common stock from engaging in certain business combinations without approval of the holders of substantially all of New
Corcentric Common Stock. Any provision of the Proposed Charter, the Proposed Bylaws or Delaware law that has the effect of delaying or deterring a change in control could limit the opportunity for our stockholders to receive a premium for their
shares of New Corcentric Common Stock and could also affect the price that some investors are willing to pay for New Corcentric Common Stock.
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We are furnishing this proxy statement/prospectus to our stockholders
as part of the solicitation of proxies by our board of directors for use at the special meeting of stockholders to be held on , 2022, and at any adjournment or postponement thereof. This proxy statement/prospectus is first being furnished to
our stockholders on or about , 2022. This proxy statement/prospectus provides you with information you need to know to be able to vote or instruct your vote to be cast at the special meeting.
The special meeting will be held on , 2022, at 10:00 a.m., Eastern
time, conducted via live webcast at the following address . You will need the control number that is printed on your proxy card to enter the special meeting. North Mountain recommends that you log in at least 15 minutes before the special
meeting to ensure you are logged in when the special meeting starts. Please note that you will not be able to attend the special meeting in person.
At the special meeting North Mountain will ask the North Mountain
stockholders to vote in favor of the following proposals:
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The Pre-Mergers Charter Amendment Proposal—a proposal to adopt an amendment to North Mountain’s Existing Charter to increase the
authorized shares of North Mountain Class A Common Stock and shares of preferred stock.
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The Business Combination Proposal—a proposal to approve and adopt the Merger Agreement and the Business Combination.
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The Post-Mergers Charter Approval Proposal—a proposal to approve the adoption of the Proposed Charter.
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The Advisory Charter Proposals—proposals to approve, on a non-binding advisory basis, certain governance provisions in the
Proposed Charter, presented separately in accordance with the SEC requirements.
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The Equity Incentive Plan Proposal—a proposal to approve and adopt the equity incentive award plan established to be effective
as of the Closing.
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The Employee Stock Purchase Plan Proposal—a proposal to approve and adopt the employee stock purchase plan established to be
effective as of the Closing.
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The Nasdaq PIPE Issuance Proposal—a proposal to consider and vote upon a proposal to approve, for purposes of complying with
the applicable listing rules of the Nasdaq Stock Market, the issuance of PIPE Shares, the delivery of PIPE Warrants and the issuance of PIPE Warrant Shares issuable upon exercise of the PIPE Warrants to the PIPE Investors in the PIPE
Financing.
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The Adjournment Proposal—a proposal to adjourn the special meeting to a later date or dates, if necessary, to permit further
solicitation and vote of proxies if, based upon the tabulated vote at the time of the special meeting, there are not sufficient votes to approve one or more proposals presented to stockholders.
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Our board of directors believes that each of the Pre-Mergers Charter
Amendment Proposal, the Business Combination Proposal, the Post-Mergers Charter Approval Proposal, each of the Advisory Charter Proposals, the Equity Incentive Plan Proposal, the Employee Stock Purchase Plan Proposal, the Nasdaq PIPE Issuance
Proposal and the Adjournment Proposal to be presented at the special meeting is in the best interests of North Mountain and our stockholders and unanimously recommends that its stockholders vote “FOR” each of these proposals.
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When you consider the recommendation of our board of directors in
favor of approval of the Business Combination Proposal, you should keep in mind that our directors and officers have interests in the Business Combination and the PIPE Financing that are different from or in addition to (or which may conflict
with) your interests as a stockholder. These interests include, among other things:
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the beneficial ownership of the Sponsor and certain members of the North Mountain Board and officers of an aggregate of
3,306,250 shares of North Mountain Class B Common Stock and 4,145,000 Private Placement Warrants, which shares and warrants were acquired for an aggregate investment of $4,145,000 at the time of the IPO and would become worthless if
North Mountain does not complete a business combination by September 22, 2022, as such stockholders have waived any redemption right with respect to these shares. After giving effect to the provisions of the Share Vesting and Warrant
Cancellation Agreement, the Sponsor would own up to an aggregate of 4,706,250 shares of North Mountain Class A Common Stock (including shares subject to vesting) and no Private Placement Warrants. Such shares have an aggregate market
value of approximately $ , based on the closing price of North Mountain Class A Common Stock of $ on , 2022, the North Mountain Record Date. Because the shares of North Mountain Class B Common Stock were purchased for a
nominal amount, the Sponsor could achieve a significant positive return even if the trading price of shares of New Corcentric following the closing of the Business Combination declines significantly. Each of our officers and directors
is a member of the Sponsor. Harbour Reach Holdings, LLC is the managing member of the Sponsor and Mr. Michael Platt is the indirect controlling member of Harbour Reach Holdings, LLC;
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North Mountain’s sponsor is North Mountain LLC, a Delaware limited liability company. The Sponsor currently holds 3,306,250 shares
of North Mountain Class B Common Stock and 4,145,000 Private Placement Warrants, acquired for an aggregate investment of $4,145,000 at the time of the IPO. Harbour Reach Holdings, LLC is the managing member of the Sponsor and Mr. Michael
Platt is the indirect controlling member of Harbour Reach Holdings, LLC. Messrs. Bernicker, Dermatas, Metzger, O’Callaghan and Pauls are non-managing members of the Sponsor;
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Millais Limited, an affiliate of the Sponsor and an affiliate of North Mountain, agreed to purchase 2,000,000 PIPE Shares and
1,000,000 PIPE Warrants for an aggregate purchase price of $20.0 million in the PIPE Financing;
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SMMC Sponsor Interests, LLC, an affiliate of North Mountain and an entity controlled by Charles Bernicker (Chief Executive
Officer and a director of North Mountain) and of which Douglas J. Pauls (a director of North Mountain) is a non-managing member, agreed to purchase 1,500,000 PIPE Shares and 750,000 PIPE Warrants for an aggregate purchase price of
$15.0 million in the PIPE Financing;
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the continued indemnification of current directors and officers of North Mountain and the continuation of directors’ and officers’
liability insurance after the Business Combination;
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the fact that our Sponsor, officers and directors will be reimbursed for out-of-pocket expenses incurred in connection with
activities on our behalf, such as identifying potential target businesses and performing due diligence on suitable business combinations. As of January 6, 2022, North Mountain’s Sponsor and its affiliates had incurred $996 of unpaid
reimbursable expenses; and
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the fact that our Sponsor, officers and directors will lose their entire investment in us if an initial business combination is
not completed.
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These interests may influence our directors in making their
recommendation that you vote in favor of the approval of the Business Combination and the transactions contemplated thereby. These interests were considered by the North Mountain Board when the North Mountain Board approved the Business
Combination.
You will be entitled to vote or direct votes to be cast at the special
meeting if you owned shares of North Mountain Class A Common Stock or North Mountain Class B Common Stock at the close of business on , 2022, which is the North Mountain Record Date for the special meeting. You are entitled to one vote for
each share of North Mountain Class A Common Stock or North Mountain Class B Common Stock that you owned as of the close of business on the North Mountain Record Date. If your shares are held in “street
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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. On the North Mountain Record Date, there were 13,225,000 shares of North Mountain Class A Common Stock outstanding and 3,306,250 shares of North
Mountain Class B Common Stock outstanding, which are held by our Sponsor.
Our Sponsor has agreed to vote all of their shares of North Mountain
Common Stock in favor of the Business Combination Proposal. North Mountain’s issued and outstanding North Mountain Warrants do not have voting rights at the special meeting.
Each share of North Mountain Class A Common Stock or North Mountain
Class B Common Stock that you own in your name entitles you to one vote on each of the proposals for the special meeting of stockholders. Your one or more proxy cards show the number of shares of North Mountain Common Stock that you own.
If you are a holder of record, there are two ways to vote your shares
of North Mountain Common Stock at the special meeting:
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You can vote by completing, signing and returning the enclosed proxy card in the postage-paid envelope provided. 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.
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 of North Mountain Common Stock will be voted as recommended by the North Mountain Board. With respect to proposals for the special meeting, that means: “FOR” each of these proposals.
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You can attend the special meeting and vote in person online. However, if your shares of North Mountain Common Stock are held in
the name of your broker, bank or other nominee, you must get a proxy from the broker, bank or other nominee. That is the only way we can be sure that the broker, bank or nominee has not already voted your shares of North Mountain Common
Stock.
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If you have any questions about how to vote or direct a vote in respect
of your shares of North Mountain Common Stock, you may call Innisfree, our proxy solicitor, at (877) 750-5836; banks and brokers can call collect at (212) 750-5833.
A quorum of our stockholders is necessary to hold a valid meeting. A
quorum will be present at the special meeting if a majority of the North Mountain Common Stock outstanding and entitled to vote at the special meeting is represented in person online or by proxy. Abstentions and broker non-votes will count as
present for the purposes of establishing a quorum.
The approval of the Pre-Mergers Charter Amendment Proposal requires the
affirmative vote (in person online or by proxy) of (i) the holders of a majority of the outstanding shares of North Mountain Common Stock, voting together as a single class and (ii) the holders of a majority of the outstanding shares of North
Mountain Class A Common Stock, voting separately as a single class. Accordingly, a North Mountain stockholder’s failure to vote by proxy or to vote in person online at the special meeting, an abstention from voting or a broker non-vote will have
the same effect as a vote against this proposal.
The approval of the Post-Mergers Charter Approval Proposal requires the
affirmative vote (in person online or by proxy) of (i) the holders of a majority of the outstanding shares of North Mountain Common Stock, voting together as a single class and (ii) the holders of a majority of the outstanding shares of North
Mountain Class B Common Stock, voting separately as a single class. Accordingly, a North Mountain stockholder’s failure to vote by proxy or to vote in person online at the special meeting, an abstention from voting or a broker non-vote will have
the same effect as a vote against this proposal.
The approval of the Business Combination Proposal, each of the
Advisory Charter Proposals, the Equity Incentive Plan Proposal, the Employee Stock Purchase Plan Proposal, the Nasdaq PIPE Issuance Proposal and
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the Adjournment Proposal require the affirmative vote (in person online or by proxy) of
a majority of the votes cast by the holders of shares of North Mountain Common Stock, voting together as a single class, that are present or represented by proxy at the special meeting. Accordingly, a North Mountain stockholder’s failure to vote
by proxy or to vote in person online at the special meeting, an abstention from voting or a broker non-vote will have no effect on the outcome of any vote on these proposals.
Holders of all of the North Mountain Class B Common Stock (or 20% of
the outstanding shares of North Mountain Common Stock) have agreed to vote in favor of the Business Combination Proposal.
Under the rules of various national and regional securities exchanges,
your broker, bank or nominee cannot vote your shares with respect to non-discretionary matters unless you provide instructions on how to vote in accordance with the information and procedures provided to you by your broker, bank or nominee.
North Mountain believes the proposals presented to its stockholders will be considered non-discretionary and therefore your broker, bank or nominee cannot vote your shares without your instruction. If you do not provide instructions with your
proxy, your bank, broker or other nominee may deliver a proxy card expressly indicating that it is NOT voting your shares; this indication that a bank, broker or nominee is not voting your shares is referred to as a “broker non-vote.”
Abstentions and broker non-votes will be counted for purposes of
determining the presence of a quorum at the special meeting. For purposes of approval, an abstention or failure to vote will have the same effect as a vote against each of the Pre-Mergers Charter Amendment Proposal and the Post-Mergers Charter
Approval Proposal, and will have no effect on any of the other proposals.
If you give a proxy, you may revoke it at any time before the special
meeting or at such meeting by doing any one of the following:
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you may send another proxy card with a later date;
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you may notify Innisfree before the special meeting that you have revoked your proxy; or
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you may attend the special meeting, revoke your proxy and vote in person online, as indicated above.
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Pursuant to the Existing Charter, any holders of Public Shares may
demand that such shares be redeemed in exchange for a pro rata share of the aggregate amount on deposit in the Trust Account, including any amounts representing interest earned on the Trust Account, less Permitted Withdrawals, provided that such
stockholders follow the specific procedures for redemption set forth in this proxy statement/prospectus relating to the stockholder vote on the Business Combination. If demand is properly made and the Business Combination is consummated, these
shares, immediately prior to the Business Combination, will cease to be outstanding and will represent only the right to receive a pro rata share of the aggregate amount on deposit in the Trust Account as of two business days prior to the
consummation of the Business Combination, net of amounts withdrawn to fund North Mountain’s regulatory compliance costs and any taxes payable, upon the consummation of the Business Combination. For illustrative purposes, based on funds in the
Trust Account of approximately $ million on , the estimated per share redemption price would have been approximately $ .
Redemption rights are not available to holders of North Mountain
Warrants in connection with the Business Combination.
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In order to exercise your redemption rights, you must, prior to 5:00
p.m., Eastern time, on , 2022 (two business days before the special meeting), both:
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Submit a request in writing that North Mountain redeem your Public Shares for cash to Continental Stock Transfer & Trust
Company, North Mountain’s transfer agent, at the following address:
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Continental Stock Transfer & Trust Company
One State Street Plaza, 30th Floor
New York, New York 10004
Attention: Mark Zimkind
E-mail: mzimkind@continentalstock.com
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Deliver your Public Shares either physically or electronically through DTC to North Mountain’s transfer agent. Stockholders
seeking to exercise their redemption rights and opting to deliver physical certificates should allot sufficient time to obtain physical certificates from the transfer agent. It is North Mountain’s understanding that stockholders should
generally allot at least one week to obtain physical certificates from the transfer agent. However, North Mountain does not have any control over this process and it may take longer than one week. Stockholders who hold their shares in
street name will have to coordinate with their bank, broker or other nominee to have the shares certificated or delivered electronically. If you do not submit a written request and deliver your Public Shares as described above, your
shares will not be redeemed.
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Any demand for redemption, once made, may be withdrawn at any time
until the deadline for exercising redemption requests and thereafter until the Closing, with North Mountain’s consent. If you delivered your shares for redemption to North Mountain’s transfer agent and decide within the required timeframe not to
exercise your redemption rights, you may request that North Mountain’s transfer agent return the shares (physically or electronically). You may make such request by contacting North Mountain’s transfer agent at the phone number or address listed
above.
Each redemption of Public Shares by the Public Stockholders will
decrease the amount in the Trust Account. In no event, however, will North Mountain redeem Public Shares in an amount that would cause its net tangible assets to be less than $5,000,001 upon completion of the Business Combination.
Prior to exercising redemption rights, stockholders should verify the
market price of their Public Shares as they may receive higher proceeds from the sale of their Public Shares in the public market than from exercising their redemption rights if the market price per share is higher than the redemption price.
North Mountain cannot assure you that you will be able to sell your Public Shares in the open market, even if the market price per share is higher than the redemption price stated above, as there may not be sufficient liquidity in the Public
Shares when you wish to sell your shares.
If you exercise your redemption rights, your Public Shares will cease
to be outstanding immediately prior to the Business Combination and will only represent the right to receive a pro rata share of the aggregate amount on deposit in the Trust Account, including any amounts representing interest earned on the Trust
Account, less amounts withdrawn to fund North Mountain’s regulatory compliance costs and taxes payable. You will no longer own those shares. You will be entitled to receive cash for these shares only if you properly demand redemption.
If the Business Combination Proposal is not approved and North Mountain
does not consummate an initial business combination by September 22, 2022 or obtain the approval of North Mountain stockholders to extend the deadline for North Mountain to consummate an initial business combination, it will be required to
dissolve and liquidate and the North Mountain Warrants will expire worthless.
Holders of outstanding North Mountain Units must separate the
underlying Public Shares and Public Warrants prior to exercising redemption rights with respect to the Public Shares.
If you hold North Mountain Units registered in your own name, you must
deliver the certificate for such North Mountain Units to Continental Stock Transfer & Trust Company with written instructions to separate such North Mountain Units into Public Shares and Public Warrants. This must be completed far enough in
advance to permit the mailing of the Public Share certificates back to you so that you may then exercise your redemption rights upon the separation of the Public Share from the North Mountain Units.
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No appraisal or dissenters’ rights are available to holders of shares
of North Mountain Common Stock or North Mountain Warrants in connection with the Business Combination.
North Mountain will pay the cost of soliciting proxies for the special
meeting. North Mountain has engaged Innisfree to assist in the solicitation of proxies for the special meeting. North Mountain has agreed to pay Innisfree a fee of up to $20,000 in connection with the Business Combination. North Mountain will
reimburse Innisfree for reasonable out-of-pocket expenses and will indemnify Innisfree and its affiliates against certain claims, liabilities, losses, damages and expenses. North Mountain also will reimburse banks, brokers and other custodians,
nominees and fiduciaries representing beneficial owners of shares of Public Shares for their expenses in forwarding soliciting materials to beneficial owners Public Shares and in obtaining voting instructions from those owners. North Mountain’s
directors, officers and employees may also solicit proxies by telephone, by facsimile, by mail, on the Internet or in person. They will not be paid any additional amounts for soliciting proxies.
As of the North Mountain Record Date, our Sponsor beneficially owns an
aggregate of approximately 20% of the outstanding shares of North Mountain Common Stock. Our Sponsor has agreed to vote all of their shares of North Mountain Common Stock in favor of the Business Combination Proposal. As of the date of this proxy
statement/prospectus, our Sponsor has not acquired any shares of North Mountain Class A Common Stock.
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Overview
Holders of North Mountain Common Stock are being asked to adopt the
Charter Amendment in the form attached as Annex B to this proxy statement/prospectus. The Charter Amendment increases the number of authorized shares of North Mountain Class A Common Stock from
200,000,000 to .
Reasons for the Amendment to North Mountain’s Existing Charter
North Mountain’s Existing Charter authorizes 221,000,000 shares,
consisting of (a) 220,000,000 shares of common stock, including 200,000,000 shares of North Mountain Class A Common Stock and 20,000,000 shares of North Mountain Class B Common Stock, and (b) 1,000,000 shares of preferred stock. The Charter
Amendment authorizes North Mountain to issue shares, consisting of (i) shares of common stock, including shares of North Mountain Class A Common Stock and 3,306,250 shares of North Mountain Class B Common Stock and (ii) shares of
preferred stock.
The Charter Amendment was negotiated as part of the Business
Combination. The North Mountain Board believes the Charter Amendment may be necessary in order for North Mountain to have sufficient authorized capital stock to issue pursuant to the Merger Agreement (including the Earnout Shares) and the
transactions contemplated thereby, including pursuant to the Share Vesting and Warrant Surrender Agreement and the Subscription Agreements. The North Mountain Board also believes that it is important for New Corcentric to have available for
issuance a number of authorized shares sufficient to support our growth and to provide flexibility for future corporate needs (including, if needed, as part of financing for future growth acquisitions). The shares will be issuable as
consideration for the Business Combination and the other transactions contemplated in this proxy statement/prospectus, and may be issued for any proper corporate purpose, including future acquisitions, capital raising transactions consisting of
equity or convertible debt, stock dividends or issuances under current and any future stock incentive plans.
The North Mountain Board believes that these additional authorized
shares will provide us with needed flexibility to issue shares in the future in a timely manner and under circumstances we consider favorable without incurring the risk, delay and potential expense incident to obtaining stockholder approval for a
particular issuance.
Vote Required for Approval
The affirmative vote (in person online or by proxy) of (i) the holders
of a majority of the outstanding shares of North Mountain Common Stock, voting together as a single class and (ii) the holders of a majority of the outstanding shares of North Mountain Class A Common Stock, voting separately as a single class, is
required to approve the Pre-Mergers Charter Amendment Proposal. Broker non-votes, abstentions or the failure to vote on the Pre-Mergers Charter Amendment Proposal will have the same effect as a vote “AGAINST” the Pre-Mergers Charter Amendment
Proposal.
The Business Combination is conditioned upon the approval of the
Pre-Mergers Charter Amendment Proposal, subject to the terms of the Merger Agreement. Notwithstanding the approval of the Pre-Mergers Charter Amendment Proposal, if the Business Combination is not consummated for any reason, the actions
contemplated by the Pre-Mergers Charter Amendment Proposal will not be effected and by approval of the Pre-Mergers Charter Amendment Proposal, North Mountain stockholders are authorizing the North Mountain Board to abandon the Pre-Mergers Charter
Amendment Proposal in the event the Business Combination is not consummated.
Recommendation of the North Mountain Board
THE NORTH MOUNTAIN BOARD UNANIMOUSLY RECOMMENDS THAT
STOCKHOLDERS VOTE “FOR” THE APPROVAL OF THE PRE-MERGERS CHARTER AMENDMENT PROPOSAL.
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Overview
Holders of North Mountain Common Stock are being asked to approve the
Merger Agreement and the transactions contemplated thereby, including the Business Combination. North Mountain stockholders should read carefully this proxy statement/prospectus in its entirety for more detailed information concerning the Merger
Agreement, which is attached as Annex A to this proxy statement/prospectus for additional information regarding the Business Combination and a summary of certain terms of the Merger Agreement. You are
urged to read carefully the Merger Agreement in its entirety before voting on this proposal.
The following is a summary of the material terms of
the Merger Agreement. A copy of the Merger Agreement is attached as Annex A to this proxy statement/prospectus. The Merger Agreement has been attached to this proxy statement/prospectus to provide you with information regarding its terms. It is
not intended to provide any other factual information about North Mountain, Merger Sub I, Merger Sub II or Corcentric. The following description does not purport to be complete and is qualified in its entirety by reference to the Merger
Agreement. You should refer to the full text of the Merger Agreement for details of the Business Combination and the terms and conditions of the Merger Agreement.
The Merger Agreement contains representations and
warranties that North Mountain, Merger Sub I and Merger Sub II, on the one hand, and Corcentric, on the other hand, have made to one another as of specific dates. These representations and warranties have been made for the benefit of the other
parties to the Merger Agreement and may be intended not as statements of fact but rather as a way of allocating the risk to one of the parties if those statements prove to be incorrect. In addition, the assertions embodied in the representations
and warranties are qualified by information in confidential disclosure schedules exchanged by the parties in connection with signing the Merger Agreement. While North Mountain and Corcentric do not believe that these disclosure schedules contain
information required to be publicly disclosed under the applicable securities laws, other than information that has already been so disclosed, the disclosure schedules do contain information that modifies, qualifies and creates exceptions to the
representations and warranties set forth in the attached Merger Agreement. Accordingly, you should not rely on the representations and warranties as current characterizations of factual information about North Mountain or Corcentric, because they
were made as of specific dates, may be intended merely as a risk allocation mechanism between North Mountain, Merger Sub I, Merger Sub II and Corcentric, and are modified by the disclosure schedules.
General; Structure of the Business Combination
On December 9, 2021, North Mountain, Merger Sub I, Merger Sub II and
Corcentric entered into the Merger Agreement, pursuant to which: (i) Merger Sub I will merge with and into Corcentric (the “Initial Merger”), with Corcentric surviving the Initial Merger as a wholly owned subsidiary of North Mountain (Corcentric,
in its capacity as the surviving corporation of the Initial Merger, is sometimes referred to as the “Initial Surviving Company”) and (ii) immediately following the Initial Merger, the Initial Surviving Company will merge with and into Merger Sub
II (the “Subsequent Merger” and, together with the Initial Merger, the “Mergers”), with Merger Sub II being the surviving entity of the Subsequent Merger as a wholly owned subsidiary of North Mountain (Merger Sub II, in its capacity as the
surviving entity of the Subsequent Merger, is sometimes referred to herein as the “Surviving Company”).
Unless the parties otherwise mutually agree, the closing of the
Business Combination (the “Closing”) will take place on the date which is three business days after the date on which all of the closing conditions have been satisfied or waived (other than those conditions that by their terms are to be satisfied
at the closing of the Business Combination) (such date, the “Closing Date”). See ”—Conditions to Closing; Termination—Conditions to Closing” for a more complete description of the conditions that must be
satisfied prior to Closing.
On the Closing Date, the Initial Merger is to be consummated by the
filing of a certificate of merger with the Secretary of State of the State of Delaware and will be effective immediately upon the Effective Time. The Subsequent Merger is to be consummated immediately following the consummation of the Initial
Merger by filing of a certificate of merger with the Secretary of State of the State of Delaware following the Effective Time and will be effective immediately upon such filing (such time, the “Second Effective Time”).
If the Business Combination is not completed by August 9, 2022 (the
“Termination Date”), the Merger Agreement may be terminated by either North Mountain or Corcentric. A party may not terminate the Merger
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Agreement pursuant to the provision described in this paragraph if the party seeking to
terminate the Merger Agreement is in material breach of its obligations set forth in the Merger Agreement on the Termination Date. See “—Conditions to Closing; Termination—Termination.”
Consideration to be Received in the Business
Combination
At the Effective Time, by virtue of the Initial Merger and without any
action on the part of North Mountain, Merger Sub I, Merger Sub II, Corcentric or the Corcentric stockholders:
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each share of Corcentric Common Stock that is issued and outstanding immediately prior to the Effective Time (other than shares
owned by Corcentric as treasury stock, dissenting shares and shares of Corcentric restricted stock) will be converted into the right to receive (i) the Per Share Stock Consideration, (ii) any cash payable in lieu of fractional shares
pursuant to the terms of the Merger Agreement and (iii) the contingent right to receive a number of Earnout Shares following the Closing in accordance with the terms of the Merger Agreement, as further detailed below;
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each share of Corcentric Preferred Stock that is issued and outstanding immediately prior to the Effective Time (other than shares
owned by Corcentric as treasury stock, dissenting shares and the Cash Consideration Shares) will be converted into the right to receive (i) a number of newly issued shares of North Mountain Class A Common Stock, equal to the product of
(A) the Per Share Stock Consideration, multiplied by (B) the number of shares of Corcentric Common Stock that such share of Corcentric Preferred Stock would be converted into if converted in accordance with the terms of the Corcentric
Certificate of Incorporation immediately prior to the Effective Time, (ii) any cash payable in lieu of fractional shares pursuant to the terms of the Merger Agreement and (iii) the contingent right to receive a number of Earnout Shares
following the Closing in accordance with the terms of the Merger Agreement, as further detailed below;
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each share of Corcentric Preferred Stock expressly identified as a Cash Consideration Share in accordance with the Merger
Agreement (each such share of Corcentric Preferred Stock, a “Cash Consideration Share”) will be converted into the right to receive the Per Share Cash Consideration multiplied by the number of shares of Corcentric Common Stock that such
shares of Corcentric Preferred Stock would be converted into if converted in accordance with the terms of the Corcentric Certificate of Incorporation immediately prior to the Effective Time. In no event will the Aggregate Cash
Consideration exceed the Total Cash Consideration Amount;
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each share of Corcentric Common Stock and Corcentric Preferred Stock held in the treasury of Corcentric immediately prior to the
Effective Time will be cancelled without any conversion thereof and no payment or distribution will be made with respect thereto;
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each share of common stock, par value $0.001 per share, of Merger Sub I issued and outstanding immediately prior to the Effective
Time will no longer be outstanding and will thereupon be converted into and become one validly issued fully paid and non-assessable share of common stock, par value $0.001 per share, of the Initial Surviving Company and all such shares
will constitute the only outstanding shares of capital stock of the Initial Surviving Company as of immediately following the Effective Time;
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each vested Corcentric stock option, to the extent then outstanding and unexercised, will automatically, without any action on the
part of the holder thereof, be cancelled, and the holder will be entitled to receive in respect of such cancelled vested Corcentric stock option (i) a number of shares of North Mountain Class A Common Stock (any cash payable in lieu of
fractional shares pursuant to the terms of the Merger Agreement) equal to the quotient obtained by dividing (A) the result of (1) product of (x) the number of shares of Corcentric Common Stock subject to such vested Corcentric stock
option immediately prior to the Effective Time, multiplied by (y) the excess, if any, of (a) the Per Share Merger Consideration Value, over (b) the per share exercise price for the shares of Corcentric Common Stock subject to such vested
Corcentric stock option immediately prior to the Effective Time, minus (2) the applicable withholding taxes payable in respect of such cancelled vested Corcentric stock option, by (B) ten dollars
($10) and (ii) the contingent right to receive a number of Earnout Shares following the Closing in accordance with the terms of the Merger Agreement, as further detailed below;
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each unvested Corcentric stock option, to the extent then outstanding and unexercised, will automatically be converted into an
option to acquire, on the same terms and conditions as were applicable to such unvested Corcentric stock option immediately prior to the Effective Time, including applicable vesting conditions, except for terms rendered inoperative by
reason of the transactions contemplated by the Merger Agreement or for such other administrative or ministerial changes (after such conversion, each a “Rollover Option”) the number of shares of North Mountain Class A Common Stock
determined by multiplying the number of shares of Corcentric Common Stock subject to the unvested Corcentric stock option immediately prior to the Effective Time by the Per Share Stock Consideration and rounding the resulting number down
to the nearest whole number of shares of North Mountain Class A Common Stock, and the per share exercise price for the North Mountain Class A Common Stock issuable upon exercise of such Rollover Option will be determined by dividing the
per share exercise price for the shares of Corcentric Common Stock subject to the unvested Corcentric stock option, as in effect immediately prior to the Effective Time, by the Per Share Stock Consideration, and rounding the resulting
exercise price up to the nearest whole cent. The Rollover Options will be entitled to the contingent right to receive a number of Earnout Shares following the Closing in accordance with the terms of the Merger Agreement, as further
detailed below; and
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each share of Corcentric restricted stock, to the extent then unvested and outstanding, will automatically be converted into the
number of shares of restricted North Mountain Class A Common Stock, subject to the same terms and conditions as were applicable to such Corcentric restricted stock immediately prior to the Effective Time, including applicable vesting
conditions, except for terms rendered inoperative by reason of the transactions contemplated by the Merger Agreement or for such other administrative or ministerial changes (after such conversion, “Rollover Restricted Stock”), determined
by multiplying (i) the number of shares of Corcentric Common Stock subject to such Corcentric restricted stock award immediately prior to the Effective Time by (ii) the Per Share Stock Consideration. The shares of Rollover Restricted
Stock will be entitled to the contingent right to receive a number of Earnout Shares following the Closing in accordance with the terms of the Merger Agreement, as further detailed below.
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At the Second Effective Time, by virtue of the Subsequent Merger and
without any action on the part of any holder thereof, each share of common stock, par value $0.001 per share, of the Initial Surviving Company issued and outstanding immediately prior to the Second Effective Time will no longer be outstanding and
will thereupon be converted into and become one hundred membership interests of the Surviving Company and all such membership interests will constitute the only outstanding equity of the Surviving Company as of immediately following the Second
Effective Time.
No fractional shares of North Mountain Class A Common Stock will be
issued upon the conversion of Corcentric securities. In lieu of the issuance of any such fractional shares, North Mountain has agreed to pay to each holder of Corcentric Stock or vested Corcentric stock options who otherwise would be entitled to
receive such fractional share of North Mountain Class A Common Stock (after aggregating all fractional shares that would otherwise be received by such holders into whole shares) an amount in cash, without interest, rounded down to the nearest
cent, equal to the product of (i) the amount of the fractional share interest in a share of North Mountain Class A Common Stock to which such holder otherwise would have been entitled multiplied by (ii) an amount equal to the VWAP of shares of
North Mountain Class A Common Stock for the twenty trading days prior to the date that is three business days prior to the Closing.
Earnout
Following the Closing, pursuant to the terms of the Merger Agreement,
holders of (i) shares of Corcentric Common Stock and Corcentric Preferred Stock (excluding the Cash Consideration Shares) outstanding immediately prior to the Effective Time, (ii) vested Corcentric stock options outstanding and unexercised
immediately prior to the Effective Time, (iii) Rollover Options, (iv) Rollover Restricted Stock and (v) without duplication of clauses (iii) and (iv), holders of North Mountain Class A Common Stock received in respect of Rollover Options and/or
Rollover Restricted Stock that vested and were exercised, as applicable, between the Effective Time and the relevant earn-out achievement date, will have the contingent right to receive in the aggregate, up to 5,000,000 shares of North Mountain
Common Stock if, from the Closing until the fifth anniversary thereof, (x) the dollar volume-weighted average price of North Mountain Class A Common Stock is greater than or equal to $12.50 or $15.00 per share, as applicable, for 20 trading days
within any consecutive 30-trading day period or (y) a sale or change of control of North Mountain occurs (as further described in the Merger Agreement) (the “Earnout Shares”).
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The following terms shall have the respective meanings ascribed to
them below:
“Aggregate Cash Consideration” means the aggregate Per Share Cash
Consideration payable for all Cash Consideration Shares pursuant to the Merger Agreement.
“Corcentric Certificate of Incorporation” means the Amended and
Restated Certificate of Incorporation of Corcentric, filed with the Secretary of State of the State of Delaware on May 1, 2020.
“Corcentric Outstanding Shares” means the total number of shares of
Corcentric Common Stock and Corcentric Preferred Stock (on an “as-converted” to Corcentric Common Stock basis as if such shares of Corcentric Preferred Stock were converted into shares of Corcentric Common Stock in accordance with the terms of
the Corcentric Certificate of Incorporation immediately prior to the Effective Time) on a fully diluted basis outstanding as of the Closing Date using the treasury method of accounting, including, without duplication, (a) the number of shares of
Corcentric Common Stock issued or issuable upon the exercise of all vested Company stock options, (b) the shares of Corcentric Common Stock underlying vested Corcentric restricted stock, and (c) any other vested Equity Equivalents, but excluding,
in all such cases, (i) unvested Corcentric stock options, (ii) shares of Corcentric Common Stock underlying Corcentric restricted stock that remain unvested as of the Effective Time, and (iii) Equity Equivalents that remain unvested as of the
Effective Time.
“Equity Equivalents” means options, warrants, preemptive rights, calls,
convertible securities, conversion rights or other equity securities or rights relating to the issued or unissued share capital of Corcentric or any phantom stock ownership interests, stock appreciation rights or similar rights in Corcentric.
“Equity Value” means one billion thirteen million dollars seventy four
thousand four hundred eighty four dollars ($1,013,074,484).
“Per Share Cash Consideration” means an amount of cash, without
interest, equal to the Per Share Merger Consideration Value.
“Per Share Merger Consideration Value” means (a) the Equity Value divided by (b) the Corcentric Outstanding Shares.
“Per Share Stock Consideration” means a number of shares of North
Mountain Class A Common Stock equal to (i) the Per Share Merger Consideration Value divided by (ii) 10.
“Total Cash Consideration Amount” mean one hundred twenty million
dollars ($120,000,000).
Corcentric Stockholder Appraisal Rights
Shares of Corcentric Capital Stock held by Corcentric stockholders who
have perfected and not lost their right to demand appraisal of their shares in accordance with the procedures and requirements of Section 262 of the DGCL will not be converted into the right to receive the merger consideration, and such
Corcentric stockholders will instead be entitled only to the rights granted by Section 262 of the DGCL. If any such Corcentric stockholder withdraws or loses his, her or its appraisal rights under Section 262 of the DGCL, the shares of Corcentric
Capital Stock held by such Corcentric stockholder will be deemed to be converted, as of the effective time, into the right to receive the merger consideration.
See Section 262 of the DGCL.
Representations, Warranties and Covenants
Representations and Warranties
The Merger Agreement contains customary representations, warranties and
covenants of (i) Corcentric and (ii) North Mountain, Merger Sub I and Merger Sub II, in each case relating to, among other things, their ability to enter into the Merger Agreement and their respective outstanding capitalization.
The Merger Agreement contains representations and warranties made by
Corcentric to North Mountain, Merger Sub I and Merger Sub II relating to a number of matters, including the following:
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corporate organization, qualification to do business and good standing;
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subsidiaries;
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requisite corporate authority to enter into the Merger Agreement and to complete the contemplated transactions;
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absence of conflicts with organizational documents, applicable laws or certain agreements and instruments as a result of entering
into the Merger Agreement or consummating the Business Combination;
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required governmental and regulatory consents necessary in connection with the Business Combination;
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capitalization;
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financial statements;
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absence of undisclosed liabilities;
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legal proceedings and absence of governmental orders;
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compliance with applicable law;
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intellectual property and information technology systems;
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material contracts;
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employee compensation and benefits matters;
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labor matters;
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tax matters;
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broker’s and finder’s fees related to the Business Combination;
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insurance;
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real property and title to assets;
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environmental matters;
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absence of a material adverse effect since December 31, 2020 and absence of certain other changes;
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affiliate agreements;
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internal controls;
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permits; and
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accuracy of Corcentric’s information provided in this proxy statement/prospectus.
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Certain of these representations and warranties are qualified as to
“materiality” or “Material Adverse Effect”. For purposes of the Merger Agreement, a “Material Adverse Effect” with respect to Corcentric means any event, change, circumstance, effect or development (each an “Effect,” and collectively, “Effects”)
that, individually or in the aggregate with any one or more other Effects, (a) has or would reasonably be expected to have a material adverse effect on the assets, business, results of operations or financial condition of Corcentric and its
subsidiaries, taken as a whole or (b) has a material adverse effect on the ability of Corcentric to consummate the Initial Merger or any of the other transactions contemplated by the Merger Agreement; provided, however, that with respect to
clause (a) only, no Effect relating to or resulting or arising from any of the following shall be deemed to constitute, alone or in combination, or be taken into account in the determination of whether, there has been or will be a Material
Adverse Effect: (a) any change or development in applicable Laws or GAAP or any official interpretation thereof, (b) any change or development in interest rates or economic, political, legislative, regulatory, business, financial, commodity,
currency or market conditions generally affecting the economy or the industries in which Corcentric operates, (c) the announcement or the execution of the Merger Agreement, the pendency or consummation of the Mergers or the performance of the
Merger Agreement, including the impact thereof on relationships, contractual or otherwise, with customers, suppliers, licensors, distributors, partners, providers and employees (provided, that the exceptions in this clause (c) shall not be deemed
to apply to references to “Material Adverse Effect” in the representations and warranties described in the third bullet above and, to the extent related thereto, the condition in respect of the bring-down of Corcentric’s representations and
warranties), (d) any change generally affecting any of the industries or markets in which
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Corcentric or its subsidiaries operate or the economy as a whole, (e) the compliance
with the terms of the Merger Agreement (other than with respect to the provision summarized in the first sentence under the heading “—Conduct of Business Pending the Merger” (the “conduct of business
provisions”)) or the taking of any action, or failure to take action, required or contemplated by the Merger Agreement (other than the conduct of business provisions) or with the prior written consent of North Mountain (provided, that the
exceptions in this clause (e) shall not be deemed to apply to references to “Material Adverse Effect” in the representations and warranties described in the third bullet above and, to the extent related thereto, the condition in respect of the
bring-down of Corcentric’s representations and warranties), (f) any earthquake, hurricane, tsunami, tornado, flood, mudslide, wild fire or other natural disaster, epidemic, disease, outbreak pandemic (including the COVID-19 or SARS-CoV-2 virus
(or any mutation or variation thereof or related health condition)), weather condition, explosion, fire, act of God or other force majeure event, (g) any national or international political or social conditions in countries in which, or in the
proximate geographic region of which, Corcentric operates, including the engagement by the United States or such other countries in hostilities or the escalation thereof, whether or not pursuant to the declaration of a national emergency or war,
or the occurrence or the escalation of any military or terrorist attack upon the United States or such other country, or any territories, possessions, or diplomatic or consular offices of the United States or such other countries or upon any
United States or such other country military installation, equipment or personnel or (h) any failure of Corcentric and its subsidiaries, taken as a whole, to meet any projections, forecasts or budgets; provided, that clause (h) shall not prevent
or otherwise affect a determination that any change or effect underlying such failure to meet projections or forecasts has resulted in, or contributed to, or would reasonably be expected to result in or contribute to, a Material Adverse Effect
(to the extent such change or effect is not otherwise excluded from this definition of Material Adverse Effect), except in the cases of clauses (a), (b), (d), (f) and (g), in each case, to the extent that Corcentric and its subsidiaries, taken as
a whole, are disproportionately and adversely affected thereby as compared with other similarly situated participants in the industries in which Corcentric and its subsidiaries operate.
The Merger Agreement also contains representations and warranties made
by North Mountain, Merger Sub I and Merger Sub II to Corcentric relating to a number of matters, including the following:
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corporate organization, qualification to do business, good standing and corporate power;
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requisite corporate authority to enter into the Merger Agreement and to complete the contemplated transactions;
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absence of conflicts with governing documents, applicable laws or certain agreements and instruments as a result of entering into
the Merger Agreement or consummate the Business Combination;
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litigation and proceedings;
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compliance with laws;
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employee benefit plans;
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required governmental and regulatory consents necessary in connection with the Business Combination;
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financial ability and the trust account;
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tax matters;
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broker’s and finder’s fees related to the Business Combination;
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proper filing of documents with the SEC, the accuracy of information contained in the documents filed with the SEC and
Sarbanes-Oxley certifications;
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historical business activities and absence of certain changes related thereto;
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accuracy of North Mountain’s information provided in this proxy statement/prospectus;
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capitalization;
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North Mountain’s Nasdaq stock market quotation;
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contracts;
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title to property;
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investment company act;
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affiliate agreements;
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business combination restrictions; and
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the Subscription Agreements.
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Conduct of Business Pending the Merger
Corcentric has agreed that, prior to the Effective Time or the earlier
termination of the Merger Agreement, it will, and will cause its subsidiaries to, (i) use commercially reasonable efforts to conduct and operate its business in the ordinary course consistent with past practice, (ii) use commercially reasonable
efforts to preserve intact the current business organization and ongoing businesses of Corcentric and its subsidiaries and maintain the existing relations and goodwill of Corcentric and its subsidiaries with customers, suppliers, joint venture
partners, distributors and creditors of Corcentric and its subsidiaries, (iii) use commercially reasonable efforts to keep available the services of their present officers and (iv) use commercially reasonable efforts to maintain all insurance
policies of Corcentric and its subsidiaries or substitutes therefore; provided, that, in the case of each of the preceding clauses (i)-(iv), during any period of full or partial suspension of operations reasonably necessary to address the
coronavirus (COVID-19) pandemic, Corcentric may, in connection with the coronavirus (COVID-19) pandemic, take such actions as are reasonably necessary (A) to protect the health and safety of Corcentric’s or its subsidiaries’ employees and other
individuals having business dealings with Corcentric or its subsidiaries or (B) to respond to third-party supply or service disruptions caused by the coronavirus (COVID-19) pandemic, including, but not limited to any quarantine, “shelter in
place,” “stay at home,” workforce reduction, social distancing, shut down, closure, sequester or any other applicable law, decree, judgment, injunction or other order, directive, guidelines or recommendations by any governmental authority or
industry group in connection with or in response to coronavirus (COVID-19) pandemic, including, the CARES Act, and any such actions taken (or not taken) as a result of or in response to the coronavirus (COVID-19) pandemic shall be deemed to be
taken in the “ordinary course of business” for all purposes of the provisions of the Merger Agreement summarized in the first sentence under this heading “—Conduct of Business Pending the Merger” (the
“conduct of business provisions”) and not be considered a breach of the conduct of business provisions, in each case, if following any such suspension, to the extent that Corcentric or any of its subsidiaries took any actions pursuant to the
immediately preceding proviso that caused deviations from its business being conducted in the ordinary course of business consistent with past practice, Corcentric and its subsidiaries resume conducting their business in the ordinary course of
business consistent with past practice in all material respects as soon as reasonably practicable.
In addition to the general covenants above, Corcentric has agreed that
through the Closing, subject to specified exceptions, it will not, and will cause its subsidiaries not to, without the written consent of North Mountain (which may not be unreasonably withheld, conditioned or delayed):
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change or amend its certificate of incorporation, bylaws or other organizational documents;
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(i) make, declare or pay any dividend or distribution (whether in cash, stock or property) to any of the stockholders of
Corcentric in their capacities as stockholders, except dividends and distributions by a wholly-owned subsidiary of Corcentric to Corcentric or another wholly-owned subsidiary of Corcentric, (ii) effect any recapitalization,
reclassification, split or other change in its capitalization, (iii) except in connection with the exercise or settlement of any Corcentric equity award, authorize for issuance, issue, sell, transfer, pledge, encumber, dispose of or
deliver any additional shares of its capital stock or securities convertible into or exchangeable for shares of its capital stock, or issue, sell, transfer, pledge, encumber or grant any right, option, restricted stock unit, stock
appreciation right or other commitment for the issuance of shares of its capital stock, or split, combine or reclassify any shares of its capital stock, or (iv) except as required pursuant to the Corcentric stock plans or any award
agreement thereunder as in effect on the date of the Merger Agreement, repurchase, redeem or otherwise acquire, or offer to repurchase, redeem or otherwise acquire, any shares of its capital stock or other equity interests;
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enter into, or amend or modify any material term of (in any manner adverse to Corcentric and its subsidiaries), terminate
(excluding any expiration in accordance with its terms), renew or fail to exercise any renewal rights, or waive or release any material rights, claims or benefits under certain
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listed material contracts, any lease or other occupancy agreement related to real
property or any collective bargaining or similar agreement (including agreements with works councils and trade unions and side letters) to which Corcentric or its subsidiaries is a party or by which it is bound, other than entry into, amendments
of, modifications of, terminations of, or waivers or releases under, such agreements in the ordinary course of business consistent with past practice;
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sell, transfer, lease, pledge or otherwise encumber or subject to any lien, abandon, cancel, let lapse or convey or dispose of any
of its or its subsidiaries assets, properties or business (including Corcentric intellectual property and Corcentric software), except for (i) with respect to registered intellectual property, where Corcentric has, in its reasonable
business judgment, decided to cancel, abandon, allow to lapse or not renew such registered intellectual property that Corcentric determined in good faith to no longer be useful to and not material to the Company’s business,
(ii) transactions solely among Corcentric and its wholly-owned subsidiaries or among the wholly-owned subsidiaries of Corcentric, (iii) dispositions of obsolete or worthless assets, (iv) sales of inventory in the ordinary course of
business consistent with past practice and (iv) sales, abandonment, lapses of assets or items or materials (in each case other than Corcentric intellectual property and Corcentric software) in excess of a specified aggregate amount, other
than as permitted by the Merger Agreement and encumbrances on property and assets in the ordinary course of business consistent with past practice and that would not, individually or in the aggregate, reasonably be expected to be material
to Corcentric and its subsidiaries, taken as a whole;
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except as otherwise required pursuant to the terms of Corcentric’s benefit plans, policies or agreements in effect on the date of
the Merger Agreement or applicable law, (i) grant any increase in compensation, benefits or severance to any director, employee or independent contractor of Corcentric or its subsidiaries with an annual base salary in excess of a
specified amount, (ii) adopt, enter into, materially amend or terminate any Corcentric benefit plan or any collective bargaining or similar agreement (including agreements with works councils and trade unions and side letters) to which
Corcentric or any of its subsidiaries are a party or by which they are bound, (iii) grant or provide any severance or termination payments or benefits to any director, employee or independent contractor of Corcentric or its subsidiaries
with an annual base salary in excess of a specified amount, (iv) hire any employee or independent contractor of Corcentric or its subsidiaries other than any employee or independent contractor with an annual base salary of less than a
specified amount, or terminate any employee of Corcentric or its subsidiaries with an annual base salary in excess of a specified amount (other than for cause), or (v) take any action that will result in the acceleration or vesting of any
payment or benefit of any director, officer, employee or independent contractor of Corcentric or its subsidiaries under any of the Corcentric benefit plans, policies or agreements;
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(i) fail to maintain its existence or acquire by merger or consolidation with, or merge or consolidate with, or purchase a
material portion of the assets or equity of, any corporation, partnership, limited liability company, association, joint venture or other business organization or division thereof; or (ii) adopt or enter into a plan of complete or partial
liquidation, dissolution, merger, consolidation, restructuring, recapitalization or other reorganization (other than the transactions contemplated by the Merger Agreement);
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make any capital expenditures (or commitment to make any capital expenditures) that in the aggregate exceed a specified amount,
other than (i) any capital expenditure (or series of related capital expenditures) consistent with Corcentric’s annual capital expenditure budget for periods following the date of the Merger Agreement, with respect to any such
expenditures made in 2022, made available and reasonably acceptable to North Mountain following the date of the Merger Agreement or (ii) in connection with buying any assets purchased for lease or resale in the ordinary course of
business;
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make any loans, advances or capital contributions to, or investments in, any other person or entity, make any material change in
its existing borrowing or lending arrangements for or on behalf of such persons or entities, or enter into any “keep well” or similar agreement to maintain the financial condition of any other person or entity, except advances to
employees or officers of Corcentric and its subsidiaries in the ordinary course of business consistent with past practice and extended payment terms for customers in the ordinary course of business;
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make, revoke or change any material tax election, adopt or change any material tax accounting method or period, file any material
tax return inconsistent with past practice in any material respect, file any amendment to a material tax return, enter into any agreement with a governmental authority with respect to a material amount of taxes, settle or compromise any
examination, audit or other action with a taxing authority relating to any material taxes, or consent to any extension or waiver of the statutory period of limitations applicable to any claim or assessment in respect of material taxes,
defer the payment of any material taxes pursuant to Section 2303 of the CARES Act (or similar successor provision) or any other law or executive order or executive memo intended to address the consequences of COVID-19, or enter into any
material tax sharing, indemnification, allocation or similar agreement or arrangement (excluding any commercial contract entered into in the ordinary course of business and not primarily related to taxes);
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take any action, or knowingly fail to take any action, which would prevent or impede the transactions contemplated by the Merger
Agreement from qualifying for the intended tax treatment;
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acquire or dispose of any fee interest in real property;
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enter into, renew or amend in any material respect any Corcentric affiliate agreement;
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waive, release, compromise, settle or satisfy any pending or threatened material claim (including any pending or threatened
action) or compromise or settle any liability, other than in the ordinary course of business consistent with past practice or that involves monetary damages that do not exceed a specified amount in the aggregate;
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incur, create, assume, refinance, guarantee or otherwise become liable for (whether directly, contingently or otherwise) any
indebtedness in excess of a specified amount, other than (i) solely between Corcentric and any of its wholly-owned subsidiaries or between any of such wholly-owned subsidiaries or (ii) in connection with borrowings or extensions of credit
in the ordinary course of business under (A) that certain Amended and Restated Loan and Security Agreement, dated as of November 15, 2018 (as amended, restated, amended and restated, modified and supplemented from time to time prior to
the date hereof), by and among Corcentric, Corcentric, LLC and Corcentric Capital Equipment Solutions, LLC, as borrowers thereunder, the other obligors party thereto from time to time, the lenders party thereto from time to time and Bank
of America, N.A., as agent or (B) that certain Loan and Security Agreement, dated as of November 15, 2018 (as amended, restated, amended and restated, modified and supplemented from time to time prior to the date hereof), by and among
Corcentric, Corcentric, LLC and Corcentric Capital Equipment Solutions, LLC, as borrowers thereunder, the other obligors party thereto from time to time, the lenders party thereto from time to time, and TCW Asset Management Company LLC,
as agent for the lenders, in each case, subject to certain limitations;
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enter into any material new line of business outside of the business currently conducted by Corcentric and its subsidiaries as of
the date of the Merger Agreement;
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make any material change in its financial accounting methods, principles or practices, except insofar as may have been required by
a change in GAAP (including pursuant to standards, guidelines and interpretations of the Financial Accounting Standards Board or any similar organization) or applicable law;
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voluntarily fail to maintain, cancel or materially change coverage under, in a manner materially detrimental to Corcentric or any
of its subsidiaries, any insurance policy maintained with respect to Corcentric and its subsidiaries and their assets and properties; or
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enter into any agreement or undertaking to do any action prohibited by the foregoing.
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North Mountain has agreed to a more limited set of restrictions on its
business prior to the Closing. Specifically, North Mountain has agreed that through the Closing, except as expressly contemplated or permitted by the Merger Agreement or as required by law and subject to certain specified exceptions, it will not,
and will cause its subsidiaries not to without the written consent of Corcentric (which may not be unreasonably withheld, conditioned or delayed):
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change, modify or amend the trust agreement, the North Mountain organizational documents or the organizational documents of Merger
Sub I or Merger Sub II, other than to effectuate the Charter Amendment, the Proposed Charter and the Proposed Bylaws;
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make, declare, set aside or pay any dividends on, or make any other distribution (whether in cash, stock or property) in respect
of any of its outstanding capital stock or other equity interests; split, combine, reclassify or otherwise change any of its capital stock or other equity interests; or, other than the redemption of any shares of North Mountain Class A
Common Stock or as otherwise required by North Mountain’s organizational documents in order to consummate the transactions contemplated by the Merger Agreement, repurchase, redeem or otherwise acquire, or offer to repurchase, redeem or
otherwise acquire, any capital stock of, or other equity interests in, North Mountain;
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make, revoke or change any material tax election, adopt or change any material tax accounting method or period, file any amendment
to a material tax return, enter into any agreement with a governmental authority with respect to a material amount of taxes, settle or compromise any examination, audit or other action with a governmental authority relating to any
material taxes or settle or compromise any claim or assessment by a governmental authority in respect of material taxes, consent to any extension or waiver of the statutory period of limitations applicable to any claim or assessment in
respect of taxes, or enter into any material tax sharing, indemnification, allocation or similar agreement or arrangement (excluding any commercial contract entered into in the ordinary course of business and not primarily related to
taxes);
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take any action, or knowingly fail to take any action, which action or failure to act would prevent or impede the transactions
contemplated by the Merger Agreement from qualifying for the intended tax treatment;
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enter into, renew or amend in any material respect, any North Mountain affiliate agreement (or any contract, that if existing on
the date of the Merger Agreement, would have constituted a North Mountain affiliate agreement);
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enter into, or amend or modify any material term of (in a manner adverse to North Mountain or any of its subsidiaries (including
Corcentric and its subsidiaries)), terminate (excluding any expiration in accordance with its terms), or waive or release any material rights, claims or benefits under, any contract to which North Mountain or any of its subsidiaries is a
party or by which any of their assets is bound (or any contract, that if existing on the date of the Merger Agreement, would have constituted such a contract) or any collective bargaining or similar agreement (including agreements with
works councils and trade unions and side letters) to which North Mountain or its subsidiaries is a party or by which it is bound;
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waive, release, compromise, settle or satisfy any pending or threatened claim (including any pending or threatened action) or
compromise or settle other than claims, compromises or settlements that do not exceed a specified aggregate amount;
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incur, create, assume, refinance, guarantee or otherwise become liable for (whether directly, contingently or otherwise) any
indebtedness;
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(A) offer, issue, deliver, grant or sell, or authorize or propose to offer, issue, deliver, grant or sell, any capital stock of,
or other equity interests in, North Mountain or any of its subsidiaries or any securities convertible into, or any rights, warrants or options to acquire, any such capital stock, equity, equity-based or phantom interests, other than
(i) in connection with the exercise of any North Mountain warrants outstanding on the date of the Merger Agreement, (ii) in connection with the conversion of the North Mountain Class B Common Stock pursuant to North Mountain’s
organizational documents, (iii) the transactions contemplated by the Merger Agreement (including transactions contemplated by the Subscription Agreements) or (iv) the transactions contemplated by any Subscription Agreement executed after
the date of the Merger Agreement with certain persons in accordance with the terms of the Merger Agreement or (B) amend, modify or waive any of the terms or rights set forth in, any North Mountain warrant or the warrant agreement,
including any amendment, modification or reduction of the warrant price set forth therein, other than pursuant to the Subscription Agreements and the Share Vesting and Warrant Surrender Agreement;
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except as contemplated by the Equity Incentive Plan or the 2022 ESPP, (i) adopt or amend any North Mountain benefit plan, or
enter into any employment contract or collective bargaining agreement or
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(ii) hire or retain the services of any employee or any other individual to provide
services to North Mountain or its subsidiaries following the closing;
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fail to maintain its existence or acquire by merger or consolidation with, or merge or consolidate with, or purchase a material
portion of the assets or equity of, any corporation, partnership, limited liability company, association, joint venture or other business organization or division thereof; or adopt or enter into a plan of complete or partial liquidation,
dissolution, merger, consolidation, restructuring, recapitalization or other reorganization (other than the transactions contemplated by the Merger Agreement);
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make any capital expenditures;
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make any loans, advances or capital contributions to, or investments in, any other person, make any change in its existing
borrowing or lending arrangements for or on behalf of such persons, or enter into any “keep well” or similar agreement to maintain the financial condition of any other person or entity;
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enter into any new line of business outside of the business currently conducted by North Mountain and its subsidiaries as of the
date of the Merger Agreement;
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make any change in its financial accounting methods, principles or practices, except insofar as may have been required by a change
in GAAP (including pursuant to standards, guidelines and interpretations of the Financial Accounting Standards Board or any similar organization) or applicable law;
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voluntarily fail to maintain, cancel or materially change coverage under any insurance policy in form and amount equivalent to the
insurance coverage currently maintained with respect to North Mountain and its subsidiaries and their assets and properties; or
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enter into any agreement or undertaking to do any action prohibited by the foregoing.
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Additional Agreements
HSR Act and Regulatory Approvals
Corcentric and North Mountain have agreed to (i) comply promptly but in
no event later than ten business days after the date of the Merger Agreement with the notification and reporting requirements of the HSR Act, (ii) use their reasonable best efforts to submit, as soon as practicable, any other required
applications or filings pursuant to any applicable law relating to antitrust and to furnish to each other as promptly as reasonably practicable all information required for any application or other filing required to be made by the other pursuant
to any applicable law relating to antitrust and (iii) substantially comply with any information or document requests from the Antitrust Division and FTC.
Corcentric and North Mountain have agreed to promptly notify the other
of any substantive communication with, and furnish to the other copies of any notices or written communications received by, them or any of their respective affiliates and any third party or governmental authority with respect to the transactions
contemplated by the Merger Agreement, and Corcentric and North Mountain have agreed to permit counsel to the other an opportunity to review in advance, and Corcentric and North Mountain (respectively) have agreed to consider in good faith the
views of such counsel in connection with, any proposed communications by Corcentric and North Mountain (respectively) or their respective affiliates to any governmental authority concerning the transactions contemplated by the Merger Agreement;
provided, that neither party shall extend any waiting period or comparable period under the HSR Act or enter into any agreement with any governmental authority to delay the consummation of the transactions contemplated by the Merger Agreement
without the written consent of the other (which consent shall not be unreasonably withheld, conditioned or delayed). Corcentric and North Mountain have agreed to provide the other and their respective counsel the opportunity, on reasonable
advance notice, to participate in any substantive meetings or discussions, either in person or by telephone, between Corcentric and North Mountain (respectively) or any of their respective affiliates, agents or advisors, on the one hand, and any
governmental authority, on the other hand, concerning or in connection with the transactions contemplated by the Merger Agreement.
North Mountain has agreed to exercise its reasonable best efforts to
(i) obtain termination or expiration of the waiting period under the HSR Act and consents or approvals pursuant to any other applicable laws relating to antitrust, (ii) prevent the entry in any action brought by the Antitrust Division or FTC or
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entity of any governmental order which would prohibit, make unlawful or delay the
consummation of the transactions contemplated by the Merger Agreement, and (iii) if any such governmental order is issued in any such action, cause such governmental order to be lifted.
North Mountain has agreed to cooperate in good faith with the Antitrust
Division and the FTC and exercise its reasonable best efforts to undertake promptly any and all action required to complete lawfully the transactions contemplated by the Merger Agreement as soon as practicable (but in any event prior to the
Termination Date) and any and all action necessary or advisable to avoid, prevent, eliminate or remove any impediment under any applicable law relating to antitrust or the actual or threatened commencement of any proceeding in any forum by or on
behalf of the Antitrust Division and the FTC or the issuance of any governmental order that would delay, enjoin, prevent, restrain or otherwise prohibit the consummation of the Business Combination, including selling, divesting or otherwise
disposing of, licensing, holding separate or taking or committing to take any action that limits in any respect North Mountain’s or Corcentric’s freedom of action with respect to, or its ability to retain, any business, products, rights,
services, licenses, assets or properties of Corcentric and its subsidiaries.
Notwithstanding anything in the Merger Agreement to the contrary,
nothing in the above covenant or any other provision of the Merger Agreement shall require or obligate North Mountain or any other person or entity to take any actions with respect to North Mountain’s affiliates, the Sponsor, the PIPE Investors,
their respective affiliates and any investment funds or investment vehicles affiliated with, or managed or advised by, North Mountain’s affiliates, the Sponsor, the Subscribers or any portfolio company (as such term is commonly understood in the
private equity industry) or investment of North Mountain’s affiliates, Sponsor, the PIPE Investors or of any such investment fund or investment vehicle.
Further, notwithstanding any other provision of the Merger Agreement,
nothing in the Merger Agreement shall require or obligate Corcentric or any of its subsidiaries or affiliates to, and North Mountain and its subsidiaries and affiliates shall not, without the prior written consent of Corcentric, agree or
otherwise be required to, take any action with respect to Corcentric or any of its subsidiaries or affiliates, including selling, divesting, or otherwise disposing of, licensing, holding separate, or taking or committing to take any action that
limits in any respect its freedom of action with respect to, or its ability to retain, any business, products, rights, services, licenses, assets or properties of Corcentric or any of its subsidiaries or affiliates, or any interest therein.
Corcentric and North Mountain have agreed to each pay 50% of all filing
fees payable to the Antitrust Division and FTC in connection with the transactions contemplated by the Merger Agreement.
North Mountain has agreed that it will not, and shall cause its
subsidiaries not to, acquire or agree to acquire, by merging with or into or consolidating with, or by purchasing a portion of the assets of or equity in, or by any other manner, any business or any corporation, partnership, association or other
business organization or division thereof, or otherwise acquire or agree to acquire any assets, or take any other action, if the entering into of a definitive agreement relating to, or the consummation of such acquisition, merger or
consolidation, or the taking of any other action, would reasonably be expected to (i) impose any material delay in the obtaining of, or materially increase the risk of not obtaining, any authorizations, consents, orders or declarations of the
Antitrust Division or FTC or the expiration or termination of any applicable waiting period; (ii) materially increase the risk of any governmental authority entering an order prohibiting the consummation of the transaction contemplated by the
Merger Agreement; (iii) materially increase the risk of not being able to remove any such order on appeal or otherwise; or (iv) materially delay or prevent the consummation of the transactions contemplated by the Merger Agreement.
Notwithstanding anything in the Merger Agreement to the contrary, the
restrictions and obligations described in the above paragraph shall not apply to or be binding upon North Mountain’s affiliates, the Sponsor, the PIPE Investors, their respective affiliates or any investment funds or investment vehicles
affiliated with, or managed or advised by, North Mountain’s affiliates, the Sponsor, the Subscribers or any portfolio company (as such term is commonly understood in the private equity industry) or investment of North Mountain’s affiliates, the
Sponsor, the PIPE Investors or of any such investment fund or investment vehicle.
Proxy Solicitation
North Mountain has agreed to use reasonable best efforts to, as
promptly as practicable, (i) establish the record date (which record date shall be mutually agreed with Corcentric) for, duly call, give notice of, convene and hold the special meeting in accordance with the DGCL, (ii) after the registration
statement is declared
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effective under the Securities Act, cause this proxy statement/prospectus to be
disseminated to North Mountain’s stockholders in compliance with applicable law, and (iii) after the registration statement is declared effective under the Securities Act, solicit proxies from the holders of North Mountain Common Stock to vote in
accordance with the recommendation of the North Mountain Board with respect to each of the proposals contained in this proxy statement/prospectus. North Mountain has agreed, through the North Mountain board of directors, to recommend to its
stockholders that they approve the proposals contained in this proxy statement/prospectus (the “North Mountain Board recommendation”) and shall include the North Mountain Board recommendation in this proxy statement/prospectus, unless the North
Mountain Board shall have changed the recommendation in accordance with the terms of the Merger Agreement. The North Mountain Board shall not (and no committee or subgroup thereof shall) change, withdraw, withhold, qualify or modify, or publicly
propose to change, withdraw, withhold, qualify or modify, the North Mountain Board recommendation (a “North Mountain change in recommendation”); provided, that, at any time prior to obtaining the approval of North Mountain stockholders, the North
Mountain Board may make a North Mountain change in recommendation and include such North Mountain change in recommendation in this proxy statement/prospectus if it determines in good faith, after consultation with its outside legal counsel, that
the failure to make a North Mountain change in recommendation would be inconsistent with its fiduciary duties to its stockholders under applicable law; provided further, North Mountain will not be entitled to make, or agree or resolve to make, a
North Mountain change in recommendation unless (A) North Mountain delivers to Corcentric a written notice (a “North Mountain change in recommendation notice”) advising Corcentric that the North Mountain Board proposes to take such action and
containing the material facts underlying the North Mountain Board’s determination that a North Mountain intervening event has occurred, including all material details and terms and conditions related thereto (which North Mountain change in
recommendation notice shall not itself constitute a breach of the Merger Agreement), and (B) at or after 5:00 p.m., New York City time, on the fifth business day immediately following the day on which North Mountain delivered the North Mountain
change in recommendation notice (such period from the time the North Mountain change in recommendation notice is provided until 5:00 p.m., New York City time, on the fifth business day immediately following the day on which North Mountain
delivered the North Mountain change in recommendation notice (it being understood that any material development with respect to a North Mountain intervening event (which shall not include an offer from Corcentric with respect to any revisions to
the terms of the Merger Agreement) shall require a new notice but with an additional four business day (instead of five business day) period from the date of such notice), the “North Mountain change in recommendation notice period”), the North
Mountain Board reaffirms in good faith (after consultation with its outside legal counsel) that the failure to make a North Mountain change in recommendation would be inconsistent with its fiduciary duties under applicable law.
If requested by Corcentric, North Mountain has agreed to, and will use
its reasonable best efforts to cause its representatives to, during the North Mountain change in recommendation notice period, engage in good faith negotiations with Corcentric and its representatives to make such adjustments in the terms and
conditions of the Merger Agreement so as to obviate the need for a North Mountain change in recommendation.
Notwithstanding the foregoing, if on a date for which the special
meeting is scheduled, North Mountain has not received proxies representing a sufficient number of shares of North Mountain Common Stock to obtain the stockholder approvals of the proposals contained in this proxy statement/prospectus, whether or
not a quorum is present, North Mountain shall have the right to make one or more successive postponements or adjournments of the special meeting; provided, that the special meeting, without the prior written consent of Corcentric (which consent
shall not be unreasonably withheld, conditioned or delayed), (x) may not be adjourned to a date that is more than 20 business days after the date for which the special meeting was originally scheduled or the most recently adjourned special
meeting (excluding any adjournments required by applicable law) and (y) is held no later than four business days prior to the Termination Date.
As used in the Merger Agreement, “North Mountain intervening event”
means any material event, fact, development, circumstance or occurrence (i) that was not known and was not reasonably foreseeable to the North Mountain Board as of the date of the Merger Agreement, and that becomes known to the North Mountain
Board after the date of the Merger Agreement and (ii) does not relate to clearance of the Business Combination by the Antitrust Division and FTC or any other applicable statute, law, ordinance, rule, regulation or governmental order; provided,
however, that (1) any change in the price or trading volume of North Mountain Class A Common Stock or (2) Corcentric meeting, failing to meet or exceeding financial or other projections or predictions (but not the cause(s) underlying Corcentric
meeting, failing to meet or exceeding such financial or
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other projections or predictions, any of which may be taken into account for purposes
of determining whether a North Mountain intervening event has occurred) shall not be taken into account for purposes of determining whether an North Mountain intervening event has occurred.
Corcentric has agreed to solicit the written consent or affirmative
vote of (i) (a) holders of a majority of the voting power of the outstanding shares of Corcentric Common Stock and Corcentric Preferred Stock (voting together as a single class on an “as-converted” to Corcentric Common Stock basis) and
(ii) holders of a majority of the outstanding shares of Corcentric Preferred Stock (voting together as a single class on an “as-converted” to Corcentric Common Stock basis) in favor of the approval and adoption of the Corcentric Business
Combination Proposal (the “Corcentric Stockholder Approval”) within two business days after the Registration Statement becomes effective. In connection therewith, Corcentric has agreed to use reasonable best efforts to, as promptly as
practicable, (i) establish the record date (which record date shall be mutually agreed with North Mountain) for determining the Corcentric stockholders entitled to provide such written consent, (ii) cause the consent solicitation statement with
respect to the solicitation by Corcentric of the Corcentric Stockholder Approval (the “consent solicitation statement”) to be disseminated to the Corcentric stockholders in compliance with applicable law and (iii) unless a Corcentric change in
recommendation (as defined below) has been made, solicit written consents from Corcentric stockholders to give the Corcentric Stockholder Approval. Corcentric has agreed, through the Corcentric board of directors, to provide the recommendation of
the Corcentric board of directors to the Corcentric stockholders that they approve and adopt the Merger Agreement and all other transactions contemplated thereby and approve the Business Combination (the “Corcentric Board Recommendation”) and
include the Corcentric Board Recommendation in the consent solicitation statement, subject to the obligations described in this paragraph. The Corcentric board of directors shall not (and no committee or subgroup thereof shall) (i) change,
withdraw, withhold, qualify or modify, or publicly propose to change, withdraw, withhold, qualify or modify, the Corcentric Board Recommendation or (ii) approve, recommend or declare advisable, or propose publicly to approve, recommend or declare
advisable, any acquisition proposal (any action described in clause (i) or (ii), a “Corcentric change in recommendation”); provided, that if, at any time prior to obtaining the Corcentric Stockholder Approval, the Corcentric board of directors
determines in good faith, in response to a Corcentric intervening event, after consultation with its outside legal counsel, that the failure to make a Corcentric change in recommendation would be a breach of its fiduciary duties to its
stockholders under applicable law, the Corcentric Board of directors may, prior to obtaining the Corcentric Stockholder Approval, make a Corcentric change in recommendation; provided further, Corcentric will not be entitled to make, or agree or
resolve to make, a Corcentric change in recommendation unless (x) Corcentric delivers to North Mountain a written notice (a “Corcentric change in recommendation notice”) advising North Mountain that the Corcentric board of directors proposes to
take such action and containing the material facts underlying the Corcentric board of director’s determination that a Corcentric intervening event has occurred, including all material details and terms and conditions related thereto (in each
case, it being acknowledged that such Corcentric change in recommendation notice shall not itself constitute a breach of the Merger Agreement), and (y) at or after 5:00 p.m., New York City time, on the fifth business day immediately following the
day on which Corcentric delivered the Corcentric change in recommendation notice (such period from the time the Corcentric change in recommendation notice is provided until 5:00 p.m. New York City time on the fifth business day immediately
following the day on which Corcentric delivered the Corcentric change in recommendation notice (it being understood that any material development with respect to a Corcentric intervening event, in each case, shall require a new notice but with an
additional four business days (instead of five business days) period from the date of such notice), the “Corcentric change in recommendation notice period”), the Corcentric board of directors reaffirms in good faith (after consultation with its
outside legal counsel) that the failure to make a Corcentric change in recommendation would be a breach of its fiduciary duties under applicable law.
If requested by North Mountain, Corcentric has agreed to, and will use
its reasonable best efforts to cause its representatives to, during the Corcentric change in recommendation notice period, engage in good faith negotiations with North Mountain and its representatives to make such adjustments in the terms and
conditions of the Merger Agreement so as to obviate the need for a Corcentric change in recommendation.
As used in the Merger Agreement, “Corcentric intervening event” means
an event, fact, development, circumstance or occurrence (but specifically excluding any acquisition proposal (as such terms are described under the heading “—Exclusivity”) (or any transaction contemplated
thereby or described in the definition thereof), any changes in capital markets, any declines or improvements in financial markets, the timing of any approval or clearance of any governmental authority required for the consummation of the
Business
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Combination, or the fact that, in and of itself, Corcentric exceeds internal or
published projections or North Mountain does not achieve internal or published projections) that was not known and was not reasonably foreseeable to Corcentric or the Corcentric board of directors as of the date of the Merger Agreement (or the
consequences of which were not reasonably foreseeable to the Corcentric board of directors as of the date of the Merger Agreement), and that becomes known to the Company or the Corcentric board of directors after the date of the Merger Agreement
but prior to obtaining the Corcentric Stockholder Approval.
Corcentric has agreed to provide North Mountain with copies of all
stockholder consents it receives within one business day of receipt. If the Corcentric Stockholder Approval is obtained, then promptly following the receipt of the required written consents, Corcentric has agreed to prepare and deliver to its
stockholders who have not consented the notice required by Section 228(e) and 262 of the DGCL. Unless the Merger Agreement has been terminated in accordance with its terms, Corcentric’s obligation to solicit written consents from the Corcentric
stockholders to give the Corcentric Stockholder Approval in accordance with the obligations described in this paragraph shall not be limited or otherwise affected by the making, commencement, disclosure, announcement or submission of any
acquisition proposal (as such terms are described under the heading “—Exclusivity”), or by any Corcentric change in recommendation.
Exclusivity
Corcentric Exclusivity. Through the Closing or earlier valid termination of the Merger Agreement, Corcentric has agreed not to, nor permit any of its affiliates or representatives to, directly or indirectly, (i) encourage, solicit,
initiate, knowingly facilitate or continue inquiries regarding an acquisition proposal; (ii) enter into discussions or negotiations with, or provide any non-public information to, any person concerning a possible acquisition proposal; or
(iii) enter into any agreements or other instruments (whether or not binding) regarding an acquisition proposal. Corcentric has agreed to immediately cease and cause to be terminated, and shall cause its affiliates and all of its and their
representatives to immediately cease and cause to be terminated, all existing discussions or negotiations with any persons conducted heretofore with respect to, or that could reasonably be expected to result in or lead to, an acquisition
proposal. For purposes hereof, “acquisition proposal” shall mean any inquiry, proposal or offer from any person (other than North Mountain or any of its affiliates) concerning (i) a merger, consolidation, liquidation, recapitalization, share
exchange or other business combination transaction involving Corcentric; (ii) the issuance or acquisition of all or a material portion of the outstanding shares of capital stock or other equity securities of Corcentric; or (iii) the sale,
lease, exchange or other disposition of all or substantially all of Corcentric’s properties or assets. Corcentric has agreed to promptly (and in any event within 48 hours after receipt thereof by Corcentric or its representatives) advise North
Mountain orally and in writing of receipt of any acquisition proposal by Corcentric, any request for information with respect to any acquisition proposal, or any inquiry with respect to or which could reasonably be expected to result in an
acquisition proposal, the material terms and conditions of such request, acquisition proposal or inquiry, and the identity of the person making the same. Nothing contained in the foregoing will prohibit Corcentric, any of its affiliates or any
of its representatives from taking any actions in the ordinary course of business that are not in violation of the restrictions described in this paragraph (such as answering phone calls) or informing any person inquiring about a possible
acquisition proposal, as applicable, of the existence of the covenants and agreements contained in this paragraph.
North Mountain Exclusivity. Through the Closing or earlier valid termination of the Merger Agreement, but only to the extent not inconsistent with the fiduciary duties of the North Mountain Board (as determined by the North Mountain in good
faith), North Mountain has agreed not to, nor permit any of its affiliates or representatives to (i) take, whether directly or indirectly, any action to solicit, initiate, continue encourage, knowingly facilitate, continue inquiries regarding
or engage in discussions or negotiations with, or enter into any agreement, letter of intent, memorandum of understanding or agreement in principle with, or encourage, respond, provide information to or commence due diligence with respect to,
any person or entity (other than Corcentric, its stockholders and/or any of their affiliates or representatives), concerning, relating to or which is intended or is reasonably likely to give rise to or result in, any offer, inquiry, proposal or
indication of interest, written or oral relating to any business combination (a “business combination proposal”) other than with Corcentric, its stockholders and their respective affiliates and representatives, (ii) enter into discussions or
negotiations with, or provide any non-public information to any person concerning a possible business combination proposal or (iii) enter into any agreements or other instruments (whether or not binding) regarding a business combination
proposal. North Mountain has agreed to, and to cause its affiliates and representatives to, immediately cease any
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and all existing discussions or negotiations with any person or entity conducted prior
to the date of the Merger Agreement with respect to, or which is reasonably likely to give rise to or result in, a business combination proposal. North Mountain has agreed to promptly (and in any event within 48 hours after receipt thereof by
North Mountain or its representatives) advise Corcentric orally and in writing of receipt of any business combination proposal by North Mountain, any request for information with respect to any business combination proposal, or any inquiry with
respect to or which could reasonably be expected to result in an business combination proposal, the material terms and conditions of such request, business combination proposal or inquiry, and the identity of the person making the same. Nothing
contained in the foregoing will prohibit North Mountain, any of its affiliates or any of its representatives from taking any actions in the ordinary course of business that are not in violation of the restrictions described in this paragraph
(such as answering phone calls) or informing any person inquiring about a possible business combination proposal, as applicable, of the existence of the covenants and agreements contained in this paragraph.
Support Agreements
Within twenty-four hours from the execution of the Merger Agreement,
Corcentric has agreed to deliver, or cause to be delivered, to North Mountain executed copies of the Corcentric Stockholder Support Agreements.
Corcentric Lender Approvals
Prior to the execution of the Merger Agreement, Corcentric delivered to
North Mountain the consents, approval, authorizations or other documents of Corcentric’s requisite lenders (the “Corcentric Lender Approvals”). Through the Closing, Corcentric has agreed to take (or cause to be taken) all actions and do (or cause
to be done) all things reasonably necessary, proper or advisable to maintain in full force and effect the Corcentric Lender Approvals. Corcentric has agreed not to replace, terminate, amend, alter or waive, or agree to replace, terminate, amend,
alter or waive (in any case whether by action or inaction), any provision or remedy under the Corcentric Lender Approvals without the prior written consent of North Mountain. Corcentric will promptly (and in any event within one business day)
notify North Mountain of (i) the expiration or termination (or attempted or purported termination, whether or not valid) of the Corcentric Lender Approvals, (ii) any breach or default (or any event or circumstance that, with or without notice,
lapse of time or both, could reasonably be expected to give rise to any breach or default) by any party to the Corcentric Lender Approvals or (iii) receipt of any written notice or other written communication from any person with respect to any:
(x) actual or potential breach, default, termination or repudiation by any party to the Corcentric Lender Approvals or (y) material dispute or disagreement between or among any parties to the Corcentric Lender Approvals.
Corcentric Insider Loans
At or prior to the Closing, Corcentric has agreed to (i) cause certain
specified persons (including all persons that will become directors or executive officers of New Corcentric at the Closing) to (A) repay in full to Corcentric any loan or advance made by Corcentric or any of its subsidiaries to such persons and
any other amount owed by such persons to Corcentric or any of its subsidiaries and (B) terminate any agreement or arrangement providing for such loan, advance or other owed amount and (ii) terminate any guaranty or similar arrangement pursuant to
which Corcentric or any of its subsidiaries has guaranteed the payment or performance of any obligations of any officer or director to a third party.
The Nasdaq Listing
Through the Closing, North Mountain has agreed to use reasonable best
efforts to ensure North Mountain remains listed as a public company on, and for shares of North Mountain Class A Common Stock to be listed on, Nasdaq. North Mountain has agreed to use reasonable best efforts to cause the North Mountain Class A
Common Stock (including Earnout Shares) to be issued in connection with the transactions contemplated by the Merger Agreement, including the Business Combination, to be approved for listing on Nasdaq as promptly as practicable following the
issuance thereof, subject to official notice of issuance, prior to the Closing Date.
