DEFM14A 1 d272389ddefm14a.htm DEFM14A DEFM14A
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UNITED STATES

SECURITIES AND EXCHANGE COMMISSION

Washington, D.C. 20549

 

 

SCHEDULE 14A

Proxy Statement Pursuant to Section 14(a) of the

Securities Exchange Act of 1934

(Amendment No.)

 

 

Filed by the Registrant  ☒

Filed by a Party other than the Registrant  ☐

Check the appropriate box:

☐ Preliminary Proxy Statement

Confidential, for Use of the Commission Only (as permitted by Rule 14a-6(e)(2))

☒ Definitive Proxy Statement

☐ Definitive Additional Materials

☐ Soliciting Material under §240.14a-12

Virgin Group Acquisition Corp. II

(Name of Registrant as Specified In Its Charter)

(Name of Person(s) Filing Proxy Statement, if other than the Registrant)

Payment of Filing Fee (Check all boxes that apply):

☐ No fee required

☒ Fee paid previously with preliminary materials

☐ Fee computed on table in exhibit required by Item 25(b) per Exchange Act Rules 14a-6(i)(1) and 0-11

 

 

 


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PROXY STATEMENT FOR

EXTRAORDINARY GENERAL MEETING OF VIRGIN GROUP ACQUISITION

CORP. II

CONSENT SOLICITATION STATEMENT FOR

GROVE

COLLABORATIVE, INC.

PROSPECTUS

FOR

239,135,629 SHARES OF CLASS A COMMON STOCK, 174,073,129 SHARES OF CLASS B COMMON STOCK AND 14,750,000 WARRANTS OF VIRGIN GROUP ACQUISITION CORP. II (AFTER ITS DOMESTICATION AS A CORPORATION INCORPORATED IN THE STATE OF DELAWARE, WHICH WILL BE RENAMED GROVE COLLABORATIVE HOLDINGS, INC. IN CONNECTION WITH THE BUSINESS COMBINATION DESCRIBED HEREIN)

The board of directors of Virgin Group Acquisition Corp. II, a Cayman Islands exempted company (“VGAC II”), has approved the transactions (collectively, other than the Domestication (as defined below), the “Business Combination”) contemplated by that certain Agreement and Plan of Merger, dated December 7, 2021, as amended and restated on March 31, 2022 (as may be further amended, supplemented, or otherwise modified from time to time, the “Merger Agreement”), by and among VGAC II, Treehouse Merger Sub, Inc., a Delaware corporation and wholly owned direct subsidiary of VGAC II (“VGAC II Merger Sub I”), Treehouse Merger Sub II, LLC, a Delaware limited liability company and wholly owned direct subsidiary of VGAC II (“VGAC II Merger Sub II”), and Grove Collaborative, Inc., a Delaware public benefit corporation (“Grove”), a copy of which is attached to this proxy statement/consent solicitation statement/prospectus as Annex A, as well as the domestication of VGAC II as a Delaware corporation (the “Domestication”). As described in this proxy statement/consent solicitation statement/prospectus, VGAC II shareholders are being asked to consider a vote upon, among other items, each of the Domestication and the Business Combination. As used in this proxy statement/consent solicitation statement/prospectus, “New Grove” refers to VGAC II after giving effect to the consummation of the Domestication.

In connection with the Domestication, at least one day prior to the Closing Date: (i) each issued and outstanding Class A ordinary share, par value $0.0001 per share (the “Class A ordinary shares”), and each issued and outstanding Class B ordinary share, par value $0.0001 per share (the “Class B ordinary shares”), of VGAC II will be converted into one share of Class A common stock, par value $0.0001 per share, of New Grove (the “New Grove Class A Common Stock”); (ii) each issued and outstanding whole warrant to purchase Class A ordinary shares of VGAC II will be converted into a warrant representing the right to purchase one share of New Grove Class A Common Stock at an exercise price of $11.50 per share on the terms and conditions set forth in the warrant agreement, dated March 22, 2021, between VGAC II and Continental Stock Transfer & Trust Company, as warrant agent (the “VGAC II Warrant Agreement”); (iii) the governing documents of VGAC II will be amended and restated and become the certificate of incorporation and the bylaws of New Grove, copies of which are attached to this proxy statement/consent solicitation statement/prospectus as Annex C and Annex D, respectively; and (iv) VGAC II’s name will change to “Grove Collaborative Holdings, Inc.” In connection with clauses (i) and (ii) of this paragraph, each issued and outstanding unit of VGAC II that has not been previously separated into the underlying Class A ordinary shares of VGAC II and the underlying warrants of VGAC II prior to the Domestication will be canceled and will entitle the holder thereof to one share of New Grove Class A Common Stock and one-fifth of one warrant representing the right to purchase one share of New Grove Class A Common Stock at an exercise price of $11.50 per share on the terms and subject to the conditions set forth in the VGAC II Warrant Agreement.

At the closing of the Business Combination (the “Closing”), (i) VGAC II Merger Sub I will merge with and into Grove (the “Initial Merger”, and the time at which the Initial Merger becomes effective, the “Initial Effective Time”), with Grove as the surviving company in the Initial Merger and, after giving effect to the Initial Merger, continuing as a wholly-owned subsidiary of New Grove (the “Initial Surviving Corporation”), and (ii) immediately following the Initial Merger, and as part of the same overall transaction as the Initial Merger, the Initial Surviving Corporation will merge with and into VGAC II Merger Sub II (the “Final Merger” and, together with the Initial Merger, the “Mergers”), with VGAC II Merger Sub II as the surviving company in the Final Merger and, after giving effect to the Final Merger, continuing as a wholly-owned subsidiary of New Grove.


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In accordance with the terms and subject to the conditions of the Merger Agreement, at the Initial Effective Time, based on an implied equity value of $1.4 billion: (a) each share of Grove common stock (other than the Backstop Tranche 1 Shares (as defined below)) and preferred stock (on an as-converted to common stock basis) (other than dissenting shares) will be canceled and converted into the right to receive (i) a number of shares of New Grove Class B common stock, par value $0.0001 per share, of New Grove (the “New Grove Class B Common Stock”), as determined pursuant to an exchange ratio set forth in the Merger Agreement (the “Exchange Ratio”) and (ii) a number of restricted shares of New Grove Class B Common Stock that will vest upon the achievement of certain earnout thresholds prior to the tenth anniversary of the Closing, as more fully described in this proxy statement/consent solicitation statement/prospectus (such shares, the “Grove Earnout Shares”); (b) each outstanding option to purchase Grove common stock (whether vested or unvested) will be assumed by New Grove and converted into (i) comparable options that are exercisable for shares of New Grove Class B Common Stock, with a value determined in accordance with the Exchange Ratio (and, with regard to options that are intended to qualify as “incentive stock options” under Section 422 of the Code, in a manner compliant with Section 424(a) of the Code) and (ii) the right to receive a number of Grove Earnout Shares; (c) each award of restricted stock units to acquire Grove common stock (whether vested or unvested) (collectively, “Grove RSUs”) will be assumed by New Grove and converted into (i) a comparable award of restricted stock units to acquire shares of New Grove Class B Common Stock and (ii) the right to receive a number of Grove Earnout Shares; (d) each warrant to acquire shares of Grove common stock or Grove preferred stock will be assumed by New Grove and converted into (i) a comparable warrant to acquire shares of New Grove Class B Common Stock and (ii) the right to receive a number of Grove Earnout Shares; and (e) each share of Grove common stock issued to the Backstop Investor (as defined below) prior to the Initial Effective Time pursuant to the Backstop Subscription Agreement (as defined below) and not repurchased prior to the Initial Effective Time (the “Backstop Tranche 1 Shares”) will be canceled and converted into the right to receive a number of shares of New Grove Class B Common Stock equal to the Exchange Ratio. The implied equity value of $1.4 billion includes the value of the options exercisable for shares of New Grove Class B Common Stock that are issued and outstanding in respect of options (whether vested or unvested) to purchase Grove common stock but excludes (X) the value of the options exercisable for shares of New Grove Class B Common Stock that are issued and outstanding in respect of options to purchase Grove common stock granted since January 1, 2021 under Grove’s 2016 Equity Incentive Plan that have not yet vested as of immediately prior to the Closing (the “Company Unvested 2021 Options”), (Y) the value of the shares of New Grove Class B Common Stock underlying outstanding Grove RSUs granted since January 1, 2021 under Grove’s 2016 Equity Incentive Plan that have not yet vested as of immediately prior to the Closing (the “Company Unvested 2021 RSUs”) and (Z) the value of the Backstop Tranche 1 Shares.

In accordance with the terms and subject to the conditions of the Backstop Subscription Agreement, (i) to the extent the amount of cash available, as of immediately prior to the Closing, to be released from the trust account (after giving effect to all payments to be made as a result of the exercise of all redemption rights) exceeds $22,500,000, the Backstop Investor will have the right to redeem all or a portion of the Backstop Tranche 1 Shares in cash for a purchase price per share equal to (x) the final Exchange Ratio calculated pursuant to the Merger Agreement multiplied by (y) $10.00, and (ii) immediately following the Closing, each share of New Grove Class B Common Stock issued pursuant to the Merger Agreement as consideration for the Backstop Tranche 1 Shares will be exchanged by the Backstop Investor for one share of New Grove Class A Common Stock (the “Backstop Share Exchange”).

Subject to approval by VGAC II shareholders of the proposal to approve and adopt the Merger Agreement, the proposal to approve the change of VGAC II’s jurisdiction of incorporation by deregistering as a Cayman Islands exempted company and continuing and domesticating as a public benefit corporation incorporated under the laws of the State of Delaware, and the proposals to approve material differences between VGAC II’s existing amended and restated memorandum and articles of association and the proposed new certificate of incorporation of New Grove and the proposed new bylaws of New Grove Collaboration upon the Domestication, New Grove will adopt a dual-class stock structure, comprised of New Grove Class A Common Stock, which will carry one vote per share, and New Grove Class B common stock, which will carry ten votes per share. Upon the Closing, and after giving effect to the Backstop Share Exchange, all stockholders of Grove other than the Backstop Investor will hold only shares of New Grove Class B Common Stock. Upon the Closing, holders of New Grove Class B Common Stock (other than the Backstop Investor) will own approximately 67.2% of the shares of New


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Grove Common Stock and be entitled to cast approximately 95.4% of the votes entitled to be cast by all holders of New Grove Common Stock, in each case, assuming no redemptions by VGAC II shareholders in connection with the Business Combination. No holder of New Grove Class B Common Stock will hold in excess of 10% of the voting power of New Grove upon the Closing. The New Grove Class B Common Stock will be entitled to the same dividends as and will rank equally to the New Grove Class A Common Stock upon any liquidation. Each share of New Grove Class B Common Stock may be converted into one share of New Grove Class A Common Stock. See “Description of New Grove Securities—Common Stock—New Grove Class B Common Stock—Mandatory Conversion.

This prospectus covers 239,135,629 shares of New Grove Class A Common Stock, 174,073,129 shares of New Grove Class B Common Stock and 14,750,000 warrants (as defined below) to acquire shares of New Grove Class A Common Stock to be issued in connection with the Domestication and the Business Combination to the existing shareholders and warrantholders of VGAC II and the existing shareholders and warrantholders of Grove.

VGAC II’s units, public shares, and public warrants (as defined below) are currently listed on the New York Stock Exchange (“NYSE”) under the symbols “VGII.U,” “VGII,” and “VGII.WS,” respectively. It is a condition of the consummation of the Business Combination that VGAC II receive confirmation from NYSE that New Grove Class A Common Stock has been conditionally approved for listing on the NYSE, but there can be no assurance that such listing condition will be met or that VGAC II will obtain such confirmation from NYSE. If such listing condition is not met or if such confirmation is not obtained, the Business Combination will not be consummated unless the NYSE condition set forth in the Merger Agreement is waived by the requisite parties.

The accompanying proxy statement/consent solicitation statement/prospectus provides shareholders of VGAC II and Grove with detailed information about the Domestication, the Business Combination and other matters to be considered at the extraordinary general meeting of VGAC II. We encourage you to read the entire accompanying proxy statement/consent solicitation statement/prospectus, including the Annexes thereto and other documents referred to therein, carefully and in their entirety. You should also carefully consider the risk factors described in “Risk Factors” beginning on page 30 of the accompanying proxy statement/consent solicitation statement/prospectus.

NEITHER THE SECURITIES AND EXCHANGE COMMISSION NOR ANY STATE SECURITIES REGULATORY AGENCY HAS APPROVED OR DISAPPROVED THE TRANSACTIONS DESCRIBED IN THE ACCOMPANYING PROXY STATEMENT/CONSENT SOLICITATION STATEMENT/ PROSPECTUS, PASSED UPON THE MERITS OR FAIRNESS OF THE BUSINESS COMBINATION OR RELATED TRANSACTIONS OR PASSED UPON THE ADEQUACY OR ACCURACY OF THE DISCLOSURE IN THE ACCOMPANYING PROXY STATEMENT/CONSENT SOLICITATION STATEMENT/PROSPECTUS. ANY REPRESENTATION TO THE CONTRARY CONSTITUTES A CRIMINAL OFFENSE.

The accompanying proxy statement/consent solicitation statement/prospectus is dated May 16, 2022, and is first being mailed to VGAC II shareholders and Grove stockholders on or about May 18, 2022.


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VIRGIN GROUP ACQUISITION CORP. II

65 Bleecker Street

6th Floor

New York, New York 10012

Dear Virgin Group Acquisition Corp. II Shareholders:

You are cordially invited to attend the extraordinary general meeting (the “extraordinary general meeting”) of Virgin Group Acquisition Corp. II, a Cayman Islands exempted company (“VGAC II”), to be held at the offices of Davis Polk & Wardwell LLP located at 450 Lexington Avenue, New York, New York 10017 and virtually via the Internet at 10:00 AM, Eastern Time, on June 14, 2022, or at such other time, on such other date and at such other place to which the meeting may be adjourned. Due to public health concerns regarding the COVID-19 pandemic, and the importance of ensuring the health and safety of VGAC II directors, officers, employees and shareholders, VGAC II shareholders are encouraged to attend the extraordinary general meeting virtually via the Internet. To attend and participate in the extraordinary general meeting virtually, you must register at https://www.cstproxy.com/vgacii/2022, which is referred to in the accompanying joint proxy statement/consent solicitation statement/prospectus as the VGAC II meeting website. Upon completing your registration, you will receive further instructions via email, including a unique link that will allow you access to the extraordinary general meeting and to vote and submit questions during the extraordinary general meeting.

As further described in the accompanying proxy statement/consent solicitation statement/prospectus, in connection with the Domestication (as defined below), at least one day prior to the closing of the Business Combination (as defined below) (the “Closing Date”), among other things, (i) VGAC II will change its name to “Grove Collaborative Holdings, Inc.,” (ii) all of the outstanding shares of VGAC II will be converted into Class A common stock of a new Delaware corporation and all of the outstanding VGAC II warrants will be converted into warrants to purchase Class A common stock of a new public benefit Delaware corporation, and (iii) the governing documents of VGAC II will be amended and restated. As used in the accompanying proxy statement/consent solicitation statement/prospectus, “New Grove” refers to VGAC II after giving effect to the Domestication. The other transactions contemplated by that certain Merger Agreement (as defined below) are collectively referred to as the “Business Combination”.

At the extraordinary general meeting, VGAC II shareholders will be asked to consider and vote upon a proposal, which is referred to herein as the “Business Combination Proposal,” to approve and adopt that certain Agreement and Plan of Merger, dated as of December 7, 2021, as amended and restated on March 31, 2022 (as may be further amended, supplemented, or otherwise modified from time to time, the “Merger Agreement”), by and among VGAC II, Treehouse Merger Sub, Inc., a Delaware corporation and wholly owned direct subsidiary of VGAC II (“VGAC II Merger Sub I”), Treehouse Merger Sub II, LLC, a Delaware limited liability company and wholly owned direct subsidiary of VGAC II (“VGAC II Merger Sub II”), and Grove Collaborative, Inc., a Delaware public benefit corporation (“Grove”), including the transactions contemplated thereby. A copy of the Merger Agreement is attached to the accompanying proxy statement/consent solicitation statement/prospectus as Annex A.

As further described in the accompanying proxy statement/consent solicitation statement/prospectus, subject to the terms and conditions of the Merger Agreement, the following transactions will occur:

 

  (a)

At least one day prior to the Closing Date, VGAC II will change its jurisdiction of incorporation by deregistering as a Cayman Islands exempted company and continuing and domesticating as a public benefit corporation incorporated under the laws of the State of Delaware (the “Domestication”), upon which VGAC II will change its name to “Grove Collaborative Holdings, Inc.” (“New Grove”) (for further details, see “Proposal No. 2—The Domestication Proposal”).

 

  (b)

On the Closing Date, (i) VGAC II Merger Sub I will merge with and into Grove (the “Initial Merger”, and the time at which the Initial Merger becomes effective, the “Initial Effective Time”), with Grove as the surviving company and, after giving effect to the Initial Merger, continuing as a wholly-owned


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  subsidiary of New Grove (the “Initial Surviving Corporation”), and (ii) immediately following the Initial Merger, and as part of the same overall transaction as the Initial Merger, the Initial Surviving Corporation will merge with and into VGAC II Merger Sub II (the “Final Merger” and, together with the Initial Merger, the “Mergers”), with VGAC II Merger Sub II as the surviving company in the Final Merger and, after giving effect to the Final Merger, continuing as a wholly-owned subsidiary of New Grove. In accordance with the terms and subject to the conditions of the Merger Agreement, at the time at which the Initial Merger becomes effective (the “Initial Effective Time”), based on an implied equity value of $1.4 billion: (a) each share of Grove common stock (other than the Backstop Tranche 1 Shares) and preferred stock (on an as-converted to common stock basis) (other than dissenting shares) will be canceled and converted into the right to receive (i) a number of shares of New Grove Class B common stock, par value $0.0001 per share, of New Grove (the “New Grove Class B Common Stock”), as determined pursuant to an exchange ratio set forth in the Merger Agreement (the “Exchange Ratio”) and (ii) a number of restricted shares of New Grove Class B Common Stock that will vest upon the achievement of certain earnout thresholds prior to the tenth anniversary of the Closing, as more fully described in the accompanying proxy statement/consent solicitation statement/prospectus (such shares, the “Grove Earnout Shares”); (b) each outstanding option to purchase Grove common stock (whether vested or unvested) will be assumed by New Grove and converted into (i) comparable options that are exercisable for shares of New Grove Class B Common Stock, with a value determined in accordance with the Exchange Ratio (and, with regard to options that are intended to qualify as “incentive stock options” under Section 422 of the Code, in a manner compliant with Section 424(a) of the Code) and (ii) the right to receive a number of Grove Earnout Shares; (c) each award of restricted stock units to acquire Grove common stock (whether vested or unvested) (collectively, “Grove RSUs”) will be assumed by New Grove and converted into (i) a comparable award of restricted stock units to acquire shares of New Grove Class B Common Stock and (ii) the right to receive a number of Grove Earnout Shares; (d) each warrant to acquire shares of Grove common stock or Grove preferred stock will be assumed by New Grove and converted into (i) a comparable warrant to acquire shares of New Grove Class B Common Stock and (ii) the right to receive a number of Grove Earnout Shares; and (e) each share of Grove common stock issued to the Backstop Investor (as defined below) prior to the Initial Effective Time pursuant to the Backstop Subscription Agreement (as defined below) and not repurchased prior to the Initial Effective Time (the “Backstop Tranche 1 Shares”) will be canceled and converted into the right to receive a number of shares of New Grove Class B Common Stock equal to the Exchange Ratio. The implied equity value of $1.4 billion includes the value of the options exercisable for shares of New Grove Class B Common Stock that are issued and outstanding in respect of options (whether vested or unvested) to purchase Grove common stock but excludes (X) the value of the options exercisable for shares of New Grove Class B Common Stock that are issued and outstanding in respect of options to purchase Grove common stock granted since January 1, 2021 under Grove’s 2016 Equity Incentive Plan that have not yet vested as of immediately prior to the Closing (the “Company Unvested 2021 Options”), (Y) the value of the shares of New Grove Class B Common Stock underlying outstanding Grove RSUs granted since January 1, 2021 under Grove’s 2016 Equity Incentive Plan that have not yet vested as of immediately prior to the Closing (the “Company Unvested 2021 RSUs”) and (Z) the value of the Backstop Tranche 1 Shares.

In connection with the foregoing, on December 7, 2021, VGAC II entered into Subscription Agreements (the “Subscription Agreements”) with certain investors (the “PIPE Investors”), pursuant to which the PIPE Investors agreed to subscribe for and purchase, and VGAC II agreed to issue and sell to the PIPE Investors, on the Closing Date, an aggregate of 8,707,500 shares of New Grove Class A Common Stock at a price of $10.00 per share, for aggregate gross proceeds of $87,075,000 (the “PIPE Financing”). One of the PIPE Investors is an affiliate of the Sponsor (as defined below) that has agreed to subscribe for 5,000,000 shares of New Grove Class A Common Stock. In addition, the other PIPE Investors include existing equityholders of Grove that have agreed to subscribe for 3,707,500 shares of New Grove Class A Common Stock in the aggregate. The shares of New Grove Class A Common Stock to be issued pursuant to the Subscription Agreements have not been registered under the Securities Act of 1933, as amended (the “Securities Act”), in reliance upon the exemption provided in Section 4(a)(2) of the Securities Act. VGAC II will grant the PIPE Investors certain customary registration rights in connection with the


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PIPE Financing. The PIPE Financing is contingent upon, among other things, the substantially concurrent closing of the Business Combination.

On March 31, 2022, VGAC II entered into a subscription agreement (the “Backstop Subscription Agreement”) with Corvina Holdings Limited, an affiliate of the Sponsor (the “Backstop Investor”) and Grove, pursuant to which, among other things, (i) the Backstop Investor subscribed for and purchased, and Grove issued and sold to the Backstop Investor, on the date of the Subscription Agreement, a number of shares of Grove common stock equal to the quotient of $27,500,000 and $11.70, for an aggregate purchase price of $27,500,000 (such shares of Grove common stock, together with any other shares of Grove common stock issued to the Backstop Investor prior to the closing of the Business Combination, the “Backstop Tranche 1 Shares”) and (ii) the Backstop Investor has agreed to subscribe for and purchase, on the Closing Date, shares of New Grove Class A Common Stock at a purchase price of $10.00 per share (the “Backstop Tranche 2 Shares”), for aggregate gross proceeds in an amount equal to (x) $22,500,000 minus (y) the amount of cash available, as of immediately prior to the Closing, to be released from the trust account (after giving effect to all payments to VGAC II shareholders that exercise their redemption rights in connection with the Business Combination).

Immediately following the closing of the Business Combination, New Grove will issue to the Backstop Investor warrants to purchase a number of New Grove Class A Common Stock (each warrant exercisable to purchase one share of New Grove Class A Common Stock for $0.01) (the “Backstop Warrants”) equal to up to 2% of the capitalization of New Grove, determined on a fully diluted basis, as of immediately following the closing of the Business Combination based in part on the level of redemptions by VGAC II shareholders. For example, the number of shares of New Grove Class A Common Stock subject to Backstop Warrants would be (i) 1,825,691 assuming no redemptions by VGAC II shareholders in connection with the Business Combination, (ii) 1,561,316 assuming high redemptions by VGAC II shareholders in connection with the Business Combination, and (iii) 4,163,509 assuming maximum redemptions by VGAC II shareholders in connection with the Business Combination.

You will also be asked to consider and vote upon: (a) a proposal to approve the Domestication (the “Domestication Proposal”); (b) a proposal to approve by special resolution the adoption and approval of the proposed new certificate of incorporation (the “Proposed Certificate of Incorporation”) and bylaws (the “Proposed Bylaws,” and together with the Proposed Certificate of Incorporation, the “Proposed Governing Documents”) of New Grove (the “Charter Amendment Proposal”) copies of which are attached to the accompanying proxy statement/consent solicitation statement/prospectus as Annexes C and D, respectively; (c) three separate and non-binding, advisory proposals to approve material differences between VGAC II’s existing amended and restated memorandum and articles of association (together, the “Existing Governing Documents”) and Proposed Governing Documents upon the Domestication, respectively (together, the “Governing Documents Proposals”); (d) a proposal to approve, for purpose of complying with New York Stock Exchange (“NYSE”) Listing Rule 312.03, the issuance of New Grove Class A Common Stock, New Grove Class B Common Stock and the Backstop Warrants in connection with the Business Combination, the Backstop Financing and the PIPE Financing (the “NYSE Proposal”); (e) a proposal to approve and adopt the Grove Collaborative Holdings, Inc. 2022 Incentive Equity Plan, a copy of which is attached to the accompanying proxy statement/consent solicitation statement/prospectus as Annex I (the “Incentive Equity Plan Proposal”); (f) a proposal to approve and adopt the Grove Collaborative Holdings, Inc. Employee Stock Purchase Plan, a copy of which is attached to the accompanying proxy statement/consent solicitation statement/prospectus as Annex J (the “ESPP Proposal”); (g) a proposal to elect the directors constituting the New Grove board of directors (the “Director Election Proposal”); and (h) a proposal to adjourn the extraordinary general meeting to a later date or dates, if necessary, for one or more of the Adjournment Purposes (as defined below) (the “Adjournment Proposal”).

The Domestication and the Business Combination will each be consummated only if the Business Combination Proposal, the Domestication Proposal, the Charter Amendment Proposal, the Incentive Equity Plan Proposal, the ESPP Proposal, the Director Election Proposal, and the NYSE Proposal (collectively, the “Condition Precedent Proposals”) are approved at the extraordinary general meeting. The Adjournment Proposal is not conditioned upon the approval of any other proposal. Each of these proposals is more fully described in the


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accompanying proxy statement/consent solicitation statement/prospectus, which each shareholder is encouraged to read carefully and in its entirety.

The Adjournment Proposal provides for a vote to adjourn the extraordinary general meeting to a later date or dates to the extent required (a) to ensure that any supplement or amendment is made to the accompanying proxy statement/consent solicitation statement/prospectus that VGAC II, after reasonable consultation with Grove, has determined in good faith is required to satisfy the conditions set forth in the Merger Agreement and other applicable law, (b) if on a date for which the extraordinary general meeting is scheduled, VGAC II has not received proxies representing a sufficient number of VGAC II ordinary shares to obtain the approval of the proposals at the extraordinary general meeting, whether or not a quorum is present, (c) if, as of the time for which the extraordinary general meeting is scheduled, there are insufficient VGAC II ordinary shares represented (either in person or by proxy) to constitute a quorum necessary to conduct the business to be conducted at the extraordinary general meeting, or (d) if, as of the deadline for electing redemption by holders of VGAC II Class A ordinary shares in accordance with the governing documents of VGAC II, the VGAC II shareholders redeem an amount of the public shares such that the condition to consummation of the Business Combination that the aggregate cash in the trust account, together with the aggregate gross proceeds from the PIPE Financing, equal no less than $175,000,000 after deducting any amounts paid to VGAC II shareholders that exercise their redemption rights in connection with the Business Combination, would not be satisfied (such aggregate cash, “Available Cash,” and such condition to the consummation of the Business Combination, the “Minimum Available Cash Condition”) (clauses (a), (b), (c), and (d) collectively the “Adjournment Purposes”). Grove has agreed to waive the Minimum Available Cash Condition effective upon (i) the payment of the purchase price for the Backstop Tranche 1 Shares by the Backstop Investor (which occurred on March 31, 2022) and (ii) if the conditions to the Backstop Investor’s obligation to purchase the Backstop Tranche 2 Shares under the Backstop Subscription Agreement are satisfied, the payment of the purchase price for the Backstop Tranche 2 Shares.

In connection with the Business Combination, certain related agreements have been, or will be entered into on or prior to the Closing, including the Sponsor Agreement, Subscription Agreements, Backstop Subscription Agreement, Grove Stockholder Support Agreement and the Amended and Restated Registration Rights Agreement (each as defined in the accompanying proxy statement/consent solicitation statement/prospectus). See “Business Combination Proposal—Related Agreements” in the accompanying proxy statement/consent solicitation statement/prospectus for more information.

Subject to approval by VGAC II shareholders of the Business Combination Proposal, the Domestication Proposal, and the Charter Amendment Proposal, New Grove will adopt a dual-class stock structure, comprised of New Grove Class A Common Stock, which will carry one vote per share, and New Grove Class B Common Stock, which will carry ten votes per share. Upon the closing of the Business Combination (the “Closing”), and after giving effect to the Backstop Share Exchange, all stockholders of Grove other than the Backstop Investor will hold only shares of New Grove Class B Common Stock. The New Grove Class B Common Stock will be entitled to the same dividends as and will rank equally to the New Grove Class A Common Stock upon any liquidation. The New Grove Class B Common Stock may be converted into one share of New Grove Class A Common Stock. See “Description of New Grove Securities—Common Stock—New Grove Class B Common Stock—Conversion.

Pursuant to the Existing Governing Documents, a holder of VGAC II’s public shares (a “public shareholder”) may request that VGAC II redeem all or a portion of such public shares for cash if the Business Combination is consummated. Holders of units must elect to separate the units into the underlying public shares and 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 warrants, or if a holder holds units registered in its own name, the holder must contact Continental Stock Transfer & Trust Company (“Continental”), VGAC II’s transfer agent, directly and instruct it to do so. The redemption rights include the requirement that a holder must identify itself in writing as a beneficial holder and provide its legal name, phone number, and address to Continental in order to validly redeem its shares. Public shareholders may elect to redeem their public shares even if they vote “FOR” the Business Combination Proposal. If the Business Combination is not consummated, the public shares will be returned to the


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respective holder, broker, or bank. If the Business Combination is consummated, and if a public shareholder properly exercises its right to redeem all or a portion of the public shares that it holds and timely delivers its share certificates (if any) and other redemption forms to Continental, New Grove will redeem such public shares for a per-share price, payable in cash, equal to the pro rata portion of the trust account established at the consummation of VGAC II’s initial public offering, calculated as of two business days prior to the consummation of the Business Combination. For illustrative purposes, as of December 31, 2021, this would have amounted to approximately $10.00 per issued and outstanding public share. If a public shareholder exercises its redemption rights in full, then it will be electing to exchange its public shares for cash and will no longer own public shares. The redemption will take place following the Domestication and, accordingly, it is shares of New Grove Class A Common Stock that will be redeemed immediately after the Closing. See “Extraordinary General Meeting of VGAC II—Redemption Rights” in the accompanying proxy statement/consent solicitation 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 public shareholder, together with any affiliate of such public shareholder or any other person with whom such public shareholder is acting in concert or as a “group” (as defined in Section 13(d)(3) of the Securities Exchange Act of 1934, as amended (the “Exchange Act”)), will be restricted from redeeming its public shares with respect to more than an aggregate of 15% of the public shares. Accordingly, if a public shareholder, 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 and such excess public shares would be converted into the merger consideration in connection with the Business Combination.

VG Acquisition Sponsor II LLC (the “Sponsor”) has, pursuant to the Sponsor Agreement, agreed to, among other things, (i) vote in favor of the Merger Agreement and the transactions contemplated thereby (including the Mergers) and (ii) waive any adjustment to the conversion ratio set forth in the Existing Governing Documents with respect to the Class B ordinary shares of VGAC II held by the Sponsor, in each case, on the terms and subject to the conditions set forth in the Sponsor Agreement.

As of the date of the accompanying proxy statement/consent solicitation statement/prospectus, the Sponsor owns approximately 20.0% of the issued and outstanding ordinary shares. See “Business Combination Proposal—Related Agreements—Sponsor Agreement” in the accompanying proxy statement/consent solicitation statement/prospectus for more information related to the Sponsor Agreement.

Pursuant to the Merger Agreement, certain stockholders of Grove each entered into a Support Agreement with VGAC II, pursuant to which such stockholders have agreed to, among other things, (i) vote in favor of the Merger Agreement and the transactions contemplated thereby and (ii) be bound by certain other covenants and agreements related to the Business Combination. The vote of such stockholders of Grove will be sufficient to approve the Business Combination on behalf of Grove.

The Merger Agreement is subject to the satisfaction or waiver of certain other closing conditions as described in the accompanying proxy statement/consent solicitation statement/prospectus. There can be no assurance that the closing conditions will be satisfied or that the parties to the Merger Agreement would waive any such provision of the Merger Agreement. In addition, in no event will VGAC II redeem public shares in an amount that would cause New Grove’s net tangible assets (as determined in accordance with Rule 3a51-1(g)(1) of the Exchange Act) to be less than $5,000,001 after giving effect to the transactions contemplated by the Merger Agreement and the PIPE Financing.

VGAC II is providing the accompanying proxy statement/consent solicitation statement/prospectus and accompanying proxy card to VGAC II shareholders in connection with the solicitation of proxies to be voted at the extraordinary general meeting and at any adjournments of the extraordinary general meeting. Information about the extraordinary general meeting, the Business Combination, and other related business to be considered by VGAC II shareholders at the extraordinary general meeting is included in the accompanying proxy statement/consent solicitation statement/prospectus. Whether or not you plan to attend the extraordinary general meeting, all of VGAC II shareholders are urged to read the accompanying proxy statement/consent


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solicitation statement/prospectus, including the Annexes thereto and other documents referred to therein, carefully and in their entirety. You should also carefully consider the risk factors described in “Risk Factors” beginning on page 31 of the accompanying proxy statement/consent solicitation statement/prospectus.

After careful consideration, the board of directors of VGAC II has approved the Merger Agreement and the transactions contemplated thereby, including the Mergers, and unanimously recommends that shareholders vote “FOR” the adoption of the Merger Agreement and approval of the transactions contemplated thereby, including the Mergers, and “FOR” all other proposals presented to VGAC II shareholders in the accompanying proxy statement/consent solicitation statement/prospectus. When you consider the recommendation of these proposals by the board of directors of VGAC II, you should keep in mind that VGAC II’s directors and officers have interests in the Business Combination that may conflict with your interests as a shareholder. See the section entitled “Business Combination Proposal—Interests of VGAC II’s Directors and Executive Officers in the Business Combination” in the accompanying proxy statement/consent solicitation statement/prospectus for a further discussion of these considerations.

The approval of each of the Domestication Proposal and the Charter Amendment Proposal requires a special resolution under Cayman Islands law, being the affirmative vote of holders of a majority of at least a two-thirds (2/3) of the issued ordinary shares who, being present in person or represented by proxy and entitled to vote at the extraordinary general meeting, vote at the extraordinary general meeting. The approval of each of the Business Combination Proposal, the Governing Documents Proposals, the NYSE Proposal, the Incentive Equity Plan Proposal, the ESPP Proposal, the Director Election Proposal and the Adjournment Proposal requires an ordinary resolution under Cayman Islands law, being the affirmative vote of holders of a majority of the issued ordinary shares who, being present in person or represented by proxy and entitled to vote at the extraordinary general meeting, vote at the extraordinary general meeting.

Your vote is very important. Whether or not you plan to attend the extraordinary general meeting, please vote as soon as possible by following the instructions in the accompanying proxy statement/consent solicitation statement/prospectus to make sure that your shares are represented at the extraordinary general meeting. If you hold your shares in “street name” through a bank, broker, or other nominee, you will need to follow the instructions provided to you by your bank, broker, or other nominee to ensure that your shares are represented and voted at the extraordinary general meeting. The Business Combination will be consummated only if the Condition Precedent Proposals are approved at the extraordinary general meeting. Each of the Condition Precedent Proposals is cross-conditioned on the approval of each other. The Adjournment Proposal is not conditioned on the approval of any other proposal set forth in the accompanying proxy statement/consent solicitation statement/prospectus.

If you sign, date, and return your proxy card without indicating how you wish to vote, your proxy will be voted “FOR” each of the proposals presented at the extraordinary general meeting. If you fail to return your proxy card or fail to instruct your bank, broker, or other nominee how to vote, and do not attend the extraordinary general meeting in person, the effect will be, among other things, that your shares will not be counted for purposes of determining whether a quorum is present at the extraordinary general meeting. If you are a shareholder of record and you attend the extraordinary general meeting and wish to vote in person, you may withdraw your proxy and vote in person.

TO EXERCISE YOUR REDEMPTION RIGHTS, YOU MUST DEMAND IN WRITING THAT YOUR PUBLIC SHARES ARE REDEEMED FOR A PRO RATA PORTION OF THE FUNDS HELD IN THE TRUST ACCOUNT AND TENDER YOUR SHARES TO CONTINENTAL, VGAC II’S TRANSFER AGENT, AT LEAST TWO BUSINESS DAYS PRIOR TO THE VOTE AT THE EXTRAORDINARY GENERAL MEETING. IN ORDER TO EXERCISE YOUR REDEMPTION RIGHT, YOU NEED TO IDENTIFY YOURSELF AS A BENEFICIAL HOLDER AND PROVIDE YOUR LEGAL NAME, PHONE NUMBER, AND ADDRESS IN YOUR WRITTEN DEMAND. YOU MAY TENDER YOUR SHARES BY EITHER DELIVERING YOUR SHARE CERTIFICATE TO CONTINENTAL OR BY DELIVERING YOUR SHARES ELECTRONICALLY USING THE DEPOSITORY TRUST COMPANY’S DWAC (DEPOSIT WITHDRAWAL


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AT CUSTODIAN) SYSTEM. IF THE BUSINESS COMBINATION IS NOT COMPLETED, THEN THESE SHARES WILL BE RETURNED TO YOU OR YOUR ACCOUNT. IF YOU HOLD THE SHARES IN STREET NAME, YOU WILL NEED TO INSTRUCT THE ACCOUNT EXECUTIVE AT YOUR BANK OR BROKER TO WITHDRAW THE SHARES FROM YOUR ACCOUNT IN ORDER TO EXERCISE YOUR REDEMPTION RIGHTS.

On behalf of VGAC II’s board of directors, I would like to thank you for your support and look forward to the successful completion of the Business Combination.

 

Sincerely,

 

Josh Bayliss
Chief Executive Officer and Director

NEITHER THE SECURITIES AND EXCHANGE COMMISSION NOR ANY STATE SECURITIES REGULATORY AGENCY HAS APPROVED OR DISAPPROVED THE TRANSACTIONS DESCRIBED IN THE ACCOMPANYING PROXY STATEMENT/CONSENT SOLICITATION STATEMENT/PROSPECTUS, PASSED UPON THE MERITS OR FAIRNESS OF THE BUSINESS COMBINATION OR RELATED TRANSACTIONS OR PASSED UPON THE ADEQUACY OR ACCURACY OF THE DISCLOSURE IN THE ACCOMPANYING PROXY STATEMENT/CONSENT SOLICITATION STATEMENT/PROSPECTUS. ANY REPRESENTATION TO THE CONTRARY CONSTITUTES A CRIMINAL OFFENSE.

The accompanying proxy statement/consent solicitation statement/prospectus is dated May 16, 2022 and is first being mailed to shareholders on or about May 18, 2022.


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NOTICE OF SOLICITATION OF WRITTEN CONSENT

To Stockholders of Grove Collaborative, Inc.:

Pursuant to that certain Agreement and Plan of Merger, dated December 7, 2021, as amended and restated on March 31, 2022 (as may be further amended, supplemented, or otherwise modified from time to time, the “Merger Agreement”), by and among VGAC II, Treehouse Merger Sub, Inc., a Delaware corporation and wholly owned direct subsidiary of VGAC II (“VGAC II Merger Sub I”), Treehouse Merger Sub II, LLC, a Delaware limited liability company and wholly owned direct subsidiary of VGAC II (“VGAC II Merger Sub II”), and Grove Collaborative, Inc., a Delaware public benefit corporation (“Grove”), (i) VGAC II Merger Sub I will merge with and into Grove (the “Initial Merger”, and the time at which the Initial Merger becomes effective, the “Initial Effective Time”), with Grove surviving the Initial Merger as a wholly owned direct subsidiary of New Grove (the “Initial Surviving Corporation”) and (ii) immediately following the Initial Merger, and as part of the same overall transaction as the Initial Merger, the Initial Surviving Corporation will merge with and into VGAC II Merger Sub II (the “Final Merger” and, together with the Initial Merger, the “Mergers”), with VGAC II Merger Sub II as the surviving company in the Final Merger and, after giving effect to the Final Merger, continuing as a wholly-owned subsidiary of New Grove.

This proxy statement/consent solicitation statement/prospectus is being delivered to you on behalf of the board of directors of Grove (the “Grove Board”) to request that holders of Grove Common Stock or Grove Preferred Stock (with respect to the common stock you will hold upon conversion of preferred stock) execute and return written consents to adopt and approve the Merger Agreement and the Mergers and the ancillary documents thereto and consent to certain other actions specified therein.

Concurrent with the execution of the Merger Agreement, certain holders of Grove Preferred Stock (determined on an as-converted basis) representing the requisite vote required under the certificate of incorporation of Grove executed a written consent pursuant to which all of Grove’s issued and outstanding preferred stock will be converted immediately prior to the Mergers into shares of Grove common stock in accordance with Grove’s certificate of incorporation. The written consents solicited via this proxy statement/consent solicitation statement/prospectus will become effective upon such conversion of the Grove preferred stock.

This proxy statement/consent solicitation statement/prospectus describes the proposed Mergers and the actions to be taken in connection with the Mergers and provides additional information about the parties involved. Please give this information your careful attention. A copy of the Merger Agreement is attached as Annex A to this proxy statement/consent solicitation statement/prospectus.

The Grove Board has considered the Mergers and the terms of the Merger Agreement and the ancillary documents and has unanimously determined that the Mergers and the Merger Agreement are advisable, fair to and in the best interests of Grove and its stockholders and recommends that Grove stockholders adopt the Merger Agreement and the ancillary documents by submitting a written consent.

Please complete, date, and sign the written consent furnished with this proxy statement/consent solicitation statement/prospectus and return it promptly to Grove by one of the means described in “Grove’s Solicitation of Written Consents.


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VIRGIN GROUP ACQUISITION CORP. II

65 Bleecker Street

6th Floor

New York, New York 10012

NOTICE OF EXTRAORDINARY GENERAL MEETING TO BE HELD ON June 14, 2022

TO THE SHAREHOLDERS OF VIRGIN GROUP ACQUISITION CORP. II:

NOTICE IS HEREBY GIVEN that an extraordinary general meeting (the “extraordinary general meeting”) of Virgin Group Acquisition Corp. II, a Cayman Islands exempted company (“VGAC II”), will be held at the offices of Davis Polk & Wardwell LLP located at 450 Lexington Avenue, New York, New York 10017 and virtually via the Internet at 10:00 AM, Eastern Time, on June 14, 2022. Due to public health concerns regarding the COVID-19 pandemic, and the importance of ensuring the health and safety of VGAC II directors, officers, employees and shareholders, VGAC II shareholders are encouraged to attend the extraordinary general meeting virtually via the Internet. To attend and participate in the extraordinary general meeting virtually, VGAC II shareholders must register at https://www.cstproxy.com/vgacii/2022, which is referred to in the accompanying joint proxy statement/consent solicitation statement/prospectus as the VGAC II meeting website. Upon completing their registration, VGAC II shareholders will receive further instructions via email, including a unique link that will allow VGAC II shareholders access to the extraordinary general meeting and to vote and submit questions during the extraordinary general meeting. You are cordially invited to attend the extraordinary general meeting, which will be held for the following purposes:

 

   

Proposal No. 1—The Business Combination Proposal—RESOLVED, as an ordinary resolution, that VGAC II’s entry into that certain Agreement and Plan of Merger, dated as of December 7, 2021, as amended and restated on March 31, 2022 (as may be further amended, supplemented, or otherwise modified from time to time, the “Merger Agreement”), by and among VGAC II, Treehouse Merger Sub, Inc., a Delaware corporation and wholly owned direct subsidiary of VGAC II (“VGAC II Merger Sub I”), Treehouse Merger Sub II, LLC, a Delaware limited liability company and wholly owned direct subsidiary of VGAC II (“VGAC II Merger Sub II”), and Grove Collaborative, Inc., a Delaware public benefit corporation (“Grove”), a copy of which is attached to the proxy statement/consent solicitation statement/prospectus as Annex A, be approved, pursuant to which, among other things, at least one day following the de-registration of VGAC II as an exempted company in the Cayman Islands and the continuation and domestication of VGAC II as a public benefit corporation in the State of Delaware with the name “Grove Collaborative Holdings, Inc.,” (a) (i) VGAC II Merger Sub I will merge with and into Grove (the “Initial Merger”), with Grove as the surviving company in the Initial Merger and, after giving effect to the Initial Merger, continuing as a wholly-owned subsidiary of New Grove (the “Initial Surviving Corporation”), and (ii) immediately following the Initial Merger, and as part of the same overall transaction as the Initial Merger, the Initial Surviving Corporation will merge with and into VGAC II Merger Sub II (the “Final Merger” and, together with the Initial Merger, the “Mergers”), with VGAC II Merger Sub II as the surviving company in the Final Merger and, after giving effect to the Final Merger, continuing as a wholly-owned subsidiary of New Grove, and (b) in accordance with the terms and subject to the conditions of the Merger Agreement, at the time at which the Initial Merger becomes effective (the “Initial Effective Time”), based on an implied equity value of $1.4 billion: (a) each share of Grove common stock (other than the Backstop Tranche 1 Shares) and preferred stock (on an as-converted to common stock basis) (other than dissenting shares) will be canceled and converted into the right to receive (i) a number of shares of New Grove Class B common stock, par value $0.0001 per share, of New Grove (the “New Grove Class B Common Stock”), as determined pursuant to an exchange ratio set forth in the Merger Agreement (the “Exchange Ratio”) and (ii) a number of restricted shares of New Grove Class B Common Stock that will vest upon the achievement of certain earnout thresholds prior to the tenth anniversary of the Closing, as more fully described in the accompanying proxy statement/consent solicitation statement/prospectus (such shares, the “Grove Earnout Shares”); (b) each outstanding option to purchase Grove common stock (whether


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vested or unvested) will be assumed by New Grove and converted into (i) comparable options that are exercisable for shares of New Grove Class B Common Stock, with a value determined in accordance with the Exchange Ratio (and, with regard to options that are intended to qualify as “incentive stock options” under Section 422 of the Code, in a manner compliant with Section 424(a) of the Code) and (ii) the right to receive a number of Grove Earnout Shares; (c) each award of restricted stock units to acquire Grove common stock (collectively, “Grove RSUs”) will be assumed by New Grove and converted into (i) a comparable award of restricted stock units to acquire shares of New Grove Class B Common Stock and (ii) the right to receive a number of Grove Earnout Shares; (d) each warrant to acquire shares of Grove common stock or Grove preferred stock will be assumed by New Grove and converted into (i) a comparable warrant to acquire shares of New Grove Class B Common Stock and (ii) the right to receive a number of Grove Earnout Shares; and (e) each Backstop Tranche 1 Share will be canceled and converted into the right to receive a number of shares of New Grove Class B Common Stock equal to the Exchange Ratio. The implied equity value of $1.4 billion includes the value of the options exercisable for shares of New Grove Class B Common Stock that are issued and outstanding in respect of options (whether vested or unvested) to purchase Grove common stock but excludes (X) the value of the options exercisable for shares of New Grove Class B Common Stock that are issued and outstanding in respect of options to purchase Grove common stock granted since January 1, 2021 under Grove’s 2016 Equity Incentive Plan that have not yet vested as of immediately prior to the Closing (the “Company Unvested 2021 Options”), (Y) the value of the shares of New Grove Class B Common Stock underlying outstanding Grove RSUs granted since January 1, 2021 under Grove’s 2016 Equity Incentive Plan that have not yet vested as of immediately prior to the Closing (the “Company Unvested 2021 RSUs”) and (Z) the value of the Backstop Tranche 1 Shares.

