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As filed with the Securities and Exchange Commission on September 17, 2021

Registration No. 333-257726

 

 

 

UNITED STATES

SECURITIES AND EXCHANGE COMMISSION

Washington, D.C. 20549

Amendment No. 2

to

FORM S-4

REGISTRATION STATEMENT

UNDER

THE SECURITIES ACT OF 1933

GORES METROPOULOS II, INC.

(Exact Name of Registrant as Specified in its Certificate of Incorporation)

 

Delaware   6770   85-2097088

(State or Other Jurisdiction of

Incorporation or Organization)

 

(Primary Standard Industrial

Classification Code Number)

 

(IRS Employer

Identification Number)

6260 Lookout Road

Boulder, CO 80301

(303) 531-3100

(Address, including Zip code, and Telephone Number, including Area Code, of Principal Executive Offices)

Dean Metropoulos

Chairman

200 Greenwich Avenue

Greenwich, CT 06830

Telephone: (203) 629-6644

Facsimile: (203) 629-6660

(Name, Address, including Zip Code, and Telephone Number, including Area Code, of Agent for Service)

Copies to:

 

James R. Griffin, Esq.

Weil, Gotshal & Manges LLP

200 Crescent Court, Suite 300

Dallas, TX 75201

(214) 746-7779

  

Kyle C. Krpata, Esq.

Weil, Gotshal & Manges LLP

201 Redwood Shores Parkway

Redwood Shores, CA 94065

(650) 802-3093

  

Mark B. Baudler

Andrew D. Hoffman

Christina L. Poulsen

Jonathan Chan

Wilson Sonsini Goodrich &
Rosati

Professional Corporation

One Market Plaza

Spear Tower, Suite 3300

San Francisco, CA 94105

(415) 947-2000

  

Sanjay Banker

Ritesh Patel

Phil Rothenberg

Sonder Holdings Inc.

101 15th Street

San Francisco, CA 94103

Approximate date of commencement of proposed sale to the public: As soon as practicable after the effectiveness of this registration statement.

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

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

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


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

 

Large accelerated filer      Accelerated filer  
Non-accelerated filer      Smaller reporting company  
     Emerging Growth Company  

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

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

 

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

    

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

    


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CALCULATION OF REGISTRATION FEE

 

 

Title of Each Class of

Securities to be Registered

 

Amount

to be

Registered

 

Proposed

Maximum

Offering Price

Per Share

 

Proposed

Maximum

Aggregate

Offering Price

 

Amount of

Registration Fee

Common Stock to be issued in the Business Combination

  232,160,300(1)(3)   N/A   $2,294,904,565.50(4)   $262,892.79(6)

Post-Combination Company Special Voting Common Stock to be issued in the Business Combination

  37,193,625(2)(3)   N/A   $37.19(5)   $0.00(7)

Total

              $262,892.79(8)

 

 

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

 

(1)

Represents the estimated maximum number of shares of common stock, par value $0.000001 per share (“Common Stock”), of the Company following the Business Combination (as defined herein) (such Company, the “Post-Combination Company”) to be issued to the holders of Sonder Common Stock (as defined herein) immediately prior to the effective time of the First Merger (as defined herein) upon completion of the Business Combination, estimated solely for the purpose of calculating the registration fee, and is based on an amount equal to the sum of: (a) (i) $2,176,603,000, divided by (ii) $10.00; and (b) 14,500,000 shares of Common Stock that may be issued as contingent consideration in the Business Combination pursuant to the Merger Agreement.

(2)

Represents the estimated maximum number of shares of Post-Combination Company Special Voting Common Stock, par value $0.000001 per share (“Post-Combination Company Special Voting Common Stock”), of the Post-Combination Company to be issued to holders of existing shares of Sonder Special Voting Common Stock (as defined herein) upon completion of the Business Combination, estimated solely for the purpose of calculating the registration fee, and is based on an amount equal to the product of (a) 22,017,113, the maximum number of shares of Sonder Special Voting Common Stock that could be outstanding immediately prior to the effective time of the First Merger, multiplied by (b) 1.68930507853591, the Estimated Exchange Rate (as defined herein) for the purposes of calculating the maximum number of Post-Combination Company Special Voting Common Stock to be issued in connection with the Business Combination.

(3)

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

(4)

Pursuant to Rules 457(c), 457(f)(1) and 457(f)(3) promulgated under the Securities Act and solely for the purpose of calculating the registration fee, the proposed aggregate maximum offering price is (i) $9.885 (the average of the high and low prices of Public Shares as reported on Nasdaq on June 28, 2021) multiplied by (ii) 232,160,300 shares of Common Stock to be registered.

(5)

Pursuant to Rules 457(c), 457(f)(1) and 457(f)(3) promulgated under the Securities Act and solely for the purpose of calculating the registration fee, the proposed aggregate maximum offering price is (i) $0.000001 (the book value of each share of Post-Combination-Company Special Voting Common Stock) multiplied by (ii) 37,193,625 shares of Post-Combination Company Special Voting Common Stock to be registered.

(6)

Reflects the amount previously paid in connection with the initial filing of this Registration Statement with respect to the Common Stock to be issued in the Business Combination.

(7)

Computed in accordance with Rule 457(f) under the Securities Act to be $0.00, which is equal to 0.0001091 multiplied by the proposed maximum aggregate offering price of shares of Post-Combination Company Special Voting Common Stock of $37.19.

(8)

Previously paid in connection with the initial filing of this Registration Statement.

 

 

 


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EXPLANATORY NOTE

This proxy statement/prospectus/consent solicitation statement relates to an Agreement and Plan of Merger, dated April 29, 2021 (as it may be amended from time to time, the “Merger Agreement”), by and among Gores Metropoulos II, Inc., a Delaware corporation (“we”, “us”, “our”, or the Company”), Sunshine Merger Sub I, Inc., a Delaware corporation (“First Merger Sub”) and a direct, wholly-owned subsidiary of the Second Merger Sub (as defined below), Sunshine Merger Sub II, LLC, a Delaware limited liability company and a direct, wholly-owned subsidiary of the Company (“Second Merger Sub”) and Sonder Holdings Inc., a Delaware corporation (“Sonder”), a copy of which is attached to this proxy statement/prospectus/consent solicitation statement as Annex A.

Pursuant to the Merger Agreement and in connection therewith, among other things and subject to the terms and conditions contained therein:

 

   

at the closing of the Business Combination, First Merger Sub will merge with and into Sonder, with Sonder continuing as the Surviving Corporation (the “First Merger”);

 

   

immediately following the First Merger and as part of the same overall transaction as the First Merger, the Surviving Corporation will merge with and into Second Merger Sub, with Second Merger Sub continuing as the Surviving Entity (the “Second Merger” and, together with the First Merger and the other transactions contemplated by the Merger Agreement, the “Business Combination”) and a wholly-owned subsidiary of the Company after the Business Combination (the “Post-Combination Company”);

 

   

in connection with the Business Combination, we will adopt the proposed Amended and Restated Certificate of Incorporation (the “Amended and Restated Certificate of Incorporation”), a form of which is attached to this proxy statement/prospectus/consent solicitation statement as Annex B, to provide for, among other things, the authorization of our Common Stock, par value $0.000001 per share (the “Common Stock”) and Special Voting Common Stock, par value $0.000001 per share (the “Post-Combination Company Special Voting Common Stock”), to be issued in connection with the Business Combination;

 

   

in connection with the Business Combination, the holders of Sonder’s (a) Common Stock, par value $0.000001 per share (“Sonder Common Stock”), (b) (i) Series Seed-1 Preferred Stock, (ii) Series Seed-1A Preferred Stock, (iii) Series Seed-2 Preferred Stock, (iv) Series Seed-2A Preferred Stock, (v) Series Seed-3 Preferred Stock, (vi) Series Seed-3A Preferred Stock, (vii) Series A Preferred Stock, (viii) Series A-1 Preferred Stock, (ix) Series B Preferred Stock, (x) Series B-1 Preferred Stock, (xi) Series C Preferred Stock, (xii) Series C-1 Preferred Stock, (xiii) Series D Preferred Stock, (xiv) Series D-1 Preferred Stock and (xv) Series E Preferred Stock, in each case, par value $0.000001 per share (collectively, such classes referred to in clause (b), the “Sonder Preferred Stock”), and (c) (i) Special Voting Series AA Common Stock (the “Sonder Special Voting Common Stock”), (ii) Special Voting Series Seed-1 Stock, (iii) Special Voting Series Seed-2 Stock, (iv) Special Voting Series Seed-3 Stock, (v) Special Voting Series A Stock, (vi) Special Voting Series B Stock, (vii) Special Voting Series C Stock, (viii) Special Voting Series D Stock and (ix) Special Voting Series E Stock, in each case, par value $0.000001 per share (collectively, such classes and series referred to in clauses “(a),” “(b)” and “(c),” the “Sonder Stock”), will receive in exchange for their Sonder Stock, (x) with respect to Sonder Common Stock (following the conversion of each issued and outstanding share of Sonder Preferred Stock and the convertible promissory notes issued by Sonder to certain purchasers pursuant to the Note Purchase Agreement, dated March 12, 2021, as amended (the “Sonder Convertible Notes”), into shares of Sonder Common Stock prior to the effective time of the First Merger) a number of shares of our newly issued Common Stock equal to the Per Share Sonder Common Stock Consideration (as defined below) and (y) with respect to Sonder Special Voting Common Stock, a number of shares of our newly issued Post-Combination Company Special Voting Common Stock equal to (i) the number of shares of Post-Combination Company Special Voting Common Stock multiplied by (ii) the ratio equal to the number of shares of Common Stock issuable


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with respect to each share of Sonder Common Stock in accordance with the Per Share Sonder Common Stock Consideration (as defined below);

 

   

Per Share Sonder Common Stock Consideration” means, with respect to each share of Sonder Common Stock, (a) a number of shares of Common Stock (deemed to have a value of $10.00 per share), equal to the result of (i) $2,176,603,000, divided by (ii) $10.00, divided by (b) the Sonder Stock Adjusted Fully Diluted Shares (as defined below);

 

   

Sonder Stock Adjusted Fully Diluted Shares” means the sum of, without duplication (a) the aggregate number of shares of Sonder Common Stock issued and outstanding as of immediately prior to the effective time of the First Merger (assuming the conversion of all Sonder Preferred Stock prior to Closing), plus (b) the aggregate number of shares of Sonder Common Stock reserved for issuance upon the exchange of all Series AA Common Exchangeable Preferred Shares (the “Sonder Canada Exchangeable Common Shares”) of Sonder Canada Inc., a corporation existing under the laws of the province of Québec (“Sonder Canada”), issued and outstanding as of immediately prior to the effective time of the First Merger (assuming the conversion of all shares of Sonder Canada’s (i) Series Seed-1 Exchangeable Preferred Shares, (ii) Series Seed-2 Exchangeable Preferred Shares, (iii) Series Seed-3 Exchangeable Preferred Shares, (iv) Series A Exchangeable Preferred Shares, (v) Series B Exchangeable Preferred Shares, (vi) Series C Exchangeable Preferred Shares, (vii) Series D Exchangeable Preferred Shares and (viii) Series E Exchangeable Preferred Shares prior to Closing), plus (c) the aggregate number of shares of Sonder Common Stock issuable upon exercise or settlement of all options to purchase Sonder Common Stock granted pursuant to (i) Sonder’s 2019 Equity Incentive Plan, as amended from time to time, and (ii) Sonder’s Stock Option Plan dated February 25, 2015, as amended and restated on February 24, 2016, March 14, 2017, March 9, 2018, September 26, 2018, May 5, 2019, November 15, 2019 and December 20, 2019 (the “Sonder Stock Options”), whether vested or unvested, outstanding as of immediately prior to the effective time of the First Merger (assuming for the purposes of this definition that all such Sonder Stock Options are fully vested and exercised on a net exercise basis based on the Per Share Sonder Common Stock Consideration), plus (d) the aggregate number of shares of Sonder Common Stock issuable upon exercise or settlement of all warrants to purchase shares of Sonder Stock (the “Sonder Warrants”) outstanding as of immediately prior to the effective time of the First Merger (assuming for the purposes of this definition that all such Sonder Warrants are exercised on a net exercise basis based on the Per Share Sonder Common Stock Consideration), plus (e) the aggregate number of shares of Sonder Common Stock issuable upon conversion of all of the Sonder Convertible Notes, to the extent issued and outstanding as of immediately prior to the effective time of the First Merger;

 

   

in connection with the Business Combination, each share of Sonder Canada Exchangeable Common Shares will be exchanged into a new series of the same class of virtually identical Sonder Canada Exchangeable Common Shares (the “Post-Combination Canada Exchangeable Common Shares”) exchangeable for Common Stock upon the completion of the First Merger;

 

   

at the closing of the Business Combination, the Company, Sponsor, Randall Bort, Michael Cramer, Joseph Gatto and certain Sonder Stockholders (the “Registration Rights Holders”) will enter into a registration rights agreement (the “Registration Rights Agreement”), pursuant to which, (a) any (i) outstanding share of Common Stock or any Private Placement Warrants, (ii) shares of Class F Stock reclassified into Common Stock and shares of Common Stock issued or issuable upon exercise of the Private Placement Warrants, and (iii) shares of Common Stock issued as earn out shares from the Post-Combination Company, issuable in Common Stock in accordance with the terms provided in the Merger Agreement (the “Earn Out Shares”) or issuable upon the conversion of any Earn Out Shares, in each case, held by the Sonder Stockholders, and (b) any other equity security of the Company issued or issuable with respect to any such share of Common Stock by way of a stock dividend or stock split or in connection with a combination of shares, recapitalization, merger, consolidation or other reorganization or otherwise, will be entitled to registration rights; and

 


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following the closing of the Business Combination, the foregoing consideration to be paid to the Sonder equityholders may be further increased by amounts payable in respect of Earn Out Shares, of up to an aggregate of 14,500,000 shares of Common Stock.

The aggregate merger consideration to be paid in connection with the Business Combination (excluding any Earn Out Shares) is expected to be approximately 217,660,300 shares of the Post-Combination Company’s Common Stock with an implied value (based on an assumed value of $10.00 per share) equal to approximately $2,176,603,000. However, certain of these shares of Common Stock will be reserved for issuance upon (a) the exercise of Rollover Options and (b) the exchange of Post-Combination Canada Exchangeable Common Shares corresponding to shares of Post-Combination Company Special Voting Common Stock to be issued in the Business Combination. Holders of Sonder Stock Options will not receive their portion of the 217,660,300 shares of Post-Combination Company’s Common Stock issued as consideration in the Business Combination at the completion of the Business Combination, but will instead receive Rollover Options, which may be exercisable following the Business Combination for the applicable number of shares of the Post-Combination Company’s Common Stock. Holders of Sonder Special Voting Common Stock will not receive their portion of the 217,660,300 shares of Post-Combination Company’s Common Stock issued as consideration in the Business Combination at the completion of the Business Combination, but will instead receive shares of Post-Combination Company Special Voting Common Stock, which shares of Post-Combination Company Special Voting Common Stock may be redeemed upon the future exchange by holders of Post-Combination Canada Exchangeable Common Shares for the applicable number of shares of the Post-Combination Company’s Common Stock. Based on 17,099,526 outstanding Sonder Stock Options and 22,017,113 outstanding Sonder Canada Exchangeable Common Shares as of June 30, 2021, (x) approximately 28,898,199 Rollover Options (corresponding to approximately 28,898,199 shares of the Post-Combination Company’s Common Stock) would be expected to be outstanding immediately following the consummation of the Business Combination (assuming an Option Exchange Ratio equal to 1.69 and excluding any additional Discounted Earn Out Option Amount, which will be determined on or prior to the consummation of the Business Combination) and (y) approximately 37,208,921 shares of Post-Combination Company Special Voting Common Stock (corresponding to approximately 37,208,921 shares of the Post-Combination Company’s Common Stock) would be expected to be issued as consideration in the Business Combination (assuming an Exchange Rate of 1.69).

In addition and in connection with the foregoing, we, First Merger Sub and Second Merger Sub entered into Voting and Support Agreements with certain Sonder Stockholders concurrently with the execution of the Merger Agreement, pursuant to which, among other things, such Sonder Stockholders have agreed to vote all of their respective shares of Sonder Stock in favor of, among other things, adopting the Merger Agreement.

In connection with the foregoing, Gores Metropoulos Sponsor II, LLC (the “Sponsor”) and Randall Bort, Michael Cramer, and Joseph Gatto, our independent directors (together with the Sponsor, our “Initial Stockholders”) have agreed and their permitted transferees will agree, to vote their Founder Shares, as well as any Public Shares purchased during or after the Company IPO, in favor of the Business Combination. In addition, our Initial Stockholders have also agreed to waive their right to a conversion price adjustment with respect to any shares of our Common Stock they may hold in connection with the consummation of the Business Combination as set forth in the Amended and Restated Certificate of Incorporation of the Company, dated January 19, 2021 (the “Current Company Certificate”). In addition, and in connection with the foregoing and concurrently with the execution of the Merger Agreement, the Company entered into subscription agreements (the “Subscription Agreements”) with certain investors (the “PIPE Investors”) that are “accredited investors” (as defined by Rule 501 of Regulation D) and a subscription agreement with our Sponsor that is an “accredited investor” (as defined by Rule 501 of Regulation D). Pursuant to the Subscription Agreements, the PIPE Investors agreed to subscribe for and purchase and the Company agreed to issue and sell to such PIPE Investors, 20,000,000 shares of Class A Stock (which will be reclassified into Common Stock upon the effectiveness of the Amended and Restated Certificate of Incorporation) for a purchase price of $10.00 per share, or an aggregate of approximately $200 million (the “PIPE Investment”). The Subscription Agreement to which our Sponsor is a party is substantially similar to the Subscription Agreements to which the other PIPE Investors are parties except that the Sponsor may assign its rights under the Subscription Agreement, subject to compliance with the


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securities laws. The closing of the PIPE Investment will occur immediately pre-closing of the Business Combination. The Class A Stock (which will be reclassified into Common Stock upon the effectiveness of the Amended and Restated Certificate of Incorporation) to be issued pursuant to the Subscription Agreements has not been registered under the Securities Act in reliance upon the exemption provided under Section 4(a)(2) of the Securities Act / Regulation D promulgated thereunder.

This proxy statement/prospectus/consent solicitation statement serves as:

 

   

a proxy statement for the special meeting of the Company in lieu of the 2021 annual meeting of the Company being held on [●], 2021, (including any adjournment or postponement thereof, the “Special Meeting”), where Company stockholders will vote on, among other things, proposals to (i) approve the Merger Agreement and the transactions contemplated thereby, including the Business Combination, (ii) approve the issuance of the Common Stock and Company Special Voting Stock in connection with the Business Combination and (iii) adopt the proposed Amended and Restated Certificate of Incorporation under the DGCL to be effective in connection with the consummation of the Business Combination;

 

   

a consent solicitation statement for Sonder, where Sonder will solicit the written consent of the Sonder Stockholders with respect to the adoption of the Merger Agreement; and

 

   

a prospectus for the Common Stock that Sonder Stockholders will receive in the Business Combination.

This proxy statement/prospectus/consent solicitation statement does not serve as a prospectus for the Common Stock that our Initial Stockholders (as defined herein) will receive in the Business Combination.


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ADDITIONAL INFORMATION

No person is authorized to give any information or to make any representation with respect to the matters that this proxy statement/prospectus/consent solicitation statement describes other than those contained in this proxy statement/prospectus/consent solicitation statement, and, if given or made, the information or representation must not be relied upon as having been authorized by the Company or Sonder. This proxy statement/prospectus/consent solicitation statement does not constitute an offer to sell or a solicitation of an offer to buy securities or a solicitation of a proxy in any jurisdiction where, or to any person to whom, it is unlawful to make such an offer or a solicitation. Neither the delivery of this proxy statement/prospectus/consent solicitation statement nor any distribution of securities made under this proxy statement/prospectus/consent solicitation statement will, under any circumstances, create an implication that there has been no change in the affairs of the Company or Sonder since the date of this proxy statement/prospectus/consent solicitation statement or that any information contained herein is correct as of any time subsequent to such date.


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The information contained in this document is subject to completion or amendment. A registration statement relating to these securities has been filed with the United States Securities and Exchange Commission. These securities may not be sold nor may offers to buy be accepted prior to the time the registration statement becomes effective. This document is not an offer to sell these securities and it is not soliciting an offer to buy these securities, nor shall there be any sale of these securities, in any jurisdiction in which such offer, solicitation or sale is not permitted or would be unlawful prior to registration or qualification under the securities laws of any such jurisdiction.

 

PRELIMINARY — SUBJECT TO COMPLETION, DATED SEPTEMBER 17, 2021

LETTER TO STOCKHOLDERS OF GORES METROPOULOS II, INC.

6260 Lookout Road

Boulder, CO 80301

(303) 531-3100

Dear Gores Metropoulos II, Inc. Stockholder:

We cordially invite you to attend a special meeting in lieu of the 2021 annual meeting of the stockholders of Gores Metropoulos II, Inc., a Delaware corporation (“we,” “us,” “our” or the “Company”), which, in light of public health concerns regarding the COVID-19 pandemic, will be held via live webcast at [●], on [●], 2021, at [●]. The Special Meeting can be accessed by visiting [●], where you will be able to listen to the meeting live and vote during the meeting. Additionally, you have the option to listen only to the Special Meeting by dialing [●] (toll-free within the U.S. and Canada) or [●] (outside of the U.S. and Canada, standard rates apply). The passcode for telephone access is [●], but you cannot vote or ask questions if you choose to participate telephonically. Please note that you will only be able to access the Special Meeting by means of remote communication.

On April 29, 2021, the Company, Sunshine Merger Sub I, Inc., a Delaware corporation (“First Merger Sub”) and a direct, wholly-owned subsidiary of the Second Merger Sub (as defined below), Sunshine Merger Sub II, LLC, a Delaware limited liability company and a direct, wholly-owned subsidiary of the Company (“Second Merger Sub”) and Sonder Holdings Inc., a Delaware corporation (“Sonder”), entered into an Agreement and Plan of Merger (as it may be amended from time to time, the “Merger Agreement”), which provides for, among other things, (i) the merger of First Merger Sub with and into Sonder, with Sonder continuing as the surviving corporation (the “First Merger”), and (ii) immediately following the First Merger and as part of the same overall transaction as the First Merger, the merger of Sonder with and into Second Merger Sub, with Second Merger Sub continuing as the surviving entity (the “Second Merger” and, together with the First Merger, the “Mergers” and, together with the other transactions contemplated by the Merger Agreement, the “Business Combination”). As a result of the First Merger, Second Merger Sub will own 100% of the outstanding capital stock of Sonder as the surviving corporation of the First Merger and each share of capital stock of Sonder will be cancelled and converted into the right to receive the merger consideration in accordance with the terms of the Merger Agreement. As a result of the Second Merger, the Company following the Business Combination (the “Post-Combination Company”) will own 100% of the outstanding interests in the surviving entity of the Second Merger (the “Surviving Entity”). Pursuant to the terms of the Merger Agreement, the holders of existing shares of Common Stock of Sonder, par value $0.000001 per share (“Sonder Common Stock”) (following the conversion of each issued and outstanding share of Sonder’s preferred stock and the convertible promissory notes issued by Sonder to certain purchasers pursuant to the Note Purchase Agreement, dated March 12, 2021, as amended, into shares of Sonder Common Stock prior to the effective time of the First Merger), will receive shares of the Post-Combination Company’s Common Stock, par value $0.000001 per share (the “Common Stock”, which term (a) with reference to the Company prior to the Business Combination and the effectiveness of the Amended and Restated Certificate of Incorporation in the form attached hereto as Annex B (the “Amended and Restated Certificate of Incorporation”), means the Class A Stock and the Class F Stock, and (b) with reference to the Post-Combination Company from and after the effectiveness of the Amended and Restated Certificate of Incorporation and the reclassification of the Class A Stock and Class F Stock in accordance with the Amended and Restated Certificate of Incorporation, the Common Stock, par value $0.000001 per share, of the Post-Combination Company), and holders of existing shares of Special Voting Series AA Common Stock, par value $0.000001 per share (the “Sonder Special Voting Common Stock”), will receive shares of our newly created Post-Combination Company Special Voting Common Stock, par value $0.000001 per share (the “Post-Combination Company Special Voting Common Stock” and, together with the Post-Combination Company’s Common Stock, the “Post-Combination Company Stock”). In addition, each share of Series AA Common Exchangeable Preferred Shares (the “Sonder Canada Exchangeable Common Shares”) of Sonder Canada Inc., a corporation existing under the laws of the province of Québec (“Sonder Canada”) will be exchanged into a new series of the same class of virtually identical Sonder


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Canada Exchangeable Common Shares (the “Post-Combination Canada Exchangeable Common Shares”) exchangeable for Common Stock upon the completion of the the First Merger, and holders of Post-Combination Canada Exchangeable Common Shares will receive our Common Stock upon the exchange of their Post-Combination Canada Exchangeable Common Shares following the consummation of the Business Combination. The Post-Combination Company Special Voting Common Stock will entitle the holders thereof to vote on matters submitted to the stockholders on which the holders of Common Stock are entitled to vote, but the holders of the Post-Combination Company Special Voting Common Stock will not be entitled to receive any dividends out of any assets of the Company. Following the closing of the Business Combination, the Company will own, directly or indirectly, all of the issued and outstanding equity interests in the Surviving Entity and its subsidiaries, and the securityholders of Sonder as of immediately prior to the effective time of the First Merger (the “Sonder Securityholders”) are expected to hold approximately 74.1% of the Post-Combination Company Stock. You are being asked to vote on the Business Combination.

Subject to the terms of the Merger Agreement and customary adjustments set forth therein, the aggregate merger consideration (excluding any Earn Out Shares) to be paid in connection with the Business Combination is expected to be approximately 217,660,300 shares of the Post-Combination Company’s Common Stock with an implied value (based on an assumed value of $10.00 per share) equal to approximately $2,176,603,000. However, certain of these shares of Common Stock will be reserved for issuance upon (a) the exercise of Rollover Options and (b) the exchange of the Post-Combination Canada Exchangeable Common Shares corresponding to shares of Post-Combination Company Special Voting Common Stock to be issued in the Business Combination. Holders of Sonder Stock Options will not receive their portion of the 217,660,300 shares of Post-Combination Company’s Common Stock issued as consideration in the Business Combination at the completion of the Business Combination, but will instead receive Rollover Options, which may be exercisable following the Business Combination for the applicable number of shares of the Post-Combination Company’s Common Stock. Holders of Sonder Special Voting Common Stock will not receive their portion of the 217,660,300 shares of Post-Combination Company’s Common Stock issued as consideration in the Business Combination at the completion of the Business Combination, but will instead receive shares of Post-Combination Company Special Voting Common Stock, which shares of Post-Combination Company Special Voting Common Stock may be redeemed upon the future exchange by holders of Post-Combination Canada Exchangeable Common Shares for the applicable number of shares of the Post-Combination Company’s Common Stock. Based on 17,099,526 outstanding Sonder Stock Options and 22,017,113 outstanding Sonder Canada Exchangeable Common Shares as of June 30, 2021 (x) approximately 28,898,199 Rollover Options (corresponding to approximately 28,898,199 shares of the Post-Combination Company’s Common Stock) would be expected to be outstanding immediately following the consummation of the Business Combination (assuming an Option Exchange Ratio equal to 1.69 and excluding any additional Discounted Earn Out Option Amount, which will be determined on or prior to the consummation of the Business Combination) and (y) approximately 37,208,921 shares of Post-Combination Company Special Voting Common Stock (corresponding to approximately 37,208,921 shares of the Post-Combination Company’s Common Stock) would be expected to be issued as consideration in the Business Combination (assuming an Exchange Rate of 1.69). The consideration to be paid to the Sonder Stockholders will be the Per Share Sonder Common Stock Consideration and the Per Share Sonder Special Voting Stock Consideration, as applicable, consisting of (a) with respect to Sonder Common Stock, par value $0.000001, a number of shares of our newly issued Common Stock equal to (i)(A) $2,176,603,000, divided by (B) $10.00, divided by (ii) the number of Sonder Stock Adjusted Fully Diluted Shares and (b) with respect to Sonder Special Voting Common Stock, a number of shares of our newly issued Post-Combination Company Special Voting Common Stock equal to (i) the number of shares of Sonder Special Voting Common Stock multiplied by (ii) the Exchange Rate (as defined below). Following the closing of the Business Combination, Sonder equityholders may receive up to 14,500,000 additional shares of Common Stock as consideration as a result of the Common Stock achieving certain benchmark share prices as contemplated by the Merger Agreement pursuant to the earn out.

In order to facilitate the Business Combination, our sponsor, Gores Metropoulos Sponsor II, LLC (the “Sponsor”), forfeited 250,000 shares of Class F common stock of the Company, par value $0.0001 per share (the “Class F Stock”) out of a total of 11,500,000 shares issued to it prior to the Company IPO (such remaining 11,250,000 shares, the “Founder Shares”). The Founder Shares will be reclassified into Common Stock in


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connection with the effectiveness of the Amended and Restated Certificate of Incorporation and will continue to be subject to the transfer restrictions applicable to the Founder Shares.

In addition, and in connection with the foregoing and concurrently with the execution of the Merger Agreement, the Company entered into subscription agreements (the “Subscription Agreements”) with certain investors (the “PIPE Investors”) that are “accredited investors” (as defined by Rule 501 of Regulation D) and a subscription agreement with our Sponsor that is an “accredited investor” (as defined by Rule 501 of Regulation D). Pursuant to the Subscription Agreements, the PIPE Investors agreed to subscribe for and purchase, and the Company agreed to issue and sell to such PIPE Investors, 20,000,000 shares of Class A Stock (which will be automatically reclassified into Common Stock upon the effectiveness of the Amended and Restated Certificate of Incorporation) for a purchase price of $10.00 per share, or an aggregate of approximately $200 million (the “PIPE Investment”). The Subscription Agreement to which our Sponsor is a party is substantially similar to the Subscription Agreements to which the other PIPE Investors are parties except that the Sponsor may assign its rights under the Subscription Agreement, subject to compliance with the securities laws. The closing of the PIPE Investment will occur immediately prior to the closing of the Business Combination. The Class A Stock (which will be reclassified into Common Stock upon the effectiveness of the Amended and Restated Certificate of Incorporation) to be issued pursuant to the Subscription Agreements has not been registered under the Securities Act in reliance upon the exemption provided under Section 4(a)(2) of the Securities Act/Regulation D promulgated thereunder.

In connection with the closing of the Business Combination, upon the effectiveness of the Amended and Restated Certificate of Incorporation, the Founder Shares held by our Sponsor and certain other stockholders, and the shares of Class A Stock of the Company will be reclassified into shares of Common Stock on a one-for-one basis.

At the Special Meeting, our stockholders will be asked to consider and vote upon a proposal (the “Business Combination Proposal” or “Proposal No. 1”) to approve the Merger Agreement, a copy of which is attached to the accompanying proxy statement/prospectus/consent solicitation statement as Annex A, and the transactions contemplated thereby, including the Business Combination. In addition, you are being asked to consider and vote upon: (i) a proposal to approve, for purposes of complying with applicable Nasdaq listing rules, the issuance of Common Stock and Post-Combination Company Special Voting Common Stock constituting more than 20% of the Company’s issued and outstanding Common Stock or other securities convertible into or exercisable for common stock in connection with the Business Combination (the “Nasdaq Proposal” or “Proposal No. 2”); (ii) a proposal to adopt the Amended and Restated Certificate of Incorporation in the form attached hereto as Annex B (the “Charter Proposal” or “Proposal No. 3”); (iii) a separate proposal with respect to certain governance provisions in the Amended and Restated Certificate of Incorporation, which are being separately presented in accordance with SEC requirements and which will be voted upon on a non-binding advisory basis (the “Governance Proposals” or “Proposal No. 4”); (iv) a proposal to approve the 2021 Management Equity Incentive Plan (the “Management Equity Incentive Plan”), including the authorization of the initial share reserve under the Management Equity Incentive Plan, (the “Management Equity Incentive Plan Proposal” or “Proposal No. 5”); (v) a proposal to approve the 2021 Incentive Plan (the “Incentive Plan”), including the authorization of the initial share reserve under the Incentive Plan (the “Incentive Plan Proposal” or “Proposal No. 6”); (vi) a proposal to approve the 2021 Employee Stock Purchase Plan (the “ESPP”), including the authorization of the initial share reserve under the ESPP (the “ESPP Proposal” or “Proposal No. 7”); (vii) a proposal to elect four directors to serve on our Board until the earlier of the consummation of the Business Combination and the 2023 annual meeting of stockholders, and until their respective successors are duly elected and qualified (the “Director Election Proposal” or “Proposal No. 8”) and (viii) a proposal to allow the chairman of the Special Meeting to adjourn the Special Meeting to a later date or dates, if necessary, to permit further solicitation and vote of proxies if there are insufficient votes for, or otherwise in connection with, the approval of the Business Combination Proposal, the Nasdaq Proposal, the Charter Proposal, the Management Equity Incentive Plan Proposal, the Incentive Plan Proposal, the ESPP Proposal or the Director Election Proposal but no other proposal if the Business Combination Proposal, the Nasdaq Proposal, the Charter Proposal, the Management Equity Incentive Plan Proposal, the Incentive Plan Proposal, the ESPP Proposal and the Director Election Proposal are approved (the “Adjournment Proposal” or “Proposal No. 9”).

Each of these proposals is more fully described in this proxy statement/prospectus/consent solicitation statement, which each stockholder is encouraged to read carefully.


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Our Public Shares, Public Units and Public Warrants are currently listed on Nasdaq under the symbols “GMII,” “GMIIU” and “GMIIW,” respectively. We intend to apply to continue the listing of our Common Stock (following the reclassification of Class A Stock into Common Stock upon the effectiveness of the Amended and Restated Certificate of Incorporation) and Public Warrants on Nasdaq under the symbols “SOND” and “SONDW,” respectively, upon the closing of the Business Combination.

Pursuant to the Amended and Restated Certificate of Incorporation of the Company, dated January 19, 2021 (the “Current Company Certificate”), we are providing our Public Stockholders with the opportunity to redeem, upon the closing of the Business Combination, shares of Class A Stock then held by them for cash equal to their pro rata share of the aggregate amount on deposit (as of two business days prior to the closing of the Business Combination) in the Trust Account that holds the proceeds of the Company IPO (including interest not previously released to the Company to fund regulatory compliance requirements and other costs related thereto, subject to an annual limit of $900,000, for a maximum of 24 months, using funds released to the Company from the Trust Account (“Regulatory Withdrawals”) and/or to pay its franchise and income taxes). The per-share amount we will distribute to investors who properly redeem their shares will not be reduced by the deferred underwriting commission totaling $15,750,000 that we will pay to the underwriters of the Company IPO or transaction expenses incurred in connection with the Business Combination. For illustrative purposes, based on the balance of the Trust Account of $450,018,248 as of June 30, 2021, the estimated per share redemption price would have been approximately $10.00. Public Stockholders may elect to redeem their shares even if they vote for the Business Combination. A Public Stockholder, together with any of its affiliates or any other person with whom it is acting in concert or as a “group” (as defined under Section 13 of the Securities Exchange Act of 1934, as amended), will be restricted from redeeming in the aggregate his, her or its shares or, if part of such a group, the group’s shares, in excess of 20% of the shares of Class A Stock included in the Public Units sold in the Company IPO. We refer to this as the “20% threshold.” We have no specified maximum redemption threshold under our Current Company Certificate, other than the aforementioned 20% threshold. Each redemption of shares of Class A Stock by our Public Stockholders will reduce the amount in the Trust Account. The Merger Agreement provides that the obligation of Sonder to consummate the Business Combination is conditioned on the total of (i) the amount in the Trust Account, after giving effect to redemptions of Public Shares, (ii) the proceeds from the purchase of 20,000,000 shares of Class A Stock (which will be reclassified into Common Stock upon the effectiveness of the Amended and Restated Certificate of Incorporation) pursuant to the Subscription Agreements (the “PIPE Investment”), and (iii) all funds held by us outside of the Trust Account and immediately available to us, equaling or exceeding $500,000,000. This condition to closing in the Merger Agreement is for the sole benefit of Sonder and may be waived by Sonder. If, as a result of redemptions of Class A Stock by our Public Stockholders, this condition is not met (or waived), then Sonder may elect not to consummate the Business Combination. In addition, in no event will we redeem shares of our Class A Stock in an amount that would result in the Company’s failure to have net tangible assets equaling or exceeding $5,000,001. Holders of our outstanding Public Warrants do not have redemption rights in connection with the Business Combination. Unless otherwise specified, the information in the accompanying proxy statement/prospectus/consent solicitation statement assumes that none of our Public Stockholders exercise their redemption rights with respect to their shares of Class A Stock. Our Sponsor and current independent directors (collectively, our “Initial Stockholders”), as well as our officers and other current directors, have agreed to waive their redemption rights with respect to their shares of Common Stock in connection with the consummation of the Business Combination, and the Founder Shares will be excluded from the pro rata calculation used to determine the per-share redemption price. Our Initial Stockholders have also agreed to waive their right to a conversion price adjustment with respect to any shares of our Common Stock they may hold in connection with the consummation of the Business Combination. Currently, our Initial Stockholders own 20% of our issued and outstanding shares of Common Stock, including all of the Founder Shares. Our Initial Stockholders, directors and officers have agreed to vote any shares of our Common Stock owned by them in favor of the Business Combination. The Founder Shares are subject to transfer restrictions.

We are providing the accompanying proxy statement/prospectus/consent solicitation statement and accompanying proxy card to our stockholders in connection with the solicitation of proxies to be voted at the Special Meeting (including following any adjournments or postponements of the Special Meeting). Information about the Special Meeting, the Business Combination and other related business to be considered by our


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stockholders at the Special Meeting is included in this proxy statement/prospectus/consent solicitation statement. Whether or not you plan to attend the Special Meeting via the virtual meeting website, we urge all our stockholders to read this proxy statement/prospectus/consent solicitation statement, including the Annexes and the accompanying financial statements of the Company and Sonder, carefully and in their entirety. In particular, we urge you to read carefully the section titled “Risk Factors” beginning on page 78 of this proxy statement/prospectus/consent solicitation statement.

After careful consideration, our Board has unanimously approved the Merger Agreement and the transactions contemplated therein, and unanimously recommends that our stockholders vote “FOR” the approval of the Merger Agreement and approval of the transactions contemplated thereby, including the Business Combination, and “FOR” all other proposals presented to our stockholders in the accompanying proxy statement/prospectus/consent solicitation statement. When you consider our Board’s recommendation of these proposals, you should keep in mind that our directors and officers have interests in the Business Combination that may conflict with your interests as a stockholder. Please see the section titled “The Business Combination—Interests of Certain Persons in the Business Combination—Interests of the Company Initial Stockholders and the Company’s Other Current Officers and Directors” for additional information.

Approval of the Business Combination Proposal requires the affirmative vote of a majority of the votes cast by holders of our outstanding shares of Common Stock represented in person via the virtual meeting platform or by proxy and entitled to vote thereon at the Special Meeting. Approval of the Nasdaq Proposal requires the affirmative vote of a majority of the votes cast by holders of our outstanding shares of Common Stock represented in person via the virtual meeting platform or by proxy and entitled to vote thereon at the Special Meeting. Approval of the Charter Proposal requires (i) the affirmative vote of holders of a majority of our outstanding shares of Common Stock entitled to vote thereon at the Special Meeting and (ii) the affirmative vote of holders of a majority of our outstanding shares of Class F Stock, voting separately as a single class, entitled to vote thereon at the Special Meeting. Approval of the Governance Proposals requires the affirmative vote of a majority of the votes cast by holders of our outstanding shares of Common Stock represented in person via the virtual meeting platform or by proxy and entitled to vote thereon at the Special Meeting. Approval of each of the Management Equity Incentive Plan Proposal, the Incentive Plan Proposal and the ESPP Proposal requires the affirmative vote of a majority of the votes cast by holders of our outstanding shares of Common Stock represented in person via the virtual meeting platform or by proxy and entitled to vote thereon at the Special Meeting. Approval of the Director Election Proposal requires the affirmative vote of a plurality of votes cast by holders of our outstanding shares of Class F Stock, voting separately as a single class, represented in person via the virtual meeting platform or by proxy and entitled to vote thereon at the Special Meeting. Approval of the Adjournment Proposal requires the affirmative vote of a majority of the votes cast by holders of our outstanding shares of Common Stock represented in person via the virtual meeting platform or by proxy and entitled to vote thereon at the Special Meeting.

Your vote is very important. Whether or not you plan to attend the Special Meeting, please vote as soon as possible by following the instructions in this proxy statement/prospectus/consent solicitation statement to make sure that your shares are represented at the Special 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 Special Meeting. The transactions contemplated by the Merger Agreement will be consummated only if the Business Combination Proposal, the Nasdaq Proposal, the Charter Proposal and the Director Election Proposal are approved at the Special Meeting. The closing of the Business Combination is conditioned upon the approval of the Business Combination Proposal, the Nasdaq Proposal, the Charter Proposal and the Director Election Proposal. If we fail to obtain the requisite stockholder approval for any of the Business Combination Proposal, the Nasdaq Proposal, the Charter Proposal or the Director Election Proposal, we will not satisfy the conditions to closing of the Merger Agreement and we may be prevented from closing the Business Combination. Each of the proposals other than the Business Combination Proposal, the Nasdaq Proposal, the Charter Proposal and the Director Election Proposal, is conditioned on the approval of the Business Combination Proposal, the Nasdaq Proposal, the Charter Proposal and the Director Election Proposal, other than the Governance Proposals and the Adjournment Proposal, which are not conditioned on the approval of any other proposal set forth in this proxy statement/prospectus/consent


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solicitation statement. Additionally, the Director Election Proposal is not conditioned on the approval of the Business Combination Proposal, the Nasdaq Proposal, the Charter Proposal or any other proposal set forth in this proxy statement/prospectus/consent solicitation statement.

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 Special 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 Special Meeting in person via the virtual meeting platform, the effect will be that your shares will not be counted for purposes of determining whether a quorum is present at the Special Meeting. If you are a stockholder of record and you attend the Special Meeting and wish to vote in person via the virtual meeting platform, you may withdraw your proxy and vote in person via the virtual meeting platform.

TO EXERCISE YOUR REDEMPTION RIGHTS, YOU MUST DEMAND THAT THE COMPANY REDEEM YOUR SHARES FOR A PRO RATA PORTION OF THE FUNDS HELD IN THE TRUST ACCOUNT, IDENTIFY TO THE COMPANY THE BENEFICIAL HOLDER OF THE SHARES BEING REDEEMED AND TENDER YOUR SHARES TO THE COMPANY’S TRANSFER AGENT AT LEAST TWO BUSINESS DAYS PRIOR TO THE VOTE AT SUCH MEETING. YOU MAY TENDER YOUR SHARES BY EITHER DELIVERING YOUR SHARE CERTIFICATE TO THE TRANSFER AGENT OR BY DELIVERING YOUR SHARES ELECTRONICALLY USING DEPOSITORY TRUST COMPANY’S DWAC (DEPOSIT WITHDRAWAL AT CUSTODIAN) SYSTEM. IF THE BUSINESS COMBINATION IS NOT COMPLETED, THEN THESE SHARES WILL NOT BE REDEEMED FOR CASH. IF YOU HOLD THE SHARES IN STREET NAME, YOU WILL NEED TO INSTRUCT THE ACCOUNT EXECUTIVE AT YOUR BANK OR BROKER TO WITHDRAW THE SHARES FROM YOUR ACCOUNT IN ORDER TO EXERCISE YOUR REDEMPTION RIGHTS.

On behalf of our Board, I would like to thank you for your support of Gores Metropoulos II, Inc. and look forward to a successful consummation of the Business Combination.

 

Sincerely,

 

Dean Metropoulos

Chairman of the Board of Directors

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

This proxy statement/prospectus/consent solicitation statement is dated [●], 2021, and is expected to be first mailed or otherwise delivered to Company stockholders on or about [●], 2021.


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NOTICE OF SPECIAL MEETING OF GORES METROPOULOS II, INC.

IN LIEU OF 2021 ANNUAL MEETING OF GORES METROPOULOS II, INC.

TO BE HELD [], 2021

To the Stockholders of Gores Metropoulos II, Inc.:

NOTICE IS HEREBY GIVEN that a special meeting (the “Special Meeting”) in lieu of the 2021 annual meeting of the stockholders of Gores Metropoulos II, Inc., a Delaware corporation (“we,” “us,” “our” or the “Company”), which, in light of public health concerns regarding the COVID-19 pandemic, will be held via live webcast at [●], on [●], 2021, at [●]. The Special Meeting can be accessed by visiting [●], where you will be able to listen to the meeting live and vote during the meeting. Additionally, you have the option to listen only to the Special Meeting by dialing [●] (toll-free within the U.S. and Canada) or [●] (outside of the U.S. and Canada, standard rates apply). The passcode for telephone access is [●], but you cannot vote or ask questions if you choose to participate telephonically. Please note that you will only be able to access the Special Meeting by means of remote communication. You are cordially invited to attend the Special Meeting to conduct the following items of business:

 

  1.

Business Combination Proposal—To consider and vote upon a proposal to approve the Agreement and Plan of Merger, dated as of April 29, 2021 (as it may be amended from time to time, the “Merger Agreement”), by and among the Company, Sunshine Merger Sub I, Inc., a Delaware corporation (“First Merger Sub”) and a direct, wholly-owned subsidiary of the Second Merger Sub (as defined below), Sunshine Merger Sub II, LLC, a Delaware limited liability company and a direct, wholly-owned subsidiary of the Company (“Second Merger Sub”) and Sonder Holdings Inc., a Delaware corporation (“Sonder”), a copy of which is attached to this proxy statement/prospectus/consent solicitation statement as Annex A, and approve the transactions contemplated thereby, including, among other things, (i) the merger of First Merger Sub with and into Sonder, with Sonder continuing as the surviving corporation (the “First Merger”), and (ii) immediately following the First Merger and as part of the same overall transaction as the First Merger, the merger of Sonder with and into Second Merger Sub, with Second Merger Sub continuing as the surviving entity (the “Second Merger” and, together with the First Merger, the “Mergers” and, together with the other transactions contemplated by the Merger Agreement, the “Business Combination”) (Proposal No. 1);

 

  2.

Nasdaq Proposal—To consider and vote upon a proposal to approve, for purposes of complying with applicable Nasdaq listing rules, the issuance of (i) Common Stock, which consists of (a) prior to the Business Combination and the effectiveness of the Amended and Restated Certificate of Incorporation, Class A common stock, par value $0.0001 per share, of the Company (the “Class A Stock”) and Class F common stock, par value $0.0001 per share, of the Company (the “Class F Stock”), and (b) from and after the effectiveness of the Amended and Restated Certificate of Incorporation and the reclassification of the Class A Stock and Class F Stock in accordance with the Amended and Restated Certificate of Incorporation, the Common Stock, par value $0.000001 per share, of the Post-Combination Company and (ii) Post-Combination Company Special Voting Common Stock, par value $0.000001 per share (the “Post-Combination Company Special Voting Common Stock”), constituting more than 20% of the Company’s issued and outstanding shares of Common Stock or other securities convertible into or exercisable for common stock in connection with the Business Combination (Proposal No. 2);

 

  3.

Charter Proposal—To consider and act upon a proposal to adopt the proposed Amended and Restated Certificate of Incorporation of the Company in the form attached hereto as Annex B (Proposal No. 3);

 

  4.

Governance Proposals—To consider and act upon, on a non-binding advisory basis, a separate proposal with respect to certain governance provisions in the Amended and Restated Certificate of Incorporation in accordance with the United States Securities and Exchange Commission (“SEC”) requirements (Proposal No. 4);

 

  5.

Management Equity Incentive Plan Proposal—To consider and vote upon a proposal to approve the Company’s 2021 Management Equity Incentive Plan (the “Management Equity Incentive Plan”),


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  including the authorization of the initial share reserve under the Management Equity Incentive Plan (Proposal No. 5);

 

  6.

