S-4/A 1 d111487ds4a.htm S-4/A S-4/A
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As filed with the United States Securities and Exchange Commission on May 3, 2021

Registration No. 333-253136

 

 

 

UNITED STATES SECURITIES AND EXCHANGE COMMISSION

Washington, D.C. 20549

 

 

AMENDMENT NO. 2 TO

FORM S-4

REGISTRATION STATEMENT

UNDER THE SECURITIES ACT OF 1933

 

 

FOREST ROAD ACQUISITION CORP.

(Exact name of registrant as specified in its charter)

 

 

 

Delaware   6770   85-3222090
(State or Other Jurisdiction of
Incorporation or Organization)
  (Primary Standard Industrial
Classification Code Number)
  (I.R.S. Employer
Identification No.)

1177 Avenue of the Americas, 5th Floor

New York, New York 10036

Telephone: (917) 310-3772

(Address, including zip code and telephone number, including area code, of registrant’s principal executive offices)

 

 

Keith L. Horn

Chief Executive Officer

1177 Avenue of the Americas, 5th Floor

New York, New York 10036

(917) 310-3772

(Name, address, including zip code and telephone number, including area code, of agent for service)

 

 

Copies to:

 

Douglas S. Ellenoff, Esq.
Stuart Neuhauser, Esq.
Joshua N. Englard, Esq.
Ellenoff Grossman & Schole LLP
1345 Avenue of the Americas
New York, New York 10105
(212) 370-1300
 

Monica J. Shilling, P.C.

Michael Considine, P.C.

Kirkland & Ellis LLP

2049 Century Park East

Suite 3700

Los Angeles, California 90067

(310) 552-4200

 

Justin G. Hamill

Steven B. Stokdyk

Latham & Watkins LLP

885 Third Avenue

New York, New York 10022

(212) 906-1200

 

 

Approximate date of commencement of proposed sale to the public: As soon as practicable after (i) this registration statement is declared effective and (ii) upon completion of the applicable transactions described in the enclosed proxy statement/prospectus.

If the securities being registered on this Form are being offered in connection with the formation of a holding company and there is compliance with General Instruction G, check the following box:  ☐

If this Form is filed to register additional securities for an offering pursuant to Rule 462(b) under the Securities Act, check the following box and list the Securities Act registration statement number of the earlier effective registration statement for the same offering:  ☐

If this Form is a post-effective amendment filed pursuant to Rule 462(d) under the Securities Act, check the following box and list the Securities Act registration statement number of the earlier effective registration statement for the same offering:  ☐

Indicate by check mark whether the registrant is a large accelerated filer, an accelerated filer, a non-accelerated filer, or a smaller reporting company. See the definitions of “large accelerated filer”, “accelerated filer” and “smaller reporting company” in Rule 12b-2 of the Exchange Act.

 

Large accelerated filer      Accelerated filer  
Non-accelerated filer      Smaller reporting company  
     Emerging growth company  

If an emerging growth company, indicate by check mark if the registrant has elected not to use the extended transition period for complying with any new or revised financial accounting standards provided pursuant to Section 7(a)(2)(B) of the Securities Act.  ☐

If applicable, place an X in the box to designate the appropriate rule provision relied upon in conducting this transaction:

Exchange Act Rule 13e-4(i) (Cross-Border Issuer Tender Offer)  ☐

Exchange Act Rule 14d-1(d) (Cross-Border Third-Party Tender Offer)  ☐

The Registrant hereby amends this Registration Statement on such date or dates as may be necessary to delay its effective date until the Registrant shall file a further amendment which specifically states that this Registration Statement shall thereafter become effective in accordance with Section 8(a) of the Securities Act of 1933, as amended (“Securities Act”), or until the Registration Statement shall become effective on such date as the SEC, acting pursuant to Section 8(a), may determine.

 

 

CALCULATION OF REGISTRATION FEE

 

 

Title of each class of

securities to be registered (1)

 

Amount to be

Registered

 

Proposed Maximum

Offering Price Per Share

 

Proposed Maximum

Aggregate Offering Price

 

Amount of

Registration Fee

Class A Common Stock, par value $0.0001 per share (2)

  115,241,553   $0.27 (3)   $31,115,219   —   (4)

Class X Common Stock, par value $0.0001 per share (5)

  141,176,708   $0.27 (3)   $38,117,711   $3,440

Warrants to purchase shares of Class A Common Stock (7)

  3,978,582   —     —     —   (6)

Shares underlying Warrants to purchase shares of Class A Common Stock (8)

  3,978,582   $10.745 (8)   $42,749,864   $4,664

Options to purchase shares of Class A Common Stock (9)

  34,785,453   —     —     —   (6)

Shares underlying Options to purchase shares of Class A Common Stock (8)

  34,785,453   $10.745 (8)   $373,769,692   $40,778

TOTAL

  295,182,296       $485,752,487(3)   $48,883(3)(10)

 

 

(1)

Pursuant to Rule 416(a), there are also being registered an indeterminable number of additional securities as may be issued to prevent dilution resulting from share splits, share dividends or similar transactions.

(2)

Represents (i) 101,709,590 shares of Class A Common Stock to be issued by Forest Road Acquisition Corp. (“Forest Road”) to the holders of certain common units of The Beachbody Company Group, LLC (“Beachbody”) and (ii) up to 13,531,963 shares of Class A Common Stock to be issued by Forest Road to holders of units of Myx Fitness Holdings, LLC.

(3)

Beachbody is a private company and no market exists for its securities. In accordance with Rule 457(f)(2) and (3), the registration fee payable is calculated on the basis of the book value of the Beachbody equity securities of $0.27 as of September 30, 2020, less $37.7 million cash payable in connection with the Transaction. Accordingly, the Proposed Maximum Aggregate Offering Price with respect to the shares acquired by Forest Road in exchange for the Class A Common Stock and Class X Common Stock is an aggregate $31,532,930. As a result, the Total Proposed Maximum Aggregate Offering Price that is the basis of the registration fee calculation is $448,052,487.

(4)

Combined fee in line below.

(5)

Represents shares of Class X Common Stock to be issued by Forest Road to holders of certain common units of Beachbody.

(6)

No fee pursuant to Rule 457(g).

(7)

Represents Warrants to be issued by Forest Road to holders of Beachbody warrants issued, outstanding and unexercised immediately prior to the Closing.

(8)

Pursuant to Rules 457(c) and 457(f)(1) promulgated under the Securities Act and solely for the purpose of calculating the registration fee, based on the average of the high and low trading prices of Forest Road Class A common stock on February 8, 2021 as reported by the New York Stock Exchange (within five business days prior to the date of this Registration Statement).

(9)

Represents Options to be issued by Forest Road to holders of Beachbody options (vested and unvested) issued, outstanding and unexercised immediately prior to the Closing.

(10)

Previously paid.

 

 

 


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The information in this proxy statement/prospectus is not complete and may be changed. Forest Road Acquisition Corp. may not issue the securities offered by this proxy statement/prospectus until the registration statement filed with the Securities and Exchange Commission, of which this proxy statement/prospectus is a part, is declared effective. This proxy statement/prospectus does not constitute 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 of these securities is not permitted.

 

PRELIMINARY — SUBJECT TO COMPLETION, DATED MAY 3, 2021

To the Stockholders of Forest Road Acquisition Corp.:

You are cordially invited to attend a special meeting in lieu of the 2021 annual meeting of stockholders (the “Special Meeting”) of Forest Road Acquisition Corp. (“Forest Road”), which will be held virtually at 10:00 a.m., Eastern Time, on                , 2021, at                  . In light of ongoing developments related to the novel coronavirus, after careful consideration, we have determined that the Special Meeting will be a virtual meeting conducted exclusively via live webcast in order to facilitate stockholder attendance while safeguarding the health and safety of our stockholders, directors and management team. You or your proxyholder will be able to attend and vote at the Special Meeting by visiting                 and using a control number assigned by Continental Stock Transfer & Trust Company. To register and receive access to the virtual meeting, registered stockholders and beneficial stockholders (those holding shares through a stock brokerage account or by a bank or other holder of record) will need to follow the instructions applicable to them provided in this proxy statement/prospectus.

On February 9, 2021, the Company (as defined below) entered into an Agreement and Plan of Merger (the “Merger Agreement”) with BB Merger Sub, LLC, a Delaware limited liability company and direct, wholly-owned subsidiary of the Company (“BB Merger Sub”), MFH Merger Sub, LLC, a Delaware limited liability company and direct, wholly-owned subsidiary of the Company (“Myx Merger Sub”), The Beachbody Company Group, LLC (“Beachbody”) and Myx Fitness Holdings, LLC (“Myx” and, together with Beachbody, the “Target Companies”). The transactions contemplated by the Business Combination Agreement are referred to herein as the “Business Combination.” You are being asked to vote on the Business Combination.

It is proposed that, upon the effectiveness of the Business Combination (the “Closing”), Forest Road will change its name to “The Beachbody Company, Inc.The Beachbody Company, Inc. and Forest Road, following the Business Combination, are both referred to herein as the “Company.”

As a result of and upon the Closing, among other things, all outstanding equity interests of Beachbody and Myx will be cancelled in exchange for the right to receive, in the aggregate, a number of shares of common stock (or, in the case of outstanding Beachbody options or warrants, options or warrants to purchase shares of common stock) in the Company that is approximately equal to the quotient obtained by dividing (x) $2,900,000,000 by (y) $10.00, provided, however, that (1) certain Beachbody equityholders will receive common stock in the Company with similar rights as those being issued to all other recipients of merger consideration, except that such common stock will carry 10 votes per share; (2) certain Myx equityholders will be entitled to receive, in lieu of their pro rata portion (based on their percentage ownership interests in Myx) of such shares, an amount in cash equal to the value of such shares, up to an aggregate amount of cash among all such equityholders not to exceed the result of $37.7 million minus certain payments to be made by Forest Road on behalf of Myx as set forth in the Merger Agreement; and (3) the foregoing consideration is subject to adjustment (x) in the case of the Beachbody equity interests, based on the transaction expenses of Beachbody and Forest Road, and (y) in the case of each of the Beachbody equity interests and the Myx equity interests, based on the date on which the Closing occurs (the “Closing Date”) and the related number of Myx units issuable to Beachbody, LLC, a Delaware limited liability company (“BB”) and wholly-owned subsidiary of Beachbody, upon conversion of instruments between Myx and BB, dated December 7, 2020 and March 4, 2021, pursuant to which BB funded Myx an aggregate of $15 million subject to certain terms and conditions, including (but not limited to) the right to convert, upon certain conditions, certain of BB’s rights under such instruments into equity interests of Myx.

In connection with the execution of the Merger Agreement, (i) Forest Road entered into subscription agreements with certain investors (the “Subscription Agreements”), pursuant to which such investors have agreed to purchase in connection with the Closing an aggregate of 22,500,000 shares of Class A Common Stock, par value $0.0001 per share, of the Company (the “Class A Common Stock”) for a purchase price of $10.00 per share, for an aggregate purchase price of $225,000,000 (together, the “PIPE”). The obligations of each party to consummate the PIPE are conditioned upon, among other things, customary closing conditions and the consummation of the transactions contemplated by the Merger Agreement.

Subject to approval by Forest Road stockholders of the proposal to approve the Business Combination, the proposal to approve the second amended and restated certificate of incorporation, and other proposals in this proxy statement/prospectus, the Company will adopt a multiple-class stock structure, comprised of Class A common stock, which will carry one vote per share, Class X common stock, which will carry ten votes per share, and Class C common stock. The Class X Common Stock carries substantially similar rights as the Class A Common Stock, except that each share of Class X Common Stock carries ten votes. The Class C common stock will have substantially the same rights as the Class A common stock, except it will not have any voting rights. Upon the Closing, Carl Daikeler and certain of his affiliated entities will hold a majority of outstanding shares of Class X common stock. See “Description of Securities — The Company’s Common Stock.”

Forest Road’s units, Class A common stock and warrants are traded on the New York Stock Exchange (the “NYSE”) under the symbols “FRX.U”, “FRX” and “FRX WS”, respectively. On                 , 2021, the closing sale prices of Forest Road’s units, Class A Common Stock and warrants were $                , $                 and $                , respectively. At the closing of the Business Combination, the units will separate into their component shares of common stock and warrants so that the units will no longer trade. Forest Road has applied for the listing of the common stock and warrants of the Company on the NYSE following the completion of the Business Combination under the symbols “BODY” and “BODY WS,” respectively.

Only holders of record of shares of Class A Common Stock and shares of Class B Common Stock, par value $0.0001 per share (the “Class B Common Stock”), at the close of business on                 , 2021 (the “record date”) are entitled to notice of and to vote and have their votes counted 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 10 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 and electronically during the Special Meeting at               .

This proxy statement/prospectus provides you with detailed information about the Business Combination and other matters to be considered at the Special Meeting. We urge you to carefully read this entire document and the documents incorporated herein by reference. You should also carefully consider the risk factors described in “Risk Factors” beginning on page 44 of this proxy statement/prospectus.


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After careful consideration, our board of directors has unanimously approved the Merger Agreement and the transactions contemplated thereby and determined that each of the proposals to be presented at the Special Meeting is in the best interests of the Company and its stockholders, and unanimously recommends that you vote or give instruction to vote “FOR” each of those proposals.

The existence of financial and personal interests of our directors and officers may result in conflicts of interest, including a conflict between what may be in the best interests of the Company and its stockholders and what may be best for a director’s personal interests when determining to recommend that stockholders vote for the proposals. See the sections entitled “The Business Combination Proposal — Interests of Certain Persons in the Business Combination” and “Beneficial Ownership of Securities in the accompanying proxy statement/prospectus for a further discussion.

Your vote is very important. To ensure your representation at the Special Meeting, please complete and return the enclosed proxy card or submit your proxy by following the instructions contained in this proxy statement/prospectus/consent solicitation statement and on your proxy card. Please submit your proxy promptly whether or not you expect to participate in the meeting. Submitting a proxy now will NOT prevent you from being able to vote online during the virtual special meeting. If you hold your shares in “street name”, you should instruct your broker, bank or other nominee how to vote in accordance with the voting instruction form you receive from your broker, bank or other nominee.

On behalf of our board of directors, I would like to thank you for your support of Forest Road and look forward to a successful completion of the Business Combination.

Very truly yours,

Keith L. Horn

Chief Executive Officer

Forest Road Acquisition Corp.

If you return your proxy card signed and without an indication of how you wish to vote, your shares will be voted in favor of each of the proposals.

TO EXERCISE YOUR REDEMPTION RIGHTS, YOU MUST (1) IF YOU HOLD SHARES OF CLASS A COMMON STOCK THROUGH UNITS, ELECT TO SEPARATE YOUR UNITS INTO THE UNDERLYING PUBLIC SHARES AND PUBLIC WARRANTS PRIOR TO EXERCISING YOUR REDEMPTION RIGHTS WITH RESPECT TO THE PUBLIC SHARES, (2) SUBMIT A WRITTEN REQUEST TO THE TRANSFER AGENT AT LEAST TWO BUSINESS DAYS PRIOR TO THE VOTE AT THE SPECIAL MEETING, THAT YOUR PUBLIC SHARES BE REDEEMED FOR CASH, AND (3) DELIVER YOUR SHARES OF CLASS A COMMON STOCK TO THE TRANSFER AGENT, PHYSICALLY OR ELECTRONICALLY USING THE DEPOSITORY TRUST COMPANY’S DWAC (DEPOSIT/WITHDRAWAL AT CUSTODIAN) SYSTEM, IN EACH CASE IN ACCORDANCE WITH THE PROCEDURES AND DEADLINES DESCRIBED IN THE ACCOMPANYING PROXY STATEMENT. IF THE BUSINESS COMBINATION IS NOT CONSUMMATED, THEN THE PUBLIC 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. SEE “SPECIAL MEETING OF THE STOCKHOLDERS — REDEMPTION RIGHTS” IN THE ACCOMPANYING PROXY STATEMENT/PROSPECTUS FOR MORE SPECIFIC INSTRUCTIONS.

Neither the Securities and Exchange Commission nor any state securities commission has approved or disapproved of the securities to be issued under the accompanying proxy statement/prospectus or determined that the accompanying proxy statement/prospectus is accurate or complete. Any representation to the contrary is a criminal offense.

The accompanying proxy statement/prospectus is dated                  , 2021 and is first being mailed to the stockholders of Forest Road on or about                 , 2021.


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FOREST ROAD ACQUISITION CORP.

1177 Avenue of the Americas, 5th Floor

New York, New York 10036

NOTICE OF SPECIAL MEETING OF STOCKHOLDERS

TO BE HELD ON                , 2021

TO THE STOCKHOLDERS OF FOREST ROAD ACQUISITION CORP.:

NOTICE IS HEREBY GIVEN that a special meeting in lieu of the 2021 annual meeting of stockholders (the “Special Meeting”) of Forest Road Acquisition Corp., a Delaware corporation (“Forest Road”), will be held at 10:00 am, Eastern Time, on                  , 2021. In light of ongoing developments related to the novel coronavirus, after careful consideration, we have determined that the Special Meeting will be a virtual meeting conducted exclusively via live webcast in order to facilitate stockholder attendance while safeguarding the health and safety of our stockholders, directors and management team. You are cordially invited to attend the Special Meeting online by visiting                 and using a control number assigned by Continental Stock Transfer & Trust Company. To register and receive access to the virtual meeting, registered stockholders and beneficial stockholders (those holding shares through a stock brokerage account or by a bank or other holder of record) will need to follow the instructions applicable to them provided in this proxy statement.

At the Special Meeting, you will be asked to consider and vote on the following proposals:

 

  (1)

Proposal 1 — The Business Combination Proposal — To adopt and approve the Agreement and Plan of Merger dated as of February 9, 2021 (as amended or supplemented from time to time, the “Merger Agreement”) by and among Forest Road, BB Merger Sub, LLC, a Delaware limited liability company and direct, wholly-owned subsidiary of Forest Road (“BB Merger Sub”), MFH Merger Sub, LLC, a Delaware limited liability company and direct, wholly-owned subsidiary of Forest Road (“Myx Merger Sub”, and together with BB Merger Sub, the “Merger Subs”), The Beachbody Company Group, LLC, a Delaware limited liability company (“Beachbody”), and Myx Fitness Holdings, LLC, a Delaware limited liability company (“Myx”, and together with Beachbody, the “Target Companies”), and the transactions contemplated by the Merger Agreement (collectively, the “Business Combination”). Pursuant to the Merger Agreement, (1) BB Merger Sub will merge with and into Beachbody, with Beachbody surviving as a wholly-owned subsidiary of Forest Road (the “Surviving Beachbody Entity”); (2) Myx Merger Sub will merge with and into Myx, with Myx surviving as a wholly-owned subsidiary of Forest Road; and (3) the Surviving Beachbody Entity will merge with and into Forest Road (the “Merger”), with Forest Road surviving such merger (such surviving entity, the “Company”), as described in more detail in the attached proxy statement/prospectus. We refer to this proposal as the “Business Combination Proposal.”

 

  (2)

Proposal 2 — The Organizational Document Proposal — To approve and adopt, assuming the Business Combination Proposal is approved and adopted, the second amended and restated certificate of incorporation of the Company (the “Proposed Charter”) and the proposed amended and restated bylaws of the Company to be in effect following the Business Combination, each of which, if approved, would take effect upon the Closing (we refer to this proposal as the “Organizational Document Proposal”);

 

  (3)

Proposal No. 3(A) – (F) — the Advisory Charter Proposals — To approve and adopt, on a non-binding advisory basis, certain governance provisions in the Proposed Charter, which are being presented separately in accordance with SEC guidance to give stockholders the opportunity to present their separate views on important corporate governance provisions, as 6 sub-proposals (which we refer to, collectively, as the “Advisory Charter Proposals”):

 

   

Proposal No. 3(A): to reclassify the Company’s capital stock and to increase the total number of authorized shares and classes of stock to 2,000,000,000 shares, consisting of (i) 100,000,000 shares of preferred stock, par value $0.0001 per share, (ii) 1,600,000,000 shares of Class A Common Stock, par value $0.0001 per share, (iii) 200,000,000 shares of Class X Common Stock, par value $0.0001 per shares, and (iv) 100,000,000 shares of Class C Common Stock, par value $0.0001 per share (we refer to this as “Advisory Charter Proposal A”);


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Proposal No. 3(B): to provide that holders of shares of the Company’s Class A Common Stock will be entitled to cast one vote per share of the Company’s Class A Common Stock and holders of shares of the Company’s Class X Common Stock will be entitled to cast 10 votes per share of the Company’s Class common stock on each matter properly submitted to the Company’s stockholders entitled to vote, until the earlier of (a) the date Carl Daikeler is no longer providing services to the Company as a senior executive officer or director of the Company or (b) the date on which the holders of Class X Common Stock as of the Closing Date have sold 75% of their shares (other than pursuant to a Permitted Transfer (as defined in the Proposed Charter), as opposed to each share of Forest Road Class A common stock and Forest Road Class B common stock being entitled to one vote per share on each matter properly submitted to Forest Road’s stockholders entitled to vote (we refer to this as “Advisory Charter Proposal B”);

 

   

Proposal No. 3(C): to provide that each member of the board of directors of the Company will be elected at each annual meeting of stockholders (or special meeting in lieu thereof), as opposed to Forest Road having three classes of directors, with only one class of directors being elected in each year and each class serving a three-year term (we refer to this as “Advisory Charter Proposal C”);

 

   

Proposal No. 3(D): to provide that any action required or permitted to be taken by the stockholders of the Company may not be taken by written consent, other than with respect to holders of preferred stock, who are permitted to take actions by written consent (we refer to this as “Advisory Charter Proposal D”);

 

   

Proposal No. 3(E): to provide that if the Delaware Court of Chancery lacks subject matter jurisdiction over a claim brought against or on behalf of the Company or any of its directors, officers, employees or stockholders, then the sole and exclusive forum for such action shall be another state or federal court located within the state of Delaware, unless the Court of Chancery (or such other state or federal court located within the state of Delaware, as applicable) has dismissed a prior action by the same plaintiff asserting the same claims because such court lacked personal jurisdiction over an indispensable party named as a defendant therein, and to provide further that any cause of action arising under the Securities Act of 1933, as amended, that is asserted against the Company shall be brought in the federal district courts of the United States unless the Company consents in writing to an alternate forum, and to provide further that failure to enforce the forum selection clause of the Proposed Charter would cause the Company irreparable harm and entitle the Company to equitable relief to enforce the forum selection clause; provided that, notwithstanding the foregoing, the Proposed Charter will provide that the exclusive forum provision will not apply to suits 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, as 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 and 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 (we refer to this as “Advisory Charter Proposal E”); and

 

   

Proposal No. 3(F): to provide that the bylaws of the Company may be amended, altered, rescinded or repealed or adopted either (x) by the Company’s board of directors or (y) the affirmative vote of the holders of at least two-thirds of the voting power of the capital stock of the Company (we refer to this as “Advisory Charter Proposal F”);

 

  (4)

Proposal No. 4  The NYSE Proposal — To approve, assuming the Business Combination Proposal and the Organizational Document Proposal are approved and adopted, for the purposes of complying with the applicable listing rules of the New York Stock Exchange (the “NYSE”), the issuance of more than 20% of our issued and outstanding common stock in connection with subscription agreements entered into in connection with the Business Combination that, in each case, may result in any Seller or any other investor acquiring shares pursuant to such subscription agreements owning more than 20% of our outstanding common stock, or more than 20% of the voting power, which could constitute a “change of control” under NYSE rules (we refer to this proposal as the “NYSE Proposal”);


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  (5)

Proposal No. 5  The Incentive Plan Proposal — To approve and adopt, assuming the Business Combination Proposal, the Organizational Document Proposal and the NYSE Proposal are approved and adopted, The Beachbody Company, Inc. 2021 Incentive Award Plan, a copy of which is attached to the accompanying proxy statement as Annex C (we refer to this proposal as the “Incentive Plan Proposal”);

 

  (6)

Proposal No. 6 — The ESPP Proposal — To approve and adopt, assuming the Business Combination Proposal, the Organizational Document Proposal and the NYSE Proposal are approved and adopted, The Beachbody Company, Inc. Employee Stock Purchase Plan, a copy of which is attached to the accompanying proxy statement as Annex D (we refer to this proposal as the “ESPP Proposal”);

 

  (7)

Proposal No. 7 — The Director Election Proposal — to elect                  directors, effective upon the Closing, to serve terms on our board of directors until the annual meeting of stockholders held in the year following the year of their election, or until such directors’ successors have been duly elected and qualified, or until such directors’ earlier death, resignation, retirement or removal (we refer to this proposal as the “Director Election Proposal” and, collectively with the Incentive Plan Proposal, Business Combination Proposal, Organizational Document Proposal, NYSE Proposal and ESPP Proposal, the “Condition Precedent Proposals”); and

 

  (8)

Proposal No. 8  The Adjournment Proposal — To approve the adjournment of the Special Meeting to a later date or dates, if necessary or appropriate, to permit further solicitation and vote of proxies in the event that there are insufficient votes for, or otherwise in connection with, the approval of any of the Condition Precedent Proposals or the Advisory Charter Proposals (we refer to this proposal as the “Adjournment Proposal”).

The above matters are more fully described in the accompanying proxy statement/prospectus, which also includes, as Annex A-1, a copy of the Merger Agreement. We urge you to read carefully the accompanying proxy statement/prospectus in its entirety, including the Annexes and accompanying financial statements.

The record date for the Special Meeting is                 , 2021. Only holders of record of shares of Class A Common Stock and shares of Class B Common Stock at the close of business on the record date are entitled to notice of and to vote and have their votes counted at the Special Meeting and any adjournments or postponements of the Special Meeting. A complete list of Forest Road’s stockholders of record entitled to vote at the Special Meeting will be available for 10 days before the Special Meeting at Forest Road’s principal executive offices for inspection by stockholders during ordinary business hours for any purpose germane to the Special Meeting and electronically during the Special Meeting at                 .

Our Class A Common Stock and warrants are currently listed on the NYSE under the symbols “FRX” and “FRX WS,” respectively. Certain of our shares of Class A Common Stock and warrants currently trade as units consisting of one share of Class A Common Stock and one-third of one redeemable warrant, and are listed on the NYSE under the symbol “FRX.U.” The units will automatically separate into their component securities upon consummation of the Business Combination and, as a result, will no longer trade as an independent security. Upon the Closing, we intend to change our name from “Forest Road Acquisition Corp.” to “The Beachbody Company, Inc.” We intend to continue the listing of our Class A Common Stock and warrants on the NYSE under the symbols “BODY” and “BODY WS,” respectively, upon the Closing.

Pursuant to Forest Road’s Amended and Restated Charter (the “Existing Charter”), a holder of public shares (a “public stockholder”) may request that Forest Road redeem all or a portion of its public shares for cash if the Business Combination is consummated. You will be entitled to receive cash for any public shares to be redeemed only if you:

 

  (a)

(i) hold public shares or (ii) hold public shares through units and you elect to separate your units into the underlying public shares and public warrants prior to exercising your redemption rights with respect to the public shares; and

 

  (b)

prior to                 , Eastern Time, on                 , 2021 (two business days prior to the vote at the Special Meeting), (i) submit a written request to Continental Stock Transfer & Trust Company, Forest Road’s


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  transfer agent (the “transfer agent”), that Forest Road redeem your public shares for cash and (ii) deliver your public shares to the transfer agent, physically or electronically through The Depository Trust Company (“DTC”).

Holders of units must elect to separate the underlying public shares and public warrants prior to exercising redemption rights with respect to the public shares. If holders hold their units in an account at a brokerage firm or bank, holders must notify their broker or bank that they elect to separate the units into the underlying public shares and public warrants, or if a holder holds units registered in its own name, the holder must contact the transfer agent directly and instruct it to do so. Public stockholders may elect to redeem all or a portion of their public shares even if they vote for the Business Combination Proposal. If the Business Combination is not consummated, the public shares will not be redeemed for cash. If a public stockholder properly exercises its right to redeem its public shares and timely delivers its shares to the transfer agent, we will redeem each public share for a per share price, payable in cash, equal to the aggregate amount then on deposit in the trust account (the “trust account”) established in connection with the Company’s initial public offering (the “IPO”), calculated as of two business days prior to the consummation of the Business Combination, including interest earned on the funds held in the trust account (net of taxes payable), divided by the number of then-outstanding public shares. As of                  , 2021, this would have amounted to approximately $         per public share. If a public stockholder exercises its redemption rights, then it will be exchanging its redeemed public shares for cash and will no longer own such shares. Any request to redeem public shares, once made, may be withdrawn at any time until the deadline for exercising redemption requests and thereafter, with our consent, until the Closing. Furthermore, if a holder of a public share delivers its certificate in connection with an election of its redemption and subsequently decides prior to the applicable date not to elect to exercise such rights, it may simply request that we instruct our transfer agent to return the certificate (physically or electronically). The holder can make such request by contacting the transfer agent, at the address or email address listed in this proxy statement/prospectus. We will be required to honor such request only if made prior to the deadline for exercising redemption requests. See “Special Meeting of the Stockholders — Redemption Rights” in the accompanying proxy statement/prospectus for a detailed description of the procedures to be followed if you wish to redeem your public shares for cash.

Notwithstanding the foregoing, a holder of public shares, together with any affiliate of such public stockholder or any other person with whom such public stockholder is acting in concert or as a “group” (as defined in Section 13 of the Exchange Act), will be restricted from redeeming its public shares with respect to more than an aggregate of 15% of the public shares, without our prior consent. Accordingly, if a public stockholder, alone or acting in concert as a group, seeks to redeem more than 15% of the public shares, then any such shares in excess of that 15% limitation would not be redeemed for cash, without our prior consent.

Under the Merger Agreement, the approval of each of the Conditions Precedent Proposals (i.e., the Business Combination Proposal, the Organizational Document Proposal, the NYSE Proposal, the Director Election Proposal, the Incentive Plan Proposal and the ESPP Proposal) is a condition to the consummation of the Business Combination. The adoption of each Condition Precedent Proposal is conditioned on the approval of all of the Condition Precedent Proposals. The Advisory Charter Proposals and the Adjournment Proposal are not conditioned on the approval of any other proposal. If our stockholders do not approve each of the Condition Precedent Proposals, the Business Combination may not be consummated.

Approval of each of the Business Combination Proposal, each of the Advisory Charter Proposals, the NYSE Proposal, the Incentive Plan Proposal, the ESPP Proposal and the Adjournment Proposal requires the affirmative vote of holders of a majority of the votes cast by holders of shares of Class A Common Stock and Class B 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, voting as a single class. Approval of the Organizational Document Proposal requires the affirmative vote of holders of a majority of the outstanding shares of Class A Common Stock and Class B Common Stock entitled to vote thereon at the Special Meeting, voting as a single class. The election of the director nominees pursuant to the Director Election Proposal requires a plurality of the votes cast by holders of shares of Class A Common Stock and Class B 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, voting as a single class.


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Your attention is directed to the proxy statement/prospectus accompanying this notice (including the annexes thereto) for a more complete description of the proposed Business Combination and related transactions and each of the proposals. We urge you to read the accompanying proxy statement/prospectus carefully. If you have any questions or need assistance voting your shares of Forest Road common stock, please contact Morrow Sodali LLC our proxy solicitor, by calling (800) 662-5200, or banks and brokers can call collect at (203) 658-9400, or by emailing FRX.info@investor.morrowsodali.com. This notice of special meeting and the proxy statement are available at .

 

By Order of the Board of Directors
 

 

Keith L. Horn

Chief Executive Officer and Secretary

                , 2021


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TABLE OF CONTENTS

 

     Page  

FREQUENTLY USED TERMS

     iii  

TRADEMARKS

     1  

CAUTIONARY NOTE REGARDING FORWARD-LOOKING STATEMENTS

     1  

QUESTIONS AND ANSWERS ABOUT THE PROPOSALS

     3  

SUMMARY OF THE PROXY STATEMENT/PROSPECTUS

     16  

SELECTED HISTORICAL FINANCIAL INFORMATION OF FOREST ROAD

     33  

SELECTED HISTORICAL CONSOLIDATED FINANCIAL INFORMATION OF BEACHBODY

     34  

SELECTED HISTORICAL FINANCIAL INFORMATION OF MYX

     37  

SUMMARY UNAUDITED PRO FORMA CONDENSED COMBINED FINANCIAL
INFORMATION

     38  

COMPARATIVE HISTORICAL AND UNAUDITED PRO FORMA PER SHARE FINANCIAL INFORMATION

     40  

TICKER SYMBOLS AND DIVIDEND INFORMATION

     41  

SUMMARY RISK FACTORS

     42  

RISK FACTORS

     44  

SPECIAL MEETING OF THE STOCKHOLDERS

     85  

THE BUSINESS COMBINATION PROPOSAL

     92  

THE ORGANIZATIONAL DOCUMENT PROPOSAL

     137  

THE ADVISORY CHARTER PROPOSALS

     140  

THE NYSE PROPOSAL

     146  

THE INCENTIVE PLANS PROPOSAL

     148  

THE ESPP PROPOSAL

     153  

THE DIRECTOR ELECTION PROPOSAL

     158  

THE ADJOURNMENT PROPOSAL

     159  

UNAUDITED PRO FORMA CONDENSED COMBINED FINANCIAL INFORMATION

     160  

INFORMATION ABOUT FOREST ROAD

     176  

MANAGEMENT’S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION AND RESULTS OF OPERATIONS OF FOREST ROAD

     190  

BUSINESS OF BEACHBODY

     195  

MANAGEMENT’S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION AND RESULTS OF OPERATIONS OF BEACHBODY

     208  

MANAGEMENT’S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION AND RESULTS OF OPERATIONS OF MYX

     231  

MANAGEMENT OF THE COMPANY FOLLOWING THE BUSINESS COMBINATION

     240  

EXECUTIVE COMPENSATION

     247  

CERTAIN RELATIONSHIPS AND RELATED PERSON TRANSACTIONS

     255  

BENEFICIAL OWNERSHIP OF SECURITIES

     259  

DESCRIPTION OF SECURITIES

     262  

CERTAIN UNITED STATES FEDERAL INCOME TAX CONSIDERATIONS
OF THE REDEMPTION

     281  

APPRAISAL RIGHTS

     286  

HOUSEHOLDING INFORMATION

     286  

TRANSFER AGENT AND REGISTRAR

     286  

SUBMISSION OF STOCKHOLDER PROPOSALS

     286  

FUTURE STOCKHOLDER PROPOSALS

     287  

WHERE YOU CAN FIND MORE INFORMATION

     287  

LEGAL MATTERS

     288  

EXPERTS

     288  

DELIVERY OF DOCUMENTS TO STOCKHOLDERS

     288  

 

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FREQUENTLY USED TERMS

Definitions

Unless otherwise stated or unless the context otherwise requires, the terms “we,” “us,” “our,” and “Forest Road” refer to Forest Road Acquisition Corp.

In this document:

2020 Plan” means The Beachbody Company Group, LLC 2020 Equity Compensation Plan. For additional information, see “Executive Compensation — Beachbody — Narrative to Summary Compensation Table —Equity Compensation” section of this proxy statement/prospectus.

2021 Plan” means The Beachbody Company, Inc. 2021 Incentive Award Plan, a copy of which is attached to this proxy statement/prospectus as Annex C. For additional information, see “The Incentive Plan Proposal” section of this proxy statement/prospectus.

Adjournment Proposal” means the proposal to be considered at the Special Meeting to adjourn the Special Meeting to a later date or dates, if necessary to permit further solicitation and vote of proxies if it is determined by Forest Road that more time is necessary or appropriate to approve one or more Proposals at the Special Meeting.

Business Combination” means the transactions contemplated by the Merger Agreement.

Business Combination Proposal” means the proposal to be considered at the Special Meeting to approve the Business Combination.

Bylaws” mean the proposed amended and restated bylaws of the Company to be in effect following the Business Combination, a form of which is attached hereto as Annex B-2.

Cantor” means Cantor Fitzgerald & Co., the representative of the underwriters in the IPO.

“Closing” means the closing of the Business Combination.

Code” means the Internal Revenue Code of 1986, as amended.

Company” refers to the combined company immediately following the Business Combination that shall be renamed “The Beachbody Company, Inc.” upon the Closing.

Company Board” means the board of directors of the Company subsequent to the completion of the Business Combination.

DGCL” means the Delaware General Corporation Law, as amended.

Director Election Proposal” means the proposal to elect                  directors, effective upon the Closing, to serve terms on our Board until the annual meeting of stockholders held in the year following the year of their election, or until such directors’ successors have been duly elected and qualified, or until such directors’ earlier death, resignation, retirement or removal.

DLLCA” means the Delaware Limited Liability Company Act, as amended.

DWAC” means The Depository Trust Company’s deposit/withdrawal at custodian system.

 

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ESPP” means The Beachbody Company, Inc. Employee Stock Purchase Plan, a copy of which is attached to this proxy statement/prospectus as Annex D. For additional information, see “The ESPP Proposal” section of this proxy statement/prospectus.

ESPP Proposal” means the proposal to approve and adopt the ESPP.

Exchange Act” means the U.S. Securities Exchange Act of 1934, as amended.

Founder Shares” means the shares of Class B Common Stock purchased by the Sponsor.

GAAP” means U.S. generally accepted accounting principles.

Incentive Plan Proposal” means the proposal to approve and adopt the 2021 Plan

IPO” means Forest Road’s initial public offering of its units, common stock and warrants pursuant to registration statements on Form S-1 declared effective by the SEC on November 30, 2020 (SEC File Nos. 333-249385 and 333-250943).

NYSE” means the New York Stock Exchange.

NYSE Proposal” means the proposal to approve the issuance of more than 20% of our issued and outstanding common stock pursuant to the Subscription Agreements in connection with the Business Combination.

PIPE Investors” means the subscribers that agreed to purchase Class A Common Stock at the Closing pursuant to the PIPE, including, without limitation, as reflected in the Subscription Agreements.

Proposed Charter” means the second amended and restated certificate of incorporation of the Company which, if approved, would take effect upon the Closing.

Merger” means (i) the merger of Beachbody Merger Sub with and into Beachbody, with Beachbody continuing as a wholly-owned subsidiary of the Company, (ii) the merger of Myx Merger Sub into Myx, with Myx continuing as a wholly-owned subsidiary of the Company, and (iii) the merger of the surviving entity from the merger described in the preceding clause (i) with and into the Company, with the Company surviving such merger.

Merger Agreement” means the Agreement and Plan of Merger, dated effective as of February 9, 2021 by and among Forest Road, the Merger Subs, Beachbody and Myx, as it may be amended and supplemented from time to time. A copy of the Merger Agreement is attached to this proxy statement/prospectus as Annex A-1.

Merger Subs” means BB Merger Sub, LLC, a Delaware limited liability company and direct, wholly-owned subsidiary of Forest Road, and MFH Merger Sub, LLC, a Delaware limited liability company and direct, wholly-owned subsidiary of Forest Road.

Public Stockholders” means the holders of Forest Road Class A common stock that were sold in the IPO (whether they were purchased in the IPO or thereafter in the open market).

Public Shares” means Forest Road’s Class A common stock sold in the IPO (whether they were purchased in the IPO or thereafter in the open market).

 

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Record Date” means             , 2021.

Redemption” means the redemption of Public Shares for the Redemption Price.

SEC” means the United States Securities and Exchange Commission.

Securities Act” means the Securities Act of 1933, as amended.

Sponsor” means Forest Road Acquisition Sponsor LLC, a Delaware limited liability company.

Subscription Agreements” means the Subscription Agreements, dated February 9, 2021, entered into between Forest Road and each of the PIPE Investors for the PIPE.

Transfer Agent” means Continental Stock Transfer & Trust Company.

 

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TRADEMARKS

This proxy statement includes the trademark of Beachbody and Myx such as “Beachbody®,” “Beachbody on Demand®,” “Openfit®,” “Shakeology®,” “P90X®,” “MYX®,” “MYX bike” and others, which are protected under applicable intellectual property laws and are the property of Beachbody 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 TM 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.

CAUTIONARY NOTE REGARDING FORWARD-LOOKING STATEMENTS

The statements contained in this proxy statement/prospectus that are not purely historical are forward-looking statements. Our forward-looking statements include, but are not limited to, statements regarding our or our management team’s expectations, hopes, beliefs, intentions or strategies regarding the future. The information included in this proxy statement/prospectus in relation to the Target Companies have been provided by the Target Companies and their respective management teams, and forward-looking statements include statements relating to the expectations of the Target Companies’ management team, 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,” “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 may include, for example, statements about:

 

   

Forest Road’s ability to complete the Business Combination, or, if we do not consummate the Business Combination, any other initial business combination;

 

   

the benefits of the Business Combination;

 

   

the future financial performance of the Company following the Business Combination;

 

   

expansion plans and opportunities; and

 

   

our potential ability to obtain financing to complete the Business Combination.

The forward-looking statements contained in this proxy statement/prospectus are based on our current expectations and beliefs concerning future developments and their potential effects on us. There can be no assurance that future developments affecting us will be those that we have anticipated. These forward-looking statements involve a number of risks, uncertainties (some of which are beyond our control) or other assumptions that may cause actual results or performance to be materially different from those expressed or implied by these forward-looking statements. These risks and uncertainties include, but are not limited to, the items in the following list, which summarizes some of the principal risks relating to the Business Combination and Forest Road’s and the Target Companies’ businesses:

 

   

satisfaction of conditions to the Business Combination;

 

   

the occurrence of any event, change or other circumstances that could give rise to the termination of the Merger Agreement;

 

   

the ability to obtain and/or maintain the listing of our Class A Common Stock on the NYSE following the Business Combination;

 

   

our ability to raise financing in the future;

 

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our success in retaining or recruiting, or changes required in, our officers, key employees or directors following the Business Combination;

 

   

our officers and directors allocating their time to other businesses and potentially having conflicts of interest with our business or in approving the Business Combination, as a result of which they would then receive expense reimbursements;

 

   

our public securities’ potential liquidity and trading;

 

   

the use of proceeds not held in the trust account or available to us from interest income on the trust account balance;

 

   

economic downturns and political and market conditions beyond the Target Companies’ control, including a reduction in consumer discretionary spending that could adversely affect the Target Companies’ business, financial condition, results of operations and prospects;

 

   

the Target Companies’ projections, including for revenues, market share, expenses and profitability, are subject to significant risks, assumptions, estimates and uncertainties;

 

   

the requirements of being a public company, including compliance with the SEC’s requirements regarding internal controls over financial reporting, may strain the Company’s resources and divert management’s attention, and the increases in legal, accounting and compliance expenses that will result from the Business Combination may be greater than anticipated;

 

   

factors relating to the business, operations and financial performance of Beachbody and Myx, including:

 

     

Beachbody’s and Myx’s ability to effectively compete in the fitness and nutrition industries;

 

     

Beachbody’s and Myx’s ability to successfully acquire and integrate new operations;

 

     

Beachbody’s and Myx’s reliance on a few key products;

 

     

market conditions and global and economic factors beyond Beachbody’s and Myx’s control;

 

     

intense competition and competitive pressures from other companies worldwide in the industries in which the combined company will operate; and

 

     

litigation and the ability to adequately protect Beachbody’s and Myx’s intellectual property rights; and

 

   

other factors detailed under the section entitled “Risk Factors” herein.

Should one or more of these risks or uncertainties materialize, or should any of our assumptions prove incorrect, actual results may vary in material respects from those projected in these forward-looking statements. We undertake no obligation to update or revise any forward-looking statements, whether as a result of new information, future events or otherwise, except as may be required under applicable securities laws. Before a stockholder grants its proxy or instructs how its votes should be cast or vote on the proposals set forth in this proxy statement/prospectus, it should be aware that the occurrence of the events described in the “Risk Factors” section and elsewhere in this proxy statement may adversely affect Forest Road or the Target Companies.

 

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QUESTIONS AND ANSWERS ABOUT THE PROPOSALS

The following questions and answers briefly address some commonly asked questions about the proposals to be presented at the Special Meeting, including the Business Combination. The following questions and answers do not include all the information that is important to our stockholders. We urge our stockholders to read carefully this entire proxy statement/prospectus, including the annexes and other documents referred to herein.

 

Q:

Why am I receiving this proxy statement?

 

A:

Forest Road is proposing to consummate a business combination with the Target Companies. Forest Road, Beachbody Merger Sub, Myx Merger Sub, Beachbody and Myx have entered into the Merger Agreement, the terms of which are described in this proxy statement/prospectus. You are being asked to consider and vote on the Business Combination. The Merger Agreement, among other things, provides for (i) the merger of Beachbody Merger Sub with and into Beachbody, with Beachbody continuing as a wholly-owned subsidiary of the Company, (ii) the merger of Myx Merger Sub with and into Myx, with Myx continuing as a wholly-owned subsidiary of the Company, and (iii) the merger of the surviving entity from the merger described in the preceding clause (i) with and into the Company, with the Company surviving such merger.

Approval of the Business Combination Proposal requires the approval of holders of at least a majority of the shares of Class A Common Stock and Class B Common Stock that are voted in person (which would include presence at the virtual Special Meeting) or by proxy at the Special Meeting.

YOUR VOTE IS IMPORTANT. STOCKHOLDERS ARE URGED TO SUBMIT THEIR PROXIES AS SOON AS POSSIBLE AFTER CAREFULLY REVIEWING THIS PROXY STATEMENT/PROSPECTUS.

 

Q:

Why is Forest Road proposing the Business Combination?

 

A:

Forest Road was organized to effect a merger, capital stock exchange, asset acquisition or other similar business combination with one or more businesses or entities. See “The Business Combination Proposal — Interests of Certain Persons in the Business Combination.”