 

   

Proposal No. 2—The Domestication Proposal—RESOLVED, as a special resolution, that VGAC II be transferred by way of continuation to Delaware pursuant to Part XII of the Companies Act (As Revised) of the Cayman Islands and Section 388 of the General Corporation Law of the State of Delaware (“DGCL”) and, immediately upon being de-registered in the Cayman Islands, VGAC II be continued and domesticated as a public benefit corporation under the laws of the State of Delaware and, conditioned upon, and with effect from, the registration of VGAC II as a corporation in the State of Delaware, the name of VGAC II be changed from “Virgin Group Acquisition Corp. II” to “Grove Collaborative Holdings, Inc.” and the registered office of the Company be changed to 3500 South DuPont Highway, City of Dover, County of Kent, Delaware, be approved.

 

   

Proposal No. 3—Charter Amendment Proposal—RESOLVED, as a special resolution, that the existing amended and restated memorandum and articles of association of VGAC II (together, the “Existing Governing Documents”) be amended and restated by the deletion in their entirety and the substitution in their place of the proposed new certificate of incorporation, a copy of which is attached to the proxy statement/consent solicitation statement/prospectus as Annex C (the “Proposed Certificate of Incorporation”) and the proposed new bylaws, a copy of which is attached to the proxy statement/consent solicitation statement/prospectus as Annex D (the “Proposed Bylaws”) of “Grove Collaborative Holdings, Inc.” upon the Domestication, be approved as the certificate of incorporation and bylaws, respectively, of Grove Collaborative Holdings, Inc., effective upon the effectiveness of the Domestication.

 

   

Governing Documents Proposals—to consider and vote upon the following three separate non-binding, advisory resolutions to approve certain features of the Proposed Certificate of Incorporation and Proposed Bylaws (such proposals, collectively, the “Governing Documents Proposals”):

 

   

Proposal No. 4—Governing Documents Proposal A—RESOLVED, as a non-binding, advisory resolution, that the change in the authorized share capital of VGAC II from (i) US$22,100 divided into 200,000,000 Class A ordinary shares, par value $0.0001 per share, (ii) 20,000,000 Class B ordinary shares, par value $0.0001 per share, and (iii) 1,000,000 preference shares, par value $0.0001 per share, to (a) 600,000,000 shares of New Grove Class A Common Stock, (b) 200,000,000 shares of New Grove Class B Common Stock, and (c) 100,000,000 shares of preferred stock, par value $0.0001 per share, of New Grove (the “New Grove Preferred Stock”) be approved.


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Proposal No. 5—Governing Documents Proposal B—RESOLVED, as a non-binding, advisory resolution, that the amendment and restatement of the Existing Governing Documents be approved and that all other immaterial changes necessary or, as mutually agreed in good faith by VGAC II and Grove, desirable in connection with the replacement of the Existing Governing Documents with the Proposed Certificate of Incorporation and Proposed Bylaws as part of the Domestication (copies of which are attached to the accompanying proxy statement/consent solicitation statement/prospectus as Annex C and Annex D, respectively), including (i) changing the corporate name from “Virgin Group Acquisition Corp. II” to “Grove Collaborative Holdings, Inc.” (which is expected to occur upon the consummation of the Domestication), (ii) making New Grove’s corporate existence perpetual, (iii) adopting Delaware as the exclusive forum for litigation arising out of the Securities Act of 1933, as amended and (iv) removing certain provisions related to our status as a blank check company that will no longer be applicable upon consummation of the Business Combination be approved.

 

   

Proposal No. 6—Governing Documents Proposal C—RESOLVED, as a non-binding, advisory resolution, that the issuance of shares of New Grove Class B Common Stock, which will allow holders of New Grove Class B Common Stock to cast ten votes per share of New Grove Class B Common Stock be approved.

 

   

Proposal No. 7—The NYSE Proposal—RESOLVED, as an ordinary resolution, that for the purposes of complying with the applicable provisions of New York Stock Exchange (“NYSE”) Listing Rule 312.03, the issuance of shares of New Grove Class A Common Stock, shares of New Grove Class B Common Stock and warrants to purchase New Grove Class A Common Stock be approved.

 

   

Proposal No. 8—The Incentive Equity Plan Proposal—RESOLVED, as an ordinary resolution, that the Grove Collaborative Holdings, Inc. 2022 Equity and Incentive Plan, a copy of which is attached to the proxy statement/consent solicitation statement/prospectus as Annex I, be adopted and approved.

 

   

Proposal No. 9—The ESPP Proposal—RESOLVED, as an ordinary resolution, that the Grove Collaborative Holdings, Inc. Employee Stock Purchase Plan, a copy of which is attached to the proxy statement/consent solicitation statement/prospectus as Annex J, be adopted and approved.

 

   

Proposal No. 10—The Director Election Proposal—RESOLVED, as an ordinary resolution, that the proposal to elect Stuart Landesberg, Christopher Clark, David Glazer, John Replogle, Kristine Miller, Rayhan Arif and Naytri Shroff Sramek, in each case, to serve as directors of New Grove until their respective successors are duly elected and qualified, or until their earlier death, resignation or removal, be adopted and approved.

 

   

Proposal No. 11—The Adjournment Proposal—RESOLVED, as an ordinary resolution, that the adjournment of the extraordinary general meeting to a later date or dates (A) to the extent necessary to ensure that any required supplement or amendment to the accompanying proxy statement/consent solicitation statement/prospectus is provided to VGAC II shareholders, (B) in order to solicit additional proxies from VGAC II shareholders in favor of one or more of the proposals at the extraordinary general meeting, (C) if, as of the time for which the extraordinary general meeting is scheduled, there are insufficient VGAC II ordinary shares represented (either in person or by proxy) to constitute a quorum necessary to conduct the business to be conducted at the extraordinary general meeting, or (D) if VGAC II shareholders redeem an amount of the public shares such that the condition to consummation of the Business Combination that the aggregate cash in the trust account, together with the aggregate gross proceeds from the issuance and sale of an aggregate of 8,707,500 shares of New Grove Class A Common Stock at a price of $10.00 per share pursuant to the Subscription Agreements (the “Subscription Agreements”) with certain investors (the “PIPE Investors”), for aggregate gross proceeds of $87,075,000 (the “PIPE Financing”), equal no less than $175,000,000 after deducting any amounts paid to VGAC II shareholders that exercise their redemption rights in connection with the Business Combination would not be satisfied (such condition to the consummation of the Business Combination, the “Minimum Available Cash Condition”), at the extraordinary general meeting be approved.

Each of the Business Combination Proposal, the Domestication Proposal, the Charter Amendment Proposal, the Governing Documents Proposals, the NYSE Proposal, the Incentive Equity Plan Proposal, the ESPP Proposal


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and the Director Election Proposal (collectively, the “Condition Precedent Proposals”) is conditioned on the approval and adoption of each of the other Condition Precedent Proposals. The Adjournment Proposal is not conditioned on any other proposal.

Grove has agreed to waive the Minimum Available Cash Condition effective upon (i) the payment of the purchase price for the Backstop Tranche 1 Shares by the Backstop Investor (which occurred on March 31, 2022) and (ii) if the conditions to the Backstop Investor’s obligation to purchase the Backstop Tranche 2 Shares under the Backstop Subscription Agreement are satisfied, the payment of the purchase price for the Backstop Tranche 2 Shares.

These items of business are described in the accompanying proxy statement/consent solicitation statement/prospectus, which we encourage you to read carefully and in its entirety before voting.

Only holders of record of ordinary shares at the close of business on April 25, 2022 are entitled to notice of and to vote and have their votes counted at the extraordinary general meeting and any adjournment of the extraordinary general meeting.

The accompanying proxy statement/consent solicitation statement/prospectus and accompanying proxy card is being provided to VGAC II shareholders in connection with the solicitation of proxies to be voted at the extraordinary general meeting and at any adjournment of the extraordinary general meeting. Whether or not you plan to attend the extraordinary general meeting, all VGAC II shareholders are urged to read the accompanying proxy statement/consent solicitation statement/prospectus, including the Annexes thereto and the documents referred to herein carefully and in their entirety. You should also carefully consider the risk factors described in “Risk Factors” beginning on page 31 of the accompanying proxy statement/consent solicitation statement/prospectus.

After careful consideration, the board of directors of VGAC II has approved the Merger Agreement and the transactions contemplated thereby, including the Mergers, and unanimously recommends that shareholders vote “FOR” the adoption of the Merger Agreement and approval of the transactions contemplated thereby, including the Mergers, and “FOR” all other proposals presented to VGAC II shareholders in the accompanying proxy statement/consent solicitation statement/prospectus. When you consider the recommendation of these proposals by the board of directors of VGAC II, you should keep in mind that VGAC II’s directors and officers have interests in the Business Combination that may conflict with your interests as a shareholder. See the section entitled “Business Combination Proposal—Interests of VGAC II’s Directors and Executive Officers in the Business Combination” in this proxy statement/consent solicitation statement/prospectus for a further discussion of these considerations.

Pursuant to the Existing Governing Documents, a public shareholder of VGAC II may request that New Grove redeem all or a portion of its public shares for cash if the Business Combination is consummated. As a holder of public shares, 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 elect to separate your units into the underlying public shares and warrants prior to exercising your redemption rights with respect to the public shares;

 

  (ii)

submit a written request to Continental Stock Transfer & Trust Company (“Continental”), VGAC II’s transfer agent, in which you (a) request that New Grove redeem all or a portion of your public shares for cash, and (b) identify yourself as the beneficial holder of the public shares and provide your legal name, phone number and address; and

 

  (iii)

deliver your share certificates (if any) and other redemption forms (as applicable) to Continental physically or electronically through The Depository Trust Company.

Holders must complete the procedures for electing to redeem their public shares in the manner described above prior to 5:00 PM, Eastern Time, on June 10, 2022 (two business days before the extraordinary general meeting) in order for their shares to be redeemed.


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Holders of units must elect to separate the units into the underlying public shares and 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 warrants, or if a holder holds units registered in its own name, the holder must contact Continental directly and instruct them to do so. The redemption rights include the requirement that a holder must identify itself in writing as a beneficial holder and provide its legal name, phone number, and address to Continental in order to validly redeem its shares. Public shareholders may elect to redeem public shares regardless of if or how they vote in respect of the Business Combination Proposal. If the Business Combination is not consummated, the public shares will be returned to the respective holder, broker, or bank. If the Business Combination is consummated, and if a public shareholder properly exercises its right to redeem all or a portion of the public shares that it holds and timely delivers its shares to Continental, New Grove will redeem such public shares for a per-share price, payable in cash, equal to the pro rata portion of the trust account established at the consummation of VGAC II’s initial public offering (the “trust account”), calculated as of two business days prior to the consummation of the Business Combination. For illustrative purposes, as of December 31, 2021, this would have amounted to approximately $10.00 per issued and outstanding public share. If a public shareholder exercises its redemption rights in full, then it will be electing to exchange its public shares for cash and will no longer own public shares. The redemption will take place following the Domestication and, accordingly, it is shares of New Grove Class A Common Stock that will be redeemed immediately after consummation of the Business Combination. See “Extraordinary General Meeting of VGAC II—Redemption Rights” in this proxy statement/consent solicitation 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 public shareholder, together with any affiliate of such public shareholder or any other person with whom such public shareholder is acting in concert or as a “group” (as defined in Section 13(d)(3) of the Securities Exchange Act of 1934, as amended (“Exchange Act”)), will be restricted from redeeming its public shares with respect to more than an aggregate of 15% of the public shares. Accordingly, if a public shareholder, 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 and such excess public shares would be converted into the merger consideration in connection with the Business Combination.

VG Acquisition Sponsor II LLC (the “Sponsor”) has, pursuant to the Sponsor Letter Agreement, dated as of December 7, 2021, as amended on March 31, 2022, entered into by Grove, the Sponsor, VGAC II, Credit Suisse Securities (USA) LLC as the underwriter, the Insiders (as defined therein) and the Holders (as defined therein) (the “Sponsor Agreement”), agreed to, among other things, (i) vote in favor of the Merger Agreement and the transactions contemplated thereby (including the Mergers), and (ii) waive any adjustment to the conversion ratio set forth in the Existing Governing Documents with respect to the Class B ordinary shares of VGAC II held by the Sponsor, in each case, on the terms and subject to the conditions set forth in the Sponsor Agreement. Grove has agreed to waive the earnout vesting provisions that had previously been included in the Sponsor Agreement prior to amendment, and as such Sponsor’s shares of New Grove Class A Common Stock will now vest immediately upon issuance at the Closing. See “Business Combination Proposal—Related Agreements—Sponsor Agreement” in the accompanying proxy statement/consent solicitation statement/prospectus for more information related to the Sponsor Agreement.

On March 31, 2022, VGAC II entered into the Backstop Subscription Agreement with the Backstop Investor and Grove, pursuant to which, among other things, (i) the Backstop Investor agreed to subscribed for and purchased, and Grove issued and sold to the Backstop Investor, on the date of the Subscription Agreement, the Backstop Tranche 1 Shares and (ii) the Backstop Investor has agreed to subscribe for and purchase, on the Closing Date, the Backstop Tranche 2 Shares, for aggregate gross proceeds in an amount equal to (x) $22,500,000 minus (y) the amount of cash available, as of immediately prior to the Closing, to be released from the trust account (after giving effect to all payments to VGAC II shareholders that exercise their redemption rights in connection with the Business Combination).

As further described in the accompanying proxy statement/consent solicitation statement/prospectus, the Backstop Subscription Agreement also provides (i) for an adjustment to the number of Backstop Tranche 1


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Shares held by the Backstop Investor immediately prior to the closing of the Business Combination to reflect any differences between the estimate of the Exchange Ratio used for purposes of determining the purchase price per share for the Backstop Tranche 1 Shares and the final Exchange Ratio calculated pursuant to the terms of the Merger Agreement, (ii) that, immediately prior to the closing of the Business Combination, to the extent the amount of cash available, as of immediately prior to the Closing, to be released from the trust account (after giving effect to all payments to VGAC II shareholders that exercise their redemption rights in connection with the Business Combination) exceeds $22,500,000, the Backstop Investor will have the right to redeem all or a portion of the Backstop Tranche 1 Shares in cash for a purchase price per share equal to (x) the final Exchange Ratio calculated pursuant to the Merger Agreement multiplied by (y) $10.00, (iii) that, immediately following the closing of the Business Combination, (A) each share of New Grove Class B Common Stock issued to the Backstop Investor pursuant to the Merger Agreement as consideration for the Backstop Tranche 1 Shares will be exchanged for one share of New Grove Class A Common Stock (the “Backstop Share Exchange”) and (B) New Grove will issue to the Backstop Investor a number of warrants to purchase New Grove Class A Common Stock (each warrant exercisable to purchase one share of New Grove Class A Common Stock for $0.01) (such warrants, the “Backstop Warrants”), (iv) for additional shares of New Grove Class A Common Stock to be issued to the Backstop Investor if the volume weighted average price of New Grove Class A Common Stock is less than $10.00 per share during the 10 trading days commencing on the first trading day after New Grove’s first quarterly earnings call for a fiscal quarter that ends following the closing of the Business Combination, and (v) that, in the event that the Merger Agreement is terminated pursuant to Section 9.01 of the Merger Agreement without the Business Combination having been completed, then (A) Grove will issue to the Backstop Investor certain warrants that are exercisable for shares of Grove common stock at an exercise price of $0.01, (B) the Backstop Tranche 1 Shares will automatically convert, in certain circumstances, into shares of a newly created class of Grove preferred stock and (C) Grove will be subject to certain repurchase obligations with respect to the Backstop Tranche 1 Shares.

None of the shares of Grove common stock, shares of New Grove Class A Common Stock, shares of New Grove Class B Common Stock or Backstop Warrants to be issued pursuant to the Backstop Subscription Agreement have been registered under the Securities Act, in reliance upon the exemption provided in Section 4(a)(2) of the Securities Act. VGAC II will grant the Backstop Investor certain customary registration rights in connection with the foregoing transactions.

In connection with the foregoing, Grove has agreed to waive the Minimum Available Cash Condition, effective upon (i) the payment of the purchase price for the Backstop Tranche 1 Shares by the Backstop Investor (which occurred on March 31, 2022) and (ii) if the conditions to the Backstop Investor’s obligation to purchase the Backstop Tranche 2 Shares under the Backstop Subscription Agreement are satisfied, the payment of the purchase price for the Backstop Tranche 2 Shares.

The Merger Agreement is subject to the satisfaction or waiver of certain other closing conditions as described in the accompanying proxy statement/consent solicitation statement/prospectus. There can be no assurance that the closing conditions will be satisfied or that the parties to the Merger Agreement would waive any such provision of the Merger Agreement. In addition, in no event will VGAC II redeem public shares in an amount that would cause New Grove’s net tangible assets (as determined in accordance with Rule 3a51-1(g)(1) of the Exchange Act) to be less than $5,000,001 after giving effect to the transactions contemplated by the Merger Agreement and the PIPE Financing.

The approval of each of the Domestication Proposal and the Charter Amendment Proposal require a special resolution under Cayman Islands law, being the affirmative vote of holders of a majority of at least two-thirds (2/3) of the issued ordinary shares who, being present in person or represented by proxy and entitled to vote at the extraordinary general meeting, vote at the extraordinary general meeting. The approval of each of the Business Combination Proposal, the Governing Documents Proposals, the NYSE Proposal, the Incentive Equity Plan Proposal, the ESPP Proposal, the Director Election Proposal and the Adjournment Proposal requires an ordinary resolution under Cayman Islands law, being the affirmative vote of holders of a majority of the issued ordinary shares who, being present in person or represented by proxy and entitled to vote at the extraordinary general meeting, vote at the extraordinary general meeting.


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Your vote is very important. Whether or not you plan to attend the extraordinary general meeting, please vote as soon as possible by following the instructions in the accompanying proxy statement/consent solicitation statement/prospectus to make sure that your shares are represented at the extraordinary general meeting. If you hold your shares in “street name” through a bank, broker, or other nominee, you will need to follow the instructions provided to you by your bank, broker, or other nominee to ensure that your shares are represented and voted at the extraordinary general meeting. The Business Combination will be consummated only if the Condition Precedent Proposals are approved at the extraordinary general meeting. Each of the Condition Precedent Proposals is cross-conditioned on the approval of each other. The Adjournment Proposal is not conditioned on the approval of any other proposal set forth in the accompanying proxy statement/consent solicitation statement/prospectus.

If you sign, date, and return your proxy card without indicating how you wish to vote, your proxy will be voted “FOR” each of the proposals presented at the extraordinary general meeting. If you fail to return your proxy card or fail to instruct your bank, broker, or other nominee how to vote, and do not attend the extraordinary general meeting in person, the effect will be, among other things, that your shares will not be counted for purposes of determining whether a quorum is present at the extraordinary general meeting. If you are a shareholder of record and you attend the extraordinary general meeting and wish to vote in person, you may withdraw your proxy and vote in person.

Your attention is directed to the remainder of the accompanying proxy statement/consent solicitation statement/prospectus following this notice (including the Annexes and other documents referred to herein) for a more complete description of the proposed Business Combination and related transactions and each of the proposals. You are encouraged to read the accompanying proxy statement/consent solicitation statement/prospectus carefully and in its entirety, including the Annexes hereto and other documents referred to herein. If you have any questions or need assistance voting your ordinary shares, 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 vgii.info@investor.morrowsodali.com.

Thank you for your participation. We look forward to your continued support. By Order of the Board of Directors of Virgin Group Acquisition Corp II.

Josh Bayliss

Chief Executive Officer and Director

TO EXERCISE YOUR REDEMPTION RIGHTS, YOU MUST DEMAND IN WRITING THAT YOUR PUBLIC SHARES ARE REDEEMED FOR A PRO RATA PORTION OF THE FUNDS HELD IN THE TRUST ACCOUNT AND TENDER YOUR SHARES TO CONTINENTAL, VGAC II’S TRANSFER AGENT, AT LEAST TWO BUSINESS DAYS PRIOR TO THE VOTE AT THE EXTRAORDINARY GENERAL MEETING. IN ORDER TO EXERCISE YOUR REDEMPTION RIGHTS, YOU NEED TO IDENTIFY YOURSELF AS A BENEFICIAL HOLDER AND PROVIDE YOUR LEGAL NAME, PHONE NUMBER, AND ADDRESS IN YOUR WRITTEN DEMAND. YOU MAY TENDER YOUR SHARES BY EITHER DELIVERING YOUR SHARE CERTIFICATE TO CONTINENTAL OR BY DELIVERING YOUR SHARES ELECTRONICALLY USING THE DEPOSITORY TRUST COMPANY’S DWAC (DEPOSIT WITHDRAWAL AT CUSTODIAN) SYSTEM. IF THE BUSINESS COMBINATION IS NOT COMPLETED, THEN THESE SHARES WILL BE RETURNED TO YOU OR YOUR ACCOUNT. IF YOU HOLD THE SHARES IN STREET NAME, YOU WILL NEED TO INSTRUCT THE ACCOUNT EXECUTIVE AT YOUR BANK OR BROKER TO WITHDRAW THE SHARES FROM YOUR ACCOUNT IN ORDER TO EXERCISE YOUR REDEMPTION RIGHTS.


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TABLE OF CONTENTS

 

Additional Information

     iii  

Trademarks

     iii  

Selected Definitions

     iv  

Cautionary Note Regarding Forward-Looking Statements

     ix  

Questions and Answers for Shareholders of VGAC II

     xi  

Summary of the Proxy Statement/Prospectus

     1  

Risk Factors

     30  

Extraordinary General Meeting Of VGAC II

     80  

Business Combination Proposal

     88  

Domestication Proposal

     135  

Governing Documents Proposals

     139  

Governing Documents Proposal A—Approval of Authorization of Change to Authorized Share Capital, As Set Forth In The Proposed Governing Documents

     142  

Governing Documents Proposal B—Approval of Other Changes in Connection with Adoption of the Proposed Governing Documents

     144  

Governing Documents Proposal C—Approval of Dual-Class Structure

     148  

NYSE Proposal

     149  

Incentive Equity Plan Proposal

     151  

The ESPP Proposal

     160  

Director Election Proposal

     165  

Adjournment Proposal

     167  

U.S. Federal Income Tax Considerations

     169  

Grove’s Solicitation of Written Consents

     187  

Unaudited Pro Forma Combined Financial Information

     189  

INFORMATION ABOUT VGAC II

     205  

VGAC II’S MANAGEMENT’S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION AND RESULTS OF OPERATIONS

     222  

INFORMATION ABOUT GROVE

     228  

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

     261  

EXECUTIVE AND DIRECTOR COMPENSATION OF GROVE

     285  

COMPARISON OF CORPORATE GOVERNANCE AND SHAREHOLDER RIGHTS

     309  

DESCRIPTION OF NEW GROVE SECURITIES

     312  

SECURITIES ACT RESTRICTIONS ON RESALE OF NEW GROVE CLASS A COMMON STOCK

     327  

STOCKHOLDER PROPOSALS AND NOMINATIONS

     328  

SHAREHOLDER COMMUNICATIONS

     329  

LEGAL MATTERS

     330  

ANNEXES

Annex A—Amended and Restated Agreement and Plan of Merger

Annex B—Amended and Restated Memorandum and Articles of Association of VGAC II

Annex C—Form of Certificate of Incorporation of New Grove

Annex D—Form of Bylaws of New Grove

Annex E—Sponsor Agreement

Annex E-1—Sponsor Agreement Amendment

 

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ADDITIONAL INFORMATION

You may request copies of the accompanying proxy statement/consent solicitation statement/prospectus and any other publicly available information concerning VGAC II, without charge, by written request to Virgin Group Acquisition Corp. II, 65 Bleecker Street, 6th Floor, New York, New York 10012, or by telephone request at (212) 497-9050; or Morrow Sodali LLC, VGAC II’s proxy solicitor, by calling (800) 662-5200, or banks and brokers can call collect at (203) 658-9400, or by emailing vgii.info@investor.morrowsodali.com or from the SEC through the SEC website at www.sec.gov.

In order for VGAC II shareholders to receive timely delivery of the documents in advance of the extraordinary general meeting of VGAC II to be held on June 14, 2022, you must request the information by June 7, 2022 (five business days prior to the date of the extraordinary general meeting).

TRADEMARKS

This document contains references to trademarks, trade names, and service marks belonging to other entities. Solely for convenience, trademarks, trade names, and service marks referred to in this proxy statement/consent solicitation statement/prospectus may appear without the ® or TM symbols, but such references are not intended to indicate, in any way, that the applicable licensor will not assert, to the fullest extent under applicable law, its rights to these trademarks and trade names. VGAC II does not intend VGAC II’s use or display of other companies’ trade names, trademarks, or service marks to imply a relationship with, or endorsement or sponsorship of us, by any other companies.

 

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SELECTED DEFINITIONS

Unless otherwise stated in this proxy statement/consent solicitation statement/prospectus or the context otherwise requires, references to:

 

   

Articles of Association” are to the amended and restated articles of association of VGAC II;

 

   

Available Cash” are an amount equal to the sum of, immediately prior to the Closing, (i) the amount of cash available to be released from the trust account (after giving effect to all payments to VGAC II shareholders that exercise their redemption rights in connection with the Business Combination), plus (ii) the net amount of proceeds actually received by VGAC II pursuant to the PIPE Financing.

 

   

Backstop Financing” are to the transactions contemplated by the Backstop Subscription Agreement;

 

   

Backstop Investor” are to Corvina Holdings Limited, an affiliate of the Sponsor;

 

   

Backstop Share Exchange” are to the exchange of each share of New Grove Class B Common Stock issued to the Backstop Investor as consideration for the Tranche 1 Shares pursuant to the Merger Agreement for one share of New Grove Class A Common Stock on the terms and subject to the conditions set forth in the Backstop Subscription Agreement;

 

   

Backstop Subscription Agreement” are to the subscription agreement, dated as of March 31, 2022, entered into by and among VGAC II, Grove and the Backstop Investor;

 

   

Backstop Tranche 1 Shares” are to a number of shares of Grove common stock equal to the quotient of $27,500,000 and $11.70 that were issued to the Backstop Investor pursuant to the Backstop Subscription Agreement, together with any other shares of Grove common stock issued to the Backstop Investor prior to the closing of the Business Combination pursuant to the Backstop Subscription Agreement;

 

   

Backstop Tranche 2 Shares” are to shares of New Grove Class A Common Stock issued to the Backstop Investor pursuant to the Backstop Subscription Agreement;

 

   

Backstop Warrants” are to warrants to purchase New Grove Class A Common Stock (each warrant exercisable to purchase one share of New Grove Class A Common Stock for $0.01), equal to up to 2% of the capitalization of New Grove, determined on a fully diluted basis, as of immediately following the closing of the Business Combination, based in part on the level of redemptions by VGAC II shareholders. For example, the number of shares of New Grove Class A Common Stock subject to Backstop Warrants would be (i) 1,825,691 assuming no redemptions by VGAC II shareholders in connection with the Business Combination, (ii) 1,561,316 assuming high redemptions by VGAC II shareholders in connection with the Business Combination, and (iii) 4,163,509 assuming maximum redemptions by VGAC II shareholders in connection with the Business Combination.

 

   

Business Combination” are to the Mergers and other transactions contemplated by the Merger Agreement, other than the Domestication, collectively, including the PIPE Financing;

 

   

Cayman Islands Companies Act” are to the Companies Act (As Revised) of the Cayman Islands;

 

   

Class A ordinary shares” are to the Class A ordinary shares, par value $0.0001 per share, of VGAC II prior to the Domestication, which will automatically convert, on a one-for-one basis, into shares of New Grove Class A Common Stock in connection with the Domestication, authorized pursuant to the Existing Governing Documents;

 

   

Class B ordinary shares” or “founder shares” are to the 10,062,500 Class B ordinary shares, par value $0.0001 per share, of VGAC II outstanding as of the date of this proxy statement/consent solicitation statement/prospectus that were issued to the Sponsor in a private placement prior to the initial public offering (as defined below), and, in connection with the Domestication, will automatically convert, on a one-for-one basis, into shares of New Grove Class A Common Stock;

 

   

Closing” are to the closing of the Business Combination;

 

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Closing Date” are to that date that is in no event later than the third business day, following the satisfaction (or, to the extent permitted by applicable law, waiver) of the conditions described under the section entitled “Business Combination Proposal—Conditions to Closing of the Business Combination,” (other than those conditions that by their nature are to be satisfied at the Closing, but subject to satisfaction or waiver of such conditions) or at such other date as VGAC II and Grove may agree in writing;

 

   

Condition Precedent Proposals” are to the Business Combination Proposal, the Domestication Proposal, the Charter Amendment Proposal, the NYSE Proposal, the Incentive Equity Plan Proposal, the ESPP Proposal, and the Director Election Proposal, collectively;

 

   

Continental” are to Continental Stock Transfer & Trust Company;

 

   

COVID-19” or the “COVID-19 pandemic” are to the novel coronavirus (SARS-CoV-2 or COVID-19), and any evolutions, mutations, or variations thereof or any other related or associated public health condition, emergency, epidemics, pandemics, or disease outbreaks;

 

   

Domestication” are to VGAC II’s domestication, at least one day prior to the Closing, upon the terms and subject to the conditions of the Merger Agreement, as a Delaware corporation in accordance with the DGCL and the Cayman Islands Companies Act;

 

   

ESPP” are to the Grove Collaborative Holdings, Inc. Employee Stock Purchase Plan to be considered for adoption and approval by VGAC II shareholders pursuant to the ESPP Proposal;

 

   

Existing Governing Documents” are to the Memorandum of Association and the Articles of Association;

 

   

Extraordinary General Meeting” are to the extraordinary general meeting of VGAC II to be held at the offices of Davis Polk & Wardwell LLP located at 450 Lexington Avenue, New York, New York 10017 and virtually via the Internet at 10:00 AM, Eastern Time, on June 14, 2022, or at such other time, on such other date and at such other place to which the meeting may be adjourned;

 

   

Final Effective Time” are to the time at which the Final Merger becomes effective;

 

   

Final Merger” are to the merger of the Initial Surviving Corporation with and into VGAC II Merger Sub II, with VGAC II Merger Sub II as the surviving company in such merger and, after giving effect to such merger, continuing as a wholly-owned subsidiary of New Grove;

 

   

Final Surviving Company” are to the company surviving the Final Merger as a wholly owned subsidiary of New Grove;

 

   

Governing Documents Proposals” are to Governing Documents Proposal A, Governing Documents Proposal B, and Governing Documents Proposal C;

 

   

Grove” are to Grove Collaborative, Inc., a Delaware public benefit corporation, prior to the consummation of the Business Combination;

 

   

Grove Board” are to the Board of Directors of Grove;

 

   

Grove Common Stock” are to the shares of common stock, par value $0.0001 per share, of Grove;

 

   

Grove Equityholders” are to the holders of Grove equity interests;

 

   

Grove Preferred Stock” are the shares of (i) Series Seed preferred stock; (ii) Series A preferred stock, par value $0.0001 per share, of Grove, (iii) Series B preferred stock, par value $0.0001 per share, of Grove, (iv) Series C preferred stock, par value $0.0001 per share, of Grove, (v) Series C-1 preferred stock, par value $0.0001 per share, of Grove, (vi) Series D preferred stock, par value $0.0001 per share, of Grove, (vii) Series D-1 preferred stock, par value $0.0001 per share, of Grove, (viii) Series D-2 preferred stock, par value $0.0001 per share, of Grove, and (ix) Series E preferred stock, par value $0.0001 per share, of Grove;

 

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Grove Stockholder Support Agreement” are the Support Agreement, dated as of December 7, 2021, as amended on March 31, 2022 by the Grove Stockholder Support Agreement Amendment, by and among VGAC II, Grove, Stuart Landesberg, Norwest Venture Partners XIII, LP, Mayfield Select, Mayfield XV, MHS Capital Partners II, L.P., MHS Capital Partners G2, LLC, MHS Capital Partners G, LLC, Lone Cypress, Ltd., Lone Spruce, L.P., Lone Cascade, L.P., Lone Sierra, L.P., Lone Monterey Master Fund, Ltd., General Atlantic (GC), L.P., SCM GC Investments Limited, Christopher Clark, Catherine Beaudoin, Nextview Ventures II, L.P., Nextview Ventures II-A, L.P., Nextview Ventures Co-Invest I, L.P., Serious Change II, LP, Serious Change, LP, Nevada FML, LLC, Nevada HPL, LLC, Inherent ESG Private, LP, Greenspring Secondaries Fund III, L.P., Glynn Partners V. L.P., Glynn Emerging Opportunity Fund, Glynn Emerging Opportunity Fund II-A, L.P. and Glynn Emerging Opportunity Fund II, L.P.;

 

   

Grove Stockholder Support Agreement Amendment” are the Amendment to Support Agreement, dated as of March 31, 2022, as amended on March 31, 2022, by and among VGAC II, Grove, Stuart Landesberg, Norwest Venture Partners XIII, LP, Mayfield Select, Mayfield XV, MHS Capital Partners II, L.P., MHS Capital Partners G2, LLC, MHS Capital Partners G, LLC, Lone Cypress, Ltd., Lone Spruce, L.P., Lone Cascade, L.P., Lone Sierra, L.P., Lone Monterey Master Fund, Ltd., General Atlantic (GC), L.P., SCM GC Investments Limited, Christopher Clark, Catherine Beaudoin, Nextview Ventures II, L.P., Nextview Ventures II-A, L.P., Nextview Ventures Co-Invest I, L.P., Serious Change II, LP, Serious Change, LP, Nevada FML, LLC, Nevada HPL, LLC, Inherent ESG Private, LP, Greenspring Secondaries Fund III, L.P., Glynn Partners V. L.P., Glynn Emerging Opportunity Fund, Glynn Emerging Opportunity Fund II-A, L.P. and Glynn Emerging Opportunity Fund II, L.P.;

 

   

Grove Stockholders” are to holders of Grove Common Stock and Grove Preferred Stock;

 

   

Grove Support Stockholders” are to certain holders of Grove Common Stock who executed the Grove Stockholder Support Agreement;

 

   

Incentive Equity Plan” are to the Grove Collaborative Holdings, Inc. 2022 Incentive Equity Plan to be considered for adoption and approval by VGAC II shareholders pursuant to the Incentive Equity Plan Proposal;

 

   

Initial Effective Time” are to the time at which the Initial Merger becomes effective;

 

   

Initial Merger” are to the merger of VGAC II Merger Sub I with and into Grove pursuant to the Merger Agreement, with Grove as the surviving company in the merger and, after giving effect to such merger, Grove becoming a wholly owned direct subsidiary of New Grove;

 

   

Initial Public Offering” are to VGAC II’s initial public offering that was consummated on March 25, 2021;

 

   

Initial Surviving Corporation” are to the corporation surviving the Initial Merger as a wholly owned subsidiary of New Grove;

 

   

Lock-up Period” is the period commencing on the Closing Date and ending on the date of the first trading window at least 150 days after the Closing Date;

 

   

Memorandum of Association” are to the amended and restated memorandum of association of VGAC II;

 

   

Mergers” are to the Initial Merger and the Final Merger;

 

   

Merger Agreement” are to that certain Agreement and Plan of Merger, dated December 7, 2021, as amended and restated on March 31, 2022, by and among VGAC II, VGAC II Merger Sub I, VGAC II Merger Sub II and Grove;

 

   

Minimum Available Cash Condition” are to the condition that Available Cash shall be greater than or equal to $175,000,000;

 

   

New Grove” are to Grove Collaborative Holdings, Inc. (f.k.a. Virgin Group Acquisition Corp. II) upon and after the Domestication;

 

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New Grove Board” are to the board of directors of New Grove;

 

   

New Grove Class A Common Stock” are to the shares of Class A common stock, par value $0.0001 per share, of New Grove;

 

   

New Grove Class B Common Stock” are to the shares of Class B common stock, par value $0.0001 per share, of New Grove;

 

   

New Grove Common Stock” are to the shares of New Grove Class A Common Stock and New Grove Class B Common Stock;

 

   

New Grove Preferred Stock” are to the shares of preferred stock, par value $0.0001 per share, of New Grove;

 

   

New Grove Public Warrants” are to warrants included in the public units issued in the initial public offering that will be exercisable for shares of New Grove Class A Common Stock after the Closing;

 

   

NYSE” are to the New York Stock Exchange;

 

   

Ordinary Shares” are to VGAC II Class A ordinary shares and Class B ordinary shares;

 

   

PIPE Financing” are to the transactions contemplated by the Subscription Agreements, pursuant to which the PIPE Investors have collectively committed to subscribe for an aggregate of 8,707,500 shares of New Grove Class A Common Stock for an aggregate purchase price of $87,075,000 to be consummated in connection with the Closing;

 

   

PIPE Investors” are to the investors participating in the PIPE Financing, collectively;

 

   

Private Placement Warrants” are to the 6,700,000 private placement warrants outstanding as of the date of this proxy statement/consent solicitation statement/prospectus that were issued to and held by the Sponsor in private placements simultaneously with the closing of the initial public offering, which are substantially identical to the public warrants sold as part of the units in the initial public offering, subject to certain limited exceptions;

 

   

Pro Forma” are to giving pro forma effect to the Business Combination, including the Mergers and the PIPE Financing;

 

   

Proposed Bylaws” are to the proposed bylaws of New Grove to be effective upon the Domestication attached to this proxy statement/consent solicitation statement/prospectus as Annex D;

 

   

Proposed Certificate of Incorporation” are to the proposed certificate of incorporation of New Grove to be effective upon the Domestication attached to this proxy statement/consent solicitation statement/prospectus as Annex C;

 

   

Proposed Governing Documents” are to the Proposed Certificate of Incorporation and the Proposed Bylaws;

 

   

Public Shareholders” are to holders of public shares, whether acquired in the initial public offering or acquired in the secondary market;

 

   

Public Shares” are to the currently outstanding 40,250,000 Class A ordinary shares of VGAC II, whether acquired in VGAC II’s initial public offering or acquired in the secondary market;

 

   

Public Warrants” are to the currently outstanding 8,050,000 redeemable warrants to purchase Class A ordinary shares of VGAC II that were issued by VGAC II in the initial public offering;

 

   

Redemption” are to each redemption of public shares for cash pursuant to the Existing Governing Documents;

 

   

Redemption Rights” are to the redemption rights of VGAC II shareholders;

 

   

SEC” are to the U.S. Securities and Exchange Commission;

 

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Securities Act” are to the Securities Act of 1933, as amended;

 

   

Sponsor” are to VG Acquisition Sponsor II LLC, a Cayman Islands limited liability company;

 

   

Sponsor Agreement” are to the Sponsor Letter Agreement, dated as of December 7, 2021, as amended by the Sponsor Agreement Amendment, entered into by Grove, the Sponsor, VGAC II, Credit Suisse Securities (USA) LLC as the underwriter, the Insiders (as defined therein) and the Holders (as defined therein);

 

   

Sponsor Agreement Amendment” are to the Amendment to Sponsor Letter Agreement, dated as of March 31, 2021, entered into by Grove, the Sponsor, VGAC II, Credit Suisse Securities (USA) LLC as the underwriter, the Insiders (as defined therein) and the Holders (as defined therein);

 

   

Subscription Agreements” are to the subscription agreements, entered into by VGAC II and each of the PIPE Investors in connection with the PIPE Financing;

 

   

Transfer Agent” are to Continental, VGAC II’s transfer agent;

 

   

Trust Account” are to the account established by VGAC II for the benefit of its public shareholders pursuant to the Investment Management Trust Agreement, dated as of March 22, 2021, by and between VGAC II and Continental;

 

   

Trust Agreement” are to the Investment Management Trust Agreement, dated as of March 22, 2021, between VGAC II and Continental;

 

   

Trust Fund” are to the trust fund established by VGAC II for the benefit of its public shareholders;

 

   

VGAC II” are to Virgin Group Acquisition Corp. II, a Cayman Islands exempted company, prior to the Domestication;

 

   

VGAC II Board” are to VGAC II’s board of directors;

 

   

VGAC II meeting website” are to https://www.cstproxy.com/vgacii/2022, the Internet address of the extraordinary general meeting;

 

   

VGAC II Merger Sub I” are to Treehouse Merger Sub, Inc., a Delaware corporation and wholly owned direct subsidiary of VGAC II prior to the consummation of the Business Combination;

 

   

VGAC II Merger Sub II” are to Treehouse Merger Sub II, LLC, a Delaware limited liability company and wholly owned direct subsidiary of VGAC II prior to the consummation of the Business Combination;

 

   

VGAC II Parties” are to VGAC II, VGAC II Merger Sub I and VGAC II Merger Sub II;

 

   

VGAC II units” are to the units of VGAC II, each unit representing one Class A ordinary share and one-fifth of one warrant to acquire one Class A ordinary share, that were offered and sold by VGAC II in the initial public offering;

 

   

VGAC II shareholders” are to holders of VGAC II ordinary shares;

 

   

VGAC II Warrant Agreement” are to the warrant agreement, dated March 22, 2021, between VGAC II and Continental, as warrant agent;

 

   

VGAC II warrantholders” are to holders of VGAC II warrants (as defined below);

 

   

VGAC II warrants” are to the public warrants and the private placement warrants; and

 

   

Virgin Group” are to the Virgin Group, an affiliate of the Sponsor, and its affiliates where applicable.

 

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CAUTIONARY NOTE REGARDING FORWARD-LOOKING STATEMENTS

Some of the statements contained in this proxy statement/consent solicitation statement/prospectus may constitute “forward-looking statements” for purposes of the federal securities laws. These forward-looking statements include, but are not limited to, statements regarding VGAC II or VGAC II’s management team’s expectations, hopes, beliefs, intentions, or strategies regarding the future, including, without limitation, those relating to the Domestication and the Business Combination. The information included in this proxy statement/consent solicitation statement/prospectus in relation to Grove has been provided by Grove and its respective management, and forward-looking statements include statements relating to VGAC II’s and Grove’s respective management team’s expectations, hopes, beliefs, intentions, or strategies regarding the future, including, without limitation, those relating to the Domestication and the Business Combination. 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,” “intend,” “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/consent solicitation statement/prospectus may include, for example and without limitation, statements about:

 

   

VGAC II’s ability to complete the Business Combination with Grove and the timing thereof or, if VGAC II does not consummate such Business Combination, any other initial business combination;

 

   

satisfaction or waiver of the conditions to the Business Combination including, among others: (i) the approval by VGAC II shareholders of the Condition Precedent Proposals; (ii) the expiration or termination of the applicable waiting period under the Hart-Scott-Rodino Act of 1976 (the “HSR Act”) relating to the Merger Agreement; (iii) VGAC II having at least $5,000,001 of net tangible assets (as determined in accordance with Rule 3a51-1(g)(1) of the Exchange Act) after giving effect to the transactions contemplated by the Merger Agreement and the PIPE Financing; (iv) the Minimum Available Cash Condition; and (v) the approval by the NYSE of VGAC II’s initial listing application in connection with the Business Combination;

 

   

statements regarding estimates and forecasts of other financial and performance metrics and projections of market opportunity;

 

   

references with respect to the anticipated benefits of the Business Combination and the projected future financial performance of New Grove or New Grove’s operating companies following the Business Combination;

 

   

changes in the market for Grove’s products, and expansion plans and opportunities;

 

   

anticipated customer retention by Grove;

 

   

the extent to which Grove is able to protect Grove’s intellectual property and not infringe on the intellectual property rights of others;

 

   

the sources and uses of cash of the Business Combination;

 

   

new or adverse regulatory developments relating to automatic renewal laws;

 

   

the effect of COVID-19 on the foregoing, including VGAC II’s ability to consummate the Business Combination due to the uncertainty resulting from the recent COVID-19 pandemic; and

 

   

other factors detailed under the section entitled “Risk Factors.

The forward-looking statements contained in this proxy statement/consent solicitation statement/prospectus are based on VGAC II’s current expectations and beliefs concerning future developments and their potential effects on VGAC II and/or Grove. There can be no assurance that future developments affecting VGAC II and/or Grove will be those that VGAC II has anticipated. These forward-looking statements involve a number of risks,

 

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uncertainties (some of which are beyond the control of VGAC II or Grove), 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, those factors described herein under the heading “Risk Factors.” Should one or more of these risks or uncertainties materialize, or should any of VGAC II’s assumptions prove incorrect, actual results may vary in material respects from those projected in these forward-looking statements. Some of these risks and uncertainties may in the future be amplified by the COVID-19 outbreak and there may be additional risks that VGAC II considers immaterial or which are unknown. It is not possible to predict or identify all such risks. VGAC II undertakes 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 any VGAC II shareholder grants its proxy or instructs how its vote should be cast or vote on the proposals to be put to the extraordinary general meeting, such VGAC II shareholder should be aware that the occurrence of the events described in the “Risk Factors” section and elsewhere in this proxy statement/consent solicitation statement/prospectus may adversely affect VGAC II and/or Grove.

 

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QUESTIONS AND ANSWERS FOR SHAREHOLDERS OF VGAC II

The questions and answers below highlight only selected information from this document and only briefly address some commonly asked questions about the proposals to be presented at the extraordinary general meeting, including with respect to the Domestication and the Business Combination. The following questions and answers do not include all the information that is important to VGAC II shareholders. VGAC II urges VGAC II shareholders to read this proxy statement/consent solicitation statement/prospectus, including the Annexes hereto and the other documents referred to herein, carefully and in their entirety to fully understand the Domestication and the Business Combination and the voting procedures for the extraordinary general meeting, which will be held at the offices of Davis Polk & Wardwell LLP located at 450 Lexington Avenue, New York, New York 10017 and virtually via the Internet at 10:00 AM, Eastern Time, on June 14, 2022.

 

Q:

Why am I receiving this proxy statement/consent solicitation statement/prospectus?