Incentive Plan Proposal—To consider and vote upon a proposal to approve the Company’s 2021 Equity Incentive Plan (the “Incentive Plan”), including the authorization of the initial share reserve under the Incentive Plan (Proposal No. 6);

 

  7.

ESPP Proposal—To consider and vote upon a proposal to approve the Company’s 2021 Employee Stock Purchase Plan (the “ESPP”), including the authorization of the initial share reserve under the ESPP (Proposal No. 7);

 

  8.

Director Election Proposal—To consider and vote upon a proposal to elect four directors to serve on the Company’s Board until the earlier of the consummation of the Business Combination and the 2023 annual meeting of stockholders, and until their respective successors are duly elected and qualified (Proposal No. 8); and

 

  9.

Adjournment Proposal—To consider and vote upon a proposal to allow the chairman of the Special Meeting to adjourn the Special Meeting to a later date or dates, if necessary, to permit further solicitation and vote of proxies in the event there are insufficient votes for, or otherwise in connection with, the approval of the Business Combination Proposal, the Nasdaq Proposal, the Charter Proposal, the Management Equity Incentive Plan Proposal, the Incentive Plan Proposal, the ESPP Proposal or the Director Election Proposal but no other proposal if the Business Combination Proposal, the Nasdaq Proposal, the Charter Proposal, the Management Equity Incentive Plan Proposal, the Incentive Plan Proposal, the ESPP Proposal and the Director Election Proposal are approved (Proposal No. 9).

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

The record date for the Special Meeting is [●], 2021. Only stockholders of record at the close of business on that date may vote at the Special Meeting or any adjournment thereof. A complete list of our stockholders of record entitled to vote at the Special Meeting will be available for ten days before the Special Meeting at our principal executive offices for inspection by stockholders during ordinary business hours for any purpose germane to the Special Meeting.

Gores Metropoulos Sponsor II, LLC, a Delaware limited liability company (the “Sponsor”), and Mr. Randall Bort, Mr. Michael Cramer and Mr. Joseph Gatto, the Company’s independent directors (collectively, together with the Sponsor, our “Initial Stockholders”), and our officers and other current directors have agreed to vote any of the shares of Class F Stock that are currently owned by our Initial Stockholders (the “Founder Shares”) and any Public Shares purchased during or after our initial public offering (the “Company IPO”) in favor of the Business Combination. Currently, our Initial Stockholders own 20% of our issued and outstanding shares of Common Stock, including all of the Founder Shares.

Pursuant to the Amended and Restated Certificate of Incorporation of the Company, dated January 19, 2021 (the “Current Company Certificate”), we will provide our Public Stockholders with the opportunity to redeem, upon the closing of the Business Combination, shares of the Company’s Class A Stock then held by them for cash equal to their pro rata share of the aggregate amount on deposit (as of two business days prior to the closing of the Business Combination) in our trust account (the “Trust Account”) that holds the proceeds of the Company IPO (including interest not previously released to the Company to fund regulatory compliance requirements and other costs related thereto, subject to an annual limit of $900,000, for a maximum of 24 months, using funds released to the Company from the Trust Account (“Regulatory Withdrawals”) and/or to pay its franchise and income taxes). The per-share amount we will distribute to our stockholders who properly redeem their shares will not be reduced by the deferred underwriting commission totaling $15,750,000 that we will pay to the underwriters of the Company IPO, as well as other transaction expenses incurred in connection with the Business


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Combination. For illustrative purposes, based on the balance of the Trust Account of $450,018,248 as of June 30, 2021, the estimated per share redemption price would have been approximately $10.00. Public Stockholders may elect to redeem their shares even if they vote “FOR” the Business Combination. A Public Stockholder, together with any of its affiliates or any other person with whom it is acting in concert or as a “group” (as defined under Section 13 of the Securities Exchange Act of 1934, as amended), will be restricted from redeeming in the aggregate his, her or its shares or, if part of such a group, the group’s shares, in excess of 20% of the shares of Common Stock included in the Public Units sold in the Company IPO. Each redemption of shares of Class A Stock by our Public Stockholders will reduce the amount in the Trust Account. In addition, in no event will we redeem shares of our Class A Stock in an amount that would result in the Company’s failure to have net tangible assets equaling or exceeding $5,000,001. Other than the foregoing, we have no additional specified maximum redemption thresholds under our Current Company Certificate. The Merger Agreement provides that the obligation of Sonder to consummate the Business Combination is conditioned on the total of (i) the amount in the Trust Account, after giving effect to redemptions of Public Shares, (ii) the proceeds from the purchase of 20,000,000 shares of Class A Stock (which will be reclassified into Common Stock upon the effectiveness of the Amended and Restated Certificate of Incorporation) pursuant to the Subscription Agreements (the “PIPE Investment”) and (iii) all funds held by us outside of the Trust Account and immediately available to us, equaling or exceeding $500,000,000. This condition to closing in the Merger Agreement is for the sole benefit of Sonder and may be waived by Sonder. If, as a result of redemptions of Class A Stock by our Public Stockholders, this condition is not met (or waived), then Sonder may elect not to consummate the Business Combination. Holders of our outstanding Public Warrants do not have redemption rights in connection with the Business Combination.

Our Initial Stockholders, current officers and other current directors have agreed to waive their redemption rights with respect to their shares of our Common Stock in connection with the consummation of the Business Combination, and the Founder Shares will be excluded from the pro rata calculation used to determine the per-share redemption price. Our Initial Stockholders have also agreed to waive their right to a conversion price adjustment with respect to any shares of our Common Stock they may hold in connection with the consummation of the Business Combination.

The Business Combination is conditioned on the approval of the Business Combination Proposal, the Nasdaq Proposal, the Charter Proposal and the Director Election Proposal at the Special Meeting. If we fail to obtain sufficient votes for any of the Business Combination Proposal, the Nasdaq Proposal, the Charter Proposal or the Director Election Proposal, we will not satisfy the conditions to closing of the Merger Agreement and we may be prevented from closing the Business Combination. Each of the proposals other than the Business Combination Proposal, the Nasdaq Proposal, the Charter Proposal and the Director Election Proposal, is conditioned on the approval of the Business Combination Proposal, the Nasdaq Proposal, the Charter Proposal and the Director Election Proposal, other than the Governance Proposals and the Adjournment Proposal, which are not conditioned on the approval of any other proposal set forth in this proxy statement/prospectus/consent solicitation statement. Additionally, the Director Election Proposal is not conditioned on the approval of the Business Combination Proposal, the Nasdaq Proposal, the Charter Proposal or any other proposal set forth in this proxy statement/prospectus/consent solicitation statement.

A majority of the issued and outstanding shares of our Common Stock entitled to vote as of the record date at the Special Meeting must be present, in person via the virtual meeting platform or represented by proxy, at the Special Meeting to constitute a quorum and in order to conduct business at the Special Meeting. The approval of the Business Combination Proposal requires the affirmative vote of a majority of the votes cast by holders of our outstanding shares of Common Stock represented in person via the virtual meeting platform or by proxy and entitled to vote thereon at the Special Meeting. The approval of the Nasdaq Proposal requires the affirmative vote of a majority of the votes cast by holders of our outstanding shares of Common Stock represented in person via the virtual meeting platform or by proxy and entitled to vote thereon at the Special Meeting. The approval of the Charter Proposal requires (i) the affirmative vote of holders of a majority of our outstanding shares of Common Stock entitled to vote thereon at the Special Meeting and (ii) the affirmative vote of holders of a majority of our outstanding shares of Class F Stock, voting separately as a single class, entitled to vote thereon at the Special Meeting. The approval of the Governance Proposals requires the affirmative vote of a majority of the votes cast by holders of our outstanding shares of Common Stock represented in person via the virtual meeting platform or


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by proxy and entitled to vote thereon at the Special Meeting. Approval of each of the Management Equity Incentive Plan Proposal, the Incentive Plan Proposal and the ESPP Proposal requires the affirmative vote of a majority of the votes cast by holders of our outstanding shares of Common Stock represented in person via the virtual meeting platform or by proxy and entitled to vote thereon at the Special Meeting. Approval of the Director Election Proposal requires the affirmative vote of a plurality of votes cast by holders of our outstanding shares of Class F Stock, voting separately as a single class, represented in person via the virtual meeting platform or by proxy and entitled to vote thereon at the Special Meeting. Approval of the Adjournment Proposal requires the affirmative vote of a majority of the votes cast by holders of our outstanding shares of Common Stock represented in person via the virtual meeting platform or by proxy and entitled to vote thereon at the Special Meeting. Our Board unanimously recommends that you vote “FOR” each of these proposals.

 

By Order of the Board of Directors

Dean Metropoulos

Chairman of the Board of Directors

Boulder, Colorado

[●], 2021


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NOTICE OF SOLICITATION OF WRITTEN CONSENT OF THE STOCKHOLDERS OF SONDER HOLDINGS INC.

SONDER HOLDINGS INC.

101 15th Street

San Francisco, CA 94103

To the Stockholders of Sonder Holdings Inc.:

Pursuant to an Agreement and Plan of Merger, dated as of April 29, 2021 (as it may be amended from time to time, the “Merger Agreement”), by and among Gores Metropoulos II, Inc., a Delaware corporation (the “Company”), Sunshine Merger Sub I, Inc., a Delaware corporation (“First Merger Sub”) and a direct, wholly-owned subsidiary of the Second Merger Sub (as defined below), Sunshine Merger Sub II, LLC, a Delaware limited liability company and a direct, wholly-owned subsidiary of the Company (“Second Merger Sub”) and Sonder Holdings Inc., a Delaware corporation (“Sonder”), First Merger Sub will merge with and into Sonder (the “First Merger”), with Sonder being the surviving corporation of the First Merger (the “Surviving Corporation”), and immediately following the First Merger and as part of the same overall transaction as the First Merger, the Surviving Corporation will merge with and into Second Merger Sub, (the “Second Merger” and, collectively with the First Merger and the other transactions contemplated by the Merger Agreement, the “Business Combination”), with Second Merger Sub being the Surviving Entity of the Second Merger.

This proxy statement/prospectus/consent solicitation statement is being delivered to you on behalf of Sonder’s board of directors to request that holders of Sonder Common Stock, Sonder Preferred Stock and Sonder Special Voting Stock as of the record date of April 29, 2021 execute and return written consents to (i) adopt the Merger Agreement and approve the transactions contemplated thereby, including the Business Combination, and (ii) approve, on a non-binding advisory basis, each of the amendments described in Proposal No. 4 of this proxy statement/prospectus/consent solicitation statement.

This proxy statement/prospectus/consent solicitation statement describes the proposed Business Combination and the actions to be taken in connection with the Business Combination 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/prospectus/consent solicitation statement.

A summary of the appraisal rights that may be available to you is described in this proxy statement/prospectus/consent solicitation statement in the section titled “Appraisal Rights,” which is qualified by the copy of Section 262 of the DGCL attached as Annex L to this proxy statement/prospectus/consent solicitation statement. Please note that if you wish to exercise appraisal rights, you must not sign and return a written consent adopting the Merger Agreement. However, so long as you do not return a consent form at all, it is not necessary to affirmatively vote against or disapprove the Business Combination. In addition, you must take all other steps necessary to perfect your appraisal rights, as described in the aforementioned section of and annex to this proxy statement/prospectus/consent solicitation statement.

Sonder’s board of directors has considered the Business Combination and the terms of the Merger Agreement and has unanimously determined that the Business Combination and the Merger Agreement are fair to and in the best interests of Sonder and the Sonder Stockholders and recommends that the Sonder Stockholders (i) adopt the Merger Agreement and (ii) approve each of the amendments described in Proposal No. 4 of this proxy statement/prospectus/consent solicitation statement by submitting a written consent.

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


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If you have any questions concerning the Merger Agreement, the Business Combination, the consent solicitation or the accompanying proxy statement/prospectus/consent solicitation statement, or if you have any questions about how to deliver your written consent, please contact Sonder’s agent in connection with the consent solicitation, Avery Minor, at aminor@wsgr.com.

 

By Order of the Board of Directors,

Francis Davidson

Chief Executive Officer

[●], 2021


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EXPLANATORY NOTE

  

ADDITIONAL INFORMATION

  

NOTICE OF SPECIAL MEETING OF GORES METROPOULOS II, INC. IN LIEU OF 2021 ANNUAL MEETING OF GORES METROPOULOS II, INC.

  

FREQUENTLY USED TERMS

     1  

TRADEMARKS, TRADE NAMES AND SERVICE MARKS

     10  

QUESTIONS AND ANSWERS

     11  

SUMMARY

     38  

RISK FACTORS

     78  

GENERAL INFORMATION

     140  

SPECIAL MEETING OF THE STOCKHOLDERS OF THE COMPANY IN LIEU OF THE 2021 ANNUAL MEETING OF THE COMPANY

     146  

THE BUSINESS COMBINATION

     156  

MATERIAL U.S. FEDERAL INCOME TAX CONSIDERATIONS OF THE BUSINESS COMBINATION

     211  

THE MERGER AGREEMENT AND RELATED AGREEMENTS

     221  

REGULATORY APPROVALS RELATED TO THE BUSINESS COMBINATION

     244  

SELECTED HISTORICAL FINANCIAL DATA OF THE COMPANY

     245  

SELECTED HISTORICAL FINANCIAL INFORMATION OF SONDER

     246  

UNAUDITED PRO FORMA CONDENSED COMBINED FINANCIAL INFORMATION

     247  

COMPARATIVE HISTORICAL AND UNAUDITED PRO FORMA PER SHARE DATA

     264  

INFORMATION ABOUT THE COMPANY

     267  

MANAGEMENT OF THE COMPANY

     271  

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

     283  

INFORMATION ABOUT SONDER

     290  

MANAGEMENT OF SONDER

     317  

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

     323  

MANAGEMENT OF THE POST-COMBINATION COMPANY

     354  

DESCRIPTION OF SECURITIES

     372  

COMPARISON OF STOCKHOLDER RIGHTS

     386  

CERTAIN RELATIONSHIPS AND RELATED TRANSACTIONS

     406  

BENEFICIAL OWNERSHIP OF SECURITIES

     414  

PRICE RANGE OF SECURITIES AND DIVIDENDS

     419  

PROPOSAL NO. 1 — THE BUSINESS COMBINATION PROPOSAL

     420  

PROPOSAL NO. 2 — THE NASDAQ PROPOSAL

     422  

PROPOSAL NO. 3 — THE CHARTER PROPOSAL

     424  

PROPOSAL NO. 4 — THE GOVERNANCE PROPOSALS

     427  

PROPOSAL NO. 5 — THE MANAGEMENT EQUITY INCENTIVE PLAN PROPOSAL

     431  

PROPOSAL NO. 6 — THE INCENTIVE PLAN PROPOSAL

     436  

PROPOSAL NO. 7 — THE ESPP PROPOSAL

     445  

PROPOSAL NO. 8 — THE DIRECTOR ELECTION PROPOSAL

     451  

PROPOSAL NO. 9 — THE ADJOURNMENT PROPOSAL

     452  

ACCOUNTING TREATMENT

     453  

LEGAL MATTERS

     453  

EXPERTS

     453  

APPRAISAL RIGHTS

     453  

HOUSEHOLDING INFORMATION

     459  

TRANSFER AGENT AND REGISTRAR

     459  

 

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FUTURE STOCKHOLDER PROPOSALS

     459  

WHERE YOU CAN FIND MORE INFORMATION

     459  

INDEX TO CONSOLIDATED FINANCIAL INFORMATION

     F-1  

PART II INFORMATION OF REGISTRATION STATEMENT

     II-1  

EXHIBIT INDEX

     II-4  

SIGNATURES AND POWER OF ATTORNEY

     II-6  

ANNEXES

 

Annex A

  

Agreement and Plan of Merger

Annex B

  

Amended and Restated Certificate of Incorporation

Annex C

  

Amended and Restated Bylaws

Annex D

  

Warrant Agreement

Annex E

  

Form of Subscription Agreement

Annex F

  

Registration Rights Agreement

Annex G

  

Form of Voting and Support Agreement

Annex H

  

Fairness Opinion

Annex I

  

2021 Management Equity Incentive Plan

Annex J

  

2021 Equity Incentive Plan

Annex K

  

2021 Employee Stock Purchase Plan

Annex L

  

Section 262 of the DGCL

 

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FREQUENTLY USED TERMS

In this proxy statement/prospectus/consent solicitation statement:

Additional Dilution Sources” means specified sources of potential dilution, including Earn Out Shares, Public Warrants, Private Placement Warrants, the Management Equity Incentive Plan, the Incentive Plan and the ESPP, which are described in the risk factor entitled “—Our Public Stockholders will experience dilution as a consequence of the issuance of Common Stock and Post-Combination Company Special Voting Common Stock as consideration in the Business Combination (including the PIPE Investment) and may experience dilution from several additional sources in connection with and after the Business Combination. Having a minority share position may reduce the influence that our current stockholders have on the management of the Post-Combination Company” beginning on page 114.

Aggregate Sonder Common Stock Consideration” means a number of shares of Common Stock (deemed to have a value of $10.00 per share), equal to the result of (a) $2,176,603,000, divided by (b) $10.00.

Amended and Restated Bylaws” means the proposed Amended and Restated Bylaws of the Company, a form of which is attached hereto as Annex C, which will become the Post-Combination Company’s bylaws.

Amended and Restated Certificate of Incorporation” means the proposed Amended and Restated Certificate of Incorporation of the Post-Combination Company, a form of which is attached hereto as Annex B, which will become the Post-Combination Company’s certificate of incorporation, assuming the consummation of the Business Combination.

Antitrust Division” means the Antitrust Division of the U.S. Department of Justice.

A&R Share Terms” means the amended and restated Share Provisions which will reorganize Sonder Canada’s share capital by exchanging the then issued and outstanding Sonder Canada Exchangeable Shares into a new series of the same class of virtually identical Sonder Canada Exchangeable Shares whose terms will provide (i) for a deferral of any mandatory exchange caused by the Business Combination for a period of at least 12 months from the closing date of the Business Combination, and (ii) that such new Sonder Canada Exchangeable Shares will be exchangeable for Common Stock upon the completion of the First Merger.

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

Business Combination” means the transactions contemplated by the Merger Agreement, including among other things the Mergers.

Canadian Approvals” means, collectively, the A&R Share Terms, Exchange Rights Agreement Amendment, the Exchange Rights Agreement Consent and a written consent executed by the requisite number of holders of Sonder Canada Exchangeable Common Shares and Sonder Canada Exchangeable Preferred Shares approving the Business Combination.

Canadian Split” means the split of the issued and outstanding Sonder Canada Exchangeable Shares on the basis of the Exchange Rate to occur in the context of the First Merger and prior to the Second Merger.

Class A Stock” means the shares of Class A common stock, par value $0.0001 per share, of the Company.

Class F Stock” means the shares of Class F common stock, par value $0.0001 per share, of the Company.

Common Stock” means, (a) with respect to the Company prior to the Business Combination and the effectiveness of the Amended and Restated Certificate of Incorporation, the Class A Stock and the Class F Stock

 

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and (b) with respect to the Post-Combination Company from and after the effectiveness of the Amended and Restated Certificate of Incorporation and the reclassification of the Class A Stock and Class F Stock in accordance with the Amended and Restated Certificate of Incorporation, the Common Stock, par value $0.000001 per share, of the Post-Combination Company.

Company” means Gores Metropoulos II, Inc. prior to the Business Combination.

Company IPO” means the Company’s initial public offering, consummated on January 22, 2021, through the sale of 45,000,000 Public Units (including 5,000,000 Public Units sold pursuant to the underwriters’ partial exercise of their over-allotment option) at $10.00 per Public Unit.

Company Warrants” means, collectively, the Private Placement Warrants and the Public Warrants.

Computershare Warrant Agreement” means that certain Warrant Agreement, by and between the Company and Computershare Trust Company, N.A., as warrant agent, dated as of January 22, 2021, which is attached hereto as Annex D.

Contracted Units” means units that have signed real estate contracts, but are not yet available for guests to book. Sonder is not yet able to generate revenue from these units. Some of the real estate contracts for Contracted Units have contingencies that must be satisfied prior to Sonder’s takeover of the units or are terminable by Sonder or the landlord prior to Sonder’s takeover of the units.

Conversion Share Lock-Up Agreements” means those certain lock-up agreements to be entered into in connection with the closing of the Business Combination, by and among the Company, Sonder and the Sonder Noteholders.

Court of Chancery” means the Court of Chancery in the State of Delaware.

CSAT” means customer satisfaction score, which is defined as the percentage of guests surveyed who rated Sonder as a 5 on a scale of 1 (lowest satisfaction) to 5 (highest satisfaction).

Cumulative Dilution Sources” means specified sources of potential dilution including Common Stock and Post-Combination Company Special Voting Common Stock issued as consideration at the closing of the Business Combination, the PIPE Investment and the Additional Dilution Sources, which are further described in the risk factor entitled “—Our Public Stockholders will experience dilution as a consequence of the issuance of Common Stock and Post-Combination Company Special Voting Common Stock as consideration in the Business Combination (including the PIPE Investment) and may experience dilution from several additional sources in connection with and after the Business Combination. Having a minority share position may reduce the influence that our current stockholders have on the management of the Post-Combination Company” beginning on page 114.

Current Company Certificate” means the Amended and Restated Certificate of Incorporation of the Company, dated January 19, 2021.

Deferred Discount” means any deferred underwriting commissions, which amount will be payable upon consummation of an initial business combination.

Deloitte” means Deloitte & Touche LLP, independent auditors to Sonder.

DGCL” means the General Corporation Law of the State of Delaware.

 

 

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Discounted Earn Out Option Amount” means the value, as measured at the closing of the First Merger, of the Earn Out Shares that would have been payable in respect of each share of Sonder Common Stock issuable upon exercise of all Sonder Stock Options outstanding as of immediately prior to the closing of the First Merger, had each such share of Sonder Common Stock issuable upon the exercise of all Sonder Stock Options been entitled to receive its applicable Earn Out Pro Rata Share (as defined in the Merger Agreement) of the Earn Out Shares, taking into account, among other factors, the likelihood such amounts will be paid and the time value thereof. The Discounted Earn Out Option Amount will be determined prior to the closing of the First Merger by Sonder’s board of directors in accordance with the procedures set forth in the Merger Agreement.

Earn Out Cap” means the quotient of (i) all Earn Out Shares (i.e., 14,500,000 shares of Common Stock) divided by (ii) the sum of, without duplication (A) the aggregate number of shares of Sonder Common Stock issued and outstanding as of immediately prior to the effective time of the First Merger (assuming the conversion of all Sonder Preferred Stock prior to the closing of the First Merger), plus (B) the aggregate number of shares of Sonder Common Stock reserved for issuance upon the exchange of all Sonder Canada Exchangeable Common Shares issued and outstanding as of immediately prior to the effective time of the First Merger (assuming the conversion of all Sonder Canada Exchangeable Preferred Shares prior to the closing of the First Merger), plus (C) the total number of shares of Sonder Common Stock issuable upon exercise of all Sonder Stock Options (for the purposes of this definition on a gross basis) outstanding as of immediately prior to the effective time of the First Merger, plus (D) the aggregate number of shares of Sonder Common Stock issuable upon exercise or settlement of all Sonder Warrants outstanding as of immediately prior to the effective time of the First Merger (for the purposes of this definition on a gross basis), plus (E) the aggregate number of shares of Sonder Common Stock issuable upon conversion of all Sonder Convertible Notes to the extent issued and outstanding as of immediately prior to the effective time of the First Merger.

Earn Out Period” means the period beginning on the 180th day following the closing date of the Business

Combination and ending on the fifth anniversary of such date.

Earn Out Shares” means earn out shares from the Post-Combination Company, issuable in Common Stock in accordance with the terms provided in the Merger Agreement.

Exchange Act” means the Securities Exchange Act of 1934, as amended, together with the rules and regulations promulgated thereunder.

Exchange Rate” means a ratio equal to the number of shares of Common Stock issuable with respect to each share of Sonder Common Stock in accordance with the Per Share Sonder Common Stock Consideration.

Exchange Rights Agreement Amendment” means the amendment to the Exchange Rights Agreement to permit the majority of the holders of Sonder Canada Exchangeable Shares to consent to a transaction despite the terms of Section 4.1 thereof.

Exchange Rights Agreement Consent” means a written consent with respect to the Business Combination as it relates to Section 4.1 of the Exchange Rights Agreement (as amended) executed by the requisite number of holders of Sonder Canada Exchangeable Shares.

FINRA” means the Financial Industry Regulatory Authority.

First Merger” means the merger of First Merger Sub with and into Sonder, with Sonder continuing as the Surviving Corporation.

First Merger Sub” means Sunshine Merger Sub I, Inc., a Delaware corporation and a direct, wholly-owned subsidiary of Second Merger Sub.

 

 

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Founder Shares” means the 11,250,000 shares of Class F Stock that are currently owned by our Initial Stockholders, of which 11,175,000 shares are held by our Sponsor and 25,000 shares are held by each of Randall Bort, Michael Cramer and Joseph Gatto.

FTC” means the U.S. Federal Trade Commission.

HSR Act” means the Hart-Scott-Rodino Antitrust Improvements Act of 1976, as amended.

initial business combination” means a merger, capital stock exchange, asset acquisition, stock purchase, reorganization or similar business combination involving the Company and one or more businesses.

Initial Stockholders” means our Sponsor and Randall Bort, Michael Cramer and Joseph Gatto, the Company’s independent directors.

Investment Company Act” means the Investment Company Act of 1940, as amended.

IPO Closing Date” means January 22, 2021.

IRS” means the U.S. Internal Revenue Service.

JOBS Act” means the Jumpstart Our Business Startups Act of 2012.

Key Employee” means any current or former director, employee or individual independent contractor of Sonder or its subsidiaries with an annual base salary, wages or fees in excess of $250,000.

KPMG” means KPMG LLP, an independent registered public accounting firm.

Merger Agreement” means that certain Agreement and Plan of Merger, dated as of April 29, 2021 (as it may be further amended from time to time), by and among the Company, First Merger Sub, Second Merger Sub and Sonder, which is attached hereto as Annex A.

Mergers” means, collectively, the First Merger and the Second Merger.

Nasdaq” means the National Association of Securities Dealers Automated Quotations Capital Market.

Online Travel Agencies” or “OTAs” means third party online travel agencies such as Airbnb, Booking.com and Expedia.

Option Exchange Ratio” means the sum of (i) the Per Share Sonder Common Stock Consideration plus (ii) the quotient of (A) the Discounted Earn Out Option Amount divided by (B) $10.00; provided, however, that the Option Exchange Ratio will not exceed the sum of (i) the Per Share Sonder Common Stock Consideration plus (ii) Option Earn Out Cap.

Per Share Sonder Common Stock Consideration” means, with respect to each share of Sonder Common Stock, a number of shares of Common Stock equal to the result of (a) the Aggregate Sonder Common Stock Consideration divided by (b) the Sonder Stock Adjusted Fully Diluted Shares.

Per Share Sonder Special Voting Stock Consideration” means, with respect to each share of Sonder Special Voting Common Stock, a number of shares of Post-Combination Company Special Voting Common Stock multiplied by the Exchange Rate.

PIPE Investment” means the purchase of 20,000,000 shares of Class A Stock (which will be reclassified into Common Stock upon the effectiveness of the Amended and Restated Certificate of Incorporation) pursuant to the Subscription Agreements.

PIPE Investors” means the purchasers of PIPE Shares in the PIPE Investment.

 

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PIPE Shares” means the shares of Common Stock (following the reclassification of Class A Stock to Common Stock upon the effectiveness of the Amended and Restated Certificate of Incorporation) acquired in the PIPE Investment.

Post-Combination Canada Exchangeable Common Shares” means the shares of a new series of Sonder Canada, virtually identical to the Sonder Canada Exchangeable Common Shares, exchangeable for the Post-Combination Company’s Common Stock upon the completion of the First Merger.

Post-Combination Company” means the Company following the Business Combination.

Post-Combination Company Board” means the board of directors of the Company following the Business Combination.

Post-Combination Company Special Voting Common Stock” means the Post-Combination Company’s Special Voting Common Stock, par value $0.000001 per share.

Post-Combination Company Stock” means the Common Stock and the Post-Combination Company Special Voting Common Stock.

Preferred Stock” means the preferred stock, par value of $0.0001 per share, of the Company, and following the Business Combination, of the Post-Combination Company.

Preferred Stock Designation” means any resolution or resolutions adopted by the Post-Combination Board providing for the issuance of one or more series of Preferred Stock stating the voting rights, if any, designations, powers, preferences and relative, participating, optional, special and other rights, if any, of each such series and any qualifications, limitations and restrictions thereof and included in a certificate of designation.

Primary Lock-Up Agreements” means those certain lock-up agreements to be entered into in connection with the closing of the Business Combination, by and among the Company, Sonder and certain Sonder Stockholders.

Private Placement Warrants” means the warrants held by our Sponsor that were issued to our Sponsor on the IPO Closing Date, each of which is exercisable, at an exercise price of $11.50, for one share of Class A Stock in accordance with its terms.

Public Shares” means the shares of Class A Stock included in the Public Units issued in the Company IPO.

Public Stockholders” means holders of Public Shares, including the Initial Stockholders to the extent the Initial Stockholders hold Public Shares; provided, that the Initial Stockholders are considered a “Public Stockholder” only with respect to any Public Shares held by them.

Public Unit” means one share of Class A Stock and one-fifth of one Public Warrant, whereby each whole Public Warrant entitles the holder thereof to purchase one share of Class A Stock at an exercise price of $11.50 per share of Class A Stock, sold in the Company IPO.

Public Warrants” means the warrants included in the Public Units issued in the Company IPO, each of which is exercisable, at an exercise price of $11.50, for one share of Class A Stock in accordance with its terms.

Registration Rights Agreement” means that certain Amended & Restated Registration Rights Agreement to be entered into at the closing of the Business Combination, by and among the Company and the Registration Rights Holders, and in substantially the form attached hereto as Annex F.

 

 

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Registration Rights Holders” means the Company, the Initial Stockholders and the Sonder Supporting Stockholders.

Regulatory Withdrawals” means funds released to the Company from the Trust Account to fund regulatory compliance requirements and other costs related thereto, subject to an annual limit of $900,000, for a maximum of 24 months.

Related Agreements” means, collectively, the Registration Rights Agreement, the Primary Lock-Up Agreements, the Conversion Shares Lock-Up Agreements, the Subscription Agreements and the Voting and Support Agreements.

Rollover Options” means the options to acquire Common Stock resulting from the automatic conversion at the effective time of the First Merger of Sonder Stock Options in accordance with the terms of the Merger Agreement.

Rule 144” means Rule 144 under the Securities Act.

Sarbanes-Oxley Act” means the Sarbanes-Oxley Act of 2002.

SEC” means the United States Securities and Exchange Commission.

Second Merger” means the merger of the Surviving Corporation with and into Second Merger Sub, with Second Merger Sub continuing as the Surviving Entity.

Second Merger Sub” means Sunshine Merger Sub II, LLC, a Delaware limited liability company and a direct, wholly-owned subsidiary of the Company.

Section 203” means Section 203 of the DGCL.

Securities Act” means the Securities Act of 1933, as amended, and the rules and regulations promulgated thereunder.

Share Provisions” means the Articles of Amalgamation of Sonder Canada, as amended on May 4, 2020.

Sonder” means Sonder Holdings Inc., a Delaware corporation, and, unless the context otherwise requires, its consolidated subsidiaries.

Sonder Canada” means Sonder Canada Inc., a corporation existing under the laws of the province of Québec and a subsidiary of Sonder.

Sonder Canada Exchangeable Common Shares” means Sonder Canada’s Series AA Common Exchangeable Preferred Shares.

Sonder Canada Exchangeable Preferred Shares” means, collectively, Sonder Canada’s (a) Series Seed-1 Exchangeable Preferred Shares, (b) Series Seed-2 Exchangeable Preferred Shares, (c) Series Seed-3 Exchangeable Preferred Shares, (d) Series A Exchangeable Preferred Shares, (e) Series B Exchangeable Preferred Shares, (f) Series C Exchangeable Preferred Shares, (g) Series D Exchangeable Preferred Shares and (h) Series E Exchangeable Preferred Shares.

Sonder Canada Exchangeable Shares” means, collectively, the Sonder Canada Exchangeable Common Shares and the Sonder Canada Exchangeable Preferred Shares.

 

 

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Sonder Canada Share Capital Reorganization” means the share capital reorganization undertaken by Sonder Canada prior to the consummation of the Business Combination which creates a new series of Sonder Canada Exchangeable Shares in accordance with the A&R Share Terms into which existing Sonder Canada Exchangeable Shares will be exchanged in a tax deferred manner contemplated by the Income Tax Act (Canada).

Sonder Certificate of Incorporation” means the Amended and Restated Certificate of Incorporation of Sonder, filed with the Secretary of State of the State of Delaware on April 3, 2020, as amended by the Certificate of Amendment No. 1 to Amended and Restated Certificate of Incorporation of Sonder, filed with the Secretary of State of the State of Delaware on May 4, 2020, as amended by the Certificate of Amendment No. 2 to Amended and Restated Certificate of Incorporation of Sonder, filed with the Secretary of State of the State of Delaware on March 11, 2021, and as amended by the Certificate of Amendment No. 3 to Amended and Restated Certificate of Incorporation of Sonder, filed with the Secretary of State of the State of Delaware on March 19, 2021.

Sonder Common Stock” means the common stock, par value $0.000001 per share, of Sonder.

Sonder Common Stockholders” means stockholders of Sonder that hold Sonder Common Stock, solely in their capacity as such.

Sonder Convertible Notes” means the convertible promissory notes issued by Sonder to certain purchasers pursuant to the Note Purchase Agreement, dated March 12, 2021, as amended.

Sonder Noteholders” means the purchasers of Sonder Convertible Notes issued by Sonder pursuant to the Note Purchase Agreement, dated March 12, 2021, as amended.

Sonder Preferred Stock” means, collectively, Sonder’s (a) Series Seed-1 Preferred Stock, (b) Series Seed-1A Preferred Stock, (c) Series Seed-2 Preferred Stock, (d) Series Seed-2A Preferred Stock, (e) Series Seed-3 Preferred Stock, (f) Series Seed-3A Preferred Stock, (g) Series A Preferred Stock, (h) Series A-1 Preferred Stock, (i) Series B Preferred Stock, (j) Series B-1 Preferred Stock, (k) Series C Preferred Stock, (l) Series C-1 Preferred Stock, (m) Series D Preferred Stock, (n) Series D-1 Preferred Stock and (o) Series E Preferred Stock, in each case, par value $0.000001 per share.

Sonder Preferred Stockholders” means stockholders of Sonder that hold Sonder Preferred Stock.

Sonder Securityholders” means holders of securities of Sonder as of immediately prior to the effective time of the First Merger.

Sonder Senior Preferred Stock” means collectively, Sonder’s (a) Series Seed-1A Preferred Stock, (b) Series Seed-2A Preferred Stock, (c) Series Seed-3A Preferred Stock, (d) Series A-1 Preferred Stock, (e) Series B-1 Preferred Stock, (f) Series C-1 Preferred Stock, (g) Series D-1 Preferred Stock and (h) Series E Preferred Stock, in each case, par value $0.000001 per share.

Sonder Special Voting Common Stock” means Sonder’s Special Voting Series AA Common Stock, par value $0.000001 per share.

Sonder Special Voting Preferred Stock” means collectively, Sonder’s (a) Special Voting Series Seed-1 Stock, (b) Special Voting Series Seed-2 Stock, (c) Special Voting Series Seed-3 Stock, (d) Special Voting Series A Stock, (e) Special Voting Series B Stock, (f) Special Voting Series C Stock, (g) Special Voting Series D Stock and (h) Special Voting Series E Stock, in each case, par value $0.000001 per share.

Sonder Special Voting Stock” means, collectively, the Sonder Special Voting Common Stock and the Sonder Special Voting Preferred Stock.

 

 

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Sonder Stock” means, collectively, the Sonder Common Stock, the Sonder Preferred Stock and the Sonder Special Voting Stock.

Sonder Stock Adjusted Fully Diluted Shares” means the sum of, without duplication (a) the aggregate number of shares of Sonder Common Stock issued and outstanding as of immediately prior to the effective time of the First Merger (assuming the conversion of all Sonder Preferred Stock prior to Closing), plus (b) the aggregate number of shares of Sonder Common Stock reserved for issuance upon the exchange of all Sonder Canada Exchangeable Common Shares issued and outstanding as of immediately prior to the effective time of the First Merger (assuming the conversion of all Sonder Canada Exchangeable Preferred Shares prior to Closing), plus (c) the aggregate number of shares of Sonder Common Stock issuable upon exercise or settlement of all Sonder Stock Options (vested or unvested) outstanding as of immediately prior to the effective time of the First Merger (assuming for the purposes of this definition that all such Sonder Stock Options are fully vested and exercised on a net exercise basis based on the Per Share Sonder Common Stock Consideration), plus (d) the aggregate number of shares of Sonder Common Stock issuable upon exercise or settlement of all Sonder Warrants outstanding as of immediately prior to the effective time of the First Merger (assuming for the purposes of this definition that all such Sonder Warrants are exercised on a net exercise basis based on the Per Share Sonder Common Stock Consideration), plus (e) the aggregate number of shares of Sonder Common Stock issuable upon conversion of all Sonder Convertible Notes to the extent issued and outstanding as of immediately prior to the effective time of the First Merger.

Sonder Stock Plans” means Sonder’s (a) 2019 Equity Incentive Plan, as amended from time to time, and (b) Stock Option Plan dated February 25, 2015, as amended and restated on February 24, 2016, March 14, 2017, March 9, 2018, September 26, 2018, May 5, 2019, November 15, 2019 and December 20, 2019.

Sonder Stock Options” means the options to purchase Sonder Common Stock granted pursuant to the Sonder Stock Plans.

Sonder Stockholders” means, collectively, the stockholders of Sonder that hold Sonder Common Stock, Sonder Preferred Stock or Sonder Special Voting Stock.

Sonder Supporting Stockholders” means those Sonder Stockholders who are a party to a Voting and Support Agreement.

Sonder Warrants” means any warrant to purchase shares of Sonder Stock.

Special Meeting” means the special meeting of the Company in lieu of the 2021 annual meeting of the stockholders of the Company that is the subject of this proxy statement/prospectus/consent solicitation statement.

Sponsor” means Gores Metropoulos Sponsor II, LLC, an affiliate of Mr. Dean Metropoulos, the Company’s Chairman, and Mr. Alec E. Gores, the Company’s Chief Executive Officer.

Subject Securities” means Sonder Stock and any security convertible or exchangeable into Sonder Stock.

Subscription Agreements” means the agreements that the Company and PIPE Investors entered into for a private placement of 20,000,000 shares of Class A Stock (which will be reclassified into Common Stock upon the effectiveness of the Amended and Restated Certificate of Incorporation) to be consummated prior to or substantially concurrently with the consummation of the Business Combination.

Surviving Corporation” means Sonder, in its capacity as the surviving corporation of the First Merger.

Surviving Entity” means Second Merger Sub, in its capacity as the surviving entity of the Second Merger.

The Gores Group” means The Gores Group, LLC, an affiliate of our Sponsor.

 

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Trust Account” means the trust account of the Company that holds the proceeds from the Company IPO.

Trustee” means Computershare Trust Company, N.A.

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

Voting and Support Agreement” means that certain Voting and Support Agreement, dated April 29, 2021, by and among the Company, First Merger Sub, Second Merger Sub and the Sonder Supporting Stockholders.

Weil” means Weil, Gotshal & Manges LLP, counsel to the Company.

Wilson Sonsini” means Wilson Sonsini Goodrich & Rosati, PC, counsel to Sonder.

The section titled “Glossary of Terms” on page 320 of this proxy statement/prospectus/consent solicitation statement contains additional defined terms.

 

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TRADEMARKS, TRADE NAMES AND SERVICE MARKS

The Company, Sonder and Sonder’s subsidiaries own or have rights to trademarks, trade names and service marks that they use in connection with the operation of their business. In addition, their names, logos and website names and addresses are their trademarks or service marks. “Sonder” and the Sonder logo are registered and unregistered trademarks of Sonder Canada Inc. in the United States and other jurisdictions. Other trademarks, trade names and service marks appearing in this proxy statement/prospectus/consent solicitation statement are the property of their respective owners. Solely for convenience, in some cases, the trademarks, trade names and service marks referred to in this proxy statement/prospectus/consent solicitation statement are listed without the applicable ®, and SM symbols, but they will assert, to the fullest extent under applicable law, their rights to these trademarks, trade names and service marks.

 

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QUESTIONS AND ANSWERS

The questions and answers below highlight only selected information from this proxy statement/prospectus/consent solicitation statement and only briefly address some commonly asked questions about the Special Meeting and the proposals to be presented at the Special Meeting, including with respect to the proposed Business Combination. The following questions and answers do not include all the information that is important to our stockholders. Stockholders are urged to read carefully this entire proxy statement/prospectus/consent solicitation statement, including the Annexes and the other documents referred to herein, to fully understand the proposed Business Combination and the voting procedures for the Special Meeting, which, in light of public health concerns regarding the COVID-19 pandemic, will be held via live webcast at [●], on [●], 2021, at [●]. The Special Meeting can be accessed by visiting [●], where you will be able to listen to the meeting live and vote during the meeting. Additionally, you have the option to listen only to the Special Meeting by dialing [●] (toll-free within the U.S. and Canada) or [●] (outside of the U.S. and Canada, standard rates apply). The passcode for telephone access is [●], but you cannot vote or ask questions if you choose to participate telephonically. Please note that you will only be able to access the Special Meeting by means of remote communication.

QUESTIONS AND ANSWERS ABOUT THE COMPANY’S SPECIAL STOCKHOLDER MEETING AND THE BUSINESS COMBINATION

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

A: Our stockholders are being asked to consider and vote upon a proposal to approve the Merger Agreement and the transactions contemplated thereby, including the Business Combination, among other proposals. We have entered into the Merger Agreement, providing for, among other things, (i) the First Merger, and (ii) immediately following the First Merger and as part of the same overall transaction as the First Merger, the Second Merger. You are being asked to vote on the Business Combination. Subject to the terms of the Merger Agreement, the aggregate merger consideration to be paid in connection with the Business Combination is expected to be stock consideration valued at approximately $2,176,603,000. A copy of the Merger Agreement is attached to this proxy statement/prospectus/consent solicitation statement as Annex A.

This proxy statement/prospectus/consent solicitation statement and its Annexes contain important information about the proposed Business Combination and the other matters to be acted upon at the Special Meeting. You should read this proxy statement/prospectus/consent solicitation statement and its Annexes carefully and in their entirety.

Your vote is important. You are encouraged to submit your proxy as soon as possible after carefully reviewing this proxy statement/prospectus/consent solicitation statement and its Annexes.

Q: When and where is the Special Meeting?

A: In light of public health concerns regarding the COVID-19 pandemic, the Special Meeting will be held via live webcast at [●], on [●], 2021, at [●]. The Special Meeting can be accessed by visiting [●], where you will be able to listen to the meeting live and vote during the meeting. Additionally, you have the option to listen only to the Special Meeting by dialing [●] (toll-free within the U.S. and Canada) or [●] (outside of the U.S. and Canada, standard rates apply). The passcode for telephone access is [●], but you cannot vote or ask questions if you choose to participate telephonically. Please note that you will only be able to access the Special Meeting by means of remote communication.

Q: What are the specific proposals on which I am being asked to vote at the Special Meeting?

A: Our stockholders are being asked to approve the following proposals:

 

  1.

Business Combination Proposal—To consider and vote upon a proposal to approve the Merger Agreement, a copy of which is attached to this proxy statement/prospectus/consent solicitation

 

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  statement as Annex A, and the transactions contemplated thereby, including, among other things, the Business Combination (Proposal No. 1);

 

  2.

Nasdaq Proposal—To consider and vote upon a proposal to approve, for purposes of complying with applicable Nasdaq listing rules, the issuance of Common Stock and Post-Combination Company Special Voting Common Stock constituting more than 20% of the Company’s issued and outstanding shares of Common Stock or other securities convertible into or exercisable for common stock in connection with the Business Combination (Proposal No. 2);

 

  3.

Charter Proposal—To consider and act upon a proposal to adopt the proposed Amended and Restated Certificate of Incorporation in the form attached hereto as Annex B (Proposal No. 3);

 

  4.

Governance Proposals—To consider and act upon, on a non-binding advisory basis, a separate proposal with respect to certain governance provisions in the Amended and Restated Certificate of Incorporation in accordance with SEC requirements (Proposal No. 4);

 

  5.

Management Equity Incentive Plan Proposal—To consider and vote upon a proposal to approve the Management Equity Incentive Plan, including the authorization of the initial share reserve under the 2021 Management Equity Incentive Plan (Proposal No. 5);

 

  6.

Incentive Plan Proposal—To consider and vote upon a proposal to approve the Incentive Plan, including the authorization of the initial share reserve under the Incentive Plan (Proposal No. 6);

 

  7.

ESPP Proposal—To consider and vote upon a proposal to approve the ESPP, including the authorization of the initial share reserve under the ESPP (Proposal No. 7);

 

  8.

Director Election Proposal—To consider and vote upon a proposal to elect four directors to serve on the Company’s Board until the earlier of the consummation of the Business Combination and the 2023 annual meeting of stockholders, and until their respective successors are duly elected and qualified (Proposal No. 8); and

 

  9.

Adjournment Proposal—To consider and vote upon a proposal to allow the chairman of the Special Meeting to adjourn the Special Meeting to a later date or dates, if necessary, to permit further solicitation and vote of proxies in the event there are insufficient votes for, or otherwise in connection with, the approval of the Business Combination Proposal, the Nasdaq Proposal, the Charter Proposal, the Management Equity Incentive Plan Proposal, the Incentive Plan Proposal, the ESPP Proposal or the Director Election Proposal but no other proposal if the Business Combination Proposal, the Nasdaq Proposal, the Charter Proposal, the Management Equity Incentive Plan Proposal, the Incentive Plan Proposal, the ESPP Proposal and the Director Election Proposal are approved (Proposal No. 9).

Q: Are the proposals conditioned on one another?

A: Yes. The Business Combination is conditioned on the approval of the Business Combination Proposal, the Nasdaq Proposal, the Charter Proposal and the Director Election Proposal at the Special Meeting. If we fail to obtain sufficient votes for any of the Business Combination Proposal, the Nasdaq Proposal, the Charter Proposal or the Director Election Proposal, we will not satisfy the conditions to closing of the Merger Agreement and we may be prevented from closing the Business Combination. Each of the proposals other than the Business Combination Proposal, the Nasdaq Proposal, the Charter Proposal and the Director Election Proposal is conditioned on the approval of the Business Combination Proposal, the Nasdaq Proposal, the Charter Proposal and the Director Election Proposal, other than the Governance Proposals and the Adjournment Proposal, which are not conditioned on the approval of any other proposal set forth in this proxy statement/prospectus/consent solicitation statement. Additionally, the Director Election Proposal is not conditioned on the approval of the Business Combination Proposal, the Nasdaq Proposal, the Charter Proposal or any other proposal set forth in this proxy statement/prospectus/consent solicitation statement. It is important for you to note that in the event that the Business Combination Proposal, the Nasdaq Proposal, or the Charter Proposal do not receive the requisite vote for approval, we will not consummate the Business Combination. Unless we amend our Current Company

 

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Certificate (which requires the affirmative vote of 65% of all then outstanding shares of Class A Stock) and amend certain other agreements into which we have entered to extend the life of the Company, if we do not consummate the Business Combination and fail to complete an initial business combination by January 22, 2023, we will be required to dissolve and liquidate our Trust Account by returning the then remaining funds in such account to the Public Stockholders.

Q: Why is the Company proposing the Business Combination?