 

Q:

What will the Target Companies’ equity holders receive in return for the acquisition of the Target Companies by Forest Road?

 

A:

Pursuant to the Merger Agreement, the aggregate consideration payable or issuable by Forest Road in exchange for the outstanding equity interests of Beachbody and Myx is comprised of: the right to receive, in the aggregate, a number of shares of common shares (or, in the case of outstanding Beachbody options and warrants, options and warrants, as applicable, to purchase shares of common shares) in the Company that is approximately equal to the quotient obtained by dividing (x) $2,900,000,000 by (y) $10.00, provided, however, that (1) certain Beachbody equityholders will receive common stock in the Company with similar rights as those being issued to all other recipients of merger consideration, except that such common stock will carry 10 votes per share; (2) certain Myx equityholders will be entitled to receive, in lieu of their pro rata portion (based on their percentage ownership interests in Myx) of such shares, an amount in cash equal to the value of such shares, up to an aggregate amount of cash among all such equityholders not to exceed the result of $37.7 million minus certain payments to be made by Forest Road on behalf of Myx as set forth in the Merger Agreement; and (3) the foregoing consideration is subject to adjustment (x) in the case of the Beachbody equity interests, based on the transaction expenses of Beachbody and Forest Road, and (y) in the case of each of the Beachbody equity interests and the Myx equity interests, based on the Closing Date and the related number of Myx units issuable to Beachbody, LLC, a Delaware limited liability company and wholly-owned subsidiary of Beachbody, upon conversion of instruments between Myx and BB, dated December 7, 2020, as amended by the first amendment thereto, dated as of February 9, 2021 and March 4,

 

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  2021, pursuant to which BB funded Myx an aggregate of $15 million subject to certain terms and conditions, including (but not limited to) the right to convert, upon certain conditions, certain of Beachbody, LLC’s rights under such instruments into equity interests of Myx.

 

Q:

Will Forest Road obtain new financing in connection with the Business Combination?

 

A:

Yes. In connection with the execution of the Merger Agreement, Forest Road and certain investors entered into Subscription Agreements pursuant to which such investors have agreed to purchase as of immediately prior to the Closing an aggregate of 22,500,000 shares of Class A Common Stock, par value $0.0001 per share, of the Company (the “Class A Common Stock”) for a purchase price of $10.00 per share, for an aggregate purchase price of $225,000,000 (together, the “PIPE”). The obligations of each party to consummate the PIPE are conditioned upon, among other things, customary closing conditions and the consummation of the transactions contemplated by the Merger Agreement.

 

Q:

What are the principal differences between Class A Common Stock and the Class X Common Stock that is proposed to be issued to certain persons in the Business Combination?

 

A:

The Class X Common Stock carries substantially similar rights as the Class A Common Stock, except that each share of Class X Common Stock carries 10 votes.

 

Q:

What voting interests will our current stockholders, the Sponsor, the PIPE Investors and the holders of equity interests in Beachbody and Myx that are receiving shares in the Company as consideration in the Business Combination (collectively, the “Target Company Equityholders”) hold in the Company immediately after the consummation of the Business Combination?

 

A:

We anticipate that, upon completion of the Business Combination, the voting interests in the Company will be as set forth in the table below.*

 

     Assuming No
Redemptions
of Public
Shares(1)
    Assuming Maximum
Redemptions
of Public
Shares(2)
 

Forest Road’s Public Stockholders

                  

Forest Road’s Sponsor

                  

PIPE Investors

                  

Target Company Equityholders

                  

 

(1)

Assumes that (i) none of the holders of public shares of Class A Common Stock exercise their redemption rights, (ii) there is no exercise at the Closing of the Sponsor’s 5,333,333 private placement warrants at an exercise price of $11.50 per share (which warrants are not exercisable until the later of 12 months from the closing of the IPO and 30 days after the completion of the Business Combination), (iii) none of the parties set forth above purchase shares of Class A Common Stock in the open market, (iv) there are no other issuances of equity interests of the Company prior to or in connection with the Closing (v) there is no exercise of the Beachbody warrants, (vi) there are no additional issuance of equity interests under the 2020 Plan, and (vii) there are no issuances of any shares of the Company’s Class A Common Stock following the Closing under the 2021 Plan.

 

(2)

Assumes that holders of 17,500,000 shares of Class A Common Stock exercise their redemption rights (representing the maximum amount of public shares that can be redeemed to satisfy the Minimum Cash Condition).

*Upon completion of the Business Combination, Forest Road’s public stockholders, the Sponsor, certain of the Target Company Equityholders and the PIPE Investors will hold shares of Class A Common Stock and Carl Daikeler and certain of his affiliated entities will hold shares of Class X Common Stock.

 

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If the actual facts are different than the assumptions set forth above, the voting percentages set forth above will be different.

Following the Closing, Carl Daikeler and certain of his affiliated entities (collectively, the “Controlling Holders”), will own a majority of the Company’s outstanding Class X Common Stock, which stock carries 10 votes per share, and, therefore, will control a majority of the voting power of the Company’s outstanding common stock. As a result, the Company will be a “controlled company” within the meaning of the corporate governance standards of the New York Stock Exchange, which status permits the Company to elect not to comply with certain corporate governance requirements as further described herein.

 

Q:

What interests do our initial stockholders, current officers, directors and advisors, and the Target Companies’ current owners have in the Business Combination?

 

A:

In considering the recommendation of our Board to vote in favor of the Business Combination, stockholders should be aware that, aside from their interests as stockholders, our Sponsor and our directors and officers and the Target Companies’ current owners have interests in the Business Combination that are different from, or in addition to, those of our other stockholders generally. Our directors were aware of and considered these interests, among other matters, in evaluating the Business Combination, and in recommending to our stockholders that they approve the Business Combination. Stockholders should take these interests into account in deciding whether to approve the Business Combination. These interests include, among other things:

 

   

the fact that our Sponsor has waived its right to redeem any of the founder shares and public shares in connection with a stockholder vote to approve a proposed initial business combination;

 

   

the fact that our Sponsor paid an aggregate of $25,000 for the founder shares, which will convert into 7,500,000 shares of Class A Common Stock in accordance with the terms of the Existing Charter and such securities will have a significantly higher value at the time of the Business Combination, estimated at approximately $         based on the closing price of $         per public share on the NYSE on                 , 2021;

 

   

the fact that our Sponsor has agreed to waive its rights to liquidating distributions from the trust account with respect to the founder shares if we fail to complete an initial business combination by November 30, 2022;

 

   

the fact that our Sponsor paid approximately $8,000,000 for 5,333,333 private placement warrants, each of such private placement warrants is exercisable commencing on the later of 12 months from the closing of the IPO and 30 days following the Closing for one share of Class A Common Stock at $11.50 per share; if we do not consummate an initial business combination by November 30, 2022, then the proceeds from the sale of the private placement warrants will be part of the liquidating distribution to the public stockholders and the warrants held by our Sponsor will be worthless; the warrants held by our Sponsor had an aggregate market value of approximately $             based upon the closing price of $             per warrant on the NYSE on                 , 2021;

 

   

if the trust account is liquidated, including in the event we are unable to complete an initial business combination within the required time period, our Sponsor has agreed that it will be liable to us if and to the extent any claims by a third-party for services rendered or products sold to us, or a prospective target business with which we have entered into a written letter of intent, confidentiality or other similar agreement or business combination agreement, reduce the amount of funds in the trust account to below: (i) $10.00 per public share; or (ii) 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 the interest which may be withdrawn to pay taxes and up to $100,000 of interest to pay dissolution expenses, 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 underwriters of the IPO against certain liabilities, including liabilities under the Securities Act;

 

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Kevin Mayer, a current director of Forest Road, is expected to be a director of the Company after the consummation of the Business Combination. As such, in the future he will receive any cash fees, stock options, stock awards or other remuneration that the Company’s board of directors determines to pay to him and any applicable compensation as described under section “Execution Compensation - Director Compensation”;

 

   

the fact that Cantor Fitzgerald & Company Co. (“Cantor”) and Guggenheim Securities, LLC (“Guggenheim Securities”), Forest Road’s PIPE placement agent and financial advisor, respectively, and underwriters in the IPO, will be entitled to receive a deferred underwriting commission and a placement agency and financial advisory fees, as applicable, upon completion of the Business Combination.

 

   

the fact that Raine who, with its affiliates, will beneficially own at least 12.5% of the Company upon completion of the Business Combination, will be entitled to receive an advisory fee of $10 million in connection with Raine’s engagement with Beachbody as its financial advisor; and

 

   

John Salter, a current director of Beachbody and co-founder and partner of Raine, Michael Heller and Ben Van de Bunt, current directors of Beachbody, and Mary Conlin are each expected to be directors of the Company after the consummation of the Business Combination. As such, in the future each of Messrs. Salter, Heller and Van de Bunt and Ms. Conlin will receive any cash fees, stock options, stock awards or other remuneration that the Company’s board of directors determines to pay them and any applicable compensation as described under section “Executive Compensation — Director Compensation.”

Please also see the sections “Certain Relationships and Related Person Transactions “Execution Compensation - Director Compensation” and “Beneficial Ownership of Securities” for more information on the interests and relationships of our Sponsor, current officers and directors, and the Target Companies’ current owners.

 

Q:

What happens to the funds deposited in the trust account after consummation of the Business Combination?

 

A:

Upon the completion of the IPO, a total of $300,000,000 was placed in a trust account maintained by Continental Stock Transfer & Trust Company, acting as trustee. As of              , 2021, there were investments and cash held in the trust account of approximately $             . These funds will not be released until the earlier of the completion of our initial business combination and the redemption of our public shares if we are unable to complete an initial business combination by November 30, 2022, although we may withdraw the interest earned on the funds held in the trust account to pay taxes.

 

Q:

What happens if a substantial number of the public stockholders vote in favor of the Business Combination proposal and exercise their redemption rights?

 

A:

Forest Road’s public stockholders may vote in favor of the Business Combination and exercise their redemption rights. Accordingly, the Business Combination may be consummated even though the funds available from the trust account and the number of public stockholders are reduced as a result of redemptions by public stockholders. However, the consummation of the Business Combination is conditioned upon, among other things, approval by Forest Road’s stockholders of the Merger Agreement and the Business Combination. In addition, with fewer public shares and public stockholders, the trading market for Class A Common Stock may be less liquid than the market for shares of Class A Common Stock was prior to consummation of the Business Combination and the Company may not be able to meet the listing standards for the NYSE or another national securities exchange. In addition, with less funds available from the trust account, the working capital infusion from the trust account into the Company’s business will be reduced.

 

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Q:

What conditions must be satisfied to complete the Business Combination?

 

A:

Unless waived by the parties to the Merger Agreement, and subject to applicable law, the consummation of the Business Combination is subject to a number of conditions set forth in the Merger Agreement including, among other things, (i) approval of the Business Combination and related agreements and transactions by certain respective equityholders of Forest Road, Beachbody and Myx, (ii) effectiveness of this proxy statement/prospectus and this registration statement, (iii) expiration or termination of the waiting period under the Hart-Scott-Rodino Antitrust Improvements Act (the “HSR Act”), (iv) receipt of approval for listing on the NYSE the shares of common stock of the Company to be issued in connection with the Mergers, and (v) the absence of any injunctions. In addition, unless waived pursuant to the terms thereof by the parties so entitled to waive, and subject to applicable law, if any of these conditions are not satisfied, the Business Combination may not be consummated. Furthermore, in no event will we redeem our public shares in an amount that would cause our net tangible assets to be less than $5,000,001.

 

Q:

What happens if the Business Combination is not consummated?

 

A:

If we are not able to complete the Business Combination or another initial business combination by November 30, 2022, we will cease all operations except for the purpose of winding up and redeeming our public shares and liquidating the trust account, in which case our public stockholders may only receive approximately $10.00 per share and our warrants will expire worthless. In addition, the underwriters of the IPO, including Cantor and Guggenheim Securities, agreed to waive their rights to their deferred underwriting commission held in the trust account in the event we do not complete our initial business combination within the required time period.

 

Q:

When do you expect the Business Combination to be completed?

 

A:

It is currently anticipated that the Business Combination will be consummated as soon as practicable following the Special Meeting, which is set for                 ; however, (i) such meeting could be adjourned if the Adjournment Proposal is adopted by our stockholders at the Special Meeting and we elect to adjourn the Special Meeting to a later date or dates to permit further solicitation and vote of proxies if, based upon the tabulated vote at the time of the Special Meeting, any of the Condition Precedent Proposals has not been approved, and (ii) the Closing will not occur until all conditions set forth in the Merger Agreement are satisfied or waived. For a description of the conditions for the completion of the Business Combination, see “The Business Combination Proposal — The Business Combination Agreement — Conditions to the Closing of the Business Combination.”

 

Q:

What proposals are stockholders being asked to vote upon?

 

A:

Under the Merger Agreement, the approval of the Condition Precedent Proposals is a condition to the consummation of the Business Combination. If our public stockholders do not approve each of the Condition Precedent Proposals, then the Business Combination may not be consummated.

In addition, as required by applicable SEC guidance to give stockholders the opportunity to present their separate views on important corporate governance provisions, the Company is requesting that our stockholders vote upon, on a non-binding advisory basis, a proposal to approve certain amendments contained in the Proposed Charter that materially affect stockholder rights, which are amendments that will be made to the Existing Charter as reflected in the Proposed Charter if the Organizational Document Proposal is approved. See “The Organizational Document Proposal.” This separate vote is not otherwise required by Delaware law separate and apart from the Organizational Document Proposal, but pursuant to SEC guidance, the Company is required to submit these provisions to our stockholders separately for approval. However, the stockholder vote regarding these proposals are advisory votes, and are not binding on the Company or our Board (separate and apart from the approval of the Organizational Document

 

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Proposal). Furthermore, the Business Combination is not conditioned on the separate approval of the Advisory Charter Proposals (separate and apart from approval of the Organizational Document Proposal).

In addition to the foregoing proposals, the stockholders also may be asked to consider and vote upon a proposal to adjourn the Special Meeting to a later date or dates to permit further solicitation and vote of proxies if (1) based upon the tabulated vote at the time of the Special Meeting, each of the Condition Precedent Proposals has not been approved and/or (2) Forest Road determines that one or more of the closing conditions under the Business Combination Agreement has not been satisfied. See “The Adjournment Proposal.”

Forest Road will hold the Special Meeting of our stockholders to consider and vote upon these proposals. This proxy statement/prospectus contains important information about the Business Combination and the other matters to be acted upon at the Special Meeting. Stockholders should read it carefully.

After careful consideration, the Board has unanimously approved the Merger Agreement and the transactions contemplated thereby and determined that the Business Combination Proposal, the Organizational Document Proposal, each of the Advisory Charter Proposals, the NYSE Proposal, the Incentive Plan Proposal, the ESPP Proposal, the Director Election Proposal and the Adjournment Proposal is in the best interests of Forest Road and its stockholders and unanimously recommends that you vote “FOR” or give instruction to vote “FOR” each of these proposals.

The existence of financial and personal interests of our directors and officers may result in conflicts of interest, including a conflict between what may be in the best interests of the Company and its stockholders and what may be best for a director’s personal interests when determining to recommend that stockholders vote for the proposals. See the sections entitled “The Business Combination Proposal — Interests of Certain Persons in the Business Combination” and “Beneficial Ownership of Securities in the accompanying proxy statement for a further discussion.

THE VOTE OF STOCKHOLDERS IS IMPORTANT. STOCKHOLDERS ARE URGED TO SUBMIT THEIR PROXIES AS SOON AS POSSIBLE AFTER CAREFULLY REVIEWING THIS PROXY STATEMENT/PROSPECTUS.

 

Q:

Do I have redemption rights?

 

A:

If you are a holder of public shares, you have the right to request that Forest Road redeem all or a portion of your public shares for cash provided that you follow the procedures and deadlines described elsewhere in this proxy statement/prospectus. Public stockholders may elect to redeem all or a portion of such public stockholder’s public shares even if they vote for the Business Combination Proposal. We sometimes refer to these rights to elect to redeem all or a portion of the public shares into a pro rata portion of the cash held in the trust account as “redemption rights.” If you wish to exercise your redemption rights, please see the answer to the next question, “How do I exercise my redemption rights?

Notwithstanding the foregoing, a holder of public shares, together with any affiliate of such public stockholder or any other person with whom such public stockholder is acting in concert or as a “group” (as defined in Section 13 of the Exchange Act), will be restricted from redeeming its public shares with respect to more than an aggregate of 15% of the public shares, without our prior consent. Accordingly, if a public stockholder, alone or acting in concert or as a group, seeks to redeem more than 20% of the public shares, then any such shares in excess of that 15% limit would not be redeemed for cash, without our prior consent.

Our initial stockholders entered into a letter agreement, pursuant to which they have agreed to waive their redemption rights with respect to their founder shares and public shares in connection with the completion of a business combination.

 

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The consummation of the Business Combination is conditioned upon, among other things, approval by Forest Road’s stockholders of the Merger Agreement and the Business Combination. Unless waived, if any of these conditions are not satisfied, the Business Combination may not be consummated. Furthermore, in no event will we redeem our public shares in an amount that would cause our net tangible assets to be less than $5,000,001. See “The Business Combination Proposal — The Merger Agreement.”

 

Q:

How do I exercise my redemption rights?

 

A:

If you are a holder of public shares and wish to exercise your right to redeem your public shares, you must:

 

  (a)

hold public shares or (b) hold public shares through units and elect to separate your units into the underlying public shares and public warrants prior to exercising your redemption rights with respect to the public shares; and

 

  (b)

prior to              , Eastern Time, on                 , 2021 (two business days prior to the vote at the special meeting) (a) submit a written request to the transfer agent that the Company redeem your public shares for cash and (b) deliver your public shares to the transfer agent, physically or electronically through DTC.

The address of the transfer agent is listed under the question “Who can help answer my questions?” below.

Holders of units must elect to separate the underlying public shares and public warrants prior to exercising redemption rights with respect to the public shares. If holders hold their units in an account at a brokerage firm or bank, holders must notify their broker or bank that they elect to separate the units into the underlying public shares and public warrants, or if a holder holds units registered in its own name, the holder must contact the transfer agent directly and instruct it to do so.

Any holder of public shares will be entitled to request that their public shares be redeemed for a per share price, payable in cash, equal to the aggregate amount then on deposit in the trust account calculated as of two business days prior to the consummation of the Business Combination, including interest earned on the funds held in the trust account (net of taxes payable), divided by the number of then-outstanding public shares. As of                 , 2021, this would have amounted to approximately $                 per public share. However, the proceeds deposited in the trust account could become subject to the claims of our creditors, if any, which could have priority over the claims of our public stockholders, regardless of whether such public stockholders vote for or against the Business Combination Proposal. Therefore, the per share distribution from the trust account in such a situation may be less than originally anticipated due to such claims. Your vote on any proposal other than the Business Combination Proposal will have no impact on the amount you will receive upon exercise of your redemption rights. We anticipate that the funds to be distributed to public stockholders electing to redeem their public shares will be distributed promptly after the consummation of the Business Combination.

If you are a holder of public shares, you may exercise your redemption rights by submitting your request in writing to the transfer agent at the address listed at the end of this section.

Any request for redemption, once made by a holder of public shares, may be withdrawn at any time until the deadline for exercising redemption requests and thereafter, with our consent, until the Closing. If you deliver your shares for redemption to the transfer agent and later decide prior to Closing not to elect redemption, you may request that Forest Road instruct our transfer agent to return the shares (physically or electronically). You may make such request by contacting the transfer agent at the phone number or address listed at the end of this section. We will be required to honor such request only if made prior to the deadline for exercising redemption requests.

 

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Any corrected or changed written exercise of redemption rights must be received by the transfer agent prior to the deadline for exercising redemption requests and, thereafter, with our consent, prior to Closing. No request for redemption will be honored unless the holder’s stock has been delivered (either physically or electronically) to the transfer agent by              , Eastern Time, on                 , 2021.

If a holder of public shares properly makes a request for redemption and the public shares are delivered as described above, then, if the Business Combination is consummated, the Company will redeem public shares for a pro rata portion of funds deposited in the trust account, calculated as of two business days prior to the consummation of the Business Combination. If you are a holder of public shares and you exercise your redemption rights, it will not result in the loss of any Forest Road warrants that you may hold

 

Q:

Will how I vote on the Business Combination proposal affect my ability to exercise redemption rights?

 

A:

No. You may exercise your redemption rights irrespective of whether you vote your Class A Common Stock for or against the Business Combination Proposal or any other proposal described by this proxy statement/prospectus. As a result, the Merger Agreement can be approved by stockholders who will redeem their public shares and no longer remain stockholders, leaving stockholders who choose not to redeem their 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 the NYSE.

 

Q:

If I am a holder of units, can I exercise redemption rights with respect to my units?

 

A:

No. Holders of outstanding units must elect to separate the units into the underlying public shares and public warrants prior to exercising redemption rights with respect to the public shares. If you hold your units in an account at a brokerage firm or bank, you must notify your broker or bank that you elect to separate the units into the underlying public shares and public warrants, or if you hold units registered in your own name, you must contact the transfer agent directly and instruct them to do so. If you fail to cause your public shares to be separated and delivered to the transfer agent by              , Eastern Time, on                 , 2021, you will not be able to exercise your redemption rights with respect to your public shares.

 

Q:

What are United States federal income tax considerations relating to the exercise of my redemption rights?

 

A:

Whether the redemption is subject to United States federal income tax depends on the particular facts and circumstances. Please see the section entitled “The Business Combination Proposal — Certain United States Federal Income Tax Considerations of the Redemption. We urge you to consult your tax advisors regarding the tax consequences of exercising your redemption rights.

 

Q:

Do I have appraisal rights in connection with the proposed Business Combination?

 

A:

No. Neither our stockholders nor our warrant holders have appraisal rights in connection with the Business Combination under the DGCL.

 

Q:

What do I need to do now?

 

A:

Forest Road urges you to read carefully and consider the information contained in this proxy statement/prospectus, including the annexes, and to consider how the Business Combination will affect you as a stockholder and/or warrant holder of Forest Road Stockholders should then vote as soon as possible in accordance with the instructions provided in this proxy statement/prospectus and on the enclosed proxy card.

 

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Q:

How do I vote?

 

A:

The Special Meeting will be held via live webcast at 10:00 a.m., Eastern Time, on                 , 2021, at                 . The Special Meeting can be accessed by visiting                 , where you will be able to listen to the meeting live and vote during the meeting. Please note that you will only be able to access the Special Meeting by means of remote communication.

If you are a holder of record of shares of Forest Road common stock on the record date, you may vote at the Special Meeting or by submitting a proxy for the Special Meeting. You may submit your proxy by completing, signing, dating and returning the enclosed proxy card in the accompanying pre-addressed postage paid envelope. If you hold your shares in “street name,” which means your shares are held of record by a broker, bank or nominee, you should contact your broker to ensure that votes related to the shares you beneficially own are properly counted. In this regard, you must provide the broker, bank or nominee with instructions on how to vote your shares or, if you wish to attend the Special Meeting and vote, obtain a proxy from your broker, bank or nominee

 

Q:

If my shares are held in “street name,” will my broker, bank or nominee automatically vote my shares for me?

 

A:

No. If your shares are held in a stock brokerage account or by a bank or other nominee, you are considered the “beneficial holder” of the shares held for you in what is known as “street name.” If this is the case, this proxy statement may have been forwarded to you by your brokerage firm, bank or other nominee, or its agent.

As the beneficial holder, you have the right to direct your broker, bank or other nominee as to how to vote your shares. If you do not provide voting instructions to your broker on a particular proposal on which your broker does not have discretionary authority to vote, your shares will not be voted on that proposal. This is called a “broker non-vote.” Broker non-votes will not be counted for the purposes of determining the existence of a quorum. Moreover, broker non-votes will have no effect on any of the proposals in this proxy statement, except that broker non-votes will have the same effect as a vote “AGAINST” the Organizational Document Proposal.

For the proposals in this proxy statement/prospectus, your broker will not have the discretionary authority to vote your shares. Accordingly, your bank, broker, or other nominee can vote your shares at the Special Meeting only if you provide instructions on how to vote. You should instruct your broker to vote your shares as soon as possible in accordance with directions you provide.

 

Q:

When and where will the Special Meeting be held?

 

A:

The Special Meeting will be held via live webcast at 10:00 am, Eastern Time, on                 , 2021, at                 , unless the Special Meeting is adjourned. The Special Meeting can be accessed by visiting                 , where you will be able to listen to the Special Meeting live and vote during the Special Meeting. Please note that you will only be able to access the Special Meeting by means of remote communication.

 

Q:

Who is entitled to vote at the Special Meeting?

 

A:

Forest Road has fixed                 , 2021 as the record date. If you were a stockholder of Forest Road at the close of business on the record date, you are entitled to vote on matters that come before the Special Meeting. However, a stockholder may only vote his or her shares if he or she is present in person (which would include presence at the virtual Special Meeting) or is represented by proxy at the Special Meeting.

 

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Q:

How many votes do I have?

 

A:

Our stockholders are entitled to one vote at the Special Meeting for each share of common stock held of record as of the record date. As of the close of business on the record date, there were outstanding 37,500,000 shares of Forest Road common stock, of which 30,000,000 were outstanding public shares.

 

Q:

What constitutes a quorum?

 

A:

A quorum of our stockholders is necessary to hold a valid meeting. The presence (which would include presence at the virtual Special Meeting), in person or by proxy, of stockholders holding a majority of the shares of common stock entitled to vote at the Special Meeting constitutes a quorum at the Special Meeting. In the absence of a quorum, the chairperson of the Special Meeting has the power to adjourn the Special Meeting. As of the record date for the Special Meeting, 18,750,001 shares of Forest Road common stock would be required to achieve a quorum.

 

Q:

What vote is required to approve each proposal at the Special Meeting?

 

A:

The following votes are required for each proposal at the Special Meeting:

 

   

Business Combination Proposal: The approval of the Business Combination Proposal requires the affirmative vote of a majority of the votes cast by holders of Class A Common Stock and Class B Common Stock present in person or represented by proxy and entitled to vote at the Special Meeting, voting together as a single class.

 

   

Organizational Document Proposal: The approval of the Organizational Document Proposal requires the affirmative vote of holders of a majority of the outstanding shares of Class A Common Stock and Class B Common Stock entitled to vote thereon at the Special Meeting, voting as a single class.

 

   

Advisory Charter Proposals: 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 Class A Common Stock and Class B Common Stock present in person or represented by proxy and entitled to vote at the Special Meeting, voting as a single class.

 

   

NYSE Proposal: The approval of the NYSE Proposal requires the affirmative vote of a majority of the votes cast by holders of Class A Common Stock and Class B Common Stock present in person or represented by proxy and entitled to vote at the special meeting, voting as a single class.

 

   

Director Election Proposal: The election of the director nominees pursuant to the director election proposal requires a plurality of the votes cast by holders of Class A Common Stock and Class B Common Stock present in person or represented by proxy and entitled to vote at the Special Meeting, voting as a single class.

 

   

Incentive Plan Proposal: The approval of the Incentive Plan Proposal requires the affirmative vote of a majority of the votes cast by holders of Class A Common Stock and Class B Common Stock present in person or represented by proxy and entitled to vote at the Special Meeting, voting as a single class.

 

   

The ESPP Proposal: The approval of the ESPP Proposal requires the affirmative vote of a majority of the votes cast by holders of Class A Common Stock and Class B Common Stock present in person or represented by proxy and entitled to vote at the Special Meeting, voting as a single class.

 

   

Adjournment Proposal: The approval of the Adjournment Proposal requires the affirmative vote of a majority of the votes cast by holders of Class A Common Stock and Class B Common Stock present in person or represented by proxy and entitled to vote at the Special Meeting, voting as a single class.

 

Q:

What are the recommendations of the Board?

 

A:

The Board believes that the Business Combination Proposal and the other proposals to be presented at the Special Meeting are in the best interest of Forest Road’s stockholders and unanimously recommends that

 

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  our stockholders vote “FOR” the Business Combination Proposal, “FOR” the Organizational Document Proposal, “FOR” each of the separate Advisory Charter Proposals, “FOR” the NYSE Proposal, “FOR” the Incentive Plan Proposal, “FOR” the ESPP Proposal, “FOR” each of the director nominees set forth in the Director Election Proposal, and “FOR” the Adjournment Proposal, in each case, if presented to the Special Meeting.

The existence of financial and personal interests of Forest Road’s directors and officers may result in conflicts of interest, including a conflict between what may be in the best interests of the Company and its stockholders and what may be best for a director’s personal interests when determining to recommend that stockholders vote for the proposals. These conflicts of interest include, among other things, that if we do not consummate an initial business combination by November 30, 2022, we may be forced to liquidate, and the 7,500,000 founder shares, 5,333,333 private placement warrants owned by our Sponsor, of which our directors and officers are members, would be worthless. See the sections entitled “The Business Combination Proposal — Interests of Certain Persons in the Business Combination” and “Beneficial Ownership of Securities” for more information.

 

Q:

How do our Sponsor and the other initial stockholders intend to vote their shares?

 

A:

Pursuant to the terms of the letter agreement entered into at the time of the IPO, our initial stockholders agreed to vote their founder shares and any public shares purchased by them, in favor of the Business Combination Proposal. As of the date of this proxy statement/prospectus, our initial stockholders own an aggregate of 7,500,000 shares of Forest Road common stock, which in the aggregate represent 20% of our total outstanding shares on the date of this proxy statement/prospectus.

 

Q:

May our Sponsor and the other initial stockholders purchase public shares or warrants prior to the Special Meeting?

 

A:

At any time prior to the Special Meeting, during a period when they are not then aware of any material non-public information regarding Forest Road or our securities, our initial stockholders, the Target Companies and/or their respective affiliates may purchase shares and/or warrants from investors, or they may enter into transactions with such investors and others to provide them with incentives to acquire shares of Forest Road common stock or vote their shares in favor of the Business Combination Proposal. The purpose of such share purchases and other transactions would be to increase the likelihood that the proposals presented to stockholders for approval at the Special Meeting are approved or to provide additional equity financing. Any such share purchases and other transactions may thereby increase the likelihood of obtaining stockholder approval of the Business Combination. This may result in the completion of our Business Combination that may not otherwise have been possible. While the exact nature of any such incentives has not been determined as of the date of this proxy statement/prospectus, they might include, without limitation, arrangements to protect such investors or holders against potential loss in value of their shares, including the granting of put options.

Entering into any such incentive arrangements may have a depressive effect on shares of Forest Road common stock. For example, as a result of these arrangements, an investor or holder may have the ability to effectively purchase shares at a price lower than market and may therefore be more likely to sell the shares he owns, either prior to or immediately after the Special Meeting.

If such transactions are effected, the consequence could be to cause the Business Combination to be approved in circumstances where such approval could not otherwise be obtained. Purchases of shares by the persons described above would allow them to exert more influence over the approval of the proposals to be presented at the Special Meeting and would likely increase the chances that such proposals would be approved. As of the date of this proxy statement/prospectus, there have been no such discussions and no agreements to such effect have been entered into with any such investor or holder. Forest Road will file a

 

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Current Report on Form 8-K to disclose any arrangements entered into or significant purchases made by any of the aforementioned persons that would affect the vote on the proposals to be voted on at the Special Meeting. Any such report will include descriptions of any arrangements entered into or significant purchases by any of the aforementioned persons.

 

Q:

What happens if I sell my shares of Forest Road common stock before the Special Meeting?

 

A:

The record date for the Special Meeting is earlier than the date of the Special Meeting and earlier than the date that the Business Combination is expected to be completed. If you transfer your shares of Forest Road common stock after the applicable record date, but before the Special Meeting, unless you grant a proxy to the transferee, you will retain your right to vote at the Special Meeting with respect to such shares, but the transferee, and not you, will have the ability to redeem such shares (if time permits).

 

Q:

How has the announcement of the Business Combination affected the trading price of the Company’s Class A Common Stock, warrants and units?

 

A:

On February 9, 2021, the last trading date before the public announcement of the Business Combination, the Company’s Class A Common Stock, warrants and units closed at $10.76, $2.71 and $11.63, respectively. On February 12, 2021, the trading date immediately prior to the date of this proxy statement/prospectus, the Company’s Class A Common Stock, warrants and units closed at $11.48, $2.20 and $12.06, respectively.

 

Q:

May I change my vote after I have mailed my signed proxy card?

 

A:

Yes. Stockholders may send a later-dated, signed proxy card to Forest Road’s Secretary at the address set forth below so that it is received by Forest Road’s secretary prior to the vote at the Special Meeting (which is scheduled to take place                 , 2021) or attend the Special Meeting in person (which would include presence at the virtual Special Meeting) and vote. Stockholders also may revoke their proxy by sending a notice of revocation to Forest Road’s Chief Executive Officer, which must be received by Forest Road’s Secretary prior to the vote at the Special Meeting. However, if your shares are held in “street name” by your broker, bank or another nominee, you must contact your broker, bank or other nominee to change your vote.

 

Q:

What happens if I fail to take any action with respect to the Special Meeting?

 

A:

If you fail to take any action with respect to the Special Meeting and the Business Combination is approved by stockholders and consummated, you will become a stockholder and/or warrant holder of the Company. If you fail to take any action with respect to the Special Meeting and the Business Combination is not approved, you will remain a stockholder and/or warrant holder of Forest Road. However, if you fail to take any action with respect to the Special Meeting, you will nonetheless be able to elect to redeem your public shares in connection with the Business Combination, provided you follow the instructions in this proxy statement for redeeming your shares.

 

Q:

What should I do with my stock certificates, warrant certificates and/or unit certificates?

 

A:

Stockholders who exercise their redemption rights must deliver their stock certificates to the transfer agent (either physically or electronically) prior to                  a.m., Eastern Time, on                 , 2021 (two business days prior to the vote at the Special Meeting).

Forest Road warrant holders should not submit the certificates relating to their warrants. Public stockholders who do not elect to have their public shares redeemed for the pro rata share of the trust account should not submit the certificates relating to their public shares.

Upon effectiveness of the Business Combination, holders of Forest Road common stock and warrants will receive Class A Common Stock and warrants of the Company without needing to take any action and

 

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accordingly such holders should not submit the certificates relating to their common stock and warrants. In addition, before the Closing, each outstanding unit of Forest Road (each of which consists of one share of Class A Common Stock and one-third of one warrant to purchase one share of Class A Common Stock) will be separated into its component share of Class A Common Stock and warrant.

 

Q:

What should I do if I receive more than one set of voting materials?

 

A:

Stockholders may receive more than one set of voting materials, including multiple copies of this proxy statement and multiple proxy cards or voting instruction cards. For example, if you hold your shares in more than one brokerage account, you will receive a separate voting instruction card for each brokerage account in which you hold shares. If you are a holder of record and your shares are registered in more than one name, you will receive more than one proxy card. Please complete, sign, date and return each proxy card and voting instruction card that you receive in order to cast a vote with respect to all of your shares of Forest Road common stock.

 

Q:

Who can help answer my questions?

 

A:

If you have questions about the Business Combination or if you need additional copies of the proxy statement/prospectus or the enclosed proxy card you should contact:

Forest Road Acquisition Corp.

1177 Avenue of the Americas, 5th Floor

New York, New York 10036

Tel: (917) 310-3722

Attn: Idan Shani, Chief Operating Officer

You also may obtain additional information about Forest Road from documents filed with the SEC by following the instructions in the section entitled “Where You Can Find More Information.” If you are a holder of public shares and you intend to seek redemption of your shares, you will need to deliver your public shares (either physically or electronically) to the transfer agent at the address below prior to                  a.m., Eastern Time, on                 , 2021 (two business days prior to the vote at the Special Meeting). If you have questions regarding the certification of your position or delivery of your stock, please contact:

Mark Zimkind

Continental Stock Transfer & Trust Company

One State Street Plaza, 30th Floor

New York, New York 10004

E-mail: mzimkind@continentalstock.com

 

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SUMMARY OF THE PROXY STATEMENT/PROSPECTUS

This summary highlights selected information from this proxy statement/prospectus and does not contain all of the information that is important to you. To better understand the proposals to be submitted for a vote at the Special Meeting, including the Business Combination, you should read this entire document carefully, including the Merger Agreement, attached as Annex A-1 to this proxy statement/prospectus. The Merger Agreement is the legal document that governs the Business Combination and the other transactions that will be undertaken in connection therewith. The Merger Agreement is also described in detail in this proxy statement/prospectus in the section entitled “The Business Combination Agreement.” This proxy statement/prospectus also includes forward-looking statements that involve risks and uncertainties. See “Cautionary Note Regarding Forward-Looking Statements.”

Parties to the Business Combination

Forest Road

Forest Road is a blank check company incorporated as a Delaware corporation on September 24, 2020 for the purpose of effecting a merger, capital stock exchange, asset acquisition, stock purchase, reorganization or similar business combination with one or more businesses or entities.

Our Class A Common Stock and warrants are currently listed on the NYSE under the symbols “FRX” and “FRX WS,” respectively. Certain of our shares of Class A Common Stock and warrants currently trade as units consisting of one share of Class A Common Stock and one-third of one redeemable warrant, and are listed on the NYSE under the symbol “FRX.U.” The units will automatically separate into their component securities upon consummation of the Business Combination and, as a result, will no longer trade as an independent security. Upon the Closing, we intend to change our name from “Forest Road Acquisition Corp.” to “The Beachbody Company, Inc.” We intend to continue the listing of our Class A Common Stock and warrants on the NYSE under the symbols “BODY” and “BODY WS,” respectively, upon the Closing.

Forest Road’s principal executive offices are located at 1177 Avenue of the Americas, 5th Floor, New York, New York 10036 and its phone number is (917) 310-3722.

Merger Subs

BB Merger Sub, LLC is a Delaware limited liability company and a direct, wholly-owned subsidiary of Forest Road formed on February 5, 2021. MFH Merger Sub, LLC is a Delaware limited liability company and a direct, wholly-owned subsidiary of Forest Road formed on February 5, 2021.

Merger Subs’ principal executive offices are located at 1177 Avenue of the Americas, 5th Floor, New York, New York 10036 and its phone number is (917) 310-3722.

Beachbody

The Beachbody Company Group, LLC, a Delaware limited liability company, is a health and wellness platform that provides fitness, nutrition and stress-reducing programs to its customers.

Beachbody’s principal executive offices are located at 3301 Exposition Blvd, Santa Monica, CA 90404 and its phone number is (310) 883-9000.

MYX

Myx Fitness Holdings, LLC, a Delaware limited liability company, is a fitness company that provides exercise bikes and fitness programs to its customers.



 

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Myx’s principal executive offices are located at 19 West Elm St. Greenwich, CT 06830 and its phone number is (855) 699-2453.

Summary of the Merger Agreement

On February 9, 2021, Forest Road entered into the Merger Agreement with Beachbody Merger Sub, Myx Merger Sub, and the Target Companies. Upon the terms and subject to the conditions of the Merger Agreement, in accordance with the Delaware General Corporation Law, as amended and the Delaware Limited Liability Companies Act, as amended, (x) Beachbody Merger Sub will be merged with and into Beachbody, following which the separate existence of Beachbody Merger Sub will cease and Beachbody will continue as the surviving entity (the “Surviving Beachbody Entity”) and as a wholly-owned subsidiary of Forest Road, and all the property, rights, privileges, agreements, powers and franchises, debts, liabilities, duties and obligations of Beachbody Merger Sub and Beachbody will become the property, rights, privileges, agreements, powers and franchises, debts, liabilities, duties and obligations of the Surviving Beachbody Entity (the “Beachbody Merger”); (y) Myx Merger Sub will be merged with and into Myx, following which the separate existence of Myx Merger Sub will cease and Myx will continue as the surviving entity (the “Surviving Myx Entity”) and as a wholly-owned subsidiary of Forest Road, and all the property, rights, privileges, agreements, powers and franchises, debts, liabilities, duties and obligations of Myx Merger Sub and Myx will become the property, rights, privileges, agreements, powers and franchises, debts, liabilities, duties and obligations of the Surviving Myx Entity (the “Myx Merger”); and (z) immediately following the consummation of the Beachbody Merger, the Surviving Beachbody Entity will be merged with and into Forest Road, following which the separate existence of the Surviving Beachbody Entity will cease and Forest Road will continue as the Company, and all the property, rights, privileges, agreements, powers and franchises, debts, liabilities, duties and obligations of the Surviving Beachbody Entity and Forest Road will become the property, rights, privileges, agreements, powers and franchises, debts, liabilities, duties and obligations of the Company (the “Forest Road Merger”, and together with the Beachbody Merger and the Myx Merger, the “Mergers”. For additional information regarding the Merger Agreement, you are encouraged to carefully read the Merger Agreement in its entirety, which is attached to this Proxy Statement as Annex A-1, and to review the sections of this Proxy Statement entitled “The Business Combination Proposal — The Merger Agreement” and “The Business Combination Proposal — General; Structure of the Business Combination.

Consideration Received under the Merger Agreement

In consideration for the consummation of the Business Combination and as a result of the Mergers, among other things, all outstanding equity interests of Beachbody and Myx will be cancelled in exchange for the right to receive, in the aggregate, a number of shares of common stock (or, in the case of outstanding Beachbody options, options to purchase shares of common stock) in the Company that is approximately equal to the quotient obtained by dividing (x) $2,900,000,000 by (y) $10.00, provided, however, that (1) certain Beachbody equityholders will receive common stock in the Company with similar rights as those being issued to all other recipients of merger consideration, except that such common stock will carry 10 votes per share; (2) certain Myx equityholders will be entitled to receive, in lieu of their pro rata portion (based on their percentage ownership interests in Myx) of such shares, an amount in cash equal to the value of such shares, up to an aggregate amount of cash among all such equityholders not to exceed the result of $37.7 million minus certain payments to be made by Forest Road on behalf of Myx as setforth in the Merger Agreement; and (3) the foregoing consideration is subject to adjustment (x) in the case of the Beachbody equity interests, based on the transaction expenses of Beachbody and Forest Road, and (y) in the case of each of the Beachbody equity interests and the Myx equity interests, based on the date on which the Closing occurs (the “Closing Date”) and the related number of Myx units issuable to Beachbody, LLC, a Delaware limited liability company (“BB”) and wholly-owned subsidiary of Beachbody, upon conversion of instruments between Myx and BB, dated December 7, 2020, as amended pursuant to the first amendment thereto, dated as of February 9, 2021 and March 4, 2021, pursuant to which BB



 

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funded Myx with an aggregate of $15 million subject to certain terms and conditions, including (but not limited to) the right to convert, upon certain conditions, certain of BB’s rights under such instruments into equity interests of Myx.

For additional information regarding the consideration payable under the Merger Agreement, see the section in this Proxy Statement entitled “The Business Combination Proposal — Consideration to be Received in the Business Combination.

Conditions to Completion of the Merger Agreement

The Merger Agreement is subject to the satisfaction or waiver of certain customary closing conditions, including, among others:

 

   

The HSR Act approval;

 

   

Absence of laws or governmental orders prohibiting the Business Combination;

 

   

Required stockholder or member approvals from each of the Forest Road, Beachbody, and Myx;

 

   

The consummation of the PIPE Investment (and funding of the PIPE Investment Amount) prior to or substantially concurrently with the Closing;

 

   

The effectiveness of the Registration Statement;

 

   

The listing or approval for listing on NYSE of the Acquiror Class A Common Stock;

 

   

The accuracy of the representations and warranties of Myx, Beachbody and Forest Road as of the date of the Merger Agreement and as of the Closing (subject to customary materiality qualifiers);

 

   

Each of the covenants and agreements of Myx, Beachbody and Forest Road to be performed or complied with under the Merger Agreement prior to or at Closing having been performed or complied with in all material respects; and

 

   

Other customary SPAC deal conditions.

Other conditions to the obligation of Beachbody to consummate the Business Combination include, among others, the condition that the sum of (a) the Trust Account (after reduction for the aggregate amount of payments required to be made in connection with any Redemptions), plus (b) the amount that has been funded pursuant to the PIPE Investment Financing totals no less than $350,000,000.

For additional information regarding the conditions to the completion of the Merger Agreement, see the section in this Proxy Statement entitled “The Business Combination Proposal – Conditions to the Closing of the Business Combination.

Summary of the Registration Rights Agreement

At the Closing, Forest Road, Sponsor, and certain other stockholders of the Company will enter into a Registration Rights Agreement pursuant to which Forest Road will agree to register for resale certain shares of Forest Road Common Stock and other equity securities of Forest Road. Additionally, the Registration Rights Agreement provides for (a) certain restrictions on transfer with respect to the registrable securities held by certain stockholders, including Sponsor, immediately following the Closing and (b) customary “demand” and “piggyback” registration rights for certain stockholders (each as more fully described herein). For additional information regarding the Registration Rights Agreement, see the section in this Proxy Statement entitled “The Business Combination Proposal — Related Agreements; The Registration Rights Agreement.



 

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Related Agreements

Sponsor Agreements

On February 9, 2021, Forest Road entered into a Sponsor Agreement (the “Sponsor Agreement”), by and among Forest Road, Forest Road Acquisition Sponsor LLC, a Delaware limited liability company (the “Sponsor”), and Beachbody, whereby Sponsor agreed to, among other things, (a) vote in favor of approving the Merger Agreement and the Business Combination and (b) waive any adjustment to the conversion ratio with respect to shares of Forest Road common stock (the “Sponsor Shares”) held by Sponsor as set forth in Forest Road’s Existing Charter, in each case, subject to the terms and conditions set forth in the Sponsor Agreement.

