Redemption rights are provisions that allow shareholders or investors to require a company to repurchase their shares under certain conditions, often at a predetermined price. These rights are typically found in financing agreements or shareholder agreements and provide an exit strategy for investors while offering a measure of protection against unforeseen circumstances.
Proposal No. 3 — The Additional Redemption Rights Amendment Proposal — a proposal to amend the Certificate of Incorporation pursuant to an amendment to the Certificate of Incorporation (as set forth in paragraph 9 of Annex A of the accompanying proxy statement) to set the date by which, upon the approval of the Extension Proposal, the Corporation must redeem shares of Class A Common Stock held by public stockholders who elect to redeem such shares prior to 5:00 p.m., Eastern Time, on April 3, 2023, for a per-share price, payable in cash, equal to the aggregate amount then on deposit in the trust account established in connection with the IPO (the “Trust Account”), including interest (net of any tax obligation owed by the Company as a result of assets of the Company or interest or other income earned on the Trust Account), divided by the number of then-issued and outstanding shares of Class A Common Stock, as April 5, 2023 (such date, the “Additional Redemption Rights Amendment Date,” such amendment, the “Additional Redemption Rights Amendment,” such proposal, the “Additional Redemption Rights Amendment Proposal,” and together with the Extension Proposal and the Redemption Limitation Amendment Proposal, the “Amendment Proposals”); and
THE BOARD UNANIMOUSLY RECOMMENDS A VOTE “FOR” THE EXTENSION PROPOSAL, THE REDEMPTION LIMITATION AMENDMENT PROPOSAL, THE ADDITIONAL REDEMPTION RIGHTS AMENDMENT PROPOSAL AND, IF PRESENTED, THE ADJOURNMENT PROPOSAL.
Any demand for redemption, once made, may be withdrawn at any time until 5:00 p.m., Eastern time, on April 3, 2023. If you delivered your shares for redemption to our transfer agent and decide within the required timeframe not to exercise your redemption rights, you may request that our transfer agent return the shares (physically or electronically). You may make such request by contacting our transfer agent at the email address or physical address listed under the question “Who can help answer my questions?” below.
“Section 9.7 Additional Redemption Rights. If, in accordance with Section 9.1(a), any amendment is made to Section 9.2(d) that would (A) modify the substance or timing of the Corporation’s obligation to allow redemptions in connection with an initial Business Combination or to redeem 100% of the Offering Shares if the Corporation has not consummated an initial Business Combination within 24 months from the date of the closing of the Offering, or (B) with respect to any other provision herein relating to stockholder’s rights or pre-initial Business Combination activity, the Public Stockholders shall be provided with the opportunity to redeem their Offering Shares upon the approval of any such amendment, at a per-share price, payable in cash, equal to the aggregate amount then on deposit in the Trust Account, including interest (net of taxes payable), divided by the number of then outstanding Offering Shares. The Corporation’s ability to provide such opportunity is subject to the Redemption Limitation.”
How do I exercise my redemption rights? A. If you are a holder of public shares and wish to exercise your redemption rights, you must (i) demand that CAH redeem your public shares into cash no later than the second business day preceding the date of the special meeting by delivering your shares to CAH’s transfer agent physically or electronically using The Depository Trust Company’s DWAC (Deposit and Withdrawal at Custodian) System prior to the vote at the special meeting. Any holder of public shares will be entitled to demand that such holder’s shares be redeemed for a full pro rata portion of the amount then in the trust account (which, for illustrative purposes, was $115,013,930.47, or $10 per share, as of September 1, 2021, the record date). Such amount, less any owed but unpaid taxes on the funds in the trust account, will be paid promptly upon consummation of the Merger. However, under Delaware law, the proceeds held in the trust account could be subject to claims which could take priority over those of CAH’s public stockholders exercising redemption rights. Therefore, the per-share distribution from the trust account in such a situation may be less than originally anticipated due to such claims. Your vote on any proposal other than the Merger Proposal will have no impact on the amount you will receive upon exercise of your redemption rights.
To exercise your redemption rights, you must tender your shares to the Company’s transfer agent at least two business days prior to the Special Meeting (or May 30, 2023). You may tender your shares by either delivering your share certificate to the transfer agent or by delivering your shares electronically using the Depository Trust Company’s DWAC (Deposit/Withdrawal At Custodian) system. If you hold your shares in street name, you will need to instruct your bank, broker or other nominee to withdraw the shares from your account in order to exercise your redemption rights.
Redemption Rights Pursuant to the Certificate of Incorporation, holders of Common Stock may seek to redeem, out of funds legally available therefor, their shares for cash, regardless of whether they vote for or against, or whether they abstain from voting on, the Extension Amendment Proposal. In connection with the Extension Amendment Proposal and contingent upon the effectiveness of the implementation of the Charter Extension and the availability of lawful funds, any stockholder holding Common Stock may demand that the Company redeem such shares for a full pro rata portion of the Trust Account (which, for illustrative purposes, was approximately $[•] per share of Public Stock as of [•], 2023), calculated as of two business days prior to the Stockholder Meeting. If a holder properly seeks redemption as described in this section, the Company will, subject to funds being legally available therefor, redeem these shares for a pro rata portion of funds deposited in the Trust Account and the holder will no longer own these shares following the Stockholder Meeting. However, the Company will not proceed with the Charter Extension if the Company will not have at least $5,000,001 of net tangible assets after taking into account all Redemptions. In that case the Charter Extension will not become effective and, promptly following the Original Termination Date, the Company will cease operating, redeem the Public Stock out of funds lawfully available therefor, and dissolve pursuant to the DGCL and the Certificate of Incorporation.