A: We are a blank check company incorporated as a Delaware corporation on July 21, 2020 and incorporated for the purpose of effecting a merger, capital stock exchange, asset acquisition, stock purchase, reorganization or similar business combination with one or more businesses (an “initial business combination”). Our acquisition plan is not limited to a particular industry or geographic region for purposes of consummating an initial business combination. However, we (a) must complete an initial business combination with one or more target businesses that together have a fair market value of at least 80% of the assets held in the Trust Account (excluding the deferred underwriting commissions and taxes payable on the income earned on the Trust Account) at the time of the agreement to enter into the initial business combination and (b) are not, under the Current Company Certificate, permitted to effect an initial business combination with a blank check company or a similar company with nominal operations.

We have identified several criteria and guidelines we believe are important for evaluating acquisition opportunities. We use these criteria and guidelines in evaluating acquisition opportunities, but we can decide to enter into an initial business combination with a target business that does not meet these criteria and guidelines. We are seeking to acquire companies that we believe: (a) can utilize the extensive networks we have built in the consumer products and services industries; (b) have a defensible core business, sustainable revenues and established customer relationships; (c) are undergoing change in capital structure, strategy, operations or growth; (d) can benefit from our operational and strategic approach; (e) offer a unique value proposition with transformational potential that can be substantiated during our detailed due diligence process; and (f) have reached a transition point in their lifecycle presenting an opportunity for transformation. Based on our due diligence investigations of Sonder and the industry in which it operates, including the financial and other information provided by Sonder in the course of negotiations, we believe that Sonder meets the criteria and guidelines listed above. Please see the section titled “The Business Combination—Recommendation of Our Board of Directors and Reasons for the Business Combination” for additional information.

Q: Why is the Company providing stockholders with the opportunity to vote on the Business Combination?

A: Under the Current Company Certificate, we must provide all holders of Public Shares with the opportunity to have their Public Shares redeemed upon the consummation of our initial business combination either in conjunction with a tender offer or in conjunction with a stockholder vote. For business and other reasons, we have elected to provide our stockholders with the opportunity to have their Public Shares redeemed in connection with a stockholder vote rather than a tender offer. Therefore, we are seeking to obtain the approval of our stockholders of the Business Combination Proposal in order to allow our Public Stockholders to effectuate redemptions of their Public Shares in connection with the closing of the Business Combination. The approval of the Business Combination is required under the Current Company Certificate. In addition, such approval is also a condition to the closing of the Business Combination under the Merger Agreement.

Q: What revenues and losses has Sonder generated in the first half of 2021 and in the last two fiscal years?

A: Sonder’s revenue was $47.3 million and $78.8 million for the three and six months ended June 30, 2021, respectively, and was $115.7 million and $142.9 million for the years ended December 31, 2020 and 2019, respectively. Sonder’s net loss was $73.9 million and $152.5 million for the three and six months ended June 30, 2021, respectively, and $250.3 million and $178.2 million for the years ended December 31, 2020 and 2019, respectively.

 

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Q: What will happen in the Business Combination?

A: Pursuant to the Merger Agreement, and upon the terms and subject to the conditions set forth therein, the Company will acquire Sonder in a series of transactions we collectively refer to as the “Business Combination.” At the closing of the Business Combination contemplated by the Merger Agreement, among other things, First Merger Sub will merge with and into Sonder, with Sonder continuing as the Surviving Corporation, and the Surviving Corporation will merge with and into Second Merger Sub, with Second Merger Sub continuing as the Surviving Entity. As a result of the Mergers, immediately following the closing of the Business Combination, the Post-Combination Company will own 100% of the outstanding equity interests of Sonder, and each share of Sonder Common Stock will be cancelled and converted into the right to receive the Per Share Sonder Common Stock Consideration and each share of Sonder Special Voting Common Stock will be cancelled and converted into the right to receive the Per Share Sonder Special Voting Stock Consideration.

Q: How has the announcement of the Business Combination affected the trading price of the Public Shares?

A: On April 29, 2021, the trading date before the public announcement of the Business Combination, the Public Units, Public Shares and Public Warrants closed at $10.25, $9.94 and $1.43, respectively. On [●], 2021 the trading date immediately prior to the date of this proxy statement/prospectus/consent solicitation statement, the Public Units, Public Shares and Public Warrants closed at $[●], $[●] and $[●], respectively.

Q: Following the Business Combination, will Company’s securities continue to trade on a stock exchange?

A: Yes. The Public Shares, Public Units and Public Warrants are currently listed on Nasdaq under the symbols “GMII,” “GMIIU” and “GMIIW,” respectively. We intend to apply to continue the listing of our Common Stock (following the reclassification of Class A Stock into Common Stock upon the effectiveness of the Amended and Restated Certificate of Incorporation) and Public Warrants on Nasdaq under the symbols “SOND” and “SONDW,” respectively, upon the closing of the Business Combination.

Q: Will the Board of Directors of the Company change in the Business Combination?

A: Upon the closing of the Business Combination, it is anticipated that the Post-Combination Company’s board will be composed of one director in Class I (expected to be [●]), one director in Class II (expected to be [●]) and two directors in Class III (expected to be [●] and [●]). The term of the initial Class I Director will expire at the first annual meeting of Post-Combination Company stockholders, the term of the initial Class II Director will expire at the second annual meeting of Post-Combination Company stockholders, and the term of the initial Class III Directors will expire at the third annual meeting of Post-Combination Company stockholders. At each annual meeting of Post Combination Company stockholders, beginning with the first annual meeting of Post-Combination Company stockholders, successors to the class of directors whose term expires at that annual meeting will be elected for a three-year term or until the election and qualification of their respective successors in office, subject to their earlier death, resignation or removal.

Please see the section titled “Management of the Post-Combination Company” for additional information.

Q: Will the management of the Company change in the Business Combination?

A: Following the closing of the Business Combination, it is expected that the current senior management of Sonder will comprise the senior management of the Post-Combination Company.

Please see the section titled “Management of the Post-Combination Company” for additional information.

 

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Q: How will the Business Combination impact the shares of the Company outstanding after the Business Combination?

A: As a result of the Business Combination and the consummation of the transactions contemplated thereby, the amount of Common Stock outstanding will increase by approximately 423% to approximately 293,910,300 shares of Common Stock (assuming (a) that no shares of Class A Stock are redeemed, (b) the issuance of approximately 28.9 million shares related to the exercise of Rollover Options issued to former holders of Sonder stock options, and (c) the issuance of each of the approximately 37.2 million shares of our Common Stock reserved for issuance upon the exchange of Post-Combination Canada Exchangeable Common Shares after the consummation of the Business Combination pursuant to the terms of the Merger Agreement (each of which corresponds to a share of Post-Combination Company Special Voting Common Stock to be issued in the Business Combination)). The issuance and sale of such shares in the public market could adversely impact the market price of our Common Stock, even if our business is doing well.

Q: What will the Sonder Stockholders receive in the Business Combination?

A: Subject to the terms of the Merger Agreement, Sonder Stockholders at the closing of the Business Combination are expected to receive a number of shares of Common Stock (deemed to have a value of $10.00 per share) equal to the Per Share Sonder Common Stock Consideration and the Per Share Sonder Special Voting Stock Consideration, or such shares resulting from the Canadian Split, as applicable, plus the Earn Out Shares, if and when applicable.

Immediately prior to the effective time of the First Merger, each issued and outstanding share of Sonder Preferred Stock will convert into shares of Sonder Common Stock, pursuant to the Sonder Certificate of Incorporation. Holders of shares of Sonder Common Stock will be entitled to receive a number of newly issued shares of Common Stock equal to the Per Share Sonder Common Stock Consideration for each such share of Sonder Common Stock.

Holders of shares of Sonder Special Voting Common Stock will be entitled to receive a number of newly issued shares of Post-Combination Company Special Voting Common Stock equal to the Per Share Sonder Special Voting Stock Consideration for each such share of Sonder Special Voting Stock.

Following the consummation of the Business Combination, holders of Post-Combination Canada Exchangeable Shares will be entitled to receive shares of Common Stock, pursuant to the (i) Sonder Canada Share Capital Reorganization, (ii) A&R Share Terms and (iii) Canadian Split.

In addition to the consideration to be paid at the closing of the Business Combination, equityholders of Sonder will be entitled to receive their pro rata share of an additional number of Earn Out Shares from the Post-Combination Company, up to an aggregate of 14,500,000 shares of Common Stock collectively issuable to all Sonder equityholders.

Q: What will holders of Sonder Stock Options receive in the Business Combination?

A: Each Sonder Stock Option, to the extent then outstanding and unexercised, will automatically be converted into an option, subject to the same terms and conditions as were applicable to the corresponding Sonder Stock Option prior to the closing of the Business Combination, to acquire a number of shares of Common Stock (rounded down to the nearest whole share) equal to (i) the number of shares of Sonder Common Stock subject to the Sonder Stock Option immediately prior to the effective time of the First Merger multiplied by (ii) the Option Exchange Ratio (rounded down to the nearest whole number of shares of Common Stock), at a per share exercise price equal to (x) the per share exercise price of the Sonder Stock Option immediately prior to the effective time of the First Merger divided by (y) the Option Exchange Ratio (rounded up to the nearest whole cent).

 

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Q: What will holders of Sonder Warrants receive in the Business Combination?

A: Each Sonder Warrant, to the extent then outstanding and unexercised, will automatically be converted into a warrant, subject to the same terms and conditions as were applicable to the corresponding Sonder Warrant prior to the effective time of the First Merger, to acquire a number of shares of Common Stock (rounded down to the nearest whole share) equal to multiplying the number of shares of Sonder Stock subject to the Sonder Warrant by the Per Share Sonder Common Stock Consideration (rounded down to the nearest whole number of shares) at a per share exercise price equal to (x) the per share exercise price of the shares of Sonder Stock subject to the Sonder Warrant, as in effect immediately prior to the effective time of the First Merger, divided by (y) the Per Share Sonder Common Stock Consideration (rounded up to the nearest whole cent). Holders of each Sonder Warrant will also be entitled to Earn Out Shares pursuant to the applicable terms and conditions set forth in the Merger Agreement.

Q: What equity stake will the Public Stockholders and the Sonder Stockholders hold in the Company after the consummation of the Business Combination?

A: It is anticipated that, upon consummation of the Business Combination and without giving effect to any issuance of Earn Out Shares or any redemptions: (i) our Public Stockholders will retain an ownership interest of approximately 15.3% of the Post-Combination Company Stock; (ii) our Initial Stockholders (including our Sponsor) will own approximately 3.8% of the Post-Combination Company Stock (excluding 4,000,000 shares of Class A Stock, which will be reclassified into Common Stock upon the effectiveness of the Amended and Restated Certificate of Incorporation, to be purchased under the Sponsor Subscription Agreement as part of the PIPE Investment); (iii) the PIPE Investors (including 4,000,000 shares of Class A Stock, which will be reclassified into Common Stock upon the effectiveness of the Amended and Restated Certificate of Incorporation, to be purchased under the Sponsor Subscription Agreement as part of the PIPE Investment) will own approximately 6.8% of the Post-Combination Company Stock; and (iv) the Sonder Securityholders will own approximately 74.1% of the Post-Combination Company Stock. In the event that, following the Business Combination, all 14,500,000 Earn Out Shares are issued to Sonder Securityholders and assuming no redemptions and that no additional shares of Post-Combination Company Stock are issued between the closing of the Business Combination and the realization of all of the benchmark share prices in the earn out: (i) our Public Stockholders will retain an ownership interest of approximately 14.6% of the Post-Combination Company Stock; (ii) our Initial Stockholders (including our Sponsor) will own approximately 3.6% of the Post-Combination Company Stock (excluding 4,000,000 shares of Class A Stock, which will be reclassified into Common Stock upon the effectiveness of the Amended and Restated Certificate of Incorporation, to be purchased under the Sponsor Subscription Agreement as part of the PIPE Investment); (iii) the PIPE Investors (including 4,000,000 shares of Class A Stock, which will be reclassified into Common Stock upon the effectiveness of the Amended and Restated Certificate of Incorporation, to be purchased under the Sponsor Subscription Agreement as part of the PIPE Investment) will own approximately 6.5% of the Post-Combination Company Stock; and (iv) the Sonder Securityholders will own approximately 75.3% of the Post-Combination Company Stock.

In this proxy statement/prospectus/consent solicitation statement, we assume that funds from the Trust Account (plus any interest accrued thereon) will be used to pay certain transaction expenses, assuming that the (i) funds available in Trust Account plus any other cash and cash equivalents of the Company as of the effective time of the First Merger, net of any amounts required to satisfy any redemptions of shares of Class A Stock by our Public Stockholders, plus (ii) amount of all cash and cash equivalents of Sonder as of the effective time of the First Merger, equals or exceeds $500,000,000. For more information, please see the sections titled “Summary—Impact of the Business Combination on the Company’s Public Float” and “Unaudited Pro Forma Condensed Combined Financial Information.”

 

 

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Q: What is the impact on relative stock ownership if a substantial number of our Public Stockholders vote in favor of the Business Combination Proposal and exercise their redemption rights?

A: Our Public Stockholders are not required to vote “FOR” 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 Stockholders are reduced as a result of redemptions by Public Stockholders.

If a Public Stockholder exercises its redemption rights, such exercise will not result in the loss of any warrants that it may hold. We cannot predict the ultimate value of the Company Warrants following the consummation of the Business Combination, but assuming that 100% or 45,000,000 shares of Class A Stock held by our Public Stockholders were redeemed, the 9,000,000 retained outstanding Public Warrants would have an aggregate value of $[●], based on the price per Public Warrant of $[●] on [●], 2021, the most recent practicable date prior to the date of this proxy statement/prospectus/consent solicitation statement. In addition, on [●], 2021, the most recent practicable date prior to the date of this proxy statement/prospectus/consent solicitation statement, the price per share of Class A Stock closed at $[●]. If the shares of Class A Stock are trading above the exercise price of $11.50 per warrant, the warrants are considered to be “in the money” and are therefore more likely to be exercised by the holders thereof (when they become exercisable). This in turn increases the risk to non-redeeming stockholders that the warrants will be exercised, which would result in immediate dilution to the non-redeeming stockholders.

In each of the no redemption, illustrative redemption, contractual maximum redemption and charter redemption limitation scenarios as described below, the residual equity value owned by non-redeeming stockholders, taking into account the respective redemption amounts, is assumed to remain the deemed value of $10.00 per share as illustrated in the sensitivity table below. As a result of such redemption amounts and the assumed $10.00 per share value, the implied total equity value of the Company following the Business Combination (including the PIPE Investment), assuming no dilution from any Additional Dilution Sources, would be (a) $2,939 million in the no redemption scenario, (b) $2,864 million in the illustrative redemption scenario, (c) $2,789 million in the contractual maximum redemption scenario and (d) $2,494 million in the charter redemption limitation scenario. Additionally, the sensitivity table below sets forth (x) the potential additional dilutive impact of each of the Additional Dilution Sources in each redemption scenario, as described further in Notes 9 through 15 below, and (y) the effective underwriting fee incurred in connection with the Company IPO in each redemption scenario, as further described in Note 16 below.

 

Holders

  No
Redemption
Scenario(1)
    % of
Total
    Illustrative
Redemption
Scenario(2)
    % of
Total
    Contractual
Maximum
Redemption
Scenario(3)
    % of
Total
    Charter
Redemption
Limitation
Scenario(4)
    % of
Total
 

Public Stockholders

    45,000,000       15.3     37,498,480       13.1     29,998,784       10.8     499,980       0.2

Initial Stockholders (including Sponsor)(5)

    11,250,000       3.8     11,250,000       3.9     11,250,000       4.0     11,250,000       4.5

PIPE Investors(6)

    20,000,000       6.8     20,000,000       7.0     20,000,000       7.2     20,000,000       8.0

Sonder Equity Holders(7)

    217,660,300       74.1     217,660,300       76.0     217,660,300       78.0     217,660,300       87.3
 

 

 

   

 

 

   

 

 

   

 

 

   

 

 

   

 

 

   

 

 

   

 

 

 

Total Shares Outstanding Excluding Earnout Shares and Warrants

    293,910,300       100     286,408,780       100     278,909,084       100     249,410,280       100

Total Equity Value Post-Redemptions and PIPE Investment ($ in millions)

  $ 2,939       $ 2,864       $ 2,789       $ 2,494    

Per Share Value

  $ 10.00       $ 10.00       $ 10.00       $ 10.00    

 

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Additional Dilution Sources

  No
Redemption
Scenario(1)
    % of
Total(8)
    Illustrative
Redemption
Scenario(2)
    % of
Total(8)
    Contractual
Maximum
Redemption
Scenario(3)
    % of
Total(8)
    Charter
Redemption
Limitation
Scenario(4)
    % of
Total(8)
 

Earn Out Shares(9)

    14,500,000       4.7     14,500,000       4.8     14,500,000       4.9     14,500,000       5.5

Company Warrants

               

Public Warrants(10)

    9,000,000       3.0     9,000,000       3.0     9,000,000       3.1     9,000,000       3.5

Private Placement Warrants(11)

    5,500,000       1.8     5,500,000       1.9     5,500,000       1.9     5,500,000       2.2

Equity Incentive Plans

               

Management Equity Incentive Plan(12)

    14,401,605       4.7     14,034,030       4.7     13,666,545       4.7     12,221,104       4.7

Incentive Plan(13)

    35,269,236       10.7     34,369,054       10.7     33,469,090       10.7     29,929,234       10.7

Employee Stock Purchase Plan(14)

    5,878,206       2.0     5,728,176       2.0     5,578,182       2.0     4,988,206       2.0
 

 

 

   

 

 

   

 

 

   

 

 

   

 

 

   

 

 

   

 

 

   

 

 

 

Total Additional Dilution Sources(15)

    84,549,047       22.3     83,131,259       22.5     81,713,817       22.7     76,138,543       23.4

Deferred Discount

  No
Redemption
Scenario(1)
    % of
Trust
Account
    Illustrative
Redemption
Scenario(2)
    % of
Trust
Account
    Contractual
Maximum
Redemption
Scenario(3)
    % of
Trust
Account
    Charter
Redemption
Limitation
Scenario(4)
    % of
Trust
Account
 

Effective Deferred Discount(16)

  $ 15,750,000       3.5   $ 15,750,000       4.2   $ 15,750,000       5.25   $ 15,750,000       315.0

 

(1)

This scenario assumes that no Class A Stock is redeemed from our Public Stockholders.

(2)

This scenario assumes that approximately 7,501,520 shares of Class A Stock are redeemed by our Public Stockholders.

(3)

This scenario assumes that approximately 15,001,216 shares of Class A Stock are redeemed by our Public Stockholders, which, based on the amount of $450,018,248 in the Trust Account as of June 30, 2021, represents the maximum amount of redemptions that would still enable us to have sufficient cash to satisfy the cash closing conditions in the Merger Agreement.

(4)

This scenario assumes that approximately 44,500,020 shares of Class A Stock are redeemed by our Public Stockholders, which, based on the amount of $450,018,248 in the Trust Account as of June 30, 2021, represents the maximum amount of redemptions that would still enable us to have sufficient cash to satisfy the provision in the Current Company Certificate that prohibits us from redeeming shares of our Class A Stock in an amount that would result in our failure to have net tangible assets equaling or exceeding $5,000,001.

(5)

This row excludes 4,000,000 shares of Class A Stock, which will be reclassified into Common Stock upon the effectiveness of the Amended and Restated Certificate of Incorporation, to be purchased under the Sponsor Subscription Agreement as part of the PIPE Investment.

(6)

This row includes 4,000,000 shares of Class A Stock, which will be reclassified into Common Stock upon the effectiveness of the Amended and Restated Certificate of Incorporation, to be purchased under the Sponsor Subscription Agreement as part of the PIPE Investment.

(7)

This row assumes (i) inclusion of the Rollover Options, assuming an Option Exchange Ratio equal to the Per Share Sonder Common Stock Consideration and excluding any additional Discounted Earn Out Option Amount, which will be determined on or prior to the consummation of the Business Combination (please see the section titled “Summary—Treatment of Sonder Equity Awards”), and (ii) the exercise of all outstanding Sonder Warrants and the conversion of all outstanding Sonder Convertible Notes into Common Stock in connection with the consummation of the Business Combination. This row excludes up to 14,500,000 of Earn Out Shares that are issuable to Sonder Securityholders upon the realization of all of the benchmark share prices in the earn out.

(8)

The Percentage of Total with respect to each Additional Dilution Source set forth below, including the Total Additional Dilution Sources, includes the full amount of shares issued with respect to the applicable Additional Dilution Source in both the numerator and denominator. For example, in the illustrative redemption scenario, the Percentage of Total with respect to the Incentive Plan would be calculated as follows: (a) 34,369,054 shares issued pursuant to the Incentive Plan (reflecting 12.0% of the previously outstanding 286,408,780 shares); divided by (b) (i) 286,408,780 shares (the number of shares outstanding prior to any issuance pursuant to the Incentive Plan) plus (ii) 34,369,054 shares issued pursuant to the Incentive Plan.

(9)

This row assumes all 14,500,000 Earn Out Shares are issued to Sonder Securityholders and assumes that no additional shares of Post-Combination Company Stock are issued between the closing of the Business Combination and the realization of all of the benchmark share prices in the earn out. Percentages in this row represent (a) the 14,500,000 Earn Out Shares divided by (b) (i) the amounts included in the row titled “Total Shares Outstanding Excluding Earnout Shares and Warrants” plus (ii) 14,500,000 Earn Out Shares.

(10)

This row assumes exercise of all Public Warrants to purchase 9,000,000 shares of Common Stock (following the reclassification of Class A Stock to Common Stock upon the effectiveness of the Amended and Restated Certificate of Incorporation). Percentages in this row represent (a) the 9,000,000 shares of Common Stock underlying the Public Warrants divided by (b) (i) the amounts included in the row titled “Total Shares Outstanding Excluding Earnout Shares and Warrants” plus (ii) 9,000,000 shares of Common Stock underlying the Public Warrants.

 

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(11)

This row assumes exercise of all Private Placement Warrants to purchase 5,500,000 shares of Common Stock (following the reclassification of Class A Stock to Common Stock upon the effectiveness of the Amended and Restated Certificate of Incorporation). Percentages in this row represent (a) the 5,500,000 shares of Common Stock underlying the Private Placement Warrants divided by (b) (i) the amounts included in the row titled “Total Shares Outstanding Excluding Earnout Shares and Warrants” plus (ii) 5,500,000 shares of Common Stock underlying the Private Placement Warrants.

(12)

This row assumes the issuance of all shares of Common Stock reserved for issuance under the Management Equity Incentive Plan, which equals 14,401,605 shares of Common Stock in the no redemption scenario, 14,034,030 shares of Common Stock in the illustrative redemption scenario, 13,666,545 shares of Common Stock in the contractual maximum redemption scenario or 12,221,104 shares of Common Stock in the charter redemption limitation scenario, in each case, following the consummation of the Business Combination. Percentages in this row represent (a) the foregoing share amounts, as applicable, divided by (b) (i) the amounts included in the row titled “Total Shares Outstanding Excluding Earnout Shares and Warrants” plus (ii) 14,401,605 shares of Common Stock in the no redemption scenario, 14,034,030 shares of Common Stock in the illustrative redemption scenario, 13,666,545 shares of Common Stock in the contractual maximum redemption scenario or 12,221,104 shares of Common Stock in the charter redemption limitation scenario.

(13)

This row assumes the issuance of all shares of Common Stock reserved for issuance under the Incentive Plan, which equals 35,269,236 shares of Common Stock in the no redemption scenario, 34,369,054 shares of Common Stock in the illustrative redemption scenario, 33,469,090 shares of Common Stock in the contractual maximum redemption scenario or 29,929,234 shares of Common Stock in the charter redemption limitation scenario, in each case, following the consummation of the Business Combination. Percentages in this row represent (a) the foregoing share amounts, as applicable, divided by (b) (i) the amounts included in the row titled “Total Shares Outstanding Excluding Earnout Shares and Warrants” plus (ii) 35,269,236 shares of Common Stock in the no redemption scenario, 34,369,054 shares of Common Stock in the illustrative redemption scenario, 33,469,090 shares of Common Stock in the contractual maximum redemption scenario or 29,929,234 shares of Common Stock in the charter redemption limitation scenario.

(14)

This row assumes the issuance of all shares of Common Stock reserved for issuance under the ESPP, which equals 5,878,206 shares of Common Stock in the no redemption scenario, 5,728,176 shares of Common Stock in the illustrative redemption scenario, 5,578,182 shares of Common Stock in the contractual maximum redemption scenario or 4,988,206 shares of Common Stock in the charter redemption limitation scenario, in each case, following the consummation of the Business Combination. Percentages in this row represent (a) the foregoing share amounts, as applicable, divided by (b) (i) the amounts included in the row titled “Total Shares Outstanding Excluding Earnout Shares and Warrants” plus (ii) 5,878,206 shares of Common Stock in the no redemption scenario, 5,728,176 shares of Common Stock in the illustrative redemption scenario, 5,578,182 shares of Common Stock in the contractual maximum redemption scenario or 4,988,206 shares of Common Stock in the charter redemption limitation scenario.

(15)

This row assumes the issuance of all shares of Common Stock in connection with each of the Additional Dilution Sources, as described further in Notes 9 through 14 above, which equals 84,549,047 shares of Common Stock in the no redemption scenario, 83,131,259 shares of Common Stock in the illustrative redemption scenario, 81,713,817 shares of Common Stock in the contractual maximum redemption scenario or 76,138,543 shares of Common Stock in the charter redemption limitation scenario, in each case, following the consummation of the Business Combination. Percentages in this row represent (a) the foregoing share amounts, as applicable, divided by (b) (i) the amounts included in the row titled “Total Shares Outstanding Excluding Earnout Shares and Warrants” plus (ii) 84,549,047 shares of Common Stock in the no redemption scenario, 83,131,259 shares of Common Stock in the illustrative redemption scenario, 81,713,817 shares of Common Stock in the contractual maximum redemption scenario or 76,138,543 shares of Common Stock in the charter redemption limitation scenario.

(16)

Reflects the Deferred Discount of $15,750,000 incurred in connection with the Company IPO. The level of redemption impacts the effective Deferred Discount incurred in connection with the Company IPO. In the no redemption scenario, the effective Deferred Discount is based on $450,018,248 in the Trust Account. In the illustrative redemption scenario, the effective Deferred Discount is based on $375,000,006 in the Trust Account. In the contractual maximum redemption scenario, the effective Deferred Discount is based on $300,000,005 in the Trust Account. In the charter redemption limitation scenario, the effective Deferred Discount is based on $5,000,003 in the trust account.

The foregoing table is provided for illustrative purposes only and there can be no assurance that the Post-Combination Company’s Common Stock will trade at the illustrative per share values set forth therein, regardless of the levels of redemption.

Q: Will the Company obtain new financing in connection with the Business Combination?

A: Yes. The Company will use the proceeds from the PIPE Investment, together with the funds in the Trust Account, to fund the cash consideration to be contributed to Sonder in the Business Combination, and to pay certain transaction expenses. The PIPE Investment is contingent upon, among other things, stockholder approval of the Business Combination Proposal and the closing of the Business Combination. The Company does not anticipate obtaining any new debt financing to fund the Business Combination.

 

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Q: Are there any arrangements to help ensure that the Company will have sufficient funds, together with the proceeds in its Trust Account, to fund the aggregate purchase price?

A: Unless waived by Sonder, the Merger Agreement provides that the obligation of Sonder to consummate the Business Combination is conditioned on the total of (i) the amount in the Trust Account, after giving effect to redemptions of Public Shares, (ii) the proceeds from the PIPE Investment and (iii) all funds held by us outside of the Trust Account and immediately available to us, equaling or exceeding $500,000,000.

The PIPE Investors have agreed to purchase approximately 20,000,000 shares of Class A Stock (which will be reclassified into Common Stock upon the effectiveness of the Amended and Restated Certificate of Incorporation) in the aggregate in the PIPE Investment at a price of $10.00 per share (subject to customary terms and conditions, including the closing of the Business Combination) for gross proceeds to the Company of approximately $200,000,000 pursuant to Subscription Agreements entered into at the signing of the Business Combination.

The Company did not consider financing arrangements other than the PIPE Investment, as the Company believes that cash generated from the additional equity invested in connection with the PIPE Investment is preferable to other financing arrangements.

Q: Why is the Company proposing the Nasdaq Proposal?

A: We are proposing the Nasdaq Proposal in order to comply with Nasdaq Listing Rules 5635(a) and (d), which require stockholder approval of certain transactions that result in the issuance of 20% or more of the outstanding voting power or shares of Common Stock outstanding before the issuance of stock or securities.

In connection with the Business Combination and the PIPE Investment, we expect to issue approximately 237,660,300 shares of Post-Combination Company Stock, which (a) includes 20,000,000 shares of Class A Stock (which will be reclassified into Common Stock upon the effectiveness of the Amended and Restated Certificate of Incorporation) to be issued to the PIPE Investors pursuant to the Subscription Agreements, (b) assumes the issuance of approximately 28,898,199 shares of Common Stock related to the exercise of Rollover Options based on Sonder’s capitalization as of June 30, 2021 and (c) assumes approximately 37,208,921 shares of Post-Combination Company Special Voting Common Stock to be issued in the Business Combination (each of which corresponds to a share of Common Stock reserved for issuance by the Company upon the exchange of the Post-Combination Canada Exchangeable Common Shares corresponding to such share of Post-Combination Company Special Voting Common Stock) based on Sonder’s capitalization as of June 30, 2021. Because we may issue 20% or more of our outstanding common stock when including the Per Share Sonder Company Stock Consideration and Per Share Sonder Special Voting Stock Consideration, we are required to obtain stockholder approval of such issuance pursuant to Nasdaq Listing Rules 5635(a) and (d). For more information, please see the section titled “Proposal No. 2—The Nasdaq Proposal.”

Q: Why is the Company proposing the Charter Proposal?

A: The Amended and Restated Certificate of Incorporation that we are asking our stockholders to adopt in connection with the Business Combination (the “Charter Proposal” or “Proposal No. 3”) provides for certain amendments to the Current Company Certificate to effect the Business Combination. Pursuant to Delaware law and the Merger Agreement, we are required to submit the Charter Proposal to our stockholders for adoption. For additional information please see the section titled “Proposal No. 3—The Charter Proposal.”

Q: Why is the Company proposing the Governance Proposals?

A: As required by applicable SEC guidance, we are requesting that our stockholders vote upon, on a non-binding advisory basis, a proposal to approve certain governance provisions contained in the Amended and

 

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Restated Certificate of Incorporation that materially affect stockholder rights. This separate vote is not otherwise required by Delaware law separate and apart from Proposal No. 3, but pursuant to SEC guidance, we are required to submit these provisions to its stockholders separately for approval. However, the stockholder vote regarding this proposal is an advisory vote, and is not binding on us or our Board (separate and apart from the approval of the Charter Proposal). Furthermore, the Business Combination is not conditioned on the separate approval of the Governance Proposals (separate and apart from approval of the Charter Proposal). For additional information, please see the section titled “Proposal No. 4—The Governance Proposals.

Q: Why is the Company proposing the Management Equity Incentive Plan Proposal?

A: The Management Equity Incentive Plan will enable the Post-Combination Company to grant equity awards based on certain triggering events based on the terms of the Management Equity Incentive Plan. The Post-Combination Company anticipates that the Post-Combination Company will use these as performance-driven equity awards as an incentive and retention tool as we shift the Sonder business to a public company and compete for talent and drive expansion. The Management Equity Incentive Plan will be adopted following the consummation of the Business Combination. For additional information, please see the section titled “Proposal No. 5—The Management Equity Incentive Plan Proposal.”

Q: Why is the Company proposing the Incentive Plan Proposal?

A: The Incentive Plan is intended to replace the Sonder 2019 Equity Incentive Plan, as amended, which will expire as to future grants as of the effective date of the Merger. Approval of the Incentive Plan will allow the Post-Combination Company to provide equity awards as part of the Post-Combination Company compensation program, an important tool for motivating, attracting and retaining talented employees and for creating stockholder value. The Incentive Plan will be adopted following the consummation of the Business Combination. For additional information, please see the section titled “Proposal No. 6—The Incentive Plan Proposal.

Q: Why is the Company proposing the ESPP Proposal?

A: The ESPP will provide eligible employees an opportunity to purchase shares of Common Stock at a discount through accumulated contributions of their earned compensation. The Board has determined that offering an employee stock purchase plan is important to the Post-Combination Company’s ability to compete for talent. The ESPP will become a significant part of the Post-Combination Company’s overall equity compensation strategy (especially with respect to the Post-Combination Company’s nonexecutive employees) if it is approved by our stockholders. The ESPP will be adopted following the consummation of the Business Combination. For additional information, please see the section titled “Proposal No. 7—The ESPP Proposal.”

Q: Why is the Company proposing the Director Election Proposal?

A: The Company believes it is in the best interests of stockholders to elect directors in 2021. For additional information, please see the section titled “Proposal No. 8—The Director Election Proposal”.

Q: Why is the Company proposing the Adjournment Proposal?

A: We are proposing the Adjournment Proposal to allow the chairman of the Special Meeting to adjourn the Special Meeting to a later date or dates, if necessary, to permit further solicitation of proxies in the event that there are insufficient votes for, or otherwise in connection with, the approval of the Business Combination Proposal, the Nasdaq Proposal, the Charter Proposal, the Management Equity Incentive Plan, the Incentive Plan Proposal, the ESPP Proposal or the Director Election Proposal but no other proposal if the Business Combination Proposal, the Nasdaq Proposal, the Charter Proposal, the Management Equity Incentive Plan Proposal, the Incentive Plan Proposal, the ESPP Proposal and the Director Election Proposal are approved. For additional information, please see the section titled “Proposal No. 9—The Adjournment Proposal.”

 

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Q: What happens if I sell my shares of Class A Stock before the Special Meeting?

A: The record date for the Special Meeting is earlier than the date that the Business Combination is expected to be completed. If you transfer your shares of Class A Stock after the record date, but before the Special Meeting, unless the transferee obtains from you a proxy to vote those shares, you will retain your right to vote at the Special Meeting. However, you will not be able to seek redemption of your shares of Class A Stock because you will no longer be able to deliver them for cancellation upon consummation of the Business Combination. If you transfer your shares of Class A Stock prior to the record date, you will have no right to vote those shares at the Special Meeting or redeem those shares for a pro rata portion of the proceeds held in our Trust Account.

Q: What vote is required to approve the proposals presented at the Special Meeting?

A: The approval of the Business Combination Proposal requires the affirmative vote of at least a majority of the votes cast by holders of outstanding shares of our Common Stock represented in person via the virtual meeting platform or by proxy and entitled to vote thereon at the Special Meeting. Because our Initial Stockholders have agreed to vote the shares of Common Stock they own in favor of the Business Combination Proposal (which amount constitutes approximately 20% of our outstanding shares of Common Stock), approximately 38% of our Common Stock held by our Public Stockholders will need to vote in favor of the Business Combination Proposal for the Business Combination Proposal to be approved (assuming all of the outstanding shares of Common Stock are represented in person via the virtual meeting platform or by proxy, are entitled to vote at the Special Meeting and vote on the Business Combination Proposal). Failure to vote by proxy or to vote in person via the virtual meeting platform at the Special Meeting and broker non-votes will have no effect on the Business Combination Proposal. Abstentions will be counted in connection with the determination of whether a valid quorum is established but will have no effect on the Business Combination Proposal.

The approval of the Nasdaq Proposal requires the affirmative vote of holders of at least a majority of the votes cast by holders of outstanding shares of our Common Stock represented in person via the virtual meeting platform or by proxy and entitled to vote thereon at the Special Meeting. Failure to vote by proxy or to vote in person via the virtual meeting platform at the Special Meeting and broker non-votes will have no effect on the Nasdaq Proposal. Abstentions will be counted in connection with the determination of whether a valid quorum is established but will have no effect on the Nasdaq Proposal.

The approval of the Charter Proposal requires (i) the affirmative vote of holders of a majority of our outstanding shares of Common Stock entitled to vote thereon at the Special Meeting and (ii) the affirmative vote of holders of a majority of our outstanding shares of Class F Stock, voting separately as a single class, entitled to vote thereon at the Special Meeting. Accordingly, a Company stockholder’s failure to vote by proxy or to vote in person via the virtual meeting platform at the Special Meeting, as well as an abstention from voting and a broker non-vote with regard to the Charter Proposal will have the same effect as a vote “AGAINST” such Charter Proposal.

The approval of the Governance Proposals requires the affirmative vote of at least a majority of the votes cast by holders of our outstanding shares of Common Stock represented in person via the virtual meeting platform or by proxy and entitled to vote thereon at the Special Meeting. Accordingly, a Company stockholder’s failure to vote by proxy or to vote in person via the virtual meeting platform at the Special Meeting, as well as an abstention from voting and a broker non-vote with regard to the Governance Proposals will have no effect on the Governance Proposals. Abstentions will be counted in connection with the determination of whether a valid quorum is established but will have no effect on the Governance Proposals.

The approval of the Management Equity Incentive Plan Proposal requires the affirmative vote of a majority of the votes cast by holders of our outstanding shares of Common Stock represented in person via the virtual meeting platform or by proxy and entitled to vote thereon at the Special Meeting. Accordingly, a Company stockholder’s failure to vote by proxy or to vote in person via the virtual meeting platform at the Special Meeting, as well as a broker non-vote with regard to the Management Equity Incentive Plan Proposal will have no effect on the

 

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Management Equity Incentive Plan Proposal. Abstentions will be counted in connection with the determination of whether a valid quorum is established but will have no effect on the Management Equity Incentive Plan Proposal.

The approval of the Incentive Plan Proposal requires the affirmative vote of a majority of the votes cast by holders of our outstanding shares of Common Stock represented in person via the virtual meeting platform or by proxy and entitled to vote thereon at the Special Meeting. Accordingly, a Company stockholder’s failure to vote by proxy or to vote in person via the virtual meeting platform at the Special Meeting, as well as a broker non-vote with regard to the Incentive Plan Proposal will have no effect on the Incentive Plan Proposal. Abstentions will be counted in connection with the determination of whether a valid quorum is established but will have no effect on the Incentive Plan Proposal.

The approval of the ESPP Proposal requires the affirmative vote of a majority of the votes cast by holders of our outstanding shares of Common Stock represented in person via the virtual meeting platform or by proxy and entitled to vote thereon at the Special Meeting. Accordingly, a Company stockholder’s failure to vote by proxy or to vote in person via the virtual meeting platform at the Special Meeting, as well as a broker non-vote with regard to the ESPP Proposal will have no effect on the ESPP Proposal. Abstentions will be counted in connection with determination of whether a valid quorum is established but will have no effect on the ESPP Proposal.

For purposes of the Director Election Proposal, if a quorum is present, directors are elected by a plurality of the votes cast by holders of our outstanding shares of Class F Stock, voting separately as a single class, in person via the virtual meeting platform or by proxy. This means that the four director nominees who receive the most affirmative votes will be elected. Votes marked “FOR” a nominee will be counted in favor of that nominee. Proxies will have full discretion to cast votes for other persons in the event any nominee is unable to serve. Failure to vote by proxy or to vote in person via the virtual meeting platform at the Special Meeting, abstentions and broker non-votes will have no effect on the vote.

The approval of the Adjournment Proposal requires the affirmative vote of a majority of the votes cast by holders of outstanding shares of our Common Stock represented in person via the virtual meeting platform or by proxy and entitled to vote thereon at the Special Meeting. Accordingly, a Company stockholder’s failure to vote by proxy or to vote in person via the virtual meeting platform at the Special Meeting, as well as a broker non-vote with regard to the Adjournment Proposal will have no effect on the Adjournment Proposal. Abstentions will be counted in connection with the determination of whether a valid quorum is established but will have no effect on the Adjournment Proposal.

Q: What happens if the Business Combination Proposal is not approved?

A: Unless we amend our Current Company Certificate (which requires the affirmative vote of 65% of all then outstanding shares of Class A Stock) and amend certain other agreements into which we have entered to extend the life of the Company, if the Business Combination Proposal is not approved and we do not consummate an initial business combination by January 22, 2023, we will be required to dissolve and liquidate the Trust Account.

Q: How many votes do I have at the Special Meeting?

A: Our stockholders are entitled to one vote on each proposal presented at the Special Meeting for each share of Common Stock held of record as of [●], 2021, the record date for the Special Meeting, except that only the Class F Stock is entitled to vote on the Director Election Proposal. As of the close of business on the record date, there were [●] outstanding shares of Common Stock.

Q: What constitutes a quorum at the Special Meeting?

A: A majority of the issued and outstanding shares of Common Stock entitled to vote as of the record date at the Special Meeting must be present, in person via the virtual meeting platform or represented by proxy, at the

 

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Special Meeting to constitute a quorum and in order to conduct business at the Special Meeting. Abstentions will be counted as present for the purpose of determining a quorum. Our Initial Stockholders, who currently own 20% of our issued and outstanding shares of Common Stock, will count towards this quorum. In the absence of a quorum, the chairman of the Special Meeting has power to adjourn the Special Meeting. As of the record date for the Special Meeting, [●] shares of Common Stock would be required to achieve a quorum.

Q: How will the Company’s Sponsor, directors and officers vote?

A: Prior to the Company IPO, we entered into agreements with our Sponsor and each of our directors and officers, pursuant to which each agreed to vote any shares of Common Stock owned by them in favor of the Business Combination Proposal. None of our Sponsor, directors or officers has purchased any shares of our Common Stock during or after the Company IPO and, as of the date of this proxy statement/prospectus/consent solicitation statement, neither we nor our Sponsor, directors or officers have entered into agreements, and are not currently in negotiations, to purchase shares prior to the consummation of the Business Combination. Currently, our Initial Stockholders own 20% of our issued and outstanding shares of Common Stock, including all of the Founder Shares, and will be able to vote all such shares at the Special Meeting.

Q: What interests do the Sponsor and the Company’s current officers and directors have in the Business Combination?

A: The Sponsor, certain members of our Board and our officers may have interests in the Business Combination that are different from or in addition to (and which may conflict with) your interests. You should take these interests into account in deciding whether to approve the Business Combination. These interests include:

 

   

the fact that our Initial Stockholders have agreed not to redeem any of the Founder Shares in connection with a stockholder vote to approve a proposed initial business combination;

 

   

the fact that our Initial Stockholders have agreed to waive their rights to conversion price adjustments with respect to any Founder Shares they may hold in connection with the consummation of the Business Combination. Therefore, shares of Class F Stock held by the Initial Stockholders will convert on a one-for-one basis in connection with the consummation of the Business Combination (including the PIPE Investment);

 

   

the fact that our Sponsor paid an aggregate of $25,000 for 11,500,000 Founder Shares and (after giving effect to the cancellation of 250,000 Founder Shares on March 7, 2021) the remaining 11,250,000 Founder Shares will have a significantly higher value at the time of the Business Combination, which if unrestricted and freely tradable would be valued at approximately $112.5 million but, given the restrictions on such shares, we believe such shares have less value;

 

   

the fact that given the differential in the purchase price that our Sponsor paid for the Founder Shares as compared to the price of the Public Units sold in the Company IPO and the substantial number of shares of Common Stock that our Sponsor will receive upon conversion of the Founder Shares in connection with the Business Combination, our Sponsor and its affiliates may earn a positive rate of return on their investment even if the Common Stock trades below the price initially paid for the Public Units in the Company IPO and the Public Stockholders experience a negative rate of return following the completion of the Business Combination;

 

   

the fact that our Initial Stockholders have agreed to waive their rights to liquidating distributions from the Trust Account with respect to their Founder Shares if we fail to complete an initial business combination by January 22, 2023;

 

   

the fact that our Sponsor paid an aggregate of approximately $11,000,000 for its 5,500,000 Private Placement Warrants to purchase shares of Class A Stock, and that such Private Placement Warrants will expire worthless if an initial business combination is not consummated by January 22, 2023. The

 

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Private Placement Warrants are identical to the Public Warrants sold as part of the Public Units issued in the Company IPO except that, so long as they are held by our Sponsor or its permitted transferees: (i) they will not be redeemable by us (except as set forth under “Description of Securities—Warrants—Public Warrants—Redemption of Public Warrants for Cash” and “—Redemption of Public Warrants for Class A Stock”); (ii) they (including the Class A Stock issuable upon exercise of these warrants) may not, subject to certain limited exceptions, be transferred, assigned or sold by our Sponsor until 30 days after the completion of an initial business combination; (iii) they may be exercised by the holders on a cashless basis; and (iv) they are subject to registration rights. For addition information regarding the Private Placement Warrants and the Public Warrants, please see “Description of Securities—Warrants—Public Warrants—Redemption of Public Warrants for Cash” and “—Redemption of Public Warrants for Class A Stock”;

 

   

the continued right of our Sponsor to hold our Class A Stock and the shares of Class A Stock to be issued to our Sponsor upon exercise of its Private Placement Warrants following the Business Combination, subject to certain lock-up periods;

 

   

the fact that if the Trust Account is liquidated, including in the event we are unable to complete an initial business combination within the required time period, our Sponsor has agreed to indemnify us 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 we have entered into an acquisition agreement or claims of any third party (other than our independent public accountants) for services rendered or products sold to us, 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 continued indemnification of our existing directors and officers and the continuation of our directors’ and officers’ liability insurance after the Business Combination;

 

   

the fact that, in exchange for serving on the Board, each of our independent directors, Messrs. Bort, Cramer and Gatto, received a nominal economic interest through the transfer from our Sponsor of 25,000 Founder Shares at their original purchase price of $0.002 per share. If the Company fails to complete an initial business combination by January 22, 2023, these Founder Shares will become worthless. As a result, our independent directors may have a conflict of interest in determining whether a particular business is an appropriate business with which to effectuate the Company’s initial business combination;

 

   

the fact that our Sponsor, officers and directors will lose their entire investment in us and will not be reimbursed for any out-of-pocket expenses if an initial business combination is not consummated by January 22, 2023;

 

   

the fact that our Sponsor, officers and directors would hold the following number of shares in the Post-Combination Company at the closing of the Business Combination:

 

Name of Person/Entity

   Number of
shares of
Common
Stock
     Value of
Common
Stock(1)
 

Gores Metropoulos Sponsor II, LLC(2)

     15,175,000      $ 151,750,000  

Alec Gores(2)

     15,175,000      $ 151,750,000  

Dean Metropoulos

     0      $ 0  

Andrew McBride

     0      $ 0  

Randall Bort

     25,000      $ 250,000  

Michael Cramer

     25,000      $ 250,000  

Joseph Gatto

     25,000      $ 250,000  

 

(1)

Assumes a value of $10.00 per share, the deemed value of the Common Stock in the Business Combination.

(2)

Represents shares held by the Sponsor which is controlled indirectly by Mr. Gores. Mr. Gores may be deemed to beneficially own 11,175,000 shares of Class F Stock and 4,000,000 shares of Common Stock to be purchased under the Sponsor Subscription Agreement,

 

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  provided, however, that the Sponsor may choose to syndicate such shares pursuant to the Sponsor Subscription Agreement (and the Company currently expects that all such shares will be syndicated), and ultimately exercises voting and dispositive power of the securities held by the Sponsor. Voting and disposition decisions with respect to such securities are made by Mr. Gores. Mr. Gores disclaims beneficial ownership of these securities except to the extent of any pecuniary interest therein.

 

   

the fact that, at the closing of the Business Combination, we will enter into the Registration Rights Agreement with the Registration Rights Holders, which provides for registration rights to Registration Rights Holders and their permitted transferees;

 

   

the fact that we entered into a Subscription Agreement with our Sponsor, pursuant to which our Sponsor has committed to purchase 4,000,000 shares of Class A Stock (which will be reclassified into Common Stock upon the effectiveness of the Amended and Restated Certificate of Incorporation) in the PIPE Investment for an aggregate commitment of approximately $40,000,000, provided that our Sponsor has the right to syndicate the Class A Stock (which will be reclassified into Common Stock upon the effectiveness of the Amended and Restated Certificate of Incorporation) purchased under such Sponsor Subscription Agreement in advance of the closing of the Business Combination; and

 

   

the fact that we will reimburse our Sponsor for the fees and expenses it incurs in connection with the Business Combination.