Additionally, pursuant to the terms of the Sponsor Agreement, 50% of the Sponsor Shares will be unvested, and will vest, in equal tranches of 10% each, upon the occurrence of the Company’s last sale price on the New York Stock Exchange exceeding each of the following price-per-share thresholds for any 20 trading days within any consecutive 30-day trading period, commencing at least 180 days after the Closing Date: $12.00, $13.00, $14.00, $15.00 and $16.00 (as adjusted for stock splits, stock dividends, reorganizations, recapitalizations and the like) (each, a “Price Threshold”). Subject to the terms and conditions of the Sponsor Agreement, upon the consummation of a transaction involving a change of control at the Company on or prior to the date that is the tenth anniversary of the Closing Date, if the consideration payable to stockholders of the Company exceeds any of the Price Thresholds, such Price Threshold will be deemed satisfied and the related portion of unvested Sponsor Shares will be deemed vested, and the holders of such Sponsor Shares will be eligible to participate in such change of control transaction, provided, that if the consideration is payable in equity securities that are, or after the closing of such transaction, will be, publicly-traded, any remaining unvested Sponsor Shares will be converted into equity securities in the surviving company with similar rights, including vesting based on applicable Price Thresholds. Any Sponsor Shares that do not vest within 10 years after Closing will be forfeited.

Support Agreements

On February 9, 2021, Forest Road entered into a Member Support Agreement (the “Beachbody Support Agreement”), by and among Forest Road, Beachbody and certain equityholders of Beachbody (the “Beachbody Equityholders”). Under the Beachbody Support Agreement, the Beachbody Equityholders agreed vote or cause to be voted or to execute and deliver a written consent with respect to the Beachbody equity interests held by the Beachbody Equityholders adopting the Merger Agreement and approving the Business Combination. The Beachbody equity interests that are owned by the Beachbody Equityholders and subject to the Beachbody Support Agreement represent a majority of the outstanding voting power of Beachbody units (on an as converted basis).

On February 9, 2021, Forest Road entered into a Myx Support Agreement (the “Myx Support Agreement”), by and among Forest Road, Myx, Beachbody and a certain equityholder of Myx (the “Myx Equityholder”). Under the Myx Support Agreement, the Myx Equityholder agreed to vote or cause to be voted or to execute and deliver a written consent with respect to the Myx equity interests held by the Myx Equityholder adopting the Merger Agreement and approving the Business Combination. The Myx equity interests that are owned by the Myx Equityholder and subject to the Myx Support Agreement represent a majority of the outstanding voting power of Myx units.

Proposed Charter and Amended and Restated Bylaws of the Company

Prior to the Closing on or prior to the Closing Date, the Company will amend and restate (i) subject to receipt of stockholder approval, the Existing Charter by adopting the Proposed Charter and (ii) the current bylaws of the Company by adopting the Amended and Restated Bylaws of Company (the “Bylaws”), to establish a structure containing Class A common stock, which will carry such economic and voting rights as set forth in the Proposed Charter and the Bylaws, Class X common stock, which will carry the same rights as the Class A



 

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common stock, except which shall carry 10 votes per share, Class C common stock, which shall not carry any voting rights, and preferred stock, in each case as set forth in the Proposed Charter and the Bylaws (as more fully described herein).

Subscription Agreements

In connection with the execution of the Merger Agreement, Forest Road and certain investors entered into subscription agreements (the “Subscription Agreements”) pursuant to which such investors have agreed to purchase in connection with the Closing an aggregate of 22,500,000 shares of Class A Common Stock for a purchase price of $10.00 per share, for an aggregate purchase price of $225,000,000 (together, the “PIPE”). The obligations of each party to consummate the PIPE are conditioned upon, among other things, customary closing conditions and the consummation of the transactions contemplated by the Merger Agreement.

Equity Ownership Upon Closing

As of the date of this proxy statement/prospectus, there are 37,500,000 shares of Forest Road common stock outstanding, comprised of 30,000,000 shares of Class A common stock held by public stockholders and 7,500,000 shares of Class B common stock held by the Sponsor. In connection with the Closing, (i) each then-issued and outstanding share of Class B common stock will automatically convert into a share of Class A Common Stock on a one-for-one basis in accordance with the terms of the Existing Charter and (ii) the PIPE Investors will acquire                  shares of Class A common stock

 

     Assuming No
Redemptions
of Public
Shares(1)
    Assuming Maximum
Redemptions
of Public
Shares(2)
 

Forest Road’s Public Stockholders

                  

Forest Road’s Sponsor

                  

PIPE Investors

                  

Target Company Equityholders

                  

 

(1)

Assumes that (i) none of the holders of public shares of Class A Common Stock exercise their redemption rights, (ii) there is no exercise at the Closing of the Sponsor’s 5,333,333 private placement warrants at an exercise price of $11.50 per share (which warrants are not exercisable until the later of 12 months from the closing of the IPO and 30 days after the completion of the Business Combination), (iii) none of the parties set forth above purchase shares of Class A Common Stock in the open market, (iv) there are no other issuances of equity interests of the Company prior to or in connection with the Closing and (v) there are no issuances of any shares of the Company’s Class A Common Stock following the Closing under the 2021 Plan.

 

(2)

Assumes that holders of 17,500,000 shares of Class A Common Stock exercise their redemption rights (representing the maximum amount of public shares that can be redeemed to satisfy the Minimum Cash Condition).

*Upon completion of the Business Combination, Forest Road’s public stockholders, the Sponsor, certain of the Target Company Equityholders and the PIPE Investors will hold shares of Class A Common Stock and Carl Daikeler and certain of his affiliated entities will hold shares of Class X Common Stock.

If the actual facts are different than the assumptions set forth above, the voting percentages set forth above will be different.

Following the Closing, Carl Daikeler and certain of his affiliated entities (collectively, the “Controlling Holders”), will own a majority of the Company’s outstanding Class X Common Stock, which carries 10 votes



 

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per share and, therefore, will control a majority of the voting power of the Company’s outstanding common stock. As a result, the Company will be a “controlled company” within the meaning of the corporate governance standards of the New York Stock Exchange, which status permits the Company to elect not to comply with certain corporate governance requirements as further described herein.

The voting percentages set forth above were calculated based on the amounts set forth in the sources and uses table on pages 31 and 128 of this proxy statement/prospectus and do not take into account (i) warrants that will remain outstanding immediately following the Business Combination and may be exercised thereafter (commencing on the later of 12 months from the closing of the IPO and 30 days following the Closing for one share of Class A Common Stock for one share of Class A Common Stock, or (ii) the issuance of any shares upon completion of the Business Combination under the 2021 Plan, a copy of which is attached to this proxy statement as Annex C, but does include the shares owned by our Sponsor, which, on the effective date of the Business Combination, will convert into 7,500,000 shares of Class A Common Stock in accordance with the terms of the Existing Charter, subject to adjustment. For more information, please see the section entitled “Unaudited Pro Forma Condensed Combined Financial Information.

If the actual facts are different than the assumptions set forth above, the voting percentages set forth above will be different. For example, there are currently outstanding an aggregate of 15,333,333 warrants to acquire our shares of Class A Common Stock, which are comprised of 5,333,333 private placement warrants held by our Sponsor and 10,000,000 warrants sold as part of the units in the Company’s IPO (the “public warrants”). Each of our outstanding warrants is exercisable commencing on the later of 12 months from the closing of the IPO and 30 days following the Closing for one share of Class A Common Stock for one share of Class A Common Stock. If we assume that each outstanding warrant is exercised and one share of Class A Common Stock is issued as a result of such exercise, with payment to Forest Road of the exercise price of $11.50 per warrant for one share, our fully-diluted share capital would increase by a total of 15,333,333 shares, with approximately $176,333,330 paid to Forest Road to exercise the warrants.

Proposals to be Submitted at the Special Meeting

The Business Combination Proposal

Forest Road and the Target Companies have agreed to the Business Combination under the terms the Merger Agreement. Pursuant to the terms set forth in the Merger Agreement, subject to the satisfaction or waiver of the conditions to the Closing therein, the Merger Subs will merge with and into the Target Companies, with the Target Companies continuing as the surviving entities and becoming subsidiaries of the Company, and thereafter the Surviving Beachbody Entity shall merge with and into the Company, with the Company surviving such merger.

After consideration of the factors identified and discussed in the section entitled “The Business Combination Proposal — Interests of Certain Persons in the Business Combination,” the Board concluded that the Business Combination met all of the requirements disclosed in the prospectus for our IPO, including that the business of Forest Road had a fair market value of at least 80% of the balance of the funds in the trust account at the time of execution of the Merger Agreement.

If any proposal is not approved by Forest Road’s stockholders at the Special Meeting, the Board may submit the Adjournment Proposal for a vote.

For additional information, see “The Business Combination Proposal” section of this proxy statement/prospectus.



 

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The Organizational Document Proposal

If the Business Combination Proposal is approved and the Business Combination is to be consummated, prior to the Closing on or prior to the Closing Date, the Company will amend and restate the Existing Charter with the Proposed Charter under the DGCL, and amend and restate its bylaws to adopt the Bylaws, to, among other things:

 

   

change Forest Road’s name to “The Beachbody Company, Inc.”;

 

   

reclassify the Company’s capital stock and increase the total number of authorized shares of all classes of capital stock, par value of  $0.0001 per share, from 321,000,000 shares, consisting of 320,000,000 shares of common stock, including 300,000,000 shares of Class A common stock, and 20,000,000 shares of Class B common stock, and 1,000,000 shares of preferred stock, to 2,000,000,000 shares, consisting of 1,900,000,000 shares of common stock, including 1,600,000,000 shares of Class A common stock, par value $0.0001 per share, 200,000,000 shares of Class X common stock, par value $0.0001 per share, and 1,000,000,000 shares of Class C common stock, par value $0.0001 per share and 100,000,000 shares of preferred stock, par value $0.0001 per share;

 

   

declassify the Company’s Board;

 

   

amend the terms of the shares of common stock, in particular to provide that each share of Class A common stock of the Company has one vote and each share of Class X common stock has ten (10) votes until the earlier of (a) the date Carl Daikeler is no longer providing services to the Company as a senior executive officer or director of the Company or (b) the date on which the holders of Class X common stock as of the Closing Date have sold 75% of their shares (other than pursuant to a Permitted Transfer (as defined in the Proposed Charter). Upon the occurrence of such event, each share of Class X common stock will automatically convert into one share of Class A common stock. Additionally, shares of Class X common stock will automatically convert into shares of Class A common stock in connection with a Transfer (as defined in the Proposed Charter) to anyone other than a Qualified Stockholder (as defined in the Proposed Charter). Shares of Class C Common Stock will not be entitled to any votes. The Company intends to have the ability to issue shares of Class C common stock in future stock-based acquisition transactions, to fund employee equity incentive programs or otherwise, providing for participation in the economic power of the Company, which would result in diluted economic interests of holders of shares of Class A and Class X common stock, but would not dilute the voting power of such existing shareholders;

 

   

eliminate the ability of stockholders to act by written consent in lieu of a meeting, other than holders of preferred stock;

 

   

reaffirming the Court of Chancery of the State of Delaware as the sole and exclusive forum for any derivative action or proceeding brought on behalf of the Company, subject to certain limitations;

 

   

eliminate certain provisions specific to Forest Road’s status as a blank check company;

 

   

amend the Company’s current bylaws to implement changes conforming to the Existing Charter and to add a lock-up provision restricting transfer of shares by Beachbody Holders, the Sponsor, and their respective permitted Transferees for certain periods of time

The Proposed Charter and Bylaws differ in material respects from the Existing Charter and the Company’s current bylaws, respectively, and we urge stockholders to carefully consult the information set out in the Section “The Organizational Document Proposal” and the full text of the Proposed Charter, attached hereto as Annex B-1, and Bylaws, attached hereto as Annex B-2.

The Organizational Document Proposal is conditioned on the approval of the Business Combination Proposal. Therefore, if the Business Combination Proposal is not approved, the Organizational Document Proposal will have no effect, even if approved by our stockholders.



 

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The Advisory Charter Proposals

Our stockholders are also being asked to approve and adopt, on a non-binding advisory basis, in accordance with SEC guidance to give stockholders the opportunity to present their separate views on important corporate governance provisions, the Advisory Charter Proposals, which are those amendments that will be made to the Existing Charter as reflected in the Proposed Charter if the Organizational Document Proposal is approved.

For additional information, see “The Advisory Charter Proposals” section of this proxy statement/prospectus.

The NYSE Proposal

Assuming the Business Combination Proposal and the Organizational Document Proposal are approved, our stockholders are also being asked to approve the NYSE Proposal.

The NYSE proposal is a proposal to approve, assuming the Business Combination Proposal and the Organizational Document Proposal are approved and adopted, for the purposes of complying with the applicable listing rules of NYSE, the issuance of more than 20% of our issued and outstanding common stock in connection with Subscription Agreements entered into in connection with the Business Combination.

If the NYSE proposal is adopted, 22,500,000 shares of Class A Common Stock are issuable pursuant to the Subscription Agreements, which will represent approximately 75% of the Class A shares of our common stock outstanding immediately prior to the Closing, assuming (a) none of Forest Road’s public shareholders exercises redemption rights with respect to their public shares and (b) no exercise of Forest Road’s 15,333,333 outstanding warrants at an exercise price of $11.50 per share (which warrants are not exercisable until the later of 12 months from the closing of the IPO and 30 days after the completion of the Business Combination).

For additional information, see “The NYSE Proposal” section of this proxy statement.

The Incentive Plan Proposal

Assuming the Business Combination Proposal, the Organizational Document Proposal and the NYSE Proposal are approved, our stockholders are also being asked to approve the Incentive Plan Proposal.

We expect that, prior to the consummation of the Business Combination, our Board will approve and adopt the Incentive Plan. Our stockholders should carefully read the entire 2021 Plan, a copy of which is attached to this proxy statement/prospectus as Annex C, before voting on this proposal.

For additional information, see “The Incentive Plan Proposal” section of this proxy statement/prospectus.

The ESPP Proposal

Assuming the Business Combination Proposal, the Organizational Document Proposal and the NYSE Proposal are approved, our stockholders are also being asked to approve the ESPP Proposal.

We expect that, prior to the consummation of the Business Combination, our Board will approve and adopt the ESPP. Our stockholders should carefully read the entire ESPP, a copy of which is attached to this proxy statement/prospectus as Annex D, before voting on this proposal.

For additional information, see “The ESPP Proposal” section of this proxy statement/prospectus.

The Director Election Proposal

Assuming the Business Combination Proposal, the Organizational Document Proposal, the NYSE Proposal and the Incentive Plan Proposal are approved, our stockholders are also being asked to approve the Director Election Proposal.

Our Board has nominated                  directors to serve on our Board, effective upon the Closing, with each director having a term that expires at the Company’s annual meeting of stockholders held in the year following the year of their election, or until such directors’ successors have been duly elected and qualified, or until such directors’ earlier death, resignation, retirement or removal.



 

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For additional information, see “The Director Election Proposal” section of this proxy statement/prospectus.

The Adjournment Proposal

The Adjournment Proposal allows the Board to submit a proposal to approve the adjournment of the Special Meeting to a later date or dates, if necessary or appropriate, to permit further solicitation of proxies in the event that there are insufficient votes for, or otherwise in connection with, the approval of any of the Condition Precedent Proposals or the Advisory Charter Proposals.

For additional information, see “The Adjournment Proposal” section of this proxy statement/prospectus.

Date, Time and Place of Special Meeting of Forest Road’s Stockholders

The Special Meeting will be held via live webcast at 10:00 a.m., Eastern Time, on                , 2021, at                 , to consider and vote upon the proposals to be submitted to the Special Meeting, including if necessary, the adjournment proposal. The special meeting can be accessed by visiting                , where you will be able to listen to the meeting live and vote during the meeting. Please note that you will only be able to access the Special Meeting by means of remote communication. Please have your control number, which can be found on your proxy card, to join the Special Meeting. If you do not have a control number, please contact the Continental Stock Transfer Company, the transfer agent.

Registering for the Special Meeting

Pre-registration at                 is recommended but is not required in order to attend.

Any stockholder wishing to attend the virtual meeting should register for the meeting by                , 2021. To register for the Special Meeting, please follow these instructions as applicable to the nature of your ownership of our common stock:

 

   

If your shares are registered in your name with Continental Stock Transfer & Trust Company and you wish to attend the online-only Special Meeting, go to                 , enter the 12-digit control number included on your proxy card or notice of the meeting and click on the “Click here to preregister for the online meeting” link at the top of the page. Just prior to the start of the meeting you will need to log back into the meeting site using your control number. Pre-registration is recommended but is not required in order to attend.

 

   

Beneficial stockholders (those holding shares through a stock brokerage account or by a bank or other holder of record) who wish to attend the virtual meeting must obtain a legal proxy by contacting their account representative at the bank, broker, or other nominee that holds their shares and e-mail a copy (a legible photograph is sufficient) of their legal proxy to proxy@continentalstock.com. Beneficial stockholders who e-mail a valid legal proxy will be issued a 12-digit meeting control number that will allow them to register to attend and participate in the special meeting. After contacting Continental Stock Transfer & Trust Company, a beneficial holder will receive an e-mail prior to the meeting with a link and instructions for entering the virtual meeting. Beneficial stockholders should contact Continental Stock Transfer & Trust Company at least five (5) business days prior to the meeting date in order to ensure access.

Voting Power; Record Date

Stockholders will be entitled to vote or direct votes to be cast at the Special Meeting if they owned shares of Forest Road common stock at the close of business on                , 2021, which is the record date for the Special



 

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Meeting. Stockholders will have one vote for each share of common stock owned at the close of business on the record date. If your shares are held in “street name” or are in a margin or similar account, you should contact your broker to ensure that votes related to the shares you beneficially own are properly counted. Our warrants do not have voting rights. On the record date, there were 37,500,000 shares of Forest Road common stock outstanding, of which 30,000,000 were public shares, with the rest being held by our Sponsor.

Quorum and Vote of Stockholders

A quorum of our stockholders is necessary to hold a valid meeting. The presence, in person (which would include presence at the virtual Special Meeting) or by proxy, of stockholders holding a majority of the shares entitled to vote at the Special Meeting constitutes a quorum at the special Meeting. In the absence of a quorum, the chairperson of the Special Meeting has the power to adjourn the Special Meeting. As of the record date for the Special Meeting, 18,750,001 shares of Forest Road common stock would be required to achieve a quorum.

Our Sponsor and our officers and directors at the time of the IPO entered into a letter agreement to vote their founder shares as well as any public shares purchased during or after the IPO, in favor of the Business Combination Proposal. As of the date hereof, our Sponsor owns approximately 20% of our total outstanding common stock.

The following votes are required for each proposal at the Special Meeting:

 

   

Business Combination Proposal: The approval of the Business Combination Proposal requires the affirmative vote of a majority of the votes cast by holders of Class A Common Stock and Class B Common Stock present in person or represented by proxy and entitled to vote at the Special Meeting, voting as a single class.

 

   

Organizational Document Proposal: The approval of the Organizational Document Proposal requires the affirmative vote of holders of a majority of the outstanding shares of Class A Common Stock and Class B Common Stock entitled to vote thereon at the Special Meeting, voting as a single class.

 

   

Advisory Charter Proposals: 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 Class A Common Stock and Class B Common Stock present in person or represented by proxy and entitled to vote at the Special Meeting, voting as a single class.

 

   

NYSE Proposal: The approval of the NYSE Proposal requires the affirmative vote of a majority of the votes cast by holders of Class A Common Stock and Class B Common Stock present in person or represented by proxy and entitled to vote at the Special Meeting, voting as a single class.

 

   

Director Election Proposal: The election of the director nominees pursuant to the director election proposal requires a plurality of the votes cast by holders of Class A Common Stock and Class B Common Stock present in person or represented by proxy and entitled to vote at the Special Meeting, voting as a single class.

 

   

Incentive Plan Proposal: The approval of the Incentive Plan Proposal requires the affirmative vote of a majority of the votes cast by holders of Class A Common Stock and Class B Common Stock present in person or represented by proxy and entitled to vote at the Special Meeting, voting as a single class.

 

   

The ESPP Proposal: The approval of the ESPP Proposal requires the affirmative vote of a majority of the votes cast by holders of Class A Common Stock and Class B Common Stock present in person or represented by proxy and entitled to vote at the Special Meeting, voting as a single class.

 

   

Adjournment Proposal: The approval of the Adjournment Proposal requires the affirmative vote of a majority of the votes cast by holders of Class A Common Stock and Class B Common Stock present in person or represented by proxy and entitled to vote at the Special Meeting, voting as a single class.



 

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With respect to each proposal in this proxy statement/prospectus (other than the Director Election Proposal), you may vote “FOR,” “AGAINST” or “ABSTAIN.” With respect to the Director Election Proposal, you may vote “FOR” or “WITHHOLD” with respect to each nominee.

If a stockholder fails to return a proxy card or fails to instruct a broker or other nominee how to vote, and does not attend the Special Meeting in person, then the stockholder’s shares will not be counted for purposes of determining whether a quorum is present at the Special Meeting. If a valid quorum is established, any such failure to vote or to provide voting instructions will have the same effect as a vote “AGAINST” the Organizational Document Proposal, but will have no effect on the outcome of any other proposal in this proxy statement/prospectus.

Abstentions and “WITHHOLD” votes will be counted in connection with the determination of whether a valid quorum is established but their effect on the proposals in this proxy statement/prospectus differ as follows:

 

   

An abstention will have no effect on the Business Combination Proposal, the Advisory Charter Proposals, the Adjournment Proposal, and for the Director Election Proposal, a “WITHHOLD” vote will have the same effect as an abstention and will not count as a vote “FOR” or “AGAINST” a director because directors are elected by plurality voting.

 

   

In contrast, an abstention will have the same effect as a vote “AGAINST” the Organizational Document Proposal. Moreover, for purposes of the NYSE Proposal, the Incentive Plan Proposal and the ESPP Proposal, the NYSE considers an abstention vote as a “vote cast”, and therefore, an abstention will have the same effect as a vote “AGAINST” such proposals.

Redemption Rights

Pursuant to the Existing Charter, a public stockholder may request that Forest Road redeem all or a portion of such public stockholder’s public shares for cash if the Business Combination is consummated. You will be entitled to receive cash for any public shares to be redeemed only if you:

 

  (i)

(a) hold public shares or (b) hold public shares through units and you elect to separate your units into the underlying public shares and public warrants prior to exercising your redemption rights with respect to the public shares; and

 

  (ii)

prior to                 , Eastern Time, on                , 2021 (two business days prior to the vote at the Special Meeting) (a) submit a written request to the transfer agent that the Company redeem your public shares for cash and (b) deliver your public shares to the transfer agent, physically or electronically through DTC.

As noted above, holders of units must elect to separate the underlying public shares and public warrants prior to exercising redemption rights with respect to the public shares. Holders may instruct their broker to do so, or if a holder holds units registered in its own name, the holder must contact the transfer agent directly and instruct it to do so. Public stockholders may elect to redeem all or a portion of such public stockholder’s public shares even if they vote for the Business Combination Proposal. If the Business Combination is not consummated, the public shares will not be redeemed for cash. If a public stockholder properly exercises its right to redeem its public shares and timely delivers its public shares to the transfer agent, Forest Road will redeem each share of Class A Common Stock for a per share price, payable in cash, equal to the aggregate amount then on deposit in the trust account calculated as of two business days prior to the consummation of the Business Combination, including interest earned on the funds held in the trust account (net of taxes payable), divided by the number of then-outstanding public shares. If a public stockholder exercises its redemption rights, then it will be exchanging its redeemed public shares for cash and will no longer own such shares. Any request to redeem public shares, once made, may be withdrawn at any time until the deadline for exercising redemption requests



 

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and thereafter, with our consent, until the Closing. Furthermore, if a holder of a public shares delivers its certificate in connection with an election of its redemption and subsequently decides prior to the Closing not to elect to exercise such rights, it may simply request that Forest Road instruct our transfer agent to return the certificate (physically or electronically). The holder can make such request by contacting the transfer agent, at the address or email address listed in this proxy statement/prospectus. We will be required to honor such request only if made prior to the deadline for exercising redemption requests. See “Special Meeting of the Stockholders — Redemption Rights” for a detailed description of the procedures to be followed if you wish to redeem your public shares for cash.

Notwithstanding the foregoing, a holder of public shares, together with any affiliate of such public stockholder or any other person with whom such public stockholder is acting in concert or as a “group” (as defined in Section 13 of the Exchange Act), will be restricted from redeeming its public shares with respect to more than an aggregate of 15% of the public shares, without our prior consent. Accordingly, if a public stockholder, alone or acting in concert as a group, seeks to redeem more than 15% of the public shares, then any such shares in excess of that 15% limit would not be redeemed for cash, without our prior consent.

In order for public stockholders to exercise their redemption rights in respect of the Business Combination Proposal, public stockholders must properly exercise their right to redeem the public shares they hold no later than the close of the vote on the Business Combination Proposal and deliver their public shares (either physically or electronically) to the transfer agent prior to                , Eastern Time, on                , 2021 (two business days prior to the vote at the Special Meeting). Immediately following the consummation of the Business Combination, the Company will satisfy the exercise of redemption rights by redeeming the public shares issued to the public stockholders that validly exercised their redemption rights.

Holders of our warrants will not have redemption rights with respect to the warrants.

Appraisal Rights

Neither our stockholders nor our warrant holders have appraisal rights in connection with the Business Combination under the DGCL.

Proxy Solicitation

Proxies may be solicited by mail, telephone or in person. Forest Road has engaged                  to assist in the solicitation of proxies.

If a stockholder grants a proxy, it may still vote its shares in person (which would include presence at the virtual special meeting) if it revokes its proxy before the Special Meeting. A stockholder also may change its vote by submitting a later-dated proxy as described in the section entitled “Special Meeting of the Stockholders — Revoking Your Proxy.”

Interests of Certain Persons in the Business Combination

In considering the recommendation of our Board to vote in favor of the Business Combination, stockholders should be aware that, aside from their interests as stockholders, our Sponsor and our directors, officers and advisors and the Target Companies’ current owners have interests in the Business Combination that are different from, or in addition to, those of our other stockholders generally. Our directors were aware of and considered these interests, among other matters, in evaluating the Business Combination, and in recommending to our



 

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stockholders that hey approve the Business Combination. Stockholders should take these interests into account in deciding whether to approve the Business Combination. These interests include, among other things:

 

   

the fact that our Sponsor has waived its right to redeem any of the founder shares and public shares in connection with a stockholder vote to approve a proposed initial business combination;

 

   

the fact that our Sponsor paid an aggregate of $25,000 for the founder shares, which will convert into 7,500,000 shares of Class A Common Stock in accordance with the terms of the Existing Charter and such securities will have a significantly higher value at the time of the Business Combination, estimated at approximately $                 based on the closing price of $         per public share on the NYSE on                 , 2021;

 

   

the fact that our Sponsor has agreed to waive its rights to liquidating distributions from the trust account with respect to the founder shares if we fail to complete an initial business combination by November 30, 2022;

 

   

the fact that our Sponsor paid approximately $8,000,000 for 5,333,333 private placement warrants, each of such private placement warrants is exercisable commencing on the later of 12 months from the closing of the IPO and 30 days following the Closing for one share of Class A Common Stock for one share of Class A Common Stock at $11.50 per share; if we do not consummate an initial business combination by November 30, 2022, then the proceeds from the sale of the private placement warrants will be part of the liquidating distribution to the public stockholders and the warrants held by our Sponsor will be worthless; the warrants held by our Sponsor had an aggregate market value of approximately $                 based upon the closing price of $                 per warrant on the NYSE on                 , 2021;

 

   

if the trust account is liquidated, including in the event we are unable to complete an initial business combination within the required time period, our Sponsor has agreed that it will be liable to us if and to the extent any claims by a third-party for services rendered or products sold to us, or a prospective target business with which we have entered into a written letter of intent, confidentiality or other similar agreement or business combination agreement, reduce the amount of funds in the trust account to below: (i) $10.00 per public share; or (ii) 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 the interest which may be withdrawn to pay taxes and up to $100,000 of interest to pay dissolution expenses, 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 underwriters of the IPO against certain liabilities, including liabilities under the Securities Act;

 

   

Kevin Mayer, a current director of Forest Road, is expected to be a director of the Company after the consummation of the Business Combination. As such, in the future he will receive any cash fees, stock options, stock awards or other remuneration that the Company’s board of directors determines to pay to him and any applicable compensation as described under section “Execution Compensation - Director Compensation”;

 

   

the fact that Cantor and Guggenheim Securities, Forest Road’s PIPE placement agent and financial advisor, respectively, and underwriters in the IPO, will be entitled to receive a deferred underwriting commission and a placement agency and financial advisory fees, as applicable, upon completion of the Business Combination;

 

   

the fact that Raine who, with its affiliates, will beneficially own at least 12.5% of the Company upon completion of the Business Combination, will be entitled to receive an advisory fee of $10 million in connection with Raine’s engagement with Beachbody as its financial advisor; and

 

   

John Salter, a current director of Beachbody and co-founder and partner of Raine, Michael Heller and Ben Van de Bunt, current directors of Beachbody, and Mary Conlin are each expected to be directors



 

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of the Company after the consummation of the Business Combination. As such, in the future each of Messrs. Salter, Heller and Van de Bunt and Ms. Conlin will receive any cash fees, stock options, stock awards or other remuneration that the Company’s board of directors determines to pay them and any applicable compensation as described under section “Executive Compensation — Director Compensation.”

At any time prior to the Special Meeting, during a period when they are not then aware of any material non-public information regarding Forest Road or our securities, our initial stockholders, the Target Companies and/or their respective affiliates may purchase shares and/or warrants from investors, or they may enter into transactions with such investors and others to provide them with incentives to acquire shares of Forest Road common stock or vote their shares in favor of the Business Combination Proposal. The purpose of such share purchases and other transactions would be to increase the likelihood that the proposals presented to stockholders for approval at the Special Meeting are approved or to provide additional equity financing. Any such share purchases and other transactions may thereby increase the likelihood of obtaining stockholder approval of the Business Combination. This may result in the completion of our Business Combination that may not otherwise have been possible. While the exact nature of any such incentives has not been determined as of the date of this proxy statement/prospectus, they might include, without limitation, arrangements to protect such investors or holders against potential loss in value of their shares, including the granting of put options.

Entering into any such incentive arrangements may have a depressive effect on shares of Forest Road common stock. For example, as a result of these arrangements, an investor or holder may have the ability to effectively purchase shares at a price lower than market and may therefore be more likely to sell the shares he owns, either prior to or immediately after the Special Meeting.

If such transactions are effected, the consequence could be to cause the Business Combination to be approved in circumstances where such approval could not otherwise be obtained. Purchases of shares by the persons described above would allow them to exert more influence over the approval of the proposals to be presented at the Special Meeting and would likely increase the chances that such proposals would be approved. As of the date of this proxy statement/prospectus, there have been no such discussions and no agreements to such effect have been entered into with any such investor or holder. Forest Road will file a Current Report on Form 8-K to disclose any arrangements entered into or significant purchases made by any of the aforementioned persons that would affect the vote on the proposals to be voted on at the Special Meeting. Any such report will include descriptions of any arrangements entered into or significant purchases by any of the aforementioned persons.

The existence of financial and personal interests of our directors and officers may result in conflicts of interest, including a conflict between what may be in the best interests of the Company and its stockholders and what may be best for a director’s personal interests when determining to recommend that stockholders vote for the proposals. See the sections entitled “Risk Factors”, “The Business Combination Proposal — Interests of Certain Persons in the Business Combination” and “Beneficial Ownership of Securities” for more information and other risks.

Certain Other Benefits in the Business Combination

In addition to the interests of the Company’s directors and officers in the Business Combination, stockholders should be aware that Cantor and Guggenheim Securities have financial interests that are different from, or in addition to, the interests of our stockholders.

Each of Cantor and Guggenheim Securities was an underwriter in Forest Road’s IPO, and, upon consummation of the Business Combination, the underwriters of the IPO are entitled to $10,500,000 of deferred



 

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underwriting commission, of which Cantor is entitled to $7,000,000 and Guggenheim Securities is entitled to $3,500,000. The underwriters of the IPO have agreed to waive their rights to the deferred underwriting commission held in the trust account in the event Forest Road does not complete an initial business combination within 24 months of the closing of the IPO. Accordingly, if the Business Combination, or any other initial business combination, is not consummated by that time and Forest Road is therefore required to be liquidated, the underwriters of the initial public offering, including Cantor and Guggenheim Securities, will not receive any of the deferred underwriting commission and such funds will be returned to the Company’s public stockholders upon its liquidation.

Furthermore, Cantor was engaged by Forest Road as a placement agent with respect to the PIPE and Guggenheim Securities is engaged as one of Forest Road’s financial advisors. Forest Road decided to retain Cantor as a placement agent for the PIPE based primarily on Cantor’s extensive knowledge, strong market position and positive reputation in equity capital markets and its experienced and capable investment banking team. Similarly, Forest Road decided to retain Guggenheim Securities as its lead financial advisor based primarily on its leading investment banking franchise with a strong track record of advising on complex, transformational transactions and deep connectivity in the technology, media and telecommunications space.

In addition, under the terms of each of Cantor and Guggenheim Securities engagements, Forest Road agreed to reimburse Cantor and Guggenheim Securities, respectively, for their reasonable out-of-pocket expenses, including the fees and disbursements of its outside attorneys, and to indemnify each of Cantor and Guggenheim Securities and certain related parties against liabilities, including liabilities under federal securities laws, in each case, in connection with, as a result of, or relating to their respective engagements.

Each of Cantor and Guggenheim Securities therefore have an interest in the Company completing a business combination that will result in the payment of the deferred underwriting commission to the underwriters of the IPO, including Cantor and Guggenheim Securities. In considering approval of the Business Combination, the Company’s stockholders should consider the roles of Cantor and Guggenheim Securities in light of the deferred underwriting commission each of Cantor and Guggenheim Securities is entitled to receive if the Business Combination is consummated within 24 months of the closing of the IPO.

Recommendation of the Board

The Board believes that the Business Combination Proposal and the other proposals to be presented at the Special Meeting are in the best interest of Forest Road’s stockholders and unanimously recommends that our stockholders vote “FOR” the Business Combination Proposal, “FOR” the Organizational Document Proposal, “FOR” the separate Advisory Charter Proposal, “FOR” the NYSE Proposal, “FOR” the Incentive Plan Proposal, “FOR” the ESPP Proposal, “FOR” each of the director nominees set forth in the Director Election Proposal and “FOR” the Adjournment Proposal, in each case, if presented to the Special Meeting.

Conditions to the Closing of the Business Combination

Unless waived by the parties to the Merger Agreement, and subject to applicable law, the consummation of the Business Combination is subject to a number of conditions set forth in the Merger Agreement including, among other things, approval by Forest Road’s stockholders of the Merger Agreement and the Business Combination, effectiveness of this proxy statement/prospectus and this registration statement, expiration or termination of the waiting period under the Hart-Scott-Rodino Antitrust Improvements Act of 1976, and the rules and regulations promulgated thereunder (the “HSR Act”), receipt of approval for listing on the NYSE the shares of common stock of the Company to be issued in connection with the Mergers, and the absence of any injunctions. For more information about conditions to the consummation of the Business Combination, see “The Business Combination Proposal — The Merger Agreement — Conditions to the Closing of the Business Combination.”



 

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Sources and Uses of Funds for the Business Combination

The following table summarizes the sources and uses for funding the Business Combination. Where actual amounts are not known or knowable, the figures below represent Forest Road’s good faith estimate of such amounts.

Sources and Uses of Proceeds

($ in millions)

 

Sources

   No
Redemption(1)
     Max
Redemption(2)
 

Cash Held in Trust Account(3)

   $ 300.0      $ 300.0  

Private Placement Equity Financing(4)

     225.0        225.0  

Seller Rollover Equity

     2,862.3        2,862.3  

Seller Rollover Net Cash

     62.5        62.5  
  

 

 

    

 

 

 

Total Sources

   $  3,449.8      $  3,449.8  
  

 

 

    

 

 

 

Uses

             

Seller Rollover Equity

   $ 2,862.3      $ 2,862.3  

Cash Proceeds to Myx Shareholders

     37.7        37.7  
  

 

 

    

 

 

 

Total Seller Consideration / Pre Money Equity Value

     2,900.0        2,900.0  

Shareholder Redemptions

     0.0        175.0  

Net Cash to Balance Sheet(5)

     486.8        311.8  

Transaction Fees

     63.0        63.0  
  

 

 

    

 

 

 

Total Uses

   $  3,449.8      $  3,449.8  
  

 

 

    

 

 

 

 

(1)

Assumes that none of the holders of public shares of Class A Common Stock exercise their redemption rights.

(2)

Assumes that holders of 17,500,000 shares of Class A Common Stock exercise their redemption rights (representing the maximum amount of public shares that can be redeemed to satisfy the Minimum Cash Condition).

(3)

Represents the expected amount of the cash held in the Company’s trust account prior to the Closing (and prior to any redemption by Forest Road stockholders), excluding any interest earned on the funds.

(4)

Represents the proceeds from the PIPE as of the consummation of the Business Combination.

(5)

Represents the sum of proceeds from the PIPE as of the consummation of the Business Combination, cash held in the Company’s trust account prior to the Closing and existing cash of the Company on the balance sheet less expenses and less cash proceeds to Myx shareholders.

Certain United States Federal Income Tax Considerations

For a discussion summarizing the United States federal income tax considerations of an exercise of redemption rights, please see “United States Federal Income Tax Considerations of the Redemption.

Anticipated Accounting Treatment

For a discussion summarizing the anticipated accounting treatment of the Business Combination, please see “Anticipated Accounting Treatment.



 

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Regulatory Matters

Under the HSR Act and the rules that have been promulgated thereunder by the Federal Trade Commission (‘‘FTC’’), certain transactions may not be consummated unless information has been furnished to the Antitrust Division of the Department of Justice (“Antitrust Division”) and the FTC and certain waiting period requirements have been satisfied. The Business Combination is subject to these requirements and may not be completed until the expiration of a 30-day waiting period following the two filings of the required Notification and Report Forms with the Antitrust Division and the FTC or until early termination is granted. On February 24, 2021, Forest Road, Beachbody and Myx filed the required forms under the HSR Act with respect to the Business Combination with the Antitrust Division and the FTC and requested early termination.

At any time before or after consummation of the Business Combination, notwithstanding termination of the respective waiting periods under the HSR Act, the Department of Justice or the FTC, or any state or foreign governmental authority could take such action under applicable antitrust laws as such authority deems necessary or desirable in the public interest, including seeking to enjoin the consummation of the Business Combination, conditionally approving the Business Combination upon divestiture of assets, subjecting the completion of the Business Combination to regulatory conditions or seeking other remedies. Private parties may also seek to take legal action under the antitrust laws under certain circumstances. Forest Road cannot assure you that the Antitrust Division, the FTC, any state attorney general or any other government authority will not attempt to challenge the Business Combination on antitrust grounds, and, if such a challenge is made, Forest Road cannot assure you as to its result.

None of Forest Road, Beachbody or Myx are aware of any material regulatory approvals or actions that are required for completion of the Business Combination other than the expiration of the waiting period under the HSR Act. It is presently contemplated that if any such additional regulatory approvals or actions are required, those approvals or actions will be sought. There can be no assurance, however, that any additional approvals or actions will be obtained.

Risk Factors

In evaluating the proposals to be presented at the special meeting, a stockholder should carefully read this proxy statement and especially consider the factors discussed in the section entitled “Risk Factors.”

Sources of Industry and Market Data

Where information has been sourced from a third-party, the source of such information has been identified. Unless otherwise indicated, the information contained in this proxy statement on the market environment, market developments, growth rates, market trends and competition in the markets in which Forest Road and the Target Companies operate is taken from publicly available sources, including third-party sources, or reflects Forest Road’s or the Target Companies’ estimates that are principally based on information from publicly available sources.



 

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SELECTED HISTORICAL FINANCIAL INFORMATION OF FOREST ROAD

FOREST ROAD ACQUISITION CORP.

STATEMENT OF OPERATIONS

FOR THE PERIOD FROM SEPTEMBER 24, 2020 (INCEPTION) TO DECEMBER 31, 2020 (As Restated)

 

Formation and operating costs

   $ 531,404  
  

 

 

 

Loss from operations

     (531,404
  

 

 

 

Other Income (Expense)

  

Interest income

     10  

Change in fair value of warrant liabilities

     (3,608,275

Offering cost associated with warrants recorded as liabilities

     (980,895 )  

Loss on sale of private placement warrants

     (2,796,275
  

 

 

 

Total other income (expense)

     (7,385,435
  

 

 

 

Net loss

   $ (7,916,839
  

 

 

 

Weighted average shares outstanding of Class A common stock

     30,000,000  
  

 

 

 

Basic and diluted net income per share, Class A common stock

   $ 0.00  
  

 

 

 

Weighted average shares outstanding of Class B common stock

     6,856,915  
  

 

 

 

Basic and diluted net loss per share, Class B common stock

   $ (1.15
  

 

 

 
     December 31,
2020
 

Balance Sheet Data:

  

Total assets

   $ 301,478,213  

Total liabilities

   $ 42,699,466  

Total commitments

   $ 253,778,740  

Total stockholders’ equity

   $ 5,000,007  


 

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SELECTED HISTORICAL CONSOLIDATED FINANCIAL INFORMATION OF BEACHBODY

The following table shows selected historical financial information of Beachbody for the periods and as of the dates indicated.

The selected historical financial information of Beachbody as of December 31, 2020 and 2019, and for the years ended December 31, 2020, 2019 and 2018 was derived from the audited historical consolidated financial statements of Beachbody included elsewhere in this proxy statement/prospectus. As explained elsewhere in this proxy statement/prospectus, the financial information contained in this section relates to Beachbody, prior to and without giving pro forma effect to the impact of the Business Combination and, as a result, the results reflected in this section may not be indicative of the results of Beachbody going forward. See the section entitled “Unaudited Pro Forma Condensed Combined Financial Information” included elsewhere in this proxy statement/prospectus.

The following selected historical financial information should be read together with the consolidated financial statements and accompanying notes and “Management’s Discussion and Analysis of Financial Condition and Results of Operations of Beachbody” appearing elsewhere in this proxy statement/prospectus. The selected historical financial information in this section is not intended to replace Beachbody’s consolidated financial statements and the related notes. Beachbody’s historical results are not necessarily indicative of Beachbody’s future results.

 

     Year Ended December 31,  
Statement of Operations Data    2020      2019      2018  
     (amounts in thousands, except units and per
unit amounts)
 

Revenue:

        

Digital

   $  334,804      $  250,764      $  210,726  

Nutrition and other

     528,778        505,015        579,563  
  

 

 

    

 

 

    

 

 

 

Total revenue

     863,582        755,779        790,289  
  

 

 

    

 

 

    

 

 

 

Cost of revenue:

        

Digital

     38,285        33,595        27,308  

Nutrition and other

     211,422        176,724        201,607  
  

 

 

    

 

 

    

 

 

 

Total cost of revenue

     249,707        210,319        228,915  
  

 

 

    

 

 

    

 

 

 

Gross profit

     613,875        545,460        561,374  

Operating expenses:

        

Selling and marketing

     464,000        384,376        401,141  

Technology and development

     93,036        84,132        91,189  

General and administrative

     64,818        56,899        63,096  

Restructuring

     (1,677      1,171        6,555  
  

 

 

    

 

 

    

 

 

 

Total operating expenses

     620,177        526,578        561,981  
  

 

 

    

 

 

    

 

 

 

Operating income (loss)

     (6,302      18,882        (607

Interest expense

     (527      (790      (268

Other income, net

     666        813        991  
  

 

 

    

 

 

    

 

 

 

Income (loss) before income taxes

     (6,163      18,905        116  

Income tax benefit (provision)

     (15,269      13,390        —    
  

 

 

    

 

 

    

 

 

 

Net income (loss)

     (21,432      32,295        116  

Distribution and cumulative preferred return to Redeemable convertible preferred unit members

     —          (349      (21,752
  

 

 

    

 

 

    

 

 

 

Net income available to common unit members (loss)

   $ (21,432    $ 31,946      $ (21,636
  

 

 

    

 

 

    

 

 

 


 

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     Year Ended December 31,  
Statement of Operations Data    2020      2019      2018  
     (amounts in thousands, except units and per unit
amounts)
 

Net income (loss) per common unit, basic

   $ (0.35    $ 0.53      $ (0.36

Net income (loss) per common unit, diluted

   $ (0.35    $ 0.45      $ (0.36

Weighted-average common units outstanding, basic

     61,229,753        60,252,139        59,798,835  

Weighted average common units outstanding, diluted

     61,229,753        72,108,820        59,798,835  

 

     As of December 31,  
Balance Sheet Data    2020      2019  

Total assets

   $     356,253      $     291,111  

Total liabilities

     256,995        203,709  

Total mezzanine equity

     98,110        98,245  

Total members’ equity

     1,148        (10,843

Key Performance Indicators

Beachbody reports the following financial and operational key performance indicators, which are used by management to assess its performance:

Adjusted EBITDA. Beachbody defines and calculates Adjusted EBITDA as net income (loss) before the impact of interest income or expense, income tax (benefit) expense and depreciation and amortization, as further adjusted for the following items: equity-based compensation, transaction-related costs, restructuring and related costs and certain other non-core items. See “Management’s Discussion and Analysis of Financial Condition and Results of Operations of Beachbody  Non-GAAP Information” for important information about the limitations of Adjusted EBITDA and a reconciliation of Adjusted EBITDA to net income (loss), the most directly comparable financial measure calculated in accordance with U.S. GAAP.

