Filed
by PropTech Acquisition Corporation pursuant to
Rule
425 under the Securities Act of 1933
and
deemed filed pursuant to Rule 14a-12
under
the Securities Exchange Act of 1934
Subject
Company: PropTech Acquisition Corporation
Commission
File No. 333-249468
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Q1:
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IN
THIS DOCUMENT, THE TERMS ’STOCK’ AND ‘EQUITY AWARDS’ ARE USED.
WHAT DO THESE TERMS MEAN?
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A:
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Stock
means actual shares of Porch stock, whether purchased from Porch for cash or received
as a result of exercising a vested Porch stock option.
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Equity
awards means (whether vested or unvested): unexercised stock options, shares of restricted stock, and restricted stock units (often
referred to as RSUs). At Porch, RSUs were granted in relation to the Porch 2020 programs providing equity awards during our furlough
as well as in lieu of cash compensation.
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Q2:
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IF
I AM A PORCH FULL TIME EMPLOYEE AND I HOLD PORCH STOCK, WHAT WILL I RECEIVE IN THE IPO?
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A:
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If
the IPO is completed, at such time you will receive 3 items in exchange for your
Porch stock.
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1.
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Shares
in the IPO company that reflect your proportionate ownership in the IPO company when
compared to all other stockholders and equity award holders of Porch plus all other stockholders
and warrant holders of PTAC. The number of shares of the IPO company will be adjusted
through an exchange ratio that reflects the comparative per share values of Porch and
the post-IPO company and is designed to preserve the value of your pre-IPO shares.
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2.
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An
allocation of Restricted shares in the IPO company called “earnout shares”1
that are not tradeable unless the IPO company’s trading price exceeds share
price milestones prior to the third anniversary of the IPO. If milestones are met, you
would not need to be a Porch full time employee (FTE) at such time to freely trade the
applicable earnout shares.
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3.
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A
cash payout2, based upon your proportionate ownership in Porch compared
to all other stockholders in Porch.
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Q3:
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IF
I AM A CURRENT PORCH FTE AND I HOLD PORCH EQUITY AWARDS (WHETHER VESTED OR UNVESTED),
WHAT WILL I RECEIVE IN THE IPO?
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A:
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If
the IPO is completed and you remain an FTE team member through such date, at such time
you will receive 2 items in exchange for your Porch equity awards.
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1
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A
total of 5 million shares will be issued as earnout shares. We expect that Porch’s founders as well as venture capital and
other institutional investors/lenders will be entitled to a substantial majority of these shares given, among other things, their
significant investment of cash into Porch from prior years.
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2
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The
size of the cash payout is not known at this time (it is between 2 – 6% of the total deal amount). The amount will be distributed
based upon your ownership of Porch.
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1.
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Equity
awards in the IPO company that reflect your proportionate ownership in the IPO company
when compared to all other stockholders and equity award holders of Porch plus all other
stockholders and warrant holders of PTAC. The equity award you receive in the IPO company
will be the same type of award that you hold prior to the IPO (i.e., stock options, RSUs,
or restricted stock). The number of shares of the IPO company subject to the substitute
award and the exercise price of a substitute stock option will be adjusted through an
exchange ratio that reflects the comparative per share values of Porch and the post-IPO
company and is designed to preserve the value of your pre-IPO award.
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2.
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Restricted
shares in the IPO company called “earnout shares” that are not tradeable
unless the IPO company’s trading price exceeds share price milestones prior
to the third anniversary of the IPO. If milestones are met, you would need to be a then
current Porch team member through such time to vest into the earnout shares and thereafter
be able to freely trade such earnout shares. Exercising or vesting in Porch equity awards
post-IPO will not change this earnout criteria.
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Q4:
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HOW
MUCH WILL I RECEIVE IN THE CASH PAYOUT?
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A:
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The
amount is expected to be determined within 1 week of the IPO and depends on Porch’s
financial position (debt, cash, working capital) at such time as well as whether the
PTAC shareholders elect to financially support the IPO with their cash. Once known, this
information will be shared publicly.
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Q5:
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WHAT
ARE THE MILESTONES FOR THE EARNOUT SHARES?
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A:
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The
milestones are as follows:
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If
Porch stock trades at or above $18.00 per share over any 20 trading days within any 30-consecutive trading day period, then one-third
of the earnout shares will vest into your Employee brokerage account (see Q&A-6 below for more detail about this new account).
If
Porch stock trades at or above $20.00 per share over any 20 trading days within any 30-consecutive trading day period, then one-third
of the earnout shares will vest into your Employee brokerage account.