In the aggregate, Sponsor and its affiliates have approximately $123,500,000 at risk that depends upon the completion of a business combination. Specifically, $112,500,000 of such amount is the value of the Sponsor’s and its affiliates’ Class F Stock (assuming a value of $10.00 per share, the deemed value of the Common Stock in the Business Combination), and $11,000,000 of such amount is the value of the Sponsor’s Private Placement Warrants (based on the purchase price of $2.00 per Private Placement Warrant). There are no fees contingent on a business combination payable to the Sponsor’s affiliates upon consummation of the Business Combination. The foregoing interests present a risk that the Sponsor and its affiliates will benefit from the completion of a business combination, including in a manner that may not be aligned with Public Stockholders. As such, the Sponsor may be incentivized to complete an acquisition of a less favorable target company or on terms less favorable to Public Stockholders rather than liquidate.

These interests may influence our Board in making their recommendation that you vote in favor of the approval of the Business Combination.

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

A: Yes. Although the Current Company Certificate does not require our Board to seek a third-party valuation or fairness opinion in connection with a business combination unless the target is affiliated with our Sponsor, directors or officers, Moelis delivered a written fairness opinion to our Board, dated April 29, 2021, to the effect that, as of the date of such opinion and based upon and subject to the assumptions, conditions and limitations set forth in the opinion, the consideration to be paid by the Company in the Business Combination was fair, from a financial point of view, to the Company.

Please see the section titled “The Business Combination—Opinion of the Company’s Financial Advisor” and the opinion of Moelis attached hereto as Annex H for additional information.

Q: What happens if I vote against the Business Combination Proposal?

A: If you vote against the Business Combination Proposal but the Business Combination Proposal still obtains the affirmative vote of a majority of the votes cast by holders of our outstanding shares of Common Stock represented in person via the virtual meeting platform or by proxy and entitled to vote thereon at the Special Meeting, then the Business Combination Proposal will be approved and, assuming the approval of the Nasdaq Proposal and the Charter Proposal and the satisfaction or waiver of the other conditions to closing, the Business Combination will be consummated in accordance with the terms of the Merger Agreement.

 

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If you vote against the Business Combination Proposal and the Business Combination Proposal does not obtain the affirmative vote of a majority of the votes cast by holders of our outstanding shares of Common Stock represented in person via the virtual meeting platform or by proxy and entitled to vote thereon at the Special Meeting, then the Business Combination Proposal will fail and we will not consummate the Business Combination. If we do not consummate the Business Combination, we may continue to try to complete an initial business combination with a different target business until January 22, 2023. Unless we amend our Current Company Certificate (which requires the affirmative vote of 65% of all then outstanding shares of Class A Stock) and amend certain other agreements into which we have entered to extend the life of the Company, if we fail to complete an initial business combination by January 22, 2023, we will be required to dissolve and liquidate the Trust Account by returning the then-remaining funds in such account to our Public Stockholders.

Q: Do I have redemption rights?

A: If you are a Public Stockholder, you may redeem your Public Shares for cash at the applicable redemption price per share equal to the quotient obtained by dividing (i) the aggregate amount on deposit in the Trust Account as of two business days prior to the consummation of the Business Combination, including interest not previously released to us to fund Regulatory Withdrawals and/or to pay its franchise and income taxes, by (ii) the total number of then-outstanding Public Shares; provided that we may not redeem any shares of Class A Stock issued in the Company IPO to the extent that such redemption would result in our failure to have net tangible assets (as determined in accordance with Rule 3a51-1(g)(1) of the Exchange Act) in excess of $5,000,000. A Public Stockholder, together with any of his, her or its affiliates or any other person with whom it is acting in concert or as a “group” (as defined under Section 13 of the Exchange Act), will be restricted from redeeming in the aggregate his, her or its shares or, if part of such a group, the group’s shares, in excess of 20% of the shares of Class A Stock included in the Public Units sold in the Company IPO. Holders of our outstanding Public Warrants do not have redemption rights in connection with the Business Combination. Our Sponsor, directors and officers have agreed to waive their redemption rights with respect to their shares of Common Stock in connection with the consummation of the Business Combination, and the Founder Shares will be excluded from the pro rata calculation used to determine the per-share redemption price. Our Initial Stockholders have also agreed to waive their right to a conversion price adjustment with respect to any shares of our Common Stock they may hold in connection with the consummation of the Business Combination. For illustrative purposes, based on the balance of the Trust Account of $450,018,248 as of June 30, 2021, the estimated per share redemption price would have been approximately $10.00. Additionally, shares properly tendered for redemption will only be redeemed if the Business Combination is consummated; otherwise holders of such shares will only be entitled to a pro rata portion of the Trust Account (including interest not previously released to the Company to fund Regulatory Withdrawals and/or to pay its franchise and income taxes) in connection with the liquidation of the Trust Account, unless we complete an alternative initial business combination prior to January 22, 2023 or we amend our Current Company Certificate (which requires the affirmative vote of 65% of all then outstanding shares of Class A Stock) and amend certain other agreements into which we have entered to extend the life of the Company.

Q: Can our Initial Stockholders redeem their Founder Shares in connection with consummation of the Business Combination?

A: No. Our Initial Stockholders, officers and other current directors have agreed to waive their redemption rights with respect to their Founder Shares and any Public Shares they may hold in connection with the consummation of the Business Combination.

Q: Is there a limit on the number of shares I may redeem?

A: Yes. A Public Stockholder, together with any affiliate of such stockholder or any other person with whom such stockholder is acting in concert or as a “group” (as defined under Section 13 of the Exchange Act), is restricted from exercising redemption rights with respect to more than an aggregate of 20% of the shares sold in

 

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the Company IPO. Accordingly, all shares in excess of 20% owned by a holder or “group” of holders will not be redeemed for cash. On the other hand, a Public Stockholder who holds less than 20% of the Public Shares and is not a member of a “group” may redeem all of the Public Shares held by such stockholder for cash. In addition, in no event will we redeem shares of our Class A Stock in an amount that would result in the Company’s failure to have net tangible assets equaling or exceeding $5,000,001. Other than the foregoing, we have no additional specified maximum redemption thresholds under our Current Company Certificate.

In no event is your ability to vote all of your shares (including those shares held by you or by a “group” in excess of 20% of the shares sold in the Company IPO) for or against the Business Combination restricted.

Each redemption of shares of Class A Stock by our Public Stockholders will reduce the amount in our Trust Account, which held cash and investment securities with a fair value of $450,018,248 as of June 30, 2021.

Q: Is there a limit on the total number of Public Shares that may be redeemed?

A: Yes. The Current Company Certificate provides that we may not redeem our Public Shares in an amount that would result in our failure to have net tangible assets in excess of $5,000,000 (such that we are not subject to the SEC’s “penny stock” rules) or any greater net tangible asset or cash requirement which may be contained in the Merger Agreement. Based on a value of $10.00 per share, up to 44,500,020 Public Shares may be redeemed under the Current Company Certificate. We refer to this as the charter redemption limitation scenario.

Q: Are there other redemption thresholds that affect the Business Combination?

A: Yes. The Merger Agreement also provides that the obligation of Sonder to consummate the Business Combination is conditioned on the total of (i) the amount in the Trust Account, after giving effect to redemptions of Public Shares, (ii) the proceeds from the PIPE Investment and (iii) all funds held by us outside of the Trust Account and immediately available to us, equaling or exceeding $500,000,000. As a result, we may be able to complete our proposed Business Combination even though a substantial portion of our Public Stockholders do not agree with the Business Combination and have redeemed their shares or have entered into privately negotiated agreements to sell their shares to our Sponsor, directors or officers or their affiliates. As of the date of this proxy statement/prospectus/consent solicitation statement, no agreements with respect to the private purchase of Public Shares by us or the persons described above have been entered into with any such investor or holder. We will file a Current Report on Form 8-K with the SEC to disclose private arrangements, if any, entered into or significant private purchases made by any of the aforementioned persons that would affect the vote on the Business Combination Proposal or other proposals (as described in this proxy statement/prospectus/consent solicitation statement) at the Special Meeting. Based on the amount of $450,018,248 in our Trust Account as of June 30, 2021, approximately 15,001,216 shares of Class A Stock may be redeemed and still enable us to have sufficient cash to satisfy the cash closing conditions in the Merger Agreement. We refer to this as the contractual maximum redemption scenario.

Q: Will how I vote affect my ability to exercise redemption rights?

A: No. You may exercise your redemption rights whether you vote your Public Shares for or against, or whether you abstain from voting on, the Business Combination Proposal, the Nasdaq Proposal, the Charter Proposal, the Governance Proposals or any other proposal described by this proxy statement/prospectus/consent solicitation statement. As a result, the Merger Agreement can be approved by stockholders who will redeem their shares and no longer remain stockholders, leaving stockholders who choose not to redeem their shares 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 Nasdaq.

Q: How do I exercise my redemption rights?

A: In order to exercise your redemption rights, you must (i) if you hold Public Units, separate the underlying Public Shares and Public Warrants, and (ii) prior to 5:00 P.M., Eastern Time on [●], 2021 (two business days

 

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before the Special Meeting), tender your shares physically or electronically and submit a request in writing that the Company redeem your Public Shares for cash to Computershare Trust Company, N.A., the Transfer Agent, at the following address:

Computershare Trust Company, N.A.

520 Pike Street, Suite 1305

Seattle, WA 98101

Attention: Joe Campbell

Email: joseph.campbell@computershare.com

A holder of the Public Shares, together with any affiliate of his or any other person with whom he is acting in concert or as a “group” (as defined in Section 13d-3 of the Exchange Act) will be restricted from seeking redemption rights with respect to more than 20% of the Public Shares included in the Public Units sold in the Company IPO. Accordingly, all Public Shares in excess of the aforementioned 20% threshold beneficially owned by a Public Stockholder or group will not be redeemed for cash. Additionally, you must identify to the Company the beneficial holder of the Public Shares being redeemed in order to validly redeem Public Shares.

Company stockholders 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. It is our understanding that Company stockholders should generally allot at least two weeks to obtain physical certificates from the Transfer Agent. However, we do not have any control over this process and it may take longer than two weeks. Company stockholders 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.

Company stockholders seeking to exercise their redemption rights, whether they are record holders or hold their shares in “street name” are required to either tender their certificates to the Transfer Agent prior to the date set forth in this proxy statement/prospectus/consent solicitation statement, or up to two business days prior to the vote on the proposal to approve the Business Combination at the Special Meeting, or to deliver their shares to the Transfer Agent electronically using Depository Trust Company’s (DTC) Deposit/Withdrawal At Custodian (DWAC) system, at such stockholder’s option. The requirement for physical or electronic delivery prior to the Special Meeting ensures that a redeeming stockholder’s election to redeem is irrevocable once the Business Combination is approved.

There is a nominal cost associated with the above-referenced tendering process and the act of certificating the shares or delivering them through the DWAC system. The Transfer Agent will typically charge a tendering broker a fee, and it is in the broker’s discretion whether or not to pass this cost on to the redeeming stockholder. However, this fee would be incurred regardless of whether or not stockholders seeking to exercise redemption rights are required to tender their shares, as the need to deliver shares is a requirement to exercising redemption rights, regardless of the timing of when such delivery must be effectuated.

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

A: The U.S. federal income tax consequences of the redemption depends on particular facts and circumstances. Please see the section titled “Material U.S. Federal Income Tax Considerations of the Business CombinationMaterial U.S. Federal Income Tax Considerations for Holders of Class A Stock” for additional information. You are urged to consult your tax advisors regarding the tax consequences of exercising your redemption rights.

Q: If I am a Public Warrant holder, can I exercise redemption rights with respect to my Public Warrants?

A: No. The holders of Public Warrants have no redemption rights with respect to such Public Warrants. However, if a holder of Public Warrants elects to exercise its redemption rights with respect to any Public Shares

 

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held by such holder, such exercise of redemption rights will not affect the holder’s entitlement to exercise its Public Warrants to purchase Class A Stock in accordance with the procedures set forth herein. Please see the section titled “Description of Securities—Warrants—Public Warrants” for more information regarding the procedure to be followed by holders of Public Warrants that wish to exercise their Public Warrants and purchase shares of Class A Stock.

Q: Do I have appraisal rights or dissenters’ rights if I object to the proposed Business Combination?

A: No. Appraisal rights or dissenters’ rights are not available to holders of shares of Common Stock in connection with the Business Combination.

Q: What happens to the funds held in the Trust Account upon consummation of the Business Combination?

A: If the Business Combination is consummated, the funds held in the Trust Account (together with the proceeds from the PIPE Investment) will be used to: (i) pay our Public Stockholders who properly exercise their redemption rights; (ii) pay $15,750,000 in deferred underwriting commissions to the underwriters of the Company IPO, in connection with the Business Combination; and (iii) pay certain other fees, costs and expenses (including regulatory fees, legal fees, accounting fees, printer fees and other professional fees) that were incurred by the Company and other parties to the Merger Agreement in connection with the transactions contemplated by the Merger Agreement, including the Business Combination, and pursuant to the terms of the Merger Agreement. Any remaining funds will be used by the Company for general corporate purposes.

Q: What conditions must be satisfied to complete the Business Combination?

A: There are a number of closing conditions in the Merger Agreement, including the termination or expiration of the applicable waiting period under the HSR Act, the adoption by the Sonder Stockholders of the Merger Agreement and the approval of the transactions contemplated thereby and the approval by the stockholders of the Company of the Business Combination Proposal, the Nasdaq Proposal, the Charter Proposal and the Director Election Proposal. The Company and the Sonder Supporting Stockholders with a sufficient number of votes to adopt the Merger Agreement and approve of the transactions contemplated thereby, including the Business Combination, entered into Voting and Support Agreements, pursuant to which, among other things, such Sonder Supporting Stockholders agreed to vote their shares of Sonder Stock in favor of the adoption of the Merger Agreement and the transactions contemplated thereby, including the Business Combination. For a summary of the conditions that must be satisfied or waived prior to consummation of the Business Combination, please see the section titled “The Merger Agreement and Related Agreements.

Q: What happens if the Business Combination is not consummated?

A: There are certain circumstances under which the Merger Agreement may be terminated. Please see the section titled “The Merger Agreement and Related Agreements” for information regarding the parties’ specific termination rights.

If we do not consummate the Business Combination, we may continue to try to complete an initial business combination with a different target business until January 22, 2023. Unless we amend the Current Company Certificate (which requires the affirmative vote of 65% of all then outstanding shares of Class A Stock) and amend certain other agreements into which we have entered to extend the life of the Company, if we fail to complete an initial business combination by January 22, 2023, we 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 our Public Shares, at a per-share price, payable in cash, equal to the aggregate amount then on deposit in the Trust Account, including interest not previously released to us to fund Regulatory Withdrawals and/or to pay its franchise and income taxes (less up to $100,000 of interest to pay dissolution expenses), divided by the

 

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number of then outstanding Public Shares, which redemption will completely extinguish our Public Stockholders’ rights as stockholders (including the right to receive further liquidating distributions, if any), subject to applicable law; and (iii) as promptly as reasonably possible following such redemption, subject to the approval of our remaining stockholders and our Board, dissolve and liquidate, subject in each case to our obligations under Delaware law to provide for claims of creditors and the requirements of other applicable law. In the event of such distribution, it is possible that the per share value of the residual assets remaining available for distribution (including Trust Account assets) will be less than the initial public offering price per unit in the Company IPO. Please see the section titled “Risk Factors—Risks Related to the Company and the Business Combination.”

Holders of our Founder Shares have waived any right to any liquidation distribution with respect to such shares. In addition, if we fail to complete an initial business combination by January 22, 2023, there will be no redemption rights or liquidating distributions with respect to our outstanding warrants, which will expire worthless unless we amend our Current Company Certificate and amend certain other agreements into which we have entered to extend the life of the Company.

Q: When is the Business Combination expected to be completed?

A: The closing of the Business Combination is expected to take place on or prior to the third business day following the satisfaction or waiver of the conditions described below in the subsection titled “The Merger Agreement and Related Agreements—The Merger Agreement—Conditions to Closing of the Business Combination.” Following the Closing of the Business Combination, Sonder will merge with and into First Merger Sub, with Sonder surviving the First Merger as the Surviving Corporation. Following the First Merger, the Surviving Corporation will merge with and into Second Merger Sub, with Second Merger Sub continuing as the Surviving Entity. The Mergers will become effective at the time and on the date specified in the certificate of mergers in accordance with the DGCL and the Delaware Limited Liability Company Act. The consummation of the Business Combination is expected to occur in the second half of 2021.

For a description of the conditions to the consummation of the Business Combination, see the section titled “The Merger Agreement and Related Agreements—The Merger Agreement—Conditions to Closing of the Business Combination.”

Q: Is the approval of the Sonder Stockholders required to consummate the Business Combination?

A: Yes. In order to consummate the Business Combination, the Sonder Stockholders holding (i) a majority of the outstanding shares of Sonder Stock, (ii) a majority of the outstanding shares of Sonder Preferred Stock and the Sonder Special Voting Preferred Stock, including a majority of the outstanding shares of the Sonder Senior Preferred Stock, (iii) a majority of the outstanding shares of the Sonder Special Voting Stock, (iv) a majority of the outstanding shares of Sonder Series C Preferred Stock, Sonder Series C-1 Preferred Stock and the Sonder Special Voting Series C Stock, including a majority of the outstanding shares of the Sonder Series C-1 Preferred Stock, (v) a majority of the outstanding shares of Sonder Series D Preferred Stock, Sonder Series D-1 Preferred Stock and the Sonder Special Voting Series D Stock, including a majority of the outstanding shares of the Sonder Series D-1 Preferred Stock and (vi) a majority of the outstanding shares of Sonder Series E Preferred Stock and the Sonder Special Voting Series E Stock (the majorities described in clauses “(i)” through “(vi),” together the “Sonder Requisite Approval”), must adopt the Merger Agreement. The Sonder Requisite Approval is the only vote of the holders of Sonder Stock required to approve and adopt the Business Combination.

On April 29, 2021, the Company and the Sonder Supporting Stockholders with a sufficient number of votes to achieve the Sonder Requisite Approval entered into Voting and Support Agreements, pursuant to which, among other things, such Sonder Supporting Stockholders agreed to vote their shares of Sonder Stock in favor of the adoption of the Merger Agreement and the transactions contemplated thereby, including the Business Combination, among other proposals. Sonder will solicit the written consent of Sonder Stockholders, including

 

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the Sonder Supporting Stockholders, to approve the Merger Agreement and the transactions contemplated thereby, including the Business Combination, among other proposals, prior to the consummation of the Business Combination.

Q: What do I need to do now?

A: You are urged to read carefully and consider the information contained in this proxy statement/prospectus/consent solicitation statement, including the Annexes, and to consider how the Business Combination will affect you as a stockholder. You should then vote as soon as possible in accordance with the instructions provided in this proxy statement/prospectus/consent solicitation statement and on the enclosed proxy card or, if you hold your shares through a brokerage firm, bank or other nominee, on the voting instruction form provided by the broker, bank or nominee.

Q: How do I vote?

A: If you were a holder of record of shares of our Common Stock on [●], 2021, the record date for the Special Meeting, you may vote with respect to the proposals in person via the virtual meeting platform at the Special Meeting, or by completing, signing, dating and returning the enclosed proxy card in the postage-paid envelope provided.

Voting by Mail. By signing the proxy card and returning it in the enclosed prepaid and addressed envelope, you are authorizing the individuals named on the proxy card to vote your shares at the Special Meeting in the manner you indicate. You are encouraged to sign and return the proxy card even if you plan to attend the Special Meeting so that your shares will be voted if you are unable to attend the Special Meeting. If you receive more than one proxy card, it is an indication that your shares are held in multiple accounts. Please sign and return all proxy cards to ensure that all of your shares are voted. Votes submitted by mail must be received by [●] on [●].

Voting at the Special Meeting via the Virtual Meeting Platform. If you attend the Special Meeting and plan to vote in person via the virtual meeting platform, you will be provided with explicit instructions on how to vote in person via the virtual meeting platform. If your shares are registered directly in your name, you are considered the stockholder of record and you have the right to vote in person via the virtual meeting platform at the Special Meeting. If you hold your shares in “street name,” which means your shares are held of record by a broker, bank or other nominee, you should follow the instructions provided by your broker, bank or nominee to ensure that votes related to the shares you beneficially own are properly counted. In this regard, you must provide the record holder of your shares with instructions on how to vote your shares or, if you wish to attend the Special Meeting and vote in person via the virtual meeting platform, you will need to contact your broker, bank or nominee to obtain a legal proxy that will authorize you to vote these shares. For additional information, please see the section titled “Special Meeting of the Stockholders of the Company in lieu of the 2021 Annual Meeting of the Company.”

Q: What will happen if I abstain from voting or fail to vote at the Special Meeting?

A: At the Special Meeting, we will count a properly executed proxy marked “ABSTAIN” with respect to a particular proposal as present for purposes of determining whether a quorum is present. For purposes of approval, a failure to vote or an abstention will have no effect on the Business Combination Proposal, the Nasdaq Proposal, the Governance Proposals, the Management Equity Incentive Plan Proposal, the Incentive Plan Proposal, the ESPP Proposal, the Director Election Proposal or the Adjournment Proposal; a failure to vote or abstention will have the same effect as a vote “AGAINST” the Charter Proposal.

Q: What will happen if I sign and return my proxy card without indicating how I wish to vote?

A: Signed and dated proxies we receive without an indication of how the stockholder intends to vote on a proposal will be voted “FOR” each proposal presented to the stockholders. The proxyholders may use their discretion to vote on any other matters that properly come before the Special Meeting.

 

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Q: If I am not going to attend the Special Meeting via the virtual meeting platform, should I return my proxy card instead?

A: Yes. Whether you plan to attend the Special Meeting or not, please read the enclosed proxy statement/prospectus/consent solicitation statement carefully, and vote your shares by completing, signing, dating and returning the enclosed proxy card in the postage-paid envelope provided.

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

A: No. Under the rules of various national and regional securities exchanges, your broker, bank, or nominee cannot vote your shares with respect to non-discretionary matters unless you provide instructions on how to vote in accordance with the information and procedures provided to you by your broker, bank, or nominee. We believe that all of the proposals presented to the stockholders at this Special Meeting will be considered non-discretionary and, therefore, your broker, bank, or nominee cannot vote your shares without your instruction on any of the proposals presented at the Special Meeting. If you do not provide instructions with your proxy, your broker, bank, or other nominee may deliver a proxy card expressly indicating that it is NOT voting your shares; this indication that a broker, bank, or nominee is not voting your shares is referred to as a “broker non-vote.” Broker non-votes will not be counted for the purposes of determining the existence of a quorum or for purposes of determining the number of votes cast at the Special Meeting. Your bank, broker, or other nominee can vote your shares only if you provide instructions on how to vote. You should instruct your broker to vote your shares in accordance with directions you provide.

Q: How will a broker non-vote impact the results of each proposal?

A: Broker non-votes will count as a vote “AGAINST” the Charter Proposal but will not have any effect on the outcome of any other proposals.

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

A: Yes. You may change your vote by sending a later-dated, signed proxy card to our Secretary at the address listed below so that it is received by our Secretary prior to the Special Meeting or attend the Special Meeting in person via the virtual meeting platform and vote. You also may revoke your proxy by sending a notice of revocation to our Secretary, which must be received by our Secretary prior to the Special Meeting.

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

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

Q: Who will solicit and pay the cost of soliciting proxies for the Special Meeting?

A: We will pay the cost of soliciting proxies for the Special Meeting. We have engaged Morrow Sodali LLC (“Morrow”) to assist in the solicitation of proxies for the Special Meeting. We have agreed to pay Morrow a fee of $27,250, 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. We will also reimburse banks, brokers and other custodians, nominees and fiduciaries representing beneficial owners of shares of our Common Stock for their expenses in forwarding soliciting materials to beneficial owners of shares of our Common Stock and in obtaining voting instructions from those owners. Our directors, officers and employees

 

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may also solicit proxies by telephone, by facsimile, by mail, on the Internet or in person. They will not be paid any additional amounts for soliciting proxies.

Q: Who can help answer my questions?

A: If you have questions about the proposals or if you need additional copies of this proxy statement/prospectus/consent solicitation statement or the enclosed proxy card you should contact:

Gores Metropoulos II, Inc.

6260 Lookout Road,

Boulder, CO 80301

(303) 531-3100

Email: jchou@gores.com

You may also contact the proxy solicitor for the Company at:

Morrow Sodali LLC

470 West Avenue

Stamford, Connecticut 06902

Individuals, please call toll-free: (800) 662-5200

Banks and brokerage, please call: (203) 658-9400

Email: GMII.info@investor.morrowsodali.com

To obtain timely delivery, Company stockholders must request the materials no later than [●], 2021, or five business days prior to the Special Meeting.

You may also obtain additional information about the Company from documents filed with the SEC by following the instructions in the section titled “Where You Can Find More Information.”

If you intend to seek redemption of your Public Shares, you will need to send a letter demanding redemption and deliver your Public Shares (either physically or electronically) to the Transfer Agent prior to the Special Meeting in accordance with the procedures detailed under the question “How do I exercise my redemption rights?” If you have questions regarding the certification of your position or delivery of your Public Shares, please contact the Transfer Agent:

Computershare Trust Company, N.A.

520 Pike Street, Suite 1305

Seattle, WA 98101

Attention: Joe Campbell

Email: joseph.campbell@computershare.com

 

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QUESTIONS AND ANSWERS ABOUT SONDER’S SOLICITATION OF WRITTEN CONSENTS

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

A: The Sonder Stockholders are being asked to (i) adopt the Merger Agreement and approve the transactions contemplated thereby, including the Business Combination and (ii) approve, on a non-binding advisory basis, each of the amendments described in Proposal No. 4 of this proxy statement/prospectus/consent solicitation statement by executing and delivering the written consent furnished with this proxy statement/prospectus/consent solicitation statement. As a result of the Business Combination, the Company will acquire Sonder. Subject to the terms of the Merger Agreement, holders of Sonder equity interests (and convertible securities) will be entitled to receive shares of Common Stock or Post-Combination Company Special Voting Common Stock at a deemed value of $10.00 per share as consideration following the Merger. For more information about the consideration payable to the holders of Sonder equity interests (and special voting securities), please see the section titled “The Business Combination—Consideration in the Business Combination” beginning on page 160 of this proxy statement/prospectus/consent solicitation statement.

A copy of the Merger Agreement is attached to this proxy statement/prospectus/consent solicitation statement as Annex A. This proxy statement/prospectus/consent solicitation statement and its Annexes contain important information about the proposed Business Combination and the solicitation of written consents. You should read this proxy statement/prospectus/consent solicitation statement and its Annexes carefully and in their entirety.

The Sonder Stockholders are encouraged to return their written consent as soon as possible after carefully reviewing this proxy statement/prospectus/consent solicitation statement and its Annexes.

Q: Who is entitled to act by written consent?

A: The Sonder Stockholders of record holding shares of Sonder Stock at the close of business on the record date of April 29, 2021 (the “Sonder Record Date”), will be notified of and be entitled to execute and deliver a written consent with respect to the written consent distributed with this proxy statement/prospectus/consent solicitation statement.

Q: How can I give my consent?

A: The Sonder Stockholders may give their consent by completing, dating and signing the written consent distributed with this proxy statement/prospectus/consent solicitation statement. The Sonder Stockholders may either electronically sign the written consent sent by Sonder to each Sonder Stockholder’s electronic address on record at Sonder or manually sign and email a scanned copy of the Sonder Stockholder’s signature page to Sonder’s legal advisor, Wilson Sonsini, at the following email address: aminor@wsgr.com.

Q: What is the deadline for returning my consent?

A: The targeted final date for the receipt of written consents (the “target date”) is currently 5:00 p.m., Pacific Time, on [●], 2021. Sonder reserves the right to extend the final date for the receipt of written consents beyond the target date. Any such extension may be made without notice to Sonder Stockholders. Once a sufficient number of consents to adopt the Merger Agreement and approve the transactions contemplated thereby, including the Business Combination, have been received, the consent solicitation will conclude. The delivery of the written consent by each of the Sonder Supporting Stockholders pursuant to the Support Agreements will be sufficient to adopt the Merger Agreement and approve the transactions contemplated thereby, including the Business Combination.

 

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Q: What approval is required to adopt the Merger Agreement?

A: In order to consummate the Business Combination, Sonder holders of (i) a majority of the outstanding shares of Sonder Stock, (ii) a majority of the outstanding shares of Sonder Preferred Stock and the Sonder Special Voting Preferred Stock, including a majority of the outstanding shares of the Sonder Senior Preferred Stock, (iii) a majority of the outstanding shares of the Sonder Special Voting Stock, (iv) a majority of the outstanding shares of Sonder Series C Preferred Stock, Sonder Series C-1 Preferred Stock and the Sonder Special Voting Series C Stock, including a majority of the outstanding shares of the Sonder Series C-1 Preferred Stock, (v) a majority of the outstanding shares of Sonder Series D Preferred Stock, Sonder Series D-1 Preferred Stock and the Sonder Special Voting Series D Stock, including a majority of the outstanding shares of the Sonder Series D-1 Preferred Stock and (vi) a majority of the outstanding shares of Sonder Series E Preferred Stock and the Sonder Special Voting Series E Stock (the majorities described in clauses “(i)” through “(vi),” together the “Sonder Requisite Approval”), must adopt the Merger Agreement. The Sonder Requisite Approval is the only vote of the holders of capital stock of Sonder required to adopt the Merger Agreement and approve the transactions contemplated thereby, including the Business Combination.

On April 29, 2021, the Company and the Sonder Supporting Stockholders with a sufficient number of votes to achieve the Sonder Requisite Approval entered into Voting and Support Agreements, pursuant to which, among other things, such Sonder Stockholders agreed to vote their shares of Sonder Stock in favor of adopting the Merger Agreement and approving the transactions contemplated thereby, including the Business Combination. Sonder will solicit the written consent of Sonder Stockholders, including the Supporting Sonder Stockholders, to adopt the Merger Agreement and approve the transactions contemplated thereby, including the Business Combination, prior to the consummation of the Business Combination.

Q: Can I dissent and require appraisal of my Sonder Stock?

If you are a Sonder Stockholder who does not deliver a written consent adopting the Merger Agreement and approving the transactions contemplated thereby, including the Business Combination, you will, if you comply with Section 262 of the DGCL, be entitled to appraisal rights. A summary description of Section 262 of the DGCL is attached as Annex L to this proxy statement/prospectus/consent solicitation statement. Failure to follow any of the statutory procedures set forth in Annex L will result in 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 Sonder after receiving a notice that appraisal rights are available to you, which notice will be sent to non-consenting Sonder Stockholders in the future. This proxy statement/prospectus/consent solicitation statement is not intended to constitute such a notice. Do not send in your demand before the date of such notice because a demand for appraisal made prior to the date of giving of such notice may not be effective to perfect your rights. For more information, see the section titled “Appraisal Rights” of this proxy statement/prospectus/consent solicitation statement.

Q: What are the material United States federal income tax consequences of the Business Combination to Sonder Stockholders?

The parties intend for the Mergers to be treated as an integrated transaction and together to constitute a single “reorganization” within the meaning of Section 368(a) of the U.S. Tax Code for U.S. federal income tax purposes. Provided that the Mergers qualify as a reorganization, no gain or loss will generally be recognized by a U.S. holder of Sonder Stock for U.S. federal income tax purposes on the exchange of its shares of Sonder Stock for Common Stock (including any Earn Out Shares) in the First Merger, except, in each case, with respect to cash received in lieu of fractional shares and imputed interest.

For a more complete discussion of the material U.S. federal income tax consequences of the Mergers, please carefully review the information set forth in the section titled “Material U.S. Federal Income Tax Considerations of the Business Combination—Material U.S. Federal Income Tax Considerations of the Mergers to U.S. Holders of Sonder Stock” of this proxy statement/prospectus/consent solicitation statement. The tax consequences of the

 

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Business Combination to any particular stockholder will depend on that stockholder’s particular facts and circumstances. Accordingly, you are urged to consult your own tax advisor as to the specific tax consequences of the Business Combination, including the effects of U.S. federal, state or local, or non-U.S. tax laws.

Q: Who should I contact if I have any questions about the consent solicitation?

A: If you have any questions about the Business Combination or how to execute your written consent electronically or if you need additional copies of this proxy statement/prospectus/consent solicitation statement or a replacement written consent, you should contact Wilson Sonsini, Sonder’s legal advisor, at aminor@wsgr.com.

 

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SUMMARY

This summary highlights selected information contained in this proxy statement/prospectus/consent solicitation statement and does not contain all of the information that is important to you. You should read carefully this entire proxy statement/prospectus/consent solicitation statement, including the Annexes and accompanying financial statements of the Company and Sonder, to fully understand the proposed Business Combination (as described below) before voting on the proposals to be considered at the Special Meeting (as described below). Please see the section titled “Where You Can Find More Information” beginning on page 459 of this proxy statement/prospectus/consent solicitation statement.

Unless otherwise specified, all share calculations assume (i) no exercise of redemption rights by our Public Stockholders, (ii) no inclusion of any shares issuable upon the exercise of the Company Warrants, (iii) no issuance of Earn Out Shares, (iv) an Option Exchange Ratio equal to the Per Share Company Common Stock Consideration (and excluding any Discounted Earn Out Option Amount), and (v) the issuance of all shares of Common Stock reserved for issuance upon the exchange of Post-Combination Canada Exchangeable Shares occurring following the Business Combination.

Company

The Company is a blank check company incorporated on July 21, 2020 as a Delaware corporation and formed for the purpose of effecting an initial business combination with one or more target businesses.

The Public Shares, Public Units and Public Warrants are traded on Nasdaq under the ticker symbols “GMII,” “GMIIU” and “GMIIW,” respectively. The Company intends to apply to continue the listing of its Common Stock (following the reclassification of Class A Stock into Common Stock upon the effectiveness of the Amended and Restated Certificate of Incorporation) and Public Warrants on Nasdaq under the symbols “SOND” and “SONDW,” respectively, upon the closing of the Business Combination.

The mailing address of the Company’s principal executive office is 6260 Lookout Road, Boulder, CO 80301 and its telephone number is (303) 531-3100.

First Merger Sub

First Merger Sub, a Delaware corporation, is a wholly-owned subsidiary of Second Merger Sub, formed by the Company on April 13, 2021, to consummate the Business Combination. In the Business Combination, First Merger Sub will merge with and into Sonder, with Sonder continuing as the Surviving Corporation.

The mailing address of First Merger Sub’s principal executive office is 6260 Lookout Road, Boulder, CO 80301.

Second Merger Sub

Second Merger Sub, a Delaware limited liability company, is a wholly-owned subsidiary of the Company, formed by the Company on April 13, 2021, to consummate the Business Combination. In the Business Combination, the Surviving Corporation will merge with and into Second Merger Sub, with Second Merger Sub continuing as the Surviving Entity.

The mailing address of Second Merger Sub’s principal executive office is 6260 Lookout Road, Boulder, CO 80301.


 

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Sonder

Sonder’s mission is to revolutionize hospitality through design and technology to make a world of better stays open to all. With its innovative end-to-end model, Sonder aims to provide better choice, comfort, reliability and a compelling price point across a wide variety of use cases—from one night to extended stays—for its diverse traveler types. Officially launched in 2014 and headquartered in San Francisco, California, Sonder’s unique product portfolio of Live and Contracted Units—from rooms to suites and apartments—now spans 39 cities in ten countries and three continents. Sonder works directly with real estate developers and property owners to lease, manage and operate spaces, providing guests with exceptionally designed accommodations. Sonder operates and manages each of its 250+ live properties using proprietary technology, delivering services to guests via the Sonder app which features self-service and 24/7 on-the-ground support.

Sonder has incurred net losses each year since its inception, including net losses of $152.5 million and $122.5 million for the six months ended June 30, 2021 and 2020, respectively, and $250.3 million and $178.2 million for the years ended December 31, 2020 and December 31, 2019, respectively. In addition, Sonder had an accumulated deficit of $672.9 million as of June 30, 2021. Sonder’s revenue was $78.8 million and $60.7 million for the six months ended June 30, 2021 and 2020, respectively, and was $115.7 million and $142.9 million for the years ended December 31, 2020 and 2019, respectively. Please see the section titled “Risk Factors—Risks Related to the Post-Combination Company’s Business—Sonder has a history of net losses and it may not be able to achieve or maintain profitability in the future” for additional information.

The mailing address of Sonder’s principal executive office is 101 15th Street, San Francisco, CA 94103 and its telephone number is (617) 300-0956.

The Business Combination

General

On April 29, 2021, the Company entered into the Merger Agreement with First Merger Sub, Second Merger Sub and Sonder. Pursuant to the Merger Agreement and in connection therewith, among other things and subject to the terms and conditions contained therein:

 

   

First Merger Sub will merge with and into Sonder, with Sonder continuing as the Surviving Corporation of the First Merger;

 

   

immediately following the First Merger and as part of the same overall transaction as the First Merger, the Surviving Corporation will merge with and into Second Merger Sub, with Second Merger Sub continuing as the Surviving Entity of the Second Merger;

 

   

in connection with the Business Combination, we will adopt the proposed Amended and Restated Certificate of Incorporation effective prior to the effective time of the First Merger;

 

   

in connection with the Business Combination, holders of shares of Sonder Common Stock (following the conversion of each issued and outstanding share of Sonder Preferred Stock and the Sonder Convertible Notes into shares of Sonder Common Stock prior to the effective time of the First Merger) will be entitled to receive a number of shares of newly-issued Common Stock equal to the Per Share Sonder Common Stock Consideration for each such share of Sonder Common Stock held by such holder immediately prior to the effective time of the First Merger. Holders of shares of Sonder Special Voting Common Stock will be entitled to receive a number of shares of newly-issued Post-Combination Company Special Voting Common Stock equal to the Per Share Sonder Special Voting Stock Consideration for each such share of Sonder Special Voting Common Stock held by such holder immediately prior to the effective time of the First Merger;

 

   

in connection with the Business Combination, each Sonder Stock Option, to the extent then outstanding and unexercised, will automatically be converted into an option, subject to the same terms and conditions


 

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as were applicable to the corresponding Sonder Stock Option prior to the closing of the Business Combination, to acquire a number of shares of Common Stock (rounded down to the nearest whole share) equal to (i) the number of shares of Sonder Common Stock subject to the Sonder Stock Option immediately prior to the effective time of the First Merger multiplied by (ii) the Option Exchange Ratio (rounded down to the nearest whole number of shares of Common Stock), at a per share exercise price equal to (x) the per share exercise price of the Sonder Stock Option immediately prior to the effective time of the First Merger divided by (y) the Option Exchange Ratio (rounded up to the nearest whole cent);

 

   

in connection with the Business Combination, each share of Sonder Canada Exchangeable Common Shares will be exchanged into a new series of the same class of virtually identical Post-Combination Canada Exchangeable Common Shares exchangeable for Common Stock upon the completion of the First Merger;

 

   

at the closing of the Business Combination, the Registration Rights Holders will enter into the Registration Rights Agreement, pursuant to which, (a) any (i) outstanding share of Common Stock or any Private Placement Warrants, (ii) shares of Common Stock issued or issuable upon the conversion of the Class F Stock and upon exercise of the Private Placement Warrants, and (iii) shares of Common Stock issued as Earn Out Shares or issuable upon the conversion of any Earn Out Shares, in each case, held by the Sonder Stockholders, and (b) any other equity security of the Company issued or issuable with respect to any such share of Common Stock by way of a stock dividend or stock split or in connection with a combination of shares, recapitalization, merger, consolidation or other reorganization or otherwise, will be entitled to registration rights; and

 

   

following the closing of the Business Combination, the foregoing consideration to be paid to the Sonder equityholders may be further increased by amounts payable in respect of Earn Out Shares, of up to an aggregate of 14,500,000 shares of Common Stock.

In connection with the foregoing, our Initial Stockholders have agreed, and their permitted transferees will agree, to vote their Founder Shares, as well as any Public Shares purchased during or after the Company IPO, in favor of the Business Combination. In addition, our Initial Stockholders have also agreed to waive their right to a conversion price adjustment with respect to any shares of our Common Stock they may hold in connection with the consummation of the Business Combination as set forth in the Current Company Certificate.


 

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Organizational Structure

The following diagram shows the current ownership structure of the Company:

 

LOGO

Initial Stockholders(1) Public Stockholders20% 80%Gores Metropoulos II, Inc., a Delaware corporationSunshine Merger Sub II, LLC, a Delaware limited liability companySunshine Merger Sub I, Inc., a Delaware corporation

 

 

(1)

For more information about the ownership interests of our Initial Stockholders, including our Sponsor, prior to the Business Combination, please see the section titled “Beneficial Ownership of Securities.”


 

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The following diagram shows the current ownership structure of Sonder:

 

LOGO

Sonder Stockholders Sonder Holdings Inc.Note (1)Sonder Group Holdings LLCNote (2)Sonder Exchange ULCSonder Canada Inc.Other SubsidiariesOther SubsidiariesSonder Hospitality USA Inc.Sonder Guest Services LLCSonder International Holdings LtdOther Subsidiaries

 

 

(1)

All subsidiaries are directly or indirectly owned 100% by Sonder Holdings Inc. except (i) Sonder Canada Inc. as described in note (2) below, and (ii) Sonder’s Middle East subsidiaries which are beneficially owned and controlled by Sonder International Holdings Ltd and have a locally resident shareholder of record, as required under local ownership regulations.

(2)

Sonder Group Holdings LLC owns 100% of the common shares of Sonder Canada Inc., which carry 100% of the voting rights. Canadian shareholders of Sonder Canada Inc. own non-voting exchangeable shares constituting less than 30% of the total shares outstanding of Sonder Canada Inc.


 

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The following diagram illustrates the ownership percentages and structure of the Post-Combination Company:

 

LOGO

Initial Stockholders (1)(2)Public StockholdersSubscribers (2)Sonder Stockholders (3)(4)3.8%(5) 15.3%(5)6.8%(5)74.1%(5)Sonder Holdings Inc.(fka Gores Metropoulos II, Inc.),a Delaware corporationNote (6)Sonder Holdings LLC(fka Sunshine Merger Sub II, LLC)Sonder Group Holdings LLCNote (7)Sonder Exchange ULCSonder Canada Inc.Other subsidiariesOther subsidiariesSonder Hospitality USA Inc.Sonder Guest Services LLCSonder International Holdings LtdOther subsidiaries

 

 

(1)

For more information about the ownership interests of our Initial Stockholders, including our Sponsor, following the Business Combination, please see the section titled “Beneficial Ownership of Securities.

(2)

The PIPE Investors’ ownership percentage includes 4,000,000 shares of Class A Stock to be purchased under the Sponsor Subscription Agreement, and such shares are consequently excluded from the Initial Stockholders’ ownership percentage.


 

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(3)

The ownership interests of the Sonder Stockholders (i) include the Rollover Options, assuming an Option Exchange Ratio equal to the Per Share Sonder Common Stock Consideration and excluding any additional Discounted Earn Out Option Amount, which will be determined on or prior to the consummation of the Business Combination (please see the section titled “Summary—Treatment of Sonder Equity Awards”), and (ii) reflect the exercise of all outstanding Sonder warrants and the conversion of all outstanding Sonder convertible notes into Common Stock in connection with the consummation of the Business Combination.

(4)

For more information about the ownership interests of the Sonder equityholders following the Business Combination, please see the section titled “Beneficial Ownership of Securities.”

(5)

These ownership percentages assume (i) no exercise of redemption rights by our Public Stockholders, (ii) no issuance of Earn Out Shares, (iii) inclusion of the Rollover Options calculated on the basis described in note (3) above, and (iv) the exercise of all outstanding Sonder warrants and conversion of Sonder convertible notes into Common Stock.

(6)

All subsidiaries are directly or indirectly owned 100% by Sonder Holdings Inc. except (i) Sonder Canada Inc. as described in note (7) below, and (ii) Sonder’s Middle East subsidiaries, which are beneficially owned and controlled by Sonder International Holdings Ltd and have a locally resident shareholder of record, as required under local ownership regulations.

(7)

Sonder Group Holdings LLC owns 100% of the common shares of Sonder Canada Inc., which carry 100% of the voting rights. Canadian shareholders of Sonder Canada Inc. own nonvoting exchangeable shares constituting less than 30% of the total shares outstanding of Sonder Canada Inc.

Consideration to Sonder Stockholders in the Business Combination

Pursuant to the Merger Agreement, the aggregate purchase price to be paid by the Company to acquire Sonder is expected to be approximately $2.177 billion. At the closing of the Business Combination, each Sonder Stockholder will receive a mix of shares of Common Stock and cash consideration in lieu of fractional shares. Following the closing of the Business Combination, each Sonder Stockholder may receive additional shares of Common Stock as consideration as a result of the Common Stock achieving certain benchmark share prices as contemplated by the Merger Agreement pursuant to the earn out.

The following table sets forth ranges of potential aggregate stock consideration taking into account adjustments that may occur based on the realization of the benchmark share prices in the earn out:

 

($ and shares in thousands)    Assuming
No Earn
Out Target
    Triggering
Event I(4)
Achieved
    Triggering
Event II(5)
Achieved
    Triggering
Event III(6)
Achieved
    Triggering
Event IV(7)
Achieved
    Triggering
Event V(8)
Achieved
    Triggering
Event VI(9)
Achieved
 

Aggregate Company Stock Consideration(1)

   $ 2,176,603     $ 2,829,584     $ 3,373,735     $ 3,917,885     $ 4,462,036     $ 5,006,187     $ 5,550,338  

Value of Earn Out Shares(2)

   $ —       $ 31,417     $ 74,917     $ 130,500     $ 198,167     $ 277,917     $ 369,750  

Earn Out Shares

     0       2,417       4,833       7,250       9,667       12,083       14,500  

Aggregate Consideration (inclusive of $ Value of Earn Out Shares)

   $ 2,176,603     $ 2,861,001     $ 3,448,651     $ 4,048,385     $ 4,660,203     $ 5,284,104     $ 5,920,088  

Total Shares (Assuming No Redemptions)

     293,910       296,327       298,744       301,160       303,577       305,994       308,410  

Total Shares (Assuming Redemption of 15 Million Public Shares)

     278,909       281,326       283,742       286,159       288,576       290,992       293,409  

Post-Combination Company Stock Ownership of Public Stockholders Assuming No Redemptions(3)

     15.31     15.19     15.06     14.94     14.82     14.71     14.59

Post-Combination Company Stock Ownership of Public Stockholders Assuming Redemption of 15 Million Public Shares(3)

     10.76     10.66     10.57     10.48     10.40     10.31     10.22

 

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(1)

In the “Assuming No Earn Out Target” scenario, the Aggregate Company Stock Consideration is based on 217,660,300 shares issued at the closing of the Business Combination, with each such share valued at $10.00 per share. The Aggregate Company Stock Consideration with respect to each Triggering Event is based on 217,660,300 shares Common Stock issued at the closing of the Business Combination with each such share valued at the applicable Common Share Price (i.e., the volume weighted average closing sale price of one share of Common Stock on the Nasdaq for a period of at least 10 days out of 20 consecutive trading days) required to be achieved at such Triggering Event. For example, the Aggregate Company Stock Consideration assuming Triggering Event IV, but not Triggering Event V or Triggering Event VI, is achieved will be valued at approximately $4.46 billion based on a per share price of $20.50 (the Common Share Price required to achieve Triggering Event IV).