 

A:

VGAC II shareholders are being asked to consider and vote upon, among other proposals, a proposal to approve and adopt the Merger Agreement and approve the transactions contemplated thereby, including the Business Combination. In accordance with the terms and subject to the conditions of the Merger Agreement, among other things, in connection with the Initial Merger, based on an implied equity value of $1.4 billion: (a) each share of Grove Common Stock (other than the Backstop Tranche 1 Shares) and Grove Preferred Stock (on an as-converted to common stock basis) (other than dissenting shares) will be canceled and converted into the right to receive (i) a number of shares of New Grove Class B Common Stock, as determined pursuant to an exchange ratio set forth in the Merger Agreement (the “Exchange Ratio”) and (ii) a number of restricted shares of New Grove Class B Common Stock that will vest upon the achievement of certain earnout thresholds prior to the tenth anniversary of the Closing, as more fully described in the accompanying proxy statement/consent solicitation statement/prospectus (such shares, the “Grove Earnout Shares”); (b) each outstanding option to purchase Grove Common Stock (whether vested or unvested) will be assumed by New Grove and converted into (i) comparable options that are exercisable for shares of New Grove Class B Common Stock, with a value determined in accordance with the Exchange Ratio (and, with regard to options that are intended to qualify as “incentive stock options” under Section 422 of the Code, in a manner compliant with Section 424(a) of the Code) and (ii) the right to receive a number of Grove Earnout Shares; (c) each award of restricted stock units to acquire Grove Common Stock (whether vested or unvested) (collectively, “Grove RSUs”) will be assumed by New Grove and converted into (i) a comparable award of restricted stock units to acquire shares of New Grove Class B Common Stock and (ii) the right to receive a number of Grove Earnout Shares; (d) each warrant to acquire shares of Grove Common Stock or Grove Preferred Stock will be assumed by New Grove and converted into (i) a comparable warrant to acquire shares of New Grove Class B Common Stock and (ii) the right to receive a number of Grove Earnout Shares; and (e) each Backstop Tranche 1 Share will be canceled and converted into the right to receive a number of shares of New Grove Class B Common Stock equal to the Exchange Ratio. The implied equity value of $1.4 billion includes the value of the options exercisable for shares of New Grove Class B Common Stock that are issued and outstanding in respect of options (whether vested or unvested) to purchase Grove common stock but excludes (X) the value of the options exercisable for shares of New Grove Class B Common Stock that are issued and outstanding in respect of options to purchase Grove common stock granted since January 1, 2021 under Grove’s 2016 Equity Incentive Plan that have not yet vested as of immediately prior to the Closing (the “Company Unvested 2021 Options”), (Y) the value of the shares of New Grove Class B Common Stock underlying outstanding Grove RSUs granted since January 1, 2021 under Grove’s 2016 Equity Incentive Plan that have not yet vested as of immediately prior to the Closing (the “Company Unvested 2021 RSUs”) and (Z) the value of the Backstop Tranche 1 Shares.

In connection with the Final Merger, (i) each share of common stock of the Initial Surviving Corporation that is issued and outstanding immediately prior to the Final Effective Time will be canceled without any conversion or payment in respect thereof and (ii) the membership interests of VGAC II Merger Sub II that are issued and outstanding immediately prior to the Final Effective Time will be converted into and become

 

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all of the membership interests of the Final Surviving Company (and shall be the only membership interests of the Final Surviving Company that are issued and outstanding immediately after the Final Effective Time).

A copy of the Merger Agreement is attached to this proxy statement/consent solicitation statement/prospectus as Annex A and you are encouraged to read the Merger Agreement in its entirety. This proxy statement/consent solicitation statement/prospectus includes descriptions of the Merger Agreement and particular provisions therein. These descriptions do not purport to be complete and are qualified in their entirety by reference to the full text of the Merger Agreement.

The approval of each of the Business Combination Proposal, the Governing Documents Proposals, the NYSE Proposal, the Incentive Equity Plan Proposal, the ESPP Proposal, the Director Election Proposal, and the Adjournment Proposal requires an ordinary resolution under Cayman Islands law, being the affirmative vote of holders of a majority of the issued ordinary shares who, being present in person or represented by proxy and entitled to vote at the extraordinary general meeting, vote at the extraordinary general meeting, and each of the Domestication Proposal and the Charter Amendment Proposal require a special resolution under Cayman Islands law, being the affirmative vote of holders of a majority of at least a two-thirds (2/3) of the issued ordinary shares who, being present in person or represented by proxy and entitled to vote at the extraordinary general meeting, vote at the extraordinary general meeting.

In connection with the Domestication, at least one day prior to the Closing Date, (i) each issued and outstanding Class A ordinary share and each issued and outstanding Class B ordinary share of VGAC II will convert automatically, on a one-for-one basis, into shares of New Grove Class A Common Stock, (ii) each issued and outstanding warrant to purchase Class A ordinary shares of VGAC II will convert automatically into a warrant to acquire New Grove Class A Common Stock in the same form and on the same terms and conditions as the converted VGAC II warrant, and (iii) each issued and outstanding unit of VGAC II that has not been previously separated into the underlying Class A ordinary share of VGAC II and underlying VGAC II warrant upon the request of the holder thereof prior to the Domestication will be canceled and will entitle the holder thereof to one share of New Grove Class A Common Stock and one-fifth of one warrant representing the right to purchase one share of New Grove Class A Common Stock at an exercise price of $11.50 per share on the terms and conditions set forth in the VGAC II Warrant Agreement. See “Domestication Proposal.”

The provisions of the Proposed Governing Documents will differ in certain material respects from the Existing Governing Documents. Please see “What amendments will be made to the current constitutional documents of VGAC II?” below.

THE VOTE OF SHAREHOLDERS IS IMPORTANT. SHAREHOLDERS ARE ENCOURAGED TO VOTE AS SOON AS POSSIBLE AFTER CAREFULLY REVIEWING THIS PROXY STATEMENT/CONSENT SOLICITATION STATEMENT/PROSPECTUS.

 

Q:

What proposals are shareholders of VGAC II being asked to vote upon?

 

A:

At the extraordinary general meeting, VGAC II is asking holders of its ordinary shares to consider and vote upon eleven separate proposals:

 

   

a proposal to approve and adopt by ordinary resolution the Merger Agreement, including the Mergers, and the transactions contemplated thereby;

 

   

a proposal to approve by special resolution the Domestication;

 

   

a proposal to approve by special resolution the adoption and approval of the proposed new certificate of incorporation (the “Proposed Certificate of Incorporation”) and bylaws (the “Proposed Bylaws,” and together with the Proposed Certificate of Incorporation, the “Proposed Governing Documents”) of New Grove, copies of which are attached to the accompanying proxy statement/consent solicitation statement/prospectus as Annexes D and E, respectively;

 

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the following three separate non-binding, advisory proposals to approve by ordinary resolution the following material differences between the Existing Governing Documents and the Proposed Governing Documents:

 

   

to authorize the change in the authorized share capital of VGAC II from (i) US$22,100 divided into 200,000,000 Class A ordinary shares, par value $0.0001 per share, 20,000,000 Class B ordinary shares, par value $0.0001 per share, and 1,000,000 preference shares, par value $0.0001 per share, to (ii) 600,000,000 shares of New Grove Class A Common Stock, 200,000,000 shares of New Grove Class B Common Stock, and 100,000,000 shares of New Grove Preferred Stock;

 

   

to amend and restate the Existing Governing Documents and authorize all other immaterial changes necessary or, as mutually agreed in good faith by VGAC II and Grove, desirable in connection with the replacement of the Existing Governing Documents with the Proposed Governing Documents as part of the Domestication;

 

   

to authorize the issuance of shares of New Grove Class B Common Stock, which will allow holders of New Grove Class B Common Stock to cast ten votes per share of New Grove Class B Common Stock; and

 

   

a proposal to approve by ordinary resolution the issuance of shares of New Grove Class A Common Stock, shares of New Grove Class B Common Stock and the Backstop Warrants in connection with the Business Combination, the Backstop Financing and the PIPE Financing pursuant to NYSE Listing Rules;

 

   

a proposal to approve and adopt by ordinary resolution the Incentive Equity Plan;

 

   

a proposal to approve and adopt by ordinary resolution the ESPP;

 

   

a proposal to elect the directors to the New Grove Board; and

 

   

a proposal to approve by ordinary resolution the adjournment of the extraordinary general meeting to a later date or dates, if necessary, to, among other things, permit further solicitation and vote of proxies in the event that there are insufficient votes for the approval of one or more proposals at the extraordinary general meeting.

If VGAC II shareholders do not approve each of the Condition Precedent Proposals, then unless certain conditions in the Merger Agreement are waived by the applicable parties to the Merger Agreement, the Merger Agreement could terminate and the Business Combination may not be consummated.

For more information, please see “Business Combination Proposal,” “Domestication Proposal,” “Governing Documents Proposals,” “NYSE Proposal,” “Incentive Equity Plan Proposal,” “ESPP Proposal,” “Director Election Proposal,” and “Adjournment Proposal.”

VGAC II will hold the extraordinary general meeting to consider and vote upon these proposals. This proxy statement/consent solicitation statement/prospectus contains important information about the Business Combination and the other matters to be acted upon at the extraordinary general meeting. Shareholders of VGAC II should read it carefully and in its entirety.

After careful consideration, the VGAC II Board has determined that the Business Combination Proposal, the Domestication Proposal, the Charter Amendment Proposal, each of the Governing Documents Proposals, the NYSE Proposal, the Incentive Equity Plan Proposal, the ESPP Proposal, the Director Election Proposal, and the Adjournment Proposal are in the best interests of VGAC II and VGAC II shareholders and unanimously recommends that VGAC II shareholders vote or give instruction to vote “FOR” each of those proposals.

The existence of financial and personal interests of one or more of VGAC II’s directors may result in a conflict of interest on the part of such director(s) between what he or she or they may believe is in the best interests of VGAC II and VGAC II shareholders and what he or she or they may believe is best for himself

 

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or herself or themselves in determining to recommend that shareholders vote for the proposals. In addition, VGAC II’s officers have interests in the Business Combination that may conflict with your interests as a VGAC II shareholder. See the section entitled “Business Combination Proposal—Interests of VGAC II’s Directors and Executive Officers in the Business Combination” for a further discussion of these considerations.

 

Q:

Why is VGAC II proposing the Business Combination?

 

A:

VGAC II is a blank check company incorporated on January 13, 2021 as a Cayman Islands exempted company and incorporated for the purpose of effecting a merger, share exchange, asset acquisition, share purchase, reorganization, or similar business combination with one or more businesses. Although VGAC II may pursue an acquisition opportunity in any business, industry, sector, or geographical location for purposes of consummating an initial business combination, VGAC II has focused on companies in the travel & leisure, financial services, health & wellness, technology & internet-enabled, music & entertainment, media & mobile, and renewable energy/resource efficiency sectors. VGAC II is not permitted under the Existing Governing Documents to effect a business combination with a blank check company or a similar type of company with nominal operations.

VGAC II has identified several criteria and guidelines it believes are important for evaluating acquisition opportunities. VGAC II has sought targets that it believes: will perform well in the public markets over the long term and offer attractive returns to VGAC II shareholders; would uniquely benefit from an association with a trusted name like the Virgin Group through brand enhancement and improved operational performance; can be sourced through VGAC II’s extensive proprietary networks so as to avoid broadly marketed processes; generate stable free cashflows or that have a clear near-term path to produce healthy free cashflows; have the ability to provide a strong consumer experience that is meaningfully differentiated from competitors; have a strong and experienced management team that VGAC II can work alongside and augment as the company scales; and are prepared from a management, corporate governance, and reporting perspective to become a publicly traded company and can benefit from the access to the broader capital markets that this will provide.

Based on its due diligence investigations of Grove and the industry in which it operates, including the financial and other information provided by Grove in the course of negotiations, the VGAC II Board believes that Grove meets the criteria and guidelines listed above. However, there is no assurance of this. See “Business Combination Proposal—The VGAC II Board’s Reasons for the Business Combination.”

Although the VGAC II Board believes that the Business Combination with Grove presents an attractive business combination opportunity and is in the best interests of VGAC II and VGAC II shareholders, the VGAC II Board did consider certain potentially material negative factors in arriving at that conclusion. These factors are discussed in greater detail in the sections entitled “Business Combination Proposal—The VGAC II Board’s Reasons for the Business Combination” and “Risk Factors—Risks Related to Grove and New Grove Business Following the Business Combination.”

 

Q:

Did the VGAC II Board obtain a third-party valuation or fairness opinion in determining whether or not to proceed with the Business Combination?

 

A:

Yes. Although the Existing Governing Documents do not require VGAC II to seek an opinion from an independent investment banking firm or another valuation or appraisal firm that regularly renders fairness opinions unless it pursues a business combination with an affiliated company, the board of directors of VGAC II received an opinion dated December 6, 2021, of Houlihan Lokey Capital, Inc. (“Houlihan Lokey”) to the effect that, as of such date and on the basis of and subject to the qualifications, limitations and assumptions set forth in Houlihan Lokey’s written opinion, the merger consideration, excluding the Grove Earnout Shares, to be issued by VGAC II in the Initial Merger pursuant to the Merger Agreement (the “Closing Payment Shares”) was fair, from a financial point of view, to VGAC II. See the section entitled “BCA Proposal — Opinion of Houlihan Lokey.”

 

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Q:

What will Grove’s equityholders receive in the Business Combination with VGAC II?

 

A:

On the date of Closing, (i) VGAC II Merger Sub I will merge with and into Grove, with Grove as the surviving company in the Initial Merger and, after giving effect to the Initial Merger, continuing as a Initial Surviving Corporation, and (ii) immediately following the Initial Merger, and as part of the same overall transaction as the Initial Merger, the Initial Surviving Corporation will merge with and into VGAC II Merger Sub II, with VGAC II Merger Sub II as the surviving company in the Final Merger and, after giving effect to the Final Merger, continuing as a wholly-owned subsidiary of New Grove. In accordance with the terms and subject to the conditions of the Merger Agreement, at the time at which the Initial Merger becomes effective (the “Initial Effective Time”), based on an implied equity value of $1.4 billion: (a) each share of Grove Common Stock (other than the Backstop Tranche 1 Shares) and Grove Preferred Stock (on an as-converted to common stock basis) (other than dissenting shares) will be canceled and converted into the right to receive (i) a number of shares of New Grove Class B Common Stock, as determined pursuant to an exchange ratio set forth in the Merger Agreement and (ii) a number of shares of Grove Earnout Shares, as more fully described in the accompanying proxy statement/consent solicitation statement/prospectus; (b) each outstanding option to purchase Grove Common Stock (whether vested or unvested) will be assumed by New Grove and converted into (i) comparable options that are exercisable for shares of New Grove Class B Common Stock, with a value determined in accordance with the Exchange Ratio (and, with regard to options that are intended to qualify as “incentive stock options” under Section 422 of the Code, in a manner compliant with Section 424(a) of the Code) and (ii) the right to receive a number of Grove Earnout Shares; (c) each award of Grove RSUs will be assumed by New Grove and converted into (i) a comparable award of restricted stock units to acquire shares of New Grove Class B Common Stock and (ii) the right to receive a number of Grove Earnout Shares; (d) each warrant to acquire shares of Grove Common Stock or Grove Preferred Stock will be assumed by New Grove and converted into (i) a comparable warrant to acquire shares of New Grove Class B Common Stock and (ii) the right to receive a number of Grove Earnout Shares; and (e) each Backstop Tranche 1 Share will be canceled and converted into the right to receive a number of shares of New Grove Class B Common Stock equal to the Exchange Ratio. The implied equity value of $1.4 billion includes the value of the options exercisable for shares of New Grove Class B Common Stock that are issued and outstanding in respect of options (whether vested or unvested) to purchase Grove common stock but excludes (X) the value of the options exercisable for shares of New Grove Class B Common Stock that are issued and outstanding in respect of the Company Unvested 2021 Options, (Y) the value of the shares of New Grove Class B Common Stock underlying the Company Unvested 2021 RSUs and (Z) the value of the Backstop Tranche 1 Shares. In addition, immediately following the Closing, pursuant to the terms of the Backstop Subscription Agreement, (1) the Backstop Investor will receive the Backstop Warrants and (2) the Backstop Investor will subscribe for and purchase the Backstop Tranche 2 Shares. Other equityholders of Grove will not receive the Backstop Warrants or the Backstop Tranche 2 Shares as a result of the Business Combination.

 

Q:

What are the Grove Earnout Shares?

 

A:

The Grove Earnout Shares will consist of 14,000,000 restricted shares of New Grove Class B Common Stock, which, immediately after the Closing, will represent approximately 5.7% of the outstanding shares of New Grove Common Stock and approximately 7.9% of the voting power of New Grove Common Stock on a fully-diluted basis assuming no redemptions by VGAC II shareholders in connection with the Business Combination.

The Grove Earnout Shares will be unvested at the Closing and will automatically vest effective (A) with respect to 50% of the Grove Earnout Shares, if the daily volume weighted average price of the shares of New Grove Class A Common Stock is greater than or equal to $12.50 per share for any 20 trading days (which may be consecutive or not consecutive) within any 30-trading-day period that occurs after the Closing Date and on or prior to the ten year anniversary of the Closing Date (the “Earnout Period”) and (B) with respect to the other 50% of the Grove Earnout Shares, if the daily volume weighted average price of the shares of New Grove Class A Common Stock is greater than or equal to $15.00 per share for any 20 trading days (which may be consecutive or not consecutive) within any 30-trading-day period that occurs

 

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after the Closing Date and on or prior to expiration of the Earnout Period. In addition, in the event that (x) there is a Change of Control (as defined in the section entitled “Grove Earnout Shares”) (or a definitive agreement providing for a Change of Control has been entered into) after the Closing and prior to the expiration of the Earnout Period or (y) there is a liquidation, dissolution, bankruptcy, reorganization, assignment for the benefit of creditors or similar event with respect to New Grove after the Closing Date and on or prior to the expiration of the Earnout Period, the Grove Earnout Shares that have not vested prior to such occurrence will automatically vest.

If, upon the expiration of the Earnout Period, any Grove Earnout Shares have not vested, then such Grove Earnout Shares will automatically be forfeited by the holders thereof and be canceled by New Grove.

 

Q:

How will the combined company be managed following the Business Combination?

 

A:

Following the Closing, it is expected that the current management of Grove will become the management of New Grove, and the New Grove Board will consist of nine directors. If the Director Election Proposal is approved, the New Grove Board will consist of Stuart Landesberg, Christopher Clark, David Glazer, John Replogle, Kristine Miller, Rayhan Arif and Naytri Shroff Sramek. Please see the section entitled “Management of New Grove Following the Business Combination” and “Director Election Proposal” for further information.

 

Q:

What equity stake will current VGAC II shareholders and current equityholders of Grove hold in New Grove immediately after the consummation of the Business Combination?

 

A:

As of the date of this proxy statement/consent solicitation statement/prospectus, there are (i) 40,250,000 Class A ordinary shares outstanding underlying units issued in the initial public offering and (ii) 9,972,500 Class B ordinary shares outstanding held by the Sponsor. As of the date of this proxy statement/consent solicitation statement/prospectus, there are 6,700,000 private placement warrants outstanding and held by the Sponsor and 8,050,000 public warrants. Each whole warrant entitles the holder thereof to purchase one Class A ordinary share and, following the Domestication, will entitle the holder thereof to purchase one share of New Grove Class A Common Stock. Therefore, as of the date of this proxy statement/consent solicitation statement/prospectus (without giving effect to the Business Combination or the issuance of the Backstop Tranche 2 Shares or the Backstop Warrants and assuming that none of VGAC II’s outstanding public shares are redeemed in connection with the Business Combination), VGAC II’s fully diluted share capital, giving effect to the exercise of all of the private placement warrants and public warrants, would be 65,062,500 ordinary shares.

The following table illustrates varying estimated pro forma ownership levels in New Grove immediately following the consummation of the Business Combination, based on the varying levels of redemptions by the public shareholders and the following additional assumptions.

 

     Share Ownership in New Grove(1)  
     No
Redemption
    High
Redemption(2)
    Maximum
Redemption(3)
 

VGAC II Shareholders(8)

     21.7     3.4     0.1

Sponsor

     5.4     6.6     6.5

Backstop Warrants(7)

     1.0     1.0     2.7

Backstop Investor(4)

     —       —       3.3

Grove Stockholders(5)(6)

     67.2     83.2     81.7

PIPE Investors

     4.7     5.8     5.7

 

 

(1)

As of December 31, 2021.

(2)

Assumes that 35,250,000 of the Class A ordinary shares are redeemed for an aggregate payment of $352.5 million (which represents approximately 88% of the Class A ordinary shares and results in $50.0 million remaining in the trust account after redemptions).

(3)

Assumes that 40,250,000 of the Class A ordinary shares are redeemed for an aggregate payment of $402.5 million (which represents 100% of the Class A ordinary shares).

 

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(4)

Reflects ownership interest attributable only to the Backstop Tranche 1 Shares and Backstop Tranche 2 Shares (and not any other equity interests held by the Backstop Investor). Redemption of the Backstop Tranche 1 Shares and no issuance of any Backstop Tranche 2 Shares is assumed in the no and high redemption scenarios. All Backstop Tranche 1 Shares and Backstop Tranche 2 Shares are assumed outstanding in the maximum redemption scenario.

(5)

Excludes equity awards issued at Closing upon rollover of vested and unvested Grove equity awards under the proposed New Grove Incentive Equity Plan.

(6)

Each share of New Grove Class B Common Stock will have ten (10) votes per share, while each share of New Grove Class A Common Stock will have one (1) vote per share.

(7)

Assumes the exercise of 1,825,691, 1,561,316 and 4,163,509 Backstop Warrants (each warrant exercisable to purchase one share of New Grove Class A Common Stock for $0.01) under the no, high, and maximum redemption scenarios, respectively.

(8)

Includes 90,000 of Class B ordinary shares which were transferred from the Sponsor to three independent directors, each receiving 30,000 Class B ordinary shares.

The following table illustrates varying estimated pro forma ownership levels in New Grove immediately following the consummation of the Business Combination on a fully-diluted basis including the Grove Earnout Shares and shares of New Grove Common Stock issuable pursuant to the public warrants, the private placement warrants, the Backstop Warrants and Grove equity awards, based on the varying levels of redemptions by the public shareholders and the following additional assumptions:

 

     Ownership in New Grove(1)  
     No
Redemption
    High
Redemption(2)
    Maximum
Redemption(3)
 

VGAC II Shareholders(6)

     16.4     2.4     —  

Sponsor

     4.1     4.8     4.7

Grove Stockholders

     50.9     59.6     58.8

PIPE Investors

     3.6     4.2     4.1

Private Placement Warrants

     2.7     3.2     3.2

Public Warrants

     3.3     3.8     3.8

Backstop Warrants

     0.7     0.7     2.0

Backstop Investor(4)

     —       —       2.4

Grove common stock options(5)

     11.4     13.3     13.1

Grove restricted stock units(5)

     0.7     0.8     0.8

Grove common stock warrants(5)

     0.5     0.5     0.5

Grove common stock issued upon early exercise of options(5)

     —       —       —  

Grove Earnout Shares(5)

     5.7     6.7     6.6

 

(1)

As of December 31, 2021.

(2)

Assumes that 35,250,000 of the Class A ordinary shares are redeemed for an aggregate payment of $352.5 million (which represents approximately 88% of the Class A ordinary shares and results in $50.0 million remaining in the trust account after redemptions).

(3)

Assumes that 40,250,000 of the Class A ordinary shares are redeemed for an aggregate payment of $402.5 million (which represents 100% of the Class A ordinary shares).

(4)

Reflects ownership interest attributable only to the Backstop Tranche 1 Shares and Backstop Tranche 2 Shares (and not any other equity interests held by the Backstop Investor). Redemption of the Backstop Tranche 1 Shares and no issuance of any Backstop Tranche 2 Shares is assumed in the no and high redemption scenarios. All Backstop Tranche 1 Shares and Backstop Tranche 2 Shares are assumed outstanding in the maximum redemption scenario.

(5)

Each share of New Grove Class B Common Stock will have ten (10) votes per share, while each share of New Grove Class A Common Stock will have one (1) vote per share.

(6)

Includes 90,000 of Class B ordinary shares which were transferred from the Sponsor to three independent directors, each receiving 30,000 Class B ordinary shares.

 

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Furthermore, subject to approval by VGAC II shareholders of the Business Combination Proposal, the Domestication Proposal, and the Charter Amendment Proposal, New Grove will adopt a dual-class stock structure, comprising of New Grove Class A Common Stock, which will carry one (1) vote per share, and New Grove Class B Common Stock, which will carry ten (10) votes per share. Upon the Closing, and after giving effect to the Backstop Share Exchange, all stockholders of Grove other than the Backstop Investor will hold only shares of New Grove Class B Common Stock. The New Grove Class B Common Stock will be entitled to the same dividends as and will rank equally to the New Grove Class A Common Stock upon any liquidation. The New Grove Class B Common Stock is also subject to conversion to New Grove Class A Common Stock upon the occurrence of certain events. Upon conversion, each share of New Grove Class B Common Stock will convert into one share of New Grove Class A Common Stock. See “Description of New Grove Securities—Common Stock—New Grove Class B Common Stock—Mandatory Conversion.

 

Q:

What percentage of voting power will current VGAC II shareholders and current equityholders of Grove hold in New Grove immediately after the consummation of the Business Combination?

 

A:

The following table illustrates the estimated pro forma voting power in New Grove immediately following the consummation of the Business Combination, based on the varying levels of redemptions by the public shareholders and the following additional assumptions:

 

     Voting Power in New Grove(1)  
     No Redemption     High
Redemption(2)
    Maximum
Redemption(3)
 

VGAC II Shareholders(7)

     3.1     0.4     —  

Sponsor

     0.8     0.8     0.8

Backstop Investor(4)

     —       —       0.4

Grove Class B Stockholders(5)(6)

     95.4     98.1     98.1

PIPE Investors

     0.7     0.7     0.7

 

(1)

As of December 31, 2021.

(2)

Assumes that 35,250,000 of the Class A ordinary shares are redeemed for an aggregate payment of $352.5 million (which represents approximately 88% of the Class A ordinary shares).

(3)

Assumes that 40,250,000 of the Class A ordinary shares are redeemed for an aggregate payment of $402.5 million (which represents 100% of the Class A ordinary shares).

(4)

Reflects ownership interest attributable only to the Backstop Tranche 1 Shares and Backstop Tranche 2 Shares (and not any other equity interests held by the Backstop Investor). Redemption of the Tranche 1 backstop shares is assumed and no issuance of any Backstop Tranche 2 Shares in the no and high redemption scenarios. All Backstop Tranche 1 and Tranche 2 Shares are assumed outstanding in the maximum redemption scenario.

(5)

Excludes equity awards issued at Closing upon rollover of vested and unvested Grove equity awards under the proposed New Grove Incentive Equity Plan.

(6)

Each share of New Grove Class B Common Stock will have ten (10) votes per share, while each share of New Grove Class A Common Stock will have one (1) vote per share.

(7)

Includes 90,000 of Class B ordinary shares which were transferred from the Sponsor to three independent directors, each receiving 30,000 Class B ordinary shares.

 

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The following table illustrates the estimated pro forma voting power in New Grove immediately following the consummation of the Business Combination on a fully-diluted basis including the Grove Earnout Shares and shares of New Grove Common Stock issuable pursuant to the public warrants, the private placement warrants, the Backstop Warrants and Grove equity awards, based on the varying levels of redemptions by the public shareholders and the following additional assumptions:

 

     Voting Power in New Grove(1)  
     No Redemption     High
Redemption(2)
    Maximum
Redemption(3)
 

VGAC II Shareholders(6)

     2.3     0.3     —  

Sponsor

     0.6     0.6     0.6

PIPE Investors

     0.5     0.5     0.5

Grove Shareholders

     70.4     71.8     71.9

Private Placement Warrants

     0.4     0.4     0.4

Public Warrants

     0.5     0.5     0.5

Backstop Warrants

     0.1     0.1     0.2

Backstop Investor(4)

     —       —       0.3

Grove common stock options(5)

     15.7     16.1     16.0

Grove restricted stock units(5)

     1.0     1.0     1.0

Grove common stock warrants(5)

     0.6     0.6     0.6

Grove common stock issued upon early exercise of options(5)

     —       —       —  

Grove Earnout Shares(5)

     7.9     8.1     8.0

 

(1)

As of December 31, 2021.

(2)

Assumes that 35,250,000 of the Class A ordinary shares are redeemed for an aggregate payment of $352.5 million (which represents approximately 88% of the Class A ordinary shares and results in $50.0 million remaining in the trust account after redemptions).

(3)

Assumes that 40,250,000 of the Class A ordinary shares are redeemed for an aggregate payment of $402.5 million (which represents 100% of the Class A ordinary shares).

(4)

Reflects ownership interest attributable only to the Backstop Tranche 1 Shares and Backstop Tranche 2 Shares (and not any other equity interests held by the Backstop Investor). Redemption of the Backstop Tranche 1 Shares is assumed and no issuance of any Backstop Tranche 2 Shares in the no and high redemption scenarios. All Backstop Tranche 1 Shares and Tranche 2 Shares are assumed outstanding in the maximum redemption scenario.

(5)

Each share of New Grove Class B Common Stock will have ten (10) votes per share, while each share of New Grove Class A Common Stock will have one (1) vote per share.

(6)

Includes 90,000 of Class B non-redeemable ordinary shares which were transferred from the Sponsor to three independent directors, each receiving 30,000 Class B ordinary shares.

 

Q:

Why is VGAC II proposing the Domestication?

 

A:

The VGAC II Board believes that there are significant advantages to VGAC II that will arise as a result of a change of its domicile to Delaware. Further, the VGAC II Board believes that any direct benefit that the Delaware General Corporation Law (the “DGCL”) provides to a corporation also indirectly benefits its stockholders, who are the owners of the corporation. The VGAC II Board believes that there are several reasons why transfer by way of continuation to Delaware is in the best interests of VGAC II and the VGAC II shareholders, including (i) the prominence, predictability, and flexibility of the DGCL, (ii) Delaware’s well-established principles of corporate governance, and (iii) the increased ability for Delaware corporations to attract and retain qualified directors. Each of the foregoing reasons are discussed in greater detail in the section entitled “Domestication Proposal—Reasons for the Domestication.”

To effect the Domestication, VGAC II will file an application for deregistration with the Cayman Islands Registrar of Companies, together with the necessary accompanying documents, and file a certificate of

 

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corporate domestication and a certificate of incorporation with the Secretary of State of the State of Delaware, under which VGAC II will be domesticated and continue as a Delaware public benefit corporation.

The approval of the Domestication Proposal is a condition to the Closing under the Merger Agreement. The approval of the Domestication Proposal requires a special resolution under Cayman Islands law, being the affirmative vote of at least a two-thirds (2/3) majority of the votes cast by the holders of the issued ordinary shares present in person or represented by proxy at the extraordinary general meeting and entitled to vote on such matter. Abstentions and broker nonvotes, while considered present for the purposes of establishing a quorum, will not count as votes cast at the extraordinary general meeting, and otherwise will have no effect on a particular proposal.

 

Q:

What amendments will be made to the current constitutional documents of VGAC II?

 

A:

The Closing is conditional, among other things, on the Domestication. Accordingly, in addition to voting on the Business Combination, VGAC II shareholders also are being asked to consider and vote upon a proposal to approve the Domestication, and replace the Existing Governing Documents, in each case, under Cayman Islands law with the Proposed Governing Documents, in each case, under the DGCL, which differ from the Existing Governing Documents in the following material respects:

 

    

Existing Governing Documents

  

Proposed Governing Documents

Authorized Shares

(Governing Documents Proposal A)

   The share capital under the Existing Governing Documents is US$22,100 divided into 200,000,000 Class A ordinary shares of par value US$0.0001 per share, 20,000,000 Class B ordinary shares of par value US$0.0001 per share, and 1,000,000 preference shares of par value US$0.0001 per share.    The Proposed Governing Documents authorize 600,000,000 shares of New Grove Class A Common Stock, 200,000,000 shares of New Grove Class B Common Stock, and 100,000,000 shares of New Grove Preferred Stock.
   See paragraph 5 of the Memorandum of Association.    See Article IV of the Proposed Certificate of Incorporation.
Corporate Name (Governing Documents Proposal B)    The Existing Governing Documents provide the name of the company is “Virgin Group Acquisition Corp. II”    The Proposed Governing Documents will provide that the name of the corporation will be “Grove Collaborative Holdings, Inc.”
   See paragraph 1 of VGAC II’s Memorandum of Association.    See Article I of the Proposed Certificate of Incorporation.
Perpetual Existence (Governing Documents Proposal B)    The Existing Governing Documents provide that if VGAC II does not consummate a business combination (as defined in the Existing Governing Documents) by March 25, 2023 (twenty-four months after the closing of the initial public offering), VGAC II will cease all operations except for the purposes of winding up and will redeem the shares issued in the initial public offering and liquidate its trust account.    The Proposed Governing Documents do not include any provisions relating to New Grove’s ongoing existence; the default under the DGCL will make New Grove’s existence perpetual.
   See Article 49 of VGAC II’s Articles of Association.    This is the default rule under the DGCL.

 

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Existing Governing Documents

  

Proposed Governing Documents

Exclusive Forum (Governing Documents Proposal B)    The Existing Governing Documents do not contain a provision adopting an exclusive forum for certain shareholder litigation.    The Proposed Governing Documents adopt Delaware as the exclusive forum for certain stockholder litigation and the federal district courts of the United States as the exclusive forum for litigation arising out of the Securities Act.
Provisions Related to Status as Blank Check Company (Governing Documents Proposal B)    The Existing Governing Documents set forth various provisions related to VGAC II’s status as a blank check company prior to the consummation of a business combination.    The Proposed Governing Documents do not include such provisions related to VGAC II’s status as a blank check company, which no longer will apply upon consummation of the Business Combination, as VGAC II will cease to be a blank check company at such time.
   See Article 49 of VGAC II’s Amended and Restated Articles of Association.   
Voting Rights of Common Stock (Governing Documents Proposal C)    The Existing Governing Documents provide that the holders of each ordinary share of VGAC II is entitled to one vote for each share on each matter properly submitted to the VGAC II shareholders entitled to vote.    The Proposed Governing Documents provide that holders of shares of New Grove Class A Common Stock will be entitled to cast one (1) vote per share of New Grove Class A Common Stock, and holders of shares of New Grove Class B Common Stock will be entitled to cast ten (10) votes per share of New Grove Class B Common Stock on each matter properly submitted to the stockholders entitled to vote.
   See Article 23 of VGAC II’s Articles of Association.    See Article IV of the Proposed Certificate of Incorporation.

 

Q:

How will the Domestication affect my ordinary shares, warrants, and units?

 

A:

In connection with the Domestication, at least one day prior to the Closing Date, (i) each issued and outstanding Class A ordinary share and each issued and outstanding Class B ordinary share of VGAC II will convert automatically, on a one-for-one basis, into shares of New Grove Class A Common Stock, (ii) each issued and outstanding warrant to purchase Class A ordinary shares of VGAC II will convert automatically into a warrant to acquire New Grove Class A Common Stock in the same form and on the same terms and conditions as the converted VGAC II warrant, and (iii) each issued and outstanding unit of VGAC II that has not been previously separated into the underlying Class A ordinary share of VGAC II and underlying VGAC II warrant upon the request of the holder thereof prior to the Domestication will be canceled and will entitle the holder thereof to one share of New Grove Class A Common Stock and one-fifth of one warrant representing the right to purchase one share of New Grove Class A Common Stock at an exercise price of $11.50 per share on the terms and conditions set forth in the VGAC II Warrant Agreement. See “Domestication Proposal.

 

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In accordance with the terms and subject to the conditions of the Merger Agreement, at the Effective Time, based on an implied equity value of $1.4 billion: (a) each share of Grove Common Stock (other than the Backstop Tranche 1 Shares) and Grove Preferred Stock (on an as-converted to common stock basis) (other than dissenting shares) will be canceled and converted into the right to receive (i) a number of shares of New Grove Class B Common Stock, as determined pursuant to an exchange ratio set forth in the Merger Agreement and (ii) a number of shares of Grove Earnout Shares, as more fully described in the accompanying proxy statement/consent solicitation statement/prospectus; (b) each outstanding option to purchase Grove Common Stock (whether vested or unvested) will be assumed by New Grove and converted into (i) comparable options that are exercisable for shares of New Grove Class B Common Stock, with a value determined in accordance with the Exchange Ratio (and, with regard to options that are intended to qualify as “incentive stock options” under Section 422 of the Code, in a manner compliant with Section 424(a) of the Code) and (ii) the right to receive a number of Grove Earnout Shares; (c) each award of Grove RSUs will be assumed by New Grove and converted into (i) a comparable award of restricted stock units to acquire shares of New Grove Class B Common Stock and (ii) the right to receive a number of Grove Earnout Shares; (d) each warrant to acquire shares of Grove Common Stock or Grove Preferred Stock will be assumed by New Grove and converted into (i) a comparable warrant to acquire shares of New Grove Class B Common Stock and (ii) the right to receive a number of Grove Earnout Shares; and (e) each Backstop Tranche 1 Share will be canceled and converted into the right to receive a number of shares of New Grove Class B Common Stock equal to the Exchange Ratio. The implied equity value of $1.4 billion includes the value of the options exercisable for shares of New Grove Class B Common Stock that are issued and outstanding in respect of options (whether vested or unvested) to purchase Grove common stock but excludes (X) the value of the options exercisable for shares of New Grove Class B Common Stock that are issued and outstanding in respect of the Company Unvested 2021 Options, (Y) the value of the shares of New Grove Class B Common Stock underlying the Company Unvested 2021 RSUs and (Z) the value of the Backstop Tranche 1 Shares.

 

Q:

What effect will New Grove being a public benefit corporation under Delaware law have on New Grove’s public stockholders?

 

A:

The Proposed Certificate of Incorporation of New Grove will establish New Grove as a public benefit corporation with the specific public benefit of the development, promotion and distribution of consumer products as a positive force for human and environmental health globally. Examples of New Grove’s specific public benefit include Grove’s use of carbon offsets to ensure its shipments to customers are carbon neutral, its goal that its products be plastic-free by 2025, and its commitment to only sell products free from the harmful chemicals identified in Grove’s “anti-ingredient” list. These examples are non-exclusive, and the specific public benefit is intentionally broad to give New Grove flexibility in executing on its purpose.

Unlike traditional corporations, which have a fiduciary duty to focus exclusively on maximizing stockholder value, as a Delaware public benefit corporation, New Grove’s directors will have a fiduciary duty to consider not only the stockholders’ interests, but also the company’s public benefit and the interests of other stakeholders affected by New Grove’s actions. Therefore, New Grove may take actions that its directors believe will be in the best interests of those stakeholders materially affected by its specific benefit purpose, even if those actions do not maximize New Grove’s financial results. While New Grove intends for this public benefit designation and obligation to provide an overall net benefit to New Grove and its stakeholders, it could instead cause New Grove to make decisions and take actions without seeking to maximize the income generated from its business, and hence available for distribution to its stockholders.

In addition, Delaware law provides that New Grove’s stockholders will be entitled to file a derivative lawsuit claiming the directors failed to balance stockholder and public benefit interests. This potential liability does not exist for traditional corporations. In addition, as a public benefit corporation, New Grove may make contractual or other commitments, or take actions, in furtherance of its public benefit that make it less attractive as a takeover target and, therefore, New Grove stockholders’ ability to realize a gain on their investment through an acquisition less likely.

 

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Q:

What are the U.S. federal income tax consequences of the Domestication Proposal?

 

A:

The Domestication should constitute a tax-free reorganization within the meaning of Section 368(a)(1)(F) of the Internal Revenue Code of 1986, as amended (the “Code”). Assuming that the Domestication so qualifies, the following summarizes the consequences to U.S. Holders (as defined in “U.S. Federal Income Tax Considerations” below) of the Domestication:

 

   

Subject to the discussion below concerning PFICs, a U.S. Holder of Class A ordinary shares whose ordinary shares have a fair market value of less than $50,000 on the date of the Domestication and who does not own actually and/or constructively 10% or more of the total combined voting power of all classes of VGAC II shares entitled to vote or 10% or more of the total value of all classes of VGAC II shares (that is, who is not a “10% shareholder”) will not recognize any gain or loss and will not be required to include any part of VGAC II’s earnings in income.

 

   

Subject to the discussion below concerning PFICs, a U.S. Holder of Class A ordinary shares whose ordinary shares have a fair market value of $50,000 or more, but who is not a 10% shareholder will generally recognize gain (but not loss) on the deemed receipt of New Grove Class A Common Stock in the Domestication. As an alternative to recognizing gain as a result of the Domestication, such U.S. Holder may file an election to include in income, as a dividend, the “all earnings and profits amount” (as defined in the regulations promulgated under the Code (the “Treasury Regulations”) under Section 367 of the Code) attributable to its Class A ordinary shares provided certain other requirements are satisfied.

 

   

Subject to the discussion below concerning PFICs, a U.S. Holder of Class A ordinary shares who on the date of the Domestication is a 10% shareholder will generally be required to include in income, as a dividend, the “all earnings and profits amount” (as defined in the Treasury Regulations under Section 367 of the Code) attributable to its Class A ordinary shares provided certain other requirements are satisfied.

 

   

As discussed further under “U.S. Federal Income Tax Considerations” below, VGAC II believes that it is (and has been) treated as a PFIC for U.S. federal income tax purposes. In the event that VGAC II is (or in some cases has been) treated as a PFIC, notwithstanding the foregoing, proposed Treasury Regulations under Section 1291(f) of the Code (which have a retroactive effective date), if finalized in their current form, generally would require a U.S. Holder to recognize gain as a result of the Domestication unless the U.S. Holder makes (or has made) certain elections discussed further under “U.S. Federal Income Tax Considerations—The Domestication.” The tax on any such gain would be imposed at the rate applicable to ordinary income and an interest charge would apply based on a complex set of rules. It is difficult to predict whether such proposed regulations will be finalized and whether, in what form, and with what effective date, other final Treasury Regulations under Section 1291(f) of the Code will be adopted. Further, it is not clear how any such regulations would apply to the warrants. For a more complete discussion of the potential application of the PFIC rules to U.S. Holders as a result of the Domestication, see the section entitled “U.S. Federal Income Tax Considerations.” Each U.S. Holder of Class A ordinary shares or warrants is urged to consult its own tax advisor concerning the application of the PFIC rules to the exchange of Class A ordinary shares for New Grove Class A Common Stock and public warrants for New Grove warrants pursuant to the Domestication.

Additionally, the Domestication may cause Non-U.S. Holders (as defined in “U.S. Federal Income Tax Considerations” below) to become subject to U.S. federal income withholding taxes on any dividends in respect of such Non-U.S. Holder’s New Grove Class A Common Stock subsequent to the Domestication.

The tax consequences of the Domestication are complex and will depend on a holder’s particular circumstances. All holders are strongly urged to consult their tax advisor for a full description and understanding of the tax consequences of the Domestication, including the applicability and effect of U.S. federal, state, local and foreign income and other tax laws. For a more complete discussion of the U.S.

 

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federal income tax considerations of the Domestication, see the section entitled “U.S. Federal Income Tax Considerations.”

 

Q:

Do I have redemption rights?

 

A:

If you are a holder of public shares, you have the right to request that VGAC II redeems all or a portion of your public shares for cash provided that you follow the procedures and deadlines described elsewhere in this proxy statement/consent solicitation statement/prospectus. Public shareholders may elect to redeem all or a portion of the public shares held by them regardless of if or how they vote in respect of the Business Combination Proposal. 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 public shareholder, together with any affiliate of such public shareholder or any other person with whom such public shareholder is acting in concert or as a “group” (as defined in Section 13(d)(3) of the Exchange Act), will be restricted from redeeming its public shares with respect to more than an aggregate of 15% of the public shares. Accordingly, if a public shareholder, 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 and such excess public shares would be converted into the merger consideration in connection with the Business Combination.

The Sponsor has agreed to waive its redemption rights with respect to all of its ordinary shares in connection with the consummation of the Business Combination. Such shares will be excluded from the pro rata calculation used to determine the per share redemption price.

 

Q:

How do I exercise my redemption rights?

 

A:

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

 

  (i)

(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;

 

  (ii)

submit a written request to Continental, VGAC II’s transfer agent, in which you (a) request that VGAC II redeem all or a portion of your public shares for cash, and (b) identify yourself as the beneficial holder of the public shares and provide your legal name, phone number, and address; and

 

  (iii)

deliver your share certificates (if any) and other redemption forms (as applicable) to Continental physically or electronically through The Depository Trust Company (“DTC”).

Holders must complete the procedures for electing to redeem their public shares in the manner described above prior to 5:00 PM, Eastern Time, on June 10, 2022 (two business days before the extraordinary general meeting) in order for their shares to be redeemed.

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

Holders of 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 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 Continental directly and instruct them to do so.

Public shareholders will be entitled to request that their public shares be redeemed for a pro rata portion of the amount then on deposit in the trust account as of two business days prior to the Closing including interest earned on the funds held in the trust account and not previously released to VGAC II (net of taxes payable). For illustrative purposes, as of December 31, 2021, this would have amounted to approximately $10.00 per issued and outstanding public share. However, the proceeds deposited in the trust account could

 

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become subject to the claims of VGAC II’s creditors, if any, which could have priority over the claims of VGAC II shareholders, regardless of whether such public shareholders vote or, if they do vote, irrespective of if they vote for or against the Business Combination Proposal. Therefore, the per share distribution from the trust account in such a situation may be less than originally expected due to such claims. Whether any particular VGAC II shareholder votes, and if any particular VGAC II shareholder does vote irrespective of how such VGAC II shareholder votes, on any proposal, including the Business Combination Proposal, will have no impact on the amount such VGAC II shareholder will receive upon exercise of your redemption rights. It is expected that the funds to be distributed to public shareholders electing to redeem their public shares will be distributed promptly after the consummation of the Business Combination.

Any request for redemption, once made by a holder of public ordinary shares, may not be withdrawn once submitted to VGAC II unless the VGAC II Board determines (in its sole discretion) to permit the withdrawal of such redemption request (which they may do in whole or in part). If you deliver your share certificates (if any) and other redemption forms (as applicable) to Continental, VGAC II’s transfer agent, and later decide prior to the extraordinary general meeting not to elect redemption, you may request that Continental return the share certificates (if any) and the shares (physically or electronically) to you. You may make such request by contacting Continental at the phone number or address listed at the end of this section.

Any corrected or changed written exercise of redemption rights must be received by Continental prior to the vote taken on the Business Combination Proposal at the extraordinary general meeting. No request for redemption will be honored unless the holder’s public shares have been delivered (either physically or electronically) to Continental at least two business days prior to the vote at the extraordinary general meeting.

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, VGAC II will redeem the 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. The redemption takes place following the Domestication and, accordingly, it is shares of New Grove Class A Common Stock that will be redeemed immediately after consummation of the Business Combination.

If you are a holder of public shares and you exercise your redemption rights, such exercise will not result in the loss of any warrants that you may hold.

 

Q:

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

 

A:

No. Holders of issued and 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 Continental directly and instruct them to do so. The redemption rights include the requirement that a holder must identify itself in writing as a beneficial holder and provide its legal name, phone number, and address to Continental in order to validly redeem its shares. You are requested to cause your public shares to be separated and delivered to Continental by 5:00 PM, Eastern Time, on June 10, 2022 (two business days before the extraordinary general meeting) in order to exercise your redemption rights with respect to your public shares.

 

Q:

What are the U.S. federal income tax consequences of exercising my redemption rights?