If
Porch stock trades at or above $22.00 per share over any 20 trading days within any 30 consecutive trading day period, then one-third
of the earnout shares will vest into your Employee brokerage account.
As
a reminder to FTEs who are stockholders, with respect to earnout shares issued to you in respect of your Porch stock, in order
to monetize earnout shares following a milestone, you would not need to be an FTE as of the milestone date in order to vest in
such earnout shares and thereafter freely trade such shares. Please see Q&A-1 for detail on what constitutes “stock”.
As
a reminder to FTEs who are equity award holders, with respect to earnout shares issued to you in respect of your equity awards,
in order to monetize earnout shares following a milestone, you would need to be an FTE through the milestone date in order to
vest in such earnout shares and thereafter freely trade such shares. Exercising options post IPO will not change the FTE vesting
criteria of the earnout shares. Please see Q&A-1 for detail on what constitutes “equity awards”.
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Q6:
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WHEN
WILL I RECEIVE THE EARNOUT SHARES?
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A:
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You
will receive these earnout shares in an Employee brokerage account that will be set up
through a coordinated process with the People team, a new vendor that will replace Carta,
and you. We expect you to receive shares in such brokerage account within a few weeks
following the IPO closing.
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Q7:
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WHAT
ARE THE TAX IMPLICATIONS OF THE IPO TO PORCH STOCKHOLDERS?
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A:
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Each
person’s tax position is different and so Porch is not able to give tax advice. You should speak to your own tax advisor.
However, our advisors do not expect the IPO itself to give rise to any tax to Porch stockholders, other than in respect of any
cash received by a stockholder in the IPO.
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Q8:
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WHAT
ARE THE TAX IMPLICATIONS OF THE IPO TO PORCH EQUITY AWARD HOLDERS WHO ARE FTEs?
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A:
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Each
person’s tax position is different and so Porch is not able to give tax advice. You should speak to your own tax advisor.
However, our advisors do not expect the IPO itself to cause any Porch equity award holders to incur any required tax obligations
unless you exercise vested Porch stock options prior to the IPO.
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Q9:
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AM
I ABLE TO EXERCISE MY VESTED PORCH STOCK OPTIONS PRIOR TO THE IPO?
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A:
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Yes,
except as described below, you are able to exercise your vested Porch stock options prior to the IPO. In order to do so, you would
need to pay both the strike price and your tax withholding obligations via ACH to Carta and send the taxes due to Porch, where
they will be forwarded to the IRS on your behalf. Your taxes must be paid IMMEDIATELY after you exercise your options.
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In
order to administrate the IPO closing, we will not permit the exercise of stock options likely during the 2-week period leading
up to the IPO closing. We will communicate this period to you as soon as we know the potential IPO date.
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Q10:
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AM
I ABLE TO EXERCISE MY VESTED IPO COMPANY STOCK OPTIONS AFTER THE IPO?
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A:
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Yes,
so long as you pay the strike price to Porch in cash and immediately pay your tax withholding obligations. Your strike prices
must be paid via the Employee brokerage account via ACH at the same time a check is sent to Porch to cover the taxes associated
with your purchase (Employee Brokerage account is the new system replacing Carta).
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Q11:
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WHEN
WILL MY RSUs VEST AND BE SETTLED AFTER THE IPO?
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A:
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RSUs
vest over time and generally shares of Porch stock will be credited to your plan account shortly after each vesting date.
However, if your RSUs satisfied the time-based vesting requirements prior to the IPO, the RSUs will not become vested until the
IPO occurs, and thereafter IPO company shares will then be issued to you six months after the IPO, at which time you will be required
to make a payment to the company for any required withholding taxes and the company will forward this payment to the IRS.
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Q12:
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AM
I ABLE TO TRADE IN PORCH STOCK AFTER THE IPO?
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A:
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Generally
speaking, you will be able to buy and sell Porch stock only during specified periods
of time (generally 30-day windows) following Porch’s filing of financial reports
with the SEC. Such financial report filings are expected to occur on a quarterly basis
over the course of 2021 and beyond. The first such report is called an Annual Report
(aka Form 10-K) and is expected to be filed sometime in February or March 2021 –
after that filing, you will be notified by Porch that it is permissible to trade in Porch
stock, unless you have “material non public information” about Porch in your
possession at such time.
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If
you have any questions after the IPO about whether you have “material non public information”, we will have a dedicated
resource set up to answer those questions.
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Q13:
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ARE
WE GOING TO CONTINUE TO USE CARTA AFTER THE IPO?