(2)

Value of Earn-Out Shares based on Common Stock awarded at each Triggering Event multiplied by the applicable Common Share Price (i.e., the volume weighted average closing sale price of one share of Common Stock on the Nasdaq for a period of at least 10 days out of 20 consecutive trading days) required to be achieved at such Triggering Event. For example, Triggering Event IV will be met when the Common Share Price reaches $20.50, at which time approximately 2,416,667 Earn Out Shares will be issued with an implied value of approximately $49.54 million (based on a $20.50 stock price). The total Value of Earn Out Shares in Triggering Event IV would also include three tranches of approximately 2,416,667 Earn-Out shares per tranche each with an implied value of approximately $49.54 million (based on a $20.50 stock price) and implying a total Value of Earn Out Shares of approximately $198.17 million.

(3)

Ownership numbers assume (a) no inclusion of any shares issuable upon the exercise of the Company Warrants, (b) an Option Exchange Ratio equal to the Per Share Company Common Stock Consideration (and excluding any Discounted Earn Out Option Amount), (c) the issuance of all shares of Common Stock reserved for issuance upon the exchange of Post-Combination Canada Exchangeable Shares following the Business Combination, (d) the issuance of all outstanding shares related to the exercise of Rollover Options are issued to former holders of Sonder stock options and (e) that no additional shares of Post-Combination Company Stock are issued between the closing of the Business Combination and the realization of any benchmark share prices for the Triggering Events in the earn out.

(4)

“Triggering Event I” means the date on which the Common Share Price is greater than $13.00 within the Earn Out Period (i.e., the period beginning on the 180th day following the closing date of the Business Combination and ending on the fifth anniversary of such date).

(5)

“Triggering Event II” means the date on which the Common Share Price is greater than $15.50 within the Earn Out Period.

(6)

“Triggering Event III” means the date on which the Common Share Price is greater than $18.00 within the Earn Out Period.

(7)

“Triggering Event IV” means the date on which the Common Share Price is greater than $20.50 within the Earn Out Period.

(8)

“Triggering Event V” means the date on which the Common Share Price is greater than $23.00 within the Earn Out Period.

(9)

“Triggering Event VI” means the date on which the Common Share Price is greater than $25.50 within the Earn Out Period.

Conditions to Closing of the Business Combination

Conditions to Each Party’s Obligations

The respective obligations of each of Sonder and the Company to complete the Business Combination are subject to the satisfaction of the following conditions, any one or more of which may be waived (if legally permitted) in writing by all of such parties:

 

   

the applicable waiting period(s) under the HSR Act (and any extensions thereof, including any agreement with a governmental authority to delay consummation of the Business Combination) in respect of the Business Combination shall have expired or been terminated;

 

   

there shall not have been enacted or promulgated any governmental order, statute, rule or regulation enjoining or prohibiting the consummation of the Business Combination;

 

   

the Company shall have at least $5,000,001 of net tangible assets (as determined in accordance with Rule 3a51-1(g)(1) of the Exchange Act) remaining after the completion of the redemption offer and prior to the closing of the First Merger;

 

   

the approval by the Company Stockholders of the Business Combination Proposal, the Nasdaq Proposal, the Charter Proposal and the Director Election Proposal shall have been obtained;

 

   

the Sonder Requisite Approval to adopt the Merger Agreement and approve the transactions contemplated thereby, including the Business Combination, shall have been obtained;

 

   

the Canadian Approvals shall have been delivered;

 

   

the Common Stock to be issued in connection with the Business Combination (including the Common Stock to be issued pursuant to the earn out) shall have been approved for listing on Nasdaq, subject


 

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only to the requirement to have a sufficient number of round lot holders and official notice of listing; and

 

   

the registration statement, of which this proxy statement/prospectus/consent solicitation statement is a part, shall have become effective under the Securities Act and no stop order suspending the effectiveness of the registration statement, of which this proxy statement/prospectus/consent solicitation statement is a part, shall have been issued and no proceedings for that purpose shall have been initiated or threatened by the SEC and not withdrawn.

Conditions to Sonder’s Obligations

The obligation of Sonder to consummate and effect the Mergers is subject to the satisfaction, at or prior to the closing of the Business Combination, of each of the following conditions, any one or more of which may be waived in writing by Sonder:

 

   

(i) the representations and warranties of the Company, First Merger Sub and Second Merger Sub (other than the representations and warranties of the Company, First Merger Sub and Second Merger Sub, with respect to corporate organization, due authorization, the Trust Account, brokers’ fees and capitalization) shall be true and correct (without giving effect to any limitation as to “materiality,” “material adverse effect” or any similar limitation) as of the date of the Merger Agreement and as of the closing date of the Business Combination as though then made (except to the extent such representations and warranties expressly relate to an earlier date, and in such case, shall be true and correct on and as of such earlier date), except, where the failure of such representations and warranties to be so true and correct, individually or in the aggregate, has not had, and would not reasonably be expected to result in, a material adverse effect on the Company, First Merger Sub and Second Merger Sub, taken as a whole, or a material adverse effect on the Company’s, First Merger Sub’s and Second Merger Sub’s ability to consummate the Business Combination, including the Mergers, and (ii) the representations and warranties of the Company, First Merger Sub and Second Merger Sub with respect to corporate organization, due authorization, the Trust Account, brokers’ fees and capitalization, shall be true and correct (without giving effect to any limitation as to “materiality,” “material adverse effect” or any similar limitation) in all material respects as of the date of the Merger Agreement and as of the closing date of the Business Combination as though then made (except to the extent such representations and warranties expressly relate to an earlier date, and in such case, shall be true and correct on and as of such earlier date);

 

   

each of the covenants of the Company to be performed or complied with as of or prior to the closing of the Business Combination shall have been performed or complied with in all material respects;

 

   

the receipt of a certificate signed by the chief executive officer of the Company certifying that the conditions in the two preceding bullets have been satisfied;

 

   

the Current Company Certificate shall be amended and restated in the form of the Amended and Restated Certificate of Incorporation; and

 

   

the Company shall have Closing Cash equal to or exceeding $500,000,000. “Closing Cash” as used in herein means the amount equal to: (i) the funds contained in the Trust Account as of the effective time of the First Merger; plus (ii) all other cash and cash equivalents of the Company; plus (iii) the amount delivered to the Company at or prior to the closing in connection with the consummation of the PIPE Investment; minus (iv) the aggregate amount of cash proceeds that will be required to satisfy the redemption of any shares of Class A Stock (to the extent not already paid).


 

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Conditions to the Company’s Obligations

The obligations of the Company to consummate and effect the Mergers are subject to the satisfaction, at or prior to the closing of the Business Combination, of each of the following conditions, any one or more of which may be waived in writing by the Company:

 

   

(i) certain representations and warranties of Sonder with respect to due incorporation and the representations and warranties of Sonder with respect to due incorporation, due authorization, capitalization, brokers’ fees and affiliate arrangements shall be true and correct (without giving any effect to any limitation as to “materiality” or “Material Adverse Effect” or any similar limitation) in all material respects as of the date of the Merger Agreement and as of the closing date of the Business Combination as though then made (except to the extent such representations and warranties expressly relate to an earlier date, and in such case, shall be true and correct on and as of such earlier date), (ii) the representations and warranties of Sonder with respect to the lack of a Material Adverse Effect shall be true and correct in all respects as of the date of the Merger Agreement and as of the closing date of the Business Combination as though then made, and (iii) all other representations and warranties of Sonder shall be true and correct (without giving any effect to any limitation as to “materiality” or “Material Adverse Effect” or any similar limitation) as of the date of the Merger Agreement and as of the closing date of the Business Combination as though then made (except to the extent such representations and warranties expressly relate to an earlier date, and in such case, shall be true and correct on and as of such earlier date), except, where the failure of such representations and warranties to be so true and correct, individually and in the aggregate, has not had, and would not reasonably be expected to result in, a Material Adverse Effect;

 

   

each of the covenants of Sonder to be performed or complied with as of or prior to the closing of the Business Combination shall have been performed or complied with in all material respects; and

 

   

the receipt of a certificate signed by an officer of Sonder certifying that the conditions in the two preceding bullets have been satisfied.

Related Agreements

Subscription Agreements

On or prior to April 29, 2021, the Company entered into Subscription Agreements with certain investors, including the Individual Investor Subscription Agreements, Institutional Investor Subscription Agreements and the Sponsor’s subscription agreement (the “Sponsor Subscription Agreement”) pursuant to which the investors have agreed to purchase an aggregate of 20,000,000 shares of Class A Stock (which will be reclassified into Common Stock upon the effectiveness of the Amended and Restated Certificate of Incorporation) in the PIPE Investment.

Each Subscription Agreement will terminate with no further force and effect upon the earliest to occur of: (a) such date and time as the Merger Agreement is terminated in accordance with its terms; (b) upon the mutual written agreement of the parties to such Subscription Agreement; (c) if any of the conditions to closing set forth in such Subscription Agreement are not satisfied on or prior to the closing and, as a result thereof, the transactions contemplated by such Subscription Agreement are not consummated at the closing; or (d) if the consummation of the Business Combination shall not have occurred by October 28, 2021. As of the date hereof, the shares of Class A Stock (which will be reclassified into Common Stock upon the effectiveness of the Amended and Restated Certificate of Incorporation) to be issued pursuant to the Subscription Agreements have not been registered under the Securities Act. The Company will, within 30 days after the closing of the First Merger, file with the SEC the Post-Closing Registration Statement registering the resale of such shares of Common Stock (following the automatic conversion of the Class A Stock upon the effectiveness of the Amended and Restated Certificate of Incorporation) and will use its commercially reasonable efforts to have such Post-Closing Registration Statement declared effective as soon as practicable after the filing thereof.


 

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The Sponsor Subscription Agreement is substantially similar to the Individual Investor Subscription Agreements, except that the Sponsor has the right to syndicate the Common Stock purchased under the Sponsor Subscription Agreement in advance of the closing of the First Merger. The Institutional Investor Subscription Agreement is substantially similar to the Individual Investor Subscription Agreement, except that it contains additional representations and warranties on the part of the Company and restrictions regarding the Company’s ability to delay or suspend a Post-Closing Registration Statement filed pursuant to the registration rights provided under the Institutional Investor Subscription Agreements. The form Subscription Agreements are attached hereto as Annex E to this proxy statement/prospectus/consent solicitation statement and the foregoing description of the PIPE Investment is qualified in its entirety by reference thereto.

Registration Rights Agreement

At the closing of the Business Combination, the Company will enter into the Registration Rights Agreement, substantially in the form attached as Annex F to this proxy statement/prospectus/consent solicitation statement, with the Registration Rights Holders. Pursuant to the terms of the Registration Rights Agreement, the Registration Rights Holders will be entitled to certain registration rights with respect to any (i) outstanding share of Common Stock or any Private Placement Warrants, (ii) Founder Shares reclassified into Common Stock and shares of Common Stock issued upon exercise of the Private Placement Warrants, (iii) shares of Common Stock issued as Earn Out Shares or issuable upon the conversion of any Earn Out Shares, in each case, held by the Sonder Holders, (iv) Common Stock issued or issuable upon conversion of the Sonder Convertible Notes or upon exercise of the warrants issued pursuant to the Note Purchase Agreement, dated on or about March 12, 2021 between Sonder and the other parties thereto and (v) any other equity security of the Company issued or issuable with respect to any such share of Common Stock referred to in the foregoing clauses “(i)” through “(iv)” by way of a stock dividend or stock split or in connection with a combination of shares, recapitalization, merger, consolidation or other reorganization or otherwise, in each case held by such Registration Rights Holder, subject to certain limitations set forth in the Registration Rights Agreement.

The Registration Rights Agreement provides that the Company will, within 30 days after the consummation of the Business Combination, file with the SEC a shelf registration statement registering the resale of the shares of Common Stock held by the Registration Rights Holders and will use its reasonable best efforts to have such registration statement declared effective as soon as practicable after the filing thereof, but in no event later than 60 days following the filing deadline; provided, that the effectiveness deadline will be extended to 90 days after the filing deadline if the registration statement is reviewed by, and receives comments from, the SEC. The Registration Rights Holders are each entitled to make up to two demands for registration, excluding short form demands, that the Company register shares of Common Stock held by these parties. In addition, the Registration Rights Holders have certain “piggy-back” registration rights. The Company will bear the expenses incurred in connection with the filing of any registration statements filed pursuant to the terms of the Registration Rights Agreement. The Company and the Registration Rights Holders agree in the Registration Rights Agreement to provide customary indemnification in connection with any offerings of Common Stock effected pursuant to the terms of the Registration Rights Agreement.

Our Initial Stockholders entered into a letter agreement pursuant to which they agreed to restrictions on the transfer of their securities issued in the Company IPO, which (i) in the case of the Class F Stock is 180 days after the consummation of the Business Combination, and (ii) in the case of the Private Placement Warrants and the respective Common Stock underlying the Private Placement Warrants, is 30 days after the consummation of the Business Combination.

The foregoing summary of the Registration Rights Agreement is not complete and is qualified in its entirety by reference to the complete text of the Registration Rights Agreement as set forth in Annex F to this proxy statement/prospectus/consent solicitation statement.


 

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Primary Lock-Up Agreements

Sonder Supporting Stockholders will enter into separate letters with Sonder (the “Primary Lock-Up Agreements”), pursuant to which such Sonder Supporting Stockholders will agree to be bound by restrictions on their ability to transfer such shares of Common Stock for a period of 180 days after the closing of the Business Combination; provided, if during such period the volume weighted average price of Common Stock for 10 trading days within any 20 consecutive trading day period is at least $12.50 per share or $15.00 per share, then following achievement of each such price, one-third of the shares of Common Stock owned by the Sonder Stockholder will no longer be subject to such transfer restrictions in the Primary Lock-Up Agreements (not to occur earlier than 90 days following the consummation of the Business Combination).

Conversion Share Lock-Up Agreements

Sonder Stockholders who will receive Conversion Shares (the “Sonder Noteholders”) will enter into separate letters with Sonder (the “Conversion Share Lock-Up Agreements”), pursuant to which such Sonder Noteholders will agree to be bound by restrictions on the transfer of their Conversion Shares until the earlier of (i) 180 days after the consummation of the Business Combination or (ii) the date that the resale registration statement on Form S-1 registering the PIPE Shares is declared effective by the SEC.

Voting and Support Agreements

On April 29, 2021, the Company and the Sonder Supporting Stockholders with a sufficient number of votes to achieve the Sonder Requisite Approval entered into Voting and Support Agreements, pursuant to which, among other things, such Sonder Supporting Stockholders agreed to vote their shares of Sonder Stock in favor of adopting the Merger Agreement and approving the transactions contemplated thereby, including the Business Combination.

Impact of the Business Combination on the Company’s Public Float

It is anticipated that, upon consummation of the Business Combination and without giving effect to any issuance of Earn Out Shares or any redemptions: (i) our Public Stockholders will retain an ownership interest of approximately 15.3% of the Post-Combination Company Common Stock; (ii) our Initial Stockholders (including our Sponsor) will own approximately 3.8% of the Post-Combination Company Stock (excluding 4,000,000 shares of Class A Stock, which will be reclassified into Common Stock upon the effectiveness of the Amended and Restated Certificate of Incorporation, to be purchased under the Sponsor Subscription Agreement as part of the PIPE Investment); (iii) the PIPE Investors (including 4,000,000 shares of Class A Stock, which will be reclassified into Common Stock upon the effectiveness of the Amended and Restated Certificate of Incorporation, to be purchased under the Sponsor Subscription Agreement as part of the PIPE Investment) will own approximately 6.8% of the Post-Combination Company Stock; and (iv) the Sonder Securityholders will own approximately 74.1% of the Post-Combination Company Stock. In the event that, following the Business Combination, all 14,500,000 Earn Out Shares are issued to Sonder Securityholders and assuming no redemptions and that no additional shares of Post-Combination Company Stock are issued between the closing of the Business Combination and the realization of all of the benchmark share prices in the earn out: (i) our Public Stockholders will retain an ownership interest of approximately 14.6% of the Post-Combination Company Stock; (ii) our Initial Stockholders (including our Sponsor) will own approximately 3.6% of the Post-Combination Company Stock (excluding 4,000,000 shares of Class A Stock, which will be reclassified into Common Stock upon the effectiveness of the Amended and Restated Certificate of Incorporation, to be purchased under the Sponsor Subscription Agreement as part of the PIPE Investment); (iii) the PIPE Investors (including 4,000,000 shares of Class A Stock, which will be reclassified into Common Stock upon the effectiveness of the Amended and Restated Certificate of Incorporation, to be purchased under the Sponsor Subscription Agreement as part of the PIPE Investment) will own approximately 6.5% of the Post-Combination Company Stock; and (iv) the Sonder Securityholders will own approximately 75.3% of the Post-Combination Company Stock.


 

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In this proxy statement/prospectus/consent solicitation statement, we assume that funds from the Trust Account (plus any interest accrued thereon) will be used to pay certain transaction expenses, assuming that the (i) funds available in Trust Account plus any other cash and cash equivalents of the Company as of the effective time of the First Merger, net of any amounts required to satisfy any redemptions of shares of Class A Stock by our Public Stockholders, plus (ii) amount of all cash and cash equivalents of Sonder as of the effective time of the First Merger, equals or exceeds $500,000,000. For more information, please see the sections titled “The Business Combination—Impact of the Business Combination on the Company’s Public Float” and “Unaudited Pro Forma Condensed Combined Financial Information.”

Our Board’s Reasons for Approval of the Business Combination

We were formed for the purpose of effecting an initial business combination with one or more businesses. We sought to do this by utilizing the networks and industry experience of both our Sponsor and our Board to identify and consummate an initial business combination with one or more businesses within or outside of the United States, although we were not limited to a particular industry or sector.

In particular, our Board considered the following positive factors, although not weighted or in any order of significance:

 

   

Ability to Transform the Hospitality Industry on a Global Scale. Our Board noted that Sonder’s strategic, technological and operational performance, along with its partnerships with artists, architects and significant technology investments, allow it to leverage technology and design across the value chain, creating a unique brand providing high quality and tech-enabled experiences to consumers and suppliers at a compelling value within the $800 billion addressable lodging market.

 

   

Resiliency in Adverse Economic Conditions. Our Board noted the resiliency of Sonder’s business model during the COVID-19 pandemic, which allowed Sonder to significantly outperform the hotel industry and outperform its competitors. Additionally, our Board considered Sonder’s strong performance in generating direct bookings since the beginning of the COVID-19 pandemic.

 

   

Market Leadership. Our Board took into account Sonder’s market leadership in the hospitality industry, noting Sonder’s existing platform and long-term growth potential compared favorably to its competition. Our Board also recognized that a number of Sonder’s historic competitors recently exited the market, creating more whitespace for growth.

 

   

Significant, Long-Term Growth Potential. Our Board took into account the upside involved in investing in technology to enhance guest experiences and cost structures, which Sonder has already integrated and continues to refine across multiple markets in countries around the world. The Board believed this would position Sonder to deepen its reach in existing markets and reach unpenetrated markets that represent opportunities for growth. Further, our Board took into account that younger customer demographics inclined to use Sonder’s app-based interface represent a large and growing part of the traveler base. Our Board additionally noted that Sonder plans to further its geographic expansion and to extend into additional product categories, such as vacation and resort destinations, a franchising model and a software solution for third party operators.

 

   

Vertical Integration of Hospitality Services Drives Exceptional Economics and Value for Customers and Suppliers. Our Board noted that Sonder uses its innovative technology in an end-to-end model where it controls nearly every facet of its guests’ experiences with a vertically integrated business (using technology solutions for, among other things, revenue forecasting, real estate underwriting, supply chain, distribution, revenue management, housekeeping and customer service), reducing operating costs by as much as 50% compared to traditional hotels and bringing service to a customer’s phone through Sonder’s app, which produces customer satisfaction scores of approximately 70% across Sonder’s locations. Our Board also noted that Sonder’s real estate partners also benefit through cost


 

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efficiencies driven by Sonder’s technology and operational capabilities, increasing cash flows for real estate partners while offloading operational responsibilities to allow real estate developers to better monetize their assets while delivering better and more modern hospitality service to Sonder’s guests.

 

   

Proven Leadership Team with Deep Technology, Operations and Hospitality Experience. Our Board noted that the Sonder management team has deep technology, operations and hospitality experience, and that the management team is expected to remain with Sonder upon the closing of the Business Combination. Additionally, our Board believes that Sonder’s proven management team and strategy will help enable Sonder to deliver continued strategic growth.

 

   

Opinion of our Financial Advisor. Our Board took into account the opinion of Moelis, dated April 29, 2021, addressed to our Board as to the fairness, from a financial point of view and as of the date of such opinion, of the consideration to be paid by us in the Business Combination, which opinion was based on and subject to the assumptions made, procedures followed, matters considered and limitations and qualifications set forth in such opinion as more fully described under the caption “The Business Combination—Opinion of the Company’s Financial Advisor.”

 

   

Other Alternatives. Our Board believed, after a review of other business combination opportunities reasonably available to the Company, that the proposed Business Combination represents the best potential business combination for us based upon the process utilized to evaluate and assess other potential acquisition targets. Our Board and our management also believed that such processes had not presented a better alternative.

 

   

Due Diligence. Our Board took into account the results of our due diligence investigation of Sonder conducted by our management team and our financial and legal advisors.

 

   

Stockholder Approval. Our Board considered the fact that, in connection with the Business Combination, our stockholders have the option to (i) remain stockholders of the Company, (ii) sell their shares of Class A Stock or (iii) redeem their shares of Class A Stock for the per share amount held in the Trust Account pursuant to the terms of the Current Company Certificate.

 

   

Negotiated Terms of the Merger Agreement. Our Board considered the terms and conditions of the Merger Agreement and the transactions contemplated thereby, including the Business Combination.

 

   

Independent Director Role. Our Board is comprised of a majority of independent directors who are not affiliated with our Sponsor and its affiliates, including The Gores Group and Dean Metropoulos. In connection with the Business Combination, our independent directors, Messrs. Randall Bort, Michael Cramer and Joseph Gatto, took an active role in evaluating the proposed terms of the Business Combination, including the Merger Agreement, the Related Agreements and the amendments to the Current Company Certificate to take effect in connection with the Business Combination, and unanimously approved, as members of our Board, the Merger Agreement and the transactions contemplated thereby, including the Business Combination.

Our Board also considered a variety of uncertainties and risks and other potentially negative factors concerning the Business Combination, including, but not limited to, the following:

 

   

Benefits May Not Be Achieved. The risk that the potential benefits of the Business Combination may not be fully achieved, or may not be achieved within the expected timeframe.

 

   

Stockholder Vote. The risk that our stockholders may fail to provide the votes necessary to effect the Business Combination.

 

   

Redemption Risk. The risk that a significant number of our stockholders may elect to redeem their shares prior to the consummation of the Business Combination pursuant to the Current Company Certificate, which may potentially make the Business Combination more difficult to complete.


 

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Closing Conditions. The fact that consummation of the Business Combination is conditioned on the satisfaction of certain closing conditions that are not within our control.

 

   

Litigation. The possibility of litigation challenging the Business Combination or that an adverse judgment granting permanent injunctive relief could indefinitely enjoin consummation of the Business Combination.

 

   

Fees and Expenses. The fees and expenses associated with completing the Business Combination.

 

   

Liquidation of the Company. The risks and costs to us if the Business Combination is not completed, including the risk of diverting management focus and resources from other initial business combination opportunities, which, if the Business Combination is not consummated, could result in us being unable to effect an initial business combination by January 22, 2023 and force us to liquidate and the Public Warrants to expire worthless.

 

   

Other Risks. Various other risks associated with the Business Combination, the business of Sonder and ownership of the Post-Combination Company’s shares described under the section titled “Risk Factors.”

In addition to considering the factors described above, our Board also considered that:

 

   

Interests of Certain Persons. Some of our officers and directors may have interests in the Business Combination as individuals that are in addition to, and that may be different from, the interests of our stockholders (see the section titled “The Business Combination—Interests of Certain Persons in the Business Combination—Interests of the Company Initial Stockholders and the Company’s Other Current Officers and Directors”). Our independent directors reviewed and considered these interests during the negotiation of the Business Combination and in evaluating and unanimously approving, as members of our Board, the Merger Agreement and the Business Combination.

Our Board concluded that the potential benefits it expected the Company and its stockholders to achieve as a result of the Business Combination outweighed the potentially negative factors associated with the Business Combination. Accordingly, our Board unanimously determined that the Merger Agreement and the transactions contemplated thereby, including the Business Combination, were advisable, fair to, and in the best interests of the Company and its stockholders.

The Sonder Board’s Reasons for Approval of the Business Combination

After consideration, the Sonder Board adopted resolutions unanimously (i) determining that the Merger Agreement, the Mergers contemplated by the Merger Agreement and the other transactions contemplated by the Merger Agreement were advisable, fair to and in the best interests of Sonder and Sonder Stockholders, (ii) approving the Merger Agreement and the transactions contemplated thereby, including the Mergers, (iii) and directing that the Merger Agreement be submitted to the Sonder Stockholders for their consideration. The Sonder Board unanimously recommends that the Sonder Stockholders adopt the Merger Agreement and approve the transactions contemplated thereby, including the Business Combination, by executing and delivering the written consent furnished with this proxy statement/prospectus/consent solicitation statement.

In reaching its decision to approve and declare advisable the Merger Agreement, and in resolving to recommend that Sonder Stockholders adopt the Merger Agreement and approve the transactions contemplated thereby, including the Business Combination, the Sonder Board consulted with Sonder’s management, as well as its financial and legal advisors, and considered a number of factors, including its knowledge of Sonder’s business, operations, financial condition, earnings and prospects, and its knowledge of the financial and capital markets. Among the various factors that the Sonder Board considered in favor of its decision are:

 

   

Evaluation of Alternative Transactions. It is the belief of the Sonder Board, after review of alternative strategic opportunities from time to time, including strategic transactions with other partners and the


 

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possibility of, and benefits and risks associated with, continuing to operate Sonder as a privately held entity, that the proposed Business Combination represents the best potential transaction for Sonder to create greater value for the Sonder Stockholders, while also providing greater liquidity for the Sonder Stockholders by owning stock in a public company.

 

   

Terms of the Merger Agreement. The Sonder Board considered the terms and conditions of the Merger Agreement, including, but not limited to, the nature and scope of the closing conditions and the likelihood of obtaining any necessary approvals, in addition to the transactions contemplated thereby, including the Mergers.

 

   

Consideration Received by Sonder Stockholders. The Sonder Board considered the amount of consideration to be received by the Sonder Stockholders in the proposed Mergers under the terms and conditions of the Merger Agreement.

 

   

Size of Post-Combination Company. The Sonder Board considered the implied enterprise value of approximately $2.2 billion for Sonder at the closing of the Business Combination, providing the Sonder Stockholders with the opportunity to go forward with ownership in a public company with a larger market capitalization.

 

   

Access to Capital. The Sonder Board considered the current industry trends and market conditions affecting Sonder and the cost of alternative means of raising capital and expects that the Business Combination would be a more time- and cost-effective means to access capital and potentially repay its existing indebtedness than other options considered.

 

   

Benefit from Being a Public Company. The Sonder Board believes that as a newly public company, Sonder will have the flexibility and financial resources to pursue and execute a growth strategy to increase revenue and stockholder value and will benefit from being publicly traded, and can effectively utilize the broader access to capital and public profile that are associated with being a publicly traded company.

 

   

Opportunity to Increase Earnings and Expand Prospects. The Sonder Board considered the financial condition, historical results of operations, and business and strategic objectives of Sonder, as well as the risks involved in achieving those objectives, and believes that the Business Combination will create an opportunity for Sonder to increase future earnings and cultivate superior prospects.

 

   

Insider Letters. The Sonder Board considered that, pursuant to the letter agreements entered into with the Company, each of Messrs. Alec E. Gores, Dean Metropoulos, Randall Bort, Michael Cramer, Joseph Gatto and Andrew McBride (collectively, the “Insiders”) and the Sponsor, the Insiders and the Sponsor agreed to, among other things, vote all of the shares of the capital stock of the Company they hold to approve the Business Combination Proposal at the Special Meeting and not to redeem such shares in connection with the transactions contemplated by the Merger Agreement.

 

   

Primary Lock-Up Agreements. The Sonder Board also considered that in connection with the consummation of the Mergers, the Company, Sonder and certain Sonder Stockholders who will receive Common Stock will enter into Primary Lock-Up Agreements. Under the Primary Lock-Up Agreements, such stockholders will agree not to, subject to certain exceptions, without the prior written consent of the Post-Combination Company Board, (i) sell or otherwise dispose of, or agree to sell or dispose of, any shares of Common Stock held by the stockholder immediately after the effective time of the Mergers or any shares of Common Stock issuable upon the exercise of options, warrants or other convertible securities to purchase shares of Common Stock held by the stockholder immediately after the effective time of the Mergers (the “Lock-Up Shares”), (ii) enter into any arrangement that transfers to another any of the economic consequences of ownership of any of such Lock-Up Shares, or (iii) publicly announce any intention to effect any transaction specified in clause “(i)” or “(ii)” above for 180 days after the closing date of the Mergers; provided, if during such period the volume weighted


 

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average price of Common Stock for 10 trading days within any 20 consecutive trading day period is at least $12.50 per share or $15.00 per share, then following achievement of each such price, one-third of the shares of Common Stock owned by the Sonder Stockholder will no longer be subject to such transfer restrictions in the Primary Lock-Up Agreements (not to occur earlier than 90 days following the consummation of the Business Combination).

 

   

Conversion Share Lock-Up Agreements. The Sonder Board also considered that, in connection with the consummation of the Mergers, the Company, Sonder and Sonder Noteholders who will receive Common Stock will enter into Conversion Share Lock-Up Agreements. Under the Conversion Share Lock-Up Agreements, such Sonder Noteholders will agree to be bound by restrictions on the transfer of their Conversion Shares until the earlier of (i) 180 days after the consummation of the Business Combination or (ii) the date that the resale registration statement on Form S-1 registering the PIPE Shares is declared effective by the SEC.

 

   

Registration Rights Agreement. The Sonder Board also considered that, in connection with the consummation of the Mergers, the Company, the Sponsor, Sonder, certain Company stockholders and certain Sonder Stockholders who will receive Common Stock will enter into the Registration Rights Agreement. Under the Registration Rights Agreement, the Post-Combination Company will agree to provide to such stockholders and their permitted transferees with certain registration rights, including, among other things, customary “demand” and “piggyback” registration rights, with respect to their shares of Common Stock, including shares issued as Earn Out Shares or issuable upon the conversion of certain Earn Out Shares (as defined in the Merger Agreement), and Private Placement Warrants, subject to certain requirements and customary conditions. The Registration Rights Agreement will also provide that the Post-Combination Company will pay certain expenses relating to such registrations and indemnify the Registration Rights Holders against (or make contributions in respect of) certain liabilities which may arise under the Securities Act. For a more detailed description of the Registration Rights Agreement, see the section titled “The Merger Agreement and Related Agreements—Registration Rights Agreement.

The Sonder Board also considered the following negative factors:

 

   

Risk that the Business Combination may not be completed. The Sonder Board considered the risk that the Business Combination might not be consummated in a timely manner or at all, due to a lack of stockholder approval or failure to satisfy various conditions to closing.

 

   

Effects on reputation, business and employees if the Business Combination is not completed. The Sonder Board considered the possibility that there may be an adverse effect on Sonder’s reputation, business and employees upon the public announcement of the agreement to enter into the Merger Agreement or in the event the Business Combination is not completed.

 

   

Expenses and challenges. The Sonder Board considered the expenses to be incurred in connection with the Business Combination and related administrative challenges associated with combining the companies.

 

   

Costs of being a public company. The Sonder Board considered the additional public company expenses and obligations that Sonder’s business will be subject to following the closing of the Business Combination that it has not previously been subject to as a private company.

 

   

Restrictions on operation of Sonder’s business prior to the closing. The Sonder Board considered the fact that, although Sonder will continue to exercise, consistent with the terms and conditions of the Merger Agreement, control and supervision over its operations prior to the closing of the Business Combination, the Merger Agreement generally obligates Sonder, subject to the Company’s prior consent (which consent may not be unreasonably withheld, conditioned or delayed), to conduct its business during the period prior to the closing of the Business Combination in the ordinary course of


 

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business consistent with past practice and in accordance with specified restrictions, which might delay or prevent Sonder from undertaking certain business opportunities that might arise prior to the closing of the Business Combination.

 

   

Interests of Sonder executive officers and directors. The Sonder Board considered the fact that certain executive officers and directors of Sonder have interests in the Business Combination that may be different from, or in addition to, the interests of the Sonder Stockholders generally, including the manner in which they would be affected by the Business Combination. For more information, see the section titled Interests of Certain Persons in the Business Combination—Interests of Certain Sonder Stockholders and Sonder’s Current Officers and Directors.”

 

   

Other risks. The Sonder Board considered various other risks associated with the Business Combination, including the risks described in the section titled “Risk Factors.”

The foregoing discussion of the factors considered by the Sonder Board is not intended to be exhaustive, but, rather, includes the material factors considered by the Sonder Board. In reaching its decision to unanimously approve, and declare advisable, the Merger Agreement, the Mergers and the other transactions contemplated by the Merger Agreement, the Sonder Board did not quantify or assign any relative weights to the factors considered, and individual directors may have given different weights to different factors. The Sonder Board considered all these factors as a whole, including discussions with, and questioning of, Sonder’s management and financial and legal advisors, and, overall, considered these factors to be favorable to, and to support, its determination.

The Sonder Board concluded that the potentially negative factors associated with the Business Combination were outweighed by the potential benefits that it expected the Sonder Stockholders to receive as a result of the Business Combination, including the belief of the Sonder Board that the Business Combination would maximize the immediate value of shares of Sonder Stock and Sonder Preferred Stock and eliminate the risk and uncertainty affecting the future prospects of Sonder, including the potential execution risks associated with going public and pursuing its business plan as a public company. Accordingly, the Sonder Board determined that the Mergers and the other transactions contemplated by the Merger Agreement are advisable and fair to, and in the best interests of, Sonder and the Sonder Stockholders, and unanimously approved, and declared advisable, the Merger Agreement, the Mergers and the other transactions contemplated by the Merger Agreement. The Sonder Board recommends that the Sonder Stockholders execute and deliver a written consent adopting the Merger Agreement and approving the transactions contemplated thereby, including the Business Combination, as described in the section titled “Sonder Solicitation of Written Consents—Purpose of the Consent Solicitation.

Independent Director Oversight

Our Board is comprised of a majority of independent directors who are not affiliated with our Sponsor and its affiliates, including Mr. Dean Metropoulos and The Gores Group. In connection with the Business Combination, our independent directors, Messrs. Randall Bort, Michael Cramer and Joseph Gatto, took an active role in evaluating the proposed terms of the Business Combination, including the Merger Agreement, the Related Agreements and the amendments to the Current Company Certificate to take effect in connection with the consummation of the Business Combination. As part of their evaluation of the Business Combination, our independent directors were aware of the potential conflicts of interest with our Sponsor and its affiliates, including Mr. Metropoulos and The Gores Group, that could arise with regard to the proposed terms of the Merger Agreement and Related Agreements. Our Board did not deem it necessary to, and did not form, a special committee of the Board to exclusively evaluate and negotiate the proposed terms of the Business Combination, as our Board is comprised of a majority of independent and disinterested directors and did not deem the formation of a special committee necessary or appropriate. Our independent directors reviewed and considered these interests during the negotiation of the Business Combination and in evaluating and unanimously approving, as members of our Board, the Merger Agreement and the transactions contemplated therein, including the Business Combination. Please see the section titled “The Business Combination—Independent Director Oversight.


 

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Satisfaction of 80% Test

It is a requirement under the Current Company Certificate and Nasdaq listing requirements that the business or assets acquired in our initial business combination have a fair market value equal to at least 80% of the balance of the funds in the Trust Account (excluding the deferred underwriting commissions and taxes payable on the income earned on the Trust Account) at the time of the execution of a definitive agreement for our initial business combination. As of April 29, 2021, the date of the execution of the Merger Agreement, the balance of the Trust Account was approximately $450,007,028 (excluding $15,750,000 of deferred underwriting commissions and taxes payable on the income earned on the Trust Account) and 80% thereof represents approximately $360,005,623. In reaching its conclusion that the Business Combination meets the 80% asset test, our Board reviewed the enterprise value of Sonder of approximately $2.2 billion, which was implied based on the terms of the transaction agreed to by the parties in negotiating the Merger Agreement. In determining whether the enterprise value described above represents the fair market value of Sonder, our Board considered all of the factors described above in this section and the fact that the purchase price for Sonder was the result of an arm’s length negotiation. As a result, our Board concluded that the fair market value of the business acquired was significantly in excess of 80% of the assets held in the Trust Account (excluding the deferred underwriting commissions and taxes payable on the income earned on the Trust Account).

Special Meeting of the Stockholders of the Company in lieu of the 2021 Annual Meeting of the Company

Date, Time and Place of Special Meeting

In light of public health concerns regarding the COVID-19 pandemic, the Special Meeting will be held via live webcast at [●], on [●], 2021, at [●]. The Special Meeting can be accessed by visiting [●], where you will be able to listen to the meeting live and vote during the meeting. Additionally, you have the option to listen only to the Special Meeting by dialing [●] (toll-free within the U.S. and Canada) or [●] (outside of the U.S. and Canada, standard rates apply). The passcode for telephone access is [●], but you cannot vote or ask questions if you choose to participate telephonically. Please note that you will only be able to access the Special Meeting by means of remote communication.

Proposals

At the Special Meeting, Company stockholders will be asked to consider and vote on:

 

  1.

Business Combination Proposal—To consider and vote upon a proposal to approve the Merger Agreement, a copy of which is attached to this proxy statement/prospectus/consent solicitation statement as Annex A, and the transactions contemplated thereby, including, among other things, the Business Combination (Proposal No. 1);

 

  2.

Nasdaq Proposal—To consider and vote upon a proposal to approve, for purposes of complying with applicable Nasdaq listing rules, the issuance of Common Stock and Post-Combination Company Special Voting Common Stock constituting more than 20% of the Company’s issued and outstanding shares of Common Stock or other securities convertible into or exercisable for common stock in connection with the Business Combination (Proposal No. 2);

 

  3.

Charter Proposal—To consider and act upon a proposal to adopt the proposed Amended and Restated Certificate of Incorporation in the form attached hereto as Annex B (Proposal No. 3);

 

  4.

Governance Proposals—To consider and act upon, on a non-binding advisory basis, a separate proposal with respect to certain governance provisions in the Amended and Restated Certificate of Incorporation in accordance with SEC requirements (Proposal No. 4);

 

  5.

Management Equity Incentive Plan Proposal—To consider and vote upon a proposal to approve the Management Equity Incentive Plan, including the authorization of the initial share reserve under the Incentive Plan (Proposal No. 5);


 

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  6.

Incentive Plan Proposal—To consider and vote upon a proposal to approve the Incentive Plan, including the authorization of the initial share reserve under the Incentive Plan (Proposal No. 6);

 

  7.

ESPP Proposal – To consider and vote upon a proposal to approve the ESPP, including the authorization of the initial share reserve under the ESPP (Proposal No. 7);

 

  8.

Director Election Proposal—To consider and vote upon a proposal to elect four directors to serve on the Company’s Board until the earlier of the consummation of the Business Combination and the 2023 annual meeting of stockholders, and until their respective successors are duly elected and qualified (Proposal No. 8); and

 

  9.

Adjournment Proposal—To consider and vote upon a proposal to allow the chairman of the Special Meeting to adjourn the Special Meeting to a later date or dates, if necessary, to permit further solicitation and vote of proxies if there are insufficient votes for, or otherwise in connection with, the approval of the Business Combination Proposal, the Nasdaq Proposal, the Charter Proposal, the Management Equity Incentive Plan Proposal, the Incentive Plan Proposal, the ESPP Proposal or the Director Election Proposal but no other proposal if the Business Combination Proposal, the Nasdaq Proposal, the Charter Proposal, the Management Equity Incentive Plan Proposal, the Incentive Plan Proposal, the ESPP Proposal and the Director Election Proposal are approved (Proposal No. 9).

Voting Power; Record Date

Only Company stockholders of record at the close of business on [●], 2021, the record date for the Special Meeting, will be entitled to vote at the Special Meeting. Each Company stockholder is entitled to one vote for each share of our Common Stock that such stockholder owned as of the close of business on the record date. If a Company stockholder’s shares are held in “street name” or are in a margin or similar account, such stockholder should contact its broker, bank or other nominee to ensure that votes related to the shares beneficially owned by such stockholder are properly counted. On the record date, there were [●] shares of our Common Stock outstanding, of which [●] are Public Shares and [●] are Founder Shares held by our Initial Stockholders.

Vote of our Initial Stockholders

Our Initial Stockholders have agreed to vote any shares of Common Stock owned by them in favor of the Business Combination Proposal. As of the date hereof, our Initial Stockholders own shares equal to 20% of our issued and outstanding shares of Common Stock. As a result, approximately 38% of our Common Stock held by Public Stockholders will need to vote in favor of the Business Combination Proposal for the Business Combination Proposal to be approved (assuming all of the outstanding shares of Common Stock are represented in person via the virtual meeting platform or by proxy, are entitled to vote at the Special Meeting and cast votes on the Business Combination Proposal).

Quorum and Required Vote for Proposals at the Special Meeting

A majority of the issued and outstanding shares of our Common Stock entitled to vote as of the record date at the Special Meeting must be present, in person via the virtual meeting platform or represented by proxy, at the Special Meeting to constitute a quorum and in order to conduct business at the Special Meeting. The approval of the Business Combination Proposal requires the affirmative vote of a majority of the votes cast by holders of our outstanding shares of Common Stock represented in person via the virtual meeting platform or by proxy and entitled to vote thereon at the Special Meeting. The approval of the Nasdaq Proposal requires the affirmative vote of a majority of the votes cast by holders of our outstanding shares of Common Stock represented in person via the virtual meeting platform or by proxy and entitled to vote thereon at the Special Meeting. The approval of the Charter Proposal requires (i) the affirmative vote of holders of a majority of our outstanding shares of Common Stock entitled to vote thereon at the Special Meeting and (ii) the affirmative vote of holders of a majority of our


 

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outstanding shares of Class F Stock, voting separately as a single class, entitled to vote thereon at the Special Meeting. The approval of the Governance Proposals requires the affirmative vote of a majority of the votes cast by holders of our outstanding shares of Common Stock represented in person via the virtual meeting platform or by proxy and entitled to vote thereon at the Special Meeting. Approval of the Management Equity Incentive Plan Proposal, the Incentive Plan Proposal and the ESPP Proposal requires the affirmative vote of a majority of the votes cast by holders of our outstanding shares of Common Stock represented in person via the virtual meeting platform or by proxy and entitled to vote thereon at the Special Meeting. Approval of the Director Election Proposal requires the affirmative vote of a plurality of votes cast by holders of our outstanding shares of Class F Stock, voting separately as a single class, represented in person via the virtual meeting platform or by proxy and entitled to vote thereon at the Special Meeting. Approval of the Adjournment Proposal requires the affirmative vote of a majority of the votes cast by holders of our outstanding shares of Common Stock represented in person via the virtual meeting platform or by proxy and entitled to vote thereon at the Special Meeting.

Recommendation of our Board of Directors

Our Board believes that approval of each of the Business Combination Proposal, the Nasdaq Proposal, the Charter Proposal, the Governance Proposals, the Management Incentive Plan Proposal, the Incentive Plan Proposal, the ESPP Proposal, the Director Election Proposal and the Adjournment Proposal to be presented at the Special Meeting is in the best interests of the Company and its stockholders and unanimously recommends that its stockholders vote “FOR” each of the proposals.

Recommendation of the Sonder Board of Directors

The Sonder Board believes that adopting the Merger Agreement and approving the transactions contemplated thereby, including the Business Combination, is in the best interest of Sonder and the Sonder Stockholders and unanimously recommends that the Sonder Stockholders execute and deliver the written consent furnished with this proxy statement/prospectus/consent solicitation statement.

In the course of reaching its decision to approve the Mergers, the Merger Agreement and the transactions contemplated thereby, including the Business Combination, the Sonder Board consulted with its senior management, legal counsel, and financial advisors, reviewed a significant amount of information and considered a number of reasons, uncertainties and risks concerning the Mergers and Merger Agreement. The Sonder Board concluded that the potential uncertainties and risks associated with the proposed Mergers were outweighed by the potential benefits of completing the Mergers. Accordingly, on April 29, 2021, after careful consideration, the Sonder Board unanimously approved the Merger Agreement and determined that the Mergers, the Merger Agreement and the transactions contemplated thereby, including the Business Combination, are advisable and fair to, and in the best interests of, Sonder and its stockholders. For the reasons why the Sonder Board reached its decision to approve the Mergers, Merger Agreement, and the transactions contemplated thereby, and for additional information, see the section titled The Business Combination—Recommendation of the Sonder Board and Reasons for the Business Combination beginning on page 175 of this proxy statement/prospectus/consent solicitation statement.

Opinion of the Company’s Financial Advisor

At the meeting of the Board on April 29, 2021 to evaluate and approve the Business Combination, Moelis delivered an oral opinion, which was confirmed by delivery of a written opinion, dated April 29, 2021, addressed to the Board to the effect that, as of the date of the opinion and based upon and subject to the assumptions, conditions and limitations set forth in the opinion, the consideration to be paid by the Company in the Business Combination was fair, from a financial point of view, to the Company.

The full text of Moelis’ written opinion, dated April 29, 2021, which sets forth the assumptions made, procedures followed, matters considered and limitations on the review undertaken in connection with the opinion


 

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(which are also summarized herein), is attached as Annex H to this proxy statement/prospectus/consent solicitation statement and is incorporated herein by reference. Moelis’ opinion was provided for the use and benefit of the Board (solely in its capacity as such and not in any other capacity) in its evaluation of the Business Combination (and, in its engagement letter, Moelis provided its consent to the inclusion of the text of its opinion as part of this proxy statement/prospectus/consent solicitation statement). Moelis’ opinion is limited solely to the fairness, from a financial point of view, of the consideration to be paid by the Company in the Business Combination and does not address the Company’s underlying business decision to effect the Business Combination or the relative merits of the Business Combination as compared to any alternative business strategies or transactions that might be available to the Company. Moelis’ opinion does not constitute a recommendation as to how any stockholder of the Company should vote or act with respect to the Business Combination or any other matter. Moelis’ opinion was approved by a Moelis fairness opinion committee.

Interests of Certain Persons in the Business Combination

Interests of the Company Initial Stockholders and the Company’s Other Current Officers and Directors

In considering the recommendation of our Board to vote in favor of the Business Combination, Company stockholders should be aware that aside from their interests as stockholders, our Sponsor and certain other members of our Board and officers have interests in the Business Combination that are different from, or in addition to, those of other stockholders generally. Our Board was aware of and considered these interests, among other matters, in evaluating and negotiating the Business Combination, and in recommending to Company stockholders that they approve the Business Combination. Company stockholders should take these interests into account in deciding whether to approve the Business Combination.