Digital Subscriptions.    Digital subscriptions include Beachbody On Demand, Nutrition+, and Openfit subscriptions. Digital subscriptions include paid and free-to-pay subscriptions. Free to pay subscriptions, on average, represent less than 4% of total digital subscriptions. Digital subscriptions are inclusive of all billing plans, currently for annual, semi-annual, quarterly and monthly billing intervals.

Nutritional Subscriptions.    Beachbody packages and synthesizes the content experience of digital subscriptions with nutritional subscriptions that work together. Beachbody Nutritional Subscriptions are monthly subscriptions to nutritional products such as, Shakeology, Beachbody Performance, BEACHBAR, Bevvy and Collagen.

Average Digital Retention. Beachbody uses month over month digital subscription retention to measure the retention of its digital subscriptions. Beachbody defines digital subscription retention as the average rate in which a subscription renews for a new billing cycle.

Daily Active Users to Monthly Active Users (DAU/MAU). Beachbody uses the ratio of daily active users to monthly active users to understand how frequently digital customers are utilizing its service in a given month. Beachbody defines a daily active user as a unique user streaming content on its platform in a given day. Beachbody defines monthly active user in this ratio as a unique user streaming content on its platform in that same month.



 

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Average Monthly Streams per Average Active User. Beachbody uses average monthly streams per average active user to measure engagement, which is the leading indicator of retention for its digital subscribers. While the measure of a digital stream may vary across companies, Beachbody defines streams and total streams as the stream of a video for at least 25% of its length during a given period. Beachbody defines active user as an unique user streaming a program in a given period. Beachbody defines average monthly streams per active user as the total streams in the month divided by the average active users in the month.

The following table presents Beachbody’s key performance indicators for the periods indicated:

 

     As of December 31,  
     2020     2019     2018  

Digital Subscriptions (millions)

     2.6       1.7       1.5  

Nutritional Subscriptions (millions)

     0.4       0.3       0.4  
     For The Year Ended December 31,  
     2020     2019     2018  

Average Digital Retention

     95.5     95.3     94.1

Total Streams (in millions)

     180       104       89  

DAU/MAU

     31.6     29.2     28.5

Adjusted EBITDA (millions) (1)

   $     51.5     $     78.4     $     68.1  

 

(1)

Adjusted EBITDA is a non-GAAP financial measure. See “Management’s Discussion and Analysis of Financial Condition and Results of Operations of Beachbody  Non-GAAP Information” for the definition of and additional information about Adjusted EBITDA and reconciliation to net income (loss), the most directly comparable U.S. GAAP financial measure.

For important information about how Beachbody uses Digital Subscriptions, Nutritional Subscriptions, Average Digital Retention, Average Monthly Streams per Average Active User and Total Streams, see “Management’s Discussion and Analysis of Financial Condition and Results of Operations of Beachbody.”



 

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SELECTED HISTORICAL FINANCIAL INFORMATION OF MYX

The following selected historical financial information should be read together with the consolidated financial statements and accompanying notes and “Management’s Discussion and Analysis of Financial Condition and Results of Operations of Myx” appearing elsewhere in this proxy statement/prospectus. The selected historical financial information in this section is not intended to replace Myx’s consolidated financial statements and the related notes. Myx’s historical results are not necessarily indicative of Myx’s future results.

 

     For The Year Ended December 31,  
Statement of Operations Data    2020     2019     2018  
     (amounts in thousands)  

Net sales

   $ 29,671     $ —       $ —    

Cost of goods sold

     34,051       —         —    
  

 

 

   

 

 

   

 

 

 

Gross deficit

     (4,380     —         —    

Operating expenses:

      

Selling and marketing expenses

     9,243       766       131  

Technology and development

     1,950       1,565       997  

General and administrative

     6,484       1,686       821  

Depreciation

     55       63       34  
  

 

 

   

 

 

   

 

 

 

Total operating expenses

     17,732       4,080       1,983  
  

 

 

   

 

 

   

 

 

 

Loss from operations

     (22,112     (4,080     (1,983

Other income (expense)

     (156     38       17  

Loss from change in fair value of convertible instrument

     (288     —         —    

Interest expense

     (201     —         —    
  

 

 

   

 

 

   

 

 

 

Net loss

   $ (22,757   $ (4,042   $ (1,966
  

 

 

   

 

 

   

 

 

 

 

     As of December 31,  
Balance Sheet Data    2020     2019  
     (amounts in thousands)  

Total assets

   $ 18,129     $ 742  

Total liabilities

     39,939       725  

Total members’ (deficit) equity

     (21,810     17  


 

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SUMMARY UNAUDITED PRO FORMA CONDENSED COMBINED FINANCIAL INFORMATION

The following summary unaudited pro forma condensed combined financial data (the “summary pro forma data”) gives effect to the Business Combination and related transactions described in the section entitled “Unaudited Pro Forma Condensed Combined Financial Information.” The Beachbody Merger is expected to be accounted for as a reverse recapitalization, whereby Forest Road will be treated as the acquired company and Beachbody is treated as the acquirer. Accordingly, for accounting purposes, the Beachbody Merger will be treated as the equivalent of Beachbody issuing stock for the net assets of Forest Road, accompanied by a recapitalization. The net assets of Forest Road will be stated at historical cost, with no goodwill or other intangible assets recorded. Subsequently, results of operations presented for the period prior to the Beachbody Merger will be those of Beachbody. The Myx Merger will be treated as a business combination in accordance with GAAP and will be accounted for using the acquisition accounting method. Beachbody will record the estimated fair value of assets acquired and liabilities assumed from Myx. Any excess amounts after allocating the estimated consideration to identifiable tangible and intangible assets acquired and liabilities assumed will be recorded as goodwill. The summary unaudited pro forma condensed combined balance sheet data as of December 31, 2020 gives the pro forma effect to the Business Combination and related transactions as if they had occurred on December 31, 2020. The summary unaudited pro forma condensed combined statement of operations data for the year ended December 31, 2020 give pro forma effect to the Business Combination and related transactions as if they had been consummated on January 1, 2020.

The summary pro forma data have been derived from, and should be read in conjunction with, the unaudited pro forma condensed combined financial information of the combined company appearing elsewhere in this proxy statement/ prospectus and the accompanying notes. The unaudited pro forma condensed combined financial information is based upon, and should be read in conjunction with, the historical consolidated financial statements of Beachbody, Forest Road and Myx and related notes included in this proxy statement/ prospectus. The summary pro forma data have been presented for informational purposes only and are not necessarily indicative of what the combined company’s financial position or results of operations actually would have been had the Business Combination and related transactions been completed as of the dates indicated. In addition, the summary pro forma data do not purport to project the future financial position or operating results of the combined company.

The following table presents summary pro forma data after giving effect to the Business Combination and related transactions, assuming two redemption scenarios as follows:

 

   

Assuming No Redemption—assumes that none of the holders of shares of Forest Road’s Class A common stock will exercise redemption rights with respect to their public shares for a pro rata share of the funds in the trust account; and

 

   

Assuming Maximum Redemption—assumes that holders of 17,500,000 Forest Road public shares will exercise their redemption rights for their pro rata share (approximately $10.00 per share) of the funds in Forest Road’s trust account. The Merger Agreement includes a condition that, at the Closing, Forest Road will have a minimum of $350.0 million in cash comprising the amount of cash in (i) the trust account (after reduction for the aggregate amount of payments required to be made in connection with any Redemption), plus (ii) aggregate amount of cash that has been funded pursuant to the PIPE Financing.



 

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     Pro Forma
Combined
(Assuming No
Redemptions)
    Pro Forma
Combined
(Assuming
Maximum
Redemptions)
 
     (in thousands, except share and per
share data)
 

Summary Unaudited Pro Forma Condensed Combined

    

Statement of Operations Data Year Ended December 31, 2020

    

Total revenues

   $ 893,253     $ 893,253  

Gross profit

   $ 609,496     $ 609,496  

Operating loss

   $ (43,897   $ (43,897

Net loss

   $ (59,368   $ (59,368

Basic and diluted net loss per share

   $ (0.19   $ (0.20

Basic and diluted weighted average shares outstanding

     312,668,261       295,168,261  

Selected Unaudited Pro Forma Condensed Combined

    

Balance Sheet Data as of December 31, 2020

    

Total assets

   $ 986,228     $ 811,228  

Total liabilities

   $ 311,576     $ 311,576  

Total stockholders’ equity

   $ 674,652     $ 499,652  


 

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COMPARATIVE HISTORICAL AND UNAUDITED PRO FORMA PER

SHARE FINANCIAL INFORMATION

The following table sets forth selected historical comparative share information for Beachbody, Forest Road and Myx and unaudited pro forma condensed combined per share information after giving effect to the Business Combination and related transactions, assuming two redemption scenarios as follows:

 

   

Assuming No Redemption—assumes that none of the holders of shares of Forest Road’s Class A common stock will exercise redemption rights with respect to their public shares for a pro rata share of the funds in the trust account; and

 

   

Assuming Maximum Redemption—assumes that holders of 17,500,000 Forest Road public shares will exercise their redemption rights for their pro rata share (approximately $10.00 per share) of the funds in Forest Road’s trust account. The Merger Agreement includes a condition that, at the Closing, Forest Road will have a minimum of $350.0 million in cash comprising the amount of cash in (i) the trust account (after reduction for the aggregate amount of payments required to be made in connection with any Redemption), plus (ii) aggregate amount of cash that has been funded pursuant to the PIPE Financing.

The pro forma book value information reflects the Business Combination and related transactions as if they had occurred on December 31, 2020. The weighted average shares outstanding and net income (loss) per share information give pro forma effect to the Business Combination and related transactions as if they had occurred on January 1, 2020.

This information is only a summary and should be read together with the selected historical financial information included elsewhere in this proxy statement/ prospectus and the historical financial statements of Beachbody, Forest Road and Myx and related notes that are included elsewhere in this proxy statement/ prospectus. The unaudited pro forma combined per share information of Beachbody, Forest Road and Myx is derived from, and should be read in conjunction with, the unaudited pro forma condensed combined financial statements and related notes included elsewhere in this proxy statement/ prospectus.

The unaudited pro forma combined earnings per share information below does not purport to represent the earnings 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 Beachbody, Forest Road and Myx would have been had the companies been combined during the periods presented.

 

                Combined Pro Forma     Beachbody equivalent pro
forma per share data (3)
 
    Beachbody
(Historical)
    Forest Road
(Historical) (4)
    (Assuming

No
Redemption)
    (Assuming
Maximum
Redemption)
    (Assuming
No
Redemption)
    (Assuming
Maximum
Redemption)
 

As of and for the Year Ended December 31, 2020 (2)

           

Book value per share (1)

  $ 0.02     $ 0.73     $ 2.16     $ 1.69     $ 7.25     $ 5.68  

Weighted average shares outstanding of common stock—basic and diluted

    61,229,753       6,856,915       312,668,261       295,168,261       242,886,298       242,886,298  

Net loss per share of common stock—basic and diluted

  $ (0.35   $ (1.15   $ (0.19   $ (0.20   $ (0.64   $ (0.68

 

(1)

Book value per share = (Total equity excluding preferred shares)/shares outstanding.

(2)

There were no cash dividends declared in the periods presented.

(3)

The equivalent pro forma basic and diluted per share data for Beachbody is based on the exchange ratio set forth in the Merger Agreement. The weighted average shares outstanding includes Beachbody preferred units, which will be converted into shares of Forest Road common stock at the effective time of the Business Combination.

(4)

Net loss per share of common stock – basic and diluted of Forest Road represents the basic and diluted net loss per share of Class B common stock of Forest Road. Weighted average shares outstanding of common stock – basic and diluted of Forest Road represents the weighted average shares outstanding of Class B common stock of Forest Road. Book value per share of Forest Road represents the book value per share of Class B common stock of Forest Road.



 

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TICKER SYMBOLS AND DIVIDEND INFORMATION

Forest Road

Units, Common Stock and Warrants

Our Class A Common Stock and warrants are currently listed on the NYSE under the symbols “FRX” and “FRX WS,” respectively. Certain of our shares of Class A Common Stock and warrants currently trade as units consisting of one share of Class A Common Stock and one redeemable warrant and are listed on the NYSE under the symbol “FRX.U.” The units will automatically separate into their component securities upon consummation of the Business Combination and, as a result, will no longer trade as an independent security. Upon the Closing, we intend to change our name from “Forest Road Acquisition Corp.” to “The Beachbody Company, Inc.” We intend to continue the listing of our Class A Common Stock and warrants on the NYSE under the symbols “BODY” and “BODY WS”, respectively upon the Closing.

Holders

As of March 22, 2021, there was one holder of record of our units, one holder of record of our Class A Common Stock and three holders of record of our warrants. The number of holders of record does not include a substantially greater number of “street name” holders or beneficial holders whose units, shares of Class A Common Stock and warrants are held of record by banks, brokers and other financial institutions.

Dividend Policy

Forest Road has not paid any cash dividends on its shares of common stock to date and does not intend to pay any cash dividends prior to the completion of the Business Combination. The payment of cash dividends in the future will be dependent upon the Company’s revenues and earnings, if any, capital requirements and general financial condition subsequent to completion of the Business Combination. The payment of any cash dividends subsequent to a Business Combination will be within the discretion of the Board at such time.

Beachbody

There is no public market for shares of Beachbody’s equity securities.

MYX

There is no public market for Myx’s equity securities.



 

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SUMMARY RISK FACTORS

You should consider all the information contained in this proxy statement/prospectus in deciding how to vote for the proposals presented in this proxy statement/prospectus. In particular, you should consider the risk factors described under “Risk Factors” beginning on page 45. Such risks include, but are not limited to, the following risks with respect to the Company subsequent to the Business Combination:

For the purposes of this section, “we,” “us” and “our” refers to the Company subsequent to the Business Combination.

Risks Related to Our Business and Industry

 

   

If we are unable to anticipate and satisfy consumer preferences and shifting views of health, fitness and nutrition, our business may be adversely affected.

 

   

The perception of the effects of our nutritional products may change over time, which could reduce customer demand.

 

   

If we are unable to sustain pricing levels for our products and services, our business could be adversely affected.

 

   

Our marketing strategy relies on the use of social media platforms and any negative publicity on such social media platforms may adversely affect the public perception of our brand, and changing terms or conditions or ways in which advertisers use their platforms may adversely affect our ability to engage with customers, both of which in turn could have a material and adverse effect on our business, results of operations and financial condition. In addition, our use of social media could subject us to fines or other penalties.

 

   

We may be unable to attract and retain customers, which would materially and adversely affect our business, results of operations and financial condition.

 

   

Our customers use their connected fitness products and fitness accessories to track and record their workouts. If our products fail to provide accurate metrics and data to our customers, our brand and reputation could be harmed and we may be unable to retain our customers.

 

   

Our business relies on sales of a few key products.

 

   

We may be unable to effectively integrate Myx’s business into our operations.

 

   

The failure or inability of our contract manufacturers to comply with the specifications and requirements of our products could result in product recall, which could adversely affect our reputation and subject us to significant liability should the consumption of any of our products cause or be claimed to cause illness or physical harm.

 

   

If any of our products are unacceptable to us or our customers, our business could be harmed.

 

   

Our business model relies on high quality customer service, and any negative impressions of our customer service experience may adversely affect our business and result in harm to our reputation.

 

   

The seasonal nature of our business could cause operating results to fluctuate.

 

   

If we fail to obtain and retain high-profile strategic relationships, or if the reputation of any of these parties is impaired, our business may suffer.

 

   

Our founder has control over all stockholder decisions because he controls a substantial majority of our voting power through “super” voting stock.

 

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Risks Related to Expansion

 

   

There can be no assurance that we can further penetrate existing markets or that we can successfully expand our business into new markets.

 

   

We plan to expand into international markets, which will expose us to significant risks.

Risks Related to Our Personnel

 

   

We depend on our senior management team and other key employees, and the loss of one or more key personnel or an inability to attract, hire, integrate and retain highly skilled personnel could have an adverse effect on our business, financial condition and results of operations.

Risks Related to Data and Information Systems

 

   

We collect, store, process, and use personal information and other customer data which subjects us to legal obligations and laws and regulations related to data security and privacy, and any actual or perceived failure to meet those obligations could harm our business.

 

   

Any major disruption or failure of our information technology systems or websites, or our failure to successfully implement upgrades and new technology effectively, could adversely affect our business and operations.

Risks Related to Laws and Regulations

 

   

We face risks, such as unforeseen costs and potential liability in connection with content we produce, license and distribute through our various content delivery platforms.

 

   

Our nutritional products must comply with regulations of the Food and Drug Administration, or FDA, as well as state, local and applicable international regulations. Any non-compliance with the FDA or other applicable regulations could harm our business.

 

   

Our network marketing program could be found not to be in compliance with current or newly adopted laws or regulations in one or more markets, which could have a material adverse effect on our business.

 

   

Our products or services offered as part of automatically renewing subscriptions or memberships could be found not to be in compliance with laws or regulations in one or more markets, which could have a material adverse effect on our business.

 

   

Myx may be subject to warranty claims that could result in significant direct or indirect costs, or Myx could experience greater returns than expected, either of which could have an adverse effect on our business, financial condition, and results of operations.

 

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RISK FACTORS

You should carefully consider all the following risk factors, together with all of the other information in this proxy statement/prospectus, including the financial information, before deciding how to vote or instruct your vote to be cast to approve the Proposals described in this proxy statement/prospectus.

The value of your investment following the completion of the Business Combination will be subject to significant risks affecting, among other things, the Company’s business, financial condition and results of operations. If any of the events described below occur, the Company’s post-Business Combination business and financial results could be adversely affected in material respects. This could result in a decline, which may be significant, in the trading price of the Company’s securities and you therefore may lose all or part of your investment. The risk factors described below are not necessarily exhaustive and you are encouraged to perform your own investigation with respect to the businesses of Forest Road and the Target Companies.

Throughout this section, references to the “Company” refer to the Company and its consolidated subsidiaries subsequent to the Business Combination as the context so requires.

Risks Related to the Business Combination

Forest Road’s stockholders will experience dilution due to the issuance of shares of common stock of the Company, and securities that are exchangeable for shares of common stock of the Company, to the Target Companies’ Security Holders as consideration in the Merger, the issuance of shares to the PIPE Investors in the PIPE Financing and the issuance to the Target Companies’ Security Holders of securities entitling them to a significant voting stake in the Company.

Based on the Target Companies’ and Forest Road’s current capitalization, we anticipate issuing to the Target Companies’ Security Holders an aggregate of              shares of Company common stock pursuant to the Merger Agreement, and it is currently expected that Forest Road’s current stockholders would hold in the aggregate approximately     % of the outstanding common stock of the Company. If any of the Public Shares are redeemed in connection with the Merger, the percentage of the outstanding common stock held by the Public Stockholders will decrease and the percentages of the outstanding common stock held immediately following the Business Combination by the Sponsor and outstanding common stock issuable to the Target Companies’ stockholders will increase. To the extent that any of the outstanding warrants are exercised for shares of Common Stock, or additional awards are issued under the 2020 Plan or 2021 Plan, Forest Road’s existing stockholders may experience substantial dilution. Such dilution could, among other things, limit the ability of Forest Road’s current stockholders to influence the Company’s management through the election of directors following the Business Combination.

The ability of Forest Road’s stockholders to exercise Redemption Rights with respect to Forest Road’s Public Shares may prevent Forest Road from completing the Business Combination or optimizing its capital structure.

Forest Road does not know how many stockholders will ultimately exercise their Redemption Rights in connection with the Business Combination. As such, the Business Combination is structured based on Forest Road’s expectations (and those of the other parties to the Merger Agreement) as to the number of shares that will be submitted for Redemption. In addition, if a larger number of shares are submitted for Redemption than Forest Road initially expected, Forest Road may need to seek to arrange for additional third-party financing to be able to have the minimum amount of cash required pursuant to the Merger Agreement.

Even if such third-party financing is available, Forest Road’s ability to obtain such financing is subject to restrictions set forth in the Merger Agreement, including the consent of the Target Companies, acting reasonably. For information regarding the parameters of such restrictions, please see the sections of this proxy statement/prospectus entitled “The Business Combination Proposal — The Merger Agreement — Covenants of the Parties” and “The Business Combination Proposal — The Merger Agreement — Closing Conditions.

 

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Furthermore, raising such additional financing may involve dilutive equity issuances at higher than desirable levels. For information on the consequences if the Business Combination is not completed or must be restructured, please see the section of this proxy statement/prospectus entitled “Risk Factors — Risks Related to Forest Road.

Subsequent to the completion of the Business Combination, the Company may be required to take write-downs or write-offs, restructuring and impairment or other charges that could have a significant negative effect on its financial condition and its share price, which could cause you to lose some or all of your investment.

Forest Road cannot assure you that the due diligence Forest Road has conducted on the Target Companies will reveal all material issues that may be present with regard to the Target Companies, or that factors outside of Forest Road’s or the Target Companies’ control will not later arise. As a result of unidentified issues or factors outside of Forest Road’s or the Target Companies’ control, the Company may be forced to later write-down or write-off assets, restructure operations, or incur impairment or other charges that could result in reporting losses. Even if Forest Road’s due diligence successfully identifies certain risks, unexpected risks may arise and previously known risks may materialize in a manner not consistent with the preliminary risk analysis conducted by Forest Road. Even though these charges may be non-cash items that would not have an immediate impact on the Company’s liquidity, the fact that the Company reports charges of this nature could contribute to negative market perceptions about the Company or its securities. In addition, charges of this nature may cause the Company to violate leverage or other covenants to which it may be subject. Accordingly, any stockholders who choose to remain stockholders following the Business Combination could suffer a reduction in the value of their shares from any such write-down or write-downs.

The Company’s ability to be successful following the Business Combination will depend upon the efforts of the Company Board and the Target Companies’ key personnel and the loss of such persons could negatively impact the operations and profitability of the Company’s business following the Business Combination.

The Company’s ability to be successful following the Business Combination will be dependent upon the efforts of the Company Board and key personnel. Forest Road cannot assure you that, following the Business Combination, the Company Board and the Company’s key personnel will be effective or successful or remain with the Company. In addition to the other challenges they will face, such individuals may be unfamiliar with the requirements of operating a public company, which could cause the Company’s management to expend time and resources becoming familiar with such requirements.

The Company will be a holding company and its only material asset after completion of the Business Combination will be its interest in its subsidiaries, and it is accordingly dependent upon distributions made by their subsidiaries to pay taxes and pay dividends.

Upon completion of the Business Combination, the Company will be a holding company with no material assets other than the equity interests in its direct and indirect subsidiaries, including Beachbody, LLC and Myx. As a result, the Company will have no independent means of generating revenue or cash flow. The Company’s ability to pay taxes and pay dividends will depend on the financial results and cash flows of its subsidiaries and the distributions it receives from the its subsidiaries. Deterioration in the financial condition, earnings or cash flow of the such subsidiaries for any reason could limit or impair such subsidiaries’ ability to pay such distributions. Additionally, to the extent that the Company needs funds and its subsidiaries are restricted from making such distributions under applicable law or regulation or under the terms of any financing arrangements, or its subsidiaries are otherwise unable to provide such funds, it could materially adversely affect the Company’s liquidity and financial condition.

Dividends on the Company’s common stock, if any, will be paid at the discretion of the Company Board, which will consider, among other things, the Company’s business, operating results, financial condition, current

 

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and expected cash needs, plans for expansion and any legal or contractual limitations on its ability to pay such dividends. Financing arrangements may include restrictive covenants that restrict the Company’s ability to pay dividends or make other distributions to its stockholders. In addition, entities are generally prohibited under relevant law from making a distribution to a stockholder to the extent that, at the time of the distribution, after giving effect to the distribution, the liabilities of such entity (subject to certain exceptions) exceed the fair value of its assets. If the Company’s subsidiaries do not have sufficient funds to make distributions, the Company’s ability to declare and pay cash dividends may also be restricted or impaired.

Forest Road has not obtained an opinion from an independent investment banking firm or another independent firm, and consequently, you may have no assurance from an independent source that the terms of the Business Combination are fair to Forest Road from a financial point of view.

The Forest Road Board did not obtain a third-party valuation or fairness opinion in connection with their determination to approve the Business Combination. Forest Road is not required to obtain an opinion from an independent investment banking firm that is a member of FINRA or from another independent firm that the price it is paying is fair to Forest Road from a financial point of view. In analyzing the Business Combination, the Forest Road Board and Forest Road’s management conducted due diligence on the Target Companies and researched the industry in which the Target Companies operate and concluded that the Business Combination was in the best interest of its stockholders. Accordingly, Forest Road’s stockholders will be relying solely on the judgment of the Forest Road Board in determining the value of the Business Combination, and the Forest Road Board may not have properly valued such business. The lack of third-party valuation or fairness opinion may also lead an increased number of stockholders to vote against the Business Combination or demand Redemption of their shares, which could potentially impact our ability to consummate the Business Combination. For more information about our decision-making process, see the section entitled “The Business Combination Proposal — Forest Road Board’s Reasons for the Approval of the Business Combination.”

The NYSE may delist the Company’s securities from trading on its exchange, which could limit investors’ ability to make transactions in the Company’s securities and subject the Company to additional trading restrictions.

Forest Road’s securities are currently listed on the NYSE and it is anticipated that, following the Business Combination, the Company’s securities will be listed on the NYSE. However, Forest Road cannot assure you that the Company’s securities will continue to be listed on the NYSE in the future. In order to continue to maintain the listing of the Company’s securities on the NYSE, the Company must maintain certain financial, distribution and stock price levels. In addition to the listing requirements for the Company’s common stock, the NYSE imposes listing standards on warrants. Forest Road cannot assure you that the Company will be able to meet those initial listing requirements.

If the NYSE delists the Company’s securities from trading on its exchange and the Company is not able to list its securities on another national securities exchange, Forest Road expects the Company’s securities could be quoted on an over-the-counter market. If this were to occur, the Company could face significant material adverse consequences, including:

 

   

a limited availability of market quotations for its securities;

 

   

reduced liquidity for its securities;

 

   

a determination that the Company common stock is a “penny stock” which will require brokers trading in the common stock to adhere to more stringent rules and possibly result in a reduced level of trading activity in the secondary trading market for the Company’s securities;

 

   

a limited amount of news and analyst coverage; and

 

   

a decreased ability to issue additional securities or obtain additional financing in the future.

 

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The unaudited pro forma financial information included in the section entitled “Unaudited Pro Forma Condensed Combined Financial Information may not be representative of the Company’s results if the Business Combination is completed.

Forest Road and the Target Companies currently operate as separate companies and have had no prior history as a combined entity, and the Target Companies’ and the Company’s operations have not previously been managed on a combined basis. The pro forma financial information included in this proxy statement/prospectus is presented for informational purposes only and is not necessarily indicative of the financial position or results of operations that would have actually occurred had the Business Combination been completed at or as of the dates indicated, nor is it indicative of the future operating results or financial position of the Company. The pro forma statement of operations does not reflect future nonrecurring charges resulting from the Business Combination. The unaudited pro forma financial information does not reflect future events that may occur after the Business Combination and does not consider potential impacts of future market conditions on revenues or expenses. The pro forma financial information included in the section entitled “Unaudited Pro Forma Condensed Combined Financial Information” has been derived from Forest Road’s and the Target Companies’ historical financial statements and certain adjustments and assumptions have been made regarding the Company after giving effect to the Business Combination. There may be differences between preliminary estimates in the pro forma financial information and the final acquisition accounting, which could result in material differences from the pro forma information presented in this proxy statement/prospectus in respect of the estimated financial position and results of operations of the Company.

In addition, the assumptions used in preparing the pro forma financial information may not prove to be accurate and other factors may affect the Company’s financial condition or results of operations following the Closing. Any potential decline in the Company’s financial condition or results of operations may cause significant variations in the stock price of the Company.

During the pendency of the Business Combination, Forest Road will not be able to enter into a business combination with another party because of restrictions in the Merger Agreement. Furthermore, certain provisions of the Merger Agreement will discourage third parties from submitting alternative takeover proposals, including proposals that may be superior to the arrangements contemplated by the Merger Agreement.

Covenants in the Merger Agreement impede the ability of Forest Road to make acquisitions or complete other transactions that are not in the ordinary course of business pending completion of the Business Combination. As a result, Forest Road may be at a disadvantage to its competitors during that period. In addition, while the Merger Agreement is in effect, neither Forest Road nor the Target Companies may solicit, assist, facilitate the making, submission or announcement of, or intentionally encourage any alternative acquisition proposal, such as a merger, material sale of assets or equity interests or other business combination, with any third party, even though any such alternative acquisition could be favorable to Forest Road’s stockholders than the Business Combination. In addition, if the Business Combination is not completed, these provisions will make it more difficult to complete an alternative business combination following the termination of the Merger Agreement due to the passage of time during which these provisions have remained in effect.

If the conditions to the Merger Agreement are not met, the Business Combination may not occur.

Even if the Merger Agreement is approved by the stockholders of Forest Road and the Target Companies, specified conditions must be satisfied or waived before the parties to the Merger Agreement are obligated to complete the Business Combination. For a list of the material closing conditions contained in the Merger Agreement, see the section titled “The Business Combination Proposal — The Merger Agreement — Conditions to the Closing of the Business Combination.” Forest Road and the Target Companies may not satisfy all of the closing conditions in the Merger Agreement. If the closing conditions are not satisfied or waived, the Business Combination will not occur, or will be delayed pending later satisfaction or waiver, and such delay may cause

 

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Forest Road and the Target Companies to each lose some or all of the intended benefits of the Business Combination.

The Proposed Charter and Bylaws will contain certain provisions, including anti-takeover provisions that limit the ability of stockholders to take certain actions and could delay or discourage takeover attempts that stockholders may consider favorable.

The Proposed Charter will contain provisions that may discourage unsolicited takeover proposals that stockholders may consider to be in their best interests. Forest Road is also subject to anti-takeover provisions under Delaware law, which could delay or prevent a change of control. Together these provisions may make more difficult the removal of management and may discourage transactions that otherwise could involve payment of a premium over prevailing market prices for Forest Road’s securities. These provisions are described in the Section titled “Organizational Document Proposal.”

The Proposed Charter will not limit the ability of the Sponsor or its affiliates to compete with us.

The Sponsor and its affiliates engage in a broad spectrum of activities. In the ordinary course of their business activities, the Sponsor and its affiliates may engage in activities where their interests conflict with the Company’s interests or those of its stockholders. The Proposed Charter will provide that none of the Sponsor, any of its respective affiliates or any director who is not employed by the Company (including any non-employee director who serves as one of its officers in both his director and officer capacities) or his or her affiliates will have any duty to refrain from engaging, directly or indirectly, in the same business activities or similar business activities or lines of business in which the Company operates. The Sponsor and its affiliates also may pursue, in their capacities other than as directors of the Company Board, acquisition opportunities that may be complementary to the Company’s business, and, as a result, those acquisition opportunities may not be available to the Company. In addition, the Sponsor may have an interest in pursuing acquisitions, divestitures and other transactions that, in its judgment, could enhance its investment, even though such transactions might involve risks to you.

Forest Road’s officers and directors and/or their affiliates may enter into agreements concerning Forest Road’s securities prior to the Special Meeting, which may have the effect of increasing the likelihood of completion of the Business Combination or decreasing the value of the Forest Road Shares.

At any time prior to the Special Meeting, during a period when they are not then aware of any material nonpublic information regarding Forest Road or its securities, Forest Road’s officers and directors and/or their affiliates may enter into a written plan to purchase Forest Road’s securities pursuant to Rule 10b5-1 of the Exchange Act, and may engage in other public market purchases, as well as private purchases, of securities. In addition, at any time prior to the Special Meeting, during a period when they are not then aware of any material nonpublic information regarding Forest Road or its securities, Forest Road’s officers and directors and/or their respective affiliates may (i) purchase shares from institutional and other investors who vote, or indicate an intention to vote, against the Business Combination Proposal or the other Proposals, (ii) execute agreements to purchase such shares from institutional and other investors in the future, and/or (iii) enter into transactions with institutional and other investors to provide such persons with incentives to acquire Public Shares or vote their Public Shares in favor of the Business Combination Proposal or the other Proposals. Such an agreement may 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 Forest Road’s officers and directors or their affiliates purchase shares in privately negotiated transactions from Public Stockholders who have already elected to exercise their Redemption Rights, such selling Public Stockholders would be required to revoke their prior elections to redeem their shares. While the exact nature of any such incentives has not been determined as of the date of this proxy statement/prospectus, they might include, without limitation, arrangements to protect such investors or holders against potential loss in value of their shares, including the granting of put options and the transfer of shares or Warrants owned by the Sponsor for nominal value to such investors or holders.

 

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The purpose of such share purchases and other transactions by Forest Road’s officers and directors and/or their respective affiliates would be to increase the likelihood of satisfaction of the requirements that (x) the holders of the requisite number of Forest Road Shares present and voting at the Special Meeting vote in favor of the Business Combination Proposal and the other Proposals and/or (y) that Forest Road will (without regard to any assets or liabilities of the Target Companies) have at least $5,000,001 in net tangible assets immediately prior to the Closing or satisfy the Cash Consideration Condition after taking into account holders of Public Shares that properly demanded Redemption of their shares into cash, when, in each case, it appears that such requirements would otherwise not be met.

Entering into any such arrangements may have a depressive effect on the Forest Road Shares. For example, as a result of these arrangements, an investor or holder may have the ability to effectively purchase shares at a price lower than market and may therefore be more likely to sell the shares it owns, either prior to or immediately after the Special Meeting.

As of the date of this proxy statement/prospectus, except as noted above, Forest Road’s directors and officers and their affiliates have not entered into any such agreements. Forest Road will file a Current Report on Form 8-K to disclose arrangements entered into or significant purchases made by any of the aforementioned persons that would affect the vote on the Business Combination Proposal or the Redemption threshold. Any such report will include descriptions of any arrangements entered into or significant purchases by any of the aforementioned persons.

The Company’s business and operations could be negatively affected if it becomes subject to any securities litigation or stockholder activism, which could cause the Company to incur significant expense, hinder execution of business and growth strategy and impact its stock price.

In the past, following periods of volatility in the market price of a company’s securities, securities class action litigation has often been brought against that company. Stockholder activism, which could take many forms or arise in a variety of situations, has been increasing recently. Volatility in the stock price of the Company’s common stock or other reasons may in the future cause it to become the target of securities litigation or stockholder activism. Securities litigation and stockholder activism, including potential proxy contests, could result in substantial costs and divert management’s and board of directors’ attention and resources from the Company’s business. Additionally, such securities litigation and stockholder activism could give rise to perceived uncertainties as to the Company’s future, adversely affect its relationships with service providers and make it more difficult to attract and retain qualified personnel. Also, the Company may be required to incur significant legal fees and other expenses related to any securities litigation and activist stockholder matters. Further, its stock price could be subject to significant fluctuation or otherwise be adversely affected by the events, risks and uncertainties of any securities litigation and stockholder activism.

Future resales of common stock after the consummation of the Business Combination may cause the market price of the Company’s securities to drop significantly, even if the Company’s business is doing well.

Pursuant to the Registration Rights Agreement, the Sponsor Agreement and the Bylaws, after the consummation of the Business Combination and subject to certain exceptions, the Sponsor, those receiving shares of Company stock as consideration pursuant to the Merger Agreement, directors, officers and employees of the Company receiving shares of Company stock upon the settlement or exercise of warrants, stock options or other equity awards, and warrantholders of the Company receiving shares of Company stock upon the settlement or exercise of such warrants (other than holders of the Company’s warrants that are currently listed) will be contractually restricted from selling or transferring any of their shares of common stock. Such restrictions begin at Closing and end, in the case of the shares that are restricted pursuant to the Bylaws, on the date that is 180 days after Closing and in the case of the shares restricted pursuant to the Registration Rights Agreement or the Sponsor Agreement, on such dates as are described in the section titled “The Business Combination Proposal — Related Agreements.”

 

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However, following the expiration of the applicable lock-up period, such equityholders will not be restricted from selling shares of Company common stock held by them, other than by applicable securities laws. As such, sales of a substantial number of shares of Company common stock in the public market could occur at any time. These sales, or the perception in the market that the holders of a large number of shares intend to sell shares, could reduce the market price of Company common stock. As restrictions on resale end and registration statements (filed after the Closing to provide for the resale of such shares from time to time) are available for use, the sale or possibility of sale of these shares could have the effect of increasing the volatility in the Company’s share price or the market price of Company common stock could decline if the holders of currently restricted shares sell them or are perceived by the market as intending to sell them.

Risks Related to Beachbody and Myx

Following the Business Combination, the Company will be a holding company with no direct operations that relies on dividends, distributions, loans and other payments, advances and transfers of funds from Beachbody and Myx to pay dividends, pay expenses and meet its other obligations. Accordingly, the Company’s stockholders and warrant holders will be subject to all of the risks of the businesses of Beachbody and Myx following the Business Combination.

For the purposes of this section, “we,” “us” and “our” refers to Beachbody and Myx, as applicable.

Risks Related to Our Business and Industry

If we are unable to anticipate and satisfy consumer preferences and shifting views of health, fitness and nutrition, our business may be adversely affected.

The fitness industry is highly susceptible to changes in consumer preferences. Our success depends on our ability to anticipate and satisfy consumer preferences relating to health, fitness and nutrition. Our business is, and all of our workouts and products are, subject to changing consumer preferences that cannot be predicted with certainty. Consumers’ preferences for health and fitness services and products, including the technology through which they consume these services and products, could shift rapidly to offerings different from what we offer, and we may be unable to anticipate and respond to such shifts in consumer preferences. It is also possible that competitors could introduce new products, services and/or technologies that negatively impact consumer preference for our workouts and products. In addition, developments or shifts in research or public opinion on the types of workouts and products we provide could negatively impact our business. Even if we are successful in anticipating consumer preferences, our ability to adequately react to and address those preferences will in part depend upon our continued ability to develop and introduce innovative, high-quality health and fitness services. Our failure to effectively introduce new health and fitness services that are accepted by consumers could result in a decrease in revenue, which could have a material adverse effect on our financial condition and adversely impact our business.

The perception of the effects of our nutritional products may change over time, which could reduce customer demand.

A substantial portion of our revenues is derived from our Shakeology line of products. We believe that these nutritional products have, or are perceived to have, positive effects on health, and compete in a market that relies on innovation and evolving consumer preferences. However, the nutritional industry is subject to changing consumer trends, demands and preferences. Additionally, the science underlying nutritious foods and dietary supplements is constantly evolving. Therefore, products once considered healthy may over time become disfavored by consumers or no longer be perceived as healthy. Trends within the food industry change often and our failure to anticipate, identify or react to changes in these trends could, among other things, lead to reduced consumer demand and spending reductions, and could adversely impact our business, financial condition and results of operations. Additionally, ingredients used in our products may become negatively perceived by

 

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consumers, resulting in reformulation of existing products to remove such ingredients, which may negatively affect taste or other qualities. Factors that may affect consumer perception of nutritional products include dietary trends and attention to different nutritional aspects of foods, concerns regarding the health effects of specific ingredients and nutrients, trends away from specific ingredients in products and increasing awareness of the environmental and social effects of product production. For example, conflicting scientific information on what constitutes good nutrition, diet trends and other weight loss trends may also adversely affect our business from time to time. Our success depends, in part, on our ability to anticipate the tastes and dietary habits of consumers and other consumer trends and to offer nutritional products that appeal to their needs and preferences on a timely and affordable basis. Failure to do so could have a material adverse effect on our financial condition and adversely impact our business.

We rely on consumer discretionary spending, which may be adversely affected by economic downturns and other macroeconomic conditions or trends.

Our business and operating results are subject to global economic conditions and their impact on consumer discretionary spending. Some of the factors that may negatively influence consumer spending include high levels of unemployment, higher consumer debt levels, reductions in net worth, declines in asset values and related market uncertainty, home foreclosures and reductions in home values, fluctuating interest rates and credit availability, fluctuating fuel and other energy costs, fluctuating commodity prices and general uncertainty regarding the overall future of the political and economic environment. Consumer purchases of discretionary items generally decline during periods of economic uncertainty, when disposable income is reduced or when there is a reduction in consumer confidence. If consumer purchases of subscriptions and products decline, our revenue may be adversely affected.

For example, the outbreak of the novel coronavirus (“COVID-19”), a virus causing potentially deadly respiratory tract infections, has negatively affected economic conditions regionally as well as globally and has caused a reduction in consumer spending. Efforts to contain the effect of the virus have included travel restrictions and restrictions on public gatherings. Many businesses have eliminated non-essential travel and canceled in-person events to reduce instances of employees and others being exposed to large public gatherings, and governments across the globe have restricted business activities and strongly encouraged, instituted orders or otherwise restricted individuals from leaving their home. These efforts have led to an increase in at-home gyms and workouts which has in turn led to an increase in our consumers, a trend which may be negatively impacted when commercial and office gyms reopen. The ultimate severity of the coronavirus outbreak and successful distribution and vaccine inoculation results are uncertain at this time and therefore we cannot predict the full impact it may have on our end markets or operations; however, the effect on our results could be material and adverse. Any significant or prolonged decrease in consumer spending on fitness or nutritional products could adversely affect the demand for our offerings, reducing our cash flows and revenues, and thereby materially harming our business, financial condition, results of operations and prospects.

COVID-19 has had a significant impact on the fitness sector and has increased demand for home fitness solutions as gyms across the country have either been shuttered by government orders or abandoned by members uncertain of their safety in those facilities. While we cannot predict the long-term impact on consumer behavior, we believe that a significant percentage of gym goers do not plan to return to the gym even after widespread distribution of the COVID-19 vaccine. The adoption of at-home connected fitness by the broad market consumer has been accelerated by the pandemic. In addition, COVID-19 has had an adverse impact on global supply chains, resulting in an increased uncertainty in shipping lead times as well as increased import and logistics costs. However, if a significant percentage of consumers return to the gym and do not continue at-home fitness, or import and logistics costs continue to increase, our business, financial condition, results of operations and prospects may be adversely affected.

 

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If we are unable to sustain pricing levels for our products and services, our business could be adversely affected.

If we are unable to sustain pricing levels for our products and services, including our nutritional products, digital services and connected fitness products, whether due to competitive pressure or otherwise, our revenue and gross margins could be significantly reduced. Further, our decisions around the development of new ancillary products and services are grounded in assumptions about eventual pricing levels. If there is price compression in the market after these decisions are made, it could have a negative effect on our business.

Our success depends on our ability to maintain the value and reputation of our brands.

We believe that our brands are important to attracting and retaining customers. Maintaining, protecting, and enhancing our brands depends largely on the success of our marketing efforts, ability to provide consistent, high-quality products, services, features, content, and support, and our ability to successfully secure, maintain, and defend our rights to use our trademarks, logos and other intellectual property important to our brands. We believe that the importance of our brands will increase as competition further intensifies and brand promotion activities may require substantial expenditures. Our brands could be harmed if we fail to achieve these objectives or if our public image were to be tarnished by negative publicity. Unfavorable publicity about us, including our products, services, technology, subscriber service, content, personnel, industry, distribution and/or marketing channel, and suppliers could diminish confidence in, and the use of, our products and services. Such negative publicity also could have an adverse effect on the size, engagement and loyalty of our customer base and result in decreased revenue, which could have an adverse effect on our business, financial condition, and operating results.

Adverse publicity associated with our products, ingredients or network marketing program, or those of similar companies, could adversely affect our business.

The size of our distributor base and the results of our operations may be significantly affected by the perception of our company and similar companies. This perception is dependent upon opinions concerning:

 

   

the safety and quality of our products and nutritional supplement ingredients;

 

   

the safety and quality of similar products and ingredients distributed by other companies;

 

   

our distributors;

 

   

publicity concerning network marketing; and

 

   

the direct selling business generally.

Adverse publicity concerning any actual or purported failure of our Company or our distributors to comply with applicable laws and regulations regarding product claims and advertising, good manufacturing practices, the regulation of our network marketing business, the licensing of our products for sale in our target markets, or other aspects of our business, whether or not resulting in enforcement actions or the imposition of penalties, could have an adverse effect on the goodwill of our Company and could negatively affect our ability to attract, motivate and retain distributors, which would have a material adverse effect on our ability to generate revenue. We cannot ensure that all distributors will comply with applicable legal requirements relating to the advertising, sale, labeling, licensing or distribution of our products or promotion of the income opportunity.

In addition, our distributors’ and consumers’ perception of the safety and quality of our products and ingredients as well as similar products and ingredients distributed by other companies can be significantly influenced by national media attention, publicized scientific research or findings, widespread product liability claims and other publicity concerning our products or ingredients or similar products and ingredients distributed by other companies. Adverse publicity, whether or not accurate or resulting from consumers’ use or misuse of our products, that associates consumption of our products or ingredients or any similar products or ingredients with illness or other adverse effects, questions the benefits of our or similar products or claims that any such products are ineffective, inappropriately labeled or have inaccurate instructions as to their use, could have a material adverse effect on our reputation or the market demand for our products.

 

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Our marketing strategy relies on the use of social media platforms and any negative publicity on such social media platforms may adversely affect the public perception of our brand, and changing terms or conditions or ways in which advertisers use their platforms may adversely affect our ability to engage with customers, both of which in turn could have a material and adverse effect on our business, results of operations and financial condition. In addition, our use of social media could subject us to fines or other penalties.