 

A:

A U.S. Holder (as defined in “U.S. Federal Income Tax Considerations” below) of Class A ordinary shares (if the Domestication does not occur) or New Grove Class A Common Stock (if the Domestication occurs) as the case may be, that exercises its redemption rights to receive cash from the trust account in exchange for such ordinary shares or common stock may (subject to the application of the PFIC rules) be treated as

 

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  selling such ordinary shares or common stock, resulting in the recognition of capital gain or capital loss. There may be certain circumstances in which the redemption may be treated as a distribution for U.S. federal income tax purposes depending on the amount of ordinary shares or common stock, as the case may be, that a U.S. Holder owns or is deemed to own (including through the ownership of warrants). For a more complete discussion of the U.S. federal income tax considerations of an exercise of redemption rights by a U.S. Holder, see the sections entitled “U.S. Federal Income Tax Considerations—Tax Consequences of the Ownership and Disposition of Class A Ordinary Shares and Warrants if the Domestication Does Not Occur—U.S. Holders – Redemption of Class A Ordinary Shares” and “U.S. Federal Income Tax Considerations—The Domestication—Tax Consequences of a Redemption of New Grove Class A Common Stock.”

Additionally, because the Domestication will occur (if it is approved) prior to the redemption of U.S. Holders that exercise redemption rights, U.S. Holders exercising redemption rights will be subject to the potential tax consequences of Section 367 of the Code and the PFIC rules as a result of the Domestication. The tax consequences of Section 367 of the Code and the PFIC rules are discussed more fully below under “U.S. Federal Income Tax Considerations.” We urge you to consult your tax advisors regarding the tax consequences of exercising your redemption rights.

If the Domestication occurs, a Non-U.S. Holder (as defined in “U.S. Federal Income Tax Considerations” below) of New Grove Class A Common Stock that exercises its redemption rights to receive cash from the trust account in exchange for such common stock, like a U.S. Holder, will also generally be treated as selling such common stock. Gain recognized by a Non-U.S. Holder in connection with a redemption generally will not be subject to U.S. federal income tax unless certain exceptions apply. However, as with U.S. Holders, a redemption by a Non-U.S. Holder may be treated as a distribution for U.S. federal income tax purposes, depending on the amount of common stock that a Non-U.S. Holder owns or is deemed to own (including through the ownership of warrants). Any portion of such distribution that constitutes a dividend for U.S. federal income tax purposes will generally be subject to withholding tax at a rate of 30% of the gross amount of the dividend (unless such Non-U.S. Holder establishes that it is eligible for a reduced rate of withholding tax under an applicable income tax treaty or certain other exceptions apply).

Because the determination as to whether a redemption is treated as a sale or a distribution is dependent on matters of fact, withholding agents may presume, for withholding purposes, that all amounts paid to Non-U.S. Holders in connection with a redemption are treated as distributions in respect of such Non-U.S. Holder’s shares of New Grove Class A Common Stock. Accordingly, a Non-U.S. Holder should expect that a withholding agent will likely withhold U.S. federal income tax on the gross proceeds payable to a Non-U.S. Holder pursuant to a redemption at a rate of 30% unless such Non-U.S. Holder is eligible for a reduced rate of withholding tax under an applicable income tax treaty and provides proper certification of its eligibility for such reduced rate (usually on an IRS Form W-8BEN or W-8BEN-E, or other applicable IRS Form W-8). For a more complete discussion of the U.S. federal income tax considerations of an exercise of redemption rights by a Non-U.S. Holder, see the section entitled “U.S. Federal Income Tax Considerations—The Domestication—Tax Consequences of a Redemption of New Grove Class A Common Stock.”

 

Q:

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

 

A:

Following the closing of the initial public offering, an amount equal to $402,500,000 ($10.00 per unit) of the net proceeds from the initial public offering and the sale of the private placement warrants was placed in the trust account. As of December 31, 2021, funds in the trust account totaled approximately $402,530,526 and were held in money market funds. These funds will remain in the trust account, except for the withdrawal of interest to pay taxes, if any, until the earliest of (i) the completion of a business combination (including the Closing) or (ii) the redemption of all of the public shares if VGAC II is unable to complete a business combination by March 25, 2023 (unless such date is extended in accordance with the Existing Governing Documents), subject to applicable law.

 

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If VGAC II’s initial business combination is paid for using equity or debt securities or not all of the funds released from the trust account are used for payment of the consideration in connection with VGAC II’s initial business combination or used for redemptions or purchases of the public shares, New Grove may apply the balance of the cash released to it from the trust account for general corporate purposes, including for maintenance or expansion of operations of New Grove, the payment of principal or interest due on indebtedness incurred in the Business Combination, to fund the purchase of other companies, or for working capital. See “Summary of the Proxy Statement/Prospectus—Sources and Uses of Funds for the Business Combination.”

 

Q:

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

 

A:

VGAC II’s public shareholders are not required to vote in respect of the Business Combination in order to exercise their redemption rights. Accordingly, the Business Combination may be consummated even though the funds available from the trust account and the number of public shareholders are reduced as a result of redemptions by public shareholders.

The Merger Agreement provides that the obligations of Grove to consummate the Business Combination are conditioned on, among other things, that as of immediately prior to the Closing, the Available Cash equal no less than $175,000,000. If such condition is not met, and such condition is not or cannot be waived under the terms of the Merger Agreement, then the Merger Agreement could terminate and the proposed Business Combination may not be consummated.

Pursuant to the Backstop Subscription Agreement, Grove has agreed to waive such condition effective upon (i) the payment of the purchase price for the Backstop Tranche 1 Shares by the Backstop Investor (which occurred on March 31, 2022) and (ii) if the conditions to the Backstop Investor’s obligation to purchase the Backstop Tranche 2 Shares under the Backstop Subscription Agreement are satisfied, the payment of the purchase price for the Backstop Tranche 2 Shares.

In no event will VGAC II redeem public shares in an amount that would cause VGAC II’s net tangible assets (as determined in accordance with Rule 3a51-1(g)(1) of the Exchange Act) to be less than $5,000,001 after giving effect to the transactions contemplated by the Merger Agreement and the PIPE Financing.

Additionally, as a result of redemptions, the trading market for the New Grove Class A Common Stock may be less liquid than the market for the public shares was prior to consummation of the Business Combination and VGAC II may not be able to meet the listing standards for NYSE or another national securities exchange.

 

Q:

What conditions must be satisfied to complete the Business Combination?

 

A:

The consummation of the Business Combination is conditioned upon, among other things: (i) the approval by VGAC II shareholders of the Condition Precedent Proposals; (ii) the expiration or termination of the applicable waiting period under the HSR Act relating to the Merger Agreement; (iii) VGAC II having at least $5,000,001 of net tangible assets (as determined in accordance with Rule 3a51-1(g)(1) of the Exchange Act) after giving effect to the transactions contemplated by the Merger Agreement and the PIPE Financing; (iv) the Minimum Available Cash Condition; (v) the approval by NYSE of VGAC II’s initial listing application in connection with the Business Combination; and (vi) the consummation of the Domestication. Therefore, unless these conditions are waived by the applicable parties to the Merger Agreement, the Merger Agreement could terminate and the Business Combination may not be consummated.

Grove has agreed to waive the Minimum Available Cash Condition effective upon (i) the payment of the purchase price for the Backstop Tranche 1 Shares by the Backstop Investor (which occurred on March 31, 2022) and (ii) if the conditions to the Backstop Investor’s obligation to purchase the Backstop Tranche 2 Shares under the Backstop Subscription Agreement are satisfied, the payment of the purchase price for the Backstop Tranche 2 Shares.

 

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For more information about conditions to the consummation of the Business Combination, see “Business Combination Proposal—Conditions to Closing of the Business Combination.”

 

Q:

When do you expect the Business Combination to be completed?

 

A:

It is currently expected that the Business Combination will be consummated in the second quarter of 2022. This date depends on, among other things, the approval of the proposals to be voted on by VGAC II shareholders at the extraordinary general meeting. However, such extraordinary general meeting could be adjourned if the Adjournment Proposal is adopted by VGAC II shareholders at the extraordinary general meeting and VGAC II elects to adjourn the extraordinary general meeting to a later date or dates (i) to the extent necessary to ensure that any required supplement or amendment to the accompanying proxy statement/consent solicitation statement/prospectus is provided to VGAC II shareholders, (ii) in order to solicit additional proxies from VGAC II shareholders in favor of one or more of the proposals at the extraordinary general meeting, (iii) if, as of the time for which the extraordinary general meeting is scheduled, there are insufficient VGAC II ordinary shares represented (either in person or by proxy) to constitute a quorum necessary to conduct the business to be conducted at the extraordinary general meeting, or (iv) if VGAC II shareholders redeem an amount of public shares such that the Minimum Available Cash Condition would not be satisfied. For a description of the conditions for the completion of the Business Combination, see “Business Combination Proposal—Conditions to Closing of the Business Combination.”

 

Q:

What happens to VGAC II if the Business Combination is not consummated?

 

A:

VGAC II will not complete the Domestication unless all other conditions to the Closing have been satisfied or waived by the parties in accordance with the terms of the Merger Agreement. If VGAC II is not able to consummate the Business Combination with Grove nor able to complete another business combination by March 25, 2023, in each case, as such date may be extended pursuant to the Existing Governing Documents, VGAC II will: (i) cease all operations except for the purpose of winding up, (ii) as promptly as reasonably possible but not more than ten business days thereafter, redeem the public shares, at a per-share price, payable in cash, equal to the aggregate amount then on deposit in the trust account, including interest earned on the funds held in the trust account (less taxes payable and up to $100,000 of interest income to pay dissolution expenses), divided by the number of then-outstanding public shares, which redemption will completely extinguish public shareholders’ rights as shareholders (including the right to receive further liquidation distributions, if any), and (iii) as promptly as reasonably possible following such redemption, subject to the approval of VGAC II’s remaining shareholders and the VGAC II Board, liquidate and dissolve, subject in the case of clauses (ii) and (iii) to VGAC II’s obligations under Cayman Islands law to provide for claims of creditors and in all cases subject to the other requirements of applicable law.

 

Q:

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

 

A:

Neither VGAC II shareholders nor VGAC II warrantholders have appraisal rights in connection with the Business Combination or the Domestication under the Cayman Islands Companies Act or under the DGCL.

 

Q:

What do I need to do now?

 

A:

VGAC II urges you to read this proxy statement/consent solicitation statement/prospectus, including the Annexes hereto and the documents referred to herein, carefully and in their entirety and to consider how the Business Combination will affect you as a VGAC II shareholder and/or a VGAC II warrantholder. VGAC II shareholders should then vote as soon as possible in accordance with the instructions provided in this proxy statement/consent solicitation statement/prospectus and on the enclosed proxy card.

 

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Q:

What do I need in order to vote and ask questions at the extraordinary general meeting via the Internet?

 

A:

To attend the extraordinary general meeting via the Internet, you must register at https://www.cstproxy.com/vgacii/2022. Upon completing your registration, you will receive further instructions via email, including a unique link that will allow you access to the extraordinary general meeting and to vote and submit questions during the extraordinary general meeting. As part of the registration process, you must enter the control number located on your proxy card or voting instruction form. If you hold your shares in “street name,” which means your shares are held of record by a broker, bank, or nominee, you will also need to provide the registered name on your account and the name of your broker, bank or other nominee as part of the registration process. On the day of the extraordinary general meeting, you may begin to log in to the extraordinary general meeting fifteen (15) minutes prior to the extraordinary general meeting. We will have technicians ready to assist you with any technical difficulties you may have accessing the extraordinary general meeting. If you encounter any difficulties accessing the extraordinary general meeting platform, including any difficulties voting or submitting questions, you may call the technical support number that will be posted in your instructional email.

 

Q:

How do I vote my shares at the extraordinary general meeting?

 

A:

Shares Held of Record

If you hold shares directly in your name as a stockholder of record, you may submit your proxy to vote such shares via the Internet, by telephone or by mail.

To submit your proxy via Internet or by telephone, follow the instructions provided on your enclosed proxy card. If you vote via the Internet or by telephone, you must do so by no later than 11:59 PM, Eastern Time, on June 13, 2022.

As an alternative to submitting your proxy via the Internet or by telephone, you may submit your proxy by mail. To submit your proxy by mail, you will need to complete, sign and date your proxy card and return it in the enclosed, postage-paid envelope. If you vote by mail, your proxy card must be received by no later than June 13, 2022.

If you have registered in advance to attend the extraordinary general meeting at the VGAC II meeting website, you may also vote at the extraordinary general meeting via the VGAC II meeting website.

You can also attend the extraordinary general meeting and vote in person. You will receive a ballot when you arrive.

Shares Held in Street Name

If you hold your shares in “street name”, which means your shares are held of record by a broker, bank, or nominee, you will receive instructions from your broker, bank or nominee that you must follow in order to submit your voting instructions and have your shares voted at the extraordinary general meeting.

If you want to vote in person virtually at the extraordinary general meeting, you must register in advance at the VGAC II meeting website. You can also attend the extraordinary general meeting and vote in person. You will receive a ballot when you arrive. However, you may be instructed to obtain a legal proxy from your broker, bank or other nominee and to submit a copy in advance of the extraordinary general meeting. Further instructions will be provided to you as part of your registration process.

Please carefully consider the information contained in this proxy statement/consent solicitation statement/prospectus and, whether or not you plan to attend the extraordinary general meeting, submit your proxy via the Internet, by telephone or by mail so that your shares will be voted in accordance with your wishes even if you decide not to attend the extraordinary general meeting.

 

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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/consent solicitation statement/prospectus may have been forwarded to you by your brokerage firm, bank, or other nominee, or its agent. As the beneficial holder, you have the right to direct your broker, bank, or other nominee as to how to vote your shares. If you do not provide voting instructions to your broker 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.” Abstentions and broker non-votes, while considered present for the purposes of establishing a quorum, will not count as votes cast at the extraordinary general meeting, and otherwise will have no effect on a particular proposal. If you decide to vote, you should provide instructions to your broker, bank, or other nominee on how to vote in accordance with the information and procedures provided to you by your broker, bank, or other nominee.

 

Q:

When and where will the extraordinary general meeting be held?

 

A:

The extraordinary general meeting will be held at the offices of Davis Polk & Wardwell LLP located at 450 Lexington Avenue, New York, New York 10017 and virtually via the Internet at 10:00 AM, Eastern Time, on June 14, 2022, unless the extraordinary general meeting is adjourned.

 

Q:

How will the COVID-19 pandemic impact in-person voting at the General Meeting?

 

A:

VGAC II intends to hold the extraordinary general meeting both in person and virtually via the Internet. Because VGAC II is sensitive to the public health and travel concerns our shareholders may have and recommendations that public health officials may issue in light of the evolving nature of COVID-19 situation, VGAC II encourages VGAC II shareholders to attend the extraordinary general meeting virtually via the Internet. Additionally, VGAC II may impose additional procedures or limitations on VGAC II shareholders who wish to attend the extraordinary general meeting in person. VGAC II plans to announce any such updates in a press release filed with the SEC and on its proxy website, https://www.cstproxy.com/vgacii/2022, and VGAC II encourages VGAC II shareholders to check this website prior to the meeting if they plan to attend.

 

Q:

What impact will the COVID-19 pandemic have on the Business Combination?

 

A:

Given the ongoing and dynamic nature of the circumstances, it is difficult to predict the impact of COVID-19 on the businesses of VGAC II and Grove, and there is no guarantee that efforts by VGAC II and Grove to address the adverse impacts of COVID-19 will be effective. The extent of such impact will depend on future developments, which are highly uncertain and cannot be predicted, including new information which may emerge concerning the severity of COVID-19 and actions taken to contain COVID-19 or its impact, among others. If VGAC II or Grove are unable to recover from a business disruption on a timely basis, the Business Combination and/or New Grove’s business, financial condition, and results of operations following the completion of the Business Combination, would be adversely affected. The Business Combination may also be delayed and adversely affected by COVID-19 and become more costly. Each of VGAC II and Grove may also incur additional costs to remedy damages caused by any such disruptions, which could adversely affect their respective financial condition and results of operations.

 

Q:

Who is entitled to vote at the extraordinary general meeting?

 

A:

VGAC II has fixed April 25, 2022 as the record date for the extraordinary general meeting. If you were a shareholder of VGAC II at the close of business on the record date, you are entitled to vote on matters that come before the extraordinary general meeting. However, a VGAC II shareholder may only vote his or her shares if he or she is present in person or is represented by proxy at the extraordinary general meeting.

 

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Q:

How many votes do I have?

 

A:

VGAC II shareholders are entitled to one vote at the extraordinary general meeting for each ordinary share held of record as of the record date. As of the close of business on the record date for the extraordinary general meeting, there were 50,312,500 ordinary shares issued and outstanding, of which 40,250,000 were issued and outstanding public shares.

 

Q:

What constitutes a quorum?

 

A:

A quorum of VGAC II shareholders is necessary to hold a valid meeting. A quorum will be present at the extraordinary general meeting if one (1) or more VGAC II shareholders who together hold not less than a majority of the issued and outstanding ordinary shares as of the record date entitled to vote at the extraordinary general meeting are represented in person or by proxy at the extraordinary general meeting. As of the record date for the extraordinary general meeting, 25,156,251 ordinary shares would be required to achieve a quorum.

 

Q:

What vote is required to approve each proposal at the extraordinary general meeting?

 

A:

The following votes are required for each proposal at the extraordinary general meeting:

 

  (i)

Business Combination Proposal: The approval of the Business Combination Proposal requires an ordinary resolution under Cayman Islands law, being the affirmative vote of the holders of a majority of the ordinary shares who, being present in person or represented by proxy and entitled to vote at the extraordinary general meeting, vote at the extraordinary general meeting.

 

  (ii)

Domestication Proposal: The approval of the Domestication Proposal requires a special resolution under Cayman Islands law, being the affirmative vote of the holders of a majority of not less than two-thirds of the ordinary shares who, being present in person or represented by proxy and entitled to vote at the extraordinary general meeting, vote at the extraordinary general meeting.

 

  (iii)

Charter Amendment Proposal: The approval of the Charter Amendment Proposal requires a special resolution under Cayman Islands law, being the affirmative vote of the holders of a majority of not less than two-thirds of the ordinary shares who, being present in person or represented by proxy and entitled to vote at the extraordinary general meeting, vote at the extraordinary general meeting.

 

  (iv)

Governing Documents Proposals: The approval of the Governing Documents Proposals requires an ordinary resolution under Cayman Islands law, being the affirmative vote of the holders of a majority of the ordinary shares who, being present in person or represented by proxy and entitled to vote at the extraordinary general meeting, vote at the extraordinary general meeting. Because the votes on the Governing Documents Proposals are advisory only, they will not be binding on the VGAC II Board or New Grove.

 

  (v)

NYSE Proposal: The approval of the NYSE Proposal requires an ordinary resolution under Cayman Islands law, being the affirmative vote of the holders of a majority of the ordinary shares who, being present in person or represented by proxy and entitled to vote at the extraordinary general meeting, vote at the extraordinary general meeting.

 

  (vi)

Incentive Equity Plan Proposal: The approval of the Incentive Equity Plan Proposal requires an ordinary resolution under Cayman Islands law, being the affirmative vote of the holders of a majority of the ordinary shares who, being present in person or represented by proxy and entitled to vote at the extraordinary general meeting, vote at the extraordinary general meeting.

 

  (vii)

ESPP Proposal: The approval of the ESPP Proposal requires an ordinary resolution under Cayman Islands Law, being the affirmative vote of the holders of a majority of the ordinary shares who, being present in person or represented by proxy and entitled to vote at the extraordinary general meeting, vote at the extraordinary general meeting.

 

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  (viii)

Director Election Proposal: Pursuant to the Existing Governing Documents, until the Closing, only holders of Class B ordinary shares can appoint or remove directors. Therefore, only holders of Class B ordinary shares will vote on the Director Election Proposal. The approval of the Director Election Proposal requires an ordinary resolution under Cayman Islands law, being the affirmative vote of the holders of a majority of Class B ordinary shares who, being present in person or represented by proxy and entitled to vote at the extraordinary general meeting, vote at the extraordinary general meeting.

 

  (ix)

Adjournment Proposal: The approval of the Adjournment Proposal requires an ordinary resolution under Cayman Islands law, being the affirmative vote of the holders of a majority of the ordinary shares who, being present in person or represented by proxy and entitled to vote at the extraordinary general meeting, vote at the extraordinary general meeting.

 

Q:

What are the recommendations of the VGAC II Board?

 

A:

The VGAC II Board believes that the Business Combination Proposal and the other proposals to be presented at the extraordinary general meeting are in the best interest of VGAC II and VGAC II shareholders and unanimously recommends that its shareholders vote “FOR” the Business Combination Proposal, “FOR” the Domestication Proposal, “FOR” the Charter Amendment Proposal, “FOR” the Governing Documents Proposals, “FOR” the NYSE Proposal, “FOR” the Incentive Equity Plan Proposal, “FOR” the ESPP Proposal, “FOR” the Director Election Proposal, and “FOR” the Adjournment Proposal, in each case, if presented at the extraordinary general meeting.

The existence of financial and personal interests of one or more of VGAC II’s directors may result in a conflict of interest on the part of such director(s) between what he or she or they may believe is in the best interests of VGAC II and VGAC II shareholders and what he or she or they may believe is best for himself or herself or themselves in determining to recommend that shareholders vote for the proposals. In addition, VGAC II’s officers have interests in the Business Combination that may conflict with your interests as a VGAC II shareholder. See the section entitled “Business Combination Proposal—Interests of VGAC II’s Directors and Executive Officers in the Business Combination” for a further discussion of these considerations.

 

Q:

How does the Sponsor intend to vote its shares?

 

A:

The Sponsor has agreed to vote all its shares in favor of all the proposals being presented at the extraordinary general meeting. As of the date of this proxy statement/consent solicitation statement/prospectus, the Sponsor owns approximately 20.0% of the issued and outstanding ordinary shares.

 

Q:

What happens if I sell my VGAC II ordinary shares before the extraordinary general meeting?

 

A:

The record date for the extraordinary general meeting is earlier than the date of the extraordinary general meeting and earlier than the date that the Business Combination is expected to be completed. If you transfer your public shares after the applicable record date, but before the extraordinary general meeting, unless you grant a proxy to the transferee, you will retain your right to vote at the extraordinary general meeting.

 

Q:

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

 

A:

Yes. Shareholders may send a later-dated, signed proxy card to VGAC II’s Chief Financial Officer at VGAC II’s address set forth below so that it is received by VGAC II’s Chief Financial Officer prior to the vote at the extraordinary general meeting (which is scheduled to take place on June 14, 2022) or attend the extraordinary general meeting in person and vote. Shareholders also may revoke their proxy by sending a notice of revocation to VGAC II’s Chief Financial Officer, which must be received by VGAC II’s Chief Financial Officer prior to the vote at the extraordinary general 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.

 

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Q:

What happens if I fail to take any action with respect to the extraordinary general meeting?

 

A:

If you fail to vote with respect to the extraordinary general meeting and the Business Combination is approved by VGAC II shareholders and the Business Combination is consummated, you will become a stockholder and/or warrantholder of New Grove. If you fail to vote with respect to the extraordinary general meeting and the Business Combination is not approved, you will remain a shareholder and/or warrantholder of VGAC II. However, if you fail to vote with respect to the extraordinary general meeting, you will nonetheless be able to elect to redeem your public shares in connection with the Business Combination.

 

Q:

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

 

A:

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

 

Q:

Who will solicit and pay the cost of soliciting proxies for the extraordinary general meeting?

 

A:

VGAC II will pay the cost of soliciting proxies for the extraordinary general meeting. VGAC II has engaged Morrow Sodali LLC (“Morrow”) to assist in the solicitation of proxies for the extraordinary general meeting. VGAC II has agreed to pay Morrow a fee of $37,500, plus disbursements, and will reimburse Morrow for its reasonable out-of-pocket expenses and indemnify Morrow and its affiliates against certain claims, liabilities, losses, damages, and expenses. VGAC II will also reimburse banks, brokers and other custodians, nominees, and fiduciaries representing beneficial owners of Class A ordinary shares for their expenses in forwarding soliciting materials to beneficial owners of Class A ordinary shares and in obtaining voting instructions from those owners. VGAC II’s directors and officers may also solicit proxies by telephone, by text message, by facsimile, by mail, on the Internet, or in person. They will not be paid any additional amounts for soliciting proxies.

 

Q:

Where can I find the voting results of the extraordinary general meeting?

 

A:

The preliminary voting results will be announced at the extraordinary general meeting. VGAC II will publish final voting results of the extraordinary general meeting in a Current Report on Form 8-K within four business days after the extraordinary general meeting.

 

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/consent solicitation statement/prospectus or the enclosed proxy card you should contact:

Morrow Sodali LLC

333 Ludlow Street, 5th Floor,

South Tower

Stamford CT 06902

Individuals call toll-free:

(800) 662-5200

Banks and brokers call collect:

(203) 658-9400

E-mail: VGII.info@investor.morrowsodali.com

 

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You also may obtain additional information about VGAC II from documents filed with the SEC by following the instructions in the section entitled “Where You Can Find More Information; Incorporation by Reference.” If you are a holder of public shares and you intend to seek redemption of your public shares, you will need to deliver your share certificates (if any) and other redemption forms (as applicable) (either physically or electronically) to Continental, VGAC II’s transfer agent, at the address below prior to the extraordinary general meeting. Holders must complete the procedures for electing to redeem their public shares in the manner described above prior to 5:00 PM, Eastern Time, on June 10, 2022 (two business days before the extraordinary general meeting) in order for their shares to be redeemed. If you have questions regarding the certification of your position or delivery of your stock, please contact:

Continental Stock Transfer & Trust Company

One State Street Plaza, 30th Floor

New York, New York 10004

Attention: Mark Zimkind

E-mail: mzimkind@continentalstock.com

QUESTIONS AND ANSWERS ABOUT GROVE’S CONSENT SOLICITATION

 

Q:

Who is entitled to give a written consent for Grove?

 

A:

The holders representing a majority of the outstanding Grove Common Stock and Grove Preferred Stock (on an as-converted basis) will be entitled to give consent using the form of written consent furnished with this proxy statement/consent solicitation statement/prospectus.

 

Q:

What approval is required by the Grove Stockholders to adopt the Merger Agreement?

 

A:

The Mergers cannot be completed unless stockholders of Grove adopt the Merger Agreement and thereby approve the Business Combination and the other transactions contemplated by the Merger Agreement. Adoption of the Merger Agreement requires the approval of the written consent of the holders of Grove Common Stock and Grove Preferred Stock representing the requisite vote required under the certificate of incorporation of Grove. As of the close of business on April 25, 2022, there were approximately 108,424,953 shares of Grove Common Stock (including the shares of Grove Preferred Stock on an as-converted basis) outstanding and entitled to vote.

On December 7, 2021, the Grove Support Stockholders entered into the Grove Stockholder Support Agreement with VGAC II, which was subsequently amended by the Grove Stockholder Support Agreement Amendment. In the Grove Stockholder Support Agreement, the Grove Support Stockholders agreed to vote all of their Grove equity interests in favor of the Merger Agreement and the transactions contemplated thereby and to take certain other actions in support of the Business Combination. The Grove Stockholder Support Agreement also prevents the Grove Support Stockholders from transferring their voting rights with respect to their Grove equity interests or otherwise transferring their Grove equity interests prior to the Effective Time. In addition, the Grove Support Stockholders have each agreed, with certain exceptions, to a lock-up for the Lock-up Period with respect to any shares of New Grove Common Stock that they receive as merger consideration under the Merger Agreement. For a more detailed description of the support agreement, see the section titled “Other Agreements—Support Agreement” of this proxy statement/consent solicitation statement/prospectus.

 

Q:

Do any of Grove’s directors or officers have interests in the Mergers that may differ from or be in addition to the interests of Grove stockholders?

 

A:

Grove’s executive officers and certain non-employee directors may have interests in the Mergers that may be different from, or in addition to, the interests of Grove stockholders generally, including (i) the fact that a

 

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  director of Grove will become a director of New Grove after the closing of the Mergers and, as such, in the future such director will receive any cash fees, stock options or stock awards that the New Grove Board determines to pay to its non-executive directors; (ii) the fact that Grove has entered into employment agreements with certain of its named executive officers (please see “Grove—Executive Compensation”); (iii) the fact that each holder of New Grove Class B Common Stock will be entitled to ten (10) votes per share on all matters voted upon by New Grove’s stockholders; and (iv) the continued indemnification of current directors and officers and the continuation of directors’ and officers’ liability insurance. The Grove Board was aware of and considered these interests to the extent such interests existed at the time, among other matters, in approving the Merger Agreement and in recommending that the Merger Agreement be approved by the Grove stockholders.

 

Q:

I am an employee of Grove who holds equity awards of Grove. How will my equity awards be treated in the Mergers?

 

A:

As of the effective time of the Initial Merger, each outstanding option to purchase Grove Common Stock (whether vested or unvested) will be assumed by New Grove and converted into (i) comparable options that are exercisable for shares of New Grove Class B Common Stock, with a value determined in accordance with the Exchange Ratio (and, with regard to options that are intended to qualify as “incentive stock options” under Section 422 of the Code, in a manner compliant with Section 424(a) of the Code) and (ii) the right to receive a number of Grove Earnout Shares.

 

Q:

How can I return my written consent?

 

A:

If you hold shares of Grove Common Stock and you wish to submit your consent, you must fill out the enclosed written consent, date, and sign it, and promptly return it to Grove. Once you have completed, dated and signed your written consent, deliver it to Grove by emailing a .pdf copy of your written consent to writtenconsent@grove.co or by mailing your written consent to Grove at 1301 Sansome Street, San Francisco, CA 94111, Attention: Nathan Francis. Grove does not intend to hold a stockholders’ meeting to consider the Business Combination Proposal, and, unless Grove decides to hold a stockholders’ meeting for such purposes, you will be unable to vote in person or virtually by attending a stockholders’ meeting.

 

Q:

What is the deadline for returning my written consent?

 

A:

The Grove Board has set 10:00 AM, Eastern Time, on June 10, 2022 as the targeted final date for the receipt of written consents. Grove reserves the right to extend the final date for the receipt of written consents beyond June 10, 2022. Any such extension may be made without notice to Grove stockholders. Once a sufficient number of consents to adopt the Merger Agreement have been received, the consent solicitation will conclude.

 

Q:

What options do I have with respect to the proposed Mergers?

 

A:

With respect to the shares of Grove Common Stock and Grove Preferred Stock that you hold, you may execute a written consent to approve the Business Combination Proposal. If you fail to execute and return your written consent, or otherwise withhold your written consent, it has the same effect as voting against the Business Combination Proposal. You may also dissent and demand appraisal of your shares. See “—Can I Dissent and Require Appraisal of My Shares?

 

Q:

Can I dissent and require appraisal of my shares?

 

A:

If you are a Grove stockholder who does not approve the Mergers by delivering a written consent adopting the Merger Agreement, you will, by complying with Section 262 of the DGCL, be entitled to appraisal rights. Section 262 of the DGCL is attached to this proxy statement/consent solicitation statement/prospectus as Annex K. Failure to follow any of the statutory procedures set forth in Annex K may result in

 

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  the loss or waiver of appraisal rights under Delaware law. Delaware law requires that, among other things, you send a written demand for appraisal to Grove after receiving a notice that appraisal rights are available to you, which notice will be sent to non-consenting Grove stockholders in the future. This proxy statement/consent solicitation statement/prospectus is not intended to constitute such a notice. Do not send in your demand before the date of such notice because any demand for appraisal made prior to your receipt of such notice may not be effective to perfect your rights. See the section titled “Appraisal Rights” beginning in this proxy statement/consent solicitation statement/prospectus.

 

Q:

Should Grove stockholders send in their stock certificates now?

 

A:

No. Grove stockholders SHOULD NOT send in any stock certificates now. If the Merger Agreement is adopted and the Mergers are consummated, transmittal materials, with instructions for their completion, will be provided under separate cover to Grove stockholders who hold physical stock certificates and the stock certificates should be sent at that time in accordance with such instructions.

 

Q:

Whom should I contact if I have any questions about the consent solicitation?

 

A:

If you have any questions about the merger or how to return your written consent or letter of transmittal, or if you need additional copies of this proxy statement/consent solicitation statement/prospectus or a replacement written consent or letter of transmittal, you should contact Delida Costin at legal@grove.co.

 

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SUMMARY OF THE PROXY STATEMENT/PROSPECTUS

This summary highlights selected information from this proxy statement/consent solicitation 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 extraordinary general meeting, including the Business Combination, you should read this proxy statement/consent solicitation statement/prospectus, including the Annexes hereto and other documents referred to herein, carefully and in their entirety. The Merger Agreement is the legal document that governs the Business Combination and the other transactions that will be undertaken in connection with the Business Combination. The Merger Agreement is also described in detail in this proxy statement/consent solicitation statement/prospectus in the section entitled “Business Combination Proposal—The Merger Agreement.”

The Parties to the Business Combination

VGAC II

VGAC II is a blank check company incorporated on January 13, 2021 as a Cayman Islands exempted company and incorporated for the purpose of effecting a merger, share exchange, asset acquisition, share purchase, reorganization, or similar business combination with one or more businesses. VGAC II has neither engaged in any operations nor generated any revenue to date. Based on VGAC II’s business activities, it is a “shell company” as defined under the Exchange Act because it has no operations and nominal assets consisting almost entirely of cash.

On March 25, 2021, VGAC II consummated an initial public offering of 35,000,000 units at an offering price of $10.00 per unit, and a private placement with Sponsor of 6,000,000 private placement warrants at an offering price of $1.50 per private placement warrant. Each unit sold in the initial public offering and private placement consists of one Class A ordinary share and one-fifth of one redeemable warrant.

On April 9, 2021, the underwriters of the initial public offering notified VGAC II of their intent to fully exercise their over-allotment option. As such, on April 13, 2021, VGAC II sold an additional 5,250,000 units, at a price of $10.00 per unit, and the sale of an additional 700,000 private placement warrants to the Sponsor, at $1.50 per private placement warrant. A total of $51,450,000 of the net proceeds was deposited into the trust account, bringing the aggregate proceeds held in the trust account to $402,500,000.

Following the closing of the initial public offering, an amount equal to $402,500,000 of the net proceeds from the initial public offering and the sale of the private placement warrants was placed in the trust account. The trust account may be invested only in U.S. government treasury bills with a maturity of 185 days or less or in money market funds investing solely in United States Treasuries and meeting certain conditions under Rule 2a-7 under the Investment Company Act of 1940, as amended, which invest only in direct U.S. government obligations. As of December 31, 2021, funds in the trust account totaled approximately $402,530,526 and were held in money market funds. These funds will remain in the trust account, except for the withdrawal of interest to pay taxes, if any, until the earliest of (i) the completion of VGAC II’s initial business combination, (ii) the redemption of any public shares properly tendered in connection with a shareholder vote to amend the Existing Governing Documents to modify the substance and timing of VGAC II’s obligation to redeem 100% of the public shares if VGAC II does not complete a business combination by March 25, 2023, or (iii) the redemption of all of the public shares if VGAC II is unable to complete a business combination by March 25, 2023 (unless such date is extended in accordance with the Existing Governing Documents), subject to applicable law.

VGAC II’s units, public shares, and public warrants are currently listed on NYSE under the symbols “VGII.U,” “VGII,” and “VGII.WS,” respectively.

 

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VGAC II’s principal executive office is located at 65 Bleecker Street, 6th Floor, New York, New York 10012, and its telephone number is (212) 497-9050. VGAC II’s corporate website address is https://www.vgacquisition.com/. VGAC II’s website and the information contained on, or that can be accessed through, the website is not deemed to be incorporated by reference in, and is not considered part of, this proxy statement/consent solicitation statement/prospectus. The website address is included as an inactive textual reference only.

Grove

Grove, which was incorporated in Delaware and converted to a Delaware public benefit corporation in March 2021, is a digital-first, sustainability-oriented consumer products innovator specializing in the development and sale of household, personal care, beauty and other consumer products with an environmental focus. In the United States, Grove sells its products through two channels: a direct-to-consumer platform at www.grove.co and its mobile applications, where it sells products from Grove-owned brands and third parties, and the retail channel into which it sells products from Grove-owned brands at wholesale. The company develops and sells natural products that are free from the harmful chemicals identified in its “anti-ingredient” list and it designs form factors and product packaging that reduces plastic waste and improves the environmental impact of the categories in which it operates. Grove also purchases environmental offsets that have made it the first plastic neutral retailer in the world, and it plans to become 100% plastic-free by 2025.

Grove’s principal executive office is located at 1301 Sansome Street, San Francisco, CA 94111, and its telephone number is (800) 231-8527. Grove’s corporate website address is https://www.grove.co. The information on, or that can be accessed through, Grove’s website is not part of this proxy statement/consent solicitation statement/prospectus. The website address is included as an inactive textual reference only.

VGAC II Merger Sub I

VGAC II Merger Sub I is a Delaware corporation and wholly owned direct subsidiary of VGAC II formed for the purpose of effecting the Business Combination. VGAC II Merger Sub I owns no material assets and does not operate any business.

VGAC II Merger Sub I’s principal executive office is located at 65 Bleecker Street, 6th Floor, New York, New York 10012, and its telephone number is (212) 497-9050.

VGAC II Merger Sub II

VGAC II Merger Sub II is a Delaware limited liability company and wholly owned direct subsidiary of VGAC II formed for the purpose of effecting the Business Combination. VGAC II Merger Sub II owns no material assets and does not operate any business.

VGAC II Merger Sub II’s principal executive office is located at 65 Bleecker Street, 6th Floor, New York, New York 10012, and its telephone number is (212) 497-9050.

Proposals to be Put to the Shareholders of VGAC II at the Extraordinary General Meeting

The following is a summary of the proposals to be presented at the extraordinary general meeting and certain transactions contemplated by the Merger Agreement. Each of the Business Combination Proposal, the Domestication Proposal, the Charter Amendment Proposal, the Governing Documents Proposals, NYSE Proposal, the Incentive Equity Plan Proposal, the ESPP Proposal and the Director Election Proposal is conditioned on the approval and adoption of each of the other Condition Precedent Proposals. The Adjournment Proposal is not conditioned on any other proposal. The transactions contemplated by the Merger Agreement will be consummated only if the Condition Precedent Proposals are approved at the extraordinary general meeting.

 

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As discussed in this proxy statement/consent solicitation statement/prospectus, VGAC II is asking its shareholders to approve by ordinary resolution the Merger Agreement, pursuant to which, among other things, on the date of Closing, (i) VGAC II Merger Sub I will merge with and into Grove, with Grove as the surviving company in the Initial Merger and, after giving effect to the Initial Merger, continuing as a wholly-owned subsidiary of New Grove, and (ii) immediately following the Initial Merger, and as part of the same overall transaction as the Initial Merger, the Initial Surviving Corporation will merge with and into VGAC II Merger Sub II, with VGAC II Merger Sub II as the surviving company in the Final Merger and, after giving effect to the Final Merger, continuing as a wholly-owned subsidiary of New Grove. In accordance with the terms and subject to the conditions of the Merger Agreement, based on an implied equity value of $1.4 billion, at the Effective Time, (a) each share of Grove Common Stock (other than the Backstop Tranche 1 Shares) and Grove Preferred Stock (on an as-converted to common stock basis) (other than dissenting shares) will be canceled and converted into the right to receive (i) a number of shares of New Grove Class B Common Stock, as determined pursuant to an exchange ratio set forth in the Merger Agreement and (ii) a number of shares of Grove Earnout Shares, as more fully described in the accompanying proxy statement/consent solicitation statement/prospectus; (b) each outstanding option to purchase Grove Common Stock (whether vested or unvested) will be assumed by New Grove and converted into (i) comparable options that are exercisable for shares of New Grove Class B Common Stock, with a value determined in accordance with the Exchange Ratio (and, with regard to options that are intended to qualify as “incentive stock options” under Section 422 of the Code, in a manner compliant with Section 424(a) of the Code) and (ii) the right to receive a number of Grove Earnout Shares; (c) each award of Grove RSUs will be assumed by New Grove and converted into (i) a comparable award of restricted stock units to acquire shares of New Grove Class B Common Stock and (ii) the right to receive a number of Grove Earnout Shares; (d) each warrant to acquire shares of Grove Common Stock or Grove Preferred Stock will be assumed by New Grove and converted into (i) a comparable warrant to acquire shares of New Grove Class B Common Stock and (ii) the right to receive a number of Grove Earnout Shares; and (e) each Backstop Tranche 1 Share will be canceled and converted into the right to receive a number of shares of New Grove Class B Common Stock equal to the Exchange Ratio. The implied equity value of $1.4 billion includes the value of the options exercisable for shares of New Grove Class B Common Stock that are issued and outstanding in respect of options (whether vested or unvested) to purchase Grove common stock but excludes (X) the value of the options exercisable for shares of New Grove Class B Common Stock that are issued and outstanding in respect of the Company Unvested 2021 Options, (Y) the value of the shares of New Grove Class B Common Stock underlying the Company Unvested 2021 RSUs and (Z) the value of the Backstop Tranche 1 Shares.

In connection with the Final Merger, (i) each share of common stock of the Initial Surviving Corporation that is issued and outstanding immediately prior to the Final Effective Time will be canceled without any conversion or payment in respect thereof and (ii) the membership interests of VGAC II Merger Sub II that are issued and outstanding immediately prior to the Final Effective Time will be converted into and become all of the membership interests of the Final Surviving Company (and shall be the only membership interests of the Final Surviving Company that are issued and outstanding immediately after the Final Effective Time).

In addition, in connection with the Domestication, New Grove will amend and restate the Existing Governing Documents to be the Proposed Governing Documents and adopt a dual-class structure, as described in the section of this proxy statement/consent solicitation statement/prospectus titled “Description of New Grove Securities.”

After consideration of the factors identified and discussed in the section entitled “Business Combination Proposal—The VGAC II Board’s Reasons for the Business Combination,” the VGAC II Board concluded that the Business Combination met all of the requirements disclosed in the prospectus for the initial public offering, including that the businesses of Grove 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. For more information about the transactions contemplated by the Merger Agreement, see “Business Combination Proposal.”

 

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Conditions to Closing of the Business Combination

The consummation of the Business Combination is conditioned upon, among other things, (i) the approval by VGAC II shareholders of the Condition Precedent Proposals; (ii) the expiration or termination of the applicable waiting period under the HSR Act relating to the Merger Agreement; (iii) VGAC II having at least $5,000,001 of net tangible assets (as determined in accordance with Rule 3a51-1(g)(1) of the Exchange Act) after giving effect to the transactions contemplated by the Merger Agreement and the PIPE Financing; (iv) the Minimum Available Cash Condition; (v) the approval by the NYSE of VGAC II’s initial listing application in connection with the Business Combination; and (vi) the consummation of the Domestication. Therefore, unless these conditions are waived by the applicable parties to the Merger Agreement, the Merger Agreement could terminate and the Business Combination may not be consummated. Grove has agreed to waive the Minimum Available Cash Condition effective upon (i) the payment of the purchase price for the Backstop Tranche 1 Shares by the Backstop Investor (which occurred on March 31, 2022) and (ii) if the conditions to the Backstop Investor’s obligation to purchase the Backstop Tranche 2 Shares under the Backstop Subscription Agreement are satisfied, the payment of the purchase price for the Backstop Tranche 2 Shares. For further details, see “Business Combination Proposal— Conditions to Closing of the Business Combination.”

Domestication Proposal

As discussed in this proxy statement/consent solicitation statement/prospectus, VGAC II will ask its shareholders to approve by special resolution the Domestication Proposal. As a condition to closing the Business Combination pursuant to the terms of the Merger Agreement, the VGAC II Board has approved the Domestication Proposal. The Domestication Proposal, if approved, will authorize a change of VGAC II’s jurisdiction of incorporation from the Cayman Islands to the State of Delaware. Accordingly, while VGAC II is currently incorporated as an exempted company under the Cayman Islands Companies Act, upon Domestication, New Grove will be governed by the DGCL. There are differences between Cayman Islands corporate law and Delaware corporate law, as well as the Existing Governing Documents and the Proposed Governing Documents. The approval of the Domestication Proposal requires a special resolution under Cayman Islands law, being the affirmative vote of the holders of a majority of not less than two-thirds of the ordinary shares who, being present in person or represented by proxy and entitled to vote at the extraordinary general meeting, vote at the extraordinary general meeting. Accordingly, VGAC II encourages shareholders to carefully consult the information set out below under “Comparison of Corporate Governance and Shareholder Rights.”

For further details, see “Domestication Proposal” and “Governing Documents Proposals.”

Charter Amendment and Governing Documents Proposals

VGAC II will ask its shareholders to approve by special resolution, the Charter Amendment Proposal and, in addition, the Governing Documents Proposals in connection with the replacement of the Existing Governing Documents, under Cayman Islands law, with the Proposed Governing Documents, under the DGCL.

The approval of the Charter Amendment Proposal requires an ordinary resolution under Cayman Islands law, being the affirmative vote of the holders of a majority of not less than two-thirds of the ordinary shares who, being present in person or represented by proxy and entitled to vote at the extraordinary general meeting, vote at the extraordinary general meeting. The approval of the Governing Documents Proposals requires the affirmative vote of the holders of a majority of the ordinary shares who, being present in person or represented by proxy and entitled to vote at the extraordinary general meeting, vote at the extraordinary general meeting. Because the votes on the Governing Documents Proposals are advisory only, they will not be binding on the VGAC II Board or New Grove.

The VGAC II Board has approved each of the Charter Amendment Proposal and the Governing Documents Proposals and believes such proposals are necessary to adequately address the needs of New Grove after the

 

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Business Combination. Approval of each of the Governing Documents Proposals is a condition to the consummation of the Business Combination. A brief summary of each of the Governing Documents Proposals is set forth below. These summaries are qualified in their entirety by reference to the complete text of the Proposed Governing Documents.

 

   

Charter Amendment Proposal—to approve by special resolution the adoption and approval of the proposed new certificate of incorporation and bylaws of New Grove copies of which are attached to this proxy statement/consent solicitation statement/prospectus as Annexes C and D, respectively.

 

   

Governing Documents Proposal A—to authorize the change in the authorized share capital of VGAC II from (i) US$22,100 divided into 200,000,000 Class A ordinary shares, par value $0.0001 per share, 20,000,000 Class B ordinary shares, par value $0.0001 per share, and 1,000,000 preference shares, par value $0.0001 per share, to (ii) 600,000,000 shares of New Grove Class A Common Stock, 200,000,000 shares of New Grove Class B Common Stock, and 100,000,000 shares of New Grove Preferred Stock.