Q: What are the federal income tax consequences of exercising my redemption rights? A: Generally, a Company stockholder that is a U.S. person and exercises its redemption rights to receive cash from the trust account in exchange for its shares of the Company’s common stock will be required to treat the transaction as a sale of such shares and recognize gain or loss in an amount equal to the difference, if any, between the amount of cash received in the redemption and the tax basis of the shares of the Company’s common stock redeemed. Such gain or loss should be treated as capital gain or loss if such shares were held as a capital asset on the date of the redemption.
(iv) A prospectus supplement covering the issuance of up to 1,824,189 shares of Common Stock to the holders of non-managing member units of HCP DR MCD, LLC upon tender of those units in exchange for shares of Common Stock (the “MCD Prospectus Supplement”) that the Company may issue pursuant to redemption rights set forth in that certain Amended and Restated Limited Liability Company Agreement, dated as of February 9, 2007, of HCP DR MCD, LLC. The MCD Prospectus Supplement continues an offering of Common Stock previously covered by the Prior Registration Statement.
Redemption Rights If the Extension Amendment Proposal and the Trust Amendment Proposal are approved, and the Extension is implemented, each public shareholder may seek to redeem his Public Shares for a pro rata portion of the funds available in the Trust Account, less any income taxes owed on such funds but not yet paid. If you exercise your redemption rights, you will be exchanging your Public Shares for cash and will no longer own the shares. In order to exercise your redemption rights, you must: • if you hold Public Units, separate the underlying Public Shares and Public Warrants; • check the box on the enclosed proxy card to elect redemption; • check the box on the enclosed proxy card marked “Shareholder Certification” if you are not acting in concert or as a “group” (as defined in Section 13d-3 of the Exchange Act) with any other shareholder with respect to Public Shares; • prior to 5:00 p.m., New York Time on September 18, 2019 (two business days before the Extraordinary General Meeting), tender your shares physically or electronically and submit a request in writing that Pace redeem your Public Shares for cash to Continental Stock Transfer & Trust Company, the Transfer Agent, at the following address: Continental Stock Transfer & Trust Company 1 State Street 30th Floor New York, New York 10004 Attention: Mark Zimkind Email: [email protected] and • deliver your Public Shares either physically or electronically through DTC’s DWAC system to the Transfer Agent at least two business days before the Extraordinary General Meeting. Shareholders seeking to exercise their redemption rights and opting to deliver physical certificates should allot sufficient time to obtain physical certificates from the Transfer Agent and time to effect delivery. Shareholders should generally allot at least two weeks to obtain physical certificates from the Transfer Agent. However, it may take longer than two weeks. Shareholders who hold their shares in street name will have to coordinate with their bank, broker or other nominee to have the shares certificated or delivered electronically. If you do not submit a written request and deliver your Public Shares as described above, your shares will not be redeemed.
Will how I vote affect my ability to exercise redemption rights? A: No. You may exercise your redemption rights whether or not you are a holder of Public Stock on the Record Date (so long as you are a holder at the time of exercise), or whether you are a holder and vote your Public Stock of the Company on the Extension Amendment Proposal (for or against) or any other proposal described by this proxy statement. As a result, the Charter Extension can be approved by stockholders who will redeem their Public Stock and no longer remain stockholders, leaving stockholders who choose not to redeem their Public Stock holding shares in a company with a potentially less liquid trading market, fewer stockholders, potentially less cash and the potential inability to meet the listing standards of the Nasdaq Global Market (“Nasdaq”).
Redemption rights are legal provisions that allow an entity, often a company or individual, to reclaim or repurchase an asset under specified conditions. These rights are often included in financial and real estate contracts, providing the original owner with an opportunity to regain ownership, typically after a breach in the terms of a contract or a default.
Redemption rights should be considered when you want to provide a safety net for reclaiming an asset in certain situations, such as:
Writing redemption rights involves clearly outlining the terms and conditions under which the redemption can occur. Here’s a general guideline:
Example: “The borrower shall have redemption rights over the foreclosed property, exercisable within a 90-day period post-foreclosure. The redemption shall be subject to the payment of outstanding loan amounts with accrued interest.”
Redemption rights are commonly found in various types of legal agreements and financial documents, including:
These contracts incorporate redemption rights to balance interests between parties, minimize risks, and provide the potential for asset recovery or capital restructuring.
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Dive deeper into the world of clauses and learn more about these other clauses that are used in real contracts.
The redemption clause in a contract specifies the terms and conditions under which one party can reclaim or repurchase assets or securities, often at a predetermined price or within a specific timeframe. This clause is commonly found in financial agreements and bonds, providing structured guidelines for exiting or altering investments.
A refundable deposit clause requires a party to provide an upfront payment that is held as security for the duration of the contract. Upon fulfillment of the contract terms or conditions specified, this deposit is returned to the depositor, ensuring protection against non-compliance or potential damages.
The reimbursement of expenses clause outlines the conditions under which one party will repay the other for costs incurred while performing contractual obligations, typically requiring the expenses to be deemed reasonable and necessary. This clause often specifies the process for submitting expense claims, documentation requirements, and any limits or exclusions regarding which expenses are eligible for reimbursement.
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