These interests include, among other things:

 

   

the fact that our Initial Stockholders have agreed not to redeem any of the Founder Shares in connection with a stockholder vote to approve a proposed initial business combination;

 

   

the fact that our Initial Stockholders have agreed to waive their rights to conversion price adjustments with respect to any Founder Shares they may hold in connection with the consummation of the Business Combination. Therefore, shares of Class F Stock held by the Initial Stockholders will convert on a one-for-one basis in connection with the consummation of the Business Combination (including the PIPE Investment);

 

   

the fact that our Sponsor paid an aggregate of $25,000 for 11,500,000 Founder Shares and (after giving effect to the cancellation of 250,000 Founder Shares on March 7, 2021) the remaining 11,250,000 Founder Shares will have a significantly higher value at the time of the Business Combination, which if unrestricted and freely tradable would be valued at approximately $112.5 million but, given the restrictions on such shares, we believe such shares have less value;

 

   

the fact that given the differential in the purchase price that our Sponsor paid for the Founder Shares as compared to the price of the Public Units sold in the Company IPO and the substantial number of shares of Common Stock that our Sponsor will receive upon conversion of the Founder Shares in connection with the Business Combination, our Sponsor and its affiliates may earn a positive rate of return on their investment even if the Common Stock trades below the price initially paid for the Public Units in the Company IPO and the Public Stockholders experience a negative rate of return following the completion of the Business Combination;

 

   

the fact that our Initial Stockholders have agreed to waive their rights to liquidating distributions from the Trust Account with respect to their Founder Shares if we fail to complete an initial business combination by January 22, 2023;


 

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the fact that our Sponsor paid an aggregate of approximately $11,000,000 for its 5,500,000 Private Placement Warrants to purchase shares of Class A Stock, and that such Private Placement Warrants will expire worthless if an initial business combination is not consummated by January 22, 2023. The Private Placement Warrants are identical to the Public Warrants sold as part of the Public Units issued in the Company IPO except that, so long as they are held by our Sponsor or its permitted transferees: (i) they will not be redeemable by us (except as set forth under “Description of Securities—Warrants—Public Warrants—Redemption of Public Warrants for Cash” and “—Redemption of Public Warrants for Class A Stock”); (ii) they (including the Class A Stock issuable upon exercise of these warrants) may not, subject to certain limited exceptions, be transferred, assigned or sold by our Sponsor until 30 days after the completion of an initial business combination; (iii) they may be exercised by the holders on a cashless basis; and (iv) they are subject to registration rights. For addition information regarding the Private Placement Warrants and the Public Warrants, please see “Description of Securities—Warrants—Public Warrants—Redemption of Public Warrants for Cash” and “—Redemption of Public Warrants for Class A Stock”;

 

   

the continued right of our Sponsor to hold our Class A Stock and the shares of Class A Stock to be issued to our Sponsor upon exercise of its Private Placement Warrants following the Business Combination, subject to certain lock-up periods;

 

   

the fact that if the Trust Account is liquidated, including in the event we are unable to complete an initial business combination within the required time period, our Sponsor has agreed to indemnify us 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 we have entered into an acquisition agreement or claims of any third party (other than our independent public accountants) for services rendered or products sold to us, 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 continued indemnification of our existing directors and officers and the continuation of our directors’ and officers’ liability insurance after the Business Combination;

 

   

the fact that, in exchange for serving on the Board, each of our independent directors, Messrs. Bort, Cramer, and Gatto, received a nominal economic interest through the transfer from our Sponsor of 25,000 Founder Shares at their original purchase price of $0.002 per share. If the Company fails to complete an initial business combination by January 22, 2023, these Founder Shares will become worthless. As a result, our independent directors may have a conflict of interest in determining whether a particular business is an appropriate business with which to effectuate the Company’s initial business combination;

 

   

the fact that our Sponsor, officers and directors will lose their entire investment in us and will not be reimbursed for any out-of-pocket expenses if an initial business combination is not consummated by January 22, 2023;

 

   

the fact that our Sponsor, officers and directors would hold the following number of shares in the Post-Combination Company at the closing of the Business Combination:

 

Name of Person/Entity

   Number of shares
of Common
Stock
     Value of Common
Stock(1)
 

Gores Metropoulos Sponsor II, LLC(2)

     15,175,000      $ 151,750,000  

Alec Gores(2)

     15,175,000      $ 151,750,000  

Dean Metropoulos

     0      $ 0  

Andrew McBride

     0      $ 0  

Randall Bort

     25,000      $ 250,000  

Michael Cramer

     25,000      $ 250,000  

Joseph Gatto

     25,000      $ 250,000  

 

(1)

Assumes a value of $10.00 per share, the deemed value of the Common Stock in the Business Combination.


 

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(2)

Represents shares held by the Sponsor which is controlled indirectly by Mr. Gores. Mr. Gores may be deemed to beneficially own 11,175,000 shares of Class F Stock and 4,000,000 shares of Common Stock to be purchased under the Sponsor Subscription Agreement, provided, however, that the Sponsor may choose to syndicate such shares pursuant to the Sponsor Subscription Agreement (and the Company currently expects that all such shares will be syndicated), and ultimately exercises voting and dispositive power of the securities held by the Sponsor. Voting and disposition decisions with respect to such securities are made by Mr. Gores. Mr. Gores disclaims beneficial ownership of these securities except to the extent of any pecuniary interest therein.

 

   

the fact that, at the closing of the Business Combination, we will enter into the Registration Rights Agreement with the Registration Rights Holders, which provides for registration rights to Registration Rights Holders and their permitted transferees;

 

   

the fact that we entered into a Subscription Agreement with our Sponsor, pursuant to which our Sponsor has committed to purchase 4,000,000 shares of Class A Stock (which will be reclassified into Common Stock upon the effectiveness of the Amended and Restated Certificate of Incorporation) in the PIPE Investment for an aggregate commitment of approximately $40,000,000, provided that our Sponsor has the right to syndicate the Class A Stock (which will be reclassified into Common Stock upon the effectiveness of the Amended and Restated Certificate of Incorporation) purchased under such Sponsor Subscription Agreement in advance of the closing of the Business Combination; and

 

   

the fact that we will reimburse our Sponsor for the fees and expenses it incurs in connection with the Business Combination.

In the aggregate, the Sponsor and its affiliates have approximately $123,500,000 at risk that depends upon the completion of a business combination. Specifically, $112,500,000 of such amount is the value of the Sponsor’s and its affiliates’ Class F Stock (assuming a value of $10.00 per share, the deemed value of the Common Stock in the Business Combination), and $11,000,000 of such amount is the value of the Sponsor’s Private Placement Warrants (based on the purchase price of $2.00 per Private Placement Warrant). There are no fees contingent upon a business combination payable to the Sponsor’s affiliates upon consummation of the Business Combination. The foregoing interests present a risk that the Sponsor and its affiliates will benefit from the completion of a business combination, including in a manner that may not be aligned with Public Stockholders. As such, the Sponsor may be incentivized to complete an acquisition of a less favorable target company or on terms less favorable to Public Stockholders rather than liquidate.

These interests may influence our Board in making their recommendation that you vote in favor of the approval of the Business Combination.

Interests of Certain Sonder Stockholders and Sonder’s Current Officers and Directors

When you consider the recommendation of the Sonder Board in favor of adopting the Merger Agreement and approving the transactions contemplated thereby, including the Business Combination, you should keep in mind that certain of Sonder’s directors and officers have interests in the Business Combination that are different from, or in addition to, those of Sonder’s stockholders generally. The Sonder Board was aware of such interests during its deliberations on the merits of the adoption of the Merger Agreement and approval of the transactions contemplated thereby, including the Business Combination, and in deciding to recommend that the Sonder Stockholders submit written consents in favor of the adoption of the Merger Agreement and approval of the transactions contemplated thereby, including the Business Combination. These interests include, among other things:

 

   

Certain of Sonder’s executive officers hold shares of Sonder Stock, the treatment of which is described in the section titled “Proposal No. 1The Business Combination Proposal.” Please see the section titled “Beneficial Ownership of Securities” for more information regarding the shares of Sonder Stock held by Sonder’s executive officers.

 

   

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consummation of the Business Combination. The treatment of such equity awards in connection with the Business Combination is described in the section titled “Proposal No. 1The Business Combination Proposal.” Please see the section titled “Beneficial Ownership of Securities” for more information regarding the shares of Sonder Stock held by Sonder’s executive officers and non-employee directors.

 

   

The non-employee directors of Sonder have a direct or indirect ownership interest in Sonder Stock, which are described in the section titled “Beneficial Ownership of Securities.”

 

   

Sonder’s executive officers will be eligible to receive equity grants under the Management Equity Incentive Plan, under which 14,500,000 shares of Common Stock may be awarded. One-sixth of the share pool becomes available for issuance based on (including prior to but contingent on) the occurrence of each of six distinct triggering events, which occur if the stock price of the Common Stock is equal to or greater than $13.00, $15.50, $18.00, $20.50, $23.00, or $25.50, respectively, within the five year period after the expiration of the lock up period. For additional information, please see the section titled “Proposal No. 5—The Management Equity Incentive Plan Proposal.”

 

   

Sonder’s Chief Executive Officer, Francis Davidson, has agreed to sell 1,829,268 shares of Common Stock acquired in connection with the Business Combination to certain purchasers immediately following the consummation of the Business Combination for $8.20 per share for the purpose of satisfying personal tax liabilities related to his stock ownership and departure tax related to his move from Canada to the United States. The sales are conditioned upon the consummation of the Business Combination.

 

   

Certain of Sonder’s directors and executive officers are expected to become directors and/or executive officers of the Post-Combination Company upon the consummation of the Business Combination. Specifically, the following individuals who are currently executive officers of Sonder are expected to become executive officers of the Post-Combination Company upon the consummation of the Business Combination, serving in the offices set forth opposite their names below.

 

Name

  

Position

Francis Davidson

   Chief Executive Officer and Director

Sanjay Banker

   President and Chief Financial Officer

Nicole LaFlamme

   Vice President of Human Resources

Satyen Pandya

   Chief Technology Officer

Ritesh Patel

   Vice President, Corporate Controller

Martin Picard

   Global Head of Real Estate

Philip Rothenberg

   General Counsel and Secretary

 

   

The following individuals, Manon Brouillette, Francis Davidson, Nabeel Hyatt and Frits Dirk van Paasschen, who are currently directors of Sonder, are expected to become directors of the Post-Combination Company upon the consummation of the Business Combination. Additionally, following her appointment to the Sonder Board in August 2021, Janice Sears is also expected to become a director of the Post-Combination Company upon the consummation of the Business Combination.

 

   

At the closing of the Business Combination, the Company will enter into the Registration Rights Agreement with the Registration Rights Holders (in which certain members of Sonder’s Board and affiliates are included), which provides for registration rights to Registration Rights Holders and their permitted transferees.


 

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Redemption Rights

Pursuant to the Current Company Certificate, holders of Public Shares may elect to have their shares redeemed for cash at the applicable redemption price per share equal to the quotient obtained by dividing (i) the aggregate amount on deposit in the Trust Account as of two business days prior to the consummation of the Business Combination, including interest not previously released to us to fund Regulatory Withdrawals and/or to pay its franchise and income taxes, by (ii) the total number of then-outstanding Public Shares; provided that we will not redeem any shares of Class A Stock issued in the Company IPO to the extent that such redemption would result in our failure to have net tangible assets (as determined in accordance with Rule 3a51-1(g)(1) of the Exchange Act) in excess of $5,000,000. As of June 30, 2021, the estimated per share redemption price would have been approximately $10.00. Notwithstanding the foregoing, a holder of the Public Shares, together with any affiliate of his or her or any other person with whom he or she is acting in concert or as a “group” (as defined in Section 13(d)-(3) of the Exchange Act) will be restricted from exercising redemption rights with respect to more than an aggregate of 20% of the shares of Class A Stock included in the units sold in the Company IPO.

If a holder exercises its redemption rights, then such holder will be exchanging its shares of our Class A Stock for cash and will no longer own shares of the Post-Combination Company. Such a holder will be entitled to receive cash for its Public Shares only if it properly demands redemption, identifies to the Company the beneficial holder of the Public Shares being redeemed and delivers its shares (either physically or electronically) to our Transfer Agent in accordance with the procedures described herein. Please see the section titled “Special Meeting of the Stockholders of the Company in Lieu of 2021 Annual Meeting of Company Stockholders—Redemption Rights” for the procedures to be followed if you wish to redeem your shares for cash.

Treatment of Sonder Equity Awards

Sonder Stock Options. As of the effective time of the First Merger, each Sonder Stock Option, to the extent then outstanding and unexercised, will automatically be converted into an option, subject to the same terms and conditions as were applicable to the corresponding Sonder Stock Option prior to the closing of the Business Combination, to acquire a number of shares of Common Stock (rounded down to the nearest whole share) equal to (i) the number of shares of Sonder Common Stock subject to the Sonder Stock Option immediately prior to the effective time of the First Merger multiplied by (ii) the Option Exchange Ratio (rounded down to the nearest whole number of shares of Common Stock), at a per share exercise price equal to (x) the per share exercise price of the Sonder Stock Option immediately prior to the effective time of the First Merger divided by (y) the Option Exchange Ratio (rounded up to the nearest whole cent).

Sonder Warrants. As of the effective time of the First Merger, each Sonder Warrant that is not exercised and exchanged prior to the effective time of the First Merger will automatically, without any action on the part of the holder thereof, be converted into a warrant to acquire a number of shares of Common Stock at an adjusted exercise price per share (each such resulting warrant, an “Assumed Warrant”). Each Assumed Warrant will be subject to the same terms and conditions as were applicable to such corresponding Sonder Warrant immediately prior to the First Merger (including applicable vesting conditions), except to the extent such terms or conditions are rendered inoperative by the Business Combination. Accordingly, effective as of the effective time of the First Merger, each such Assumed Warrant will be exercisable solely for shares of Common Stock. The number of shares of Common Stock subject to each Assumed Warrant will be determined by multiplying (i) the number of shares of Sonder Common Stock subject to the Sonder Warrant by (ii) the Per Share Sonder Common Stock Consideration, and rounding the resulting number down to the nearest whole number of shares of Common Stock. The per share exercise price for the Common Stock issuable upon exercise of such Assumed Warrant will be determined by dividing (i) the per share exercise price for the shares of Sonder Common Stock subject to the Sonder Warrant, as in effect immediately prior to the effective time of the First Merger, by (ii) the Per Share Sonder Common Stock Consideration, and rounding the resulting exercise price up to the nearest whole cent. Additionally, each holder of an Assumed Warrant will be entitled to Earn Out Shares pursuant to the terms of the Merger Agreement.


 

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Certain Information Relating to the Company and Sonder

Company Board and Executive Officers before the Business Combination

The following individuals currently serve as directors and executive officers of the Company:

 

Name

   Age     

Position

Dean Metropoulos

     75      Chairman

Alec Gores

     68      Chief Executive Officer and Director

Andrew McBride

     40      Chief Financial Officer and Secretary

Randall Bort

     56      Director

Michael Cramer

     68      Director

Joseph Gatto

     63      Director

Sonder’s Board of Directors and Executive Officers before the Business Combination

 

Name

   Age     

Position

Executive Officers

     

Francis Davidson

     28      Chief Executive Officer and Director

Sanjay Banker

     46      President and Chief Financial Officer

Nicole LaFlamme

     41      Vice President of Human Resources

Satyen Pandya

     47      Chief Technology Officer

Ritesh Patel

     40      Vice President, Corporate Controller

Martin Picard

     35      Global Head of Real Estate

Philip Rothenberg

     51      General Counsel and Secretary

Non-Employee Directors

     

Manon Brouillette

     53      Director

Nabeel Hyatt

     44      Director

Vivek Pattipati

     35      Director

Janice Sears

     61      Director

Frits Dirk van Paasschen

     60      Director

Post-Combination Company Board and Executive Officers

The following individuals are expected to serve as directors and executive officers of the Post-Combination Company upon consummation of the Business Combination:

 

Name

   Age     

Position

Executive Officers

     

Francis Davidson

     28      Chief Executive Officer and Director

Sanjay Banker

     46      President and Chief Financial Officer

Nicole LaFlamme

     41      Vice President of Human Resources

Satyen Pandya

     47      Chief Technology Officer

Ritesh Patel

     40      Vice President, Corporate Controller

Martin Picard

     35      Global Head of Real Estate

Philip Rothenberg

     51      General Counsel and Secretary

Non-Employee Directors

     

Manon Brouillette

     53      Director

Nabeel Hyatt

     44      Director

Janice Sears

     61      Director

Frits Dirk van Paasschen

     60      Director

 

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Listing of Securities

The Public Shares, Public Units and Public Warrants are traded on Nasdaq under the ticker symbols “GMII,” “GMIIU” and “GMIIW,” respectively. The Company intends to apply to continue the listing of its Common Stock (following the reclassification of Class A Stock into Common Stock upon the effectiveness of the Amended and Restated Certificate of Incorporation) and Public Warrants on Nasdaq under the symbols “SOND” and “SONDW,” respectively, upon the closing of the Business Combination.

Comparison of Stockholder Rights

There are certain differences in the rights of the Company stockholders and the Sonder Stockholders prior to the Business Combination and after the Business Combination. Please see the section titled “Comparison of Stockholder Rights.”

Regulatory Approvals

Under the HSR Act and the rules that have been promulgated thereunder, certain transactions may not be consummated until the parties to these transactions each submit a premerger notification filing (the “Notification and Report Form”) to the FTC and the Antitrust Division and the expiration or termination of the applicable waiting period(s) following the filing of the Notification and Report Form.

The Company and Sonder filed their respective Notification and Report Forms under the HSR Act with the Antitrust Division and the FTC on May 13, 2021. The 30-day waiting period with respect to the Business Combination expired at 11:59 p.m. Eastern Time on June 14, 2021.

At any time before or after consummation of the Business Combination, notwithstanding expiration of the waiting period under the HSR Act, the applicable competition authorities could take such action under applicable antitrust laws as each deems necessary or desirable in the public interest, including seeking to enjoin the consummation of the Business Combination. Private parties may also seek to take legal action under the antitrust laws under certain circumstances. We 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, we cannot assure you as to its result. Neither the Company nor Sonder is aware of any material regulatory approvals or actions that are required for consummation 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.

Material U.S. Federal Income Tax Considerations Relating to the Merger and the Exercise of Redemption Rights to Holders of Class A Stock

Subject to the discussion and qualifications set forth in the section entitled “Material U.S. Federal Income Tax Considerations of the Business Combination,” the Company and the holders of our Class A Stock that elect not to redeem their shares of Class A Stock will not have any U.S. federal income tax consequences as a result of the Mergers that effect the Business Combination. As described more fully herein, a holder of Class A Stock that exercises its redemption rights to receive cash in exchange for such shares may be treated as selling its Class A Stock resulting in the recognition of gain or loss. There may be certain circumstances in which the redemption may be treated as a distribution in an amount equal to the redemption proceeds, for U.S. federal income tax purposes, depending on the amount of our Class A Stock that a holder owns or is deemed to own by attribution (including through the ownership of warrants).


 

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Please see the section titled “Material U.S. Federal Income Tax Considerations of the Business Combination—Material U.S. Federal Income Tax Considerations for Holders of Class A Stock” for additional information. You are urged to consult your tax advisors regarding the tax consequences of exercising your redemption rights.

Accounting Treatment of the Business Combination

The Business Combination will be accounted for as a reverse recapitalization in accordance with generally accepted accounting principles (“GAAP”) as Sonder has been determined to be the accounting acquirer, primarily due to the fact that Sonder Stockholders will continue to control the Post-Combination Company. Under this method of accounting, while the Company is the legal acquirer, it will be treated as the “acquired” company for financial reporting purposes. Accordingly, the Business Combination will be treated as the equivalent of Sonder issuing stock for the net assets of the Company, accompanied by a recapitalization, which will be stated at historical cost, with no goodwill or other intangible assets recorded. Operations prior to the Business Combination will be presented as those of Sonder in future reports of the Post-Combination Company.

Appraisal Rights

Appraisal rights or dissenters’ rights are not available to holders of our Common Stock in connection with the Business Combination.

Pursuant to Section 262 of the DGCL, the Sonder Stockholders who comply with the applicable requirements of Section 262 of the DGCL and do not otherwise fail to perfect, waive, withdraw or lose the right to appraisal under Delaware law have the right to seek appraisal of the fair value of their shares of Sonder Stock, as determined by the Court of Chancery, if the Mergers are completed. A summary of the appraisal rights that may be available to the Sonder Stockholders is described in this proxy statement/prospectus/consent solicitation statement in the section titled “Appraisal Rights,” which is qualified by the copy of Section 262 of the DGCL attached as Annex L to this proxy statement/prospectus/consent solicitation statement.

Proxy Solicitation

We are soliciting proxies on behalf of our Board. Proxies may be solicited by mail, via telephone or via e-mail or other electronic correspondence. We have engaged Morrow to assist in the solicitation of proxies.

If a Company stockholder grants a proxy, such stockholder may still vote its shares in person via the virtual meeting platform if it revokes its proxy before the Special Meeting. A Company stockholder may also change its vote by submitting a later-dated proxy, as described in the section titled “Special Meeting of the Stockholders of the Company in Lieu of the 2021 Annual Meeting of the Company—Revoking Your Proxy.”

Sonder Solicitation of Written Consents

Sonder will solicit the written consent of Sonder Stockholders to adopt the Merger Agreement and approve the transactions contemplated thereby, including the Business Combination, prior to the consummation of the Business Combination. The Sonder Stockholders are being asked to adopt the Merger Agreement and approve the transactions contemplated thereby, including the Business Combination, by executing and delivering the written consent furnished with this proxy statement/prospectus/consent solicitation statement.

Record Date; Sonder Stockholders Entitled to Consent

Only the Sonder Stockholders of record holding shares of Sonder Stock, Sonder Preferred Stock or Sonder Special Voting Stock at the close of business on the Sonder Record Date, April 29, 2021, will be notified of and


 

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be entitled to sign and deliver written consents with respect to the written consent furnished with this proxy statement/prospectus/consent solicitation statement.

On the Sonder Record Date, there were 105,490,345 shares outstanding of Sonder capital stock eligible to consent with respect to the Sonder Proposal, consisting of (i) 75,757,555 shares of Sonder Preferred Stock (which includes 38,886,731 shares of Sonder Senior Preferred Stock), (ii) 7,715,677 shares of Sonder Common Stock, and (iii) 22,017,113 shares of Sonder Special Voting Stock (which includes 12,579,755 shares of Sonder Special Voting Preferred Stock). On the Sonder Record Date, the shares outstanding of outstanding capital stock included 18,832,374 shares of Series C Preferred Stock, Series C-1 Preferred Stock and Special Voting Series C Stock together (including 3,513,536 shares of Series C-1 Preferred Stock), 21,484,383 shares of Series D Preferred Stock, Series D-1 Preferred Stock, and Special Voting Series D Stock together (including 16,049,365 shares of Series D-1 Preferred Stock), and 19,376,754 shares of Series E Preferred Stock and Special Voting Series E Stock together.

Interests of Certain Persons in the Business Combination

In considering whether to adopt the Merger Agreement and approve the transactions contemplated thereby, including the Business Combination, by executing and delivering the written consent, the Sonder Stockholders should be aware that aside from their interests as stockholders, Sonder’s officers and members of Sonder’s board of directors have interests in the Business Combination that are different from, or in addition to, those of other Sonder Stockholders generally. The Sonder Stockholders should take these interests into account in deciding whether to approve the Business Combination. For additional information please see the section titled “The Business Combination—Interests of Certain Persons in the Business Combination—Interests of Certain Sonder Stockholders and Sonder’s Current Officers and Directors” beginning on page 201 of this proxy statement/prospectus/consent solicitation statement.

Submission of Consents

If you hold shares of Sonder Stock, Sonder Preferred Stock or Sonder Special Voting Stock as of the Sonder Record Date and you wish to give your written consent, you must complete, date and sign the written consent distributed with this proxy statement/prospectus/consent solicitation statement. You may either electronically sign the written consent sent by Sonder to your electronic address on record at Sonder or manually sign and email a scanned copy of the Sonder Stockholder’s signature page to Sonder’s legal advisor, Wilson Sonsini, at the following email address: aminor@wsgr.com.

Executing Consents; Revocation of Consents

You may execute a written consent to adopt the Merger Agreement and approve the transactions contemplated thereby, including the Business Combination. If you do not execute and return your written consent, or otherwise withhold your written consent, it will have the same effect as voting against the adoption of the Merger Agreement and the approval of the transactions contemplated thereby, including the Business Combination.

Solicitation of Consents; Expenses

The expense of preparing, printing and mailing these consent solicitation materials is being borne by Sonder. Officers and directors of Sonder may solicit consents by telephone and personally, in addition to solicitation by mail. These persons will receive their regular salaries but no special compensation for soliciting consents.

Risk Factor Summary

In evaluating the Business Combination and the proposals to be considered and voted on at the Special Meeting, you should carefully review and consider the risk factors set forth in the section titled “Risk Factors.” The occurrence of one or more of the events or circumstances described in that section, alone or in combination


 

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with other events or circumstances, may have a material adverse effect on (i) our ability and Sonder’s ability to complete the Business Combination and (ii) the business, cash flows, financial condition and results of operations of the Post-Combination Company.

 

   

Sonder’s actual results may differ materially from its forecasts and projections.

 

   

Sonder’s results could be negatively affected by changes in travel, hospitality, real estate and vacation markets.

 

   

Sonder may be unable to negotiate satisfactory leases or other arrangements to operate new properties, onboard new properties in a timely manner, or renew or replace existing properties on satisfactory terms or at all.

 

   

Delays in real estate development and construction projects related to Sonder’s leases could adversely affect Sonder’s ability to generate revenue from such leased buildings.

 

   

Newly leased properties may generate revenue later than Sonder estimated, and may be more difficult or expensive to integrate into Sonder’s operations than expected.

 

   

Sonder’s limited operating history and evolving business make it difficult to evaluate its future prospects and challenges.

 

   

Sonder may be unable to effectively manage its growth.

 

   

The COVID-19 pandemic and efforts to reduce its spread have had, and will likely continue to have, a negative impact on Sonder.

 

   

Sonder has incurred net losses each year since its inception, including net losses of $152.5 million and $122.5 million for the six months ended June 30, 2021 and 2020, respectively, and $250.3 million and $178.2 million for the years ended December 31, 2020 and December 31, 2019, respectively and an accumulated deficit of $672.9 million as of June 30, 2021, and Sonder may not be able to achieve or maintain future profitability.

 

   

Costs relating to the opening, operation and maintenance of its leased properties could be higher than expected.

 

   

Sonder depends on landlords to deliver properties in a suitable condition and to manage and maintain its properties.

 

   

Sonder’s long-term and fixed-cost leases limit its flexibility.

 

   

Under certain circumstances, Sonder’s leases may be subject to termination prior to the scheduled expiration of the term, which can be disruptive and costly.

 

   

Sonder may be unable to attract new guests or generate repeat bookings.

 

   

Sonder may be unable to introduce upgraded amenities, services or features for its guests in a cost-efficient manner.

 

   

Sonder operates in the highly competitive hospitality market.

 

   

Sonder uses third-party distribution channels to market its units, and these channels have historically accounted for a substantial percentage of Sonder’s bookings.

 

   

Sonder’s results of operations vary from period-to-period, and historical performance may not be indicative of future performance.

 

   

Sonder’s long-term success depends, in part, on Sonder’s ability to expand internationally, and Sonder’s business is susceptible to risks associated with international operations.


 

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Sonder’s business depends on its reputation and the strength of its brand, and any deterioration could adversely impact its market share, revenues, business, financial condition, or results of operations.

 

   

Claims, lawsuits, and other proceedings could adversely affect Sonder’s business.

 

   

Sonder may be subject to liability or reputational damage for the activities of its guests or other incidents at Sonder’s properties.

 

   

Sonder is subject to claims and liabilities associated with potential health and safety issues and hazardous substances at properties.

 

   

Sonder must attract and retain sufficient, highly skilled personnel and is subject to risks associated with the employment of hospitality personnel, including unionized labor.

 

   

Sonder has identified material weaknesses in its internal control over financial reporting and may identify material weaknesses in the future or otherwise fail to maintain an effective system of internal controls, which may result in material misstatements of its consolidated financial statements.

 

   

Sonder relies on third parties for important services and technologies, and their availability and performance are uncertain.

 

   

Sonder’s processing, storage, use and disclosure of personal data exposes it to risks of internal or external security breaches and could give rise to liabilities and/or damage to reputation.

 

   

Failure to comply with privacy, data protection, consumer protection, marketing and advertising laws could adversely affect Sonder.

 

   

Sonder faces risks related to its intellectual property.

 

   

Sonder’s business is highly regulated across multiple jurisdictions, including evolving and sometimes uncertain short-term rental regulations and tax laws, which may limit Sonder’s growth or otherwise negatively affect it.

 

   

Sonder’s indebtedness and credit facilities contain financial covenants and other restrictions that may limit its operational flexibility or otherwise adversely affect its results of operations.

Risks Related to the Company and the Business Combination

 

   

Our Initial Stockholders have agreed to vote in favor of the Business Combination described in this proxy statement/prospectus/consent solicitation statement, regardless of how our Public Stockholders vote.

 

   

Because the Post-Combination Company will become a publicly listed company by virtue of a merger as opposed to an underwritten initial public offering (which uses the services of one or more underwriters), less due diligence on the Post-Combination Company may have been conducted.

 

   

Our Sponsor, certain members of our Board and our officers have interests in the Business Combination that are different from or are in addition to other stockholders in recommending that stockholders vote in favor of approval of the Business Combination Proposal and approval of the other proposals described in this proxy statement/prospectus/consent solicitation statement.

 

   

Our Sponsor, directors or officers or their affiliates may elect to purchase shares from Public Stockholders, which may influence a vote on a proposed Business Combination and the other proposals described in this proxy statement/prospectus/consent solicitation statement and reduce the public “float” of our Class A Stock.

 

   

Our Public Stockholders will experience dilution as a consequence of, among other transactions, the issuance of Common Stock as consideration in the Business Combination (including the PIPE Investment). Having a minority share position may reduce the influence that our current stockholders have on the management of the Post-Combination Company. Based on the assumptions regarding Cumulative Dilution Sources set forth in the section titled “Risk Factors-Risks Related to the Company


 

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and the Business Combination,” we estimate that in the no redemption scenario, Public Stockholders’ ownership of the Company would be reduced from 80% of the Common Stock prior to the Business Combination to (i) 15.3% of the Post-Combination Company’s Stock (and voting power) following the Business Combination without giving effect to any dilution from the Additional Dilution Sources or (ii) 11.9% of the Post-Combination Company’s Stock (and voting power) following the Business Combination assuming the estimated maximum dilutive effect of the Additional Dilution Sources.

 

   

In the illustrative redemption scenario, Public Stockholders’ ownership of the Company would be reduced from 80% of the Common Stock prior to the Business Combination to (i) 13.1% of the Post-Combination Company’s Stock (and voting power) following the Business Combination without giving effect to any dilution from the Additional Dilution Sources or (ii) 10.1% of the Post-Combination Company’s Stock (and voting power) following the Business Combination assuming the estimated maximum dilutive effect of the Additional Dilution Sources.

 

   

In the contractual maximum redemption scenario, Public Stockholders’ ownership of the Company would be reduced from 80% of the Common Stock prior to the Business Combination to (i) 10.8% of the Post-Combination Company’s Stock (and voting power) following the Business Combination without giving effect to any dilution from the Additional Dilution Sources or (ii) 8.3% of the Post-Combination Company’s Stock (and voting power) following the Business Combination assuming the estimated maximum dilutive effect of the Additional Dilution Sources.

 

   

In the charter redemption limitation scenario, Public Stockholders’ ownership of the Company would be reduced from 80% of the Common Stock prior to the Business Combination to (i) 0.2% of the Post-Combination Company’s Stock (and voting power) following the Business Combination without giving effect to any dilution from the Additional Dilution Sources or (ii) 0.2% of the Post-Combination Company’s Stock (and voting power) following the Business Combination assuming the estimated maximum dilutive effect of the Additional Dilution Sources.

 

   

If a Public Stockholder exercises its redemption rights, such exercise will not result in the loss of any warrants that it may hold. We cannot predict the ultimate value of the Company Warrants following the consummation of the Business Combination, but assuming that 100% or 45,000,000 shares of Class A Stock held by our Public Stockholders were redeemed, the 9,000,000 retained outstanding Public Warrants would have an aggregate value of $[●], based on the price per Public Warrant of $[●] on [●], 2021, the most recent practicable date prior to the date of this proxy statement/prospectus/consent solicitation statement. In addition, on [●], 2021, the most recent practicable date prior to the date of this proxy statement/prospectus/consent solicitation statement, the price per share of Class A Stock closed at $[●]. If the shares of Class A Stock are trading above the exercise price of $11.50 per warrant, the warrants are considered to be in the money and are therefore more likely to be exercised by the holders thereof (when they become exercisable). This in turn increases the risk to non-redeeming stockholders that the warrants will be exercised, which would result in immediate dilution to the non-redeeming stockholders.

 

   

We have no operating history and are subject to a mandatory liquidation and subsequent dissolution requirement. As such, there is a risk that we will be unable to continue as a going concern if we do not consummate an initial business combination by January 22, 2023. Unless we amend the Current Company Certificate (which requires the affirmative vote of 65% of all then outstanding shares of Class A Stock) and amend certain other agreements into which we have entered to extend the life of the Company, if we are unable to effect an initial business combination by January 22, 2023, we will be forced to liquidate and our warrants will expire worthless.

 

   

Our ability to successfully effect the Business Combination and to be successful thereafter will be dependent upon the efforts of our key personnel, including the key personnel of Sonder whom we expect to stay with the Post-Combination Company. The loss of key personnel could negatively impact the operations and profitability of the Post-Combination Company and its financial condition could suffer as a result.


 

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We may waive one or more of the conditions to the Business Combination.

 

   

The exercise of discretion by our directors and officers in agreeing to changes to the terms of or waivers of closing conditions in the Merger Agreement may result in a conflict of interest when determining whether such changes to the terms of the Merger Agreement or waivers of conditions are appropriate and in the best interests of our stockholders.

 

   

We and Sonder will incur significant transaction and transition costs in connection with the Business Combination, including the Deferred Discount of 3.5%, 4.2%, 5.25% and 315% of the value of the cash remaining in the Trust Account assuming the no redemption scenario, the illustrative redemption scenario, the contractual maximum redemption scenario and the charter redemption limitation scenario, respectively (based on Trust Account balances of $450,018,248, $375,000,006, $300,000,005 and $5,000,003 in the no redemption scenario, illustrative redemption scenario, contractual maximum redemption scenario and charter redemption limitation scenario, respectively).

 

   

If third parties bring claims against us, the proceeds held in the Trust Account could be reduced and the per-share redemption amount received by stockholders may be less than $10.00 per share.

 

   

We have no operating or financial history and our results of operations and those of the Post-Combination Company may differ significantly from the unaudited pro forma financial data included in this proxy statement/prospectus/consent solicitation statement.

 

   

If the Business Combination’s benefits do not meet the expectations of investors, stockholders or financial analysts, the market price of our securities may decline.

 

   

Past performance by Mr. Metropoulos, Mr. Gores or The Gores Group, including our management team, may not be indicative of future performance of an investment in the Company or the Post-Combination Company.


 

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Selected Historical Financial Data for the Company

The following table contains selected historical financial data for the Company as of and for the six months ended June 30, 2021 and as of December 31, 2020 and for the period from July 21, 2020 (inception) through December 31, 2020. Such data as of and for the six months ended June 30, 2021 has been derived from the unaudited financial statements of the Company included elsewhere in this proxy statement/prospectus/consent solicitation statement. Such data as of December 31, 2020 and for the period from July 21, 2020 (inception) through December 31, 2020 has been derived from the audited financial statements of the Company included elsewhere in this proxy statement/prospectus/consent solicitation statement. The information below is only a summary and should be read in conjunction with the sections titled Company Management’s Discussion and Analysis of Financial Condition and Results of Operations” and in the Company’s financial statements, and the notes and schedules related thereto, which are included elsewhere in this proxy statement/prospectus/consent solicitation statement.

 

(in thousands, except per share amounts)

   As of and
for the

Six Months
Ended

June 30,
2021
     As of
December 31, 2020
and for the
Period from
July 21, 2020
(inception)
through
December 31, 2020
 

Statement of Operations Data:

     

Total operating expenses

   $ 743      $ (40

Net income (loss)

   $ 761      $ (40

Basic and diluted net loss per share,
Class A Common Stock

   $ (0.78    $ —  

Basic and diluted net loss per share,
Class F Common Stock

   $ (0.78    $ (0.00 )

Balance Sheet Data:

     

Total assets

   $ 451,614    $   446

Total liabilities

   $ 40,557    $ 461

Total redeemable ordinary shares

   $ 450,000    $ —  

Total stockholders’ deficit

   $ (38,943    $ (15

Cash Flow Data:

     

Net cash used in operating activities

   $
(2,176

   $ (33

Net cash used in investing activities

   $ (450,018    $ —  

Net cash provided by financing activities

   $ 452,087    $   193

Selected Historical Financial Information of Sonder

The selected historical consolidated statements of operations data of Sonder for the years ended December 31, 2020 and 2019 and the historical consolidated balance sheet data as of December 31, 2020 and 2019 are derived from Sonder’s audited consolidated financial statements included elsewhere in this proxy statement/prospectus/consent solicitation statement. The selected historical condensed consolidated statements of operations data of Sonder for the six months ended June 30, 2021 and 2020 and the condensed consolidated balance sheet data as of June 30, 2021 are derived from Sonder’s unaudited interim condensed consolidated financial statements included elsewhere in this proxy statement/prospectus/consent solicitation statement. In Sonder’s management’s opinion, the unaudited interim condensed consolidated financial statements include all adjustments necessary to state fairly Sonder’s financial position as of June 30, 2021 and the results of operations for the six months ended June 30, 2021 and 2020.

 


 

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Sonder’s historical results are not necessarily indicative of the results that may be expected in the future and Sonder’s results for the six months ended June 30, 2021 are not necessarily indicative of the results that may be expected for the full year ending December 31, 2021 or any other period. You should read the following selected historical consolidated financial data together with the section titled “Sonder Management’s Discussion and Analysis of Financial Condition and Results of Operations” and Sonder’s consolidated financial statements and related notes included elsewhere in this proxy statement/prospectus/consent solicitation statement.

 

     Six Months Ended
June 30,
     Years Ended
December 31,
 

(in thousands)

   2021      2020      2020      2019  

Consolidated Statement of Operations and Comprehensive Loss

           

Revenue

   $ 78,827    $ 60,722    $ 115,678    $ 142,910

Costs and expenses:

           

Cost of revenue

     82,950        75,313        136,995      124,866

Operations and support

     60,312        57,704        115,072      105,401

General and administrative

     56,764        36,424        77,033      60,894

Research and development

     7,385        9,478        17,552      15,737

Sales and marketing

     7,399        7,297        12,848      7,115
  

 

 

    

 

 

    

 

 

    

 

 

 

Total costs and expenses

   $ 214,810    $ 186,216    $ 359,500    $ 314,013

Selected Historical Financial Data of the Post-Combination Company on a Pro Forma Basis

The historical results of the unaudited pro forma condensed combined financial information was derived from and should be read in conjunction with the following historical financial statements and the accompanying notes, which are included elsewhere in this proxy statement/prospectus/consent solicitation statement:

 

   

the accompanying notes to the unaudited pro forma condensed combined financial information;

 

   

the unaudited financial statements of the Company as of June 30, 2021 and for the six months ended June 30, 2021;

 

   

the unaudited financial statements of Sonder as of June 30, 2021 and for the six months ended June 30, 2021;

 

   

the historical audited financial statements of the Company as of December 31, 2020 and for the period from July 21, 2020 (inception) through December 31, 2020;

 

   

the historical audited financial statements of Sonder as of and for the year ended December 31, 2020;

 

   

other information relating to the Company and Sonder included in this proxy statement/prospectus/consent solicitation statement, including the Merger Agreement and the description of certain terms thereof set forth under the section titled “The Business Combination”; and

 

   

the sections titled “Company Management’s Discussion and Analysis of Financial Condition and Results of Operations” and “Sonder Management’s Discussion and Analysis of Financial Condition and Results of Operations” and other financial information included elsewhere in this proxy statement/prospectus/consent solicitation statement.

 


 

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Selected Unaudited Pro Forma Condensed

Combined Statement of Operations Data

(in thousands, except per share amounts)

   Pro Forma
Combined
(Assuming No
Redemptions)
     Pro Forma
Combined
(Assuming

Contractual
Maximum
Redemptions)
 

For the Six Months Ended June 30, 2021

     

Revenue

   $ 78,827      $ 78,827  

Net loss

   $ (142,004)      $ (142,004)  

Net loss per share of Class A Stock—basic and diluted

   $ (0.52)      $ (0.55)  

Weighted-average shares outstanding of Class A Stock—basic and diluted

     274,424,088      259,422,872  

For the Year Ended December 31, 2020

     

Revenue

   $ 115,678    $ 115,678

Net loss

   $ (251,661    $ (251,661

Net loss per share of Class A Stock—basic and diluted

   $ (0.92    $ (0.97

Weighted-average shares outstanding of Class A Stock—basic and diluted

     274,424,088        259,422,872  

Selected Unaudited Pro Forma Condensed Combined

     

Balance Sheet Data as of June 30, 2021

     

Total assets

   $ 836,030      $ 686,012  

Total liabilities

   $ 244,655      $ 244,655  

Total stockholders’ equity

   $ 591,375      $ 441,357  

Selected Comparative Per Share Information

Comparative Per Share Data of the Company

The following table sets forth the closing market prices per share of the Public Units, Public Shares and Public Warrants as reported by Nasdaq on April 29, 2021, the last trading day before the Business Combination was publicly announced, and on [●], 2021, the last practicable trading day before the date of this proxy statement/prospectus/consent solicitation statement.

 

Trading Date

   Public
Units
(GMIIU)
     Public
Shares
(GMII)
     Public
Warrants
(GMIIW)
 

April 29, 2021

   $ 10.25    $ 9.94    $ 1.43

[●], 2021

   $ [●]      $ [●]      $ [●]  

The market prices of our securities could change significantly. Because the consideration payable in the Business Combination pursuant to the Merger Agreement will not be adjusted for changes in the market prices of the Public Shares, the value of the consideration that the Sonder Stockholders will receive in the Business Combination may vary significantly from the value implied by the market prices of shares of Public Shares on the date of the Merger Agreement, the date of this proxy statement/prospectus/consent solicitation statement, and the date on which Company stockholders vote on the approval of the Merger Agreement. Company stockholders are urged to obtain current market quotations for our securities before making their decision with respect to the approval of the Merger Agreement.


 

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Comparative Per Share Data of Sonder

Historical market price information regarding Sonder is not provided because there is no public market for Sonder Stock.

Comparative Historical and Pro Forma Per Share Data

The following table sets forth summary historical comparative share information for the Company and Sonder, respectively and selected unaudited pro forma condensed combined per share information of the Post-Combination Company after giving effect to the Business Combination, presented under two scenarios:

 

   

Assuming Minimum Redemptions: This scenario assumes that no Public Stockholders of the Company exercise redemption rights with respect to their Public Shares for a pro rata share of the funds in the Trust Account.

 

   

Assuming Contractual Maximum Redemptions: This scenario assumes that Public Stockholders holding 15 million Public Shares will exercise their redemption rights for their pro rata share (approximately $10.00 per share) of the funds in the Trust Account. The Merger Agreement provides that the consummation of the Business Combination is conditioned on the Company having funds at the closing of the Business Combination of at least $500 million.

The pro forma book value information reflects the Business Combination as if it had occurred on June 30, 2021. The weighted average shares outstanding and net loss per share information for the six months ended June 30, 2021 and for the year ended December 31, 2020 reflect the Business Combination as if it had occurred on January 1, 2020.

The two alternative levels of redemptions assumed in the selected unaudited pro forma condensed combined per share information is based on the assumption that there are no adjustments for the outstanding Warrants issued in connection with the Company IPO as such securities are not exercisable until 30 days after the closing of the Business Combination. There are also no adjustments for the estimated 19.5 million shares reserved for the potential future issuance of Class A Stock upon the exercise of Rollover Options upon the closing of the Business Combination, as such event has not yet occurred.

This information is only a summary and should be read in conjunction with the historical financial statements of the Company and Sonder and related notes included elsewhere in this proxy statement/prospectus/consent solicitation statement. The unaudited pro forma combined per share information of the Company and Sonder is derived from, and should be read in conjunction with, the unaudited pro forma condensed combined financial information and related notes included elsewhere in this proxy statement/prospectus/consent solicitation statement in the section titled “Unaudited Pro Forma Condensed Combined Financial Information.”

The unaudited pro forma condensed combined net loss per share information below does not purport to represent the loss per share which would have occurred had the companies been combined during the periods presented, nor the loss per share for any future date or period. The unaudited pro forma condensed combined


 

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book value per share information below does not purport to represent what the value of the Company and Sonder would have been had the companies been combined during the periods presented.

 

                Pro Forma Combined Per
Share Data
    Sonder Equivalent Pro
Forma Per Share Data(3)
 
    Gores
Metropoulos
II

(Historical)
    Sonder
(Historical)
    (Assuming
No
Redemptions
Scenario)
    (Assuming
Contractual
Maximum
Redemptions
Scenario)
    (Assuming
No
Redemptions
Scenario)
    (Assuming
Contractual
Maximum
Redemptions
Scenario)
 

As of and for the six months ended June 30, 2021(1)

           

Book Value per share(2)

  $ (3.46   $ (77.76   $ 2.15   $ 1.70   $ 3.64   $ 2.87

Net gain (loss) per share of Class A Stock—basic and diluted

  $ (0.78     $ (0.52   $ (0.55   $ (0.87   $ (0.92

Weighted average shares outstanding of Class A Stock—basic and diluted

    39,779,006         274,424,088       259,422,872      

Net gain (loss) per share of Class F Stock—basic and diluted

  $ (0.78          

Weighted average shares outstanding of Class F Stock—basic and diluted

    11,339,779            

Net loss per share of Sonder Common Stock—basic and diluted

    $ (20.18        

Weighted average shares of Sonder Common Stock outstanding—basic and diluted

      7,558,055          

As of and for the Year Ended December 31, 2020(1)

           

Net gain (loss) per share of Class A Stock—basic and diluted

  $ —       $ (0.92   $ (0.97   $ (1.55   $ (1.64

Weighted average shares outstanding of Class A Stock—basic and diluted

    —           274,424,088       259,422,872      

Net gain (loss) per share of Class F Stock—basic and diluted

  $ —            

Weighted average shares outstanding of Class F Stock—basic and diluted

    11,500,000          

Net loss per share of Sonder Common Stock—basic and diluted

    $ (39.98        

Weighted average shares of Sonder Common Stock outstanding—basic and diluted

      6,261,247        

 

(1)

There were no cash dividends declared in the period presented.

(2)

Book value per share is calculated as (a) total equity excluding preferred shares divided by (b) the total number of shares of Common Stock outstanding classified in permanent equity.

(3)

The equivalent per share data for Sonder is calculated by multiplying the combined pro forma per share data by the Per Share Sonder Common Stock Consideration set forth in the Merger Agreement.

Market Prices and Dividends

Company

The Public Units, Public Shares and Public Warrants trade on Nasdaq under the symbols “GMIIU,” “GMII,” and “GMIIW,” respectively. Each Public Unit consists of one Public Share and one-fifth of a Public Warrant. The Public Units began trading on January 20, 2021, and the Public Warrants and Public Shares began trading on March 15, 2021.


 

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The following table sets forth, for the calendar quarter indicated, the high and low sales prices per Public Unit, Public Share and Public Warrant as reported on Nasdaq for the periods presented:

 

     Public Units
(GMIIU)(1)
     Public Shares
(GMII)(2)
     Public
Warrants
(GMIIW)(2)
 
     High      Low      High      Low      High      Low  

Fiscal Year 2021:

                 

Quarter ended June 30, 2021

   $ 10.95      $ 10.01      $ 11.00      $ 9.80      $ 2.06      $ 1.02  

Quarter ended March 31, 2021

   $ 10.11    $ 10.04    $ 9.90    $ 9.81    $ 1.49    $ 1.06

Fiscal Year 2020:

                 

Quarter ended December 31, 2020

     N/A        N/A        N/A        N/A        N/A        N/A  

 

(1)

Began trading on January 20, 2021.

(2)

Began trading on March 15, 2021.

On April 29, 2021, the trading date before the public announcement of the Business Combination, the Public Units, Public Shares and Public Warrants closed at $10.25, $9.94 and $1.43, respectively.

The Company has not paid any cash dividends on its Public Shares to date and does not intend to pay cash dividends prior to the consummation of the Business Combination.

Sonder

Historical market price information regarding shares of Sonder Stock is not provided because there is no public market for Sonder Stock. Sonder has not paid any dividends on shares of Sonder Stock and does not intend to pay dividends prior to the consummation of the Business Combination.