 

   

Governing Documents Proposal B—to amend and restate the Existing Governing Documents and authorize all other immaterial changes necessary or, as mutually agreed in good faith by VGAC II and Grove, desirable in connection with the replacement of the Existing Governing Documents with the Proposed Governing Documents as part of the Domestication, including (i) changing the post-Business Combination corporate name from “Virgin Group Acquisition Corp. II” to “Grove Collaborative Holdings, Inc.” (which is expected to occur after the consummation of the Domestication), (ii) making New Grove’s corporate existence perpetual, (iii) adopting Delaware as the exclusive forum for certain stockholder litigation and the federal district courts of the United States as the exclusive forum for litigation arising out of the Securities Act and (iv) removing certain provisions related to VGAC II’s status as a blank check company that will no longer be applicable upon consummation of the Business Combination, all of which the VGAC II Board believes is necessary to adequately address the needs of New Grove after the Business Combination.

 

   

Governing Documents Proposal C—to authorize the issuance of shares of New Grove Class B Common Stock, which will allow holders of New Grove Class B Common Stock to cast ten votes per share of New Grove Class B Common Stock.

The Proposed Governing Documents differ in certain material respects from the Existing Governing Documents, and VGAC II encourages VGAC II shareholders to carefully consult the information set out in the section entitled “Governing Documents Proposals” and the full text of the Proposed Governing Documents of New Grove, copies of which are attached to this proxy statement/consent solicitation statement/prospectus as Annexes B and C.

NYSE Proposal

VGAC II shareholders are being asked to approve, by ordinary resolution, the NYSE Proposal. VGAC II units, public shares, and public warrants are listed on NYSE and, as such, VGAC II is seeking shareholder approval for issuance of shares of New Grove Class A Common Stock, shares of New Grove Class B Common Stock and the Backstop Warrants in connection with the Business Combination, the Backstop Financing and the PIPE Financing pursuant to NYSE Listing Rule 312.03.

For additional information, see “NYSE Proposal.”

Incentive Equity Plan Proposal

VGAC II shareholders are being asked to approve, by ordinary resolution, the Incentive Equity Plan Proposal. A total 24,555,528 shares of New Grove Class A Common Stock will be reserved for issuance under

 

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the Incentive Equity Plan. The Incentive Equity Plan provides that the number of shares reserved and available for issuance under the Incentive Equity Plan will automatically increase each January 1, beginning on January 1, 2023, and continuing until (and including) the fiscal year ending December 31, 2032, by 5% of the outstanding number of shares of New Grove Class A Common Stock and New Grove Class B Common Stock on the immediately preceding December 31, or such lesser amount as determined by the New Grove Board. For additional information, see “Incentive Equity Plan Proposal.” The full text of the Incentive Equity Plan is attached hereto as Annex I.

ESPP Proposal

VGAC II shareholders are being asked to approve, by ordinary resolution, the ESPP Proposal. The number of shares of New Grove Class A Common Stock reserved for issuance under the ESPP will initially be limited to 3,274,070 shares of New Grove Class A Common Stock. The ESPP provides that the number of shares reserved and available for issuance thereunder will automatically increase on January 1, 2023 and each January 1 thereafter, continuing until (and including) the fiscal year ending December 31, 2032, by an amount equal to 1% of the aggregate number of shares of New Grove Class A Common Stock and New Grove Class B Common Stock outstanding on the immediately preceding December 31; provided, however, in no event will any annual increase exceed 3,274,070 shares or such lesser number of shares determined by the New Grove Board in its discretion. For additional information, see “ESPP Proposal.” The full text of the ESPP is attached hereto as Annex J.

Director Election Proposal

VGAC II shareholders are being asked to approve, by ordinary resolution, the Director Election Proposal, which would elect Stuart Landesberg, Christopher Clark, David Glazer, John Replogle, Kristine Miller, Rayhan Arif and Naytri Shroff Sramek, to serve as directors of the New Grove Board until their respective successors are duly elected and qualified, or until their earlier death, disqualification, resignation, or removal. The New Grove Board will consist of three classes, with only one class of directors being elected in each year. Each class of directors will generally serve for a three-year term. For additional information, see “Director Election Proposal.”

Adjournment Proposal

If, based on the tabulated vote, there are not sufficient votes at the time of the extraordinary general meeting to authorize VGAC II to consummate the Business Combination, the VGAC II Board may submit a proposal to adjourn the extraordinary general meeting to a later date or dates. For additional information, see “Adjournment Proposal.”

The VGAC II Board’s Reasons for the Business Combination

VGAC II was formed for the purpose of effecting a merger, share exchange, asset acquisition, share purchase, reorganization, or similar business combination with one or more businesses. Although VGAC II may pursue an acquisition opportunity in any business, industry, sector, or geographical location for purposes of consummating an initial business combination, VGAC II has focused on companies in the travel & leisure, financial services, health & wellness, technology & internet-enabled, music & entertainment, media & mobile, and renewable energy/resource efficiency sectors.

Before reaching its decision to approve the Merger Agreement and the Business Combination, the VGAC II Board considered the advice of its legal and financial advisors and the following positive factors:

 

   

Grove’s sustainability-first mindset and ability to innovate quickly;

 

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scale of the addressable market for home and personal care in the U.S.;

 

   

the proven ability to drive growth of Grove;

 

   

Grove’s strong and increasing margins;

 

   

Grove’s strong and loyal direct-to-consumer (“DTC”) customer base;

 

   

the financial condition of Grove;

 

   

the proven track record of Grove’s management team, which will remain in place following the Business Combination;

 

   

the continued ownership of Grove equity holders and the significant investments from PIPE Investors in the PIPE Financing;

 

   

the terms of the Merger Agreement;

 

   

the results of its review of several alternative transactions;

 

   

the results of due diligence conducted by VGAC II’s management and its legal and financial advisors; and

 

   

Grove’s attractive valuation.

The VGAC II Board also considered a variety of uncertainties, risks and other potentially negative reasons relevant to the transaction, including, among others, the following:

 

   

risks associated with the Business Combination, including the possibility that the Business Combination may not be completed;

 

   

risks associated with sourcing, manufacturing, warehousing, distribution and logistics to third-party providers;

 

   

risks associated with being subject to increased derivative litigation concerning duty to balance stockholder and public benefit interests as a public benefit corporation;

 

   

risks related to the post-Business Combination corporate governance of New Grove;

 

   

the limited review undertaken by the VGAC II Board; and

 

   

the interests of the VGAC II Board and VGAC II’s executive officers.

For more information about the VGAC II Board’s decision-making process concerning the Business Combination, please see the section entitled “The Business Combination Proposal—the VGAC II Board’s Reasons for the Business Combination.”

Opinion of the Financial Advisor to VGAC II

On December 6, 2021, Houlihan Lokey orally rendered its opinion to the VGAC II Board (which was subsequently confirmed in writing by delivery of Houlihan Lokey’s written opinion addressed to the VGAC II Board dated December 6, 2021), as to the fairness, from a financial point of view, to VGAC II of the merger consideration to be issued by VGAC II in the Initial Merger pursuant to the Merger Agreement. In the portions of this proxy statement/consent solicitation statement/prospectus referring to Houlihan Lokey’s opinion, any reference to the Merger Agreement refers to the Merger Agreement as executed on December 7, 2021 (and not the amended and restated form of the Merger Agreement executed on March 31, 2022).

 

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Houlihan Lokey’s opinion was directed to the VGAC II Board (in its capacity as such) and only addressed the fairness, from a financial point of view, as of the date thereof, to VGAC II of the merger consideration to be issued by VGAC II in the Initial Merger pursuant to the Merger Agreement and did not address any other aspect or implication of the Initial Merger or any other agreement, arrangement or understanding. The summary of Houlihan Lokey’s opinion in this proxy statement/consent solicitation statement/prospectus is qualified in its entirety by reference to the full text of its written opinion, which is attached as Annex L to this proxy statement/consent solicitation statement/prospectus and describes the procedures followed, assumptions made, qualifications and limitations on the review undertaken and other matters considered by Houlihan Lokey in connection with the preparation of its opinion. However, neither Houlihan Lokey’s opinion nor the summary of its opinion and the related analyses set forth in this proxy statement/consent solicitation statement/prospectus are intended to be, and do not constitute, advice or a recommendation to the VGAC II Board, VGAC II, any security holder or any other person as to how to act or vote or make any election with respect to any matter relating to the Mergers or otherwise, including, without limitation, whether holders of the Class A ordinary shares should redeem their shares or whether any party should participate in the PIPE Financing.

Related Agreements

This section describes certain additional agreements entered into or to be entered into in connection with the Merger Agreement. For additional information, see “Business Combination Proposal—Related Agreements.”

PIPE Financing

VGAC II entered into Subscription Agreements with the PIPE Investors to consummate the PIPE Financing, pursuant to which the PIPE Investors agreed to subscribe for and purchase, and VGAC II agreed to issue and sell to the PIPE Investors, on the Closing Date, an aggregate of 8,707,500 shares of New Grove Class A Common Stock at a price of $10.00 per share, for aggregate gross proceeds of $87,075,000. One of the PIPE Investors is an affiliate of the Sponsor that has agreed to subscribe for 5,000,000 shares of New Grove Class A Common Stock. In addition, the other PIPE Investors include existing equityholders of Grove that have agreed to subscribe for 3,707,500 shares of New Grove Class A Common Stock in the aggregate. The shares of New Grove 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. VGAC II will grant the PIPE Investors certain customary registration rights in connection with the PIPE Financing. The PIPE Financing is contingent upon, among other things, the substantially concurrent closing of the Business Combination. For additional information, see “Business Combination Proposal—Related Agreements—PIPE Financing.”

Amended and Restated Registration Rights Agreement

At the Closing, VGAC II and the Sponsor will enter into an Amended and Restated Registration Rights Agreement (the “Registration Rights Agreement”), which will terminate and replace the existing registration rights agreement between VGAC II and the Sponsor, dated March 22, 2021 (the “VGAC II Registration Rights Agreement”), and pursuant to which, among other things, the Sponsor will be granted certain customary registration rights with respect to its shares of New Grove Class A Common Stock. For additional information, see “Business Combination Proposal—Related Agreements—Sponsor Registration Rights Agreement.”

Grove Stockholder Support Agreement

Pursuant to the Merger Agreement, the Grove Support Stockholders entered into the Grove Stockholder Support Agreement with VGAC II (as amended by the Grove Stockholder Support Agreement Amendment). As of the date of this proxy statement/consent solicitation statement/prospectus, the Grove Support Stockholders and

 

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certain transferees of Grove Support Stockholders collectively hold approximately 41% of the voting power of Grove Common Stock and 76% of the voting power of Grove Preferred Stock.

In the Grove Stockholder Support Agreement, the Grove Support Stockholders agreed to vote all of their Grove equity interests in favor of the Merger Agreement and the transactions contemplated thereby and to take certain other actions in support of the Business Combination. The Grove Stockholder Support Agreement also prevents the Grove Support Stockholders from transferring their voting rights with respect to their Grove equity interests or otherwise transferring their Grove equity interests prior to the Effective Time. In addition, the Grove Support Stockholders have each agreed, with certain exceptions, to a lock-up for the Lock-up Period with respect to any shares of New Grove Common Stock that they receive as merger consideration under the Merger Agreement. For additional information, see “Business Combination Proposal—Related Agreements—Support Agreement.”

Sponsor Agreement

Pursuant to the Merger Agreement, Grove, the Sponsor, VGAC II, Credit Suisse Securities (USA) LLC as the underwriter, the Insiders (as defined therein), and the Holders (as defined therein) entered into a Sponsor Letter Agreement (as amended by the Sponsor Agreement Amendment, the “Sponsor Agreement”), pursuant to which the Sponsor has agreed to, among other things, (i) vote in favor of the Merger Agreement and the transactions contemplated thereby (including the Mergers) and (ii) waive any adjustment to the conversion ratio set forth in the Existing Governing Documents with respect to the Class B ordinary shares of VGAC II held by the Sponsor, in each case, on the terms and subject to the conditions set forth in the Sponsor Agreement. Grove has agreed to waive the earnout vesting provisions that had previously been included in the Sponsor Agreement prior to amendment, and as such Sponsor’s shares of New Grove Class A Common Stock will now vest immediately upon issuance at the Closing. For additional information, see “Business Combination Proposal—Related Agreements—Sponsor Agreement.

Backstop Subscription Agreement

On March 31, 2022, VGAC II entered into the Backstop Subscription Agreement with the Backstop Investor and Grove, pursuant to which, among other things, (i) the Backstop Investor subscribed for and purchased, and Grove issued and sold to the Backstop Investor, on the date of the Backstop Subscription Agreement, the Backstop Tranche 1 Shares and (ii) the Backstop Investor has agreed to subscribe for and purchase, on the Closing Date, the Backstop Tranche 2 Shares, for aggregate gross proceeds in an amount equal to (x) $22,500,000 minus (y) the amount of cash available, as of immediately prior to the Closing, to be released from the trust account (after giving effect to all payments to VGAC II shareholders that exercise their redemption rights in connection with the Business Combination).

As further described in this proxy statement/consent solicitation statement/prospectus, the Backstop Subscription Agreement also provides (i) for an adjustment to the number of Backstop Tranche 1 Shares held by the Backstop Investor immediately prior to the closing of the Business Combination to reflect any differences between the estimate of the Exchange Ratio used for purposes of determining the purchase price per share for the Backstop Tranche 1 Shares and the final Exchange Ratio calculated pursuant to the terms of the Merger Agreement, (ii) that, immediately prior to the closing of the Business Combination, to the extent the amount of cash available, as of immediately prior to the Closing, to be released from the trust account (after giving effect to all payments to VGAC II shareholders that exercise their redemption rights in connection with the Business Combination) exceeds $22,500,000, the Backstop Investor will have the right to redeem all or a portion of the Backstop Tranche 1 Shares in cash for a purchase price per share equal to (x) the final Exchange Ratio calculated

pursuant to the Merger Agreement multiplied by (y) $10.00, (iii) that, immediately following the closing of the Business Combination, (A) each share of New Grove Class B Common Stock issued to the Backstop Investor

 

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pursuant to the Merger Agreement as consideration for the Backstop Tranche 1 Shares will be exchanged for one share of New Grove Class A Common Stock (the “Backstop Share Exchange”) and (B) immediately following the closing of the Business Combination, New Grove will issue to the Backstop Investor the Backstop Warrants, (iv) for additional shares of New Grove Class A Common Stock to be issued to the Backstop Investor if the volume-weighted average price of New Grove Class A Common Stock is less than $10.00 per share during the 10 trading days commencing on the first trading day after New Grove’s first quarterly earnings call for a fiscal quarter that ends following the closing of the Business Combination, and (v) that, in the event that the Merger Agreement is terminated pursuant to Section 9.01 of the Merger Agreement without the Business Combination having been completed, then (A) Grove will issue to the Backstop Investor certain warrants that are exercisable for shares of Grove common stock at an exercise price of $0.01, (B) the Backstop Tranche 1 Shares will automatically convert, upon completion of a subsequent financing, or failing such a financing, eighteen months after the termination of the Merger Agreement, into shares of a newly created class of Grove preferred stock and (C) Grove will be subject to certain repurchase obligations with respect to the Backstop Tranche 1 Shares.

None of the shares of Grove common stock, shares of New Grove Class A Common Stock, shares of New Grove Class B Common Stock or Backstop Warrants to be issued pursuant to the Backstop Subscription Agreement have been registered under the Securities Act, in reliance upon the exemption provided in Section 4(a)(2) of the Securities Act. VGAC II will grant the Backstop Investor certain customary registration rights in connection with the foregoing transactions.

In connection with the foregoing, Grove has agreed to waive the Minimum Available Cash Condition, effective upon (i) the payment of the purchase price for the Backstop Tranche 1 Shares by the Backstop Investor (which occurred on March 31, 2022) and (ii) if the conditions to the Backstop Investor’s obligation to purchase the Backstop Tranche 2 Shares under the Backstop Subscription Agreement are satisfied, the payment of the purchase price for the Backstop Tranche 2 Shares. For additional information, see “Business Combination Proposal—Related Agreements—Backstop Subscription Agreement.”

Certain Engagements in Connection with the Business Combination and Related Transactions

Morgan Stanley & Co. LLC (“Morgan Stanley”) was engaged by Grove as financial advisor to Grove. Credit Suisse Securities (USA) LLC (“Credit Suisse”) was engaged by VGAC II as a financial advisor and an equity capital markets advisor to VGAC II. The aggregate fees payable to Credit Suisse and Morgan Stanley or their respective affiliates upon the closing of the Business Combination is approximately $1,293,250 for their roles as financial and equity capital markets advisors, as applicable.

In addition, Morgan Stanley and Credit Suisse are acting as co-placement agents to VGAC II (the Placement Agents) with respect to the portion of the PIPE Financing raised from qualified institutional buyers and institutional accredited investors, and Credit Suisse Securities (USA) LLC and Morgan Stanley & Co. LLC are not acting as agents or participating in any role with respect to, and will not earn any fees from, the portion of the PIPE Financing raised from individual investors. The aggregate fees payable to the Placement Agents is approximately $1,293,250, in addition to any expense reimbursement, for their roles as placement agents. Morgan Stanley also provided VGAC II and Grove with disclosure letters describing its respective roles with VGAC II and Grove and any other material relationships that it had with VGAC II and Grove. After carefully considering with their respective boards and legal counsel the potential benefits of engaging Morgan Stanley for both roles, VGAC II and Grove each consented to Morgan Stanley’s roles as financial advisor to Grove in connection with the Business Combination and as placement agent to VGAC II in connection with the PIPE Financing and waived any potential conflicts in connection with such dual roles.

In addition, Morgan Stanley (together with its affiliates) is a full service financial institution engaged in various activities, which may include sales and trading, commercial and investment banking, advisory, investment management,

 

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wealth management, investment research, principal investing, lending, financing, hedging, market making, brokerage and other financial and non-financial activities and services. In addition, Morgan Stanley and its affiliates may provide investment banking and other commercial dealings to VGAC II, Grove and their respective affiliates in the future, for which they would expect to receive customary compensation. In addition, in the ordinary course of its business activities, Morgan Stanley and its affiliates, officers, directors and employees may make or hold a broad array of investments and actively trade debt and equity securities (or related derivative securities) and financial instruments (including bank loans) for their own account and for the accounts of their customers. Such investments and securities activities may involve securities and/or instruments of VGAC II, Grove or their respective affiliates. Morgan Stanley and its affiliates may also make investment recommendations and/or publish or express independent research views in respect of such securities or financial instruments and may hold, or recommend to clients that they acquire, long and/or short positions in such securities and instruments.

Ownership and Voting Power of New Grove

As of the date of this proxy statement/consent solicitation statement/prospectus, there are 50,312,500 ordinary shares issued and outstanding, which includes an aggregate of 10,062,500 Class B ordinary shares. As of the date of this proxy statement/consent solicitation statement/prospectus, there is outstanding an aggregate of 14,750,000 warrants, comprised of 6,700,000 private placement warrants held by Sponsor and 8,050,000 public warrants. Each whole warrant entitles the holder thereof to purchase one Class A ordinary share and, following the Domestication, will entitle the holder thereof to purchase one share of New Grove Class A Common Stock.

The following table illustrates varying estimated pro forma ownership levels and voting power in New Grove immediately following the consummation of the Business Combination, based on the varying levels of redemptions by the public shareholders and the following additional assumptions:

 

    Share Ownership in New Grove(1)     Voting Power in New Grove(1)  
    No
Redemption
    High
Redemption(2)
    Maximum
Redemption(3)
    No
Redemption
    High
Redemption(2)
    Maximum
Redemption(3)
 

VGAC II Shareholders(8)

    21.7     3.4     0.1     3.1     0.4     —  

Sponsor

    5.4     6.6     6.5     0.8     0.8     0.8

Backstop Warrants(7)

    1.0     1.0     2.7     —       —       —  

Backstop Investor(4)

    —       —       3.3     —       —       0.4

Grove Class B Stockholders (5) (6)

    67.2     83.2     81.7     95.4     98.1     98.1

PIPE Investors

    4.7     5.8     5.7     0.7     0.7     0.7

 

(1)

As of December 31, 2021.

(2)

Assumes that 35,250,000 of the Class A ordinary shares are redeemed for an aggregate payment of $352.5 million (which represents approximately 88% of the Class A ordinary shares which results in $50.0 million remaining in the trust account after redemptions).

(3)

Assumes that 40,250,000 of the Class A ordinary share are redeemed for an aggregate payment of $402.5 million (which represents 100% of the Class A ordinary shares).

(4)

Reflects ownership interest attributable only to the Backstop Tranche 1 Shares and Backstop Tranche 2 Shares (and not any other equity interests held by the Backstop Investor). Redemption of the Backstop Tranche 1 Shares is assumed in the no and high redemption scenarios. All Backstop Tranche 1 Shares and Backstop Tranche 2 Shares are outstanding in the maximum redemption scenario

(5)

Excludes equity awards issued at Closing upon rollover of vested and unvested Grove equity awards under the proposed New Grove Incentive Equity Plan.

(6)

Each share of New Grove Class B Common Stock will have ten (10) votes per share, while each share of New Grove Class A Common Stock will have one (1) vote per share.

 

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(7)

Ownership assumes the exercise of 1,825,691; 1,561,316 and 4,163,509 Backstop Warrants (each warrant exercisable to purchase one share of New Grove Class A Common Stock for $0.01) under the no, high, and maximum redemption scenarios, respectively. Backstop warrants do not have voting power until exercised.

(8)

Includes 90,000 of Class B ordinary shares which were transferred from the Sponsor to three independent directors, each receiving 30,000 Class B ordinary shares.

The following table illustrates varying estimated pro forma ownership levels and pro forma voting power in New Grove immediately following the consummation of the Business Combination on a fully-diluted basis including the Grove Earnout Shares and shares of New Grove Common Stock issuable pursuant to the public warrants, the private placement warrants, the Backstop Warrants and Grove equity awards, based on the varying levels of redemptions by the public shareholders and the following additional assumptions:

 

    Share Ownership in New Grove(1)     Voting Power in New Grove(1)  
    No
Redemption
    High
Redemption(2)
    Maximum
Redemption(3)
    No
Redemption
    High
Redemption(2)
    Maximum
Redemption(3)
 

VGAC II Shareholders(6)

    16.4     2.4     —       2.3     0.3     —  

Sponsor

    4.1     4.8     4.7     0.6     0.6     0.6

Backstop Warrants

    0.7     0.7     2.0     0.1     0.1     0.2

Backstop Investor(4)

    —       —       2.4     —       —       0.3

PIPE Investors

    3.6     4.2     4.1     0.5     0.5     0.5

Grove Shareholders

    50.9     59.6     58.8     70.4     71.8     71.9

Private Placement Warrants

    2.7     3.2     3.2     0.4     0.4     0.4

Public Warrants

    3.3     3.8     3.8     0.5     0.5     0.5

Grove common stock options(5)

    11.4     13.3     13.1     15.7     16.1     16.0

Grove restricted stock units(5)

    0.7     0.8     0.8     1.0     1.0     1.0

Grove common stock warrants(5)

    0.5     0.5     0.5     0.6     0.6     0.6

Grove common stock issued upon early exercise of options(5)

    —       —       —       —       —       —  

Grove Earnout Shares(5)

    5.7     6.7     6.6     7.9     8.1     8.0

 

(1)

As of December 31, 2021.

(2)

Assumes that 35,250,000 of the Class A ordinary shares are redeemed for an aggregate payment of $352.5 million (which represents approximately 88% of the Class A ordinary shares which results in $50.0 million remaining in the trust account after redemptions).

(3)

Assumes that 40,250,000 of the Class A ordinary shares are redeemed for an aggregate payment of $402.5 million (which represents 100% of the Class A ordinary shares).

(4)

Reflects ownership interest attributable only to the Backstop Tranche 1 Shares and Backstop Tranche 2 Shares (and not any other equity interests held by the Backstop Investor). Redemption of the Backstop Tranche 1 Shares is assumed in the no and high redemption scenarios. All Backstop Tranche 1 Shares and Backstop Tranche 2 Shares are outstanding in the maximum redemption scenario

(5)

Each share of New Grove Class B Common Stock will have ten (10) votes per share, while each share of New Grove Class A Common Stock will have one (1) vote per share.

(6)

Includes 90,000 of Class B ordinary shares which were transferred from the Sponsor to three independent directors, each receiving 30,000 Class B ordinary shares.

For further details, see “Business Combination Proposal—Consideration to Grove Equityholders in the Business Combination.”

 

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Date, Time, and Place of Extraordinary General Meeting of VGAC II Shareholders

The extraordinary general meeting will be held at the offices of Davis Polk & Wardwell LLP located at 450 Lexington Avenue, New York, New York 10017 and virtually via the Internet at 10:00 AM, Eastern Time, on June 14, 2022, to consider and vote upon the proposals to be put to the extraordinary general meeting, including if necessary, the Adjournment Proposal, to permit further solicitation and vote of proxies if, based upon the tabulated vote at the time of the extraordinary general meeting, each of the Condition Precedent Proposals have not been approved.

Voting Power; Record Date

VGAC II shareholders will be entitled to vote or direct votes to be cast at the extraordinary general meeting if they owned ordinary shares at the close of business on April 25, 2022, which is the “record date” for the extraordinary general meeting. Shareholders will have one vote for each ordinary share 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. VGAC II warrants do not have voting rights. As of the close of business on the record date, there were 50,312,500 ordinary shares issued and outstanding, of which 40,250,000 were issued and outstanding public shares.

Quorum and Vote of VGAC II Shareholders

A quorum of VGAC II shareholders is necessary to hold a valid meeting. A quorum will be present at the extraordinary general meeting if one or more VGAC II shareholders who together hold not less than a majority of the issued and outstanding ordinary shares as of the record date entitled to vote at the extraordinary general meeting are represented in person or by proxy at the extraordinary general meeting. As of the record date for the extraordinary general meeting, 25,156,251 ordinary shares would be required to achieve a quorum.

The Sponsor has, pursuant to the Sponsor Agreement, agreed to, among other things, (i) vote in favor of the Merger Agreement and the transactions contemplated thereby (including the Mergers), and (ii) waive any adjustment to the conversion ratio set forth in the Existing Governing Documents with respect to the Class B ordinary shares of VGAC II held by the Sponsor. As of the date of this proxy statement/consent solicitation statement/prospectus, the Sponsor owns approximately 20.0% of the issued and outstanding ordinary shares. See “Business Combination Proposal—Related Agreements—Sponsor Agreement” in the accompanying proxy statement/consent solicitation statement/prospectus for more information related to the Sponsor Agreement.

The proposals presented at the extraordinary general meeting require the following votes:

 

  (i)

Business Combination Proposal: The approval of the Business Combination Proposal requires an ordinary resolution under Cayman Islands law, being the affirmative vote of the holders of a majority of the ordinary shares who, being present in person or represented by proxy and entitled to vote at the extraordinary general meeting, vote at the extraordinary general meeting.

 

  (ii)

Domestication Proposal: The approval of the Domestication Proposal requires a special resolution under Cayman Islands law, being the affirmative vote of the holders of a majority of not less than two-thirds of the ordinary shares who, being present in person or represented by proxy and entitled to vote at the extraordinary general meeting, vote at the extraordinary general meeting.

 

  (iii)

Charter Amendment Proposal: The approval of the Charter Amendment Proposal requires a special resolution under Cayman Islands law, being the affirmative vote of the holders of a majority of not less than two-thirds of the ordinary shares who, being present in person or represented by proxy and entitled to vote at the extraordinary general meeting, vote at the extraordinary general meeting.

 

  (iv)

Governing Documents Proposals: The approval of the Governing Documents Proposals requires the affirmative vote of the holders of a majority of the ordinary shares who, being present in person or

 

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  represented by proxy and entitled to vote at the extraordinary general meeting, vote at the extraordinary general meeting. Because the votes on the Governing Documents Proposals are advisory only, they will not be binding on the VGAC II Board or New Grove.

 

  (v)

NYSE Proposal: The approval of the NYSE Proposal requires an ordinary resolution under Cayman Islands law, being the affirmative vote of the holders of a majority of the ordinary shares who, being present in person or represented by proxy and entitled to vote at the extraordinary general meeting, vote at the extraordinary general meeting.

 

  (vi)

Incentive Equity Plan Proposal: The approval of the Incentive Equity Plan Proposal requires an ordinary resolution under Cayman Islands law, being the affirmative vote of the holders of a majority of the ordinary shares who, being present in person or represented by proxy and entitled to vote at the extraordinary general meeting, vote at the extraordinary general meeting.

 

  (vii)

ESPP Proposal: The approval of the ESPP Proposal requires an ordinary resolution under Cayman Islands law, being the affirmative vote of the holders of a majority of the ordinary shares who, being present in person or represented by proxy and entitled to vote at the extraordinary general meeting, vote at the extraordinary general meeting.

 

  (viii)

Director Election Proposal: Pursuant to the Existing Governing Documents, until the Closing, only holders of Class B ordinary shares can appoint or remove directors. Therefore, only holders of Class B ordinary shares will vote on the Director Election Proposal. The approval of the Director Election Proposal requires an ordinary resolution under Cayman Islands law, being the affirmative vote of the holders of a majority of Class B ordinary shares who, being present in person or represented by proxy and entitled to vote at the extraordinary general meeting, vote at the extraordinary general meeting.

 

  (ix)

Adjournment Proposal: The approval of the Adjournment Proposal requires an ordinary resolution under Cayman Islands law, being the affirmative vote of the holders of a majority of the ordinary shares who, being present in person or represented by proxy and entitled to vote at the extraordinary general meeting, vote at the extraordinary general meeting.

Redemption Rights

Pursuant to the Existing Governing Documents, a public shareholder may request of VGAC II that New Grove redeem all or a portion of its public shares for cash if the Business Combination is consummated. As a holder of public shares, you will be entitled to receive cash for any public shares to be redeemed only if you:

 

  (i)

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

 

  (ii)

submit a written request to Continental, VGAC II’s transfer agent, in which you (a) request that New Grove redeem all or a portion of your public shares for cash, and (b) identify yourself as the beneficial holder of the public shares and provide your legal name, phone number, and address; and

 

  (iii)

deliver your share certificates (if any) and other redemption forms (as applicable) to Continental physically or electronically through DTC.

Holders must complete the procedures for electing to redeem their public shares in the manner described above prior to 5:00 PM, Eastern Time, on June 10, 2022 (two business days before the extraordinary general meeting) in order for their shares to be redeemed.

Holders of 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 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

 

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name, the holder must contact Continental directly and instruct them to do so. The redemption rights include the requirement that a holder must identify itself in writing as a beneficial holder and provide its legal name, phone number, and address to Continental in order to validly redeem its shares. Public shareholders may elect to redeem all or a portion of the public shares held by them regardless of if or how they vote in respect of the Business Combination Proposal. If the Business Combination is not consummated, the public shares will be returned to the respective holder, broker, or bank. If the Business Combination is consummated, and if a public shareholder properly exercises its right to redeem all or a portion of the public shares that it holds and timely delivers its shares to Continental, New Grove will redeem such public shares for a per-share price, payable in cash, equal to the pro rata portion of the trust account, calculated as of two business days prior to the consummation of the Business Combination. For illustrative purposes, as of December 31, 2021, this would have amounted to approximately $10.00 per issued and outstanding public share. If a public shareholder exercises its redemption rights in full, then it will be electing to exchange its public shares for cash and will no longer own public shares. The redemption takes place following the Domestication and accordingly, it is shares of New Grove Class A Common Stock that will be redeemed immediately after consummation of the Business Combination. See “Extraordinary General Meeting of VGAC II—Redemption Rights” in this proxy statement/consent solicitation 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 public shareholder, together with any affiliate of such public shareholder or any other person with whom such public shareholder is acting in concert or as a “group” (as defined in Section 13(d)(3) of the Exchange Act), will be restricted from redeeming its public shares with respect to more than an aggregate of 15% of the public shares. Accordingly, if a public shareholder, 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 and such excess public shares would be converted into the merger consideration in connection with the Business Combination.

The Sponsor has, pursuant to the Sponsor Agreement, agreed to, among other things, (i) vote in favor of the Merger Agreement and the transactions contemplated thereby (including the Mergers), and (ii) waive any adjustment to the conversion ratio set forth in the Existing Governing Documents with respect to the Class B ordinary shares of VGAC II held by the Sponsor. Such shares will be excluded from the pro rata calculation used to determine the per-share redemption price. As of the date of this proxy statement/consent solicitation statement/prospectus, the Sponsor owns approximately 20.0% of the issued and outstanding ordinary shares. See “Business Combination Proposal—Related Agreements—Sponsor Agreement” in the accompanying proxy statement/consent solicitation statement/prospectus for more information related to the Sponsor Agreement.

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

Appraisal Rights

Neither VGAC II shareholders nor VGAC II warrantholders have appraisal rights in connection with the Business Combination or the Domestication under the Cayman Islands Companies Act or under the DGCL.

Proxy Solicitation

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

If a shareholder grants a proxy, it may still vote its shares in person if it revokes its proxy before the extraordinary general meeting. A shareholder also may change its vote by submitting a later-dated proxy as described in the section entitled “Extraordinary General Meeting of VGAC II—Revoking Your Proxy.”

 

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Interests of VGAC II’s Directors and Executive Officers in the Business Combination

When you consider the recommendation of the VGAC II Board in favor of approval of the Business Combination Proposal, you should keep in mind that the Sponsor, VGAC II’s directors, and executive officers, have interests in such proposal that are different from, or in addition to, those of VGAC II shareholders and VGAC II warrantholders generally. These interests include, among other things, the interests listed below:

 

   

the fact that the Sponsor has agreed not to redeem any Class A ordinary shares held by it in connection with a shareholder vote to approve a proposed initial business combination;

 

   

the fact that the Sponsor paid an aggregate of $25,000 for 10,062,500 Class B ordinary shares, of which the Sponsor currently owns 9,972,500 Class B ordinary shares and each of the three independent directors owns 30,000 Class B ordinary shares, and such securities will have a significantly higher value at the time of the Business Combination; as described further below:

 

     Shares of Class B
ordinary shares(1)
     Value of Class B
ordinary shares
implied by the
Business
Combination(3)
     Value of Class B
ordinary shares based
on recent trading
price(4)
 

Sponsor(2)

     9,972,500      $ 99,725,000      $ 98,927,200  

Chris Burggraeve

     30,000      $ 300,000      $ 297,600  

Elizabeth Nelson

     30,000      $ 300,000      $ 297,600  

Latif Peracha

     30,000      $ 300,000      $ 297,600  

 

(1)

Interests shown consist solely of founder shares. Such shares will automatically convert into shares of New Grove Class A Common Stock upon Domestication on a one-for-one basis.

(2)

VG Acquisition Sponsor II LLC is the record holder of the shares reported herein.

(3)

Assumes a value of $10.00 per share, the deemed value of the Class B ordinary shares in the Business Combination.

(4)

Assumes a value of $9.92 per share, the closing price of the Class A ordinary shares on April 29, 2022

 

   

the fact that the Sponsor paid an aggregate of $10,050,000 for 6,700,000 private placement warrants, as described further below:

 

     Shares of private
placement
warrants(1)
     Value of private
placement
warrants
implied by the
Business
Combination(3)
     Value of
private
placement
warrants based
on recent
trading
price(4)
 

Sponsor(2)

     6,700,000      $ 0      $ 3,752,000  

 

(1)

Interests shown consist solely of private placement warrants. Such warrants will automatically convert into warrants to acquire New Grove Class A Common Stock upon the Domestication on a one-for-one basis.

(2)

VG Acquisition Sponsor II LLC is the record holder of the warrants reported herein.

(3)

Assumes a value of $0.00 per warrant, which reflects that the exercise price of the warrants ($11.50 per warrant) exceeds the value of the underlying ordinary shares in the Business Combination.

(4)

Assumes a value of $0.56 per warrant, the closing price of the public warrants on April 29, 2022.

 

   

the fact that each of Mr. Bayliss and Mr. Lovell invested $300,000 in the Sponsor and hold interests in the Sponsor that represent an indirect interest in 1,246,600 Class B ordinary shares and 197,939 private placement warrants, and the fact that Mr. Burggraeve, Ms. Nelson and Mr. Peracha each invested $100,000, in the Sponsor indirectly through an investment in VG Acquisition Holdings II LLC, an affiliate of the Sponsor, and each holds interests in VG Acquisition Holdings II LLC that represent an indirect interest in 70,216 Class B ordinary shares, and 66,550 private placement warrants, and all of such securities would be worthless if a business combination is not consummated by March 25, 2023

 

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(unless such date is extended in accordance with the Existing Governing Documents); as described further below:

 

    Shares of
Class B
ordinary
shares
indirectly
held(1)
    Number of
private
placement
warrants
indirectly
held(2)
    Value of
Class B
ordinary shares
implied by the
Business
Combination(3)
    Value of
private
placement
warrants
implied by the
Business
Combination(4)
    Value of
Class B
ordinary
shares based
on recent
trading
price(5)
    Value of
private
placement
warrants
based on
recent trading
price(6)
 

Josh Bayliss

    1,246,600       197,939     $ 12,466,000     $ 0   $ 12,366,272   $ 110,845.84

Evan Lovell

    1,246,600       197,939     $ 12,466,000     $ 0   $ 12,366,272   $ 110,845.84

Chris Burggraeve

    70,216       66,550     $ 702,160     $ 0   $ 696,542.72     $ 37,268  

Elizabeth Nelson

    70,216       66,550     $ 702,160     $ 0   $ 696,542.72     $ 37,268  

Latif Peracha

    70,216       66,550     $ 702,160     $ 0   $ 696,542.72     $ 37,268  

 

(1)

Interests shown consist solely of founder shares. Such shares will automatically convert into shares of New Grove Class A Common Stock upon the Domestication on a one-for-one basis.

(2)

Interests shown consist solely of private placement warrants. Such warrants will automatically convert into warrants to acquire New Grove Class A Common Stock upon the Domestication.

(3)

Assumes a value of $10.00 per share, the deemed value of the Class B ordinary shares in the Business Combination.

(4)

Assumes a value of $0.00 per warrant, which reflects that the exercise price of the warrants ($11.50 per warrant) exceeds the value of the underlying ordinary shares in the Business Combination.

(5)

Assumes a value of $9.92 per share, the closing price of the Class A ordinary shares on April 29, 2022.

(6)

Assumes a value of $0.56 per warrant, the closing price of the public warrants on April 29, 2022.

 

   

the fact that given the differential in the purchase price that the Sponsor paid for the founder shares as compared to the price of the public shares sold in the initial public offering, the Sponsor and its affiliates may earn a positive rate of return on their investment even if the Class A ordinary shares trades below the price initially paid for the public shares in the initial public offering and the public shareholders experience a negative rate of return following the completion of the Business Combination. It is not practicable to quantify the Sponsor and its affiliates’ rate of return because, among other things, the timing (including as a result of the twelve-month lockup applicable to the founder shares) and the price at which the Sponsor sells shares of New Grove Class A Common Stock and other equity securities of New Grove are uncertain, both of which would have a material impact on the applicable rate of return.;

 

   

the fact that the Sponsor will benefit from the completion of a business combination and may be incentivized to complete an acquisition of a less favorable target company or on terms less favorable to shareholders rather than liquidate;

 

   

the fact that if a business combination is not consummated by March 25, 2023 (unless such date is extended in accordance with the Existing Governing Documents), the Sponsor and VGAC II’s officers and directors will lose their entire investment in VGAC II, which investment included a capital contribution of $25,000 for the Sponsor’s Class B ordinary shares and $10,050,000 for the Sponsor’s private placement warrants, and will not be reimbursed for any out-of-pocket expenses from any amounts held in the trust account;

 

   

the fact that the Sponsor and VGAC II’s other current officers and directors have agreed to waive their rights to liquidating distributions from the trust account with respect to any ordinary shares (other than public shares) held by them if VGAC II fails to complete an initial business combination by March 25, 2023;

 

   

the fact that the Registration Rights Agreement will be entered into by the Sponsor;

 

   

the fact that the Sponsor transferred 30,000 Class B ordinary shares to each of VGAC II’s three independent directors prior to the initial public offering, and such securities would be worthless if a

 

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business combination is not consummated by March 25, 2023 (unless such date is extended in accordance with the Existing Governing Documents);

 

   

the continued indemnification of VGAC II’s directors and officers and the continuation of VGAC II’s directors’ and officers’ liability insurance after the Business Combination (i.e., a “tail policy”);

 

   

the fact that if the trust account is liquidated, including in the event VGAC II is unable to complete an initial business combination by March 25, 2023, the Sponsor has agreed to indemnify VGAC II to ensure that the proceeds in the trust account are not reduced below $10.00 per public share, or such lesser per public share amount as is in the trust account on the liquidation date, by the claims of prospective target businesses with which VGAC II has entered into an acquisition agreement or claims of any third party for services rendered or products sold to VGAC II, but only if such a vendor or target business has not executed a waiver of any and all rights to seek access to the trust account;

 

   

the fact that Rayhan Arif, an Investment Director at the Virgin Group, of the Sponsor is expected to be director of New Grove after the consummation of the Business Combination and as such, in the future, he may receive cash fees, stock options, stock awards or other remuneration that the New Grove Board determines to pay to him and any other applicable compensation;

 

   

the fact that the Virgin Group owns the Backstop Tranche 1 Shares, for which it invested $27,500,000, which shares will represent, immediately following the closing of the Business Combination and after giving effect to the Backstop Share Exchange, 2,750,000 shares of New Grove Class A Common Stock, as determined pursuant to the Exchange Ratio, which shares of New Grove Class A Common Stock will represent approximately 1.8% of outstanding shares of New Grove Common Stock and approximately 0.2% of the voting power of New Grove Common Stock assuming maximum redemptions by VGAC II shareholders in connection with the Business Combination; and

 

   

the fact that (i) Virgin Group, including the Backstop Investor and the Sponsor, will collectively own 30,836,009 shares of New Grove Class A Common Stock, including 6,700,000 Private Placement Warrants, 4,163,509 warrants to purchase the Class A ordinary shares at an exercise price of $0.01, 5,000,000 shares of New Grove Class A Common Stock in connection with the PIPE Financing and 5,000,000 shares of New Grove Common Stock in connection with the Backstop Financing, which collectively will represent approximately 14.5% outstanding shares of New Grove Common Stock and approximately 1.8% of the voting power of New Grove Common Stock on a fully-diluted basis, assuming maximum redemption of the Class A ordinary shares in connection with the Business Combination and (ii) Virgin Group will have the right to receive additional shares of New Grove Class A Common Stock pursuant to the Backstop Subscription Agreement depending on the Measurement Period VWAP.

The Sponsor has, pursuant to the Sponsor Agreement, agreed to, among other things, (i) vote in favor of the Merger Agreement and the transactions contemplated thereby (including the Mergers), and (ii) waive any adjustment to the conversion ratio set forth in the Existing Governing Documents with respect to the Class B ordinary shares of VGAC II held by the Sponsor. As of the date of this proxy statement/consent solicitation statement/prospectus, the Sponsor owns approximately 20.0% of the issued and outstanding ordinary shares. See “Business Combination Proposal—Related Agreements—Sponsor Agreement” in this proxy statement/consent solicitation statement/prospectus for more information related to the Sponsor Agreement.

Approval of each of the Business Combination Proposal, the Governing Documents Proposals, the NYSE Proposal, the Incentive Equity Plan Proposal, the ESPP Proposal, the Director Election Proposal, and the Adjournment Proposal, requires the affirmative vote of the holders of a majority of the ordinary shares who, being present in person or represented by proxy and entitled to vote at the extraordinary general meeting, vote at the extraordinary general meeting. As a result, approval of each of the foregoing proposals would require 15,093,751, or 37.5%, of the 40,250,000 public shares sold in the initial public offering would need to be voted in favor of each of the foregoing proposals in addition to the founder shares held by the Sponsor (assuming all outstanding shares are voted).

 

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Approval of each of the Domestication Proposal and the Charter Amendment Proposal requires the affirmative vote of the holders of a majority of not less than two-thirds of the ordinary shares who, being present in person or represented by proxy and entitled to vote at the extraordinary general meeting, vote at the extraordinary general meeting. As a result, approval of each of the foregoing proposals would require 23,479,167, or 58.3%, of the 40,250,000 public shares sold in the initial public offering would need to be voted in favor of each of the foregoing proposals in addition to the founder shares held by the Sponsor and the directors (assuming all outstanding shares are voted).

The existence of financial and personal interests of one or more of VGAC II’s directors may result in a conflict of interest on the part of such director(s) between what he or she or they may believe is in the best interests of VGAC II and VGAC II shareholders and what he or she or they may believe is best for himself or herself or themselves in determining to recommend that shareholders vote for the proposals. In addition, VGAC II’s officers have interests in the Business Combination that may conflict with your interests as a shareholder.

Recommendation to Shareholders of VGAC II

The VGAC II Board believes that the Business Combination Proposal and the other proposals to be presented at the extraordinary general meeting are in the best interest of VGAC II and VGAC II shareholders and unanimously recommends that its shareholders vote “FOR” the Business Combination Proposal, “FOR” the Domestication Proposal, “FOR” the Charter Amendment Proposal, “FOR” each of the Governing Documents Proposals, “FOR” the NYSE Proposal, “FOR” the Incentive Equity Plan Proposal, “FOR” the ESPP Proposal, “FOR” the Director Election Proposal, and “FOR” the Adjournment Proposal, in each case, if presented to the extraordinary general meeting.

The existence of financial and personal interests of one or more of VGAC II’s directors may result in a conflict of interest on the part of such director(s) between what he or she or they may believe is in the best interests of VGAC II and VGAC II shareholders and what he or she or they may believe is best for himself or herself or themselves in determining to recommend that shareholders vote for the proposals. In addition, VGAC II’s officers have interests in the Business Combination that may conflict with your interests as a shareholder. See the section entitled “Business Combination Proposal—Interests of VGAC II’s Directors and Executive Officers in the Business Combination” for a further discussion of these considerations.

Sources and Uses of Funds for the Business Combination

The following tables summarize the sources and uses for funding the Business Combination assuming a Closing Date of December 31, 2021, and (i) assuming that none of VGAC II’s outstanding public shares are redeemed in connection with the Business Combination, (ii) under the high redemption scenario (which assumes that 35,250,000 of the Class A ordinary shares are redeemed (which represents 88% of the number of Class A ordinary shares that would be redeemed under the maximum redemption scenario)) and (iii) under the maximum redemption scenario (which assumes that 40,250,000 of the Class A ordinary shares are redeemed (which represents all of the Class A ordinary shares)).

No Redemption

 

Source of Funds(1) (in thousands)

       

Uses(1) (in thousands)

     

Existing Cash held in trust account(2)

  $ 402,531    

Merger Consideration to Grove Equityholders(3)

  $ 1,400,000  

Merger Consideration to Grove
Equityholders(3)

  $ 1,400,000    

Transaction Fees and Expenses

  $ 47,200  

PIPE Financing(3)

  $ 87,075    

Remaining Cash to Balance Sheet

  $ 442,406  

Subscription Proceeds for Backstop Tranche 1 Shares

  $ 27,500    

Redemption of Backstop Tranche 1 Shares

  $ 27,500  
 

 

 

     

 

 

 

Total Sources

  $ 1,917,106     Total Uses   $ 1,917,106  
 

 

 

     

 

 

 

 

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(1)

Totals might be affected by rounding.

