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Matterport announced that it has entered into a “definitive agreement” to go public, and says it will be known as Matterport Inc. when it lists on the NASDAQ exchange under the ticker symbol “MTTR”. The defendants assert that they would have taken discovery on “Brown’s reasons for delaying submitting his letters of transmittal, and Brown’s understanding of the value of the merger consideration he received,” had he raised this argument sooner. In my view, neither issue would change the outcome of this decision, as neither affects the A&R Bylaws’ text.
In a press release, Gores said its strategy is to identify and complete business combinations with differentiated, market-leading companies with strong equity stories, which will benefit from the growth capital of the public equity markets. The ability of the target company’s insiders to sell their SPAC shares after the merger is a key point of negotiation in any de-SPAC transaction. Concurrently with the consummation of the business combination, additional investors will purchase shares of common stock of Gores Holdings VI in a private placement. Following the closing of the business combination, the Company’s management team, led by Chief Executive Officer RJ Pittman, will continue to operate and manage Matterport. In a typical de-SPAC transaction, a target company combines with the SPAC , and the stock of the target is cancelled and exchanged for the right to receive shares of the SPAC. The issuance of those shares is generally handled by the SPAC’s transfer agent, either directly or pursuant to an exchange agreement and letters of transmittal which must be completed by stockholders .
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Brown received equity compensation in the form of stock options granting him the right to purchase 1,350,000 shares of Legacy Matterport. Immediately after the business combination—and not to shares which were issuable at such time but not actually issued for some time because the holder failed to exchange their target company shares. Significantly, in the de-SPAC transaction, Legacy Matterport stockholders https://xcritical.com/ did not automatically become Matterport stockholders. Instead, Matterport’s transfer agent would issue Matterport Class A common shares to Legacy Matterport stockholders upon receipt of a letter of transmittal surrendering their Legacy Matterport shares. In February 2021, Matterport Operating, LLC (“Legacy Matterport”) entered into an agreement to merge with a SPAC, Gores Holding VI, Inc. (“Gores”).
I agree with the plaintiff’s interpretation of the bylaw as it concerns Brown’s shares. The evidence demonstrates that Brown did not hold Matterport Class A shares “immediately following” the transaction under any commonly accepted meaning of that phrase. Matterport, a spatial data firm and the real estate industry’s top progenitor of 3D tours, is set to go public via a merger with Gores Holdings VI, a special purpose acquisition company sponsored by Gore Group, a global asset management firm.
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105 at (Brown testifying that he submitted his letters of transmittal “either November 4th or November 5th of 2021” for certain shares and “on November 19, 2021” for the “remainder of his shares”). Saba, 224 A.3d at 977 (quoting Hill, 119 A.3d at 38); see also PHL Variable Ins. Tr., 28 A.3d 1059, 1070 (Del. 2011) (“If is unambiguous, then there is no room for judicial interpretation and ‘the plain meaning . . . controls.'” (quoting LeVan v. Indep. Mall, Inc., 940 A.2d 929, 933 (Del. 2007))). Unless otherwise noted, the facts described in this section were stipulated to by the parties or proven by a preponderance of the evidence.
In reviewing the relevant provision of the New Matterport bylaws, the Court looked to their plain meaning and found the language to be unambiguous. In particular, the Court found that the common meaning of “immediately”—“without delay”—meant that Brown’s shares, which were received over 100 days after closing, could not be viewed as held “immediately” after closing. On July 22, 2021, the A&R Bylaws became effective when Gores filed an amended certificate of incorporation and the transaction was completed. Legacy Matterport stockholders did not automatically become Matterport stockholders.
The defendants assert that Brown’s reading of the provision would “nullify” the transfer restrictions because “no Legacy Matterport stockholder received Matterport shares” instantly after the transaction closed. Delaware law rejects “unreasonable” contractual interpretations that lead to an “absurd result.”But the evidence demonstrates that some Legacy Matterport stockholders would 9 have received their Matterport shares within a few days of closing. That timing could be viewed as consistent with a plain reading of the bylaw.
- These forward-looking statements generally are identified by the words “believe,” “project,” “expect,” “anticipate,” “estimate,” “intend,” “strategy,” “future,” “forecast,” “opportunity,” “plan,” “may,” “should,” “will,” “would,” “will be,” “will continue,” “will likely result,” and similar expressions .
- In 2020, Matterport expects it will have generated $86 million in revenue, up from $46 million the year prior.
- The only question presently before the court is how the transfer restrictions apply to the plaintiff.
- There are several actions that could trigger this block including submitting a certain word or phrase, a SQL command or malformed data.
- Accordingly, I find that Brown does not hold Lockup Shares subject to the transfer restrictions in Section 7.10.
The provision defined lockup shares as shares held “immediately” following the de-SPAC transaction, but under the logistics of the share transfer, the CEO was not actually issued shares until over 100 days later (Brown v. Matterport, Inc., January 10, 2022, Will, L.). Brown filed a complaint contending that the share trading restrictions were adopted without his consent in violation of Section 202 of the Delaware General Corporation Law. He sought a declaration that the lockup shares provision was unenforceable as to his shares and that he could freely transfer his shares and/or conduct derivative trading without restriction.
