COMMITMENTS AND CONTINGENCIES

9 Months Ended

Sep. 30, 2021

COMMITMENTS AND CONTINGENCIES [Abstract]

COMMITMENTS AND CONTINGENCIES

NOTE 6. COMMITMENTS AND CONTINGENCIES

Risks and Uncertainties

Management continues to evaluate the impact of the COVID-19 pandemic and has concluded that while it is reasonably possible that the virus could have a negative effect on the Company’s financial position, results of its operations and/or search for a target company, the specific impact is not readily determinable as of the date of these financial statements. The financial statements do not include any adjustments that might result from the outcome of this uncertainty.

Registration Rights

Pursuant to a registration rights agreement entered into on March 18, 2021, holders of the Founder Shares, Private Placement Warrants, and warrants that may be issued upon conversion of Working Capital Loans (and any shares of Class A common stock issued or issuable upon the exercise of the Private Placement Warrants or warrants issued upon conversion of the Working Capital Loans and upon conversion of the Founder Shares) and certain security holders holding public shares will be entitled to registration rights requiring the Company to register such securities for resale (in the case of the Founder Shares, only after conversion to shares of Class A common stock). The holders of these securities will be entitled to make up to three demands, excluding short form registration demands, that the Company register such securities. In addition, the holders will have certain “piggy-back” registration rights with respect to registration statements filed subsequent to the completion of a Business Combination and rights to require the Company to register for resale such securities pursuant to Rule 415 under the Securities Act. The Company will bear the expenses incurred in connection with the filing of any such registration statements.

Underwriting Agreement

The underwriters are entitled to a deferred fee of $0.35 per Unit (except with respect to units purchased by funds affiliated with Glenview Capital Management, LLC and an investment vehicle controlled by individuals affiliated with Glenview Capital Management, LLC), or $22,225,000 in the aggregate. The deferred fee will be forfeited by the underwriters solely in the event that the Company fails to complete a Business Combination, subject to the terms of the underwriting agreement.

HeartFlow Business Combination

On July 15, 2021, the Company entered into a business combination agreement with HF Halo Merger Sub, Inc., a wholly owned subsidiary of the Company (“Merger Sub”) and HeartFlow (the “Business Combination Agreement”). Pursuant to the Business Combination Agreement Merger Sub will merge with and into HeartFlow (the “Merger”), with HeartFlow surviving the Merger as a wholly owned subsidiary of the Company. In addition, the Company will be renamed HeartFlow Group, Inc. (“New HeartFlow”) following the consummation of the transactions (collectively, the “HeartFlow Business Combination”). The HeartFlow Business Combination is expected to close in the first quarter of 2022.

On September 30, 2021, the Company, Merger Sub and HeartFlow entered into Amendment No. 1 to Business Combination Agreement, pursuant to which the Business Combination Agreement was amended to memorialize the parties’ intention to have the shares of New Heart Flow common stock and public warrants of the post-combination company listed and traded on The Nasdaq Stock Market LLC (“Nasdaq”) rather than on the New York Stock Exchange.

On the closing date of the HeartFlow Business Combination (the “Closing Date”), among other things, the Company will distribute to record holders, on a pro rata basis, an amount, not less than zero, equal to (a) $91,000,000, less (b) the aggregate dollar amount to be paid by the Company in connection with the redemptions of shares of the Company’s Class A common stock to the extent such redemptions are in excess of $25,000,000 (the “Return of Capital Distribution Amount”). The outstanding number of shares of the Company’s Class A common stock shall be an amount of shares equal to (i) 69,000,000 minus (ii) (x) the Return of Capital Distribution Amount, divided by (y) $10.00. The Return of Capital Distribution Amount will be paid by the Company immediately following the closing.

In addition, the obligation of HeartFlow to consummate the HeartFlow Business Combination is subject to the fulfillment of other closing conditions, including, but not limited to, (i) the aggregate cash proceeds available for release from the Company’s Trust Account (after giving effect to redemptions of shares of the Company’s Class A common stock, if any, and the Return of Capital Distribution Amount), together with the proceeds from the FPA, if any, equaling no less than $345,000,000, (ii) the approval by the Nasdaq of the Company’s initial listing application in connection with the HeartFlow Business Combination and (iii) the New HeartFlow board of directors consisting of the number of directors, and comprising the individuals, as contemplated by the Business Combination Agreement.

In connection with the execution of the Business Combination Agreement, on July 15, 2021, the Company, Glenview Capital Management, LLC (“Glenview”) and certain entities affiliated with Glenview (together, the “Forward Purchasers”) entered into an amendment to the Company’s existing forward purchase agreement, dated as of July 15, 2021 (as amended, the “Amended Forward Purchase Agreement”), pursuant to which the Forward Purchasers agreed to purchase from the Company a number of shares of the Company’s Class A common stock (the “Forward Purchase Shares”), at a purchase price of $10.00 per share, an aggregate dollar amount of shares equal to the sum of (A) the aggregate redemptions of shares of the Company’s Class A common stock (which amount shall not be greater than $25,000,000), and (B) twenty-five percent (25%) of such aggregate redemptions in excess of the first $200,000,000 paid out of the Trust Account to holders redeeming shares of the Company’s Class A common stock (which amount set forth in (B) shall not be greater than $25,000,000) (or more if determined by the Forward Purchasers, up to the aggregate amount of redemptions) (the “Forward Purchase”).

On July 14, 2021 the Company entered into an agreement with UBS Securities LLC (“UBS”) to act as the exclusive financial advisor to the Company in connection with the Company’s proposed Business Combination with HeartFlow. The Company agrees to pay $10,000,000 in transaction fees to UBS payable upon successful Business Combination (a portion of which is payable from the deferred underwriting fee).

The Business Combination Agreement contains customary representations, warranties and covenants by the parties thereto and the closing is subject to certain conditions as further described in the Business Combination Agreement.