Indemnification and Directors’ and Officers’ Insurance
From and after the Effective Time, North Mountain and the Surviving
Company have agreed to indemnify and hold harmless each present and former director and officer of Corcentric and each of its subsidiaries against any costs or expenses (including reasonable attorneys’ fees), judgments, fines, losses, claims,
damages or
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liabilities incurred in connection with any action, whether civil, criminal,
administrative or investigative, arising out of or pertaining to matters existing or occurring at or prior to the Effective Time, whether asserted or claimed prior to, at or after the Effective Time, to the fullest extent that Corcentric or its
subsidiaries, as the case may be, would have been permitted under applicable law and its certificate of incorporation, bylaws or other organizational documents in effect on the date of the Merger Agreement to indemnify such person (including the
advancing of expenses as incurred to the fullest extent permitted under applicable law). Without limiting the foregoing, North Mountain has agreed to, and agreed to cause the Surviving Company and its subsidiaries to, (i) maintain for a period of
not less than six years from the Effective Time provisions in its certificate of incorporation (if applicable), bylaws and other organizational documents concerning the indemnification and exculpatory (including provisions relating to expense
advancement) of officers and directors that are no less favorable to those persons than the provisions of such certificates of incorporation, bylaws and other organizational documents as of the date of the Merger Agreement, and (ii) not amend,
repeal or otherwise modify such provisions in any respect that would adversely affect the rights of those persons thereunder, in each case, except as required by law. North Mountain has agreed to assume, and be liable for, and shall cause
Corcentric and their respective subsidiaries to honor, each of the covenants described in this paragraph.
For a period of six years from the Effective Time, North Mountain has
agreed to, or will cause one or more of its subsidiaries to, maintain in effect directors’ and officers’ liability insurance covering those persons who are currently covered by Corcentric’s or its subsidiaries’ directors’ and officers’ liability
insurance policies on terms not less favorable than the terms of such current insurance coverage, except that in no event shall North Mountain or its subsidiaries be required to pay an annual premium for such insurance in excess of 300% of the
aggregate annual premium payable by Corcentric and its subsidiaries for such insurance policy for the year ended December 31, 2020; provided, however, that (i) North Mountain may cause coverage to be extended under the current directors’ and
officers’ liability insurance by obtaining a six-year “tail” policy containing terms not materially less favorable than the terms of such current insurance coverage with respect to matters, acts or omissions existing or occurring at or prior to
the Effective Time, and (ii) if any claim is asserted or made within such six-year period, any insurance required to be maintained under the obligations described in this paragraph shall be continued in respect of such claim until the final
disposition thereof.
Financing
North Mountain, Merger Sub I and Merger Sub II have agreed to take, or
cause to be taken, as promptly as practicable after the execution of the Merger Agreement, all actions, and to do, or cause to be done, all things necessary (including enforcing its rights under the Subscription Agreements), on or prior to the
Closing Date, to consummate the purchases contemplated by the Subscription Agreements on the terms and conditions described or contemplated therein, including using its reasonable efforts to enforce its rights under the Subscription Agreements to
cause the PIPE Investors to pay to (or as directed by) North Mountain the applicable purchase price under each Subscriber’s applicable Subscription Agreement in accordance with its terms.
In the event that the North Mountain Board determines that it is
reasonably necessary, solely to satisfy the condition described in the fourth bullet point under the heading “—Conditions to Closing; Corcentric”, to enter into additional Subscription Agreements with
third parties following the date of the Merger Agreement, pursuant to which such parties, upon the terms and subject to the conditions set forth therein, shall purchase shares of North Mountain Common Stock at $10.00 per share in a private
placement or placements and, as applicable, receive PIPE Warrants with such purchase(s), to be consummated immediately prior to the consummation of the transactions contemplated by the Merger Agreement (the investments contemplated by any such
Subscription Agreements, the “additional financing”), Corcentric has agreed to, subject to its prior written consent (which consent shall deemed to be provided with respect to North Mountain’s entry into any Subscription Agreement with certain
persons in accordance with the terms of the Merger Agreement), reasonably cooperate with North Mountain with respect to the arrangement of any such additional financing.
Equity Plans
Prior to the Closing, North Mountain has agreed to, subject to
obtaining the requisite North Mountain stockholder approval, adopt (i) an omnibus incentive plan (the “Omnibus Incentive Plan”) in a form and substance to be mutually and reasonably agreed by Corcentric and North Mountain following the date of
the
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Merger Agreement (as further described in the Merger Agreement)), and (ii) an employee
stock purchase plan (together with the Omnibus Incentive Plan, the “Equity Plans”) in a form and substance to be mutually and reasonably agreed by Corcentric and North Mountain following the date of the Merger Agreement (as further described in
the Merger Agreement)..
Other Covenants and Agreements
The Merger Agreement contains other covenants and agreements,
including covenants related to:
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Corcentric and North Mountain providing, subject to certain specified restrictions and conditions, to the other party and its
respective representatives reasonable access to Corcentric’s and North Mountain’s (as applicable) and their respective subsidiaries’ properties, records, systems, contracts and commitments;
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Corcentric, its subsidiaries and stockholders agreeing not to engage in transactions involving securities of North Mountain
without North Mountain’s prior consent;
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Corcentric waiving claims to the Trust Account;
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Corcentric and North Mountain cooperating on the preparation and efforts to make effective this proxy statement/prospectus;
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North Mountain making certain disbursements from the Trust Account;
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North Mountain keeping current and timely filing all reports required to be filed or furnished with the SEC and otherwise
complying in all material respects with its reporting obligations under applicable securities laws;
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Corcentric taking all actions necessary to cause certain agreements to be terminated and/or modified or amended in accordance with
the terms of the Merger Agreement;
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North Mountain taking steps to exempt the acquisition of North Mountain Class A Common Stock from Section 16(b) of the Exchange
Act pursuant to Rule 16b-3 thereunder;
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North Mountain obtaining directors’ and officers’ liability insurance prior to the closing;
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cooperation between Corcentric and North Mountain in obtaining any necessary third-party consents required to consummate the
Business Combination;
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agreement relating to the intended tax treatment of the transactions contemplated by the Merger Agreement;
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confidentiality and publicity relating to the Merger Agreement and the transactions contemplated thereby; and
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Corcentric and North Mountain agreeing not to amend, supplement or modify any of the Subscription Agreements, the Corcentric
Stockholder Support Agreements, the Registration Rights Agreement, the Lock-up Agreements, the Share Vesting and Warrant Surrender Agreement or the Confidentiality Agreement, without the prior written consent of the other (such consent
not to be unreasonably withheld, conditioned or delayed).
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Conditions to Closing; Termination
Conditions to Closing
Mutual
The obligations of Corcentric, North Mountain, Merger Sub I and Merger
Sub II to consummate the Business Combination, including the Mergers, are subject to the satisfaction or waiver (where permissible) of the following conditions:
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all applicable waiting periods (and any extensions thereof) under the HSR Act in respect of the transactions contemplated by the
Merger Agreement shall have expired or been terminated;
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there shall not have been entered, enacted or promulgated any governmental order, statute, rule, regulation or governmental order
enjoining or prohibiting the consummation of the transactions contemplated by the Merger Agreement;
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the redemption offer in relation to the Public Shares shall have been completed in accordance with the terms of the Merger
Agreement and this proxy statement/prospectus;
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the registration statement of which this proxy statement/prospectus forms a part shall have become effective under the Securities
Act and no stop order suspending the effectiveness of the registration statement shall have been issued and no proceedings for that purpose shall have been initiated or threatened by the SEC and not withdrawn;
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North Mountain shall have at least $5,000,001 of net tangible assets (as determined in accordance with Rule 3a51-1(g)(1) of the
Exchange Act);
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the approval by North Mountain stockholders of the Business Combination Proposal, the Pre-Mergers Charter Amendment Proposal,
the Post-Mergers Charter Approval Proposal, the Equity Incentive Plan Proposal, the Employee Stock Purchase Plan Proposal and the Nasdaq PIPE Issuance Proposal shall have been obtained;
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the Corcentric Stockholder Approval shall have been obtained;
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the North Mountain Class A Common Stock, the PIPE Warrants and the shares of North Mountain Class A Common Stock issuable upon the
exercise of the PIPE Warrants to be issued or delivered in connection with the transactions contemplated by the Merger Agreement (including the Earnout Shares), including the transactions contemplated by the Subscription Agreements, shall
have been approved for listing on Nasdaq, subject only to official notice of issuance thereof and the requirement to have a sufficient number of round lot holders; and
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the Existing Charter will have been amended by the Charter Amendment.
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North Mountain, Merger Sub I and Merger Sub II
The obligations of North Mountain, Merger Sub I and Merger Sub II to
consummate the Business Combination are subject to the satisfaction or waiver (where permissible) of the following conditions:
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the accuracy of the representations and warranties of Corcentric as of the date of the Merger Agreement and as of the Closing Date
of the Business Combination, other than, in most cases, those failures to be true and correct that would not reasonably be likely to have a material adverse effect on Corcentric;
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each of the covenants of Corcentric to be performed or complied with as of or prior to the Closing shall have been performed or
complied with in all material respects; and
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the receipt of a certificate signed by an officer of Corcentric certifying that the two preceding conditions have been satisfied.
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Corcentric
The obligations of Corcentric to consummate the Business Combination
are subject to the satisfaction or waiver (where permissible) of the following conditions:
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the accuracy of the representations and warranties of North Mountain, Merger Sub I and Merger Sub II as of the date of the Merger
Agreement and as of the closing date of the Business Combination, other than, in most cases, those failures to be true and correct that would not reasonably be likely to cause an event, change, circumstance, effect or development
(collectively, “Effects”) that, individually or in the aggregate with one or more other Effects, does or would reasonably be expected to prevent, materially delay or materially impair North Mountain, Merger Sub I or Merger Sub II from
consummating the Mergers on or before the Termination Date;
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each of the covenants of North Mountain to be performed or complied with as of or prior to the closing shall have been performed
or complied with in all material respects;
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the receipt of a certificate signed by an executive officer of North Mountain certifying that the two preceding conditions have
been satisfied; and
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(a) the funds contained in the Trust Account as of immediately prior to the Effective Time; plus (b) all other cash and cash
equivalents of North Mountain; minus (c) the aggregate amount of cash proceeds that will be required to satisfy the redemption of any shares of North Mountain Class A Common Stock pursuant to the redemption offer (to the extent not
already paid); minus (d) the amount of the Outstanding Acquiror Expenses (as defined in the Merger Agreement) plus (e) the aggregate amount of cash committed to acquire North Mountain Class A Common Stock pursuant to the Subscription
Agreements (including any Subscription Agreements that have been entered into after the date hereof as permitted by the terms of the Merger Agreement or as otherwise agreed by North Mountain and Corcentric) (and that has been funded to
the escrow account in accordance with the Subscription Agreements solely to the extent such Subscription Agreement expressly contemplates the funding of such committed cash into an escrow account prior to the Closing), shall equal or
exceed $150,000,000, provided, that, Corcentric shall have no right or ability to waive this condition without the prior written consent of North Mountain (which consent may be provided or withheld by North Mountain in its sole
discretion) if such aggregate amount is less $125,000,001.
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Termination
Mutual Termination Rights
The Merger Agreement may be terminated and the transactions
contemplated thereby abandoned:
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by written consent of Corcentric and North Mountain; or
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by written notice from either Corcentric or North Mountain to the other if the approval of North Mountain stockholders to the
Business Combination Proposal, the Charter Amendment Proposal, the Charter Approval Proposal, the Equity Incentive Plan Proposal, the Employee Stock Purchase Plan Proposal and the Nasdaq PIPE Issuance Proposal are not obtained at the
North Mountain special meeting (subject to any adjournment or recess of the North Mountain special meeting).
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Corcentric Termination Rights
The Merger Agreement may be terminated and the transactions
contemplated thereby abandoned prior to the Closing, by written notice to New Mountain from Corcentric if (i) there is any breach of any representation, warranty, covenant or agreement on the part of North Mountain set forth in the Merger
Agreement, such that the conditions described in the first two bullet points under the heading “—Conditions to Closing; Corcentric” would not be satisfied at the Closing (a “terminating North Mountain
breach”), except that, if any such terminating North Mountain breach is curable by North Mountain through the exercise of its commercially reasonable efforts, then, for a period of 30 days after receipt by North Mountain of notice from Corcentric
of such breach, but only as long as North Mountain continues to exercise such commercially reasonable efforts to cure such terminating North Mountain breach (the “North Mountain cure period”), such termination shall not be effective, and such
termination shall become effective only if the terminating North Mountain breach is not cured within the North Mountain cure period, (ii) the Closing has not occurred on or before Termination Date or (iii) the consummation of the Business
Combination is permanently enjoined or prohibited by the terms of a final, non-appealable governmental order or a statute, rule or regulation; provided, that the right to terminate the Merger Agreement under this paragraph shall not be available
if Corcentric’s failure to fulfill any obligation under the Merger Agreement has been the primary cause of, or primarily resulted in, the failure of the Closing to occur on or before such date; provided, further, that the right to terminate under
clause (ii) of this paragraph shall not be available if Corcentric is in material breach of its obligations under the Merger Agreement on such date.
North Mountain Termination Rights
The Merger Agreement may be terminated and the transactions
contemplated thereby abandoned:
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prior to the closing, by written notice to Corcentric from North Mountain if (i) there is any breach of any representation,
warranty, covenant or agreement on the part of Corcentric set forth in the Merger Agreement such that the conditions described in the first two bullet points under the heading “—Conditions to Closing;
North Mountain, Merger Sub I and Merger Sub II” above would not be satisfied at the Closing (a “terminating Corcentric breach”), except that, if such terminating Corcentric breach is curable by Corcentric through the exercise of
its commercially reasonable efforts, then, for a
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period of 30 days after receipt by Corcentric of notice from North Mountain of such
breach, but only as long as Corcentric continues to use its commercially reasonable efforts to cure such terminating Corcentric breach (the “Corcentric cure period”), such termination shall not be effective, and such termination shall become
effective only if the terminating Corcentric breach is not cured within the Corcentric cure period, (ii) the Closing has not occurred on or before the Termination Date or (iii) the consummation of the Business Combination is permanently enjoined
or prohibited by the terms of a final, non-appealable governmental order or a statute, rule or regulation; provided, that the right to terminate the Merger Agreement under this paragraph shall not be available if North Mountain’s failure to
fulfill any obligation under the Merger Agreement has been the primary cause of, or primarily resulted in, the failure of the Closing to occur on or before such date; provided, further, that the right to terminate under clause (ii) of this
paragraph shall not be available if North Mountain is in material breach of its obligations under the Merger Agreement on such date;
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by written notice from North Mountain if the Corcentric Stockholder Approval has not been obtained within four business days
following the date that the registration statement of which this proxy statement/prospectus forms a part becomes effective; or
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by written notice from North Mountain if Corcentric shall not have delivered executed copies of the Corcentric Stockholder Support
Agreements within twenty-four hours from the date of the Merger Agreement.
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Effect of Termination
If the Merger Agreement is validly terminated, the agreement will
become void and have no effect, without any liability on the part of any of the parties, other than (i) liability of any party for any willful breach of the Merger Agreement or fraud by such party occurring prior to termination or (ii) liability
under a Subscription Agreement, the Confidentiality Agreement, Corcentric Stockholder Support Agreements or the Share Vesting and Warrant Surrender Agreement to which such person is a party, and to the extent arising from a claim against such
person by another person party to such agreement, in each case, subject to the terms and conditions thereof. However, the confidentiality, Trust Account claims waiver, termination fee and certain other technical provisions will continue in effect
notwithstanding termination of the Merger Agreement.
Expense Reimbursement
In the event that the Merger Agreement is terminated by North Mountain,
in accordance with its termination rights, as a result of (i) the Corcentric Stockholder Approval not being obtained within four business days following the date that the registration statement of which this proxy statement/prospectus forms a
part becomes effective or (ii) Corcentric failing to deliver executed copies of the Corcentric Stockholder Support Agreements within twenty-four hours from the date of the Merger Agreement, then Corcentric must pay North Mountain (as promptly as
reasonably practicable and, in any event, within two business days following such termination) an expense reimbursement amount equal to the actual reasonable and documented out-of-pocket fees and expenses incurred by North Mountain or the Sponsor
in connection with the Merger Agreement, the Business Combination and the other transactions contemplated by the Merger Agreement, but excluding any underwriting fees and discounts.
Amendment
The Merger Agreement may, to the fullest extent permitted by law, be
amended, modified or supplemented by a duly authorized agreement in writing executed by the parties to the Merger Agreement. The approval of the Merger Agreement by the stockholders of any of the parties shall not restrict the ability of the
board of directors of any of the parties to terminate the Merger Agreement in accordance with its terms or, to the fullest extent permitted by law, to cause such party to enter into an amendment to the Merger Agreement in accordance with its
terms.
Specific Performance
The parties to the Merger Agreement agree that they shall be entitled
to an injunction, specific performance and other equitable relief to prevent breaches of the Merger Agreement and to enforce specifically the terms of provisions thereof prior to valid termination of the Merger Agreement.
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Fees and Expenses
Except with respect to all filing fees in connection with any filing
under the HSR Act, 50% of which shall be borne by Corcentric and 50% of which will be borne by North Mountain, and certain other specified fees and expenses, all costs and expenses incurred in connection with the Merger Agreement will be paid by
the party incurring such cost or expense. Upon Closing, North Mountain will pay (i) all fees, expenses and disbursements incurred by or on behalf of or otherwise payable by North Mountain, Merger Sub I, Merger Sub II or the Sponsor in connection
with the negotiation, preparation or execution of the Merger Agreement or any ancillary agreement, the performance of its covenants or agreements in the Merger Agreement or any ancillary Agreement or the consummation of the transactions
contemplated by the Merger Agreement, in each case, solely to the extent such fees and expenses are incurred and expected to remain unpaid as of the closing of business on the business day immediately preceding the Closing Date, in an aggregate
amount not to exceed $18,000,000 without Corcentric’s prior written consent and (ii) certain transaction related fees and expenses incurred by or on behalf of Corcentric in connection with the preparation, negotiation and execution of the Merger
Agreement and the consummation of the transactions contemplated by the Merger Agreement, in each case, solely to the extent such fees and expenses are incurred and expected to remain outstanding as of the close of business on the business day
immediately preceding the Closing Date.
North Mountain is a blank check company originally incorporated on
July 14, 2020 as a Delaware corporation for the purpose of effecting a merger, capital stock exchange, asset acquisition, stock purchase, reorganization or similar business combination, involving North Mountain and one or more businesses. The
Business Combination with Corcentric is a result of an extensive search for a potential transaction utilizing the robust network and investing and transaction experience of North Mountain’s management team and the North Mountain Board. The terms
of the Merger Agreement are the result of an arm’s length negotiation between representatives of North Mountain and Corcentric.
The following chronology summarizes the key meetings and events that
led to the signing of the Merger Agreement. The following chronology does not purport to catalogue every conversation among representatives of North Mountain, Corcentric and other parties.
On September 22, 2020, North Mountain consummated the IPO. Prior to the
consummation of the IPO, neither North Mountain, nor anyone on its behalf, contacted any prospective target business or had any substantive discussions, formal or otherwise, with respect to a transaction with North Mountain.
From the date of the IPO through the signing of the LOI (as defined
below), members of the North Mountain Board and North Mountain’s management contacted, and were contacted by, a number of individuals and entities with respect to business combination opportunities. As part of this process, representatives of
North Mountain considered and evaluated more than 30 potential acquisition targets in a wide variety of industry sectors and entered into non-disclosure agreements with 17 of such potential acquisition targets (including Corcentric). North
Mountain conducted additional due diligence and/or held detailed discussions with the management teams of nine out of the 17 potential acquisition targets that entered into non-disclosure agreements with North Mountain and submitted valuation
presentations to five of those potential acquisition targets. North Mountain entered into letters of intent and transaction negotiations with two of those five potential acquisition targets (including Corcentric). North Mountain did not proceed
with a potential transaction with potential acquisition targets other than Corcentric for a variety of factors (including likelihood of execution) and decided to pursue an acquisition of Corcentric because it determined that Corcentric
represented a compelling opportunity based on certain of the factors summarized under the heading “—Recommendation of the North Mountain Board and Reasons for the Business Combination”. Compared to
Corcentric, North Mountain did not consider the other alternative acquisition targets that North Mountain evaluated to be as compelling when taking into consideration their business prospects, strategy, management teams, structure, likelihood of
execution and valuation considerations.
On February 18, 2021, Chuck Bernicker, North Mountain’s Chief
Executive Officer, was introduced to Doug Clark, Corcentric’s Chief Executive Officer, via email. The introduction was facilitated at Mr. Clark’s request by a mutual business connection in Mr. Bernicker’s and Mr. Clark’s metropolitan area given
their professional backgrounds and experiences in the financial technology sector, in particular Mr. Bernicker's prior experience as
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the Chief Executive Officer and director of South Mountain Merger Corp., a special
purpose acquisition company (”SPAC“) that had completed a business combination with Billtrust (NASDAQ: BTRS), a financial technology company. Following such introduction, Mr. Clark contacted Mr. Bernicker to set up a meeting on February 23,
2021.
On February 23, 2021, Mr. Bernicker and Mr. Clark held a virtual
introductory meeting to discuss their professional backgrounds and experiences.
On March 16, 2021, Mr. Bernicker and Matt Clark, Corcentric’s President
and Chief Operating Officer, held a virtual meeting to discuss their professional backgrounds and experiences, as well as general capital markets conditions.
On March 31, 2021, Mr. Bernicker and Mr. Doug Clark held a virtual
meeting to discuss general capital markets conditions and the SPAC market.
On May 4, 2021, Mr. Bernicker, Mr. Doug Clark, Mr. Matt Clark, and
Nicholas Dermatas, North Mountain’s Chief Financial Officer, held a virtual meeting to discuss market conditions and Corcentric’s business. Mr. Doug Clark and Mr. Matt Clark provided Mr. Bernicker and Mr. Dermatas with an update with respect to
Corcentric’s business and initiated transaction discussions with respect to a potential business combination transaction between Corcentric and North Mountain. At the end of the virtual meeting, all parties agreed to remain engaged in
discussions with respect to a potential business combination transaction between Corcentric and North Mountain.
On June 14, 2021, Mr. Bernicker and Mr. Doug Clark met in person.
During this meeting, Mr. Clark communicated that Corcentric would likely pursue a business combination transaction with a SPAC and Mr. Bernicker and Mr. Clark further discussed a potential business combination transaction between Corcentric and
North Mountain.
On June 25, 2021, representatives of J.P. Morgan Securities LLC’s
(“J.P. Morgan”) M&A Advisory group, Corcentric’s financial advisor, provided Mr. Bernicker and Mr. Dermatas with a non-disclosure agreement (“NDA”) to be entered into by North Mountain and Corcentric. J.P. Morgan also provided Mr. Bernicker
and Mr. Dermatas with materials relating to Corcentric that included a summary of certain financial and operational metrics.
On June 25, 2021, representatives of J.P. Morgan’s M&A Advisory
group, Mr. Bernicker, and Mr. Dermatas held a telephonic meeting to discuss a potential business combination between North Mountain and Corcentric.
After exchanging several drafts of the NDA, North Mountain and
Corcentric entered into the NDA on June 26, 2021, and Corcentric began to share additional information regarding its business with North Mountain pursuant to the terms of the NDA.
On July 6, 2021, J.P. Morgan’s M&A Advisory Group provided
Mr. Bernicker and Mr. Dermatas with a Corcentric presentation that outlined certain of Corcentric’s business and financial projections.
On July 7, 2021, Mr. Bernicker, Mr. Dermatas, Mr. Doug Clark, Mr. Matt
Clark, Fritz Smith, Corcentric’s Chief Revenue Officer, representatives of J.P. Morgan’s M&A Advisory group, representatives of William Blair & Company L.L.C. (“William Blair”), financial advisor to Corcentric and co-placement agent to
North Mountain, and representatives of Citigroup Global Markets Inc. (“Citigroup”), co-placement agent and capital markets advisor to North Mountain, held a virtual meeting to further discuss Corcentric’s business and a potential business
combination between North Mountain and Corcentric, which included a discussion of competition in the markets in which Corcentric operates, Corcentric’s total addressable market, Corcentric’s customer base and sales process, representative
Corcentric customer case studies, Corcentric’s historic financial performance, and Corcentric’s financial projections.
On July 14, 2021, Mr. Bernicker, Mr. Dermatas, Mark Joyce, Corcentric’s
Executive Vice President and Chief Financial Officer, and Nick Speers, Corcentric’s Senior Vice President and Corporate Controller, held a virtual meeting to further discuss Corcentric’s historic financial performance, Corcentric’s financial
projections, and Corcentric’s financial statements. Later, on the same day, Mr. Bernicker, Mr. Dermatas, Doug Clark, and Matt Clark held a virtual meeting to further discuss Corcentric’s business.
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On July 19, 2021, Mr. Bernicker, Mr. Dermatas, Sunil Padiyar,
Corcentric’s Chief Technology Officer, and Manish Jaiswal, Corcentric’s Chief Product Officer held a virtual meeting to discuss Corcentric’s technology and product offering. During the virtual meeting, Mr. Padiyar and Mr. Jaiswal provided a
product demonstration of Corcentric’s products and solutions. Later, on the same day, Mr. Bernicker, Mr. Dermatas, Mr. Doug Clark, and Mr. Matt Clark held a virtual meeting to further discuss Corcentric’s material customers.
On July 20, 2021, representatives of J.P. Morgan’s M&A Advisory
group, Mr. Bernicker, and Mr. Dermatas held a telephonic conference to discuss the transaction process for a business combination transaction between North Mountain and Corcentric.
Later on July 20, 2021, representatives of Citigroup, Mr. Bernicker,
and Mr. Dermatas held a telephonic conference to discuss a potential business combination between North Mountain and Corcentric.
On July 21, 2021, representatives of Citigroup, Mr. Bernicker, and
Mr. Dermatas held a telephonic conference to discuss a potential business combination between North Mountain and Corcentric as well as the equity financing market.
On July 22, 2021, the North Mountain Board held a telephonic meeting
which was attended by Mr. Dermatas. At the meeting, the North Mountain Board discussed a potential business combination between North Mountain and Corcentric and was provided with materials relevant to the potential transaction, a comparable
company analysis and Corcentric’s investor presentation.
On July 26, 2021, Mr. Dermatas provided the North Mountain Board with a
draft non-binding letter of intent and term sheet (“LOI”) which set forth a summary of the material terms of a potential business combination between North Mountain and Corcentric for the North Mountain Board’s review.
On July 27, 2021, Mr. Bernicker submitted a non-binding LOI to
representatives of J.P. Morgan’s M&A Advisory group which set forth a summary of the material terms of a potential business combination between North Mountain and Corcentric for aggregate consideration that would be based on an equity value
of Corcentric of approximately $1 billion (without taking into account the PIPE Financing, the funds held in the Trust Account to be utilized in the transaction, the shares of North Mountain Common Stock owned by the Sponsor, and the net
indebtedness of Corcentric). The LOI also provided for an enterprise value of Corcentric of approximately $1.2 billion (taking into account the PIPE Financing, the funds held in the Trust Account to be utilized in the transaction, the shares of
North Mountain Common Stock owned by the Sponsor, and the net indebtedness of Corcentric).
From July 27, 2021, through August 13, 2021, Mr. Bernicker and
Mr. Dermatas held several telephonic conferences with representatives of Corcentric and J.P. Morgan’s M&A Advisory group, and representatives of Paul, Weiss, Rifkind, Wharton & Garrison LLP (“Paul Weiss”), counsel to North Mountain, held
several telephonic conferences with representatives of Kirkland & Ellis LLP (“Kirkland”), counsel to Corcentric, in each case, to negotiate the terms of the LOI based on feedback to the LOI from members of the North Mountain Board and members
of North Mountain’s management and the Corcentric board of directors and members of Corcentric’s management. In particular, the representatives of North Mountain and Corcentric discussed and negotiated, among other things, (i) a condition to the
closing of the Business Combination providing for the minimum amount of cash that North Mountain would have at closing (after giving effect to the redemption offer in relation to the Public Shares and the payment of North Mountain’s transaction
expenses), (ii) the number of Private Placement Warrants and North Mountain Class B Common Stock to be surrendered or subjected to certain vesting requirements pursuant to a share vesting and warrant surrender agreement to be entered into by
North Mountain, Sponsor and Corcentric concurrently with the execution of the Merger Agreement and (iii) the terms of a period of mutual exclusivity during which time both North Mountain and Corcentric would agree not to pursue transactions with
other parties.
On August 11, 2021, at the request of J.P. Morgan’s M&A Advisory
group acting on behalf of the Corcentric board of directors, Mr. Bernicker and Mr. Dermatas attended a virtual meeting with the Corcentric board of directors to discuss a potential business combination between North Mountain and Corcentric. The
discussion included North Mountain’s experience with SPAC transactions, North Mountain’s experience in the financial technology sector, and the ability of North Mountain and Corcentric to successfully consummate a business combination in 2021.
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On August 12, 2021, Mr. Bernicker and Mr. Dermatas held a telephonic
conference with representatives of J.P. Morgan’s M&A Advisory group to discuss feedback to the LOI from the Corcentric board of directors and members of Corcentric’s management.
On August 12, 2021, the North Mountain Board held a telephonic meeting.
During the meeting, members of the North Mountain Board discussed the terms of the revised draft of the LOI and approved North Mountain’s entry into the draft LOI.
Later on August 12, 2021, Mr. Bernicker submitted the revised draft
of the LOI to Corcentric.
On August 12, 2021, with feedback from members of the Corcentric board
of directors and management, Corcentric approved the draft of the LOI submitted by Mr. Bernicker.
From August 12, 2021 to August 13, 2021, representatives of North
Mountain and Corcentric finalized and executed the LOI, which set forth a summary of the material terms of a potential business combination between North Mountain and Corcentric for aggregate consideration that would be based on an equity
valuation of Corcentric of approximately $1,018,074,484 and provided for, among other things, (i) a private placement transaction of North Mountain Class A Common Stock in an amount of $125,000,000, (ii) the appointment by the Sponsor of one
independent director to the board of directors of the post-closing company, (iii) a condition to the closing of the Business Combination in favor of Corcentric providing that North Mountain’s cash at closing (after giving effect to the redemption
offer in relation to the Public Shares and the payment of North Mountain’s transaction expenses) would equal or exceed $150,000,000, which condition cannot be waived without North Mountain’s prior consent if North Mountain’s cash at closing is
less than or equal to $125,000,001, (iv) that the entry into definitive agreements with respect to the proposed business combination would be subject to the completion of due diligence and (v) a period of mutual exclusivity ending on the later of
(a) 45-days from the signing of the LOI and (b) the time either North Mountain and Corcentric provides notice of the termination of such exclusivity, during which time both North Mountain and Corcentric agreed not to pursue transactions with
other parties. In determining and agreeing to an equity valuation of $1,018,074,484 of Corcentric, the North Mountain Board considered certain internal, unaudited prospective financial information provided by Corcentric to North Mountain (see “—Comparable Public Companies”), a benchmarking analysis of Corcentric to existing publicly traded companies in analogous markets and a valuation framework that was comprised of a revenue multiple analysis, a
growth adjusted revenue multiple analysis, an EBITDA multiple analysis and a growth adjusted EBITDA multiple analysis (comparing metrics of existing publicly traded companies in analogous markets to certain projected future financial metrics
based on certain internal and unaudited prospective financial information provided by Corcentric to North Mountain).
Later on August 13, 2021, representatives of Paul Weiss, and Kirkland
held a telephonic meeting to discuss timing and process with respect to transaction documentation.
On August 16, 2021, representatives of North Mountain and J.P. Morgan’s
M&A Advisory group held a telephonic meeting to discuss transaction process with respect to the potential business combination transaction between North Mountain and Corcentric.
Later on August 16, 2021, Corcentric provided representatives of North
Mountain with access to a digital data room containing certain detailed financial and legal materials of Corcentric. From August 16, 2021, through December 9, 2021 (the date on which the Merger Agreement was signed), various representatives of
each of North Mountain and Paul Weiss conducted due diligence of Corcentric through document review and telephonic conferences with representatives of Corcentric, covering various areas, including, but not limited to, commercial operations,
executive compensation and employment benefits, capitalization, finance arrangements, litigation and legal compliance, intellectual property, data privacy, real estate, environmental and general corporate matters.
On August 18, 2021, representatives of North Mountain, Corcentric, J.P.
Morgan’s M&A Advisory group, J.P. Morgan’s Equity Capital Markets group , Citigroup, William Blair (William Blair, J.P. Morgan’s Equity Capital Markets group and Citigroup, collectively North Mountain’s co-placement agents for the PIPE
Financing, the “co-placement agents”)), Paul Weiss, Kirkland and Mayer Brown LLP (“Mayer Brown”), counsel to the co-placement agents, held a virtual conference to discuss the organization of the transaction process and the transaction timeline.
The virtual conference included a discussion of the PIPE Financing to be arranged, negotiated and documented alongside the negotiation and documentation of the potential business combination transaction between North Mountain and Corcentric.
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On August 20, 2021, Mayer Brown, delivered an initial draft of the
form subscription agreement for the PIPE Financing to Paul Weiss and Kirkland. Between August 20, 2021 and October 5, 2021, representatives of Paul Weiss, Kirkland and Mayer Brown finalized a form of subscription agreement for the PIPE Financing.
The form of subscription agreement was made available to potential investors in the PIPE Financing through a digital data room on October 5, 2021.
On August 23, 2021, Paul Weiss delivered an initial draft of the Merger
Agreement to Kirkland. The initial draft of the Merger Agreement provided for, among other things: (i) a transaction structure which required soliciting and obtaining the approval of Corcentric stockholders after the execution of the Merger
Agreement, (ii) merger consideration consisting of North Mountain Class A Common Stock to be issued pursuant to a registration statement and an amount of cash consideration equal to $120,000,000 in the aggregate, (iii) representations and
warranties and interim operating covenants in favor of North Mountain, (iv) certain conditions to the closing of the Business Combination customary for transactions of the type contemplated by the Merger Agreement, (v) a condition to the closing
of the Business Combination in favor of Corcentric providing that North Mountain’s cash at closing (after giving effect to the redemption offer in relation to the Public Shares and the payment of North Mountain’s transaction expenses) would equal
or exceed $150,000,000 (which condition cannot be waived without North Mountain’s prior consent if North Mountain’s cash at closing is less than or equal to $125,000,001), consistent with the terms of the LOI, (vi) a termination fee to be paid by
Corcentric to North Mountain following the termination of the Merger Agreement in certain specified circumstances and (vii) an expense reimbursement to be paid by Corcentric to North Mountain following the termination of the Merger Agreement in
certain specified circumstances.
From August 23, 2021 through December 8, 2021, representatives of North
Mountain, Corcentric, Paul Weiss and Kirkland conducted various telephonic conferences and exchanged drafts of various ancillary agreements related to the transactions, including a share vesting and warrant surrender agreement (the “Share Vesting
and Warrant Surrender Agreement”), the form of support agreement to be entered into by certain stockholders of Corcentric, a registration rights agreement and a form of lock-up agreement, and negotiated and resolved all open items for
consideration.
Beginning on September 1, 2021, representatives of J.P. Morgan’s Equity
Capital Markets group, Citigroup, and William Blair contacted potential institutional investors who have a track record of long-term investments and an interest in investing in transactions similar to the Business Combination on a “wall cross”
basis to arrange for investor meetings with North Mountain and Corcentric. From September 1, 2021 through November 4, 2021, representatives of North Mountain and Corcentric, together with representatives of J.P. Morgan’s Equity Capital Markets
group, Citigroup and William Blair, held 41 investor meetings with 39 potential investors in the PIPE Financing (including certain of the PIPE Investors). One or more of Mr. Bernicker and Mr. Dermatas attended various investor meetings on behalf
of North Mountain and one or more of Mr. Doug Clark, Mr. Matt Clark and Mr. Joyce, attended various investor meetings on behalf of Corcentric. Corcentric arranged for a digital data room to be established to provide certain financial and
commercial materials of Corcentric to prospective PIPE Financing investors who agreed to be brought “over the wall”.
On September 3, 2021, Kirkland delivered a revised draft of the Merger
Agreement to Paul Weiss. The revised draft of the Merger Agreement included, among other things: (i) certain revised closing conditions in favor of Corcentric, (ii) a limitation of approximately $15,000,000 on the aggregate amount of expenses to
be incurred by North Mountain in connection with the transactions contemplated by the Merger Agreement and all other North Mountain expenses, (iii) the removal of the termination fee to be paid by Corcentric to North Mountain following the
termination of the Merger Agreement in specified circumstances, (iv) the removal of the expense reimbursement to be paid by Corcentric to North Mountain in the event that the Merger Agreement is terminated under certain specified circumstances
and (v) revised representations and warranties and interim operating covenants.
On September 11, 2021, Paul Weiss delivered a revised draft of the
Merger Agreement to Kirkland. The revised draft of the Merger Agreement included, among other things: (i) certain revised closing conditions in favor of North Mountain, (ii) the removal of the limitation on the aggregate amount of expenses
incurred by North Mountain in connection with the transactions contemplated by the Merger Agreement and all other North Mountain expenses, (iii) the addition of a termination fee to be paid by Corcentric to North Mountain following
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the termination of the Merger Agreement in specified circumstances, (iv) the addition
of an expense reimbursement to be paid by Corcentric to North Mountain in the event that the Merger Agreement is terminated under certain specified circumstances and (v) certain expanded representations and warranties and interim operating
covenants in favor of North Mountain.
On September 15, 2021 and September 20, 2021, representatives of Paul
Weiss and Kirkland held telephonic meetings to discuss issues related to the draft Merger Agreement, including (i) the proposed equity incentive plans to be approved by North Mountain’s stockholders prior to Closing, (ii) Corcentric’s proposed
limitation on the aggregate amount of expenses incurred by North Mountain in connection with the transactions contemplated by the Merger Agreement and (iii) North Mountain’s proposed termination fee and expense reimbursement in the event that the
Merger Agreement is terminated under certain specified circumstances.
On September 23, 2021, Kirkland delivered a revised draft of the Merger
Agreement to Paul Weiss. The revised draft of the Merger Agreement included, among other things: (i) certain revised closing conditions in favor of Corcentric, (ii) a limitation on the aggregate amount of expenses incurred by North Mountain in
connection with the transactions contemplated by the Merger Agreement and all other North Mountain expenses, (iii) the removal of the termination fee to be paid by Corcentric to North Mountain following the termination of the Merger Agreement in
specified circumstances, (iv) an expense reimbursement to be paid by Corcentric to North Mountain in the event that the Merger Agreement is terminated under certain specified circumstances and (v) certain revised representations and warranties
and interim operating covenants in favor of Corcentric.
On September 25, 2021, North Mountain and Corcentric entered into a
letter agreement extending the exclusivity period set forth in the LOI to October 27, 2021.
On October 5, 2021, Paul Weiss delivered a revised draft of the Merger
Agreement to Kirkland. The revised draft of the Merger Agreement included, among other things: (i) a limitation of $18,000,000 with respect to the aggregate amount of expenses incurred by North Mountain in connection with the transactions
contemplated by the Merger Agreement and all other North Mountain expenses, (ii) certain expanded representations and warranties and interim operating covenants in favor of North Mountain and (iii) a requirement that Corcentric deliver at signing
the consent of its existing lenders to the transaction.
From October 13, 2021 through November 4, 2021, Paul Weiss and Kirkland
negotiated and exchanged several drafts of the Merger Agreement which included further revisions to the representations and warranties of North Mountain and Corcentric, the conditions to the closing of the Business Combination, and the interim
operating covenants of Corcentric.
On October 26, 2021, North Mountain and Corcentric entered into a
letter agreement extending the exclusivity period set forth in the LOI to November 15, 2021.
From November 5, 2021 through November 24, 2021, representatives of
North Mountain, Corcentric and J.P. Morgan’s M&A Advisory group held several telephonic conferences to discuss the terms of the potential business combination between North Mountain and Corcentric. These discussions and negotiations were
initiated by representatives of North Mountain in response to feedback received from potential investors in the PIPE Financing. In particular, the representatives of North Mountain, Corcentric, and J.P. Morgan’s M&A Advisory group discussed
and negotiated revised PIPE Financing economic terms for the potential investors in the PIPE Financing (including the addition of one-half of one warrant for each share of North Mountain Class A Common Stock purchased by such investors), an
increased number of shares of North Mountain Class A Common Stock to be received by the Sponsor in exchange for Sponsor’s surrender of its Private Placement Warrants pursuant to the Share Vesting and Warrant Surrender Agreement and a reduction
to the previously agreed equity valuation of Corcentric from $1,018,074,484 to $1,013,074,484. In exchange for such changes, including the reduction in equity valuation, representatives of North Mountain offered a contingent right for
Corcentric equityholders to receive the Earnout Shares (see “The Business Combination Proposal — Earnout'' for a more complete description). From November 5, 2021 through
December 9, 2021, representatives of North Mountain, Corcentric, J.P. Morgan’s Equity Capital Markets group, Citigroup and William Blair held follow-up phone calls with certain prospective investors in the PIPE Financing (which calls included a
discussion of revised PIPE Financing economic terms, updates on the potential business combination process and market conditions) and received indications of interest.
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On November 20, 2021, Paul Weiss delivered a revised draft of the
Merger Agreement to Kirkland. The revised draft of the Merger Agreement included, among other things: (i) that the equityholders of Corcentric would receive a contingent right to receive up to 2,000,000 Earnout Shares in the aggregate as part of
the merger consideration payable by North Mountain pursuant to the terms of the Merger Agreement, (ii) a reduction to the previously agreed equity valuation of Corcentric from $1,018,074,484 to $1,013,074,484, (iii) that the securities sold in
the PIPE Financing would consist of shares of North Mountain Class A Common Stock and one-half of one warrant for each share of North Mountain Class A Common Stock purchased, (iv) that the Termination Date would be the date that is eight months
following the date of the Merger Agreement, (v) covenants requiring Corcentric to (a) deliver audited consolidated financial statements for the fiscal year ending December 31, 2021 as soon as practicable following the fiscal year end and (b)
repay any existing loans to, and terminate any related loan agreements or arrangement with, certain officers and directors of Corcentric prior to Closing and (vi) the removal of any obligation of North Mountain to deliver a non-redemption
agreement in connection with the Business Combination as had been contemplated by the LOI.
On November 22, 2021, Mr. Bernicker, Mr. Dermatas, representatives of
Corcentric, representatives of J.P. Morgan’s M&A Advisory Group and representatives of each of Paul Weiss and Kirkland met telephonically to discuss the revised draft Merger Agreement, in particular the inclusion of Earnout Shares as a
component of the merger consideration and the terms thereof, the proposed revised equity value of $1,013,074,484, the securities to be issued in the PIPE Financing and the removal of any obligation of North Mountain to enter into or deliver a
non-redemption agreement concurrently with the execution of the Merger Agreement.
On November 23, 2021, representatives of Paul Weiss and Kirkland met
telephonically to discuss the revised draft of the Merger Agreement, in particular the inclusion of Earnout Shares as a component of the merger consideration and the terms thereof.
On December 2, 2021, representatives of North Mountain and J.P.
Morgan’s M&A Advisory group held a telephonic conference to discuss the terms of the Merger Agreement. Specifically, members of J.P. Morgan’s M&A Advisory group relayed to the representatives of North Mountain certain requests from
representatives of Corcentric: (i) that North Mountain would deliver a non-redemption agreement in connection with the Business Combination, (ii) that North Mountain and the Sponsor would agree to certain modifications to the terms of the shares
of North Mountain Class B Common Stock and Warrant Shares to be held by the Sponsor at the closing of the Business Combination and (iii) that the aggregate number of Earnout Shares to be received by Corcentric equityholders pursuant to the Merger
Agreement would be increased up to 5,000,000.
Later on December 2, 2021, representatives of North Mountain
communicated to members of J.P. Morgan’s M&A Advisory group that North Mountain (i) would not agree to deliver a non-redemption agreement in connection with the Business Combination, (ii) would not agree to modifications to the terms of the
shares of North Mountain Class B Common Stock and Warrant Shares to be held by the Sponsor at the closing of the Business Combination and (iii) would agree to increase the aggregate number of Earnout Shares up to 5,000,000.
On December 3, 2021, members of J.P. Morgan’s M&A Advisory group
communicated to representatives of North Mountain that Corcentric would agree to the terms proposed by North Mountain on December 2, 2021.
On December 4, 2021, Kirkland delivered a revised draft of the Merger
Agreement to Paul Weiss. The revised draft included, among other things, that equityholders would receive a contingent right to receive up to 5,000,000 Earnout Shares in the aggregate. From December 4, 2021 through December 8, 2021,
representatives of Paul Weiss and Kirkland exchanged drafts of the Merger Agreement and met telephonically to discuss and finalize the Merger Agreement.
On December 5, 2021, Paul Weiss delivered a revised draft of the Share
Vesting and Warrant Surrender Agreement to Kirkland. The revised draft included, among other things, that a portion of the Private Placement Warrants surrendered by the Sponsor would be transferred and delivered to the investors in the PIPE
Financing pursuant to the terms of the subscription agreements. From December 5, 2021 through December 8, 2021, representatives of Paul Weiss and Kirkland exchanged drafts and finalized the Share Vesting and Warrant Agreement.
On December 7, 2021, representatives of J.P. Morgan’s Equity Capital
Markets group, Citigroup, and William Blair delivered a revised draft of the subscription agreement to those prospective investors in the PIPE Financing that had expressed interest in participating in the PIPE Financing on the revised economic
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previously communicated by representatives of North Mountain, Corcentric, J.P. Morgan's
Equity Capital Markets group, Citigroup and William Blair. The revised draft of the subscription agreement, included, among other things, that the securities sold in the PIPE Financing would consist of shares of North Mountain Class A Common
Stock and one-half of one warrant for each share of North Mountain Class A Common Stock purchased.
On December 8, 2021, the Corcentric board of directors held a
telephonic meeting, which was attended by representatives from Corcentric’s management, Kirkland and J.P. Morgan’s M&A Advisory Group. Representatives of Kirkland reviewed in detail the provisions of the proposed Merger Agreement and other
agreements and documents to be approved by the Corcentric board of directors in connection with the proposed transaction. Representatives of J.P. Morgan’s M&A Advisory Group discussed the financial terms concerning the proposed transaction,
including terms applicable to comparable companies in the market and the impact of different redemption scenarios on the cash available to the Company, and representatives of Kirkland discussed the legal terms concerning the proposed transaction.
During the course of the meeting the Corcentric board of directors discussed and considered the terms of the proposed transaction. Following such discussion, the Corcentric board of directors unanimously (i) determined, among other things, that
the Merger Agreement, the Business Combination and the related transaction documentation and other transactions contemplated thereby were advisable and in the best interests of Corcentric and its stockholders, (ii) approved the form, terms and
provisions of, and the transactions contemplated by, the Merger Agreement, including the Business Combination, and the related transaction documentation and other transactions contemplated thereby, including the PIPE Financing and other matters
required to be submitted to votes of the stockholders, (iii) authorized Corcentric to enter into the Merger Agreement and the other transaction documents and perform each of its obligations thereunder, including the Business Combination and the
PIPE Financing and (iv) resolved to recommend to the Corcentric stockholders that they vote to approve the proposals to be submitted to the Corcentric stockholders with respect to the transactions contemplated by the Merger Agreement and the PIPE
Financing, among other things.
On December 8, 2021, the North Mountain Board held a telephonic
meeting, which was attended by representatives from North Mountain’s management and Paul Weiss. Representatives of Paul Weiss reviewed with the North Mountain Board their fiduciary duties under applicable law and reviewed in detail the provisions
of the proposed Merger Agreement and other agreements and documents to be approved by the North Mountain Board in connection with the proposed business combination. During the course of the meeting the North Mountain Board discussed and
considered the terms of the proposed transaction. Following such discussion, the North Mountain Board (i) unanimously determined, among other things, that the Merger Agreement, the Business Combination and the related transaction documentation
and other transactions contemplated thereby were advisable and in the best interests of North Mountain and its stockholders, (ii) approved the form, terms and provisions of, and the transactions contemplated by, the Merger Agreement, including
the Business Combination, and the related transaction documentation and other transactions contemplated thereby, including the PIPE Financing, (iii) authorized North Mountain to enter into the Merger Agreement and the other transaction documents
and perform each of its obligations thereunder, including the Business Combination and the PIPE Financing and (iv) resolved to recommend to the North Mountain stockholders that they vote to approve the proposals to be submitted to the North
Mountain stockholders with respect to the transactions contemplated by the Merger Agreement and the PIPE Financing, among other things. In addition, consistent with the provisions of North Mountain’s audit committee charter and related person
transactions policy regarding related person transactions, prior to the foregoing approvals of the North Mountain Board, the members of North Mountain’s audit committee (all of which are independent directors (pursuant to the listing standards of
the Nasdaq)) approved each of the following agreements (and the transactions contemplated thereby) to be entered into by North Mountain in connection with the Business Combination (with certain members abstaining from voting on certain matters
due to related person considerations, as required): the Share Vesting and Warrant Surrender Agreement, the Registration Rights Agreement and the Subscription Agreements.
Following the meeting of the North Mountain Board and the meeting of
the Corcentric board of directors and until the evening of December 9, 2021, representatives of each of Paul Weiss, Kirkland and Mayer Brown, with the assistance of J.P. Morgan’s Equity Capital Markets group, Citigroup and William Blair,
negotiated and finalized the terms of the subscription agreements and finalized proposed allocations with the PIPE Investors (which were the only prospective investors contacted by representatives of North Mountain, Corcentric, J.P. Morgan's
Equity Capital Markets group, Citigroup and William Blair that were prepared to participate in the
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PIPE Financing on the terms set forth in the final subscription agreements at the time
of the execution of the Merger Agreement). During this time representatives of Paul Weiss and Kirkland finalized execution versions of the Merger Agreement and the various ancillary agreements related to the transactions.
During the evening of December 9, 2021, following the closing of
trading of the shares of North Mountain Class A Common Stock on the Nasdaq, the parties executed the Merger Agreement and the related transaction documentation (including the transaction documentation related to the PIPE Financing).
On December 10, 2021, prior to the commencement of trading of the
shares of North Mountain Class A Common Stock on the Nasdaq, the parties issued a press release announcing the Business Combination.
The North Mountain Board, in evaluating the Business Combination,
consulted with North Mountain’s management and financial and legal advisors. In reaching its unanimous resolution (i) that the Merger Agreement and the transactions contemplated thereby, including the Business Combination, are advisable and in
the best interests of North Mountain and its stockholders and (ii) to recommend that the North Mountain stockholders approve and adopt the Merger Agreement and approve the Business Combination and the other transactions contemplated by the Merger
Agreement, the North Mountain Board considered a range of factors, including, but not limited to, the factors discussed below. In light of the number and wide variety of factors considered in connection with its evaluation of the Business
Combination, the North Mountain Board did not consider it practicable to, and did not attempt to, quantify or otherwise assign relative weights to the specific factors that it considered in reaching its determination and supporting its decision.
The North Mountain Board viewed its decision as being based on all of the information available and the factors presented to and considered by it. In addition, individual directors may have given different weight to different factors. This
explanation of North Mountain’s reasons for the Business Combination and all other information presented in this section is forward looking in nature and, therefore, should be read in light of the factors set forth in the section titled “Cautionary Note Regarding Forward-Looking Statements.”
In approving the Business Combination, the North Mountain Board
determined not to obtain a fairness opinion. The officers and directors of North Mountain have substantial experience in evaluating the operating and financial merits of companies from a wide range of industries and concluded that their
experience and background, together with the experience and sector expertise of North Mountain’s advisors, enabled them to make the necessary analyses and determinations regarding the Business Combination. In addition, North Mountain’s officers
and directors and North Mountain’s advisors have substantial experience with mergers and acquisitions.
Based on its review of the industry data and the operational, financial
and other relevant information related to Corcentric’s business provided by Corcentric to North Mountain, the factors considered by the North Mountain Board included, but were not limited to, the following:
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•
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Large Market with Secular Shift to Digital Channels. According to Visa’s 2019 annual
report, there is over $120 trillion of global B2B payment volume. The North Mountain Board considered Corcentric management’s belief that conventional B2B procurement, AP, and AR processes are inefficient and primed for disruption, with
Visa estimating that more than 40% of B2B payments volume is still being processed through paper checks. In addition, businesses have been transitioning to digital channels with the development of superior technology and the increased
focus on automation after the COVID-19 pandemic. Based on its review of the industry data and information related to Corcentric’s business provided by Corcentric to North Mountain, the North Mountain Board expects these trends to continue
as businesses adopt Corcentric’s comprehensive end-to-end suite of solutions and allows Corcentric to capitalize on management’s estimated revenue opportunity of $140 billion;
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•
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Recurring Revenue Model. Corcentric has a highly attractive B2B commerce platform
yielding differentiated growth and margin expansion driven by software and payments revenue. Based on its review of the industry data and information provided by Corcentric to North Mountain related to Corcentric’s business, the North
Mountain Board believes that Corcentric’s ability to combine software and payments in a manner that optimizes its customers’ operations differentiates Corcentric’s platform from other B2B commerce platforms. Corcentric has also been
successful in driving revenue by
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119
cross-selling different services and solutions to its customers, including advisory
services that utilize in-house consultants to identify issues across customers’ S2P and O2C activities as well as payment and software solutions that have resulted in recurring revenue streams;
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•
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Platform Supports Further Growth Strategies. Corcentric’s platform supports actionable
opportunities to cross-sell its solutions into the Corcentric customer base. Corcentric’s platform offers robust solutions for both S2P and O2C processes which allows it to sell S2P solutions for customers only utilizing O2C and to sell
O2C solutions for customers only utilizing S2P. In addition, the Corcentric platform facilitates just over $100 billion in transaction volume annually, and Corcentric monetizes less than 3% of those payments;
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•
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Deep Relationships with a Significant Customer Base across Diverse Industry Verticals.
Corcentric has a growing and loyal customer base of over 2,500 customers across the enterprise and middle-market segments, with demonstrated customer demand across diverse industry verticals. Corcentric’s solutions serve all verticals and
include various levels of customization for each industry. Corcentric’s organization has developed domain expertise across several verticals and Corcentric’s sales teams have been structured to serve these end markets;
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•
|
Due Diligence. Due diligence examinations of Corcentric prior to North Mountain’s entry
into the Merger Agreement with Corcentric, which included discussions and meetings with Corcentric’s management team regarding Corcentric’s business and business plan, operations, prospects and forecasts (including the assumptions and key
variable underlying the Corcentric financial model), valuation analyses with respect to the Business Combination and other material matters, as well as a due diligence examination of Corcentric conducted by North Mountain’s advisors;
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•
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Stockholder Liquidity. The obligation in the Merger Agreement to have North Mountain
Class A Common Stock issued as consideration listed on the Nasdaq, a major U.S. stock exchange, which the North Mountain Board believes has the potential to offer North Mountain stockholders enhanced liquidity;
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•
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Financial Condition. The North Mountain Board also considered factors such as
Corcentric’s historical financial results, outlook, financial plan, customer-level metrics (both operational and financial) and debt structure as well as mergers and acquisitions activity for companies in the B2B commerce industry. In
considering these factors, the North Mountain Board reviewed Corcentric’s historical growth and its current prospects for growth if Corcentric achieves its business plan and various historical and current financial statements of
Corcentric. In reviewing these factors, the North Mountain Board noted that Corcentric is well-positioned for strong future growth;
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•
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Experienced and Proven Management Team. Corcentric has a strong management team with
significant experience in the B2B commerce and financial industries. Corcentric’s management team is led by its founder and Chief Executive Officer, Doug Clark, and the senior management of Corcentric intends to remain with Corcentric,
providing helpful continuity in advancing Corcentric’s strategic and growth goals;
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•
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Lock-Up. Certain stockholders of Corcentric have agreed to be subject to a 180 day lockup
in respect of their North Mountain Class A Common Stock, subject to certain customary exceptions, which will provide important stability to the leadership and governance of Corcentric;
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|
•
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PIPE Financing. Third-party investor interest, including top-tier institutional
investors’ interest, in the PIPE Financing served as validation of the valuation and opportunity represented by a transaction with Corcentric;
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•
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Role of Independent Directors. North Mountain’s independent directors, Robert L. Metzger,
Douglas J. Pauls and Scott O’Callaghan, evaluated the proposed terms of the Business Combination, including the Merger Agreement and unanimously approved, as members of the North Mountain Board, the Merger Agreement and the Business
Combination;
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•
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Other Alternatives. The North Mountain Board believes, after a thorough review of other
business combination opportunities reasonably available to North Mountain, that the proposed Business Combination represents the best potential business combination for North Mountain and the most
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120
attractive opportunity for North Mountain’s management to accelerate its business plan
based upon the process utilized to evaluate and assess other potential acquisition targets, and the North Mountain Board believes that such process has not presented a better alternative;
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•
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Continued Ownership by Sellers. Corcentric’s existing stockholders would be receiving a
significant amount of New Corcentric Common Stock in the proposed Business Combination and are “rolling over” the majority of their existing equity interests of Corcentric into equity interests in New Corcentric reflecting such
stockholders’ confidence in the Corcentric business and the continued growth prospects of the Corcentric business going forward;
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•
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Negotiated Transaction. The financial and other terms of the Merger Agreement and the
fact that such terms and conditions are reasonable and were the product of arm’s length negotiations between North Mountain and Corcentric; and
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•
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Considerations Relating to the Merger Agreement. The North Mountain Board also considered
the following aspects of the Merger Agreement:
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○
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the nature of the conditions to the completion of the Business Combination included in the Merger
Agreement, including the exceptions to the events that would constitute a material adverse effect on Corcentric for purposes of the Merger Agreement, as well as the likelihood of satisfaction of all conditions to the completion of the
transactions;
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○
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the representations and warranties of North Mountain and Corcentric, as well as that the interim
operating covenants requiring Corcentric to use its commercially reasonable efforts to conduct its business prior to completion of the Business Combination in the ordinary course of business consistent with past practice and restricting
North Mountain and Corcentric from taking certain actions, subject to specified limitations;
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○
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the requirement that each party use its commercially reasonable efforts to obtain material consents
and approvals of third parties in connection with the Business Combination;
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○
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the restrictions in the Merger Agreement on Corcentric’s ability to respond to and negotiate certain
acquisition proposals from third parties; and
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○
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the right of the North Mountain Board to change its recommendation to North Mountain stockholders to
vote “FOR” the North Mountain Proposals described in this proxy statement/ prospectus if, subject to certain conditions, the North Mountain
Board has determined in good faith, after consultation with its outside legal counsel, that the failure to take such action would be inconsistent with its fiduciary duties to its stockholders under applicable law.
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The North Mountain 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:
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•
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Macroeconomic Risks. Macroeconomic uncertainty, including the potential impact of the
COVID-19 pandemic, and the effects it could have on the post-Business Combination company’s revenues;
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•
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Business Plan and Projections May Not Be Achieved. The risk that Corcentric may not be
able to execute on its business plan, and realize the financial performance as set forth in the financial projections, in each case, presented to management of North Mountain;
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•
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Exclusivity Restrictions. The fact that the Merger Agreement includes exclusivity
provisions that prohibit North Mountain and its affiliates from soliciting other business combination proposals on behalf of North Mountain, and which restrict North Mountain’s ability to consider other potential business combinations
until the earlier of the termination of the Merger Agreement or the consummation of the Business Combination;
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•
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No Survival of Remedies for Breach of Representations, Warranties or Covenants of Corcentric.
The fact that the Merger Agreement provides that North Mountain will not have any surviving remedies against Corcentric or its stockholders after the Closing as a result of any inaccuracies or breaches of the representations, warranties,
covenants, obligations or agreements of Corcentric set forth in the Merger Agreement. As a result, North Mountain stockholders could be adversely affected by, among other things, a decrease in the financial performance or worsening of
financial condition of Corcentric
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121
prior to the Closing, whether determined before or after the Closing, without any
ability to reduce the number of shares to be issued in the Business Combination or recover for any amount of any damages. The North Mountain Board determined that this structure was appropriate and customary in light of the fact that several
similar transactions include similar terms and the current stockholders of Corcentric will be, collectively, the majority stockholders in New Corcentric;
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•
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Redemption Risk. The potential that a significant number of North Mountain stockholders
elect to redeem their shares of North Mountain Class A Common Stock prior to the consummation of the Business Combination and pursuant to the Existing Charter, which would potentially make the Business Combination more difficult or
impossible to complete;
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•
|
Stockholder Vote. The risk that North Mountain’s stockholders may fail to provide the
respective votes necessary to effect the Business Combination;
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|
•
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Closing Conditions. The fact that the completion of the Business Combination is
conditioned on the satisfaction of certain closing conditions that are not within North Mountain’s control;
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•
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Litigation. The possibility of litigation challenging the Business Combination or that an
adverse judgment granting permanent injunctive relief could indefinitely enjoin consummation of the Business Combination;
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•
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Listing Risks. The challenges associated with preparing Corcentric, a private entity, for
the applicable disclosure and listing requirements to which New Corcentric will be subject as a publicly traded company on the Nasdaq;
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|
•
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Benefits May Not Be Achieved. The risks that the potential benefits of the Business
Combination may not be fully achieved or may not be achieved within the expected timeframe;
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•
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Liquidation of North Mountain. The risks and costs to North Mountain if the Business
Combination is not completed, including the risk of diverting management focus and resources from other business combination opportunities, which could result in North Mountain being unable to effect a business combination by
September 22, 2022;
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|
•
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Growth Initiatives May Not be Achieved. The risk that Corcentric’s growth initiatives may
not be fully achieved or may not be achieved within the expected timeframe;
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|
•
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No Third-Party Valuation. The risk that North
Mountain did not obtain a third-party valuation or fairness opinion in connection with the Business Combination; and
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|
•
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Fees and Expenses. The fees and expenses associated with completing the Business
Combination, and the costs and compliance burden associated with being a publicly traded, public reporting company.
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In addition to considering the factors described above, the North
Mountain Board also considered other factors including, without limitation:
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•
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Interests of Certain Persons. The Sponsor and certain members of the North Mountain Board
and officers of North Mountain may have interests in the Business Combination and related transactions. (see the section entitled “—Interests of North Mountain Directors and Officers in the Business
Combination”); and
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•
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Other Risk Factors. Various other risk factors associated with the business of
Corcentric, as described in the section entitled “Risk Factors” appearing elsewhere in this proxy statement/prospectus.
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The North Mountain Board concluded that the potential benefits that it
expected North Mountain and its stockholders to achieve as a result of the Business Combination outweighed the potentially negative and other factors associated with the Business Combination. The North Mountain Board also noted that the North
Mountain stockholders would have an economic interest in the post-Business Combination company (the size of which would depend on the level of Public Stockholders that sought redemption of their shares of North Mountain Class A Common Stock into
cash). Accordingly, the North Mountain Board unanimously determined that the Business Combination and the transactions contemplated by the Merger Agreement, were advisable and in the best interests of North Mountain and its stockholders.
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Certain Projected Financial Information
In connection with its consideration of the potential business
combination, the North Mountain Board was provided with the projections set forth below prepared by management of Corcentric (collectively, the “Projections”).
The Projections are included in this proxy statement solely to
provide North Mountain’s shareholders access to information made available in connection with the North Mountain Board’s consideration of the proposed Business Combination. The Projections should not be viewed as public guidance. Furthermore,
the Projections do not take into account any circumstances or events, including Corcentric’s status as a public company, occurring after the date on which the Projections were prepared, which was in September 2021.
The Projections were not prepared with a view toward public
disclosure or with a view toward complying with the published guidelines of the SEC or the American Institute of Certified Public Accountants with respect to prospective financial information. The Projections have not been audited. None of the
independent registered public accounting firms of Corcentric or North Mountain, nor any other independent accountants, have compiled, examined, or performed any procedures with respect to the Projections, nor have they expressed any opinion or
any other form of assurance on such information or its achievability, and assume no responsibility for, and disclaim any association with, the Projections. See “Cautionary Note Regarding Forward-Looking
Statements.”
The Projections were prepared in good faith by Corcentric’s
management based on their reasonable estimates and assumptions with respect to the expected future financial performance of Corcentric at the time the Projections were prepared in September 2021 and speak only as of that time.
While presented with numerical specificity, the Projections are
forward-looking and reflect numerous estimates and assumptions including, but not limited to, future industry performance, as well as assumptions for competition, general business, economic, regulatory, geopolitical, market and financial
conditions and matters specific to the business of Concentric, such as the volume of transactions on the Corcentric platform, monetized transaction volume from our payment solutions, the number of new customers added, revenue growth and
profitability assumptions from recent acquisitions, future operating costs and other assumptions regarding future performance and matters specific to Corcentric. In addition, management utilized industry data (e.g., total addressable market
(TAM), growth rates, etc.) and internal sales and marketing pipeline data. All of estimates and assumptions are inherently uncertain and difficult to predict and many of which are beyond the preparing parties’ control including, among other
things, the matters described in the sections titled “Cautionary Note Regarding Forward-Looking Statements” and “Risk Factors.”
The Projections were prepared solely for internal use to assist
North Mountain in its evaluation of Corcentric and the Business Combination. Corcentric has not warranted the accuracy, reliability, appropriateness or completeness of the Projections to anyone, including North Mountain. Neither Corcentric’s
management, North Mountain’s management, nor any of their respective representatives has made or makes any representations to any person regarding the ultimate performance of New Corcentric relative to the Projections. The Projections are not
fact. The Projections are not a guarantee of actual future performance. The future financial results of New Corcentric may differ materially from those expressed in the Projections due to factors beyond their ability to control or predict.
The Projections are not included in this proxy statement/prospectus
in order to induce any North Mountain shareholders to vote in favor of any of the proposals at the Shareholder Meeting.
We encourage you to review the financial statements of Corcentric
included in this proxy statement/ prospectus, as well as the financial information other sections of this proxy statement/prospectus and to not rely on any single financial measure.
Neither Corcentric or North Mountain nor any of their respective
affiliates intends to, and, except to the extent required by applicable law, each of them expressly disclaims any obligation to update, revise or correct the Projections to reflect circumstances existing or arising after the date such
Projections were generated or to reflect the occurrence of future events, even in the event that any or all of the assumptions underlying the Projections are shown to be in error or any of the Projections otherwise would not be realized below.
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We have used adjusted revenue, adjusted gross profit, adjusted
gross margin and adjusted EBITDA for our Projections, all of which are non-GAAP measures. These non-GAAP measures are subject to limitations, including those described in “Corcentric's Management's
Discussion and Analysis of Financial Condition of Results of Operations.” The Projections were not prepared based on GAAP revenue and do not include estimated future public company costs.
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2021E
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2022E
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2023E
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|
Adjusted revenue (Non-GAAP)
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$117
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$148.6
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$189.6
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y-o-y (%)
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27.0%
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27.6%
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Adjusted gross profit (Non-GAAP)
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| |
$78
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| |
$103
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| |
$139
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Adjusted gross margin (Non-GAAP)
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| |
66.7%
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| |
69.3%
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| |
73.3%
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Adjusted EBITDA (Non-GAAP)
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$28
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| |
$42
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| |
$63
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margin
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| |
23.9%
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| |
28.3%
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| |
33.2%
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Corcentric management projected revenue growth from $117.0 million
in 2021 to $189.6 million by 2023, increasing revenue at an approximate 27% compound annual growth rate (“CAGR”). The projections are driven by Corcentric’s go-to-market strategy of focusing on software and payments revenue in both the O2C and
S2P markets, continued growth in Corcentric’s network of buyers and suppliers, recent acquisitions in both the payments and software markets (including expansion into Europe), while also providing advisory and other services to enhance
Corcentric’s product offerings. The 27% revenue CAGR is comprised of (1) projected addition of new customer logos and cross selling of services to current customers; (2) extending offerings into Europe through recent acquisitions in the UK and
France that expanded our operations outside of North America; and (3) the pipeline of new payments opportunities from both our recent Vendorin acquisition and our historical payment business and projected increases in monetized transaction
volume.
Comparable Public Companies
In considering the valuation of Corcentric, the North Mountain Board
reviewed (i) a benchmarking analysis of Corcentric to existing publicly traded companies in the B2B Software and Payments, High-Growth FinTech, and Financial SaaSmarkets (each further described below and together, the “Publicly Traded Benchmark
Companies”) and (ii) a valuation framework that was comprised of a revenue multiple analysis, a growth adjusted revenue multiple analysis, an EBITDA multiple analysis and a growth adjusted EBITDA multiple analysis.
The benchmarking analysis considered by the North Mountain Board was
comprised of three groups of public companies. The Publicly Traded Benchmark Companies can be summarized as follows:
B2B Software and Payments: these selected companies, while some are larger-scale players than Corcentric, have B2B software and payments offerings and their revenue models are dependent on bill and/or transaction volume
and/or subscription fees from accounts payable and/or accounts receivable solutions. These companies are generally expected to have revenue growth similar to Corcentric and different margin profiles from Corcentric.
High-Growth FinTech: these selected companies offer integrated software and payments and are industry disruptors with critical solutions for their customers. While their revenue models differ from Corcentric,
components of their revenue are dependent on transaction volume and software subscriptions. These companies are generally expected to have revenue growth similar to Corcentric and different margin profiles from Corcentric.
Financial SaaS: these selected companies are integrated payments and vertical software providers with subscription-based revenue models. A subset of these companies provide cloud-based accounts payable or
accounts receivable automation and services. These companies are generally expected to have revenue growth below Corcentric and different margin profiles from Corcentric.
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The 2022 estimated revenue, 2022 estimated EBITDA, 2022 and 2023
estimated revenue growth rates, 2022 estimated gross margin, and 2022 estimated EBITDA margin for the Publicly Traded Benchmark Companies are summarized in the table below. The North Mountain Board reviewed and considered information from
FactSet, public company filings, and wall street research as of July 19, 2021.
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$ in millions
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2022E
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| |
2022E
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| |
Revenue Growth
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| |
2022E Margin
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|
| |
Revenue
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| |
EBITDA
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| |
2022E
|
| |
2023E
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| |
Gross
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| |
EBITDA
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|
B2B Software and Payments
|
| |
|
| |
|
| |
|
| |
|
| |
|
| |
|
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Bill.com
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| |
$350
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| |
$1
|
| |
34%
|
| |
37%
|
| |
77%
|
| |
NM
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|
Coupa
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| |
$838
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| |
$129
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| |
25%
|
| |
27%
|
| |
69%
|
| |
17%
|
|
Billtrust
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| |
$150
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| |
$(8)
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| |
18%
|
| |
24%
|
| |
71%
|
| |
-6%
|
|
average
|
| |
$446
|
| |
$41
|
| |
26%
|
| |
29%
|
| |
72%
|
| |
6%
|
|
|
| |
|
| |
|
| |
|
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| |
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|
High-Growth FinTech
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| |
|
| |
|
| |
|
| |
|
| |
|
| |
|
|
Adyen
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| |
$1,620
|
| |
$995
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| |
44%
|
| |
37%
|
| |
NA
|
| |
NA
|
|
Square
|
| |
$6,440
|
| |
$ 1,245
|
| |
31%
|
| |
29%
|
| |
85%
|
| |
19%
|
|
Shift4
|
| |
$614
|
| |
$231
|
| |
25%
|
| |
17%
|
| |
63%
|
| |
38%
|
|
average
|
| |
$2,891
|
| |
$824
|
| |
33%
|
| |
28%
|
| |
74%
|
| |
29%
|
|
|
| |
|
| |
|
| |
|
| |
|
| |
|
| |
|
|
Financial SaaS
|
| |
|
| |
|
| |
|
| |
|
| |
|
| |
|
|
Avalara
|
| |
$805
|
| |
$18
|
| |
23%
|
| |
22%
|
| |
74%
|
| |
NA
|
|
Blackline
|
| |
$504
|
| |
$66
|
| |
21%
|
| |
24%
|
| |
80%
|
| |
NA
|
|
Anaplan
|
| |
$688
|
| |
$2
|
| |
25%
|
| |
28%
|
| |
78%
|
| |
NA
|
|
Q2 Holdings
|
| |
$600
|
| |
$52
|
| |
21%
|
| |
NA
|
| |
54%
|
| |
NA
|
|
average
|
| |
$649
|
| |
$35
|
| |
23%
|
| |
25%
|
| |
72%
|
| |
NA
|
In addition, the North Mountain Board compared the 2022 estimated
revenue, 2022 estimated EBITDA, 2022 and 2023 estimated revenue growth rates, 2022 estimated gross margin, and 2022 estimated EBITDA margin for Corcentric to the averages for B2B Software and Payments, High-Growth FinTech, and Financial SaaS
companies.
|
$ in million
|
| |
2022E
|
| |
2022E
|
| |
Revenue Growth
|
| |
2022E Margin
|
||||||
|
|
| |
Revenue
|
| |
EBITDA
|
| |
2022E
|
| |
2023E
|
| |
Gross
|
| |
EBITDA
|
|
Corcentric
|
| |
$149
|
| |
$42
|
| |
27%
|
| |
28%
|
| |
69%
|
| |
28%
|
|
|
| |
|
| |
|
| |
|
| |
|
| |
|
| |
|
|
B2B Software and Payments
|
| |
$446
|
| |
$41
|
| |
26%
|
| |
29%
|
| |
72%
|
| |
6%
|
|
High-Growth FinTech
|
| |
$ 2,891
|
| |
$ 824
|
| |
33%
|
| |
28%
|
| |
74%
|
| |
29%
|
|
Financial SaaS
|
| |
$649
|
| |
$35
|
| |
23%
|
| |
25%
|
| |
72%
|
| |
NA
|
|
average
|
| |
$ 1,329
|
| |
$ 300
|
| |
27%
|
| |
27%
|
| |
73%
|
| |
17%
|
The North Mountain board concluded that Corcentric’s 2022 and 2023
estimated revenue growth rates and estimated 2022 gross margin and 2022 EBITDA margin were similar or above the average for the Publicly Traded Benchmark Companies. Specifically, Corcentric metrics and business model compares most closely to
those of the B2B Software and Payments companies.
The valuation framework considered by the North Mountain Board was
comprised of four analysis and can be summarized as follows:
Revenue Multiple Analysis: this analysis inferred value from the Publicly Traded Benchmark Companies’ revenue multiples. The revenue multiple was defined as enterprise value divided by 2022E revenue.
Growth Adjusted Revenue Multiple
Analysis: this analysis inferred value from the Publicly Traded Benchmark Companies’ revenue multiples, adjusted for growth. The growth adjusted revenue multiple was defined as enterprise
value divided by 2022E revenue divided by 2022E revenue growth.
125
EBITDA Multiple Analysis: this analysis inferred value from the Publicly Traded Benchmark Companies’ EBITDA multiples. The EBITDA multiple was defined as enterprise value divided by 2022E EBITDA.
Growth Adjusted EBITDA Multiple
Analysis: this analysis inferred value from the Publicly Traded Benchmark Companies’ EBITDA multiples, adjusted for growth. The growth adjusted EBITDA multiple was defined as enterprise value
divided by 2022E EBITDA divided by 2022E revenue growth.
The 2022 and 2023 revenue multiples, growth adjusted revenue
multiples, EBITDA multiples, and growth adjusted EBITDA multiples for the Publicly Traded Benchmark Companies are summarized in the table below. Citi, with input from JPM, in its financial advisory capacity, prepared the benchmarking analysis
discussed in this proxy statement/prospectus. The Publicly Traded Benchmark Companies were selected based on their involvement in B2B Software and Payments, High-Growth FinTech, and Financial SaaS markets. The North Mountain Board reviewed and
considered information from FactSet, public company filings, and wall street research as of July 19, 2021.
|
|
| |
FV / Revenue
|
| |
FV / Revenue / Growth
|
| |
FV / EBITDA
|
| |
FV / EBITDA / Growth
|
||||||||||||
|
|
| |
2022E
|
| |
2023E
|
| |
2022E
|
| |
2023E
|
| |
2022E
|
| |
2023E
|
| |
2022E
|
| |
2023E
|
|
B2B Software and Payments
|
| |
|
| |
|
| |
|
| |
|
| |
|
| |
|
| |
|
| |
|
|
Bill.com
|
| |
46.8x
|
| |
34.2x
|
| |
1.4x
|
| |
0.9x
|
| |
NM
|
| |
NM
|
| |
NM
|
| |
NM
|
|
Coupa
|
| |
22.7x
|
| |
17.8x
|
| |
0.9x
|
| |
0.7x
|
| |
NM
|
| |
NM
|
| |
NM
|
| |
NM
|
|
Billtrust
|
| |
11.0x
|
| |
8.9x
|
| |
0.6x
|
| |
0.4x
|
| |
NM
|
| |
NM
|
| |
NM
|
| |
NM
|
|
median(1)
|
| |
22.7x
|
| |
17.8x
|
| |
0.9x
|
| |
0.7x
|
| |
NM
|
| |
NM
|
| |
NM
|
| |
NM
|
|
|
| |
|
| |
|
| |
|
| |
|
| |
|
| |
|
| |
|
| |
|
|
High-Growth FinTech
|
| |
|
| |
|
| |
|
| |
|
| |
|
| |
|
| |
|
| |
|
|
Adyen
|
| |
46.1x
|
| |
33.6x
|
| |
1.1x
|
| |
0.9x
|
| |
75.0x
|
| |
54.2x
|
| |
1.7x
|
| |
1.5x
|
|
Square
|
| |
17.3x
|
| |
13.4x
|
| |
0.6x
|
| |
0.5x
|
| |
89.6x
|
| |
63.3x
|
| |
2.9x
|
| |
2.2x
|
|
Shift4
|
| |
13.1x
|
| |
11.2x
|
| |
0.5x
|
| |
0.7x
|
| |
34.8x
|
| |
28.6x
|
| |
1.4x
|
| |
1.7x
|
|
median(1)
|
| |
17.3x
|
| |
13.4x
|
| |
0.6x
|
| |
0.7x
|
| |
66.5x
|
| |
48.7x
|
| |
2.0x
|
| |
1.8x
|
|
Financial SaaS
|
| |
|
| |
|
| |
|
| |
|
| |
|
| |
|
| |
|
| |
|
|
Avalara
|
| |
16.0x
|
| |
13.2x
|
| |
0.7x
|
| |
0.6x
|
| |
NM
|
| |
NM
|
| |
NM
|
| |
6.2x
|
|
Blackline
|
| |
12.7x
|
| |
10.3x
|
| |
0.6x
|
| |
0.4x
|
| |
97.5x
|
| |
61.2x
|
| |
4.7x
|
| |
2.6x
|
|
Anaplan
|
| |
11.7x
|
| |
9.1x
|
| |
0.5x
|
| |
0.3x
|
| |
NM
|
| |
NM
|
| |
NM
|
| |
5.3x
|
|
Q2 Holdings
|
| |
9.9x
|
| |
8.4x
|
| |
0.5x
|
| |
0.4x
|
| |
NM
|
| |
84.7x
|
| |
5.6x
|
| |
4.5x
|
|
median(1)
|
| |
12.2x
|
| |
9.7x
|
| |
0.6x
|
| |
0.4x
|
| |
97.5x
|
| |
73.0x
|
| |
5.2x
|
| |
4.9x
|
|
|
| |
|
| |
|
| |
|
| |
|
| |
|
| |
|
| |
|
| |
|
|
median(1)
|
| |
17.3x
|
| |
13.4x
|
| |
0.6x
|
| |
0.7x
|
| |
82.0x
|
| |
60.8x
|
| |
3.6x
|
| |
3.4x
|
|
(1)
|
FV / EBITDA and FV / EBITDA / Growth multiples calculated using the average of the companies.
|
The valuation framework considered by the North Mountain Board resulted
in enterprise values for each of the four analyses. The enterprise values and the associated multiples for Corcentric are summarized for each of the valuation analysis in the table below.
|
$ in millions
|
| |
2022E Multiples
|
| |
Enterprise Value
|
||||||||||||||||||
|
Valuation Methodology
|
| |
B2B Soft.
and Pay.
|
| |
High-Growth
FinTech
|
| |
Financial
SaaS
|
| |
Median
|
| |
B2B Soft.
and Pay.
|
| |
High-Growth
FinTech
|
| |
Financial
SaaS
|
| |
Median
|
|
Revenue Multiple Analysis
|
| |
22.7x
|
| |
17.3x
|
| |
12.2x
|
| |
17.3x
|
| |
$3,373
|
| |
$2,570
|
| |
$1,813
|
| |
$2,570
|
|
Growth Adjusted Revenue Multiple Analysis
|
| |
0.9x
|
| |
0.6x
|
| |
0.6x
|
| |
0.6x
|
| |
$3,607
|
| |
$2,405
|
| |
$2,204
|
| |
$2,405
|
|
EBITDA Multiple Analysis
|
| |
NM
|
| |
66.5x
|
| |
97.5x
|
| |
82.0x
|
| |
NM
|
| |
$2,795
|
| |
$4,100
|
| |
$3,448
|
|
Growth Adjusted EBITDA Multiple Analysis
|
| |
NM
|
| |
2.0x
|
| |
5.2x
|
| |
3.6x
|
| |
NM
|
| |
$2,269
|
| |
$5,842
|
| |
$4,055
|
126
The North Mountain Board compared the enterprise value for
Corcentric to the medians of the four valuation analysis used in the valuation framework. The summary of this comparison is as follows:
|
$ in millions
|
| |
Corcentric
|
| |
Publicly Traded Benchmark Companies
|
||||||||||||
|
Valuation Methodology
|
| |
Enterprise
Value
|
| |
2022E
Multiple
|
| |
B2B Soft.
and Pay.
|
| |
High-Growth
FinTech
|
| |
Financial
SaaS
|
| |
Median
|
|
Revenue Multiple Analysis
|
| |
$ 1,200
|
| |
8.1x
|
| |
22.7x
|
| |
17.3x
|
| |
12.2x
|
| |
17.3x
|
|
Growth Adjusted Revenue Multiple Analysis
|
| |
$ 1,200
|
| |
0.3x
|
| |
0.9x
|
| |
0.6x
|
| |
0.6x
|
| |
0.6x
|
|
EBITDA Multiple Analysis
|
| |
$ 1,200
|
| |
28.5x
|
| |
NM
|
| |
66.5x
|
| |
97.5x
|
| |
82.0x
|
|
Growth Adjusted EBITDA Multiple Analysis
|
| |
$ 1,200
|
| |
1.1x
|
| |
NM
|
| |
2.0x
|
| |
5.2x
|
| |
3.6x
|
Using the aforementioned benchmarking data in conjunction with the
valuation framework and Corcentric’s financial forecast, the North Mountain Board was able to determine that the terms of the Business Combination were fair to and in the best interests of North Mountain and its shareholders.