We rely on social media marketing through various social media platforms, such as Instagram, YouTube and Facebook, as a means to engage with our existing customers as well as attract new customers. Existing and new customers alike interact with the brand both organically, through posts by the Beachbody community, as well as through distributors via their own social media accounts. While the use of social media platforms allows us access to a broad audience of consumers and other interested persons, our use of, and reliance on, social media as a key marketing tool exposes us to significant risk of widespread negative publicity. Social media users generally have the ability to post information to social media platforms without filters or checks on accuracy of the content posted. Information concerning the Company or its many brands may be posted on such platforms at any time. Such information may be adverse to our interests or may be inaccurate, each of which can harm our reputation and value of our brands. The harm may be immediate without affording us an opportunity for redress or correction. In addition, social media platforms provide users with access to such a broad audience that collective action against our products and offerings, such as boycotts, can be more easily organized. If such actions were organized, we could suffer reputational damage. Social media platforms may be used to attack us, our information security systems, including through use of spam, spyware, ransomware, phishing and social engineering, viruses, worms, malware, distributed denial of service attacks, password attacks, “Man in the Middle” attacks, cybersquatting, impersonation of employees or officers, abuse of comments and message boards, fake reviews, doxing and swatting. As such, the dissemination of information on social media platforms and other online platforms could materially and adversely affect our business, results of operations and financial condition, regardless of the information’s accuracy.

Our reliance on social media platforms for advertising also subjects us to the risk that any change to the platforms’ algorithms, terms and conditions and/or ways in which advertisers may advertise on their platforms may adversely affect our ability to effectively engage with customers and sell our products, which in turn could have a material and adverse effect on our business, results of operations and financial condition.

In addition, our use of social media platforms as a marketing tool could also subject us to fines or other penalties. As laws and regulations, including those from the Federal Trade Commission, State Attorneys General, and other enforcement agencies rapidly evolve to govern the use of these platforms, the failure by us, our distributors, influencers, or other third parties acting at our direction to abide by applicable laws and regulations in the use of these platforms could materially and adversely impact our business, results of operations and financial condition or subject us to fines or other penalties.

We may be unable to attract and retain customers, which would materially and adversely affect our business, results of operations and financial condition.

The success of our business depends on our ability to attract and retain customers. Our marketing efforts may not be successful in attracting customers, and membership levels may materially decline over time. Customers may cancel their membership at any time. In addition, we experience attrition, and we must continually engage existing customers and attract new customers in order to maintain membership levels. Some of the factors that could lead to a decline in membership levels include, among other factors:

 

   

changing desires and behaviors of consumers or their perception of our brand;

 

   

changes in discretionary spending trends;

 

   

market maturity or saturation;

 

   

a decline in our ability to deliver quality service at a competitive price;

 

   

a failure to introduce new features, products or services that customers find engaging;

 

   

the introduction of new products or services, or changes to existing products and services, that are not favorably received;

 

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technical or other problems that affect the customer experience;

 

   

an increase in membership fees due to inflation;

 

   

direct and indirect competition in our industry;

 

   

a decline in the public’s interest in health and fitness; and

 

   

a general deterioration of economic conditions or a change in consumer spending preferences or buying trends.

Any decrease in our average fees or higher membership costs may materially and adversely impact our results of operations and financial condition. Additionally, further expansion into international markets may create new challenges in attracting and retaining customers that we may not successfully address, as these markets carry unique risks as discussed below. As a result of these factors, we cannot be certain that our membership levels will be adequate to maintain or permit the expansion of our operations. A decline in membership levels would have an adverse effect on our business, results of operations and financial condition.

Our customers use their connected fitness products and fitness accessories to track and record their workouts. If our products fail to provide accurate metrics and data to our customers, our brand and reputation could be harmed, and we may be unable to retain our customers.

Our customers use their connected fitness products and fitness accessories to track and record certain metrics related to their workouts. Examples of metrics tracked on our platform currently include heartrate and calories burned. These metrics assist our customers in tracking their fitness journeys and understanding the effectiveness of their workouts. We anticipate introducing new metrics and features in the future. If the software used in our connected fitness products or on our platform malfunctions and fails to accurately track, display, or record customers workouts and metrics, we could face claims alleging that our products and services do not operate as advertised. Such reports and claims could result in negative publicity, product liability claims, and, in some cases, may require us to expend time and resources to refute such claims and defend against potential litigation. If our products and services fail to provide accurate metrics and data to our customers, or if there are reports or claims of inaccurate metrics and data or claims of inaccuracy regarding the overall health benefits of our products and services in the future, we may become the subject of negative publicity, litigation, regulatory proceedings, and warranty claims, and our brand, operating results, and business could be harmed.

Our business relies on sales of a few key products.

Our digital platforms which provide recurring subscription revenue also provide a significant portion of our revenue, accounting for approximately 39% of revenue in 2020. Our Shakeology dietary supplement product also constitutes a significant portion of our revenue, accounting for approximately 38% of revenue in 2020. If consumer demand for these products decreases significantly or we cease offering these products without a suitable replacement, our operations could be materially adversely affected. Despite these efforts, our financial performance currently remains dependent on a few products. Any significant diminished consumer interest in these products would adversely affect our business. We could also experience adverse financial consequences if we fail to sustain market interest in the newly-added Myx business. We may not be able to develop successful new products or implement successful enhancements to existing products. Any products that we do develop or enhance may not generate sufficient revenue to justify the cost of developing and marketing these products.

We operate in highly competitive markets and we may be unable to compete successfully against existing and future competitors.

Our products and services are offered in a highly competitive market. We face significant competition in every aspect of our business, including at-home fitness equipment and content, fitness clubs, nutritional products, dietary supplements, and health and wellness apps. Moreover, we expect the competition in our market to intensify in the future as new and existing competitors introduce new or enhanced products and services that compete with ours.

 

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Our competitors may develop, or have already developed, products, features, content, services, or technologies that are similar to ours or that achieve greater acceptance, may undertake more successful product development efforts, create more compelling employment opportunities, or marketing campaigns, or may adopt more aggressive pricing policies. Our competitors may develop or acquire, or have already developed or acquired, intellectual property rights that significantly limit or prevent our ability to compete effectively in the public marketplace. In addition, our competitors may have significantly greater resources than us, allowing them to identify and capitalize more efficiently upon opportunities in new markets and consumer preferences and trends, quickly transition and adapt their products and services, devote greater resources to marketing, advertising and research and development, or be better positioned to withstand substantial price competition. If we are not able to compete effectively against our competitors, they may acquire and engage customers or generate revenue at the expense of our efforts, which could have an adverse effect on our business, financial condition, and operating results. The business of marketing nutritional products is highly competitive and sensitive to the introduction of new products, including various prescription drugs, which may rapidly capture a significant share of the market. These market segments include numerous manufacturers, distributors, marketers, retailers and physicians that actively compete for the business of consumers both in the United States and abroad. In addition, we anticipate that we will be subject to increasing competition in the future from large electronic commerce sellers. Some of these competitors have significantly greater financial, technical, product development, marketing and sales resources, greater name recognition, larger established subscriber bases, and better-developed distribution channels than we do. Our present or future competitors may be able to develop products that are comparable or superior to those we offer, adapt more quickly than we do to new technologies, evolving industry trends and standards or subscriber requirements, or devote greater resources to the development, promotion and sale of their products than we do. Accordingly, we may not be able to compete effectively in our markets and competition may intensify.

We are also subject to competition for the recruitment of distributors from other organizations, including those that market nutritional products, dietary and nutritional supplements, and personal care products as well as other types of products. Our ability to remain competitive depends, in part, on our success in recruiting and retaining coaches through an attractive compensation plan, the maintenance of an attractive product portfolio, and other incentives. We cannot ensure that our programs for recruitment and retention efforts will be successful.

We compete with other direct selling organizations, some of which have longer operating histories and higher visibility, name recognition and financial resources. The Company competes for new coaches on the basis of the culture, premium quality products and compensation plan. We envision the entry of many more direct selling organizations into the marketplace as this channel of distribution expands. There can be no assurance that the Company will be able to successfully meet the challenges posed by increased competition.

We also compete for the time, attention and commitment of its independent distributor force. Given that the pool of individuals interested in the business opportunities presented by direct selling tends to be limited in each market, the potential pool of distributors for our products is reduced to the extent other companies successfully recruit these individuals into their businesses. Although we believe that we offer an attractive business opportunity, there can be no assurance that other companies will not be able to recruit our existing distributors or deplete the pool of potential distributors in a given market.

We may be unable to effectively integrate the Myx business into our operations.

In connection with this transaction, we will acquire Myx, including the Myx brand name, its product line, and all existing equipment, inventory and facilities. The acquisition presents significant challenges for our management team. To be successful, we must effectively and efficiently integrate the Myx business into our organization, including the Myx product line, marketing and distribution system, production facilities, product development teams, and administrative and finance personnel and policies. We must also implement appropriate operational, financial and management systems and controls. We may encounter significant difficulties in this process, any one or more of which could adversely affect our business.

 

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Additional risks relating to the acquisition include the following:

 

   

Our contract manufacturing experience is generally limited to the production of our dietary supplement products. We intend to continue Myx’s contract manufacturing operations, which are much more extensive than our own. We may be unable to operate Myx’s manufacturing operations in a cost-effective or timely manner.

Because of these and other risks, the Myx acquisition could fail to produce the revenue, earnings and business synergies that we anticipate, in which case our business would be adversely affected.

We have limited control over our suppliers, manufacturers, and logistics providers, which may subject us to significant risks, including the potential inability to produce or obtain quality products on a timely basis or in sufficient quantity in order to meet demand.

We have limited control over our suppliers, manufacturers, and logistics providers, which subjects us to risks, such as the following:

 

   

inability to satisfy demand for our products or other products or services that we currently offer or may offer in the future;

 

   

reduced control over delivery timing and product reliability;

 

   

reduced ability to monitor the manufacturing process and components used in our products;

 

   

limited ability to develop comprehensive manufacturing specifications that take into account any materials shortages or substitutions;

 

   

variance in the manufacturing capability of our third-party manufacturers;

 

   

price increases;

 

   

failure of a significant supplier, manufacturer, or logistics provider to perform its obligations to us for technical, market or other reasons;

 

   

difficulties in establishing additional supplier, manufacturer or logistics provider relationships if we experience difficulties with our existing suppliers, manufacturers, or logistics providers;

 

   

shortages of materials or components;

 

   

misappropriation of our intellectual property;

 

   

exposure to natural catastrophes, pandemics, political unrest, terrorism, labor disputes, and economic instability resulting in the disruption of trade from foreign countries in which our products are manufactured or the components thereof are sourced;

 

   

changes in local economic conditions in the jurisdictions where our suppliers, manufacturers, and logistics providers are located;

 

   

the imposition of new laws and regulations, including those relating to labor conditions, quality and safety standards, imports, duties, tariffs, taxes, and other charges on imports, as well as trade restrictions and restrictions on currency exchange or the transfer of funds; and

 

   

insufficient warranties and indemnities on ingredients or components supplied to our manufacturers or performance by these parties.

We also rely on our logistics providers, including last mile warehouse and delivery providers, to complete deliveries to customers. If any of these independent contractors do not perform their obligations or meet the expectations of us or our customers, our reputation and business could suffer.

The occurrence of any of these risks, especially during seasons of peak demand, could cause us to experience a significant disruption in our ability to produce and deliver our products to our customers.

 

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The failure or inability of our contract manufacturers to comply with the specifications and requirements of our products could result in a product recall, which could adversely affect our reputation and subject us to significant liability should the consumption of any of our products cause or be claimed to cause illness or physical harm.

We sell nutritional products for human consumption, which involves risks such as product contamination or spoilage, product tampering, other adulteration, mislabeling and misbranding. We also sell stationary bikes. All of our products are manufactured by independent third-party contract manufacturers. In addition, we do not own a warehouse facility, instead it is managed for us by a third party. Under certain circumstances, we may be required to, or may voluntarily, recall or withdraw products.

A widespread recall or withdrawal of any of our products may negatively and significantly impact our sales and profitability for a period of time and could result in significant losses depending on the costs of the recall, destruction of product inventory, reduction in product availability, and reaction of competitors and consumers. We may also be subject to claims or lawsuits, including class actions lawsuits (which could significantly increase any adverse settlements or rulings), resulting in liability for actual or claimed injuries, illness or death. Any of these events could adversely affect our business, financial condition and results of operations. Even if a product liability claim or lawsuit is unsuccessful or is not fully pursued, the negative publicity surrounding any assertion that our products caused illness or physical harm could adversely affect our reputation with existing and potential consumers and its corporate and brand image. Moreover, claims or liabilities of this sort might not be covered by insurance or by any rights of indemnity or contribution that we may have against others. We maintain product liability and product recall insurance in an amount that we believe to be adequate. However, we may incur claims or liabilities for which it is not insured or that exceed the amount of its insurance coverage. A product liability judgment against us or a product recall could adversely affect our business, financial condition and results of operations.

If any of our products are unacceptable to us or our customers, our business could be harmed.

We have occasionally received, and may in the future continue to receive, shipments of products that fail to comply with our technical specifications or that fail to conform to our quality control standards. We have also received, and may in the future continue to receive, products that either meet our technical specifications but that are nonetheless unacceptable to us, or products that are otherwise unacceptable to us or our customers. Under these circumstances, unless we are able to obtain replacement products in a timely manner, we risk the loss of net revenue resulting from the inability to sell those products and related increased administrative and shipping costs. Additionally, if the unacceptability of our products is not discovered until after such products are purchased by our customers or riders, they could lose confidence in the quality of our products and our results of operations could suffer and our business could be harmed.

Our products and services may be affected from time to time by design and manufacturing defects that could adversely affect our business and result in harm to our reputation.

Through Myx, we will offer complex hardware and software products and services that can be affected by design and manufacturing defects. Sophisticated operating system software and applications, such as those which will be offered by us, often have issues that can unexpectedly interfere with the intended operation of hardware or software products. Defects may also exist in components and products that we source from third parties. Any such defects could make our products and services unsafe, create a risk of environmental or property damage and personal injury, and subject us to the hazards and uncertainties of product liability claims and related litigation. In addition, from time to time we may experience outages, service slowdowns, or errors that affect our fitness and wellness programming. As a result, our services may not perform as anticipated and may not meet customer expectations. There can be no assurance that we will be able to detect and fix all issues and defects in the hardware, software, and services we offer. Failure to do so could result in widespread technical and performance issues affecting our products and services and could lead to claims against us. We maintain general liability

 

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insurance; however, design and manufacturing defects, and claims related thereto, may subject us to judgments or settlements that result in damages materially in excess of the limits of our insurance coverage. In addition, we may be exposed to recalls, product replacements or modifications, write-offs of inventory, property, plant and equipment, or intangible assets, and significant warranty and other expenses such as litigation costs and regulatory fines. If we cannot successfully defend any large claim, maintain our general liability insurance on acceptable terms, or maintain adequate coverage against potential claims, our financial results could be adversely impacted. Further, quality problems could adversely affect the experience for users of our products and services, and result in harm to our reputation, loss of competitive advantage, poor market acceptance, reduced demand for our products and services, delay in new product and service introductions, and lost revenue.

We may incur material product liability claims, which could increase our costs and adversely affect our revenues and operating income.

Additionally, our nutritional and dietary supplement products consist of herbs, vitamins and minerals and other ingredients that are classified as foods or dietary supplements and are not subject to pre-market regulatory approval in the United States. Our products could contain contaminated substances, and some of our products contain innovative ingredients that do not have long histories of human consumption. We do not always conduct or sponsor clinical studies for our products and previously unknown adverse reactions resulting from human consumption of these ingredients could occur. As a marketer of dietary and nutritional supplements and other products that are ingested by consumers, we have been, and may again be, subjected to various product liability claims, including that the products contain contaminants, the products include inadequate instructions as to their uses, or the products include inadequate warnings concerning side effects and interactions with other substances. It is possible that widespread product liability claims could increase our costs, and adversely affect our revenues and operating income. Moreover, liability claims arising from a serious adverse event may increase our costs through higher insurance premiums and deductibles and may make it more difficult to secure adequate insurance coverage in the future. In addition, our product liability insurance may fail to cover future product liability claims thereby requiring us to pay substantial monetary damages and adversely affecting our business.

Our business model relies on high quality customer service, and any negative impressions of our customer service experience may adversely affect our business and result in harm to our reputation.

We rely on high quality overall customer service across all of our products and services. Positive customer service experiences help drive a positive reputation, increased sales and minimization of litigation. For example, once our streaming services and integrated connected-bike products are purchased, our customers rely on our high-touch delivery and set up service to deliver and install their equipment in a professional and efficient manner. Our customers also rely on our support services to resolve any issues related to the use of such services and content. Providing a high-quality customer experience is vital to our success in generating word-of-mouth referrals to drive sales and for retaining existing customers. The importance of high-quality support will increase as we expand our business and introduce new products and services. If we do not help our customers quickly resolve issues and provide effective ongoing support, our reputation may suffer and our ability to retain and attract customers, or to sell additional products and services to existing customers, could be harmed.

The seasonal nature of our business could cause operating results to fluctuate.

We have experienced and continue to expect fluctuations in quarterly results of operations due to the seasonal nature of our business. The months of January to May result in the greatest retail sales due to renewed consumer focus on healthy living following New Year’s Day, as well as significant subscriber enrollment around that time. This seasonality could cause the post combination company’s share price to fluctuate as the results of an interim financial period may not be indicative of its full year results. Seasonality also impacts relative revenue and profitability of each quarter of the year, both on a quarter-to-quarter and year-over-year basis.

 

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If we fail to obtain and retain high-profile strategic relationships, or if the reputation of any of these parties is impaired, our business may suffer.

A principal component of our marketing program has been to develop relationships with high-profile persons, such as Arnold Schwarzenegger and Lebron James, to help us extend the reach of our brand. Although we have relationships with several well-known individuals in this manner, we may not be able to attract and build relationships with new persons in the future. In addition, if the actions of these parties were to damage their or our reputation, our relationships may be less attractive to our current or prospective customers. Any of these failures by us or these parties could materially and adversely affect our business and revenues.

Our operating results could be adversely affected if we are unable to accurately forecast consumer demand for our products and services and adequately manage our inventory.

To ensure adequate inventory supply, we must forecast inventory needs and expenses and place orders sufficiently in advance with our suppliers and manufacturers, based on our estimates of future demand for particular products and services. Failure to accurately forecast our needs may result in manufacturing delays or increased costs. Our ability to accurately forecast demand could be affected by many factors, including changes in consumer demand for our products and services, changes in demand for the products and services of our competitors, unanticipated changes in general market conditions, and the weakening of economic conditions or consumer confidence in future economic conditions. This risk may be exacerbated by the fact that we may not carry a significant amount of inventory and may not be able to satisfy short-term demand increases. If we fail to accurately forecast consumer demand, we may experience excess inventory levels or a shortage of products available for sale.

Inventory levels in excess of consumer demand may result in inventory write-downs or write-offs and the sale of excess inventory at discounted prices, which would cause our gross margins to suffer and could impair the strength and premium nature of our brand. Further, lower than forecasted demand could also result in excess manufacturing capacity or reduced manufacturing efficiencies, which could result in lower margins. Conversely, if we underestimate consumer demand, our suppliers and manufacturers may not be able to deliver products to meet our requirements or we may be subject to higher costs in order to secure the necessary production capacity. An inability to meet consumer demand and delays in the delivery of our products to our customers could result in reputational harm and damaged customer relationships and have an adverse effect on our business, financial condition, and operating results.

Our founder has control over all stockholder decisions because he controls a substantial majority of our voting power through our Class X Common Stock, or “super” voting stock.

Our founder, Carl Daikeler, will own or control “super” voting shares of the Company that will represent approximately 84.4% of the voting power of the Company, as of immediately after the Closing. Following the Closing, Mr. Daikeler and certain of his affiliated entities will own a majority of the Company’s outstanding Class X Common Stock, which stock carries 10 votes per share, and, therefore, will control a majority of the voting power of the Company’s outstanding common stock. The Class X Common Stock carries substantially similar rights as the Class A Common Stock, except that each share of Class X Common Stock carries 10 votes. Therefore, Mr. Daikeler alone can exercise voting control over a majority of our voting power. As a result, Mr. Daikeler has the ability to control the outcome of all matters submitted to our stockholders for approval, including the election, removal, and replacement of our directors, amendments to the Company’s organizational documents and approval of major corporate transactions. This concentrated control could give our founder the ability to delay, defer or prevent a change of control, merger, consolidation, or sale of all or substantially all of our assets that other stockholders support. Conversely, this concentrated control could allow our founder to consummate such a transaction that our other stockholders do not support. In addition, our founder may make long-term strategic investment decisions and take risks that may not be successful and may seriously harm our business.

 

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The Class X Common Stock will automatically convert into Class A Common Stock if Mr. Daikeler no longer provides services to Beachbody as a senior executive officer or director or if the Controlling Holders have sold more than 75% of the shares of Class X Common Stock held by them at the time of the consummation of the Business Combination.

As our Chief Executive Officer, Mr. Daikeler has control over our day-to-day management and the implementation of major strategic investments of our company, subject to authorization and oversight by our board of directors. As a board member and officer, Mr. Daikeler owes a fiduciary duty to our stockholders and must act in good faith in a manner they reasonably believe to be in the best interests of our stockholders. As a stockholder, even a controlling stockholder, Mr. Daikeler is entitled to vote his shares, and shares over which he has voting control, in his own interests, which may not always be in the interests of our stockholders generally. Even if Mr. Daikeler’s employment with us is terminated, he will continue to have the ability to exercise the same significant voting power and potentially control the outcome of all matters submitted to our stockholders for approval.

The concentration of our stock ownership limits our stockholders’ ability to influence corporate matters.

Our Class X common stock has 10 votes per share, our Class A common stock has one vote per share, and our Class C common stock has no voting rights. Because our Class C common stock carries no voting rights, the issuance of the Class C common stock, including in future stock-based acquisition transactions, to fund employee equity incentive programs or otherwise could continue Mr. Daikeler’s current relative voting power and his ability to elect our directors and to determine the outcome of most matters submitted to a vote of our stockholders because, in the event of such an issuance of Class C common stock, the voting control of holders of Class X common stock would not be affected whereas the economic power of the Class X common stock would be diluted. This concentrated control limits or severely restricts other stockholders’ ability to influence corporate matters and we may take actions that some of our stockholders do not view as beneficial, which could reduce the market price of our Class A common stock and our Class C common stock.

Because the Company will be a “controlled company” within the meaning of the NYSE rules, our stockholders may not have certain corporate governance protections that are available to stockholders of companies that are not controlled companies

So long as more than 50% of the voting power for the election of directors of the Company is held by an individual, a group or another company, the Company will qualify as a “controlled company” within the meaning of the NYSE corporate governance standards. Following the completion of the Business Combination, Mr. Daikeler will control over 80% of the voting power of our outstanding capital stock. As a result, the Company will be a “controlled company” within the meaning of the NYSE corporate governance standards and will not be subject to the requirements that would otherwise require us to have: (i) a majority of independent directors; (ii) a nominating committee comprised solely of independent directors; (iii) compensation of our executive officers determined by a majority of the independent directors or a compensation committee comprised solely of independent directors; and (iv) director nominees selected, or recommended for the Board’s selection, either by a majority of the independent directors or a nominating committee comprised solely of independent directors.

Mr. Daikeler may have his interest in the Company diluted due to future equity issuances or his own actions in selling shares of Class X Common Stock, in each case, which could result in a loss of the “controlled company” exemption under the NYSE listing rules. The Company would then be required to comply with those provisions of the NYSE listing requirements.

We track certain operational and business metrics with internal methods that are subject to inherent challenges in measurement, and real or perceived inaccuracies in such metrics may harm our reputation and negatively affect our business.

We track certain operational and business metrics, including total workouts and average monthly workouts per connected fitness subscription, with internal methods, which are not independently verified by any third party and, are often reliant upon an interface with mobile operating systems, networks and standards that we do not

 

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control. Our internal methods have limitations and our process for tracking these metrics may change over time, which could result in unexpected changes to our metrics, including the metrics we report. If the internal methods we use under-count or over-count metrics related to our total workouts, average monthly workouts per connected fitness subscription or other metrics as a result of algorithm or other technical errors, the operational and business metrics that we report may not be accurate. In addition, limitations or errors with respect to how we measure certain operational and business metrics may affect our understanding of certain details of our business, which could affect our longer-term strategies. If our operational and business metrics are not accurate representations of our business, market penetration, retention or engagement; if we discover material inaccuracies in our metrics; or if the metrics we rely on to track our performance do not provide an accurate measurement of our business, our reputation may be harmed, and our operating and financial results could be adversely affected.

Risks Related to Expansion

There can be no assurance that we can further penetrate existing markets or that we can successfully expand our business into new markets.

Our ability to further penetrate existing markets in which we compete or to successfully expand our business into additional countries in Western Europe, Asia, or elsewhere, to the extent we believe that we have identified attractive geographic expansion opportunities in the future, are subject to numerous factors, many of which are out of our control. These factors may include, among others, challenges around supplement formulations, localization, harmonization, market size and acceptance, costs, competitors, geopolitical stability, labor market dynamics, legal and regulatory, culture and language, infrastructure, supply chain, payment processing, customer service, payment method, taxes, foreign exchange, and repatriation.

In addition, government regulations in both our domestic and international markets can delay or prevent the introduction, or require the reformulation or withdrawal, of some of our products, which could have a material adverse effect on our business, financial condition and results of operations. Also, our ability to increase market penetration in some countries may be limited by the finite number of persons in a given country inclined to pursue a direct selling business opportunity. Moreover, our growth will depend upon improved training and other activities that enhance distributor retention in our markets. We cannot assure you that our efforts to increase our market penetration and distributor retention in existing markets will be successful.

We plan to expand into international markets, which will expose us to significant risks.

We are currently expanding our operations to other countries, which requires significant resources and management attention and subjects us to regulatory, economic, and political risks in addition to those we already face in the United States. There are significant risks and costs inherent in doing business in international markets, including:

 

   

difficulty establishing and managing international operations and the increased operations, travel, infrastructure, including establishment of local delivery service and customer service operations, and legal compliance costs associated with locations in different countries or regions;

 

   

the need to vary pricing and margins to effectively compete in international markets;

 

   

the need to adapt and localize products for specific countries, including obtaining rights to third-party intellectual property and potentially unique music rights or licenses used in each country;

 

   

increased competition from local providers of similar products and services;

 

   

the ability to obtain, protect and enforce intellectual property rights abroad;

 

   

the need to offer content and customer support in various languages;

 

   

difficulties in understanding and complying with local laws, regulations, and customs in other jurisdictions;

 

   

complexity and other risks associated with current and future legal and regulatory requirements in other countries, including legal requirements related to advertising, our supplements and nutritional products, consumer protection, consumer product safety and data privacy;

 

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varying levels of internet technology adoption and infrastructure, and increased or varying network and hosting service provider costs;

 

   

tariffs and other non-tariff barriers, such as quotas and local content rules, as well as tax consequences;

 

   

fluctuations in currency exchange rates and the requirements of currency control regulations, which might restrict or prohibit conversion of other currencies into U.S. dollars; and

 

   

political or social unrest or economic instability in a specific country or region in which we operate.

We have limited experience with international regulatory environments and market practices and may not be able to penetrate or successfully operate in the markets we choose to enter. In addition, we may incur significant expenses as a result of our international expansion, and we may not be successful. We may face limited brand recognition in parts of the world that could lead to non-acceptance or delayed acceptance of our products and services by consumers in new markets. We may also face challenges to acceptance of our fitness, supplements and nutritional products, and wellness content in new markets. Our failure to successfully manage these risks could harm our international operations and have an adverse effect on our business, financial condition, and operating results.

We may engage in merger and acquisition activities, which could require significant management attention, disrupt our business, dilute stockholder value, and adversely affect our operating results.

As part of our business strategy, we have made or may make investments in other companies, products, or technologies in the future. We may not be able to find suitable acquisition candidates and we may not be able to complete acquisitions on favorable terms, if at all, in the future. If we do complete acquisitions, we may not ultimately strengthen our competitive position or achieve our goals, and any acquisitions we complete could be viewed negatively by customers or investors. Moreover, an acquisition, investment, or business relationship may result in unforeseen operating difficulties and expenditures, including disrupting our ongoing operations, diverting management from their primary responsibilities, subjecting us to additional liabilities, increasing our expenses, and adversely impacting our business, financial condition, and operating results. Moreover, we may be exposed to unknown liabilities and the anticipated benefits of any acquisition, investment, or business relationship may not be realized, if, for example, we fail to successfully integrate such acquisitions, or the technologies associated with such acquisitions, into our company.

To pay for any such acquisitions, we would have to use cash, incur debt, or issue equity securities, each of which may affect our financial condition or the value of our capital stock and could result in dilution to our stockholders. Additionally, we may receive indications of interest from other parties interested in acquiring some or all of our business. The time required to evaluate such indications of interest could require significant attention from management, disrupt the ordinary functioning of our business, and could have an adverse effect on our business, financial condition, and operating results.

Covenants in the loan and security agreement governing our revolving credit facility may restrict our operations, and if we do not effectively manage our business to comply with these covenants, our financial condition could be adversely impacted.

We entered into a Credit Agreement with Bank of America in 2018, providing for a $35 million secured revolving line of credit. The revolving credit facility contains various restrictive covenants, including, among other things, minimum liquidity and revenue requirements, restrictions on our ability to dispose of assets, make acquisitions or investments, incur debt or liens, make certain distributions to our stockholders, or enter into certain types of related party transactions. These restrictions may restrict our current and future operations, particularly our ability to respond to certain changes in our business or industry or take future actions. Pursuant to the Credit Agreement, we granted the parties thereto a security interest in substantially all of our assets. See the section titled “Management’s Discussion and Analysis of Financial Condition and Results of Operations — Liquidity and Capital Resources — Amended and Restated Credit Agreement” for additional information.

 

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Our ability to meet these restrictive covenants can be impacted by events beyond our control and we may be unable to do so. Our Credit Agreement provides that our breach or failure to satisfy certain covenants constitutes an event of default. Upon the occurrence of an event of default, our lenders could elect to declare all amounts outstanding under its debt agreements to be immediately due and payable. In addition, our lenders would have the right to proceed against the assets we provided as collateral. If the debt under our Credit Agreement was to be accelerated, we may not have sufficient cash on hand or be able to sell sufficient collateral to repay it, which would have an immediate adverse effect on our business and operating results.

Risks Related to Our Personnel

Increases in labor costs, including wages, could adversely affect our business, financial condition and results of operations.

The labor costs associated with our businesses are subject to many external factors, including unemployment levels, prevailing wage rates, minimum wage laws, potential collective bargaining arrangements, health insurance costs and other insurance costs and changes in employment and labor legislation or other workplace regulation. From time to time, legislative proposals are made to increase the federal minimum wage in the U.S., as well as the minimum wage in a number of individual states and municipalities, and to reform entitlement programs, such as health insurance and paid leave programs. As minimum wage rates increase or related laws and regulations change, we may need to increase not only the wage rates of our minimum wage employees, but also the wages paid to our other hourly or salaried employees. Our employees may seek to be represented by labor unions in the future or negotiate additional compensation. Any increase in the cost of our labor could have an adverse effect on our business, financial condition and results of operations or if we fail to pay such higher wages, we could suffer increased employee turnover. Increases in labor costs could force us to increase prices, which could adversely impact our visits. If competitive pressures or other factors prevent us from offsetting increased labor costs by increases in prices, our profitability may decline and could have a material adverse effect on our business, financial condition and results of operations.

If we cannot maintain our culture as we grow, we could lose the innovation, teamwork, and passion that we believe contribute to our success and our business may be harmed.

We believe that a critical component of our success has been our corporate culture. We have invested substantial time and resources in building our culture, which is based on our core purpose that we are here to help people achieve their goals and lead healthy, fulfilling lives. As we continue growing after the Merger and developing the infrastructure associated with being a public company, we will need to maintain our culture among a larger number of employees, dispersed across various geographic regions. Any failure to preserve our culture could negatively affect our future success, including our ability to retain and recruit personnel and to effectively focus on and pursue our corporate objectives.

We depend on our senior management team and other key employees, and the loss of one or more key personnel or an inability to attract, hire, integrate and retain highly skilled personnel could have an adverse effect on our business, financial condition and results of operations.

Our success depends largely upon the continued services of our senior management team and other key employees. We rely on our executives in setting our strategic direction, operating our business, identifying, recruiting and training key personnel, identifying growth opportunities, and leading general and administrative functions. From time to time, there may be changes in our executive management team resulting from the hiring or departure of executives, which could disrupt our business. Imperative to our success are also our fitness trainers, instructors and influencers, whom we rely on to develop safe, effective and fun workouts for our customers and to bring new, exciting and innovative fitness content to our platform. If we are unable to attract or retain creative and experienced trainers and nutritionists, we may not be able to generate workout content or dietary supplements on a scale or of a quality sufficient to retain or grow our membership base. The loss of one or more of our executive officers or other key employees, including any of our trainers, could have a serious adverse effect on our business. The replacement of one or more of our executive officers or other key employees would involve significant time and expense and may significantly delay or prevent the achievement of our

 

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business objectives. To continue to execute our growth strategy, we also must identify, hire and retain highly skilled personnel. Failure to identify, hire and retain necessary key personnel could have a material adverse effect on our business, financial condition and results of operations.

Risks Related to Data and Information Systems

We collect, store, process, and use personal information and other customer data, which subjects us to legal obligations and laws and regulations related to data security and privacy, and any actual or perceived failure to meet those obligations could harm our business.

We collect, process, store, and use a wide variety of data from current and prospective customers, including personal information, such as home addresses, phone numbers and geolocation. Federal, state, and international laws and regulations governing data privacy, data protection, and e-commerce transactions require us to safeguard our customers’ personal information.

Many jurisdictions continue to consider the need for greater regulation or reform to existing regulatory frameworks for data privacy and data protection. In the United States, all 50 states have now passed laws to regulate the actions that a business must take in the event of a data breach, such as prompt disclosure and notification to affected users and regulatory authorities. In addition to data breach notification laws, some states have also enacted statutes and rules governing the ways in which businesses may collect, use, and retain personal information, granting data privacy rights to certain individuals, or requiring businesses to reasonably protect certain types of personal information they hold or otherwise comply with certain data security requirements for personal information. One such example is the California Consumer Privacy Act which came into effect in 2020. The U.S. federal and state governments will likely continue to consider the need for greater regulation aimed at restricting certain uses of personal data. In the European Union (EU), the General Data Protection Regulation (GDPR) came into effect in 2018 and implemented stringent operational requirements for processors and controllers of personal data, including, for example, requiring expanded disclosures about how personal data is to be used, limitations on retention of information, mandatory data breach notifications, and higher standards for data controllers to demonstrate that they have obtained either valid consent or have another legal basis to justify their data processing activities. The GDPR provides that EU member states may make their own additional laws and regulations in relation to certain data processing activities, which could further limit our ability to use and share personal data and could require localized changes to our operating model. Recent legal developments in the EU have created complexity and uncertainty regarding transfers of personal information from the EU to “third countries,” especially the United States. For example, last year the Court of Justice of the EU invalidated the EU-U.S. Privacy Shield Framework (a mechanism for the transfer of personal information to the EU to the US) and made clear that reliance on standard contractual clauses (another mechanism for the transfer of personal information outside of the EU) alone may not be sufficient in all circumstances. In addition, after the United Kingdom, or UK, left the EU, the UK enacted the UK GDPR, which together with the amended UK Data Protection Act 2018 retains the GDPR in UK national law, but also creates complexity and uncertainty regarding transfers between the UK and the EU, which could further limit our ability to use and share personal data and require localized changes to our operating model. Other jurisdictions besides the United States, EU and UK also have laws governing data privacy and security, such as Brazil’s Lei Geral de Proteção de Dados (LGPD), or are considering the adoption of new laws. Furthermore, we may be required to disclose personal data pursuant to demands from individuals, privacy advocates, regulators, government agencies, and law enforcement agencies in various jurisdictions with conflicting privacy and security laws. This disclosure or refusal to disclose personal data may result in a breach of privacy and data protection policies, notices, laws, rules, court orders, and regulations and could result in proceedings or actions against us in the same or other jurisdictions, damage to our reputation and brand, and inability to provide our products and services to consumers in some jurisdictions.

In order for us to maintain or become compliant with applicable laws as they come into effect, it may require substantial expenditures of resources to continually evaluate our policies and processes and adapt to new requirements that are or become applicable to us. Complying with any additional or new regulatory requirements on a jurisdiction-by-jurisdiction basis may impose significant burdens and costs on our operations or require us to alter our business practices. While we strive to materially comply with data protection laws and regulations applicable to us, any failure or perceived failure by us to comply with applicable data privacy laws and

 

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regulations, including in relation to the collection of necessary end-user consents and providing end-users with sufficient information with respect to our use of their personal data, may result in fines and penalties imposed by regulators. For example, under the GDPR and UK GDPR, fines of up to €20 million (£17.5 million) or up to 4% of the total worldwide annual turnover of the preceding financial year, whichever is higher, may be assessed for non-compliance. In addition, we could also face governmental enforcement actions (including enforcement orders requiring us to cease collecting or processing data in a certain way), litigation and/or adverse publicity. Proceedings against us — regulatory, civil or otherwise — could force us to spend money and devote resources in the defense or settlement of, and remediation related to, such proceedings. Additionally, our international business expansion could be adversely affected if existing or future laws and regulations are interpreted or enforced in a manner that is inconsistent with our current business practices or that requires changes to these practices. If these laws and regulations materially limit our ability to collect, transfer, and use user data, our ability to continue our current operations without modification, develop new services or features of the products and expand our user base may be impaired.

Any major disruption or failure of our information technology systems or websites, or our failure to successfully implement upgrades and new technology effectively, could adversely affect our business and operations.

Certain of our information technology systems are designed and maintained by us and are critical for the efficient functioning of our business, including the manufacture and distribution of our connected fitness products, online sales of our connected fitness products, and the ability of our customers to access content on our platform. Our rapid growth has, in certain instances, strained these systems. As we grow, we continue to implement modifications and upgrades to our systems, and these activities subject us to inherent costs and risks associated with replacing and upgrading these systems, including, but not limited to, impairment of our ability to fulfill customer orders and other disruptions in our business operations. Further, our system implementations may not result in productivity improvements at a level that outweighs the costs of implementation, or at all. If we fail to successfully implement modifications and upgrades or expand the functionality of our information technology systems, we could experience increased costs associated with diminished productivity and operating inefficiencies related to the flow of goods through our supply chain.

In addition, any unexpected technological interruptions to our systems or websites would disrupt our operations, including our ability to timely ship and track product orders, project inventory requirements, manage our supply chain, sell our connected fitness products online, provide services to our customers, and otherwise adequately serve our customers.

Nearly all of our revenue is generated over the internet via our websites, mobile applications and third-party OTT services and websites. The operation of our direct-to-consumer e-commerce business through our mobile applications and websites depends on our ability to maintain the efficient and uninterrupted operation of online order-taking and fulfillment operations. Any system interruptions or delays could prevent potential customers from purchasing our products.

Moreover, the ability of our customers to access the content on our platform could be diminished by a number of factors, including customers’ inability to access the internet, the failure of our network or software systems, security breaches, or variability in subscriber traffic for our platform. Platform failures would be most impactful if they occurred during peak platform use periods, which generally occur before and after standard work hours. During these peak periods, there are a significant number of customers concurrently accessing our platform and if we are unable to provide uninterrupted access, our customers’ perception of our platform’s reliability may be damaged, our revenue could be reduced, our reputation could be harmed, and we may be required to issue credits or refunds, or risk losing customers.

In the event we experience significant disruptions, we may be unable to repair our systems in an efficient and timely manner which could have a material adverse effect on our business, financial condition, and operating results.

 

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If we are unable to maintain a good relationship with Apple, our business will suffer.

The Apple App Store is a key primary distribution platform for our Beachbody app. We expect to generate a significant portion of our revenue through the platform for the foreseeable future. Any deterioration in our relationship with Apple would harm our business and revenue.

We are subject to Apple’s standard terms and conditions for application developers, which govern the promotion, distribution and operation of applications on their platform.

Our business would be harmed if:

 

   

Apple discontinues or limits access to its platform by us and other app developers;

 

   

Apple removes app from their store; or

 

   

Apple modifies its terms of service or other policies, including fees charged to, or other restrictions on, us or other application developers, or change how the personal information of its users is made available to application developers on their platform or shared by users from Apple’s strong brand recognition and large user base.

If Apple loses its market position or otherwise falls out of favor with Internet users, we would need to identify additional channels for distributing our app, which would consume substantial resources and may not be effective. In addition, Apple has broad discretion to change its terms of service and other policies with respect to us and other developers, and those changes may be unfavorable to us.

If we suffer a security breach or otherwise fail to properly maintain the confidentiality and integrity of our data, including customer credit card, debit card and bank account information, our reputation and business could be materially and adversely affected.

In the ordinary course of business, we collect and transmit customer and employee data, including credit and debit card numbers, bank account information, driver’s license numbers, dates of birth and other highly sensitive personally identifiable information. We also use vendors and, as a result, we manage a number of third-party contractors who have access to our confidential information, including third party vendors of IT and data security systems and services.

We could be subject to a cyber incident or other adverse event that threatens the confidentiality, integrity or availability of information resources, including intentional attacks or unintentional events where parties gain unauthorized access to systems to disrupt operations, corrupt data or steal confidential information about customers, vendors and employees. A number of retailers and other companies have recently experienced serious cyber incidents and breaches of their information technology systems. As our reliance on technology has increased, so have the risks posed to our systems, both internal and those we have outsourced. Despite our efforts and processes to prevent breaches, our products and services, as well as our servers, computer systems, and those of third parties that we use in our operations are vulnerable to cybersecurity risks, including cyber-attacks such as viruses and worms, phishing attacks, denial-of-service attacks, physical or electronic break-ins, third-party or employee theft or misuse, and similar disruptions from unauthorized tampering with our servers and computer systems or those of third parties that we use in our operations, which could lead to interruptions, delays, loss of critical data, unauthorized access to customer data, and loss of consumer confidence. In addition, we may be the target of email scams that attempt to acquire personal information or company assets.

Some of the data we collect or process is sensitive and could be an attractive target of a criminal attack by malicious third parties with a wide range of motives and expertise, including lone wolves, organized criminal groups, “hacktivists,” disgruntled current or former employees and others. Because we accept electronic forms of payment from customers, our business requires the collection and retention of customer data, including credit and debit card numbers and other personally identifiable information in various information systems that we maintain

 

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and in those maintained by third parties with whom we contract to provide credit card processing. We also maintain important internal company data, such as personally identifiable information about our employees and information relating to our operations. The integrity and protection of customer, distributor, and employee data are critical to us.

Despite the security measures we have in place to comply with applicable laws and rules, our facilities and systems, and those of our third-party service providers (as well as their third-party service providers), may be vulnerable to security breaches, acts of cyber terrorism or sabotage, vandalism or theft, computer viruses, loss or corruption of data or programming or human errors or other similar events. Furthermore, the size and complexity of our information systems, and those of our third-party vendors (as well as their third-party service providers), make such systems potentially vulnerable to security breaches from inadvertent or intentional actions by our employees or vendors, or from attacks by malicious third parties. While we have agreements requiring our third-party service providers to use best practices for data security, we have no operational control over them. Because such attacks are increasing in sophistication and change frequently in nature, we and our third-party service providers may be unable to anticipate these attacks or implement adequate preventative measures, and any compromise of our systems, or those of our third-party vendors (as well as their third-party service providers), may not be discovered and remediated promptly. Changes in consumer behavior following a security breach or perceived security breach, act of cyber terrorism or sabotage, vandalism or theft, computer virus, loss or corruption of data or programming or human error or other similar event affecting a competitor, large retailer or financial institution may materially and adversely affect our business.

If our security and information systems, or those of our vendors, are compromised or if our employees fail to comply with these laws, regulations, or contract terms, and this information is obtained by unauthorized persons or used inappropriately, it could materially and adversely affect our reputation and could disrupt our operations and result in costly litigation, judgments, or penalties arising from violations of federal and state laws and payment card industry regulations, including those promulgated by industry groups, such as the Payment Card Industry Security Standards Council, National Automated Clearing House Association, or NACHA, Canadian Payments Association and individual credit card issuers. Under laws, regulations and contractual obligations, a cyber incident could also require us to notify customers, employees or other groups of the incident or could result in adverse publicity, loss of sales and profits, or an increase in fees payable to third parties. We could also incur penalties or remediation and other costs that could materially and adversely affect the operation of our business and results of operations. We maintain insurance coverage to address cyber incidents, and have also implemented processes, procedures and controls to help mitigate these risks; however, these measures do not guarantee that our reputation and financial results will not be adversely affected by such an incident.

We rely heavily on information systems, and any material failure, interruption or weakness may prevent us from effectively operating our business and damage our reputation.

We increasingly rely on information systems, including our technology-enabled platform through which we distribute workouts to our consumer base, point-of-sale processing systems and other information systems managed by third parties, to interact with our customers, billing information and other personally identifiable information, collection of cash, legal and regulatory compliance, management of our supply chain, accounting, staffing, payment of obligations, ACH transactions, credit and debit card transactions and other processes and procedures. Our ability to efficiently and effectively manage our business depends significantly on the reliability and capacity of these systems, and any potential failure of third parties to provide quality uninterrupted service is beyond our control.

Our operations depend upon our ability, and the ability of our third-party service providers (as well as their third-party service providers), to protect our computer equipment and systems against damage from physical theft, fire, power loss, telecommunications failure or other catastrophic events, as well as from internal and external security breaches, viruses, denial-of-service attacks and other disruptions. The failure of these systems to operate effectively, stemming from maintenance problems, upgrading or transitioning to new platforms,

 

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expanding our systems as we grow, a breach in security or other unanticipated problems could result in interruptions to or delays in our business and customer service and reduce efficiency in our operations. In addition, the implementation of technology changes and upgrades to maintain current and integrate new systems may also cause service interruptions, operational delays due to the learning curve associated with using a new system, transaction processing errors and system conversion delays and may cause us to fail to comply with applicable laws. If our information systems, or those of our third-party service providers (as well as their third-party service providers), fail and our or our providers’ third-party back-up or disaster recovery plans are not adequate to address such failures, our revenues and profits could be reduced, and the reputation of our brand and our business could be materially and adversely affected.