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A:
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It
is expected that we will not use Carta after the IPO as it is primarily intended to administer
equity award programs for private companies. We are in the process of identifying a new
stock plan administrator to use after the IPO. Once identified, we will work with that
vendor to move all of the information about each of you that is in Carta into the new
administrator’s portal. Thereafter, we will work with you (and the vendor) to get
you access to your new account at the vendor within which detailed information about
your equity awards will be included (including vesting, strike price, and number of shares
information, as applicable).
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Q14:
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WHAT
IF I HAVE MORE QUESTIONS?
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A:
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We
understand the IPO is a complex transaction and that much information about it is quite technical. However, at this time, we are
not able to answer questions on an individual basis given the work required to complete the IPO on top of ordinary course work
– our belief is that the above FAQs addressed many key questions on the minds of current staff members. We appreciate
your patience with the process.
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PropTech
and Porch Business Combination Summary
On
July 30, 2020, Porch entered into a definitive agreement with PropTech Acquisition Corporation (NASDAQ: PTAC) (“PropTech”),
a special purpose acquisition company targeting businesses in the real estate technology industry, which would result in Porch
becoming a publicly listed company. Upon closing of the transaction, which is expected to occur in Q4 2020, PropTech will be renamed
Porch Group, Inc. and is expected to remain listed on the Nasdaq Capital Market under the new ticker symbol “PRCH.”
About
Porch Group
Seattle-based
Porch, the vertical software platform for the home, provides software and services to approximately 10,500 home services companies,
such as home inspectors, moving companies, real estate agencies, utility companies, warranty companies and others. Porch helps
these service providers grow their business and improve their customer experience. As a way to pay for the software and services,
these companies connect their homebuyers to Porch, who in turn make the moving process easier, helping consumers save time and
make better decisions about critical services, including insurance, moving, security, TV/internet, home repair and improvement,
and more. To learn more about Porch, visit porchgroup.com.
About
PropTech Acquisition Corporation
PropTech
Acquisition Corporation is a special purpose acquisition company formed for the purpose of effecting a merger, capital stock exchange,
asset acquisition, stock purchase, reorganization or similar business combination with one or more businesses focused on real
estate technology. For more information, visit proptechacquisition.com.
Forward-Looking
Statements
Certain
statements in this communication may be considered “forward-looking statements” within the meaning of the “safe
harbor” provisions of the United States Private Securities Litigation Reform Act of 1995. Forward-looking statements generally
relate to future events or PTAC’s or Porch’s future financial or operating performance. These statements are based
on the beliefs and assumptions of the management of PTAC and Porch. Although PTAC and Porch believe that their respective plans,
intentions and expectations reflected in or suggested by these forward-looking statements are reasonable, neither PTAC nor Porch
can assure you that either will achieve or realize these plans, intentions or expectations. Forward-looking statements are inherently
subject to risks, uncertainties and assumptions. Generally, statements that are not historical facts, including statements concerning
possible or assumed future actions, business strategies, events or results of operations, are forward-looking statements. These
statements may be preceded by, followed by or include the words “believes,” “estimates,” “expects,”
“projects,” “forecasts,” “may,” “will,” “should,” “seeks,”
“plans,” “scheduled,” “anticipates,” “intends” or similar expressions. Forward-looking
statements contained in this communication include, but are not limited to, statements about the anticipated merger closing timing
and the ability of PTAC and Porch prior to the merger, and the combined company following the merger (“New Porch”),
to: access, collect and use personal data about consumers; execute its business strategy, including monetization of services provided
and expansions in and into existing and new lines of business; anticipate the impact of the coronavirus disease 2019 (“COVID-19”)
pandemic and its effect on business and financial conditions; manage risks associated with operational changes in response to
the COVID-19 pandemic; meet the closing conditions to the merger, including approval by stockholders of PTAC and Porch on the
expected terms and schedule; realize the benefits expected from the proposed merger; anticipate the uncertainties inherent in
the development of new business lines and business strategies; retain and hire necessary employees; increase brand awareness;
attract, train and retain effective officers, key employees or directors; upgrade and maintain information technology systems;
acquire and protect intellectual property; meet future liquidity requirements and comply with restrictive covenants related to
long-term indebtedness; effectively respond to general economic and business conditions; maintain the listing on, or the delisting
of PTAC’s or New Porch’s securities from, NASDAQ or an inability to have our securities listed on the NASDAQ or another
national securities exchange following the merger; obtain additional capital, including use of the debt market; enhance future