When you consider the recommendation of the North Mountain Board in
favor of approval of the Business Combination Proposal, you should keep in mind that certain of North Mountain’s Board and officers have interests in the Business Combination and the PIPE Financing that are different from, or in addition to, your
interests as a stockholder or warrantholder. These interests include, among other things:
|
•
|
the beneficial ownership of the Sponsor and certain members of the North Mountain Board and officers of an aggregate of
3,306,250 shares of North Mountain Class B Common Stock and 4,145,000 Private Placement Warrants, which shares and warrants were acquired for an aggregate investment of $4,145,000 at the time of the IPO and would become worthless if
North Mountain does not complete a business combination by September 22, 2022, as such stockholders have waived any redemption right with respect to these shares. After giving effect to the provisions of the Share Vesting and Warrant
Cancellation Agreement, the Sponsor would own up to an aggregate of 4,706,250 shares of North Mountain Class A Common Stock (including shares subject to vesting) and no Private Placement Warrants. Such shares have an aggregate market
value of approximately $ , based on the closing price of North Mountain Class A Common Stock of $ on , 2022, the North Mountain Record Date. Because the shares of North Mountain Class B Common Stock were purchased for a nominal
amount, the Sponsor could achieve a significant positive return even if the trading price of shares of New Corcentric following the closing of the Business Combination declines significantly. Each of our officers and directors is a
member of the Sponsor. Harbour Reach Holdings, LLC is the managing member of the Sponsor and Mr. Michael Platt is the indirect controlling member of Harbour Reach Holdings, LLC;
|
|
•
|
Millais Limited, an affiliate of the Sponsor and an affiliate of North Mountain, agreed to purchase 2,000,000 PIPE Shares and
1,000,000 PIPE Warrants for an aggregate purchase price of $20.0 million in the PIPE Financing;
|
|
•
|
SMMC Sponsor Interests, LLC, an affiliate of North Mountain and an entity controlled by Charles Bernicker (Chief Executive
Officer and a director of North Mountain) and of which Douglas J. Pauls (a director of North Mountain) is a non-managing member, agreed to purchase 1,500,000 PIPE Shares and 750,000 PIPE Warrants for an aggregate purchase price of
$15.0 million in the PIPE Financing;
|
|
•
|
the continued indemnification of current directors and officers of North Mountain and the continuation of directors’ and officers’
liability insurance after the Business Combination;
|
|
•
|
the fact that our Sponsor, officers and directors will be reimbursed for out-of-pocket expenses incurred in connection with
activities on our behalf, such as identifying potential target businesses and performing due diligence on suitable business combinations. As of January 6, 2022, North Mountain’s Sponsor and its affiliates had incurred $996 of unpaid
reimbursable expenses; and
|
|
•
|
the fact that our Sponsor, officers and directors will lose their entire investment in us if an initial business combination is
not completed.
|
127
In connection with the stockholder vote to approve the Business
Combination, the Sponsor and North Mountain’s Board, officers, advisors or their affiliates may privately negotiate transactions to purchase shares of North Mountain Class A Common Stock from stockholders who would have otherwise elected to
have their shares redeemed in conjunction with the Business Combination for a per share pro rata portion of the Trust Account, provided that any such purchases would only be made in compliance with applicable Exchange Act rules, regulations and
SEC interpretations. None of the Sponsor or North Mountain’s board of directors, officers, advisors or their affiliates will make any such purchases when they are in possession of any material non-public information not disclosed to the seller
of such shares. Such a purchase of shares may include a contractual acknowledgement that such stockholder, although still the record holder of the shares of North Mountain Class A Common Stock is no longer the beneficial owner thereof and
therefore agrees not to exercise its redemption rights. In the event that the Sponsor or North Mountain’s Board, 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 these purchases would be to increase the amount of cash available to North
Mountain for use in the Business Combination. See “Information About North Mountain—Permitted Purchases of Our Securities” for more information.
Under the HSR Act and related rules, certain transactions, including
the Business Combination, may not be completed until notifications have been given and information is furnished to the Antitrust Division of the Department of Justice (“DOJ”) and the Federal Trade Commission (“FTC”) and all statutory waiting
period requirements have been satisfied. Completion of the Business Combination is subject to the expiration or earlier termination of the applicable waiting period under the HSR Act. The parties submitted their respective filings under the HSR
Act on December 22, 2021. The 30-day waiting period under the HSR Act will expire at 11:59 p.m. on January 21, 2022, unless it is extended otherwise.
At any time before or after the expiration of the statutory waiting
periods under the HSR Act, the Antitrust Division of the DOJ and the FTC may take action under the antitrust laws, including seeking to enjoin the completion of the Business Combination, to rescind the Business Combination or to conditionally
permit completion of the Business Combination subject to regulatory conditions or other remedies. In addition, non-U.S. regulatory bodies and U.S. state attorneys general could take action under other applicable regulatory laws as they deem
necessary or desirable in the public interest, including, without limitation, seeking to enjoin or otherwise prevent the completion of the Business Combination or permitting completion subject to regulatory conditions. Private parties may also
seek to take legal action under regulatory laws under some circumstances. There can be no assurance that a challenge to the Business Combination on antitrust grounds will not be made or, if such a challenge is made, that it would not be
successful. North Mountain and Corcentric are not aware of any other regulatory approvals in the United States required for the consummation of the Business Combination.
The Business Combination will be accounted for as a reverse
recapitalization because Corcentric has been determined to be the accounting acquirer under Financial Accounting Standards Board’s Accounting Standards Codification Topic 805, Business Combinations
(“ASC 805”) under both the no redemption and contractual maximum redemption scenarios. The determination is primarily based on the evaluation of the following facts and circumstances taking into consideration both the no
redemption and contractual maximum redemption scenarios:
|
•
|
The pre-combination equity holders of Corcentric will hold the majority of voting rights in the combined company;
|
|
•
|
Corcentric has the right to appoint a majority of directors to the Board of Directors of New Corcentric;
|
|
•
|
Senior management of Corcentric will comprise the senior management of New Corcentric; and
|
|
•
|
The operations of Corcentric will comprise the only ongoing operations of New Corcentric.
|
128
Under the reverse recapitalization model, the Business Combination
will be reflected as the equivalent of Corcentric issuing stock for the net assets of North Mountain, accompanied by a recapitalization whereby no goodwill or other intangible assets are recorded.
Nasdaq rules require that an initial business combination must be with
one or more target businesses that together have a fair market value equal to at least 80% of the balance in the Trust Account (less any deferred underwriting commissions and taxes payable on interest earned) at the time of signing a definitive
agreement in connection with an initial business combination. The North Mountain Board has determined that the fair market value of the Business Combination meets this test.
The name of the combined company after the Business Combination will be
Corcentric, Inc., its headquarters will be located at 200 Lake Drive East, Cherry Hill, NJ 08002 and its phone number will be (800) 608-0809.
Upon the Closing, we anticipate that the New Corcentric Board will
consist of seven members, reclassified into three separate classes, with each class serving a three-year term, except that the Class I directors will be appointed to an initial one-year term (and three-year terms subsequently), the Class II
directors will be appointed to an initial two-year term (and three-year terms subsequently) and the Class III directors will be appointed to an initial three-year term (and three-year terms subsequently).
Our board of directors has appointed the following individuals to the
New Corcentric Board:
|
•
|
Class I Directors: ;
|
|
•
|
Class II Directors: ; and
|
|
•
|
Class III Directors: .
|
For additional details, see “Management
After the Business Combination.”
Pursuant to our Existing Charter, holders of Public Shares may elect to
have their Public Shares redeemed for cash at the applicable redemption price per share calculated in accordance with our Existing Charter. For illustrative purposes, based on funds in the Trust Account of approximately $ million on , the
estimated per share redemption price would have been approximately $ . If a Public Stockholder exercises its redemption rights, then such Public Stockholder will be exchanging its shares of North Mountain Class A Common Stock for cash and will
no longer own shares of North Mountain. Such a holder will be entitled to receive cash for its Public Shares only if it properly demands redemption and delivers its shares (either physically or electronically) to our transfer agent in accordance
with the procedures described herein. Each redemption of Public Shares by our Public Stockholders will decrease the amount in the Trust Account, which held approximately $ million on (net of Permitted Withdrawals). See the section entitled
“Special Meeting of North Mountain Stockholders—Redemption Rights” for more information, including the procedures to be followed if you wish to redeem your shares for cash.
There are no appraisal rights available to holders of North Mountain
Common Stock or North Mountain Warrants in connection with the Business Combination.
Shares of Corcentric Capital Stock held by Corcentric stockholders who
have perfected and not lost their right to demand appraisal of their shares in accordance with the procedures and requirements of Section 262 of the DGCL will not be converted into the right to receive the merger consideration, and such
Corcentric stockholders will instead be entitled only to the rights granted by Section 262 of the DGCL. If any such Corcentric stockholder withdraws or loses his, her or its appraisal rights under Section 262 of the DGCL, the shares of Corcentric
Capital Stock held by such Corcentric stockholder will be deemed to be converted, as of the effective time, into the right to receive the merger consideration. See Section 262 of the DGCL.
129
It is anticipated that, upon the completion of the Business
Combination, the ownership of New Corcentric will be as follows:
|
|
| |
Assuming
No Redemption
|
| |
Assuming
50% Redemption
|
| |
Assuming
Contractual Maximum
Redemption
|
| |
Assuming
Contractual Maximum
Redemption with
$125 million
Minimum Cash(1)
|
||||||||||||
|
|
| |
Number of
shares of New
Corcentric
Common Stock
|
| |
%
|
| |
Number of
shares of New
Corcentric
Common Stock
|
| |
%
|
| |
Number of
shares of New
Corcentric
Common Stock
|
| |
%
|
| |
Number of
Shares of New
Corcentric
Common Stock
|
| |
%
|
|
Current Corcentric Stockholders
|
| |
89,307,448
|
| |
79.6%
|
| |
89,307,448
|
| |
80.2%
|
| |
89,307,448
|
| |
80.8%
|
| |
89,307,448
|
| |
82.7%
|
|
Current North Mountain Public Stockholders
|
| |
13,225,000
|
| |
11.8%
|
| |
12,362,500
|
| |
11.1%
|
| |
11,500,000
|
| |
10.4%
|
| |
9,000,000
|
| |
8.3%
|
|
PIPE Investors
|
| |
5,000,000
|
| |
4.4%
|
| |
5,000,000
|
| |
4.5%
|
| |
5,000,000
|
| |
4.5%
|
| |
5,000,000
|
| |
4.6%
|
|
Sponsor
|
| |
4,706,250
|
| |
4.2%
|
| |
4,706,250
|
| |
4.2%
|
| |
4,706,250
|
| |
4.3%
|
| |
4,706,250
|
| |
4.4%
|
|
Total
|
| |
112,238,698
|
| |
100%
|
| |
111,376,198
|
| |
100%
|
| |
110,513,698
|
| |
100%
|
| |
108,013,698
|
| |
100%
|
|
(1)
|
The contractual maximum redemption with $125 million minimum cash scenario assumes that Corcentric waives the minimum cash
condition.
|
The numbers of shares and percentage interests set forth above
reflect four different redemption scenarios laid out below.
|
•
|
Assuming no redemption scenario: This presentation assumes that no Public Stockholders
exercise redemption rights with respect to their Public Shares.
|
|
•
|
Assuming 50% redemption scenario: This presentation assumes that
the Public Stockholders holding approximately 4.4% of the Public Shares exercise redemption rights with respect to their Public Shares, which is approximately 50% of the Public Shares assumed to be redeemed under the contractual maximum
redemption scenario. This scenario assumes that 862,500 Public Shares are redeemed for an aggregate redemption payment of approximately $8,625,000 plus a pro rata portion of interest accrued on the Trust Account.
|
|
•
|
Assuming contractual maximum redemption scenario: This
presentation assumes that the Public Stockholders holding approximately 13.0% of the Public Shares exercise redemption rights with respect to their Public Shares. This scenario assumes that 1,725,000 Public Shares are redeemed for an
aggregate redemption payment of approximately $17,250,000 plus a pro rata portion of interest accrued on the Trust Account of $1,543. The contractual maximum redemption scenario is based on a minimum cash consideration of $150,000,000
at Closing of the Business Combination, consisting of Trust Account funds, PIPE Financing proceeds and all other North Mountain cash and cash equivalents of North Mountain less the aggregate amount of cash proceeds that will be required
to satisfy the redemption of the Public Shares and the payment of North Mountain estimated transaction expenses of $15,000,000. Corcentric shall have no right or ability to waive the minimum cash condition without the prior written
consent of North Mountain (which consent may be provided or withheld by North Mountain in its sole discretion) if such aggregate amount is less than $125,000,001.
|
|
•
|
Assuming contractual maximum redemption with $125 million minimum cash scenario:
This presentation assumes that the Public Stockholders holding approximately 32.0% of the Public Shares exercise redemption rights with respect to their Public Shares. This scenario assumes that 4,225,000 Public Shares are redeemed for
an aggregate redemption payment of approximately $42,225,000 plus a pro rata portion of interest accrued on the Trust Account. This contractual maximum redemption with $125 million minimum cash scenario is based on minimum cash of
$125,000,000 at Closing of the Business Combination and assumes that Corcentric waives the $150,000,000 minimum cash condition.
|
The presentation set forth above does not give effect to any
performance vesting provisions applicable to any shares of North Mountain Common Stock pursuant to the Share Vesting and Warrant Surrender Agreement and assumes (i) that there are no exercises of any North Mountain Warrants outstanding as of
immediately prior to the Closing and (ii) no Earnout Shares have been issued.
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The numbers of shares and percentage interests set forth above have
been presented for illustrative purposes only and do not necessarily reflect what New Corcentric’s share ownership will be had the Business Combination occurred on the dates indicated. See “Unaudited Pro Forma
Condensed Combined Financial Information.”
Vote Required for Approval
The affirmative vote (in person online or by proxy) of a majority of
the votes cast by the holders of shares of North Mountain Common Stock, voting together as a single class, that are present or represented by proxy at the special meeting, is required to approve the Business Combination Proposal. Broker
non-votes, abstentions or the failure to vote on the Business Combination Proposal will have no effect on the outcome of the Business Combination Proposal.
The Business Combination is conditioned upon the approval of the
Business Combination Proposal, subject to the terms of the Merger Agreement. If the Business Combination Proposal is not approved, the other proposals (except the Adjournment Proposal, as described below) will not be presented to North Mountain
stockholders for a vote.
Recommendation of the North Mountain Board
THE NORTH MOUNTAIN BOARD UNANIMOUSLY RECOMMENDS THAT
STOCKHOLDERS VOTE “FOR” THE APPROVAL OF THE BUSINESS COMBINATION PROPOSAL.
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Overview
Holders of North Mountain Common Stock are being asked to approve and
adopt, assuming the Business Combination Proposal is approved, the Proposed Charter, which, if approved, would take effect upon the Closing. If the Business Combination Proposal is approved and the Business Combination is to be consummated, we
will amend and restate the Existing Charter with the Proposed Charter under the DGCL.
Comparison of Existing Charter to Proposed Charter
The following table summarizes the principal proposed changes and the
differences between the Existing Charter and the Proposed Charter. This summary is qualified by reference to the complete text of the Proposed Charter, a copy of which is attached to this proxy statement/prospectus as Annex C.
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Existing Charter
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Proposed Charter
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Number of Authorized Shares
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The Existing Charter provides that the total number of authorized shares of all
classes of capital stock is 221,000,000 shares, par value of $0.0001 per share, consisting of (a) 220,000,000 shares of North Mountain Common Stock, including (i) 200,000,000 shares of North Mountain Class A Common Stock and (ii)
20,000,000 shares of North Mountain Class B Common Stock, and (b) 1,000,000 shares of preferred stock.
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The Proposed Charter increases the total number of authorized shares of all
classes of capital stock, following the automatic conversion of all Class B common stock into Class A common stock immediately prior to the Closing of the Business Combination, to shares, par value of $0.0001 per share, consisting of
(a) shares of Common Stock and (b) shares of preferred stock. New Corcentric will not have Class B common stock.
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No Class Vote on Changes in Authorized Number of Shares of Stock
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| |
The Existing Charter contains no specific provision regarding the required vote
to change the authorized shares of any class of stock.
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| |
The Proposed Charter provides that, any vote to increase or decrease the number
of authorized shares of any class or classes of stock (but not below the number of shares then outstanding) requires the affirmative vote of the holders of all the then-outstanding shares of capital stock of New Corcentric entitled to
vote thereon, voting together as a single class, irrespective of the provisions of Section 242(b)(2) of the DGCL.
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Required Vote to Amend the Bylaws
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The Existing Charter requires an affirmative vote of either a majority of the
board of directors or the holders of at least a majority of the voting power of all then-outstanding shares of capital stock entitled to vote generally in the election of directors, voting together as a single class, for the adoption,
amendment, alteration or repeal of bylaws.
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The Proposed Charter requires an affirmative vote of the New Corcentric Board or
the holders of at least two-thirds (2/3) of the voting power of all then-outstanding shares of capital stock entitled to vote generally in the election of directors, voting together as a single class, for the adoption, amendment, or
repeal of any provision of the bylaws (in addition to any vote of the holders
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Existing Charter
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Proposed Charter
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of any class or series of stock if required by applicable law); provided,
however, that if the New Corcentric Board has approved such adoption, then only the affirmative vote of the holders of at least a majority of the voting power of all then-outstanding shares of New Corcentric's capital stock entitled to
vote generally in the election of directors, voting together as a single class, shall be required to adopt, amend or repeal any provision of the Proposed Bylaws.
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Limitation of Exclusive Forum Provision
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The Existing Charter adopts the Court of Chancery of the State of Delaware (the
“Chancery Court”) as the sole and exclusive forum for certain stockholder litigation, except for any action as to which the Chancery Court determines that there is an indispensable party not subject to the jurisdiction of such court and
to which jurisdiction such party does not consent, which is vested in the exclusive jurisdiction of another court or forum, or for which the Chancery Court does not have subject matter jurisdiction, or any action arising under the
Securities Act as to which the Chancery Court and the federal district court for the District of Delaware shall have concurrent jurisdiction. The Existing Charter further provides that such exclusive forum provision does not apply to
suits brought to enforce any liability or duty created by the Exchange Act or any other claim for which the federal courts have exclusive jurisdiction.
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The Proposed Charter modifies the current exclusive forum provision to clarify
that the exclusive jurisdiction of the Chancery Court shall not apply to suits brought to enforce any duty or liability under the Securities Act or the Exchange Act, or any other claim for which the federal courts have exclusive
jurisdiction. In addition, the Proposed Charter adopts, unless New Corcentric consents in writing to the selection of an alternative forum, to the fullest extent permitted by law, the federal district courts of the United States of
America as the sole and exclusive forum for the resolution of claims arising under the Securities Act, or the rules and regulations promulgated thereunder.
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Other Changes, Including Removal of Blank Check Company Provisions
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| |
The Existing Charter contains various provisions applicable only to blank check
companies and relating to North Mountain's relationship with its directors, officers and the Sponsor.
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The Proposed Charter provides for certain additional changes, including, among
others, those (i) resulting from the Business Combination, including changing the post-business combination corporate name from “North Mountain Merger Corp.” to “Corcentric, Inc.” and removing
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Existing Charter
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Proposed Charter
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certain provisions relating to North Mountain’s prior status as a blank check
company and North Mountain Class B Common Stock that will no longer apply upon the Closing, or (ii) that are administrative or clarifying in nature, including the deletion of language without substantive effect.
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Reasons for the Amendments
For a discussion of the reasons for the approval of certain provisions
in the Proposed Charter, see “Proposal No. 4—The Advisory Charter Proposals” below.
Vote Required for Approval
The affirmative vote (in person online or by proxy) of (i) the holders
of a majority of the outstanding shares of North Mountain Common Stock, voting together as a single class, and (ii) the holders of a majority of the outstanding shares of North Mountain Class B Common Stock, voting separately as a single class,
is required to approve the Post-Mergers Charter Approval Proposal. Broker non-votes, abstentions or the failure to vote on the Post-Mergers Charter Approval Proposal will have the same effect as a vote “AGAINST” the Post-Mergers Charter
Approval Proposal.
The Business Combination is conditioned upon the approval of the
Post-Mergers Charter Approval Proposal, subject to the terms of the Merger Agreement. Notwithstanding the approval of the Post-Mergers Charter Approval Proposal, if the Business Combination is not consummated for any reason, the actions
contemplated by the Post-Mergers Charter Approval Proposal will not be effected and by approval of the Post-Mergers Charter Approval Proposal, North Mountain stockholders are authorizing the North Mountain Board to abandon the Post-Mergers
Charter Approval Proposal in the event the Business Combination is not consummated.
Recommendation of the North Mountain Board
THE NORTH MOUNTAIN BOARD UNANIMOUSLY RECOMMENDS THAT
STOCKHOLDERS VOTE “FOR” THE APPROVAL OF THE POST-MERGERS CHARTER APPROVAL PROPOSAL.
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Overview
North Mountain’s stockholders are also being asked to vote on a
separate proposal with respect to certain governance provisions in the Proposed Charter, which are separately being presented in accordance with SEC guidance to give stockholders the opportunity to present their separate views on important
corporate governance provisions and which will be voted upon on a non-binding advisory basis. This separate vote is not otherwise required by Delaware law separate and apart from the Post-Mergers Charter Approval Proposal, but pursuant to SEC
guidance, North Mountain is required to submit these provisions to its stockholders separately for approval. However, the stockholder vote regarding this proposal is advisory in nature, and is not binding on North Mountain or the North Mountain
Board (separate and apart from the approval of the Pre-Mergers Charter Amendment Proposal and the Post-Mergers Charter Approval Proposal). Furthermore, the Business Combination is not conditioned on the separate approval of the Advisory Charter
Proposals (separate and apart from approval of the Pre-Mergers Charter Amendment Proposal and the Post-Mergers Charter Approval Proposal). Accordingly, regardless of the outcome of the non-binding advisory vote on these proposals, North Mountain
intends that the Proposed Charter will take effect at the Closing (assuming approval of the Post-Mergers Charter Approval Proposal).
The table set forth above in “Proposal
No. 3 —The Post-Mergers Charter Approval Proposal” summarizes the principal proposed changes and the differences between the Existing Charter and the Proposed Charter. Such summary is qualified by reference to the complete text of the
Proposed Charter, a copy of which is attached to this proxy statement/prospectus as Annex C. All stockholders are encouraged to read the Proposed Charter in its entirety for a more complete description of
its terms.
Proposal 4A -- Number of Authorized Shares
The authorized shares of capital stock in the Proposed Charter,
consisting of shares of common stock and shares of preferred stock, represents an increase from the existing authorization of 221,000,000 shares of capital stock, consisting of 220,000,000 shares of common stock (of which 200,000,000
are authorized shares of Class A common stock and 20,000,000 are authorized shares of Class B common stock) and 1,000,000 shares of preferred stock in the Existing Charter. Following the filing of the Proposed Charter with the Secretary of State
of the State of Delaware and immediately prior to Closing of the Business Combination, each share of Class B common stock outstanding immediately prior to the filing of the Proposed Charter will automatically be converted into one share of
Class A common stock of North Mountain and concurrently with such conversion, the number of authorized shares of Class B common stock will be reduced to zero.
Although, following the Pre-Mergers Charter Amendment Proposal, North
Mountain will have a sufficient number of authorized but unissued shares of common stock to complete the Business Combination and the other issuances described in this proxy statement/prospectus, the North Mountain Board has determined that the
increase in the number of shares of authorized common stock is desirable and in the best interests of stockholders because it will enhance New Corcentric's flexibility to consider and respond to future business needs and opportunities as they
arise from time to time following the Closing, without incurring the risk, delay and potential expense incident to obtaining stockholder approval for a particular issuance. Although there is no present intention to issue any shares beyond those
contemplated by the Merger Agreement or the PIPE Financing, or otherwise in the ordinary course of business, the additional authorized shares of common stock would be issuable for any proper corporate purpose, including without limitation, stock
splits, stock dividends, future acquisitions, investment opportunities, capital raising transactions of equity or convertible debt securities, issuances under current or future equity compensation plans or for other corporate purposes. New
Corcentric’s authorized but unissued shares of common stock and preferred stock will be available for future issuances without stockholder approval (except to the extent otherwise required by law or Nasdaq rules) and could be utilized for a
variety of corporate purposes, including future offerings to raise additional capital, acquisitions and employee benefit plans.
If approved, the additional shares of common stock will have rights as
described in “Description of Securities”. Incidental effects of the increase in the outstanding number of shares of common stock may include dilution of ownership and voting power of existing holders of
common stock. New Corcentric could also use the increased number of shares of common stock for potential strategic transactions, including, among other things,
135
acquisitions, strategic partnerships, joint ventures, restructurings, business
combinations and investments, although there are no immediate plans to do so. No assurance can be given that any such transactions will (i) be completed on favorable terms or at all, (ii) enhance stockholder value or (iii) not adversely affect
the business or trading price of common stock of New Corcentric.
Proposal 4B -- No Class Vote on Changes in Authorized Number of Stock
At present, the Existing Charter contains no specific provision
regarding the required vote to change the authorized shares of any class of stock. Proposal No. 4B provides that any vote with respect to the increase or decrease of the number of authorized shares of any class or classes of stock (but not below
the number of shares then outstanding) requires the affirmative vote of a majority of the holders of all the then-outstanding shares of capital stock of New Corcentric entitled to vote thereon, voting together as a single class, irrespective of
the provisions of Section 242(b)(2) of the DGCL.
North Mountain believes that vesting the power to authorize changes in
the authorized number of shares in the holders of stock entitled to vote in the election of directors will give New Corcentric greater flexibility to use its share capital.
Proposal 4C -- Required Vote to Amend the Bylaws
At present, the Existing Charter provides that North Mountain’s bylaws
may only be adopted, amended, altered or repealed with the approval of a majority of the North Mountain Board or the holders of at least a majority of the voting power of all then-outstanding shares of North Mountain’s capital stock entitled to
vote generally in the election of directors, voting together as a single class. Proposal No. 4C provides that an affirmative vote by either a majority of the New Corcentric Board or by the holders of at least two-thirds (2/3) of the voting power
of all then-outstanding shares of capital stock entitled to vote generally in the election of directors, voting together as a single class, is required to adopt, amend, or repeal the bylaws; provided, however, that if the New Corcentric Board has
approved such adoption, then only the affirmative vote of the holders of at least a majority of the voting power of all then-outstanding shares of New Corcentric’s capital stock entitled to vote generally in the election of directors, voting
together as a single class, shall be required to adopt, amend or repeal any provision of New Corcentric’s bylaws. The ability of the majority of the New Corcentric Board to amend the bylaws remains unchanged. North Mountain believes that
supermajority voting requirements are appropriate at this time to protect all stockholders against the potential self-interested actions by one or a few large stockholders. In reaching this conclusion, the North Mountain Board was cognizant of
the potential for certain stockholders to hold substantial beneficial ownership of our common stock following the Business Combination. North Mountain further believes that going forward, a supermajority voting requirement encourages any person
seeking control of New Corcentric to negotiate with the New Corcentric Board to reach terms that are appropriate for all stockholders.
Proposal 4D -- Limitation on Exclusive Forum Provision
The Existing Charter adopts the Court of Chancery of the State of
Delaware (the “Chancery Court”) as the sole and exclusive forum for certain stockholder litigation, except for any action as to which the Chancery Court determines that there is an indispensable party not subject to the jurisdiction of such court
and to which jurisdiction such party does not consent, which is vested in the exclusive jurisdiction of another court or forum, for which the Chancery Court does not have subject matter jurisdiction, or any action arising under the Securities Act
as to which the Chancery Court and the federal district court for the District of Delaware shall have exclusive jurisdiction. The Existing Charter further provides that such exclusive forum provision does not apply to suits brought to enforce any
liability or duty created by the Exchange Act or any other claim for which the federal courts have exclusive jurisdiction. The proposed charter seeks to clarify that the current exclusive forum provision adopting the Chancery Court as the
exclusive forum for certain stockholder litigation is also not applicable to any suits brought to enforce any duty or liability under the Securities Act or the Exchange Act, or any other claim for which the federal courts have exclusive
jurisdiction. In addition, the Proposed Charter adopts, unless New Corcentric consents in writing to the selection of an alternative forum, to the fullest extent permitted by law, the federal district courts of the United States of America as the
sole and exclusive forum for the resolution of any action asserting a claim arising under the Securities Act, or the rules and regulations promulgated thereunder.
136
These exclusive forum provisions are not intended to apply to
actions arising under the Exchange Act or the Securities Act. Delaware courts have held that a Delaware corporation can only use its constitutive documents to bind a plaintiff to a particular forum where the claim involves rights or relationships
that were established by or under Delaware’s corporate law. As a result, to the extent our exclusive forum provisions could be construed to apply to actions arising under the Exchange Act or the Securities Act, there is uncertainty as to whether
a court would enforce the forum selection provisions with respect to such claims, and in any event, our stockholders would not be deemed to have waived compliance with federal securities laws and the rules and regulations thereunder.
The North Mountain Board believes that clarifying in the proposed
charter that the current exclusive forum provision does not apply to actions asserted to enforce any duty or liability created by the Securities Act or the Exchange Act, or, in each case, the rules or regulations promulgated thereunder, will
permit New Corcentric to comply with the jurisdictional limitations imposed by the federal securities laws and to provide clear notice of such limitations to New Corcentric’s stockholders, in conformity with recent SEC guidance regarding such
limitations. In addition, the North Mountain Board believes that adopting the federal district courts of the United States as the exclusive forum for certain stockholder litigation under the Securities Act is intended to assist New Corcentric in
avoiding multiple lawsuits in multiple jurisdictions regarding the same matter. The ability to require such claims to be brought in a single forum will help to assure consistent consideration of the issues, the application of a relatively known
body of case law and level of expertise and should promote efficiency and cost-savings in the resolutions of such claims.
Proposal 4E -- Update of Other Provisions
Approval of each of the Governance Proposals, assuming the approval of
each of the other condition precedent proposals, will result, upon the Closing, in the wholesale replacement of the Existing Charter with the Proposed Charter. While certain material changes between the Existing Charter and the Proposed Charter
have been unbundled into distinct proposals, there are other differences between the Existing Charter and the Proposed Charter arising from, among other things, (i) the Closing, including (a) changing the post-business combination corporate name
from “North Mountain Merger Corp.” to “Corcentric, Inc.” and (b) removing (1) certain obsolete provisions relating to North Mountain’s status as a blank check company, such as its purpose of effecting a business combination, the establishment of
a Trust Account, stockholder redemption rights and North Mountain’s Class B Common Stock, such as conversion and voting rights related thereto, that will no longer apply upon the Closing, (2) exclusions from the corporate opportunities doctrine
for North Mountain directors and officers and (3) the opt out of Section 203 of the DGCL and the substantially similar provision excluding North Mountain's sponsor from the definition of “interested stockholder,” (ii) administrative or clarifying
revisions, including (a) providing that a majority of the votes cast may increase or decrease (but not below the current number) the number of shares of any class or classes of stock, (b) providing that the business to be transacted at special
meetings of stockholders shall be limited to the purpose or purposes stated in the notices of such meeting, and (c) the removal of language without substantive effect. The North Mountain Board believes that all such changes are necessary to
adequately address the needs of New Corcentric after the Business Combination and are appropriate for a public operating company.
These changes will be implemented (subject to the approval of the
aforementioned related proposals and Closing) if the North Mountain stockholders approve this Proposal No. 4E. We encourage stockholders to carefully review the terms of the Proposed Charter, attached hereto as Annex C.
Vote Required for Approval
The affirmative vote (in person online or by proxy) of a majority of
the votes cast by the holders of shares of North Mountain Common Stock, voting together as a single class, that are present or represented by proxy at the special meeting, is required to approve each of the Advisory Charter Proposals, each of
which is a non-binding advisory vote. Broker non-votes, abstentions or the failure to vote on any of the Advisory Charter Proposals will have no effect on the outcome of the Advisory Charter Proposals.
137
As discussed above, the Advisory Charter Proposals are advisory
votes and therefore are not binding on us or the North Mountain Board. Furthermore, the Business Combination is not conditioned on the separate approval of the Advisory Charter Proposals (separate and apart from approval of the Pre-Mergers
Charter Amendment Proposal and the Post-Mergers Charter Approval Proposal). Accordingly, regardless of the outcome of the non-binding advisory vote on these Proposals, we intend that the Proposed Charter will take effect upon the Closing
(assuming approval of the Post-Mergers Charter Approval Proposal).
Recommendation of the North Mountain Board
THE NORTH MOUNTAIN BOARD UNANIMOUSLY RECOMMENDS THAT
STOCKHOLDERS VOTE “FOR” THE APPROVAL OF EACH OF THE ADVISORY CHARTER PROPOSALS.
138
Overview
We are asking our shareholders to approve and adopt the Corcentric,
Inc. 2022 Equity Incentive Plan (which we refer to as the “2022 Plan”). The Corcentric Board will approve the 2022 Plan prior to the special meeting, subject to approval by our shareholders.
The 2022 Plan will provide for the grant of options, stock
appreciation rights, restricted stock, restricted stock units, performance awards, unrestricted stock awards, dividend equivalents, other stock-based awards, cash awards and substitute awards intended to align the interests of our service
providers with those of our shareholders. The 2022 Plan is described in more detail below. A copy of the 2022 Plan is attached to this proxy statement as Annex E.
Summary of the 2022 Plan
This section summarizes material features of the 2022 Plan. The
summary is qualified in its entirety by reference to the complete text of the 2022 Plan.
Securities to be Offered
The aggregate number of shares of New Corcentric Common Stock that
may be issued or used for reference purposes or with respect to which awards may be granted under the 2022 Plan shall not exceed shares (subject to adjustment in the event of certain transactions or changes of capitalization in accordance
with the 2022 Plan). The number of shares available for issuance under the Plan will be subject to an annual increase on January 1 of each calendar year during the term of the 2022 Plan, equal to the lesser of (i) % of the aggregate number of
shares outstanding on the final day of the immediately preceding calendar year and (ii) any such smaller number of shares as is determined by the Corcentric Board. The aggregate number of shares that may be issued or used under the 2022 Plan
pursuant to incentive stock options (“ISOs”) shall not exceed shares. Shares of New Corcentric Common Stock tendered in payment of an option, delivered or withheld to satisfy any tax withholding obligation, shares covered by a stock-settled
appreciation right or other awards that were not issued upon settlement of an award, or shares subject to an award that expires or is canceled, forfeited or terminated without issuance will again be available for issuance or delivery pursuant
to other awards under the 2022 Plan. The number of shares available for issuance under the 2022 Plan will not be reduced by shares issued pursuant to awards issued or assumed in connection with a merger or acquisition as contemplated by
applicable stock exchange rules, except that shares acquired upon exercise of substitute ISOs will count against the maximum number of shares that may be issued pursuant to the exercise of ISOs under the 2022 Plan.
Administration
The 2022 Plan will be administered by a committee of the Corcentric
Board authorized by the Corcentric Board to administer the Plan, or if no committee is so authorized, by the Corcentric Board (as applicable, the “Administrator”). The Administrator has broad discretion to administer the 2022 Plan, including
the power to determine the eligible individuals to whom awards will be granted, the number and type of awards to be granted, and the terms and conditions of awards. The Administrator may also accelerate the vesting or exercise of any award and
make all other determinations and to take all other actions necessary or advisable for the administration of the 2022 Plan. To the extent the Administrator is not the Corcentric Board, the Corcentric Board will retain the authority to take all
actions permitted by the Administrator under the 2022 Plan.
Eligibility
Our employees, consultants, and non-employee directors, and the
employees and consultants, and non- employee directors of our affiliates, will be eligible to receive awards under the 2022 Plan. As stated above, the basis for participation in the 2022 Plan is the Administrator’s decision to select, in its
sole discretion, participants from among those eligible. As of , 2022, we and our affiliates expect to have approximately employees, consultants and non-employee directors who will be eligible to participate in the 2022 Plan.
Grants to Non-Employee Directors. The fair value of any awards granted under the 2022 Plan to an non-employee director as compensation for services on the Corcentric Board, during any one fiscal year, taken
139
together with any cash fees paid or awards granted under any other equity
compensation plan to such non-employee director during such periodin respect of the non-employee director’s services as a member of the Corcentric Board during such year, may not exceed $ , provided that in any calendar year in which a
non-employee director (i) first commences service on the Corcentric Board, (ii) serves on a special committee of the Corcentric Board, or (iii) serves as lead director or chairman of the Corcentric Board, such limit will be $ .
Types of Awards
Options.
We may grant options to eligible persons, except that ISOs may only be granted to persons who are our employees or employees of one of our subsidiaries, in accordance with Section 422 of the Code. The exercise price of
an option cannot be less than 100% of the fair market value of a share of New Corcentric Common Stock on the date on which the option is granted and the option must not be exercisable for longer than 10 years
following the date of grant. In the case of an ISO granted to an individual who owns (or is deemed to own) at least 10% of the total combined voting power of all classes of our equity securities, the exercise price of
the option must be at least 110% of the fair market value of a share of New Corcentric Common Stock on the date of grant and the option must not be exercisable more than five years from the date of grant.
Options granted under the 2022 Plan generally must be exercised by
the optionee before the earlier of the expiration of such option or at such time or times as shall be determined by the Administrator at the time of grant. Each option award agreement will set forth the extent to which the optionee will have
the right to exercise the option following the termination of the optionee’s service with us, and the right to exercise the option of any executors or administrators of the optionee’s estate or any person who has acquired such options directly
from the optionee by bequest or inheritance.
Payment of the exercise price may be made in a manner approved by
the Administrator, which may include (i) immediately available funds in U.S. dollars, (ii) delivery of New Corcentric Common Stock having a value equal to the exercise price, (iii) a broker assisted cashless exercise, or (iv) any other means
approved by the Administrator.
SARs. A
stock appreciation right (“SAR”) is the right to receive an amount equal to the excess of the fair market value of one share of New Corcentric Common Stock on the date of exercise over the grant price of the SAR. The
grant price of a SAR cannot be less than 100% of the fair market value of a share of New Corcentric Common Stock on the date on which the SAR is granted. The term of a SAR may not exceed 10 years. The Administrator
will have the discretion to determine other terms and conditions of a SAR award.
Restricted Share Awards. A restricted share award is a grant of shares of New Corcentric Common Stock subject to the restrictions on transferability and risk of forfeiture imposed by the Administrator. Unless otherwise determined
by the Administrator and specified in the applicable award agreement, the holder of a restricted share award will have rights as a shareholder, including the right to vote the shares of New Corcentric Common Stock subject
to the restricted share award and to receive dividends on the shares of New Corcentric Common Stock subject to the restricted share award during the restriction period. In the discretion of the Administrator, dividends
distributed prior to vesting may be subject to the same restrictions and risk of forfeiture as the restricted shares with respect to which the distribution was made.
Restricted Share Units (“RSUs”). An RSU is a right to receive cash, shares of New Corcentric Common Stock, or a combination of cash and shares of New Corcentric Common Stock at the end of a specified period equal to the
fair market value of one share of New Corcentric Common Stock on the date of vesting. RSUs may be subject to the restrictions, including a risk of forfeiture, imposed by the Administrator.
Share Awards. A share award is a transfer of unrestricted shares of New Corcentric Common Stock on terms and conditions, if any, determined by the Administrator.
Dividend Equivalents. Dividend equivalents entitle a participant to receive the equivalent value (in cash or shares of New Corcentric Common Stock) equal in value to dividends paid with respect to a specified number of
shares of New Corcentric Common Stock. Dividend equivalents may be granted in connection with RSUs, provided that if dividend equivalents are declared during the period that an RSU is outstanding, such dividend equivalents
may be paid currently or credited to an account for the participant and subject to the same terms and restrictions (including vesting requirement(s)) as the applicable RSU. No divided equivalents will be paid on options
or SARs.
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Performance Awards. Performance awards entitle participants to cash, New Corcentric Common Stock, other property, or any combination thereof payable upon the attainment of specific performance goals either alone or in addition
to other awards.
Other Stock-Based Awards. Other share-based awards are awards denominated or payable in, valued in whole or in part by reference to, or otherwise based on or related to, the value of our shares of New Corcentric Common
Stock.
Cash Awards. Cash awards may be granted on a free-standing basis or as an element of, a supplement to, or in lieu of any other award.
Substitute Awards. Awards may be granted in substitution for similar awards held for individuals who become participants as a result of a merger, consolidation, or acquisition of another entity by or with us or one of our
affiliates.
Certain Transactions
If any change is made to our capitalization, such as a stock split,
stock combination, stock dividend, exchange of shares or other recapitalization, merger, or otherwise, which results in an increase or decrease in the number of outstanding shares of New Corcentric Common Stock, appropriate adjustments will be
made by the Administrator in the shares subject to an award number or kind of securities that may be issued under the Plan, the number or kind of securities or other property to be issued pursuant to an award or the applicable exercise or
purchase price, as applicable, under the 2022 Plan. The Administrator will also have the discretion to make certain adjustments to awards in the event of a change in control, such as accelerating the vesting or exercisability of awards,
requiring the surrender of an award, or making any other adjustment or modification to the award that the Administrator determines is appropriate in light of such transaction, and to take certain actions in respect of outstanding awards in the
event of a change in control, including the substitution, continuation, assumption or cashout of awards.
Clawback
All awards granted under the 2022 Plan (including any proceeds,
gains or other economic benefit received in respect of any such awards) will be subject to reduction, cancelation, or recoupment under any written clawback policy that we may adopt and that we determine should apply to awards under the 2022
Plan, in each case, in accordance with applicable law and our policy (whenever adopted).
Plan Amendment and Termination
Our Administrator may amend or terminate any award, award agreement,
or the 2022 Plan at any time; however, shareholder approval will be required for any amendment to the extent necessary to comply with applicable law or exchange listing standards. The Administrator will have the authority, without the approval
of shareholders, to (i) reduce the exercise price of any option or SAR, (ii) grant a new option, SAR or other award in substitution for, or upon the cancellation of, any previously granted option or SAR that has the effect of reducing the
exercise price thereof, (iii) exchange any option or SAR for shares of New Corcentric Common Stock, cash, or other consideration when the exercise price per share of New Corcentric Common Stock under such option or SAR exceeds the fair market
value of a share of New Corcentric Common Stock, or (iv) take any other action that would be considered a “repricing” of an option or SAR under the applicable exchange listing standards. The 2022 Plan will remain in effect for a period of
10 years (unless earlier terminated by the Corcentric Board).
Material U.S. Federal Income Tax Consequences
The following is a general summary under current law of the
principal U.S. federal income tax consequences related to awards under the 2022 Plan. This summary deals with the general federal income tax principles that apply and is provided only for general information. Some kinds of taxes, such as state,
local, and foreign income taxes and federal employment taxes, are not discussed. This summary is not intended as tax advice to participants, who should consult their own tax advisors.
Nonqualified Stock Options. If an optionee is granted a nonqualified stock option (“NSO”) under the 2022 Plan, the optionee should not have taxable income on the grant of the option. Generally, the optionee should
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recognize ordinary income at the time of exercise in an amount equal to the fair
market value of the shares acquired on the date of exercise, less the exercise price paid for the shares. The optionee’s basis in the New Corcentric Common Stock for purposes of determining gain or loss on a subsequent sale or disposition of
such shares generally will be the fair market value of a share of New Corcentric Common Stock on the date the optionee exercises such option. Any subsequent gain or loss will be taxable as a long-term or short-term capital gain or loss
depending on how long the shares were held. We or our subsidiaries or affiliates generally should be entitled to a federal income tax deduction at the time and for the same amount as the optionee recognizes ordinary income.
Incentive Stock Options. An optionee receiving ISOs should not recognize taxable income upon grant. Additionally, if applicable holding period requirements are met, the optionee should not recognize taxable income at the
time of exercise. However, the excess of the fair market value of the shares of New Corcentric Common Stock received over the option exercise price is an item of tax preference income potentially subject to the alternative
minimum tax. If shares acquired upon exercise of an ISO is held for a minimum of two years from the date of grant and one year from the date of exercise and otherwise satisfies the ISO requirements, the gain or loss
(in an amount equal to the difference between the fair market value on the date of disposition and the exercise price) upon disposition of the shares will be treated as a long-term capital gain or loss, depending on how
long the shares were held, and we will not be entitled to any deduction. If the holding period requirements are not met, the ISO will be treated as one that does not meet the requirements of the Code for ISOs and the optionee
will recognize ordinary income at the time of the disposition equal to the excess of the amount realized over the exercise price, but not more than the excess of the fair market value of the shares on the date the ISO
is exercised over the exercise price, with any remaining gain or loss being treated as capital gain or capital loss, depending on how long the shares were held. We or our subsidiaries or affiliates generally are not entitled
to a federal income tax deduction upon either the exercise of an ISO or upon disposition of the shares acquired pursuant to such exercise, except to the extent that the optionee recognizes ordinary income on disposition of the
shares.
Other Awards. The current federal income tax consequences of other awards authorized under the 2022 Plan generally follow certain basic patterns: (i) SARs are taxed and deductible in substantially the same manner as NSOs; (ii) restricted
shares subject to a substantial risk of forfeiture results in income recognition equal to the excess of the fair market value over the price paid, if any, only at the time the restrictions lapse (unless the recipient
elects to accelerate recognition as of the date of grant through a Section 83(b) election within 30 days of the grant of the award); and (iii) RSUs, dividend equivalents, and other stock or cash based awards are generally
subject to tax at the time of payment. We or our subsidiaries or affiliates generally should be entitled to a federal income tax deduction at the time and for the same amount as the grantee recognizes ordinary income.
New Plan Benefits
The benefits or amounts that may be received or allocated to
participants under the 2022 Plan will be determined at the discretion of the Administrator and are not currently determinable. On , 2022, the closing price of North Mountain Class A Common Stock traded on the Nasdaq was $ per share.
Required Vote
Approval of the Corcentric, Inc. 2022 Equity Incentive Plan pursuant
to this Equity Incentive Plan Proposal requires the affirmative vote of a majority of the votes cast by holders of shares of North Mountain Common Stock present in person (which would include presence at the virtual special meeting) or by proxy
at the special meeting and entitled to vote thereon, at a meeting at which a quorum is present.
A shareholder’s failure to vote by proxy or to vote in person at the
special meeting, as well a broker non-vote, will have no effect on the Equity Incentive Plan Proposal. An abstention will have the same effect as a vote “AGAINST” the Equity Incentive Plan Proposal.
Recommendation of the North Mountain Board
THE NORTH MOUNTAIN BOARD UNANIMOUSLY RECOMMENDS
THAT STOCKHOLDERS VOTE “FOR” THE APPROVAL OF THE EQUITY INCENTIVE PLAN PROPOSAL.
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Background
We are asking our shareholders to approve the Corcentric, Inc. 2022
Employee Stock Purchase Plan (the “2022 ESPP”), which the Corcentric Board has approved subject to the approval of our shareholders.
We strongly believe in improving opportunities for New Corcentric
employees to reap the benefits of increases in New Corcentric’s stock’s value. The ability to contribute a portion of earnings to purchase shares of New Corcentric Common Stock would represent a key benefit for New Corcentric’s employees. We
believe that such a program improves New Corcentric’s ability to attract, retain and incentivize its talent, and ultimately, better aligns the interests of its employees with those of our shareholders. As of , 2022, we anticipate that
approximately New Corcentric employees will be eligible to participate in the 2022 ESPP.
Summary of the 2022 ESPP
The following general description of material features of the 2022
ESPP is qualified in its entirety by reference to the provisions of the 2022 ESPP set forth in Annex F.
Purpose and Eligibility
The 2022 ESPP is intended to assist New Corcentric employees in
acquiring share ownership interest in New Corcentric, to encourage New Corcentric employees to remain with New Corcentric, and to better align their interests with those of our shareholders. The 2022 ESPP is intended to qualify as an “employee
stock purchase plan” under Section 423 of the Internal Revenue Code (the “Code”).
New Corcentric’s executive officers and all of its other employees
will be allowed to participate in the 2022 ESPP, provided that the administrator, in its discretion, may also exclude any or all of the following unless prohibited by applicable law, so long as any such exclusion is applied uniformly to all
employees:
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any employee who is customarily scheduled to work 20 hours or less per week;
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any employee whose customary employment is not more than five months in a calendar year;
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any employee who has been employed less than two years;
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any employee who is not employed by Corcentric prior to the applicable exercise date;
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any employee who is a highly compensated employee (within the meaning of Section 414(q) of the Code) or any highly compensated
employee with compensation above a specified level, who is an officer, or who is subject to the disclosure requirements of Section 16(a) of the Exchange Act; or
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any employee who is a citizen or resident of a jurisdiction outside the United States if the grant of the option is prohibited
under the laws of the jurisdiction governing such employee or compliance with the laws of the jurisdiction would cause the 2022 ESPP or any offering or option granted thereunder to violate the requirements of Section 423 of the Code.
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Notwithstanding the foregoing, any employee who, after the granting
of the option, would possess 5% or more of the total combined voting power or value of all classes of shares of New Corcentric Common Stock shall not be eligible. In addition, no employee shall be granted an option under the 2022 ESPP which
permits the employee to purchase shares under all of our “employee stock purchase plans” that would accrue at a rate which exceeds $25,000 of fair market value of our stock (determined at the time such option is granted) for each calendar year
in which such option is outstanding at any time.
Administration
The 2022 ESPP will be administered by the Compensation Committee or
its delegates, subject to applicable laws. The administrator will have full and exclusive authority to interpret the terms of the 2022 ESPP and determine eligibility, subject to the conditions of the 2022 ESPP, as described below.
Share Reserve
The maximum aggregate number of shares that may be issued pursuant
to the 2022 ESPP will be equal to shares. In addition, on each January 1 of each calendar year during the term of the 2022 ESPP, the
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aggregate number of shares reserved for issuance under the 2022 ESPP will be
increased automatically by the number of shares equal to the lesser of (i) % of the total number of all outstanding shares of New Corcentric Common Stock on the last day of the immediately preceding fiscal year, and (ii) such lesser amount
determined by the Corcentric Board.
Contributions and Purchases
The 2022 ESPP will permit participants to purchase common stock
through contributions (in the form of payroll deductions or otherwise to the extent permitted by the administrator) of [at least 1% and up to 10%] of their eligible compensation, which includes a participant’s gross base compensation, including
base salary, wages, prior week adjustment and overtime payments, commissions, annual incentive compensation, vacation and holiday pay and jury duty, funeral leave and military leave pay, but excluding payments under any special or one-time
bonus program, reimbursements, equity compensation and other similar compensation. Subject to the eligibility requirements discussed above, a participant may purchase a maximum of shares of New Corcentric Common Stock during each offering
period. The 2022 ESPP will have offering periods as selected by the administrator, with one or more purchase periods to be designated within such offering periods as determined by the administrator. The offering periods will start on such
trading days as determined by the administrator prior to each such offering period. The administrator may, in its discretion, modify the terms of future purchase periods and offering periods, provided that no offering period may be longer than
27 months.
Amounts contributed and accumulated by the participant during any
offering period will be used to purchase shares of our common stock at the end of each purchase period. The purchase price of the shares will be 85% of the lower of the fair market value of our common stock on the first trading day of the
offering period or on the last trading day of the offering period.
Withdrawal and Termination of Participation
A participant may withdraw from the 2022 ESPP voluntarily at any
time by filing a notice of withdrawal prior to the close of business on the date established by the administrator. A participant will be deemed to have elected to withdraw from the plan upon the termination of the participant’s employment for
any reason or in the event the participant is no longer eligible to participate in the 2022 ESPP.
Restriction on Transfers
A participant may not transfer rights granted under the 2022 ESPP
other than by will, the laws of descent and distribution or as otherwise provided under the 2022 ESPP.
Adjustments
In the event of certain changes in our capitalization, the
administrator will make proportionate adjustments to the number and class of shares that may be delivered, the applicable purchase price for shares, and/or the numerical share limits, pursuant to the 2022 ESPP.
Dissolution or Liquidation
In the event of our proposed liquidation or dissolution, any
offering period then in progress will be shortened by setting a new exercise date, and will terminate immediately prior to such liquidation or dissolution unless otherwise determined by the administrator. The administrator will notify
participants of the new exercise date in writing or electronically, at which time any participant’s purchase rights will be automatically exercised, unless the participant has earlier withdrawn from the offering period.
Certain Transactions
In the event of a merger, consolidation or similar transaction, an
acquiring or successor corporation may assume or substitute each outstanding option. If the successor corporation refuses to assume or substitute for the outstanding option, the offering period then in progress will be shortened by setting a
new exercise date. The administrator will notify each participant in writing or electronically that the exercise date has been changed and that the participant’s option will be exercised automatically on the new exercise date, unless the
participant has already withdrawn from the offering period.
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Summary of Material U.S. Federal Income Tax Considerations
The following summary is intended only as a general guide to the
material U.S. federal income tax consequences of participation in the 2022 ESPP. The summary is based on existing U.S. laws and regulations, and there can be no assurance that those laws and regulations will not change in the future. The
summary does not purport to be complete and does not discuss the tax consequences upon a participant’s death, or the provisions of the income tax laws of any municipality, state or foreign country in which the participant may reside. As a
result, tax consequences for any particular participant may vary based on individual circumstances.
The rights of participants to make purchases under the 2022 ESPP are
intended to qualify under the provisions of Section 423 of the Code. Assuming such qualification, no income will be taxable to a participant until the sale or other disposition of shares purchased under the 2022 ESPP. Upon such sale or
disposition, the participant will generally be subject to tax in an amount that depends upon the holding period of such shares prior to disposing of them.
If the shares are sold or disposed of more than two years from the
first day of the offering period during which the shares were purchased and more than one year from the date of purchase, or if the participant dies while holding the shares, the participant (or his or her estate) will recognize ordinary income
generally measured as the lesser of (i) the excess of the fair market value of the shares at the time such sale or disposition over the purchase price of such shares or (ii) an amount equal to 15% of the fair market value of the shares on the
first day of the offering period. Any additional gain will be treated as long-term capital gain. If the shares are held for at least the holding periods described above but are sold for a price that is less than the purchase price, there will
be no ordinary income and the difference will be a long-term capital loss. We will not be entitled to an income tax deduction with respect to the grant or exercise of a right to purchase our shares, or the sale of such shares by a participant,
where such participant holds such shares for at least the holding periods described above.
Any sale or other disposition of shares before the expiration of the
holding periods described above will be a “disqualifying disposition,” and the participant will recognize ordinary income generally measured as the excess of the fair market value of the shares on the date the shares are purchased over the
purchase price, and we will be entitled to an income tax deduction for such ordinary income. Any additional gain or loss on such sale or disposition will be a long-term or short-term capital gain or loss, depending on the holding period
following the date the shares were purchased by the participant prior to such sale or disposition, and we will not be entitled to an income tax deduction for any such capital gain.
New Plan Benefits
Participation in the ESPP is voluntary and each eligible employee
will make his or her own decision whether and to what extent to participate in the ESPP. It is therefore not possible to determine the benefits or amounts that will be received in the future by individual employees or groups of employees under
the ESPP.
Other Information
The 2022 ESPP was approved by the Corcentric Board on , 2022,
subject to shareholder approval. If approved by our shareholders, the 2022 ESPP will be effective , 2022. The administrator may at any time amend, suspend or terminate the 2022 ESPP, provided that, no such action may increase the maximum
number of shares subject to the 2022 ESPP or change the designation or class of eligible employees without shareholder approval within twelve months before or following such action by the Board or cause the 2022 ESPP to no longer be an employee
stock purchase plan within the meaning of Section 423(b) of the Code without shareholder approval. The 2022 ESPP will continue in effect until the tenth anniversary of the effective date, unless earlier terminated by the administrator.
Recommendation of the North Mountain Board
THE NORTH MOUNTAIN BOARD UNANIMOUSLY RECOMMENDS
THAT STOCKHOLDERS VOTE “FOR” THE APPROVAL OF THE EMPLOYEE STOCK PURCHASE PLAN PROPOSAL.
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Overview
In connection with the Business Combination, we intend to effect
(subject to customary terms and conditions, including the Closing), for purposes of complying with the applicable listing rules of the Nasdaq Stock Market:
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the issuance, pursuant to the terms of the Subscription Agreements, of 5,000,000 PIPE Shares to the PIPE Investors in the PIPE
Financing, which will be consummated concurrently with the Closing;
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the delivery, pursuant to the terms of the Subscription Agreements, of 2,500,000 PIPE Warrants to the PIPE Investors in the
PIPE Financing, which will be consummated concurrently with the Closing; and
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the issuance, pursuant to the terms of the North Mountain Warrant Agreement, of 2,500,000 PIPE Warrant Shares upon exercise of
the PIPE Warrants.
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For further information, please see the section entitled “Proposal
No. 2—The Business Combination Proposal,” as well as the annexes to this proxy statement/prospectus.
Why North Mountain Needs Stockholder Approval
We are seeking stockholder approval in order to comply with Nasdaq
Listing Rule 5635(a).
Under Nasdaq Listing Rule 5635(a), stockholder approval is required
prior to the issuance of securities in connection with the acquisition of another company if such securities are not issued in a public offering and (i) have, or will have upon issuance, voting power equal to or in excess of 20% of the voting
power outstanding before the issuance of such securities (or securities convertible into or exercisable for common stock); or (ii) the number of shares of common stock to be issued is or will be equal to or in excess of 20% of the number of
shares of common stock outstanding before the issuance of the stock or securities.
Stockholder approval of the Nasdaq PIPE Issuance Proposal is also a
condition to the Closing under the Merger Agreement.
Effect of Proposal on Current Stockholders
If the Nasdaq PIPE Issuance Proposal is adopted, we will issue
5,000,000 shares of North Mountain Class A Common Stock and transfer 2,500,000 PIPE Warrants to the PIPE Investors upon the consummation of the PIPE Financing and issue up to 2,500,000 shares of North Mountain Class A Common Stock upon exercise
of the PIPE Warrants.
The issuance of the shares of North Mountain Class A Common Stock
described above would result in significant dilution to North Mountain stockholders and result in North Mountain stockholders having a smaller percentage interest in the voting power, liquidation value and aggregate book value of North
Mountain.
Vote Required for Approval
The affirmative vote (in person online or by proxy) of a majority of
the votes cast by the holders of shares of North Mountain Common Stock, voting together as a single class, that are present or represented by proxy at the special meeting, is required to approve the Nasdaq PIPE Issuance Proposal. Broker
non-votes, abstentions or the failure to vote on the Nasdaq PIPE Issuance Proposal will have no effect on the outcome of the Nasdaq PIPE Issuance Proposal.
The Business Combination is conditioned upon the approval of the
Nasdaq PIPE Issuance Proposal, subject to the terms of the Merger Agreement. Notwithstanding the approval of the Nasdaq PIPE Issuance Proposal, if the Business Combination is not consummated for any reason, the actions contemplated by the
Nasdaq PIPE Issuance Proposal will not be effected.
Recommendation of the North Mountain Board
THE NORTH MOUNTAIN BOARD UNANIMOUSLY RECOMMENDS
THAT STOCKHOLDERS VOTE “FOR” THE APPROVAL OF THE NASDAQ PIPE ISSUANCE PROPOSAL.
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The Adjournment Proposal
The Adjournment Proposal, if adopted, will allow the North Mountain
Board to adjourn the special meeting to a later date or dates to permit further solicitation of proxies. The Adjournment Proposal will only be presented to North Mountain’s stockholders in the event that, based on the tabulated votes, there are
not sufficient votes at the time of the special meeting to approve one or more of the proposals presented at the special meeting. In no event will the North Mountain Board adjourn the special meeting or consummate the Business Combination
beyond the date by which it may properly do so under the Existing Charter and Delaware law.
Consequences if the Adjournment Proposal is Not Approved
If the Adjournment Proposal is not approved by North Mountain’s
stockholders, the North Mountain Board may not be able to adjourn the special meeting to a later date in the event that, based on the tabulated votes, there are not sufficient votes at the time of the special meeting to approve one or more of
the proposals presented at the special meeting.
Vote Required for Approval
The affirmative vote (in person online or by proxy) of a majority of
the votes cast by the holders of shares of North Mountain Common Stock, voting together as a single class, that are present or represented by proxy at the special meeting, is required to approve the Adjournment Proposal. Broker non-votes,
abstentions or the failure to vote on the Adjournment Proposal will have no effect on the outcome of the Adjournment Proposal.
The Business Combination is not conditioned upon the approval of the
Adjournment Proposal.
Recommendation of the North Mountain Board
THE NORTH MOUNTAIN BOARD UNANIMOUSLY RECOMMENDS
THAT STOCKHOLDERS VOTE “FOR” THE APPROVAL OF THE ADJOURNMENT PROPOSAL.
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UNAUDITED PRO FORMA CONDENSED COMBINED FINANCIAL INFORMATION
The following unaudited pro forma condensed combined balance sheet
of New Corcentric as of December 31, 2021 and the unaudited pro forma condensed combined statement of operations of New Corcentric for the year ended December 31, 2021 presents the combination of the financial information of North Mountain and
Corcentric after giving effect to the Business Combination and related adjustments described in the accompanying notes. North Mountain and Corcentric are collectively referred to herein as the “Companies,” and the Companies, subsequent to the
Business Combination, are referred to herein as New Corcentric.
The unaudited pro forma condensed combined statement of operations
for the year ended December 31, 2021 gives pro forma effect to the Business Combination as if it had occurred on January 1, 2021. The unaudited pro forma condensed combined balance sheet as of December 31, 2021 gives pro forma effect to the
Business Combination as if it was completed on December 31, 2021.
The unaudited pro forma condensed combined financial information is
based on and should be read in conjunction with the audited historical financial statements of North Mountain and Corcentric and the notes thereto, as well as the disclosures contained in the sections titled “North Mountain Management’s Discussion and Analysis of Financial Condition and Results of Operations” and “Corcentric’s Management’s Discussion and Analysis of
Financial Condition and Results of Operations.”
The unaudited pro forma condensed combined financial information
have been presented for illustrative purposes only and do not necessarily reflect what New Corcentric’s financial condition or results of operations would have been had the Business Combination occurred on the dates indicated. Further, the
unaudited pro forma condensed combined financial information also may not be useful in predicting the future financial condition and results of operations of New Corcentric. The actual financial position and results of operations may differ
significantly from the pro forma amounts reflected herein due to a variety of factors. The unaudited pro forma adjustments represent management’s estimates based on information available as of the date of these unaudited pro forma condensed
combined financial information and are subject to change as additional information becomes available and analyses are performed.
The unaudited pro forma condensed combined information contained
herein assumes that the North Mountain’s stockholders approve the proposed Business Combination. Public Stockholders may elect to redeem their shares of North Mountain Class A Common Stock for cash even if they approve the proposed Business
Combination. North Mountain cannot predict how many of its Public Stockholders will exercise their right to have their Class A Common Stock redeemed for cash. As a result, we have elected to provide the unaudited pro forma condensed combined
financial information under two different redemption scenarios, which produce different allocations of total New Corcentric equity between holders of common stock. As described in greater detail in Note 2 Basis
of Presentation of the “Notes to Unaudited Pro Forma Condensed Combined Financial Information”, the first scenario, or “no redemption scenario”, assumes that none
of the Public Stockholders will exercise their right to have their Public Shares redeemed for cash, and the second scenario, or “contractual maximum redemption scenario”, assumes that holders of the maximum number of Public Shares that could be
redeemed for cash while still leaving sufficient cash available to consummate the Business Combination (i.e. the minimum cash requirement) will exercise their right to have their Public Shares redeemed for cash. The actual results are expected
to be within the parameters described by the two scenarios, however, there can be no assurance regarding which scenario will be closest to the actual results. Under both scenarios, Corcentric is considered the accounting acquirer, as further
discussed in Note 2 Basis of Presentation of the “Notes to Unaudited Pro Forma Condensed Combined Financial Information.”
The Business Combination and Related Transactions
On December 9, 2021, North Mountain entered into the Merger
Agreement with Corcentric, Merger Sub I, a direct, wholly owned subsidiary of North Mountain, and Merger Sub II, a direct, wholly owned subsidiary of North Mountain pursuant to which Merger Sub I will merge with and into Corcentric (the
“Initial Merger”), with Corcentric surviving the Initial Merger as a wholly owned subsidiary of North Mountain and immediately following the Initial Merger, the Initial Surviving Company will merge with and into Merger Sub II (the “Subsequent
Merger”), with Merger Sub II surviving the Subsequent Merger as a wholly owned subsidiary of North Mountain. After giving effect to the Business Combination, North Mountain will directly own all of the issued and outstanding equity interests of
Corcentric, and the pre-Business Combination stockholders of Corcentric will hold a portion of the North Mountain Class A Common Stock.
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In accordance with the terms of the Merger Agreement, At the
effective time of the Initial Merger (the “Effective Time”):
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each share of Corcentric Common Stock that is issued and outstanding immediately prior to the Effective Time (other than shares
owned by Corcentric as treasury stock, dissenting shares and shares of Corcentric restricted stock) will be converted into the right to receive (i) the Per Share Stock Consideration, (ii) any cash payable in lieu of fractional shares
pursuant to the terms of the Merger Agreement and (iii) the contingent right to receive a number of Earnout Shares following the Closing in accordance with the terms of the Merger Agreement;
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each share of Corcentric Preferred Stock that is issued and outstanding immediately prior to the Effective Time (other than
shares owned by Corcentric as treasury stock, dissenting shares and the Cash Consideration Shares) will be converted into the right to receive (i) a number of newly issued shares of North Mountain Class A Common Stock, equal to the
product of (A) the Per Share Stock Consideration, multiplied by (B) the number of shares of Corcentric Common Stock that such share of Corcentric Preferred Stock would be converted into if converted in accordance with the terms of the
Corcentric Certificate of Incorporation immediately prior to the Effective Time, (ii) any cash payable in lieu of fractional shares pursuant to the terms of the Merger Agreement and (iii) the contingent right to receive a number of
Earnout Shares following the Closing in accordance with the terms of the Merger Agreement;
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each share of Corcentric Preferred Stock expressly identified as a Cash Consideration Share in accordance with the Merger
Agreement (each such share of Corcentric Preferred Stock, a “Cash Consideration Share”) will be converted into the right to receive the Per Share Cash Consideration multiplied by the number of shares of Corcentric Common Stock that such
shares of Corcentric Preferred Stock would be converted into if converted in accordance with the terms of the Corcentric Certificate of Incorporation immediately prior to the Effective Time. In no event will the Aggregate Cash
Consideration exceed the Total Cash Consideration Amount);
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each share of Corcentric Common Stock and Corcentric Preferred Stock held in the treasury of Corcentric immediately prior to
the Effective Time will be cancelled without any conversion thereof and no payment or distribution will be made with respect thereto;
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(e)
|
each share of common stock, par value $0.001 per share, of Merger Sub I issued and outstanding immediately prior to the
Effective Time will no longer be outstanding and will thereupon be converted into and become one validly issued fully paid and non-assessable share of common stock, par value $0.001 per share, of the Initial Surviving Company and all
such shares will constitute the only outstanding shares of capital stock of the Initial Surviving Company as of immediately following the Effective Time;
|
|
(f)
|
each vested Corcentric stock option, to the extent then outstanding and unexercised, will automatically be cancelled, and the
holder will be entitled to receive in respect of such cancelled vested Corcentric stock option (i) a number of shares of North Mountain Class A Common Stock (any cash payable in lieu of fractional shares pursuant to the terms of the
Merger Agreement) equal to the quotient obtained by dividing (A) the result of (1) the product of (x) the number of shares of Corcentric Common Stock subject to such vested Corcentric stock option immediately prior to the Effective
Time, multiplied by (y) the excess, if any, of (a) the Per Share Merger Consideration Value, over (b) the per share exercise price for the shares of Corcentric Common Stock subject to such vested Corcentric stock option immediately
prior to the Effective Time, minus (2) the applicable withholding taxes payable in respect of such cancelled vested Corcentric stock option, by (B) ten dollars ($10) and (ii) the contingent right to receive a number of Earnout Shares
following the Closing in accordance with the terms of the Merger Agreement;
|
|
(g)
|
each unvested Corcentric stock option, to the extent then outstanding and unexercised, will automatically be converted into an
option to acquire, on the same terms and conditions as were applicable to such unvested Corcentric stock option immediately prior to the Effective Time, including applicable vesting conditions, except for terms rendered inoperative by
reason of the transactions contemplated by the Merger Agreement or for such other administrative or ministerial changes (after such conversion, each a “Rollover Option”) the number of shares of North Mountain Class A Common
|
149
Stock determined by multiplying the number of shares of Corcentric Common Stock
subject to the unvested Corcentric stock option immediately prior to the Effective Time by the Per Share Stock Consideration and rounding the resulting number down to the nearest whole number of shares of North Mountain Class A Common Stock,
and the per share exercise price for the North Mountain Class A Common Stock issuable upon exercise of such Rollover Option will be determined by dividing the per share exercise price for the shares of Corcentric Common Stock subject to the
unvested Corcentric stock option, as in effect immediately prior to the Effective Time, by the Per Share Stock Consideration, and rounding the resulting exercise price up to the nearest whole cent. The Rollover Options will be entitled to the
contingent right to receive a number of Earnout Shares following the Closing in accordance with the terms of the Merger Agreement; and
|
(h)
|
each share of Corcentric restricted stock, to the extent then unvested and outstanding, will automatically be converted into
the number of shares of restricted North Mountain Class A Common Stock, subject to the same terms and conditions as were applicable to such Corcentric restricted stock immediately prior to the Effective Time, including applicable
vesting conditions, except for terms rendered inoperative by reason of the transactions contemplated by the Merger Agreement or for such other administrative or ministerial changes (after such conversion, “Rollover Restricted Stock”),
determined by multiplying (i) the number of shares of Corcentric Common Stock subject to such Corcentric restricted stock award immediately prior to the Effective Time by (ii) the Per Share Stock Consideration. The shares of Rollover
Restricted Stock will be entitled to the contingent right to receive a number of Earnout Shares following the Closing in accordance with the terms of the Merger Agreement.
|
At the effective time of the Subsequent Merger (the “Second
Effective Time”), by virtue of the Subsequent Merger and without any action on the part of any holder thereof, each share of common stock, par value $0.001 per share, of the Initial Surviving Company issued and outstanding immediately prior to
the Second Effective Time will no longer be outstanding and will thereupon be converted into membership interests of the Surviving Company and all such membership interests will constitute the only outstanding equity of the Surviving Company as
of immediately following the Second Effective Time.
Following the Closing, pursuant to the terms of the Merger
Agreement, holders of (i) shares of Corcentric Common Stock and Corcentric Preferred Stock (excluding the Cash Consideration Shares) outstanding immediately prior to the Effective Time, (ii) vested Corcentric stock options outstanding and
unexercised immediately prior to the Effective Time, (iii) Rollover Options, (iv) Rollover Restricted Stock and (v) without duplication of clauses (iii) and (iv), holders of North Mountain Common Stock received in respect of Rollover Options
and/or Rollover Restricted Stock that vested and were exercised, as applicable, between the Effective Time and the relevant earn-out achievement date, will have the contingent right to receive in the aggregate, up to 5,000,000 shares of North
Mountain Common Stock (the “Earnout Shares”) if, from the Closing until the fifth anniversary thereof, (x) the dollar volume-weighted average price of North Mountain Common Stock is greater than or equal to $12.50 or $15.00 per share, in each
case, for 20 trading days within any consecutive 30-trading day period, as applicable, or (y) a sale or change of control of North Mountain occurs (as further described in the Merger Agreement).
In connection with the execution of the Merger Agreement, North
Mountain entered into subscription agreements (the “Subscription Agreements”) with investment funds managed by Wellington Management Company LLP (“Wellington”), Millais Limited, an affiliate of the Sponsor and an affiliate of North Mountain
(“Millais”) and SMMC Sponsor Interests, LLC, an affiliate of North Mountain and an entity controlled by Charles Bernicker, the Chief Executive Officer and a director of North Mountain (such entity, “Sponsor Interests”, and together with
Wellington and Millais, the “PIPE Investors”), pursuant to which (i) the PIPE Investors have agreed to purchase, and North Mountain has agreed to sell the PIPE Investors, an aggregate of 5,000,000 shares of North Mountain Class A Common Stock
for a purchase price of $10.00 per share and at an aggregate purchase price of $50,000,000 and (ii) North Mountain has agreed to transfer to each PIPE Investor one-half of one warrant for each share of North Mountain Class A Common Stock
purchased, which warrants will be “Public Warrants” under the North Mountain Warrant Agreement, in each case, in a private placement (collectively, the “PIPE Financing”). The obligations to consummate the transactions contemplated by the
Subscription Agreements are conditioned upon, among other things, (i) at least 5,000,000 shares of North Mountain Class A Common Stock remaining outstanding immediately prior to the consummation of the Business
150
Combination after giving effect to the completion of the Redemption Offer, and with
respect to which North Mountain has not entered into a forward purchase agreement that would obligate North Mountain to purchase the shares at a future date and (ii) customary closing conditions and the consummation of the Business Combination.
The Subscription Agreements provide that North Mountain will grant the PIPE Investors certain customary registration rights.
In connection with the execution of the Merger Agreement, North
Mountain entered into a share and warrant surrender agreement (the “Share Vesting and Warrant Surrender Agreement”) with the North Mountain LLC (the “Sponsor”), which provides that immediately prior to, and contingent upon, the consummation of
the Closing (the “Surrender Effective Time”) (i) the Sponsor will surrender 4,145,000 Private Placement Warrants of North Mountain held by the Sponsor prior to the Closing, a portion of which will be transferred and delivered to the PIPE
Investors in the amounts set forth in and pursuant to the Subscription Agreements (including any Subscription Agreements entered into after the date of the Share Vesting and Warrant Surrender Agreement) and the remainder of which will be
cancelled by North Mountain upon the Surrender Effective Time in exchange for 1,400,000 newly issued shares of North Mountain Common Stock (the “Warrant Shares”), subject to certain vesting conditions set forth in the Share Vesting and Warrant
Surrender Agreement, (ii) at the Closing, all shares of North Mountain’s Class B common stock, par value $0.0001 per share (“North Mountain Class B Common Stock”) held by the Sponsor (or shares of North Mountain Common Stock issued or issuable
upon conversion thereof) and all Warrant Shares will become unvested, (iii) an aggregate of 2,603,126 of the shares of North Mountain Class B Common Stock and Warrant Shares will vest immediately following Closing and (iv) the remainder of the
Sponsor’s shares of North Mountain Class B Common Stock and Warrant Shares will, at the Surrender Effective Time, be subject to the vesting and surrender provisions set forth in the Share Vesting and Warrant Surrender Agreement, pursuant to
which such shares will vest in two equal tranches of 1,051,562 shares if the stock price level is greater than or equal to $12.50 per share (the “$12.50 Share Price Milestone”) or $15.00 per share (the “$15.00 Share Price Milestone”), in each
case for 20 trading days within any consecutive 30-trading day period within five years of Closing, subject to equitable adjustment to reflect any subdivision, stock split, stock or cash dividend, reorganization, combination, recapitalization
or similar transaction with respect to the North Mountain Common Stock. In addition, the shares subject to the $12.50 Share Price Milestone or the $15.00 Share Price Milestone will accelerate vesting upon certain acceleration events, including
a change of control transaction that occurs within five years of Closing. Any shares subject to vesting pursuant to the Share Vesting and Warrant Surrender Agreement will be surrendered to the extent such shares remain unvested following the
five year anniversary of the Closing.