(2)

As of December 31, 2021.

(3)

Shares issued to Grove Equityholders and PIPE Investors are at a deemed value of $10.00 per share.

High Redemption

 

Source of Funds(1) (in thousands)

       

Uses(1) (in thousands)

     

Existing Cash held in trust account(2)

  $ 402,531    

Merger Consideration to Grove Equityholders(3)

  $ 1,400,000  

Merger Consideration to Grove

   

Transaction Fees and Expenses

  $ 47,200  

Equityholders(3)

  $ 1,400,000    

VGAC II public shareholder redemptions

  $ 352,500  

Pipe Financing(3)

  $ 87,075    

Remaining Cash to Balance Sheet

  $ 89,906  

Subscription Proceeds for Backstop Tranche 1 Share

  $ 27,500    

Redemption of Backstop Tranche 1 Shares

  $ 27,500  
 

 

 

     

 

 

 

Total Sources

  $ 1,917,106     Total Uses   $ 1,917,106  
 

 

 

     

 

 

 

 

(1)

Totals might be affected by rounding.

(2)

As of December 31, 2021.

(3)

Shares issued to Grove Equityholders and PIPE Investors are at a deemed value of $10.00 per share.

Maximum Redemption

 

Source of Funds(1) (in thousands)

       

Uses(1) (in thousands)

     

Existing Cash held in trust account(2)

  $ 402,531    

Merger Consideration to Grove Equityholders(3)

  $ 1,400,000  

Merger Consideration to Grove

   

Transaction Fees and Expenses

  $ 47,200  

Equityholders(3)

  $ 1,400,000    

VGAC II public shareholder redemptions

  $ 402,531  

Pipe Financing(3)

  $ 87,075    

Remaining Cash to Balance Sheet(4)

  $ 89,875  

Subscription Proceeds for Backstop Tranche 1 Shares

  $ 27,500      

Subscription Proceeds for Backstop Tranche 2 Shares

  $ 22,500      
 

 

 

     

 

 

 

Total Sources

  $ 1,939,606     Total Uses   $ 1,939,606  
 

 

 

     

 

 

 

 

(1)

Totals might be affected by rounding.

(2)

As of December 31, 2021.

(3)

Shares issued to Grove Equityholders and PIPE Investors are at a deemed value of $10.00 per share.

(4)

Remaining Cash to Balance Sheet in the Maximum Redemption Scenario includes $27.5 million as subscription proceeds for the Backstop Tranche 1 Shares and $22.5 million as subscription proceeds for the Backstop Tranche 2 Shares.

 

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U.S. Federal Income Tax Considerations

For a discussion summarizing the U.S. federal income tax considerations of the Domestication and exercise of redemption rights, please see “U.S. Federal Income Tax Considerations.”

Expected Accounting Treatment

The Domestication

There will be no accounting effect or change in the carrying amount of the assets and liabilities of VGAC II as a result of the Domestication. The business, capitalization, assets and liabilities, and financial statements of New Grove immediately following the Domestication will be the same as those of VGAC II immediately prior to the Domestication.

The Business Combination

The Business Combination will be accounted for as a reverse recapitalization in conformity with accounting principles generally accepted in the United States of America (“GAAP”). Under this method of accounting, VGAC II has been treated as the “acquired” company for financial reporting purposes. This determination was primarily based on the following factors: (i) the business of Grove will comprise the ongoing operations of New Grove; (ii) Grove’s senior management will comprise the senior management of New Grove; (iii) the pre-Business Combination stockholders of Grove will have the largest ownership of New Grove and the right to appoint the highest number of board members relative to other stockholders; and (iv) the headquarters of Grove will be that of New Grove. Accordingly, for accounting purposes, the financial statements of the combined entity will represent a continuation of the financial statements of Grove with the Business Combination being treated as the equivalent of Grove issuing stock for the net assets of VGAC II, accompanied by a recapitalization. The net assets of VGAC II will be stated at historical cost, with no goodwill or other intangible assets recorded.

Regulatory Matters

Under the HSR Act and the rules that have been promulgated thereunder by the U.S. Federal Trade Commission (“FTC”), certain transactions may not be consummated unless information has been furnished to the Antitrust Division of the Department of Justice (“Antitrust Division”) and the FTC and certain waiting period requirements have been satisfied. The Business Combination is subject to these requirements and may not be completed until the expiration of a 30-day waiting period following the filing of the required Notification and Report Forms with the Antitrust Division and the FTC or until early termination is granted. VGAC II and Grove filed the required forms under the HSR Act with the Antitrust Division and the FTC within ten business days following the date of the Merger Agreement.

On January 20, 2022, the waiting period with respect to the Notification and Report Forms under the HSR Act expired at 11:59 p.m. Eastern Time. At any time before or after consummation of the Business Combination, notwithstanding termination of the waiting period under the HSR Act, the applicable competition authorities in the United States or any other applicable jurisdiction could take such action under applicable antitrust laws as such authority deems necessary or desirable in the public interest, including seeking to enjoin the consummation of the Business Combination, conditionally approving the Business Combination upon divestiture of New Grove’s 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. VGAC II 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, VGAC II cannot assure you as to its result.

 

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Neither VGAC II nor Grove is aware of any material regulatory approvals or actions that are required for completion of the Business Combination other than the expiration or early termination of the waiting period under the HSR Act. It is presently contemplated that if any such additional regulatory approvals or actions are required, those approvals or actions will be sought. There can be no assurance, however, that any additional approvals or actions will be obtained.

Emerging Growth Company

VGAC II is an “emerging growth company,” as defined in Section 2(a) of the Securities Act, as modified by the Jumpstart Our Business Startups Act of 2012 (the “JOBS Act”), and it may take advantage of certain exemptions from various reporting requirements that are applicable to other public companies that are not emerging growth companies, including, but not limited to, not being required to comply with the auditor attestation requirements of Section 404 of the Sarbanes-Oxley Act of 2002 (the “Sarbanes-Oxley Act”), reduced disclosure obligations regarding executive compensation in VGAC II’s periodic reports and proxy statements, and exemptions from the requirements of holding a nonbinding advisory vote on executive compensation, and stockholder approval of any golden parachute payments not previously approved.

Further, Section 102(b)(1) of the JOBS Act exempts emerging growth companies from being required to comply with new or revised financial accounting standards until private companies (that is, those that have not had a Securities Act registration statement declared effective or do not have a class of securities registered under the Exchange Act) are required to comply with the new or revised financial accounting standards. The JOBS Act provides that a company can elect to opt out of the extended transition period and comply with the requirements that apply to non-emerging growth companies but any such election to opt out is irrevocable. VGAC II has elected not to opt out of such extended transition period, which means that when a standard is issued or revised and it has different application dates for public or private companies, VGAC II, as an emerging growth company, can adopt the new or revised standard at the time private companies adopt the new or revised standard. This may make comparison of VGAC II’s financial statements with certain other public companies difficult or impossible because of the potential differences in accounting standards used.

New Grove will qualify as an “emerging growth company.” New Grove will remain an emerging growth company until the earlier of: (i) the last day of the fiscal year (a) following the fifth anniversary of the closing of the initial public offering, (b) in which New Grove has total annual gross revenue of at least $1.07 billion, or (c) in which New Grove is deemed to be a large accelerated filer, which means the market value of the common equity of New Grove that is held by non-affiliates exceeds $700 million as of the last business day of its most recently completed second fiscal quarter; and (ii) the date on which New Grove has issued more than $1.00 billion in non-convertible debt securities during the prior three-year period. References herein to “emerging growth company” have the meaning associated with it in the JOBS Act. Following the Business Combination, VGAC II expects that New Grove will remain an emerging growth company until March 31, 2023.

Smaller Reporting Company

Additionally, VGAC II is a “smaller reporting company” as defined in Item 10(f)(1) of Regulation S-K. Smaller reporting companies may take advantage of certain reduced or scaled disclosure obligations, including, among other things, providing only two years of audited financial statements. Following the Business Combination, VGAC II expects that New Grove will no longer be a smaller reporting company.

Risk Factors

In evaluating the proposals to be presented at the VGAC II extraordinary general meeting, a VGAC II shareholder should carefully read this proxy statement/consent solicitation statement/prospectus in its entirety and especially consider the factors discussed in the section entitled “Risk Factors.”

 

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SELECTED HISTORICAL FINANCIAL INFORMATION OF VGAC II

VGAC II is providing the following selected historical financial data to assist you in your analysis of the financial aspects of the Business Combination. VGAC II’s condensed balance sheet data as of December 31, 2021 and the statement of operations data and cash flow data for the period from January 13, 2021 (inception) through December 31, 2021 are derived from VGAC II’s unaudited interim condensed financial statements included elsewhere in this prospectus. In VGAC II’s management’s opinion, the unaudited interim condensed financial statements include all adjustments necessary to state fairly VGAC II’s financial position as of December 31, 2021 and the results of operations for the period from January 13, 2021 (date of inception) to December 31, 2021.

The information is only a summary and should be read in conjunction with VGAC II’s financial statements and related notes and “VGAC II’s Management’s Discussion and Analysis of Financial Condition and Results of Operations” contained elsewhere in this proxy statement/consent solicitation statement/prospectus. VGAC II’s historical results are not necessarily indicative of future results, and the results for any interim period are not necessarily indicative of the results that may be expected for a full fiscal year.

 

     For the Period from
January 13, 2021 to
December 31, 2021
 

Statement of Operations Data

  

Formation and operating costs

   $ 3,572,794  
  

 

 

 

Loss from operations

     (3,572,794

Other income (expense):

  

Interest earned on investments held in trust account

     30,526  

Offering costs allocated to warrants

     (570,496

Change in fair value of warranty liability

     6,811,133  
  

 

 

 

Total other income (expense)

     6,271,163  
  

 

 

 

Net Loss

   $ 2,698,369  
  

 

 

 

Weighted average shares outstanding of Class A redeemable ordinary shares

     32,705,669  
  

 

 

 

Basic and diluted net income per share, Class A

   $ 0.06  
  

 

 

 

Weighted average shares outstanding of Class B non-redeemable ordinary shares

     10,062,500  
  

 

 

 

Basic and diluted net loss per share, Class B

   $ 0.06  
  

 

 

 

 

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     As of
December 31, 2021
 

Balance Sheet Data

  

Total Current Assets

   $ 1,136,339  

Prepaid expenses—non-current portion

     629,106  

Cash and investments held in trust account

     402,530,526  
  

 

 

 

Total Assets

     403,808,198  
  

 

 

 

Total Liabilities

     30,848,501  

Class A ordinary shares, $0.0001 par value; 200,000,000 shares authorized; 40,250,000 shares subject to possible redemption at a redemption value of $10.00 per share

     402,500,000  

Shareholders’ Deficit:

  

Class B ordinary shares, $0.0001 par value; 20,000,000 shares authorized; 10,062,500 shares issued and outstanding

     1,006  

Additional paid-in capital

     —    

Accumulated deficit

     (29,541,309
  

 

 

 

Total Shareholders’ deficit

     (29,540,303
  

 

 

 

Total Liabilities and Shareholders’ deficit

     403,808,198  
  

 

 

 

 

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SELECTED HISTORICAL FINANCIAL INFORMATION OF GROVE

The following tables show selected historical financial data of Grove for the periods ended and as of the dates indicated. The selected historical statements of operations data of Grove for the years ended December 31, 2019, 2020 and 2021 and the historical balance sheet data as of December 31, 2020 and 2021 are derived from Grove’s audited financial statements included elsewhere in this proxy statement/prospectus/information statement. The selected historical statement of operations data of Grove for 2018 is derived from audited financial statements that are not included in this proxy statement/prospectus/information statement.

The financial information contained in this section relates to Grove, prior to and without giving pro forma effect to the impact of the Mergers. The results reflected in this section may not be indicative of the results of the post-combination company going forward. See “Unaudited Pro Forma Condensed Combined Financial Information”.

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

 

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Grove is providing the following selected historical financial information to assist you in your analysis of the financial aspects of the Mergers.

 

     Year Ended
December 31,
 
     2018     2019     2020     2021  
   (in thousands)  

Statement of Operations Data:

        

Revenue, net

   $ 104,928     $ 233,116     $ 364,271     $ 383,685  

Cost of goods sold

     68,502       149,681       188,267       195,181  
  

 

 

   

 

 

   

 

 

   

 

 

 

Gross profit

     36,426       83,435       176,004       188,504  
  

 

 

   

 

 

   

 

 

   

 

 

 

Operating expenses:

        

Advertising

     32,095       77,842       55,547       107,313  

Product development

     5,581       13,604       18,655       23,408  

Selling, general and administrative

     79,486       155,158       168,295       186,638  
  

 

 

   

 

 

   

 

 

   

 

 

 

Operating loss

     (80,736     (163,169     (66,493     (128,855
  

 

 

   

 

 

   

 

 

   

 

 

 

Interest expense

     619       2,052       5,607       5,202  

Loss on extinguishment of debt

     —         —         —         1,027  

Other expense (income), net

     339       (3,763     119       760  
  

 

 

   

 

 

   

 

 

   

 

 

 

Interest and other expense (income), net

     958       (1,711     5,726       6,989  
  

 

 

   

 

 

   

 

 

   

 

 

 

Loss before provision for income taxes

     (81,694     (161,458     (72,219     (135,844

Provision for income taxes

     1       12       41       52  
  

 

 

   

 

 

   

 

 

   

 

 

 

Net loss

   $ (81,695   $ (161,470   $ (72,260   $ (135,896
  

 

 

   

 

 

   

 

 

   

 

 

 

Deemed dividend due to the exchange of Series Seed convertible preferred stock and Series A convertible preferred stock for Series D convertible preferred stock

     —         (1,801     —         —    
  

 

 

   

 

 

   

 

 

   

 

 

 

Net loss attributable to common stockholders, basic and diluted

   $ (81,695   $ (163,271   $ (72,260   $ (135,896
  

 

 

   

 

 

   

 

 

   

 

 

 

Net loss per share attributable to common stockholders, basic and diluted

   $ (21.13   $ (43.37   $ (15.82   $ (18.65
  

 

 

   

 

 

   

 

 

   

 

 

 

Weighted-average shares used in computing net loss per share attributable to common stockholders, basic and diluted

     3,865,812       3,764,374       4,568,540       7,288,145  
  

 

 

   

 

 

   

 

 

   

 

 

 

 

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     December 31,  
     2020      2021  
   (in thousands)  

Balance Sheet Data:

     

Cash and cash equivalents

   $ 176,523      $ 78,376  

Working capital (1)

     164,793        71,719  

Total assets

     269,718        182,473  

Debt, current

     1,918        10,750  

Debt, noncurrent

     29,782        56,183  

Total liabilities

     121,441        150,834  

Convertible preferred stock

     487,918        487,918  

Accumulated deficit

     (354,247      (490,143

Total stockholders’ deficit

     (339,641      (456,279

 

(1)

Working capital is defined as current assets less current liabilities. See the financial statements and the related notes included elsewhere in this proxy statement/prospectus/information statement for further details regarding Grove’s current assets and current liabilities.

 

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SELECTED UNAUDITED PRO FORMA CONDENSED COMBINED FINANCIAL INFORMATION

The following selected unaudited pro forma condensed combined financial data (the “selected pro forma information”) gives effect to the Mergers and other events contemplated by the Merger Agreement as described in the section entitled “Unaudited Pro Forma Condensed Combined Financial Information” included in this proxy statement/prospectus/information statement. The Mergers will be accounted for as a reverse recapitalization under accounting principles generally accepted in the United States of America (“GAAP”). Under this method of accounting, Virgin Group Acquisition Corp. II (“VGAC II”) will be treated as the “acquired” company for financial reporting purposes. Accordingly, for accounting purposes, the financial statements of New Grove will represent a continuation of the financial statements of Grove with the Merger treated as the equivalent of Grove issuing stock for the net assets of VGAC II, accompanied by a recapitalization. The net assets of VGAC II will be stated at historical cost and no goodwill or other intangible assets will be recorded. Operations prior to the Mergers will be presented as those of Grove in future reports of New Grove.

The selected unaudited pro forma condensed combined balance sheet data as of December 31, 2021 gives pro forma effect to the Mergers and other events contemplated by the Merger Agreement as if they had occurred on December 31, 2021. The selected unaudited pro forma condensed combined statement of operations data for the year ended December 31, 2021 gives pro forma effect to the Mergers and other events contemplated by the Merger Agreement as if they had occurred on January 1, 2021.

The unaudited pro forma condensed combined financial information has been prepared in accordance with Article 11 of Regulation S-X as amended by the final rule, Release 33-10786 “Amendments to Financial Disclosures about Acquired and Disposed Businesses.” The adjustments reflected in the unaudited pro forma condensed combined financial statements have been identified and presented to provide relevant information necessary for an accurate understanding of the Combined Company upon consummation of the Mergers and the related PIPE Investment.

The selected pro forma information has been derived from, and should be read in conjunction with, the unaudited pro forma condensed combined financial information of New Grove appearing elsewhere in this proxy statement/prospectus/information statement and the accompanying notes, in the section titled “Unaudited Pro Forma Condensed Combined Financial Information.” The unaudited pro forma condensed combined financial information is derived from, and should be read in conjunction with, the historical financial statements of VGAC II and Grove and related notes included elsewhere in this proxy statement/prospectus/information statement. The selected pro forma information has been presented for informational purposes only and is not necessarily indicative of what New Grove’s financial position or results of operations actually would have been had the Mergers and the other transactions contemplated by the Merger Agreement been completed as of the dates indicated. In addition, the selected pro forma information does not purport to project the future financial position or operating results of New Grove. VGAC II and Grove have not had any historical relationship prior to the Mergers. Accordingly, no pro forma adjustments were required to eliminate activities between the companies.

The following table presents selected pro forma information after giving effect to the Mergers and other events contemplated by the Merger Agreement, presented under three scenarios:

 

   

No Redemption Scenario: This scenario assumes that no shares of the Class A ordinary shares are redeemed.

 

   

High Redemption Scenario: This scenario assumes 35,250,000 of the Class A ordinary shares are redeemed for an aggregate payment of $352.5 million, which represents approximately 88% of the Class A ordinary shares and results in $50.0 million remaining in the trust account after redemptions.

 

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Maximum Redemption Scenario: This scenario assumes 40,250,000 public shares of the Class A ordinary shares are redeemed for an aggregate payment of $402.5 million, which represents 100% of the Class A ordinary shares.

The following summarizes the pro forma New Grove Class A and Class B Common Stock issued and outstanding immediately after the Business Combination, after giving effect to the Exchange Ratio, and reflects a presumed exercise of the Backstop Warrants (each warrant exercisable to purchase one share of New Grove Class A Common Stock for $0.01), presented under the three redemption scenarios:

 

    No Redemption     High Redemption     Maximum Redemption  
    Number of
Shares
    %
Ownership
    Number of
Shares
    %
Ownership
    Number of
Shares
    %
Ownership
 

Former VGAC II shareholders(1)(2)

    40,340,000       21.7     40,340,000       21.7     40,340,000       21.7

Less: VGAC II Class A shares

    —         —       (35,250,000     (18.3 )%      (40,250,000     (21.6 )% 
 

 

 

   

 

 

   

 

 

   

 

 

   

 

 

   

 

 

 

Total held by former VGAC II shareholders

    40,340,000       21.7     5,090,000       3.4     90,000       0.1

Sponsor

    9,972,500       5.4     9,972,500       6.6     9,972,500       6.5

Backstop Warrants

    1,825,691       1.0     1,561,316       1.0     4,163,509       2.0

Backstop Investor

    —             —             5,000,000       3.3

Grove Shareholders

    124,808,526       67.2     124,808,526       83.2     124,808,526       81.7

PIPE Investors

    8,707,500       4.7     8,707,500       5.8     8,707,500       5.7
 

 

 

   

 

 

   

 

 

   

 

 

   

 

 

   

 

 

 

Pro forma shares outstanding

    185,654,217       100.0     150,139,842       100.0     152,742,035       100.0
 

 

 

   

 

 

   

 

 

   

 

 

   

 

 

   

 

 

 

 

(1)

The estimated Exchange Ratio is calculated as of March 29, 2022. The number of shares outstanding for both VGAC II and Grove are calculated as of December 31, 2021.

(2)

Includes 90,000 of Class B ordinary shares which were transferred from the Sponsor to three independent directors, each receiving 30,000 Class B ordinary shares.

If the actual facts are different than these assumptions, then the amounts and shares outstanding in the unaudited pro forma condensed combined financial information will be different and those changes could be material.

 

    Pro Forma Combined  
    No
Redemption
    High
Redemption
    Maximum
Redemption
 
    (in thousands, except per share data)  

Selected Unaudited Pro Forma Condensed Combined Statement of Operations Data—Year Ended December 31, 2021

     

Revenue

  $ 383,685     $ 383,685     $ 383,685  

Operating loss

    (132,936     (133,608     (133,615

Net loss

    (132,502     (133,174     (133,181

Net loss per share, basic and diluted

  $ (0.72   $ (0.89   $ (0.88

Weighted average shares, basic and diluted

    184,682,689       149,168,314       151,770,507  

Selected Unaudited Pro Forma Condensed Combined Balance Sheet Data—As of December 31, 2021

     

Total current assets

  $ 595,307     $ 242,807     $ 242,807  

Total assets

    633,940       281,440       281,440  

Total current liabilities

    70,706       70,706       70,706  

Total liabilities

    280,774       280,774       280,774  

Total stockholders’ deficit

    353,166       666       666  

 

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RISK FACTORS

You should carefully review and consider the following risk factors and the other information contained in this proxy statement/consent solicitation statement/prospectus, including the Annexes and the accompanying financial statements of Grove and VGAC II, in evaluating the Business Combination and the proposals to be voted on at the extraordinary general meeting. You should carefully consider the following risk factors in addition to the other information included in this proxy statement/consent solicitation statement/prospectus, including matters addressed in the section entitled “Cautionary Note Regarding Forward-Looking Statements.” Grove or VGAC II may face additional risks and uncertainties that are not presently known to Grove or VGAC II, or that Grove or VGAC II currently deems immaterial, which may also impair Grove’s or VGAC II’s business or financial condition.

Risks Related to Grove and New Grove’s Business Following the Business Combination

Our significant growth may not be indicative of our future growth and, if we continue to grow rapidly, we may not be able to effectively manage our growth or evaluate our future prospects. If we fail to effectively manage our future growth, our business could be adversely affected.

We have experienced significant growth since our launch in 2012. For example, our revenue grew from approximately $7 million in 2016 to $384 million in the year ended December 31, 2021. This growth has placed significant demands on our management, financial, operational, technological and other resources. The anticipated growth and expansion of our business depends on a number of factors, including our ability to increase awareness of our brand and successfully compete with other companies; price our products effectively so that we are able to attract new consumers and expand sales to our existing consumers; expand distribution to new retail partners; continue to innovate and introduce new products; maintain and improve our technology platform supporting our e-commerce business; expand our supplier and fulfillment capacities; expand internationally; and maintain quality control over our product offerings.

Such growth and expansion of our business places significant demands on our management and operations teams and requires significant additional resources, financial and otherwise, to meet our needs, which may not be available in a cost-effective manner, or at all. We expect to continue to expend substantial resources on marketing efforts to increase brand awareness; product innovation and development; technology platform maintenance and improvements to support sales; and general administration, including increased finance, legal, and accounting expenses associated with being a public company.

These investments may not result in the growth of our business. Even if these investments do result in the growth of our business, if we do not effectively manage our growth, we may not be able to execute on our business plan, respond to competitive pressures, take advantage of market opportunities, satisfy consumer requirements or maintain high-quality product offerings, any of which could adversely affect our business, financial condition, results of operations and prospects. You should not rely on our historical rate of revenue growth as an indication of our future performance or the rate of growth which we may experience in any new category or from international expansion.

In addition, to support continued growth, we must effectively integrate, develop and motivate a large number of new employees while maintaining our corporate culture. We face significant competition for personnel. To attract top talent, we must offer competitive compensation and benefits packages before we can validate the productivity of new employees. We may also need to increase our employee compensation levels to remain competitive in attracting and retaining talented employees. Additionally, we may not be able to hire new employees quickly enough to meet our needs. The risks associated with a rapidly growing workforce will be particularly acute to the extent we expand into new product categories and markets outside of the United States. If we fail to effectively manage our hiring needs or successfully integrate new hires, our efficiency, ability to meet forecasts and employee morale, productivity and retention could suffer, which could have an adverse effect on our business, financial condition, results of operations and prospects.

 

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We are also required to manage numerous relationships with vendors and other third parties. Further growth of our operations, vendor base, fulfillment centers, information technology systems or internal controls and procedures may not be adequate to support our operations. If we are unable to manage the growth of our organization effectively, our business, financial condition, results of operations and prospects may be adversely affected.

Our quarterly operating results fluctuate, which could cause our stock price to decline.

Our quarterly operating results fluctuate for a variety of reasons, many of which are beyond our control. Our revenue has fluctuated for a variety of reasons, including as a result of adverse market conditions due to the COVID-19 pandemic and the associated imposition and easing of restrictions on retail and travel opportunities; the seasonality of market transactions; our success in attracting new and maintaining relationships with existing retail and ecommerce partners; our success in executing on our strategy and the impact of any changes in our strategy; the timing and success of product launches, including new products that we may introduce; the success of our marketing efforts; general market conditions; disruptions or defects in our technology platform, such as privacy or data security breaches, errors in our software or other incidents that impact the availability, reliability, or performance of our platform; the impact of competitive developments and our response to those developments; supply chain issues; and our ability to recruit and retain employees. Historically, we have realized a higher portion of our net revenues in the first quarter when customers are focused on improving their lifestyle and quality of living, which we believe makes our products and marketing messages particularly appealing, and a lower portion of our net revenues in the fourth quarter when many customers are focused on holiday shopping. In addition, our operating expenses fluctuate from period to period, in part in anticipation of their seasonality.

Fluctuations in our quarterly operating results may cause those results to fall below our financial guidance or other projections, or the expectations of analysts or investors, which could cause the price of our common stock to decline. Fluctuations in our results could also cause other problems, including, for example, analysts or investors changing their models for valuing our common stock, particularly post-pandemic. We could experience short-term liquidity issues, our ability to retain or attract key personnel may diminish, and other unanticipated issues may arise.

We believe that our quarterly operating results may vary in the future and that period-to-period comparisons of our operating results may not be meaningful. For example, our overall historical growth rate and the impacts of the COVID-19 pandemic may have overshadowed the effect of seasonal variations on our recent historical operating results. Any seasonal effects may change or become more pronounced over time, which could also cause our operating results to fluctuate. You should not rely on the results of any given quarter as an indication of future performance.

We have incurred significant losses since inception, we expect to incur losses in the future, and New Grove may not be able to generate sufficient revenue to achieve and maintain profitability.

Grove has incurred significant losses since its inception. For the years ended December 31, 2021 and December 31, 2020, Grove incurred net losses of $136 million and $72 million, respectively. As of December 31, 2021, Grove had an accumulated deficit of $490 million.

We expect to continue to incur significant expenses and operating losses for the foreseeable future as we broaden our customer base, develop our brick-and-mortar retail distribution platform and expand our sales to third-party ecommerce channels, enhance our existing online direct-to-consumer website and mobile application, continue to expand research and development efforts grow the product assortment offered by our Grove-owned brands, acquire or create additional Grove-owned brands, and hire additional employees to support our growth. Historically, Grove has devoted most of its financial and other resources on sales and marketing, including a significant expansion of our marketing team and budget; continued expansion of our business; research and development related to our products; and general administration expenses, including legal, accounting and other

 

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expenses. We may not succeed in increasing our revenues, which historically have been reliant on our online direct-to-consumer website and mobile application, in a manner that will be sufficient to offset these higher expenses. Any failure to increase our revenues as we implement initiatives to grow our business could prevent us from achieving profitability. We cannot be certain that we will be able to achieve profitability on a quarterly or annual basis. If we are unable to address these risks and difficulties as we encounter them, our business, financial condition and results of operations may suffer.

Grove’s independent registered public accounting firm have expressed substantial doubt about Grove’s ability to continue as a going concern, and neither Grove nor VGAC II can assure you that the consummation of the Mergers will eliminate this concern.

Grove’s independent registered public accounting firm have expressed substantial doubt about Grove’s ability to continue as a going concern, as set forth in their opinion included elsewhere in this proxy statement/consent solicitation statement/prospectus.

The substantial doubts about Grove’s ability to continue as a going concern relate primarily to Grove’s forecasted working capital deficit, which Grove expects will be cured as a result of the cash Grove expects to receive upon the consummation of the Mergers. Grove’s ability to continue as a going concern is, however, dependent on various factors, and neither Grove nor VGAC II can assure you that the consummation of the Mergers will eliminate any doubts about Grove’s ability to continue as a going concern. For example, if holders of VGAC II common stock elect to redeem shares in an amount that is above what VGAC II expects, there may be less cash available to New Grove at the consummation of the Mergers than expected. If Grove is unable to continue as a going concern, Grove may be forced to sell assets, seek bankruptcy relief or otherwise restructure its balance sheet or liquidate and you could lose all or a substantial portion of your investment.

We may not be able to compete successfully.

The markets in which we compete are evolving rapidly and intensely competitive, and we face a broad array of competitors from many different industry sectors.

Our business includes a variety of product types and delivery channels. Our current and potential competitors include: (1) companies that sell household and personal care products online and in physical stores; (2) physical, e-commerce, and omnichannel retailers, vendors, distributors, and manufacturers of the products we offer and sell to consumers; and (3) web search engines, comparison shopping websites, social networks, and other online and app-based means of discovering, using, or acquiring goods, either directly or in collaboration with other retailers. We compete based on various product attributes, including sustainability, price, and quality.

We compete with producers of household and personal care products and e-commerce and traditional sales outlets for these products. Some of our competitors, like Seventh Generation and Mrs. Meyers, are also our partners and we distribute their products. In addition, there is a risk that our emerging retail distribution partnerships will erode the success of our DTC e-commerce business. Some of our current and potential competitors have longer histories, larger fulfillment infrastructures, better established wholesale and retail distribution networks, faster shipping times, lower-cost shipping, lower operating costs, larger consumer bases, and greater control over inputs critical to our business such as financial, marketing, institutional and other resources, and larger consumer bases than we do. They may secure better terms from suppliers, adopt more aggressive pricing, pursue restrictive distribution agreements that restrict our access to supply, direct consumers to their own offerings instead of ours, and devote more resources to research and development, technology, infrastructure, fulfillment, and marketing and develop products or services that are similar to ours or that achieve greater market acceptance. The Internet facilitates competitive entry and comparison shopping, which enhances the ability of new, smaller, or lesser-known businesses to compete against us. Our businesses is subject to rapid change and the development of new business models and the entry of new and well-funded competitors. Other companies also may enter into business combinations or alliances that strengthen their competitive positions.

 

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Competition in the natural and sustainable consumer products market presents an ongoing threat to the success of our business.

The number of companies entering the natural and sustainable consumer products market with offerings similar to ours continues to increase. We believe that our ability to compete depends upon many factors both within and beyond our control, including the size of our customer base; the timing and market acceptance of products, including the developments and enhancements to those products and services that we or our competitors offer; customer service and support efforts, selling and marketing efforts, ease of use, performance, price and reliability of the products and services that we and our competitors develop, and our brand strength relative to our competitors. Some of our current and potential competitors have longer operating histories and greater financial, technical, marketing and other resources than we do. These factors may allow our competitors to respond more quickly or efficiently than we can to new or emerging technologies. These competitors may engage in more extensive research and development efforts, undertake more far-reaching marketing campaigns and adopt more aggressive pricing policies, which may allow them to build larger customer bases than ours or greater market acceptance than us.

We must find sustainable solutions that support our brand and long-term growth.

Our vision to grow our business will require us to innovate and develop more sustainable ways of doing business. In a world where resources are scarce and demand for them continues to increase, it is critical that we succeed in reducing our resource consumption and converting to sustainably sourced supplies. In doing this, we are dependent on the efforts of partners and various certification bodies. There can be no assurance that we will be successful developing sustainable business solutions and our failure to do so could limit our growth and profit potential and damage our corporate reputation.

Today, Grove is completely plastic neutral, which means that for every ounce of plastic that we ship to our customers, we, through our partner rePurpose Global, collect and retire the same amount of nature bound plastic pollution. To quantify the amount of plastic we ship to our customers, we weigh and record the amount of plastic in every Grove Brand product we sell, and receive data on plastic weight from the makers of third-party products sold on our platform. Using these numbers, we calculate how much plastic we send in each order. Furthermore, Grove has a stated goal of our products being plastic-free by 2025. If Grove is unable to remain plastic neutral or unable to meet our goal of our products being plastic-free by 2025, our brand reputation may suffer. Not only is there a risk around finding appropriate replacement materials, but due to high demand the cost of alternative packaging materials could significantly increase in the foreseeable future and this could impact our business performance. Similarly, the cost associated with collecting and recycling nature bound plastic could significantly increase in the foreseeable future and this could impact our business performance.

If we fail to cost-effectively acquire new consumers or retain our existing consumers, our business could be adversely affected.

Our success depends on our ability to attract new customers and engage existing customers cost-effectively. To acquire and engage customers, we must, among other things, promote and sustain our platform, provide high-quality products, user experiences, and customer service. If customers do not perceive our e-commerce service or products to be reliable, sustainable and of high quality, if we fail to introduce new and improved products and services, or if we introduce new products or services that are not favorably received by the market, we may not be able to attract or retain customers.

We have historically acquired a significant number of our customers through digital advertising on social media channels owned by Facebook that may, along with other social media platforms we may engage in the future, terminate their agreements with us at any time or introduce factors beyond our control, such as such as adjustments to algorithms that may decrease user engagement or negatively affect our ability to reach a broad audience; increases in pricing; and changes in policies that may delay or prevent our advertising through these channels, all of which could impact our ability to attract new customers.

 

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We have recently introduced marketing initiatives designed to acquire customers through increased search engine optimization, streaming digital video services, and linear television. These new acquisition channels may not perform as well as our historical social media advertising channels. Our efforts to diversify customer acquisition channels may not be effective, which could negatively affect our results of operations.

Customer acquisition costs may fluctuate and rise on the channels that have been successful for us historically and on new channels that we are introducing. Rising costs may limit our ability to expand or maintain or acquisition efforts which could negatively affect our results of operations.

Changes to our DTC business designed to attract new customers and retain existing customers, including, but not limited to expanded shopping personalization, non-subscription options, and user generated and editorial content may not perform as well as our historical DTC platform which could negatively impact our results of operations.

Other factors may reduce our ability to acquire, maintain and further engage with customers, including the effectiveness of our marketing efforts and other expenditures we make to continue to acquire new customers and maintain and increase engagement with existing customers; system updates to app stores and advertising platforms; changes in search algorithms by search engines; the development of new search engines or social media sites that reduce traffic on existing search engines and social media sites; and consumer behavior changes as a result of the COVID-19 pandemic, or otherwise.

In addition, we believe that many of our new customers originate from word-of-mouth and other non-paid referrals from existing customers, including referral discounts and gift giving, so we must ensure that our existing customers remain loyal and continue to derive value from our products and services in order to continue receiving those referrals. Consequently, if our efforts to satisfy our existing customers are not successful, we may not be able to attract new customers.

Moreover, consumer preferences may change, and customers may not purchase through our marketplace as frequently or spend as much with us as historically has been the case. As a result of these potential changes, the revenue generated from customer transactions may not be as high as revenue generated from transactions historically.

We must expend resources to maintain consumer awareness of our brand, build brand loyalty and generate interest in our products. Our marketing strategies and channels will evolve and our efforts may or may not be successful.

To remain competitive and expand and keep market share for our products across our various channels, we need to increase our marketing and advertising spending. Substantial advertising and promotional expenditures may be required to maintain or improve our brand’s market position or to introduce new products to the market, and we are increasingly engaging with more traditional media, such as television and web-based streaming services, which may not prove successful. An increase in our marketing and advertising efforts may not maintain our current reputation, lead to increased brand awareness, or attract new customers. If we are unable to maintain and promote a favorable perception of our brand and products on a cost-effective basis, our business, financial condition, results of operations and prospects could be adversely affected.

Our brand and reputation may be diminished due to real or perceived quality, safety, efficacy or environmental impact issues with our products, which could have an adverse effect on our business, financial condition, results of operations and prospects.

We believe our consumers rely on us to provide them with clean, sustainable, well-designed, and effective products. Any loss of confidence on the part of consumers in our products or the ingredients used in our products, whether related to actual or perceived product contamination or product safety or quality failures, environmental

 

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impacts, or inclusion of prohibited ingredients, or ingredients that are perceived to be “toxic”, could tarnish the image of our brand and could cause consumers to choose other products. Allegations of contamination or other adverse effects on product safety or efficacy or suitability for use by a particular consumer or on the environment, even if untrue, may require us to expend significant time and resources responding to such allegations and could, from time to time, result in a recall of a product from any or all of the markets in which the affected product was distributed. Any such issues or recalls could negatively affect our ability to achieve or maintain profitability and brand image.

If our products are found to be, or perceived to be, defective or unsafe, or if they otherwise fail to meet our consumers’ expectations, our relationships with consumers could suffer, the appeal of our brand could be diminished, we may need to recall some of our products and/or become subject to regulatory action, and we could lose sales or market share or become subject to boycotts or liability claims. In addition, safety or other defects in our competitors’ products or products using the Grove name in other consumer categories, could reduce consumer confidence in or demand for our own products if consumers view them to be similar. Any such adverse effect could be exacerbated by our market positioning as a purveyor of clean, sustainable, well-designed, and effective products and may significantly reduce our brand value. Issues regarding the safety, efficacy, quality or environmental impact of any of our products, regardless of the cause, may have an adverse effect on our brand, reputation and operating results.

Further, our customers may engage with us online through social media platforms by providing feedback and public commentary about all aspects of our business. Information concerning us, whether accurate or not, may be posted on social media platforms at any time and may have a disproportionately adverse impact on our brand, reputation, or business. The harm may be immediate without affording us an opportunity for redress or correction and could have a material adverse effect on our business, results of operations, financial condition, and prospects.

Failure to introduce new products that meet the expectations of our customers may adversely affect our ability to continue to grow.

We have a limited history introducing new products and services to our customers. New potential products and services may fail at any stage of development or commercialization, including after launch, and if we determine that any of our current or future products are unlikely to succeed, we may abandon them without any return on our investment. In addition, any unsuccessful effort may adversely affect our brand and reputation. If our efforts to attract new customers and engage existing customers with new and enhanced products are unsuccessful or if such efforts are more costly than we expect, our business may be harmed and our potential for growth may be impaired.

The COVID-19 global pandemic and related government, private sector and individual consumer responsive actions may adversely affect our business operations, employee availability, financial performance, liquidity and cash flow for an unknown period of time.

The outbreak of COVID-19 has been declared a pandemic by the World Health Organization and continues to spread in the U.S., Canada, and in many other countries globally. Related government and private sector responsive actions have adversely affected, and may continue to adversely affect, our business operations. It is impossible to predict the effect and ultimate impact of the COVID-19 pandemic, as the situation continues to evolve and variant strains of the virus have led to increased uncertainty. The COVID-19 pandemic has disrupted the global supply chain and may cause disruptions to our operations if a significant number of employees are quarantined or if they are otherwise limited in their ability to work at our locations or travel. Any worsening of the COVID-19 pandemic, including the unknown potential impact of variant strains, and any future actions in response to the COVID-19 pandemic by federal, state or local authorities, including those that order the shutdown of non-essential businesses or limit the ability of our employees to travel to work, could impact our ability to take or fulfill our customers’ orders and operate our business. If surges related to the COVID-19 pandemic or any future pandemics outpace our capacity or occur at unexpected times, we may be unable to fully meet our customers’ demands for our products.

 

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As a result of the COVID-19 pandemic, many of our personnel are working remotely and it is possible that this could have a negative impact on the execution of our business plans and operations. If a natural disaster, power outage, connectivity issue, or other event occurred that impacted our employees’ ability to work remotely, it may be difficult or, in certain cases, impossible, for us to continue our business for a substantial period of time. The increase in remote working may also result in consumer privacy, IT security and fraud concerns, increase our exposure to potential wage and hour issues, and decrease the cohesiveness of our teams and our ability to maintain our corporate culture. We may experience increased costs as we prepare our facilities for a safe return to work environment and experiment with hybrid work models.

Plans to open new fulfillment centers or to expand the capacity of our existing fulfillment centers over the next few years may also be delayed or made more costly by the continuing spread of COVID-19 and variant strains. Disruptions to the operations of our fulfillment centers and delays or increased costs in the expansion of our fulfillment center capacity may negatively impact our financial performance and slow our future growth.

Quantifying the adverse impact of the COVID-19 pandemic is difficult given the pervasive disruptions and changes to society that it has caused. At the onset of the pandemic, we incurred approximately $600,000 in costs associated with additional cleaning and sanitization measures such as sanitation stations, supplies, and installation of disinfecting lights. In early 2020, we also reduced our marketing spending because of the economic uncertainty associated with the pandemic, which potentially reduced our new customer acquisition, which is primarily driven by our marketing activities. As the pandemic has continued, its disruption has spread to our shipping, supply chain and labor, along with inflation resulting from the pandemic. For example, since the start of the pandemic we have experienced an increase of approximately 10% in wages for employees at our fulfillment centers due to labor shortages and macroeconomic trends in labor markets, and increased inbound shipping rates that reduced margins on our Grove-owned brands by approximately 200 basis points. As a result of supply chain disruptions and increased shipping costs, we are also placing orders with our suppliers further in advance, which negatively impacts our cash flow. While we believe some of these upward cost trends have stabilized, others may continue to increase in the future which may result in further adverse financial impacts.

At the same time, the COVID-19 pandemic has driven a surge of demand for direct-to-consumer businesses such as ours. Early in the pandemic, we saw substantial growth in our customer base and orders, particularly for certain cleaning products, as consumers have opted for ecommerce solutions rather than in person shopping, but the pandemic also caused many customers to over-purchase and cancel their subscriptions. As the COVID-19 pandemic and restrictions related thereto wind down, we have begun to experience a softening of demand compared to the COVID-19 pandemic surge as consumers retain to “normal” shopping activities.

The uncertainty around the duration of business disruptions and the extent of the spread of the virus in the U.S. and to other areas of the world will likely continue to adversely impact the national or global economy and negatively impact consumer spending. Any of these outcomes could have a material adverse impact on our business, financial condition, operating results and ability to execute and capitalize on our strategies. The full extent of the COVID-19 pandemic’s impact on our operations and financial performance depends on future developments that are uncertain and unpredictable, including the duration and spread of the pandemic, its impact on capital and financial markets and any new information that may emerge concerning the severity of the virus, its spread to other regions as well as the actions taken to contain it, among others. The COVID-19 pandemic has adversely affected our business operations, costs of doing business, availability of labor, access to inventory, supply chain operations and financial results for a period of time that is currently unknown.

We pursue acquisitions to expand our business, and if any of those acquisitions are unsuccessful, our business may be harmed.

Our strategy includes the expansion of our business through the acquisition of other businesses, products or technologies, or through strategic alliances. Acquisitions involve numerous risks, including the possibility that we will pay more than the value we derive from the acquisitions which could result in future non-cash

 

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impairment charges, and incremental operating losses; difficulties in integration of the operations, technologies and products of the acquired companies, which may require significant attention of our management that otherwise would be available for the ongoing development of our business; the assumption of certain known and unknown liabilities of the acquired companies; difficulties in retaining key relationships with employees, customers, collaborators, vendors and suppliers of the acquired company; and in the case of acquisitions outside of the jurisdictions where we currently operates, the need to address the particular economic, currency, political, and regulatory risks associated with specific countries, particularly those related to our collection of sensitive data, regulatory approvals, and tax management, which may result in significant additional costs or management overhead for our business. Failure to successfully address any of these or other unforeseen challengers would adversely affect our business.

We may experience damage or destruction to our distribution centers, which may harm our business, results of operations and financial condition.

Our distribution centers, as well as our headquarters, are located in areas that have a history of natural disasters, including severe weather events, rendering our distribution centers vulnerable to damage. Any large-scale damage to or catastrophic loss of products stored in our distribution centers, due to natural disasters or man-made disasters such as arson, theft, power disruptions, computer viruses, data security breaches or terrorism, could result in the reduction in value of our inventory and a significant disruption in our business. Further, natural disasters such as earthquakes, hurricanes, tornadoes, fires, floods and other adverse weather and climate conditions; unforeseen health crisis, such as pandemics and epidemics, political crises, such as terrorist attacks, war and other political instability (including, for example, cyberattacks or other attacks carried out by Russia following its invasion of Ukraine in February 2022); or other catastrophic events, could disrupt our operations in any of our offices, our remote workforce and distribution centers. For example, in March 2020, due to the progression of COVID-19, we temporarily closed our corporate offices to slow the spread of COVID-19 and protect our employees. Such closures have slowed and may in the future slow or temporarily halt our operations and harm our business, results of operations and financial condition.

We are dependent on our management team, and the loss of one or more key employees or groups could harm our business and prevent us from implementing our business plan in a timely manner.

Our success depends substantially upon the continued services of our executive officers and other key members of management, particularly our Chief Executive Officer. From time to time, there may be changes in our executive management team resulting from the hiring or departure of executives. Such changes in our executive management team may be disruptive our business. We do not have employment agreements with any our executive officers or key management personnel and, therefore, they could terminate their employment with us at any time. We do not maintain key person life insurance policies on any of our employee. The loss of one or more of our key employees or groups could seriously harm our business.

Labor-related matters, including labor disputes, may adversely affect our operations.

None of our employees are currently represented by a union. If our employees decide to form or affiliate with a union, we cannot predict the negative effects such future organizational activities will have on our business and operations. If we were to become subject to work stoppages, we could experience disruption in our operations, including delays in merchandising operations and shipping, and increases in our labor costs, which could harm our business, results of operations and financial condition.

If we cannot successfully manage the unique challenges presented by international markets, we may not be successful in expanding our operations outside of the United States.

We offer our products and services in the contiguous United States. Although international expansion is part of our strategy, we may never pursue international expansion and may not be successful if we do so. We would be

 

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subject to a variety of risks inherent in doing business internationally, including political, social and/or economic instability; risks related to governmental regulations in foreign jurisdictions and unexpected changes in regulatory requirements and enforcement; fluctuations in currency exchange rates; higher levels of credit risk and payment fraud; enhanced difficulties of integrating any foreign acquisitions; burdens of complying with a variety of foreign laws; lesser protection for intellectual property rights in some countries; difficulties in staffing and managing global operations and the increased travel, infrastructure and legal compliance costs associated with operation from international locations and subsidiaries; different regulations and practices with respect to employee/employer relationships, existence of workers’ councils and labor unions, and other challenges caused by distance, language, and cultural differences, making it harder to do business in certain international jurisdictions; compliance with statutory equity requirements; and management of tax consequences and compliance.

Our business, including our costs and supply chain, is subject to risks associated with sourcing, manufacturing, warehousing, distribution, infrastructure and logistics to third-party providers, and the loss of any of our key suppliers or logistical service providers could negatively impact our business.