operating and financial results; successfully execute expansion plans; anticipate rapid technological changes; comply with laws
and regulations applicable to its business, including laws and regulations related to data privacy and insurance operations; stay
abreast of modified or new laws and regulations applying to its business, including copyright and privacy regulation; anticipate
the impact of, and response to, new accounting standards; respond to fluctuations in foreign currency exchange rates and political
unrest and regulatory changes in international markets from various events; anticipate the significance and timing of contractual
obligations; maintain key strategic relationships with partners and distributors; respond to uncertainties associated with product
and service development and market acceptance; anticipate the impact of new U.S. federal income tax law, including the impact
on deferred tax assets; successfully defend litigation; successfully deploy the proceeds from the merger; and other risks and
uncertainties set forth in the section entitled “Risk Factors” and “Cautionary Note Regarding Forward-Looking
Statements” in PTAC’s Annual Report on Form 10-K for the fiscal year ended December 31, 2019, the section entitled
“Risk Factors” in PTAC’s Quarterly Reports on Form 10-Q for the quarterly periods ended March 31, 2020, June
30, 2020 and September 30, 2020, the sections entitled “Risk Factors” and “Forward-Looking Statements; Market,
Ranking and Other Industry Data” in the preliminary proxy statement/consent solicitation statement/prospectus filed by PTAC
and other documents of PTAC filed, or to be filed, with the SEC. Nothing in this communication should be regarded as a representation
by any person that the forward-looking statements set forth herein will be achieved or that any of the contemplated results of
such forward-looking statements will be achieved. You should not place undue reliance on forward-looking statements, which speak
only as of the date they are made. Neither PTAC nor Porch undertakes any duty to update these forward-looking statements, except
as otherwise required by law.
Participants
in the Solicitation
PTAC
and its directors and executive officers may be deemed participants in the solicitation of proxies from PTAC’s shareholders
with respect to the proposed business combination. A list of the names of those directors and executive officers and a description
of their interests in PTAC is contained in PTAC’s annual report on Form 10-K for the fiscal year ended December 31, 2019,
which was filed with the SEC and is available free of charge at the SEC’s web site at www.sec.gov. Additional information
regarding the interests of such participants is set forth in the preliminary proxy statement/consent solicitation statement/prospectus
for the proposed business combination and, once available, the definitive proxy statement/consent solicitation statement/prospectus.
Porch
and its directors and executive officers may also be deemed to be participants in the solicitation of proxies from the shareholders
of PTAC in connection with the proposed business combination. A list of the names of such directors and executive officers and
information regarding their interests in the proposed business combination is set forth in the preliminary proxy statement/consent
solicitation statement/prospectus for the proposed business combination and, once available, the definitive proxy statement/consent
solicitation statement/prospectus.
Additional
Information About the Proposed Business Combination and Where to Find It
The
business combination will be submitted to stockholders of PTAC for their consideration. PTAC has filed a registration statement
on Form S-4 with the SEC containing a preliminary proxy statement and a preliminary prospectus of PTAC and a preliminary consent
solicitation statement of Porch, and after the registration statement is declared effective, PTAC will mail a definitive proxy
statement/consent solicitation statement/prospectus relating to the proposed business combination to its shareholders. This communication
does not contain all the information that should be considered concerning the proposed business combination and is not intended
to form the basis of any investment decision or any other decision in respect of the business combination. PTAC’s shareholders
and other interested persons are advised to read the preliminary proxy statement/consent solicitation statement/prospectus and,
when available, the amendments thereto and the definitive proxy statement/consent solicitation statement/prospectus and other
documents filed in connection with the proposed business combination, as these materials will contain important information about
Porch, PTAC and the business combination. When available, the definitive proxy statement/consent solicitation statement/prospectus
and other relevant materials for the proposed business combination will be mailed to shareholders of PTAC as of a record date
to be established for voting on the proposed business combination. Shareholders will also be able to obtain copies of the preliminary
proxy statement/consent solicitation statement/prospectus, and, when available, the definitive proxy statement/consent solicitation
statement/prospectus and other documents filed with the SEC, without charge, at the SEC’s website at www.sec.gov. This communication
does not constitute an offer to sell or the solicitation of an offer to buy any securities, or a solicitation of any vote or approval,
nor shall there be any sale of securities in any jurisdiction in which such offer, solicitation or sale would be unlawful prior
to the registration or qualification under the securities laws of any such jurisdiction. No offering of securities shall be made
except by means of a prospectus meeting the requirements of Section 10 of the U.S. Securities Act of 1933, as amended.
Investor
Relations Contact:
Gateway
Investor Relations
Cody
Slach, Matt Glover
(949)
574-3860
PTAC@gatewayir.com
PropTech
Contact:
contact@proptechacquisition.com
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