151
UNAUDITED PRO FORMA CONDENSED
COMBINED BALANCE SHEET
DECEMBER 31, 2021
(in thousands)
|
|
| |
North
Mountain
(Historical)
|
| |
Corcentric
(Historical)
|
| |
No redemption scenario
|
| |
Contractual maximum
redemption scenario
|
||||||||||||
|
|
| |
Transaction
Accounting
Adjustments
|
| |
Note 3
|
| |
Pro Forma
|
| |
Transaction
Accounting
Adjustments
|
| |
Note 3
|
| |
Pro Forma
|
||||||
|
Assets
|
| |
|
| |
|
| |
|
| |
|
| |
|
| |
|
| |
|
| |
|
|
Current assets:
|
| |
|
| |
|
| |
|
| |
|
| |
|
| |
|
| |
|
| |
|
|
Cash and cash equivalents
|
| |
$304
|
| |
$9,856
|
| |
$1,840
|
| |
(a), (b)
|
| |
$12,000
|
| |
$1,840
|
| |
(a),(b)
|
| |
$12,000
|
|
Accounts receivable, net
|
| |
—
|
| |
239,404
|
| |
—
|
| |
|
| |
239,404
|
| |
—
|
| |
|
| |
239,404
|
|
Rebates, fees, and other receivables
|
| |
—
|
| |
10,735
|
| |
—
|
| |
|
| |
10,735
|
| |
—
|
| |
|
| |
10,735
|
|
Inventories, prepaid expenses, and other current assets
|
| |
127
|
| |
17,705
|
| |
—
|
| |
|
| |
17,832
|
| |
—
|
| |
|
| |
17,832
|
|
Total current assets
|
| |
431
|
| |
277,700
|
| |
1,840
|
| |
|
| |
279,971
|
| |
1,840
|
| |
|
| |
279,971
|
|
Property and equipment, net
|
| |
—
|
| |
26,499
|
| |
—
|
| |
|
| |
26,499
|
| |
—
|
| |
|
| |
26,499
|
|
Goodwill
|
| |
—
|
| |
114,497
|
| |
—
|
| |
|
| |
114,497
|
| |
—
|
| |
|
| |
114,497
|
|
Other intangible assets, net
|
| |
—
|
| |
37,483
|
| |
—
|
| |
|
| |
37,483
|
| |
—
|
| |
|
| |
37,483
|
|
Other assets
|
| |
—
|
| |
12,753
|
| |
(3,499)
|
| |
(b)
|
| |
9,254
|
| |
(3,499)
|
| |
(b)
|
| |
9,254
|
|
Marketable securities held in Trust Account
|
| |
132,262
|
| |
—
|
| |
(132,262)
|
| |
(c)
|
| |
—
|
| |
(132,262)
|
| |
(c)
|
| |
—
|
|
Total assets
|
| |
$132,693
|
| |
$468,932
|
| |
$(133,921)
|
| |
|
| |
$467,704
|
| |
$(133,921)
|
| |
|
| |
$467,704
|
|
|
| |
|
| |
|
| |
|
| |
|
| |
|
| |
|
| |
|
| |
|
|
Liabilities, commitments and
contingencies, mezzanine equity and stockholders' equity
|
| |
|
| |
|
| |
|
| |
|
| |
|
| |
|
| |
|
| |
|
|
Current liabilities:
|
| |
|
| |
|
| |
|
| |
|
| |
|
| |
|
| |
|
| |
|
|
Current portion of long-term debt, net
|
| |
$—
|
| |
$751
|
| |
$—
|
| |
|
| |
$751
|
| |
$—
|
| |
|
| |
$751
|
|
Accounts payable
|
| |
—
|
| |
152,540
|
| |
—
|
| |
|
| |
152,540
|
| |
—
|
| |
|
| |
152,540
|
|
Rebates payable
|
| |
—
|
| |
6,785
|
| |
—
|
| |
|
| |
6,785
|
| |
—
|
| |
|
| |
6,785
|
|
Accrued expenses and other current liabilities
|
| |
428
|
| |
27,298
|
| |
12,713
|
| |
(b), (d)
|
| |
40,439
|
| |
12,713
|
| |
(b),(d)
|
| |
40,439
|
|
Total current liabilities
|
| |
428
|
| |
187,374
|
| |
12,713
|
| |
|
| |
200,515
|
| |
12,713
|
| |
|
| |
200,515
|
|
Long-term debt, net
|
| |
—
|
| |
164,625
|
| |
(25,422)
|
| |
(e)
|
| |
139,203
|
| |
(8,170)
|
| |
(e)
|
| |
156,455
|
|
Deferred income taxes
|
| |
—
|
| |
2,092
|
| |
417
|
| |
(f)
|
| |
2,509
|
| |
417
|
| |
(f)
|
| |
2,509
|
|
Other liabilities
|
| |
—
|
| |
1,084
|
| |
—
|
| |
|
| |
1,084
|
| |
—
|
| |
|
| |
1,084
|
|
Deferred underwriting fee payable
|
| |
4,629
|
| |
—
|
| |
(4,629)
|
| |
(b)
|
| |
—
|
| |
(4,629)
|
| |
(b)
|
| |
—
|
|
Warrant liabilities - Private Warrants
|
| |
3,275
|
| |
—
|
| |
(3,275)
|
| |
(g)
|
| |
—
|
| |
(3,275)
|
| |
(g)
|
| |
—
|
|
Warrant liabilities - Public Warrants
|
| |
5,171
|
| |
—
|
| |
1,000
|
| |
(h)
|
| |
6,171
|
| |
1,000
|
| |
(h)
|
| |
6,171
|
|
Sponsor Vesting Shares liability
|
| |
—
|
| |
—
|
| |
16,898
|
| |
(i)
|
| |
16,898
|
| |
16,898
|
| |
(i)
|
| |
16,898
|
|
Earnout Shares liability
|
| |
—
|
| |
—
|
| |
35,783
|
| |
(j)
|
| |
35,783
|
| |
35,783
|
| |
(j)
|
| |
35,783
|
|
Total liabilities
|
| |
13,503
|
| |
355,175
|
| |
33,485
|
| |
|
| |
402,163
|
| |
50,737
|
| |
|
| |
419,415
|
|
|
| |
|
| |
|
| |
|
| |
|
| |
|
| |
|
| |
|
| |
|
|
Commitments and contingencies and mezzanine equity:
|
| |
|
| |
|
| |
|
| |
|
| |
|
| |
|
| |
|
| |
|
|
Redeemable preferred stock
|
| |
—
|
| |
109,531
|
| |
(109,531)
|
| |
(k)
|
| |
—
|
| |
(109,531)
|
| |
(k)
|
| |
—
|
|
Redeemable common stock
|
| |
—
|
| |
5,419
|
| |
(5,419)
|
| |
(k)
|
| |
—
|
| |
(5,419)
|
| |
(k)
|
| |
—
|
|
Class A common stock subject to possible redemption
|
| |
132,250
|
| |
—
|
| |
(132,250)
|
| |
(k)
|
| |
—
|
| |
(132,250)
|
| |
(k)
|
| |
—
|
|
|
| |
|
| |
|
| |
|
| |
|
| |
|
| |
|
| |
|
| |
|
|
Stockholders' (deficit) equity:
|
| |
|
| |
|
| |
|
| |
|
| |
|
| |
|
| |
|
| |
|
|
Common stock
|
| |
—
|
| |
12
|
| |
(12)
|
| |
(k)
|
| |
—
|
| |
(12)
|
| |
(k)
|
| |
—
|
|
Class A common stock
|
| |
—
|
| |
—
|
| |
11
|
| |
(k)
|
| |
11
|
| |
11
|
| |
(k)
|
| |
11
|
|
Class B common stock
|
| |
—
|
| |
—
|
| |
—
|
| |
(k)
|
| |
—
|
| |
—
|
| |
(k)
|
| |
—
|
|
Preferred stock
|
| |
—
|
| |
—
|
| |
—
|
| |
(k)
|
| |
—
|
| |
—
|
| |
(k)
|
| |
—
|
|
Additional paid-in capital
|
| |
—
|
| |
59,222
|
| |
47,007
|
| |
(k)
|
| |
106,229
|
| |
29,755
|
| |
(k)
|
| |
88,977
|
|
Cumulative translation adjustments
|
| |
—
|
| |
175
|
| |
—
|
| |
(k)
|
| |
175
|
| |
—
|
| |
(k)
|
| |
175
|
|
Accumulated deficit
|
| |
(13,060)
|
| |
(38,709)
|
| |
10,895
|
| |
(k)
|
| |
(40,874)
|
| |
10,895
|
| |
(k)
|
| |
(40,874)
|
|
Treasury stock at cost
|
| |
—
|
| |
(21,893)
|
| |
21,893
|
| |
(k)
|
| |
—
|
| |
21,893
|
| |
(k)
|
| |
—
|
|
Total stockholders' (deficit) equity
|
| |
(13,060)
|
| |
(1,193)
|
| |
79,794
|
| |
|
| |
65,541
|
| |
62,542
|
| |
|
| |
48,289
|
|
Total liabilities, commitments and
contingencies, mezzanine equity and stockholders' (deficit) equity
|
| |
$132,693
|
| |
$468,932
|
| |
$(133,921)
|
| |
|
| |
$467,704
|
| |
$(133,921)
|
| |
|
| |
$467,704
|
See accompanying notes to unaudited pro forma condensed combined financial information
152
NEW CORCENTRIC
UNAUDITED PRO FORMA CONDENSED COMBINED
STATEMENT OF OPERATIONS FOR THE YEAR ENDED DECEMBER 31, 2021
(in thousands, except share and
per share amounts)
|
|
| |
North
Mountain
(Historical)
|
| |
Corcentric
(Historical)
|
| |
No redemption scenario
|
| |
Contractual maximum
redemption scenario
|
||||||||||||
|
|
| |
Transaction
Accounting
Adjustments
|
| |
Note 3
|
| |
Pro Forma
|
| |
Transaction
Accounting
Adjustments
|
| |
Note 3
|
| |
Pro Forma
|
||||||
|
Revenue:
|
| |
|
| |
|
| |
|
| |
|
| |
|
| |
|
| |
|
| |
|
|
Payments, software and advisory revenue
|
| |
$—
|
| |
$109,789
|
| |
$—
|
| |
|
| |
$109,789
|
| |
$—
|
| |
|
| |
$109,789
|
|
Equipment sales
|
| |
—
|
| |
43,905
|
| |
—
|
| |
|
| |
43,905
|
| |
—
|
| |
|
| |
43,905
|
|
Total revenues
|
| |
—
|
| |
153,694
|
| |
—
|
| |
|
| |
153,694
|
| |
—
|
| |
|
| |
153,694
|
|
Direct cost of revenues (excluding depreciation and
amortization shown separately below):
|
| |
|
| |
|
| |
|
| |
|
| |
|
| |
|
| |
|
| |
|
|
Direct costs of payments, software and advisory revenue
|
| |
—
|
| |
35,788
|
| |
—
|
| |
|
| |
35,788
|
| |
—
|
| |
|
| |
35,788
|
|
Direct costs of equipment sales
|
| |
—
|
| |
39,504
|
| |
—
|
| |
|
| |
39,504
|
| |
—
|
| |
|
| |
39,504
|
|
Total direct costs of revenue
|
| |
—
|
| |
75,292
|
| |
—
|
| |
|
| |
75,292
|
| |
—
|
| |
|
| |
75,292
|
|
Operating expenses:
|
| |
|
| |
|
| |
|
| |
|
| |
|
| |
|
| |
|
| |
|
|
Research and development
|
| |
—
|
| |
3,081
|
| |
—
|
| |
|
| |
3,081
|
| |
—
|
| |
|
| |
3,081
|
|
Sales and marketing
|
| |
—
|
| |
26,646
|
| |
—
|
| |
|
| |
26,646
|
| |
—
|
| |
|
| |
26,646
|
|
General and administrative
|
| |
—
|
| |
47,301
|
| |
4,857
|
| |
(l),(m),(n),(o)
|
| |
52,158
|
| |
4,857
|
| |
(l),(m),(n),(o)
|
| |
52,158
|
|
Depreciation and amortization
|
| |
—
|
| |
23,577
|
| |
—
|
| |
|
| |
23,577
|
| |
—
|
| |
|
| |
23,577
|
|
Operating costs
|
| |
1,173
|
| |
—
|
| |
—
|
| |
|
| |
1,173
|
| |
—
|
| |
|
| |
1,173
|
|
Total operating expenses
|
| |
1,173
|
| |
100,605
|
| |
4,857
|
| |
|
| |
106,635
|
| |
4,857
|
| |
|
| |
106,635
|
|
Operating loss
|
| |
(1,173)
|
| |
(22,203)
|
| |
(4,857)
|
| |
|
| |
(28,233)
|
| |
(4,857)
|
| |
|
| |
(28,233)
|
|
Interest expense
|
| |
—
|
| |
(9,418)
|
| |
636
|
| |
(p)
|
| |
(8,782)
|
| |
204
|
| |
(p)
|
| |
(9,214)
|
|
Interest income
|
| |
—
|
| |
65
|
| |
—
|
| |
|
| |
65
|
| |
—
|
| |
|
| |
65
|
|
Foreign exchange gain (loss)
|
| |
—
|
| |
60
|
| |
—
|
| |
|
| |
60
|
| |
—
|
| |
|
| |
60
|
|
Interest earned on marketable securities held in Trust
Account
|
| |
9
|
| |
—
|
| |
(9)
|
| |
(q)
|
| |
—
|
| |
(9)
|
| |
(q)
|
| |
—
|
|
Change in fair value of warrant liability
|
| |
6,154
|
| |
—
|
| |
(2,398)
|
| |
(r)
|
| |
3,756
|
| |
(2,398)
|
| |
(r)
|
| |
3,756
|
|
Income (loss) before income taxes
and equity in income of affiliate
|
| |
4,990
|
| |
(31,496)
|
| |
(6,628)
|
| |
|
| |
(33,134)
|
| |
(7,060)
|
| |
|
| |
(33,566)
|
|
Provision (benefit) for income taxes
|
| |
—
|
| |
1,404
|
| |
417
|
| |
(s)
|
| |
1,821
|
| |
417
|
| |
(s)
|
| |
1,821
|
|
Equity in income of affiliate
|
| |
—
|
| |
112
|
| |
—
|
| |
|
| |
112
|
| |
—
|
| |
|
| |
112
|
|
Net income (loss)
|
| |
$4,990
|
| |
$(32,788)
|
| |
$(7,045)
|
| |
|
| |
$(34,843)
|
| |
$(7,477)
|
| |
|
| |
$(35,275)
|
|
Less preferred stock dividends and accretion of
preferences
|
| |
—
|
| |
(21,336)
|
| |
—
|
| |
|
| |
(21,336)
|
| |
—
|
| |
|
| |
(21,336)
|
|
Net income (loss) available for
common stockholders
|
| |
$4,990
|
| |
$(54,124)
|
| |
$(7,045)
|
| |
|
| |
$(56,179)
|
| |
$(7,477)
|
| |
|
| |
$(56,611)
|
|
Comprehensive income (loss):
|
| |
|
| |
|
| |
|
| |
|
| |
|
| |
|
| |
|
| |
|
|
Net income (loss)
|
| |
4,990
|
| |
(32,788)
|
| |
(7,045)
|
| |
|
| |
(34,843)
|
| |
(7,477)
|
| |
|
| |
(35,275)
|
|
Cumulative translation adjustment
|
| |
—
|
| |
(678)
|
| |
—
|
| |
|
| |
(678)
|
| |
—
|
| |
|
| |
(678)
|
|
Comprehensive income (loss)
|
| |
$4,990
|
| |
$(33,466)
|
| |
$(7,045)
|
| |
|
| |
$(35,521)
|
| |
$(7,477)
|
| |
|
| |
$(35,953)
|
|
|
| |
|
| |
|
| |
|
| |
|
| |
|
| |
|
| |
|
| |
|
|
Net income (loss) per share
|
| |
|
| |
|
| |
|
| |
|
| |
|
| |
|
| |
|
| |
|
|
Basic and diluted weighted average shares outstanding
|
| |
13,225,000
|
| |
13,301,808
|
| |
|
| |
(t)
|
| |
112,238,698
|
| |
|
| |
(t)
|
| |
110,513,698
|
|
Basic and diluted net income (loss) per share(1)
|
| |
$0.30
|
| |
$(4.07)
|
| |
|
| |
(t)
|
| |
$(0.32)
|
| |
|
| |
(t)
|
| |
$(0.33)
|
|
Basic and diluted weighted average shares outstanding,
Class B common stock
|
| |
3,306,250
|
| |
n/a
|
| |
|
| |
|
| |
n/a
|
| |
|
| |
|
| |
n/a
|
|
Basic and diluted net income per share, Class B common
stock
|
| |
$0.30
|
| |
n/a
|
| |
|
| |
|
| |
n/a
|
| |
|
| |
|
| |
n/a
|
|
(1)
|
Net income (loss) per share is based on:
|
|
•
|
North Mountain — weighted average number of shares of North Mountain Class A Common Stock outstanding for the year ended
December 31, 2021;
|
|
•
|
Corcentric — weighted average number of shares of Corcentric Common Stock outstanding for the year ended December 31, 2021; and
|
|
•
|
Pro forma — number of shares of Common Stock of New Corcentric expected to be outstanding after the Closing of the Business
Combination.
|
See accompanying notes to unaudited pro forma condensed combined financial information
153
NEW CORCENTRIC
NOTES TO UNAUDITED PRO FORMA CONDENSED COMBINED FINANCIAL INFORMATION
(in thousands, except share and
per share amounts)
Note 1 — Description of the Business Combination
On December 9, 2021, North Mountain entered into the Merger
Agreement with Corcentric, Merger Sub I, a direct, wholly owned subsidiary of North Mountain, and Merger Sub II, a direct, wholly owned subsidiary of North Mountain pursuant to which Merger Sub I will merge with and into Corcentric (the
“Initial Merger”), with Corcentric surviving the Initial Merger as a wholly owned subsidiary of North Mountain and immediately following the Initial Merger, the Initial Surviving Company will merge with and into Merger Sub II (the “Subsequent
Merger”), with Merger Sub II surviving the Subsequent Merger as a wholly owned subsidiary of North Mountain. After giving effect to the Business Combination, North Mountain will directly own all of the issued and outstanding equity interests of
Corcentric, and the pre-Business Combination stockholders of Corcentric will hold a portion of the North Mountain Class A Common Stock.
Subject to the terms and conditions set forth in the Merger
Agreement and under the no redemption and contractual maximum redemption scenarios, Corcentric’s stockholders will receive aggregate consideration with a value equal to $1,013,074, which consists of (i) $120,000 in cash at the Closing of the
Business Combination and (ii) $893,074 in shares of Class A Common Stock of New Corcentric at the Closing of the Business Combination, or 89,307,448 shares based on an assumed stock price of $10 per share.
In connection with the Business Combination, North Mountain entered
into Subscription Agreements with the PIPE Investors, pursuant to which the PIPE Investors have agreed to purchase, and North Mountain has agreed to sell the PIPE Investors, an aggregate 5,000,000 shares of North Mountain Class A Common Stock
for a purchase price of $10 per share and at an aggregate purchase price of $50,000. Additionally, North Mountain will transfer to each PIPE Investor one-half of one warrant for each purchased share of North Mountain Class A Common Stock
purchased, from the Private Placement Warrants surrendered by the Sponsor. Upon transfer from North Mountain to each PIPE Investor, such warrants will be Public Warrants and are determined to be liability classified and recognized at fair value
at the Closing of the Business Combination (see Note 3(h) Public warrant liabilities).
In connection with the Business Combination, up to an additional
5,000,000 shares of North Mountain Class A Common Stock (“Earnout Shares”) will be issued to Corcentric stockholders and holders of equity awards (as described below) contingent upon achieving certain market share price milestones within a
period of five years post-Business Combination. The Earnout Shares will be immediately issued in the event of a change of control, as defined in the Merger Agreement.
|
•
|
The portion of Earnout Shares allocated to holders of Corcentric Common Stock and Corcentric Preferred Stock (4,453,318 Earnout
Shares) falls within the scope of ASC 815, according to which it is determined to be liability classified and recognized at fair value at the Closing of the Business Combination (see Note 3(j) Earnout
Shares liability). Post-Business Combination, this liability will be remeasured to its fair value at the end of each reporting period and subsequent changes in the fair value post-Business Combination will be recognized
in New Corcentric’s statement of operations within other income/expense.
|
|
•
|
The portion of Earnout Shares allocated to holders of vested equity awards (109,636 Earnout Shares) falls within the scope of
ASC 718, according to which it is determined to be equity classified and the respective fair value is to be recognized as a compensation expense at the Closing of the Business Combination (see Note 3(m) Nonrecurring compensation expense related to Earnout Shares allocated to holders of vested equity awards).
|
|
•
|
The portion of Earnout Shares allocated to holders of unvested equity awards (437,046 Earnout Shares) falls within the scope of
ASC 718, according to which it is determined to be equity classified and the respective fair value is to be recognized as compensation expense over the derived service period (see Note 3(n) Compensation
expense related to Earnout Shares allocated to holders of unvested equity awards).
|
154
In connection with the Business Combination, Sponsor will receive
4,706,250 shares of Class A Common Stock (“Sponsor Shares”) as follows:
|
•
|
Sponsor will surrender 4,145,000 Private Placement Warrants in exchange for 1,400,000 shares of North Mountain Class A Common
Stock (the “Warrant Shares”); and
|
|
•
|
3,306,250 shares of North Mountain Class B Common Stock will be converted to 3,306,250 shares of North Mountain Class A Common
Stock.
|
2,103,124 Sponsor Shares will be subject to certain vesting
conditions (“Sponsor Vesting Shares”), which entail achieving certain market share price milestones within a period of five years post-Business Combination. These shares will be forfeited if the set milestones are not reached. The Sponsor
Vesting Shares will be immediately vested upon certain acceleration events, including a change of control (as defined in the Share Vesting and Warrant Surrender Agreement) that occurs within five years of Closing. These shares are determined to
be classified as a liability measured at fair value at the Closing of the Business Combination (see Note 3(k) Impact on equity). Post-Business Combination, this liability will be
remeasured to its fair value at the end of each reporting period and subsequent changes in the fair value post-Business Combination will be recognized in New Corcentric’s statement of operations within other income/expense.
The following table summarizes the pro forma shares of New
Corcentric Common Stock outstanding under the two scenarios (as described in greater detail in Note 2 Basis of Presentation), excluding the potential dilutive effect of outstanding
options, Earnout Shares, and the exercise of warrants:
|
|
| |
No redemption scenario
|
| |
Contractual maximum redemption scenario
|
||||||
|
|
| |
Shares
|
| |
Voting rights, %
|
| |
Shares
|
| |
Voting rights, %
|
|
Corcentric stockholders(1)
|
| |
89,307,448
|
| |
79.58%
|
| |
89,307,448
|
| |
80.81%
|
|
North Mountain Public Stockholders
|
| |
13,225,000
|
| |
11.78%
|
| |
11,500,000
|
| |
10.41%
|
|
Sponsor(2)
|
| |
4,706,250
|
| |
4.19%
|
| |
4,706,250
|
| |
4.26%
|
|
PIPE Investors
|
| |
5,000,000
|
| |
4.45%
|
| |
5,000,000
|
| |
4.52%
|
|
Total
|
| |
112,238,698
|
| |
100%
|
| |
110,513,698
|
| |
100%
|
|
(1)
|
Excludes 5,000,000 Earnout Shares as the earnout contingencies have not yet been met.
|
|
(2)
|
Includes 2,103,124 Sponsor Vesting Shares.
|
Note 2 — Basis of Presentation
The historical financial information of North Mountain and
Corcentric has been adjusted in the unaudited pro forma condensed combined financial information to reflect transaction accounting adjustments related to the Business Combination in accordance with GAAP. The transaction accounting adjustments
are prepared to illustrate the estimated effect of the Business Combination and certain other adjustments.
The Business Combination will be accounted for as a reverse
recapitalization because Corcentric has been determined to be the accounting acquirer under Financial Accounting Standards Board’s Accounting Standards Codification Topic 805, Business Combinations
(“ASC 805”) under both the no redemption and contractual maximum redemption scenarios. The determination is primarily based on the evaluation of the following facts and circumstances taking into consideration both the no redemption and
contractual maximum redemption scenarios:
|
•
|
The pre-combination equity holders of Corcentric will hold the majority of voting rights in New Corcentric;
|
|
•
|
Corcentric has the right to appoint a majority of directors to the board of directors of New Corcentric;
|
|
•
|
Senior management of Corcentric will comprise the senior management of New Corcentric; and
|
|
•
|
The operations of Corcentric will comprise the only ongoing operations of New Corcentric.
|
Under the reverse recapitalization model, the Business Combination
will be reflected as the equivalent of Corcentric issuing stock for the net assets of North Mountain, accompanied by a recapitalization whereby no goodwill or other intangible assets are recorded.
155
Business Combination costs that are determined to be directly
attributable and incremental to the Business Combination will be deferred and recorded as other assets in the balance sheet leading up until the Business Combination closes. For the pro forma purposes, such costs will be recorded as a reduction
in cash with a corresponding reduction of additional paid-in capital.
The unaudited pro forma condensed combined financial information has
been prepared using the assumptions below with respect to the potential redemption of North Mountain Class A Common Stock for cash:
|
•
|
Assuming no redemption scenario: This presentation assumes that no Public
Stockholders exercise redemption rights with respect to their Public Shares.
|
|
•
|
Assuming contractual maximum redemption scenario: This presentation
assumes that the Public Stockholders holding approximately 13.0% of the Public Shares exercise redemption rights with respect to their Public Shares. This scenario assumes that 1,725,000 Public Shares are redeemed for an aggregate
redemption payment of approximately $17,252 including a pro rata portion of interest accrued on the Trust Account of $2. The contractual maximum redemption scenario is based on a minimum cash consideration of $150,000 at Closing of the
Business Combination, consisting of Trust Account funds, PIPE Financing proceeds and all other cash and cash equivalents of North Mountain less the aggregate amount of cash proceeds that will be required to satisfy the redemption of the
Public Shares and the payment of North Mountain estimated transaction expenses of $15,000. Corcentric shall have no right or ability to waive the minimum cash condition without the prior written consent of North Mountain (which consent
may be provided or withheld by North Mountain in its sole discretion) if such aggregate amount is less than $125,000.
|
In the event Corcentric exercises its right pursuant to the Merger
Agreement to reduce the minimum cash condition from $150,000 to $125,000, Public Stockholders holding up to 4,225,000 Public Shares representing approximately 31.9% of the Public Shares could exercise redemption rights with respect to their
Public Shares.
In the event cash available at closing is insufficient to meet the
minimum cash condition after taking into account the level of redemptions and other available sources of financing, a condition to closing may not be met. In the event the minimum cash condition or any other condition to closing the Business
Combination is not satisfied, the parties will engage in a commercial discussion to address the failure. In the event the parties cannot come to terms with respect to the minimum cash condition or any other condition to closing, the Business
Combination may not be consummated.
For redemptions by the Public Stockholders up to approximately 19.1%
of Public Shares, each 1% increase in redemptions (approximately 132,250 Public Shares) will reduce the cash consideration at Closing of the Business Combination by $1,323, which will lower the amount of partial repayment of the revolving line
of credit of Corcentric by the same amount. For redemptions by the Public Stockholders over approximately 19.1% of Public Shares, each 1% increase in redemptions (approximately 132,250 Public Shares) will reduce the cash consideration at
Closing of the Business Combination by $1,323, which will require additional draw on the revolving line of credit by Corcentric for the same amount. Cash consideration at Closing of the Business Combination consists of Trust Account funds, PIPE
Financing proceeds and all other cash and cash equivalents of North Mountain less the aggregate amount of cash proceeds that will be required to satisfy the redemption of the Public Shares and the payment of North Mountain estimated transaction
expenses of $15,000.
156
Note 3 — Transaction Accounting Adjustments
Adjustments to the Unaudited Pro Forma Condensed
Combined Balance Sheet as of December 31, 2021
The pro forma adjustments included in the unaudited pro forma
condensed combined balance sheet as of December 31, 2021 are as follows:
|
3(a)
|
Cash and cash equivalents. Represents the impact of the Business Combination on
the cash and cash equivalents balance of New Corcentric.
|
The table below represents the sources and uses of funds as it
relates to the Business Combination:
|
|
| |
Note
|
| |
No redemption
scenario
|
| |
Contractual maximum
redemption scenario
|
|
North Mountain cash and cash equivalents as of
December 31, 2021 - pre Business Combination
|
| |
|
| |
304
|
| |
304
|
|
Corcentric cash and cash equivalents as of December 31,
2021 - pre Business Combination
|
| |
|
| |
9,856
|
| |
9,856
|
|
Total pre Business Combination
|
| |
|
| |
10,160
|
| |
10,160
|
|
|
| |
|
| |
|
| |
|
|
Transaction accounting adjustments:
|
| |
|
| |
|
| |
|
|
North Mountain cash held in Trust Account
|
| |
(1)
|
| |
132,262
|
| |
132,262
|
|
PIPE Financing
|
| |
(2)
|
| |
50,000
|
| |
50,000
|
|
Payment to redeeming North Mountain Public Stockholders
|
| |
(3)
|
| |
—
|
| |
(17,252)
|
|
Cash to existing Corcentric stockholders at the Business Combination
|
| |
(4)
|
| |
(120,000)
|
| |
(120,000)
|
|
Payment of deferred underwriting fees
|
| |
(5)
|
| |
(4,629)
|
| |
(4,629)
|
|
Payment of transaction costs incurred by Corcentric
|
| |
(6)
|
| |
(3,226)
|
| |
(3,226)
|
|
Payment of other estimated transaction costs of North Mountain
|
| |
(7)
|
| |
(10,371)
|
| |
(10,371)
|
|
Payment of other estimated transaction costs of Corcentric
|
| |
(8)
|
| |
(16,576)
|
| |
(16,576)
|
|
Payment of additional costs of Corcentric
|
| |
(9)
|
| |
(198)
|
| |
(198)
|
|
Partial repayment of revolving line of credit
|
| |
(10)
|
| |
(25,422)
|
| |
(8,170)
|
|
Total Transaction accounting adjustments
|
| |
|
| |
1,840
|
| |
1,840
|
|
|
| |
|
| | | | ||
|
Post-Business Combination cash and cash equivalents balance
|
| |
|
| |
$12,000
|
| |
$12,000
|
|
(1)
|
Represents the amount of the restricted investments, and cash and cash equivalents held in the Trust Account at the Closing of
the Business Combination (see Note 3(c) Trust Account).
|
|
(2)
|
Represents the issuance, in a private placement consummated concurrently with the Closing of the Business Combination, to PIPE
Investors of 5,000,000 shares of North Mountain Class A Common Stock at the purchase price of $10 per share and 2,500,000 Public Warrants (see Note 3(k) Impact on equity).
|
|
(3)
|
Represents the amount paid to Public Stockholders who exercised redemption rights under the contractual maximum redemption
scenario, including a pro rata portion of interest accrued on the Trust Account of $2 (see Note 3(k) Impact on equity).
|
|
(4)
|
Represents the amount of cash consideration paid to existing Corcentric stockholders at the Closing of the Business Combination
(see Note 3(k) Impact on equity).
|
|
(5)
|
Represents the payment of deferred underwriting fees incurred as part of North Mountain’s IPO committed to be paid upon the
consummation of a Business Combination (see Note 3(b)(1) Transaction costs).
|
|
(6)
|
Represents payment of accrued Corcentric transaction cost (see Note 3(b)(2) Transaction
costs).
|
|
(7)
|
Represents payment of other estimated transaction costs of North Mountain (see Note 3(b)(4) Transaction costs).
|
|
(8)
|
Represents payment of other estimated transaction costs of Corcentric (see Note 3(b)(5) Transaction
costs).
|
|
(9)
|
Represents payment of additional costs of Corcentric (see Note 3(b)(6) Transaction
costs).
|
157
|
(10)
|
Represents partial repayment of Corcentric’s revolving line of credit (see Note 3(e) Partial
repayment of revolving line of credit).
|
3(b) Transaction costs.
|
(1)
|
Payment of deferred underwriting fee payable incurred by North Mountain in the amount of $4,629 (see Note 3(a)(5) Cash and cash equivalents). The unaudited pro forma condensed combined balance sheet reflects payment of these costs as a reduction of cash and cash equivalents, with a corresponding decrease
in deferred underwriting fee payable.
|
|
(2)
|
Payment of accrued transaction costs specific to Corcentric related to the Business Combination in the amount of $3,226. The
unaudited pro forma condensed combined balance sheet reflects these costs as a reduction of cash and cash equivalents, with a corresponding decrease in accrued expenses and other current liabilities (see Note 3(a)(6) Cash and cash equivalents).
|
|
(3)
|
Recognition of Corcentric’s capitalized transaction costs related to the Business Combination in the amount of $3,499 as a
reduction to equity proceeds. The unaudited pro forma condensed combined balance sheet reflects these costs as a decrease in other assets, with a corresponding decrease in additional paid-in capital (see Note 3(k) Impact on equity).
|
|
(4)
|
Payment of other estimated transaction costs of North Mountain that are incremental and directly attributable to the Business
Combination in the amount of $10,371 (see Note 3(a)(7) Cash and cash equivalents). The unaudited pro forma condensed combined balance sheet reflects these costs as a
reduction of cash and cash equivalents, with a corresponding decrease in additional paid-in capital (see Note 3(k) Impact on equity). Costs considered to be directly attributable
to the Business Combination include certain legal, banking, advisory, accounting and other fees.
|
|
(5)
|
Payment of other estimated transaction costs of Corcentric that are incremental and directly attributable to the Business
Combination in the amount of $16,576. The unaudited pro forma condensed combined balance sheet reflects these costs as a reduction of cash and cash equivalents, with a corresponding decrease in additional paid-in capital (see Note
3(a)(8) Cash and cash equivalents, Note 3(k) Impact on equity). Costs considered to be directly attributable to the
Business Combination include certain legal, banking, advisory, accounting and other fees.
|
|
(6)
|
Payment of additional costs of Corcentric in the amount of $198. The unaudited pro forma condensed combined balance sheet
reflects these costs as a reduction of cash and cash equivalents, with a corresponding increase in accumulated deficit (see Note 3(a)(9) Cash and cash equivalents, Note 3(k) Impact on equity). Additional costs include certain consulting fees which are determined to be not directly attributable and incremental to the Business Combination.
|
3(c) Trust Account.
Represents release of the restricted investments and marketable securities held in the Trust Account upon consummation of the Business Combination to fund the Closing of the Business Combination (see Note 3(a)(1) Cash and cash equivalents).
3(d) Withholding tax
liability. Represents employee withholding tax which is due upon net settlement of vested options into Class A Common Stock at the Closing of the Business Combination. This liability is expected to be paid after the Closing of
the Business Combination.
3(e) Partial repayment of
revolving line of credit. Represents funds from the Business Combination used to partially repay Corcentric’s revolving line of credit (see Note 3(a)(10) Cash and cash equivalents).
3 (f) Tax effect of pro
forma adjustments. Following the Business Combination, New Corcentric will be subject to U.S. federal income taxes, in addition to state and local taxes. As a result, the unaudited pro forma condensed combined balance sheet
reflects an adjustment to deferred taxes assuming the federal rates currently in effect and the current statutory rates apportioned to each state and local jurisdiction. Under ASC 740, a tax position must be more likely than not to be sustained
upon examination by taxing authorities in order to recognize the benefit of the tax position on the financial statements. Recognized tax benefits are measured as the largest amount of benefit greater than fifty percent likely of being realized.
Utilization of the NOLs and general business tax credit carryforwards may be subject to a substantial limitation under Sections 382 and 383 of the
158
Code if changes in ownership of the company have occurred previously or occur in the
future. The unaudited pro forma condensed combined balance sheet reflects this adjustment as a increase in deferred income taxes with a corresponding increase in accumulated deficit (see Note 3(k) Impact
on equity).
3(g) Private warrant
liabilities. Represents surrender of North Mountain’s Private Placement Warrants at the Closing of the Business Combination (see Note 1 Description of the Business Combination).
The unaudited pro forma condensed combined balance sheet reflects the elimination of the related liability with a corresponding increase in additional paid-in capital (see Note 3(k) Impact on equity).
3(h) Public warrant
liabilities. Reflects recognition of the Public Warrants liability attributable to PIPE Investors (as described in more detail in Note 1 Description of the Business Combination)
with a corresponding decrease in additional paid-in capital (see Note 3(k) Impact on equity).
3(i) Sponsor Vesting
Shares liability. Represents recognition of Sponsor Vesting Shares liability (as described in more detail in Note 1 Description of the Business Combination) with a
corresponding decrease in additional paid-in capital (see Note 3(k) Impact on equity).
3(j) Earnout Shares
liability. Represents recognition of Earnout Shares liability (as described in more detail in Note 1 Description of the Business Combination) with a corresponding decrease
in additional paid-in capital (see Note 3(k) Impact on equity).
159
3(k) Impact on equity.
The following table represents the impact of the Business Combination on the number of shares of New Corcentric Common Stock and represents the total equity section assuming no redemption by Public Stockholders:
|
|
| |
|
| |
North Mountain / New Corcentric common stock
|
| |
Sponsor
Vesting
Shares
|
| |
Corcentric
Common
stock
|
| |
Corcentric
Treasury
stock
|
| |
Additional
paid-in
capital
|
| |
Cumulative
translation
adjustments
|
| |
Accumulated
deficit
|
| |
Total
stockholders'
(deficit)
equity
|
| |
North Mountain Temporary equity
|
| |
Corcentric Temporary equity
|
|||||||||||||||||||||||||||
|
|
| |
|
| |
Class A
|
| |
Class B
|
| |
Class A
common
stock
subject to
possible
redemption
|
| |
Redeemable
preferred
stock
|
| |
Redeemable
common
stock
|
||||||||||||||||||||||||||||||||||||||||||
|
|
| |
Note
|
| |
Shares
|
| |
Amount
|
| |
Shares
|
| |
Amount
|
| |
Shares
|
| |
Shares
|
| |
Amount
|
| |
Shares
|
| |
Amount
|
| |
Shares
|
| |
Amount
|
| |
Shares
|
| |
Amount
|
| |
Shares
|
| |
Amount
|
||||||||||||
|
North Mountain equity as of December 31, 2021 - pre Business
Combination
|
| |
|
| |
—
|
| |
$—
|
| |
3,306,250
|
| |
$—
|
| |
—
|
| |
—
|
| |
$—
|
| |
—
|
| |
$—
|
| |
$—
|
| |
$—
|
| |
$(13,060)
|
| |
$(13,060)
|
| |
13,225,000
|
| |
$132,250
|
| |
—
|
| |
$—
|
| |
—
|
| |
$—
|
|
Corcentric equity as of December 31, 2021 - pre Business
Combination
|
| |
|
| |
—
|
| |
—
|
| |
—
|
| |
—
|
| |
—
|
| |
13,343,058
|
| |
12
|
| |
2,067,031
|
| |
(21,893)
|
| |
59,222
|
| |
175
|
| |
(38,709)
|
| |
(1,193)
|
| |
—
|
| |
—
|
| |
2,700,967
|
| |
109,531
|
| |
3,502,268
|
| |
5,419
|
|
|
| |
|
| |
|
| |
|
| |
|
| |
|
| |
|
| |
|
| |
|
| |
|
| |
|
| |
|
| |
|
| |
|
| |
|
| |
|
| |
|
| |
|
| |
|
| |
|
| |
|
|
Total equity as of December 31, 2021 - Pre Business
Combination
|
| |
|
| |
—
|
| |
—
|
| |
3,306,250
|
| |
—
|
| |
—
|
| |
13,343,058
|
| |
12
|
| |
2,067,031
|
| |
(21,893)
|
| |
59,222
|
| |
175
|
| |
(51,769)
|
| |
(14,253)
|
| |
13,225,000
|
| |
132,250
|
| |
2,700,967
|
| |
109,531
|
| |
3,502,268
|
| |
5,419
|
|
|
| |
|
| |
|
| |
|
| |
|
| |
|
| |
|
| |
|
| |
|
| |
|
| |
|
| |
|
| |
|
| |
|
| |
|
| |
|
| |
|
| |
|
| |
|
| |
|
| |
|
|
Transaction Accounting Adjustments:
|
| |
|
| |
|
| |
|
| |
|
| |
|
| |
|
| |
|
| |
|
| |
|
| |
|
| |
|
| |
|
| |
|
| |
|
| |
|
| |
|
| |
|
| |
|
| |
|
| |
|
|
Reclassification of North Mountain's Common stock shares
subject to possible redemption
|
| |
|
| |
13,225,000
|
| |
1
|
| |
—
|
| |
—
|
| |
—
|
| |
—
|
| |
—
|
| |
—
|
| |
—
|
| |
132,249
|
| |
—
|
| |
—
|
| |
132,250
|
| |
(13,225,000)
|
| |
(132,250)
|
| |
—
|
| |
—
|
| |
—
|
| |
—
|
|
Reclassification of Sponsor-held Class B stock
|
| |
|
| |
3,306,250
|
| |
—
|
| |
(3,306,250)
|
| |
—
|
| |
—
|
| |
—
|
| |
—
|
| |
—
|
| |
—
|
| |
—
|
| |
—
|
| |
—
|
| |
—
|
| |
—
|
| |
—
|
| |
—
|
| |
—
|
| |
—
|
| |
—
|
|
PIPE Investors
|
| |
3(a)(2)
|
| |
5,000,000
|
| |
1
|
| |
—
|
| |
—
|
| |
—
|
| |
—
|
| |
—
|
| |
—
|
| |
—
|
| |
49,999
|
| |
—
|
| |
—
|
| |
50,000
|
| |
—
|
| |
—
|
| |
—
|
| |
—
|
| |
—
|
| |
—
|
|
Shares issued to the Sponsor as consideration for
forfeiture of warrants
|
| |
|
| |
1,400,000
|
| |
—
|
| |
—
|
| |
—
|
| |
—
|
| |
—
|
| |
—
|
| |
—
|
| |
—
|
| |
—
|
| |
—
|
| |
—
|
| |
—
|
| |
—
|
| |
—
|
| |
—
|
| |
—
|
| |
—
|
| |
—
|
|
Sponsor Vesting Shares
|
| |
|
| |
(2,103,124)
|
| |
—
|
| |
—
|
| |
—
|
| |
2,103,124
|
| |
—
|
| |
—
|
| |
—
|
| |
—
|
| |
—
|
| |
—
|
| |
—
|
| |
—
|
| |
—
|
| |
—
|
| |
—
|
| |
—
|
| |
—
|
| |
—
|
|
Shares issued to Corcentric stockholders as consideration
|
| |
|
| |
89,307,448
|
| |
9
|
| |
—
|
| |
—
|
| |
—
|
| |
—
|
| |
—
|
| |
—
|
| |
—
|
| |
(9)
|
| |
—
|
| |
—
|
| |
—
|
| |
—
|
| |
—
|
| |
—
|
| |
—
|
| |
—
|
| |
—
|
|
Cash to existing Corcentric stockholders at Business
Combination
|
| |
3(a)(4)
|
| |
—
|
| |
—
|
| |
—
|
| |
—
|
| |
—
|
| |
—
|
| |
—
|
| |
—
|
| |
—
|
| |
(120,000)
|
| |
—
|
| |
—
|
| |
(120,000)
|
| |
—
|
| |
—
|
| |
—
|
| |
—
|
| |
—
|
| |
—
|
|
Corcentric's capitalized expenses related to the Business
Combination
|
| |
3(b)(3)
|
| |
—
|
| |
—
|
| |
—
|
| |
—
|
| |
—
|
| |
—
|
| |
—
|
| |
—
|
| |
—
|
| |
(3,499)
|
| |
—
|
| |
—
|
| |
(3,499)
|
| |
—
|
| |
—
|
| |
—
|
| |
—
|
| |
—
|
| |
—
|
|
Other estimated transaction costs of North Mountain
|
| |
3(b)(4)
|
| |
—
|
| |
—
|
| |
—
|
| |
—
|
| |
—
|
| |
—
|
| |
—
|
| |
—
|
| |
—
|
| |
(10,371)
|
| |
—
|
| |
—
|
| |
(10,371)
|
| |
—
|
| |
—
|
| |
—
|
| |
—
|
| |
—
|
| |
—
|
|
Other estimated transaction costs of Corcentric
|
| |
3(b)(5)
|
| |
—
|
| |
—
|
| |
—
|
| |
—
|
| |
—
|
| |
—
|
| |
—
|
| |
—
|
| |
—
|
| |
(16,576)
|
| |
—
|
| |
—
|
| |
(16,576)
|
| |
—
|
| |
—
|
| |
—
|
| |
—
|
| |
—
|
| |
—
|
|
Additional costs of Corcentric
|
| |
3(b)(6)
|
| |
—
|
| |
—
|
| |
—
|
| |
—
|
| |
—
|
| |
—
|
| |
—
|
| |
—
|
| |
—
|
| |
—
|
| |
—
|
| |
(198)
|
| |
(198)
|
| |
—
|
| |
—
|
| |
—
|
| |
—
|
| |
—
|
| |
—
|
|
Sponsor Vesting Shares liability
|
| |
3(i)
|
| |
—
|
| |
—
|
| |
—
|
| |
—
|
| |
—
|
| |
—
|
| |
—
|
| |
—
|
| |
—
|
| |
(16,898)
|
| |
—
|
| |
—
|
| |
(16,898)
|
| |
—
|
| |
—
|
| |
—
|
| |
—
|
| |
—
|
| |
—
|
|
Earnout Shares liability
|
| |
3(j)
|
| |
—
|
| |
—
|
| |
—
|
| |
—
|
| |
—
|
| |
—
|
| |
—
|
| |
—
|
| |
—
|
| |
(35,783)
|
| |
—
|
| |
—
|
| |
(35,783)
|
| |
—
|
| |
—
|
| |
—
|
| |
—
|
| |
—
|
| |
—
|
|
Elimination of historical Corcentric redeemable preferred
stock
|
| |
|
| |
—
|
| |
—
|
| |
—
|
| |
—
|
| |
—
|
| |
—
|
| |
—
|
| |
—
|
| |
—
|
| |
109,531
|
| |
—
|
| |
—
|
| |
109,531
|
| |
—
|
| |
—
|
| |
(2,700,967)
|
| |
(109,531)
|
| |
—
|
| |
—
|
|
Elimination of historical Corcentric redeemable common
stock
|
| |
|
| |
—
|
| |
—
|
| |
—
|
| |
—
|
| |
—
|
| |
—
|
| |
—
|
| |
—
|
| |
—
|
| |
5,419
|
| |
—
|
| |
—
|
| |
5,419
|
| |
—
|
| |
—
|
| |
—
|
| |
—
|
| |
(3,502,268)
|
| |
(5,419)
|
|
Elimination of Private Placement Warrants of the Sponsor
|
| |
3(g)
|
| |
—
|
| |
—
|
| |
—
|
| |
—
|
| |
—
|
| |
—
|
| |
—
|
| |
—
|
| |
—
|
| |
3,275
|
| |
—
|
| |
—
|
| |
3,275
|
| |
—
|
| |
—
|
| |
—
|
| |
—
|
| |
—
|
| |
—
|
|
Recognition of Public Warrants liability attributable to
PIPE Investors
|
| |
3(h)
|
| |
—
|
| |
—
|
| |
—
|
| |
—
|
| |
—
|
| |
—
|
| |
—
|
| |
—
|
| |
—
|
| |
(1,000)
|
| |
—
|
| |
—
|
| |
(1,000)
|
| |
—
|
| |
—
|
| |
—
|
| |
—
|
| |
—
|
| |
—
|
|
Elimination of historical Corcentric common stock
|
| |
|
| |
—
|
| |
—
|
| |
—
|
| |
—
|
| |
—
|
| |
(13,343,058)
|
| |
(12)
|
| |
—
|
| |
—
|
| |
12
|
| |
—
|
| |
—
|
| |
—
|
| |
—
|
| |
—
|
| |
—
|
| |
—
|
| |
—
|
| |
—
|
|
Elimination of historical accumulated deficit of North
Mountain
|
| |
|
| |
—
|
| |
—
|
| |
—
|
| |
—
|
| |
—
|
| |
—
|
| |
—
|
| |
—
|
| |
—
|
| |
(13,060)
|
| |
—
|
| |
13,060
|
| |
—
|
| |
—
|
| |
—
|
| |
—
|
| |
—
|
| |
—
|
| |
—
|
|
Elimination of historical Corcentric treasury stock
|
| |
|
| |
—
|
| |
—
|
| |
—
|
| |
—
|
| |
—
|
| |
—
|
| |
—
|
| |
(2,067,031)
|
| |
21,893
|
| |
(21,893)
|
| |
—
|
| |
—
|
| |
—
|
| |
—
|
| |
—
|
| |
—
|
| |
—
|
| |
—
|
| |
—
|
|
Vesting of equity awards at the Closing of the Business
Combination
|
| |
3(l)
|
| |
—
|
| |
—
|
| |
—
|
| |
—
|
| |
—
|
| |
—
|
| |
—
|
| |
—
|
| |
—
|
| |
669
|
| |
—
|
| |
(669)
|
| |
—
|
| |
—
|
| |
—
|
| |
—
|
| |
—
|
| |
—
|
| |
—
|
|
Compensation expense related to earnout for vested equity
awards holders
|
| |
3(m)
|
| |
—
|
| |
—
|
| |
—
|
| |
—
|
| |
—
|
| |
—
|
| |
—
|
| |
—
|
| |
—
|
| |
881
|
| |
—
|
| |
(881)
|
| |
—
|
| |
—
|
| |
—
|
| |
—
|
| |
—
|
| |
—
|
| |
—
|
|
Tax liability related to net settlement of vested options
|
| |
3(d)
|
| |
—
|
| |
—
|
| |
—
|
| |
—
|
| |
—
|
| |
—
|
| |
—
|
| |
—
|
| |
—
|
| |
(15,939)
|
| |
—
|
| |
—
|
| |
(15,939)
|
| |
—
|
| |
—
|
| |
—
|
| |
—
|
| |
—
|
| |
—
|
|
Tax effect of pro forma adjustments
|
| |
3(f)
|
| |
—
|
| |
—
|
| |
—
|
| |
—
|
| |
—
|
| |
—
|
| |
—
|
| |
—
|
| |
—
|
| |
—
|
| |
—
|
| |
(417)
|
| |
(417)
|
| |
—
|
| |
—
|
| |
—
|
| |
—
|
| |
—
|
| |
—
|
|
Total Transaction Accounting Adjustments
|
| |
|
| |
110,135,574
|
| |
11
|
| |
(3,306,250)
|
| |
—
|
| |
2,103,124
|
| |
(13,343,058)
|
| |
(12)
|
| |
(2,067,031)
|
| |
21,893
|
| |
47,007
|
| |
—
|
| |
10,895
|
| |
79,794
|
| |
(13,225,000)
|
| |
(132,250)
|
| |
(2,700,967)
|
| |
(109,531)
|
| |
(3,502,268)
|
| |
(5,419)
|
|
|
| |
|
| |
|
| |
|
| |
|
| |
|
| |
|
| |
|
| |
|
| |
|
| |
|
| |
|
| |
|
| |
|
| |
|
| |
|
| |
|
| |
|
| |
|
| |
|
| |
|
|
Post-Business Combination equity balance
|
| |
|
| |
110,135,574
|
| |
$11
|
| |
—
|
| |
$—
|
| |
2,103,124
|
| |
—
|
| |
$—
|
| |
—
|
| |
$—
|
| |
$106,229
|
| |
$175
|
| |
$(40,874)
|
| |
$65,541
|
| |
—
|
| |
$—
|
| |
—
|
| |
$—
|
| |
—
|
| |
$—
|
160
In case of contractual maximum redemption by holders of North
Mountain Class A Common Stock, the following table represents the impact of the Business Combination on the number of shares of New Corcentric Common Stock and represents the total equity section:
|
|
| |
|
| |
North Mountain / New Corcentric common stock
|
| |
Sponsor
Vesting
Shares
|
| |
Corcentric
Common
stock
|
| |
Corcentric
Treasury
stock
|
| |
Additional
paid-in
capital
|
| |
Cumulative
translation
adjustments
|
| |
Accumulated
deficit
|
| |
Total stockholders'
(deficit) equity
|
| |
North Mountain Temporary equity
|
| |
Corcentric Temporary equity
|
|||||||||||||||||||||||||||
|
|
| |
|
| |
Class A
|
| |
Class B
|
| |
Class A
common
stock
subject to
possible
redemption
|
| |
Redeemable
preferred
stock
|
| |
Redeemable
common
stock
|
||||||||||||||||||||||||||||||||||||||||||
|
|
| |
Note
|
| |
Shares
|
| |
Amount
|
| |
Shares
|
| |
Amount
|
| |
Shares
|
| |
Shares
|
| |
Amount
|
| |
Shares
|
| |
Amount
|
| |
Shares
|
| |
Amount
|
| |
Shares
|
| |
Amount
|
| |
Shares
|
| |
Amount
|
||||||||||||
|
North Mountain equity as of December 31, 2021 - pre Business
Combination
|
| |
|
| |
—
|
| |
$—
|
| |
3,306,250
|
| |
$—
|
| |
—
|
| |
—
|
| |
$—
|
| |
—
|
| |
$—
|
| |
$—
|
| |
$—
|
| |
$(13,060)
|
| |
$(13,060)
|
| |
13,225,000
|
| |
$132,250
|
| |
—
|
| |
$—
|
| |
—
|
| |
$—
|
|
Corcentric equity as of December 31, 2021 - pre Business
Combination
|
| |
|
| |
—
|
| |
—
|
| |
—
|
| |
—
|
| |
—
|
| |
13,343,058
|
| |
12
|
| |
2,067,031
|
| |
(21,893)
|
| |
59,222
|
| |
175
|
| |
(38,709)
|
| |
(1,193)
|
| |
—
|
| |
—
|
| |
2,700,967
|
| |
109,531
|
| |
3,502,268
|
| |
5,419
|
|
Total equity as of December 31, 2021 - Pre Business
Combination
|
| |
|
| |
—
|
| |
—
|
| |
3,306,250
|
| |
—
|
| |
—
|
| |
13,343,058
|
| |
12
|
| |
2,067,031
|
| |
(21,893)
|
| |
59,222
|
| |
175
|
| |
(51,769)
|
| |
(14,253)
|
| |
13,225,000
|
| |
132,250
|
| |
2,700,967
|
| |
109,531
|
| |
3,502,268
|
| |
5,419
|
|
|
| |
|
| |
|
| |
|
| |
|
| |
|
| |
|
| |
|
| |
|
| |
|
| |
|
| |
|
| |
|
| |
|
| |
|
| |
|
| |
|
| |
|
| |
|
| |
|
| |
|
|
Transaction Accounting Adjustments:
|
| |
|
| |
|
| |
|
| |
|
| |
|
| |
|
| |
|
| |
|
| |
|
| |
|
| |
|
| |
|
| |
|
| |
|
| |
|
| |
|
| |
|
| |
|
| |
|
| |
|
|
Reclassification of North Mountain's Common stock shares
subject to possible redemption
|
| |
|
| |
13,225,000
|
| |
1
|
| |
—
|
| |
—
|
| |
—
|
| |
—
|
| |
—
|
| |
—
|
| |
—
|
| |
132,249
|
| |
—
|
| |
—
|
| |
132,250
|
| |
(13,225,000)
|
| |
(132,250)
|
| |
—
|
| |
—
|
| |
—
|
| |
—
|
|
Reclassification of Sponsor-held Class B stock
|
| |
|
| |
3,306,250
|
| |
—
|
| |
(3,306,250)
|
| |
—
|
| |
—
|
| |
—
|
| |
—
|
| |
—
|
| |
—
|
| |
—
|
| |
—
|
| |
—
|
| |
—
|
| |
—
|
| |
—
|
| |
—
|
| |
—
|
| |
—
|
| |
—
|
|
Less: Redemption of redeemable stock
|
| |
3(a)(3)
|
| |
(1,725,000)
|
| |
—
|
| |
—
|
| |
—
|
| |
—
|
| |
—
|
| |
—
|
| |
—
|
| |
—
|
| |
(17,252)
|
| |
—
|
| |
—
|
| |
(17,252)
|
| |
—
|
| |
—
|
| |
—
|
| |
—
|
| |
—
|
| |
—
|
|
PIPE Investors
|
| |
3(a)(2)
|
| |
5,000,000
|
| |
1
|
| |
—
|
| |
—
|
| |
—
|
| |
—
|
| |
—
|
| |
—
|
| |
—
|
| |
49,999
|
| |
—
|
| |
—
|
| |
50,000
|
| |
—
|
| |
—
|
| |
—
|
| |
—
|
| |
—
|
| |
—
|
|
Shares issued to the Sponsor as consideration for
forfeiture of warrants
|
| |
|
| |
1,400,000
|
| |
—
|
| |
—
|
| |
—
|
| |
—
|
| |
—
|
| |
—
|
| |
—
|
| |
—
|
| |
—
|
| |
—
|
| |
—
|
| |
—
|
| |
—
|
| |
—
|
| |
—
|
| |
—
|
| |
—
|
| |
—
|
|
Sponsor Vesting Shares
|
| |
|
| |
(2,103,124)
|
| |
—
|
| |
—
|
| |
—
|
| |
2,103,124
|
| |
—
|
| |
—
|
| |
—
|
| |
—
|
| |
—
|
| |
—
|
| |
—
|
| |
—
|
| |
—
|
| |
—
|
| |
—
|
| |
—
|
| |
—
|
| |
—
|
|
Shares issued to Corcentric stockholders as consideration
|
| |
|
| |
89,307,448
|
| |
9
|
| |
—
|
| |
—
|
| |
—
|
| |
—
|
| |
—
|
| |
—
|
| |
—
|
| |
(9)
|
| |
—
|
| |
—
|
| |
—
|
| |
—
|
| |
—
|
| |
—
|
| |
—
|
| |
—
|
| |
—
|
|
Cash to existing Corcentric stockholders at Business
Combination
|
| |
3(a)(4)
|
| |
—
|
| |
—
|
| |
—
|
| |
—
|
| |
—
|
| |
—
|
| |
—
|
| |
—
|
| |
—
|
| |
(120,000)
|
| |
—
|
| |
—
|
| |
(120,000)
|
| |
—
|
| |
—
|
| |
—
|
| |
—
|
| |
—
|
| |
—
|
|
Corcentric's capitalized expenses related to the Business
Combination
|
| |
3(b)(3)
|
| |
—
|
| |
—
|
| |
—
|
| |
—
|
| |
—
|
| |
—
|
| |
—
|
| |
—
|
| |
—
|
| |
(3,499)
|
| |
—
|
| |
—
|
| |
(3,499)
|
| |
—
|
| |
—
|
| |
—
|
| |
—
|
| |
—
|
| |
—
|
|
Other estimated transaction costs of North Mountain
|
| |
3(b)(4)
|
| |
—
|
| |
—
|
| |
—
|
| |
—
|
| |
—
|
| |
—
|
| |
—
|
| |
—
|
| |
—
|
| |
(10,371)
|
| |
—
|
| |
—
|
| |
(10,371)
|
| |
—
|
| |
—
|
| |
—
|
| |
—
|
| |
—
|
| |
—
|
|
Other estimated transaction costs of Corcentric
|
| |
3(b)(5)
|
| |
—
|
| |
—
|
| |
—
|
| |
—
|
| |
—
|
| |
—
|
| |
—
|
| |
—
|
| |
—
|
| |
(16,576)
|
| |
—
|
| |
—
|
| |
(16,576)
|
| |
—
|
| |
—
|
| |
—
|
| |
—
|
| |
—
|
| |
—
|
|
Additional costs of Corcentric
|
| |
3(b)(6)
|
| |
—
|
| |
—
|
| |
—
|
| |
—
|
| |
—
|
| |
—
|
| |
—
|
| |
—
|
| |
—
|
| |
—
|
| |
—
|
| |
(198)
|
| |
(198)
|
| |
—
|
| |
—
|
| |
—
|
| |
—
|
| |
—
|
| |
—
|
|
Sponsor Vesting Shares liability
|
| |
3(i)
|
| |
—
|
| |
—
|
| |
—
|
| |
—
|
| |
—
|
| |
—
|
| |
—
|
| |
—
|
| |
—
|
| |
(16,898)
|
| |
—
|
| |
—
|
| |
(16,898)
|
| |
—
|
| |
—
|
| |
—
|
| |
—
|
| |
—
|
| |
—
|
|
Earnout Shares liability
|
| |
3(j)
|
| |
—
|
| |
—
|
| |
—
|
| |
—
|
| |
—
|
| |
—
|
| |
—
|
| |
—
|
| |
—
|
| |
(35,783)
|
| |
—
|
| |
—
|
| |
(35,783)
|
| |
—
|
| |
—
|
| |
—
|
| |
—
|
| |
—
|
| |
—
|
|
Elimination of historical Corcentric redeemable preferred
stock
|
| |
|
| |
—
|
| |
—
|
| |
—
|
| |
—
|
| |
—
|
| |
—
|
| |
—
|
| |
—
|
| |
—
|
| |
109,531
|
| |
—
|
| |
—
|
| |
109,531
|
| |
—
|
| |
—
|
| |
(2,700,967)
|
| |
(109,531)
|
| |
—
|
| |
—
|
|
Elimination of historical Corcentric redeemable common
stock
|
| |
|
| |
—
|
| |
—
|
| |
—
|
| |
—
|
| |
—
|
| |
—
|
| |
—
|
| |
—
|
| |
—
|
| |
5,419
|
| |
—
|
| |
—
|
| |
5,419
|
| |
—
|
| |
—
|
| |
—
|
| |
—
|
| |
(3,502,268)
|
| |
(5,419)
|
|
Elimination of Private Placement Warrants of the Sponsor
|
| |
3(g)
|
| |
—
|
| |
—
|
| |
—
|
| |
—
|
| |
—
|
| |
—
|
| |
—
|
| |
—
|
| |
—
|
| |
3,275
|
| |
—
|
| |
—
|
| |
3,275
|
| |
—
|
| |
—
|
| |
—
|
| |
—
|
| |
—
|
| |
—
|
|
Recognition of Public Warrants liability attributable to
PIPE Investors
|
| |
3(h)
|
| |
—
|
| |
—
|
| |
—
|
| |
—
|
| |
—
|
| |
—
|
| |
—
|
| |
—
|
| |
—
|
| |
(1,000)
|
| |
—
|
| |
—
|
| |
(1,000)
|
| |
—
|
| |
—
|
| |
—
|
| |
—
|
| |
—
|
| |
—
|
|
Elimination of historical Corcentric common stock
|
| |
|
| |
—
|
| |
—
|
| |
—
|
| |
—
|
| |
—
|
| |
(13,343,058)
|
| |
(12)
|
| |
—
|
| |
—
|
| |
12
|
| |
—
|
| |
—
|
| |
—
|
| |
—
|
| |
—
|
| |
—
|
| |
—
|
| |
—
|
| |
—
|
|
Elimination of historical accumulated deficit of North
Mountain
|
| |
|
| |
—
|
| |
—
|
| |
—
|
| |
—
|
| |
—
|
| |
—
|
| |
—
|
| |
—
|
| |
—
|
| |
(13,060)
|
| |
—
|
| |
13,060
|
| |
—
|
| |
—
|
| |
—
|
| |
—
|
| |
—
|
| |
—
|
| |
—
|
|
Elimination of historical Corcentric treasury stock
|
| |
|
| |
—
|
| |
—
|
| |
—
|
| |
—
|
| |
—
|
| |
—
|
| |
—
|
| |
(2,067,031)
|
| |
21,893
|
| |
(21,893)
|
| |
—
|
| |
—
|
| |
—
|
| |
—
|
| |
—
|
| |
—
|
| |
—
|
| |
—
|
| |
—
|
|
Vesting of equity awards at the Closing of the Business
Combination
|
| |
3(l)
|
| |
—
|
| |
—
|
| |
—
|
| |
—
|
| |
—
|
| |
—
|
| |
—
|
| |
—
|
| |
—
|
| |
669
|
| |
—
|
| |
(669)
|
| |
—
|
| |
—
|
| |
—
|
| |
—
|
| |
—
|
| |
—
|
| |
—
|
|
Compensation expense related to earnout for vested equity
awards holders
|
| |
3(m)
|
| |
—
|
| |
—
|
| |
—
|
| |
—
|
| |
—
|
| |
—
|
| |
—
|
| |
—
|
| |
—
|
| |
881
|
| |
—
|
| |
(881)
|
| |
—
|
| |
—
|
| |
—
|
| |
—
|
| |
—
|
| |
—
|
| |
—
|
|
Tax liability related to net settlement of vested options
|
| |
3(d)
|
| |
—
|
| |
—
|
| |
—
|
| |
—
|
| |
—
|
| |
—
|
| |
—
|
| |
—
|
| |
—
|
| |
(15,939)
|
| |
—
|
| |
—
|
| |
(15,939)
|
| |
—
|
| |
—
|
| |
—
|
| |
—
|
| |
—
|
| |
—
|
|
Tax effect of pro forma adjustments
|
| |
3(f)
|
| |
—
|
| |
—
|
| |
—
|
| |
—
|
| |
—
|
| |
—
|
| |
—
|
| |
—
|
| |
—
|
| |
—
|
| |
—
|
| |
(417)
|
| |
(417)
|
| |
—
|
| |
—
|
| |
—
|
| |
—
|
| |
—
|
| |
—
|
|
Total Transaction Accounting Adjustments
|
| |
|
| |
108,410,574
|
| |
11
|
| |
(3,306,250)
|
| |
—
|
| |
2,103,124
|
| |
(13,343,058)
|
| |
(12)
|
| |
(2,067,031)
|
| |
21,893
|
| |
29,755
|
| |
—
|
| |
10,895
|
| |
62,542
|
| |
(13,225,000)
|
| |
(132,250)
|
| |
(2,700,967)
|
| |
(109,531)
|
| |
(3,502,268)
|
| |
(5,419)
|
|
Post-Business Combination equity balance
|
| |
|
| |
108,410,574
|
| |
$11
|
| |
—
|
| |
$—
|
| |
2,103,124
|
| |
—
|
| |
$—
|
| |
—
|
| |
$—
|
| |
$88,977
|
| |
$175
|
| |
$(40,874)
|
| |
$48,289
|
| |
—
|
| |
$—
|
| |
—
|
| |
$—
|
| |
—
|
| |
$—
|
161
Adjustments to the Unaudited Pro Forma
Condensed Combined Statement of Operations for the year ended December 31, 2021
The transaction accounting adjustments included in the unaudited pro
forma condensed combined statement of operations for the year ended December 31, 2021 are as follows:
3(l) Nonrecurring equity
awards compensation expense. Reflects compensation expense in the amount of $669 related to the accelerated vesting of certain equity awards concurrently with the Closing of the Business Combination. This compensation expense is
not expected to have a continuing impact on the combined results (see Note 3(k) Impact on equity).
3(m) Nonrecurring
compensation expense related to Earnout Shares allocated to holders of vested equity awards. Reflects compensation expense in the amount of $881 related to Earnout Shares allocated to holders of vested equity awards (see
Note 1 Description of the Business Combination for further details). This compensation expense is not expected to have a continuing impact on the combined results (see Note 3(k) Impact on equity).
3(n) Compensation expense
related to Earnout Shares allocated to holders of unvested equity awards. Reflects compensation expense in the amount of $3,109 related to Earnout Shares allocated to holders of unvested equity awards (see Note 1 Description of the Business Combination for further details).
3(o) Additional
transaction costs. Represents recognition of the additional transaction costs of Corcentric in the amount of $198 (see Note 3(b)(6) Transaction costs). This expense is not
expected to have a continuing impact on the combined results.
3(p) Interest expense.
Represents elimination of the interest expense incurred during 2021 attributable to a partially repaid revolving line of credit in connection with the Business Combination (see Note 3(e) Partial repayment
of revolving line of credit).
3(q) Exclusion of interest
income. Represents elimination of interest earned on marketable securities held in Trust Account in the amount of $9.
3(r) Change in fair value
of private warrant liabilities. Represents the elimination of the change in fair value of the private warrant liabilities in the amount of $2,398 as a result of the surrender of the North Mountain Private Placement Warrants upon
consummation of the Business Combination (see Note 3(g) Private warrant liabilities).
3(s) Pro forma tax effect.
Reflects the impact of U.S. federal, state and local income taxes on the income of New Corcentric. Pro forma tax effect is different than an amount that would result from applying the applicable statutory tax rates to such income or loss in
each period, primarily due to limitations on the recognition of tax benefits as a result of full valuation allowance maintained in the United States.
3(t) Net loss per share.
Represents pro forma net loss per share based on pro forma net loss and 110,135,574 and 108,410,574 total shares outstanding upon consummation of the Business Combination for no redemption and contractual maximum redemption scenario,
respectively (see Note 3(k) Impact on equity). For each period presented, there is no difference between basic and diluted pro forma net loss per share as the inclusion of all potential
shares of Common Stock of New Corcentric outstanding would have been anti-dilutive.
162
General
We are a blank check company formed for the purpose of effecting a
merger, capital stock exchange, asset acquisition, stock purchase, reorganization or other similar business combination with one or more businesses, which we refer to throughout this proxy statement/prospectus as our initial business combination.
We have reviewed a number of opportunities to enter into a business combination. We have neither engaged in any operations nor generated any revenue to date. Based on our business activities, we are a “shell company” as defined under the Exchange
Act because we have no operations and nominal assets consisting almost entirely of cash.
Our executive offices are located at 767 Fifth Avenue, 9th
Floor, New York, NY 10153 and our telephone number is (646) 446-2700. Our corporate website address is www.northmountainmerger.com. Our 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. You should not rely on any such information in deciding how to vote on with respect to the proposals.
Company History
In July 2020, our Sponsor purchased an aggregate of 3,306,250 shares of
North Mountain Class B Common Stock for an aggregate purchase price of $25,000, or approximately $0.008 per share. North Mountain Class B Common Stock will automatically convert into shares of North Mountain Class A Common Stock, on a one-for-one
basis, upon the completion of a business combination. The foregoing issuance was made pursuant to the exemption from registration contained in Section 4(a)(2) of the Securities Act. The number of North Mountain Class B Common Stock issued was
determined based on the expectation that the North Mountain Class B Common Stock would represent 20% of the outstanding shares of North Mountain Common Stock upon completion of the IPO.
On September 22, 2020, we consummated the IPO of 13,225,000 North
Mountain Units, which includes a full exercise by the underwriter of the over-allotment option to purchase an additional 1,725,000 North Mountain Units. The North Mountain Units sold in the IPO were sold at an offering price of $10.00 per North
Mountain Unit, generating total gross proceeds of $132,250,000. Each North Mountain Unit consists of one share of North Mountain Class A Common Stock and one-half of one Public Warrant. Each whole Public Warrant entitles the holder thereof to
purchase one share of North Mountain Class A Common Stock at a price of $11.50 per share, subject to certain adjustments.
Simultaneous with the consummation of the IPO, we consummated the
Private Placement of an aggregate of 4,145,000 Private Placement Warrants, each exercisable to purchase one share of the North Mountain Class A Common Stock for $11.50 per share, to the Sponsor at a price of $1.00 per Private Placement Warrant,
generating total proceeds of $4,145,000. Of the gross proceeds received from the IPO and the Private Placement Warrants, $132,250,000 was placed in the Trust Account. Each Private Placement Warrant entitles the holder thereof to purchase one
share of North Mountain Class A Common Stock at a price of $11.50 per share, subject to certain adjustments.
On November 6, 2020, we announced that, commencing November 9, 2020,
holders of the 13,225,000 North Mountain Units sold in the IPO may elect to separately trade the shares of North Mountain Class A Common Stock and the Public Warrants included in the North Mountain Units. Those North Mountain Units not separated
continued to trade on Nasdaq under the symbol “NMMCU” and the shares of North Mountain Class A Common Stock and the Public Warrants that were separated trade under the symbols “NMMC” and “NMMCW,” respectively.
We intend to effectuate the Business Combination using cash from the
proceeds of the IPO, the sale of the Private Placement Warrants and funds from the PIPE Financing and through the issuance of shares of North Mountain Class A Common Stock.
Permitted Purchases of Our Securities
If we seek stockholder approval of the Business Combination and we
do not conduct redemptions in connection with the Business Combination pursuant to the tender offer rules, our Sponsor, directors, officers, advisors or any of their respective affiliates may purchase Public Shares or Public Warrants or a
combination
163
thereof in privately negotiated transactions or in the open market either prior to
or following the completion of the Business Combination, provided that any such purchases would only be made in compliance with applicable Exchange Act rules, regulations and SEC interpretations as discussed below. There is no limit on the
number of shares or warrants such persons may purchase. 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. In the event our
Sponsor, directors, officers, advisors or any of their respective affiliates determine to make any such purchases at the time of a stockholder vote relating to the Business Combination, such purchases could have the effect of influencing the
vote necessary to approve such transaction. None of the funds in the Trust Account will be used to purchase Public Shares in such transactions. If they engage in such transactions, they will be restricted from making any such purchases when
they are in possession of any material non-public information not disclosed to the seller or if such purchases are prohibited by Regulation M under the Exchange Act. 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. We have adopted an insider trading policy which requires insiders to (1) refrain
from purchasing securities during certain blackout periods and when they are in possession of any material non-public information and (2) to clear all trades with our legal counsel prior to execution. We cannot currently determine whether our
insiders will make such purchases pursuant to a written plan to purchase North Mountain’s securities pursuant to Rule 10b5-1 of the Exchange Act (“Rule 10b5-1 plan”), as it will be dependent upon several factors, including but not limited to,
the timing and size of such purchases. Depending on such circumstances, our insiders may either make such purchases pursuant to a Rule 10b5-1 plan or determine that such a plan is not necessary.
In the event that our Sponsor, directors, officers, advisors or any
of their respective affiliates purchase Public Shares in privately negotiated transactions from Public Stockholders who have already elected to exercise their redemption rights or submitted a proxy to vote against the Business Combination, such
selling stockholders would be required to revoke their prior elections to redeem their shares and any proxy to vote against our initial business combination. We do not currently anticipate that such purchases, if any, would constitute a tender
offer subject to the tender offer rules under the Exchange Act or a going-private transaction subject to the going-private rules under the Exchange Act; however, if the purchasers determine at the time of any such purchases that the purchases
are subject to such rules, the purchasers will comply with such rules.
The purpose of these purchases would be to increase the amount of
cash available to North Mountain for use in the Business Combination. In addition, if such purchases are made, the public “float” of North Mountain Class A Common Stock may be reduced and the number of beneficial holders of our securities may
be reduced, which may make it difficult to maintain or obtain the quotation, listing or trading of our securities on a national securities exchange. Any shares purchased by the Sponsor or its affiliates would not be voted in favor of approving
the Business Combination.
Our Sponsor, officers, directors, advisors and/or any of their
respective affiliates anticipate that they may identify the stockholders with whom our Sponsor, officers, directors, advisors or any of their respective affiliates may pursue privately negotiated purchases by either the stockholders contacting us
directly or by our receipt of redemption requests submitted by stockholders following our mailing of proxy materials in connection with our initial business combination. To the extent that our Sponsor, officers, directors, advisors or any of
their respective affiliates enter into a private purchase, they would identify and contact only potential selling stockholders who have expressed their election to redeem their shares for a pro rata share of the Trust Account or vote against the
Business Combination. Such persons would select the stockholders from whom to acquire shares based on the number of shares available, the negotiated price per share and such other factors as any such person may deem relevant at the time of
purchase. The price per share paid in any such transaction may be different than the amount per share a Public Stockholder would receive if it elected to redeem its shares in connection with the Business Combination. Our Sponsor, officers,
directors, advisors or any of their respective affiliates will purchase shares only if such purchases comply with Regulation M under the Exchange Act and the other federal securities laws.
Any purchases by our Sponsor, officers, directors and/or any of their
respective affiliates who are affiliated purchasers under Rule 10b-18 under the Exchange Act will only be made to the extent such purchases are made in compliance with Rule 10b-18, which is a safe harbor from liability for manipulation under
Section 9(a)(2) and Rule 10b-5 of the Exchange Act. Rule 10b-18 has certain technical requirements that must be complied with in
164
order for the safe harbor to be available to the purchaser. Our Sponsor, officers,
directors and/or any of their respective affiliates will be restricted from making purchases of North Mountain Class A Common Stock if such purchases would violate Section 9(a)(2) or Rule 10b-5 of the Exchange Act.
Redemption Rights for Public Stockholders Upon Completion of the
Business Combination
Pursuant to the Existing Charter, any holders of Public Shares may
demand that such shares be redeemed in exchange for a pro rata share of the aggregate amount on deposit in the Trust Account, including any amounts representing interest earned on the Trust Account, less Permitted Withdrawals, provided that such
stockholders follow the specific procedures for redemption set forth in this proxy statement/prospectus relating to the stockholder vote on the Business Combination. If demand is properly made and the Business Combination is consummated, these
shares, immediately prior to the Business Combination, will cease to be outstanding and will represent only the right to receive a pro rata share of the aggregate amount on deposit in the Trust Account which holds the proceeds of the IPO as of
two business days prior to the consummation of the Business Combination, net of amounts withdrawn to fund North Mountain’s regulatory compliance costs and any taxes payable, upon the consummation of the Business Combination. For illustrative
purposes, based on funds in the Trust Account of approximately $ million on , the estimated per share redemption price would have been approximately $ . Our initial stockholders, officers and directors have entered into a letter
agreement with us, pursuant to which they have agreed to waive their redemption rights with respect to any shares of North Mountain Common Stock and held by them in connection with the completion of the Business Combination (the “letter
agreement”).
Limitation on Redemption Upon Completion of the Business Combination
Notwithstanding the foregoing, our 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 15% of the shares sold in the IPO, without our prior consent, which we refer to as the “Excess Shares.” We believe this restriction will discourage stockholders from accumulating large blocks of
shares, and subsequent attempts by such holders to use their ability to exercise their redemption rights against the Business Combination as a means to force us or our Sponsor or its affiliates to purchase their shares at a significant premium to
the then-current market price or on other undesirable terms. Absent this provision, a Public Stockholder holding more than an aggregate of 15% of the shares sold in the IPO could threaten to exercise its redemption rights if such holder’s shares
are not purchased by us or our Sponsor or its affiliates at a premium to the then-current market price or on other undesirable terms. By limiting our stockholders’ ability to redeem no more than 15% of the shares sold in the IPO, we believe we
will limit the ability of a small group of stockholders to unreasonably attempt to block our ability to complete the Business Combination, particularly since a closing condition of the Business Combination is that we have a minimum net worth or a
certain amount of cash. However, we would not be restricting our stockholders’ ability to vote all of their shares (including Excess Shares) for or against the Business Combination.
Redemption of Public Shares and Liquidation if No Initial Business
Combination
Our Existing Charter provides that we will have until September 22,
2022, the date that is 24 months from the closing of the IPO, to complete our initial business combination (the period from the closing of the IPO until September 22, 2022, the “completion window”). If we are unable to complete our initial
business combination within such period, we will: (1) cease all operations except for the purpose of winding up; (2) as promptly as reasonably possible but not more than ten business days thereafter, redeem the Public Shares, at a per share
price, payable in cash, equal to the aggregate amount then on deposit in the Trust Account, including interest (net of Permitted Withdrawals and up to $100,000 of interest to pay dissolution expenses), divided by the number of then outstanding
Public Shares, which redemption will completely extinguish Public Stockholders’ rights as stockholders (including the right to receive further liquidating distributions, if any), subject to applicable law; and (3) as promptly as reasonably
possible following such redemption, subject to the approval of our remaining stockholders and our board of directors, dissolve and liquidate, subject in each case to our obligations under Delaware law to provide for claims of creditors and the
requirements of other applicable law. There will be no redemption rights or liquidating distributions with respect to the North Mountain Warrants, which will expire worthless if we fail to complete our initial business combination within the
completion window.