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Brown also brought fiduciary claims against Legacy Matterport’s former directors. The court bifurcated the claims and held an expedited trial on the limited issue of whether Brown was bound by the transfer restrictions. For parties negotiating or considering entering into a future de-SPAC transaction, it is critical to carefully negotiate the scope of the lock-up and any other restrictions on alienation of the shares of the combined company. To avoid ambiguity, it may be preferred to add language clarifying that the restrictions apply to any shares “held by the holders immediately after the effective time or otherwise issued or issuable to the holders in connection with the business combination transaction”.
To the extent that any conflicting evidence was presented, I have weighed it and made findings of fact accordingly. Given the limited focus of this decision, the discussion of certain peripheral facts is abbreviated. Where facts are drawn from exhibits jointly submitted by the parties at trial, they are referred to according to the numbers provided on the parties’ joint exhibit list (cited as “JX “) unless defined. Sign up for a free Matterport account with 1 active space, 1 user, and access to a suite of tools. The addition of LiDAR support for iPhone customers to capitalize on Apple’s new depth sensor and increase the fidelity and accuracy of Matterport digital twins. This website is using a security service to protect itself from online attacks.
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Forward-looking statements speak only as of the date they are made. Readers are cautioned not to put undue reliance on forward-looking statements, and Matterport assumes no obligation and, except as required by law, does not intend to update or revise these forward-looking statements, whether as a result of new information, future events, or otherwise. Matterport does not give any assurance that it will achieve its expectations. ”) and the markets in which Matterport operates, spac matterport business strategies, debt levels, industry environment, potential growth opportunities, the effects of regulations and Gores’ or Matterport’s projected future results. These forward-looking statements generally are identified by the words “believe,” “project,” “expect,” “anticipate,” “estimate,” “intend,” “strategy,” “future,” “forecast,” “opportunity,” “plan,” “may,” “should,” “will,” “would,” “will be,” “will continue,” “will likely result,” and similar expressions .
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Matterport, founded in 2011, has benefited from the COVID-19 pandemic and social distancing as buyers look to shop for homes online instead of going to see them in-person. The company provides software that can be used to create 3D renderings of homes. Prospective buyers can then “visit” the homes virtually, walking through them as if they were there in person. Besides homes, Matterport’s software can also be used to create digital representations of office spaces, museums, retail spaces and just about any kind of property. The company said it grew its user base by more than 500% in 2020, while its revenue grew by 87% to $85.9 million that year. The company believes there’s a large total addressive market of more than $1.2 trillion for the digitization of spaces, with less than one percent of space currently digitized and Matterport leading the way.
Existing lock-up agreements containing the “immediately following” formulation used in Matterport may not be enforceable against holders who did not exchange their target company shares for SPAC shares reasonably promptly following the closing of the business combination transaction. Brown held only the right to receive Matterport Class A common shares at that time. The evidence 10 demonstrates that Brown was not issued Matterport shares until at least November 5 and 19, 2021-after he sent executed letters of transmittal to Matterport’s transfer agent. Roughly three and a half months elapsed between the business combination closing and the date Brown possessed any Matterport shares.
There are several actions that could trigger this block including submitting a certain word or phrase, a SQL command or malformed data. In 2020, Matterport expects it will have generated $86 million in revenue, up from $46 million the year prior. The company projects steady year-over-year revenue growth reaching $747 million in 2025. Brown also filed a Verified Second Amended Complaint on November 17, 2021, but it did not amend Count I and the defendants contest whether Brown could amend his previous Complaint as a matter of right. The A&R Bylaws were adopted on July 21, 2021 but did not go into effect until the next day. A near-identical version of the bylaws, which only differed in the naming of the SPAC, was adopted simultaneously with the A&R Bylaws and was effective in the interim.
Accordingly, I find that Brown does not hold Lockup Shares subject to the transfer restrictions in Section 7.10. This conclusion is the natural consequence of the “deliberate and knowing selection of words for inclusion” in the A&R Bylaws, which the court will not rewrite. Matterport is the latest firm to use a SPAC to make its public debut, in favor of the more traditional initial public offering route. Real estate technology company Opendoor also went public via a merger with a SPAC in late 2020. “We believe the proposed transaction with Gores Holdings VI unlocks the potential of our platform and accelerates our mission to make every building and every space more valuable and accessible,” Matterport CEO RJ Pittman, said in a statement. The merger will give the combined company — which will be listed on the NASDAQ exchange under the ticker symbol “MTTR” — an enterprise value of approximately $2.3 billion and a total equity value of $2.9 billion.
In February 2021, Legacy Matterport agreed to a business combination with Gores Holding VI, Inc., a SPAC. In the proposed de-SPAC merger, Gores would be the surviving entity and would be renamed Matterport, and Legacy Matterport would become a wholly owned subsidiary of Matterport. In July 2021, Gores adopted bylaws in anticipation of the business combination, which imposed transfer restrictions on certain shares of Matterport Class A common stock, referred to as “Lockup Shares.” The transaction was completed and the bylaws became effective. A CEO’s shares in a company acquired by a special purpose acquisition company were not subject to a lockup restriction, the Delaware Court of Chancery held.