Risks Related to Laws and Regulations

We face risks, such as unforeseen costs and potential liability in connection with content we produce, license and distribute through our content delivery platform.

As a producer and distributor of content, we face potential liability for negligence, copyright and trademark infringement, violations for rights of publicity, or other claims based on the nature and content of materials that we produce, license and distribute. We also may face potential liability for content used in promoting workouts and products, including marketing materials. We may decide to remove content from our workouts or to discontinue or alter our production of types of content if we believe such content might not be well received by our customers or could be damaging to our brand and business.

To the extent we do not accurately anticipate costs or mitigate risks, including for content that we obtain but ultimately does not appear in our products, or if we become liable for content we produce, license or distribute, our business may suffer. Litigation to defend these claims could be costly and the expenses and damages arising from any liability could harm our results of operations. We may not be indemnified against claims or costs of these types and we may not have insurance coverage for these types of claims.

Our nutritional products must comply with regulations of the Food and Drug Administration, or FDA, as well as state, local and applicable international regulations. Any non-compliance with the FDA or other applicable regulations could harm our business.

Our products must comply with various FDA rules and regulations, including those regarding product manufacturing, marketing, food safety, required testing and appropriate labeling of our products. Conflicts between state and federal law regarding definitions of ingredients, as well as labeling requirements, may lead to non-compliance with state and local regulations. For example, states may maintain narrower definitions of ingredients, as well as more stringent labeling requirements, of which we are unaware. Any non-compliance at the state or local level could also adversely affect our business, financial condition and results of operations.

Because we do not manufacture our products directly, we must rely on these manufacturers to maintain compliance with regulatory requirements. Although we require our contract manufacturers to be compliant, we do not have direct control over such facilities. Failure of our contract manufacturers to comply with applicable regulations could have an adverse effect on our business.

Changes in the legal and regulatory environment could limit our business activities, increase our operating costs, reduce demand for our products or result in litigation.

Elements of our businesses, including the production, storage, distribution, sale, advertising, marketing, labeling, health and safety practices, transportation and use of many of our products, and sale of automatically renewing subscriptions, are subject to various laws and regulations administered by federal, state and local governmental agencies in the United States, as well as the laws and regulations administered by government entities and agencies outside the United States in markets in which our products or components thereof (such as

 

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packaging) may be made, manufactured or sold. These laws and regulations and interpretations thereof may change, sometimes dramatically, as a result of a variety of factors, including political, economic or social events. Such changes may include changes in:

 

   

food and drug laws (including FDA and international regulations);

 

   

laws related to product labeling;

 

   

advertising and marketing laws and practices;

 

   

laws and programs restricting the sale and advertising of products;

 

   

laws and programs aimed at reducing, restricting or eliminating ingredients present in our supplement products;

 

   

laws and programs aimed at discouraging the consumption of products or ingredients or altering the package or portion size of our products;

 

   

state consumer protection and disclosure laws;

 

   

taxation requirements, including the imposition or proposed imposition of new or increased taxes or other limitations on the sale of our products; competition laws;

 

   

anti-corruption laws, including the U.S. Foreign Corrupt Practices Act of 1977, as amended, or FCPA, and the UK Bribery Act of 2010, or Bribery Act;

 

   

economic sanctions and anti-boycott laws, including laws administered by the U.S. Department of Treasury, Office of Foreign Assets Control and the European Union;

 

   

laws relating to export, re-export, transfer, and import controls, including the Export Administration Regulations, the EU Dual Use Regulation, and the customs and import laws administered by the U.S. Customs and Border Protection;

 

   

labor and employment laws;

 

   

laws related to automatically renewing subscriptions and cancellation of such subscriptions;

 

   

data collection and privacy laws; and

 

   

environmental laws.

New laws, regulations or governmental policies and their related interpretations, or changes in any of the foregoing, including taxes or other limitations on the sale of our products, ingredients contained in our products or commodities used in the production of our products, may alter the environment in which we do business and, therefore, may impact our operating results or increase its costs or liabilities. In addition, if we fail to adhere to such laws and regulations, we could be subject to regulatory investigations, civil or criminal sanctions, as well as class action litigation, which has increased in its industry in recent years.

We are affected by extensive laws, governmental regulations, administrative determinations, court decisions and similar constraints both domestically and abroad.

In both domestic and foreign markets, the formulation, manufacturing, packaging, labeling, distribution, importation, exportation, licensing, sale and storage of our products are affected by extensive laws, governmental regulations, administrative determinations, court decisions and similar constraints. Such laws, regulations and other constraints may exist at the federal, state or local levels in the United States and at all levels of government in foreign jurisdictions. There can be no assurance that we or our distributors are in compliance with all of these regulations. Our failure or our distributors’ failure to comply with these regulations or new regulations could lead to the imposition of significant penalties or claims and could have a material adverse effect on our business. In addition, the adoption of new regulations or changes in the interpretations of existing regulations may result in significant compliance costs or discontinuation of product sales and may adversely affect the marketing of our products, resulting in significant loss of sales revenues.

 

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Regulations related to conflict minerals may cause us to incur additional expenses and could limit the supply and increase the costs of certain metals used in the manufacturing of our products.

We are subject to requirements under the Dodd-Frank Wall Street Reform and Consumer Protection Act of 2010, which will require us to conduct due diligence on and disclose whether or not our products contain conflict minerals. The implementation of these requirements could adversely affect the sourcing, availability, and pricing of the materials used in the manufacture of components used in our products. In addition, we will incur additional costs to comply with the disclosure requirements, including costs related to conducting diligence procedures to determine the sources of minerals that may be used or necessary to the production of our products and, if applicable, potential changes to products, processes, or sources of supply as a consequence of such due diligence activities. It is also possible that we may face reputational harm if we determine that certain of our products contain minerals not determined to be conflict free or if we are unable to alter our products, processes, or sources of supply to avoid such materials.

Our network marketing program could be found not to be in compliance with current or newly adopted laws or regulations in one or more markets, which could have a material adverse effect on our business.

Our network marketing program is subject to a number of federal and state regulations administered by the Federal Trade Commission and various state agencies in the United States as well as regulations on direct selling in foreign markets administered by foreign agencies. We are subject to the risk that, in one or more markets, our network marketing program could be found not to be in compliance with applicable law or regulations. Regulations applicable to network marketing organizations generally are directed at preventing fraudulent or deceptive schemes, often referred to as “pyramid” or “chain sales” schemes, by ensuring that product sales ultimately are made to consumers and that advancement within an organization is based on sales of the organization’s products rather than investments in the organization or other non-retail sales-related criteria. The regulatory requirements concerning network marketing programs do not include “bright line” rules and are inherently fact-based, and thus, even in jurisdictions where we believe that our network marketing program is in full compliance with applicable laws or regulations governing network marketing systems, we are subject to the risk that these laws or regulations or the enforcement or interpretation of these laws and regulations by governmental agencies or courts can change. The failure of our network marketing program to comply with current or newly adopted regulations could have a material adverse effect on our business in a particular market or in general.

We are also subject to the risk of private party challenges to the legality of our network marketing program. The network marketing programs of other companies have been successfully challenged in the past. An adverse judicial determination with respect to our network marketing program, or in proceedings not involving us directly but which challenge the legality of network marketing systems, could have a material adverse effect on our business.

Our products or services offered as part of automatically renewing subscriptions or memberships could be found not to be in compliance with laws or regulations in one or more markets, which could have a material adverse effect on our business.

Certain of our products and services include subscriptions and memberships that automatically renew unless cancelled by the subscribing consumer. There are a number of consumer-protection regulations at the state and federal level that govern how automatically renewing subscriptions are offered, including the types of notices that must be provided to consumers upon sign-up, and the manner in which consumers are able to cancel such renewals. We are subject to the risk that, in one or more markets, our automatically renewing subscription products could be found not to be in compliance with applicable law or regulations. This could result in regulatory bodies or a private party bringing an action that challenges the legality of our subscription products. These actions, including those without merit, could result in us having to expend significant litigation costs to defend against such claims, incur penalties or pay damages as a result of legal judgments against us, or require us

 

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to change elements of our automatically renewing subscription products. Each of these could have a material adverse effect on our business.

Changes in legislation or requirements related to EFT, or our failure to comply with existing or future regulations, may materially and adversely impact our business.

We derive a significant amount of revenue from auto-renewal arrangements incorporated within our programs, which require express consent from our customers to commence. Any changes in the laws, regulations or interpretations of the laws regarding auto-renewal arrangements, or increased enforcement of such laws and/or regulations, could adversely affect our ability to engage or retain customers and harm our financial condition and operating performance. Our business relies heavily on the fact that our subscriptions continue on a recurring basis after the completion of any initial term requirements, and compliance with these laws and regulations and similar requirements may be onerous and expensive. In addition, variances and inconsistencies from jurisdiction to jurisdiction may further increase the cost of compliance and doing business. States that have fitness membership statutes may be applicable to us and could provide harsh penalties for violations, including membership contracts being void or voidable. Our failure to comply fully with these rules or requirements may subject us to fines, higher transaction fees, penalties, damages and civil liability and may result in the loss of our ability to accept EFT payments, which would have a material adverse effect on our business and in turn our results of operations and financial condition. In addition, any such costs, which may arise in the future as a result of changes to the legislation and regulations or in their interpretation, could individually or in the aggregate cause us to change or limit our business practice, which may make our business model less attractive to our customers.

We are subject to a number of risks related to ACH, credit card and debit card payments we accept.

We accept payments through ACH, credit card and debit card transactions. For ACH, credit card and debit card payments, we pay interchange and other fees, which may increase over time. An increase in those fees would require us to either increase the prices we charge for our subscriptions, which could cause us to lose customers, or suffer an increase in our operating expenses, either of which could harm our operating results.

If we or any of our processing vendors have problems with our billing software, or the billing software malfunctions, it could have an adverse effect on our customer satisfaction and could cause one or more of the major credit card companies to disallow our continued use of their payment products. In addition, if our billing software fails to work properly and, as a result, we do not automatically charge our customers’ credit cards, debit cards or bank accounts on a timely basis or at all, we could lose subscription revenue, which would harm our operating results.

If we fail to adequately control fraudulent ACH, credit card and debit card transactions, we may face civil liability, diminished public perception of our security measures and significantly higher ACH, credit card and debit card related costs, each of which could adversely affect our business, financial condition and results of operations. The termination of our ability to process payments through ACH transactions or on any major credit or debit card would significantly impair our ability to operate our business.

As consumer behavior shifts to use emerging forms of payment, there may be an increased reluctance to use ACH or credit cards for membership dues and point of sale transactions which could result in decreased revenues as consumers choose to give their business to competition with more convenient forms of payment. We may need to expand our information systems to support newer and emerging forms of payment methods, which may be time-consuming and expensive and may not realize a return on our investment.

We are subject to payment processing risk.

Our customers pay for our products and services using a variety of different payment methods, including credit and debit cards and gift cards. We rely on third parties to process payments. Acceptance and processing of

 

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these payment methods are subject to certain rules and regulations and require payment of interchange and other fees. To the extent there are disruptions in our payment processing systems, increases in payment processing fees, material changes in the payment ecosystem, such as large re-issuances of payment cards, delays in receiving payments from payment processors, or changes to rules or regulations concerning payment processing, our revenue, operating expenses and results of operation could be adversely impacted. We leverage our third-party payment processors to bill customers on our behalf. If these third parties become unwilling or unable to continue processing payments on our behalf, we would have to find alternative methods of collecting payments, which could adversely impact customer acquisition and retention. In addition, from time to time, we encounter fraudulent use of payment methods, which could impact our results of operation and if not adequately controlled and managed could create negative consumer perceptions of our service.

We are subject to governmental export and import controls and economic sanctions laws that could subject us to liability and impair our ability to compete in international markets.

The United States and various foreign governments have imposed controls, export license requirements, and restrictions on the import or export of technologies. Our products may be subject to U.S. export controls, which may require submission of a product classification and annual or semi-annual reports. Compliance with applicable regulatory requirements regarding the export of our products and services may create delays in the introduction of our products and services in international markets, prevent our international customers from accessing our products and services, and, in some cases, prevent the export of our products and services to some countries altogether.

Furthermore, U.S. export control laws and economic sanctions prohibit the provision of products and services to countries, governments, and persons targeted by U.S. sanctions. Even though we take precautions to prevent our products from being provided to targets of U.S. sanctions, our products and services could be provided to those targets or provided by our customers. Any such provision could have negative consequences, including government investigations, penalties, reputational harm. Our failure to obtain required import or export approval for our products could harm our international and domestic sales and adversely affect our revenue.

We could be subject to future enforcement action with respect to compliance with governmental export and import controls and economic sanctions laws that result in penalties, costs, and restrictions on export privileges that could have an adverse effect on our business, results of operations and financial condition.

Failure to comply with anti-corruption and anti-money laundering laws, including the FCPA and similar laws associated with our activities outside of the United States, could subject us to penalties and other adverse consequences.

We operate a global business and may have direct or indirect interactions with officials and employees of government agencies or state-owned or affiliated entities. We are subject to the Foreign Corrupt Practices Act, or the FCPA, the U.S. domestic bribery statute contained in 18 U.S.C. § 201, the U.S. Travel Act, the USA PATRIOT Act, the U.K. Bribery Act, and possibly other anti-bribery and anti-money laundering laws in countries in which we conduct activities. These laws that prohibit companies and their employees and third-party intermediaries from corruptly promising, authorizing, offering, or providing, directly or indirectly, improper payments or anything of value to foreign government officials, political parties, and private-sector recipients for the purpose of obtaining or retaining business, directing business to any person, or securing any advantage. In addition, U.S. public companies are required to maintain records that accurately and fairly represent their transactions and have an adequate system of internal accounting controls. In many foreign countries, including countries in which we may conduct business, it may be a local custom that businesses engage in practices that are prohibited by the FCPA or other applicable laws and regulations. We face significant risks if we or any of our directors, officers, employees, agents or other parties or representatives fail to comply with these laws and governmental authorities in the United States and elsewhere could seek to impose substantial civil and/or criminal fines and penalties which could have a material adverse effect on our business, reputation, results of operations and financial condition.

 

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We have begun to implement an anti-corruption compliance program and policies, procedures and training designed to foster compliance with these laws; however, our employees, contractors, and agents, and companies to which we outsource some of our business operations, may take actions in violation of our policies or applicable law. Any such violation could have an adverse effect on our reputation, business, operating results and prospects.

Any violation of the FCPA, other applicable anti-corruption laws, or anti-money laundering laws could result in whistleblower complaints, adverse media coverage, investigations, loss of export privileges, severe criminal or civil sanctions and, in the case of the FCPA, suspension or debarment from U.S. government contracts, any of which could have a materially adverse effect on our reputation, business, operating results, and prospects. In addition, responding to any enforcement action may result in a significant diversion of management’s attention and resources and significant defense costs and other professional fees.

Our intellectual property rights are valuable, and any inability to protect them could reduce the value of our products, services, and brand.

Our success depends in large part on our proprietary content and technology and our trademarks, copyrights, patents, trade secrets and other intellectual property rights. We rely on, and expect to continue to rely on, a combination of trademark, trade dress, domain name, copyright, trade secret and patent laws, as well as confidentiality and license agreements with our employees, contractors, consultants, and third parties with whom we have relationships, to establish and protect our brand and other intellectual property rights. However, our efforts to obtain and protect our intellectual property rights may not be sufficient or effective, and any of our intellectual property rights may be challenged, which could result in them being narrowed in scope or declared invalid or unenforceable. There can be no assurance that our intellectual property rights will be sufficient to protect against others offering products, services, or technologies that are substantially similar to ours and that compete with our business.

Effective protection of patents, trademarks, and domain names is expensive and can be difficult to maintain, both in terms of application and registration costs as well as the costs of defending and enforcing those rights. As we have grown, we have sought to obtain and protect our intellectual property rights in an increasing number of countries, a process that can be expensive and may not always be successful. For example, the U.S. Patent and Trademark Office and various foreign governmental patent agencies require compliance with a number of procedural requirements to complete the patent application process and to maintain issued patents, and noncompliance or non-payment could result in abandonment or lapse of a patent or patent application, resulting in partial or complete loss of patent rights in a relevant jurisdiction. Further, intellectual property protection may not be available to us in every country in which our products and services are available. For example, some foreign countries have compulsory licensing laws under which a patent owner must grant licenses to third parties. In addition, many countries limit the enforceability of patents against third parties, including government agencies or government contractors. In these countries, patents may provide limited or no benefit.

In order to protect our brand and intellectual property rights, we may be required to spend significant resources to monitor and protect these rights. Enforcement actions and litigation brought to protect and enforce our intellectual property rights could be costly, time-consuming, and distracting to management and could result in the impairment or loss of portions of our intellectual property. Furthermore, our efforts to enforce our intellectual property rights may be met with defenses, counterclaims, and countersuits attacking the validity and enforceability of our intellectual property rights. Accordingly, we may not be able to prevent third parties from infringing upon or misappropriating our intellectual property. Our failure to secure, protect, and enforce our intellectual property rights could seriously damage our brand and our business.

 

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We have been, and may in the future be, subject to claims that we infringed certain intellectual property rights of third parties, and such claims could result in costly litigation expenses or the loss of significant rights related to, among other things, our products and marketing activities, including as it relates to Myx stationary bike products.

There may be intellectual property rights held by others, including issued or pending patents, trademarks, and copyrights, and applications of the foregoing, that they allege cover significant aspects of our products, services, content, branding, or business methods. We have received in the past, and may receive in the future, communications from third parties, including practicing and non-practicing entities, claiming that we may have infringed, misused, or otherwise misappropriated their intellectual property rights. Moreover, companies in the stationary bicycle space are frequent targets of entities seeking to enforce their rights in their intellectual property, or to otherwise profit from royalties in connection with grants of licenses in their intellectual property. These intellectual property claims include enforcement of a broad variety of patents that cover various elements of stationary bicycle products.

Defending against intellectual property infringement claims may result in costly litigation expenses and diversion of technical and management personnel. It also may result in our inability to use certain technologies, content, branding, or business methods found to be in violation of another party’s rights. As a result of a dispute, we may have to develop non-infringing technology, enter into royalty or licensing agreements, revise our marketing activities, cease the sale of certain products, or take other actions to resolve the claims that would result in additional cost and expense to our business. Any of these results could materially adversely affect our ability to compete and our business, results of operations, and financial condition.

Our subscriber engagement on mobile devices depends upon effective operation with mobile operating systems, networks, and standards that we do not control.

A growing portion of our customers access our platform through Openfit/Beachbody on Demand (“BOD”) and there is no guarantee that popular mobile devices will continue to support Openfit/BOD or that mobile device users will use Openfit/BOD rather than competing products. We are dependent on the interoperability of Openfit/BOD with popular mobile operating systems that we do not control, such as Android and iOS, and any changes in such systems that degrade the functionality of our digital offering or give preferential treatment to competitors could adversely affect our platform’s usage on mobile devices. Additionally, in order to deliver high-quality mobile content, it is important that our digital offering is designed effectively and works well with a range of mobile technologies, systems, networks, and standards that we do not control. We may not be successful in developing relationships with key participants in the mobile industry or in developing products that operate effectively with these technologies, systems, networks, or standards. In the event that it is more difficult for our customers to access and use our platform on their mobile devices or customers find our mobile offerings do not effectively meet their needs, our competitors develop products and services that are perceived to operate more effectively on mobile devices, or if our customers choose not to access or use our platform on their mobile devices or use mobile products that do not offer access to our platform, our subscriber growth and subscriber engagement could be adversely impacted.

In addition, a portion of our customers access our products through over-the-top (“OTT”) services such as AppleTV and Roku. These OTT services are managed by third parties that we do not control, and any changes in such systems or services that degrade the functionality of our digital offering or give preferential treatment to competitors could adversely affect our platform’s usage through these services.

Myx may be subject to warranty claims that could result in significant direct or indirect costs, or Myx could experience greater returns than expected, either of which could have an adverse effect on our business, financial condition, and operating results.

Myx generally provides a minimum 12-month limited warranty on all of its bikes. The occurrence of any material defects in our products could make it liable for damages and warranty claims in excess of its current

 

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reserves, which could result in an adverse effect on our business prospects, liquidity, financial condition, and cash flows if warranty claims were to materially exceed anticipated levels. In addition, Myx could incur significant costs to correct any defects, warranty claims, or other problems, including costs related to product recalls. Any negative publicity related to the perceived quality and safety of its products could affect our brand image, decrease consumer and subscriber confidence and demand, and adversely affect our financial condition and operating results. Also, while its warranty is limited to repairs and returns, warranty claims may result in litigation, the occurrence of which could have an adverse effect on our business, financial condition, and operating results.

Changes in U.S. tax law may have an adverse effect on our business, financial condition and results of operations and affect the U.S. federal tax considerations of the purchase, ownership and disposition of the common stock.

Potential tax reforms in the U.S. may result in significant changes in the rules governing United States federal income taxation. Such changes may have an adverse effect on our business, financial condition and results of operations. Such changes may also affect the U.S. federal tax considerations of the purchase, ownership and disposition of our common stock.

We may be subject to obligations to collect and remit sales tax and other taxes, and we may be subject to tax liability for past sales, which could adversely harm our business.

State and local jurisdictions have differing rules and regulations governing sales, use, value added and other taxes, and these rules and regulations are subject to varying interpretations that may change over time. In particular, the applicability of such taxes to our trainings in various jurisdictions is unclear. While we do not believe we are currently required to collect and remit sales or similar taxes on our trainings in any jurisdiction in which we are not collecting such tax, we could face the possibility of tax assessments and audits. A successful assertion that we should be collecting sales, use, value added or other taxes on our trainings in those jurisdictions where we do not do so or have not historically done so could result in substantial tax liabilities and related penalties for past sales, discourage customers from purchasing our services or otherwise harm our business, results of operations and financial condition.

Risks Related to Being a Public Company

Our management team has limited experience managing a public company.

Most members of our management team have limited experience managing a publicly traded company, interacting with public company investors, and complying with the increasingly complex laws pertaining to public companies. Our management team may not successfully or efficiently manage our transition to being a public company subject to significant regulatory oversight and reporting obligations under the federal securities laws and the continuous scrutiny of securities analysts and investors. These new obligations and constituents will require significant attention from our senior management and could divert their attention away from the day-to-day management of our business, which could adversely affect our business, results of operations and financial condition.

Our internal controls over financial reporting may not be effective and our independent registered public accounting firm may not be able to certify as to their effectiveness, which could have a significant and adverse effect on our business and reputation.

As a public company, we will be required to comply with the SEC’s rules implementing Sections 302 and 404 of the Sarbanes-Oxley Act, which require management to certify financial and other information in our quarterly and annual reports and provide an annual management report on the effectiveness of controls over financial reporting. As an “emerging growth company,” as defined in the JOBS Act, our independent registered

 

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public accounting firm will not be required to formally attest to the effectiveness of our internal controls over financial reporting pursuant to Section 404 until the date we are no longer an emerging growth company. At such time, our independent registered public accounting firm may issue a report that is adverse in the event that it is not satisfied with the level at which our controls are documented, designed or operating.

To comply with the requirements of being a public company, we may need to undertake various actions, such as implementing additional internal controls and procedures and hiring additional accounting or internal audit staff. Testing and maintaining internal controls can divert our management’s attention from other matters that are important to the operation of our business. If we identify material weaknesses in our internal controls over financial reporting or are unable to comply with the requirements of Section 404 or assert that our internal controls over financial reporting is effective, or if our independent registered public accounting firm is unable to express an opinion as to the effectiveness of our internal controls over financial reporting, investors may lose confidence in the accuracy and completeness of our financial reports and the market price of our common stock could be negatively affected, and we could become subject to investigations by the SEC or other regulatory authorities, which could require additional financial and management resources.

If securities or industry analysts do not publish research or reports about our business, if they adversely change their recommendations regarding our shares or if our results of operations do not meet their expectations, our share price and trading volume could decline.

The trading market for our shares will be influenced by the research and reports that industry or securities analysts publish about us or our business. We do not have any control over these analysts. Securities and industry analysts do not currently, and may never, publish research on us. If no securities or industry analysts commence coverage of us, the trading price of our shares would likely be negatively impacted. In the event securities or industry analysts initiated coverage, and one or more of these analysts cease coverage of us or fail to publish reports on us regularly, we could lose visibility in the financial markets, which in turn could cause our share price or trading volume to decline. Moreover, if one or more of the analysts who cover us downgrade our stock, or if our results of operations do not meet their expectations, our share price could decline.

As a public company, we will become subject to additional laws, regulations and stock exchange listing standards, which will impose additional costs on us and may strain our resources and divert our management’s attention.

As a company with publicly-traded securities, we will be subject to the reporting requirements of the Exchange Act, the Sarbanes-Oxley Act, the Dodd-Frank Wall Street Reform and Consumer Protection Act of 2010, the listing requirements of the NYSE and other applicable securities laws and regulations. These rules and regulations require that we adopt additional controls and procedures and disclosure, corporate governance and other practices thereby significantly increasing our legal, financial and other compliance costs. These new obligations will also make other aspects of our business more difficult, time-consuming or costly and increase demand on our personnel, systems and other resources. For example, to maintain and improve the effectiveness of our disclosure controls and procedures and internal control over financial reporting, we will need to commit significant resources, hire additional staff and provide additional management oversight. Furthermore, as a result of disclosure of information in this prospectus and in our Exchange Act and other filings required of a public company, our business and financial condition will become more visible, which we believe may give some of our competitors who may not be similarly required to disclose this type of information a competitive advantage. In addition to these added costs and burdens, if we are unable to satisfy our obligations as a public company, we could be subject to delisting of our common stock, fines, sanctions, other regulatory actions and civil litigation, any of which could negatively affect the price of our common stock.

 

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Our Proposed Charter will provide that the Court of Chancery of the State of Delaware will be the exclusive forum for substantially all disputes between us and our stockholders, which could limit our stockholders’ ability to obtain a favorable judicial forum for disputes with us or our directors, officers or employees.

Our Proposed Charter which will become effective prior to the closing of the Merger will provide that, unless we consent in writing to the selection of an alternative forum, the sole and exclusive forum, to the fullest extent permitted by law, for (1) any derivative action or proceeding brought on our behalf, (2) any action asserting a claim of breach of a fiduciary duty owed by any of our directors, officers, employees or agents or our stockholders, (3) any action asserting a claim against us or any director or officer arising pursuant to any provision of the DGCL, (4) any action to interpret, apply, enforce or determine the validity of our Proposed Charter or Bylaws, or (5) any other action asserting a claim that is governed by the internal affairs doctrine shall be the Court of Chancery of the State of Delaware or federal court located within the State of Delaware if the Court of Chancery does not have jurisdiction, in all cases subject to the court’s having jurisdiction over indispensable parties named as defendants. A complaint asserting a cause of action under the Securities Act of 1933, as amended, may be brought in state or federal court. With respect to the Securities Exchange Act of 1934, as amended, only claims brought derivatively under the Securities Exchange Act of 1934, as amended, would be subject to the forum selection clause described above. The enforceability of similar choice of forum provisions in other companies’ certificates of incorporation and bylaws has been challenged in legal proceedings, and it is possible that, in connection with any action, a court could find the choice of forum provisions contained in our Proposed Charter and Bylaws to be inapplicable or unenforceable in such action. Although we believe these provisions benefit us by providing increased consistency in the application of Delaware law for the specified types of actions and proceedings, the provisions may have the effect of discouraging lawsuits against us or our directors and officers. Alternatively, if a court were to find the choice of forum provision contained in our Proposed Charter and Bylaws to be inapplicable or unenforceable in an action, we may incur additional costs associated with resolving such action in other jurisdictions, which could harm our business, financial condition and operating results. Any person or entity purchasing or otherwise acquiring any interest in our shares of capital stock shall be deemed to have notice of and consented to this exclusive forum provision but will not be deemed to have waived our compliance with the federal securities laws and the rules and regulations thereunder.

Our quarterly operating results and other operating metrics may fluctuate from quarter to quarter, which makes these metrics difficult to predict.

Our quarterly operating results and other operating metrics have fluctuated in the past and may continue to fluctuate from quarter to quarter. As a result, you should not rely on our past quarterly operating results as indicators of future performance. You should take into account the risks and uncertainties frequently encountered by companies in rapidly evolving markets. Our financial condition and operating results in any given quarter can be influenced by numerous factors, many of which we are unable to predict or are outside of our control, including:

 

   

the continued market acceptance of, and the growth of the connected fitness and wellness market;

 

   

our ability to maintain and attract new customers;

 

   

our development and improvement of the quality of the subscriber experience, including, enhancing existing and creating new content, services, nutritional supplements, technology, and features;

 

   

the continued development and upgrading of our technology platform;

 

   

the timing and success of new product, service, feature, and content introductions by us or our competitors or any other change in the competitive landscape of our market;

 

   

pricing pressure as a result of competition or otherwise;

 

   

delays or disruptions in our supply chain;

 

   

errors in our forecasting of the demand for our products and services, which could lead to lower revenue or increased costs, or both;

 

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increases in marketing, sales, and other operating expenses that we may incur to grow and expand our operations and to remain competitive;

 

   

the continued maintenance and expansion of last mile delivery and maintenance services for our fitness products;

 

   

successful expansion into international markets;

 

   

seasonal fluctuations in subscriptions and usage of fitness products by our customers, each of which may change as our products and services evolve or as our business grows;

 

   

the diversification and growth of our revenue sources;

 

   

our ability to maintain gross margins and operating margins;

 

   

constraints on the availability of consumer financing or increased down payment requirements to finance purchases of our integrated fitness products;

 

   

system failures or breaches of security or privacy;

 

   

adverse litigation judgments, settlements, or other litigation-related costs, including content costs for past use;

 

   

changes in the legislative or regulatory environment, including with respect to privacy, consumer product safety, and advertising, or enforcement by government regulators, including fines, orders, or consent decrees;

 

   

fluctuations in currency exchange rates and changes in the proportion of our revenue and expenses denominated in foreign currencies;

 

   

changes in our effective tax rate;

 

   

changes in accounting standards, policies, guidance, interpretations, or principles; and

 

   

changes in business or macroeconomic conditions, including lower consumer confidence, recessionary conditions, increased unemployment rates, or stagnant or declining wages.

Any one of the factors above or the cumulative effect of some of the factors above may result in significant fluctuations in our operating results.

The variability and unpredictability of our quarterly operating results or other operating metrics could result in our failure to meet our expectations or those of analysts that cover us or investors with respect to revenue or other operating results for a particular period. If we fail to meet or exceed such expectations, the market price of our common stock could fall substantially, and we could face costly lawsuits, including securities class action suits.

The requirements of being a public company, including maintaining adequate internal control over our financial and management systems, may strain our resources, divert management’s attention, and affect our ability to attract and retain executive management and qualified board members.

As a public company we will incur significant legal, accounting, and other expenses that we did not incur as a private company. We will be subject to reporting requirements of the Exchange Act, the Sarbanes-Oxley Act of 2002, or the Sarbanes-Oxley Act, the rules subsequently implemented by the SEC, the rules and regulations of the listing standards of the NYSE, and other applicable securities rules and regulations. Compliance with these rules and regulations will likely strain our financial and management systems, internal controls, and employees.

The Exchange Act requires, among other things, that we file annual, quarterly, and current reports with respect to our business and operating results. Moreover, the Sarbanes-Oxley Act requires, among other things,

 

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that we maintain effective disclosure controls and procedures, and internal control, over financial reporting. In order to maintain and, if required, improve our disclosure controls and procedures, and internal control over, financial reporting to meet this standard, significant resources and management oversight may be required. If we have material weaknesses or deficiencies in our internal control over financial reporting, we may not detect errors on a timely basis and our consolidated financial statements may be materially misstated. Effective internal control is necessary for us to produce reliable financial reports and is important to prevent fraud.

In addition, we will be required to comply with the auditor attestation requirements of Section 404 of the Sarbanes-Oxley Act when we cease to be an emerging growth company. We expect to incur significant expenses and devote substantial management effort toward ensuring compliance with the auditor attestation requirements of Section 404 of the Sarbanes-Oxley Act. As a result of the complexity involved in complying with the rules and regulations applicable to public companies, our management’s attention may be diverted from other business concerns, which could harm our business, operating results, and financial condition. Although we have already engaged additional resources to assist us in complying with these requirements, our finance team is small and we may need to hire more employees in the future, or engage outside consultants, which will increase our operating expenses.

We also expect that being a public company and complying with applicable rules and regulations will make it more expensive for us to obtain director and officer liability insurance, and we may be required to incur substantially higher costs to obtain and maintain the same or similar coverage. These factors could also make it more difficult for us to attract and retain qualified members of our board of directors and qualified executive officers.

Our ability to raise capital in the future may be limited.

Our business and operations may consume resources faster than we anticipate. In the future, we may need to raise additional funds through the issuance of new equity securities, debt or a combination of both. However, the lapse or waiver of any lock up restrictions or any sale or perception of a possible sale by our stockholders, and any related decline in the market price of our common stock, could impair our ability to raise capital. Separately, additional financing may not be available on favorable terms, or at all. If adequate funds are not available on acceptable terms, we may be unable to fund our capital requirements. If we issue new debt securities, the debt holders would have rights senior to common stockholders to make claims on our assets, and the terms of any debt could restrict our operations, including our ability to pay dividends on our common stock. If we issue additional equity securities, existing stockholders will experience dilution, and the new equity securities could have rights senior to those of our common stock. Because our decision to issue securities in any future offering will depend on market conditions and other factors beyond our control, we cannot predict or estimate the amount, timing or nature of our future offerings. Thus, our stockholders bear the risk of our future securities offerings reducing the market price of our common stock and diluting their interest.

The forecasts of market growth and other projections included in this prospectus may prove to be inaccurate, and even if the markets in which we compete achieve the forecasted growth, we cannot assure you that our business will grow at a similar rate, if at all.

Growth forecasts and projections are subject to significant uncertainty and are based on assumptions and estimates that may not prove to be accurate. The forecasts in this prospectus relating to the expected growth in the fitness market, including estimates based on our own internal survey data, as well as any corresponding projections related to our potential performance, may prove to be inaccurate. Even if the markets experience the forecasted growth described in this prospectus, we may not grow our business at a similar rate, or at all. Our growth is subject to many factors, including our success in implementing our business strategy, which is subject to many risks and uncertainties. Accordingly, the forecasts of market growth included in this prospectus should not be taken as indicative of our future growth.

 

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The Merger involves the integration of businesses that currently operate as independent businesses. Each of the companies will be required to devote attention and resources to integrating their business practices and operations following the Closing, and prior to the Merger, our attention and resources will be required to plan for such integration. The companies may encounter potential difficulties in the integration process including the following:

 

   

the inability to successfully integrate the businesses, including operations, technologies, products and services, in a manner that permits Beachbody, Myx or the Company to achieve the cost savings and operating synergies anticipated to result from the Merger, which could result in the anticipated benefits of the Merger not being realized partly or wholly in the time frame currently anticipated or at all;

 

   

the necessity of coordinating geographically separated organizations, systems and facilities;

 

   

potential unknown liabilities and unforeseen expenses, delays or regulatory conditions associated with the Merger;

 

   

the integration of personnel with diverse business backgrounds and business cultures, while maintaining focus on providing consistent, high-quality products and services;

 

   

the consolidation and rationalization of information technology platforms and administrative infrastructures as well as accounting systems and related financial reporting activities; and

 

   

the challenge of preserving important relationships of both Beachbody and Myx and resolving potential conflicts that may arise.

Furthermore, it is possible that the integration process could result in the loss of talented employees or skilled workers of Beachbody and Myx. The loss of talented employees and skilled workers could adversely affect Beachbody’s, Myx’s or the Company’s ability to successfully conduct their respective businesses because of such employees’ experience and knowledge of the respective business. In addition, Beachbody, Myx, or the Company could be adversely affected by the diversion of our attention and any delays or difficulties encountered in connection with the integration of Beachbody and Myx. The process of integrating operations could cause an interruption of, or loss of momentum in, the activities of the businesses. If Beachbody, Myx or the Company experience difficulties with the integration process, the anticipated benefits of the Merger may not be realized fully or at all, or may take longer to realize than expected. These integration matters could have an adverse effect on the business, results of operations, financial condition or prospects of Beachbody, Myx, or the Company during this transition period and for an undetermined period after completion of the Merger.

Risks Related to Forest Road

You have limited rights or interests in funds in the trust account. To liquidate your investment, therefore, you may be forced to sell your Public Shares or warrants, potentially at a loss.

Public Stockholders will be entitled to receive funds from the trust account only upon (i) such stockholder’s exercise of Redemption Rights in connection with Forest Road’s initial business combination (which will be the Business Combination should it occur) and then only in connection with those shares of Forest Road’s common stock that such stockholder properly elected to redeem, subject to the limitations described herein, (ii) the Redemption of any Public Shares properly tendered in connection with a stockholder vote to amend the Charter to (A) modify the substance or timing of Forest Road’s obligation to redeem 100% of the Public Shares if Forest Road does not complete an initial business combination by November 29, 2022 or (B) with respect to any other material provisions relating to stockholders’ rights or pre-business combination activity and (iii) the Redemption of Public Shares if Forest Road is unable to complete an initial business combination by November 29, 2022, subject to applicable law and as further described herein. In addition, if Forest Road’s plan to redeem its Public Shares if it is unable to complete an initial Business Combination by November 29, 2022 is not completed for any reason, compliance with Delaware law and the Charter may require that Forest Road submit a plan of dissolution to its then-existing stockholders for approval prior to the distribution of the proceeds held in Forest

 

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Road’s trust account. In that case, Public Stockholders may be forced to wait beyond November 29, 2022 before they receive funds from the trust account. In no other circumstances will a Public Stockholder have any right or interest of any kind in the trust account. Accordingly, to liquidate your investment, you may be forced to sell your Public Shares or warrants, potentially at a loss.

If you or a “group” of stockholders are deemed to hold in excess of 15% of Forest Road’s Public Shares, you will lose the ability to redeem all such shares in excess of 15% of Forest Road’s Public Shares.

The 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 Forest Road’s IPO, which is referred to as the “Excess Shares.” However, such stockholders may vote all their shares (including Excess Shares) for or against the Business Combination. Your inability to redeem the Excess Shares will reduce your influence over Forest Road’s ability to complete the Business Combination and you could suffer a material loss on your investment in Forest Road if you sell Excess Shares in open market transactions. Additionally, you will not receive Redemption distributions with respect to the Excess Shares if Forest Road completes the Business Combination. As a result, you will continue to hold that number of Public Shares exceeding 15% and, in order to dispose of such shares, would be required to sell such shares in open market transactions, potentially at a loss.

Forest Road’s stockholders may be held liable for claims by third parties against Forest Road to the extent of distributions received by them upon Redemption of their shares.

If Forest Road is forced to file a bankruptcy case or an involuntary bankruptcy case is filed against Forest Road which is not dismissed, any distributions received by stockholders could be viewed under applicable debtor/creditor and/or bankruptcy laws as either a “preferential transfer” or a “fraudulent conveyance.” As a result, a bankruptcy court could seek to recover all amounts received by Forest Road’s stockholders. Furthermore, because Forest Road intends to distribute the proceeds held in the trust account to Forest Road’s Public Stockholders promptly after expiration of the time Forest Road has to complete an initial business combination, this may be viewed or interpreted as giving preference to Forest Road’s Public Stockholders over any other potential creditors with respect to access to, or distributions from Forest Road’s assets. Furthermore, the Forest Road Board may be viewed as having breached its fiduciary duties to Forest Road or Forest Road’s creditors and/or having acted in bad faith, thereby exposing itself and Forest Road to claims of punitive damages, by paying public stockholders from the trust account prior to addressing the claims of creditors. There is no assurance that claims will not be brought against Forest Road for these reasons.

Although Forest Road seeks to have all vendors, service providers (other than its independent auditors), prospective target businesses or other entities with which it does business execute agreements with Forest Road waiving any right, title, interest or claim of any kind in or to any monies held in the trust account for the benefit of Forest Road’s Public Stockholders, as well as distributions to 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 Public Stockholders or claims challenging the enforceability of the waiver.

If third parties bring claims against Forest Road, the proceeds held in the trust account could be reduced and the Redemption Price received by Public Stockholders may be less than $10.00 per share.

Forest Road’s placing of funds in the trust account may not protect those funds from third-party claims against Forest Road. Although Forest Road seeks to have all vendors, service providers (other than its independent registered public accounting firm), prospective target businesses or other entities with which it does business execute agreements with Forest Road waiving any right, title, interest or claim of any kind in or to any monies held in the trust account for the benefit of Forest Road’s Public Stockholders, such parties may not execute such agreements, or even if they execute such agreements they may not be prevented from bringing

 

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claims against the trust account, including, but not limited to, fraudulent inducement, breach of fiduciary duty 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 Forest Road’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, Forest Road’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 Forest Road than any alternative.

Examples of possible instances where Forest Road 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 Forest Road and agree not seek recourse against the trust account for any reason. Upon Redemption of Forest Road’s Public Shares, if Forest Road is unable to complete its initial business combination within the prescribed time frame, or upon the exercise of a Redemption Right in connection with the Business Combination, Forest Road will be required to provide for payment of claims of creditors that were not waived that may be brought against Forest Road within the ten years following Redemption. Accordingly, the Redemption Price 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 the Insider Letter Agreement, the Sponsor has agreed that it will be liable to Forest Road if and to the extent any claims by a vendor (other than Forest Road’s independent registered public accounting firm) for services rendered or products sold to Forest Road, or a prospective target business with which Forest Road has discussed entering into a transaction agreement, reduce the amount of funds in the trust account to below (i) $10 per public share or (ii) 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 the interest which may be withdrawn to pay taxes, 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 Forest Road’s indemnity of the underwriters 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, the Sponsor will not be responsible to the extent of any liability for such third party claims. Forest Road believes that the Sponsor’s only assets are securities of Forest Road, and Forest Road has neither undertaken any efforts to independently verify whether the Sponsor has sufficient funds available to satisfy its indemnification obligations, nor asked the Sponsor to reserve for such obligations. As a result, if any such claims were successfully made against the trust account, the funds available for an initial business combination and Redemptions could be reduced to less than $10.00 per Public Share without any meaningful recourse against the Sponsor. In such event, Forest Road may not be able to complete an initial business combination, and you would receive such lesser amount per share in connection with any Redemption of your Public Shares.

None of Forest Road’s officers or directors will indemnify Forest Road for claims by third parties including, without limitation, claims by vendors and prospective target businesses.

Forest Road’s directors may decide not to enforce the indemnification obligations of the Sponsor under the Insider Letter Agreement, resulting in a reduction in the amount of funds in the trust account available for distribution to Forest Road’s Public Stockholders.

In the event that the proceeds in the trust account are reduced below the lesser of (i) $10.00 per Public Share or (ii) such lesser amount per 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 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, Forest Road’s independent directors would determine whether to take

 

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legal action against the Sponsor to enforce its indemnification obligations. While Forest Road currently expects that its independent directors would take legal action on behalf of Forest Road against the Sponsor to enforce their indemnification obligations to Forest Road, it is possible that Forest Road’s independent directors, in exercising their business judgment, may choose not to do so in any particular instance. If Forest Road’s independent directors choose not to enforce these indemnification obligations, there may be less funds in the trust account available for distribution to Forest Road’s Public Stockholders.

If, after Forest Road distributes the proceeds in the trust account to its Public Stockholders, Forest Road files a bankruptcy petition or an involuntary bankruptcy petition is filed against Forest Road that is not dismissed, a bankruptcy court may seek to recover such proceeds and the members of the Forest Road Board may be viewed as having breached their fiduciary duties to Forest Road’s creditors, thereby exposing the members of the Forest Road Board and Forest Road to claims of punitive damages.

If, after Forest Road distributes the proceeds in the trust account to its Public Stockholders, Forest Road files a bankruptcy petition or an involuntary bankruptcy petition is filed against Forest Road that is not dismissed, any distributions received by stockholders could be viewed under applicable debtor/creditor and/or bankruptcy laws as either a “preferential transfer” or a “fraudulent conveyance.” As a result, a bankruptcy court could seek to recover all amounts received by Forest Road’s stockholders. In addition, the Forest Road Board may be viewed as having breached its fiduciary duty to Forest Road’s creditors and/or having acted in bad faith, thereby exposing itself and Forest Road to claims of punitive damages, by paying Public Stockholders from the trust account prior to addressing the claims of creditors.

Changes in laws or regulations, or a failure to comply with any laws and regulations, may adversely affect the business, investments and results of operations of Forest Road.

Forest Road is subject to laws and regulations enacted by national, regional and local governments. In particular, Forest Road is required to comply with certain SEC and other legal requirements. Compliance with, and monitoring of, applicable laws and regulations may be difficult, time consuming and costly. Those laws and regulations and their interpretation and application may also change from time to time and those changes could have a material adverse effect on the business, investments and results of operations of Forest Road. In addition, a failure to comply with applicable laws or regulations, as interpreted and applied, could have a material adverse effect on Forest Road’s business and results of operations.

Your unexpired Warrants may be redeemed prior to their exercise at a time that is disadvantageous to you, thereby making your Warrants worthless.