165
Our initial stockholders, officers and directors have entered into a
letter agreement with us, pursuant to which they have waived their rights to liquidating distributions from the Trust Account with respect to any shares of North Mountain Class B Common Stock held by them if we fail to complete our initial
business combination within the completion window. However, if our Sponsor or any of our officers and directors acquires Public Shares after the IPO, it will be entitled to liquidating distributions from the Trust Account with respect to such
Public Shares if we fail to complete our initial business combination within the completion window.
Our Sponsor, officers and directors have agreed, pursuant to a written
agreement with us, that they will not propose any amendment to our amended and restated certificate of incorporation to modify the substance or timing of our obligation to provide for the redemption of our Public Shares in connection with an
initial business combination or to redeem 100% of our Public Shares if we do not complete our initial business combination within the completion window, unless we provide our Public Stockholders with the opportunity to redeem their shares of
North Mountain Class A Common Stock upon approval of any such amendment at a per share price, payable in cash, equal to the aggregate amount then on deposit in the Trust Account, including interest (net of Permitted Withdrawals), divided by the
number of then outstanding Public Shares. However, we may not redeem our Public Shares in an amount that would cause our net tangible assets, after payment of the deferred underwriting commissions, to be less than $5,000,001 (so that we do not
then become subject to the SEC’s “penny stock” rules).
We expect that all costs and expenses associated with implementing our
plan of dissolution, as well as payments to any creditors, will be funded from amounts remaining out of the $1,500,000 of proceeds held outside the Trust Account, although we cannot assure you that there will be sufficient funds for such purpose.
However, if those funds are not sufficient to cover the costs and expenses associated with implementing our plan of dissolution, to the extent that there is any interest accrued in the Trust Account not required to pay taxes, we may request the
trustee to release to us an additional amount of up to $100,000 of such accrued interest to pay those costs and expenses.
If we were to expend all of the net proceeds of the IPO and the sale of
the Private Placement Warrants, other than the proceeds deposited in the Trust Account, and without taking into account interest, if any, earned on the Trust Account and any tax payments or expenses for the dissolution of the trust, the per share
redemption amount received by stockholders upon our dissolution would be $10.00. The proceeds deposited in the Trust Account could, however, become subject to the claims of our creditors which would have higher priority than the claims of our
Public Stockholders. We cannot assure you that the actual per share redemption amount received by stockholders will not be substantially less than $10.00. Under Section 281(b) of the DGCL, our plan of dissolution must provide for all claims
against us to be paid in full or make provision for payments to be made in full, as applicable, if there are sufficient assets. These claims must be paid or provided for before we make any distribution of our remaining assets to our stockholders.
While we intend to pay such amounts, if any, we cannot assure you that we will have funds sufficient to pay or provide for all creditors’ claims.
Although we will seek to have all vendors, service providers (other
than our independent registered public accounting firm), prospective target businesses or other entities with which we do business execute agreements with us waiving any right, title, interest or claim of any kind in or to any monies held in the
Trust Account for the benefit of our Public Stockholders, there is no guarantee that they will execute such agreements or even if they execute such agreements that they would 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 an 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. 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 we are 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. In order to protect the amounts held in the Trust Account, our Sponsor has
166
agreed that it will be liable to us if and to the extent any claims by a third party
(other than our independent registered public accounting firm) for services rendered or products sold to us, or a prospective target business, including Corcentric, with which we have discussed entering into a transaction agreement, reduce the
amount of funds in the Trust Account to below (1) $10.00 per Public Share or (2) such lesser amount per Public Share held in the Trust Account as of the date of the liquidation of the Trust Account due to reductions in the value of the trust
assets, in each case net of Permitted Withdrawals, except as to any claims by a third party who executed a waiver of any and all rights to seek access to the Trust Account and except as to any claims under our indemnity of the underwriter of the
IPO against certain liabilities, including liabilities under the Securities Act. Moreover, in the event that an executed waiver is deemed to be unenforceable against a third party, our Sponsor will not be responsible to the extent of any
liability for such third party claims. We have not independently verified whether our Sponsor has sufficient funds to satisfy its indemnity obligations and believe that our Sponsor’s only assets are securities of our company and, therefore, our
Sponsor may not be able to satisfy those obligations. We have not asked our Sponsor to reserve for such obligations. Therefore, we cannot assure you that our Sponsor would be able to satisfy those obligations. As a result, if any such claims were
successfully made against the Trust Account, the funds available for our initial business combination and redemptions could be reduced to less than $10.00 per Public Share. In such event, we may not be able to complete our initial business
combination, and you would receive such lesser amount per share in connection with any redemption of your Public Shares. None of our officers will indemnify us for claims by third parties including, without limitation, claims by vendors and
prospective target businesses. None of our other officers will indemnify us for claims by third parties including, without limitation, claims by vendors and prospective target businesses, including Corcentric.
In the event that the proceeds in the Trust Account are reduced below:
(1) $10.00 per Public Share; or (2) such lesser amount per Public Share held in the Trust Account as of the date of the liquidation of the Trust Account, due to reductions in the value of the trust assets, in each case net of Permitted
Withdrawals, and our Sponsor asserts that it is unable to satisfy its indemnification obligations or that it has no indemnification obligations related to a particular claim, our independent directors would determine whether to take legal action
against our Sponsor to enforce its indemnification obligations. While we currently expect that our independent directors would take legal action on our behalf against our Sponsor to enforce its indemnification obligations to us, it is possible
that our independent directors in exercising their business judgment may choose not to do so in certain instances. For example, the cost of such legal action may be deemed by the independent directors to be too high relative to the amount
recoverable or the independent directors may determine that a favorable outcome is not likely. Accordingly, we cannot assure you that due to claims of creditors the actual value of the per share redemption price will not be substantially less
than $10.00 per share.
We will seek to reduce the possibility that our Sponsor will have to
indemnify the Trust Account due to claims of creditors by endeavoring to have all vendors, service providers (other than our independent registered public accounting firm), prospective target businesses or other entities with which we do business
execute agreements with us waiving any right, title, interest or claim of any kind in or to monies held in the Trust Account. Our Sponsor will also not be liable as to any claims under our indemnity of the underwriter of the IPO against certain
liabilities, including liabilities under the Securities Act. We have access to up to $1,500,000 from the proceeds of the IPO and the sale of the Private Placement Warrants with which to pay any such potential claims (including costs and expenses
incurred in connection with our liquidation, currently estimated to be no more than approximately $100,000). In the event that we liquidate and it is subsequently determined that the reserve for claims and liabilities is insufficient,
stockholders who received funds from the Trust Account could be liable for claims made by creditors.
Under the DGCL, stockholders may be held liable for claims by third
parties against a corporation to the extent of distributions received by them in a dissolution. The pro rata portion of the Trust Account distributed to our Public Stockholders upon the redemption of our Public Shares in the event we do not
complete our initial business combination by September 22, 2022 may be considered a liquidating distribution under Delaware law. If the corporation complies with certain procedures set forth in Section 280 of the DGCL intended to ensure that it
makes reasonable provision for all claims against it, including a 60-day notice period during which any third-party claims can be brought against the corporation, a 90-day period during which the corporation may reject any claims brought, and an
additional 150-day waiting period before any liquidating distributions are made to stockholders, any liability of stockholders with respect to a liquidating distribution is limited to the lesser of such stockholder’s pro rata share of the claim
or the amount distributed to the stockholder, and any liability of the stockholder would be barred after the third anniversary of the dissolution.
167
Furthermore, if the pro rata portion of the 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 by September 22, 2022, is not considered a liquidating distribution under Delaware law and such
redemption distribution is deemed to be unlawful, then pursuant to Section 174 of the DGCL, the statute of limitations for claims of creditors could then be six years after the unlawful redemption distribution, instead of three years, as in the
case of a liquidating distribution. If we are unable to complete our initial business combination by September 22, 2022, we will: (1) cease all operations except for the purpose of winding up; (2) as promptly as reasonably possible but not more
than ten business days thereafter, redeem the Public Shares, at a per share price, payable in cash, equal to the aggregate amount then on deposit in the Trust Account, including interest (net of Permitted Withdrawals and up to $100,000 of
interest to pay dissolution expenses), divided by the number of then outstanding Public Shares, which redemption will completely extinguish Public Stockholders’ rights as stockholders (including the right to receive further liquidating
distributions, if any), subject to applicable law; and (3) as promptly as reasonably possible following such redemption, subject to the approval of our remaining stockholders and our board of directors, dissolve and liquidate, subject in each
case to our obligations under Delaware law to provide for claims of creditors and the requirements of other applicable law. Accordingly, it is our intention to redeem our Public Shares as soon as reasonably possible following September 22, 2022
and, therefore, we do not intend to comply with those procedures. 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
well beyond the third anniversary of such date.
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 subsequent ten years. However,
because we are a blank check company, rather than an operating company, and our operations have been limited to searching for prospective target businesses to acquire, the only likely claims to arise would be from our vendors (such as lawyers,
investment bankers, etc.) or prospective target businesses. As described above, pursuant to the obligation contained in the underwriting agreement entered into in the IPO, we will seek to have all vendors, service providers (other than our
independent registered public accounting firm), prospective target businesses or other entities with which we do business execute agreements with us waiving any right, title, interest or claim of any kind in or to any monies held in the Trust
Account.
As a result of this obligation, the claims that could be made against
us are significantly limited and the likelihood that any claim that would result in any liability extending to the Trust Account is remote.
Further, our Sponsor may be liable only to the extent necessary to
ensure that the amounts in the Trust Account are not reduced below: (1) $10.00 per Public Share; or (2) such lesser amount per Public Share held in the Trust Account as of the date of the liquidation of the Trust Account, due to reductions in
value of the trust assets, in each case net of Permitted Withdrawals and will not be liable as to any claims under our indemnity of the underwriter of the IPO against certain liabilities, including liabilities under the Securities Act. In the
event that an executed waiver is deemed to be unenforceable against a third party, our Sponsor will not be responsible to the extent of any liability for such third-party claims.
If 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, we cannot assure you we will be able to return $10.00 per share to our Public Stockholders. Additionally, if 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 some or all amounts received by our stockholders. Furthermore, our board of directors may be viewed as having breached its fiduciary duty to our creditors and/or may have acted in bad faith, and
thereby exposing itself and our company to claims of punitive damages, by paying Public Stockholders from the Trust Account prior to addressing the claims of creditors. We cannot assure you that claims will not be brought against us for these
reasons.
Our Public Stockholders will be entitled to receive funds from the
Trust Account only in the event of the redemption of our Public Shares if we do not complete our initial business combination by September 22, 2022 or if they redeem their respective shares for cash upon the completion of the initial business
combination. In no
168
other circumstances will a stockholder have any right or interest of any kind to or in
the Trust Account. In the event we seek stockholder approval in connection with our initial business combination, a stockholder’s voting in connection with our initial business combination alone will not result in a stockholder’s redeeming its
shares to us for an applicable pro rata share of the Trust Account. Such stockholder must have also exercised its redemption rights described above.
Facilities
We currently maintain our executive offices at 767 Fifth Avenue, 9th
Floor, New York, NY 10153. The cost for this space is included in the $10,000 per month fee that we pay an affiliate of our Sponsor for office space, administrative and support services. We consider our current office space adequate for our
current operations.
Employees
We currently have two officers and do not intend to have any other
full-time employees prior to the completion of our initial business combination. Although they expect to devote substantially all of their business time to our business combination process, members of our management team are not obligated to
devote any specific number of hours to our matters but they intend to devote as much of their time as they deem necessary to our affairs until we have completed our initial business combination. The amount of time that any such person will devote
in any time period to our company will vary based on the current stage of the business combination process.
Periodic Reporting and Financial Information
North Mountain Units, North Mountain Class A Common Stock and Public
Warrants are registered under the Exchange Act and we have reporting obligations, including the requirement that we file annual, quarterly and current reports with the SEC. In accordance with the requirements of the Exchange Act, our annual
reports contain financial statements audited and reported on by our independent registered public accounting firm.
Legal Proceedings
We are not currently subject to any material legal proceedings. In
connection with our proposed Business Combination with Corcentric, we have been contacted by purported shareholders demanding supplemental disclosures regarding the proposed transaction. However, we are not aware of any material legal
proceeding that is threatened against us or any of our officers or directors in their corporate capacity.
Directors and Executive Officers
The following table sets forth the name, age and position of each of
our current directors and executive officers.
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Name
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Age
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Title
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Charles B. Bernicker
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56
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| |
Chief Executive Officer, President and Director
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Nicholas Dermatas
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37
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Chief Financial Officer and Secretary
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Robert L. Metzger
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53
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Director
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Scott O’Callaghan
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58
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| |
Director
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Douglas J. Pauls
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63
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Director
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Charles B. Bernicker has been our Chief Executive Officer and a member of our board of directors since July 2020. Mr. Bernicker was also the Chief Executive Officer and a director of South Mountain Merger Corp. and
now serves as a director of Billtrust (NASDAQ: BTRS) following its business combination with South Mountain Merger Corp. Mr. Bernicker most recently has acted as a consultant to Repay Holdings Corp (NASDAQ: RPAY) management team on their merger
with Thunder Bridge Acquisition, Ltd. in July 2019 and the International Money Express, Inc. (NASDAQ: IMXI) management team in connection with their merger with FinTech Acquisition Corp. II in July 2018. From 2012 until it was acquired by First
Data Corp. (NYSE: FDC) in July 2017, Mr. Bernicker was the Chief Financial Officer of CardConnect, which merged with FinTech Acquisition Corp., a former special purpose acquisition company (“SPAC”), in July 2016. From 2010 until 2012,
Mr. Bernicker was an Executive Director of Heartland Payment Systems, a merchant acquirer and payment processor. From 2008 until 2010, Mr. Bernicker was a Senior Vice President of Fraud Strategy for Bank of
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America and, prior to that, Mr. Bernicker held several leadership positions with
Commerce Bancorp, prior to its acquisition by TD Bank NA in March 2008. Prior to joining Commerce Bancorp, from 2000 until 2004, Mr. Bernicker was the Chief Financial Officer of C/Base Inc., dba eCount, a stored-value card issuer. Mr. Bernicker
was also a member of the Card Operations Risk Executive Council for Visa/USA. Prior to that, Mr. Bernicker was a member of the audit group in the Philadelphia office of Ernst & Young, LLP. Mr. Bernicker holds a bachelor’s degree in accounting
from the University of Delaware. Mr. Bernicker was selected to serve on our board of directors due to his significant experience leading and growing companies as an executive in financial services, financial technology and retail banking.
Nicholas Dermatas is our Chief Financial Officer and Secretary since July 2020. Mr. Dermatas was also the Chief Financial Officer and Secretary of South Mountain Merger Corp. until its initial business
combination. Mr. Dermatas most recently served as a Vice President of Finance at First Data Corp. (NYSE: FDC). From 2012 until it was acquired by First Data Corp. (NYSE: FDC) in July 2017, Mr. Dermatas was the Senior Vice President of Finance
of CardConnect, which merged with FinTech Acquisition Corp., a former SPAC, in July 2016. From 2009 until 2011, Mr. Dermatas was an Associate of Carousel Capital Partners, a private equity investment firm that invests in companies headquartered
in the Southeastern United States. From 2007 until 2009, Mr. Dermatas was an Analyst at Edgeview Partners, now Piper Jaffray (NYSE: PJC), a middle-market advisory firm specializing in mergers and acquisitions. Mr. Dermatas holds a bachelor’s
degree in Electrical Engineering from the Georgia Institute of Technology.
Robert L. Metzger has been a member of our board of directors since the IPO. Since 2016, Mr. Metzger has served as a senior advisor at MissionOG, a venture capital firm. Mr. Metzger was also a director of South
Mountain Merger Corp. until its initial business combination. Mr. Metzger is a Clinical Assistant Professor at the University of Illinois at Urbana-Champaign Gies College of Business and has served as the Director of the Investment Banking
Academy since August 2015 and is also the Faculty Director of Gies Business Honors Programs. Since May 2019 he has served as a director of Payroc, LLC, a privately held payments processing company; and since June 2020 has served as a National
Director of CareerSpring, a not-for-profit organization focused on helping first generation college graduates gain meaningful employment. Previously, he served as a member of the Audit Committee and the Board of Directors of WageWorks, Inc.
(NYSE: WAGE) from February 2016 until their acquisition by HealthEquity (NASDAQ: HQY) in August 2019; as a member of the Audit Committee and Board of Directors of USA Technologies, Inc. (NASDAQ: USAT) from December 2016 to April 2020; as a
member of the Audit Committee and Board of Directors of Millennium Trust, a privately held provider of specialized custody solutions, from February 2016 until April 2019; and as a member of the Audit Committee and Board of Directors of JetPay
Corporation since November 2017, prior to their acquisition by NCR (NYSE: NCR) in December 2018. Mr. Metzger was a Partner at William Blair & Company, L.L.C. from January 2005 to December 2015 after joining the firm in 1999, and since
January 2016, he has been employed as a Senior Director at the firm. He served as the head of the Technology group between January 2011 and January 2015 and of the Financial Services Investment Banking Group between April 2007 and December
2015. He also acted as Chairman of the firm’s Audit Committee from January 2013 to December 2015. Prior to joining William Blair & Company, L.L.C., he worked in the Investment Banking Division of ABN AMRO Incorporated from 1997 to 1999, in
the Financial Institutions Group at A.T. Kearney, Inc. from 1995 to 1997, and in Audit and Audit Advisory Services at Price Waterhouse from 1990 to 1994. Mr. Metzger graduated with a Master’s in Business Administration with concentrations in
Finance and Strategy in 1995 from Northwestern University’s Kellogg School of Management and a Bachelor of Science degree in Accountancy in 1989 from the University of Illinois at Urbana-Champaign. Mr. Metzger was selected to serve on our board
of directors due to his significant financial and leadership experience.
Scott O’Callaghan has been a member of our board of directors since the IPO. He previously served as the Managing Director of Onex Credit and focuses on Onex Credit’s fundraising efforts.
Mr. O’Callaghan has 34 years of experience in the leveraged credit markets, including business development roles for alternative credit investment firms. Before joining Onex Credit in 2019, Mr. O’Callaghan was a partner and
managed business development for Rotation Capital Management and MidOcean Credit Partners. Previously he was global head of leverage finance sales at Bank of America, and held various positions at Deutsche Bank, Bankers Trust,
Drexel Burnham Lambert and Manufacturers Hanover Trust. Mr. O’Callaghan was also a member of the Board of Directors of South Mountain Merger Corp. until its initial business combination. Mr. O’Callaghan earned a B.A. from
Brown University in 1986. Mr. O’Callaghan was selected to serve on our board of directors due to his extensive experience in the financial services industry and his leadership experience.
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Douglas J. Pauls has been a member of our board of directors since the IPO. Mr. Pauls has over 30 years of experience in the areas of finance, accounting, internal controls, and financial reporting for public
companies, including most recently senior roles with financial institutions. Mr. Pauls served as Chief Financial Officer of BankUnited, Inc., a bank holding company, from 2009 until his retirement in 2013. From 2008 until 2009, Mr. Pauls served
as Executive Vice President of finance for TD Bank, NA following TD Bank’s acquisition of Commerce Bancorp, Inc. in March 2008. Prior to that, Mr. Pauls held several positions with Commerce, including serving as its Chief Financial Officer from
2002 until its acquisition by TD Bank and its Chief Accounting Officer from 1995 to 2002. Earlier in his career, Mr. Pauls was a senior manager in the audit department of Ernst & Young in Philadelphia and Pittsburgh, Pennsylvania. He is
currently a director of BankUnited, Inc. (NYSE: BKU), where he serves as the Chairman of the Risk Committee, Essent Group Ltd. (NYSE:ESNT), where he serves as Chairman of the Audit Committee, and Global Atlantic Financial Group Limited, where
he also serves as Chairman of the Audit Committee. Mr. Pauls was also a member of the Board of Directors of South Mountain Merger Corp. until its initial business combination. Mr. Pauls holds a BA in Economics from Dickinson College and serves
on Dickinson’s Board of Trustees. Mr. Pauls was selected to serve on our board of directors due to his extensive experience in the financial services industry and his leadership roles at various public companies.
Number and Terms of Office of Officers and Directors
Our board of directors consists of four members. Holders of North
Mountain Class B Common Stock will have the right to elect all of our directors prior to consummation of our initial business combination and Public Stockholders will not have the right to vote on the election of directors during such time. These
provisions of our Existing Charter may only be amended if approved by a majority of at least 90% of North Mountain Common Stock voting at a stockholder meeting. Approval of our initial business combination will require the affirmative vote of a
majority of our board of directors.
Our board of directors is divided into three classes with only one
class of directors being elected in each year and each class (except for those directors appointed prior to our first annual meeting of stockholders) serving a three-year term. The term of office of the first class of directors, consisting of
Mr. O’Callaghan, will expire at our first annual meeting of stockholders. The term of office of the second class of directors, consisting of Mr. Metzger, will expire at the second annual meeting of stockholders. The term of office of the third
class of directors, consisting of Mr. Bernicker and Mr. Pauls, will expire at the third annual meeting of stockholders.
Our officers are appointed by the board of directors and serve at the
discretion of the board of directors, rather than for specific terms of office. Our board of directors is authorized to appoint persons to the offices set forth in our bylaws as it deems appropriate. Our bylaws will provide that our officers may
consist of a Chief Executive Officer, a President, a Chief Financial Officer, Vice Presidents, a Secretary, Assistant Secretaries, a Treasurer, Assistant Treasurers and such other offices as may be determined by the board of directors.
Director Independence
The rules of Nasdaq require that a majority of our board of directors
be independent within one year of our IPO. An “independent director” is defined generally as a person that, in the opinion of the company’s board of directors, has no material relationship with the listed company (either directly or as a partner,
shareholder or officer of an organization that has a relationship with the company). Our board has determined that each of Mr. Metzger, Mr. O’Callaghan and Mr. Pauls is an independent director under applicable SEC and Nasdaq rules. Our
independent directors will have regularly scheduled meetings at which only independent directors are present.
Committees of the Board of Directors
Our board of directors has three standing committees: an audit
committee, a compensation committee and a nominating and corporate governance committee. Both our audit committee and our compensation committee are composed solely of independent directors. Subject to phase-in rules, the rules of Nasdaq and Rule
10A-3 of the Exchange Act require that the audit committee of a listed company be comprised solely of independent directors, and the rules of Nasdaq require that the compensation committee and the nominating and corporate governance committee of
a listed company be comprised solely of independent directors. Each committee operates under a charter that was approved by our board and has the composition and responsibilities described below. The charter of each committee is available on our
website.
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Audit Committee
The members of our audit committee are Robert L. Metzger, Scott
O’Callaghan and Douglas J. Pauls. Each member of the audit committee is financially literate and our board of directors has determined that each of Robert L. Metzger and Douglas J. Pauls qualify as an “audit committee financial expert” as defined
in applicable SEC rules and has accounting or related financial management expertise. We have adopted an audit committee charter, which details the purpose and principal functions of the audit committee, including:
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•
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assisting board oversight of (1) the integrity of our financial statements, (2) our compliance with legal and regulatory
requirements, (3) our independent auditor’s qualifications and independence, and (4) the performance of our internal audit function and independent auditors;
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•
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the appointment, compensation, retention, replacement, and oversight of the work of the independent auditors and any other
independent registered public accounting firm engaged by us;
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•
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pre-approving all audit and non-audit services to be provided by the independent auditors or any other registered public
accounting firm engaged by us, and establishing pre-approval policies and procedures;
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•
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reviewing and discussing with the independent auditors all relationships the auditors have with us in order to evaluate their
continued independence;
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•
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setting clear hiring policies for employees or former employees of the independent auditors;
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•
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setting clear policies for audit partner rotation in compliance with applicable laws and regulations;
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•
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obtaining and reviewing a report, at least annually, from the independent auditors describing (1) the independent auditor’s
internal quality-control procedures and (2) any material issues raised by the most recent internal quality-control review, or peer review, of the audit firm, or by any inquiry or investigation by governmental or professional authorities,
within the preceding five years respecting one or more independent audits carried out by the firm and any steps taken to deal with such issues;
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•
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meeting to review and discuss our annual audited financial statements and quarterly financial statements with management and the
independent auditor, including reviewing our specific disclosures under “North Mountain Management’s Discussion and Analysis of Financial Condition and Results of Operations”;
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•
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reviewing and approving any related party transaction required to be disclosed pursuant to Item 404 of Regulation S-K promulgated
by the SEC prior to us entering into such transaction; and
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•
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reviewing with management, the independent auditors, and our legal advisors, as appropriate, any legal, regulatory or compliance
matters, including any correspondence with regulators or government agencies and any employee complaints or published reports that raise material issues regarding our financial statements or accounting policies and any significant changes
in accounting standards or rules promulgated by the FASB, the SEC or other regulatory authorities.
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The audit committee is governed by a charter that complies with the
rules of Nasdaq.
Compensation Committee
The members of our Compensation Committee are Robert L. Metzger, Scott
O’Callaghan, and Douglas J. Pauls.
We have adopted a compensation committee charter, which details the
purpose and responsibility of the compensation committee, including:
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•
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reviewing and approving on an annual basis the corporate goals and objectives relevant to our Chief Executive Officer’s
compensation, evaluating our Chief Executive Officer’s performance in light of such goals and objectives and determining and approving the remuneration (if any) of our Chief Executive Officer based on such evaluation;
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•
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reviewing and making recommendations to our board of directors with respect to (or approving, if such authority is so delegated by
our board of directors) the compensation, and any incentive-compensation and equity-based plans that are subject to board approval of all of our other officers;
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•
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reviewing our executive compensation policies and plans;
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•
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implementing and administering our incentive compensation equity-based remuneration plans;
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•
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assisting management in complying with our proxy statement and annual report disclosure requirements;
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•
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approving all special perquisites, special cash payments and other special compensation and benefit arrangements for our officers
and employees;
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•
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producing a report on executive compensation to be included in our annual proxy statement; and
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•
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reviewing, evaluating and recommending changes, if appropriate, to the remuneration for directors.
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The charter also provides that the compensation committee may, in its
sole discretion, retain or obtain the advice of a compensation consultant, independent legal counsel or other adviser and will be directly responsible for the appointment, compensation and oversight of the work of any such adviser. The charter
complies with the rules of Nasdaq.
However, before engaging or receiving advice from a compensation
consultant, external legal counsel or any other adviser, the compensation committee will consider the independence of each such adviser, including the factors required by Nasdaq and the SEC.
Nominating and Corporate Governance Committee
The members of our nominating and corporate governance committee are
Robert L. Metzger, Scott O’Callaghan, and Douglas J. Pauls.
We adopted a nominating and corporate governance committee charter,
which details the purpose and responsibilities of the nominating and corporate governance committee, including:
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identifying, screening and reviewing individuals qualified to serve as directors, consistent with criteria approved by the board,
and recommending to the board of directors candidates for nomination for election at the annual meeting of stockholders or to fill vacancies on the board of directors;
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•
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developing and recommending to the board of directors and overseeing implementation of our corporate governance guidelines;
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coordinating and overseeing the annual self-evaluation of the board of directors, its committees, individual directors and
management in the governance of the company; and
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•
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reviewing on a regular basis our overall corporate governance and recommending improvements as and when necessary.
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The charter also provides that the nominating and corporate governance
committee may, in its sole discretion, retain or obtain the advice of, and terminate, any search firm to be used to identify director candidates, and will be directly responsible for approving the search firm’s fees and other retention terms. The
charter complies with the rules of Nasdaq.
We have not formally established any specific, minimum qualifications
that must be met or skills that are necessary for directors to possess. In general, in identifying and evaluating nominees for director, the board of directors considers educational background, diversity of professional experience, knowledge of
our business, integrity, professional reputation, independence, wisdom, and the ability to represent the best interests of our stockholders. Prior to our initial business combination, holders of our Public Shares will not have the right to
recommend director candidates for nomination to our board of directors.
Advisory Committee
We have established an advisory committee formed for the purpose of
assisting the board of directors and management with sourcing and evaluating business opportunities and devising plans and strategies to optimize any business that we acquire. Our advisory committee is comprised of former senior executives from
leading global companies with experience in a wide range of sub-sectors and functional areas, who are not members of the board of directors and who provide us with access to their expertise and extensive industry networks from which we intend to
source and evaluate targets.
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Compensation Committee Interlocks and Insider Participation
None of our officers currently serves, and in the past year has not
served, as a member of the board of directors or compensation committee of any entity that has one or more officers serving on our board of directors.
Code of Ethics
We have adopted a code of ethics applicable to our directors, officers
and employees (the “Code of Ethics”).
You are able to review these documents on our website at
www.northmountainmerger.com. In addition, a copy of the Code of Ethics will be provided without charge upon request from us. We intend to disclose any amendments to or waivers of certain provisions of our Code of Ethics in a Current Report on
Form 8-K.
SPAC Experience
North Mountain’s management team consists of Charles Bernicker,
North Mountain’s Chief Executive Officer, and Nicholas Dermatas, North Mountain’s Chief Financial Officer. Both Mr. Bernicker and Mr. Dermatas have significant experience with the special purpose acquisition company (“SPAC”) acquisition
process. Most recently, Mr. Bernicker and Mr. Dermatas were members of the management team of South Mountain Merger Corp. (“South Mountain”), a SPAC that consummated a business combination transaction with Factor Systems, Inc. (d/b/a Billtrust)
(“Billtrust”) on January 12, 2021. Following the consummation of that business combination transaction, South Mountain changed its name to BTRS Holdings Inc. (NASDAQ: “BTRS”). At the time that North Mountain consummated the IPO, Sponsor was
also the sponsor of South Mountain which was then in transaction discussions with Billtrust. South Mountain entered into a letter of intent with Billtrust shortly after the consummation of the IPO and then entered into a definitive merger
agreement with Billtrust on October 18, 2020. Since February 18, 2021 (the date that Mr. Bernicker was introduced to Doug Clark, Corcentric’s Chief Executive Officer (see “Proposal No. 2—The Business Combination Proposal—The Business
Combination—Background of the Business Combination”), Sponsor has not been the sponsor of any SPAC other than North Mountain. Earlier, Mr. Bernicker served as the Chief Financial Officer and Mr. Dermatas served as the Vice President of Finance
of CardConnect (“CardConnect”) from 2012 until its sale to First Data Corporation in July 2017. CardConnect had merged with FinTech Acquisition Corp., a SPAC, in July 2016 and both Mr. Bernicker and Mr. Dermatas were involved in that
transaction. Mr. Bernicker acted as a consultant to Repay Holdings Corp on its merger with Thunder Bridge Acquisition, Ltd., a SPAC, which was consummated in July 2019. Mr. Bernicker acted as a consultant to the International Money Express,
Inc. from April 2018 through the consummation of its merger with FinTech Acquisition Corp II, a SPAC, in July 2018. From August 2018 through March 2019, Mr. Bernicker provided consulting services to Gordon Pointe Acquisition Corporation, a
SPAC, including target evaluation and negotiation and merger structuring.
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ANALYSIS OF FINANCIAL CONDITION AND RESULTS OF OPERATIONS
All statements other than statements of historical
fact included in this proxy statement/prospectus including, without limitation, statements under “North Mountain Management’s Discussion and Analysis of Financial Condition and Results of Operations” regarding North Mountain’s financial position,
business strategy and the plans and objectives of management for future operations, are forward-looking statements. When used in this proxy statement/prospectus, words such as “anticipate,” “believe,” “estimate,” “expect,” “intend” and similar
expressions, as they relate to us or our management, identify forward-looking statements. Such forward-looking statements are based on the beliefs of management, as well as assumptions made by, and information currently available to, North
Mountain’s management. Actual results could differ materially from those contemplated by the forward-looking statements as a result of certain factors detailed in our filings with the SEC. As used in this section, unless the context suggests
otherwise, “we,” “us,” “our,” “the Company” or “North Mountain” refer to North Mountain Merger Corp.
The following discussion and analysis of our
financial condition and results of operations should be read in conjunction with the financial statements and the notes thereto contained elsewhere in this proxy statement/prospectus. Certain information contained in the discussion and analysis
set forth below includes forward-looking statements that involve risks and uncertainties.
Overview
We are a blank check company formed under the laws of the State of
Delaware for the purpose of effecting a merger, capital stock exchange, asset acquisition, stock purchase, reorganization or other similar business combination with one or more businesses. We intend to effectuate our Business Combination using
cash from the proceeds of the Initial Public Offering and the sale of the Private Placement Warrants, our capital stock, debt or a combination of cash, stock and debt.
We expect to continue to incur significant costs in the pursuit of
our acquisition plans. We cannot assure you that our plans to raise capital or to complete our initial Business Combination will be successful.
Recent Developments
On December 9, 2021, we entered into the Merger Agreement, by and
among North Mountain, Corcentric, Merger Sub I, a direct, wholly owned subsidiary of North Mountain and Merger Sub II, a direct, wholly owned subsidiary of North Mountain.
Results of Operations
We have neither engaged in any operations nor generated any revenues
to date. Our only activities through December 31, 2021 were organizational activities, those necessary to prepare for the Initial Public Offering, described below, and, after our Initial Public Offering, identifying a target company for a
Business Combination. We do not expect to generate any operating revenues until after the completion of our Business Combination. We generate non-operating income in the form of interest income on marketable securities held in the trust
account. We incur expenses as a result of being a public company (for legal, financial reporting, accounting and auditing compliance), as well as for due diligence expenses.
For the year ended December 31, 2021, we had net income of
$4,990,116, which consisted of a change in fair value of warrant liabilities of $6,154,025 and interest earned on marketable securities held in the trust account of $8,733, offset by operating costs of $1,172,642.
For the period from July 14, 2020 (inception) through December 31,
2020, we had a net loss of $4,563,349, which consists of operating costs of $648,442 and a change in the fair value of warrant liabilities of $3,918,000, offset by interest earned on marketable securities held in the trust account of $3,093.
Liquidity and Capital Resources
On September 22, 2020, we consummated the Initial Public Offering of
13,225,000 Units, which includes the full exercise of 1,725,000 Units by the underwriters of the over-allotment option, at $10.00 per unit, generating gross proceeds of $132,250,000. Simultaneously with the closing of the Initial Public
Offering, we consummated the sale of 4,145,000 Private Placement Warrants to the Sponsor at a price of $1.00 per warrant, generating gross proceeds of $4,145,000.
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Following the Initial Public Offering, the exercise of the
over-allotment option and the sale of the Private Placement Warrants, a total of $132,250,000 was placed in the trust account. We incurred $7,385,802 in transaction costs, including $2,417,300 of underwriting fees, $4,628,750 of deferred
underwriting fees and $339,752 of other offering costs.
For the year ended December 31, 2021, cash used in operating
activities was $667,854. Net income of $4,990,116 was affected by interest earned on marketable securities held in the trust account of $8,733 and a change in fair value of warrant liability of $6,154,025. Changes in operating assets and
liabilities provided $504,788 of cash for operating activities.
For the period from July 14, 2020 (inception) through December 31,
2020, cash used in operating activities was $441,479. Net loss of $4,563,349 was affected by interest earned on marketable securities held in the trust account of $3,093, a change in the fair value of warrant liabilities of $3,918,000,
transaction costs allocable to warrant liabilities of $355,812, compensation expense related to warrant liabilities of $55,000 and changes in operating assets and liabilities, which used $203,849 of cash from operating activities.
As of December 31, 2021, we had cash and marketable securities held
in the trust account of $132,261,826. We intend to use substantially all of the funds held in the trust account, including any amounts representing interest earned on the trust account (less deferred underwriting commissions and income taxes
payable), to complete our Business Combination. We may withdraw interest to pay franchise and income taxes. During the period ended December 31, 2021, we did not withdraw any interest earned on the trust account. To the extent that our capital
stock or debt is used, in whole or in part, as consideration to complete our Business Combination, the remaining proceeds held in the trust account will be used as working capital to finance the operations of the target business or businesses,
make other acquisitions and pursue our growth strategies.
As of December 31, 2021, we had cash of $303,615 outside of the
trust account. We intend to use the funds held outside the trust account primarily to identify and evaluate target businesses, perform business due diligence on prospective target businesses, travel to and from the offices, plants or similar
locations of prospective target businesses or their representatives or owners, review corporate documents and material agreements of prospective target businesses, and structure, negotiate and complete a Business Combination.
We have material cash requirements related to entered agreements in
connection with our proposed merger. The Underwriting Agreement, Pipe Engagement Agreement, and Capital Markets Agreement aggregate to approximately $8,100,000 of fees that are required to be paid at the closing of the merger. We intend to use
a combination of the remaining funds within our operating bank account of $303,615 as well as the $50,000,000 of funds related to the Subscribers of the proposed merger, as detailed in our Subscription Agreement, to settle our cash
requirements. The purpose of this paragraph is to appropriately present our current and projected cash requirements as we continue to close on our proposed merger.
In order to fund working capital deficiencies or finance transaction
costs in connection with a Business Combination the Sponsor, an affiliate of the Sponsor, or our officers and directors may, but are not obligated to, loan us funds as may be required. If we complete a Business Combination, we would repay such
loaned amounts. In the event that a Business Combination does not close, we may use a portion of the working capital held outside the trust account to repay such loaned amounts but no proceeds from our trust account would be used for such
repayment. Up to $1,500,000 of such loans may be convertible into warrants identical to the Private Placement Warrants, at a price of $1.00 per warrant at the option of the lender.
We will need to raise additional funds in order to meet the
expenditures required for operating our business. We may also need to obtain additional financing either to complete our Business Combination or because we become obligated to redeem a significant number of our public shares in connection of
our Business Combination, in which case we may issue additional securities or incur debt in connection with such Business Combination. Subject to compliance with applicable securities laws, we would only complete such financing simultaneously
with the completion of our Business Combination. If we are unable to complete our Business Combination because we do not have sufficient funds available to us, we will be forced to cease operations and liquidate the trust account. In addition,
following our Business Combination, if cash on hand is insufficient, we may need to obtain additional financing in order to meet our obligations.
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Going Concern
As of December 31, 2021, we had $303,615 of cash within the
operating bank account, a working capital balance of $14,502, and less than twelve months to complete a business combination. No assurances can be given that the Company will complete a business combination before September 22, 2022, the
Company’s liquidation date, or through twelve months following the issuance of this report.
The Company has incurred and expects to continue to incur
significant costs in pursuit of its acquisition plans. In connection with the Company’s assessment of going concern considerations in accordance with Accounting Standards Update (“ASU”) 2014-15, “Disclosures of Uncertainties about an Entity’s
Ability to Continue as a Going Concern,” we believe that we will need to obtain additional capital in order to have adequate liquidity to sustain operations, which consists of pursuing a Business Combination. While the Company expects to have
sufficient access to additional sources of capital if necessary, there is no current commitment on the part of any financing source to provide additional capital and no assurances can be provided that such additional capital will ultimately be
available. These conditions raise substantial doubt about the Company’s ability to continue as a going concern for a period of time through at least one year from the date the financial statements are issued. The financial statements do not
include any adjustments that might result from the outcome of this uncertainty.
Off-Balance Sheet Arrangements
We have no obligations, assets or liabilities, which would be
considered off-balance sheet arrangements as of December 31, 2021 and 2020. We do not participate in transactions that create relationships with unconsolidated entities or financial partnerships, often referred to as variable interest entities,
which would have been established for the purpose of facilitating off-balance sheet arrangements. We have not entered into any off-balance sheet financing arrangements, established any special purpose entities, guaranteed any debt or
commitments of other entities, or purchased any non-financial assets.
Contractual Obligations
We do not have any long-term debt, capital lease obligations,
operating lease obligations or long-term liabilities, other than an agreement to pay an affiliate of the Sponsor a monthly fee of $10,000 for office space, administrative and support services to the Company. We began incurring these fees on
September 22, 2020 and will continue to incur these fees monthly until the earlier of the completion of the Business Combination and our liquidation.
The underwriter is entitled to a deferred fee of $4,628,750 in the
aggregate. The deferred fee will be forfeited by the underwriter solely in the event that we fail to complete a Business Combination, subject to the terms of the underwriting agreement. The underwriter did not receive any underwriting discount
or commissions on Units purchased by Millais Limited, the indirect majority owner of our sponsor.
Critical Accounting Policies
The preparation of financial statements and related disclosures in
conformity with accounting principles generally accepted in the United States of America requires management to make estimates and assumptions that affect the reported amounts of assets and liabilities, disclosure of contingent assets and
liabilities at the date of the financial statements, and income and expenses during the periods reported. Actual results could materially differ from those estimates. We have identified the following critical accounting policies:
Share-Based Compensation
We adopted ASC Topic 718, Compensation --Stock Compensation,
guidance to account for our share-based compensation. The guidance defines a fair value-based method of accounting for an employee share option or similar equity instrument. We recognize all forms of share-based payments, including share option
grants, warrants and restricted share grants, at their fair value on the grant date, which are based on the estimated number of awards that are ultimately expected to vest. Share-based payments, excluding restricted shares, are valued using a
Black-Scholes option pricing model. Grants of share-based payment awards issued to nonemployees for services rendered have been recorded at the fair value of the share-based payment, which is the more readily determinable value. The grants are
amortized on a straight-line basis over the requisite service
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periods, which is generally the vesting period. If an award is granted, but vesting
does not occur, any previously recognized compensation cost is reversed in the period related to the termination of service. Share-based compensation expenses are included in costs and operating expenses depending on the nature of the services
provided in the statements of operations.
Warrant Liabilities
We account for the warrants issued in connection with our Initial
Public Offering in accordance as either equity-classified or liability-classified instruments based on an assessment of the warrant’s specific terms and applicable authoritative guidance in Financial Accounting Standards Board (“FASB”)
Accounting Standards Codification (“ASC”) 480, Distinguishing Liabilities from Equity (“ASC 480”) and ASC 815, Derivatives and Hedging (“ASC 815”), under which the warrants do not meet the criteria for equity treatment and must be recorded as
liabilities. Accordingly, we classify the warrants as liabilities at their fair value and adjust the warrants to fair value at each reporting period. This liability is subject to re-measurement at each balance sheet date until exercised, and
any change in fair value is recognized in our statements of operations. The fair value of the private warrants was estimated using a Modified Black-Scholes Model. The fair value of the public warrants was initially measured using the Modified
Black-Scholes model, and then subsequently measured at the public trading price. The key inputs and assumptions used for the Modified Black-Scholes model were the common stock price, expected term in years, expected volatility derived using a
Monte Carlo Simulation, exercise price, and risk-free interest rate.
Class A Common Stock Subject to Possible Redemption
We account for our shares of Class A common stock subject to
possible redemption in accordance with the guidance in Accounting Standards Codification (“ASC”) Topic 480 “Distinguishing Liabilities from Equity.” Shares of Class A common stock subject to mandatory redemption is classified as a liability
instrument and is measured at fair value. Conditionally redeemable common stock (including common stock that features redemption rights that are either within the control of the holder or subject to redemption upon the occurrence of uncertain
events not solely within our control) is classified as temporary equity. At all other times, common stock is classified as stockholders’ equity. Our common stock features certain redemption rights that are considered to be outside of our
control and subject to occurrence of uncertain future events. Accordingly, the Class A common stock subject to possible redemption is presented as temporary equity, outside of the stockholders’ deficit section of our consolidated balance
sheets.
Net Income per Common Stock
We calculate earnings per share to allocate net income (loss) evenly
to Class A and Class B common shares. This presentation contemplates a Business Combination as the most likely outcome, in which case, both classes of common stock share pro rata in the income (loss) of the Company.
Recent accounting standards
Management does not believe that any recently issued, but not yet
effective, accounting standards, if currently adopted, would have a material effect on our financial statements.
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Our mission is to transform how businesses purchase, pay, and get paid.
We are a leading provider of B2B commerce solutions for enterprise and
middle-market businesses. We offer a comprehensive, end-to-end software and technology-enabled suite of Source-to-Pay (“S2P”) and Order-to-Cash (“O2C”) solutions that, together with our proprietary B2B Payments Network, empower our customers to
enable growth, optimize working capital, enhance visibility, and minimize risk. Our solutions are delivered through a powerful combination of cloud-based software, payments, and advisory services. Our solutions are used by more than 2,500
customers globally across numerous industry verticals, and we have processed over $100 billion in transaction volume on our end-to-end platform during the twelve months ended December 31, 2020. With more than 450,000 buyers and 1.4 million
suppliers on our global network, we are building a preeminent hub for B2B commerce with significant barriers to entry.
Our decades of experience in B2B commerce have shown us that enterprise
and middle-market businesses are burdened by legacy systems and processes that are complex, manual, and expensive, which result in operational inefficiencies and poor cash flow management. The proliferation of homegrown or third-party point
solutions across procurement, accounts payable, and accounts receivable functions comes with high costs, complex integration challenges, and a lack of true end-to-end visibility to our customers in the office of the CFO. The diverse B2B commerce
ecosystem across both buyer and supplier relationships span a mix of industry participants, including Enterprise Resource Planning (ERP) systems, point solution providers, and homegrown solutions, and this depth of complexity has created a
tremendous opportunity for our solutions to solve the unique challenges these businesses face, including streamlining purchasing, digitizing and automating invoicing and payment processing, managing credit risk, improving payment collection, and
optimizing cash flow.
Our approach is unique because we serve both buyers and suppliers with
our software and advisory services, and we have cutting edge payment capabilities to improve the efficiency of transactions between parties. The breadth and depth of our solutions, combined with our proprietary B2B Payments Network, is a key
competitive advantage in the market we serve.
The B2B commerce market we serve is large, fragmented, and
fast-growing. We estimate our software and advisory solutions address a $140 billion revenue opportunity across S2P and O2C processes, and our integrated payments capabilities are addressing an even larger opportunity. It is estimated by Visa
that more than $120 trillion of total B2B payment transaction volume was processed last year and over 40% of that volume was still being processed through paper checks. These payment processes, particularly those where checks are involved, remain
highly manual, expensive, and prone to error. On our platform alone, we see over $100 billion of annual B2B transaction volume, which represents a tremendous monetization opportunity as these payments migrate to electronic methods over time.
While there are numerous solution providers attempting to solve these challenges, we believe the majority of our market is still heavily fragmented with a combination of homegrown and point solutions, which creates tremendous opportunities for us
to grow sustainably into the future.
Our end-to-end solutions for S2P and O2C address the lifecycle of B2B
buying and selling decisioning and workflows. We have built our solutions to be modular, extensible and flexible to easily integrate into our customer’s workflows, which minimizes the cost of switching to us from a competitor. Our core solutions
are each discussed below:
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Source-to-Pay solutions: Through our suite of S2P solutions, we offer
customers the ability to identify their suppliers, run procurement processes, diligence potential suppliers, manage contract lifecycles, initiate purchase orders, automate invoicing receipt, enhance reconciliation and approval processes,
and initiate payment, all through our highly automated and intuitive software and advisory services. Our customers also leverage our analytics software to consolidate and cleanse data that resides in our customers’ systems. In addition,
we offer payments and financing capabilities to power multimodal payment disbursement.
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Order-to-Cash solutions: Through our suite of O2C solutions, we offer
powerful lifecycle software that enables our customers to gain new customers, receive purchase orders, automate invoicing and eBilling,
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manage disputes and collections, simplify cash application processes and outsource and
optimize accounts receivables. Customers also leverage our analytics software for customer or transaction-level analysis. Our proprietary B2B Payments Network gives us unique insight into both sides of the transaction, thereby enabling us to
offer highly differentiated supply chain financing services and thoughtfully extend credit to some of our customers. These solutions allow us to deliver certainty of payment to our customers, which in turn, allows them to reduce days sales
outstanding (“DSO”), unlock working capital, and drive tangible business outcomes.
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B2B Payments Network: As we gain more customers through our S2P and
O2C solutions, we create powerful network effects, as more and more buyers and suppliers leverage our solutions and join our network. We are building network density within our core customer verticals, which provides enhanced value to
existing customers and strengthens our market position relative to our competitive set. These network effects drive more transaction volume and makes us uniquely positioned to monetize this volume with multimodal payment solutions. Today,
we have over $100 billion in transaction volume flowing through our network, and we believe this will grow significantly over time as businesses invest in digital procurement and payment solutions.
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Our suite of software and payments solutions are powered by our
integrated, modern technology stack, which has been designed from day one to serve as a B2B commerce hub. Our Corcentric Platform is a cloud-native, multi-tenant architecture with a single code base that is highly scalable. We have a robust
extension framework that enables new best-of-breed technologies to be seamlessly integrated into our technology stack. Our technology framework provides us with a competitive advantage that is not easily replicated.
We have also established a highly experienced executive team to
operate our business and execute our strategy. As it relates to our go-to-market strategy, our sales and customer success teams work hand-in-hand to deliver a seamless customer experience across the sales lifecycle. Following an initial sale to
a customer, we focus on continuous engagement to unlock cross-sell opportunities and expand share of wallet. We have a tremendous opportunity to grow revenue and have identified more than $2 billion of cross-sell opportunities across software,
payments and advisory services inside our existing customer base. We also have an indirect sales channel, leveraging a mix of referrals, partners, and resellers to reach new markets. We plan to continue to invest in developing our indirect
sales channel to help us enter and grow in new markets, and complement our direct sales efforts.
Our revenue model has three components across software, payments, and
advisory services. Within software, our revenue is primarily subscription-based, with multi-year contracts that automatically renew upon reaching maturity. This revenue is highly predictable and repeatable in nature. Our payments revenue is
predominantly derived as a percentage of the dollar volume of the transactions that we process, which allows us to grow alongside our customers. Advisory revenue is generated on a project-based fee or hourly billing basis. Advisory services
enable us to provide critical advice to our customers that can create future software and payment revenue opportunities in addition to ensuring success for customers using our solutions.
Our success in providing best-in-class software, payments, and
advisory solutions to our customers has translated to strong financial performance for us. Our total revenues were $153.7 million, $174.7 million, and $144.6 million, for the fiscal years ended December 31, 2021, 2020, and 2019, respectively.
Our adjusted revenue was $100.5 million, $100.7 million, and $77.6 million for the fiscal years ended December 31, 2021, 2020, and 2019, respectively. Our net income (loss) was ($32.8) million, $2.8 million and ($3.8) million for the fiscal
years ended December 31, 2021, 2020, and 2019, respectively. See “Corcentric’s Management’s Discussion and Analysis of Financial Condition and Results of Operations — Key Performance Metrics” for a definition of Adjusted Revenue, information
regarding our use of Adjusted Revenue and a reconciliation of total revenues to Adjusted Revenue.
Huge market across B2B software,
payments and services: According to Visa, B2B commerce comprises nearly two thirds of global GDP with over $120 trillion in transaction volume generated globally. Conventional B2B
procurement, AP, and AR processes are antiquated, disjointed, and primed for disruption, as more than 40% of B2B transaction volume is still being processed through paper checks. These processes are manual, expensive, and prone to human error,
which present an attractive market opportunity for digital transformation. While there is no shortage of legacy solutions or next-generation disruptors addressing narrow segments of our market, we
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believe we are the only scaled player offering an end-to-end suite of enterprise-grade
solutions spanning both S2P and O2C in the B2B commerce market. We believe our competitive strength relative to our competition will allow us to capitalize on what we estimate to be a revenue opportunity in excess of $140 billion in our total
addressable market of global S2P and O2C software and services.
Highly complex ecosystem of
legacy solutions: Businesses today utilize a myriad of S2P and O2C systems that are plagued by manual processes, point solutions, complex integrations, and high costs. CFOs of both enterprise
and middle-market businesses are viewing these workflows as a strategic priority for transformation as they face real costs of legacy systems. The consequences of inefficient processes can range from high transaction and operating costs, to
inefficiencies across inventory, days sales outstanding, days payable outstanding, and supplier relationships. Ultimately, this results in lower cash flow for businesses.
Secular shift to digital
channels: Businesses have been migrating to digital channels with the emergence of superior technology. The COVID-19 pandemic has further accelerated this migration and the desire for digital
payments and automation in their B2B commerce workflows. We expect these trends to continue as businesses adopt software and payment solutions to execute on digital transformation plans that will enhance operational efficiency, provide superior
customer experiences, and more recently, cater to a distributed workforce. Our comprehensive end-to-end suite of S2P and O2C solutions address many of these challenges, and we are poised to benefit from these industry tailwinds.
We believe we have a compelling value proposition in the market that is
differentiated by the following factors.
Track record of innovation and
market leadership: We have been solving critical issues in B2B commerce for more than 20 years. From our inception, we have leveraged technology to transform inefficient and manual processes
experienced by our customers. We were early adopters of emerging technologies, and we have invested organically and inorganically to build our platform. With our deep domain expertise, we have evolved from our origins as a Group Purchasing
Organization (“GPO”) in transportation into an end-to-end suite of B2B commerce solutions focused on serving the fragmented universe of buyers and suppliers. We have a history of innovation, and through our newly formed Business Innovation Lab,
we will continue to deliver new and best-in-class experiences for our customers.
Comprehensive, end-to-end suite
of S2P and O2C software solutions: We are differentiated through our solutions that span the entire spectrum of S2P and O2C operations for enterprise and middle-market businesses. While many
competitors have focused on one side of the network, we have focused on serving both buyers and suppliers. By offering comprehensive B2B commerce solutions, we have a singular view of the entire transaction lifecycle, from sourcing, purchase
order exchange, and invoicing, to payments and reconciliation. We sit in the financial payment flow, and we are able to prudently extend credit to our O2C customers given our visibility into their invoice approval process. By doing so, we can
guarantee a reduction in day sales outstanding for our customers and unlock significant cash flow. Our differentiated solutions enable us to drive growth, optimize working capital, enhance visibility, and minimize risk. Finally, by bringing
together both S2P and O2C, we are serving a meaningfully larger addressable market.
Powerful combination of
cloud-based software, payments and advisory services: From day one, our services have been designed with an integrated approach across software, payments, and advisory. We believe existing
solutions rarely combine payments and software in a way that truly removes inefficiencies and transforms customer operations. Many competitors provide strong foundational technology, but lack the payment capabilities, or vice versa. We combine
all three of our services in a seamless package for a best-in-class customer experience. We initiate the customer journey with our advisory services using in-house expert consultants to identify pain points and inefficiencies across S2P or O2C.
We then recommend and implement our combined payments and software solutions that are transformational to our customers.
Proprietary B2B payments network
of buyers and suppliers: We are becoming a global hub for B2B commerce with a highly differentiated asset that has powerful network effects. One buyer can bring many suppliers to our
platform, and similarly one supplier can bring many buyers. This has enabled our platform to
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grow exponentially to more than 450,000 and 1.4 million active buyers and suppliers,
respectively. To power our network and monetize these transactions, we centralize and manage various payment modalities including ACH, virtual cards, checks, wire, among others. Our network has processed over $100 billion in transaction volume
during the twelve months ended December 31, 2020.
Our end-to-end solutions for S2P and O2C address the lifecycle of
buying and selling decisioning and workflows. From sourcing, purchase order exchange, and invoicing, to payments and reconciliation, our solutions help customers at every stage of the process. Our unique combination of software, payments and
advisory services allows us to generate high customer ROI, drive operational improvements and optimize working capital and cash flow for over 2,500 customers.
As our customer base has grown, we have developed a deep B2B commerce
network of more than 450,000 buyers and 1.4 million suppliers that transact with our customers.
Our end-to-end solutions span both S2P and O2C. By unifying both
functions on our platform, we are able to offer our B2B Payment Network, which is a private commerce network that our customers can leverage.
Our Source-to-Pay solutions:
We offer a cutting-edge set of modules that encompasses all of the
activities required for an organization to obtain and pay for goods and services from sellers, covering procurement and accounts payable functions. These activities start with the development of specific sourcing strategies to best obtain the
goods and services an organization needs. They continue with the selection of specific suppliers, contracting with those suppliers, the placement of orders, the verification that appropriate goods and services have been delivered, and finally the
authorization and release of payment. In addition to these core processes, we support the activities necessary to manage the end-to-end process, such as vendor and master-data management.
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We have designed our offering in an extensible way with modules we
offer to customers, which can be purchased in isolation to complement existing solutions. Customers can equally purchase our entire solution set to fully automate their S2P workflows.
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Sourcing: Our Sourcing solution provides collection and analysis capabilities to optimize
supplier selection that meets business requirements, lowers costs, reduces cycle time, leverages best practices, and ensures participation and visibility. The solution supports auctions of many types, bid analysis, and awards. We also
offer a variety of advisory and managed services to fully run sourcing events on behalf of a client to drive efficiencies and outcomes.
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Supplier Management: Our supplier management solution provides end-to-end workflows that
helps clients establish and maintain stronger supplier relationships, ensure compliance, and mitigate risk. It supports supplier registration, profile information and certificate management, internal and external performance management,
action planning, and collaboration to ensure performance against contracted procurement goals and business outcomes.
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Contract Lifecycle Management (CLM): Our CLM solution offers an efficient and self-service
model to request, author, collaborate, approve, sign, store, search, renew, amend, and terminate contracts. It provides all users, from procurement to legal to sales, the visibility and insights to turn every contract into a powerful
decision-making tool. It offers powerful features such as contract extraction and import, hierarchy assignments, task management, template and clause library, and eSignatures.
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Procurement: Our procurement solution simplifies the entire requisition-to-Purchase Order
(PO) workflow, driving better user adoption to gain greater control over maverick spend, risk and compliance. It features robust catalog management – locally hosted, punch-out or federated via API; requisition management via an intuitive
shopping experience and an automated approval workflow; PO automation that helps error free electronic PO submission with suppliers; and integration of purchasing with contracts, receipt and dispute management. We can also offer
pre-negotiated GPO programs as well as a host of managed services.
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Invoice Management: Our invoice management solution improves accuracy, eliminates manual
processes, and vastly increases productivity of AP staff. The solution includes features such as fully managed mailroom operations and data capture; automatic and manual matching; approval workflow with straight through processing;
compliant eInvoice validation and archiving; and re-invoicing.
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Financial Management: Our financial management solution allows stakeholders to make
informed decisions about budget and spend management forecasting. Budget management includes budget allocation, real-time monitoring, support for multi-level budgets and OpEx, CapEx, project-based and contract-based budgets. We use open
API integration with budget planning, and ERP systems. We additionally provide tax management software that allow for accurate management of tax obligations, exemptions, reconciliations, and reporting.
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Payments and Financing: Our payment solution allows a client to efficiently manage the
last mile payment execution, resulting in more advantageous payment cycles, a significant reduction in fraud, and improved relationships with suppliers. Our payment solutions can handle a multitude of payment methods, including ACH,
virtual cards, checks, wire, among others. We can also offer accelerated payment options to suppliers that are funded by Corcentric or by the Buyer. Our solution also includes robust system capabilities as well as managed services around
supplier enrollment into various payment programs
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Analytics: Our Analytics solution empowers clients to collect, consolidate and cleanse
spend data across their organization. With a holistic view of all spend-related activities via KPIs, reports and dashboards, stakeholders can influence spend behavior, deliver savings, lower risk, and improve compliance. Our advisory team
can also perform spend analyses for clients to identify and prioritize savings opportunities and execute on them to help realize such savings.
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Our Order-to-Cash solutions:
We offer highly differentiated O2C solutions. We address all O2C
business processes that manage and automate everything from sales orders to customer payments. Improving the efficiency of the overall O2C process results in faster collections, stronger working capital turns, and superior customer experience. As
with our S2P solutions, customers can either purchase singular modules or our comprehensive solution offering.
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Credit Management: Credit management solution provides the technology and business process
to fully handle a client’s credit management needs. Whether making bulk credit checks, or ongoing credit verification and monitoring, Our solution has the ability to integrate with leading credit bureaus and apply advanced credit
decisioning criteria to offer a seamless credit qualification and onboarding
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process. Credit management solutions can be accessed via APIs from point-of-sale systems
for instantaneous decisions on credit check / issuance. Our managed service also continuously monitors and adjusts credit limits based on the customer’s payments and transaction history, as well as addresses any specific requests from clients.
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Invoicing / eBilling: Our Invoicing and eBilling solution enables clients to accurately
and efficiently deliver invoices to their customers, regardless of the invoice formats and protocols like email, or even paper. Beyond saving time and cost, it provides a risk-free and seamless shift to electronic invoicing and online
payments. It drastically reduces invoicing errors, guarantees delivery and offers one centralized, automated and highly resilient process with real-time end-to-end visibility. It enhances the end customer experience with electronic
document delivery, access to historical invoices / statements, easy online payments, as well as the ability to amend contact details and preferences.
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Dispute Management: Dispute management solution capabilities simplify the management of
disputed invoices. Dispute management solution allows buyers to initiate a dispute with a few simple clicks from within a transaction. It offers extensive support for notifications, notes, attachments, and history, allowing robust
self-service capabilities. Our highly experienced managed services team acts as the single point of contact to resolve disputes. A full audit of all activities is captured and available for reporting and analysis.
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Collections Management: With our Credit and Collections managed service, AR teams spend
less time prioritizing accounts, researching information, and chasing customer payments. They can now focus on strategic business activities. We have an established system for following up on late payments. We take early actions on
outstanding invoices to prevent problems that can cause rifts in customer relationships. The methods we use are: Reminder calls - contacting customers shortly after certain due dates. Dunning letters - automate dunning via email, fax,
print, and email correspondence. Follow up phone calls - assigned collection managers who follow up with customers by phone.
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Cash Application: Cash application solution lifts the burden of cash application from the
client’s team, managing payment information, centralized receipt, remittance, invoice matching, deduction management, and reconciliation across the payment process. Our portal offers a full range of reports to help sellers and buyers keep
track of payments and invoice status. Aging details and open balance reports are available for different aging buckets. Remittance Advice reports can be delivered for automatic processing and reconciliation.
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Supply Chain Financing: We offer flexible, non-recourse financing options that ensure
guaranteed on-time payments for sellers, leading to DSO reduction, improving cash-flow, and offering greater control over working capital. We can offer fixed payment terms or acceleration on top of existing payment terms between seller
and buyer. We eliminate credit risk and bad debt expense with no more unpaid invoices. We can also offer term extensions to buyers as desired.
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Managed AR Services: From enrollment support to program marketing and customer success
management, we offer a whole suite of managed services that is key to ensuring a client’s financial and operational success. Our managed AR services complement our credit management, discrepancy management, disputes management, and
collections management teams.
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Analytics: Our Analytics solution offers business insights into the entire O2C process
from sales patterns to dispute metrics and collection efficiency. Using our solution, users can drill down into individual cohorts or transactions, which provides for a rich decisioning process.
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Our B2B Payments Network:
We have developed a proprietary B2B Payments Network of buyers and
suppliers that offer and derive value from participation in the network. We have more than 450,000 buyers and 1.4 million suppliers active on our network today. We have been able to significantly scale our network due to the powerful network
effects it delivers. As we add new customers to our platform, they bring with them a long tail of buyers or suppliers that meaningfully increases the number of participants, and therefore the transaction volume that we process.
Our buyers and suppliers generated more than $100 billion of
transaction volume across our platform during the twelve months ended December 31, 2020. We have a tremendous opportunity to grow our revenue by
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monetizing this volume. We are expected to generate revenue from approximately
$3 billion of this total volume for the twelve months ended December 31, 2021. We are unlocking this opportunity by offering customers multiple ways to pay across various payment modalities, including ACH, virtual cards, checks, wire, among
others. As suppliers in our network generate more sales, we earn volume-rebates, calculated as a percentage of the transaction value.
By processing transactions on our platform, customers are able to
recognize a number of immediate and long-term benefits, including operational improvements and access to an expanded pool of buyers and suppliers.
For suppliers who subscribe to our B2B Payments Network, each applicant
enrolls on the platform and agrees to accept payments from all buyers. Suppliers are able to manage their payment preferences along with their company profile, and any changes are fully validated via an anti-fraud layer. When new buyers sign up
for our payment solution, a portion of their vendor spend is already “in network”. That is, Corcentric already has a relationship with the supplier allowing them to get paid, obtain remittance or get trade financing in their preferred manner.
This also helps achieve density in key verticals, wherein more suppliers and buyers in a particular vertical participate in our network.
We expect to continue to invest in and expand our payments network to
become a leading hub for B2B commerce.
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Multiple Payment Modalities: Once customers are part of our B2B payments network, they are
offered many ways to pay including, among others, ACH, virtual cards, checks, wire. Corcentric monetizes a percentage of each transaction and our take rate varies depending on the specific payment modality and on whether we also offer
auxiliary services (e.g., extending credit).
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Indirect GPO: Corcentric Indirect GPO increases savings on customer indirect spend through
the collective buying power of Corcentric’s fast, streamlined marketplace. For organizations that lack a sufficient scale of buying power, one of the most efficient paths to procure-to-pay savings is the management of indirect spend
through a GPO. The Corcentric Indirect GPO is a turnkey purchasing solution that quickly boosts customer spend under management by sidestepping resource constraints, giving customers instant expertise in key categories, and eliminating
unnecessary spend. By replacing the cost of supplier and pricing inconsistencies with the simplicity of leveraged buying power, Corcentric customers can optimize indirect spend management and procure confidently.
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Fleet GPO: Corcentric Fleet GPO is a solution that specifically caters to our customers
who need to leverage the buying power of Corcentric for fleet parts procurement. From tires to parts to lubricants to supplies, we connect buyers to industry leading suppliers. Through the marketplace, Corcentric connects buyers to latest
products, negotiates pricing and terms on behalf of customers, and provides flexible credit and payment services.
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Our technology platform is a best-in-class, multi-tenant, cloud-based
system built using open-source and proprietary frameworks, workflows and a powerful business process management engine, which enables us to innovate much faster. Our platform is differentiated through our 360 degree view across business data,
process life cycles, data and native integrations.
We have built our technology platform to be extensible, scalable, and
easily integrated. Particularly at the enterprise level, many customers have a complex web of ERP systems by geography or inherited through acquisitions. Our ability to deeply integrate across the entire ecosystem allows us to remain agnostic to
legacy or incumbent systems while providing a single “pane of glass” across the entire sourcing, AP and AR process in the office of the CFO.
Our technology underpins our end-to-end solutions of S2P, O2C and the
B2B Payments Network. We are in the process of integrating our O2C apps into our primary technology stack, which powers our S2P solutions. Following this integration, we will have a unified technology stack under a single code base.
Core tenets of our technology platform
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Cloud-native infrastructure: Our stack uses Amazon Web Services for
Infrastructure-as-a-Service. We use virtual private clouds in different regions of the world to host customers based on their region of preference. Individual services in each virtual private cloud are distributed among availability zones
for reliability and scalability.
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Single code base: Our primary tech stack that powers our S2P solutions
is built with a single code base, which enables us to innovate faster and deliver high quality software. We are able to qualify our releases more efficiently, with faster deployment of code. Our platform is a fully redundant deployment
stack with real-time database replication, using Percona. Our platform is hosted in Amazon Web Services and leverages best practices for scalability and redundancy. Our platform provides a self-service deployment tool called Online
Builder that enables our customers to deploy and manage different versions of products using minimal configurations. Our Online Builder tool also enables us to roll out new releases in a sandbox environment for a customer to test and
validate before moving to production.
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Business Process Management engine: We offer rich, customizable and
easily integrated business process management. Our proprietary business process management engine allows for integrated workflow, data management and interface construction. We provide several
out-of-the-box business process management templates that can be used to satisfy the needs of a wide variety of customer-specific workflows.
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Robust extension framework: Our platform provides a robust extension
framework, which enables us to natively integrate new technologies within our existing stack. This enables our customers to customize our base product offerings to cater to their specific business requirements. Customers can tailor
standardized functions to their own requirements in a simple and powerful way.
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Network of Networks: As opposed to many competitors, who treat
connectivity between any two entities as a “walled garden”, we have pioneered open connectivity within our network. For instance, when a supplier joins our network, their trading relationship is available to every buyer within our
network. This is unlike other competitor networks, in which a supplier is often required to forge a unique connection with each buyer, which is a costly, expensive, and time-consuming process. This is due to the unique way in which we
have enabled a high degree of configurability.
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Seamless integrations: Our tech platform provides a wide variety of
integration options to customers. We are agnostic to third-party software and technology vendors used by our customers. We support numerous industry standard transport protocols such as HTTPS, AS2, and sFTP along with rest-based and
soap-based APIs. Our platform also supports a diverse range of file formats and custom mappings for customers. We have standardized connections to third-party business networks like Ariba Network, Coupa and other partners like ReadSoft,
Numen, Dun & Bradstreet, CreditSafe, Beroe, etc., to enhance the network of networks effect of our platform. We also provide integration to some of the most common ERP systems, including SAP, Oracle, Netsuite, Sage, and Microsoft
Dynamics. Our technology platform has standardized integrations with third-party providers like Beroe, Readsoft, Numen, and more to extend and enrich our standard product functionality so that customers have a seamless and unified
experience.
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Business Innovation Lab: We have a team of highly dedicated,
industry-leading professionals who are engaged in developing a variety of technologies with breakthrough innovative features and functions. These technologies include the use of machine learning, natural language processing and artificial
intelligence in the areas of invoice/data extraction and interpretation, predictive analytics, business process mining, business intelligence capability, and intelligent digital assistants. Our lab is also engaged in researching the use
of blockchain as a key platform technology to allow for immutable transactions, full transparency, enhanced security, and fraud prevention.
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We serve over 2,500 customers across the enterprise and middle-market
segments, optimizing how they purchase, pay, and get paid. We digitize and automate B2B commerce for enterprises in the Fortune 1000 and other middle-market companies across the countries we serve. We began by focusing on the transportation
industry, which has some of the most strenuous demands on buyer and supplier relationships. Our experiences have enabled us to build a platform that is easily integrated, globally deployable, and agnostic to existing systems and workflows. By
solving the complexity of S2P and O2C for the transportation industry, we have replicated our success in other verticals, including consumer & retail, healthcare, distribution, transportation, food & beverage and finance, among others.
Our solutions serve all verticals, and we offer various levels of customization for each industry. We have developed deep domain expertise across each vertical we serve, and we have organized our sales team around these end markets. Our
diversified business across our industries helps to mitigate volatility through economic cycles.
Our top ten customer relationships and our largest customer
relationship represent 19.9% and 13.8% of our total revenue for the year ended December 31, 2021, respectively. The contract with our largest customer will expire on December 31, 2022 if not extended by both parties. The contract is a similar
form agreement that we have with our other customers. The contract contains certain anti-competition provisions. For example, we may
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not provide the same services to certain of our largest customer's competitors and
may not hire or solicit any employee or contractor of our customer involved with performance of the contract for 12 months following termination. In addition, this contract can be terminated due to an uncured material breach by either party and
there are no minimum purchase requirements.
We leverage our differentiated payments and advisory services as the
tip of the spear to engage customers. We identify the key pain points across S2P or O2C, before selling our software and payments solutions that tackle the key issues potential customers face. We generally provide one or two modules and expand
our services as we demonstrate our ROI. Through our combination of payments and software solutions, we have developed a highly sticky solution that is deeply embedded in our customer’s business processes and workflows. We have a track record of
deepening our relationships over time, as customers process more volume on our platform, and consume more of our software. We have achieved 106.2% dollar-based net retention for the year ended December 31, 2021.
We serve customers in a variety of industries ranging from middle
market companies to the Fortune 500. Some customers use only one solution, while others may utilize us as an end to end process improvement solution. The case studies below provide examples of how some of our larger customers have leverage one
or more of our solutions to improve their processes.
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Fortune 500 global chemical and ingredients manufacturer - S2P customer:
We began working with a Fortune 500 global chemical and ingredients distributor in March 2020. The customer operated a lean sourcing, and procurement team that had limited expertise, and the customer had fragmented procurement activities
across its group. We were able to differentiate ourselves in the RFP process by offering true, end-to-end capabilities. The customer leveraged all of our S2P software, payments, and advisory services capabilities to drive significant
savings and optimize its lean procurement process. We have delivered more than $6.5 million in realized savings, processed over $300 million in spend, and generated more than a 4x ROI for our customer. All of our customer’s supplier
invoices are now processed through our platform.
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One of the world’s largest tire and rubber companies - O2C customer:
One of the world’s largest tire and rubber companies added Corcentric as a solution in August 2018. The customer was confronted by complex integration requirements with key strategic customers. Challenged with enrollment delays, slow
response times, poor customer experiences, and decreasing sales, our customer engaged us to analyze supplier and credit data, while improving billing management and O2C services. By deploying all of our software, payments and advisory
services capabilities, our customer experienced a 10% increase in sales, significant decrease in DSO, working capital improvements, and increased customer engagement.
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Daimler - B2B Payments Network customer: Corcentric has worked with
Daimler, a leading global supplier of premium and luxury cars and commercial vehicles, since February 2012. Daimler has implemented both S2P and O2C solutions to create a personalized private commerce network, which consists of its dealer
and distributor relationships. Daimler has highly complex integration requirements because of the 17,600 unique system connections between ERP, point-of-sale and S2P systems, among other point solutions. We have helped Daimler enable
eBilling, digitize its payment system and radically improve its support services. By implementing our solutions, Daimler has experienced a 59% decrease in DSO, 86% reduction in disputes, and significant revenue expansion since 2012.
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We target enterprise and middle-market companies that interact with
dense networks of buyers and suppliers who transact frequently and have complicated S2P and O2C requirements. We are principally a direct sales organization and work in collaboration with a variety of channel partners.
Our direct sales force of over 50 individuals targets strategic
accounts with platform-based sales. We leverage channel partners to broaden our account coverage, where a mix of payment, integration, and technology partners help us serve new verticals or geographies. Our partners are a cost-effective channel
for us to grow our revenue. While the majority of our sales are generated through our direct partners, we have a limited number of resellers that contribute to our growth through indirect sales channels.
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We have revitalized our go-to-market strategy to better capture
our large market opportunity. Through our direct sales force, we deploy our Sell, Deliver, Delight, Support strategy, which allows us to unify our new sales and customer success objectives using platform-based sales. We have organized our sales
team around specific industry verticals and areas of opportunity to maximize our potential to acquire new customers, cross-sell and up-sell existing customer accounts. We plan to continue to develop our direct sales approach, leveraging our
unique ability to provide end-to end-solutions to the office of the CFO of potential and existing customers.
We collaborate with channel partners for indirect sales to increase
our speed and time to market by having their direct sales organization certified to sell our product offering. As of the date of this prospectus, our channel partners are primarily focused on selling into the mid-market and small enterprise. We
look to align with channel partners who have a geographic focus by industry and empower them to take their industry expertise to sell Corcentric offering to their customers. From time to time, we work with channel partners to develop joint
go-to-market plans, conduct sales training, and analyze account mapping and targeting. We have a stringent vetting process to determine which channel partners to work with. We plan to expand our network of channel partners as an indirect sales
channel to help us enter and grow in new markets.
The breadth of our platform enables us to sell modules for digital
transformation across the entire S2P and O2C spectrum, enabling us to uncover inefficiencies in our customers’ cash conversion cycle. This includes functional areas of strategic sourcing, contract lifecycle management, accounts payable workflow,
procure to pay, credit, order, invoicing, payments, cash application, and collection. In most cases, our new customers purchase one to three modules, including integrated payments. This creates a significant land and expand opportunity, which is
a key underlying objective and value driver in our business. We calibrate our sales and marketing activities based upon the size of the customer and whether the customer is an existing customer or a new logo opportunity.
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New Customer Acquisition. Our direct sales team consists of sales
representatives that have designated portfolios of accounts. We use account-based selling and marketing. This includes personal identification such as individual influencers, gatekeepers, and decision makers. We also take a classic funnel
approach to marketing based on a large number of targets that drives activity to the top of our sales funnel. Our business development team quickly manages this activity to qualify leads and transition opportunities to our sales
executives.
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Existing Customer Expansion. We follow a land and expand strategy and
regularly seek to grow our business by expanding within our existing customer base. We accomplish this in collaboration with our customer success organization synchronized with renewal cycles, customer delight metrics, and quarterly
business reviews to keep pulse on delight and opportunity. This provides a natural mechanism to sell new capabilities into our customer base, penetrating additional divisions or related parties, thereby identifying incremental processing
activity. Our respective teams identify the expansion opportunity within each account based on capability purchased and proclivity to purchase additional solutions based on industry and company dynamics. This enables disciplined account
planning, targeting, execution, and success measurement.
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Cross-sell our leading software
solutions: With our expansive reach and capabilities, we have real opportunities to cross-sell our solutions into our existing customer base. For example, for customers that are currently
utilizing only our O2C solutions, we have the opportunity to sell them S2P solutions. Likewise, for customers that are currently utilizing only our S2P solutions, we have the opportunity to sell them O2C solutions. Relatedly, for many of our
customers, payments serves as the tip of the spear and enables us to cross-sell our S2P and O2C solutions.
Monetize $100 billion of
payments flow on our platform: The B2B payments industry is ripe for disruption and transformation. With over 40% of B2B transaction volume still being processed through paper checks, there
is significant opportunity for us to monetize the transition from paper checks to electronic payments. Visa estimates that there is over $120 trillion in B2B transaction volume each year globally. Our platform currently facilitates just over
$100 billion in transaction volume annually, and we monetize less than 3% of those payments.
Platform-based sales with new
customers: Our platform and solutions target enterprise and middle-market customers. Today, we serve over 2,500 customers across diverse industries and geographies. As we dedicate more
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resources to sales and marketing, we expect to acquire more customers. We target
customers using our direct sales force and also leverage our channel partners to reach new markets and broaden our account coverage. As more customers join our platform, we find word-of-mouth an effective tool that has further helped us acquire
additional customers.
Develop new, innovative products: We strive to be a one-stop shop for B2B software and payments. Since our founding, we have continuously innovated and rolled out new products that have met the evolving needs of our customers.
Within each of S2P and O2C, we regularly conduct gap analyses to determine what our customers might be missing. For many of our customers, we actively work with them to identify and improve on product offerings. At the same time, we have a
Business Innovation Lab that is dedicated to developing disruptive technologies that include artificial intelligence, machine learning, robotic process automation, and blockchain. Our comprehensive set of solutions makes our platform sticky and
helps fuel the virtuous cycle of cross-selling and upselling our customers.
International expansion: Our platform and solutions are scalable across geographies. Today, we already operate in North America and Europe. As we further penetrate various markets within and outside of these regions,
we expect to win more customers. For many of our customers, we help them expand into new regions.
Pursue strategic M&A: As we pursue growth organically, we continue to opportunistically evaluate opportunities to grow through acquisitions to increase market share, create a more comprehensive platform, acquire
talent, and access new markets. We have a demonstrated track record of acquisitions of varying sizes. In the past three years, we have made three acquisitions—Determine (2019), Netsend (2019), and Vendorin (2020). Our successful track record of
M&A gives us confidence to pursue opportunities to further bolster our offerings.
We operate in the evolving B2B commerce industry, serving our customers
with a comprehensive platform of S2P and O2C solutions. We believe we are the only scaled provider of both S2P and O2C solutions, as we build a powerful network of buyers and suppliers.
We aim to address the following pain points in the market:
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Complexity in B2B payments resulting in poor cash flow management
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Inefficient legacy systems and processes
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Proliferation of point solutions driving high costs
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Multitude of accounting and reporting systems posing integration challenges
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The B2B commerce ecosystem is highly fragmented, with a long tail of
providers that offer either S2P or O2C solutions, as well as a limited number of scaled players. In addition, we believe the majority of solutions in the market today are manual with a lack of automation, or based on legacy technology with
limited integration capabilities, and we consider these providers as our main competition.
On the S2P side, we compete against a mix of small and scaled players.