 

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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/prospectus/consent solicitation statement, including the financial statements and notes to the financial statements included herein, in evaluating the Business Combination and the proposals to be voted on at the Special Meeting. Certain of the following risk factors apply to the business and operations of Sonder and will also apply to the business and operations of Post-Combination Company following the consummation of the Business Combination. The occurrence of one or more of the events or circumstances described in these risk factors, alone or in combination with other events or circumstances, may adversely affect the ability to complete or realize the anticipated benefits of the Business Combination, and may have a material adverse effect on the business, cash flows, financial condition and results of operations of Company following the Business Combination. The risks discussed below may not prove to be exhaustive and are based on certain assumptions made by the Company and Sonder that later may prove to be incorrect or incomplete. The Company and Sonder may face additional risks and uncertainties that are not presently known to such entity, or that are currently deemed immaterial, which may also impair our business or financial condition. The following discussion should be read in conjunction with the financial statements and notes to the financial statements included herein.

Risks Related to the Post-Combination Company’s Business

Unless the context requires otherwise, references to “Sonder,” “we,” “our” and “us” in this section are to the business and operations of Sonder prior to the Business Combination and the business and operations of the Post-Combination Company as directly or indirectly affected by Sonder by virtue of the Post-Combination Company’s ownership of the business of Sonder through its ownership of the Surviving Entity following the Business Combination. In addition, you should read and consider the risks associated with the business of the Company because these risks may also affect the Post-Combination Company. Please see the section titled “Where You Can Find More Information” in this proxy statement/prospectus/consent solicitation statement.

Risks Related to Sonder’s Business and Industry

Sonder’s forecasts and projections are based upon assumptions, analyses and estimates developed by its management. If these assumptions, analyses or estimates prove to be incorrect or inaccurate, Sonder’s actual results may differ materially from those forecasted or projected.

Sonder’s forecasts and projections, including projected revenues, margins, profitability, cash flows, Bookable Nights, Revenue per Available Room (“RevPAR”), lease signings and Live Units, and the anticipated market opportunity, growth and penetration, are subject to significant uncertainty and are based on assumptions, analyses and estimates developed by Sonder’s management, including with reference to third-party forecasts, any or all of which may prove to be incorrect or inaccurate. These include assumptions, analyses and estimates about future pricing and Occupancy Rates, the type and size of future properties, the timing of lease signings, building openings and development, local regulatory environments, the terms of future leases, and future costs, all of which are subject to a wide variety of business, regulatory and competitive risks and uncertainties. If these assumptions, analyses or estimates prove to be incorrect or inaccurate, Sonder’s actual results may differ materially from those forecasted or projected, adversely affecting the value of the Post-Combination Company’s Common Stock.

Sonder’s revenue, expenses and operating results could be materially adversely affected by changes in travel, hospitality, and real estate markets, as well as general economic conditions such as an economic downturn or recession.

Sonder’s business is particularly sensitive to trends in the travel, hospitality, and real estate markets, and trends in the general economy, which are unpredictable. Travel, including demand for accommodations, is highly dependent on discretionary spending levels. As a result, hospitality sales tend to decline during general economic downturns and recessions, and times of political or economic uncertainty, as consumers engage in less discretionary

 

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spending, are concerned about unemployment or inflation, have reduced access to credit or experience other concerns or effects that reduce their ability or willingness to travel. Leisure travel in particular, which accounted for a substantial majority of Sonder’s pre-COVID-19 pandemic traveler demographic, is dependent on discretionary consumer spending levels. Downturns in worldwide or regional economic conditions, such as the current downturn resulting from the COVID-19 pandemic, have led to a general decrease in leisure travel and travel spending, and similar downturns in the future may materially adversely impact demand for Sonder’s accommodations. Such a shift in consumer behavior could materially and adversely affect Sonder’s business, results of operations, and financial condition. Therefore, Sonder’s operating results may be adversely affected by changes in the broader economy and the travel, real estate and vacation rental industries.

In addition to the impact of economic conditions, Sonder’s business could be adversely affected by other factors that cause reductions in travel, such as:

 

   

public health concerns, including but not limited to the COVID-19 pandemic or other future public health crises;

 

   

immigration policies and other governmental restrictions on residency and travel;

 

   

regional hostilities, war, terrorist attacks or civil unrest;

 

   

imposition of travel- or hospitality-related taxes or surcharges by regulatory authorities;

 

   

changes in regulations, policies, or conditions related to sustainability, including climate change, and the impact of climate change on seasonal destinations;

 

   

work stoppages or labor unrest at a potential travel destination; or

 

   

natural disasters or adverse weather conditions.

In addition to affecting demand, economic downturns and other adverse developments in real estate markets may result in decreases in new construction starts, property conversions and renovations, and increases in foreclosures, which could result in fewer units available for leasing. Any or all of these and other factors could reduce the demand for Sonder’s services and the supply of new units, thereby reducing Sonder’s revenue. The above factors could also require higher marketing and other costs to attract guests, and could result in less favorable terms for new leases, which would increase Sonder’s expenses.

Sonder may be unable to successfully negotiate satisfactory leases or other arrangements to operate new properties, onboard new properties in a timely manner, or renew or replace existing properties on satisfactory terms or at all, any of which may limit Sonder’s growth and could cause Sonder to miss its growth forecasts.

Sonder currently leases all of its locations. Sonder continually pursues additional units by signing new leases or additions to existing leases, and also pursues management agreements and other arrangements with property owners and developers. If Sonder fails to secure or renew leases or other arrangements for attractive properties, it will not be able to expand its portfolio of locations and may not achieve its growth and financial forecasts.

Sonder may not be able to add sufficient properties to its portfolio that meet its brand standards, at an acceptable cost, to meet its strategic growth goals and financial forecasts. Due to the number of properties that Sonder has already secured under leases or other arrangements in many major U.S. and Canadian cities, it may find it more difficult to find additional attractive properties in those markets. In Europe and other international markets, Sonder has less experience and fewer real estate personnel, and local regulations and real estate industry practices may make it more difficult to locate properties that are strategically aligned with Sonder’s business model. Even where Sonder identifies suitable properties, it may not be able to negotiate leases or other arrangements on commercially reasonable terms.

In addition, commercial terms that are negotiated by Sonder’s real estate teams in existing markets may not be widely accepted in new markets, which may complicate or delay Sonder’s planned expansion or make such

 

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expansion less attractive. Competition for attractive properties can be intense, and competitors may offer owners and developers more attractive terms. Sonder also has relatively little experience with management agreements or other alternatives to traditional leases which may make it more difficult for it to secure properties where the owner or developer prefers a management agreement or other occupancy arrangement over a lease.

In addition, Sonder’s ability to extend an expiring lease on favorable terms or to secure an alternate location will depend on then-prevailing conditions in the real estate market, such as overall rental cost increases, competition from other would-be tenants for desirable leased spaces, Sonder’s relationships with current and prospective building landlords, and other potential factors that are not within Sonder’s control. If Sonder is not able to renew or replace an expiring lease, it will lose the opportunity to generate additional revenue from that space and will incur costs related to vacating it.

Delays in real estate development and construction projects related to Sonder’s leases could adversely affect Sonder’s ability to generate revenue from such leased buildings.

Sonder’s business is also subject to property development risks. From time to time, Sonder enters into arrangements with property developers to lease all or a portion of a building that is being built or converted for housing accommodations. Sonder expects the number of these early-stage development projects within its business to increase. The commitments of owners and developers under these arrangements are subject to various conditions and the completion of such development and construction projects are subject to numerous risks, including, in many cases, the owner’s or developer’s ability to obtain adequate financing, construction materials or labor, and governmental or regulatory approvals. Sonder has experienced unforeseen delays in the readiness of property developments, and expects to encounter similar delays in the future. As a result, any such properties in Sonder’s forecast property pipeline may never develop into new sources of revenue when Sonder anticipated or at all.

Newly leased properties may generate revenue later than Sonder estimated, and may be more difficult or expensive to integrate into Sonder’s operations than expected.

Even when Sonder succeeds in signing a lease for a new property, the landlord or developer may be unable or unwilling to deliver the property in the timeline initially provided for, or Sonder may encounter other unforeseen delays in preparing the property for initial guest bookings. Sonder refers to this process as “building opening.” Many newly-leased properties become available to Sonder only after a considerable period of time, which increases the risk of unforeseen delays in building openings. Later than expected building openings at properties also results in a delay in generating revenue from such properties, which could cause Sonder to miss its financial forecasts. In addition, the success of any new property will depend on Sonder’s ability to integrate it into existing operations, which is subject to uncertainties including potential difficulties in integrating guest-facing and back-office systems or in engaging third party vendors to service the properties. Newly-leased properties could be more difficult or expensive to onboard, have undisclosed conditions that result in unanticipated expenses or claims against Sonder for which it may have little or no effective recourse against the landlord, or otherwise may not provide their anticipated benefits.

Sonder’s limited operating history and evolving business make it difficult to predict whether Sonder will achieve its financial, operating and growth forecasts.

Sonder’s business continues to evolve. Sonder has expanded significantly since its inception, including the number of cities and countries in which it operates. Within the last few years, it also has begun to operate properties with traditional hotel room layouts and to focus more of its expansion efforts on leasing full buildings or larger numbers of units or floors within a property. In addition, Sonder has operated many of its leased properties for a limited period of time, and their early results may not be indicative of their long-term performance. For example, approximately 40% of units available for guest bookings as of June 30, 2021, which Sonder refers to as “live” units, had been live for less than one year. Sonder’s relatively limited operating history

 

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and evolving business make it difficult to evaluate the likelihood that Sonder will achieve its financial, operating and growth forecasts, and to predict and plan for the risks and challenges Sonder may encounter. These risks and challenges include Sonder’s ability to:

 

   

forecast its revenue and budget for and manage its expenses, particularly at new buildings or in new markets;

 

   

onboard new, high-quality units in a timely and cost-effective manner;

 

   

keep existing units available for booking and reduce nights lost to repairs or other interruptions;

 

   

comply with existing and new laws and regulations applicable to its business, including those related to the COVID-19 pandemic or any future public health crises;

 

   

plan for and manage capital expenditures for current and future properties, including renovations of units and development of new properties, and manage relationships with landlords, developers, service providers and other partners;

 

   

anticipate and respond to macroeconomic changes, fluctuations in travel and tourism, and other changes in the markets in which Sonder operates;

 

   

maintain and enhance the value of its reputation and brand;

 

   

effectively manage growth;

 

   

successfully expand its geographic reach;

 

   

hire, integrate and retain talented people at all levels of its organization; and

 

   

successfully develop new features, amenities and services to enhance the experience of guests.

If Sonder fails to address the risks and difficulties that it faces, including those associated with the challenges listed above as well as those described elsewhere in this section titled “Risk Factors”, Sonder’s business, financial condition and results of operations could be adversely affected. Further, because Sonder has limited historical financial data and operates in a rapidly evolving industry, any predictions about future revenue and expenses may not be as accurate as they would be if it had a longer operating history or operated in more predictable markets. If Sonder does not address these risks successfully, or if Sonder’s assumptions regarding these risks and uncertainties, which are used to plan and operate Sonder’s business, are incorrect or change, Sonder’s results of operations could differ materially from expectations and its business, financial condition and results of operations could be adversely affected.

Sonder may be unable to effectively manage its growth.

Since its inception, Sonder has experienced rapid growth and continues to pursue significant unit growth in existing and new markets throughout the world. The number of Sonder units available for guest bookings, which are referred to as Live Units, increased from approximately 1,700 as of December 31, 2018 to approximately 4,600 as of December 31, 2019 and over 5,500 Live Units as of June 30, 2021. Sonder’s worldwide employee headcount grew from approximately 500 employees at the end of 2018 to approximately 1,200 as of June 30, 2021.

Sonder’s business is becoming increasingly complex due in part to the continued rapid evolution of the hospitality industry, the ongoing COVID-19 pandemic, Sonder’s expansion into new markets, the increasing number of hotels within its portfolio, and changing local and national tax regimes and regulatory requirements. This increased complexity and rapid growth have demanded, and will continue to demand, substantial resources and attention from Sonder’s management. To support its planned growth, Sonder will need to improve and maintain its technology infrastructure and business systems, which may be costly and is subject to uncertainties. Sonder will also need to increase headcount and hire additional specialized personnel in the future as it pursues

 

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its growth objectives. For example, Sonder will need to hire, train and manage additional qualified employees to support its engineering, real estate, and operations (including financial operations and accounting, sales and marketing, legal, customer service, and trust and safety personnel), as well as employees experienced in security and hospitality operations to support its growing city teams to properly manage its growth. When Sonder enters or expands operations in a particular city, it will also need to hire a substantial number of building opening and guest services staff to meet target dates for opening new properties even before these properties begin to generate revenues.

Sonder is experiencing, and may in the future experience, shortages of qualified hospitality personnel, including in markets where hotels and other accommodations are re-opening due to improved public health. Hospitality personnel in many markets left the industry in the past year due to the effects of the COVID-19 pandemic. Local labor shortages may arise for other reasons, from time to time. If Sonder is unable to hire, train and integrate a sufficient number of hospitality personnel when needed, if new hires perform poorly, or if Sonder is unsuccessful in retaining existing employees, Sonder may not be able to meet its business and growth objectives and provide effective guest services.

The COVID-19 pandemic and efforts to reduce its spread have had and are expected to continue to have a material detrimental impact on Sonder’s business, operations and financial results.

The COVID-19 pandemic has severely restricted the level of economic activity around the world, and is continuing to have an unprecedented effect on the global hospitality and travel industries. The global spread of COVID-19 has been and continues to be a complex and evolving situation. Governments, public institutions and other organizations have and continue to impose or recommend, at various times and degrees, that businesses and individuals implement restrictions on a wide array of activities to combat its spread, such as restrictions and bans on travel or transportation, limitations on the size of in-person gatherings, closures of, or occupancy or other operating limitations on, work facilities, hospitality facilities, schools, public buildings and businesses, cancellation of events, including sporting events, conferences and meetings, and quarantines and lock-downs. COVID-19 and efforts to mitigate its spread have dramatically reduced travel and demand for accommodations, which has impacted and will continue to impact Sonder’s business. While many countries have begun the process of vaccinating their residents against COVID-19, the unprecedented scale and logistical challenges of vaccine distribution, as well as uncertainty over the efficacy of the vaccines against new variants of the virus, may contribute to delays in the loosening of restrictions and economic recovery and continued reluctance to travel.

The extent to which the COVID-19 pandemic impacts Sonder’s business, operations, and financial results, including the duration and magnitude of such effects, will depend on numerous evolving factors that Sonder may not be able to accurately predict or assess, including:

 

   

the continued duration and scope of the COVID-19 pandemic, as well as whether and to what extent additional variants or resurgences of the virus occur (including due to the Delta variant of the virus);

 

   

the COVID-19 pandemic’s negative impact on global and regional economies and economic activities, including the duration and magnitude of its impact on unemployment rates and consumer discretionary spending;

 

   

the COVID-19 pandemic’s short- and long-term impact on the demand for travel and for accommodations in Sonder’s markets;

 

   

the actions governments, businesses and individuals take in response to the COVID-19 pandemic, including quarantines and lock-downs, and limiting or banning travel and/or in-person gatherings;

 

   

the COVID-19 pandemic’s effect on the financial health, budgets and business activities of current and potential landlords and property developers;

 

   

the effectiveness, availability and deployment of COVID-19 vaccines; and

 

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how quickly economies, travel activity and demand for accommodations recover after the initial COVID-19 pandemic subsides.

Sonder’s responses to the COVID-19 pandemic and future public health crises may adversely affect guest loyalty and satisfaction, employee relations, and hospitality operations.

In response to the COVID-19 pandemic’s effect on demand for accommodations, Sonder took steps to reduce operating costs, including, in March 2020, laying off a substantial number of employees, and temporarily furloughing, reducing compensation, or implementing reduced work weeks for other personnel. The ongoing COVID-19 pandemic and any other future regional or global public health crises may also necessitate more restrictive approaches to providing guest services, changes in guest cancellation and refund practices, or additional guest support resources related to enhanced health and hygiene requirements. These steps and further changes Sonder may make to respond to public health concerns or reduce costs may negatively impact guest satisfaction, guest services and hospitality operations, or Sonder’s ability to attract and retain employees, and its reputation and market share may suffer as a result. The COVID-19 pandemic may also cause financial difficulties for Sonder’s landlords, resulting in inadequate maintenance or other problems at the properties Sonder offers to guests, which could damage Sonder’s revenues and reputation, disrupt its operations, and lead to costly or disruptive disputes.

The COVID-19 pandemic and any future public health crisis may result in higher costs, slower than anticipated growth and lower than expected revenues.

Sonder has adopted measures to address the COVID-19 pandemic that have increased its short-term costs and reduced near-term revenues. For instance, through lease renegotiation and exercise of termination rights, Sonder phased out nearly 3,400 units from its Total Portfolio from March 1 through December 31, 2020 (including both Live Units and units that were leased but not yet receiving guests), which resulted in lease termination costs and other offboarding-related expenses, disputes with landlords, and foregone revenue from the phased-out units. Sonder also implemented new cleaning procedures and health and safety protocols, and restricted certain bookings due to pandemic-related travel restrictions. Prospectively, Sonder also expects to incur restart costs and other expenses associated with reopening offices that were closed during the COVID-19 pandemic. A future pandemic or other public health crisis may require similar responses or result in other cost increases, including higher operating expenses due to the need to invest in new technology, amenities or unit designs in order to satisfy new health and safety regulations or to conform to evolving guest expectations.

In addition, the ongoing COVID-19 pandemic or a future public health crisis may disrupt or delay Sonder’s planned growth in its property portfolio, for example, by adversely affecting the ability of some developers to obtain or draw upon financing arrangements for Sonder projects that are in construction or development. The COVID-19 pandemic also caused construction delays due to government restrictions on non-essential activities and shortages of supplies caused by supply chain interruptions, and a future public health crisis may also affect real estate development activities. The COVID-19 pandemic is also causing financial difficulties for some existing and prospective landlords, which may impair their willingness or ability to invest in property improvements or conversions necessary to add to Sonder’s portfolio of units. As a result, some of the properties in Sonder’s pipeline may not enter the market or become part of its portfolio when anticipated, or at all. Delays, increased costs and other impediments to projects under development, or to its unit opening process, would reduce Sonder’s ability to realize revenue.

Sonder also cannot predict the long-term effects of the COVID-19 pandemic on its partners and their business and operations or the ways that the pandemic or a future public health crisis may fundamentally alter the travel and hospitality industries. In particular, Sonder may need to adjust to future supply shortages or other changes in its supply chain as well as structural changes to certain types of travel. For example, Sonder recently commenced sales and marketing efforts focused on corporate travel, which has not been a meaningful source of revenue, but there is uncertainty over whether and how corporate travel will rebound given the increase in remote working and video conferencing during the COVID-19 pandemic, as well as lingering public health concerns.

 

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Sonder has a history of net losses and it may not be able to achieve or maintain profitability in the future.

Sonder has incurred net losses each year since its inception, and it may not be able to achieve or maintain profitability in the future. Sonder incurred net losses of $152.5 million and $122.5 million for the six months ended June 30, 2021 and 2020, respectively, and $250.3 million and $178.2 million for the years ended December 31, 2020 and December 31, 2019, respectively. In addition, Sonder had an accumulated deficit of $672.9 million as of June 30, 2021. Sonder’s expenses will likely increase in the future as it seeks to expand in existing and new domestic and international markets, focus heavily on sales and marketing efforts, continue to invest in new technologies, internal systems, designs and unit amenities, expand its operations, and hire additional employees. These efforts may be more costly than expected and may not result in expected increases in revenue or growth in its business, which would impair Sonder’s ability to achieve or maintain profitability. In addition, Sonder generally leases properties under multi-year arrangements, but guest revenues are generated through stays that currently average less than one week. Any failure to increase Sonder’s revenue sufficiently to keep pace with the fixed components of its lease obligations, investments and other expenses could prevent it from achieving or maintaining profitability or positive cash flow on a consistent basis or at all. If Sonder is unable to successfully address these risks and challenges, its business, financial condition and results of operations would be adversely affected.

Sonder expends resources relating to the preparation and repair of its leased properties, which may be higher than anticipated.

Sonder typically devotes resources to prepare a newly-leased property for its initial guests, referred to as building openings, and to keep its leased properties in a safe and attractive condition. Although Sonder attempts to have the landlord or developer bear the out-of-pocket opening costs, it is sometimes responsible for all or a portion. Even where landlords and developers are contractually responsible for some costs, they may dispute or fail to comply with their obligations. In addition, while the majority of Sonder’s leases require landlords to bear responsibility for the repair and maintenance of building structures and systems, at times Sonder may be responsible for some of these obligations, and in most cases, Sonder is responsible for the repair and maintenance of damage caused by its guests. Sonder’s leases may also require that it return the space to the landlord at the end of the lease term in essentially the same condition it was delivered to Sonder, which may require repair work. The costs associated with Sonder’s building openings, repair and maintenance may be significant and may vary from its forecasts.

Sonder also periodically refurbishes some of its units to keep pace with the changing needs of its guests and to maintain its brand and reputation. Although Sonder includes estimated refurbishments in its business and financial planning, refurbishments can result in lost revenues at the affected unit, may be more costly and time-consuming than Sonder expects, may impair guests’ experiences in other units, and may otherwise adversely affect its results of operations and financial condition.

Sonder depends on landlords for certain maintenance and other significant obligations related to its properties, and any failures in this area could hurt its business.

Sonder does not own any of its properties, and manages and operates them under leases with third-party landlords. At some properties, Sonder’s guest units comprise only a portion of the building and common areas and amenities are shared with other tenants or unit owners. Sonder often has limited control over the common areas and amenities of buildings in which its units are located. In addition, Sonder depends on its landlords to deliver properties in a suitable condition and to perform important ongoing maintenance, repair and other activities with respect to common areas, amenities and building systems such as plumbing, elevators, electrical, fire and life safety. If Sonder’s landlords do not fulfill their obligations or fail to maintain and operate their buildings appropriately, Sonder could be subject to claims by guests and other parties, and its business, reputation and guest relationships may suffer.

 

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Disputes and litigation relating to Sonder’s leases have occurred and can be expected to occur in the future, which may result in significant costs, damage to landlord relationships, slower than expected expansion, and lower revenues.

The nature of Sonder’s rights and responsibilities under its leases may be subject to interpretation and will from time to time give rise to disagreements, which may include disagreements over the timing and amount of

capital investments or improvements, operational and repair responsibilities, liability to third parties, a party’s right to terminate a lease, and reimbursement for certain renovations and costs.

Sonder seeks to resolve any disagreements and develop and maintain positive relations with current and potential landlords, but it cannot always do so. Failure to resolve such disagreements has resulted in litigation in the past and could result in litigation in the future. Disputes may be expensive to litigate, even if the outcome is ultimately in Sonder’s favor. Sonder cannot predict the outcome of any litigation. An adverse judgment, settlement, or court order in a proceeding could cause significant expenses and constraints in Sonder’s business operations and expansion plans. For example, Sonder is involved in litigation with its landlord at 20 Broad Street in New York, arising out of the landlord’s failure to address Legionella bacteria contamination in the building’s water supply and the associated health risks posed to its guests. In response, Sonder withheld payment of rent on grounds of, among other reasons, constructive eviction. Sonder’s landlord disagreed with the contentions and terminated the lease in July 2020 and subsequently filed a lawsuit seeking unpaid rent from Sonder. Sonder counter-sued against its landlord and is seeking, among other remedies, substantial monetary damages against the landlord. If Sonder’s landlord prevails, there may be significant damages against Sonder. Sonder is unable to predict the outcome of the dispute with its landlord, or its ultimate responsibility for any adverse outcome in the lawsuit. Even if this lawsuit is resolved favorably, the proceeding will require substantial management attention as well as significant legal fees and expenses.

The long-term and fixed-cost nature of Sonder’s leases may limit its operating flexibility and could adversely affect its liquidity and results of operations.

Sonder currently leases all of its properties and is committed for the leases’ terms, generally without the right to terminate early. Sonder’s obligations to landlords under these agreements extend for years, while Sonder does not have a corresponding source of guaranteed revenue because guests typically stay for less than a week at a Sonder property.

Sonder’s leases generally provide for fixed monthly payments that are not tied to Occupancy Rates or revenues, and its leases typically contain minimum rental payment obligations. Sonder increasingly seeks to negotiate leases with lower minimum payments in return for a share of the property’s revenues, or other variable terms, but it may be unsuccessful in securing variable or participating lease terms. As a result, if Sonder is unable to maintain sufficient Occupancy Rates and pricing, its lease expenses may exceed its revenue and it may not achieve its financial projections. In addition, in an environment where the prevailing cost of accommodations is decreasing, Sonder may not be able to lower its fixed monthly payments under its leases at rates commensurate with the rates at which it would be pressured to lower its guest rates, which may also reduce its margins and cash flow. In any such event, Sonder may be unable to reduce its rent under the lease or otherwise terminate the lease in accordance with its terms.

Sonder has limited flexibility to rapidly alter its portfolio of properties and its lease commitments in response to changing circumstances. Leases require substantial time to negotiate and are typically multi-year commitments that can only be revised or terminated with the landlord’s agreement. In addition, some of Sonder’s leases require the landlord’s consent to assign the lease or sublease the property, which may not be granted or may be granted only on unfavorable terms. Even if Sonder is able to assign or sublease an unprofitable property, it may incur significant costs, including transaction costs associated with finding and negotiating with potential transferees, upfront payments or other inducements, costs to restore the property to its previous condition, and other costs to exit the property.

 

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Sonder’s leases may be subject to termination before their scheduled expiration, which can be disruptive and costly.

Sonder’s leases may be subject to termination before they are scheduled to expire, in certain circumstances including the bankruptcy of a developer or other landlord, noncompliance with underlying covenants governing the property, or, under some agreements, failure to meet specified financial or performance criteria. Some leases also contain conditions to the landlord’s or Sonder’s obligations, or permit the landlord to terminate before the scheduled expiration date, typically in the later years of the lease and/or upon payment of specified compensation to Sonder. Some leases for Contracted Units, which are units that have signed real estate contracts but are not yet available for guests to book, have contingencies that must be satisfied prior to Sonder’s takeover of the units or are terminable by Sonder or the landlord prior to Sonder’s takeover of the units. Many of Sonder’s leased properties have been pledged as collateral for mortgage loans entered into by the owners of the properties when those properties were purchased or refinanced. If those owners cannot repay or refinance maturing indebtedness on favorable terms or at all, such owners may declare bankruptcy and/or lenders could declare a default, accelerate the related debt, and foreclose on the subject property. The termination of Sonder’s leases due to any of the foregoing events would eliminate its anticipated income and cash flows from the affected property, which could have a significant negative effect on its results of operations and liquidity. Landlords or other business partners may also assert the right to terminate leases or other significant contracts even where the agreements do not provide such a right. If terminations occur for these or other reasons, Sonder may need to enforce its right to damages for breach of contract and related claims, which may cause it to incur significant legal fees and expenses. Any damages Sonder ultimately collects could be less than the projected future value of the revenues and income it would have otherwise generated from the property. Early terminations of significant agreements could hurt Sonder’s financial performance or its ability to grow its business.

If Sonder fails to attract new guests or generate repeat bookings from previous guests, its business, results of operations, and financial condition would be materially adversely affected.

Sonder’s success depends significantly on attracting new guests and securing repeat bookings from previous guests. Sonder’s ability to attract and retain guests could be materially and adversely affected by a number of factors, including:

 

   

the impact of events beyond its control on demand for travel and accommodations in Sonder’s markets, such as the COVID-19 pandemic or a future public health crisis, changes in government travel restrictions or policies, labor or civic unrest, travel-related incidents and weather;

 

   

failing to meet guests’ expectations, including increased expectations for cleanliness in light of the COVID-19 pandemic;

 

   

increased competition from other hotel and alternative accommodation providers;

 

   

any failure to provide differentiated, high-quality experiences at competitive prices;

 

   

guests not receiving timely and adequate customer service support;

 

   

failure to provide new or enhanced amenities and services that guests value;

 

   

any disruptions in guests’ access to properties or to the properties’ amenities;

 

   

ineffectiveness of marketing efforts;

 

   

negative associations with, or failure to raise awareness of, Sonder’s brand;

 

   

negative perceptions of the safety of Sonder’s properties or the security of its app or website; and

 

   

macroeconomic and other conditions outside of Sonder’s control affecting travel and hospitality industries generally.

In addition, Sonder could fail to attract first-time guests or additional bookings from previous guests if its website and/or the Sonder app are not easy to navigate, if guests have an unsatisfactory sign-up, search, booking, payment, or check-in experience, if the listings and other content provided on its website or the Sonder app and on third-party listing platforms are not displayed effectively to guests, or if Sonder fails to provide an experience

 

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that meets rapidly changing consumer preferences and travel needs, which could materially adversely affect its business, results of operations, and financial condition. If Sonder fails to attract new guests or generate repeat bookings due to these or other factors, its revenues would suffer, it may not meet its financial projections or achieve or maintain profitability, and its business and planned expansion could be adversely affected.

If Sonder is unable to introduce new or upgraded amenities, services or features that guests recognize as valuable, it may fail to attract guests, property developers and landlords. Sonder’s efforts to develop new and upgraded services and amenities could require it to incur significant costs.

In order to continue to attract new guests and generate repeat bookings from previous guests, and to attract property developers and landlords, Sonder will need to continue to invest in the development of new amenities, services and features that add value to the Sonder brand and/or differentiate Sonder from its competitors. The success of any new amenity, service or feature depends on several factors, including its timely completion, strategic introduction and market acceptance, all of which remain subject to various uncertainties. If guests, property developers and landlords do not recognize the value of the new amenities, services or features, they may choose not to engage with Sonder.

Developing and delivering these new or upgraded amenities, services and features is costly and involves inherent risks and difficulties. Consumer preferences for interior design and furnishings and technology-related services are subject to frequent change. Technology development efforts may be unsuccessful, and any new features or services offered to guests through Sonder’s website or app may be difficult to manage or maintain. Sonder cannot guarantee that such efforts will succeed or that new or upgraded amenities, services and features will work as intended or provide their expected value. In addition, some new or upgraded amenities, services and features may be difficult for Sonder to market, may require additional regulatory permits and personnel, may subject Sonder to additional liabilities, and may involve unfavorable pricing or fees. Even if Sonder succeeds in introducing new or upgraded amenities, services and features, it cannot guarantee that its guests or landlords will respond favorably to them.

In addition to developing its own amenities, features and services, Sonder may license or otherwise integrate applications, technologies, content and data from third parties. These third-party applications may not support Sonder’s offerings as intended, may cause unanticipated disruptions in guests’ bookings, in-room experience or Sonder’s other business operations, and may not remain available on commercially reasonable terms, or at all. If Sonder partners with certain companies to offer food delivery, parking or other services through Sonder’s app, these third-party services may be difficult to integrate with Sonder’s product offering, may not comply with guest security and privacy measures or otherwise operate as Sonder intended, could give rise to guest complaints, and could damage Sonder’s brand and reputation.

Sonder offers a different type of hospitality services than traditional hospitality operators and short-term rental marketplaces, and if guest and property owner acceptance of this innovative approach to accommodations does not continue to grow or grows more slowly than Sonder expects, its business, financial condition and results of operations could be adversely affected.

Sonder offers a distinctive type of hospitality service for which the market is still relatively new, and it is uncertain to what extent market acceptance will continue to grow, if at all. Sonder’s success will depend on the willingness of potential guests and the market at large to widely adopt its particular model of hospitality services, which differs from both traditional hotels and short-term rental marketplaces such as Airbnb. In many geographies, including geographies that Sonder hopes to enter in the near future, the market for its hospitality services is unproven, with little data or research available regarding the market and industry. If potential guests do not perceive Sonder’s units’ designs, amenities, location or pricing to be attractive, or choose different accommodations due to concerns regarding safety, the availability of onsite staffing, amenities or services associated with traditional hotels, affordability or other reasons, then the market for Sonder’s accommodations may not further develop, may develop more slowly than expected or may not achieve its expected growth potential. Such outcomes could adversely affect Sonder’s business, financial condition and results of operations.

 

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Sonder’s growth also depends on the acceptance of its innovative business model by landlords and property developers, and on its ability to operate in markets without clear or well-established regulations covering properties used in Sonder’s business. For these and other reasons, Sonder may make errors in predicting demand and the supply of potential units in certain markets, which could cause it to spend more in a certain market than is justified by the resulting revenues, or to miss its financial targets, and could otherwise harm its business.

The hospitality market is highly competitive, and Sonder may be unable to compete successfully with current or future competitors.

The hospitality market is highly competitive and fragmented. In addition, new competitors may enter the market at any time. Sonder’s current and potential competitors include global hotel brands, regional hotel chains, independent hotels, online travel agencies (“OTAs”) and short-term rental services. Numerous vacation, hotel and apartment rental listing websites and apps also compete directly with Sonder for guests. Sonder’s competitors may adopt aspects of Sonder’s business model, which could reduce its ability to differentiate its services. For example, the COVID-19 pandemic caused some competitors, including traditional hotels, to introduce contactless check-in and self-service technologies that they did not previously offer, and has encouraged the development and rollout of in-room communications hubs and other technologies that may permit competitors to offer more technology-enabled guest services. Certain current and potential competitors may also offer inspiring designs at attractive locations or have greater economies of scale and other cost advantages that allow them to offer attractive pricing. Sonder also competes with hotel operators, property rental and management companies, and others to secure leases for attractive properties to add to Sonder’s portfolio. If Sonder is unsuccessful in offering a distinctive combination of modern, technology-enabled service and superior design at an affordable price point, or is unable to lease new properties, it may be unable to compete effectively and may be unable to attract new or retain existing guests and landlords.

Additionally, current or new competitors may introduce new business models or services that Sonder may need to adopt or otherwise adapt to in order to compete, which could reduce Sonder’s ability to differentiate its business or services from those of its competitors. For example, some travel intermediaries, like online travel agencies, are entering into arrangements with hospitality providers that may compete with Sonder more directly. Increased competition could result in a reduction in revenue, fewer attractive properties, higher lease rates, higher costs, or reduced market share.

Sonder believes it competes for guests primarily on the basis of the quantity and quality of its units, the global diversity and attractiveness of its units, the quality of its guests’ experience, and its customer service, brand identity and price. Competitive factors in Sonder’s industry are subject to change, such as the increased emphasis on cleaning, social distancing and “healthy buildings” due to the COVID-19 pandemic. If guests choose to use other competitive offerings in lieu of Sonder’s, Sonder’s revenue could decrease, and it could be required to make additional expenditures to compete more effectively. Any of these events or results could harm Sonder’s business, operating results and financial condition.

Many of Sonder’s competitors enjoy substantial competitive advantages, such as greater name recognition in their markets, well-established guest loyalty programs, longer operating histories and larger marketing budgets, as well as substantially greater financial, technical and other resources. Many competitors operate restaurants or other amenities at their properties that Sonder’s properties may not provide. Future competitors may also have these advantages compared to Sonder. Moreover, the hospitality services industry has experienced significant consolidation, and Sonder expects this trend may continue as companies attempt to strengthen or hold their market positions in a highly competitive industry. Consolidation among Sonder’s competitors would give them increased scale and may enhance their capacity, abilities, and resources, and lower their cost structures. In addition, Sonder’s current or potential competitors may have access to larger developer, landlord or guest bases. As a result, Sonder’s competitors may be able to respond more quickly and effectively than Sonder can to new or changing opportunities, technologies, standards, regulatory regimes, or landlord or guest requirements. Furthermore, because of these advantages, existing and potential landlords and guests might accept Sonder’s

 

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competitors’ offerings, even if they may be inferior to its own. For all of these reasons, Sonder may not be able to compete successfully against its current and future competitors.

Sonder markets its units through third-party distribution channels, and if such third parties do not perform adequately or terminate or modify their relationships, Sonder’s business, financial condition and results of operations could be adversely affected.

Sonder’s success depends in part on its relationships with third-party distribution channels to list its units online and raise awareness of its brand. In particular, Sonder generates demand by marketing its units with OTAs, such as Airbnb, Booking.com, and Expedia. Bookings through these OTAs and other indirect channels accounted for nearly half of Sonder’s revenues in 2020. The terms of some of Sonder’s agreements with these partners allow the partner to change or terminate terms at their discretion. If any of Sonder’s partners terminates their relationship with Sonder or refuse to renew their agreement with Sonder on commercially reasonable terms, Sonder would need to find alternate providers and may not be able to secure similar terms or replace such providers in acceptable time frames. Additionally, many of these OTAs have discretion in how units are listed or prioritized within their platform and may unilaterally reduce the visibility of Sonder’s units. Sonder’s revenues could be adversely affected if its units are not featured prominently or accurately within OTA platforms for any reason, including changes in an OTA’s relationship with Sonder or its competitors, errors by an OTA, or otherwise. If Sonder’s relationship with an OTA is terminated or the OTA makes changes that reduce the prominence of Sonder units on its platform, Sonder’s revenue could be materially adversely affected.

Sonder’s relationships with OTAs and other distribution partners may shift as industry dynamics change, and these third parties may be less willing to partner with Sonder as such shifts occur. For example, should a significant distribution partner adjust its platform to compete more directly with Sonder, that partner may be more likely to promote and sell its own offerings, impose additional conditions on Sonder or even cease listing Sonder’s units. Similarly, if any significant distribution partner decided to sell another competitor’s offerings over Sonder’s, it could adversely impact Sonder’s sales and harm Sonder’s business, operating results, and prospects.

Furthermore, any negative publicity related to any of its distribution partners, including any negative publicity related to quality standards, regulatory issues, or safety concerns at other properties listed by a particular channel partner, could adversely affect Sonder’s reputation and brand, and could potentially lead to increased regulatory or litigation exposure.

Business generated through indirect channels could adversely affect guest loyalty and poses other risks to Sonder.

Sonder’s strategy includes increasing the proportion of stays booked directly with Sonder through its website, mobile app, and direct sales team, but it also relies to a significant extent on bookings through OTAs and other Internet-based travel intermediaries. In 2020, nearly half of Sonder’s revenues were attributable to bookings through OTAs and other indirect channels. Major Internet search companies also provide online travel services that compete with Sonder’s direct bookings. If indirect channels increase in popularity, these intermediaries may be able to obtain higher commissions or other concessions from Sonder. Some travel intermediaries are also entering into arrangements that compete with Sonder more directly, such as partnering with hotel owners to provide access to technology or consumer data, or to operate under the intermediary’s brand. Intermediaries may reduce bookings at Sonder’s properties by de-emphasizing its properties in search results on their platforms, or requiring its listings to meet certain criteria, and other online providers may divert business away from Sonder’s properties.

There can be no assurance that Sonder will be able to negotiate or maintain favorable terms with intermediaries. Moreover, hospitality intermediaries generally employ aggressive marketing strategies, including significant advertising spending to drive consumers to their websites, and some consumers are conducting an

 

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increasing portion of their activities through so-called “super-apps.” Consumers may develop brand loyalties to the intermediaries’ brands, websites, apps and reservations systems rather than to Sonder’s. This may make Sonder’s branding efforts less effective, reduce guest loyalty and recurring demand, and require it to increase its marketing expenses.

Sonder’s results of operations vary from period-to-period, and historical performance may not be indicative of future performance.

Sonder’s results of operations have historically varied from period-to-period and it expects that its results of operations will continue to do so for a variety of reasons, many of which are outside of its control and difficult to predict. Because its results of operations may vary significantly from quarter-to-quarter and year-to-year, the results of any one period should not be relied upon as an indication of future performance. Sonder’s revenue, expenses, operating results and cash flows, as well as its key operating metrics, have fluctuated from quarter-to-quarter in the past and are likely to continue to do so in the future. These fluctuations are due to, or may result from, many factors, including:

 

   

the quantity of its Live Units;

 

   

changes in Occupancy Rates and average length of stay (“LOS”), which dictate many turnover costs;

 

   

seasonal fluctuations in demand, in certain markets;

 

   

pricing fluctuations and the proportion of stays booked with extended stay discounts or promotional pricing;

 

   

the timing and success of changes in amenities and services;

 

   

the impact of the COVID-19 pandemic or other public health crises on demand for its accommodations, and on its operating expenses and capital requirements;

 

   

the introduction and performance of new properties, amenities, technologies and services, including how quickly new properties are ready for booking by guests;

 

   

the timing, cost and success of advertising and marketing initiatives;

 

   

the amount and timing of financing activities, operating expenses and capital expenditures;

 

   

changes in prevailing lease rates for attractive properties, and any adjustments in rental rates under existing leases;

 

   

changes in cash flow due to lease renewals and amendments and new lease acquisitions and property openings;

 

   

changes in cash flow due to the unpredictability of guest cancellations;

 

   

economic instability in major markets, and fluctuations in exchange rates;

 

   

the introduction of new properties, amenities or services by its competitors;

 

   

declines or disruptions in the hospitality industry, particularly in cities or regions where Sonder generates substantial revenue;

 

   

changes in relationships and/or fees with online travel agencies or other distribution channels;

 

   

changes in the mix of stays booked through indirect distribution channels, rather than directly with Sonder;

 

   

changes in the timing of holidays or other vacation events, or major local events in markets where Sonder operates, such as conferences, and music, film or other cultural festivals;

 

   

unanticipated disruptions or costs due to regulatory issues, including changes in short-term rental laws, hotel regulations, or zoning or accessibility laws;

 

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litigation and settlement costs, including unforeseen attorneys’ fees and costs;

 

   

new accounting pronouncements and changes in accounting standards or practices, particularly any affecting the recognition of revenue as well as accounting for leases;

 

   

new laws or regulations, or new interpretations of existing laws or regulations, that harm its business or restrict the hospitality industry, travel, the Internet, e-commerce, online payments or online communications; and

 

   

other risks described elsewhere herein.

Fluctuations in operating results may, particularly if unforeseen, cause Sonder to miss projections it may have provided to the public. In addition, a significant portion of Sonder’s expenses and investments, such as Sonder’s leases, are fixed and such fluctuations in operating results may cause Sonder to face short-term liquidity issues, impact its ability to retain or attract key personnel or expand its portfolio of properties, or cause other unanticipated issues. Company-wide margins may also be difficult to predict because a significant portion of the property portfolio will still be opening or only recently operating at any point in time, and therefore will not be comparable to the profitability of more mature units. As a result of the potential variability in Sonder’s quarterly revenue and operating results, it believes that quarter-to-quarter comparisons of its revenue and operating results may not be meaningful, and the results of any one quarter should not be relied upon as an indication of future performance.

Sonder’s long-term success depends, in part, on Sonder’s ability to expand internationally, and Sonder’s business is susceptible to risks associated with international operations.

Sonder has established properties around the world and continues to expand its operations. Currently, Sonder maintains properties in the United States, Canada, the United Kingdom, continental Europe, Mexico and the United Arab Emirates, and plans to continue its efforts to expand globally, including in jurisdictions where it does not currently operate, such as additional countries in Europe, Asia and Central and South America. Managing a global organization is difficult, time consuming and expensive, and any international expansion efforts that Sonder undertakes may not be profitable in the near or long term or otherwise be successful. Sonder has limited operating experience in many foreign jurisdictions and must continue to make significant investments to build its international operations. Conducting international operations subjects Sonder to risks that it generally does not face in the United States. These risks include:

 

   

costs, risks and uncertainties associated with tailoring its services in international jurisdictions as needed to better address both the needs of guests, and the threats of local competitors;

 

   

uncertainties in forecasting revenues and expenses in markets where Sonder has not previously operated;

 

   

costs and risks associated with local and national laws and regulations governing zoning, hotels and other accommodations, accessibility, property development and rental, health and safety, climate change and sustainability, and labor and employment;

 

   

differences in local real estate and hotel industry practices, including leasing and hotel transaction terms, that may make it difficult for Sonder to add properties on satisfactory terms or that may require higher than expected upfront payments, security deposits, repair and maintenance expenses, or other costs;

 

   

operational and compliance challenges caused by distance, language, and cultural differences;

 

   

costs and risks associated with compliance with international tax laws and regulations;

 

   

costs and risks associated with compliance with the U.S. Foreign Corrupt Practices Act and other laws in the United States related to conducting business outside the U.S., as well as the laws and regulations of non-U.S. jurisdictions governing bribery and other corrupt business activities;

 

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costs and risks associated with human trafficking, modern slavery and forced labor reporting, training and due diligence laws and regulations in various jurisdictions;

 

   

being subject to other laws and regulations, including laws governing online advertising and other Internet activities, email and other messaging, collection and use of personal information, ownership of intellectual property, taxation and other activities important to Sonder’s online business practices;

 

   

competition with companies that understand the local market better than Sonder does or who have pre-existing relationships with landlords, property developers, regulators and guests in those markets;

 

   

uncertainty and possibly adverse effects resulting from the U.K.’s exit from the European Union (commonly known as “Brexit”); and

 

   

reduced or varied protection for intellectual property rights in some countries.

Entry into certain transactions with foreign entities now or in the future may be subject to government regulations, including review related to foreign direct investment by U.S. or foreign government entities. If a transaction with a foreign entity was subject to regulatory review, such regulatory review might limit our ability to enter into the desired strategic alliance and thus our ability to carry out our long-term business strategy.

Operating in international markets also requires significant management attention and financial resources. The investment and additional resources required to establish operations and manage growth in other countries may not produce desired levels of revenue or profitability and could instead result in increased costs without a corresponding benefit. Sonder cannot guarantee that its international expansion efforts will be successful.

Certain of the measures Sonder uses to evaluate its operating performance are subject to inherent challenges in measurement and may be subject to future adjustments.

Sonder tracks certain operational metrics, including key performance indicators such as Live Units, Contracted Units, Total Portfolio, Room Nights Booked, Bookable Nights, Occupied Nights, Occupancy Rate, Average Daily Rate (“ADR”), RevPAR, and Landlord Payments, with internal systems and tools that are not independently verified by any third party.

While the metrics presented herein are based on what Sonder believes to be reasonable assumptions and estimates, Sonder’s internal systems and tools have a number of limitations, and Sonder’s methodologies for tracking these metrics may change over time. In addition, limitations or errors with respect to how Sonder measures data or with respect to the data that Sonder measures may affect Sonder’s understanding of certain details of Sonder’s business, which could affect Sonder’s long-term strategies. If the internal systems and tools Sonder uses to track these metrics understate or overstate key performance indicators or contain other technical errors, the data Sonder reports may not be accurate. If investors do not perceive our operating metrics to be accurate, or if Sonder discovers material inaccuracies with respect to these figures, Sonder’s reputation may be significantly harmed, and Sonder’s results of operations and financial condition could be adversely affected.

Sonder’s business depends on its reputation and the strength of its brand, and any deterioration could adversely impact its market share, revenues, business, financial condition, or results of operations.

Sonder’s business depends on its reputation and the strength of its brand. Sonder believes that the strength of its reputation and brand are important to its ability to attract and retain guests, to compete for attractive new properties, and to establish and preserve good relationships with the communities in which it operates and with local governmental authorities and regulators. Many factors can affect Sonder’s reputation and the value of its brand, including:

 

   

the quality of guest service, and the guest experience from booking through check-out;

 

   

the nature and severity of guest complaints;

 

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guest safety and their perception of safety;

 

   

Sonder’s guest privacy and data security practices, and any breaches of privacy or data security;

 

   

Sonder’s approach to health and cleanliness within units and common areas;

 

   

publicized incidents in or around its properties;

 

   

employee relations;

 

   

any local concerns about perceived over-tourism or the effect of new hotels or other accommodations on affordable housing, noise or neighborhood congestion;

 

   

Sonder’s support for local communities, and other community relations matters;

 

   

Sonder’s approach to supply chain management, sustainability, human rights, and other matters relating to corporate social responsibility;

 

   

Sonder’s ability to protect and use its brand and trademarks; and

 

   

any perceived or alleged non-compliance with regulatory requirements.