All of the products we offer are supplied or manufactured by a limited number of third-party suppliers and manufacturers, and as a result we may be subject to price fluctuations or supply disruptions. Our operating results would be negatively impacted by increases in the costs of our products, and we have no guarantees that costs will not rise. In addition, as we expand into new categories and product types, we expect that we may not have strong purchasing power in these new areas, which could lead to higher costs than we have historically seen in our current categories. We may not be able to pass increased costs on to consumers, which could adversely affect our operating results. Moreover, in the event of a significant disruption in the supply of the materials used in the manufacture of the products we offer, we and the vendors that we work with might not be able to locate alternative suppliers of materials of comparable quality at an acceptable price. Furthermore, our reliance on suppliers and manufacturers outside of the United States, the number of third parties with whom we transact and the number of jurisdictions to which we sell complicates our efforts to comply with customs duties and excise taxes; any failure to comply could adversely affect our business.

In addition, products and merchandise we receive from manufacturers and suppliers may not be of sufficient quality or free from damage, or such products may be damaged during shipping, while stored in our warehouse fulfillment centers or with third-party ecommerce or retail customers or when returned by consumers. We may incur additional expenses and our reputation could be harmed if consumers and potential consumers believe that our products do not meet their expectations, are not properly labeled or are damaged. Quality control problems could also result in regulatory action, such as FDA Warning Letters, restrictions on importation, product liability litigation, product seizures, products of inferior quality or product stock outages or shortages, harming our sales and creating inventory write-downs for unusable products.

We purchase significant amounts of product from a limited number of suppliers with limited supply capabilities. There can be no assurance that our current suppliers will be able to accommodate our anticipated growth or continue to supply current quantities at preferential prices. In the past, we have experienced supply shortage of certain goods that has resulted in lost sales. We generally do not maintain long-term supply contracts with any of our suppliers and any of our suppliers could discontinue selling to us at any time. An inability of our existing suppliers to provide materials in a timely or cost-effective manner could impair our growth and have an adverse effect on our business, financial condition, results of operations and prospects.

We rely or may rely on SaaS technologies from third parties in order to operate critical functions of our business, including financial management services, payment processing, customer relationship management services, website platform services, ecommerce services, email services, supply chain services and data storage services. If these services become unavailable due to extended outages or interruptions or because they are no longer available on commercially reasonable terms or prices or for any other reason, or if we fail to migrate successfully to new services, our expenses could increase, our ability to manage our finances could be interrupted, our processes for managing sales of our offerings and supporting our consumers could be impaired,

 

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our ability to communicate with our suppliers could be weakened and our ability to access or save data stored to the cloud may be impaired until equivalent services, if available, are identified, obtained and implemented, all of which could have an adverse effect on our business, financial condition, results of operations and prospects.

We utilize cloud services from third-party data center facilities operated by AWS. Any damage to, failure of or interference with our cloud service that is hosted by us, AWS or by third-party providers we may utilize in the future, whether as a result of our actions, actions by the third-party data centers, actions by other third parties, or acts of God, could result in interruptions in our cloud service and/or the loss of our or our customers’ data, including personal information. Impairment of, or interruptions in, our cloud services may subject us to claims and litigation and adversely affect our ability to attract new customers. Our business will also be harmed if our customers and potential customers believe our services are unreliable. Additionally, any limitation of the capacity of our data centers could impede our ability to scale, onboard new customers or expand the usage of existing customers, which could adversely affect our business, financial condition and results of operations. While we have some disaster recovery arrangements in place, our preparations may not be adequate to account for disasters or similar events that may occur in the future and may not effectively permit us to continue operating in the event of any problems with respect to our systems or those of our third-party data centers or any other third-party facilities. Our disaster recovery and data redundancy measures may be inadequate, and our business interruption insurance may not be sufficient to compensate us for the losses that could occur.

If any of our key suppliers becomes insolvent, ceases or significantly reduces its operations or experiences financial distress or if any environmental, economic or other outside factors impact their operations, our operations could be substantially disrupted. If we are unable to identify or enter into distribution relationships with new suppliers or to replace the loss of any of our existing suppliers, we may experience a competitive disadvantage, our business may be disrupted and our business, financial condition, results of operations and prospects could be adversely affected.

If our third-party suppliers and manufacturers do not comply with ethical business practices or with applicable laws and regulations, our reputation, business, financial condition, results of operations and prospects could be harmed.

We continually seek to expand our base of suppliers, especially as we identify new products that necessitate new or additional materials. We also require our new and existing suppliers to meet our ethical and business partner standards. Suppliers may also have to meet governmental and industry standards and any relevant standards required by our consumers, which may require additional investment and time on behalf of suppliers and us.

Our reputation and our consumers’ willingness to purchase our products depend in part on our suppliers’, manufacturers’, and retail partners’ compliance with ethical employment practices, such as with respect to child labor, wages and benefits, forced labor, discrimination, safe and healthy working conditions, and with all legal and regulatory requirements relating to the conduct of their businesses. We do not exercise control over our suppliers, manufacturers, and retail partners and cannot guarantee their compliance with ethical and lawful business practices. If our suppliers, manufacturers, or retail partners fail to comply with applicable laws, regulations, safety codes, employment practices, human rights standards, quality standards, environmental standards, production practices, or other obligations, norms, or ethical standards, our reputation and brand image could be harmed, and we could be exposed to litigation, investigations, enforcement actions, monetary liability, and additional costs that would harm our reputation, business, financial condition, results of operations and prospects.

If we or our distribution partners do not successfully optimize, operate and manage the expansion of the capacity of our warehouse fulfillment centers, our business, financial condition, results of operations and prospects could be adversely affected.

We operate warehouse fulfillment centers located in Reno, Nevada, Elizabethtown, Pennsylvania, and St. Peters, Missouri. If we do not optimize and operate our warehouse fulfillment centers successfully and

 

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efficiently, it could result in excess or insufficient fulfillment capacity, an increase in costs or impairment charges or harm our business in other ways. In addition, if we do not have sufficient fulfillment capacity or experience a problem fulfilling orders in a timely manner, our consumers may experience delays in receiving their purchases, which could harm our reputation and our relationship with our consumers.

We have designed and established our own fulfillment center infrastructure, including customizing inventory and package handling software systems, which is tailored to meet the specific needs of our business. If we continue to add fulfillment and warehouse capabilities, add new businesses or categories with different fulfillment requirements or change the mix in products that we sell, our fulfillment network will become increasingly complex and operating it will become more challenging. Failure to successfully address such challenges in a cost-effective and timely manner could impair our ability to timely deliver purchases to our consumers and merchandise inventory to our retail and ecommerce partners, and could have an adverse effect on our reputation and ultimately, our business, financial condition, results of operations and prospects.

If we grow faster than we anticipate, we may exceed our fulfillment center capacity sooner than we anticipate, we may experience problems fulfilling orders in a timely manner or our consumers may experience delays in receiving their purchases, which could harm our reputation and our relationships with our consumers. In such event, we would need to increase our capital expenditures more than anticipated and in a shorter time frame than we currently anticipate. Our ability to expand our fulfillment center capacity, including our ability to secure suitable facilities and recruit qualified employees, have been and may in the future be adversely affected by the COVID-19 pandemic and related governmental orders. Many of the expenses and investments with respect to our fulfillment centers are fixed, and any expansion of such fulfillment centers will require additional investment of capital. We expect to incur higher capital expenditures in the future for our fulfillment center operations as our business continues to grow.

Shipping is a critical part of our business and any changes in our shipping arrangements or any interruptions in shipping could adversely affect our operating results.

We rely on several vendors for our shipping requirements. If we are not able to negotiate acceptable pricing and other terms with these vendors or if they experience performance problems or other difficulties, it could negatively impact our operating results and our consumer experience. Rising shipping costs and the imposition of surcharges from time to time could negatively impact our operating results. In addition, our ability to receive inbound inventory and ship products to consumers and retailers may be negatively affected by inclement weather, fire, flood, power loss, earthquakes, labor disputes, acts of war or terrorism, trade embargoes, customs and tax requirements and similar factors. For example, the recent invasion of Ukraine by Russia in February 2022 could increase disruptions in shipping or our supply chain. We are also subject to risks of damage or loss during delivery by our shipping vendors. If our products are not delivered in a timely fashion or are damaged or lost during delivery, our consumers could become dissatisfied and cease shopping on our site or retailer or third-party ecommerce sites that carry our products, which could have an adverse effect on our business, financial condition, operating results and prospects.

Risks associated with the outsourcing of our fulfillment process and other technology-related functions could materially and adversely affect our business, financial condition, and results of operations.

We have also outsourced portions of our fulfillment process, as well as certain technology-related functions, to third-party service providers. Specifically, we rely on third parties in a number of foreign countries and territories, we are dependent on third-party vendors for credit card processing, and we use third-party hosting and networking providers to host our sites. The failure of one or more of these entities to provide the expected services on a timely basis, or at all, or at the prices we expect, or the costs and disruption incurred in changing these outsourced functions to being performed under our management and direct control or that of a third party, could have an adverse effect on our business, financial condition, results of operations and prospects. We are not party to long-term contracts with some of our retail and ecommerce partners, and upon expiration of these existing agreements, we may not be able to renegotiate the terms on a commercially reasonable basis, or at all.

 

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We are subject to risks related to online payment methods, including third-party payment processing-related risks.

We currently accept payments using a variety of methods, including credit card, debit card, and gift cards. As we offer new payment options to consumers, we may be subject to additional regulations, compliance requirements, fraud and other risks. We also rely on third parties to provide payment processing services, and for certain payment methods, we pay interchange and other fees, which may increase over time and raise our operating costs and affect our ability to achieve or maintain profitability. We are also subject to payment card association operating rules and certification requirements, including the Payment Card Industry Data Security Standard, or PCI-DSS, and rules governing electronic funds transfers, which could change or be reinterpreted to make it difficult or impossible for us to comply. If we (or a third party processing payment card transactions on our behalf) suffer a security breach affecting payment card information, we may have to pay onerous and significant fines, penalties and assessments arising out of the major card brands’ rules and regulations, contractual indemnifications or liability contained in merchant agreements and similar contracts, and we may lose our ability to accept payment cards for payment for our goods and services, which could materially impact our operations and financial performance.

Furthermore, as our business changes, we may be subject to different rules under existing standards, which may require new assessments that involve costs above what we currently pay for compliance. As we offer new payment options to consumers, including by way of integrating emerging mobile and other payment methods, we may be subject to additional regulations, compliance requirements and fraud. If we fail to comply with the rules or requirements of any provider of a payment method we accept, if the volume of fraud in our transactions limits or terminates our rights to use payment methods we currently accept, or if a data breach occurs relating to our payment systems, we may, among other things, be subject to fines or higher transaction fees and may lose, or face restrictions placed upon, our ability to accept credit card payments from consumers or facilitate other types of online payments. In addition, our customers could lose confidence in certain payment types, which may result in a shift to other payment types or potential changes to our payment systems that may result in higher costs.

We also occasionally receive orders placed with fraudulent data and we may ultimately be held liable for the unauthorized use of a cardholder’s card number in an illegal activity and be required by card issuers to pay charge-back fees. Charge-backs result not only in our loss of fees earned with respect to the payment, but also leave us liable for the underlying money transfer amount. If our charge-back rate becomes excessive, card associations also may require us to pay fines or refuse to process our transactions. In addition, we may be subject to additional fraud risk if third-party service providers or our employees fraudulently use consumer information for their own gain or facilitate the fraudulent use of such information. Overall, we may have little recourse if we process a criminally fraudulent transaction. If we fail to adequately control fraudulent credit card transactions, we may face civil liability, diminished public perception of our security measures, and significantly higher credit card-related costs, each of which could harm our business, results of operations and financial condition.

We have only recently expanded to offer our own branded products in retail stores and our inability to secure, maintain and increase our presence in retail stores could adversely impact our revenue.

Our omnichannel strategy includes selling our products through third-party ecommerce and retail partners (including their websites). Our retail operations were established in 2021 and include sales to retail stores and their related websites. The success of our business is largely dependent on our continuing development of strong relationships with major retail chains. To date, our only retail partnership has been with Target, and our experience operating through the retail channel is extremely limited. Factors that could affect our ability to maintain or expand our sales to Target or any future retail distribution partner include: (a) failure to accurately identify the needs of our customers; (b) a lack of customer acceptance of new products or product expansions; (c) unwillingness of our retail distribution partners and customers to attribute premium value to our new or existing products or product expansions relative to competing products; (d) failure to obtain floor space from retail distribution partners; (e) new, well-received product introductions by competitors; (f) damage to our

 

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relationships with our retail distribution partners due to brand or reputational harm; (g) delays or defaults on our retail distribution partners’ payment obligations to us; and (h) store closures, decreased foot traffic, recession or other adverse effects resulting from public health crises such as the current COVID-19 pandemic (or other future pandemics or epidemics).

The loss of our relationship with Target or any other future large retail partner could have a significant impact on our revenue. In addition, we may be unable to secure adequate shelf space in new markets, or any shelf space at all, until we develop relationships with the retailers that operate in such markets. We may not be successful in developing those relationships. Consequently, growth opportunities through our retail operations may be limited and our revenue, business, financial condition, results of operations and prospects could be adversely affected if we are unable to successfully establish relationships with other retailers in new or current markets. To date, our retail sales have not comprised a significant percentage of our total revenue.

We also face competition to display our products on store shelves and obtain optimal presence on those shelves. Due to the intense competition for limited shelf space, retailers are in a position to negotiate favorable terms of sale, including price discounts, allowances and product return policies. To the extent we increase discounts or allowances in an effort to secure shelf space, our operating results could be adversely affected. We may not be able to increase or sustain our volume of retail shelf space or offer retailers price discounts sufficient to overcome competition. As a result our retail distribution channels may not continue to grow and may shrink and our sales and results of operations could be adversely affected. In addition, many of our competitors have significantly greater financial, manufacturing, marketing, management and other resources than we do and may have greater name recognition, a more established distribution network and a larger base of wholesale customers and distributors. Furthermore, our retail sales, to the extent successful, may compete with and erode our DTC business. If we are unable to address these challenges, our business may be adversely affected.

We may be unable to adequately obtain, maintain, protect, defend and enforce our intellectual property rights.

Our ability to compete effectively is dependent in part upon our ability to obtain, maintain, protect, defend and enforce our intellectual property and other proprietary rights, including our proprietary technology. We establish and protect our intellectual property and proprietary rights, including our proprietary information and technology, through a combination of confidentiality procedures and other contractual provisions, as well as through patent, trademark, copyright, trade secret and other intellectual property laws in the United States and similar laws in certain other jurisdictions. However, the steps we take to obtain, maintain, protect, defend and enforce our intellectual property and proprietary rights may be inadequate. There can be no assurance that these protections will be available in all cases or will be adequate to prevent our competitors or other third parties from copying, reverse engineering, accessing or otherwise obtaining and using our technology, intellectual property or proprietary rights or solutions without our permission.

We pursue the registration of certain aspects of our intellectual property in the U.S. and other countries. We are seeking to protect certain aspects of our intellectual property in an increasing number of jurisdictions, a process that is expensive and time-consuming and may not be successful or which we may not pursue in every jurisdiction in which we conduct business. As we apply to register our unregistered trademarks in the U.S. and other countries, our applications may not be allowed for registration in a timely fashion or at all, and our registered trademarks may not be maintained or enforced. In addition, third parties may oppose our trademark and service mark applications or trademark registrations, or otherwise challenge our use of the trademarks and service marks. In certain countries outside of the U.S., trademark registration is required to enforce trademark rights. If we do not secure registrations for our trademarks, we may encounter more difficulty in enforcing them against third parties than we otherwise would. We also may not be able to acquire or maintain appropriate domain names in all countries in which we do business. Furthermore, regulations governing domain names may not protect our trademarks and similar proprietary rights. We may be unable to prevent third parties from acquiring domain names that are similar to, infringe upon, or diminish the value of our intellectual property.

 

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As of December 31, 2021, we had four issued U.S. patents, five pending U.S. patent applications, 11 issued foreign patents and two patent applications pending through the Patent Cooperation Treaty. We cannot offer any assurances about which, if any, patents will issue from our applications, the breadth of any such patents, or whether any issued patents will be found invalid and unenforceable or will be threatened by third parties. Any successful opposition to these patents or any other patents owned by or, if applicable in the future, licensed to us could deprive us of rights necessary for the successful commercialization of products that we may develop. Since patent applications in the United States and most other countries are confidential for a period of time after filing, we cannot be certain that we were the first to file on the technologies covered in several of the patent applications related to our technologies or products. Furthermore, a derivation proceeding can be provoked by a third party, or instituted by the U.S. Patent and Trademark Office (USPTO), to determine who was the first to invent any of the subject matter covered by the patent claims of our applications.

Enforcement of our intellectual property rights may be difficult and may require considerable resources. We are not always able to discover or determine the extent of any unauthorized use of our intellectual property. Moreover, the steps we take to protect our intellectual property do not always adequately protect our rights or prevent third parties from infringing or misappropriating our proprietary rights. We also cannot be certain that others will not independently develop or otherwise acquire equivalent or superior technology or other intellectual property rights. In addition, any of our intellectual property rights may be challenged or circumvented by others or invalidated or held unenforceable through administrative process or litigation in the U.S. or in foreign jurisdictions.

In addition, the laws of some foreign countries do not protect intellectual property rights to the same level of protection as the laws of the U.S., and we may encounter difficulties in protecting and defending such rights in foreign jurisdictions. To the extent we expand our international activities, our exposure to unauthorized copying and use of our intellectual property and proprietary information may increase. Consequently, we may not be able to prevent third parties from infringing on our intellectual property in all countries outside the U.S., or from selling or importing products made using our intellectual property in and into the U.S. or other jurisdictions. Competitors may use our technologies in jurisdictions where we have not obtained patent protection to develop their own products and may also export infringing products to territories where we have patent protection, but enforcement of patents and other intellectual protection is not as strong as that in the U.S. These products may compete with our products and our patents or other intellectual property rights may not be effective or sufficient to prevent them from competing.

As we move into new markets and expand our products or services offerings, incumbent participants in such markets may assert their intellectual property and other proprietary rights against us as a means of slowing our entry into such markets or as a means to extract substantial license and royalty payments from us. In addition, our agreements with some of our customers, suppliers or other entities with whom we do business requires us to defend or indemnify these parties to the extent they become involved in infringement claims, including the types of claims described above. As a result, we could incur significant costs and expenses that could adversely affect our business, operating results or financial condition.

Third parties may knowingly or unknowingly infringe our intellectual property and proprietary rights, third parties may challenge our intellectual property and proprietary rights, pending and future patent, copyright, trademark and other applications may not be approved and we may not be able to prevent infringement without incurring substantial expense. If the protection of our proprietary rights is inadequate to prevent use or appropriation by third parties, the value of our brand and other intangible assets may be diminished and competitors may be able to more effectively mimic our service and methods of operations. With respect to any intellectual property rights claim, we may have to seek a license to continue practices found to be in violation of a third parties rights, which may not be available on reasonable terms and may significantly increase our operating expenses. A license to continue such practices may not be available to us at all.

Litigation may be necessary to enforce our intellectual property rights, protect our trade secrets, or determine the validity and scope of the proprietary rights of others. Any litigation of this nature, regardless of

 

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outcome or merit, may be time-consuming and could incur substantial costs and expenses, substantial liability for damages, or could require us to stop our development and commercialization efforts for our products and services. Our efforts to enforce our intellectual property and proprietary rights might be met with defenses, counterclaims and countersuits attacking the validity and enforceability of our intellectual property and proprietary rights, and if such defenses, counterclaims or countersuits are successful, we could lose valuable intellectual property and proprietary rights. Furthermore, many of our current and potential competitors may be in a position to dedicate substantially greater resources to enforce their intellectual property and proprietary rights than us. Accordingly, despite our efforts, we may not be able to prevent third parties from infringing, misappropriating or otherwise violating our intellectual property and proprietary rights. Additionally, because of the substantial amount of discovery required in connection with intellectual property litigation, there is a risk that some of our confidential information could be compromised by disclosure during this type of litigation.

Moreover, the outcome of any such litigation might not be favorable to us, even when our rights have been infringed, misappropriated or otherwise violated. If we do not prevail, we may be required to pay significant money damages, suffer losses of significant revenues, be prohibited from using the relevant systems, processes, technologies or other intellectual property (temporarily or permanently), be required to cease offering certain products or services, incur significant license, royalty or technology development expenses, or be required to comply with other unfavorable terms. Even if we were to prevail, such litigation could result in substantial costs and diversion of resources and could have a material adverse effect on our business, operating results or financial condition. We may also be required to enter into license agreements that may not be available on commercially reasonable terms or at all. In addition, although in some cases a third party may have agreed to indemnify us for such costs, such an indemnifying party may refuse or be unable to uphold its contractual obligations. In other cases, insurance may not cover potential claims of this type adequately or at all, and we may be required to pay monetary damages, which may be significant.

We rely on trademark, copyright, and patent law, trade secret protection, and confidentiality and/or license agreements with our employees, customers, and others to protect our proprietary rights.

We rely and expect to continue to rely on a combination of confidentiality, invention assignment and other agreements with our employees, consultants and third parties with whom we have relationships and who may have access to confidential or patentable aspects of our research and development output, as well as trademark, copyright, patent and trade secret protection laws, to protect our proprietary rights. However, any of these parties may breach their agreements with us and disclose information improperly. In addition, we cannot guarantee that we have entered into such agreements with each party that has or may have had access to our proprietary information, know-how and trade secrets or each party that has developed intellectual property on our behalf. Moreover, no assurance can be given that these agreements will be effective in controlling access to, distribution, use, misuse, misappropriation, reverse engineering or disclosure of our proprietary information, know-how and trade secrets, platform or confidential information. Further, these agreements may not prevent our competitors from independently developing technologies that are substantially equivalent or superior to our offerings. These agreements may be insufficient or breached, and we may not have adequate remedies for any such breach. Additionally, such agreements may not effectively prevent unauthorized access to or unauthorized use, disclosure, misappropriation or reverse engineering of, our confidential information, intellectual property, or technology. Enforcing a claim that a party illegally disclosed or misappropriated a trade secret or know-how is difficult, expensive, and time-consuming, and the outcome is unpredictable. In addition, trade secrets and know-how can be difficult to protect and some courts inside and outside the U.S. are less willing or unwilling to protect trade secrets and know-how. If any of our trade secrets were to be lawfully obtained or independently developed by a competitor or other third party, we would have no right to prevent them from using that technology or information to compete with us, and our competitive position would be materially and adversely harmed.

Additionally, individuals not subject to invention assignment agreements may make adverse ownership claims to our current and future intellectual property. For example, we may be subject to claims that former

 

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employees, collaborators or other third parties have an interest in our owned or in-licensed patents, trade secrets or other intellectual property as an inventor or co-inventor. Ownership disputes may arise, for example, from conflicting obligations of employees, consultants or others who are involved in developing our future products and services.

We may be subject to claims that our employees, consultants or independent contractors have wrongfully used or disclosed confidential information of third parties or that our employees have wrongfully used or disclosed alleged trade secrets of their former employers.

We employ, and expect to employ in the future, individuals who were previously employed at universities or other companies, including our competitors or potential competitors. We may be subject to claims that our employees, consultants or independent contractors have inadvertently or otherwise used or disclosed trade secrets or other proprietary information of their former employers or other third parties, or to claims that we have improperly used or obtained such trade secrets. Litigation may be necessary to defend against these claims. In defending such claims, in addition to paying monetary damages, we may lose valuable intellectual property rights or key personnel, which could adversely impact our business. Even if we are successful in defending against these claims, litigation could result in substantial costs and be a distraction to management and other employees.

Indemnity provisions in various agreements to which we are party potentially expose us to substantial liability for infringement, misappropriation or other violation of intellectual property rights.

Our agreements with our customers and other third parties may include indemnification provisions under which we agree to indemnify or otherwise be liable to them for losses suffered or incurred as a result of claims of infringement, misappropriation or other violation of intellectual property rights or other liabilities relating to or arising from our products, our acts or omissions under such agreements or other contractual obligations. Some of these indemnity agreements provide for uncapped liability and some indemnity provisions survive termination or expiration of the applicable agreement. As we continue to grow, the possibility of infringement claims and other intellectual property rights claims against us may increase. For any intellectual property rights indemnification claim against us or our customers, we will incur significant legal expenses and may have to pay damages, settlement fees, license fees or stop using products or technology found to be in violation of the third party’s rights. Large indemnity payments could harm our business, financial condition and results of operations.

Although we attempt to contractually limit our liability with respect to such indemnity obligations, we are not always successful and we may still incur substantial liability related to them. We may be required to cease use of certain functions of our platform or cease selling certain products as a result of any such claims. Any dispute with a customer or other third party with respect to such indemnification obligations could have adverse effects on our relationship with such customer or other third party and other existing or current and prospective customers, subject us to costly and time-consuming litigation, expensive remediation and licenses, divert management attention and financial resources, reduce demand for our products and adversely affect our brand, reputation, business, financial conditions and results of operations. In addition, although we carry general liability insurance, our insurance may not be adequate to indemnify us for all liability that may be imposed or otherwise protect us from liabilities or damages with respect to claims alleging compromises of customer data, and any such coverage may not continue to be available to us on acceptable terms or at all.

We must successfully maintain, scale and upgrade our information technology systems, and our failure to do so could have an adverse effect on our business, financial condition, results of operations and prospects.

We have identified the need to significantly expand, scale and improve our information technology systems and personnel to support recent and expected future growth. As such, we are in the process of implementing, and will continue to invest in and implement, significant modifications and upgrades to our information technology systems and procedures, including replacing legacy systems with successor systems, making changes to legacy

 

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systems or acquiring new systems with new functionality, hiring employees with information technology expertise and building new policies, procedures, training programs and monitoring tools. There are inherent costs and risks associated with replacing and changing these systems, including impairment of our ability to fulfill customer orders, potential disruption of our internal control structure, substantial capital expenditures, additional administration and operating expenses, the need to acquire and retain sufficiently skilled personnel to implement and operate the new systems, demands on management time, the introduction of errors or vulnerabilities and other risks and costs of delays or difficulties in transitioning to or integrating new systems into our current systems. These implementations, modifications and upgrades may not result in productivity improvements at a level that outweighs the costs of implementation, or at all. Additionally, difficulties with implementing new technology systems, delays in our timeline for planned improvements, significant system failures, or our inability to successfully modify our information systems to respond to changes in our business needs may cause disruptions in our business operations and could have an adverse effect on our business, financial condition, results of operations and prospects.

If we (or our vendors) are unable to protect against or adequately respond to mitigate the impacts of a service interruption, data corruption, or cybersecurity attack, our operations could be disrupted, our reputation may be harmed and we could face significant costs to remediate the incident and defend against claims by business partners, customers, or regulators. Such security breaches or other cybersecurity incidents may harm our reputation and expose us to loss of consumers and business.

We rely on information technology networks and systems and data processing (some of which are managed by third-party service providers) to market, sell and deliver our products and services, to fulfill orders, to collect, receive, store, generate, use, transfer, disclose, make accessible, protect, secure, dispose of, share and otherwise process personal information, confidential or proprietary information, financial information and other information, to manage a variety of business processes and activities, for financial reporting purposes, to operate our business, process orders and to comply with regulatory, legal and tax requirements. These information technology networks and systems, and the processing they perform, may be susceptible to damage, disruptions or shutdowns, software or hardware vulnerabilities, security incidents, ransomware attacks, unauthorized activity and access, malicious code (such as malware, viruses and worms), acts of vandalism, employee or contractor theft, misplaced or lost data, fraud, misconduct or misuse, social engineering attacks and denial of service attacks, supply-side attacks, phishing and spear phishing attacks, organized cyberattacks, programming or human errors, failures during the process of upgrading or replacing software, databases or components, power outages, fires, natural disasters, hardware failures, telecommunication failures, user errors or catastrophic events, any of which could result in the loss or disclosure of confidential customer information or our own proprietary information, software, methodologies and business information.

In addition, due to the COVID-19 pandemic, our personnel are temporarily working remotely and relying on their own computers, routers and other equipment, which may pose additional data security risks to networks, systems and data. Any material disruption of our networks, systems or data processing activities, or those of our third-party service providers, could disrupt our ability to undertake, and cause a material adverse impact to our business, reputation and financial condition. If our information technology networks and systems or data processing (or of our third-party service providers) suffers damage, security breaches, vulnerabilities, disruption or shutdown (including, for example, cyberattacks or other attacks on global networking infrastructure carried out by Russia following its invasion of Ukraine in February 2022), and we do not effectively resolve the issues in a timely manner, they could cause a material adverse impact to our business, reputation and financial condition. Our DTC and ecommerce operations are critical to our business and our financial performance. Our website serves as an effective extension of our marketing strategies by exposing potential new consumers to our brand, product offerings and enhanced content. Due to the importance of our website and DTC operations, any material disruption of our networks, systems or data processing activities related to our websites and DTC operations could reduce DTC sales and financial performance, damage our brand’s reputation and materially adversely impact our business.

 

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The recovery systems, security protocols, network protection mechanisms and other security measures that we have integrated into our systems, networks and physical facilities, which are designed to protect against, detect and minimize security breaches, may not be adequate to prevent or detect service interruption, system failure data loss or theft, or other material adverse consequences. We and our third-party service providers regularly defend against and respond to cybersecurity incidents. No security solution, strategy, or measures can address all possible security threats or block all methods of penetrating a network or otherwise perpetrating a security incident, and our incident response procedures may be inadequate to fully contain, mitigate, or remediate a data security incident. Moreover, notwithstanding any contractual rights or remedies we may have, because we do not control our third-party service providers, including their security measures and their processing of data, we cannot ensure the integrity or security of measures they take to protect customer information and prevent data loss.

The risk of unauthorized circumvention of our security measures or those of our third-party providers, has been heightened by the increased use of the Internet and telecommunications technologies (including mobile and other connected devices) to conduct financial and other business transactions, advances in computer and software capabilities and the increasing sophistication of hackers who employ complex techniques, including without limitation, the theft or misuse of personal and financial information, counterfeiting, “phishing” or social engineering incidents, ransomware, extortion, publicly announcing security breaches, account takeover attacks, denial or degradation of service attacks, malware, fraudulent payment and identity theft. Because the techniques used by hackers change frequently, we may be unable to anticipate these techniques or implement adequate preventive measures. Our applications, systems, networks, software and physical facilities could have material vulnerabilities, be breached or personal or confidential information could be otherwise compromised due to employee error or malfeasance, such as where third parties fraudulently induce our personnel or our consumers to disclose information or user names and/or passwords, or otherwise compromise the security of our networks, systems and/or physical facilities. Third-party criminals regularly attempt to exploit vulnerabilities in, or obtain unauthorized access to, platforms, software, applications, systems, networks, sensitive information, and/or physical facilities utilized by us or our vendors. Improper access to our systems or databases could result in the theft, publication, deletion or modification of personal information, confidential or proprietary information, financial information and other information. An actual or perceived breach of our security systems or those of our third-party service providers may require notification under applicable data privacy regulations or contractual obligations, or for consumer relations or publicity purposes, which could result in reputational harm, costly litigation (including class action litigation), material contract breaches, liability, settlement costs, loss of sales, regulatory scrutiny, actions or investigations, a loss of confidence in our business, systems and processing, a diversion of management’s time and attention, and significant fines, penalties, assessments, fees and expenses.

As is common in the digital world we operate in, we and our third-party service providers have experienced occasional security incidents involving unauthorized access to our account credentials, however, all such incidents have been remediated and we are not aware of any of significant impact resulting from such incidents. While we regularly defend against and respond to cybersecurity threats and attacks, our efforts to contain, mitigate and remediate a data security incident may not be successful, resulting in unexpected interruptions, delays, cessation of service, negative publicity, and other harm to our business and our competitive position. The costs to respond to a significant security breach or security vulnerability, including to provide breach notification where required, can be substantial. We may have to notify stakeholders of security breaches, which may harm our reputation and expose us to loss of consumers and business. Breach notification can lead to negative publicity, may cause our consumers to lose confidence in the effectiveness of our security measures, and could require us to expend significant capital and other resources to respond to and/or alleviate problems caused by the actual or perceived security breach. A security breach could lead to claims by our consumers or ecommerce or retail customers, or other relevant stakeholders that we have failed to comply with our legal or contractual obligations. As a result, we could be subject to legal action or our consumers or ecommerce or retail customers could end their relationships with us. There can be no assurance that any limitations of liability in our contracts would be enforceable or adequate or would otherwise protect us from liabilities or damages. We could be required to fundamentally change our business activities and practices in response to a security breach or related

 

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regulatory actions or litigation, which could have an adverse effect on our business. We may not have, or in the future be able to obtain, adequate insurance coverage for security incidents or breaches, including fines, judgments, settlements, penalties, costs, attorney fees and other impacts that arise out of incidents or breaches. Any incidents may result in loss of, or increased costs of, our cybersecurity insurance. We also cannot ensure that our existing insurance coverage will continue to be available on acceptable terms or will be available in sufficient amounts to cover one or more large claims related to a security incident or breach, or that the insurer will not deny coverage as to any future claim. If the impact of a security incident or breach or the successful assertion of one or more large claims against us exceeds our available insurance coverage or results in changes to our insurance policies (including premium increases or the imposition of large deductible or co-insurance requirements), it could have an adverse effect on our business, financial condition, reputation and results of operations.

We use open source software in our platform, which may subject us to additional risks and harm our intellectual property.

We use open source software in our platform and expect to continue to use open source software in the future. There are risks and uncertainties regarding the proper interpretation of and compliance with open source software licenses. Some open source software licenses require those who distribute open source software as part of their own software product to publicly disclose all or part of the source code to such software product or to make available any derivative works of the open source code on unfavorable terms or at no cost, and we may be subject to such terms. Consequently, there is a risk that the owners of the copyrights in such open source software may claim that the open source licenses governing their use impose certain conditions or restrictions on our ability to use the software that we did not anticipate. Such owners may seek to enforce the terms of the applicable open source license, including by demanding release of the source code for the open source software, derivative works of such software, or, in some cases, our proprietary source code that uses or was developed using such open source software. These claims could also result in litigation, subject us to significant damages, require us to purchase costly third-party licenses, require us to devote additional research and development resources to change our products or discontinue the sale of our proprietary products, any of which could result in reputational harm and would be disruptive to our business. In addition, if the license terms for the open source software we utilize change, we may be forced to re-engineer our platform or incur additional costs to comply with the changed license terms or to replace the affected open source software. Furthermore, if we were to combine our proprietary platform with open source software in a certain manner, we could, under certain of the open source licenses, be required to release the source code of our proprietary platform to the public or offer our platform to users at no cost. This could allow our competitors to create similar platforms with lower development effort and time and ultimately could result in a loss of sales for us.

In addition to risks related to license requirements, usage of open source software can lead to greater risks than use of third-party commercial software, as open source licensors generally do not provide warranties or assurance of title or controls on origin of the software. There is typically no support available for open source software, and we cannot ensure that the authors of such open source software will implement or push updates to address security risks or will not abandon further development and maintenance.

Although we have implemented policies and tools to regulate the use and incorporation of open source software into our platform, we cannot be certain that we have not incorporated open source software in our platform in a manner that is inconsistent with such policies. Therefore, we may inadvertently use open source in a manner that we do not intend or that could expose us to claims for breach of contract or intellectual property infringement, misappropriation or other violation. Any of the foregoing could have a material adverse effect on our business, financial condition, prospects and results of operations.

 

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The actual or perceived failure by us or our vendors to comply with applicable privacy and data protection laws, regulations or industry standards could have an adverse effect on our business, financial condition, results of operations and prospects.

We collect, store, share, use, retain, safeguard, transfer, analyze and otherwise process, and our vendors process on our behalf, personal information, confidential information and other information necessary to provide and deliver our products through our e-commerce channel to operate our business, for legal and marketing purposes, and for other business-related purposes. Collection and use of this information might raise privacy and data protection concerns, which could negatively impact our business. Data privacy and information security has become a significant issue in the United States, countries in Europe, and in many other countries. The legal and regulatory framework for privacy and security issues is rapidly evolving and is expected to increase our compliance costs and exposure to liability. There are numerous federal, state, local, and international laws, orders, codes, rules, regulations and regulatory guidance regarding privacy, information security and processing (which we collectively refer to as “Data Protection Laws”), the number and scope of which is changing, subject to differing applications and interpretations, and which may be inconsistent among jurisdictions, or in conflict with other rules, laws or obligations (which we collectively refer to as “Data Protection Obligations”). Therefore, the regulatory framework for privacy and data protection worldwide is, and is likely to remain, uncertain and complex for the foreseeable future, and our actual or perceived failure to address or comply with applicable Data Protection Laws and Data Protection Obligations could have an adverse effect on our business, financial condition, results of operations and prospects. We also expect that there will continue to be new Data Protection Laws and Data Protection Obligations, and we cannot yet determine the impact such future Data Protection Laws and Data Protection Obligations may have on our business. Any significant change to Data Protection Laws and Data Protection Obligations, including without limitation, regarding the manner in which the express or implied consent of consumers for processing is obtained, could increase our costs and require us to modify our operations, possibly in a material manner, which we may be unable to complete and may limit our ability to store and process consumer data and operate our business.

We are or may also be subject to the terms of our external and internal privacy and security policies, codes, representations, certifications, industry standards, publications and frameworks (which we collectively refer to as “Privacy Policies”) and contractual obligations to third parties related to privacy, information security and processing, including contractual obligations to indemnify and hold harmless third parties from the costs or consequences of non-compliance with Data Protection Laws or Data Protection Obligations.

We may not be successful in achieving compliance if our employees, partners or vendors do not comply with applicable Data Protection Laws, Privacy Policies and Data Protection Obligations. If we or our vendors fail (or are perceived to have failed) to comply with applicable Data Protection Laws, Privacy Policies and Data Protection Obligations, or if our Privacy Policies are, in whole or part, found to be inaccurate, incomplete, deceptive, unfair, or misrepresentative of our actual practices, our business, financial condition, results of operations and prospects could be adversely affected.

In the United States, our obligations include rules and regulations promulgated under the authority of the Federal Trade Commission, the Electronic Communications Privacy Act, the Computer Fraud and Abuse Act, the California Consumer Privacy Act (the “CCPA”) and other state and federal laws relating to privacy and data security. The CCPA, which took effect on January 1, 2020, requires companies that process information of California residents to make new disclosures to consumers about their data collection, use and sharing practices, allows consumers to opt out of the sale of personal information with third parties and prohibits covered businesses from discriminating against California residents (for example, charging more for services) for exercising any of their rights under the CCPA. The law also provides a private right of action and statutory damages for certain data breaches that result in the loss of personal information. This private right of action is expected to increase the likelihood of, and risks associated with, data breach litigation. However, it remains unclear how various provisions of the CCPA will be interpreted and enforced. Therefore, the CCPA may increase our compliance costs and potential liability.

 

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In addition, California voters recently approved the California Privacy Rights Act of 2020 (the “CPRA”) that goes into effect on January 1, 2023. The CPRA will significantly modify the CCPA, and will impose additional data protection obligations on companies doing business in California, potentially resulting in further complexity. The law will, among other things, give California residents the ability to limit the use of their sensitive information, provide for penalties for CPRA violations concerning California residents under the age of 16, and establish a new California Privacy Protection Agency to implement and enforce the law. The effects of this legislation are potentially far-reaching and may impact our business. Some observers have noted that the CCPA could mark the beginning of a trend toward more stringent privacy legislation in the United States, which could increase our potential liability and adversely affect our business, financial condition, results of operations and prospects.

Other jurisdictions in the United States have already passed or are considering laws similar to the CCPA, with potentially greater penalties and more rigorous compliance requirements relevant to our business. Many state legislatures have already adopted legislation that regulates how businesses operate online, including measures relating to privacy, data security, data breaches and the protection of sensitive and personal information. For example, on March 2, 2021, Virginia enacted the Virginia Consumer Data Protection Act (the “CDPA”), a comprehensive privacy statute that shares similarities with the CCPA, CPRA, and legislation proposed in other states. The CDPA will require us to incur additional costs and expenses in an effort to comply with it before it becomes effective on January 1, 2023. June 2021, Colorado also enacted a similar law, the Colorado Privacy Act (the “CPA”), which becomes effective on July 1, 2023. Many other states are currently considering proposed comprehensive data privacy legislation and all 50 states have passed at least some form of data privacy legislation (for example, all 50 states have enacted laws requiring disclosure of certain personal data breaches). At the federal level, the United States Congress is also considering various proposals for comprehensive federal data privacy legislation and, while no comprehensive federal data privacy law currently exists, we are subject to applicable existing federal laws and regulations, such as the rules and regulations promulgated under the authority of the Federal Trade Commission, which regulates unfair or deceptive acts or practices, including with respect to data privacy and security. These state statutes, and other similar state or federal laws, may require us to modify our data processing practices and policies and incur substantial compliance-related costs and expenses.

We rely on a variety of marketing techniques and practices, including email and social media marketing, online targeted advertising, cookie-based processing, and postal mail to sell our products and services and to attract new consumers, and we, and our vendors, are subject to various current and future Data Protection Laws and Data Protection Obligations that govern marketing and advertising practices. Governmental authorities continue to evaluate the privacy implications inherent in the use of third-party “cookies” and other methods of online tracking for behavioral advertising and other purposes, such as by regulating the level of consumer notice and consent required before a company can employ cookies or other electronic tracking tools or the use of data gathered with such tools. Additionally, some providers of consumer devices, web browsers and application stores have implemented, or announced plans to implement, means to make it easier for Internet users to prevent the placement of cookies or to block other tracking technologies, require additional consents, or limit the ability to track user activity, which could if widely adopted result in the use of third-party cookies and other methods of online tracking becoming significantly less effective. Laws and regulations regarding the use of these cookies and other current online tracking and advertising practices or a loss in our ability to make effective use of services that employ such technologies could increase our costs of operations and limit our ability to acquire new consumers on cost-effective terms, which, in turn, could have an adverse effect on our business, financial condition, results of operations and prospects.

Government regulation of the Internet and ecommerce is evolving, and unfavorable changes or failure by us to comply with these regulations could have an adverse effect on our business, financial condition, results of operations and prospects.

We are subject to general business regulations and laws as well as regulations and laws specifically governing the Internet and ecommerce, including consumer protection regulations that regulate retailers and

 

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govern the promotion and sale of merchandise. Existing and future regulations and laws could impede the growth of the Internet, ecommerce or mobile commerce, which could in turn adversely affect our growth. These regulations and laws may involve taxes, tariffs, privacy and data security, anti-spam, content protection, electronic contracts and communications, consumer protection, sales practices and Internet neutrality. It is not clear how existing laws governing issues such as property ownership, sales and other taxes and consumer privacy apply to the Internet as the vast majority of these laws were adopted prior to the advent of the Internet and do not contemplate or address the unique issues raised by the Internet or ecommerce. It is possible that general business regulations and laws, or those specifically governing the Internet or ecommerce, may be interpreted and applied in a manner that is inconsistent from one jurisdiction to another and may conflict with other rules or our practices. We cannot be sure that our practices have complied, comply or will comply fully with all such laws and regulations. Any failure, or perceived failure, by us to comply with any of these laws or regulations could result in damage to our reputation, a loss in business and proceedings or actions against us by governmental entities, customers, suppliers or others. Any such proceeding or action could hurt our reputation, force us to spend significant amounts in defense of these proceedings, distract our management, increase our costs of doing business, decrease the use of our website and mobile applications by customers and suppliers and may result in the imposition of monetary liabilities and burdensome injunctions. We may also be contractually liable to indemnify and hold harmless third parties from the costs or consequences of noncompliance with any such laws or regulations. As a result, adverse developments with respect to these laws and regulations could have an adverse effect on our business, financial condition, results of operations and prospects.

Advertising inaccuracies or product mislabeling may have an adverse effect on our business by exposing us to lawsuits, product recalls or regulatory enforcement actions, increasing our operating costs and reducing demand for our product offerings.

Many products that we sell are labeled and advertised with claims as to their origin, ingredients or health, wellness, environmental or other benefits, including, by way of example, the use of the term “natural”, “organic”, “clean conscious”, or “sustainable”, or similar synonyms or implied statements relating to such benefits. Grove’s brand as a whole is marketed using similar environmental language. The Federal Trade Commission’s (FTC) Guides For The Use Of Environmental Marketing Claims, or the “Green Guides,” or “Green Guides,” provide guidance on how to use environmental marketing claims, provide specific guidance for certain terms (e.g. “recyclable”), and recommend against using unqualified statements about environmental benefits such as “eco-friendly”. Although the FDA and the USDA each have issued statements regarding the appropriate use of the word “natural,” there is no single, U.S. government regulated definition of the term “natural” for use in the consumer and personal care industry. This is also true for many other claims common in the clean conscious product industry.

Consumer class actions, actions from industry groups such as the National Advertising Division of the Better Business Bureau, and public enforcement actions have been brought against numerous companies that market “natural,” “sustainable,” or other ecologically conscious products or ingredients, asserting false, misleading and deceptive advertising and labeling claims. These suits often identify ingredients or components of a product for which certain marketing claims may not be fully accurate, and claim that their presence in the product renders the statements false and deceptive. For example, some actions concerning “natural” claims have focused on the presence of genetically modified and/or synthetic ingredients or components in products, including synthetic forms of otherwise natural ingredients.

Many of our products are subject to regulatory enforcement:

 

   

The FDA regulates product labels and other product claims for the consumer products subject to its jurisdiction and has the authority to challenge product labels and claims that it believes are non-compliant or false or misleading, through the use of a variety of enforcement tools (e.g., Warning Letters, untitled letters, and seizure actions). In limited circumstances, the FDA has taken regulatory action against products labeled “natural” but that nonetheless contain synthetic ingredients or components.

 

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The FTC has the authority to challenge claims made in product advertising and requires that such claims are adequately substantiated prior to use. The FTC similarly has enforcement tools that it uses to challenge advertising claims that it deems non-compliant with the law.

 

   

The USDA enforces federal standards for organic production and use of the term “organic” on product labeling. These laws prohibit a company from selling or labeling products as organic unless they are produced and handled in accordance with the applicable federal law. Failure to comply with these requirements may subject us to liability or regulatory enforcement. Consumers may also pursue state law claims challenging use of the organic label as being intentionally mislabeled or misleading or deceptive to consumers.

 

   

In addition, certain products, including the disinfectant products, we sell may require approval from and registration with the EPA and state regulatory agencies prior to sale. Products that expressly or impliedly claim to control microorganisms that pose a threat to human health may be subject by additional regulatory scrutiny and need to be supported by additional efficacy data. Should we advertise or market these regulated products with claims that are not permitted by the terms of their registration or are otherwise false or misleading, the EPA and states may be authorized to take enforcement action to prevent the sale or distribution of disinfectant products.

State and local enforcers also have the authority to prosecute false advertising cases, including relating to environmental marketing claims.