These include a diverse range of FinTechs, point solution providers, enterprise resource planning software, financial institutions, payment processors, and other service providers. Scaled providers of spend management solutions include Coupa, SAP
Ariba, and AvidXchange. We often find that new customers’ prior solutions are a set of fragmented products and homegrown solutions, which are expensive and have complex integration requirements. We expect our market to continue to evolve over
time as businesses choose to digitize and automate their S2P workflows.
Many O2C solutions are antiquated, with manual processes and limited
ERP customization. Conventional solutions, as well as disparate AR solutions with limited payment integrations, represent the significant majority of competition in the market. Players in the O2C market include FinTechs, point solution providers,
accounting software, financial institutions, payment processors and other service providers. The smaller suppliers of solutions tend to focus on billing, invoicing solutions and/or electronic bill presentment and payment. Larger players also
compete in this market with more sophisticated and automated O2C solutions and cover a wider set of processes, such as Billtrust and HighRadius. We expect competition to increase over time as new solution providers emerge or enter the B2B
commerce space.
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Given the lack of scaled players across both S2P and O2C, there are
few players that compete directly with our B2B Payments Network. We believe our biggest competition is inertia, whereby suppliers and buyers continue to expend unnecessary resources and fail to adopt more efficient third-party solutions.
However, with S2P and O2C solutions, we expect to see new entrants in
the market and see competition intensify over time. Billtrust, for example, partners with Visa to deliver its Business Payments Network. Coupa and AvidXchange also recently announced similar partnerships.
We believe we have a differentiated, end-to-end platform across S2P and
O2C platform that is well positioned to retain and win market share as businesses increase their digital adoption and evolve past legacy solutions. Moreover, we are building a powerful network of buyers and suppliers that will deliver the
greatest choice to both sides. We have a demonstrable track record of innovating for our clients and delivering market-leading solutions and compelling returns on investment. Payments is a core competency and helps our clients unlock cash flow by
optimizing our customers' working capital cycles. We believe these factors are critical in our continued success.
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AND RESULTS OF OPERATIONS
We are a leading provider of B2B commerce solutions for enterprise
and middle-market businesses. We offer a comprehensive, end-to-end software and technology-enabled suite of Source-to-Pay (“S2P”) and Order-to-Cash (“O2C”) solutions that, together with our proprietary B2B Payments Network, empower our
customers to enable growth, optimize working capital, enhance visibility, and minimize risk. Our solutions are delivered through a powerful combination of cloud-based software, payments, and advisory services. Our solutions are used by more
than 2,500 customers globally across numerous industry verticals, and we have processed over $100 billion in transaction volume on our end-to-end platform during the twelve months ended December 31, 2021. With more than 450,000 buyers and
1.4 million suppliers on our global network, we are building a preeminent hub for B2B commerce with significant barriers to entry.
Our decades of experience in B2B commerce have shown us that enterprise
and middle-market businesses are burdened by legacy systems and processes that are complex, manual, and expensive, which result in operational inefficiencies and poor cash flow management. The proliferation of homegrown or third-party point
solutions across procurement, accounts payable, and accounts receivable functions comes with high costs, complex integration challenges, and a lack of true end-to-end visibility to our customers in the office of the CFO. The diverse B2B commerce
ecosystem across both buyer and supplier relationships span a mix of industry participants, including Enterprise Resource Planning (ERP) systems, point solution providers, and homegrown solutions, and this depth of complexity has created a
tremendous opportunity for our solutions to solve the unique challenges these businesses face, including streamlining purchasing, digitizing and automating invoicing and payment processing, managing credit risk, improving payment collection, and
optimizing cash flow.
Our approach is unique because we serve both buyers and suppliers with
our software and advisory services, and we have cutting edge payment capabilities to improve the efficiency of transactions between parties. The breadth and depth of our solutions, combined with our proprietary B2B Payments Network, is a key
competitive advantage in the market we serve.
The B2B commerce market we serve is large, fragmented, and
fast-growing. We estimate our software and advisory solutions address a $140 billion revenue opportunity across S2P and O2C processes, and our integrated payments capabilities are addressing an even larger opportunity. It is estimated by Visa
that more than $120 trillion of total B2B payment transaction volume was processed last year and over 40% of that volume was still being processed through paper checks. These payment processes, particularly those where checks are involved, remain
highly manual, expensive, and prone to error. On our platform alone, we see over $100 billion of annual B2B transaction volume, which represents a tremendous monetization opportunity as these payments migrate to electronic methods over time.
While there are numerous solution providers attempting to solve these challenges, we believe the majority of our market is still heavily fragmented with a combination of homegrown and point solutions, which creates tremendous opportunities for us
to grow sustainably into the future.
We have invested heavily in our platform, our go-to-market strategy,
and our team, which has resulted in tremendous success. Looking forward, we intend to continue to invest in our platform, deepen existing customer relationships and increase new customer growth, expand internationally, and pursue strategic
acquisitions to drive continued growth and enhance our ability to deliver value to our customers.
Our business model is focused on transforming how businesses
purchase, pay, and get paid. We leverage a powerful combination of cloud-based software, payments technology, and advisory solutions to remove friction for our customers and automate their procurement, AP, and AR processes. As a result, we
generate revenue from a mix of payments, software as a service, and advisory fees, as well as equipment sales.
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Payments revenue
We generate transaction fees for facilitating payments between buyers
and suppliers on our platform, using multiple methods including supply chain financing, group purchasing, and electronic payment disbursement. Such revenue includes:
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Transaction fees - We generate fees from transaction processing which are based upon either a fixed amount per transaction or a
percentage of the underlying transaction value. Such fees are recognized at the time that the transaction is processed and validated in our system.
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Rebates - We receive volume-based rebates from certain suppliers within our payment network, a portion of which is shared with the
customer and a portion of which we retain as compensation. Rebate revenue is recognized net of expected payouts to customers and is based upon the actual volume achieved in a period.
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Software as a service revenue
Subscription fees are generated when we host and provide software to
customers to facilitate efficient transaction processing.
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The subscription model provides for a fixed monthly fee that covers a certain allotment of transactions to be processed through
our system.
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Fixed fees are recognized on a monthly basis when we provide service under the terms of a contractual agreement.
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Overage fees for transactions processed in excess of a customer’s allotment are recognized as they occur.
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Advisory revenue
Primarily generated through consulting, implementation and training,
and lease brokerage fees, charged on either a project by project basis or hourly.
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Consulting fees are typically the result of cost-savings or software development engagements and are generated on a (1)
contingent, (2) fixed or (3) time & materials basis.
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Implementation and training fees are based on the amount of work required to configure systems and solutions specific to
customers’ needs and provide subsequent trainings to customers.
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We receive fees for brokering leases between our customers and members of our lending network which are recognized when the
underlying lease is consummated and assigned to a lender.
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Equipment sales
Though not a core product offering, we purchase equipment (primarily
commercial trucks) for resale in support of certain of our advisory solutions. Equipment sales can lead to large fluctuations in our revenue with limited impact to profitability, so they are excluded from the non-GAAP measures we use to monitor
our business (see the section entitled “Non-GAAP Financial Measures”).
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Revenue on equipment sales is recognized when the customer has taken title to and possession of the equipment which occurs
after an agreement of sale has been executed and payment has been received.
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Our model for such transactions generally limits the amount of time inventory is held to 1-3 business days, resulting in high
rates of inventory turnover and low inventory risk.
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The majority of our revenue is derived from software and payments,
which are highly predictable in nature. Our advisory solutions represent a smaller component of our revenue but enable us to provide critical advice to our customers that can lead to cross-sell and upsell opportunities as well as drive greater
transaction volume through our platform. In 2021, our payments, software and advisory solutions represented 40%, 21% and 10% of total revenue, respectively. In 2020, our payments, software and advisory solutions represented 28%, 18% and 12% of
total revenues, respectively. We expect software and payments revenues to continue to grow as a percentage of total revenue as we monetize a greater portion of the payments volume flowing through our
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network and deepen product penetration across our existing customer base. Equipment
sales made up the remainder of our total revenues in calendar 2021 and 2020. Due to the nature of the underlying commercial truck market, equipment sales may generate relatively large swings in our revenue but have a modest impact on our
overall profitability.
We believe that our future performance and growth depends on a number
of factors that present significant opportunities. The most significant factors affecting our business results include, but are not limited to:
New Customer Acquisition – We target middle market and enterprise companies that serve a wide variety of customers and industries internationally and that have complicated AR, AP, and payment processing requirements. We
employ our Sell, Deliver, Delight, and Support strategy to address all aspects of the customer lifecycle from the initial sale through implementation and customer support. Our ability to acquire and retain new customers is a key factor
impacting our ability to drive continued growth.
We leverage a combination of direct and indirect sales strategies to
acquire new customers. Direct sales account for the majority of new customer bookings and consist of an internal sales force organized by industry vertical and customer size. Indirect sales account for the remainder of our new customer bookings
and consist of a network of payment partners, integration partners, and technology partners that provide referrals or resell our solutions. We plan to continue investing in our relationships with these and other strategic partners to develop an
effective channel partner network to help us grow and reach new markets.
Monetize Existing Customer
Base – We serve a customer base of over 2,500 customers spanning a variety of industries, including manufacturing, consumer & retail, healthcare, distribution,
transportation, food & beverage, finance, and others. We generally establish relationships with one or two modules of our solution suite, creating a significant opportunity to cross-sell additional software and payments
modules over time. We follow a land and expand strategy and regularly seek to grow our business by expanding within our existing customer base. We accomplish this by focusing our customer success organization on customer
renewal cycles, analyzing customer delight metrics, and conducting quarterly business reviews to identify opportunities for upsell or cross-sell. For the years ended December 31, 2021 and 2020, 95.9%
and 98.5% of our payments and software revenue have come from customers who had entered into contracts prior to the start of each such calendar years, respectively. In addition, we achieved a dollar-based
net revenue retention rate of 106.2% in the year ended December 31, 2021. We believe there is significant whitespace opportunity remaining within our existing customers and our ability to capture that
opportunity is a core tenet of our overall growth strategy.
Payments Monetization – We have
over $100 billion in total transaction volume flowing through our platform on an annualized basis across a growing network of over 450,000 buyers and over 1.4 million suppliers. Presently, we are monetizing less than 3% of our platform’s
annualized transaction volume, creating a significant growth opportunity within our existing customer base. Our proprietary buyer and supplier network and ability to automate and improve visibility across the procurement, AP, and AR processes
make us the ideal partner to manage and streamline the last mile of payment execution. Through our end-to-end Source-to-Pay and Order-to-Cash solutions, we are able to monetize transactions through a variety of methods, including supply chain
financing, group purchasing, virtual cards and ACH processing. Our ability to monetize a greater portion of the volume flowing through our platform will have a direct impact on our ability to deepen our existing customer relationships and drive
revenue growth.
Software Cross-Sell – Software
cross-sell represents an additional opportunity for us to further penetrate our existing customer base. We believe there is significant opportunity to sell our S2P solutions to our existing O2C customers, and vice versa, as well as drive
greater module adoption within both our S2P and O2C suites. Greater software product adoption drives greater platform stickiness while also leading to greater transaction volume, providing additional opportunity for payments monetization.
Investment in Technology – We are focused on transforming how businesses purchase, pay and get paid. We continue to invest in technology to expand and enhance our suite of B2B commerce solutions. We strive to provide
increased digital capabilities and drive greater efficiencies for our customers across their procurement, AP, and AR processes. We believe that continued investment in our product suite deepens our competitive moat
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and is crucial to our ability to land new customers and expand existing customer
relationships. Additionally, we continue to invest in initiatives focused on improving platform efficiency, platform security and overall scalability. Continued investment in platform architecture and in the improvement of internal processes will
enable us to continue to achieve greater scale.
On January 30, 2020, the World Health Organization announced a global
health emergency because of COVID-19, a new strain of coronavirus. On March 11, 2020, the World Health Organization declared the COVID-19 outbreak a global pandemic. As a result of COVID-19, shelter-in-place and social distancing measures,
restrictions on travel, and forced closures of certain types of businesses were enacted globally, resulting in a broader global economic decline. In response to these events, we took precautionary measures to ensure the health and safety of our
employees and to mitigate the impact on our operations and financial position. We moved all employees to fully remote working and implemented frequent, regular communications and processes for employees and managers to ask questions and report
issues. A vast majority of employees continue to work remotely. Additionally, we instituted a temporary hiring freeze and paused all business travel; these restrictions were gradually lifted by early 2021.
The spread of COVID-19 and the related shutdowns and restrictions
drove supply chain constraints that negatively impacted some of our customers and resulted in a decline in transaction volume through our platform. Moreover, the pandemic also saw significant budget constraints for transformation business
upgrades, such as those that we provide. For the year ended December 31, 2020, our transaction volume and payments, software and advisory revenue declined 6% and 2% over the same period from the prior year, respectively.
However, we have demonstrated strong resilience due to our focus on
digital solutions, our diverse customer base, and our limited concentration in highly impacted end markets, like travel, hospitality, and brick-and-mortar retail. For the year ended December 31, 2021, transaction volume and payments, software
and advisory revenue have recovered significantly, having increased by 45% and 9% over the same period from the prior year, respectively.
We believe that the long-term impact has resulted in a sustainable
tailwind for the industry. The pandemic has served to accelerate the need for digitization and automation across the procurement, AP, and AR processes, which positions us to capitalize on new customer acquisition and drive growth as the broader
economic environment continues to recover.
We continue to monitor the extent of the impact of COVID-19 and any
broader business implications. While it is very difficult to accurately predict the future direction of the effects of the COVID-19 pandemic, we expect continued recovery in line with the broader macroeconomic environment.
We pursue a disciplined acquisition strategy focused on enhancing
our value proposition to customers and expanding our addressable market. Our business has evolved from a North America-focused GPO for the transportation industry to a global provider of end-to-end Source-to-Pay and Order-to-Cash solutions
across multiple verticals with significant transaction volume flowing through our proprietary B2B Payments Network. This transformation has been accelerated by our ability to acquire and integrate point solution technology providers that are
core to our strategy to offer a global, all-in-one B2B commerce platform. We regularly conduct product gap analysis and have made acquisitions on both the S2P and O2C sides of our platform to meet our customers’ needs. The acquisition of
Determine (2019) expanded our S2P offering further upstream with enhanced sourcing and contract lifecycle management capabilities, while the acquisition of Netsend (2019) added enhanced e-billing capabilities to our O2C offering, expanding its
applicability to a broader addressable market. Most recently, we turned to payment execution with the acquisition of Vendorin (2020), seeking to enhance our ability to monetize the billions of dollars of transaction volume flowing through our
network. Vendorin’s virtual card capabilities and payment automation platform is now a core component of our payments monetization strategy. In addition to product expansion, these recent acquisitions have provided access to additional
international markets and have advanced our technological infrastructure with greater cloud platform capabilities. We will continue to pursue strategic acquisitions in a disciplined and methodical manner as we seek to execute on our core
strategy.
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Since 2019, we have acquired the following three companies:
Vendorin (2020) – On December 24,
2020, we closed on the acquisition of Vendorin L.L.C. (“Vendorin”), a U.S. based provider of B2B payments automation and supplier enablement solutions that enable customers to manage and pay their suppliers electronically. The acquisition
bolstered our payments execution and virtual card capabilities, which will enable us to monetize a greater portion of the volume flowing through our platform.
Determine (2019) – On April 10,
2019, we closed on the acquisition of Determine, Inc. (“Determine”), a global provider of SaaS source-to-pay and enterprise contract lifecycle management solutions. The acquisition bolstered our existing Source-to-Pay offering, augmented our
cloud platform capabilities, and accelerated access into the continental European market.
Netsend (2019) – On
February 11, 2019, we closed on the acquisition of Netsend Ltd. (“Netsend”), a U.K. based provider of electronic billing, invoicing, and document distribution solutions to customers in over 50 countries. The acquisition
expanded our global footprint and bolstered our e-billing capabilities.
Corcentric monitors the following key metrics to help it evaluate the
health of its business, identify trends affecting its growth, formulate goals and objectives and make strategic decisions.
Monetized Transaction Volume
Monetized Transaction Volume (“MTV”) is the dollar value of customer
payment transactions that we process through our payment network and is a key driver of our payments revenue. We believe this metric is helpful for investors in evaluating our ability to grow payments revenue. To grow payments revenue, we must
deliver a software platform that streamlines and simplifies the process of granting credit, accepting payments, and reconciling remittance data. As more customers use our software platform to settle their transactions, MTV and the related
payments revenue should grow. We use this metric in evaluating performance of the Corcentric platform and for forecasting future performance.
MTV was $2,756.0 million for the year ended December 31, 2021
compared to $1,901.5 million for the year ended December 31, 2020, an increase of $854.5 million or 45%. $488.3 million of this increase was attributable to MTV related to Vendorin (acquisition closed December 2020). Refer to Note 2 in our
annual consolidated financial statements for more information about the Vendorin acquisition. In addition, MTV increased as we began to experience a recovery from the COVID-19 pandemic which caused a decrease in MTV during 2020.
MTV was $1,901.5 million for the year ended December 31, 2020
compared to $2,020.8 million for the year ended December 31, 2019, a decrease of $119.3 million or 6%. This was primarily driven by the economic impact of the COVID-19 pandemic.
Dollar Based Net Revenue Retention
Dollar Based Net Revenue Retention (“DBNRR”) is a measure of customer
retention. DBNRR is an important indicator of customer satisfaction and usage of our platform, as well as an indicator of potential revenue for future periods. This metric is helpful for investors in evaluating our growth. We use this metric in
evaluating performance of the Corcentric platform and for forecasting future performance. We calculate DBNRR at the end of each period by dividing the current period revenue from customers that existed during the prior year period by the revenue
generated from the identical customer set during the prior period. Customers obtained through acquisition are not included in the calculation until revenues generated from them are comparable in both the current and prior periods. This
calculation includes only our payments and software revenues as our advisory and equipment sale revenues are non-recurring in nature.
|
|
| |
Year ended
December 31,
|
||||||
|
|
| |
2021
|
| |
2020
|
| |
2019
|
|
DBNRR
|
| |
106.2%
|
| |
100.8%
|
| |
108.0%
|
197
Description of Certain Components of Financial
Data
Significant revenue sources are described below. Refer to critical accounting
estimates for more detail and for the related recognition policies.
Payments Revenue:
We generate revenue as we process payment transactions on behalf of
our customers. For payment transactions, we may receive a fixed fee per transaction or a percentage of the underlying transaction value. We also received volume-based rebates from certain suppliers within our payment network.
Software as a service revenue:
We generate revenue through subscription fees for hosting and
providing software (as a service) to our customers to facilitate efficient transaction processing. We charge a fixed fee for a certain allotment of transactions processed through the system and overage fees for transactions in excess of a
customer's allotment.
Advisory revenue:
We generate revenue from advisory services provided to customers. Such
revenue includes:
Implementation and training fees – We charge our customers implementation and training fees to configure the system to their specific needs and provide training to them.
Consulting fees – We provide consulting services where we perform cost savings projects for our customers and charge either a contingency fee where we are entitled to a percentage of the savings generated for our customer,
a fixed fee, or a fee based on time and materials.
Lease brokerage fees – We receive fees for brokering leases (primarily commercial trucks) between our customers and members of our lending network.
Equipment sales:
We generate revenue through the purchase and resale of equipment
(primarily commercial trucks).
Direct costs of revenues (excluding depreciation
and amortization)
We record direct costs of revenues as follows:
Direct costs of payments, software and advisory revenue primarily
consists of direct support personnel costs, technology-related expenses such as hosting and support costs related to delivery of solutions, bad debt expense related to uncollectible accounts receivable and related-facilities rent.
Direct costs of equipment sales consist of costs that we incur to
facilitate sales of equipment, including the direct cost of asset purchases that we incur in equipment sales offerings.
Research and development
Research and development expenses consist primarily of
personnel-related expenses, including benefits and stock-based compensation expenses, for employees who design product enhancements.
Sales and marketing
Sales and marketing expenses consist primarily of personnel-related
expenses, including employee benefits and stock-based compensation expenses, sales commissions, marketing program expenses, travel-related expenses and costs to market and promote our platform through advertisements, marketing events, partnership
arrangements, direct customer acquisition and allocated overhead costs. Sales commissions that are incremental to obtaining new customer contracts are deferred and amortized ratably over the estimated period of our relationship with the
customers, which is generally three years.
198
Our sales and marketing efforts are focused on increasing revenue
from the acquisition of new customers, the expansion of revenue from existing customers and from facilitating increased electronic adoption, which drives more volume through our platform. Sales and marketing spend may fluctuate from period to
period based on a variety of factors including changes in the broader economic environment and our return on this spend.
General and administrative
General and administrative expenses consist of personnel-related
expenses, including employee benefits and stock-based compensation expenses, associated with our executive team, human resources, finance, legal and compliance, facilities and other administrative functions. We expect to incur additional general
and administrative expenses as a result of operating as a public company, including expenses to comply with the rules and regulations applicable to companies listed on a national securities exchange, expenses related to compliance and reporting
obligations pursuant to the rules and regulations of the SEC, as well as higher expenses for director and officer insurance, investor relations, and professional services. We also expect to increase the size of our general and administrative
functions to support the growth in our business. As a result, we expect that our general and administrative expenses will increase in absolute dollars but may fluctuate as a percentage of total revenues from period to period.
Depreciation and amortization
Our depreciation expense is primarily attributable to our depreciation
of computer hardware and software, equipment, furniture and fixtures, and leasehold improvements.
Our amortization expense is primarily attributable to the amortization
of our internally developed software and intangible assets acquired through business combinations, primarily consisting of customer and vendor relationships and developed software. Internally developed software is amortized over 3 years, while
acquired intangible assets are amortized over their estimated useful lives which range from 1 to 15 years.
We currently expect depreciation costs and amortization costs related
to internally developed software to remain generally consistent on a dollar basis and to decline as a percentage of revenue as our business grows. However, these costs may increase in the future as we make additional capital investments to
support the business. We currently expect amortization expense related to acquired intangible assets to decrease on a dollar basis and as a percentage of revenue as time elapses and certain assets reach the end of their useful lives.
The Company operates as a single reporting segment. The following table
sets forth consolidated statements of operations for the periods indicated:
|
|
| |
Year ended
December 31,
|
||||||
|
(in thousands)
|
| |
2021
|
| |
2020
|
| |
2019
|
|
Revenue:
|
| |
|
| |
|
| |
|
|
Payments, software and advisory revenue
|
| |
$109,789
|
| |
$101,231
|
| |
$102,830
|
|
Equipment sales
|
| |
43,905
|
| |
73,445
|
| |
41,755
|
|
Total revenues
|
| |
153,694
|
| |
174,676
|
| |
144,585
|
|
Direct costs of revenues (excluding depreciation and
amortization shown separately below):
|
| |
|
| |
|
| |
|
|
Direct costs of payments, software and advisory revenue
|
| |
35,788
|
| |
34,145
|
| |
34,521
|
|
Direct costs of equipment sales
|
| |
39,504
|
| |
71,012
|
| |
38,911
|
|
Total direct costs of revenue
|
| |
75,292
|
| |
105,157
|
| |
73,432
|
|
Operating expenses:
|
| |
|
| |
|
| |
|
|
Research and development
|
| |
3,081
|
| |
1,678
|
| |
1,594
|
|
Sales and marketing
|
| |
26,646
|
| |
27,064
|
| |
29,368
|
|
General and administrative
|
| |
47,301
|
| |
17,751
|
| |
17,904
|
|
Depreciation and amortization
|
| |
23,577
|
| |
18,664
|
| |
16,850
|
|
Change in fair value of contingent consideration
|
| |
—
|
| |
—
|
| |
1,655
|
199
|
|
| |
Year ended
December 31,
|
||||||
|
(in thousands)
|
| |
2021
|
| |
2020
|
| |
2019
|
|
Total operating expenses
|
| |
100,605
|
| |
65,157
|
| |
67,371
|
|
Operating (loss) income
|
| |
(22,203)
|
| |
4,362
|
| |
3,782
|
|
Interest expense
|
| |
(9,418)
|
| |
(6,930)
|
| |
(9,076)
|
|
Interest income
|
| |
65
|
| |
111
|
| |
175
|
|
Foreign exchange gain (loss)
|
| |
60
|
| |
(34)
|
| |
461
|
|
Loss before income taxes and equity in income (loss) of affiliate
|
| |
(31,496)
|
| |
(2,491)
|
| |
(4,658)
|
|
(Provision) benefit for income taxes
|
| |
(1,404)
|
| |
5,193
|
| |
926
|
|
Equity in income (loss) of affiliate
|
| |
112
|
| |
72
|
| |
(46)
|
|
Net (loss) income
|
| |
$(32,788)
|
| |
$2,774
|
| |
$(3,778)
|
Comparison of the Years Ended December 31, 2021 and 2020
Total Revenues
|
|
| |
Year ended
December 31,
|
| |
Change from
Prior Period
|
||||||
|
(in thousands)
|
| |
2021
|
| |
2020
|
| |
$
|
| |
%
|
|
Payments
|
| |
$61,789
|
| |
$49,575
|
| |
$12,214
|
| |
25%
|
|
Software as a service
|
| |
32,649
|
| |
30,709
|
| |
1,940
|
| |
6%
|
|
Advisory
|
| |
15,351
|
| |
20,947
|
| |
(5,596)
|
| |
-27%
|
|
Equipment sales
|
| |
43,905
|
| |
73,445
|
| |
(29,540)
|
| |
-40%
|
|
Total revenues
|
| |
$153,694
|
| |
$174,676
|
| |
$(20,982)
|
| |
-12%
|
Payments revenues increased by 25%. The largest component of the
increase was $6.0 million in revenues related to the acquisition of Vendorin (acquisition closed December 2020). Refer to Note 2 in our annual consolidated financial statements for more information about the Vendorin acquisition. The remaining
increase was driven by higher MTV in our managed receivables and private commerce networks due to strong macro economic activity in 2021.
Software revenues increased by 6%, primarily driven by a higher
number of transactions processed on our platforms.
Advisory revenues decreased by 27% which was primarily attributable
to fewer consulting engagements in our strategic sourcing offering.
Equipment sales decreased by $29.5 million or 40%. We experienced a
decline in equipment sales volumes due to an agreement we had with a key customer starting in 2019 to assist them in the divestiture of their commercial truck fleet. This was a nonrecurring transaction that resulted in $51.6 million of
incremental equipment sales in 2020 compared to 2021. This was partially offset by higher transaction volumes due to a strong used commercial truck market in 2021 compared to 2020.
Direct Costs of Revenues (excluding depreciation and
amortization)
|
|
| |
Year ended
December 31,
|
| |
Change from
Prior Period
|
| |
Percentage of
Total Revenue
|
|||||||||
|
(in thousands)
|
| |
2021
|
| |
2020
|
| |
$
|
| |
%
|
| |
2021
|
| |
2020
|
|
Direct costs of payments, software and advisory revenue
|
| |
$35,788
|
| |
$34,145
|
| |
$1,643
|
| |
5%
|
| |
23%
|
| |
20%
|
|
Direct costs of equipment sales
|
| |
39,504
|
| |
71,012
|
| |
(31,508)
|
| |
-44%
|
| |
26%
|
| |
41%
|
|
Total direct costs of revenue
|
| |
$75,292
|
| |
$105,157
|
| |
$(29,865)
|
| |
-28%
|
| |
49%
|
| |
60%
|
Direct costs of payments, software and advisory revenue increased
5%. This was largely attributable to an increase of $3.0 million related to direct costs associated with Vendorin in 2021 (acquisition closed December 2020), an increase in incentive compensation expense of $1.7 million as there was no
incentive compensation
200
expense in 2020, an increase of $1.2 million in bad debt expense due to increased
MTV, and an increase of $0.7 million related to data processing costs due to higher transaction volumes in 2021 compared to 2020. This was partially offset by a decrease in personnel costs of $3.3 million resulting from reduced hiring during
the second half of 2020 as a result of the COVID-19 pandemic, which resulted in lower headcount costs during the first half of 2021. In addition, facilities expense decreased by $0.7 million due to the consolidation of some of our offices and
reduced office supplies as more employees are working remotely due to the COVID-19 pandemic. We also had a $0.4 million decrease due to salaries being deferred into our work in process accounts and a $0.2 million decrease in meeting expense.
Direct costs of equipment sales decreased 44% primarily due to an
agreement we had with a key customer starting in 2019 to assist them in the divestiture of their fleet. This was a nonrecurring transaction that resulted in $48.3 million in incremental direct costs of equipment sales in 2020 compared to 2021.
This was partially offset by higher costs due to a strong commercial truck market in 2021 compared to 2020.
Operating Expense
Research and development
|
|
| |
Year ended
December 31,
|
| |
Change from
Prior Period
|
| |
Percentage of
Total Revenue
|
|||||||||
|
(in thousands)
|
| |
2021
|
| |
2020
|
| |
$
|
| |
%
|
| |
2021
|
| |
2020
|
|
Research and development
|
| |
$3,081
|
| |
$1,678
|
| |
$1,403
|
| |
84%
|
| |
2%
|
| |
1%
|
The increase was due to $1.1 million in higher personnel costs
because of hiring additional employees starting in the third quarter of 2021 and incentive compensation expense in 2021. There was no related incentive compensation expense in 2020. In addition, $0.2 million increase was due to consulting fees
related to the redesign of certain aspects of our user interface.
Sales and marketing
|
|
| |
Year ended
December 31,
|
| |
Change from
Prior Period
|
| |
Percentage of
Total Revenue
|
|||||||||
|
(in thousands)
|
| |
2021
|
| |
2020
|
| |
$
|
| |
%
|
| |
2021
|
| |
2020
|
|
Sales and marketing
|
| |
$26,646
|
| |
$27,064
|
| |
$(418)
|
| |
-2%
|
| |
17%
|
| |
15%
|
The decrease was driven by a $1.3 million decrease in travel costs
due to lower attendance at tradeshows as a result of the COVID-19 pandemic. In addition, personnel costs decreased by $0.9 million overall which was largely attributable to reduced hiring during the second half of 2020 as a result of the
COVID-19 pandemic, which resulted in lower headcount costs during the first half of 2021, offset by incentive compensation expense in 2021. There was no related incentive compensation expense in 2020. This was offset by $1.5 million in sales
and marketing costs associated with Vendorin (acquisition closed December 2020).
General and administrative
|
|
| |
Year ended
December 31,
|
| |
Change from
Prior Period
|
| |
Percentage of
Total Revenue
|
|||||||||
|
(in thousands)
|
| |
2021
|
| |
2020
|
| |
$
|
| |
%
|
| |
2021
|
| |
2020
|
|
General and administrative
|
| |
$47,301
|
| |
$17,751
|
| |
$29,550
|
| |
166%
|
| |
31%
|
| |
10%
|
This increase was primarily due to a $21.8 million increase in stock
compensation expense largely due to the modification of certain awards as described in Note 15 to the annual consolidated financial statements and a $3.8 million increase in personnel costs including salaries and related benefits and taxes and
incentive compensation expense. The increase in personnel costs was largely attributable to incentive compensation in 2021 and the hiring of certain key executives in 2021 including a Chief Product Officer, a Chief Customer Officer, and a Chief
Financial Officer. We also hired a Chief Revenue Officer in the fourth quarter of 2020 which contributed to the increase in personnel costs. There was no related incentive compensation expense in 2020. In addition, an increase of $1.4 million
related to general and administrative costs associated with Vendorin (acquisition closed December 2020), an increase of $1.4 million related to special projects including recruitment costs of key executives, tax restructuring, professional fees
related to the Business Combination, and consolidation of our customer relationship management system, and an
201
increase of $0.9 million related to the reduction of certain contingent accruals in
2020 related to the purchase of Determine (acquisition closed 2019). This was partially offset by a $1.2 million decrease in legal costs. We had higher legal costs in 2020 related to acquisitions.
Depreciation and amortization
|
|
| |
Year ended
December 31,
|
| |
Change from
Prior Period
|
| |
Percentage of
Total Revenue
|
|||||||||
|
(in thousands)
|
| |
2021
|
| |
2020
|
| |
$
|
| |
%
|
| |
2021
|
| |
2020
|
|
Depreciation and amortization
|
| |
$23,577
|
| |
$18,664
|
| |
$4,913
|
| |
26%
|
| |
15%
|
| |
11%
|
The increase was primarily driven by a $2.5 million increase in
amortization on acquired intangibles which was comprised of $3.0 million related to the Vendorin acquisition (acquisition closed December 2020) partially offset by a $0.5 million decrease in acquired intangibles related to prior acquisitions as
certain assets reached the end of their useful life. In addition, there was a $2.2 million increase in amortization of our internally developed software, which was driven by an increase in software development projects that were placed in
service during recent periods.
Non-operating income and expenses
|
|
| |
Year ended
December 31,
|
| |
Change from
Prior Period
|
| |
Percentage of
Total Revenue
|
|||||||||
|
(in thousands)
|
| |
2021
|
| |
2020
|
| |
$
|
| |
%
|
| |
2021
|
| |
2020
|
|
Interest expense
|
| |
$(9,418)
|
| |
$(6,930)
|
| |
$(2,488)
|
| |
36%
|
| |
6%
|
| |
4%
|
|
Interest income
|
| |
$65
|
| |
$111
|
| |
$(46)
|
| |
-41%
|
| |
0%
|
| |
0%
|
|
Foreign exchange gain (loss)
|
| |
$60
|
| |
$(34)
|
| |
$94
|
| |
-276%
|
| |
0%
|
| |
0%
|
|
(Provision) benefit for income taxes
|
| |
$(1,404)
|
| |
$5,193
|
| |
$(6,597)
|
| |
-127%
|
| |
1%
|
| |
3%
|
The increase in interest expense was primarily due to increased
interest on the Term Loan. In December 2020, we modified the terms of the loan resulting in additional borrowings of $20 million which resulted in an additional $2.0 million in interest expense in 2021. Refer to Note 12 of our annual
consolidated financial statements. In addition, an increase of $0.5 million in 2021 was due to interest expense on the Vendorin seller note which we entered into in December 2020 in connection with the acquisition.
Foreign exchange gain (loss) is primarily driven by the effect of
remeasurement of the assets and liabilities of foreign currency denominated transactions into U.S. dollars. For the year ended December 31, 2021, we had foreign currency gains because the Canadian dollar strengthened compared to the U.S. dollar
on a weighted average basis. For the year ended December 31, 2020, we had foreign currency losses because the U.S. dollar strengthened compared to the Canadian dollar on a weighted average basis.
Provision for income taxes was $1.4 million or (4.5%) of pretax net
loss for the year ended December 31, 2021. The effective tax rate during this period differs from the U.S. statutory rate primarily due to the recording of a valuation allowance in 2021 against the Company's deferred tax assets which
contributed $10.7 million to tax expense during the period. Refer to Note 13 to our annual consolidated financial statements included elsewhere in this proxy statement/prospectus for more information related to the valuation allowance we
recorded in 2021.
Benefit for income taxes was $5.2 million or 208.5% of pretax net
loss for the year ended December 31, 2020. The effective tax rate during this period differs from the U.S. statutory rate primarily due to a rate differential on a tax loss carryback of $2.4 million, a tax benefit for stock option exercises of
$1.1 million, and a change in deferred tax assets and liabilities due to state and foreign tax rate changes of $0.5 million.
202
Total Revenues
|
|
| |
Year ended
December 31,
|
| |
Change from
Prior Period
|
||||||
|
(in thousands)
|
| |
2020
|
| |
2019
|
| |
$
|
| |
%
|
|
Payments
|
| |
$49,575
|
| |
$51,054
|
| |
$(1,479)
|
| |
-3%
|
|
Software as a service
|
| |
30,709
|
| |
21,639
|
| |
9,070
|
| |
42%
|
|
Advisory
|
| |
20,947
|
| |
30,137
|
| |
(9,190)
|
| |
-30%
|
|
Equipment sales
|
| |
73,445
|
| |
41,755
|
| |
31,690
|
| |
76%
|
|
Total revenues
|
| |
$174,676
|
| |
$144,585
|
| |
$30,091
|
| |
21%
|
Payments revenues decreased 3% due to lower MTV as a result of reduced
macro economic activity due to COVID-19 related restrictions.
Software revenues increased by $9.0 million or 42%. The increase was
primarily driven by a $8.5 million increase in revenues related to Determine, which was acquired in April of 2019 and thus had only 8 months of activity in 2019 compared to 12 months in 2020. Excluding the impact of Determine, software revenue
was relatively flat due to the impact of the COVID-19 pandemic.
Advisory revenues decreased by $9.2 million or 30%. This decrease was
primarily driven by a $4.7 million decrease in our lease brokerage revenue, where COVID-19 related supply chain issues caused delays in the delivery schedules of leased equipment (primarily commercial trucks). Additionally, a decrease of
$3.9 million relates to our strategic sourcing consulting offering resulting from an inability to deploy our consultants to client sites due to COVID-19 restrictions.
Equipment sales increased by $31.7 million or 76%. The increase was
largely attributable to sales related to an agreement we had with a key customer starting in the fourth quarter of 2019 and ending in 2020 to assist them in the divestiture of their commercial truck fleet. This was a nonrecurring transaction that
resulted in $38.1 million of incremental equipment sales in 2020 compared to 2019. This was partially offset by lower transaction volumes in 2020 compared to 2019 due to the impact of the COVID-19 pandemic.
Direct Costs of Revenues (excluding depreciation and
amortization)
|
|
| |
Year ended
December 31,
|
| |
Change from
Prior Period
|
| |
Percentage of
Total Revenue
|
|||||||||
|
(in thousands)
|
| |
2020
|
| |
2019
|
| |
$
|
| |
%
|
| |
2020
|
| |
2019
|
|
Direct costs of payments, software and advisory revenue
|
| |
$34,145
|
| |
$34,521
|
| |
$(376)
|
| |
-1%
|
| |
20%
|
| |
24%
|
|
Direct costs of equipment sales
|
| |
71,012
|
| |
38,911
|
| |
32,101
|
| |
82%
|
| |
41%
|
| |
27%
|
|
Total direct costs of revenue
|
| |
$105,157
|
| |
$73,432
|
| |
$31,725
|
| |
43%
|
| |
60%
|
| |
51%
|
Direct costs of payments, software and advisory revenue remained
relatively consistent in total. Personnel costs increased by $2.3 million, partially offset by a $1.2 million decrease in incentive compensation expense and a $1.0 million decrease in bad debt expense driven by favorable collection experience in
2020.
Direct costs of equipment sales increased $32.1 million or 82%. This
was primarily attributable to costs related to an agreement we had with a key customer starting in the fourth quarter of 2019 and ending in 2020 to assist them in the divestiture of their commercial truck fleet. This was a nonrecurring
transaction that resulted in $35.7 million of incremental costs in 2020 compared to 2019. This was partially offset by a decrease in costs in 2020 compared to 2019 due to the impact of the COVID-19 pandemic.
Operating Expense
Research and development
|
|
| |
Year ended
December 31,
|
| |
Change from
Prior Period
|
| |
Percentage of
Total Revenue
|
|||||||||
|
(in thousands)
|
| |
2020
|
| |
2019
|
| |
$
|
| |
%
|
| |
2020
|
| |
2019
|
|
Research and development
|
| |
$1,678
|
| |
$1,594
|
| |
$84
|
| |
5%
|
| |
1%
|
| |
1%
|
203
Research and development expense remained relatively consistent
for the year ended December 31, 2020 compared to the year ended December 31, 2019. The slight increase was primarily due to personnel costs resulting from higher average headcount as employees of Determine (acquisition closed April 2019) and
Netsend (acquisition closed February 2019) were employed for twelve months in 2020 compared to eight months and ten months, respectively, in 2019. This was offset by a decrease in incentive compensation expense as there was no incentive
compensation in 2020.
Sales and marketing
|
|
| |
Year ended
December 31,
|
| |
Change from
Prior Period
|
| |
Percentage of
Total Revenue
|
|||||||||
|
(in thousands)
|
| |
2020
|
| |
2019
|
| |
$
|
| |
%
|
| |
2020
|
| |
2019
|
|
Sales and marketing
|
| |
$27,064
|
| |
$29,368
|
| |
$(2,304)
|
| |
-8%
|
| |
15%
|
| |
20%
|
The decrease was primarily due to a $2.6 million decrease in travel
expense due to reduced travel costs and lower attendance at tradeshows as a result of the COVID-19 pandemic. This was partially offset by other net increases of $0.4 million, largely due to higher average headcount as employees of Determine
(acquisition closed April 2019) and Netsend (acquisition closed February 2019) were employed for twelve months in 2020 compared to eight months and ten months, respectively, in 2019.
General and administrative
|
|
| |
Year ended
December 31,
|
| |
Change from
Prior Period
|
| |
Percentage of
Total Revenue
|
|||||||||
|
(in thousands)
|
| |
2020
|
| |
2019
|
| |
$
|
| |
%
|
| |
2020
|
| |
2019
|
|
General and administrative
|
| |
$17,751
|
| |
$17,904
|
| |
$(153)
|
| |
-1%
|
| |
10%
|
| |
12%
|
General and administrative expense remained relatively consistent
for the year ended December 31, 2020 compared to the year ended December 31, 2019. Consulting fees decreased by $2.4 million in 2020 as we had significant levels of spending in 2019 related to our acquisitions of Determine and Netsend. This was
essentially offset by a $2.0 million increase in personnel costs resulting from higher average headcount as employees of Determine (acquisition closed April 2019) and Netsend (acquisition closed February 2019) were employed for twelve months in
2020 compared to eight months and ten months, respectively, in 2019.
Depreciation and amortization
|
|
| |
Year ended
December 31,
|
| |
Change from
Prior Period
|
| |
Percentage of
Total Revenue
|
|||||||||
|
(in thousands)
|
| |
2020
|
| |
2019
|
| |
$
|
| |
%
|
| |
2020
|
| |
2019
|
|
Depreciation and amortization
|
| |
$18,664
|
| |
$16,850
|
| |
$1,814
|
| |
11%
|
| |
11%
|
| |
12%
|
The increase was primarily driven by $1.1 million of amortization of
our internally developed software, which was driven by an increase in software development projects that were placed in service during recent periods. In addition, an increase of $0.7 million relates to amortization on acquired intangibles
primarily related to the Determine (acquisition closed April 2019) and Netsend (acquisition closed February 2019) acquisitions which resulted in a full year of amortization expense in 2020 but only a partial period in 2019.
Change in fair value of contingent consideration
|
|
| |
Year ended
December 31,
|
| |
Change from
Prior Period
|
| |
Percentage of
Total Revenue
|
|||||||||
|
(in thousands)
|
| |
2020
|
| |
2019
|
| |
$
|
| |
%
|
| |
2020
|
| |
2019
|
|
Change in fair value of contingent consideration
|
| |
$—
|
| |
$1,655
|
| |
$(1,655)
|
| |
-100%
|
| |
0%
|
| |
1%
|
The change in fair value of contingent consideration was $1.7 million
for the year ended December 31, 2019. This amount was contingent consideration paid to the seller of Source One Management Services, a business acquired in 2018. The final payment of contingent consideration was made in March 2020.
204
Non-operating income and expenses
|
|
| |
Year ended
December 31,
|
| |
Change from
Prior Period
|
| |
Percentage of
Total Revenue
|
|||||||||
|
(in thousands)
|
| |
2020
|
| |
2019
|
| |
$
|
| |
%
|
| |
2020
|
| |
2019
|
|
Interest expense
|
| |
$(6,930)
|
| |
$(9,076)
|
| |
$2,146
|
| |
-24%
|
| |
4%
|
| |
6%
|
|
Interest income
|
| |
$111
|
| |
$175
|
| |
$(64)
|
| |
-37%
|
| |
0%
|
| |
0%
|
|
Foreign exchange (loss) gain
|
| |
$(34)
|
| |
$461
|
| |
$(495)
|
| |
-107%
|
| |
0%
|
| |
0%
|
|
Benefit for income taxes
|
| |
$5,193
|
| |
$926
|
| |
$4,267
|
| |
461%
|
| |
3%
|
| |
1%
|
The decrease in interest expense was primarily due to a $1.3 million
decrease related to the Revolving Line of Credit due to lower outstanding balances, as we used the capital raised from our May 2020 preferred stock issuance to pay down the Revolving Line of Credit in May 2020, and a lower average interest rate
in 2020 compared to the same period in 2019. In addition, a $1.2 million decrease was driven by lower interest on the Term Loan due to lower market interest rates in 2020 as compared to 2019.
Foreign exchange (loss) gain is primarily driven by the effect of
remeasurement of the assets and liabilities of foreign currency denominated transactions into U.S. dollars. Foreign exchange (loss) gain changed due to the strengthening of the U.S. dollar compared to the Canadian dollar.
Benefit for income taxes was $5.2 million or 208.5% of pretax net loss
for the year ended December 31, 2020. The effective tax rate during this period differs from the U.S. statutory rate primarily due to a rate differential on a tax loss carryback of $2.4 million, a tax benefit for stock option exercise of
$1.1 million, and a change in deferred tax assets and liabilities due to state and foreign tax rate changes of $0.5 million.
Benefit for income taxes was $0.9 million or 20.0% of pretax loss
from continuing operations for the year ended December 31, 2019. The effective tax rate during this period differs from the U.S. statutory rate primarily due to a foreign tax rate differential of $(0.3) million and a benefit for tax credits of
$0.4 million.
To provide investors with additional information regarding our
financial results, we have used adjusted revenue, adjusted gross profit, adjusted gross margin and adjusted EBITDA, all of which are non-GAAP measures, within this proxy statement/prospectus.
We have included these non-GAAP measures in this proxy
statement/prospectus because they are measures used by our management and board of directors to understand and evaluate our core operating performance and trends, to prepare and approve our annual budget and to develop short- and long-term
operational plans. In addition, we believe that the exclusion of the items eliminated in calculating adjusted revenue, adjusted gross profit, adjusted gross margin, and adjusted EBITDA can provide useful measures for period-to-period comparisons
of our core business. Accordingly, we believe that these non-GAAP measures provide useful information to investors and others in understanding and evaluating our operating results in the same manner as our management and board of directors. These
non-GAAP measures are subject to limitations, including those described in this section. As such, you should consider adjusted revenue, adjusted gross profit, adjusted gross margin and adjusted EBITDA alongside other GAAP-based financial
performance measures, including revenue, gross profit, and net income, and our other GAAP financial results. Management addresses the inherent limitations associated with using these measures through disclosure of such limitations, presentation
of our financial statements in accordance with GAAP and reconciliation of the non-GAAP measures to the most directly comparable GAAP measure in each case. A reconciliation of each non-GAAP measure to the most directly comparable GAAP based
measure along with material limitations of such measure are included in this section.
Adjusted revenue (Non-GAAP)
We define adjusted revenue (non-GAAP) as total revenues less direct
cost of equipment sales . Adjusted revenue excludes the effects of the gross presentation in revenue of our sales of equipment. Although we sell equipment in support of certain of our advisory services, it is not our primary source of
profitability and often results in very large shifts in revenue with very little impact to our overall profitability. As such, we use adjusted revenue to include only the net profit on sales of equipment.
205
Although adjusted revenue measures are frequently used by investors
and securities analysts in their evaluations of companies, adjusted revenue measures have limitations as analytical tools, and you should not consider them in isolation or as a substitute for analysis of our results of operations as reported
under GAAP. Some of these limitations are:
|
•
|
adjusted revenue (non-GAAP) does not reflect the full value of the equipment sold for which we took risk of loss while in
inventory; and
|
|
•
|
other companies, including companies in our industry, may calculate adjusted revenue or similarly titled measures differently,
which reduces its usefulness as a comparative measure.
|
Because of these and other limitations, you should consider adjusted
revenue (non-GAAP) alongside other GAAP-based financial performance measures, including total revenue and our other GAAP financial results.
Adjusted Gross Profit (Non-GAAP) and Adjusted
Gross Margin (Non-GAAP)
We define adjusted gross profit as total revenues less total direct
costs of revenue, excluding depreciation and amortization, plus stock-based compensation expense included in total direct costs of revenue. Adjusted gross margin is defined as our adjusted gross profit divided by total revenues less direct cost
of equipment sales or adjusted revenue (non-GAAP). We believe adjusted gross profit (non-GAAP) and adjusted gross margin (non-GAAP) can provide a useful measure of our core performance over time as they eliminate the impact of non-cash expenses
and allow a direct comparison of our cash operations and ongoing operating performance between periods.
The following table presents a reconciliation of adjusted revenue
(non-GAAP), adjusted gross profit (non-GAAP), and adjusted gross margin (non-GAAP) to their most directly comparable GAAP financial measures, for each of the periods identified:
|
|
| |
Year ended
December 31,
|
||||||
|
(in thousands)
|
| |
2021
|
| |
2020
|
| |
2019
|
|
Total revenues
|
| |
$153,694
|
| |
$174,676
|
| |
$144,585
|
|
Less: direct cost of equipment sales
|
| |
39,504
|
| |
71,012
|
| |
38,911
|
|
Adjusted revenue (Non-GAAP)
|
| |
$114,190
|
| |
$103,664
|
| |
$105,674
|
|
|
| |
|
| |
|
| |
|
|
Gross profit(1)
|
| |
59,751(2)
|
| |
55,220(3)
|
| |
58,805(4)
|
|
Depreciation and amortization
|
| |
18,651
|
| |
14,299
|
| |
12,348
|
|
Stock-based compensation expense included in cost of revenues
|
| |
323
|
| |
240
|
| |
103
|
|
Adjusted Gross Profit (Non-GAAP)
|
| |
$78,725
|
| |
$69,759
|
| |
$71,256
|
|
|
| |
|
| |
|
| |
|
|
Gross margin
|
| |
38.9%
|
| |
31.6%
|
| |
40.7%
|
|
Adjusted gross margin (Non-GAAP)
|
| |
68.9%
|
| |
67.3%
|
| |
67.4%
|
|
(1)
|
Gross profit is calculated as total revenues less cost of revenues (excluding depreciation and amortization), amortization of
acquired technologies, and amortization of internally developed software.
|
|
(2)
|
For the year ended December 31, 2021, gross profit represents total revenues of $153.7 million less cost of revenues (excluding
depreciation and amortization) of $75.3 million, amortization of acquired technologies of $6.8 million, and amortization of internally developed software of $11.9 million.
|
|
(3)
|
For the year ended December 31, 2020, gross profit represents total revenues of $174.7 million less cost of revenues (excluding
depreciation and amortization) of $105.2 million, amortization of acquired technologies of $5.0 million, and amortization of internally developed software of $9.3 million.
|
|
(4)
|
For the year ended December 31, 2019, gross profit represents total revenues of $144.6 million less cost of revenues (excluding
depreciation and amortization) of $73.4 million, amortization of acquired technologies of $4.3 million, and amortization of internally developed software of $8.1 million.
|
Adjusted EBITDA (non-GAAP)
We define adjusted EBITDA (non-GAAP) as net income (loss) from
continuing operations adjusted for (i) Interest expense, net; (ii) Provision (benefit) for income taxes; (iii) Depreciation and amortization; (iv) Stock-based compensation ; (vi) Foreign exchange gain (loss); (vii) Equity in loss (income) of
affiliate;
206
(viii) Acquisition costs; (ix) Change in fair value of contingent consideration;
(x) Acquisition accounting adjustments; and (xi) Restructuring and strategic project expenses which qualify as adjustments to EBITDA as defined in our credit agreements.
We use adjusted EBITDA (non-GAAP) to measure cash flow and our ability
to repay our debt obligations. In addition, adjusted EBITDA (non-GAAP) is the primary metric that determines compliance with covenants under our debt obligations. Although adjusted EBITDA (non-GAAP) measures are frequently used by investors and
securities analysts in their evaluations of companies, adjusted EBITDA (non-GAAP) measures each have limitations as an analytical tool, and you should not consider them in isolation or as a substitute for analysis of our results of operations as
reported under GAAP. Some of these limitations are:
|
•
|
although depreciation and amortization are non-cash charges, the assets being depreciated and amortized may have to be replaced in
the future, and adjusted EBITDA (non-GAAP) does not reflect cash capital expenditure requirements for such replacements or for new capital expenditure requirements;
|
|
•
|
adjusted EBITDA (non-GAAP) does not reflect interest income or expense;
|
|
•
|
adjusted EBITDA (non-GAAP) does not reflect changes in, or cash requirements for, our working capital needs;
|
|
•
|
adjusted EBITDA (non-GAAP) does not reflect the potentially dilutive impact of stock-based compensation;
|
|
•
|
adjusted EBITDA (non-GAAP) does not reflect income tax expense that may represent a reduction in cash available to us; and
|
|
•
|
other companies, including companies in our industry, may calculate adjusted EBITDA (non-GAAP) or similarly titled measures
differently, which reduces its usefulness as a comparative measure.
|
Because of these and other limitations, you should consider adjusted
EBITDA (non-GAAP) alongside other GAAP-based financial performance measures, including various cash flow metrics, net income and our other GAAP financial results. Management addresses the inherent limitations associated with using adjusted EBITDA
(non-GAAP) through disclosure of such limitations, presentation of our financial statements in accordance with GAAP and reconciliation of adjusted EBITDA (non-GAAP) to the most directly comparable GAAP measure, net income. Further, management
also reviews GAAP measures, and evaluates individual measures that are not included in adjusted EBITDA (non-GAAP) such as our level of capital expenditures and interest expense, among other items.
The following table presents a reconciliation of adjusted EBITDA
(non-GAAP) to net income (loss) from continuing operations, the most comparable GAAP measure, for each of the periods identified.
|
|
| |
Year ended
December 31,
|
||||||
|
(in thousands)
|
| |
2021
|
| |
2020
|
| |
2019
|
|
Net (loss) income
|
| |
$(32,788)
|
| |
$2,774
|
| |
$(3,778)
|
|
Adjustments:
|
| |
|
| |
|
| |
|
|
Interest expense, net
|
| |
9,353
|
| |
6,819
|
| |
8,901
|
|
Provision (benefit) for income taxes
|
| |
1,404
|
| |
(5,193)
|
| |
(926)
|
|
Depreciation and amortization
|
| |
23,577
|
| |
18,664
|
| |
16,850
|
|
Earnings Before Interest Taxes Depreciation and Amortization
|
| |
$1,546
|
| |
$23,064
|
| |
$21,047
|
|
|
| |
|
| |
|
| |
|
|
Adjustments:
|
| |
|
| |
|
| |
|
|
Stock-based compensation expense
|
| |
$24,097
|
| |
$2,228
|
| |
$1,058
|
|
Foreign currency (gain) loss
|
| |
(60)
|
| |
34
|
| |
(461)
|
|
Equity in (income) loss of affiliate
|
| |
(112)
|
| |
(72)
|
| |
46
|
|
Change in Contingent Consideration
|
| |
—
|
| |
—
|
| |
1,655
|
|
Acquisition costs(1)
|
| |
100
|
| |
1,250
|
| |
2,964
|
|
Acquisition Accounting Adjustments(2)
|
| |
—
|
| |
(886)
|
| |
4,932
|
|
Restructuring and strategic project expenses(3)
|
| |
3,088
|
| |
1,431
|
| |
330
|
|
Adjusted EBITDA (Non-GAAP)
|
| |
$28,659
|
| |
$27,049
|
| |
$31,571
|
|
(1)
|
Represents legal, accounting and other professional fees incurred in connection with the acquisitions of Determine (2019),
Netsend Ltd (2019) and Vendorin LLC (2020).
|
207
|
(2)
|
For the year ended December 31, 2019, represents purchase accounting adjustments for the Determine acquisition related to the
step down of deferred revenue on the opening balance sheet. For the year ended December 31, 2020, represents a benefit related to reduction in contingent liabilities recorded on the opening balance sheet of the Determine acquisition.
|
|
(3)
|
For the year ended December 31, 2021, represents transaction costs associated with the Business Combination see (Note 1) as well
as charges associated with severance and employer taxes due upon the exercise of stock options. For the years ended December 31, 2020 and 2019, represents costs associated with special projects, including the Company's legal
reorganization and brand consolidation, as well as charges associated with severance and employer taxes due upon the exercise of stock options.
|
Our principal sources of liquidity are cash, cash equivalents, cash
flows from operations, private sales of common and preferred equity, as well as debt borrowings and availability pursuant to our Revolving Line of Credit (described below). Our primary uses of liquidity are for operating expenses, capital
expenditures and acquiring businesses. We do not enter into investments for trading or speculative purposes. As of December 31, 2021, we had cash and cash equivalents of $9.9 million. We believe cash, cash equivalents, and the availability
under the Revolving Line of Credit, will be sufficient to meet our working capital and capital expenditure requirements for a period of at least twelve months from the date of this proxy statement/prospectus. Cash from operations could be
affected by various risks and uncertainties, including, but not limited to, the effects of the COVID-19 pandemic.
The following table shows our cash flows from operating activities,
investing activities and financing activities for the stated periods:
|
|
| |
Year ended
December 31,
|
||||||
|
(in thousands)
|
| |
2021
|
| |
2020
|
| |
2019
|
|
Net cash (used in) provided by operating activities
|
| |
$(10,012)
|
| |
$19,444
|
| |
$31,623
|
|
Net cash used in investing activities
|
| |
(16,377)
|
| |
(93,035)
|
| |
(63,260)
|
|
Net cash provided by financing activities
|
| |
25,637
|
| |
72,775
|
| |
34,119
|
|
Increase (decrease) in cash and cash equivalents
|
| |
$(752)
|
| |
$(816)
|
| |
$2,482
|
Net cash provided by (used in) operating activities consisted of net
loss (income) adjusted for certain non-cash items including depreciation and amortization, bad debt expense, stock-based compensation, and deferred income taxes, as well as the effect of changes in working capital and other activities. Net cash
provided by (used in) operating activities is significantly influenced by the amount of cash we require to support the recent growth of our payment solutions, where we may take credit risk and often make payments on our customer’s behalf to
suppliers and other vendors before the customer would be required to pay us. As a result, as our revenue in those areas grows, we may use more cash than we collect due to acceleration of payments to suppliers and other vendors. This working
capital need is supported by our Revolving Line of Credit.
Net cash used in operating activities was $10.0 million for the year
ended December 31, 2021, which was driven by net loss of $32.8 million, adjusted for non-cash expenses primarily driven by stock-based compensation of $24.1 million due to a modification of certain awards, as described in Note 15 to the annual
consolidated financial statements, and depreciation and amortization of $23.6 million. Increases in accounts payable and accrued expenses and other current liabilities, largely due to timing of payments, contributed an additional $16.8 million
and $3.0 million in net cash provided by operations, respectively. This was offset by an increase in accounts receivable and other receivables of $46.1 million which was driven by increases in our MTV. An increase in other assets was primarily
driven by $6.1 million in loans to executive officers in order to support funding of payroll tax obligations related to stock compensation awards.
Net cash provided by operating activities was $19.4 million for the
year ended December 31, 2020, which was driven by net income of $2.8 million, adjusted for non-cash expenses primarily driven by depreciation and amortization of $18.7 million. An increase in accounts payable of $17.8 million was largely due to
timing of payments, partially offset by a decrease in accrued expenses and other current liabilities of $17.0 million also related to timing of accruals and payments and an increase in other current assets of $5.8 million due to income tax
refunds to be received resulting from the carryback of losses during 2020.
208
Net cash provided by operating activities was $31.6 million for
the year ended December 31, 2019, which was driven by net loss of $3.8 million adjusted for non-cash expenses primarily driven by depreciation and amortization of $16.9 million. Increases in accounts payable of $8.6 million and accrued expenses
of $18.0 million was largely due to timing of payments, partially offset by increases in accounts receivable and other current assets of $4.8 million and $6.0 million, respectively, which was driven by increases in our MTV.
Our investing activities have consisted primarily of purchases of
equipment and software developed for internal use, short-term investments, and business acquisitions. We expect our capital expenditures and our investment activity to continue to increase as our business grows.
Net cash used in investing activities was $16.4 million for the year
ended December 31, 2021. This amount was largely driven by a $16.0 million investment in capitalized software to support our platforms and $1.0 million in purchases of property and equipment partially offset by $0.6 million in proceeds from the
sale of property and equipment.
Net cash used in investing activities was $93.0 million for the year
ended December 31, 2020. This amount was largely driven by a payment of $79.0 million related to the Vendorin acquisition (acquisition closed December 2020), a $11.3 million investment in capitalized software to support our platforms, and
$2.7 million in purchases of property and equipment.
Net cash used in investing activities was $63.3 million for the year
ended December 31, 2019. This amount was largely driven by payments of $31.8 million and $20.1 million related to the Determine (acquisition closed April 2019) and Netsend (acquisition closed February 2019) acquisitions, respectively. In
addition, $10.0 million related to investments in capitalized software to support our platforms and we made purchases of $1.4 million in property and equipment.
Net cash provided by financing activities was $25.6 million for the
year ended December 31, 2021. This was primarily influenced by the net proceeds and payments on our Revolving Line of Credit, which resulted in a net increase of $30.8 million of cash to support growth in our MTV. This was offset by a $3.6
million decrease related to the repurchase of common stock and a $ 1.4 million decrease related to the repayment of the Term Loan.
Net cash provided by financing activities was $72.8 million for the
year ended December 31, 2020. This change was largely driven by proceeds from the above noted May issuance of preferred stock of $79.6 million and proceeds from the Term Loan of $19.7 million. In December 2020, we modified the Term Loan to
provide an additional $20 million of principal. This was offset by the net proceeds and payments on our Revolving Line of Credit, which resulted in a net decrease of $12.4 million . In addition, a $7.5 million decrease related to the repurchase
of common stock, a $4.3 million decrease related to preferred stock issuance costs in connection with the preferred stock purchase agreement, and a $1.3 million decrease related to the payment for contingent consideration related to the Source
One acquisition (acquired in 2018).
Net cash provided by financing activities was $34.1 million during
the year ended December 31, 2019. This was primarily influenced by the net proceeds and payments on our Revolving Line of Credit, which resulted in a net increase of $38.6 million of cash to support growth in our MTV. This was offset by a $1.1
million decrease related to the repayment of the Term Loan and the payment of $2.4 million in contingent consideration related to the Determine acquisition.
Revolving Line of Credit
We have a revolving line of credit (the “Revolving Line of Credit”)
under which we are permitted to borrow up to 85% of eligible receivables up to a maximum commitment amount of $150 million. We primarily use this line of credit to support the working capital needs of our payment solutions. Often, our solutions
require us to pay invoices on behalf of our customers faster than we collect those amounts from customers. As a result, during periods of increasing MTV, our cash used in the operations from our solutions may exceed our cash flows from those
operations.
209
The Revolving Line of Credit expires in November 2023. Interest on
borrowings under the Revolving Line of Credit accrues at the option of the Company at either (1) Base Rate plus 0.50%, (2) LIBOR plus 1.50%, (3) Canadian Prime Rate plus 0.50%, or (4) CDOR Rate plus 1.50%. Interest payments are due monthly.
The amount of available borrowings as of December 31, 2021 was
approximately $150.0 million of which approximately $60.5 million was available to be drawn, and $89.5 million was outstanding, all of which is classified as long-term in our audited consolidated financial statements included elsewhere in this
proxy statement/prospectus.
Term Loan
In November 2018, we entered into a $50 million term loan agreement
(the “Term Loan”) to provide growth capital for investments in our products as well as acquisitions. In December 2020, we modified the terms of the loan to provide an additional $20 million of principal and amended certain restrictive covenants
to allow for the acquisition of Vendorin. There were no other material changes in the terms of the loan. The Term Loan matures on November 15, 2023 and, at the option of the Company, bears interest at either the Prime Rate plus 5% or LIBOR plus
6%. The interest rate is subject to adjustment based on the Company’s senior leverage ratio. Interest payments are due quarterly.
Principal payments equal to 0.50% of the original principal amount,
currently $0.4 million, are due quarterly. In addition to the scheduled principal payments, the Term Loan is also subject to excess cash flow sweep provisions whereby if the senior leverage ratio is within certain levels at the end of a given
fiscal year, the Company must prepay the Term Loan in an amount equal to 50% of the excess cash flow, as defined in the agreement. To date there have been no required excess cash flow sweep payments. The outstanding balance on the Term Loan is
$66.6 million as of December 31, 2021.
Covenants
The Revolving Line of Credit and Term Loan contain customary conditions
to borrowing, events of default and covenants, including covenants that restrict our ability to dispose of assets, merge with or acquire other entities, incur indebtedness, grant liens, make distributions to holders of our equity interests and
make investments. In addition, the Revolving Line of Credit and Term Loan contain certain financial covenants and cross defaults. The target levels for these covenants vary over the term of the Revolving Line of Credit and Term Loan.
As of December 31, 2021, the financial covenants included:
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Maximum Senior Leverage Ratio of 6.50:1.00
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Fixed Charge Coverage Ratio of 1.00:1.00
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Minimum EBITDA of $25 million (as defined)
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The Company was in compliance with such covenants as of December 31,
2021.
Vendorin Seller Note
In connection with the acquisition of Vendorin, we issued notes
payable in the amount of $10.0 million. These notes bear interest at a rate of 5% and mature February 15, 2024. Interest on the notes accrues annually and is capitalized and paid in kind by adding all such accrued and unpaid interest to the
outstanding principal amount of the notes. The principal amount and all accrued but unpaid interest are due upon maturity. The total amount due on the notes is $10.5 million as of December 31, 2021.
Redeemable Preferred Stock
On May 1, 2020, we entered into a stock purchase agreement with a
private equity sponsor (the Sponsor) to provide growth capital and fund acquisitions in which the Company issued 2,700,967 shares of Series A redeemable Preferred Stock for an aggregate purchase price of $80.0 million. The preferred stock
accrues cumulative dividends compounded quarterly based on an annual rate of 13.25%. Accumulated unpaid dividends were approximately $19.4 million as of December 31, 2021.
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The preferred stock is convertible into 3,442,633 shares of
common stock, at the option of the holder, or upon the occurrence of certain events. As a result of the transaction described in Note 1 to the audited consolidated financial statements included elsewhere in this proxy statement/prospectus the
redeemable preferred stock will be exchanged for shares of new Corcentric on an “as converted” basis at the closing of the Business Combination.
Accumulated accretion on the preferred stock redemption preference
and issuance costs was approximately $15.0 million as of December 31, 2021.
Redeemable Common Stock
As described in Note 14 to the audited consolidated financial
statements included elsewhere in this proxy statement/prospectus, under certain circumstances we may be required to repurchase common stock from our shareholders. The aggregate amount of such repurchases has been approximately $2.6 million during
the last three years.
As of December 31, 2021, we have cash requirements for the
following:
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Principal payments on our Term loan, Revolving Line of Credit, and Vendorin seller note of $166.6 million are expected to be
paid out as follows: $1.4 million in 2022 and $154.7 million in 2023, and $10.5 million in 2024.
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Interest payments related to our Term loan, Revolving Line of Credit, and Vendorin seller note of $14.2 million are expected to
be paid out as follows: $ 6.9 million in 2022, $6.1 million in 2023, and $1.2 million in 2024.
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Lease payments as described in Note 17 of the audited consolidated financial statements included elsewhere in this proxy
statement/prospectus.
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Payments under a software service agreement to be paid as follows: $0.6 million in 2022 and $0.5 million in 2023.
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Capital expenditures to improve and maintain our technology platforms. Our historical spending on an annual basis during the
last three years has ranged from $10.1 million to $16.0 million related to investments in internally developed software and $1.0 million to $2.8 million related to purchases of property and equipment. We currently expect the level of
capital spending to increase in whole dollar terms but remain consistent as a percentage of our revenue.
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Other than operating leases which remain off-balance sheet as we have
not yet adopted ASU 2016-02, off-balance sheet arrangements are not a significant source of our financing strategy. Refer to Note 17 of our annual consolidated financial statements included in this proxy statement/prospectus for additional
information with respect to leases and other contractual commitments.
In addition to the items referenced above, we periodically enter
into agreements in the normal course of business to repurchase assets from third-party leasing companies at a pre-determined residual price at the end of a third-party lease. The purpose of these arrangements is to provide a source of inventory
for our used commercial truck sales operations. Inventory procured under such arrangements are considered to be conditional purchase obligations as the agreements are subject to quality inspections, maintenance requirements, and other typical
industry conditions. Over the next five years, the maximum committed inventory purchases are $43.4 million with the maximum annual commitment of $10.9 million in 2022. The committed purchase levels generally represent less than 20% of our
expected future inventory needs.
We are not aware of any event, demand, commitment, trend, or
uncertainty that will result in or is likely to result in the termination, or material reduction in availability to our off-balance-sheet arrangements.
Our financial statements and the related notes included elsewhere in
this proxy statement/prospectus statement are prepared in accordance with generally accepted accounting principles (“GAAP”) in the United States. The preparation of these financial statements requires us to make estimates and assumptions that
affect
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the reported amounts of assets, liabilities, revenues, expenses and disclosure of
contingent assets and liabilities at the date of the financial statements, and reported amounts of revenues and expenses during the reporting period. These estimates are based on historical data and experience, as well as various other factors
that we believe to be reasonable under the circumstances, the results of which form the basis for making judgments about the carrying value of assets and liabilities that are not readily determined from other sources. We engaged third-party
valuation specialists to assist with estimates related to the valuation of the Company’s common stock, and the valuation of assets and liabilities acquired in business combinations. Such estimates often require the selection of appropriate
valuation methodologies and models, and significant judgment in evaluating ranges of assumptions and financial inputs.
Although we believe the estimates and assumptions used in determining
the recorded amounts in the accompanying consolidated financial statements are reasonable, actual results may differ from those estimates under different assumptions or circumstances.
We believe the assumptions and estimates associated with the following
accounting policies have the greatest potential impact on our consolidated financial statements.
Revenue Recognition
In accordance with ASC 606, Revenue
from Contracts with Customers and all the related amendments (“the revenue standard”), we use the five-step model to achieve the core underlying principle that we should recognize revenue to depict the transfer of goods or
services to customers at an amount that we expect to be entitled to in exchange for those goods or services. These steps include (1) identifying the contract with the customer, (2) identifying the performance obligations, (3) determining the
transaction price, (4) allocating the transaction price to the performance obligations, and (5) recognizing revenue as we satisfy the performance obligation(s).
Significant revenue sources include payments revenue, software revenue
and advisory revenue as well as equipment sales.
Payments revenue:
Payments revenue includes transaction fees and rebates. We generate
fees from transaction processing which are based upon either a fixed amount per transaction or a percentage of the underlying transaction value. Such fees are recognized at the time that the transaction is processed and validated in our system.
Rebate revenue is recognized as transactions occur based upon the estimated rebate rate to be paid. Rebate payments to customers are accounted for as consideration payable to a customer and recorded as a reduction to revenue in accordance with
ASC 606. Expected payouts are estimated based on historical data.
Software as a service revenue:
Software as a service revenue includes subscription fees for hosting
and providing software to our customers to facilitate efficient transaction processing. The subscription models provide for a fixed monthly fee that covers a certain allotment of transactions and is recognized when we provide services under the
terms of a contractual agreement. Software as a service revenue also includes overage fees for transactions processed in excess of a customer's allotment and are recognized as they occur.
Advisory revenue:
Advisory revenue includes implementation and training fees, consulting
fees and lease brokerage fees.
Implementation and training fees: We have contracts that often
require customers to pay implementation or contract set up fees. Each contract is reviewed to determine whether implementation and training services represent distinct performance obligations. If the service is determined to represent a
distinct performance obligation, consideration is allocated to that performance obligation based upon established selling prices for similar services. Revenue is recognized based on the proportional performance of our obligations under the
contract. The measurement of proportional performance under the contract involves significant judgments including estimating the amount of labor and other support costs that will be needed to complete the contract. If the service is determined
not to represent a distinct performance obligation, the fees received are recognized on a straight-line basis over 3-5 years, the estimated life of the customer relationship.
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Consulting fees: We perform sourcing consulting services. Fees can
be generated in one of three ways:
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Contingency fees – We perform cost savings projects on a contingent basis. Under these arrangements we are entitled to a
percentage of the savings generated through the engagement. The billings for such projects can occur over a period of up to 24 months following the completion of a project, as the actual savings are realized by the customers. Revenue
for these projects is initially measured based upon an estimate of the future savings to be achieved. Significant judgment is required in estimating the savings. The customer’s historical usage patterns as well as contractual price
reductions achieved as part of the engagement are used to develop the estimate. Actual savings realized may vary from the estimates. The savings estimates are updated each reporting period based upon actual savings realized.
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Fixed fees – We perform cost savings projects at a fixed rate. Revenue for such projects is recognized over time based upon the
proportional performance of our obligations under the contract. Fixed fee contracts are generally less than 1 year in duration.
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Time and materials – We perform cost savings and client requested software development projects that are recognized as hours are
incurred on a project.
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Lease brokerage fees: We receive fees for brokering leases
(primarily commercial trucks) between our customers and members of our lending network. Such fees are recognized when the underlying lease is consummated and assigned to the lender.
Equipment sales:
Equipment revenue is generated when we purchase equipment (primarily
commercial trucks) for resale. Revenue on equipment sales is recognized when the customer has taken title to and possession of the equipment which occurs after an agreement of sale has been executed and payment has been received.
Allowance for Doubtful Accounts
We develop the allowance for doubtful accounts receivable based upon
its historical write off experience as well as a specific review of significant past due customer accounts. Each significant past due customer account is reviewed monthly and assigned a reserve based upon the amount of the past due balance, the
customer’s financial strength, payment history, collateral, and any known actions, such as liquidation or bankruptcy. A non-specific reserve is also established at the portfolio level, based upon an average of historical write offs in relation
to total monetized transaction volume. We believe our procedures for estimating such amounts are reasonable and historically have not resulted in material adjustments in subsequent periods. While we do not currently foresee any significant
changes in our ability to collect receivables, deterioration in the financial strength of our customers could cause a significant increase in our historical level of write offs and the related bad debt expenses. For additional information refer
to Note 6 to our annual consolidated financial statements included elsewhere in this proxy statement/prospectus.
We may assess finance charges when accounts are past due. Finance
charge revenue is recognized when cash is received, as we do not believe collectability will be reasonably assured until that point.
Software Development Costs
We capitalize certain development costs incurred to acquire or create
the Company's internal-use software. These capitalized costs are primarily related to applications hosted by the Company and accessed by the Company's customers. We follow internal use software guidance for product related costs as customers
cannot take possession of the underlying software. Costs incurred in the preliminary stages of development are expensed as incurred. Once the application development stage is reached, internal and external costs, if direct and incremental, are
capitalized until the software is substantially complete and ready for its intended use. Capitalization ends when all substantial testing is complete. Our internal capitalized costs consist primarily of direct labor and fringe benefits. We also
capitalize costs related to specific upgrades and enhancements when it is probable the expenditures will result in additional functionality. Capitalized costs are included in the internally developed software class in property and equipment.
These costs are amortized on a straight-line basis over their estimated useful life which is typically three years. Maintenance and training costs are expensed as incurred. We evaluate the remaining useful lives of these assets on an annual basis
and test for impairment whenever events or changes in circumstances occur that could impact the recoverability of these assets.
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Business Combinations and Intangible Assets
Business combinations are accounted for in accordance with the
acquisition method. The Company recognizes separately from goodwill the assets acquired and the liabilities assumed at its acquisition date fair values. In connection with acquisitions the identifiable intangible assets purchased typically
consist of customer relationships, technologies, vendor relationships, trade names and non-compete agreements. While the Company uses its best estimates and assumptions to accurately value assets acquired and liabilities assumed at the
acquisition date, its estimates are inherently uncertain and subject to refinement. As a result, during the measurement period, which may be up to one year from the acquisition date, the Company records adjustments to the assets acquired and
liabilities assumed with the corresponding offset to goodwill.
Goodwill and intangible assets deemed to have indefinite lives are
tested at least annually for impairment, or when circumstances indicate that the carrying amount of the asset may not be recoverable. Our impairment test is performed on October 1 on an annual basis. Goodwill is tested for impairment as a
single reporting unit. Goodwill is tested for impairment by either performing a qualitative evaluation or a quantitative test. The qualitative evaluation is an assessment of factors to determine whether it is more likely than not that the fair
value of the reporting unit is less than its carrying amount, including goodwill. We may elect not to perform the qualitative assessment and perform a quantitative impairment test. For purposes of performing the quantitative test, fair value is
determined based on discounted cash flow analysis, or the use of market multiples applied to earnings. Both valuation methods include significant management assumptions such as revenue growth rates, operating margins, weighted average cost of
capital, the selection of comparable companies, and future economic and market conditions. If the carrying value of the reporting unit exceeds fair value, goodwill is considered impaired. The impairment charge recognized is equal to the amount
by which the carrying amount exceeds the reporting unit’s fair value. However, the loss recognized should not exceed the total amount of goodwill.
Definite-lived intangible assets consist primarily of customer
relationships and acquired software. Customer relationships are primarily amortized over 9 to 15 years utilizing an accelerated method of amortization. Acquired software is amortized over 3 to 9 years utilizing the straight-line method of
amortization.
Income Taxes
We account for deferred income taxes under the asset and liability
method of accounting for income taxes. Under the asset and liability method, deferred tax assets and liabilities are adjusted to reflect changes in tax rates and other provisions of the tax law in the period in which such changes are enacted.
Deferred tax assets are recognized unless it is more likely than not that some portion or all of the deferred tax assets will not be realized.
Significant management judgment is required to determine the amount of
benefit to be recognized in relation to an uncertain tax position. We use a two-step process to evaluate tax positions. The first step requires us to determine whether it is more likely than not (greater than 50% chance) that the tax position
will be sustained. The second step requires us to recognize in the financial statements the benefit of a tax position that meets the more likely than not recognition criterion. The amounts ultimately paid upon resolution of issues raised by
taxing authorities may differ materially from the amounts accrued and may materially impact the financial statements in future periods.
See Note 5 to our annual consolidated financial statements included
elsewhere in this proxy statement/prospectus for a description of recently adopted accounting pronouncements and issued accounting pronouncements not yet adopted.
In April 2012, the JOBS Act was enacted. Section 107(b) of 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. Thus, an emerging growth company can delay the adoption of certain accounting standards until
those standards would otherwise apply to private companies. North Mountain initially elected, and now Corcentric has elected to take advantage of the extended transition period to comply with new or revised accounting standards and to adopt
certain of the reduced disclosure requirements available to emerging growth
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companies. As a result of the accounting standards election, Corcentric will not be
subject to the same implementation timeline for new or revised accounting standards as other public companies that are not emerging growth companies which may make comparison of Corcentric’s financials to those of other public companies more
difficult.
Corcentric also intends to take advantage of the reduced regulatory
and reporting requirements of emerging growth companies pursuant to the JOBS Act so long as it qualifies as an emerging growth company, including, but not limited to, not being required to comply with the auditor attestation requirements of
Section 404(b) of the Sarbanes-Oxley Act, reduced disclosure obligations regarding executive compensation, and exemptions from the requirements of holding non-binding advisory votes on executive compensation and golden parachute payments.
In the normal course of business, we are subject to a variety of risks
which can affect our operations and profitability. These risks primarily include interest rate and foreign exchange. In addition, we maintain significant amounts of cash and cash equivalents at one or more financial institutions that are in
excess of federally insured limits. We cannot be assured that we will not experience losses on these deposits.