Reputational value is also based on perceptions, and broad access to social media makes it easy for anyone to provide public feedback that can influence perceptions of Sonder, its brand and its properties. It may be difficult to control or effectively manage negative publicity, regardless of whether it is accurate.

Sonder’s ability to control its reputation and brand is also limited due to the role of third parties in its business. For example, guests who book stays through OTAs and other indirect channels sometimes have issues with their bookings that Sonder does not control, such as refund and cancellation terms, which may result in disputes or otherwise negatively affect Sonder’s reputation. Sonder also relies on third-party companies to provide some guest services, including housekeeping and linen services at many of its locations, and remote guest support. Sonder does not directly control these companies or their personnel. Sonder also depends upon its landlords to perform important maintenance and other functions at its properties, particularly in common areas, and at many properties Sonder does not control access to or amenities at the entire building, including pools, gyms and food and beverage services. Guest complaints or negative publicity about Sonder’s properties, services or business activities, due to its own operations or actions or omissions of third parties, could diminish consumer confidence in Sonder and impair its relationships with guests, landlords, governmental authorities, local residents, third-party business partners, and others that are important to its business.

Sonder may become involved in claims, lawsuits, and other proceedings that could adversely affect its business, financial condition, and results of operations.

Sonder is involved in various legal proceedings relating to matters incidental to the ordinary course of its business, and may be subject to additional legal proceedings from time to time. Such legal actions include tort and other general liability claims, employee claims, consumer protection claims, violations of privacy claims, commercial disputes, claims by guests, claims under state and federal law, and disputes with landlords. Due to the potential risks, expenses, and uncertainties of litigation, Sonder may, from time to time, settle disputes even where it has meritorious claims or defenses. Sonder may also be the subject of subpoenas, requests for information, reviews, investigations and proceedings (both formal and informal) by governmental agencies regarding its business activities. Legal proceedings can be time-consuming, divert management’s attention and resources, and cause Sonder to incur significant expenses or liability for substantial damages. The timing and amount of these expenses and damages are difficult to estimate and subject to change, and they could adversely affect its business, financial condition and results of operations.

Sonder may be subject to liability for the activities of its guests or other incidents at its properties, which could harm its reputation and increase its operating costs.

Sonder may be subject to claims of liability based on events that occur during guests’ stays, including those related to robbery, injury, illness, death, physical damage to property, and other similar incidents. These claims

 

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could increase Sonder’s operating costs and adversely affect its business and results of operations, even if they do not result in liability, as Sonder may incur costs related to investigation and defense. This risk is heightened due to the fact that, in many cases, Sonder does not control access to certain areas of buildings in which its units are located. From time to time, Sonder must also spend time and resources resolving issues with guests who remain past their paid stay, which results in lost revenue and higher costs. If Sonder is subject to additional disputes, liability or claims of liability relating to the acts of its guests, third parties in or around Sonder’s leased properties (including residents of these properties who are not Sonder guests) or the condition of the leased properties, Sonder may be subject to negative publicity, incur additional expenses, face regulatory or governmental scrutiny, and be subject to liability, any of which could harm its business and operating results.

Sonder is subject to claims and liabilities associated with potential health and safety issues and hazardous substances at Sonder properties.

Sonder and the developers and owners of its leased properties are exposed to potentially significant liabilities and compliance costs as a result of any hazardous or unsafe conditions at its properties, including under environmental, health and safety laws and regulations. These laws and regulations govern matters such as the release, use, storage and disposal of hazardous and toxic substances, such as asbestos, mold, radon gas, or lead, and unsafe or unhealthy conditions at hotels and other residential premises. Failure to comply with these laws, including any required permits or licenses, can result in substantial fines or possible revocation of the authority to conduct operations. Any impairment of Sonder’s or its landlords’ authority to permit hospitality operations at its leased properties, due to these factors, could harm its reputation and revenue. Sonder could also be liable under environmental, health and safety laws for the costs of investigation, removal or remediation of hazardous or toxic substances or unsafe or unhealthy conditions at its currently or formerly leased or managed properties, even if it did not know of or cause the presence or release of the substances or conditions, and even where this is contractually the responsibility of its landlord.

The presence or release of toxic, unhealthy or hazardous substances or conditions at Sonder’s properties could result in governmental investigations and third-party claims for personal injury, property or natural resource damages, business interruption or other losses, and costly disputes with its landlords and guests. For example, Sonder has engaged in litigation with one of its landlords relating to the presence of toxic mold at one property, and it has faced expensive and disruptive claims relating to Legionella bacteria contamination in the water supply at another property, including lawsuits by guests. Sonder expects to encounter claims, governmental investigations and potential enforcement actions about property conditions and related matters in the future. These claims and the need to investigate, remediate or otherwise address hazardous, toxic or unsafe conditions could adversely affect its business, reputation, results of operations and financial condition. Environmental, health and safety requirements have also become increasingly stringent, and Sonder’s costs may increase as a result. New or revised laws and regulations or new interpretations of existing laws and regulations, such as those related to climate change, could affect the operation of Sonder’s properties or result in significant additional expense and restrictions on its business operations.

Sonder relies on its third-party landlords to deliver properties to it in a safe and suitable condition, and in most cases it does not undertake to independently verify the safety, suitability or condition of the properties it leases. Sonder expects to continue to rely on landlords to disclose information about their properties, though such disclosures may be inaccurate or incomplete, and to keep the properties in a safe and compliant condition in accordance with the terms of its leases and applicable law. If unsafe or unhealthy conditions are present or develop at Sonder’s properties, its guests may be harmed, it may be subject to expensive and disruptive claims, and its reputation, business, results of operations, and financial condition could be materially and adversely affected.

Sonder is subject to the risk of financial and reputational damage due to fraud.

Sonder has from time to time experienced, and expects to continue to experience, fraud in connection with bookings and payments. The methods used by perpetrators of fraud are complex and constantly evolving. Sonder

 

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devotes substantial resources to trust and security measures, but they may not detect all fraudulent activity or prevent stays that are disruptive or harmful to neighbors or other guests. As a result, Sonder expects to continue to receive complaints from guests and requests for reimbursement of their payments, as well as actual or threatened related legal action against it, due to fraudulent activity or the actions of persons booking stays under false pretenses.

Sonder may focus on rapid innovation, expansion and growth, over short-term financial results.

Sonder often emphasizes innovation and growth, sometimes over short-term financial results. It has taken actions in the past and may continue to make decisions that have the effect of reducing its short-term revenue or profitability if it believes that the decisions will benefit long-term revenue and profitability through enhanced guest experiences, penetration of new markets, greater familiarity with the Sonder brand, or otherwise. The short-term reductions in revenue or profitability could be more severe than anticipated. These decisions may not produce the expected long-term benefits, in which case Sonder’s growth, guest experience, relationships with developers and landlords, and business and results of operations could be harmed.

Sonder depends on its key personnel and other highly skilled personnel, and if Sonder fails to attract, retain, motivate or integrate its personnel, its business, financial condition and results of operations could be adversely affected.

Sonder’s success depends to a significant degree on the continued service of its founders, senior management team, key technical, financial and operations employees and other highly skilled personnel and on its ability to identify, hire, develop, promote, motivate, retain and integrate highly qualified personnel for all areas of its organization. Sonder may not be successful in attracting and retaining qualified personnel to fulfill its current or future needs. In addition, all of Sonder’s U.S.-based employees, including its management team, work for Sonder on an at-will basis, and there is no assurance that any such employee will remain with Sonder. Competitors may be successful in recruiting and hiring members of Sonder’s management team or other key employees, and it may be difficult to find suitable replacements on a timely basis, on competitive terms or at all. If Sonder is unable to attract and retain the necessary personnel, particularly in critical areas of its business, it may not achieve its strategic goals.

Sonder faces intense competition for highly skilled personnel, especially in the San Francisco Bay Area, the Dallas-Fort Worth metroplex, Denver and Montreal where it has a substantial presence and need for highly skilled personnel. To attract and retain top talent, Sonder has had to offer, and it believes it will need to continue to offer, competitive compensation and benefits packages. Job candidates and existing personnel often consider the value of the equity awards they receive in connection with their employment. If the perceived value of Sonder’s equity awards declines, it may adversely affect its ability to attract and retain highly qualified personnel. Sonder may need to invest significant amounts of cash and equity to attract and retain new employees and expend significant time and resources to identify, recruit, train and integrate such employees, and it may never realize returns on these investments. If Sonder is unable to effectively manage its hiring needs or successfully integrate new hires, its efficiency, ability to meet forecasts and employee morale, productivity and retention could suffer, which could adversely affect its business, financial condition and results of operations.

Sonder is subject to risks associated with the employment of hospitality personnel, particularly at locations that employ unionized labor, and the use of third-party guest services contractors.

Sonder’s hospitality employees and other guest services personnel are critical to its ability to add properties, maintain its units, enhance the guest experience, and attract and retain guests. If its relationship with employees in any city or at any key property, or within its central guest services function, deteriorates for any reason, its reputation, guest relationships and revenue may suffer, and it may incur costs to replace and retrain additional personnel or third-party contractors. In addition, many of Sonder’s guest services representatives and housekeepers who provide services to Sonder and its guests are employed by third-party agencies, which it does

 

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not control. Sonder’s business and reputation could be harmed in the event of any dispute with these agencies by their staff or with Sonder, or if their staff do not provide services that meet Sonder’s or its guests’ standards and expectations. In addition, labor costs are a significant component of Sonder’s operating expenses, and any increase in the cost of wages, benefits or other employee-related costs could cause its results of operations and cash flow to be lower than anticipated. Certain cities have also adopted re-hiring ordinances and other requirements with respect to hotel and other hospitality employees, and these and other employment regulations may increase Sonder’s costs and impair its operations.

Like other businesses in the hospitality industry, Sonder may be adversely affected by organized labor activity. A small portion of Sonder’s non-U.S. employees are currently represented by labor unions and/or covered by a collective bargaining agreement. Union, worker council or other organized labor activity may occur at other locations. Sonder cannot predict the outcome of any labor-related proposal or other organized labor activity. Increased unionization of its workforce or other collective labor action, new labor legislation or changes in regulations could be costly, reduce Sonder’s staffing flexibility or otherwise disrupt its operations, and reduce its profitability. From time to time, hospitality operations may be disrupted because of strikes, lockouts, public demonstrations or other negative actions and publicity involving employees and third-party contractors. Sonder may also incur increased legal costs and indirect labor costs because of disputes involving its workforce. The resolution of labor disputes or new or renegotiated labor contracts could lead to increased labor costs, which are a significant component of Sonder’s operating costs, either by increases in wages or benefits or by changes in work rules that raise operating costs. Labor disputes and disruptions may also occur within landlords’ workforces at buildings Sonder occupies, which could harm its guests’ experience and reduce bookings at the affected property.

Sonder has identified material weaknesses in its internal control over financial reporting, including some of its general information technology controls, and may identify material weaknesses in the future or otherwise fail to maintain an effective system of internal controls, which may result in material misstatements of its consolidated financial statements.

Sonder has identified material weaknesses in its internal control over financial reporting which, if not remediated, could affect the reliability of its consolidated financial statements and have other adverse consequences. A material weakness is a deficiency, or a combination of deficiencies, in internal control over financial reporting such that there is a reasonable possibility that a material misstatement of its annual or interim consolidated financial statements will not be prevented or detected on a timely basis.

The material weaknesses in internal control over financial reporting that Sonder identified, and is currently working to remediate, relate to its financial closing and reporting process and to its general information technology controls (“GITCs”).

Sonder’s management has concluded that these material weaknesses in its internal control over financial reporting are due to the fact that Sonder has limited resources and has not had the necessary business processes and related internal controls formally designed and implemented. In addition, Sonder has not had the appropriate resources and the appropriate level of experience and technical expertise to oversee Sonder’s business processes and controls. Furthermore, the material weakness relating to GITCs occurred because of the lack of design and implementation of certain of Sonder’s GITCs involving controls that are intended to ensure that access to financial applications and data is adequately restricted, and that changes affecting the financial applications and underlying account records are authorized, tested, and implemented appropriately.

To remediate these material weaknesses, Sonder has engaged a third party consultant and is developing formal policies and procedures over its financial closing and reporting processes, enhancing its information technology governance policies, implementing additional control procedures relating to system access, management and monitoring, hiring additional accounting, engineering, IT and business intelligence personnel, implementing process level and management review controls to identify and address emerging risks, and providing additional training to personnel responsible for the relevant controls.

 

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Sonder can give no assurance that its efforts will succeed in remediating these deficiencies in internal control over financial reporting, including the GITCs that comprise part of its system of internal controls, or that additional material weaknesses in its internal control over financial reporting will not be identified in the future. Sonder’s failure to remediate these deficiencies, or to implement and maintain effective internal control over financial reporting, including its GITCs, could result in errors in its consolidated financial statements.

Sonder’s failure to implement and maintain effective internal control over financial reporting could result in errors in the Post-Combination Company’s consolidated financial statements that could result in a restatement of its consolidated financial statements, and could cause the Post-Combination Company to fail to meet its reporting obligations, any of which could diminish investor confidence in the Post-Combination Company and cause a decline in the price of the Common Stock. Failure could also subject the Post-Combination Company to potential delisting from Nasdaq or any other stock exchange on which its stock is listed or to other regulatory investigations and civil or criminal sanctions.

If Sonder is unable to adapt to changes in technology, Sonder’s business could be harmed.

The Sonder website and mobile app, and the technology-enabled features of its units, are critical to Sonder’s business, and guests increasingly demand technology-driven features and amenities when they seek accommodations. Therefore, Sonder will need to continuously modify and enhance its services and business systems to keep pace with technological changes. Sonder may not be successful in developing necessary, functional and popular modifications and enhancements. Furthermore, uncertainties about the timing and nature of these necessary changes could result in unplanned research and development expenses which could result in a failure to meet Sonder’s financial projections or divert resources from other business initiatives. In addition, if Sonder’s properties, website or mobile app, or internal systems fail to operate effectively with future technologies, Sonder could experience guest dissatisfaction, lost revenue, difficulties in providing customer service or adding new properties to its portfolio, or other disruptions in its operations, any of which could materially harm its business.

Sonder relies on certain third-party technologies and services, and any failures of or defects in these technologies or any inability to obtain or integrate third-party technologies could harm Sonder’s business.

Sonder relies on software and other technologies and services supplied by third parties to provide certain services to Sonder and its guests, including internal communications, customer service communications, payment processing of guest credit cards, lease management, accounting and other internal functions, and other technologies employed to facilitate bookings and guests’ use and enjoyment of Sonder’s properties, such as digital locks and streaming television services. Sonder’s business may be adversely affected to the extent such software, services and technologies contain errors or vulnerabilities, are compromised or experience outages, or otherwise fail to meet expectations. Any of these risks could increase Sonder’s costs and adversely affect its business, financial condition and results of operations.

When Sonder incorporates technology from third parties into Sonder’s technology, Sonder cannot be certain that its licensors are not infringing the intellectual property rights of others or that its suppliers and licensors have sufficient rights to the technology in all jurisdictions in which Sonder may operate. If Sonder is unable to obtain or maintain rights to any of this technology because of intellectual property infringement claims brought by third parties against its suppliers and licensors or against Sonder, Sonder’s ability to operate some aspects of its business could be severely limited and its business could be harmed. In addition, some of Sonder’s license agreements may be terminated by its licensors for convenience. If Sonder is unable to obtain necessary technology from third parties, it may be forced to acquire or develop alternate technology, which may require significant time and effort and may be of lower quality or performance standards. This would limit and delay its ability to provide new or competitive offerings and increase its costs. In addition, Sonder may be unable to enter into new agreements on commercially reasonable terms or develop its own technologies and amenities relying on or containing technology previously obtained from third parties. If alternate technology cannot be obtained or

 

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developed, Sonder may not be able to offer certain functionality to guests or manage its business as it had intended, which could adversely affect its business, financial condition and results of operations.

Sonder relies on a third-party payment processor to process payments made by guests, and if it cannot manage its relationships with such third parties and other payment-related risks, its business, financial condition and results of operations could be adversely affected.

Sonder relies on a third-party payment processor to process payments made by guests. If its third-party payment processor terminates its relationship with Sonder or refuses to renew its agreement with Sonder on commercially reasonable terms, Sonder would need to find an alternate payment processor, and may not be able to secure similar terms or replace such payment processor in an acceptable time frame. Furthermore, the software and services provided by its third-party payment processors may fail to meet Sonder’s expectations, contain errors or vulnerabilities, be compromised or experience outages. Any of these risks could cause Sonder to lose its ability to accept online payments or other payment transactions or make timely payments to landlords, any of which could adversely affect Sonder’s ability to attract and retain guests or disrupt Sonder’s operations.

Nearly all payments made to Sonder by its guests are made by credit card, debit card or through a third-party payment service, which subjects Sonder to certain regulations and to the risk of fraud. Sonder may in the future offer new payment options to guests that may be subject to additional regulations and risks. Sonder is also subject to a number of other laws and regulations relating to the payments it accepts from its guests, including with respect to money laundering, money transfers, privacy and information security, and these regulations may differ by locality and can be expected to change over time.

Sonder’s processing, storage, use and disclosure of personal data exposes it to risks of internal or external security breaches and could give rise to liabilities and/or damage to reputation.

The security of guests’ personal data is essential to maintaining consumer confidence in Sonder’s services. Among other things, Sonder may collect guests’ name, birthdate, credit card data, proof of identity (including identification numbers) and other personal information as part of the booking process. Cyberattacks by individuals, groups of hackers and state-sponsored organizations are increasing in frequency and sophistication and are constantly evolving. Security breaches may also occur due to misuse or misappropriation of guests’ personal data by employees or third-party contractors. Any security breach whether instigated internally or externally on Sonder’s systems or third-party systems could significantly harm Sonder’s reputation and therefore its business, brand, market share and results of operations. It is possible that computer circumvention capabilities, new discoveries or advances or other developments, including Sonder’s own acts or omissions, could result in a compromise or breach of consumer data. Techniques used to obtain unauthorized access to systems change frequently and may not be known until launched against Sonder or its third-party service providers. Security breaches can also occur as a result of non-technical issues, including social engineering and other intentional or inadvertent actions by Sonder’s employees, its third-party service providers, or their personnel. For example, third parties may attempt to fraudulently induce employees or guest services contractors, travel service provider partners or consumers to disclose usernames, passwords or other sensitive information (“phishing”), which may in turn be used to access Sonder’s information technology systems or to defraud its partners or guests. Third parties may also attempt to take over consumer accounts by using passwords, usernames and other personal information obtained elsewhere to attempt to login to consumer accounts on Sonder’s platforms. Sonder has experienced targeted and organized phishing and account takeover attacks and may experience more in the future. These risks are likely to increase as Sonder expands its business, integrates its products and services with those of third parties or at new properties, and stores and processes more data, including personal information. Sonder’s efforts to protect information from unauthorized access may be unsuccessful or may result in the rejection of legitimate attempts to book reservations, each of which could result in lost business and have a material adverse effect on its business, reputation and results of operations.

Sonder’s existing security measures may not be successful in preventing security breaches. A party (whether internal, external, an affiliate or unrelated third party) that is able to circumvent Sonder’s security systems could

 

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steal consumer information, transaction data, trade secrets or other proprietary or confidential information. In connection with the audit of its 2020 financial statements, Sonder and its independent auditors identified deficiencies in its controls over system access, program change management and computer operations that are intended to ensure that access to data is adequately restricted. Although Sonder is attempting to address these deficiencies, there can be no assurance that it will remediate them successfully. In the last few years, several major companies experienced high-profile security breaches that exposed their systems and information and/or their consumers’ or employees’ personal information, and it is expected that these types of events will continue to occur. Sonder is increasing resources to protect against security breaches. Sonder incurs significant costs in an effort to detect and prevent security breaches and other security-related incidents and it expects its costs will increase as it makes improvements to its systems and processes to prevent further breaches and incidents. In the event of a future breach or incident, Sonder could be required to expend additional significant capital and other resources in an effort to prevent further breaches or incidents, which may require Sonder to divert substantial resources. Moreover, Sonder could be required or otherwise find it appropriate to expend significant capital and other resources to respond to, notify third parties of, and otherwise address the incident or breach and its root cause, and most jurisdictions have enacted laws requiring companies to notify individuals, regulatory authorities and others of security breaches involving certain types of data. Each of these could require Sonder to divert substantial resources. Sonder has experienced and responded to cyberattacks, which it believes have not had a significant impact on the integrity of its systems or the security of data, including customer data maintained by it. These issues are likely to become more difficult to manage as Sonder expands the number of places where it operates and the number and variety of services it offers, and as the tools and techniques used in such attacks become more advanced. Security breaches could result in severe damage to its information technology infrastructure, including damage that could impair its ability to book stays, collect payments or otherwise operate its business, or the ability of consumers to make reservations or access its properties or in-room features and services, as well as loss of consumer, financial or other data that could materially and adversely affect its ability to conduct its business or satisfy its commercial obligations. Security breaches could also result in negative publicity, damage its reputation, expose it to risk of loss or litigation and possible liability, subject it to regulatory penalties and sanctions, or cause consumers to lose confidence in its security and choose to stay with its competitors, any of which would have a negative effect on its brand, market share, results of operations and financial condition. Sonder’s insurance policies have coverage limits and deductibles and may not be adequate to reimburse it for all losses caused by security breaches.

Additionally, Sonder’s guests could be affected by security breaches at third parties such as OTAs and a security breach at any such third party could be perceived by consumers as a security breach of Sonder’s systems, or may decrease confidence in Sonder’s security measures, and in any event could result in negative publicity, subject it to notification requirements, damage its reputation, expose it to risk of loss or litigation and possible liability and subject it to regulatory penalties and sanctions. In addition, such third parties may not comply with applicable disclosure requirements, which could expose Sonder to liability.

System capacity constraints, system or operational failures, or denial-of-service or other attacks could materially adversely affect Sonder’s business, results of operations, and financial condition.

Since Sonder’s founding, it has experienced rapid growth in consumer traffic to its website and usage of its app, and its portfolio of properties has grown and diversified. If Sonder’s technologies, systems and network infrastructure cannot be expanded or are not scaled to cope with increased demand or fail to perform, it could result in unanticipated disruptions in bookings and guest service, slower response times, decreased guest satisfaction, and delays in launching new properties and markets.

Sonder’s systems and operations throughout the world may be vulnerable to damage or interruption from human error, computer viruses, earthquakes, floods, fires, power loss, telecommunications failure, terrorist attacks, cyber attacks, acts of war, break-ins, and similar events. A catastrophic event that results in the destruction or disruption of its global or Canadian headquarters, warehouses, or other key facilities (including but not limited to offices in Sonder’s major cities), any third-party cloud hosting facilities, or its critical business or

 

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information technology systems could severely affect Sonder’s ability to conduct normal business operations and result in lengthy interruptions of guest bookings, payments and other operations, which could adversely affect Sonder’s business, financial condition, and results of operations.

Sonder’s systems and operations are also subject to break-ins, sabotage, intentional acts of vandalism, terrorism, and similar misconduct from external sources and malicious insiders. Sonder’s existing security measures may not be successful in preventing attacks on its systems, and any such attack could cause significant interruptions in its operations. There are numerous other potential forms of attack, such as phishing, account takeovers, malicious code injections, ransomware, and the attempted use of its platform to launch a denial-of-service attack against another party, each of which could cause significant interruptions in Sonder’s operations or involve Sonder in legal or regulatory proceedings. Reductions in the availability and response time of Sonder’s app and website could cause guest dissatisfaction and lost revenue, and measures Sonder may take to divert suspect traffic to its website in the event of such an attack could result in the diversion of bona fide customers. These issues are likely to become more difficult to manage as Sonder expands the number of places where it operates and the variety of services it offers, and as the tools and techniques used in such attacks become more advanced and available. Sonder has experienced targeted and organized phishing and account takeover attacks and may experience more in the future. To date, Sonder believes these attacks have been unsuccessful in causing unauthorized transfers of funds but the outcome of any future attacks is inherently uncertain. Successful attacks could result in negative publicity, financial loss, and damage to Sonder’s reputation, and could prevent guests from booking stays or receiving services during the attack, any of which could materially adversely affect its business, results of operations, and financial condition.

In the event of certain system failures, Sonder may not have back-up systems, or may be unable to switch to back-up systems immediately, and the time to full recovery could be prolonged. Sonder has experienced system failures from time to time, including failures of important guest-facing systems such as keyless entry systems at guest properties. In addition to placing increased burdens on its engineering staff, these outages can create a significant number of guest issues and complaints that need to be resolved by Sonder’s guest services team. Any unscheduled interruption in Sonder’s service could result in an immediate and significant loss of revenue, an increase in guest support costs (including refunds and reimbursements), and harm Sonder’s reputation, and could result in some consumers switching to competitors. If Sonder experiences frequent or persistent system failures, its brand and reputation could be permanently and significantly harmed, and its business, results of operations, and financial condition could be materially adversely affected. Sonder’s ongoing efforts to increase the reliability of its systems will be expensive and may not be completely effective in reducing the frequency or duration of unscheduled downtime or in system errors affecting guest experience or Sonder’s operations. Sonder does not carry business interruption insurance sufficient to compensate it for all losses that may occur.

Sonder uses both internally developed systems and third-party systems to operate its mobile app, website and other critical infrastructure, including transaction and payment processing, and financial and accounting systems, and certain technology-enabled features at guest properties. If the number of consumers using its website increases substantially, or if critical internally developed or third-party systems stop operating as designed, it may need to significantly upgrade, expand, or repair its systems and other infrastructure. Sonder may not be able to upgrade its systems and infrastructure to accommodate such conditions in a timely manner, and its systems could be impacted for a meaningful period of time, which could materially adversely affect its business, results of operations, and financial condition. The software underlying Sonder’s services is highly complex and may contain undetected errors or vulnerabilities, some of which may only be discovered after the code has been released. Any errors or vulnerabilities discovered in Sonder’s code after release could result in damage to its reputation, loss of customers, disruption to its sales channels, loss of revenue, or liability for damages, any of which could adversely affect Sonder’s growth prospects and its business.

Disruptions in Internet access or guests’ usage of their mobile devices could harm Sonder’s business.

Sonder’s business depends on the performance and reliability of the Internet, telecommunications network operators, and other infrastructures that are not under its control. Its revenue and guest experience are also

 

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heavily dependent on consumers’ ability to interact with its mobile app and guest services functions using their mobile devices. Accordingly, Sonder depends on consumers’ access to the Internet through mobile carriers and their systems. Disruptions in Internet access, whether generally, in a specific region or otherwise, could materially adversely affect its business, results of operations, and financial condition.

Supply chain interruptions may increase Sonder’s costs or reduce its revenues.

Sonder depends on good vendor relationships and the effectiveness of its supply chain management systems to ensure reliable and sufficient supply, on reasonably favorable terms, of materials used in its renovation, building openings and operating activities, such as furniture, linens, unit decor and appliances, lighting, security equipment and consumables. The materials it purchases and uses in the ordinary course of its business are sourced from a wide variety of suppliers around the world, including Vietnam, China, India, and the United States. Disruptions in the supply chain may result from the COVID-19 pandemic or other public health crises, weather-related events, natural disasters, trade restrictions, tariffs, border controls, acts of war, terrorist attacks, third-party strikes, work stoppages or slowdowns, shipping capacity constraints, supply or shipping interruptions or other factors beyond its control. In the event of disruptions in its existing supply chain, the labor and materials it relies on in the ordinary course of its business may not be available at reasonable rates or at all. In some cases, it may rely on a single source for procurement of furniture or other supplies in a given region. Sonder’s supply chain also depends on third-party warehouses and logistics providers, including two central distribution centers in North America. Any disruption in the supply, storage or delivery of materials to Sonder’s leased properties could disrupt operations at its existing locations or significantly delay its opening of a new location, which may cause harm to its reputation and results of operations.

Sonder may be subject to liability claims and its insurance may be inadequate to wholly cover its losses.

Sonder is subject to various types of claims and liabilities in the operation of its business. Despite the procedures, systems and internal controls Sonder has implemented to avoid or mitigate risks, it may experience claims and incur liabilities, whether through a weakness in these procedures, systems and internal controls, or because of negligence or the willful act of an employee, contractor, guest or other third party. Sonder’s insurance policies may be inadequate to wholly cover the potentially significant losses that may result from claims arising from incidents related to its units or leased properties, guest or employee acts or omissions, disruptions in its service, including those caused by cybersecurity incidents, failures or disruptions to its infrastructure, catastrophic events and disasters or otherwise. In addition, such insurance may not be available to Sonder in the future on economically reasonable terms, or at all. Further, the insurance may not cover all claims made against Sonder, and defending a suit, regardless of its merit, could be costly and divert management’s attention.

Sonder’s business is subject to the risks of earthquakes, fire, floods, and other catastrophic events.

A significant natural disaster could materially adversely affect Sonder’s business, results of operations, financial condition, and prospects. In addition, climate change could result in an increase in the frequency or severity of natural disasters and cause performance problems with Sonder’s technology infrastructure.

Although Sonder maintains incident management and disaster response plans, in the event of a major disruption caused by a natural disaster or man-made problem, or outbreak of pandemic diseases, including COVID-19, it may be unable to continue its operations and may experience system interruptions and reputational harm. Acts of terrorism and other geopolitical unrest could also cause disruptions in its business or the business of Sonder’s landlords, vendors or other business partners, or the economy as a whole. All of the aforementioned risks may be further increased if Sonder’s disaster recovery plans prove to be inadequate.

 

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Sonder’s technology contains third-party open source software components, and failure to comply with the terms of the underlying open source software licenses could restrict its ability to operate as intended or could increase its costs.

Sonder’s technology contains software modules licensed to it by third-party authors under “open source” licenses. Use and distribution of open source software may entail greater risks than use of third-party commercial software, as open source licensors generally do not provide support, warranties, indemnification or other contractual protections regarding infringement claims or the quality of the code. In addition, the public availability of such software may make it easier for others to compromise Sonder’s technology.

Some open source licenses contain requirements that Sonder make available source code for modifications or derivative works it creates based upon the type of open source software it uses, or grant other licenses to its intellectual property. If Sonder combines its proprietary software with open source software in a certain manner, it could, under certain open source licenses, be required to release the source code of its proprietary software to the public. This would allow its competitors to create similar offerings with lower development effort and time and ultimately could result in a loss of its competitive advantages. Alternatively, to avoid the public release of the affected portions of its source code, Sonder could be required to expend substantial time and resources to re-engineer some or all of its software.

Although Sonder monitors its use of open source software to avoid subjecting its technology to conditions it does not intend, the terms of many open source licenses have not been interpreted by U.S. or foreign courts, and there is a risk that these licenses could be construed in a way that could impose unanticipated conditions or restrictions on Sonder’s ability to provide or distribute its technology. From time to time, there have been claims challenging the ownership of open source software against companies that incorporate open source software into their solutions. As a result, Sonder could be subject to lawsuits by parties claiming ownership of what it believes to be open source software. Moreover, Sonder cannot assure you that its processes for controlling its use of open source software in its technology will be effective. If Sonder is held to have breached or failed to fully comply with all the terms and conditions of an open source software license, it could face infringement or other liability, or be required to seek costly licenses from third parties to continue providing its offerings on terms that may not be economically feasible, re-engineer its technology, discontinue or delay the provision of its offerings if re-engineering could not be accomplished on a timely basis or make generally available, in source code form, its proprietary code, any of which could adversely affect its business, financial condition and results of operations.

Sonder may be unable to protect its brand and other intellectual property, and it has been and may be subject to legal proceedings and claims relating to intellectual property rights.

Sonder’s intellectual property is important to its success. Sonder relies on a combination of trademark, copyright, and trade secret laws, employee and third-party non-disclosure and/or invention assignment agreements and other methods to protect its intellectual property. However, these only afford limited protection, and unauthorized parties may attempt to copy aspects of Sonder’s services, technology, mobile app, algorithms, or other features and functionality, or to use information that Sonder considers proprietary or confidential. There can be no assurance that any of Sonder’s intellectual property will be protectable by patents, but if it is, any efforts to obtain patent protection that is not successful may harm Sonder’s business in that others will be able to use Sonder’s technologies. In addition, the laws of some foreign countries do not protect proprietary rights to the same extent as do the laws of the United States. There can be no assurance that the steps taken by Sonder to protect its proprietary rights will be adequate or that third parties will not infringe or misappropriate Sonder’s trademarks, copyrights, and similar proprietary rights. Sonder endeavors to defend its intellectual property rights diligently, but intellectual property litigation is expensive and time-consuming, and may divert managerial attention and resources from its business objectives. Sonder may not be able to successfully defend its intellectual property rights, which could have a material adverse effect on its business, brand, and results of operations.

 

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From time to time, in the ordinary course of business, Sonder has been and may be subject to legal proceedings and claims relating to the intellectual property rights of others, and Sonder expects that third parties will continue to assert intellectual property claims, in particular trademark claims, against it, particularly as Sonder expands the complexity and scope of its business. Successful claims against Sonder could result in a significant monetary liability or prevent Sonder from operating its business, or portions of its business. In addition, resolution of claims may require Sonder to obtain licenses to use intellectual property rights belonging to third parties, which may be expensive to procure, or to cease using those rights altogether. Any of these events could have a material adverse effect on its business, results of operations and financial condition.

Various factors that affect the desirability of Sonder units in a particular region or season could adversely affect its ability to attract and retain guests.

Sonder’s units are often located in popular vacation destinations, some of which are more heavily utilized on a seasonal basis. As a result, its revenue in these regions is heavily dependent upon its ability to maintain occupancy during key seasonal periods.

In addition, factors influencing the desirability of its units in a particular city or region or during a specific season could adversely affect Sonder’s ability to attract new guests and retain existing guests. A significant natural disaster, health crisis, event of civil unrest, political turmoil or other regional disturbance could reduce the number of available units in or visitors to the affected area, thereby reducing Sonder’s revenue. Sonder’s properties are concentrated in a relatively limited number of cities, which makes local events and conditions, and the relative appeal of travel to those cities, particularly important to its business and financial results. In addition, Sonder’s property leasing and opening process can take substantial time, which may make it more difficult to compete for guests in a newly popular travel destination.

Sonder’s properties are concentrated in a limited number of cities, which increases its exposure to local factors affecting demand or hospitality operations.

Sonder’s operations are relatively concentrated in a limited number of cities, and Sonder expects that the majority of its operations will continue to be concentrated in a limited number of cities. As of June 30, 2021, Sonder’s five largest cities (New York City, Philadelphia, New Orleans, London and Chicago) accounted for approximately 45% of its Live Units, and its 10 largest cities accounted for approximately 60% of its Live Units. Geographic concentration magnifies the risk to Sonder of localized economic, political, public health and other conditions such as national disasters. Civil unrest, public health crises, unusual weather, natural disasters or other factors affecting travel to these cities or other markets in which Sonder is expanding, as well as changes in local competitive conditions, may have a disproportionate negative effect on its revenue and on its ability to secure sufficient staffing, supplies or services for its largest markets.

Sonder is exposed to fluctuations in currency exchange rates.

Since Sonder conducts a portion of its business outside the United States but reports its results in U.S. dollars, it faces exposure to adverse movements in currency exchange rates, which may cause its revenue and operating results to differ materially from expectations. In addition, fluctuation in its mix of U.S. and foreign currency denominated transactions may contribute to this effect as exchange rates vary. Moreover, as a result of these exchange rate fluctuations, revenue, cost of revenue, operating expenses and other operating results may differ materially from expectations when translated from the local currency into U.S. dollars upon consolidation. For example, if the U.S. dollar strengthens relative to foreign currencies Sonder’s non-U.S. revenue would be adversely affected when translated into U.S. dollars. Conversely, a decline in the U.S. dollar relative to foreign currencies would increase Sonder’s non-U.S. revenue when translated into U.S. dollars. As exchange rates vary, revenue, cost of revenue, operating expenses and other operating results, when translated, may differ materially from expectations. In addition, Sonder’s revenue and operating results are subject to fluctuation if its mix of U.S. and foreign currency denominated transactions and expenses changes in the future. Sonder may enter into

 

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hedging arrangements in order to manage foreign currency exposure, but such activity may not completely eliminate fluctuations in its operating results.

Changes in Sonder’s effective tax rate could harm its future operating results.

Sonder is subject to federal and state income taxes in the United States and in various international jurisdictions. Sonder’s provision for income taxes and its effective tax rate are subject to volatility and could be adversely affected by several factors, including:

 

   

earnings being lower than anticipated in countries that have lower tax rates and higher than anticipated in countries that have higher tax rates;

 

   

effects of certain non-tax-deductible expenses, including those arising from the requirement to expense stock options;

 

   

changes in the valuation of its deferred tax assets and liabilities;

 

   

adverse outcomes resulting from any tax audit, including transfer pricing adjustments with respect to intercompany transactions;

 

   

its ability to utilize its net operating losses and other deferred tax assets; and

 

   

changes in accounting principles or changes in tax laws and regulations, or the application of the tax laws and regulations, including possible U.S. changes to the deductibility of expenses attributable to foreign income or the foreign tax credit rules.

Additionally, on December 22, 2017, the U.S. enacted the Tax Cuts and Jobs Act of 2017, or the “TCJA”, which significantly affected U.S. tax law by changing how the U.S. imposes income tax on multinational corporations. In addition to reducing the corporate income tax rate from 35% to 21%, the TCJA requires complex computations not previously required by U.S. tax law. As such, the application of accounting guidance for such items is currently uncertain. Further, compliance with the TCJA and the accounting for such provisions require preparation and analysis of information not previously required or regularly produced. In addition, the U.S. Department of Treasury has broad authority to issue regulations and interpretive guidance that may significantly impact how Sonder will apply the law and impact its results of operations in future periods. Accordingly, further regulatory or GAAP accounting guidance for the TCJA, Sonder’s further analysis on the application of the law, and refinement of Sonder’s initial estimates and calculations could materially change Sonder’s current provisional estimates of the impact of the TCJA in its financial statements, which could in turn materially affect its tax obligations and effective tax rate. The change in the U.S. Presidential administration in January 2021 may increase the chance for legislative changes to the TCJA provisions.

Significant judgment is required in the application of accounting guidance relating to uncertainty in income taxes. If tax authorities challenge Sonder’s tax positions, any such challenges that are settled unfavorably could adversely impact Sonder’s provision for income taxes.

Sonder’s corporate structure and intercompany arrangements cause it to be subject to the tax laws of various jurisdictions, and it could be obligated to pay additional taxes, which could materially adversely affect its business, financial condition, results of operations, and prospects.

Sonder is expanding its international operations and personnel to support its business in international markets. Sonder generally conducts its international operations through wholly-owned subsidiaries and is or may be required to report its taxable income in various jurisdictions worldwide based upon its business operations in those jurisdictions. Sonder’s intercompany relationships are subject to complex transfer pricing regulations administered by tax authorities in various jurisdictions. The amount of taxes Sonder pays in different jurisdictions may depend on the application of the tax laws of such jurisdictions, including the United States, to its international business activities, changes in tax rates, new or revised tax laws, interpretations of existing tax

 

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laws and policies, and Sonder’s ability to operate its business in a manner consistent with its corporate structure and intercompany arrangements. The relevant tax authorities may disagree with Sonder’s determinations as to the income and expenses attributable to specific jurisdictions. If such a disagreement were to occur, and its position was not sustained, Sonder could be required to pay additional taxes, interest, and penalties, which could result in one-time tax charges, higher effective tax rates, reduced cash flows, and lower overall profitability of its operations.

If existing tax laws, rules or regulations are amended, or if new unfavorable tax laws, rules or regulations are enacted, including with respect to occupancy, sales, value-added taxes, withholding taxes, revenue based taxes, unclaimed property, or other tax laws applicable to the multinational businesses, the results of these changes could increase Sonder’s tax liabilities. Possible outcomes include double taxation, multiple levels of taxation, or additional obligations, prospectively or retrospectively, including the potential imposition of interest and penalties. Demand for Sonder’s products and services could decrease if such costs are passed on to Sonder’s guests, result in increased costs to update or expand Sonder’s technical or administrative infrastructure or effectively limit the scope of Sonder’s business activities should Sonder decide not to conduct business in particular jurisdictions.

Sonder is subject to federal, state, and local income, sales, and other taxes in the United States and income, withholding, transaction, and other taxes in numerous foreign jurisdictions. Evaluating its tax positions and its worldwide provision for taxes is complicated and requires exercising significant judgment. During the ordinary course of business, there are many activities and transactions for which the ultimate tax determination is uncertain. In addition, Sonder’s tax obligations and effective tax rates could be adversely affected by changes in the relevant tax, accounting, and other laws, regulations, principles, and interpretations, including those relating to income tax nexus, by recognizing tax losses or lower than anticipated earnings in jurisdictions where it has lower statutory rates, or higher than anticipated earnings in jurisdictions where it has higher statutory rates, by changes in foreign currency exchange rates, or by changes in the valuation of its deferred tax assets and liabilities. Sonder may be audited in various jurisdictions, and such jurisdictions may assess additional taxes (including income taxes, sales taxes, and value added taxes) against it. Although Sonder believes its tax estimates are reasonable, the final determination of any tax audits or litigation could differ materially from its historical tax provisions and accruals, which could have an adverse effect on its results of operations or cash flows in the period or periods for which a determination is made.

Sonder may be subject to substantial liabilities if it is determined that Sonder should have collected, or in the future should collect, additional sales and use, value added or similar taxes.

Sonder currently collects and remits applicable sales taxes and other applicable transfer taxes in jurisdictions where it, through its employees or economic activity, has a presence and where Sonder has determined, based on applicable legal precedents, that sales of travel accommodations are classified as taxable. Sonder does not currently collect and remit state and local excise, utility user, or ad valorem taxes, fees, or surcharges in jurisdictions where it believes it does not have sufficient “nexus.” There is uncertainty as to what constitutes sufficient nexus for a state or local jurisdiction to levy taxes, fees, and surcharges on sales made over the Internet, and there is also uncertainty as to whether Sonder’s characterization of its traveler accommodations in certain jurisdictions will be accepted by state and local tax authorities.

The application of indirect taxes, such as sales and use, value added, goods and services, business, and gross receipts taxes, to businesses that transact online, such as Sonder, is a complex and evolving area. In some instances, Sonder sells its services through OTAs and does not control how taxes are collected or remitted. There are substantial ongoing costs associated with complying with the various indirect tax requirements in the numerous markets in which Sonder conducts or may conduct business. If an OTA does not collect such taxes from travelers, Sonder could be held liable for such obligations. The application of existing or future indirect tax laws, whether in the United States or internationally, or the failure to collect and remit such taxes, could materially adversely affect Sonder’s business, financial condition, results of operations, and prospects.

 

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Failure to comply with anti-bribery, anti-corruption laws and similar laws, could subject us to penalties and other adverse consequences.

Sonder is subject to the U.S. Foreign Corrupt Practices Act of 1977, as amended, commonly referred to as the FCPA, the U.S. Travel Act, the United Kingdom Bribery Act 2010, and possibly other anti-bribery and anti-corruption laws in countries outside of the United States in which it conducts its activities. Anti-corruption and anti-bribery laws have been enforced aggressively in recent years and are interpreted broadly to generally prohibit companies, their employees, agents, representatives, business partners, and third-party intermediaries from authorizing, offering, or providing, directly or indirectly, improper payments or benefits to recipients in the public or sometimes the private sector.

Sonder sometimes engages third parties to conduct its business abroad. Sonder and its employees, agents, representatives, business partners and third-party intermediaries may have direct or indirect interactions with officials and employees of government agencies or state-owned or affiliated entities and may be held liable for the corrupt or other illegal activities of these employees, agents, representatives, business partners or third-party intermediaries even if Sonder does not explicitly authorize such activities. Sonder cannot guarantee that all of its employees and agents will not take actions in violation of applicable law, for which Sonder may be ultimately held responsible. As Sonder increases its international sales and business, the risks under these laws may increase.

These laws also require that Sonder keep accurate books and records and maintain internal controls and compliance procedures designed to prevent any such actions. While Sonder has policies and procedures to address compliance with such laws, Sonder cannot guarantee that none of its employees, agents, representatives, business partners or third-party intermediaries will take actions in violation of company policies and applicable law, for which Sonder may be ultimately held responsible.

Any allegations or violation of the FCPA or other applicable anti-bribery and anti-corruption laws could result in whistleblower complaints, sanctions, settlements, prosecution, enforcement actions, fines, damages, adverse media coverage, investigations, loss of export privileges, severe criminal or civil sanctions, or suspension or debarment from U.S. government contracts, all of which may have an adverse effect on Sonder’s reputation, business, results of operations, and prospects. Responding to any investigation or action will likely result in a materially significant diversion of management’s attention and resources and significant defense costs and other professional fees.

Sonder is subject to governmental export and import controls and economic sanctions programs that could impair its ability to compete in international markets or subject Sonder to liability if it violates these controls.

In many cases, Sonder’s business activities are subject to U.S. and international import and export control laws and regulations including trade and economic sanctions maintained by the Office of Foreign Assets Control, or OFAC. For example, restrictions may exist on its ability to provide services to persons located in certain U.S. embargoed or sanctioned countries or listed on certain lists of sanctioned persons. Additionally, the import of furniture used in various properties must be conducted in accordance with applicable import laws and regulations. If Sonder were to fail to comply with such import or export control laws and regulations, trade and economic sanctions, or other similar laws, it could be subject to both civil and criminal penalties, including substantial fines, possible incarceration for employees and managers for willful violations, and the possible loss of export or import privileges.

Operating as a public company will require the Post-Combination Company to incur substantial costs and requires substantial management attention. In addition, key members of Sonder’s management team have limited experience managing a public company.

After the Business Combination, the Post-Combination Company will incur substantial legal, accounting, and other expenses that Sonder did not incur as a private company before the Business Combination. For

 

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example, the Post-Combination Company is subject to the reporting requirements of the Exchange Act, the applicable requirements of the Sarbanes-Oxley Act, the Dodd-Frank Wall Street Reform and Consumer Protection Act, the rules and regulations of the SEC, and the listing standards of Nasdaq. Compliance with these rules and regulations will increase its legal and financial compliance costs, and increase demand on its systems, particularly after the Post-Combination Company is no longer an “emerging growth company” under SEC rules. In addition, the Post-Combination Company may be subject to stockholder activism, which can lead to additional substantial costs, distract management, and impact the manner in which the Post-Combination Company operates its business in ways that it cannot currently anticipate. As a result of disclosure of information herein and in filings required of a public company, Sonder’s business and financial condition will become more visible, which may result in threatened or actual litigation, including by competitors.

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

Risks Related to Government Regulation

Unfavorable changes in, or interpretations or enforcement of, government regulations or taxation of the evolving short-term and long-term rental, Internet and e-commerce industries could harm Sonder’s operating results.

Sonder operates in markets throughout the world and is subject to various regulatory and taxation requirements of the jurisdictions in which it operates. Sonder’s regulatory compliance efforts are burdensome because each local jurisdiction has different requirements, including with respect to zoning, licensing, permitting, sanitation, accessibility, taxes, employment, labor and health and safety, and regulations in the industry are constantly evolving. Compliance requirements that vary significantly from jurisdiction to jurisdiction reduce Sonder’s ability to achieve economies of scale, add compliance costs, and increase the potential liability for compliance deficiencies. In addition, laws or regulations that may harm Sonder’s business could be adopted, or interpreted in a manner that affects its activities, including but not limited to the regulation of personal and consumer information, consumer advertising, labor laws, accessibility, health and safety, taxation, and real estate and hotel licensing and zoning requirements. Violations or new interpretations of these laws or regulations may result in penalties, disrupt Sonder’s ability to operate existing properties or to develop new ones, negatively impact Sonder’s guest relations or operations in other ways, increase its expenses, and damage its reputation and business.

In addition, since Sonder began its operations, there have been, and continue to be, regulatory developments that affect the hospitality services industry and the ability of companies like Sonder to offer its units for specified durations or in certain neighborhoods. For example, some municipalities have adopted ordinances that limit Sonder’s ability to offer certain properties to its guests for fewer than a stated number of consecutive nights, such as