Outstanding Warrants may be redeemed 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 price of the Company’s common stock equals or exceeds $18.00 per share for any 20 trading days within a 30 trading-day period ending on the third trading day prior to the date the Company sends the notice of Redemption to the Warrant holders. If and when the warrants become redeemable by the Company, the Company may not exercise its Redemption Rights if the issuance of shares of common stock upon exercise of the Warrants is not exempt from registration or qualification under applicable state blue sky laws or Forest Road is unable to effect such registration or qualification, subject to the Company’s obligation in such case to use its best efforts to register or qualify the shares of Class A common stock under the blue sky laws of the state of residence in those states in which the Warrants were initially offered by Forest Road in its IPO. Redemption of the outstanding Warrants could force you to (i) exercise your Warrants and pay the exercise price at a time when it may be disadvantageous for you to do so, (ii) sell your warrants at the then-current market price when you might otherwise wish to hold your warrants or (iii) accept the nominal Redemption Price which, at the time the outstanding warrants are called for Redemption, is likely to be substantially less than the market value of your Warrants. None of the Private Placement Warrants will be redeemable by the Company so long as they are held by their initial purchasers or their permitted transferees.

 

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Forest Road is an emerging growth company within the meaning of the Securities Act and Forest Road has taken advantage of certain exemptions from disclosure requirements available to emerging growth companies; this could make the Company’s securities less attractive to investors and may make it more difficult to compare the Company’s performance with other public companies.

Forest Road (and the Company following the Business Combination) is an “emerging growth company” within the meaning of the Securities Act, as modified by the JOBS Act, and has taken advantage of certain exemptions from various reporting requirements that are applicable to other public companies that are not emerging growth companies including, but not limited to, not being required to comply with the auditor attestation requirements of Section 404 of the Sarbanes-Oxley Act, reduced disclosure obligations regarding executive compensation in Forest Road’s periodic reports and proxy statements and exemptions from the requirements of holding a nonbinding advisory vote on certain executive compensation matters. As a result, Forest Road’s stockholders may not have access to certain information they may deem important. Forest Road and the Company may be an emerging growth company for up to five years from the IPO, although circumstances could cause the loss of that status earlier, including if the market value of the common stock of the Company held by non-affiliates exceeds $700 million as of any June 30 before that time, in which case the Company would no longer be an emerging growth company as of the following December 31. Forest Road cannot predict whether investors will find its (or the Company’s) securities less attractive because Forest Road (or the Company) rely on these exemptions. If some investors find the securities less attractive as a result of reliance on these exemptions, the trading prices of the Company’s securities may be lower than they otherwise would be, there may be a less active trading market for the Company’s securities and the trading prices of the 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 an emerging growth 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. Forest Road has elected not to opt out of such extended transition period. Accordingly, when a standard is issued or revised and it has different application dates for public or private companies, Forest Road (or the Company following the Business Combination), as an emerging growth company, will adopt the new or revised standard at the time private companies adopt the new or revised standard, unless early adoption is permitted by the standard. This may make comparison of Forest Road’s and the Company’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.

 

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SPECIAL MEETING OF THE STOCKHOLDERS

General

Forest Road is furnishing this proxy statement/prospectus to its stockholders as part of the solicitation of proxies by Forest Road’s Board for use at the Special Meeting to be held on                , 2021, and at any adjournments or postponements thereof. This proxy statement/prospectus is first being furnished to Forest Road’s stockholders on or about                , 2021 in connection with the vote on the proposals described in this proxy statement/prospectus. This proxy statement/prospectus provides Forest Road’s stockholders with information they need to know to be able to vote or instruct their vote to be cast at the Special Meeting.

Date, Time and Place of Special Meeting

The Special Meeting will be held via live webcast at 10:00 a.m., Eastern Time, on                , 2021, at                 , to consider and vote upon the proposals to be submitted to the Special Meeting, including if necessary, the adjournment proposal. The special meeting can be accessed by visiting                , where you will be able to listen to the meeting live and vote during the meeting. Please note that you will only be able to access the Special Meeting by means of remote communication. Please have your control number, which can be found on your proxy card, to join the Special Meeting. If you do not have a control number, please contact Continental Stock Transfer and Trust Company, the transfer agent.

Registering for the Special Meeting

Pre-registration at                 is recommended but is not required in order to attend.

Any stockholder wishing to attend the virtual meeting should register for the meeting by                , 2021. To register for the Special Meeting, please follow these instructions as applicable to the nature of your ownership of our common stock:

 

   

If your shares are registered in your name with Continental Stock Transfer & Trust Company and you wish to attend the online-only Special Meeting, go to                 , enter the 12-digit control number included on your proxy card or notice of the meeting and click on the “Click here to preregister for the online meeting” link at the top of the page. Just prior to the start of the meeting you will need to log back into the meeting site using your control number. Pre-registration is recommended but is not required in order to attend.

 

   

Beneficial stockholders (those holding shares through a stock brokerage account or a bank or other holder of record) who wish to attend the virtual meeting must obtain a legal proxy by contacting their account representative at the bank, broker, or other nominee that holds their shares and e-mail a copy (a legible photograph is sufficient) of their legal proxy to proxy@continentalstock.com. Beneficial stockholders who e-mail a valid legal proxy will be issued a 12-digit meeting control number that will allow them to register to attend and participate in the special meeting. After contacting Continental Stock Transfer & Trust Company, a beneficial holder will receive an e-mail prior to the meeting with a link and instructions for entering the virtual meeting. Beneficial stockholders should contact Continental Stock Transfer & Trust Company at least five (5) business days prior to the meeting date in order to ensure access.

Purpose of the Special Meeting

At the Special Meeting, Forest Road is asking holders of its common stock:

 

   

To consider and vote upon a proposal to adopt and approve the Business Combination. A copy of the Merger Agreement is attached to this proxy statement/prospectus as Annex A-1;

 

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To consider and vote upon a proposal to adopt and approve the Proposed Charter. A copy of the Proposed Charter is attached to this proxy statement/prospectus as Annex B-1;

 

   

To consider and vote upon, on a non-binding advisory basis, the Advisory Charter Proposals;

 

   

To consider and vote upon the NYSE Proposal;

 

   

To consider and vote upon the Director Election Proposal;

 

   

To consider and vote upon the Incentive Plan Proposal. A copy of the 2021 Plan is attached to this proxy statement/prospectus as Annex C;

 

   

To consider and vote upon the ESPP Proposal. A copy of the ESPP is attached to this proxy statement/prospectus as Annex D;

 

   

To consider and vote upon the Adjournment Proposal, if it is presented at the Special Meeting.

Recommendation of the Forest Road Board with Respect to the Proposals

The Board believes that the Business Combination Proposal and the other proposals to be presented at the Special Meeting are in the best interest of Forest Road’s stockholders and unanimously recommends that our stockholders vote “FOR” the Business Combination Proposal, “FOR” the Organizational Document Proposal, “FOR” each of the separate Advisory Charter Proposals, “FOR” the NYSE Proposal, “FOR” the Incentive Plan Proposal, “FOR” the ESPP Proposal, “FOR” each of the director nominees set forth in the Director Election Proposal, and “FOR” the Adjournment Proposal, in each case, if presented to the Special Meeting.

Record Date; Who is Entitled to Vote

We have fixed the close of business on                , 2021, as the “record date” for determining the stockholders entitled to notice of and to attend and vote at the Special Meeting. As of the close of business on                , 2021, there were 37,500,000 shares of Forest Road common stock outstanding and entitled to vote. Each share of common stock is entitled to one vote per share at the special meeting.

Our initial stockholders and our other officers and directors at the time of the IPO entered into a letter agreement to vote their Class B common stock and any public shares purchased during or after the IPO, in favor of the Business Combination Proposal. As of the date hereof, our Sponsor owns approximately 20% of our total outstanding shares of Class A Common Stock and Class B Common Stock.

Quorum

The presence, in person (which would include presence at the virtual Special Meeting) or by proxy, of stockholders holding a majority of the shares entitled to vote at the Special Meeting constitutes a quorum at the Special Meeting.

Abstentions and Broker Non-Votes

With respect to each proposal in this proxy statement/prospectus (other than the director election proposal), you may vote “FOR,” “AGAINST” or “ABSTAIN.” With respect to the Director Election Proposal, you may vote “FOR” or “WITHHOLD” with respect to each nominee.

If a stockholder fails to return a proxy card or fails to instruct a broker or other nominee how to vote, and does not attend the Special Meeting in person, then the stockholder’s shares will not be counted for purposes of determining whether a quorum is present at the Special Meeting. If a valid quorum is established, any such failure to vote or to provide voting instructions will have the same effect as a vote “AGAINST” the Organizational Document Proposal, but will have no effect on the outcome of any other proposal in this proxy statement/prospectus.

 

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Abstentions and “WITHHOLD” votes will be counted in connection with the determination of whether a valid quorum is established but their effect on the proposals in this proxy statement/prospectus differ as follows:

 

   

An abstention will have no effect on the Business Combination Proposal, the Advisory Charter Proposals and the Adjournment Proposal, and for the Director Election Proposal, a “WITHHOLD” vote will have the same effect as an abstention and will not count as a vote “FOR” or “AGAINST” a director because directors are elected by plurality voting.

 

   

In contrast, an abstention will have the same effect as a vote “AGAINST” the Organizational Document Proposal. Moreover, for purposes of the NYSE Proposal, the Incentive Plan Proposal, and the ESPP Proposal, the NYSE considers an abstention vote as a “vote cast”, and therefore, an abstention will have the same effect as a vote “AGAINST” such proposals.

Vote Required for Approval

The following votes are required for each proposal at the special meeting:

 

   

Business Combination Proposal: The approval of the Business Combination Proposal requires the affirmative vote of a majority of the votes cast by holders of Class A Common Stock and Class B Common Stock present in person or represented by proxy and entitled to vote at the Special Meeting, voting together as a single class.

 

   

Organizational Document Proposal: The approval of the Organizational Document Proposal requires the affirmative vote of holders of a majority of the outstanding shares of Class A Common Stock and Class B Common Stock entitled to vote thereon at the Special Meeting, voting as a single class.

 

   

Advisory Charter Proposals: 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 Class A Common Stock and Class B Common Stock present in person or represented by proxy and entitled to vote at the Special Meeting, voting as a single class.

 

   

NYSE Proposal: The approval of the NYSE Proposal requires the affirmative vote of a majority of the votes cast by holders of Class A Common Stock and Class B Common Stock present in person or represented by proxy and entitled to vote at the special meeting, voting as a single class.

 

   

Director Election Proposal: The election of the director nominees pursuant to the director election proposal requires a plurality of the votes cast by holders of Class A Common Stock and Class B Common Stock present in person or represented by proxy and entitled to vote at the Special Meeting, voting as a single class.

 

   

Incentive Plan Proposal: The approval of the Incentive Plan Proposal requires the affirmative vote of a majority of the votes cast by holders of Class A Common Stock and Class B Common Stock present in person or represented by proxy and entitled to vote at the Special Meeting, voting as a single class.

 

   

ESPP Proposal: The approval of the ESPP Proposal requires the affirmative vote of a majority of the votes cast by holders of Class A Common Stock and Class B Common Stock present in person or represented by proxy and entitled to vote at the Special Meeting, voting as a single class.

 

   

Adjournment Proposal: The approval of the Adjournment Proposal requires the affirmative vote of a majority of the votes cast by holders of Class A Common Stock and Class B Common Stock present in person or represented by proxy and entitled to vote at the Special Meeting, voting as a single class.

Under the Merger Agreement, the approval of each of the Condition Precedent Proposals (i.e., the Business Combination Proposal, the Organizational Document Proposal, the NYSE Proposal, the Director Election Proposal, the Incentive Plan Proposal and the ESPP Proposal) is a condition to the consummation of the Business Combination. The adoption of each Condition Precedent Proposal is conditioned on the approval of all of the Condition Precedent Proposals. Each of the Advisory Charter Proposals and the Adjournment Proposal are not

 

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conditioned on the approval of any other proposal. If our stockholders do not approve each of the Condition Precedent Proposals, the Business Combination may not be consummated.

Voting Your Shares

Each share of common stock that you own in your name entitles you to one vote. Your proxy card shows the number of shares of Forest Road common stock that you own. If your shares are held in “street name” or are in a margin or similar account, you should contact your broker to ensure that votes related to the shares you beneficially own are properly counted. There are two ways to vote your shares of Forest Road common stock at the special meeting.

 

   

You Can Vote by Signing and Returning the Enclosed Proxy Card. If you vote by proxy card, your “proxy,” whose name is listed on the proxy card, will vote your shares as you instruct on the proxy card. If you sign and return the proxy card but do not give instructions on how to vote your shares, your shares will be voted as recommended by Forest Road’s board “FOR” the Business Combination Proposal, “FOR” the Organizational Document Proposal, “FOR” each of the separate Advisory Charter Proposals, “FOR” the NYSE Proposal, “FOR” the Incentive Plan Proposal, “FOR” the ESPP Proposal, “FOR” each of the director nominees set forth in the Director Election Proposal and “FOR” the Adjournment Proposal, in each case, if presented to the special meeting. Votes received after a matter has been voted upon at the Special Meeting will not be counted.

 

   

You Can Attend the Special Meeting and Vote in Person. We will be hosting the Special Meeting via live webcast. If you attend the Special Meeting, you may submit your vote at the Special Meeting online at                , in which case any votes that you previously submitted will be superseded by the vote that you cast at the Special Meeting. See “— Registering for the Special Meeting” above for further details on how to attend the Special Meeting.

Revoking Your Proxy

Stockholders may send a later-dated, signed proxy card to Forest Road’s Secretary at the address set forth below so that it is received by Forest Road’s Secretary prior to the vote at the Special Meeting (which is scheduled to take place                , 2021) or attend the Special Meeting in person (which would include presence at the virtual Special Meeting) and vote. Stockholders also may revoke their proxy by sending a notice of revocation to Forest Road’s Chief Executive Officer, which must be received by Forest Road’s Secretary prior to the vote at the Special Meeting. However, if your shares are held in “street name” by your broker, bank or another nominee, you must contact your broker, bank or other nominee to change your vote.

Who Can Answer Your Questions About Voting Your Shares

If you are a stockholder and have any questions about how to vote or direct a vote in respect of your shares of common stock, you may call Morrow Sodali LLC, our proxy solicitor, by calling (800) 662-5200, or banks and brokers can call collect at (203) 658-9400, or by emailing FRX.info@investor.morrowsodali.com.

Vote of Forest Road’s Sponsor, Directors and Officers

Forest Road entered into agreements with the Sponsor, directors and officers, pursuant to which each agreed to vote any shares of Forest Road common stock owned by them in favor of an initial business combination.

Forest Road’s Sponsor, directors and officers have waived any redemption rights, including with respect to any shares of common stock purchased in the IPO or in the aftermarket, in connection with the Business Combination. The shares held by our Sponsor have no redemption rights upon our liquidation and will be worthless if no Business Combination is effected by us by November 30, 2022. However, our initial stockholders are entitled to redemption rights upon our liquidation with respect to any public shares they may own.

 

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Redemption Rights

Public stockholders may seek to redeem the public shares that they hold, regardless of whether they vote for the proposed Business Combination, against the proposed Business Combination or do not vote in relation to the proposed Business Combination. Any public stockholder may request redemption of their public shares for a per share price, payable in cash, equal to the aggregate amount then on deposit in the trust account calculated as of two business days prior to the consummation of the Business Combination, including interest earned on the funds held in the trust account (net of taxes payable), divided by the number of then outstanding public shares. If a holder properly seeks redemption as described in this section and the Business Combination is consummated, the holder will no longer own these shares following the Business Combination.

Notwithstanding the foregoing, a public stockholder, together with any affiliate of such holder or any other person with whom such holder is acting in concert or as a “group” (as defined in Section 13 of the Exchange Act) will be restricted from seeking redemption rights with respect to 15% or more of the public shares, without our prior consent. Accordingly, if a public stockholder, alone or acting in concert or as a group, seeks to redeem more than 15% of the public shares, then any such shares in excess of that 15% limit would not be redeemed for cash, without our prior consent.

Forest Road’s initial stockholders will not have redemption rights with respect to any shares of Forest Road common stock owned by them, directly or indirectly.

You will be entitled to receive cash for any public shares to be redeemed only if you:

 

  (i)

(a) hold public shares or (b) hold public shares through units and you elect to separate your units into the underlying public shares and public warrants prior to exercising your redemption rights with respect to the public shares; and

 

  (ii)

prior to                 , Eastern Time, on                , 2021 (two business days prior to the vote at the Special Meeting) (a) submit a written request to the transfer agent that the Company redeem your public shares for cash and (b) deliver your public shares to the transfer agent, physically or electronically through DTC.

If you hold the shares in street name, you will have to coordinate with your broker to have your shares certificated or delivered electronically. Public shares that have not been tendered (either physically or electronically) in accordance with these procedures will not be redeemed for cash. There is a nominal cost associated with this tendering process and the act of certificating the shares or delivering them through the DWAC (Deposit/Withdrawal At Custodian) system. The transfer agent will typically charge the tendering broker $80 and it would be up to the broker whether or not to pass this cost on to the redeeming stockholder. In the event the proposed Business Combination is not consummated this may result in an additional cost to stockholders for the return of their shares.

Holders of units must elect to separate the underlying public shares and public warrants prior to exercising redemption rights with respect to the public shares. If holders hold their units in an account at a brokerage firm or bank, holders must notify their broker or bank that they elect to separate the units into the underlying public shares and public warrants, or if a holder holds units registered in its own name, the holder must contact the transfer agent directly and instruct them to do so.

Any request to redeem public shares, once made, may be withdrawn at any time until the deadline for exercising redemption requests and thereafter, with our consent, until the Closing. Furthermore, if a holder of a public share delivers its certificate in connection with an election of its redemption and subsequently decides prior to the Closing not to elect to exercise such rights, it may simply request that Forest Road instruct our transfer agent to return the certificate (physically or electronically). The holder can make such request by contacting the transfer agent, at the address or email address listed in this proxy statement. We will be required to honor such request only if made prior to the deadline for exercising redemption requests.

 

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If the Business Combination is not approved or completed for any reason, then Forest Road’s public stockholders who elected to exercise their redemption rights will not be entitled to redeem their shares. In such case, Forest Road will promptly return any shares previously delivered by public holders.

The closing price of shares of Class A Common Stock on                , 2021 was $    . As of                , 2021 was approximately $     or approximately $     per public share. Prior to exercising redemption rights, stockholders should verify the market price of shares of Class A Common Stock as they may receive higher proceeds from the sale of their shares of Class A Common Stock in the public market than from exercising their redemption rights if the market price per share is higher than the redemption price. Forest Road cannot assure our stockholders that they will be able to sell their shares of Class A Common Stock 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 our securities when our stockholders wish to sell their shares.

If a public stockholder exercises its redemption rights, then it will be exchanging its redeemed public shares for cash and will no longer own those public shares. You will be entitled to receive cash for your public shares only if you properly exercise your right to redeem the public shares you hold, no later than the close of the vote on the business combination proposal, and deliver your public shares (either physically or electronically) to the transfer agent, prior to                 , Eastern Time, on                , 2021 (two business days prior to the vote at the special meeting), and the Business Combination is consummated.

Appraisal Rights

Neither Forest Road stockholders nor Forest Road warrant holders have appraisal rights in connection with the Business Combination under the DGCL.

Proxy Solicitation Costs

Forest Road is soliciting proxies on behalf of our Board. This solicitation is being made by mail but also may be made by telephone or in person. Forest Road and our directors, officers and employees may also solicit proxies in person, by telephone or by other electronic means. Forest Road will bear the cost of the solicitation.

Forest Road has hired Morrow Sodali LLC to assist in the proxy solicitation process. Forest Road will pay that firm a fee of $            , plus disbursements. Such fee will be paid with non-trust account funds.

Forest Road will ask banks, brokers and other institutions, nominees and fiduciaries to forward the proxy materials to their principals and to obtain their authority to execute proxies and voting instructions. Forest Road will reimburse them for their reasonable expenses.

Potential Purchases of Public Shares and/or Warrants

At any time prior to the Special Meeting, during a period when they are not then aware of any material nonpublic information regarding Forest Road or our securities, our initial stockholders, the Target Companies and/or their respective affiliates may purchase shares and/or warrants from investors, or they may enter into transactions with such investors and others to provide them with incentives to acquire shares of Forest Road common stock or vote their shares in favor of the Business Combination Proposal. The purpose of such share purchases and other transactions would be to increase the likelihood that the proposals presented to stockholders for approval at the Special Meeting are approved, or to provide additional equity financing. Any such share purchases and other transactions may thereby increase the likelihood of obtaining stockholder approval of the Business Combination. This may result in the completion of our Business Combination that may not otherwise have been possible. While the exact nature of any such incentives has not been determined as of the date of this proxy statement/prospectus, they might include, without limitation, arrangements to protect such investors or holders against potential loss in value of their shares, including the granting of put options.

 

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Entering into any such incentive arrangements may have a depressive effect on shares of Forest Road common stock. For example, as a result of these arrangements, an investor or holder may have the ability to effectively purchase shares at a price lower than market and may therefore be more likely to sell the shares he owns, either prior to or immediately after the Special Meeting.

If such transactions are effected, the consequence could be to cause the Business Combination to be approved in circumstances where such approval could not otherwise be obtained. Purchases of shares by the persons described above would allow them to exert more influence over the approval of the proposals to be presented at the Special Meeting and would likely increase the chances that such proposals would be approved. As of the date of this proxy statement/prospectus, there have been no such discussions and no agreements to such effect have been entered into with any such investor or holder. Forest Road will file a Current Report on Form 8-K to disclose any arrangements entered into or significant purchases made by any of the aforementioned persons that would affect the vote on the proposals to be voted on at the Special Meeting. Any such report will include descriptions of any arrangements entered into or significant purchases by any of the aforementioned persons.

The existence of financial and personal interests of our directors and officers may result in conflicts of interest, including a conflict between what may be in the best interests of the Company and its stockholders and what may be best for a director’s personal interests when determining to recommend that stockholders vote for the proposals. See the sections entitled “Risk Factors”, “The Business Combination Proposal — Interests of Certain Persons in the Business Combination” and “Beneficial Ownership of Securities” for more information and other risks.

 

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THE BUSINESS COMBINATION PROPOSAL

We are asking our stockholders to approve and adopt the Merger Agreement and the transactions contemplated thereby. Our 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-1 to this proxy statement/prospectus. Please see the subsection entitled “The Merger Agreement” below, for additional information 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.

Because we are holding a stockholder vote on the Business Combination, we may consummate the Business Combination only if it is approved by the affirmative vote for the proposal by the holders of a majority of shares of Class A Common Stock and Class B Common Stock who, being present and entitled to vote at the Special Meeting to approve the business combination proposal, vote at the Special Meeting, voting as a single class.

The Merger Agreement

This section describes the material provisions of the Merger Agreement, but does not purport to describe all of the terms of the Merger Agreement. The following summary is qualified in its entirety by reference to the complete text of the Merger Agreement, a copy of which is attached as Annex A-1 hereto, which is incorporated herein by reference. Stockholders and other interested parties are urged to read the Merger Agreement, carefully and in its entirety (and, if appropriate, with the advice of financial and legal counsel) because it is the primary legal document that governs the Business Combination.

The Merger Agreement contains representations, warranties and covenants that the respective parties made to each other as of the date of the Merger Agreement or other specific dates. The assertions embodied in those representations, warranties and covenants were made for purposes of the contract among the respective parties and are subject to important qualifications and limitations agreed to by the parties in connection with negotiating the Merger Agreement, including by the underlying disclosure letters (“disclosure letters”) which are not filed publicly and are subject to a contractual standard of materiality different from that generally applicable to shareholders and were used for the purpose of allocating risk among the Parties (as defined below) rather than establishing matters as facts. We do not believe that the disclosure letters contain information that is material to an investment decision. Additionally, the representations and warranties of the Parties to the Merger Agreement may or may not have been accurate as of any specific date and do not purport to be accurate as of the date of this proxy statement/prospectus. Accordingly, no person should rely on the representations and warranties in the Merger Agreement or the summaries thereof in this proxy statement/prospectus as characterizations about the actual state of facts of the Parties.

General; Structure of the Business Combination

On February 9, 2021, Forest Road entered into the Merger Agreement with BB Merger Sub, LLC, a Delaware limited liability company and direct, wholly-owned subsidiary of Forest Road (“BB Merger Sub”), MFH Merger Sub, LLC, a Delaware limited liability company and direct, wholly-owned subsidiary of Forest Road (“Myx Merger Sub”), and the Target Companies (collectively, the “Parties” and each a “Party”), pursuant to which, at the Closing (as defined in the Merger Agreement), on the terms and subject to the conditions set forth in the Merger Agreement and in accordance with the applicable provisions of the DGCL and DLLCA:

(a) BB Merger Sub will be merged with and into Beachbody, following which the separate existence of BB Merger Sub will cease and Beachbody will continue as the surviving entity (the “Surviving Beachbody Entity”) and a wholly-owned subsidiary of Forest Road, and all the property, rights, privileges, agreements, powers and franchises, debts, liabilities, duties and obligations of BB Merger Sub and Beachbody will become the property, rights, privileges, agreements, powers and franchises, debts, liabilities, duties and obligations of the Surviving Beachbody Entity (the “Beachbody Merger”);

 

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(b) Myx Merger Sub will be merged with and into Myx, following which the separate existence of Myx Merger Sub will cease and Myx will continue as the surviving entity (the “Surviving Myx Entity”) and as a direct, wholly-owned subsidiary of Forest Road, and all the property, rights, privileges, agreements, powers and franchises, debts, liabilities, duties and obligations of Myx Merger Sub and Myx will become the property, rights, privileges, agreements, powers and franchises, debts, liabilities, duties and obligations of the Surviving Myx Entity (the “Myx Merger”); and

(c) immediately following the consummation of the Beachbody Merger, the Surviving Beachbody Entity will be merged with and into Forest Road, following which the separate existence of the Surviving Beachbody Entity will cease and the Company will continue as the surviving entity, and all the property, rights, privileges, agreements, powers and franchises, debts, liabilities, duties and obligations of the Surviving Beachbody Entity and Forest Road will become the property, rights, privileges, agreements, powers and franchises, debts, liabilities, duties and obligations of the Company.

Following the Business Combination, the Company will change its name to The Beachbody Company, Inc.

Consideration to be Received in the Business Combination

In consideration for the consummation of the Business Combination:

(a) The Beachbody common units issued and outstanding immediately prior to the Closing, other than those held by Carl Daikeler and certain of his affiliated and related entities, will be automatically cancelled, extinguished and converted into the right to receive, in the aggregate, approximately 101,709,590 shares of Company Class A Common Stock, par value $0.0001 per share (“Class A Common Stock”), subject to adjustment as described below;

(b) The Beachbody common units issued and outstanding immediately prior to the Closing held by Carl Daikeler, the Ava Daikeler 2012 Irrevocable Trust and the Daniel Daikeler 2012 Irrevocable Trust will be automatically cancelled, extinguished and converted into the right to receive, in the aggregate, approximately 141,176,708 shares of Company Class X Common Stock, par value $0.0001 per share (“Class X Common Stock”) (which amount includes (i) 3,789,367 shares of Class X Common Stock to be issued to the Ava Daikeler 2012 Irrevocable Trust and (ii) 3,789,367 shares of Class X Common Stock to be issued to the Daniel Daikeler 2012 Irrevocable Trust, for both of which trusts Michael Heller serves as trustee and has voting power), which shares of Class X Common Stock will have substantially the same rights and privileges as the Class A Common Stock but will carry 10 votes per share, subject to adjustment as described below;

(c) The Beachbody warrants issued, outstanding and unexercised immediately prior to the Closing will be converted into warrants of the Company representing the right to receive, in the aggregate, approximately 3,978,582 shares of Class A Common Stock, on terms substantially similar to the Beachbody warrants, subject to adjustment as described below;

(d) The Beachbody options (whether vested or unvested) will be converted into options of the Company representing the right to purchase, in the aggregate, approximately 34,785,453 shares of Class A Common Stock, on terms substantially similar to the Beachbody options, subject to adjustment as described below;

(e) The Myx units issued and outstanding immediately prior to the Closing will be automatically cancelled, extinguished and converted into the right to receive, in the aggregate, approximately 13,531,963 shares of Class A Common Stock; provided, however, that (i) certain holders of Myx units will be entitled to receive, in lieu of their pro rata portion (based on their percentage ownership interests in Myx) of such shares of Class A Common Stock, an amount in cash equal to the value of such shares, up to an aggregate amount of cash among all such holders not to exceed the result of $37.7 million minus the payments to be made by Forest Road as described in subsections (f) – (i) below, and (ii) pursuant to the Myx Fitness Holdings, LLC 2020 Profits Interest Plan (the “Myx Equity Plan”), 25% of the consideration, whether

 

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Class A Common Stock or cash (each such portion, the “Myx Class B Escrowed Consideration”), that a holder of Myx Class B Units (as defined in the Merger Agreement) would otherwise be entitled to receive pursuant to this subsection (e), will be held in escrow until such consideration is released or forfeited pursuant to the terms of the Myx Equity Plan, and in the case of forfeiture, such Myx Class B Escrowed Consideration will be distributed to the remaining holders of Myx units on a pro rata basis, in each of the foregoing subsections (i) and (ii), subject to adjustment as described below;

(f) Forest Road will make a cash payment sufficient to pay off and discharge in full all of Myx’s obligations under (i) the Credit Agreement, dated as of August 4, 2020, by and among Myx Fitness, LLC, a Delaware limited liability company (“Myx Fitness”), and JPMorgan Chase Bank, N.A., as amended from time to time, (ii) the Senior Secured Promissory Note and Security Agreement, dated as of January 1, 2020, by and between Myx Fitness and PALM MULTIFUNDS, LLC, a Delaware limited liability company, (iii) the Senior Secured Promissory Note and Security Agreement, dated as of July 31, 2020, by and between Myx Fitness and PALM QOZ1 TIER1, LLC, LLC, a Delaware limited liability company, and (iv) the Reimbursement Agreement, dated as of August 4, 2020, by and between PALM MULTIFUNDS, LLC, a Delaware limited liability company, and Myx Fitness, and, in each case, release all liens related thereto;

(g) Forest Road will make a cash payment sufficient to pay off and discharge in full the aggregate amount that is required to be distributed to certain holders of Myx units pursuant to the provisions in the Operating Agreement of Myx, dated as of November 6, 2020 (as amended from time to time, the “Myx Operating Agreement”), that are applicable to distributions to be made to holders of Myx units in connection with the Business Combination;

(h) Forest Road will make a cash payment equal to $100,000 to Myx Brands Holdings, LLC, a Delaware limited liability company (the “Myx Representative”), which payment will be held for the benefit of holders of Myx units and will be used for the purpose of paying for any third-party expenses incurred by the Myx Representative in connection with the Merger Agreement, to be released at a later date of the Myx Representative’s choosing to the remaining holders of Myx units pro rata in accordance with their percentage ownership interests in Myx; and

(i) Forest Road will make a cash payment sufficient to pay off and discharge in full the Closing Myx Transaction Expenses (as defined in the Merger Agreement).

Pursuant to an election notice by the holders of the Beachbody Series A Preferred Units (the “Beachbody Series A Election Notice”), all Beachbody Series A Preferred Units will convert to Beachbody common units on a one for one basis immediately prior to the Beachbody Merger, and following such conversion, each such as-converted Beachbody common unit will be treated as set forth in the preceding subsection (a).

The consideration available to holders of Beachbody equity interests as described in the foregoing subsections (a) – (d) is subject to upward adjustment if Forest Road’s FRX Transaction Expenses (as defined in the merger agreement) exceed a specified dollar threshold, and downward adjustment if Beachbody’s Transaction Expenses (as defined in the merger agreement) exceed a specified dollar threshold.

The consideration available to holders of Beachbody equity interests as described in the foregoing subsections (a) – (d), and to holders of Myx units as described in the foregoing subsection (e), is subject to adjustment based on the number of Myx units issuable to Beachbody, LLC, a Delaware limited liability company (“BB”) a wholly-owned subsidiary of Beachbody, upon conversion of instruments issued by Myx in favor of BB, dated December 7, 2020 as amended by the first amendment thereto, dated as of February 9, 2021 and March 4, 2021, pursuant to which Myx issued to BB instruments in an aggregate of $15 million, redeemable by BB on June 7, 2022 and subject to conversion upon certain events. The instruments are automatically convertible into Myx units upon a financing of total gross proceeds over a certain amount and upon a change of control involving BB. The number of Myx units issuable to BB upon exercise of such conversion right depends, among other things, on the date on which such conversion right is exercised.

 

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Closing of the Business Combination

In accordance with the terms and subject to the conditions of the Merger Agreement, the closing of the Business Combination (the “Closing”) will take place (a) electronically by the mutual exchange of electronic signatures (including portable document format (PDF)) commencing as promptly as practicable (and in any event no later than 9:00 a.m. Eastern Time on the third Business Day) following the satisfaction or (to the extent permitted by applicable law) waiver of the conditions set forth in Article IX of the Merger Agreement (other than those conditions that by their terms or nature are to be satisfied at the Closing; provided, that such conditions are satisfied or (to the extent permitted by applicable law) waived in writing) or (b) at such other place, time or date as Forest Road and Beachbody may mutually agree in writing. The date on which the Closing will occur is the “Closing Date”.

Conditions to the Closing of the Business Combination

Conditions to Obligations of all Parties

The respective obligations of Forest Road, Beachbody and Myx to consummate the Business Combination are subject to the satisfaction, or written waiver by all parties, of each of the following conditions:

 

   

All applicable waiting periods (and any extensions) under the HSR Act in respect of the Business Combination will have expired or been terminated.

 

   

There will be no law or Governmental Order (as defined in the Merger Agreement) by any Governmental Authority (as defined in the Merger Agreement) with competent jurisdiction and having jurisdiction over the parties with respect to the Business Combination that enjoins, prohibits or makes the Business Combination illegal.

 

   

Each of the (i) affirmative vote of the holders of the requisite number of shares of Forest Road Common Stock entitled to vote on the matters described in this proxy statement/prospectus approving the Condition Precedent Proposals (the “Required Forest Road Stockholder Approval”), (ii) affirmative vote of holders of a majority in interest of the Series A Preferred Units of Beachbody approving the Merger Agreement and the Business Combination, and (iii) affirmative vote of the Myx Representative approving the Merger Agreement and the Business Combination will have been obtained.

 

   

The registration statement of which this proxy statement/prospectus forms a part (the “Registration Statement”) will have become effective in accordance with the provisions of the Securities Act, no stop order will have been issued by the SEC that remains in effect with respect to the Registration Statement, and no proceeding seeking such a stop order will have been threatened or initiated by the SEC that remains pending.

Additional Conditions to Obligations of Forest Road and Beachbody

The respective obligations of Forest Road and Beachbody to consummate the Business Combination are subject to the satisfaction, or written waiver by each of Forest Road and Beachbody, of each of the following additional conditions:

 

   

The PIPE Investment (as defined in the Merger Agreement) (and the funding of the PIPE Investment Amount (as defined in the Merger Agreement)) will have been consummated or will be consummated substantially concurrently with the Closing as set forth in the applicable Subscription Agreements.

 

   

The Class A Common Stock will be listed or have been approved for listing on NYSE, subject only to official notice of issuance thereof.

 

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Additional Conditions to Obligations of Forest Road Parties

The obligations of the Forest Road Parties to consummate, or cause to be consummated, the Business Combination are subject to the satisfaction, or written waiver by Forest Road, of each of the following additional conditions:

 

   

Each of the Beachbody and Myx representations and warranties regarding corporation organization, subsidiaries, due authorization, current capitalization, capitalization of subsidiaries and, solely with respect to Beachbody, information provided in this proxy statement/prospectus, will be true and correct, without giving any effect to any limitation as to “materiality” or “Company Material Adverse Effect” or any similar limitation set forth therein, in all material respects as of the date of the Merger Agreement and as of the Closing Date (except to the extent such representations and warranties expressly relate to an earlier date, which in such case, will be true and correct in all material respects on and as of such earlier date). For purposes of determining whether a representation or warranty is true and correct in “all material respects” for purposes of this closing condition, only effects on Beachbody and its direct and indirect subsidiaries, and Myx and its direct and indirect subsidiaries, taken as a whole (the “Combined Company Group”) will be considered. The representations and warranties of Beachbody and Myx regarding the absence of a Company Material Adverse Effect from and after December 31, 2019 will be true and correct in all respects as of the date of the Merger Agreement and as of the Closing Date; provided, that for the avoidance of doubt, the words “Company Material Adverse Effect” in each of such representations and warranties of Beachbody and Myx will consider only effects on the Combined Company Group. All other representations and warranties of Beachbody and Myx contained in Article IV of the Merger Agreement will be true and correct, without giving any effect to any limitation as to “materiality” or “Company Material Adverse Effect” or any similar limitation set forth therein, as of the date of the Merger Agreement and as of the Closing Date (except to the extent such representations and warranties expressly relate to an earlier date, which in such case, will be true and correct on and as of such earlier date), except, in each case, where the failure of such representations and warranties to be so true and correct, individually or in the aggregate, has not had, and would not reasonably be expected to have, a Company Material Adverse Effect. For purposes of determining whether the failure of a representation and warranty to be true and correct, individually or in the aggregate, has not had, and would not reasonably be expected to have, a Company Material Adverse Effect for purposes of this closing condition, only effects on the Combined Company Group will be considered.

 

   

The covenants and agreements of Beachbody and Myx in the Merger Agreement to be performed as of or prior to the Closing will have been performed in all material respects; provided that for purposes of this closing condition, a covenant and agreement of Beachbody or Myx will only be deemed to have not been performed if Beachbody or Myx, respectively, has materially breached such covenant or agreement and failed to cure within 20 days after written notice of such breach has been delivered to Beachbody or Myx (or, if earlier, the Termination Date (as defined below)).

 

   

Beachbody will have delivered to Forest Road a certificate signed by an officer of Beachbody, dated as of the Closing Date, certifying, to the knowledge and belief of such officer, that the conditions specified in preceding two bullets have been fulfilled.

 

   

The Beachbody Series A Election Notice will remain in full force and effect.

Additional Conditions to Obligations of Beachbody

The obligation of Beachbody to consummate, or cause to be consummated, the Business Combination is subject to the satisfaction, or written waiver by Beachbody, of each of the following additional conditions:

 

   

Each of the representations and warranties of the Forest Road Parties regarding organization, authorization, and capitalization will be true and correct (without giving any effect to any limitation as to “materiality” or any similar limitation set forth therein) in all material respects as of the Closing Date as though then made (except to the extent such representations and warranties expressly relate to

 

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an earlier date, which in such case, will be true and correct in all material respects on and as of such earlier date). The representations and warranties of the Forest Road Parties regarding the absence of an Acquiror Material Adverse Effect (as defined below) from and after November 24, 2020 will be true and correct in all respects as of the date of the Merger Agreement and as of the Closing Date. All other representations and warranties of the Forest Road Parties will be true and correct, without giving any effect to any limitation as to “materiality” or “Acquiror Material Adverse Effect” or any similar limitation set forth therein, as of the date of the Merger Agreement and as of the Closing Date as though then made (except to the extent such representations and warranties expressly relate to an earlier date, which in such case, will be true and correct on and as of such earlier date), except, in either case, where the failure of such representations and warranties to be so true and correct, individually or in the aggregate, has not had, and would not reasonably be expected to have, an Acquiror Material Adverse Effect. “Acquiror Material Adverse Effect” means any change, event, circumstance, occurrence, effect, development or state of facts that, individually or in the aggregate, with any other change, event, circumstance, occurrence, effect, development or state of facts has had or would reasonably be expected to prevent or materially delay or materially impact the ability of the Forest Road Parties and Sponsor to consummate the Business Combination; provided, however, that the amount of redemptions pursuant to the Redemption or the failure to obtain the approval of the Company’s stockholders over the Acquiror Stockholder Matters (as defined in the Merger Agreement) will not be deemed to be an Acquiror Material Adverse Effect.

 

   

The covenants and agreements of the Forest Road Parties in the Merger Agreement to be performed as of or prior to the Closing will have been performed in all material respects; provided that for purposes of this closing condition a covenant or agreement of the Forest Road Parties will only be deemed to have not been performed if the Forest Road Parties have materially breached such covenant or agreement and failed to cure within 20 days after written notice of such breach has been delivered to Forest Road (or, if earlier, the Termination Date).

 

   

Forest Road will have delivered to Beachbody a certificate signed by an officer of Forest Road, dated as of the Closing Date, certifying, to the knowledge and belief of such officer, that the conditions specified in preceding two bullets have been fulfilled.

 

   

The amount of cash in (a) the trust account (after reduction for the aggregate amount of payments required to be made in connection with), plus (b) the aggregate amount of cash that has been funded pursuant to the PIPE Investment will not be less than $350,000,000.

Additional Conditions to Obligations of Myx

The obligation of Myx to consummate, or cause to be consummated, the Business Combination is subject to the satisfaction, or written waiver by Myx, of each of the following additional conditions:

 

   

Certain tax-related covenants and agreements of Beachbody and the Forest Road Parties described under “Additional Covenants of the Parties – Joint Covenants” below will have been performed by Beachbody and the Forest Road Parties, except where the failure by Beachbody or the Forest Road Parties to perform such covenants and agreements would not prevent the Myx Merger from qualifying as part of an exchange described in Section 351 of the Internal Revenue Code of 1986, as amended (the “Code”).

 

   

The representations and warranties of the Forest Road Parties regarding taking or permitting to be taken any action or being aware of any fact or circumstance that would reasonably be expected to prevent the Business Combination from qualifying as an exchange under Section 351 of the Code will be true and correct (without giving any effect to any limitation as to “materiality” or “Acquiror Material Adverse Effect” or any similar limitation set forth therein) as of the date of this Agreement and as of the Closing Date as though then made (except to the extent such representations and warranties expressly relate to an earlier date, which in such case, will be true and correct on and as of

 

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such earlier date), except, in either case, where the failure of such representations and warranties to be so true and correct, individually or in the aggregate, has not had, and would not reasonably be expected to have, an Acquiror Material Adverse Effect.

 

   

Each of Forest Road and Beachbody will have delivered to Myx a certificate signed by an officer of Forest Road and Beachbody (as applicable), dated as of the Closing Date, certifying that, to the knowledge and belief of such officer of Forest Road (with respect to the performance of the Forest Road Parties) and Beachbody (with respect to the performance of Beachbody), the condition specified in the first bullet above under this Section titled “Additional Conditions to Obligations of Myx” has been fulfilled, and Forest Road will have delivered to Myx a certificate signed by an officer of Forest Road, dated as of the Closing Date, certifying that, to the knowledge and belief of such officer of Forest Road, the condition specified in the second bullet above under this Section titled “Additional Conditions to Obligations of Myx” has been fulfilled.

Limitations of Failure of a Condition

A Party may not rely on the failure of any condition to be satisfied if such failure was due to the failure of such Party to perform any of its obligations.

Termination

The Merger Agreement may be terminated and the transactions contemplated thereby (including the Business Combination) abandoned at any time prior to the Closing by:

 

   

mutual written agreement of Forest Road and Beachbody;

 

   

either Forest Road or Beachbody, if there will be in effect any law in any jurisdiction of competent authority or Governmental Order issued, promulgated, made, rendered or entered into by any court or other tribunal of competent jurisdiction that, in each case, permanently restrains, enjoins, makes illegal or otherwise prohibits the consummation of the Business Combination and, in the case of any such Governmental Order, will have become final and nonappealable, except that the foregoing right to terminate will not be available to any Party that has failed to use its reasonable best efforts to resist, appeal, obtain consent pursuant to, resolve or lift, as applicable, such final and non-appealable order;

 

   

either Forest Road, Beachbody or Myx, if the Effective Time (as defined in the Merger Agreement) has not occurred by 11:59 p.m., Eastern Time, on August 10, 2021 (the “Termination Date”), subject to a 60 day extension for delays to the applicable waiting or review periods by any Governmental Authority or NYSE that would, or would reasonably be expected to, have the effect of delaying, impeding, hindering or preventing the review of the Business Combination or issuance of clearance or approval from such Governmental Authority to the extent required to satisfy this condition, except that the foregoing right to terminate will not be available to any Party whose breach of any provision of the Merger Agreement primarily causes or results in the failure of the Business Combination to be consummated by such times;

 

   

either Forest Road or Beachbody, if Forest Road fails to obtain the Required Forest Road Stockholder Approval;

 

   

Forest Road, in the event of a breach or failure to perform on the part of Beachbody resulting in the failure of a condition described in the first two bullets above under “Additional Conditions to Obligations of Forest Road Parties”, or any condition described above under “Additional Conditions to Obligations of Myx” to be satisfied, which is not capable of being cured by the Termination Date, or, if so capable of being cured, is not cured by Beachbody before the earlier of (i) the fifth Business Day immediately prior to the Termination Date and (ii) the 30th day following receipt of written notice from Forest Road of such breach or failure to perform, unless Forest Road is then in material breach of the Merger Agreement that would result in the failure of a condition described in the first two bullets above under “Additional Conditions to Obligations of Beachbody”;

 

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Beachbody, in the event of a breach or failure to perform on the part of any Forest Road Party resulting in the failure of a condition described in the first two bullets above under “Conditions to Obligations of Beachbody” to be satisfied, which is not capable of being cured by the Termination Date, or, if so capable of being cured, is not cured by such Forest Road Party before the earlier of (i) the fifth Business Day immediately prior to the Termination Date and (ii) the 30th day following receipt of written notice from Beachbody of such breach or failure to perform, unless Beachbody is then in material breach of the Merger Agreement that would result in the failure of a condition described at the beginning of this bullet.