Interest rate risk
We are exposed to market risk related to changes in interest rates
relating to existing and future borrowings under our Revolving Line of Credit and Term Loan. These facilities will increase if market interest rates rise as all rates are variable based upon LIBOR or other market rates. Also, in July 2017, the
United Kingdom's Financial Conduct Authority (FCA), which regulates LIBOR, announced that it intends to phase out LIBOR by the end of 2021. We are evaluating the potential impact of the eventual replacement of the LIBOR benchmark interest rate.
We are not able to predict what the impact of a replacement interest rate benchmark may be on our financial position or results of operations, but we do not believe it will be material at this time. As of the most recent period end, we estimate
that a twenty-five basis point change in LIBOR interest rates would impact annual interest expense by $0.4 million.
Foreign exchange risk
While we operate across many currencies including the British pound,
the EURO, the Canadian dollar, and the Australian dollar, our primary economic risk related to foreign exchange is driven by the United States dollar to the Canadian dollar exchange rate. A portion of the transactions processed through our
solutions are denominated in foreign currencies (primarily the Canadian dollar). In processing these transactions, we are exposed to risk associated with changes in the valuation of the U.S. dollar relative to other currencies. In general, we pay
the transactions that we process in advance of collecting the underlying cash from our customers. As a result, we will experience gains during times that the U.S. dollar is weakening and losses during times that the U.S. dollar is strengthening.
However, given the overall level of exposure that we have to foreign currency in recent periods, we believe that a 10% change in applicable foreign exchange rates would not have a significant effect on our financial position or results of
operations.
Our headquarters is an approximately 16,830 square foot facility that
we lease in Cherry Hill, New Jersey. Our lease for this facility expires in August 2029. We believe our facilities are adequate and suitable for our current needs and that should it be needed, suitable additional or alternative space will be
available to accommodate our operations.
From time to time, we may become involved in legal proceedings or be
subject to claims arising in the ordinary course of its business. We are not currently a party to any legal proceedings, the outcome of which, if determined adversely to us, would individually or in the aggregate have a material adverse effect on
our business, financial condition or results of operations.
Certain of our products and services are based on proprietary software
and related solutions. We rely on a combination of copyright, trademark and trade secret laws, as well as employee and third-party non-disclosure,
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confidentiality, and other contractual arrangements to establish, maintain, and enforce
our intellectual property rights in our technology, including with respect to our proprietary rights related to our products and services. In addition, we license technology from third parties that is integrated into some of our solutions.
We own a number of registered service marks, including CORCENTRIC,
CORCONNECT, COR360 and other pending applications. We also own a number of domain names, including www.corcentric.com.
As of December 31, 2021, we had 484 employees, consisting of 199
employees in operations and support, 87 employees in research and development, 80 employees in general and administrative and 118 employees in sales and marketing, with a majority of our employees currently working remotely.
We are an Equal Employment Opportunity and Affirmative Action employer.
All aspects of employment including the decision to hire, promote, discipline, or discharge, are based on merit, competence, performance, and business needs. We do not discriminate on the basis of race, color, religion, marital status, age,
national origin, ancestry, physical or mental disability, medical condition, pregnancy, genetic information, gender, sexual orientation, gender identity or expression, veteran status, or any other status protected under federal, state, or local
law.
Many of our employees are highly skilled in technical areas specific to
software and product development as well as mission critical SaaS operations related to billing and payments, accounts receivable and payment systems. From time to time, we supplement our workforce with consultants or independent contractors,
primarily in the information technology area, through contracted service arrangements.
Our employees are key to our success as a company, and we are committed
to attracting, developing, and retaining the best talent. We leverage formal and informal programs to identify and attract top talent including social media, job boards, employee referrals and professional associations and industry groups. We
develop and retain the best talent through various means including performance evaluation and goal setting as well as a robust training and development curriculum. Our online training platform provides a variety of tools and application resources
for all team members to build learning experiences and skills.
We provide employees with competitive compensation and benefits
consistent with positions, skill levels, experience, knowledge, and geographic location. All full-time employees are eligible for health insurance, paid and unpaid leave, a retirement plan, and life/disability coverage. We also offer a variety of
voluntary benefits that allow employees to select the options that meet their needs, including critical illness and accident coverage, medical and dependent care flexible spending accounts, health saving accounts, paid parental leave, and an
employee assistance program.
Our executive management team and Human Resources department regularly
review and update our talent strategy, monitoring a variety of data, including turnover, diversity, and tenure, to design and implement effective reward/recognition, training, development, succession, and benefit programs to meet the needs of our
businesses and our employees.
The success of our business is connected to the well-being of our team
members. Accordingly, we are committed to the health, safety and wellness of our team members worldwide. In response to the COVID-19 pandemic, we implemented significant changes that we determined were in the best interest of our team members,
our customers and partners, and the communities in which we operate. Because of investments in our operating environments and technology that support day-to-day execution, we were able to transition 100% of our employees to a remote work
environment in a timely and seamless manner. While some of our office locations have been reopened for voluntary onsite work, the vast majority of our workforce continues to work remotely. We continue to monitor health statistics and guidance
published by governmental agencies as well as regulatory updates related to the pandemic and keep our employees informed and supported through regular communication on this topic.
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Executive Officers and Directors after the Business Combination
Upon the consummation of the Business Combination, the business and
affairs of New Corcentric will be managed by or under the direction of the New Corcentric Board. The following table sets forth the name, age and position of each of the expected directors and executive officers of New Corcentric upon
consummation of the Business Combination:
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Name
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Age
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Position
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Executive Officers
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Douglas Clark
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79
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Chief Executive Officer and Chairman of the New Corcentric Board
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Matthew Clark
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42
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President and Chief Operating Officer
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Thomas Sabol
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62
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Chief Financial Officer
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Mark Joyce
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51
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Executive Vice President and Chief Accounting Officer
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Non-Employee Directors
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Director
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Director
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Director
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Director
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Director
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Director
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(1)
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Member of the New Corcentric audit committee, effective upon the consummation of the Business Combination.
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(2)
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Member of the New Corcentric compensation committee, effective upon the consummation of the Business Combination.
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(3)
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Member of the New Corcentric nominating and corporate governance committee, effective upon the consummation of the Business
Combination.
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Executive Officers
Douglas Clark. Upon consummation of the Business Combination, Mr. Clark will serve as New Corcentric’s Chief Executive Officer and as the chairman of the New Corcentric Board. Mr. Clark has served as a member
of the board of directors of Corcentric since December 1996, as the President and the Chief Executive Officer of Corcentric since January 1997 and chairman of the board of directors of Corcentric since December 2015. Mr. Clark received a
bachelor of arts degree in accounting from the University of Miami and a master of business administration degree from Drexel University. We believe Mr. Clark is qualified to serve as a member of New Corcentric’s board of directors because of
his extensive background in business management, his role as founder, President and Chief Executive Officer of Corcentric, and his years of service on the Corcentric board of directors.
Matthew Clark. Upon consummation of the Business Combination, Mr. Clark will serve as the President and Chief Operating Officer of New Corcentric. Since the beginning of 2018, Mr. Clark has guided Corcentric
through three acquisitions that positioned Corcentric as a global leader in Source-to-Pay and Order-to-Cash solutions. Mr. Clark is an adviser and guest lecturer for the University of Maryland’s Entrepreneurship and Innovation Program, and is
an active member of Vistage Chief Executive Group, which provides peer-to-peer mentoring for DC area business leaders. He holds a Bachelor of Arts Degree in Journalism from the University of Maryland.
Thomas Sabol. Upon consummation of the Business Combination, Mr. Sabol will serve as the Chief Financial Officer of New Corcentric. Mr. Sabol has served as the Chief Financial Officer of Corcentric since
October 2021. Mr. Sabol provided management consulting services to various companies from January 2021 to September 2021. Mr. Sabol served as Chief Financial Officer and Senior Vice President of Operations of Transact Campus Inc., a privately
held software and payments company in the higher education industry, from November 2019 to December 2020. Previously, Mr. Sabol served as the Senior Vice President and Chief Financial Officer of Rimini Street, Inc. a publicly-traded IT services
company from November 2016 to November 2019. Mr. Sabol provided management consulting services from May 2015 to November 2016. He served as Chief Financial Officer of Comverse, Inc. (now Mavenir Systems, Inc.), a global software service
provider, from July 2012 to April 2015. From April 2009 to August 2011, Mr. Sabol served as Chief Financial Officer of Hypercom Corporation, a publicly-traded global leader in high security, end-to-end electronic payment products and services.
From February 2006 to April 2009, he served as Chief
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Financial Officer of Suntron Corporation, a publicly-traded provider of electronic
manufacturing services that was taken private by its majority shareholder in December 2007. Prior thereto, Mr. Sabol served as Chief Financial Officer of Wolverine Tube, Inc. and in senior executive positions at Plexus Corp., including as its
Chief Operating Officer and Chief Financial Officer. Mr. Sabol was also the General Auditor at Kemper Corporation and practiced public accounting with Coopers & Lybrand. Mr. Sabol formerly served as a director of Suntron Corporation from
July 2004 to April 2009. Mr. Sabol is a Certified Public Accountant and holds a B.S. in Accounting from Marquette University.
Mark Joyce. Upon consummation of the Business Combination, Mr. Joyce will serve as the Executive Vice President and Chief Accounting Officer of New Corcentric. Mr. Joyce has served as the Executive Vice
President and Chief Accounting Officer since October 2021. Mr. Joyce served as Executive Vice President and Chief Financial Officer of Corcentric from December 2006 through October 2021. He previously served in various financial roles,
including chief financial officer, at NationaLease Purchasing Corporation from 2001 to 2006. Mr. Joyce received a bachelor of science degree in business administration from John Carroll University and a master of business administration degree
from DePaul University. Mr. Joyce is a licensed certified public accountant in the State of Illinois and is a member of the American Institute of Certified Public Accountants.
Board Composition
New Corcentric’s business and affairs will be organized under the
direction of the New Corcentric Board. We anticipate that the New Corcentric Board will consist of seven members upon the consummation of the Business Combination. Douglas Clark will serve as Chairman of the New Corcentric Board. The primary
responsibilities of the New Corcentric Board will be to provide oversight, strategic guidance, counseling and direction to New Corcentric’s management. The New Corcentric Board will meet on a regular basis and additionally as required.
In accordance with the terms of the Proposed Charter, which will be
effective upon the consummation of the Business Combination, the New Corcentric Board will be divided into three classes, Class I, Class II and Class III, with only one class of directors being elected in each year and each class serving a
three-year term, except that the Class I directors will be appointed to an initial one-year term (and three-year terms subsequently), the Class II directors will be appointed to an initial two-year term (and three-year terms subsequently) and the
Class III directors will be appointed to an initial three-year term (and three-year terms subsequently). There is no cumulative voting with respect to the election of directors, with the result that the holders of more than 50% of the shares
voted for the election of directors can elect all of the directors.
The New Corcentric Board will be divided into the following classes:
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Class I, which Corcentric and North Mountain anticipate will consist of , whose terms will expire at New Corcentric’s first
annual meeting of stockholders to be held after the completion of the Business Combination;
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Class II, which Corcentric and North Mountain anticipate will consist of , whose terms will expire at New Corcentric’s second
annual meeting of stockholders to be held after the completion of the Business Combination; and
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Class III, which Corcentric and North Mountain anticipate will consist of , whose terms will expire at New Corcentric’s third
annual meeting of stockholders to be held after the completion of the Business Combination.
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At each annual meeting of stockholders to be held after the initial
classification, the successors to directors whose terms then expire will be elected to serve from the time of election and qualification until the third annual meeting following their election and until their successors are duly elected and
qualified. This classification of the New Corcentric Board may have the effect of delaying or preventing changes in New Corcentric’s control or management.
Director Independence
Upon the consummation of the Business Combination, the New Corcentric
Board is expected to determine that each of the directors on the New Corcentric Board other than will qualify as independent directors, as defined under the listing rules of The Nasdaq Stock Market LLC (the “Nasdaq listing rules”), and the
New Corcentric Board will consist of a majority of “independent directors,” as defined under the rules of the SEC and Nasdaq listing rules relating to director independence requirements. In addition, New Corcentric will be
218
subject to the rules of the SEC and Nasdaq relating to the membership, qualifications
and operations of the audit committee, as discussed below.
Board Committees
Effective upon the consummation of the Business Combination, the New
Corcentric Board will establish an audit committee, a compensation committee and a nominating and corporate governance committee. The New Corcentric Board will adopt a charter for each of these committees, which will comply with the applicable
requirements of current Nasdaq rules. New Corcentric intends to comply with future requirements to the extent they will be applicable to New Corcentric. Following the consummation of the Business Combination, copies of the charters for each
committee will be available on the investor relations portion of New Corcentric’s website.
Audit Committee
New Corcentric’s audit committee will consist of . The New
Corcentric Board has determined that each of the members of the audit committee will satisfy the independence requirements of Nasdaq and Rule 10A-3 under the Exchange Act. Each member of the audit committee can read and understand fundamental
financial statements in accordance with Nasdaq audit committee requirements. In arriving at this determination, the New Corcentric Board examined each audit committee member’s scope of experience and the nature of their prior and/or current
employment.
will serve as the chair of the audit committee. The New Corcentric
Board determined that qualifies as an audit committee financial expert within the meaning of SEC regulations and meets the financial sophistication requirements of Nasdaq listing rules. In making this determination, the New Corcentric Board
considered ’s formal education and previous experience in financial roles. Both New Corcentric’s independent registered public accounting firm and management periodically will meet privately with New Corcentric’s audit committee.
The functions of this committee will include, among other things:
|
•
|
evaluating the performance, independence and qualifications of New Corcentric’s independent auditors and determining whether to
retain New Corcentric’s existing independent auditors or engage new independent auditors;
|
|
•
|
helping ensure the independence and performance of New Corcentric’s independent auditors;
|
|
•
|
helping to maintain and foster an open avenue of communication between management and New Corcentric’s independent auditors;
|
|
•
|
discussing the scope and results of the audit with New Corcentric’s independent auditors, and reviewing, with management, New
Corcentric’s interim and year-end operating results;
|
|
•
|
developing procedures for employees to submit concerns anonymously about questionable accounting or audit matters;
|
|
•
|
administering risk oversight of New Corcentric’s risk management process, reviewing New Corcentric’s policies on risk assessment
and risk management;
|
|
•
|
reviewing related party transactions;
|
|
•
|
obtaining and reviewing a report by New Corcentric’s independent auditors at least annually, that describes New Corcentric’s
internal quality control procedures, any material issues with such procedures, and any steps taken to deal with such issues when required by applicable law; and
|
|
•
|
approving (or, as permitted, pre-approving) all audit and all permissible non-audit services to be performed by New Corcentric’s
independent auditors.
|
The composition and function of the audit committee will comply with
all applicable requirements of the Sarbanes-Oxley Act, SEC rules and regulations and Nasdaq listing rules. New Corcentric will to comply with future requirements to the extent they become applicable to New Corcentric.
Compensation Committee
New Corcentric’s compensation committee will consist of . will
serve as the chair of the compensation committee. The New Corcentric Board has determined that each of the members of the
219
compensation committee will be a non-employee director, as defined in Rule 16b-3
promulgated under the Exchange Act and will satisfy the independence requirements of Nasdaq.
The functions of the committee will include, among other things:
|
•
|
approving the retention of compensation consultants and outside service providers and advisors;
|
|
•
|
reviewing and approving, or recommending that the New Corcentric Board approve, the compensation, individual and corporate
performance goals and objectives and other terms of employments of New Corcentric’s executive officers, including evaluating the performance of New Corcentric’s chief executive officer, and, with his assistance, that of New Corcentric’s
other executive officers;
|
|
•
|
reviewing and recommending to the New Corcentric Board the compensation of New Corcentric’s directors;
|
|
•
|
administering New Corcentric’s equity and non-equity incentive plans;
|
|
•
|
reviewing New Corcentric’s practices and policies of employee compensation as they relate to risk management and risk-taking
incentives;
|
|
•
|
reviewing and evaluating succession plans for the executive officers;
|
|
•
|
reviewing and approving, or recommending that the New Corcentric Board approve, incentive compensation and equity plans;
|
|
•
|
helping the New Corcentric Board oversee New Corcentric’s human capital management policies, plans and strategies; and
|
|
•
|
reviewing and establishing general policies relating to compensation and benefits of New Corcentric’s employees and reviewing New
Corcentric’s overall compensation philosophy.
|
The composition and function of its compensation committee will comply
with all applicable requirements of the Sarbanes-Oxley Act, SEC rules and regulations and Nasdaq listing rules. New Corcentric will comply with future requirements to the extent they become applicable to New Corcentric.
Nominating and Corporate Governance Committee
New Corcentric’s nominating and corporate governance committee will
consist of . will serve as the chair of the nominating and corporate governance committee. The New Corcentric Board has determined that each of the members of New Corcentric’s nominating and corporate governance committee will satisfy the
independence requirements of Nasdaq.
The functions of this committee include, among other things:
|
•
|
identifying, evaluating, and selecting, or recommending that the New Corcentric Board approve, nominees for election to the New
Corcentric Board and its committees;
|
|
•
|
approving the retention of director search firms;
|
|
•
|
evaluating the performance of the New Corcentric Board and of individual directors;
|
|
•
|
considering and making recommendations to the New Corcentric Board regarding the composition of the New Corcentric Board and its
committees;
|
|
•
|
evaluating the adequacy of New Corcentric’s corporate governance practices and reporting; and
|
|
•
|
overseeing an annual evaluation of the New Corcentric Board’s performance.
|
The composition and function of the nominating and corporate governance
committee will comply with all applicable requirements of the Sarbanes-Oxley Act, SEC rules and regulations and Nasdaq listing rules. New Corcentric will comply with future requirements to the extent they become applicable to New Corcentric.
Compensation Committee Interlocks and Insider Participation
None of the intended members of New Corcentric’s compensation committee
has ever been an executive officer or employee of New Corcentric. None of New Corcentric’s executive officers currently serve, or has served during the
220
last completed fiscal year, on the compensation committee or board of directors of any
other entity that has one or more executive officers that will serve as a member of the New Corcentric Board or compensation committee.
Limitation on Liability and Indemnification of Directors and Officers
The Proposed Charter, which will be effective upon consummation of the
Business Combination, eliminates New Corcentric’s directors’ liability for monetary damages to the fullest extent permitted by applicable law. The DGCL provides that directors of a corporation will not be personally liable for monetary damages
for breach of their fiduciary duties as directors, except for liability:
|
•
|
for any transaction from which the director derives an improper personal benefit;
|
|
•
|
for any act or omission not in good faith or that involves intentional misconduct or a knowing violation of law;
|
|
•
|
for any unlawful payment of dividends or redemption of shares; or
|
|
•
|
for any breach of a director’s duty of loyalty to the corporation or its stockholders.
|
If the DGCL is amended to authorize corporate action further
eliminating or limiting the personal liability of directors, then the liability of New Corcentric’s directors will be eliminated or limited to the fullest extent permitted by the DGCL, as so amended.
The Proposed Charter requires New Corcentric to indemnify and advance
expenses to, to the fullest extent permitted by applicable law, its directors, officers and agents. New Corcentric plans to maintain a directors’ and officers’ insurance policy pursuant to which New Corcentric’s directors and officers are insured
against liability for actions taken in their capacities as directors and officers. Finally, the Proposed Charter prohibits any retroactive changes to the rights or protections or increase the liability of any director in effect at the time of the
alleged occurrence of any act or omission to act giving rise to liability or indemnification.
In addition, New Corcentric will enter into separate indemnification
agreements with New Corcentric’s directors and officers. These agreements, among other things, require New Corcentric to indemnify its directors and officers for certain expenses, including attorneys’ fees, judgments, fines and settlement amounts
incurred by a director or officer in any action or proceeding arising out of their services as one of New Corcentric’s directors or officers or any other company or enterprise to which the person provides services at New Corcentric’s request.
We believe these provisions in the Proposed Charter are necessary to
attract and retain qualified persons as directors and officers for New Corcentric following the completion of the Business Combination.
Code of Business Conduct and Ethics for Employees, Executive Officers
and Directors
The New Corcentric Board will adopt a Code of Business Conduct and
Ethics (the “Code of Conduct”), applicable to all of New Corcentric’s employees, executive officers and directors. The Code of Conduct will be available on New Corcentric’s website at www.corcentric.com. Information contained on or accessible
through New Corcentric’s website is not a part of this proxy statement/prospectus, and the inclusion of New Corcentric’s website address in this proxy statement/prospectus is an inactive textual reference only. The nominating and corporate
governance committee of the New Corcentric Board will be responsible for overseeing the Code of Conduct and must approve any waivers of the Code of Conduct for employees, executive officers and directors. New Corcentric expects that any
amendments to the Code of Conduct, or any waivers of its requirements, will be disclosed on its website.
Non-Employee Director Compensation
The New Corcentric Board expects to review director compensation
periodically to ensure that director compensation remains competitive such that New Corcentric is able to recruit and retain qualified directors. Following the consummation of the Business Combination, New Corcentric intends to develop a board of
directors’ compensation program that is designed to align compensation with New Corcentric’s business objectives and the creation of stockholder value, while enabling New Corcentric to attract, retain, incentivize and reward directors who
contribute to the long-term success of New Corcentric.
221
Unless we state otherwise or the context
otherwise requires, in this Executive Compensation section the terms “Corcentric,” “we,” “us,” “our” and the “Company” refer to Corcentric, Inc. prior to the consummation of the Business Combination.
This section discusses the material components
of the executive compensation program for Corcentric’s executive officers named in the table entitled “Summary Compensation Table” below.
Overview
As an emerging growth company, we have opted to comply with the
executive compensation disclosure rules applicable to “smaller reporting companies” as such term is defined in the rules promulgated under the Securities Act. This section discusses the material components of the executive compensation program
for our Chief Executive Officer and our two other most highly compensated officers, whom we refer to as our “named executive officers”. Corcentric’s named executive officers for the fiscal year ended December 31, 2021 (also referred to as
“fiscal 2021”) were:
|
•
|
Douglas W. Clark, Chief Executive Officer and Chairman;
|
|
•
|
Mark P. Joyce, Executive Vice President and Chief Accounting Officer;1 and
|
|
•
|
Matthew D. Clark, President and Chief Operating Officer.
|
This discussion may contain forward-looking statements that are
based on our current plans, considerations, expectations and determinations regarding future compensation programs. Actual compensation programs that we adopt in the future may differ materially from the currently planned programs summarized in
this discussion.
Summary Compensation Table
|
Name and Principal Position
|
| |
Year
|
| |
Salary
($)(1)
|
| |
Bonus(2)
|
| |
Stock
Awards
($)(3)
|
| |
Option
Awards
($)(3)
|
| |
Non-Equity
Incentive Plan
Compensation
|
| |
All Other
Compensation
($)(4)
|
| |
Total
($)
|
|
Douglas W. Clark
Chief Executive Officer and Chairman
|
| |
2021
|
| |
$490,364
|
| |
$0
|
| |
$156,139
|
| |
$13,625,537
|
| |
$0
|
| |
$20,734
|
| |
$14,292,774
|
|
|
| |
|
| |
|
| |
|
| |
|
| |
|
| |
|
| |
|
| |
|
|
Mark P. Joyce
Executive Vice President and Chief
Accounting Officer
|
| |
2021
|
| |
$307,742
|
| |
$52,700
|
| |
$58,800
|
| |
$6,793,495
|
| |
$63,550
|
| |
$13,726
|
| |
$7,290,013
|
|
|
| |
|
| |
|
| |
|
| |
|
| |
|
| |
|
| |
|
| |
|
|
Matthew D. Clark
President and Chief Operating Officer
|
| |
2021
|
| |
$374,096
|
| |
$68,000
|
| |
$1,415,426
|
| |
$67,286
|
| |
$82,000
|
| |
$16,017
|
| |
$2,022,825
|
|
(1)
|
The amounts set forth in this column reflect each named executive officer’s annual base salary earned in fiscal 2021.
|
|
(2)
|
Represents the amounts that the Board determined to pay over and above the amounts earned by meeting the performance criteria
under Corcentric’s Incentive Compensation Plan for fiscal 2021, in recognition of the extraordinary efforts of the Company in a challenging business climate. Mr. D. Clark elected not to receive a bonus for fiscal year 2021.
|
|
(3)
|
Amounts represent the grant date fair value of the restricted stock and stock options granted to the named executive officers,
as computed in accordance with FASB ASC 718, excluding estimated forfeitures. See Note 15 Stock-Based Compensation to our Consolidated Financial Statements contained in this
registration statement for assumptions used in computing fair value. In the case of Messrs. D. Clark and Joyce, amounts also include the incremental fair value, computed in accordance with FASB ASC 718, of the remaining 20% unvested
portion of stock options granted on January 1, 2012 under the AmeriQuest Transportation Services, Inc. Equity and Incentive Plan, as amended and restated March 27, 2008 (the “2008 Plan”), that were accelerated and
vested by the Board on December 29, 2021 and exercised by Messrs. D. Clark and Joyce. No awards remained outstanding under the 2008 Plan as of December 31, 2021.
|
|
1
|
Mark Joyce was named Executive Vice President and Chief Accounting Officer in October 2021. Mr.
Joyce previously served as the Company’s Executive Vice President and Chief Financial Officer.
|
222
|
(4)
|
The amounts reported in the All Other Compensation column consist of the following Company-paid portions of premiums for
coverage under Company benefit plans, as well as a car allowance provided only to Mr. D. Clark:
|
|
Name
|
| |
Life and AD&D
Insurance
Premiums
|
| |
Long-Term and
Short-Term
Disability
Premiums
|
| |
Dental, Vision and
Medical Care
Premiums
|
| |
Car
Allowance
|
| |
Total
|
|
Douglas W. Clark
|
| |
$156
|
| |
$558
|
| |
$11,020
|
| |
$9,000
|
| |
$20,734
|
|
Mark P. Joyce
|
| |
$240
|
| |
$558
|
| |
$12,928
|
| |
—
|
| |
$13,726
|
|
Matthew D. Clark
|
| |
$240
|
| |
$558
|
| |
$15,219
|
| |
—
|
| |
$16,017
|
Narrative to Summary Compensation Table
Severance Arrangements with Named Executive
Officers
On July 16, 2015, our Board of Directors (our “Board”) approved our
entry into a severance and change-in-control agreement (“Severance Agreements”) with each of Mr. D. Clark and Mr. Joyce. Mr. M. Clark is not party to a Severance Agreement or other employment agreement or arrangement with the Company.
The Severance Agreements with Messrs. D. Clark and Joyce each
provided for an initial term of three years, followed by automatic one-year renewals, with any such renewal term to extend automatically through the twelve-month anniversary of the effective date of a “change in control” (as defined in the
Severance Agreements). The Severance Agreements each provide that in the event Mr. D. Clark or Mr. Joyce is terminated by the Company without “cause” (excluding by reason of death or disability) or Mr. D. Clark or Mr. Joyce resigns for “good
reason” (each, as described below) (each, a “Good Leaver Termination”), in each case, at any time other than the six month period prior to or the twenty-four month period following a change in control, then, subject to execution and
non-revocation of a release of claims and continued compliance with applicable restrictive covenants (as described below), they would each be entitled to receive the following payments and benefits: (i) a lump-sum payment equal to 18 months (in
the case of Mr. D. Clark) or 12 months (in the case of Mr. Joyce) of the executive’s annual base salary, (ii) a pro-rata bonus for the year in which termination occurs, based on actual performance through the termination date (or based on
target levels, if actual performance levels cannot be evaluated), payable in a lump sum (a “Pro-Rata Bonus”), (iii) reimbursement of Company COBRA health coverage for a period of up to 18 months (in the case of Mr. D. Clark) or 12 months (in
the case of Mr. Joyce), (iv) Company-provided outplacement services for up to three months, and (v) pro-rata vesting of the named executive officer’s outstanding and unvested Company equity-based awards based on the named executive officer’s
completed service from the vesting commencement date through the termination date.
In the event Mr. D. Clark or Mr. Joyce experiences a Good Leaver
Termination within six months prior to or twenty-four months following a change in control, then, subject to execution and non-revocation of a release of claims and continued compliance with applicable restrictive covenants (as described
below), they would each be entitled to receive the following: (i) a lump-sum payment equal to the sum of (a) 24 months (in the case of Mr. D. Clark) or 18 months (in the case of Mr. Joyce) of the executive’s annual base salary, plus (b) 200%
(in the case of Mr. D. Clark) or 150% (in the case of Mr. Joyce) of the named executive officer’s target annual bonus for the year in which termination occurs, (ii) a Pro-Rata Bonus, (iii) reimbursement of Company COBRA health coverage for a
period of up to 24 months (in the case of Mr. D. Clark) or 18 months (in the case of Mr. Joyce), and (iv) full vesting as to 100% of the named executive officer’s outstanding and unvested Company equity-based awards.
The Severance Agreements each contain employee non-solicitation and
non-competition covenants that apply during the post-termination periods in the event the executive receives severance payments or benefits. The Severance Agreements each contain a “best-of-net cutback” provision with respect to amounts that
may constitute “parachute payments” within the meaning of Section 280G of the Internal Revenue Code.
Under the terms of the Severance Agreements, “cause” is generally
defined to mean the named executive officer’s: (i) misconduct in connection with the performance of duties including misappropriation of funds or property, (ii) commission of any felony or a misdemeanor involving moral turpitude, deceit,
dishonesty or fraud, or any conduct that would reasonably be expected to result in injury or harm to the reputation of the Company, (iii) continued non-performance of duties for more than thirty (30) days following written notice, (iv) a breach
of confidentiality or non-competition obligations in favor of the Company or a violation of the written employment
223
policies, or (v) failure to cooperate with an internal or external investigation;
provided, in each case, such failures, if curable in the discretion of the Company, are not cured to the reasonable satisfaction of the Company within thirty (30) days after receipt of written notice of such failure from the Company.
Under the terms of the Severance Agreements, “good reason” generally
means the occurrence of any of the following events without the named executive officer’s consent: (i) a material diminution of duties, authority or responsibilities, relative to the named executive officer’s duties, authority or
responsibilities as in effect immediately prior to such reduction, or the assignment to the named executive officer of such reduced duties, authority or responsibilities, (ii) a material reduction by the Company in the base salary of the named
executive officer as in effect immediately prior to such reduction, (iii) relocation to a facility or location more than fifty miles from the named executive officer’s then-present location, or (iv) a material breach by the Company of the
Severance Agreement. In order for an event to qualify as “good reason,” the named executive officer must not terminate employment with the Company without first providing the Company with written notice of the acts or omissions constituting the
grounds for “good reason” within ninety days of the initial occurrence of the grounds for “good reason” and such grounds must not have been cured within a reasonable cure period of not less than thirty days following the date of such notice.
Bonus and Non-Equity Incentive Plan Compensation
Corcentric seeks to motivate and reward its executives for
achievements relative to its corporate goals and expectations for each fiscal year. In fiscal 2021, each of Corcentric’s named executive officers was eligible to participate in Corcentric’s Incentive Compensation Plan, which provides for grants
of annual bonuses based on the achievement of pre-established performance goals, as determined by the Board. The Compensation Committee of the Board (the “Compensation Committee”), upon the recommendations of management, selects
company-specific performance goals that must be achieved to fund a bonus pool under the plan. Individual bonus amounts are subsequently recommended by management and approved by the Compensation Committee in its discretion.
For fiscal 2021, Corcentric’s bonus targets were based two-thirds on
achievement of adjusted revenue targets, and one-third on achievement of adjusted EBITDA targets. Each named executive officer was assigned a target bonus by the Board expressed as a percentage of annual base salary. The target bonus amounts
for Messrs. D. Clark, Joyce and M. Clark were 75%, 50% and 50% of annual base salary, respectively. Due to the continued toll of the COVID-19 pandemic on the global economy, the Company achieved a 41% pay-out on the fiscal 2021 bonus program
based on having achieved 92% of the adjusted revenue target and 99% of the adjusted EBITDA target. The Board recognized the extraordinary efforts of the Company in a challenging business climate and approved a 75% funding of the bonus pool for
members of the Executive Leadership Team, which included Mr. M. Clark and Mr. Joyce, who received a bonus of $150,000 and $116,250, respectively. Mr. D. Clark elected not to receive a bonus for fiscal 2021.
Equity-Based Incentive Awards
Corcentric’s equity-based incentive awards are designed to align its
interests and those of its stockholders with those of its service providers, including the named executive officers. Corcentric’s Board is responsible for approving equity grants under each of the Company’s equity-based incentive plans. Our
named executive officers received various stock option and restricted stock awards granted in fiscal 2021, as discussed in the table entitled “Outstanding Equity Awards at 2021 Fiscal Year End” below. For additional information, see the section
entitled “Equity-Based Incentive Plans” below.
Health, Welfare and Retirement Plans
Health and Welfare Plans
All of Corcentric’s named executive officers are eligible to
participate in Corcentric’s employee benefits plans, which includes medical, dental, vision, life insurance, short- and long-term disability coverages. Corcentric pays the full premiums for life and disability insurance for all employees and
contributes to the premiums for medical coverage when coverage is elected by a Corcentric employee.
401(k) Plan
All of Corcentric’s named executive officers are eligible to
participate in Corcentric’s tax-qualified retirement plan, or 401(k) Plan, which provides eligible employees with an opportunity to save for retirement on
224
a tax-advantaged basis. All participants' interests in their contributions are 100%
vest when contributed. Historically, the Company has not made any matching contributions to the 401(k) Plan. Pre-tax contributions are allocated to each participant's individual account and are then invested in selected investment alternatives
according to the participants' directions. The 401(k) Plan is intended to qualify under Sections 401(a) and 501(a) of the Internal Revenue Code.
Outstanding Equity Awards at 2021 Fiscal Year End
The following table summarizes the outstanding equity awards held as
of December 31, 2021 by each of the named executive officers.
|
|
| |
|
| |
Option Awards
|
| |
Stock Awards
|
|||||||||||||||
|
Name
|
| |
Date of
Grant
|
| |
Number of
Securities
Underlying
Unexercised
Options (#)
Exercisable
|
| |
Number of
Securities
Underlying
Unexercised
Options (#)
Unexercisable
|
| |
Equity
Incentive Plan
Awards:
Number of
Securities
Underlying
Unexercised
Unearned
Options (#)
|
| |
Option
Exercise
Price ($)
|
| |
Option
Expiration
Date
|
| |
Number of
Shares or
Units of
Stock That
Have Not
Vested (#)
|
| |
Market Value
of Shares or
Units of Stock
That Have
Not Vested ($)
|
|
Douglas W. Clark
|
| |
06-Dec-2016(1)
|
| |
48,428
|
| |
—
|
| |
—
|
| |
$8.50
|
| |
30-Jun-2026
|
| |
—
|
| |
—
|
| |
01-Jul-2017(2)
|
| |
43,369
|
| |
—
|
| |
—
|
| |
$9.25
|
| |
01-Jul-2027
|
| |
—
|
| |
—
|
||
| |
01-Jul-2018(2)
|
| |
35,829
|
| |
6,102
|
| |
—
|
| |
$10.50
|
| |
01-Jul-2028
|
| |
—
|
| |
—
|
||
| |
05-Dec-2019(3)
|
| |
21,726
|
| |
13,048
|
| |
—
|
| |
$13.40
|
| |
05-Dec-2029
|
| |
—
|
| |
—
|
||
| |
01-Jul-2020(2)
|
| |
13,893
|
| |
25,337
|
| |
—
|
| |
$12.25
|
| |
01-Jul-2030
|
| |
—
|
| |
—
|
||
| |
01-Jul-2021(6)
|
| |
—
|
| |
36,738
|
| |
—
|
| |
$12.25
|
| |
01-Jul-2031
|
| |
—
|
| |
—
|
||
| |
01-Jul-2018(1)
|
| |
—
|
| |
—
|
| |
—
|
| |
—
|
| |
—
|
| |
3,488
|
| |
$138,962
|
||
| |
03-Dec-2019(5)
|
| |
—
|
| |
—
|
| |
—
|
| |
—
|
| |
—
|
| |
5,826
|
| |
$232,108
|
||
| |
01-Jul-2020(1)
|
| |
—
|
| |
—
|
| |
—
|
| |
—
|
| |
—
|
| |
9,559
|
| |
$380,831
|
||
| |
01-Jul-2021(7)
|
| |
—
|
| |
—
|
| |
—
|
| |
—
|
| |
—
|
| |
12,746
|
| |
$507,801
|
||
|
|
||||||||||||||||||||||||
|
Mark P. Joyce
|
| |
06-Dec-2016(1)
|
| |
17,996
|
| |
—
|
| |
—
|
| |
$8.50
|
| |
30-Jun-2026
|
| |
—
|
| |
—
|
| |
01-Jul-2017(2)
|
| |
16,260
|
| |
—
|
| |
—
|
| |
$9.25
|
| |
01-Jul-2027
|
| |
—
|
| |
—
|
||
| |
01-Jul-2018(2)
|
| |
13,495
|
| |
2,319
|
| |
—
|
| |
$10.50
|
| |
01-Jul-2028
|
| |
—
|
| |
—
|
||
| |
05-Dec-2019(3)
|
| |
8,188
|
| |
4,907
|
| |
—
|
| |
$13.40
|
| |
05-Dec-2029
|
| |
—
|
| |
—
|
||
| |
01-Jul-2020(2)
|
| |
5,233
|
| |
9,540
|
| |
—
|
| |
$12.25
|
| |
01-Jul-2030
|
| |
—
|
| |
—
|
||
| |
01-Jul-2021(6)
|
| |
—
|
| |
13,834
|
| |
—
|
| |
$12.25
|
| |
01-Jul-2031
|
| |
—
|
| |
—
|
||
| |
01-Jul-2018(1)
|
| |
—
|
| |
—
|
| |
—
|
| |
—
|
| |
—
|
| |
1,316
|
| |
$52,429
|
||
| |
03-Dec-2019(5)
|
| |
—
|
| |
—
|
| |
—
|
| |
—
|
| |
—
|
| |
2,194
|
| |
$87,409
|
||
| |
01-Jul-2020(1)
|
| |
—
|
| |
—
|
| |
—
|
| |
—
|
| |
—
|
| |
3,599
|
| |
$143,384
|
||
| |
01-Jul-2021(7)
|
| |
—
|
| |
—
|
| |
—
|
| |
—
|
| |
—
|
| |
4,800
|
| |
$191,232
|
||
|
|
||||||||||||||||||||||||
|
Matthew D. Clark
|
| |
01-Jul-2018(2)
|
| |
14,724
|
| |
2,528
|
| |
—
|
| |
$10.50
|
| |
01-Jul-2028
|
| |
—
|
| |
—
|
| |
07-Oct-2019(4)
|
| |
55,498
|
| |
27,750
|
| |
—
|
| |
$11.60
|
| |
07-Oct-2029
|
| |
—
|
| |
—
|
||
| |
05-Dec-2019(3)
|
| |
9,362
|
| |
5,623
|
| |
—
|
| |
$13.40
|
| |
05-Dec-2029
|
| |
—
|
| |
—
|
||
| |
01-Jul-2020(2)
|
| |
5,987
|
| |
10,919
|
| |
—
|
| |
$12.25
|
| |
01-Jul-2030
|
| |
—
|
| |
—
|
||
| |
01-Jul-2021(6)
|
| |
—
|
| |
15,832
|
| |
—
|
| |
$12.25
|
| |
01-Jul-2031
|
| |
—
|
| |
—
|
||
| |
01-Jul-2018(1)
|
| |
—
|
| |
—
|
| |
—
|
| |
—
|
| |
—
|
| |
1,435
|
| |
$57,170
|
||
| |
07-Oct-2019(4)
|
| |
—
|
| |
—
|
| |
—
|
| |
—
|
| |
—
|
| |
9,339
|
| |
$372,066
|
||
| |
03-Dec-2019(5)
|
| |
—
|
| |
—
|
| |
—
|
| |
—
|
| |
—
|
| |
2,511
|
| |
$100,038
|
||
| |
01-Jul-2020(1)
|
| |
—
|
| |
—
|
| |
—
|
| |
—
|
| |
—
|
| |
4,119
|
| |
$164,101
|
||
| |
01-Jul-2021(7)
|
| |
—
|
| |
—
|
| |
—
|
| |
—
|
| |
—
|
| |
5,493
|
| |
$218,841
|
||
|
(1)
|
Stock options or shares of restricted stock, as applicable, will vest in four equal annual installments on each of the first,
second, third and fourth anniversaries of the grant date, subject to the named executive officer’s continued employment through each applicable vesting date.
|
|
(2)
|
Twenty-five percent (25%) of the stock options will vest on the one (1) year anniversary of the Vesting Commencement Date, and
one forty-eighth (1/48th) of the shares will vest each month thereafter on the same day of the month as the Vesting Commencement Date, subject to the named executive officer’s continual employment through each such vesting date.
|
225
|
(3)
|
Twenty-five percent (25%) of the stock options vested on June 30, 2020, and one forty-eighth (1/48th) of the shares subject to
the stock option will vest each month thereafter on the same day of the month as the applicable vesting commencement date, subject to the named executive officer’s continued employment through each such vesting date.
|
|
(4)
|
Stock options or shares of restricted stock, as applicable, vest in equal annual installments over the three-year period ending
October 7, 2022, and will immediately vest in full upon the occurrence of a change in control, subject in each case to Mr. M. Clark’s continued employment through each applicable vesting date.
|
|
(5)
|
Twenty-five percent (25%) of the shares of restricted stock will vest on June 30 on each calendar year of 2020, 2021, 2022 and
2023, subject to the named executive officer’s continued employment through each vesting date.
|
|
(6)
|
Twenty-five percent (25%) of the stock options will vest on June 30, 2022, and one forty-eighth (1/48th) of the shares subject
to the stock option will vest each month thereafter on the same day of the month as the applicable vesting commencement date, subject to the named executives officer’s continued employment through each such vesting date.
|
|
(7)
|
Twenty-five percent (25%) of the shares of restricted stock will vest on June 30 on each calendar year of 2022, 2023, 2024 and
2025, subject to the named executive officer’s continued employment through each vesting date.
|
Equity-Based Incentive Plans
2016 Plan
The Company maintains the AmeriQuest, Inc. 2016 Equity Incentive
Plan, as adopted by the Board effective September 14, 2016 (the “2016 Plan”), the purpose of which is to attract and retain the best available personnel for positions of substantial responsibility, to provide additional
incentives to employees, directors and consultants of the Company, and to promote the success of the Company’s business. Under the 2016 Plan, the Company may provide these incentives through the grant of stock options, stock appreciation
rights, restricted stock and restricted stock units. All unvested and outstanding awards granted under the 2016 Plan are forfeited upon a termination of employment.
Other than the stock options and shares of restricted stock granted
to Mr. M. Clark on October 7, 2019 (as described in footnote four accompanying the table entitled “Outstanding Equity Awards at 2020 Fiscal Year End” above), awards do not automatically vest in connection with a change in control of the
Company. Under the terms of the 2016 Plan, in the event of a change in control or a merger of the Company with or into another corporation or another entity, the administrator, in its sole discretion, will determine the treatment of outstanding
equity awards, including by providing for the assumption or substitution of awards, termination of awards immediately prior to the consummation of such merger or change in control, the immediate vesting and exercisability or payment of awards
upon consummation of such merger or change in control, termination of such awards in exchange for an amount of cash and/or property equal to the value of such award in the merger or change in control, the replacement of awards with other rights
or property, or any combination of the foregoing. To the extent awards are not assumed or substituted in the merger or change in control, outstanding awards will fully vest and become exercisable, with any performance-based vesting criteria to
be deemed achieved at 100% of target levels and with any stock options or stock appreciation rights to remain exercisable for a period of time determined by the administrator.
2011 Director Plan
The Company maintains the AmeriQuest Transportation Services, Inc.
Non-Employee Director Stock Purchase Plan 2011 (the “2011 Director Plan”), the purpose of which is to enable the Company’s non-employee directors to purchase shares of the Company’s common stock through the Company’s
retention of fees paid in respect of such individuals’ service as non-employee directors, and to benefit the Company’s growth and success and enable the Company to continue to attract highly qualified persons to serve as directors. Eligibility
in the Director Plan is limited to non-employee directors of the Company. The plan will terminate automatically upon the earlier of an initial public offering or the start of active market trading in the Company’s common stock.
The 2011 Director Plan does not contain any provisions relating to
accelerated vesting upon a change in control of the Company. Shares purchased or granted under the 2011 Director Plan are subject to drag-along rights in the event at least a majority of the Board or of the Company’s shareholders approve a
change in control of the Company by reason of a sale of all or substantially all of the Company’s assets, the sale of any capital stock of the Company, or any merger, or a consolidation or other business combination of the Company.
Director Compensation
The following table presents the total compensation for each person
who served as a non-employee member of the Board during fiscal 2021. Other than as set forth in the table and described more fully below, Corcentric did not pay any compensation, reimburse any expense of, make any equity awards or non-equity
awards or pay
226
any other compensation to, any of the non-employee members of the Board in fiscal
2021. Mr. D. Clark does not receive any compensation for his services as Chairman of the Board and, consequently, is not included in this table. The compensation received by Mr. D. Clark in connection with his employment is presented in the
table entitled “Summary Compensation Table” above.
Under the Company’s director compensation program, each of our
non-employee directors (other than Mr. Yoon, who is not eligible to receive compensation in respect of his services as a director) receives an annual retainer of $40,000, payable quarterly. In addition, the Lead Director receives an additional
annual retainer of $30,000, and the Compensation Committee Chairman and Audit Committee Chairman each receive an additional annual retainer of $12,000, in each case payable quarterly. Committee members (other than Mr. Yoon) are each entitled to
an additional annual retainer of $5,000 in respect of service on the Board’s committees. The Company does not have a practice of paying meeting fees to its directors. In addition to cash fees, non-employee directors are eligible to receive an
annual grant of restricted stock under the 2011 Plan in respect of their Board service, which restricted stock awards vest in full on January 2nd of each year following the calendar year to which the award relates, subject to the non-employee
director’s continued service through the vesting date.
|
Name
|
| |
Fees Earned or
Paid
in Cash ($)
|
| |
Stock
Awards
($)(1)(2)
|
| |
Total
($)
|
|
Brian Hogan
|
| |
$80,000
|
| |
$59,988
|
| |
$139,988
|
|
Tom Brown
|
| |
$45,000
|
| |
$59,988
|
| |
$104,988
|
|
Michael Enright
|
| |
$57,000
|
| |
$59,988
|
| |
$116,988
|
|
Jack Gavin
|
| |
$57,000
|
| |
$69,997
|
| |
$126,997
|
|
Kirk Tilley
|
| |
$45,000
|
| |
$59,988
|
| |
$104,988
|
|
Gene Yoon
|
| |
—
|
| |
—
|
| |
—
|
|
(1)
|
Represents the aggregate grant date fair value calculated in accordance with FASB ASC Topic 718 of each grant of restricted
stock, which restricted stock awards would vest in full on January 2, 2022 subject to continued service. Restricted stock awards granted to our non-employee directors in fiscal 2021 were granted under the 2011 Plan.
|
|
(2)
|
The amounts set forth in this column represent the aggregate number of stock awards held by each non-employee director
outstanding as of December 31, 2021.
|
North Mountain Executive Officer and Director Compensation
None of North Mountain’s officers or directors have received any
compensation for services rendered to North Mountain. North Mountain’s Sponsor, officers, directors and their respective affiliates will be reimbursed for any out-of-pocket expenses incurred in connection with activities on North Mountain’s
behalf such as identifying potential target businesses and performing due diligence on suitable business combinations. North Mountain’s audit committee will review on a quarterly basis all payments that were made by North Mountain to its
Sponsor, officers, directors or its or any of their respective affiliates. As of January 6, 2022, North Mountain’s Sponsor and its affiliates had incurred $996 of unpaid reimbursable expenses.
After the completion of the Business Combination, directors or members
of North Mountain’s management team who remain with North Mountain may be paid consulting, management or other compensation from New Corcentric. All compensation will be fully disclosed to stockholders, to the extent then known, in the proxy
solicitation materials furnished to North Mountain’s stockholders in connection with a proposed business combination, including in this proxy statement/prospectus. Any compensation to be paid to North Mountain’s officers after the completion of
the Business Combination will be determined by a compensation committee constituted solely by independent directors.
North Mountain is not party to any agreements with its executive
officers and directors that provide for benefits upon termination of employment. The existence or terms of any such employment or consulting arrangements may influence North Mountain’s management’s motivation in identifying or selecting a target
business, and North Mountain does not believe that the ability of its management to remain with North Mountain after the consummation of its initial business combination should be a determining factor in North Mountain’s decision to proceed with
any potential business combination.
For a discussion of North Mountain’s executive compensation
arrangements after the Closing, please see the section entitled “Management After the Business Combination.”
227
North Mountain Class B Common Stock
In July 2020, our Sponsor purchased 3,306,250 shares of North Mountain
Class B Common Stock for an aggregate price of $25,000, of which up to 431,250 shares were subject to forfeiture to the extent that the underwriter’s over-allotment option was not exercised in full or in part in the IPO, so that the Sponsor would
own, on an as-converted basis, 20% of North Mountain’s issued and outstanding shares after the IPO (assuming the Sponsor did not purchase any Public Shares in the IPO). As a result of the underwriter’s election to fully exercise the
over-allotment option, 431,250 shares are no longer subject to forfeiture. The North Mountain Class B Common Stock will automatically convert into North Mountain Class A Common Stock upon the consummation of the Business Combination on a
one-for-one basis, subject to adjustments.
The Sponsor has agreed, subject to certain limited exceptions, not to
transfer, assign or sell any of its North Mountain Class B Common Stock until the earlier to occur of: (i) one year after the completion of a Business Combination or (ii) subsequent to a Business Combination, (x) if the closing price of the North
Mountain Class A Common Stock equals or exceeds $12.00 per share (as adjusted for share sub-divisions, share dividends, rights issuances, consolidations, reorganizations, recapitalizations and the like) for any 20 trading days within any
30-trading day period commencing at least 150 days after a Business Combination, or (y) the date on which North Mountain completes a liquidation, merger, amalgamation, share exchange, reorganization or other similar transaction that results in
all of the public stockholders having the right to exchange their North Mountain Class A Common Stock for cash, securities or other property.
Promissory Note
On July 14, 2020, North Mountain issued an unsecured promissory note to
the Sponsor (the “Promissory Note”), pursuant to which the Sponsor agreed to loan North Mountain an aggregate of up to $300,000 to cover expenses related to the IPO. The Promissory Note was non-interest bearing and payable on the earlier of
December 31, 2020 or the completion of the IPO. The borrowings outstanding under the Promissory Note of $75,000 were repaid upon the consummation of the IPO on September 22, 2020. No amount is outstanding as of September 30, 2021.
Administrative Support Agreement
North Mountain entered into an agreement whereby, commencing on
September 22, 2020, North Mountain began paying an affiliate of the Sponsor a total of $10,000 per month for office space, administrative and support services. Upon completion of the Business Combination or North Mountain’s liquidation, North
Mountain will cease paying these monthly fees. For the nine months ended September 30, 2021, North Mountain incurred $90,000 in fees for these services, of which such amount is included in accrued expenses in the accompanying balance sheets.
Related Party Loans
In order to finance transaction costs in connection with a Business
Combination, the Sponsor, an affiliate of the Sponsor, or North Mountain’s officers and directors may, but none of them are obligated to, loan North Mountain funds from time to time or at any time, as may be required (“Working Capital Loans”).
Each Working Capital Loan would be evidenced by a promissory note. The Working Capital Loans would either be paid upon consummation of a Business Combination, without interest, or, at the holder’s discretion, up to $1,500,000 of the Working
Capital Loans may be converted into warrants at a price of $1.00 per warrant. The warrants would be identical to the Private Placement Warrants. In the event that a Business Combination does not close, North Mountain may use a portion of the
proceeds held outside the Trust Account to repay the Working Capital Loans, but no proceeds held in the Trust Account would be used to repay the Working Capital Loans.
Related Party Policy
North Mountain has adopted a written Related Person Transactions Policy
(the “policy”), which sets forth its policy with respect to the review, approval, ratification and disclosure of all related person transactions by North Mountain's audit committee. In accordance with the policy, North Mountain's audit committee
has overall responsibility for implementation of and compliance with the policy. Under the policy, the North Mountain audit
228
committee may approve only those related person transactions that are in, or not
inconsistent with, the best interests of North Mountain and its stockholders. North Mountain has also adopted a code of ethics requiring us to avoid, wherever possible, all conflicts of interests, except under guidelines or resolutions approved
by the North Mountain Board (or the appropriate committee of the North Mountain Board) or as disclosed in public filings with the SEC. Under North Mountain’s Code of Ethics, conflict of interest situations will include any financial transaction,
arrangement or relationship (including any indebtedness or guarantee of indebtedness) involving North Mountain.
These procedures are intended to determine whether any such related
party transaction impairs the independence of a director or presents a conflict of interest on the part of a director, employee or officer.
To further minimize conflicts of interest, North Mountain has agreed
not to consummate an initial business combination with an entity that is affiliated with any of its Sponsor, officers or directors unless it, or a committee of independent and disinterested directors, has obtained an opinion from an independent
investment banking firm which is a member of the Financial Industry Regulatory Authority, Inc. or an independent accounting firm that North Mountain’s initial business combination is fair to North Mountain from a financial point of view. There
will be no finder’s fees, reimbursement, consulting fee, monies in respect of any payment of a loan or other compensation paid by North Mountain to its Sponsor, officers or directors or North Mountain’s or any of their respective affiliates, for
services rendered to North Mountain prior to or in connection with the completion of the initial business combination (regardless of the type of transaction that it is). However, the following payments will be, or have been, made to North
Mountain’s Sponsor, officers, or directors, or North Mountain’s or their affiliates, and, if made prior to an initial business combination will be made from (i) funds held outside the Trust Account or (ii) permitted withdrawals from interest
earned on the Trust Account:
|
•
|
repayment of an aggregate of up to $300,000 in loans made to North Mountain by its Sponsor to cover IPO-related and organizational
expenses;
|
|
•
|
payment to an affiliate of North Mountain’s Sponsor of a total of $10,000 per month, for up to 24 months, for office space,
administrative and support services;
|
|
•
|
reimbursement for any out-of-pocket expenses related to identifying, investigating and completing an initial business combination;
and
|
|
•
|
repayment of loans which may be made by Sponsor, an affiliate of Sponsor or North Mountain’s officers and directors to finance
transaction costs in connection with an intended initial business combination, the terms of which have not been determined nor have any written agreements been executed with respect thereto. Up to $1,500,000 of such loans may be
convertible into warrants of the post-business combination entity at a price of $1.00 per warrant at the option of the lender.
|
These payments may be funded using the net proceeds of the IPO and the
sale of the Private Placement Warrants not held in the Trust Account, Permitted Withdrawals or, upon completion of the initial business combination, from any amounts remaining from the proceeds of the Trust Account released to North Mountain in
connection therewith.
In connection with the Business Combination, certain agreements were
entered into or will be entered into pursuant to the Merger Agreement by Corcentric. References below are qualified in their entirety by reference to the full text of such agreements and to the descriptions thereof included elsewhere in this
proxy statement/prospectus. These agreements include:
|
•
|
Corcentric Stockholder Support Agreements (see the section entitled “Agreements Related To The
Business Combination—Corcentric Stockholder Support Agreements”);
|
|
•
|
PIPE Subscription Agreements (see the section entitled “Agreements Related To The Business
Combination—PIPE Subscription Agreements”);
|
|
•
|
Share Vesting and Warrant Surrender Agreement (see the section entitled “Agreements Related To
The Business Combination—Share Vesting and Warrant Surrender Agreement”);
|
|
•
|
Registration Rights Agreement (see the section entitled “Agreements Related To The Business
Combination—Amended and Restated Registration Rights Agreement”); and
|
229
|
•
|
Lock-up Agreements (see the section entitled “Agreements Related To The Business
Combination—Lock-up Agreements”).
|
Upon consummation of the Business Combination, it is anticipated that
New Corcentric’s Board will adopt a written related person transaction policy that sets forth the following policies and procedures for the review and approval or ratification of related person transactions.
A “Related Person Transaction” is a transaction, arrangement or
relationship in which New Corcentric or any of its subsidiaries was, is or will be a participant, the amount of which involved exceeds $120,000, and in which any related person had, has or will have a direct or indirect material interest. A
“Related Person” means:
|
•
|
any person who is, or at any time during the applicable period was, one of New Corcentric’s executive officers or a member of New
Corcentric’s Board;
|
|
•
|
any person who is known by New Corcentric to be the beneficial owner of more than 5% of our voting stock;
|
|
•
|
any immediate family member of any of the foregoing persons, which means any child, stepchild, parent, stepparent, spouse,
sibling, mother-in-law, father-in-law, daughter-in-law, brother-in-law or sister-in-law of a director, officer or a beneficial owner of more than 5% of our voting stock, and any person (other than a tenant or employee) sharing the
household of such director, executive officer or beneficial owner of more than 5% of our voting stock; and
|
|
•
|
any firm, corporation or other entity in which any of the foregoing persons is a partner or principal or in a similar position or
in which such person has a 10% or greater beneficial ownership interest.
|
It is also anticipated that New Corcentric will have policies and
procedures designed to minimize potential conflicts of interest arising from any dealings it may have with its affiliates and to provide appropriate procedures for the disclosure of any real or potential conflicts of interest that may exist from
time to time. Specifically, pursuant to its audit committee charter, the audit committee will have the responsibility to review related person transactions.
230
This section describes the material provisions of
certain additional agreements entered into or to be entered into pursuant to or in connection with the transactions contemplated by the Merger Agreement, which are referred to as the “Related Agreements,” but does not purport to describe all of
the terms thereof. The descriptions below are qualified by reference to the actual text of these agreements. Copies of the form of Corcentric Stockholder Support Agreement, form of Subscription Agreement, form of Share Vesting and Warrant
Surrender Agreement, form of Registration Rights Agreement and form of Lock-Up Agreement are attached to the Merger Agreement as Exhibit B, Exhibit A, Exhibit E, Exhibit C and Exhibit D, respectively. You are encouraged to read the Related
Agreements in their entirety.
Corcentric Stockholder Support Agreements
In connection with the execution of the Merger Agreement, the
Corcentric Supporting Stockholders executed and delivered to North Mountain support agreements, pursuant to which, among other things, such persons have agreed (a) to support the adoption of the Merger Agreement and the approval of the Business
Combination, subject to certain customary conditions, and (b) not to transfer any of their subject shares (or enter into any arrangement with respect thereto), subject to certain customary conditions. As of December 31, 2021, the Corcentric
Supporting Stockholders who had entered into Corcentric Stockholder Support Agreements collectively held approximately 48.2% of the outstanding voting power of Corcentric Capital Stock.
PIPE Subscription Agreements
In connection with the execution of the Merger Agreement, North
Mountain entered into the Subscription Agreements with the PIPE Investors, pursuant to which (i) the PIPE Investors agreed to purchase, and North Mountain agreed to sell to the PIPE Investors, the PIPE Shares, for a purchase price of $10.00 per
share and an aggregate purchase price of $50,000,000 and (ii) North Mountain agreed to transfer to each PIPE Investor one-half of one warrant for each PIPE Share purchased, which warrants will be “Public Warrants” under the North Mountain Warrant
Agreement, in each case in a private placement.
The Subscription Agreements are in all material respects similar to the
Form of Subscription Agreement attached to the Merger Agreement as Exhibit A. The Subscription Agreement contains customary representations and warranties of North Mountain, on the one hand, and each PIPE Investor, on the other hand.
The closing of the PIPE Financing is expected to occur substantially
concurrently with the Closing and is contingent upon, among other things, (i) at least 5,000,000 shares of North Mountain Class A Common Stock remaining outstanding immediately prior to the consummation of the Business Combination after giving
effect to the completion of the Redemption Offer, and with respect to which North Mountain has not entered into a forward purchase agreement that would obligate North Mountain to purchase the shares at a future date and (ii) customary closing
conditions and the consummation of the Business Combination. The purpose of the PIPE Financing is to raise additional capital for use by New Corcentric following the Closing.
Pursuant to the Subscription Agreements, North Mountain agreed that,
within 30 calendar days after the Closing, New Corcentric will file with the SEC (at New Corcentric’s sole cost and expense) a registration statement (the “PIPE Resale Registration Statement”) registering the resale of the PIPE Shares, the PIPE
Warrants and the PIPE Warrant Shares (collectively, the “Registrable Securities”), and New Corcentric will use its commercially reasonable efforts to have the PIPE Resale Registration Statement declared effective as soon as practicable after the
filing thereof, but no later than the earlier of (i) the 75th calendar day (or 100th calendar day if the SEC notifies New Corcentric that it will “review” the Registration Statement) following the Closing and (ii) the 10th business day after the
date New Corcentric is notified (orally or in writing, whichever is earlier) by the SEC that the PIPE Resale Registration Statement will not be “reviewed” or will not be subject to further review. Until the earliest of (i) the date on which the
Registrable Securities may be resold without volume or manner of sale restrictions (including as may be applicable to affiliates) pursuant to Rule 144 and without the requirement for New Corcentric to be in compliance with the current public
information requirements under Rule 144(c)(1), (ii) the date on which such Registrable Securities have actually been sold and (iii) the date which is two years after the closing of the PIPE Financing, except for such times New Corcentric is
permitted under the Subscription Agreements to suspend the use of the prospectus forming part of the PIPE Resale Registration Statement, New Corcentric must use commercially reasonable efforts to keep such PIPE Resale Registration Statement
effective. North Mountain also agreed that New Corcentric will file all reports and other documents required of New Corcentric to enable the PIPE Investors to resell the Registrable Securities pursuant to Rule 144.
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Share Vesting and Warrant Surrender Agreement
In connection with the execution of the Merger Agreement, North
Mountain entered into a Share Vesting and Warrant Surrender Agreement with the Sponsor, which provides that immediately prior to, and contingent upon, the consummation of the Closing (the “Surrender Effective Time”) (i) the Sponsor will surrender
to North Mountain 4,145,000 Private Placement Warrants held by the Sponsor prior to the Closing, a portion of which will be transferred and delivered to the PIPE Investors in the amounts set forth in and pursuant to the Subscription Agreements
(including any Subscription Agreements entered into after the date of the Share Vesting and Warrant Surrender Agreement) and the remainder of which will be cancelled by North Mountain upon the Surrender Effective Time in exchange for 1,400,000
newly issued shares of North Mountain Class A Common Stock (the “Warrant Shares”), subject to certain vesting conditions set forth in the Share Vesting and Warrant Surrender Agreement, (ii) at the Closing, all shares of North Mountain Class B
Common Stock held by the Sponsor (or shares of North Mountain Class A Common Stock issued or issuable upon conversion thereof) and all Warrant Shares will become unvested, (iii) an aggregate of 2,603,126 of the shares of North Mountain Class B
Common Stock and Warrant Shares will vest immediately following Closing and (iv) the remainder of the Sponsor’s shares of North Mountain Class B Common Stock and Warrant Shares will, at the Surrender Effective Time, be subject to the vesting and
forfeiture provisions set forth in the Share Vesting and Warrant Surrender Agreement, whereby 1,051,562 shares will vest upon the occurrence of the $12.50 Share Price Milestone and 1,051,562 shares will vest upon the occurrence of the $15.00
Share Price Milestone, in each case for 20 trading days within any consecutive 30-trading day period within five years of Closing, subject to equitable adjustment to reflect any subdivision, stock split, stock or cash dividend, reorganization,
combination, recapitalization or similar transaction with respect to the North Mountain Common Stock. In addition, the shares subject to the $12.50 Share Price Milestone or the $15.00 Share Price Milestone will accelerate vesting upon certain
acceleration events, including a change of control of New Corcentric that occurs within five years of Closing. Any shares subject to vesting pursuant to the Share Vesting and Warrant Surrender Agreement will be surrendered to the extent such
shares remain unvested following the five year anniversary of the Closing.
Amended and Restated Registration Rights Agreement
In connection with the execution of the Merger Agreement, North
Mountain, the Sponsor and certain stockholders of Corcentric entered into an amended and restated registration rights agreement (the “Registration Rights Agreement”), which will become effective upon the consummation of the Business Combination.
Pursuant to the Registration Rights Agreement, North Mountain agreed to file a shelf registration statement with respect to the registrable securities under the Registration Rights Agreement within 30 days of the closing of the Business
Combination. Additionally, the Registration Rights Agreement contains certain restrictions on transfer with respect to the shares of North Mountain Common Stock held by Sponsor Holders (as defined therein) immediately following Closing. Such
restrictions begin at Closing and end on the earlier of the earlier to occur of (A) the date that is one year following the date of the Closing and (B) subsequent to the Closing, (x) if the closing price of the Common Stock equals or exceeds
$12.00 per share (as adjusted for stock splits, stock dividends, reorganizations, recapitalizations and the like) for any 20 trading days within any 30 trading day period commencing at least 150 days after the Closing (as such term is defined in
the Merger Agreement) or (y) the date on which the Company completes a liquidation, merger, capital stock exchange, reorganization or other similar transaction that results in all of the Company’s stockholders having the right to exchange their
shares of Common Stock for cash, securities or other property. Up to twice in any 12-month period, certain legacy North Mountain and Corcentric stockholders may request to sell all or any portion of their registrable securities in an underwritten
offering so long as the total offering price is reasonably expected to exceed $30,000,000 or all of such holders’ remaining registrable securities. North Mountain also agreed to provide customary “piggyback” registration rights. The Registration
Rights Agreement also provides that North Mountain will pay certain expenses relating to such registrations and indemnify the stockholders against certain liabilities.
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Lock-up Agreements
In connection with the execution of the Merger Agreement, North
Mountain and certain Corcentric stockholders entered into Lock-up Agreements (the “Lock-up Agreements”), in the form attached to the Merger Agreement as Exhibit D. Pursuant to the Lock-up Agreements, such Corcentric stockholders have agreed that
they will not, during the period beginning as of the effective time of the Business Combination and continuing to and including the date that is one hundred eighty (180) days after the Closing Date, directly or indirectly, offer, sell, contract
to sell, pledge, grant any option to purchase, make any short sale or otherwise dispose of any shares of New Corcentric Common Stock, or any options or warrants to purchase any shares of New Corcentric Common Stock, or any securities convertible
into, exchangeable for or that represent the right to receive shares of New Corcentric Common Stock, or any interest in any of the foregoing whether owned at the time of entry into the Lock-up Agreements or thereafter acquired (in each case,
subject to certain exceptions set forth in the Lock-up Agreements). The Lock-up Agreements will become effective upon the consummation of the Business Combination.
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THE BUSINESS COMBINATION AND THE REDEMPTION
The following is a discussion of the material U.S. federal income tax
consequences of (i) the Mergers to the U.S. Holders (as defined below) of Corcentric Common Stock and (ii) the exercise by Public Stockholders of their redemption rights in connection with the Mergers.
This discussion is based upon the Code, the regulations promulgated
under the Code and court and administrative rulings and decisions, all as in effect on the date of this registration statement. These authorities may change, possibly retroactively, and any change could affect the accuracy of the statements and
conclusions set forth in this discussion.
This discussion addresses only those (i) U.S. Holders of Corcentric
Common Stock that hold their shares of Corcentric Common Stock and will, following the Mergers, hold their shares of New Corcentric Common Stock, and (ii) Public Stockholders that hold Public Shares, as “capital assets” within the meaning of
Section 1221 of the Code (generally, property held for investment). This discussion does not address any tax consequences arising as a result of the Medicare contribution tax on net investment income, the alternative minimum tax or special tax
accounting rules under Section 451(b) of the Code, nor does it address any tax consequences arising under the laws of any state, local or non-U.S. jurisdiction, or under any U.S. federal laws other than those pertaining to income taxes. Further,
this discussion does not address all aspects of U.S. federal income taxation that may be relevant to you in light of your individual circumstances or that may be applicable to you if you are subject to special treatment under the U.S. federal
income tax laws, including if you are:
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a tax-exempt organization;
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a real estate investment trust;
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an S corporation or other pass-through entity (or an investor in an S corporation or other pass-through entity);
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an insurance company;
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a regulated investment company or a mutual fund;
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a “controlled foreign corporation” or a “passive foreign investment company”;
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a dealer or broker in stocks and securities or currencies;
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a trader in securities that elects mark-to-market treatment;
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a holder of Corcentric Common Stock that received Corcentric Common Stock through the exercise of an employee stock option,
through a tax qualified retirement plan or otherwise as compensation;
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a holder of Corcentric Common Stock or Public Shares that has a functional currency other than the U.S. dollar;
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a holder of Corcentric Common Stock that holds Corcentric Common Stock, or a Public Stockholder that holds Public Shares, as part
of a hedge, straddle, constructive sale, conversion or other integrated transaction;
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a holder of Corcentric Common Stock that is not a U.S. Holder;
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a government or agency or instrumentality thereof;
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a holder that owns more than five percent of Corcentric Common Stock;
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a holder who holds its shares as “qualified small business stock” within the meaning of Section 1202(c) of the Code;
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a holder of Corcentric Common Stock or Public Shares that is a U.S. expatriate; or
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a holder of Corcentric Common Stock that exercises its appraisal rights.
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For purposes of this discussion, the term “U.S. Holder” means a
beneficial owner of Corcentric Common Stock, or beneficial owner of Public Shares, as applicable, that is (1) an individual who is a citizen or resident of
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the United States as determined for U.S. federal income tax purposes, (2) a corporation
(or any other entity treated as a corporation for U.S. federal income tax purposes) organized in or under the laws of the United States or any state thereof or the District of Columbia, (3) a trust if (a) a court within the United States is able
to exercise primary supervision over the administration of the trust and one or more United States persons have the authority to control all substantial decisions of the trust or (b) such trust has made a valid election to be treated as a United
States person for U.S. federal income tax purposes or (4) an estate, the income of which is includible in gross income for U.S. federal income tax purposes regardless of its source. A “Non-U.S. Holder” means a beneficial owner of Public Shares
(other than a partnership or other entity or arrangement classified as a partnership for U.S. federal income tax purposes) that is not a U.S. Holder.
If an entity or an arrangement treated as a partnership for U.S.
federal income tax purposes holds Corcentric Common Stock or Public Shares, the U.S. federal income tax consequences of the Mergers, or of a redemption of Public Shares, as applicable, to a partner in such partnership (or owner of such entity)
generally will depend on the status of the partner and the activities of the partnership (or entity). Any entity treated as a partnership for U.S. federal income tax purposes that holds Corcentric Common Stock or Public Shares, and any partners
in such partnership, are urged to consult their own tax advisors with respect to the tax consequences of the Mergers, or of a redemption of Public Shares, as applicable, in their specific circumstances.
The tax consequences of the Mergers or of a redemption of your
Public Shares, as applicable, will depend on your specific situation. You are urged to consult with your own tax advisor as to the tax consequences of the Mergers or of a redemption of your Public Shares, as applicable, in your particular
circumstances, including the applicability and effect of the alternative minimum tax and any state, local, foreign or other tax laws and of changes in those laws.
Tax Consequences of the Mergers to U.S. Holders of Corcentric
Common Stock
It is the opinion of Kirkland & Ellis LLP that the Mergers will
qualify as a “reorganization” for U.S. federal income tax purposes within the meaning of Section 368(a) of the Code. This opinion is based on facts and representations contained in representation letters provided by Corcentric and North
Mountain and on customary factual assumptions, and further assumes that the Mergers are completed in the manner set forth in the Merger Agreement and the Registration Statement on Form S-4 of which this proxy statement/prospectus forms a part.
If any assumption or representation is or becomes inaccurate, the U.S. federal income tax consequences of the Mergers could be adversely affected.
Neither Corcentric nor North Mountain has requested, and neither
intends to request, a ruling from the IRS as to the U.S. federal income tax consequences of the Mergers. A tax opinion represents the legal judgment of counsel rendering the opinion and is not binding on the IRS. Consequently, no assurance can
be given that the IRS will not assert, or that a court would not sustain, a position that the Mergers do not constitute a “reorganization.” Accordingly, each U.S. Holder is urged to consult its tax advisor with respect to the particular tax
consequence of the Mergers to such holder.
Tax Consequences if the Mergers Qualify as a Reorganization
Subject to the qualifications and limitations set forth herein, if
the Mergers qualify as a “reorganization” within the meaning of Section 368(a) of the Code for U.S. federal income tax purposes, the following tax consequences will result for U.S. Holders that exchange shares of Corcentric Common Stock (i)
solely for North Mountain Class A Common Stock, (ii) for North Mountain Class A Common Stock and cash or (iii) solely for cash:
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U.S. Holders of Corcentric Common Stock who receive solely North Mountain Class A Common Stock in the Mergers will not
recognize gain or loss in the exchange. Each U.S. Holder’s aggregate tax basis in the North Mountain Class A Common Stock received in the Mergers will equal the aggregate adjusted tax basis in the shares of Corcentric Common Stock
surrendered in the Mergers. The holding period of the North Mountain Class A Common Stock received in the Mergers by such U.S. Holder will include the holding period of the shares of Corcentric Common Stock surrendered in the Mergers in
exchange therefor.
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U.S. Holders of Corcentric Common Stock who receive both North Mountain Class A Common Stock and cash in the Mergers will
recognize gain, if any, but not loss, in amount equal to the lesser of: (i) the amount of cash received in the exchange and (ii) the amount of gain realized in the exchange (computed as the excess of the sum of the cash received in the
Mergers plus the fair market value of the North Mountain Class A Common Stock received in the Mergers over such U.S. Holder’s adjusted tax basis of the shares of Corcentric Common Stock surrendered in the exchange). Generally, the
aggregate tax basis in the North Mountain Class A Common Stock that a U.S. Holder receives pursuant to the Mergers will equal such U.S. Holder’s aggregate adjusted tax basis in the shares of the Corcentric Common Stock surrendered by
such U.S. Holder, increased by the amount of gain, if any, recognized by such U.S. Holder in the Mergers (other than with respect to cash received in lieu of fractional shares of North Mountain Class A Common Stock), and decreased by
the amount of cash, if any, received by such U.S. Holder in the Mergers (other than cash received in lieu of fractional shares of North Mountain Class A Common Stock). The holding period for shares of North Mountain Class A Common Stock
received by such U.S. Holder, including any fractional shares deemed received by such U.S. Holder, will include such U.S. Holder’s holding period for the Corcentric Common Stock surrendered by such U.S. Holder in exchange for the North
Mountain Class A Common Stock. If a U.S. Holder acquired shares of Corcentric Common Stock at different times, such U.S. Holder must calculate gain or loss separately for each identifiable block of shares (i.e., shares acquired at the
same cost in a single transaction) of Corcentric Common Stock surrendered by such U.S. Holder pursuant to the Mergers, and such U.S. Holder’s tax basis and holding period in the North Mountain Class A Common Stock received by such U.S.
Holder in the Mergers may be determined with reference to each identifiable block of Corcentric Common Stock surrendered.
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U.S. Holders of Corcentric Common Stock who receive solely cash in the Mergers will recognize gain or loss equal to the
difference between the amount of cash received in the exchange and such U.S. Holder’s adjusted tax basis of the shares of Corcentric Common Stock surrendered in the exchange. Such recognized gain or loss will be long-term capital gain
or loss if the Corcentric Common Stock has been held for more than one year as of the date of the exchange, and will be short-term capital gain or loss if the Corcentric Common Stock has been held for one year or less as of such date.
Long-term capital gains of non-corporate U.S. Holders may be eligible for reduced rates of taxation. The deductibility of capital losses is subject to limitations. A U.S. Holder generally will have an aggregate tax basis in the shares
of North Mountain Class A Common Stock received equal to the fair market value of such shares as of the date such shares are received, and such U.S. Holder’s holding period in such shares of North Mountain Class A Common Stock would
begin on the day following the date of the Mergers
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If a U.S. Holder receives cash instead of a fractional share of
North Mountain Class A Common Stock, such U.S. Holder’s tax treatment with respect to such fractional share should generally be the same as the treatment described in the paragraph (iii) above with respect to U.S. Holders that receive solely
cash.
A U.S. Holder that acquired different blocks of Corcentric Common
Stock at different times or different prices is urged to consult its tax advisor regarding the manner in which gain or loss should be determined in its specific circumstances.
Tax Consequences if the Mergers Do Not Qualify as a Reorganization
If the Mergers do not qualify as a reorganization under Section
368(a) of the Code, a U.S. Holder of Corcentric Common Stock will recognize gain or loss in an amount equal to the difference between (x) the amount of cash and the fair market value of the North Mountain Class A Common Stock received by such
U.S. Holder and (y) such U.S. Holder’s adjusted tax basis in the shares of Corcentric Common Stock surrendered. Gain or loss will be calculated separately for each block of Corcentric Common Stock (generally shares acquired at the same cost in
a single transaction) surrendered. Such gain or loss generally will be capital gain or loss, and will be long-term capital gain or loss if such U.S. Holder’s Corcentric Common Stock has been held for more than one year at the time of the
Mergers. Long-term capital gains of non-corporate U.S. Holders may be eligible for reduced rates of taxation. The deductibility of capital losses is subject to limitations. Such U.S. Holder
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generally will have an aggregate tax basis in the shares of North Mountain Class A
Common Stock received equal to the fair market value of such shares as of the date such shares are received, and such U.S. Holder’s holding period in such shares of North Mountain Class A Common Stock would begin on the day following the date
of the Mergers.
If a U.S. Holder of Corcentric Common Stock receives cash instead of
a fractional share of North Mountain Class A Common Stock, such U.S. Holder’s tax treatment with respect to such fractional share should generally be the same as the treatment described above (see “—Tax Consequences if the Mergers Qualify as a
Reorganization”) with respect to U.S. Holders that receive solely cash.
Information Reporting
Certain information reporting requirements may apply to each U.S.
Holder that is a “significant holder” of Corcentric Common Stock. A “significant holder” is a holder of Corcentric Common Stock, that, immediately before the Mergers, owned at least 1% (by vote or value) of the outstanding stock of Corcentric
(or, in certain instances, Corcentric Common Stock with a basis of at least $1,000,000). You are urged to consult your tax advisor as to the potential application of these information reporting requirements.
All holders of Corcentric Common Stock are urged to
consult their tax advisors with respect to the tax consequences of the Mergers in their particular circumstances, including tax return reporting requirements, the applicability and effect of the alternative minimum tax, any federal tax laws other
than those pertaining to income tax (including estate and gift tax laws), and any state, local, foreign or other tax laws.
Tax Consequences of a Redemption of Public Shares
The discussion below applies to you if you are a Public Stockholder
that exercises redemption rights in connection with the Mergers with respect to your Public Shares.
Tax Consequences of Redemption for U.S. Holders
The discussion below applies to you if you are a “U.S. Holder” (as
defined above) of Public Shares that exercises the redemption rights described above under “Special Meeting of North Mountain Stockholders—Redemption Rights” with respect to your Public Shares.
Treatment of Redemption
The treatment of a redemption of your Public Shares for U.S. federal
income tax purposes will depend on whether the redemption qualifies as a sale of the Public Shares under Section 302 of the Code. If the redemption qualifies as a sale of the Public Shares, you will recognize gain or loss as described below under
“—Taxation of Redemptions Treated as a Sale or Exchange of Public Shares.” If the redemption does not qualify as a sale of Public Shares, you will be treated as
receiving a corporate distribution subject to tax as described below under “—Taxation of Redemptions Treated as a Distribution.” Whether a redemption qualifies for sale treatment will depend largely on the
total number of shares of North Mountain Class A Common Stock treated as held by you (including any shares constructively owned by the you) relative to all of the shares of North Mountain Class A Common Stock outstanding both before and after the
redemption. The redemption of Public Shares generally will be treated as a sale of the Public Shares (rather than as a corporate distribution) if the redemption (i) results in a “complete termination” of your interest in North Mountain, (ii) is
“not essentially equivalent to a dividend” with respect to you or (iii) is a “substantially disproportionate redemption” with respect to you. These tests are explained more fully below.