Should we become subject to actions regarding our branding or product marketing, consumers may avoid purchasing products from us or seek alternatives, even if the basis for the claim is unfounded. Moreover, any regulatory or government enforcement actions may trigger class action lawsuits under state consumer protection laws.

Adverse publicity about these matters may discourage consumers from buying our products. The cost of defending against any such claims could be significant and we may incur substantial costs remediating product claims in labeling and advertising if we are unsuccessful in defending such actions. Any loss of confidence on the part of consumers in the truthfulness of our labeling, advertising or ingredient claims would be difficult and costly to overcome and may significantly reduce our brand value. Any of these events could adversely affect our reputation and brand and decrease our sales, which could have an adverse effect on our business, financial condition, results of operations and prospects.

False or misleading marketing claims concerning a product’s registration or its efficacy may also create the risk for challenges under federal or state law.

We may become subject to product liability claims, which could harm our reputation, financial condition, and liquidity if Grove is not able to successfully defend or insure against such claims.

Selling consumer product goods and personal care products involves inherent legal and other risks, and there is increasing governmental scrutiny of and public awareness regarding product safety. Such products are highly regulated by numerous government agencies.

Some of the products we sell or manufacture expose us to product liability claims relating to personal injury or illness, death, or environmental or property damage, and can require product recalls or other actions. Third parties who sell products using our services also expose us to product liability claims. Although we maintain liability insurance, we cannot be certain that our coverage will be adequate for liabilities actually incurred or that insurance will continue to be available to us on economically reasonable terms, or at all. In addition, some of our agreements with our vendors and sellers do not indemnify us from product liability.

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involving our suppliers, could result in the disruption or discontinuance of sales of these products or our relationships with such suppliers, or otherwise result in increased operating costs, regulatory enforcement actions (e.g., seizure), and harm to our reputation.

Shipment of adulterated, misbranded or expired products, even if inadvertent or the fault of a third-party supplier, can result in criminal or civil liability. Such incidents could also expose us to product liability, negligence or other lawsuits, including consumer class action lawsuits. Any claims brought against us may exceed or be outside the scope of our existing or future insurance policy coverage or limits. Any judgment against us that is more than our policy limits or not covered by our policies or not subject to insurance would have to be paid from our cash reserves, which would reduce our capital resources.

The occurrence of adverse reactions, ineffectiveness or other safety incidents associated with our products could also adversely affect the price and availability of affected ingredients or products, resulting in higher costs, disruptions in supply and a reduction in our sales. Furthermore, any safety, contamination, defects, or regulatory noncompliance issues, whether or not caused by our actions, could compel us, our suppliers, our retail or ecommerce customers, or our consumers, depending on the circumstances, to conduct a recall in accordance with requests from the FDA, the Consumer Product Safety Commission, or CPSC, the USDA, the U.S. Environmental Protection Agency, or EPA, or other federal, state or local authorities. Product recalls could result in significant losses due to their costs, the destruction of product inventory, lost sales due to the unavailability of the product for a period of time and potential loss of existing retail or ecommerce partners or consumers, negative publicity and a potential negative impact on our ability to attract new consumers due to negative consumer experiences or because of an adverse impact on our brand and reputation. The costs of a recall could be outside the scope of our existing or future insurance policy coverage or limits.

Companies that sell consumer and personal care products have also been subject to targeted, large-scale tampering as well as to opportunistic, individual product tampering, and we, like any such company, could be a target for product tampering. Forms of tampering could include the introduction of foreign material, chemical contaminants and pathological organisms into products, as well as product substitution. Governmental regulations require companies like us to analyze, prepare and implement mitigation strategies specifically to address tampering designed to inflict widespread public health harm. If we do not adequately address the possibility, or any actual instance, of product tampering, we could face possible seizure or recall of our products and the imposition of civil or criminal sanctions, which could have an adverse effect on our business, financial condition, results of operations and prospects.

We are subject to a number of other laws and regulations, which could impact our business.

We are subject to a broad range of federal, state, local, and foreign laws and regulations intended to protect public and worker health and safety, natural resources, the environment and consumers. Our operations are subject to regulation by the Occupational Safety and Health Administration, or OSHA, the FDA, the CPSC, the USDA, the FTC, EPA, and by various other federal, state, local and foreign authorities regarding the manufacture, processing, packaging, storage, sale, order fulfillment, advertising, labeling, import and export of our products. In addition, we and our manufacturing partners are subject to additional regulatory requirements, including environmental, health and safety laws and regulations administered by the EPA, state, local and foreign environmental, health and safety legislative and regulatory authorities and the National Labor Relations Board, covering such areas as discharges and emissions to air and water, the use, management, disposal and remediation of, and human exposure to, hazardous materials and wastes, and public and worker health and safety, and Current Good Manufacturing Practice requirements, or GMPs, enforced by the FDA.

In addition, as the provider of products with a subscription-based element, a variety of laws and regulations govern the ability of users to cancel subscriptions and auto-payment renewals. California’s automatic renewal law in particular has been the basis for both consumer class actions and government enforcement.

 

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Violations of or liability under any of these laws and regulations may result in administrative, civil or criminal fines, penalties or sanctions against us, revocation or modification of applicable permits, licenses or authorizations, environmental, health and safety investigations or remedial activities, voluntary or involuntary product recalls, warning or untitled letters or cease and desist orders against operations that are not in compliance, among other things. Such laws and regulations generally have become more stringent over time and may become more so in the future, and we may incur (directly, or indirectly through our manufacturing partners) material costs to comply with current or future laws and regulations or in any required product recalls. For example, in just the last year or so, California, New York, Illinois, Delaware, and Colorado all enacted more robust requirements for subscription programs.

Liabilities under, and/or costs of compliance, and the impacts on us of any non-compliance, with or investigations under any such laws and regulations could have an adverse effect on our business, financial condition, results of operations and prospects. For example, the Consumer Protection Division of the Santa Clara County District Attorney’s Office, in conjunction with other county and city prosecutors, is currently investigating our automatic renewal practices, and we may be subject to future claims under auto-payment renewal laws and regulations that could have a material adverse effect on our business. In addition, changes in the laws and regulations to which we are subject, or in the prevailing interpretations of such laws and regulations by courts and enforcement authorities, could impose significant limitations and require changes to our business, which may increase our compliance expenses, make our business more costly and less efficient to conduct, and compromise our growth strategy, which could have an adverse effect on our business, financial condition, results of operations and prospects.

Our products are also subject to state laws and regulations, such as California’s Proposition 65, or Prop 65, which requires a specific warning on any product that causes an exposure to a substance listed by the State of California as known to cause cancer or birth defects, unless the exposure is below the warning level. We have in the past been subject to lawsuits brought under Prop 65, and if we fail to comply with Prop 65 in the future, it may result in lawsuits and regulatory enforcement that could have a material adverse effect on our reputation, business, financial condition, results of operations and prospects. Further, the inclusion of warnings on our products to comply with Prop 65 could also reduce overall consumption of our products or leave consumers with the perception (whether or not valid) that our products do not meet their health and wellness needs, all of which could adversely affect our reputation, business, financial condition, results of operations and prospects.

These developments, depending on the outcome, could have an adverse effect on our reputation, business, financial condition, results of operations and prospects.

Changes in existing laws or regulations or related official guidance, or the adoption of new laws or regulations or guidance, may increase our costs and otherwise adversely affect our business, financial condition, results of operations and prospects.

The regulatory environment in which we operate has changed in the past and could change significantly and adversely in the future. For example, in December 2009, the FTC substantially revised its Guides Concerning the Use of Endorsements and Testimonials in Advertising, or “Endorsement Guides,” to eliminate a safe harbor principle that formerly recognized that advertisers could publish consumer testimonials that conveyed truthful but extraordinary results from using the advertiser’s product as long as the advertiser clearly and conspicuously disclosed that the endorser’s results were not typical. Similarly, in 2012, the FTC announced revisions to its Green Guides discussed above, which assist advertisers in avoiding the dissemination of false or deceptive environmental claims for their products. The Green Guides revisions introduced new and proscriptive guidance regarding advertisers’ use of product certifications and seals of approval, “recyclable” claims, “renewable materials” claims, “carbon offset” claims and other environmental benefit claims. In October 2021, California passed a new environmental marketing law banning recyclability claims unless a product and/or its packaging meets specifically enumerated benchmarks focused on the practical realities of the recycling process; the benchmarks, which have not yet been enumerated, may be more stringent than those currently imposed by the FTC’s Green Guides.

 

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Although we strive to adapt our marketing efforts to evolving legal and regulatory requirements and related guidance, we may not always anticipate or timely identify changes in regulation or official guidance that could impact our business, with the result that we could be subjected to litigation and enforcement actions that could adversely affect our business, financial condition, results of operations and prospects. Future changes in laws, regulations, and related official agency guidance, such as the Endorsement Guides and Green Guides (or state automatic renewal laws, discussed above), could also introduce new restrictions that impair our ability to market our products effectively and place us at a competitive disadvantage with competitors who, for example, depend less than we do on environmental marketing claims and social media influencer relationships.

Moreover, any change in laws, regulations or guidance relating to manufacturing, advertising, labeling or packaging for our products may lead to an increase in costs or interruptions in production, either of which could adversely affect our business, financial condition, results of operations and prospects. New or revised government laws, regulations or guidelines could result in additional compliance costs and, in the event of non-compliance, civil remedies, including fines, injunctions, withdrawals, recalls or seizures and confiscations, as well as potential criminal sanctions, any of which could have an adverse effect on our business, financial condition, results of operations and prospects.

Failure by our network of retail and ecommerce partners, suppliers or manufacturers to comply with product safety, environmental or other laws and regulations, or with the specifications and requirements of our products, may disrupt our supply of products and adversely affect our business.

If our network of retail and ecommerce partners, suppliers or manufacturers fail to comply with environmental, health and safety or other laws and regulations, or face allegations of non-compliance, their operations may be disrupted and our reputation could be harmed. Additionally, our retail and ecommerce partners, suppliers and manufacturers are required to maintain the quality of our products and to comply with our standards and specifications. In the event of actual or alleged non-compliance, we might be forced to find alternative retail or ecommerce partners, suppliers or manufacturers and we may be subject to lawsuits and/or regulatory enforcement actions related to such non-compliance by the suppliers and manufacturers. As a result, our supply of products could be disrupted or our costs could increase, which could adversely affect our business, financial condition, results of operations and prospects. The failure of any partner or manufacturer to produce products that conform to our standards could adversely affect our reputation in the marketplace and result in product recalls, product liability claims, government or third-party actions and economic loss. For example, a manufacturer’s failure to meet GMPs, could result in the delivery of a product that is subject to a product recall, product liability litigation, or government investigations and enforcement. Additionally, actions we may take to mitigate the impact of any disruption or potential disruption in our supply of materials or finished inventory, including increasing inventory in anticipation of a potential supply or production interruption, could have an adverse effect on our business, financial condition, results of operations and prospects.

Our status as a public benefit corporation and a Certified B Corporation may not result in the benefits that we anticipate.

We are a public benefit corporation incorporated under Delaware law. As a public benefit corporation we are required to balance the financial interests of our stockholders with the best interests of those stakeholders materially affected by our conduct, including particularly those affected by the specific benefit purposes set forth in our certificate of incorporation. In addition, there is no assurance that the expected positive impact from being a public benefit corporation will be realized. Accordingly, being a public benefit corporation and complying with our related obligations could negatively impact our ability to provide the highest possible return to our stockholders.

As a public benefit corporation, we are required to disclose to stockholders a report at least biennially on our overall public benefit performance and on our assessment of our success in achieving our specific public benefit purpose. If we are not timely or are unable to provide this report, or if the report is not viewed favorably by

 

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parties doing business with us or regulators or others reviewing our credentials, our reputation and status as a public benefit corporation may be harmed.

While not required by Delaware law or the terms of our certificate of incorporation, we have elected to have our social and environmental performance, accountability and transparency assessed against the proprietary criteria established by an independent non-profit organization. As a result of this assessment, we have been designated as a “Certified B Corporation,” which refers to companies that are certified as meeting certain levels of social and environmental performance, accountability and transparency. The standards for Certified B Corporation certification are set by an independent organization and may change over time. Currently, we are required to recertify as a Certified B Corporation once every three years, with our next certification required by October 20, 2023. Our reputation could be harmed if we lose our status as a Certified B Corporation, whether by our choice or by our failure to continue to meet the certification requirements, if that failure or change were to create a perception that we are more focused on financial performance and are no longer as committed to the values shared by Certified B Corporations. Likewise, our reputation could be harmed if our publicly reported Certified B Corporation score declines.

As a public benefit corporation, our duty to balance a variety of interests may result in actions that do not maximize stockholder value.

As a public benefit corporation, our board of directors has a duty to balance (i) the pecuniary interest of our stockholders, (ii) the best interests of those materially affected by our conduct and (iii) specific public benefits identified in our charter documents. In balancing these interests our board of directors may take actions that do not maximize stockholder value. Any benefits to stockholders resulting from our public benefit purposes may not materialize within the timeframe we expect or at all and may have negative effects. For example: we may choose to revise our policies in ways that we believe will be beneficial to our stakeholders, including customers, suppliers, employees and local communities, even though the changes may be costly; we may be influenced to pursue programs and services to demonstrate our commitment to the communities to which we serve and bringing ethically produced food to the table even though there is no immediate return to our stockholders; or in responding to a possible proposal to acquire the company, our board of directors may be influenced by the interests of our stakeholders, including farmers, suppliers, crew members and local communities, whose interests may be different from the interests of our stockholders.

We may be unable or slow to realize the benefits we expect from actions taken to benefit our stakeholders, including farmers, suppliers, crew members and local communities, which could adversely affect our business, financial condition and results of operations, which in turn could cause our stock price to decline.

As a public benefit corporation, we may be subject to increased derivative litigation concerning our duty to balance stockholder and public benefit interests, the occurrence of which may have an adverse impact on our financial condition and results of operations.

As a Delaware public benefit corporation, our stockholders (if they, individually or collectively, own at least 2% of our outstanding capital stock or shares having at least $2 million in market value (whichever is less)) are entitled to file a derivative lawsuit claiming that our directors failed to balance stockholder and public benefit interests. This potential liability does not exist for traditional corporations. Therefore, we may be subject to the possibility of increased derivative litigation, which would require the attention of management and, as a result, may adversely impact management’s ability to effectively execute our strategy. Any such derivative litigation may be costly and have an adverse impact on our financial condition and results of operations.

We and our directors and executive officers may be subject to litigation for a variety of claims, which could harm our reputation and adversely affect our business, results of operations and financial condition.

In the ordinary course of business, we may face allegations, lawsuits, and regulatory inquiries, audits, and investigations regarding labor and employment, wage and hour, consumer protection, commercial, antitrust,

 

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alleged securities law violations or other investor claims, claims that our employees or independent contractors have wrongfully disclosed or we have wrongfully used proprietary information of our employees’ or independent contractors’ former employers and other matters, data privacy, security, consumer protection, and intellectual property infringement, acquisitions, or business practices. The number and significance of these potential claims and disputes may increase as our business expands. Further, our general liability insurance may not cover all potential claims made against us or be sufficient to indemnify us for all liability that may be imposed. Any claim against us, regardless of its merit, could be costly, divert management’s attention and operational resources, and harm our reputation.

Our directors and executive officers may also be subject to litigation. The limitation of liability and indemnification provisions that are included in our amended and restated certificate of incorporation, our amended and restated bylaws and indemnification agreements that we entered into with our directors and executive officers provide that we will indemnify our directors and officers to the fullest extent permitted by Delaware law and may discourage stockholders from bringing a lawsuit against our directors and executive officers for breach of their fiduciary duties. Such provisions may also reduce the likelihood of derivative litigation against our directors and executive officers, even though an action, if successful, might benefit us and other stockholders. Further, a stockholder’s investment may be harmed to the extent that we pay the costs of settlement and damage awards against our directors and executive officers as required by these indemnification provisions. We have obtained insurance policies under which, subject to the limitations of the policies, coverage is provided to our directors and executive officers against loss arising from claims made by reason of breach of fiduciary duty or other wrongful acts as a director or executive officer, including claims relating to public securities matters, and to us with respect to payments that may be made by us to these directors and executive officers pursuant to our indemnification obligations or otherwise as a matter of law. These insurance policies may not cover all potential claims made against our directors and executive officers, may not be available to us in the future at a reasonable rate and may not be adequate to indemnify us for all liability that may be imposed. As litigation is inherently unpredictable, we cannot assure you that any potential claims or disputes will not harm our business, results of operations and financial condition.

The results of regulatory proceedings, litigation, claims, and audits cannot be predicted with certainty, and determining reserves for pending litigation and other legal, regulatory and audit matters requires significant judgment. Regardless of the outcome of any litigation, the litigation itself can have an adverse impact on us because of legal costs, diversion of management resources and other factors.

Risks Related to the Business Combination and Integration of Businesses

Each of VGAC II and Grove have incurred and will incur substantial costs in connection with the Business Combination and related transactions, such as legal, accounting, consulting, and financial advisory fees.

As part of the Business Combination, each of VGAC II and Grove are utilizing professional service firms for legal, accounting, and financial advisory services. Although the parties have been provided with estimates of the costs for each advisory firm, the total actual costs may exceed those estimates.

Risks Related to the Business Combination and VGAC II

Unless the context otherwise requires, any reference in this section of this proxy statement/consent solicitation statement/prospectus to “VGAC II,” “we,” “us,” or “our” refers to VGAC II prior to the Business Combination and to New Grove and its subsidiaries following the Business Combination.

The Sponsor has entered into a letter agreement with VGAC II to vote in favor of the Business Combination, regardless of how VGAC II public shareholders vote.

Unlike some other blank check companies in which the initial shareholders agree to vote their shares in accordance with the majority of the votes cast by the public shareholders in connection with an initial business

 

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combination, the Sponsor, pursuant to the Sponsor Agreement, has agreed, among other things, to vote in favor of all the proposals being presented at the extraordinary general meeting, including the Business Combination Proposal and the transactions contemplated thereby (including the Mergers). As of the date of this proxy statement/consent solicitation statement/prospectus, the Sponsor owns approximately 20.0% of the issued and outstanding ordinary shares (excluding the private placement shares underlying the private placement warrants).

The COVID-19 pandemic triggered an economic crisis which may delay or prevent the consummation of the Business Combination.

In December 2019, the COVID-19 outbreak was reported in China, and, in March 2020, the World Health Organization declared it a pandemic. Since being initially reported in China, COVID-19 has spread throughout the world and has resulted in unprecedented restrictions and limitations on operations of many businesses and governmental entities, including in the United States and the United Kingdom. Given the ongoing and dynamic nature of the COVID-19 crisis, it is difficult to predict the impact on the businesses of VGAC II, Grove, and New Grove, and there is no guarantee that efforts by VGAC II, Grove, and New Grove to address the adverse impact of COVID-19 will be effective. If VGAC II or Grove are unable to recover from a business disruption on a timely basis, the Business Combination and New Grove’s business and financial conditions and results of operations following the completion of the Business Combination could be adversely affected. The Business Combination may also be delayed and adversely affected by COVID-19, and become more costly. Each of VGAC II and Grove may also incur additional costs to remedy damages caused by such disruptions, which could adversely affect their respective financial condition and results of operations.

Since the Sponsor and VGAC II’s directors and executive officers have interests that are different, or in addition to (and which may conflict with), the interests of VGAC II shareholders, a conflict of interest may have existed in determining whether the Business Combination with Grove is appropriate as VGAC II’s initial business combination. Such interests include that the Sponsor, as well as VGAC II’s executive officers and directors, will lose their entire investment in VGAC II if VGAC II’s business combination is not completed.

When you consider the recommendation of the VGAC II Board in favor of approval of the Business Combination Proposal, you should keep in mind that the Sponsor, VGAC II’s directors, and executive officers, have interests in such proposal that are different from, or in addition to, those of VGAC II shareholders and VGAC II warrantholders generally. These interests include, among other things, the interests listed below:

 

   

the fact that the Sponsor has agreed not to redeem any Class A ordinary shares held by it in connection with a shareholder vote to approve a proposed initial business combination;

 

   

the fact that the Sponsor paid an aggregate of $25,000 for 10,062,500 Class B ordinary shares, of which the Sponsor currently owns 9,972,500 Class B ordinary shares and each of the three independent directors owns 30,000 Class B ordinary shares, and such securities will have a significantly higher value at the time of the Business Combination; as described further below:

 

     Shares of Class B
ordinary shares(1)
     Value of Class B
ordinary shares
implied by the
Business
Combination(3)
     Value of Class B
ordinary shares
based on recent
trading price(4)
 

Sponsor(2)

     9,972,500      $ 99,725,000      $ 98,927,200  

Chris Burggraeve

     30,000      $ 300,000      $ 297,600  

Elizabeth Nelson

     30,000      $ 300,000      $ 297,600  

Latif Peracha

     30,000      $ 300,000      $ 297,600  

 

(1)

Interests shown consist solely of founder shares. Such shares will automatically convert into shares of New Grove Class A Common Stock upon Domestication on a one-for-one basis.

(2)

VG Acquisition Sponsor II LLC is the record holder of the shares reported herein.

 

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(3)

Assumes a value of $10.00 per share, the deemed value of the Class B ordinary shares in the Business Combination.

(4)

Assumes a value of $9.92 per share, the closing price of the Class A ordinary shares on April 29, 2022.

 

   

the fact that the Sponsor paid an aggregate of $10,050,000 for 6,700,000 private placement warrants, as described further below:

 

     Shares of private
placement warrants(1)
     Value of private
placement warrants
implied by the
Business
Combination(3)
     Value of private
placement warrants based
on recent trading price(4)
 

Sponsor(2)

     6,700,000      $ 0      $ 3,752,000

 

(1)

Interests shown consist solely of private placement warrants. Such warrants will automatically convert into warrants to acquire New Grove Class A Common Stock upon the Domestication on a one-for-one basis.

(2)

VG Acquisition Sponsor II LLC is the record holder of the warrants reported herein.

(3)

Assumes a value of $0.00 per warrant, which reflects that the exercise price of the warrants ($11.50 per warrant) exceeds the value of the underlying ordinary shares in the Business Combination.

(4) Assumes a value of $0.56 per warrant, the closing price of the public warrants on April 29, 2022.

 

   

the fact that each of Mr. Bayliss and Mr. Lovell invested $300,000 in the Sponsor and hold interests in the Sponsor that represent an indirect interest in 1,246,600 Class B ordinary shares and 197,939 private placement warrants, and the fact that Mr. Burggraeve, Ms. Nelson and Mr. Peracha each invested $100,000, in the Sponsor indirectly through an investment in VG Acquisition Holdings II LLC, an affiliate of the Sponsor, and each holds interests in VG Acquisition Holdings II LLC that represent an indirect interest in 70,216 Class B ordinary shares, and 66,550 private placement warrants, and all of such securities would be worthless if a business combination is not consummated by March 25, 2023 (unless such date is extended in accordance with the Existing Governing Documents); as described further below:

 

    Shares of Class B
ordinary shares
indirectly held(1)
    Number of
private placement
warrants
indirectly held(2)
    Value of Class B
ordinary shares
implied by the
Business
Combination(3)
    Value of private
placement warrants
implied by the
Business
Combination(4)
    Value of Class B
ordinary shares/
private placement
warrants based
on recent  trading
price(5)
    Value of private
placement
warrants based
on recent trading
price(6)
 

Josh Bayliss

    1,246,600       197,939     $ 12,466,000     $             0   $ 12,366,272   $ 110,845.84

Evan Lovell

    1,246,600       197,939     $ 12,466,000     $ 0   $ 12,366,272   $ 110,845.84

Chris Burggraeve

    70,216       66,550     $ 702,160     $ 0   $ 696,542.72     $ 37,268  

Elizabeth Nelson

    70,216       66,550     $ 702,160     $ 0   $ 696,542.72     $ 37,268  

Latif Peracha

    70,216       66,550     $ 702,160     $ 0   $ 696,542.72     $ 37,268  

 

(1)

Interests shown consist solely of founder shares. Such shares will automatically convert into shares of New Grove Class A Common Stock upon the Domestication on a one-for-one basis.

(2)

Interests shown consist solely of private placement warrants. Such warrants will automatically convert into warrants to acquire New Grove Class A Common Stock upon the Domestication.

(3)

Assumes a value of $10.00 per share, the deemed value of the Class B ordinary shares in the Business Combination.

(4)

Assumes a value of $0.00 per warrant, which reflects that the exercise price of the warrants ($11.50 per warrant) exceeds the value of the underlying ordinary shares in the Business Combination.

(5)

Assumes a value of $9.92 per share, the closing price of the Class A ordinary shares on April 29, 2022.

(6)

Assumes a value of $0.56 per warrant, the closing price of the public warrants on April 29, 2022.

 

   

the fact that given the differential in the purchase price that the Sponsor paid for the founder shares as compared to the price of the public shares sold in the initial public offering, the Sponsor and its affiliates may earn a positive rate of return on their investment even if the Class A ordinary shares trades below the price initially paid for the public shares in the initial public offering and the public shareholders

 

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experience a negative rate of return following the completion of the Business Combination. It is not practicable to quantify the Sponsor and its affiliates’ rate of return because, among other things, the timing (including as a result of the twelve-month lockup applicable to the founder shares) and the price at which the Sponsor sells shares of New Grove Class A Common Stock and other equity securities of New Grove are uncertain, both of which would have a material impact on the applicable rate of return;

 

   

the fact that the Sponsor will benefit from the completion of a business combination and may be incentivized to complete an acquisition of a less favorable target company or on terms less favorable to shareholders rather than liquidate;

 

   

the fact that if a business combination is not consummated by March 25, 2023 (unless such date is extended in accordance with the Existing Governing Documents), the Sponsor and VGAC II’s officers and directors will lose their entire investment in VGAC II, which investment included a capital contribution of $25,000 for the Sponsor’s Class B ordinary shares and $10,050,000 for the Sponsor’s private placement warrants, and will not be reimbursed for any out-of-pocket expenses from any amounts held in the trust account;

 

   

the fact that the Sponsor and VGAC II’s other current officers and directors have agreed to waive their rights to liquidating distributions from the trust account with respect to any ordinary shares (other than public shares) held by them if VGAC II fails to complete an initial business combination by March 25, 2023;

 

   

the fact that the Registration Rights Agreement will be entered into by the Sponsor;

 

   

the fact that the Sponsor transferred 30,000 Class B ordinary shares to each of VGAC II’s three independent directors prior to the initial public offering, and such securities would be worthless if a business combination is not consummated by March 25, 2023 (unless such date is extended in accordance with the Existing Governing Documents);

 

   

the continued indemnification of VGAC II’s directors and officers and the continuation of VGAC II’s directors’ and officers’ liability insurance after the Business Combination (i.e., a “tail policy”);

 

   

the fact that if the trust account is liquidated, including in the event VGAC II is unable to complete an initial business combination by March 25, 2023, the Sponsor has agreed to indemnify VGAC II to ensure that the proceeds in the trust account are not reduced below $10.00 per public share, or such lesser per public share amount as is in the trust account on the liquidation date, by the claims of prospective target businesses with which VGAC II has entered into an acquisition agreement or claims of any third party for services rendered or products sold to VGAC II, but only if such a vendor or target business has not executed a waiver of any and all rights to seek access to the trust account;

 

   

the fact that Rayhan Arif, an Investment Director at the Virgin Group, is expected to be director of New Grove after the consummation of the Business Combination and as such, in the future, he may receive cash fees, stock options, stock awards or other remuneration that the New Grove Board determines to pay to him and any other applicable compensation;

 

   

the fact that the Virgin Group owns the Backstop Tranche 1 Shares, for which it invested $27,500,000, which shares will represent, immediately following the closing of the Business Combination and after giving effect to the Backstop Share Exchange, 2,750,000 shares of New Grove Class A Common Stock, as determined pursuant to the Exchange Ratio, which shares of New Grove Class A Common Stock will represent approximately 1.8% of outstanding shares of New Grove Common Stock and approximately 0.2% of the voting power of New Grove Common Stock assuming maximum redemptions by VGAC II shareholders in connection with the Business Combination; and

 

   

the fact that (i) Virgin Group, including the Backstop Investor and the Sponsor, will collectively own 30,836,009 shares of New Grove Class A Common Stock, including 6,700,000 Private Placement Warrants, 4,149,321 warrants to purchase the Class A ordinary shares at an exercise price of $0.01,

 

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5,000,000 shares of New Grove Class A Common Stock in connection with the PIPE Financing and 5,000,000 shares of New Grove Common Stock in connection with the Backstop Financing, which collectively will represent approximately 14.5% outstanding shares of New Grove Common Stock and approximately 1.8% of the voting power of New Grove Common Stock on a fully diluted basis, assuming maximum redemption of the Class A ordinary shares in connection with the Business Combination and (ii) Virgin Group will have the right to receive additional shares of New Grove Class A Common Stock pursuant to the Backstop Subscription Agreement depending on the Measurement Period VWAP.

See “Business Combination Proposal—Interests of VGAC II’s Directors and Executive Officers in the Business Combination” for additional information on interests of VGAC II’s directors and executive officers.

The exercise of VGAC II’s directors’ and executive officers’ discretion in agreeing to changes or waivers in the terms of the Business Combination may result in a conflict of interest when determining whether such changes to the terms of the Business Combination or waivers of conditions are appropriate and in VGAC II shareholders’ best interest.

In the period leading up to the closing of the Business Combination, events may occur that, pursuant to the Merger Agreement, would require VGAC II to agree to amend the Merger Agreement, to consent to certain actions taken by Grove, or to waive rights that VGAC II is entitled to under the Merger Agreement. Such events could arise because of changes in the course of Grove’s business, a request by Grove to undertake actions that would otherwise be prohibited by the terms of the Merger Agreement, or the occurrence of other events that would have a material adverse effect on Grove’s business and would entitle VGAC II to terminate the Merger Agreement. In any of such circumstances, it would be at VGAC II’s discretion, acting through the VGAC II Board, to grant its consent or waive those rights. The existence of financial and personal interests of one or more of the directors described in the preceding risk factors may result in a conflict of interest on the part of such director(s) between what he or she or they may believe is best for VGAC II and VGAC II shareholders and what he or she or they may believe is best for himself or herself or themselves in determining whether or not to take the requested action. As of the date of this proxy statement/consent solicitation statement/prospectus, VGAC II does not believe there will be any changes or waivers that VGAC II’s directors and executive officers would be likely to make after shareholder approval of the Business Combination Proposal has been obtained. While certain changes could be made without further shareholder approval, VGAC II will circulate a new or amended proxy statement/consent solicitation statement/prospectus and resolicit VGAC II shareholders if changes to the terms of the transaction that would have a material impact on VGAC II shareholders are required prior to the vote on the Business Combination Proposal.

The dual-class structure of New Grove’s common stock will have the effect of concentrating voting power with the current Grove stockholders, which will limit an investor’s ability to influence the outcome of important transactions, including a change in control.

Shares of New Grove Class B Common Stock will have ten votes per share, while shares of New Grove Class A Common Stock will have one vote per share. Upon the consummation of the Business Combination, and after giving effect to the Backstop Share Exchange, holders of Grove Common Stock and Grove Preferred Stock (other than the Backstop Investor) will hold all of the issued and outstanding shares of New Grove Class B Common Stock. Accordingly, upon the consummation of the Business Combination, after giving effect to the Backstop Share Exchange, holders of Grove Common Stock and Grove Preferred Stock (other than the Backstop Investor) will hold, directly or indirectly, and assuming maximum redemptions by the public shareholders, approximately 97.5% of the voting power of New Grove’s Common Stock on a fully-diluted basis and will be able to control matters submitted to New Grove stockholders for approval, including the election of directors, amendments of New Grove’s organizational documents, and any merger, consolidation, sale of all or substantially all of New Grove’s assets, or other major corporate transactions. The current holders of Grove Common Stock and Grove Preferred Stock may have interests that differ from yours and may vote in a way with which you disagree and which may be adverse to your interests. This concentrated control may have the effect of

 

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delaying, preventing, or deterring a change in control of New Grove, could deprive VGAC II shareholders of an opportunity to receive a premium for their capital stock as part of a sale of New Grove, and might ultimately affect the market price of shares of New Grove Class A Common Stock. For information about New Grove’s dual-class structure, see the section titled “Description of New Grove Securities.

VGAC II cannot predict the impact New Grove’s dual-class structure may have on the stock price of New Grove Class A Common Stock.

VGAC II cannot predict whether New Grove’s dual-class structure will result in a lower or more volatile market price of New Grove Class A Common Stock or in adverse publicity or other adverse consequences. For example, certain index providers have announced restrictions on including companies with multiple-class share structures in certain of their indices. In July 2017, FTSE Russell and S&P Dow Jones announced that they would cease to allow most newly-public companies utilizing dual or multi-class capital structures to be included in their indices. Affected indices include the Russell 2000 and the S&P 500, S&P MidCap 400, and S&P SmallCap 600, which together make up the S&P Composite 1500. Beginning in 2017, MSCI, a leading stock index provider, opened public consultations on their treatment of no-vote and multi-class structures and temporarily barred new multi-class listings from certain of its indices. However, in October 2018, MSCI announced its decision to include equity securities “with unequal voting structures” in its indices and to launch a new index that specifically includes voting rights in its eligibility criteria. Under the announced policies, New Grove’s dual-class capital structure would make New Grove ineligible for inclusion in certain indices, and as a result, mutual funds, exchange-traded funds, and other investment vehicles that attempt to passively track those indices will not invest in New Grove Class A Common Stock. These policies are still fairly new and it is unclear what effect, if any, they will have on the valuations of publicly traded companies excluded from the indices, but it is possible that they may depress these valuations compared to those of other similar companies that are included. Because of New Grove’s dual-class structure, New Grove will likely be excluded from certain of these indices and VGAC II cannot assure you that other stock indices will not take similar actions. Given the sustained flow of investment funds into passive strategies that seek to track certain indices, exclusion from stock indices would likely preclude investment by many of these funds and could make shares of New Grove Class A Common Stock less attractive to other investors. As a result, the market price of shares of New Grove Class A Common Stock could be adversely affected.

Going public through a merger rather than an underwritten offering presents risks to unaffiliated investors. Following the Closing, New Grove may be required to take write-downs or write-offs, restructuring and impairment or other charges that could have a significant negative effect on New Grove’s financial condition, results of operations and stock price, which could cause you to lose some or all of your investment.

Going public through a merger rather than an underwritten offering, as Grove is seeking to do through the Business Combination, presents risks to unaffiliated investors. Such risks include the absence of a due diligence investigation conducted by an underwriter that would be subject to potential liability for any material misstatements or omissions in a registration statement. Although VGAC II has conducted due diligence on Grove, VGAC II cannot assure you that this diligence revealed all material issues that may be present in its business, that it would be possible to uncover all material issues through a customary amount of due diligence, or that factors outside of VGAC II’s or New Grove’s control will not later arise. As a result, New Grove may be forced to later write down or write off assets, restructure its operations, or incur impairment or other charges that could result in losses. Even if the due diligence successfully identifies certain risks, unexpected risks may arise and previously known risks may materialize in a manner not consistent with VGAC II’s preliminary risk analysis. Even though these charges may be non-cash items and not have an immediate impact on New Grove’s liquidity, the fact that New Grove reports charges of this nature could contribute to negative market perceptions about New Grove or its securities. In addition, charges of this nature may cause New Grove to violate net worth or other covenants to which it may be subject. Accordingly, any VGAC II shareholder who chooses to remain a shareholder of New Grove following the Closing could suffer a reduction in the value of their VGAC II shares. Such VGAC II shareholders are unlikely to have a remedy for such reduction in value unless they are able to successfully claim that the reduction was due to the breach by VGAC II’s officers or directors of a duty of care or other fiduciary duty owed to them, or if they are

 

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able to successfully bring a private claim under securities laws that the proxy solicitation relating to the Business Combination contained an actionable material misstatement or material omission.

Our ability to successfully effect the Business Combination and to be successful thereafter will be dependent upon the efforts of key personnel of New Grove, including those from Grove, and some of whom may join New Grove following the Business Combination. The loss of key personnel or the hiring of ineffective personnel after the Business Combination could negatively impact the operations and profitability of New Grove.

Our ability to successfully effect the Business Combination and be successful thereafter will be dependent upon the efforts of VGAC II’s key personnel. VGAC II expects Grove’s current management to remain in place. VGAC II cannot assure you that VGAC II will be successful in integrating and retaining such key personnel, or in identifying and recruiting additional key individuals VGAC II determines may be necessary following the Business Combination.

The unaudited pro forma financial information included elsewhere in this proxy statement/consent solicitation statement/prospectus may not be indicative of what New Grove’s actual financial position or results of operations would have been.

The unaudited pro forma financial information in this proxy statement/consent solicitation statement/prospectus is presented for illustrative purposes only and has been prepared based on a number of assumptions including Grove being considered the accounting acquirer in the Business Combination, the debt obligations and the cash and cash equivalents of Grove at the Closing, and the number of public shares that are redeemed in connection with the Business Combination. Accordingly, such pro forma financial information may not be indicative of VGAC II’s future operating or financial performance and VGAC II’s actual financial condition and results of operations may vary materially from VGAC II’s pro forma results of operations and balance sheet contained elsewhere in this proxy statement/consent solicitation statement/prospectus, including as a result of such assumptions not being accurate. Additionally, the final acquisition accounting adjustments could differ materially from the unaudited pro forma adjustments presented in this proxy statement/consent solicitation statement/prospectus. The unaudited pro forma condensed combined financial information does not give effect to any operating efficiencies or cost savings that may be associated with the Business Combination. See “Unaudited Pro Forma Condensed Combined Financial Information.”

The ability of the public shareholders to exercise redemption rights with respect to a large number of VGAC II public shares may not allow VGAC II to complete the most desirable business combination or optimize the capital structure of New Grove.

At the time of entering into the Merger Agreement, VGAC II did not know how many shareholders may exercise their redemption rights, and therefore, VGAC II needed to structure the transaction based on its expectations as to the number of shares that will be submitted for redemption. The consummation of the Business Combination is conditioned upon, among other things: (i) the approval by VGAC II shareholders of the Condition Precedent Proposals; (ii) the expiration or termination of the applicable waiting period under the HSR Act relating to the Merger Agreement; (iii) VGAC II having at least $5,000,001 of net tangible assets (as determined in accordance with Rule 3a51-1(g)(1) of the Exchange Act) after giving effect to the transactions contemplated by the Merger Agreement and the PIPE Financing; (iv) the Minimum Available Cash Condition; (v) the approval by the NYSE of VGAC II’s initial listing application in connection with the Business Combination; and (vi) the consummation of the Domestication. Therefore, unless these conditions are waived by the applicable parties to the Merger Agreement, the Merger Agreement could terminate and the Business Combination may not be consummated.

Grove has agreed to waive the Minimum Available Cash Condition effective upon (i) the payment of the purchase price for the Backstop Tranche 1 Shares by the Backstop Investor (which occurred on March 31, 2022) and (ii) if the conditions to the Backstop Investor’s obligation to purchase the Backstop Tranche 2 Shares under the Backstop Subscription Agreement are satisfied, the payment of the purchase price for the Backstop Tranche 2 Shares.

 

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If third parties bring claims against VGAC II, the proceeds held in the trust account could be reduced and the per share redemption amount received by VGAC II shareholders may be less than $10.00 per share (which was the offering price in the initial public offering).

VGAC II’s placing of funds in the trust account may not protect those funds from third-party claims against VGAC II. Although VGAC II will seek to have all vendors, service providers (other than VGAC II’s independent registered public accounting firm), prospective target businesses, or other entities with which VGAC II does business execute agreements with VGAC II waiving any right, title, interest, or claim of any kind in or to any monies held in the trust account, there is no guarantee that they will execute such agreements or even if they execute such agreements that they would be prevented from bringing claims against the trust account, including fraudulent inducement, breach of fiduciary responsibility or other similar claims, as well as claims challenging the enforceability of the waiver, in each case, in order to gain advantage with respect to a claim against VGAC II’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, VGAC II’s management will consider whether competitive alternatives are reasonably available to VGAC II and will only enter into an agreement with such third party if management believes that such third party’s engagement would be in the best interests of the company under the circumstances.

Examples of possible instances where VGAC II 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. WithumSmith+Brown, PC, VGAC II’s independent registered public accounting firm, and the underwriters of VGAC II’s initial public offer have not executed agreements with VGAC II waiving such claims to the monies held in the trust account. 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 VGAC II and will not seek recourse against the trust account for any reason. In order to protect the amounts held in the trust account, the Sponsor has agreed that it will be liable to VGAC II if and to the extent any claims by a third party (other than WithumSmith+Brown, PC, VGAC II’s independent registered public accounting firm) for services rendered or products sold to us, or a prospective target business with which VGAC II has 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 the lesser of (i) $10.00 per public share and (ii) the actual amount per public share held in the trust account as of the date of the liquidation of the trust account, if less than $10.00 per share due to reductions in the value of the trust assets, less taxes payable, provided that such liability will not apply to any claims by a third party or prospective target business who executed a waiver of any and all rights to the monies held in the trust account (whether or not such waiver is enforceable) nor will it apply to any claims under VGAC II’s indemnity of the underwriters of this offering against certain liabilities, including liabilities under the Securities Act. However, VGAC II has not asked the Sponsor to reserve for such indemnification obligations, nor has VGAC II independently verified whether the Sponsor has sufficient funds to satisfy its indemnity obligations, and VGAC II believes that the Sponsor’s only assets are securities of VGAC II. Therefore, VGAC II cannot assure you that the Sponsor would be able to satisfy those obligations. As a result, if any such claims were successfully made against the trust account, the funds available for an initial business combination and redemptions could be reduced to less than $10.00 per public share. In such event, VGAC II 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 VGAC II’s officers or directors will indemnify VGAC II for claims by third parties including, without limitation, claims by vendors and prospective target businesses.

Additionally, if VGAC II is forced to file a bankruptcy case or an involuntary bankruptcy case is filed against VGAC II which is not dismissed, or if VGAC II otherwise enters compulsory or court supervised liquidation, the proceeds held in the trust account could be subject to applicable bankruptcy law, and may be included in VGAC II’s bankruptcy estate and subject to the claims of third parties with priority over the claims of VGAC II shareholders. To the extent any bankruptcy claims deplete the trust account, VGAC II may not be able to return to the public shareholders $10.00 per share (which was the offering price in the initial public offering).

 

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If, after VGAC II distributes the proceeds in the trust account to the public shareholders, VGAC II files a bankruptcy petition or an involuntary bankruptcy petition is filed against VGAC II that is not dismissed, a bankruptcy court may seek to recover such proceeds, and VGAC II and the VGAC II Board may be exposed to claims of punitive damages.

If, after VGAC II distributes the proceeds in the trust account to the public shareholders, VGAC II files a bankruptcy petition or an involuntary bankruptcy petition is filed against VGAC II that is not dismissed, any distributions received by public shareholders 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 VGAC II shareholders. In addition, the VGAC II Board may be viewed as having breached its fiduciary duty to VGAC II’s creditors and/or having acted in bad faith, thereby exposing it and VGAC II to claims of punitive damages, by paying public shareholders from the trust account prior to addressing the claims of creditors. VGAC II cannot assure you that claims will not be brought against VGAC II for these reasons.

If, before distributing the proceeds in the trust account to the public shareholders, VGAC II files a bankruptcy petition or an involuntary bankruptcy petition is filed against VGAC II that is not dismissed, the claims of creditors in such proceeding may have priority over the claims of VGAC II shareholders and the per share amount that would otherwise be received by VGAC II shareholders in connection with VGAC II’s liquidation may be reduced.

If, before distributing the proceeds in the trust account to the public shareholders, VGAC II files a bankruptcy petition or an involuntary bankruptcy petition is filed against VGAC II that is not dismissed, the proceeds held in the trust account could be subject to applicable bankruptcy law, and may be included in VGAC II’s bankruptcy estate and subject to the claims of third parties with priority over the claims of public shareholders. To the extent any bankruptcy claims deplete the trust account, the per share amount that would otherwise be received by VGAC II shareholders in connection with VGAC II’s liquidation may be reduced.

VGAC II shareholders may be held liable for claims by third parties against VGAC II to the extent of distributions received by them upon redemption of their shares.

If VGAC II is forced to enter into an insolvent liquidation, any distributions received by VGAC II shareholders could be viewed as an unlawful payment if it was proved that immediately following the date on which the distribution was made, VGAC II was unable to pay VGAC II’s debts as they fall due in the ordinary course of business. As a result, a liquidator could seek to recover all amounts received by VGAC II shareholders. Furthermore, VGAC II directors may be viewed as having breached their fiduciary duties to VGAC II or VGAC II’s creditors and/or may have acted in bad faith, and thereby exposing themselves and VGAC II’s company to claims, by paying public shareholders from the trust account prior to addressing the claims of creditors. Claims may be brought against VGAC II for these reasons.

VGAC II is an emerging growth company and a smaller reporting company within the meaning of the Securities Act, and if VGAC II takes advantage of certain exemptions from disclosure requirements available to “emerging growth companies” or “smaller reporting companies,” this could make VGAC II’s securities less attractive to investors and may make it more difficult to compare VGAC II’s performance with other public companies.

VGAC II is an “emerging growth company” within the meaning of the Securities Act, as modified by the JOBS Act, and VGAC II may take advantage of certain exemptions from various reporting requirements that are applicable to other public companies that are not “emerging growth companies” including 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 VGAC II’s periodic reports and proxy statements, and exemptions from the requirements of holding a nonbinding advisory vote on executive compensation and

 

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shareholder approval of any golden parachute payments not previously approved. As a result, VGAC II shareholders may not have access to certain information they may deem important. VGAC II could be an emerging growth company for up to five years, although circumstances could cause VGAC II to lose that status earlier, including if the market value of Class A ordinary shares or, after the Domestication, the New Grove Class A Common Stock held by non-affiliates exceeds $700 million as of any June 30th (or, if after the Business Combination, September 30th) before that time, in which case VGAC II would no longer be an emerging growth company as of the following December 31st (or, if after the Business Combination, March 31st). Following the Business Combination, VGAC II expects that New Grove will remain an emerging growth company until March 31, 2023. VGAC II cannot predict whether investors will find VGAC II’s securities less attractive because VGAC II will rely on these exemptions. If some investors find VGAC II’s securities less attractive as a result of VGAC II’s reliance on these exemptions, the trading prices of VGAC II’s securities may be lower than they otherwise would be, there may be a less active trading market for VGAC II’s securities and the trading prices of VGAC II’s securities may be more volatile.

Further, Section 102(b)(1) of the JOBS Act exempts emerging growth companies from being required to comply with new or revised financial accounting standards until private companies (that is, those that have not had a Securities Act registration statement declared effective or do not have a class of securities registered under the Exchange Act) are required to comply with the new or revised financial accounting standards. The JOBS Act provides that a company can elect to opt out of the extended transition period and comply with the requirements that apply to non-emerging growth companies but any such election to opt out is irrevocable. VGAC II has elected not to opt out of such extended transition period which means that when a standard is issued or revised and it has differ