Except as otherwise set forth in this paragraph, if the Merger Agreement is validly terminated as described above, the Merger Agreement will become void and have no effect, without any liability on the part of any Party or its respective affiliates, officers, directors, employees or stockholders, other than liability of any Party for any fraud or any willful and knowing material breach of the Merger Agreement by such Party occurring prior to such termination. Those certain provisions of the Merger Agreement related to claims against the trust account, confidentiality, publicity, the effect of termination and the provisions set forth under Article XI thereof (the “Surviving Provisions”) and the confidentiality agreements entered into by Forest Road with each of Myx and Beachbody, and any other sections which are required to survive in order to give appropriate effect to the Surviving Provisions, will in each case survive any termination of the Merger Agreement.

Fees and Expenses

Each Party is responsible for their own fees and expenses in connection with the Business Combination, provided, that if the Closing occurs, the penultimate paragraph above under the section titled “Consideration to be Received in the Business Combination” will apply to the consideration to be received by holders of Beachbody equity interests. The Target Companies will pay all filing fees in connection with the HSR Act, and such fees will be deemed 50% fees and expenses incurred by Forest Road, and 50% fees and expenses incurred by Beachbody.

Additional Covenants of the Parties

Joint Covenants

The Parties made certain joint covenants in the Merger Agreement including:

 

   

to use their reasonable best efforts to consummate the Business Combination (including (i) the satisfaction of the conditions described above under the heading “Conditions to the Closing of the Business Combination” and (ii) obtaining the PIPE Investment on terms and subject to the conditions set forth in the Subscription Agreement);

 

   

to use their reasonable best efforts to obtain, file with or deliver any consents of any Governmental Authorities or other Persons (as defined in the Merger Agreement) necessary to consummate the Business Combination, including making all required filings pursuant to the HSR Act with respect to the Business Combination within 10 business days following the date of the Merger Agreement, responding as promptly as reasonably practicable to any requests by any Governmental Authority for additional information and documentary material that may be requested pursuant to the HSR Act, keeping each other informed about any communications from any Governmental Authority regarding the Business Combination and giving each other a reasonable opportunity to review, and to consider in good faith the views of the other parties in connection with, any proposed written communication to any Governmental Authority relating to the Business Combination, not to participate in any substantive discussion or meeting with any Governmental Authority in connection with the Business Combination unless it consults with Beachbody, in the case of Forest Road, and Forest Road, in the case of either Beachbody or Myx, and gives such Party the opportunity to attend and participate in such meeting or discussion, requesting early termination of all waiting periods applicable to the Business Combination under the HSR Act, not extending any waiting period or comparable period under the HSR Act or

 

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entering into any agreement with any Governmental Authority not to consummate the Business Combination except with the prior written consent of the other Parties. Notwithstanding anything to the contrary, nothing in the Merger Agreement obligates any Party or any of its affiliates to agree to (i) sell, license or dispose of, or hold separate and agree to sell, license or dispose of, any entities or assets of either Beachbody or Myx or any of their respective subsidiaries or any entity or asset of such Party or any of its affiliates or any other Person or (ii) terminate, amend or assign any existing relationships and contractual rights or obligations. No Party will agree to any of the measures in the foregoing sentence with respect to any other Party or any of its affiliates, except with each of the other Parties’ prior written consent;

 

   

to cooperate with each other to prepare and make certain SEC filings, including this Registration Statement and the proxy statement/prospectus included herein, and causing the same to be declared effective under the Securities Act as promptly as practicable after such filing and to keep the same effective as long as is necessary to consummate the Business Combination and otherwise ensure that the information contained therein contains no untrue statement of material fact or material omission;

 

   

with respect to Forest Road, to take all action necessary to duly convene the Special Meeting as promptly as reasonably practicable after the completion of the SEC’s review of the proxy statement/prospectus for the purpose of voting upon the approval of the Acquiror Stockholder Matters, and providing Forest Road stockholders with an opportunity to elect to redeem pursuant to the Redemption, and using its reasonable best efforts to solicit from Forest Road stockholders proxies in favor of the Acquiror Stockholder Matters and to include in this proxy statement/prospectus the recommendation of the Board to our stockholders to vote in favor of the Acquiror Stockholder Matters;

 

   

with respect to the Board, if at any time prior to obtaining the approval of the Acquiror Stockholder Matters (as defined in the Merger Agreement), solely in response to a Forest Road Intervening Event (as defined below), to fail to make, amend, change , withdraw, modify, withhold or qualify the Acquiror Board Recommendation (a “Change in Recommendation”) if the Board determines in good faith, in consultation with its outside legal counsel, that in response to such Forest Road Intervening Event, a failure to make a Change in Recommendation would violate its fiduciary duties under applicable law, subject to certain obligations to negotiate in good faith with Beachbody and its representatives prior to making any such Change in Recommendation with regard to adjustments to the terms and conditions of the Merger Agreement that would enable Forest Road to proceed with its recommendation of the Merger Agreement and the Business Combination, and not make a Change in Recommendation. A “Forest Road Intervening Event” means any material change, event, circumstance, occurrence, effect, development or state of facts (x) that was not known or reasonably foreseeable to the Board as of the date hereof and that becomes known to the Board after the date of the Merger Agreement and prior to the receipt of the Acquiror Stockholder Approval (as defined in the Merger Agreement) and (y) that does not relate to an Alternate Business Combination Proposal (as defined in the Merger Agreement); provided, however, that (a) any change in the price or trading volume of the Company’s Common Stock and (b) any change, event, circumstance, occurrence, effect, development or state of facts that is excluded in determining whether a Company Material Adverse Effect (as described below under the heading “Company Material Adverse Effect”) has occurred or would reasonably be expected to occur pursuant to clauses (a), (b), (d), (e) and (f) of the description below (other than as expressly contemplated by the final proviso of clause (h) of the description of Company Material Adverse Effect) will in the case of clause (x) of this bullet be excluded for determining whether a Forest Road Intervening Event has occurred;

 

   

with respect to the Target Companies, to not take, or permit any of its affiliates or representatives to take, directly or indirectly, any action to solicit, engage in discussions with, enter into any agreement with, or encourage or provide information to, any Person that is not a Party or a Party’s affiliates or representatives concerning any merger or similar business combination or sale of substantially all assets or any other transaction that would in the case of the Target Companies, prohibit or delay the

 

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Business Combination, other than the Business Combination, or take any action in connection with a public offering of equity securities, and cease any and all discussions or negotiations with any Person conducted prior to the date hereof with respect to the foregoing;

 

   

with respect to Forest Road, to not take, or permit any of its affiliates or representatives to take, directly or indirectly, any action to solicit, engage in discussions with, enter into any agreement with, or encourage or provide information to, any Person that is not a Party or a Party’s affiliates or representatives concerning any offer, inquiry, proposal, indication of interest, written or oral relating to any other business combination involving Forest Road, and cease any and all discussions or negotiations with any Person conducted prior to the date hereof with respect to the foregoing;

 

   

to cooperate on certain tax matters, including allocation of values of the assets of the Target Companies, the intended tax treatment, transfer taxes, and requiring the consent of the Myx Representative with respect to certain tax filings and elections;

 

   

to maintain certain standards of confidentiality with respect to information provided in connection with the Merger Agreement and the Business Combination, and to prohibit, prior to the Closing, the issuance of any press releases or the making of any public announcement without the other Parties’ prior written consent, except that each Party may make any such announcement or other communication (i) if such announcement or other communication is required by applicable law or the rules of any stock exchange, (ii) to the extent such announcements or other communications contain only information previously disclosed in an approved public statement, and (iii) to Governmental Authorities in connection with any consents required to be made under this Agreement or in connection with the Business Combination, and to coordinate release of an initial joint press release and Forest Road’s Current Report on Form 8-K, filed on February 10, 2021;

 

   

to take certain post-Closing actions as necessary to give effect to the Business Combination; and

 

   

with respect to Forest Road, to take all actions necessary until the Closing to maintain qualification as an “emerging growth company” within the meaning of the Jumpstart Our Business Startups Act of 2012.

Forest Road Covenants

Forest Road made certain other covenants in the Merger Agreement, including:

 

   

to indemnify each present and former director, manager and officer of each Target Company, and each of their respective subsidiaries against any 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 Closing, to the fullest extent that such Target Company or its subsidiaries would have been permitted to indemnify under applicable law and their respective certificate of incorporation, bylaws or other organizational documents in effect on the date of the Merger Agreement, including by maintaining for a period of six years from the Closing provisions regarding director and officer indemnification in such entity’s organizational documents that are no less favorable to such person than the provisions of such organizational documents as of the date of the Merger Agreement, and to maintain for a period of six years from the Closing directors’ and officers’ liability insurance on terms not less favorable than the terms of such current insurance coverage, except that none of Forest Road or any of its subsidiaries will be obligated to pay an aggregate premium for such insurance in excess of 300% of the annual premium payable in the aggregate by the Target Companies and their subsidiaries for such insurance policy for the year ended December 31, 2020;

 

   

to not take the following actions without Beachbody’s (in good faith consultation with Myx) written consent (not to be unreasonably conditioned, withheld or delayed) or as required by applicable law until the earlier of the Closing and the termination of the Merger Agreement;

 

   

change, modify or amend the Trust Agreement (as defined in the Merger Agreement) or the organizational documents of any Forest Road Party;

 

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(A) declare, set aside or pay any dividends on, or make any other distribution in respect of any outstanding equity securities of any Forest Road Party, (B) split, combine or reclassify any equity securities of any Forest Road Party or (C) other than in connection with the Redemption or as otherwise required by Forest Road’s organizational documents in order to consummate the Business Combination, repurchase, redeem or otherwise acquire, or offer to repurchase, redeem or otherwise acquire, any equity securities of any Forest Road Party;

 

   

make, change or revoke any tax election in a manner inconsistent with past practice, adopt, change or revoke any accounting method with respect to taxes, file or amend any tax return in a manner inconsistent with past practice, prosecute, settle or compromise any tax liability or any action related to any amount of taxes, enter into any closing agreement with respect to any tax, surrender any right to claim a refund of taxes, consent to any extension or waiver of the limitations period applicable to any tax claim or assessment, or enter into any tax allocation, tax sharing, tax indemnification or similar agreement or arrangement (other than any customary commercial agreement entered into in the ordinary course of business and not primarily relating to taxes), in each case with respect to each item in this bullet, to the extent such action would have a material and adverse impact on Forest Road or a Target Company;

 

   

enter into, renew or amend in any material respect, any transaction or contract with an affiliate of Forest Road (including, for the avoidance of doubt, (A) the Sponsor and (B) any person in which the Sponsor has a direct or indirect legal, contractual or beneficial ownership interest of 5% or greater);

 

   

waive, release, compromise, settle or satisfy any pending or threatened material claim (which will include, but not be limited to, any pending or threatened action) or compromise or settle any liability, in each case other than compromises or settlements in an aggregate amount not greater than $500,000, subject to certain exceptions for litigation in respect of the Business Combination;

 

   

incur or assume any indebtedness or guarantee any indebtedness of another person, issue or sell any debt securities or warrants or other rights to acquire any debt securities of another person, other than any indebtedness (A) for borrowed money or guarantee or (B) incurred among wholly-owned subsidiaries of Forest Road;

 

   

(A) offer, issue, deliver, grant or sell, or authorize or propose to offer, issue, deliver, grant or sell, any equity securities other than (y) issuance of Forest Road Class A Common Stock in connection with the exercise of any Forest Road warrants outstanding on the date hereof or (z) issuance of Forest Road Class A Common Stock at not less than $10 per share in connection with the transactions contemplated by the Subscription Agreements or (B) amend, modify or waive any of the terms or rights set forth in, any Forest Road warrant or the applicable warrant agreement, including any amendment, modification or reduction of the warrant price set forth therein;

 

   

make any material change in accounting principles or methods of accounting, other than as may be required by GAAP;

 

   

enter into any agreement, or otherwise become obligated, to do any action prohibited by the foregoing sub-bullets;

 

   

to provide Beachbody with reasonable access to Forest Road’s books and records and to furnish financial and operating information as Beachbody may reasonably request solely for purposes of consummating the Business Combination, subject to customary exceptions and confidentiality requirements;

 

   

to take all commercially reasonable steps to cause acquisitions or dispositions of our Class A Common Stock that occurs in connection with the Business Combination by each individual who is subject to the reporting requirements of Section 16(a) of the Exchange Act with respect to Forest Road to be exempt under Rule 16b-3 promulgated under the Exchange Act;

 

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to take all necessary action to appoint the agreed-upon initial post-Closing directors and officers of the Company, consisting of one director nominee to be designated by Sponsor, who will be reasonably acceptable to Beachbody, and such other director nominees to be designated by Beachbody pursuant to written notice to Forest Road, and certain initial officers of Forest Road as set forth in Beachbody’s disclosure letter;

 

   

to adopt the 2021 Plan and the ESPP;

 

   

to adopt the Proposed Charter and Bylaws;

 

   

to not permit any amendment or modification to the Subscription Agreements;

 

   

to timely file all required SEC reports;

 

   

to ensure that Forest Road remains listed as a public company on the NYSE; and

 

   

to provide certain employee benefits to Myx employees post-Closing (as described below under the heading “Employee Matters”).

Target Company Covenants

Each of the Target Companies made certain other covenants in the Merger Agreement, including:

 

   

to operate and to cause its subsidiaries to operate in the ordinary course of business, except as consented to in writing by Forest Road (such consent not to be unreasonably conditioned, withheld or delayed) and except as required by applicable law, and to refrain from taking (or allowing any of its subsidiaries to take) any of the following actions, except as consented to in writing by Forest Road (such consent not to be unreasonably conditioned, withheld or delayed where noted below):

 

   

to change or amend its certificate of formation, limited liability company agreement, certificate of incorporation, bylaws or other organizational documents;

 

   

to make, declare, set aside, establish a record date for or pay any dividend or distribution, other than any dividends or distributions from any wholly owned subsidiary of such Target Company either to such Target Company or any other wholly owned subsidiaries of such Target Company;

 

   

except in the ordinary course of business, to enter into, materially modify, materially amend, waive any material right under, terminate or fail to renew, certain material contracts or leases to which a Target Company or its subsidiaries is a party or by which it is bound (any consent to such action by Forest Road not to be unreasonably conditioned, withheld or delayed);

 

   

to (i) issue, deliver, sell, transfer, pledge or dispose of, or place any lien (other than a permitted lien) on, any equity securities of such Target Company or any of its subsidiaries (other than equity securities issued upon exercise of a Beachbody option, Beachbody warrant or Myx warrant) or (ii) issue or grant any equity securities of a Target Company or its subsidiaries;

 

   

to sell, assign, transfer, convey, lease, license, abandon, allow to lapse or expire, subject to or grant any lien (other than permitted liens) on, or otherwise dispose of, any material assets, rights or properties (including material owned intellectual property) of the Target Companies, other than certain matters in the ordinary course of business or transactions between such Target Company and any of its wholly owned subsidiaries or between any of such wholly owned subsidiaries (any consent to such action by Forest Road not to be unreasonably conditioned, withheld or delayed);

 

   

to disclose to any Person any trade secrets or any source code constituting owned intellectual property (in each case, other than pursuant to a written confidentiality agreement entered into in the ordinary course of business, or in connection with the Business Combination);

 

   

to (i) cancel or compromise any claim or indebtedness owed to such Target Company or any of its subsidiaries, (ii) settle any pending or threatened action, with certain exceptions or (iii) agree to

 

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modify in any respect materially adverse to such Target Company and its subsidiaries any confidentiality or similar contract to which such Target Company or any of its subsidiaries are a party;

 

   

except as otherwise required by the terms of any existing Target Company benefit plan, to (i) materially increase the compensation or benefits of any current or former key employee, except for annual increases of less than 10% in base salary or hourly wage rates made in the ordinary course of business to key employees, (ii) make any grant or promise of any severance, retention or termination payment or arrangement to any key employee, except for any severance or termination payments in connection with the termination of any key employee in the ordinary course of business, (iii) make any change in the key management structure of such Target Company or any of its subsidiaries, including the hiring of any individuals who would be, upon such hire, key employees, or the termination (other than for “cause” or due to death or disability) of key employees, (iv) take any action to accelerate any payments or benefits, or the funding of any payments or benefits, payable or to become payable to any key employees, or (v) establish, adopt, enter into, amend or terminate in any material respect any material Target Company benefit plan or any plan, program, policy or other arrangement that would be a Target Company benefit plan if in existence as of the date of signing, other than in the ordinary course of business (and other than an employment offer letter that does not contain severance and/or a transaction or retention payment);

 

   

to implement or announce any employee layoffs, furloughs, reductions in force, or similar actions that could implicate the Worker Adjustment and Retraining Notification Act of 1988, as amended, or any similar laws;

 

   

to (i) negotiate, modify, extend, or enter into any collective bargaining agreement or (ii) recognize or certify any labor union, labor organization, works council, or group of employees as the bargaining representative for any employee of such Target Company or any of its subsidiaries;

 

   

to waive or release any noncompetition, nonsolicitation, nondisclosure, noninterference, nondisparagement, or other restrictive covenant obligation of any individual who is a key employee or with respect to any Trainer (as defined in the Merger Agreement) (any consent to such action by Forest Road not to be unreasonably conditioned, withheld or delayed);

 

   

to directly or indirectly acquire any business or any corporation or other entity or Person or division or substantial portion of the assets or a substantial equity interest thereof, in each case, that would be material to the Target Companies, taken as a whole, and other than in the ordinary course of business;

 

   

to make any loans or advance any money or other property to any Person, except for (A) advances in the ordinary course of business to employees, officers or independent contractors of such Target Company or any of its subsidiaries for expenses not to exceed $100,000 individually or $1,000,000 in the aggregate, (B) prepayments and deposits paid to suppliers of such Target Company Party or any of its subsidiaries in the ordinary course of business, (C) trade credit extended to customers of such Target Company or any of its subsidiaries in the ordinary course of business, and (D) certain ordinary course exceptions or loans or advances between such Target Company and any of its wholly owned subsidiaries or between any of such wholly owned subsidiaries;

 

   

to redeem, purchase, repurchase or otherwise acquire, or offer to redeem, purchase, repurchase or acquire, any equity securities of such Target Company or any of its subsidiaries, except for (i) the acquisition by such Target Company or any of its subsidiaries of any equity securities of such Target Company or its subsidiaries in connection with the forfeiture or cancellation of such interests and (ii) transactions between such Target Company and a wholly owned subsidiary of such Target Company or between wholly owned subsidiaries of such Target Company;

 

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to adjust, split, combine, subdivide, recapitalize, reclassify or otherwise effect any change in respect of any equity securities of such Target Company or any of its subsidiaries, except for any such transaction by a wholly owned subsidiary of such Target Company that remains a wholly owned subsidiary of such Target Company after consummation of such transaction;

 

   

to make any material change in accounting principles or methods of accounting, other than as may be required by GAAP;

 

   

to adopt or enter into a plan of complete or partial liquidation, dissolution, merger, consolidation, restructuring, recapitalization or other reorganization of such Target Company or any of its subsidiaries (other than the Business Combination);

 

   

to make, change or revoke any tax election in a manner inconsistent with past practice, adopt, change or revoke any accounting method with respect to taxes, file or amend any tax return in a manner inconsistent with past practice, prosecute, settle or compromise any tax liability or any action, audit or other similar proceeding related to taxes, enter into any closing agreement with respect to any tax, surrender any right to claim a refund of taxes, consent to any extension or waiver of the limitations period applicable to any tax claim or assessment, or enter into any tax allocation, tax sharing, tax indemnification or similar agreement or arrangement (other than any customary commercial agreement entered into in the ordinary course of business and not primarily relating to taxes), in each case, to the extent such action would have a material and adverse impact on Forest Road or Beachbody and its subsidiaries or Myx and its subsidiaries (any consent to such action by Forest Road not to be unreasonably conditioned, withheld or delayed);

 

   

to (i) incur, create or assume any indebtedness, (ii) modify the terms of any indebtedness, or (iii) assume, guarantee or endorse, or otherwise become responsible for, the obligations of any Person for indebtedness, in each case, other than any (w) indebtedness in replacement of existing indebtedness for borrowed money on terms substantially consistent with or more favorable to such Target Company or its applicable subsidiary than the indebtedness being replaced, (x) indebtedness incurred in the ordinary course of business, the proceeds of which are used solely with respect to operational aspects of such Target Company and its subsidiaries and in an aggregate amount not to exceed $20 million, (y) indebtedness incurred between such Target Company and any of its wholly owned subsidiaries or between any of such wholly owned subsidiaries or (z) guarantees of indebtedness of a wholly owned subsidiary of such Target Company otherwise incurred in compliance with the Merger Agreement;

 

   

to fail to maintain in full force and effect material insurance policies covering such Target Company and its subsidiaries and their respective properties, assets and businesses in a form and amount consistent with past practices in a manner materially detrimental to such Target Company and its subsidiaries (any consent to such action by Forest Road not to be unreasonably conditioned, withheld or delayed);

 

   

to enter into any contract or amend in any material respect any existing contract with any holder of Beachbody equity securities or any holder of Myx equity securities or any affiliates thereof or any affiliates of such Target Company or its subsidiaries (excluding ordinary course payments of annual compensation, provision of benefits or reimbursement of expenses in respect of members or stockholders who are officers or directors of such Target Company or its subsidiaries in their capacity as an officer or director (any consent to such action by Forest Road not to be unreasonably conditioned, withheld or delayed); or

 

   

to enter into any contract, or otherwise become obligated, to do any of the foregoing.

Additional covenants that each of the Target Companies made include:

 

   

to provide Forest Road with reasonable access to the Target Companies’ books and records and to furnish financial and operating information as the Company may reasonably request, subject to customary exceptions and confidentiality requirements;

 

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to release certain claims it and its affiliates may have against the trust account (see Trust Account Waiver below);

 

   

to provide Forest Road with required documentation for this proxy statement/prospectus, and providing Forest Road with prompt written notice of any developments that become known by such Target Company that would cause the proxy statement/prospectus to contain an untrue statement of a material fact or omit to state a material fact necessary in order to make the statements, in light of the circumstances under which they were made, not misleading;

 

   

with respect to Beachbody, to deliver a valid executed FIRPTA certificate to Forest Road at Closing and, with respect to Myx, to deliver a valid completed and executed IRS Form W-9 for each holder of Myx equity securities;

 

   

with respect to Myx, to provide Forest Road with fully executed pay off letters in respect of the outstanding indebtedness of Myx described above in clause (f) of the section titled “Consideration to be Received in the Business Combination”;

 

   

to seek to obtain required approvals of the Business Combination from certain identified Target Company equityholders; and

 

   

to refrain from purchasing or selling any securities of Forest Road while in possession of material nonpublic information.

Employee Matters

Forest Road has made certain covenants with respect to employees of Myx as of immediately prior to the Closing (each, a “Continuing Employee”), including:

 

   

for a period of 12 months following the Closing, to cause the Company or the Surviving Myx Company, as applicable, to provide each Continuing Employee with (i) annual salary and incentive compensation opportunities (excluding equity compensation) that are no less than the annual salary and incentive compensation opportunities (excluding equity compensation) provided to such Continuing Employee immediately prior to the Closing Date, and (ii) employee benefits that are not less favorable in the aggregate to such Continuing Employee than those provided to such Continuing Employee immediately prior to the Closing Date;

 

   

from and after the Closing, to the Company or the Surviving Myx Entity, as applicable, to give or cause to be given to each Continuing Employee credit under each employee benefit plan established or maintained by Forest Road under which Continuing Employees are eligible to participate on or after the Closing (“New Plan”) to the same extent and for the same purpose as such service with Myx was credited on or prior to the Closing under the corresponding benefit plan maintained by Myx; and

 

   

with respect to each New Plan that is a group welfare benefit plan in which any Continuing Employee or spouse or dependent thereof may be eligible to participate on or after the Closing, to use commercially reasonable efforts to (i) waive, or cause its affiliates or insurance carrier to waive, all limitations as to certain conditions and requirements, if any, applicable to each Continuing Employee or spouse or dependent thereof, and any other similar restrictions that would prevent immediate or full participation by such Continuing Employee or eligible spouse or dependent thereof, under such New Plan, to the same extent satisfied or waived under a comparable benefit plan maintained by Myx in which such Continuing Employee participated, and (ii) provide or cause its affiliates to provide credit to each Continuing Employee or eligible spouse or dependent thereof for any co-payments, deductibles, out-of-pocket expenses and for any lifetime maximums paid by such Continuing Employee or eligible spouse or dependent thereof under the comparable benefit plan maintained by Myx during the relevant plan year up to and including the Closing to the same extent and for the same purpose as credited under such comparable benefit plan maintained by Myx as if such amounts had been paid under such New Plan.

 

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Trust Account Waiver

Each of the Target Companies has agreed that it does not and will not at any time have any right, title, interest or claim of any kind in or to any assets in the trust account (or distributions therefrom to Forest Road’s public stockholders or to the underwriters of Forest Road’s initial public offering in respect of their deferred underwriting commissions held in the trust account, in each case as set forth in the Trust Agreement), and has waived any claims it, and its equityholders and affiliates, had or may have at any time against or with respect to the trust account (or distributions therefrom to Forest Road’s public stockholders) as a result of, or arising out of, any discussions, contracts or agreements (including the Merger Agreement and the Subscription Agreement) among Forest Road and the Target Companies and agreed not seek recourse against the trust account (or distributions therefrom to Forest Road’s public stockholders or to the underwriters of Forest Road’s initial public offering in respect of their deferred underwriting commissions held in the trust account, in each case as set forth in the Trust Agreement) for any reason whatsoever.

Representations and Warranties

The Merger Agreement contains customary representations and warranties by the parties thereto.

In the Merger Agreement, Forest Road makes customary representations and warranties regarding itself, BB Merger Sub, and Myx Merger Sub, including in relation to: organization, authority, non-contravention, litigation, required consents, trust account matters, brokers’ fees, Forest Road’s SEC filings and financial statements and liabilities relating thereto, prior business activities, taxes, capitalization, Forest Road’s listing on the NYSE, PIPE Investment matters, related party transactions, this proxy statement/prospectus, the absence of certain material adverse changes, indebtedness matters and the Sponsor Agreement.

In the Merger Agreement, each of the Target Companies makes representations and warranties regarding itself and its subsidiaries, including relating to: organization, authority, non-contravention, required consents, capitalization, financial statements, undisclosed liabilities, litigation, compliance with laws, material contracts and contractual defaults, benefit plans, labor matters, taxes, insurance, compliance with permits, title to tangible assets, real property, intellectual property and information security, environmental matters, the absence of certain material adverse changes, brokers’ fees, related party transactions, this proxy statement/prospectus and international trade and anti-corruption matters.

Company Material Adverse Effect

Under the Merger Agreement, certain representations and warranties of the Target Companies are qualified in whole or in party by a material adverse effect standard for purposes of determining whether a breach of such representations and warranties has occurred. Under the Merger Agreement, certain representations and warranties of Forest Road are qualified in whole or in part by a material adverse effect on the ability of Forest Road to enter into and perform its obligations under the Merger Agreement standard for purposes of determining whether a breach of such representations and warranties has occurred.

Pursuant to the Merger Agreement, a material adverse effect with respect to the Target Companies and their subsidiaries (“Company Material Adverse Effect”) means any change, event, circumstance, occurrence, effect development or state of facts has had, or would reasonably be expected to have either (a) a material adverse effect on the business, assets, liabilities, operations, results of operations or financial condition of Target Companies, taken as a whole or (b) prevent or materially delay or materially impact the ability of the Target Companies to consummate the Business Combination.

However, in no event would any of the following, alone or in combination, be deemed to constitute, or be taken into account in determining whether there has been or will be, a Company Material Adverse Effect:

 

  (a)

any change in applicable laws (including COVID-19 Measures (as defined in the Merger Agreement)) or GAAP or any official interpretation thereof;

 

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  (b)

any change in interest rates or economic, political, business, financial, commodity, currency or market conditions generally; or changes generally affecting the economy, markets or industry in which the Target Company and its subsidiaries operates;

 

  (c)

the announcement of the Merger Agreement, the pendency or consummation of the Business Combination 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 (it being understood that this clause will be disregarded for purposes of the representation and warranties in Section 4.04 of the Merger Agreement and the corresponding condition to Closing);

 

  (d)

any earthquake, hurricane, tsunami, tornado, flood, mudslide, wildfire or other natural disaster, act of nature or other force majeure event or any epidemic, disease, outbreak or pandemic (including COVID-19);

 

  (e)

any national or international political or social conditions in countries in which, or in the proximate geographic region of which, the Target Company and its subsidiaries 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;

 

  (f)

any failure of the Target Company and its subsidiaries to meet any projections, forecasts or budgets (provided, that this subsection (f) will 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 Company Material Adverse Effect (to the extent such change or effect is not otherwise excluded from the definition of Company Material Adverse Effect));

 

  (g)

any matter set forth on the disclosure letter of the applicable Target Company; or

 

  (h)

any action taken by, or at the request of, the Forest Road Parties; provided, that in the case of clauses (a), (b), (d) and (e) such changes may be taken into account to the extent (but only to the extent) that such changes have had a disproportionate impact on the Target Company and its subsidiaries, taken as a whole, as compared to other industry participants in the industries or markets in which the Target Company and its subsidiaries operates.

No Survival of Representations and Warranties of Pre-Closing Covenants

Forest Road and Beachbody may, to the extent legally allowed and except as otherwise set forth in the Merger Agreement, extend the time for performance of any of the obligations or acts of the other Party, waive any inaccuracies in the representations and warranties of the other Party, and subject to the requirements of applicable law, waive compliance by the other party with any of the agreements or conditions contained in the Merger Agreement applicable to such Party. Any agreement on the part of Forest Road or Beachbody to any such extension of waiver will be valid only if set forth in an instrument in writing signed by such party, and any delay in exercising any right pursuant to this Merger Agreement will not constitute a waiver of such right.

The Merger Agreement may be amended or modified in whole or in part, only by a duly authorized agreement in writing that is executed by each of the Parties in the same manner as the Merger Agreement and which makes reference to the Merger Agreement.

None of the representations, warranties, covenants, obligations or other agreements in the Merger Agreement or in any certificate, statement or instrument delivered pursuant to the Merger Agreement, including any rights arising out of any breach of such representations, warranties, covenants, obligations, agreements and

 

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other provisions, will survive the Closing and will terminate and expire upon the occurrence of the Effective Time (and there will be no liability after the Closing in respect thereof), except for (a) those covenants and agreements contained herein that by their terms apply in whole or in part at or after the Closing and then only with respect to any breaches occurring at or after the Closing and (b) Article XI of the Merger Agreement.

Related Agreements

The Sponsor Agreement

Concurrently with the execution of the Merger Agreement, Sponsor, Forest Road and Beachbody have entered into the Sponsor Agreement, a copy of which is attached to this proxy statement/prospectus as Annex A-2 (the “Sponsor Agreement”), pursuant to which, among other things, Sponsor will (a) vote all of its Class B Common Stock in favor of approval of the Merger Agreement and the Business Combination, (b) agree to waive any adjustment to the conversion ratio set forth in Forest Road Organizational Documents with respect to the Class B Common Stock related to the issuance of Class A Common Stock pursuant to the PIPE Investment, (c) vote against proposals in opposition to the Merger Agreement, (d) vote against any change in the business of Forest Road or the Board, (e) against any proposal that would frustrate the Merger Agreement or the Business Combination, and (e) comply with and fully perform its obligations under that certain Letter Agreement, dated as of November 24, 2020, by and among Forest Road, its officers, its directors and Sponsor, including the transfer restrictions set forth therein irrespective of any release or waiver thereof, as if such transfer restrictions remain in effect until the valid termination of the Merger Agreement or the termination of the Sponsor Agreement.

Pursuant to the Sponsor Agreement, as of immediately prior to (but subject to) the Closing, all of the shares of Class B Common Stock and the shares of Class A Common Stock and Class A Common Stock issuable upon conversion of such Class B Common Stock in connection with the Closing (the “Sponsor Shares”) held by Sponsor as of immediately prior to the Closing will be unvested and will be subject to the vesting provisions set forth as follows:

 

   

50% of the unvested Sponsor Shares owned by Sponsor (or its affiliates and Permitted Transferees (as defined in the Merger Agreement)) as of the Closing will vest at the Closing.

 

   

The remaining 50% of unvested Sponsor Shares owned by Sponsor at Closing will vest in increments of 10% upon the occurrence of each of the dates on which the Class A Common Stock’s last sale price on the NYSE is greater than $12.00, $13.00, $14.00, $15.00 and $16.00, respectively, per share (as adjusted for stock splits, stock dividends, reorganizations, recapitalizations and the like) for any 20 trading days within any consecutive 30-trading day period commencing at least 180 days after the Closing Date (each, a “Triggering Event”), and if any such Triggering Event has not occurred by the date that is the 10-year anniversary of the Closing, any Sponsor Shares that are as-yet unvested as of such time will be forfeited, and will be cancelled by the Company and will cease to exist.

In the event that there is a Company Sale (as defined below) after the Closing but on or prior to the 10th anniversary of the Closing Date that will result in the holders of Sponsor Shares receiving a Company Sale Price (as defined below) in cash in excess of the applicable price per share attributable to any Triggering Event, then immediately prior to the consummation of the Company Sale any such Triggering Event that has not previously occurred will be and the related vesting conditions will also be deemed to have occurred and the holders of such Sponsor Shares will be eligible to participate in such Company Sale. In the event of any business transaction that does not constitute a Company Sale, any remaining unvested Sponsor Shares will not be forfeited, will remain outstanding, and will remain subject to the applicable vesting triggering events described above. If the consideration in a Company Sale is equity securities of the surviving company or one of its affiliates that are (or will be at the closing of such Company Sale) publicly traded, any remaining unvested Sponsor Shares (not otherwise vested pursuant to the provisions described above) will not be forfeited and will instead be converted into such equity securities in the surviving entity and will remain subject to the remaining applicable vesting triggering events set forth in the Sponsor Agreement. A “Company Sale” means, for purposes of the Sponsor Agreement’s provisions regarding vesting of Sponsor Shares, (x) any transaction or series of related

 

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transactions that results in any Person or “group” (within the meaning of Section 13(d)(3) of the Exchange Act) acquiring equity securities that represent more than 50% of the total voting power of the then outstanding voting securities of the Company (or the equity interests of the surviving Person outstanding immediately after such transaction or transactions) or (y) a sale or disposition of all or substantially all of the assets of the Company and its subsidiaries on a consolidated basis, in each case other than a transaction or series of related transactions which results in at least 50% of the combined voting power of the then outstanding voting securities of the Company (or any successor to the Company) immediately following the closing of such transaction (or series of related transactions) being beneficially owned, directly or indirectly, by individuals and entities (or Affiliates of such individuals and entities) who were the beneficial owners, respectively, of equity securities representing more than 50% of the total voting power of the then outstanding voting securities of the Company immediately prior to such transaction (or series of related transactions). A “Company Sale Price” means the price per share for Company Common Stock in a Company Sale; provided that if and to the extent the price paid per share includes any escrows, holdbacks, deferred purchase price, earnouts or other contingent consideration, the Board will determine the price paid per share of Company Common Stock in such Company Sale in good faith, including the affirmative vote of the Director appointed by Sponsor if he is then on the Board. If and to the extent the price is payable in whole or in part with consideration other than cash, the price for such non-cash consideration will be determined as follows: (x) with respect to any securities: (A) the average of the closing prices of the sales of the securities on all securities exchanges on which the securities may at the time be listed averaged over a period of 21 days consisting of the day as of which such value is being determined and the 20 consecutive business days prior to such day or (B) if the information in (A) is not practically available, the value of each such security will be equal to the fair value thereof as of the date of valuation as determined by an independent, nationally recognized investment banking firm to be appointed with the mutual approval of Sponsor and the Board on the basis of an orderly sale to a willing, unaffiliated buyer in an arm’s-length transaction, taking into account all factors determinative of value as the investment banking firm determines relevant and (y) with respect to any other non-cash assets, the fair value thereof as of the date of valuation as determined by an independent, nationally recognized investment banking firm to be appointed with the mutual approval of Sponsor and the Board on the basis of an orderly sale to a willing, unaffiliated buyer in an arm’s-length transaction, taking into account all factors determinative of value as the investment banking firm determines relevant.

Subject to the limitations contemplated within the Sponsor Agreement, the Sponsor will have all of the rights of a stockholder of Forest Road with respect to the Sponsor Shares, including the right to receive dividends and/or distributions made to the holders of Company Common Stock and to voting rights generally granted to holders of Company Common Stock; provided, however, that other than transfers to a permitted transferee, the unvested Sponsor Shares may not otherwise be offered, sold, transferred, redeemed, assigned, pledged, hypothecated, encumbered or otherwise disposed of (whether by operation of law or otherwise) by Sponsor, as the case may be, or be subject to execution, attachment or similar process, and will bear a customary legend with respect to such transfer restrictions.

The Sponsor Agreement will terminate in its entirety, and be of no further force or effect, upon the earliest to occur of (a) the Expiration Time (as defined in Sponsor Agreement) and (b) the valid termination of the Sponsor Agreement in accordance with its terms. Upon such termination of the Sponsor Agreement, all obligations of the parties thereunder will terminate, without any liability or other obligation on the part of any party thereto, except that such termination will not affect any liability of any Party for willful breach or fraud, and certain sections of the Sponsor Agreement will survive such termination.

The Beachbody Support Agreement

In connection with the execution of the Merger Agreement, Forest Road entered into a support agreement with Beachbody and certain equityholders of Beachbody (the “Beachbody Equityholders”), a copy of which is attached to this proxy statement/prospectus as Annex A-3 (the “Beachbody Support Agreement”). Pursuant to the Beachbody Support Agreement, Beachbody Equityholders agreed to, among other things, vote to adopt and

 

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approve, upon the effectiveness of the Registration Statement, the Merger Agreement, the Business Combination and all other documents and transactions contemplated thereby, in each case, subject to the terms and conditions of Beachbody Support Agreement.

Pursuant to the Beachbody Support Agreement, Beachbody Equityholders also agreed to, among other things, (a) vote or provide in favor of the Merger Agreement and the Business Combination, (b) authorize and approve the Business Combination as a Deemed Liquidation Event pursuant to the Amended and Restated Operating Agreement of Beachbody, dated as of September 18, 2020, as amended from time to time (the “Beachbody Operating Agreement”), (c) exercise the drag-along rights pursuant to and in accordance with the Beachbody Operating Agreement and the Second Amended and Restated Rights Agreement, dated as of December 28, 2020, by and among Beachbody and certain of Beachbody’s equityholders, and (c) deliver a duly executed copy of the Registration Rights Agreement at the Closing.

The Beachbody Support Agreement will terminate in its entirety, and be of no further force or effect, upon the earliest to occur of (a) the Expiration Time (as defined in the Beachbody Support Agreement) and (b) the valid termination of the Beachbody Support Agreement in accordance with its terms. Upon such termination of the Beachbody Support Agreement, all obligations of the parties thereunder will terminate, without any liability or other obligation on the part of any party thereto, except that such termination will not affect any liability of any Party for willful breach or fraud, and certain sections of the Beachbody Support Agreement will survive such termination.

The Myx Support Agreement

In connection with the execution of the Merger Agreement, Forest Road entered into a support agreement with Myx, the Myx Representative, and Beachbody, a copy of which is attached to this proxy statement/prospectus as Annex A-4 (the “Myx Support Agreement”). Pursuant to Myx Support Agreement, the Myx Representative agreed to, among other things, vote to adopt and approve, upon the effectiveness of the Registration Statement, the Merger Agreement, the Business Combination and all other documents and transactions contemplated thereby, in each case, subject to the terms and conditions of Myx Support Agreement.

Pursuant to Myx Support Agreement, the Myx Representative also agreed to, among other things, (a) vote or provide in favor of the Merger Agreement and the Business Combination, (b) authorize and approve the Business Combination as a Deemed Liquidation Event pursuant to the Myx Operating Agreement, and (c) exercise the drag-along rights pursuant to and in accordance with the Myx Operating Agreement.

The Myx Support Agreement will terminate in its entirety, and be of no further force or effect, upon the earliest to occur of (a) the Effective Time (as defined in Merger Agreement) and (b) the valid termination of the Merger Agreement in accordance with its terms. Upon such termination of the Myx Support Agreement, all obligations of the parties thereunder will terminate, without any liability or other obligation on the part of any party thereto, except that such termination will not affect any liability of any Party for willful breach or fraud, and certain sections of the Myx Support Agreement will survive such termination.

PIPE Financing

Concurrently with the execution of the Merger Agreement, Forest Road has entered into the Subscription Agreements with each of the PIPE Investors (as defined in the Merger Agreement), pursuant to which the PIPE Investors have agreed to subscribe for and purchase, and Forest Road has agreed to issue and sell to the PIPE Investors, an aggregate of 22,500,000 shares of our Class A Common Stock at a price of $10.00 per share, for aggregate gross proceeds of $225,000,000. The shares of our Class A Common Stock to be issued pursuant to the Subscription Agreements have not been registered under the Securities Act in reliance upon the exemption provided in Section 4(a)(2) of the Securities Act. Forest Road will grant the PIPE Investors (as defined in the Merger Agreement) certain registration rights in connection with the PIPE Investment. The PIPE Investment is contingent upon, among other things, the closing of the Business Combination.

 

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The Registration Rights Agreement

The Merger Agreement contemplates that, at the Closing, Forest Road, Sponsor, Beachbody, certain equityholders of Beachbody (the “Beachbody Holders”) and Kevin Mayer will enter into a Registration Rights Agreement (the “Registration Rights Agreement”), pursuant to which the Company will agree to register for resale, pursuant to Rule 415 under the Securities Act, certain shares of Company common stock and other equity securities of the Company that are held by the parties thereto from time to time.

Additionally, the Registration Rights Agreement contains certain restrictions on transfer with respect to the shares of Common Stock held by the Beachbody Holders or Sponsor and its Permitted Transferees (as defined in the Registration Rights Agreement) immediately following the Closing (the “Lock-up Shares”), including a lock-up of such shares in the case of the Beachbody Holders and their respective permitted Transferees for the period beginning on the Closing Date and ending on the date that is 180 days after the Closing Date; and in the case of the Sponsor and its Permitted Transferees for the period beginning on the Closing Date and ending on the earlier of (i) the date that is 365 days after the Closing Date and (ii) subsequent to the Business Combination, (x) if the closing price of the Common Stock equals or exceeds $14.00 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 Business Combination 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. The Registration Rights Agreement amends and restates the registration rights agreement that was entered into by Forest Road, Sponsor and the other parties thereto in connection with Forest Road’s initial public offering. The Registration Rights Agreement will terminate on the earlier of (a) the ten-year anniversary of the date of the Registration Rights Agreement or (b) with respect to any Holder, on the date that such Holder no longer holds any Registrable Securities (as defined therein).

Background of the Business Combination

The terms of the Merger Agreement and ancillary agreements are the result of negotiations between representatives of us and the Target Companies. The following is a brief description of the background of these negotiations and related transactions.

Forest Road is a blank check company formed under the laws of the State of Delaware and was incorporated in Delaware on September 24, 2020. Forest Road was formed for the purpose of effecting a merger, capital stock exchange, asset acquisition, stock purchase, reorganization or similar business combination with one or more businesses, with the intent to focus specifically on a combination with a target business in the technology, media, and telecommunications space. Furthermore, on September 26, 2020, Forest Road engaged Guggenheim Securities, LLC (“Guggenheim Securities”) as a co-manager in Forest Road’s IPO and as its lead financial advisor and capital markets advisor to assist in any potential business combinations.

In September 2020, the Sponsor purchased 7,187,500 Founder Shares for an aggregate purchase price of $25,000, or approximately $0.0035 per share. In November 2020, Forest Road effectuated a stock dividend of 0.0044 shares for each share outstanding, resulting in an aggregate of 7,503,750 outstanding Founder Shares. Up to 978,750 of these Founder Shares were subject to forfeiture, such that the Founder Shares would comprise 20% of the issued and outstanding shares of all classes of common stock of Forest Road after the IPO and the exercise, if any, of the over-allotment option.

On November 30, 2020, Forest Road completed its IPO of 30,000,000 units at a price of $10.00 per unit, generating gross proceeds of $300 million. Each unit consists of one (1) share of Class A Common Stock, par value $0.0001, and one-third (1/3) of one (1) warrant. Each whole warrant entitles the holder thereof to purchase one (1) share of Class A Common Stock at a price of $11.50 per share, subject to certain adjustments.

 

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Concurrently with the completion of Forest Road’s IPO, the Sponsor purchased an aggregate of 5,333,333 private placement warrants at a price of $1.50 per warrant, or $8 million in the aggregate. Each whole private placement warrant entitles the holder thereof to purchase one (1) share of Class A Common Stock at a price of $11.50 per share, subject to certain adjustments.

In connection with the IPO, Forest Road’s underwriter was granted an over-allotment option to purchase up to an additional 3,915,000 units. The underwriter exercised the over-allotment option in part, purchasing 3,900,000 of the total possible 3,915,000 over-allotment units. This partial exercise of the over-allotment option resulted in the Sponsor’s forfeiture of 3,750 Founder Shares on November 30, 2020. The Founder Shares forfeited by the Sponsor were subsequently cancelled by Forest Road. Following the forfeiture and cancellation of these Founder Shares, the Sponsor held 7,500,000 Founders Shares, totaling 20% of the 37,500,000 issued and outstanding shares of all classes of common stock of