In determining whether any of the foregoing tests are satisfied, you
must take into account not only shares of North Mountain Class A Common Stock actually owned by you, but also shares of North Mountain Class A Common Stock that are constructively owned by you. In addition to shares owned directly, you may
constructively own shares owned by certain related individuals and entities in which you have an interest or that have an interest in you, as well as any shares of North Mountain Class A Common Stock you have a right to acquire by exercise of an
option. There will be a complete termination of your interest if either (i) all of the shares of North Mountain Class A Common Stock actually and constructively owned by you are redeemed or (ii) all of the North Mountain Class A Common Stock
actually owned by you are redeemed and you are eligible
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to waive, and do waive, the attribution of shares owned by certain family members and
you do not constructively own any other shares. The redemption of Public Shares will not be essentially equivalent to a dividend if your redemption results in a “meaningful reduction” of your proportionate interest in North Mountain. Whether the
redemption will result in a meaningful reduction in your proportionate interest in North Mountain will depend on the particular facts and circumstances. However, the IRS has indicated in a published ruling that even a small reduction in the
proportionate interest of a small minority stockholder in a publicly held corporation who exercises no control over its corporate affairs may constitute such a “meaningful reduction.” In order to meet the “substantially disproportionate” test,
the percentage of outstanding North Mountain Class A Common Stock actually and constructively owned by you immediately following the redemption of the Public Shares must, among other requirements, be less than 80% of the percentage of the
outstanding North Mountain Class A Common Stock actually and constructively owned by you immediately before the redemption. You are urged to consult with your tax advisor as to the tax consequences of a redemption.
If none of the foregoing tests is satisfied, then the redemption
proceeds will be treated as a corporate distribution and the tax effects will be as described under “—Taxation of Redemptions Treated as a Distribution”, below. After the application of those rules, any
remaining tax basis you have in the redeemed Public Shares will generally be added to your adjusted tax basis in your remaining North Mountain Class A Common Stock.
Taxation of Redemptions Treated as a Distribution
If the redemption of your Public Shares does not qualify as a sale of
Public Shares, you will be treated as receiving a distribution from North Mountain. You generally will be required to include in gross income as dividends the amount of proceeds received in connection with such a redemption to the extent the
distribution is paid out of North Mountain’s current or accumulated earnings and profits (as determined under U.S. federal income tax principles). Distributions in excess of such earnings and profits generally will treated as a return of capital
that will be applied against and reduce your tax basis in your shares (but not below zero), with any remaining excess treated as gain from the sale or exchange of such shares as described below under “—Taxation
of Redemptions Treated as a Sale or Exchange of Public Shares.”
If you are a corporate U.S. Holder, dividends paid by North Mountain to
you generally will be eligible for the dividends-received deduction allowed to domestic corporations in respect of dividends received from other domestic corporations so long as you satisfy the holding period requirement for the
dividends-received deduction. If you are a non-corporate U.S. Holder, under tax laws currently in effect, and subject to certain exceptions (including, but not limited to, dividends treated as investment income for purposes of investment interest
deduction limitations), dividends generally will be taxed at the lower applicable long-term capital gains rate so long as you satisfy certain holding period requirements (see “—Taxation of Redemptions Treated as
a Sale or Exchange of Public Shares” below). It is unclear whether the redemption rights with respect to the Public Shares described herein may prevent a U.S. Holder from satisfying the applicable holding period requirements with respect
to the dividends received deduction or the preferential tax rate on qualified dividend income, as the case may be.
Taxation of Redemptions Treated as a Sale or Exchange of Public Shares
If a redemption of your Public Shares qualifies as a sale of Public
Shares, you generally will recognize capital gain or loss in an amount equal to the difference between (i) the amount of cash received in the redemption and (ii) your adjusted tax basis in the Public Shares so redeemed.
Any such capital gain or loss generally will be long-term capital gain
or loss if your holding period for the Public Shares so disposed of exceeds one year. It is unclear, however, whether the redemption rights with respect to the Public Shares may suspend the running of the applicable holding period for this
purpose. Long-term capital gains recognized by non-corporate U.S. Holders generally will be eligible for taxation at reduced rates. The deductibility of capital losses is subject to limitations.
U.S. Holders that hold different blocks of North Mountain Class A
Common Stock (shares of North Mountain Class A Common Stock purchased or acquired on different dates or at different prices) are urged to consult their tax advisors to determine how the above rules apply to them.
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Tax Consequences of Redemption for Non-U.S.
Holders
The discussion below applies to you if you are a Non-U.S. Holder of
Public Shares that exercises the redemption rights described above under “Special Meeting of North Mountain Stockholders—Redemption Rights” with respect to your Public Shares.
Treatment of Redemption
If you are a Non-U.S. Holder, the characterization for U.S. federal
income tax purposes of the redemption of your Public Shares generally will correspond to the U.S. federal income tax characterization of such a redemption of a U.S. Holder’s Public Shares, as described above under “—Tax Consequences of Redemption for U.S. Holders—Treatment of Redemption”.
Non-U.S. Holders considering exercising their redemption rights are
urged to consult their own tax advisors as to whether the redemption of their Public Shares will be treated as a distribution, or as a sale, under the Code.
Taxation of Redemptions Treated as a Distribution
If the redemption of your Public Shares does not qualify as a sale or
exchange of your Public Shares, you will be treated as receiving a distribution from North Mountain, which distribution will be treated as a dividend to the extent the distribution is paid out of North Mountain’s current or accumulated earnings
and profits (as determined under U.S. federal income tax principles). The gross amount of such dividends will be subject to a withholding tax at a rate of 30% unless you are eligible for a reduced rate of withholding under an applicable income
tax treaty and provide proper certification of your eligibility for such reduced rate. Dividends that are effectively connected with the conduct by you of a trade or business in the United States (and are attributable to a U.S. permanent
establishment if an applicable treaty so requires) generally will be subject to U.S. federal income tax at the same regular U.S. federal income tax rates applicable to a comparable U.S. Holder and, if you are a corporation for U.S. federal income
tax purposes, also may be subject to an additional branch profits tax at a 30% rate or a lower applicable tax treaty rate.
Distributions in excess of such earnings and profits generally will be
treated as a return of capital that will be applied against and reduce your tax basis in your shares (but not below zero), with any remaining excess treated as gain from the sale or exchange of such shares as described under “—Taxation of Redemptions Treated as a Sale or Exchange of Public Shares” below.
Taxation of Redemptions Treated as a Sale or Exchange of Public Shares
If the redemption of your Public Shares qualifies as a sale or exchange
of such shares, you generally will not be subject to U.S. federal income tax on any gain recognized on such redemption unless:
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such gain is effectively connected with the conduct by you of a trade or business in the United States (and, if required by an
applicable income tax treaty, is attributable to a permanent establishment or fixed base that you maintain in the United States), in which case you generally will be subject to U.S. federal income tax on such gain at the same regular U.S.
federal income tax rates applicable to a comparable U.S. Holder and, if you are a corporation for U.S. federal income tax purposes, also may be subject to an additional branch profits tax at a 30% rate or a lower applicable tax treaty
rate;
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you are an individual who is present in the United States for 183 days or more in the taxable year of the redemption and certain
other conditions are met, in which case you will be subject to a 30% tax on your net capital gain for the year; or
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we are or have been a “United States real property holding corporation” for U.S. federal income tax purposes at any time during
the shorter of the five-year period ending on the date of the redemption or the period during which you held Public Shares, and you have owned, directly or constructively, more than 5% of our North Mountain Class A Common Stock at any
time within the shorter of the five-year period or your holding period for our Public Shares. We do not believe that we are or have been a United States real property holding corporation for U.S. federal income tax purposes.
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All holders of Public Shares are urged to consult
their tax advisors with respect to the tax consequences of a redemption of Public Shares in their particular circumstances, including tax return
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reporting requirements, the applicability and effect of the
alternative minimum tax, any federal tax laws other than those pertaining to income tax (including estate and gift tax laws), and any state, local, foreign or other tax laws.
FATCA Withholding Taxes
Provisions commonly referred to as “FATCA” impose withholding of 30% on
payments of dividends (including amounts treated as dividends received pursuant to a redemption of stock) on our North Mountain Class A Common Stock. The 30% withholding under FATCA was scheduled to apply to the gross proceeds of a disposition of
any stock, debt instrument, or other property that can produce U.S. source dividends or interest beginning on January 1, 2019, but on December 13, 2018, the IRS released proposed regulations that, if finalized in their proposed form, would
eliminate the obligation to withhold on gross proceeds. Although these proposed Treasury Regulations are not final, taxpayers generally may rely on them until final Treasury Regulations are issued.
In general, no such withholding will be required with respect to a U.S.
holder or an individual Non-U.S. Holder that timely provides the certifications required on a valid IRS Form W-9 or W-8, respectively. Holders potentially subject to withholding include “foreign financial institutions” (which is broadly defined
for this purpose and in general includes investment vehicles) and certain other non-U.S. entities unless various U.S. information reporting and due diligence requirements (generally relating to ownership by United States persons of interests in
or accounts with those entities) have been satisfied, or an exemption applies (typically certified as to by the delivery of a properly completed IRS Form W-8BEN-E). If FATCA withholding is imposed, a beneficial owner that is not a foreign
financial institution generally will be entitled to a refund of any amounts withheld by filing a U.S. federal income tax return (which may entail significant administrative burden). Foreign financial institutions located in jurisdictions that
have an intergovernmental agreement with the United States governing FATCA may be subject to different rules. Non-U.S. Holders are urged to consult their tax advisors regarding the effects of FATCA on a redemption of North Mountain Class A Common
Stock.
Information Reporting and Backup Withholding
Proceeds received in connection with the Mergers or the redemptions may
be subject to information reporting to the IRS and U.S. backup withholding. Backup withholding will not apply, however, to a U.S. Holder who furnishes a correct taxpayer identification number and makes other required certifications, or who is
otherwise exempt from backup withholding and establishes such exempt status. A Non-U.S. Holder generally will eliminate the requirement for information reporting and backup withholding by providing certification of its foreign status, under
penalties of perjury, on a duly executed applicable IRS Form W-8 or by otherwise establishing an exemption.
Backup withholding is not an additional tax. Amounts withheld as backup
withholding may be credited against a holder’s U.S. federal income tax liability, and a U.S. Holder generally may obtain a refund of any excess amounts withheld under the backup withholding rules by timely filing the appropriate claim for refund
with the IRS and furnishing any required information.
240
The following table sets forth information regarding (i) the actual
beneficial ownership of North Mountain Common Stock as of December 31, 2021 (the “Ownership Date”), which is prior to the consummation of the Business Combination (pre-Business Combination); (ii) the actual ownership of Corcentric Capital Stock
as of December 31, 2021 (pre-Business Combination) and (iii) expected beneficial ownership of New Corcentric Common Stock immediately following the Closing (post-Business Combination), assuming that no Public Shares are redeemed, and
alternatively that the maximum number of Public Shares are redeemed, by:
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•
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each person who is the beneficial owner of more than 5% of issued and outstanding shares of North Mountain Common Stock or of
Corcentric Capital Stock;
|
|
•
|
each of our current executive officers and directors;
|
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•
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each person who will (or is expected to) become an executive officer or director of New Corcentric following the Closing; and
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|
•
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all executive officers and directors of North Mountain as a group pre-Business Combination and all executive officers and
directors of New Corcentric post-Business Combination.
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At any time prior to the special meeting, during a period when they are
not then aware of any material nonpublic information regarding North Mountain or its securities, the Sponsor, North Mountain’s directors and officers and/or their affiliates may enter into a Rule 10b5-1 plan and may engage in other public market
purchases, as well as private purchases, of securities. See the sections of this proxy statement/prospectus entitled “Risk Factors—Risks Related to North Mountain and the Business Combination—Our Sponsor,
directors, officers, advisors and their affiliates may elect to purchase shares or warrants from Public Stockholders, which may influence the vote on the Business Combination and reduce the public “float” of North Mountain Class A Common Stock.”
Beneficial ownership is determined according to the rules of the SEC,
which generally provide that a person has beneficial ownership of a security if he, she or it possesses sole or shared voting or investment power over that security, including options and warrants that are currently exercisable or exercisable
within 60 days.
The beneficial ownership of shares of North Mountain Common Stock
pre-Business Combination is based on 16,531,250 outstanding shares of North Mountain Common Stock (including 13,225,000 Public Shares and 3,306,250 shares of North Mountain Class B Common Stock) issued and outstanding as of the Ownership Date.
The ownership percentages listed below do not include any such shares of North Mountain Class A Common Stock that may be purchased after the Ownership Date.
The expected beneficial ownership percentages set forth in the table
below post-Business Combination do not give effect to any performance vesting provisions applicable to any shares of North Mountain Common Stock pursuant to the Share Vesting and Warrant Surrender Agreement and assumes:
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(i)
|
no exercise of the 6,612,500 Public Warrants that will remain outstanding post-Business Combination, which will become exercisable
at the holder’s option 30 days after Closing at an exercise price of $11.50 per share, provided that New Corcentric has an effective registration statement under the Securities Act covering the shares of New Corcentric Common Stock
issuable upon exercise of the Public Warrants or Private Placement Warrants and a current prospectus relating to them is available, which are not expected to occur within 60 days of the date of this proxy statement/prospectus;
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(ii)
|
the issuance, pursuant to the Share Vesting and Warrant Surrender Agreement, of 1,400,000 shares of North Mountain Class A Common
Stock upon the Closing; and
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|
(iii)
|
5,000,000 shares of North Mountain Class A Common Stock are issued in connection with the PIPE Financing immediately prior to the
Closing.
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The expected beneficial ownership of shares of New Corcentric Common
Stock post-Business Combination Assuming No Redemption in the table below has been determined based upon 112,238,698 shares of New Corcentric Common Stock outstanding.
The expected beneficial ownership of shares of New Corcentric Common
Stock post-Business Combination Assuming Contractual Maximum Redemptions in the table below has been determined based upon 110,513,698 shares of New Corcentric Common Stock outstanding, based on the assumption that the Public Stockholders
241
holding approximately 13.0% of the Public Shares exercise redemption rights with
respect to their Public Shares and that the Public Stockholders listed in the table below exercise the redemption rights with respect to their shares. This scenario assumes that 1,725,000 Public Shares are redeemed for an aggregate redemption
payment of approximately $17,250,000 plus a pro rata portion of interest accrued on the Trust Account of $1,543. This contractual maximum redemption scenario is based on a minimum cash condition of $150,000,000 at Closing of the Business
Combination, consisting of Trust Account funds, PIPE Financing proceeds and all other North Mountain cash and cash equivalents less the aggregate amount of cash proceeds that will be required to satisfy the redemption of the Public Shares and
the payment of North Mountain estimated transaction expenses of $15,000,000. Corcentric shall have no right or ability to waive the minimum cash condition without the prior written consent of North Mountain (which consent may be provided or
withheld by North Mountain in its sole discretion) if such aggregate amount is less than $125,000,001.
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After the Business Combination
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Before the Business Combination
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Assuming
No Redemption
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Assuming Redemption
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Name and Address of
Beneficial Owner(1)
|
| |
Number of
shares of
North
Mountain
Class A
Common Stock
|
| |
%
|
| |
Number of
shares of
North
Mountain
Class B
Common Stock
|
| |
%
|
| |
Number of
Shares of
Corcentric
Capital Stock
|
| |
%
|
| |
Number of
shares of New
Corcentric
Common Stock
|
| |
%
|
| |
Number of
shares of New
Corcentric
Common Stock
|
| |
%
|
|
Directors and Named
Executive Officers of North Mountain:
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| |
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| |
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| |
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| |
|
| |
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| |
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| |
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|
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Charles B. Bernicker(2)
|
| |
—
|
| |
—
|
| |
—
|
| |
—
|
| |
—
|
| |
—
|
| |
1,500,000
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| |
1.3%
|
| |
1,500,000
|
| |
1.36%
|
|
Nicholas Dermatas(2)
|
| |
—
|
| |
—
|
| |
—
|
| |
—
|
| |
—
|
| |
—
|
| |
—
|
| |
—
|
| |
—
|
| |
—
|
|
Robert L. Metzger(2)
|
| |
—
|
| |
—
|
| |
—
|
| |
—
|
| |
—
|
| |
—
|
| |
—
|
| |
—
|
| |
—
|
| |
—
|
|
Scott O’Callaghan(2)
|
| |
—
|
| |
—
|
| |
—
|
| |
—
|
| |
—
|
| |
—
|
| |
—
|
| |
—
|
| |
—
|
| |
—
|
|
Douglas J. Pauls(2)
|
| |
—
|
| |
—
|
| |
—
|
| |
—
|
| |
—
|
| |
—
|
| |
—
|
| |
—
|
| |
—
|
| |
—
|
|
All Directors and Executive Officers of North Mountain as a
Group (5 Individuals)
|
| |
—
|
| |
—
|
| |
—
|
| |
—
|
| |
—
|
| |
—
|
| |
1,500,000
|
| |
1.3%
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| |
1,500,000
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| |
1.36%
|
|
Five Percent Holders
of North Mountain:
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| |
|
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| |
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| |
|
| |
|
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| |
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| |
|
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|
|
North Mountain LLC (our Sponsor)(2)
|
| |
—
|
| |
—
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| |
3,306,250
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| |
100%
|
| |
—
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| |
—
|
| |
4,706,250
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4.2%
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| |
4,706,250
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4.3%
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|
Wellington Management Group LLP(3)
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| |
1,447,350
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| |
11.2%
|
| |
—
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| |
—
|
| |
—
|
| |
—
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| |
2,947,350
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| |
2.4%
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| |
2,947,350
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| |
2.7%
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Millais Limited(4)
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| |
1,138,500
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| |
8.6%
|
| |
—
|
| |
—
|
| |
—
|
| |
—
|
| |
3,138,500
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2.8%
|
| |
3,138,500
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| |
2.8%
|
|
Linden Capital L.P.(5)
|
| |
968,870
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| |
7.3%
|
| |
—
|
| |
—
|
| |
—
|
| |
—
|
| |
968,870
|
| |
*
|
| |
968,870
|
| |
*
|
|
Adage Capital Partners, L.P.(6)
|
| |
827,417
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| |
6.3%
|
| |
—
|
| |
—
|
| |
—
|
| |
—
|
| |
827,417
|
| |
*
|
| |
827,417
|
| |
*
|
|
Millennium Management, LLC(7)
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| |
757,614
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| |
5.7%
|
| |
—
|
| |
—
|
| |
—
|
| |
—
|
| |
757,614
|
| |
*
|
| |
757,614
|
| |
*
|
|
The Goldman Sachs Group, Inc.(8)
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| |
722,078
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| |
5.5%
|
| |
—
|
| |
—
|
| |
—
|
| |
—
|
| |
722,078
|
| |
*
|
| |
722,078
|
| |
*
|
|
Directors and Named
Executive Officers of New Corcentric After Consummation of the Business Combination:
|
| |
|
| |
|
| |
|
| |
|
| |
|
| |
|
| |
|
| |
|
| |
|
| |
|
|
Douglas Clark
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| |
|
| |
|
| |
|
| |
|
| |
|
| |
|
| |
|
| |
|
| |
|
| |
|
|
Matthew Clark
|
| |
|
| |
|
| |
|
| |
|
| |
|
| |
|
| |
|
| |
|
| |
|
| |
|
|
Thomas Sabol
|
| |
|
| |
|
| |
|
| |
|
| |
|
| |
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| |
|
| |
|
| |
|
| |
|
|
Mark Joyce
|
| |
|
| |
|
| |
|
| |
|
| |
|
| |
|
| |
|
| |
|
| |
|
| |
|
|
All Directors and Executive Officers of New Corcentric as a
Group ( Individuals)
|
| |
|
| |
|
| |
|
| |
|
| |
|
| |
|
| |
|
| |
|
| |
|
| |
|
|
Five Percent Holders
of New Corcentric After Consummation of the Business Combination:
|
| |
|
| |
|
| |
|
| |
|
| |
|
| |
|
| |
|
| |
|
| |
|
| |
|
|
*
|
Less than one percent.
|
242
|
(1)
|
Unless otherwise noted, the business address of our Sponsor and each of the directors and executive officers of North Mountain is
767 Fifth Avenue, 9th Floor, New York, NY 10153. Unless otherwise noted, the business address of each of the executive officers and directors of New Corcentric is 200 Lake Drive East, Cherry Hill, NJ 08002.
|
|
(2)
|
Represents North Mountain Class B Common Stock held by our Sponsor. Harbour Reach Holdings, LLC (“Harbour Reach”) is the managing
member of our sponsor and Mr. Michael Platt is the indirect controlling member of Harbour Reach. Messrs. Bernicker, Dermatas, Metzger, O’Callaghan and Pauls are non-managing members of our Sponsor. Accordingly, all of the shares held by
our Sponsor may be deemed to be beneficially held by Harbour Reach and Mr. Platt. SMMC Sponsor Interests, LLC, an affiliate of North Mountain and an entity controlled by Charles Bernicker (Chief Executive Officer and a director of North
Mountain) and of which Douglas J. Pauls (a director of North Mountain) is a non-managing member, agreed to purchase 1,500,000 shares of North Mountain Class A Common Stock in the PIPE Financing.
|
|
(3)
|
According to Schedule 13G/A filed on February 10, 2022 by Wellington Management Group LLP, Wellington Group Holdings LLP,
Wellington Investment Advisors Holdings LLP and Wellington Management Company LLP. The shares of North Mountain Class A Common Stock are owned of record by clients of the Wellington Investment Advisers. Wellington Investment Advisors
Holdings LLP controls directly, or indirectly through Wellington Management Global Holdings, Ltd., the Wellington Investment Advisers. Wellington Investment Advisors Holdings LLP is owned by Wellington Group Holdings LLP. Wellington
Group Holdings LLP is owned by Wellington Management Group LLP. The business address of each such party is 280 Congress Street, Boston, MA 02210. Investment funds managed by Wellington Management Company LLP agreed to purchase 1,500,000
shares of North Mountain Class A Common Stock in the PIPE Financing.
|
|
(4)
|
Millais Limited, the indirect majority owner of our Sponsor, purchased 1,138,500 North Mountain units in the IPO and has agreed
to purchase 2,000,000 shares of North Mountain Class A Common Stock in the PIPE Financing. Mr. Michael Platt may be deemed to beneficially own the shares held by Millais Limited.
|
|
(5)
|
According to Schedule 13G/A filed on January 31, 2022 by Linden Capital L.P., a Bermuda limited partnership (“Linden Capital”),
Linden Advisors LP, a Delaware limited partnership (“Linden Advisors”), Linden GP LLC, a Delaware limited liability company (“Linden GP”), and Mr. Siu Min (Joe) Wong. Each of Linden Advisors and Mr. Wong may be deemed the beneficial
owner of 968,870 shares, consisting of 894,476 Shares held by Linden Capital and 74,394 shares held by separately managed accounts. Each of Linden GP and Linden Capital may be deemed the beneficial owner of the 894,476 shares held by
Linden Capital. The principal business address for Linden Capital is Victoria Place, 31 Victoria Street, Hamilton HM10, Bermuda. The principal business address for each of Linden Advisors, Linden GP and Mr. Wong is 590 Madison Avenue,
15th Floor, New York, New York 10022.
|
|
(6)
|
According to Schedule 13G/A filed on February 10, 2022 by Adage Capital Partners, L.P., Adage Capital Partners GP, L.L.C., Adage
Capital Advisors, L.L.C., Robert Atchinson and Phillip Gross. Adage Capital Partners, L.P., a Delaware limited partnership (“ACP”), has the power to dispose of and the power to vote the shares of Class A Common Stock beneficially owned
by it, which power may be exercised by its general partner, Adage Capital Partners GP, L.L.C., a Delaware limited liability company (“ACPGP”). Adage Capital Advisors, L.L.C., a Delaware limited liability company (“ACA”), as managing
member of ACPGP, directs ACPGP's operations. Robert Atchinson and Philip Gross are managing members of ACA, managing members of ACPGP and general partners of ACP. The business address of each such party is 200 Clarendon Street,
52nd Floor, Boston, Massachusetts 02116.
|
|
(7)
|
According to Schedule 13G filed on January 11, 2022 by Millennium Management LLC, Millennium Group Management LLC and Israel A.
Englander. The securities disclosed as beneficially owned by Millennium Management LLC, Millennium Group Management LLC and Mr. Englander are held by entities subject to voting control and investment discretion by Millennium Management
LLC and/or other investment managers that may be controlled by Millennium Group Management LLC (the managing member of Millennium Management LLC) and Mr. Englander (the sole voting trustee of the managing member of Millennium Group
Management LLC). The business address of each of Millennium Management LLC, Millennium Group Management LLC and Israel A. Englander is 399 Park Avenue, New York, New York 10022.
|
|
(8)
|
According to Schedule 13G filed on February 4, 2022 by The Goldman Sachs Group, Inc. and Goldman Sachs & Co. LLC. The
business address of each of The Goldman Sachs Group, Inc. and Goldman Sachs & Co. LLC is 200 West Street, New York, New York 10282.
|
243
The following summary of the material terms of North Mountain’s
securities following the Business Combination is not intended to be a complete summary of the rights and preferences of such securities. The descriptions below are qualified by reference to the actual text of the Proposed Charter. We urge you to
read the Proposed Charter in its entirety for a complete description of the rights and preferences of North Mountain’s securities following the Business Combination. The Proposed Charter is described in “Proposal
No. 3—The Post-Mergers Charter Approval Proposal” and the full text of the Proposed Charter is attached as Annex C to this proxy statement/prospectus.
Authorized and Outstanding Stock
The Proposed Charter authorizes the issuance of shares of New
Corcentric capital stock, consisting of shares of New Corcentric Common Stock and shares of undesignated preferred stock, each having a par value of $ . The outstanding shares of North Mountain Class A Common Stock are, and the shares
of North Mountain Class A Common Stock issued in the Business Combination will be, duly authorized, validly issued, fully paid and non-assessable. Following the consummation of the Business Combination, all outstanding shares of North Mountain
Class A Common Stock will be reclassified as shares of New Corcentric Common Stock on a one-to-one basis. There will be no outstanding shares of North Mountain Class B Common Stock following the Business Combination as the outstanding North
Mountain Class B Common Stock will be converted into shares of North Mountain Class A Common Stock in connection with the Business Combination. As of the North Mountain Record Date, there were 13,225,000 shares of North Mountain Class A Common
Stock, 3,306,250 shares of North Mountain Class B Common Stock and no shares of preferred stock of North Mountain outstanding.
New Corcentric Common Stock Following the Business Combination
Voting Power
Except as otherwise required by law or as otherwise provided in any
certificate of designation for any series of preferred stock, the holders of New Corcentric Common Stock possess all voting power for the election of our directors and all other matters requiring stockholder action. Holders of New Corcentric
Common Stock are entitled to one vote per share on matters to be voted on by stockholders.
Dividends
Holders of New Corcentric Common Stock will be entitled to receive such
dividends, if any, as may be declared from time to time by the New Corcentric Board in its discretion out of funds legally available therefor. In no event will any stock dividends or stock splits or combinations of stock be declared or made on
New Corcentric Common Stock unless the shares of New Corcentric Common Stock at the time outstanding are treated equally and identically.
Liquidation, Dissolution and Winding Up
In the event of New Corcentric’s voluntary or involuntary liquidation,
dissolution, distribution of assets or winding-up, the holders of New Corcentric Common Stock will be entitled to receive an equal amount per share of all of New Corcentric’s assets of whatever kind available for distribution to stockholders,
after the rights of the holders of the preferred stock have been satisfied.
Preemptive or Other Rights
New Corcentric stockholders will have no preemptive or other
subscription rights and there will be no sinking fund or redemption provisions applicable to New Corcentric Common Stock.
Election of Directors
The New Corcentric Board will remain divided into three classes,
Class I, Class II and Class III, with only one class of directors being elected in each year and each class serving a three-year term, except that the Class I directors will be appointed to an initial one-year term (and three-year terms
subsequently), the Class II directors will be appointed to an initial two-year term (and three-year terms subsequently) and the Class III directors will
244
be appointed to an initial three-year term (and three-year terms subsequently). There
will be no cumulative voting with respect to the election of directors, with the result that the holders of more than 50% of the shares voted for the election of directors can elect all of the directors.
North Mountain Class A Common Stock Prior to the Business Combination
North Mountain is providing the holders of North Mountain Class A
Common Stock with the opportunity to redeem their shares of North Mountain Class A Common Stock upon the consummation of the Business Combination at a per share price, payable in cash, equal to the aggregate amount then on deposit in the Trust
Account, including interest but net of Permitted Withdrawals, divided by the number of then outstanding Public Shares, subject to the limitations described herein. North Mountain’s Sponsor has agreed to waive its redemption rights with respect to
the North Mountain Class B Common Stock and has agreed to waive its redemption rights with respect to any Public Shares that it may have acquired during or after the IPO in connection with the completion of the Business Combination.
North Mountain will consummate the Business Combination only if a
majority of the outstanding shares of North Mountain Class A Common Stock voted at the special meeting in person online or by proxy is voted in favor of the Business Combination Proposal and the other conditions under the Merger Agreement to the
parties’ obligations to close, as described above under “Proposal No. 2—the Business Combination Proposal,” are satisfied or, where permitted, waived. However, the participation of North Mountain’s
Sponsor, officers, directors, advisors or their affiliates in privately-negotiated transactions (as described in this proxy statement/prospectus), if any, could result in the approval of the Business Combination even if holders who currently own
a majority of the outstanding Public Shares indicate their intention to vote, against the Business Combination.
North Mountain’s Sponsor has agreed to vote any shares of North
Mountain Common Stock owned by them in favor of the Business Combination. Public Stockholders may elect to redeem their Public Shares without voting on the Business Combination Proposal and irrespective of whether they vote for or against the
Business Combination.
Pursuant to North Mountain’s Existing Charter, if North Mountain is
unable to complete an initial Business Combination by September 22, 2022, or obtain the approval of its stockholders to further extend the deadline for it to consummate an initial Business Combination, North Mountain will (i) cease all operations
except for the purpose of winding up, (ii) as promptly as reasonably possible but no more than ten business days thereafter, subject to lawfully available funds therefor, redeem the Public Shares, at a per share price which is payable in cash and
equal to the aggregate amount then on deposit in the Trust Account, including interest (which interest will be net of Permitted Withdrawals and up to $100,000 of interest to pay dissolution expenses) divided by the number of then outstanding
Public Shares, which redemption will completely extinguish Public Stockholders’ rights as stockholders (including the right to receive further liquidation distributions, if any), subject to applicable law, and (iii) as promptly as reasonably
possible following such redemption, subject to the approval of North Mountain’s remaining stockholders and the North Mountain Board, dissolve and liquidate, subject in each case to North Mountain’s obligations under Delaware law to provide for
claims of creditors and the requirements of other applicable law. North Mountain’s Sponsor has entered into a letter agreement with it, pursuant to which they have agreed to (1) waive their redemption rights with respect to any North Mountain
Common Stock held by them in connection with the completion of an initial Business Combination or any amendment to the provisions of the Existing Charter relating to North Mountain’s pre-initial Business Combination activity and related
stockholders’ rights and (2) waive their rights to liquidating distributions from the Trust Account with respect to their shares of North Mountain Common Stock if North Mountain fails to complete its initial Business Combination within the
prescribed timeframe.
There are no sinking fund provisions applicable to North Mountain
Common Stock, except that North Mountain will provide holders of Public Shares with the opportunity to redeem all or a portion of their Public Shares upon the completion of the Business Combination at a per share price, payable in cash, equal to
the aggregate amount then 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 (which interest will be net of Permitted
Withdrawals and up to $100,000 of interest to pay dissolution expenses), divided by the number of then outstanding Public Shares, subject to the limitations described herein.
In the event of a liquidation, dissolution or winding up of North
Mountain after the initial Business Combination, our holders of North Mountain Class A Common Stock (on an as converted basis with respect to
245
the North Mountain Class B Common Stock) are entitled to share ratably in all assets
remaining available for distribution to them after payment of liabilities and after provision is made for each class of stock, if any, having preference over the common stock. Shares of North Mountain Class A Common Stock provide for no
preemptive or other subscription rights.
North Mountain Class B Common Stock Prior to the Business Combination
The shares of North Mountain Class B Common Stock are identical to the
shares of North Mountain Class A Common Stock included in the North Mountain Units, except that: (1) only holders of the North Mountain Class B Common Stock have the right to vote on the election of directors prior to an initial business
combination; (2) the shares of North Mountain Class B Common Stock are subject to certain transfer restrictions, as described in more detail below; (3) North Mountain’s initial stockholders, officers and directors have entered into a letter
agreement with North Mountain, pursuant to which they have agreed to: (a) waive their redemption rights with respect to any North Mountain Class B Common Stock and any Public Shares held by them in connection with the completion of an initial
business combination, (b) waive their redemption rights with respect to any North Mountain Class B Common Stock and Public Shares held by them in connection with a stockholder vote to approve an amendment to the Existing Charter to modify the
substance or timing of our obligation to provide for the redemption of North Mountain’s Public Shares in connection with an initial business combination or to redeem 100% of North Mountain’s Public Shares if North Mountain has not consummated its
initial business combination within the completion window; and (c) waive their rights to liquidating distributions from the Trust Account with respect to any shares of North Mountain Class B Common Stock held by them if North Mountain fails to
complete its initial business combination by September 22, 2022 (although they will be entitled to liquidating distributions from the Trust Account with respect to any Public Shares they hold if North Mountain fails to complete an initial
business combination within the completion window); (4) the North Mountain Class B Common Stock are automatically convertible into shares of North Mountain Class A Common Stock at the time of an initial business combination, or earlier at the
option of the holder, on a one-for-one basis, subject to adjustment pursuant to certain anti-dilution rights, as described herein; and (5) the holders of North Mountain Class B Common Stock are entitled to registration rights. If North Mountain
submits an initial business combination to its Public Stockholders for a vote, its initial stockholders, officers and directors have agreed (and their permitted transferees, as applicable, will agree) to vote any shares of North Mountain Class B
Common Stock and any Public Shares held by them in favor of such initial business combination.
The shares of North Mountain Class B Common Stock will automatically
convert into shares of North Mountain Class A Common Stock at the time of an initial business combination, or earlier at the option of the holder, on a one-for-one basis, subject to adjustment as provided herein. In the case that additional
shares of North Mountain Class A Common Stock, or equity-linked securities, are issued or deemed issued in excess of the amounts sold in the IPO and related to the closing of an initial business combination, the ratio at which shares of North
Mountain Class B Common Stock shall convert into shares of North Mountain Class A Common Stock will be adjusted (unless the holders of a majority of the outstanding shares of North Mountain Class B Common Stock agree to waive such anti-dilution
adjustment with respect to any such issuance or deemed issuance) so that the number of shares of North Mountain Class A Common Stock issuable upon conversion of all shares of North Mountain Class B Common Stock will equal, in the aggregate, on an
as-converted basis, 20% of the total number of all shares of North Mountain Common Stock outstanding upon completion of the IPO plus all shares of North Mountain Class A Common Stock and equity-linked securities issued or deemed issued in
connection with an initial business combination (net of the number of shares of North Mountain Class A Common Stock redeemed in connection with an initial business combination), excluding any shares or equity-linked securities issued, or to be
issued, to any seller in our initial business combination and any private warrants issued upon the conversion of Working Capital Loans made to North Mountain.
With certain limited exceptions, the shares of North Mountain Class B
Common Stock are not transferable, assignable or salable (except to North Mountain’s officers and directors and other persons or entities affiliated with its Sponsor and other permitted transferees, each of whom will be subject to the same
transfer restrictions) until the earlier of (A) one year after the completion of an initial business combination, (B) subsequent to an initial business combination, if the closing price of our North Mountain Class A Common Stock equals or exceeds
$12.00 per share (as adjusted for stock splits, stock dividends, reorganizations, recapitalizations and the like) for any 20 trading days within any 30-trading day period commencing at least 150 days after the initial business combination, and
(C) following the completion of an initial business combination, such future date on
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which North Mountain completes a liquidation, merger, stock exchange, reorganization or
other similar transaction that results in all of North Mountain’s public stockholders having the right to exchange their shares of common stock for cash, securities or other property.
Preferred Stock
The Existing Charter provides, and the Proposed Charter will provide,
that shares of preferred stock may be issued from time to time in one or more series. The North Mountain Board or the New Corcentric Board, as applicable, is authorized to fix the voting rights, if any, designations, powers and preferences, the
relative, participating, optional or other special rights, and any qualifications, limitations and restrictions thereof, applicable to the shares of each series of preferred stock. The North Mountain Board or the New Corcentric Board, as
applicable, is able to, without stockholder approval, issue preferred stock with voting and other rights that could adversely affect the voting power and other rights of the holders of North Mountain Common Stock or New Corcentric Common Stock,
as applicable, and could have anti-takeover effects. The ability of the North Mountain Board or the New Corcentric Board, as applicable, to issue preferred stock without stockholder approval could have the effect of delaying, deferring or
preventing a change of control of North Mountain or New Corcentric, as applicable, or the removal of existing management.
North Mountain has no preferred stock outstanding at the date hereof,
and will have no preferred stock outstanding immediately after the Closing.
Redeemable Warrants
Public Stockholders’ Warrants
Each whole Public Warrant entitles the registered holder to purchase
one share of North Mountain Class A Common Stock at a price of $11.50 per share, subject to adjustment as discussed below, at any time commencing on the later of 12 months from the closing of the IPO and 30 days after the completion of an initial
business combination.
Pursuant to the warrant agreement, a warrant holder may exercise its
Public Warrants only for a whole number of shares of North Mountain Class A Common Stock. This means only a whole Public Warrant may be exercised at a given time by a warrant holder. No fractional Public Warrants were issued upon separation of
the North Mountain Units and only whole Public Warrants trade. Accordingly, unless an investor purchases at least two units, such investor is not able to receive or trade a whole Public Warrant. The Public Warrants will expire five years after
the completion of an initial business combination, at 5:00 p.m., New York City time, or earlier upon redemption or liquidation.
North Mountain will not be obligated to deliver any shares of North
Mountain Class A Common Stock pursuant to the exercise of a Public Warrant and will have no obligation to settle such Public Warrant exercise unless a registration statement under the Securities Act covering the issuance of the shares of North
Mountain Class A Common Stock issuable upon exercise of the Public Warrants is then effective and a current prospectus relating to those shares of North Mountain Class A Common Stock is available, subject to North Mountain satisfying its
obligations described below with respect to registration. No Public Warrant will be exercisable for cash or on a cashless basis, and North Mountain will not be obligated to issue any shares to holders seeking to exercise their Public Warrants,
unless the issuance of the shares upon such exercise is registered or qualified under the securities laws of the state of the exercising holder, or an exemption from registration is available. In the event that the conditions in the two
immediately preceding sentences are not satisfied with respect to a Public Warrant, the holder of such Public Warrant will not be entitled to exercise such Public Warrant and such Public Warrant may have no value and expire worthless. In the
event that a registration statement is not effective for the exercised Public Warrants, the purchaser of a Unit containing such Public Warrant will have paid the full purchase price for the Unit solely for the share of North Mountain Class A
Common Stock underlying such Unit.
North Mountain has agreed that as soon as practicable, but in no event
later than 15 business days after the closing of its initial business combination, North Mountain will use its reasonable best efforts to file with the SEC, and within 60 business days following its initial business combination to have declared
effective, a registration statement covering the issuance of the shares of North Mountain Class A Common Stock issuable upon exercise of the Public Warrants and to maintain a current prospectus relating to those shares of North Mountain Class A
Common Stock until the Public Warrants expire or are redeemed. Notwithstanding the above,
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if North Mountain Class A Common Stock is at the time of any exercise of a Public
Warrant not listed on a national securities exchange such that it satisfies the definition of a “covered security” under Section 18(b)(1) of the Securities Act, North Mountain may, at its option, require holders of Public Warrants who exercise
their Public Warrants to do so on a “cashless basis” in accordance with Section 3(a)(9) of the Securities Act and, in the event it so elects, it will not be required to file or maintain in effect a registration statement, but will use its
reasonable best efforts to qualify the shares under applicable blue sky laws to the extent an exemption is not available.
Redemption of Warrants for Cash. Once the Public Warrants become exercisable, North Mountain may call the Public Warrants for redemption:
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in whole and not in part;
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at a price of $0.01 per Public Warrant;
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upon a minimum of 30 days’ prior written notice of redemption, which we refer to as the 30-day redemption period; and
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if, and only if, the closing price of North Mountain Class A Common Stock equals or exceeds $18.00 per share (as adjusted for
stock splits, stock dividends, reorganizations, recapitalizations and the like) for any 20 trading days within a 30-trading day period ending on the third trading day prior to the date on which North Mountain send the notice of redemption
to the warrant holders.
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If and when the Public Warrants become redeemable by North Mountain, it
may exercise its redemption right even if it is unable to register or qualify the underlying securities for sale under all applicable state securities laws.
North Mountain has established the last of the redemption criterion
discussed above to prevent a redemption call unless there is at the time of the call a significant premium to the warrant exercise price. If the foregoing conditions are satisfied and North Mountain issues a notice of redemption of the Public
Warrants, each warrant holder will be entitled to exercise his, her or its Public Warrant prior to the scheduled redemption date. However, the price of the North Mountain Class A Common Stock may fall below the $18.00 redemption trigger price as
well as the $11.50 warrant exercise price after the redemption notice is issued.
Redemption Procedures and Cashless Exercise. If North Mountain calls the Public Warrants for redemption as described above, its management will have the option to require all holders that wish to exercise Public Warrants to do so on a “cashless basis.” In
determining whether to require all holders to exercise their Public Warrants on a “cashless basis,” its management will consider, among other factors, its cash position, the number of Public Warrants that are outstanding and the dilutive effect
on North Mountain stockholders of issuing the maximum number of shares of North Mountain Class A Common Stock issuable upon the exercise of Public Warrants. In such event, each holder would pay the exercise price by surrendering the Public
Warrants for that number of shares of North Mountain Class A Common Stock equal to the quotient obtained by dividing (x) the product of the number of shares of North Mountain Class A Common Stock underlying the Public Warrants, multiplied by
the excess of the “fair market value” (defined below) over the exercise price of the Public Warrants by (y) the fair market value. The “fair market value” shall mean the average closing price of the North Mountain Class A Common Stock for the
ten trading days ending on the third trading day prior to the date on which the notice of redemption is sent to the holders of Public Warrants. If North Mountain management takes advantage of this option, the notice of redemption will contain
the information necessary to calculate the number of shares of North Mountain Class A Common Stock to be received upon exercise of the Public Warrants, including the “fair market value” in such case. Requiring a cashless exercise in this manner
will reduce the number of shares to be issued and thereby lessen the dilutive effect of a warrant redemption. North Mountain believes this feature is an attractive option to it if it does not need the cash from the exercise of the Public
Warrants after an initial business combination. If North Mountain calls its Public Warrants for redemption and its management does not take advantage of this option, the Sponsor and its permitted transferees would still be entitled to exercise
their Private Placement Warrants for cash or on a cashless basis using the same formula described above that other warrant holders would have been required to use had all warrant holders been required to exercise their warrants on a cashless
basis, as described in more detail below.
A holder of a Public Warrant may notify us in writing in the event it
elects to be subject to a requirement that such holder will not have the right to exercise such Public Warrant, to the extent that after giving effect to
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such exercise, such person (together with such person’s affiliates), to the warrant
agent’s actual knowledge, would beneficially own in excess of 9.8% (or such other amount as a holder may specify) of the shares of North Mountain Class A Common Stock outstanding immediately after giving effect to such exercise.
Anti-Dilution Adjustments. If the number of outstanding shares of North Mountain Class A Common Stock is increased by a stock dividend payable in shares of North Mountain Class A Common Stock, or by a split-up of shares of North Mountain Class A Common Stock
or other similar event, then, on the effective date of such stock dividend, split-up or similar event, the number of shares of North Mountain Class A Common Stock issuable on exercise of each Public Warrant will be increased in proportion to
such increase in the outstanding shares of North Mountain Class A Common Stock. A rights offering to holders of North Mountain Class A Common Stock entitling holders to purchase shares of North Mountain Class A Common Stock at a price less than
the fair market value will be deemed a stock dividend of a number of shares of North Mountain Class A Common Stock equal to the product of (1) the number of shares of North Mountain Class A Common Stock actually sold in such rights offering (or
issuable under any other equity securities sold in such rights offering that are convertible into or exercisable for Class A common stock) multiplied by (2) one minus the quotient of (x) the price per share of North Mountain Class A Common
Stock paid in such rights offering divided by (y) the fair market value. For these purposes (1) if the rights offering is for securities convertible into or exercisable for North Mountain Class A Common Stock, in determining the price payable
for North Mountain Class A Common Stock, there will be taken into account any consideration received for such rights, as well as any additional amount payable upon exercise or conversion and (2) fair market value means the volume weighted
average price of North Mountain Class A Common Stock as reported during the ten trading day period ending on the trading day prior to the first date on which the shares of North Mountain Class A Common Stock on the applicable exchange or in the
applicable market, regular way, without the right to receive such rights.
In addition, if North Mountain, at any time while the Public Warrants
are outstanding and unexpired, pays a dividend or makes a distribution in cash, securities or other assets to the holders of North Mountain Class A Common Stock on account of such shares of North Mountain Class A Common Stock (or other shares of
North Mountain’s capital stock into which the Public Warrants are convertible), other than (a) as described above, (b) certain ordinary cash dividends, (c) to satisfy the redemption rights of the holders of North Mountain Class A Common Stock in
connection with a proposed initial business combination, (d) to satisfy the redemption rights of the holders of North Mountain Class A Common Stock in connection with a stockholder vote to (i) amend the Existing Charter (i) to modify the
substance or timing of North Mountain’s obligation to provide for the redemption of its Public Shares in connection with an initial business combination or to redeem 100% of North Mountain Class A Common Stock if it does not complete an initial
business combination within the completion window, or (ii) with respect to any provisions relating to the rights of holders of North Mountain Class A Common Stock or (e) in connection with the redemption of its Public Shares upon a failure to
complete its initial business combination, then the warrant exercise price will be decreased, effective immediately after the effective date of such event, by the amount of cash and/or the fair market value of any securities or other assets paid
on each share of North Mountain Class A Common Stock in respect of such event.
If the number of outstanding shares of North Mountain Class A Common
Stock is decreased by a consolidation, combination, reverse stock split or reclassification of shares of North Mountain Class A Common Stock or other similar event, then, on the effective date of such consolidation, combination, reverse stock
split, reclassification or similar event, the number of shares of North Mountain Class A Common Stock issuable upon exercise of each Public Warrant will be decreased in proportion to such decrease in outstanding shares of North Mountain Class A
Common Stock.
Whenever the number of shares of North Mountain Class A Common Stock
purchasable upon the exercise of the Public Warrants is adjusted, as described above, the warrant exercise price will be adjusted by multiplying the warrant exercise price immediately prior to such adjustment by a fraction (x) the numerator of
which will be the number of shares of North Mountain Class A Common Stock purchasable upon the exercise of the Public Warrants immediately prior to such adjustment, and (y) the denominator of which will be the number of shares of North Mountain
Class A Common Stock so purchasable immediately thereafter.
In case of any reclassification or reorganization of the outstanding
shares of North Mountain Class A Common Stock (other than those described above or that solely affects the par value of such shares of North Mountain Class A Common Stock), or in the case of any merger or consolidation of North Mountain with or
into another corporation (other than a consolidation or merger in which it is the continuing corporation and that does
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not result in any reclassification or reorganization of its outstanding shares of North
Mountain Class A Common Stock), or in the case of any sale or conveyance to another corporation or entity of the assets or other property of North Mountain as an entirety or substantially as an entirety in connection with which North Mountain is
dissolved, the holders of the Public Warrants will thereafter have the right to purchase and receive, upon the basis and upon the terms and conditions specified in the Public Warrants and in lieu of the shares of North Mountain Class A Common
Stock immediately theretofore purchasable and receivable upon the exercise of the rights represented thereby, the kind and amount of shares of stock or other securities or property (including cash) receivable upon such reclassification,
reorganization, merger or consolidation, or upon a dissolution following any such sale or transfer, that the holder of the Public Warrants would have received if such holder had exercised their Public Warrants immediately prior to such event.
However, if such holders were entitled to exercise a right of election as to the kind or amount of securities, cash or other assets receivable upon such consolidation or merger, then the kind and amount of securities, cash or other assets for
which each Public Warrant will become exercisable will be deemed to be the weighted average of the kind and amount received per share by such holders in such consolidation or merger that affirmatively make such election, and if a tender, exchange
or redemption offer has been made to and accepted by such holders (other than a tender, exchange or redemption offer made by North Mountain in connection with redemption rights held by stockholders of North Mountain as provided for in the
Existing Charter or as a result of the redemption of shares of North Mountain Class A Common Stock by North Mountain if a proposed initial business combination is presented to the stockholders of North Mountain for approval) under circumstances
in which, upon completion of such tender or exchange offer, the maker thereof, together with members of any group (within the meaning of Rule 13d-5(b)(1) under the Exchange Act) of which such maker is a part, and together with any affiliate or
associate of such maker (within the meaning of Rule 12b-2 under the Exchange Act) and any members of any such group of which any such affiliate or associate is a part, own beneficially (within the meaning of Rule 13d-3 under the Exchange Act)
more than 50% of the outstanding shares of North Mountain Class A Common Stock, the holder of a Public Warrant will be entitled to receive the highest amount of cash, securities or other property to which such holder would actually have been
entitled as a stockholder if such warrant holder had exercised the Public Warrant prior to the expiration of such tender or exchange offer, accepted such offer and all of the North Mountain Class A Common Stock held by such holder had been
purchased pursuant to such tender or exchange offer, subject to adjustments (from and after the consummation of such tender or exchange offer) as nearly equivalent as possible to the adjustments provided for in the warrant agreement.
Additionally, if less than 70% of the consideration receivable by the holders of North Mountain Class A Common Stock in such a transaction is payable in the form of common stock in the successor entity that is listed for trading on a national
securities exchange or is quoted in an established over-the-counter market, or is to be so listed for trading or quoted immediately following such event, and if the registered holder of the Public Warrant properly exercises the Public Warrant
within thirty days following public disclosure of such transaction, the warrant exercise price will be reduced as specified in the warrant agreement based on the per share consideration minus Black-Scholes Warrant Value (as defined in the warrant
agreement) of the Public Warrant. The purpose of such exercise price reduction is to provide additional value to holders of the Public Warrants when an extraordinary transaction occurs during the exercise period of the Public Warrants pursuant to
which the holders of the Public Warrants otherwise do not receive the full potential value of the Public Warrants in order to determine and realize the option value component of the Public Warrant. This formula is to compensate the warrant holder
for the loss of the option value portion of the Public Warrant due to the requirement that the warrant holder exercise the Public Warrant within 30 days of the event. The Black-Scholes model is an accepted pricing model for estimating fair market
value where no quoted market price for an instrument is available.
In addition, if we issue additional shares of North Mountain Class A
Common Stock or equity-linked securities for capital raising purposes in connection with the closing of our initial business combination at a newly issued price of less than $9.20 per share of North Mountain Class A Common Stock (with such issue
price or effective issue price to be determined in good faith by the North Mountain Board, and in the case of any such issuance to our initial stockholders or their respective affiliates, without taking into account any founder shares held by
them, as applicable, prior to such issuance), the exercise price of the Public Warrants will be adjusted (to the nearest cent) to be equal to 115% of the newly issued price. This will not be applicable in the Business Combination.
Other than as described in the preceding six paragraphs, North Mountain
will not be required to adjust the exercise price of the Public Warrants.
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Other. The
Public Warrants may be exercised upon surrender of the warrant certificate on or prior to the expiration date at the offices of the warrant agent, with the exercise form on the reverse side of the warrant certificate completed and executed as
indicated, accompanied by full payment of the exercise price (or on a cashless basis, if applicable), by certified or official bank check payable to North Mountain, for the number of Public Warrants being exercised. The warrant holders do not
have the rights or privileges of holders of North Mountain Class A Common Stock and any voting rights until they exercise their Public Warrants and receive shares of North Mountain Class A Common Stock. After the issuance of shares of North
Mountain Class A Common Stock upon exercise of the Public Warrants, each holder will be entitled to one vote for each share held of record on all matters to be voted on by stockholders.
The Public Warrants are issued in registered form under a warrant
agreement between Continental Stock Transfer & Trust Company, as warrant agent, and North Mountain. You should review a copy of the warrant agreement, which is filed as an exhibit to the registration statement of which this proxy
statement/prospectus forms a part, for a description of the terms and conditions applicable to the Public Warrants. The warrant agreement provides that the terms of the Public Warrants may be amended without the consent of any holder to cure any
ambiguity or correct any defective provision, but requires the approval by the holders of at least 50% of the then outstanding Public Warrants to make any change that adversely affects the interests of the registered holders of Public Warrants.
Private Placement Warrants
The Private Placement Warrants (including the North Mountain Class A
Common Stock issuable upon exercise of the Private Placement Warrants) are not transferable, assignable or salable until 30 days after the completion of an initial business combination (except, among other limited exceptions as described in North
Mountain’s Annual Report on Form 10-K, to its officers and directors and other persons or entities affiliated with its Sponsor) and they will not be redeemable by North Mountain so long as they are held by the Sponsor or its permitted
transferees. The Sponsor, or its permitted transferees, has the option to exercise the Private Placement Warrants on a cashless basis and will be entitled to certain registration rights. Otherwise, the Private Placement Warrants have terms and
provisions that are identical to those of the Public Warrants sold as part of the North Mountain Units in the IPO. If the Private Placement Warrants are held by holders other than the Sponsor or its permitted transferees, the Private Placement
Warrants will be redeemable by North Mountain and exercisable by the holders on the same basis as the Public Warrants included in the North Mountain Units.
If holders of the Private Placement Warrants elect to exercise them on
a cashless basis, they would pay the exercise price by surrendering their warrants for that number of shares of North Mountain Class A Common Stock equal to the quotient obtained by dividing (x) the product of the number of shares of North
Mountain Class A Common Stock underlying the warrants, multiplied by the excess of the “fair market value” (defined below) over the exercise price of the Private Placement Warrants by (y) the fair market value. The “fair market value” shall mean
the average closing price of the North Mountain Class A Common Stock for the 10 trading days ending on the third trading day prior to the date on which the notice of redemption is sent to the holders of Private Placement Warrants. The reason that
North Mountain has agreed that these Private Placement Warrants will be exercisable on a cashless basis so long as they are held by the Sponsor and its permitted transferees is because it is not known at this time whether they will be affiliated
with North Mountain following a business combination. If they remain affiliated with North Mountain, their ability to sell its securities in the open market will be significantly limited. North Mountain expects to have policies in place that
prohibit insiders from selling its securities except during specific periods of time. Even during such periods of time when insiders will be permitted to sell its securities, an insider cannot trade in North Mountain securities if he or she is in
possession of material non-public information. Accordingly, unlike public stockholders who could exercise their warrants and sell the shares of North Mountain Class A Common Stock received upon such exercise freely in the open market in order to
recoup the cost of such exercise, the insiders could be significantly restricted from selling such securities. As a result, we believe that allowing the holders to exercise such Private Placement Warrants on a cashless basis is appropriate.
In order to finance transaction costs in connection with an intended
initial business combination, the Sponsor, an affiliate of the Sponsor or North Mountain’s officers and directors may, but none of them is obligated to, loan North Mountain funds as may be required. If North Mountain completes an initial business
combination, it would repay such loaned amounts out of the proceeds of the Trust Account released to it. In the event that an initial business combination does not close, North Mountain may use a portion of the working
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capital held outside the Trust Account to repay such loaned amounts but no proceeds
from the Trust Account would be used to repay such loaned amounts. Up to $1,500,000 of such loans may be convertible into warrants at a price of $1.00 per warrant at the option of the lender. The warrants would be identical to the Private
Placement Warrants issued to the Sponsor.
Certain Anti-Takeover Provisions of Delaware Law
Special Meetings of Stockholders
Our Existing Charter, our current bylaws, the Proposed Charter and the
Proposed Bylaws provide that special meetings of our stockholders, or New Corcentric’s stockholders, as applicable, may be called only by a majority vote of the North Mountain Board or the New Corcentric Board, as applicable, by the Chairman of
the North Mountain Board or the New Corcentric Board, as applicable, or by the North Mountain or New Corcentric chief executive officer, as applicable.
Advance Notice Requirements for Stockholder
Proposals and Director Nominations
Our current bylaws and the Proposed Bylaws provide that stockholders
seeking to bring business before our or New Corcentric’s annual meeting of stockholders, or to nominate candidates for election as directors at our or New Corcentric’s annual meeting of stockholders, must provide timely notice of their intent in
writing. To be timely under our current bylaws and the Proposed Bylaws, a stockholder’s notice will need to be received by the company secretary at our principal executive offices or those of New Corcentric not later than the close of business on
the 90th day nor earlier than the open of business on the 120th day prior to the first anniversary of the preceding year’s annual meeting. Pursuant to Rule 14a-8 of the Exchange Act, proposals seeking inclusion in our or New Corcentric’s annual
proxy statement must comply with the notice periods contained therein. Our current bylaws and the Proposed Bylaws also specify certain requirements as to the form and content of a stockholders’ meeting. These provisions may preclude our
stockholders from bringing matters before our or New Corcentric’s annual meeting of stockholders or from making nominations for directors at our or New Corcentric’s annual meeting of stockholders.
Authorized but Unissued Shares
Our authorized but unissued North Mountain preferred stock is available
for future issuances without stockholder approval and could be utilized for a variety of corporate purposes, including future offerings to raise additional capital, acquisitions and employee benefit plans. The existence of authorized but unissued
and unreserved North Mountain Common Stock and preferred stock could render more difficult or discourage an attempt to obtain control of us by means of a proxy contest, tender offer, merger or otherwise.
Exclusive Forum Selection
Our Existing Charter and the Proposed Charter provide that unless we or
New Corcentric consent in writing to the selection of an alternative forum, the Court of Chancery of the State of Delaware (or, if and only if the Court of Chancery of the State of Delaware lacks subject matter jurisdiction, any state court
located within the State of Delaware or, if and only if all such state courts lack subject matter jurisdiction, the federal district court for the District of Delaware), to the fullest extent permitted by applicable law, will be the sole and
exclusive forum for any stockholder (including any beneficial owner) to bring (a) any derivative action or proceeding brought on behalf of North Mountain or New Corcentric, as applicable, (b) any action asserting a claim of breach of a fiduciary
duty owed by any director, officer or other employee of North Mountain or New Corcentric to North Mountain or North Mountain’s stockholders or New Corcentric or New Corcentric’s stockholders, as applicable and (c) any action asserting a claim
against North Mountain or New Corcentric, as applicable, their respective directors, officers or employees arising pursuant to any provision of the DGCL or the Existing Charter or our bylaws or the Proposed Charter or Proposed Bylaws, as
applicable, and the Proposed Charter also includes (d) any action asserting a claim against North Mountain or New Corcentric, as applicable, their respective directors, officers or employees governed by the internal affairs doctrine, (e) any
action to interpret, apply, enforce or determine the validity of New Corcentric’s charter or bylaws and (f) any action as to which the DGCL confers jurisdiction to the Court of Chancery of the State of Delaware. The Proposed Charter also requires
the federal district courts of the United States will be the exclusive forum for the resolution of any complaint asserting a cause of action under the Securities Act and the Exchange Act. Although we believe these
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provisions benefit us by providing increased consistency in the application of Delaware
law in the types of lawsuits to which it applies, a court may determine that these provisions are unenforceable, and to the extent they are enforceable, the provisions may have the effect of discouraging lawsuits against our directors and
officers, although the North Mountain stockholders and the New Corcentric stockholders will not be deemed to have waived our compliance with federal securities laws and the rules and regulations thereunder.
Section 203 of the Delaware General Corporation
Law
New Corcentric will not opt out of the provisions of Section 203 of the
DGCL regulating corporate takeovers under the Proposed Charter. This statute prevents certain Delaware corporations, under certain circumstances, from engaging in a “business combination” with:
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a stockholder who owns 15% or more of our outstanding voting stock (otherwise known as an “interested stockholder”);
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an affiliate of an interested stockholder; or
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an associate of an interested stockholder, for three years following the date that the stockholder became an interested
stockholder.
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A “business combination” includes a merger or sale of more than 10% of
our assets. However, the above provisions of Section 203 do not apply if:
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the New Corcentric Board approves the transaction that made the stockholder an “interested stockholder,” prior to the date of the
transaction;
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after the completion of the transaction that resulted in the stockholder becoming an interested stockholder, that stockholder
owned at least 85% of New Corcentric’s voting stock outstanding at the time the transaction commenced, other than statutorily excluded shares of common stock; or
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on or subsequent to the date of the transaction, such transaction is approved by an affirmative vote of at least two-thirds of the
outstanding voting stock not owned by the interested stockholder.
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Under certain circumstances, this provision will make it more difficult
for a person who would be an “interested stockholder” to effect various business combinations with New Corcentric for a three-year period. This provision may encourage companies interested in acquiring New Corcentric to negotiate in advance with
the New Corcentric Board because the stockholder approval requirement would be avoided if the New Corcentric Board approves either the business combination or the transaction which results in the stockholder becoming an interested stockholder.
These provisions also may have the effect of preventing changes in the New Corcentric Board and may make it more difficult to accomplish transactions which stockholders may otherwise deem to be in their best interests.
Limitation on Liability and Indemnification of Directors and Officers
Our Existing Charter eliminates each director’s liability for monetary
damages for breaches of fiduciary duty as a director, except to the extent prohibited by law, unless a director violated his or her duty of loyalty to North Mountain or its stockholders, acted in bad faith, knowingly or intentionally violated the
law, authorized unlawful payments of dividends, unlawful stock purchases or unlawful redemptions, or derived improper personal benefit from his or her actions as a director. The Proposed Charter eliminates directors’ liability for monetary
damages to the fullest extent permitted by applicable law. Our Existing Charter and the Proposed Charter require North Mountain and New Corcentric, as applicable, to indemnify and advance expenses to, to the fullest extent permitted by applicable
law, their respective directors, officers and agents and prohibit any retroactive changes to the rights or protections or increase the liability of any director in effect at the time of the alleged occurrence of any act or omission to act giving
rise to liability or indemnification. We believe these provisions in our Existing Charter and the Proposed Charter are necessary to attract and retain qualified persons as directors and officers. However, these provisions may discourage
stockholders from bringing a lawsuit against our directors or New Corcentric’s directors for breach of their fiduciary duty. These provisions also may have the effect of reducing the likelihood of derivative litigation against directors and
officers, even though such an action, if successful, might otherwise benefit North Mountain and New Corcentric, as applicable, and their respective stockholders. Furthermore, a stockholder’s investment may be adversely affected to the extent
North Mountain or New Corcentric, as applicable, pays the costs of settlement and damage awards against directors and officers pursuant to these indemnification provisions.
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Business Combination Shares
North Mountain will issue up to 94,307,448 shares of North Mountain
Class A Common Stock to Corcentric equity holders in connection with the Business Combination. All of the shares of North Mountain Class A Common Stock issued in connection with the Business Combination will be freely transferable by persons
other than by New Corcentric’s “affiliates” without restriction or further registration under the Securities Act, subject to any lock-up restrictions. Sales of substantial amounts of the North Mountain Class A Common Stock (which, in connection
with the Business Combination, will be converted into New Corcentric Common Stock) in the public market could adversely affect prevailing market prices of New Corcentric Common Stock.
Lock-up Provisions
Our Sponsor and certain existing Corcentric stockholders, including all
Corcentric executive officers, directors, and certain stockholders of Corcentric Capital Stock prior to the Closing, and their affiliates that hold Corcentric securities, will be broadly prohibited from selling, pledging, transferring or
otherwise disposing of their ownership interest in New Corcentric Common Stock or the Public Warrants for 180 days after the Closing, subject to certain customary exceptions. Additional details of these transfer restrictions can be found under
the sections entitled “Agreements Related to the Business Combination—Amended and Restated Registration Rights Agreement” and “Agreements Related to the Business
Combination—Lock-up Agreements.”
Registration Rights
North Mountain has agreed to give holders of certain restricted
securities, including shares of North Mountain Class B Common Stock and the PIPE Shares, registration rights to facilitate the resale of such restricted securities. Additional details of these rights can be found under the sections entitled “Agreements Related to the Business Combination—Amended and Restated Registration Rights Agreement” and “Agreements Related to the Business Combination—PIPE Subscription
Agreements.”
Rule 144
Pursuant to Rule 144, a person who has beneficially owned restricted
shares of North Mountain Class A Common Stock (which, in connection with the Business Combination, will be converted into New Corcentric Common Stock) or restricted Public Warrants for at least six months would be entitled to sell their
securities provided that (i) such person is not deemed to have been one of New Corcentric’s affiliates at the time of, or at any time during the three months preceding, a sale and (ii) we are subject to the Exchange Act periodic reporting
requirements for at least three months before the sale and have filed all required reports under Section 13 or 15(d) of the Exchange Act during the 12 months (or such shorter period as we were required to file reports) preceding the sale.
Persons who have beneficially owned restricted shares of North Mountain
Class A Common Stock (which, in connection with the Business Combination, will be converted into New Corcentric Common Stock) or restricted Public Warrants for at least six months but who are New Corcentric’s affiliates at the time of, or any
time during the three months preceding, a sale, would be subject to additional restrictions, by which such person would be entitled to sell within any three-month period only a number of securities that does not exceed the greater of either of
the following:
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1% of the total shares of New Corcentric Common Stock then outstanding; or
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the average weekly reported trading volume of New Corcentric Common Stock during the four calendar weeks preceding the filing of a
notice on Form 144 with respect to the sale.
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Sales by affiliates of New Corcentric under Rule 144 are also subject
to certain requirements relating to manner of sale, notice and the availability of current public information about New Corcentric.
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Restrictions on the Use of Rule 144 by Shell Companies or Former Shell
Companies
Rule 144 is not available for the resale of securities initially issued
by shell companies (other than business combination related shell companies) or issuers that have been at any time previously a shell company. However, Rule 144 also includes an important exception to this prohibition if the following conditions
are met:
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the issuer of the securities that was formerly a shell company has ceased to be a shell company;
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the issuer of the securities is subject to the reporting requirements of Section 13 or 15(d) of the Exchange Act;
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the issuer of the securities has filed all Exchange Act reports and material required to be filed, as applicable, during the
preceding 12 months (or such shorter period that the issuer was required to file such reports and materials), other than Form 8-K reports; and
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at least one year has elapsed from the time that the issuer filed current Form 10 type information with the SEC, which is expected
to be filed promptly after completion of the Business Combination, reflecting its status as an entity that is not a shell company.
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As of the date of this proxy statement/prospectus, there are 16,531,250
shares of North Mountain Common Stock outstanding. Of these shares, the 13,225,000 shares sold in the IPO are freely tradable without restriction or further registration under the Securities Act, except for any shares purchased by one of North
Mountain’s affiliates within the meaning of Rule 144 under the Securities Act. All of the remaining 3,306,250 shares owned by our Sponsor are restricted securities under Rule 144, in that they were issued in a private transaction not involving a
public offering.
As of the date of this proxy statement/prospectus, there are a total of
10,757,500 North Mountain Warrants outstanding, consisting of 6,612,500 Public Warrants and 4,145,000 Private Placement Warrants. Each whole warrant is exercisable for one share of North Mountain Class A Common Stock (or one share of New
Corcentric Common Stock post-Business Combination), in accordance with the terms of the North Mountain Warrant Agreement. The Public Warrants and are freely tradable, except for any Public Warrants purchased by one of North Mountain’s affiliates
within the meaning of Rule 144 under the Securities Act. In connection with and effective immediately prior to the consummation of the Business Combination, (i) the Sponsor will surrender to North Mountain 4,145,000 Private Placement Warrants a
portion of which will be transferred and delivered to the PIPE Investors in the amounts set forth in and pursuant to the Subscription Agreements (including any Subscription Agreements entered into after the date of the Share Vesting and Warrant
Surrender Agreement) and the remainder of which will be cancelled by North Mountain upon the Closing, in exchange for 1,400,000 newly issued shares of North Mountain Class A Common Stock and (ii) at the Closing the shares of North Mountain
Class B Common Stock held by the Sponsor (or shares of North Mountain Class A Common Stock issued or issuable upon conversion thereof) and all shares of North Mountain Class A Common Stock issued in exchange for the cancellation of the Sponsor’s
Private Placement Warrants will become unvested and subject to certain vesting and surrender conditions related to the achievement of certain share price thresholds within five years of the Closing Date of the Business Combination.
In addition, New Corcentric will be obligated to file no later than 15
business days after the Closing a registration statement under the Securities Act covering the 6,612,500 shares of New Corcentric Common Stock that may be issued upon the exercise of remaining Public Warrants post-Business Combination and use
reasonable best efforts to cause such registration statement to become effective and maintain the effectiveness of such registration statement until the expiration of the Public Warrants.
Rule 701
In general, under Rule 701 of the Securities Act as currently in
effect, each of Corcentric’s employees, consultants or advisors who purchases equity shares from Corcentric in connection with a compensatory stock plan or other written agreement executed prior to the completion of the Business Combination is
eligible to resell those equity shares in reliance on Rule 144, but without compliance with some of the restrictions, including the holding period, contained in Rule 144. However, the Rule 701 shares would remain subject to lock-up arrangements
and would only become eligible for sale when the lock-up period expires.
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Submission of Stockholder Proposals
The North Mountain Board is aware of no other matter that may be
brought before the special meeting. Under Delaware law, only business that is specified in the notice of special meeting to stockholders may be transacted at the special meeting.
Future Stockholder Proposals
The Proposed Bylaws, which will be effective upon the consummation of
the Business Combination, provide notice procedures for stockholders to propose business (other than director nominations) to be considered by stockholders at a meeting. To be timely, a stockholder’s notice must be received by the Secretary at
the principal executive offices of New Corcentric not later than the close of business on the 90th day nor earlier than the close of business on the 120th day prior to the first anniversary of the preceding year’s annual meeting; provided,
however, that in the event that no annual meeting was held during the preceding year or the date of the annual meeting is advanced more than 30 days prior to or delayed by more than 30 days after such anniversary of the preceding year’s annual
meeting, notice by the stockholder to be timely must be so received no earlier than the close of business on the 120th day prior to such annual meeting and no later than the close of business on the later of the 90th day prior to such annual
meeting or the tenth day following the day on which public announcement of the date such meeting is first made.
Further, the Proposed Bylaws, which will be effective upon the
consummation of the Business Combination, provide notice procedures for stockholders to nominate a person as a director to be considered by stockholders at a meeting. To be timely, a stockholder’s notice must be received by the Secretary at the
principal executive offices of New Corcentric (a) in the case of an annual meeting, not later than the close of business on the 90th day nor earlier than the close of business on the 120th day prior to the first anniversary of the preceding
year’s annual meeting; provided, however, that in the event that no annual meeting was held during the preceding year or the date of the annual meeting is advanced more than 30 days prior to or delayed by more than 60 days after the anniversary
of the preceding year’s annual meeting, notice by the stockholder to be timely must be so received no earlier than the close of business on the 120th day prior to such annual meeting and not later than the close of business on the later of the
90th day prior to such annual meeting or the tenth day following the day on which public announcement of the date of such meeting was first made.
Stockholder Communications
Stockholders and interested parties may communicate with the North
Mountain Board, any committee chairperson or the non-management directors as a group by writing to the board or committee chairperson in care of 767 Fifth Avenue, 9th Floor, New York, NY 10153. Following the Business Combination, such
communications should be sent to 200 Lake Drive East, Cherry Hill, NJ 08002. Each communication will be forwarded, depending on the subject matter, to the board of directors, the appropriate committee chairperson or all non-management directors.
Delivery of Documents to Stockholders
Pursuant to the rules of the SEC, North Mountain and servicers that it
employs to deliver communications to its stockholders are permitted to deliver to two or more stockholders sharing the same address a single copy of this proxy statement/prospectus. Upon written or oral request, North Mountain will deliver a
separate copy of this proxy statement/prospectus to any stockholder at a shared address to which a single copy of this proxy statement/prospectus was delivered and who wishes to receive separate copies in the future. Stockholders receiving
multiple copies of this proxy statement/prospectus may likewise request delivery of single copies of this proxy statement/prospectus. Stockholders may notify North Mountain of their requests by calling or writing North Mountain at its principal
executive offices at (646) 446-2700 and 767 Fifth Avenue, 9th Floor, New York, NY 10153.
Transfer Agent; Warrant Agent and Registrar
The registrar and transfer agent for the shares of North Mountain
Common Stock and the warrant agent for North Mountain Warrants is Continental Stock Transfer & Trust Company. North Mountain has agreed to indemnify Continental Stock Transfer & Trust Company in its roles as transfer agent and warrant
agent against all liabilities, including judgments, costs and reasonable counsel fees that may arise out of acts performed or omitted for its activities in that capacity, except for any liability due to any gross negligence, willful misconduct or
bad faith of the indemnified person or entity.
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The validity of the shares of North Mountain Class A Common Stock to be
issued in connection with the Business Combination will be passed upon by Paul, Weiss, Rifkind, Wharton & Garrison LLP.
The consolidated financial statements of North Mountain as of
December 31, 2021 and 2020, for the year ended December 31, 2021, and for the period from July 14, 2020 (inception) through December 31, 2020, included in this proxy statement/prospectus have been audited by Marcum LLP, independent registered
public accounting firm, as set forth in their report, which includes an explanatory paragraph as to the Company's ability to continue as a going concern, thereon, appearing herein, and are included in reliance on such report given on the
authority of such firm as an experts in auditing and accounting.
The consolidated financial statements of Corcentric, Inc. as of
December 31, 2021 and 2020 and for each of the three years in the period ended December 31, 2021, included in this proxy statement/prospectus have been audited by BDO USA, LLP, an independent registered public accounting firm, as stated in
their report thereon which report expresses an unqualified opinion, appearing elsewhere in this proxy statement/prospectus, given on the authority of said firm as experts in auditing and accounting.
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North Mountain files reports, proxy statements/prospectuses and
other information with the SEC as required by the Exchange Act. You can read North Mountain’s SEC filings, including this proxy statement/prospectus as well as North Mountain’s Annual Report on Form 10-K for the year ended December 31, 2021,
over the Internet at the SEC’s website at http://www.sec.gov.
If you would like additional copies of this proxy statement/prospectus
or if you have questions about the Business Combination or the proposals to be presented at the special meeting, you should contact us by telephone or in writing:
North Mountain Merger Corp.
767 Fifth Avenue, 9th Floor
New York, New York 10153
Attention: Nicholas Dermatas, Chief Financial Officer and Secretary
E-mail: ndermatas@smmergercorp.com
You may also obtain these documents by requesting them in writing or by
telephone from our proxy solicitor at:
Innisfree M&A Incorporated
501 Madison Avenue, 20th Floor
New York, New York 10022
Shareholders may call toll free: (877) 750-5836
Banks and Brokers may call collect: (212) 750-5833
If you are a stockholder of North Mountain and would like to request
documents, please do so by to receive them before the special meeting. If you request any documents from us, we will mail them to you by first class mail, or another equally prompt means.
All information contained in this proxy statement/prospectus relating
to North Mountain has been supplied by North Mountain, and all such information relating to Corcentric has been supplied by Corcentric. Information provided by either North Mountain or Corcentric does not constitute any representation, estimate
or projection of any other party.
Neither North Mountain nor Corcentric has authorized anyone to give any
information or make any representation about the Business Combination or their companies that is different from, or in addition to, that contained in this proxy statement/prospectus. Therefore, if anyone does give you information of this sort,
you should not rely on it. If you are in a jurisdiction where offers to exchange or sell, or solicitations of offers to exchange or purchase, the securities offered by this proxy statement/prospectus or the solicitation of proxies is unlawful, or
if you are a person to whom it is unlawful to direct these types of activities, then the offer presented in this proxy statement/prospectus does not extend to you. The information contained in this proxy statement/prospectus speaks only as of the
date of this proxy statement/prospectus unless the information specifically indicates that another date applies.
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NORTH MOUNTAIN MERGER CORP.
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CORCENTRIC, INC.
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Audited Financial Statements
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F-1
To the Shareholders and Board of Directors of
North Mountain Merger Corp.
Opinion on the Financial Statements
We have audited the accompanying consolidated balance sheets of North Mountain Merger
Corp. (the “Company”) as of December 31, 2021 and 2020, the related consolidated statements of operations, changes in stockholders’ (deficit) and cash flows for the year ended December 31, 2021 and for the period from July 14, 2020 (inception)
through December 31, 2020, and the related notes (collectively referred to as the “financial statements”). In our opinion, the financial statements present fairly, in all material respects, the financial position of the Company as of December
31, 2021 and 2020, and the results of its operations and its cash flows for the year ended December 31, 2021 and for the period from July 14, 2020 (inception) through December 31, 2020, in conformity with accounting principles generally
accepted in the United States of America.
Explanatory Paragraph – Going Concern
The accompanying financial statements have been prepared assuming that the Company
will continue as a going concern. As discussed in Note 1 to the financial statements, the Company’s business plan is dependent on the completion of a business combination and the Company’s cash and working capital as of December 31, 2021 are
not sufficient to complete its planned activities. These conditions raise substantial doubt about the Company’s ability to continue as a going concern. Management’s plans in regard to these matters are also described in Note 1. The financial
statements do not include any adjustments that might result from the outcome of this uncertainty.
Basis for Opinion
These financial statements are the responsibility of the Company’s management. Our
responsibility is to express an opinion on the Company’s financial statements based on our audit. We are a public accounting firm registered with the Public Company Accounting Oversight Board (United States) (the “PCAOB”) and are required to be
independent with respect to the Company in accordance with the U.S. federal securities laws and the applicable rules and regulations of the Securities and Exchange Commission and the PCAOB.
We conducted our audits in accordance with the standards of the PCAOB. Those standards
require that we plan and perform the audits to obtain reasonable assurance about whether the financial statements are free of material misstatement, whether due to error or fraud. The Company is not required to have, nor were we engaged to
perform, an audit of its internal control over financial reporting. As part of our audits, we are required to obtain an understanding of internal control over financial reporting but not for the purpose of expressing an opinion on the
effectiveness of the Company’s internal control over financial reporting. Accordingly, we express no such opinion.
Our audits included performing procedures to assess the risks of material misstatement
of the financial statements, whether due to error or fraud, and performing procedures that respond to those risks. Such procedures included examining, on a test basis, evidence regarding the amounts and disclosures in the financial statements.
Our audits also included evaluating the accounting principles used and significant estimates made by management, as well as evaluating the overall presentation of the financial statements. We believe that our audits provide a reasonable basis
for our opinion.
/s/ Marcum LLP
Marcum LLP
We have served as the Company’s auditor since 2020.
Los Angeles, CA
March 21, 2022
F-2