TABLE OF CONTENTS
UNITED STATES
SECURITIES AND EXCHANGE COMMISSION
Washington, D.C. 20549
SCHEDULE 14A
Proxy Statement Pursuant to Section 14(a) of
the Securities Exchange Act of 1934
(Amendment No. 1)
Filed by the Registrant ☒
Filed by a Party other than the Registrant ☐
Check the appropriate box:

Preliminary Proxy Statement

Confidential, for Use of the Commission Only (as permitted by Rule 14a-6(e)(2))

Definitive Proxy Statement

Definitive Additional Materials

Soliciting Material under §240.14a-12
ALDEL FINANCIAL INC.
(Name of Registrant as Specified In Its Charter)
N/A
(Name of Person(s) Filing Proxy Statement, if other than the Registrant)
Payment of Filing Fee (Check the appropriate box):

No fee required.

Fee computed on table below per Exchange Act Rules 14a-6(i)(1) and 0-11.
(1)
Title of each class of securities to which transaction applies:
   
(2)
Aggregate number of securities to which transaction applies:
   
(3)
Per unit price or other underlying value of transaction computed pursuant to Exchange Act
Rule 0-11 (set forth the amount on which the filing fee is calculated and state how it was determined):
   
(4)
Proposed maximum aggregate value of transaction:
   
(5)
Total fee paid:
   

Fee paid previously with preliminary materials.

Check box if any part of the fee is offset as provided by Exchange Act Rule 0-11(a)(2) and identify the filing for which the offsetting fee was paid previously. Identify the previous filing by registration statement number, or the Form or Schedule and the date of its filing.
(1)
Amount Previously Paid:
   
(2)
Form, Schedule or Registration Statement No.:
   
(3)
Filing Party:
   
(4)
Date Filed:
   

TABLE OF CONTENTS
The information in this preliminary proxy statement is not complete and may be changed. These securities may not be issued until the registration statement filed with the Securities and Exchange Commission is effective. This preliminary proxy statement is not an offer to sell these securities and it is not soliciting an offer to buy these securities in any jurisdiction where the offer or sale is not permitted.
PRELIMINARY PROXY STATEMENT
SUBJECT TO COMPLETION, DATED OCTOBER 1, 2021
PROXY STATEMENT FOR SPECIAL MEETING OF
ALDEL FINANCIAL INC.
Aldel Financial Inc.
105 S. Maple Street
Itasca, Illinois 60143
To the Stockholders of Aldel Financial Inc.:
You are cordially invited to attend the Special Meeting of Stockholders (the “Special Meeting”) of Aldel Financial Inc., which is referred to as “Aldel.” The Special Meeting will be held on       , 2021, at 10:00 am Eastern time, via a virtual meeting. In light of the novel coronavirus (referred to as “COVID-19”) pandemic and to support the well-being of Aldel’s stockholders and partners, the Special Meeting will be completely virtual. You will need the 12-digit meeting control number that is printed on your proxy card to enter the Special Meeting. Aldel recommends that you log in at least 15 minutes before the Special Meeting to ensure you are logged in when the Special Meeting starts. Please note that you will not be able to attend the Special Meeting in person.
At the Special Meeting, Aldel stockholders will be asked to consider and vote upon the following proposals (the “Proposals”):
Proposal 1 — The Business Combination Proposal — to adopt (a) the Business Combination Agreement, dated as of August 17, 2021 (the “Business Combination Agreement”), by and among Aldel, Aldel Merger Sub LLC, a Delaware limited liability company and wholly owned subsidiary of Aldel (“Merger Sub”), and The Hagerty Group, LLC, a Delaware limited liability company (“Hagerty”), pursuant to which: (a) all of the outstanding equity interests of Hagerty will be exchanged for shares of Class V Common Stock and OpCo Units; (b) Merger Sub will be merged with and into Hagerty (the “Merger”), whereupon the separate limited liability company existence of Merger Sub shall cease and Hagerty shall be the surviving company (Hagerty following the Merger is sometimes hereinafter referred to as the “OpCo”) and continue its existence under the Delaware Limited Liability Company Act (the “LLC Act”); (c) the existing limited liability company agreement of Hagerty will be amended and restated in the form attached to the Business Combination Agreement, to, among other things, make Aldel a member of the OpCo; and (d) Aldel will change its name to Hagerty, Inc. (“New Hagerty”) (the Merger and the other transactions contemplated by the Business Combination Agreement are collectively referred to as the “Business Combination”);
This Business Combination is being accomplished through what is commonly referred to as an “Up-C” structure, which is often used by partnerships and limited liability companies undertaking an initial public offering. The Up-C structure allows the current equity holders of OpCo to retain their equity ownership in OpCo, an entity that is classified as a partnership for U.S. federal income tax purposes, in the form of post-merger OpCo Units, and provides potential future tax benefits for both New Hagerty and the post-merger OpCo equity holders (other than New Hagerty) when they ultimately exchange their OpCo Units. As a result of the Business Combination, New Hagerty will be the publicly traded reporting company. A copy of the Business Combination Agreement is attached to this proxy statement as Annex A;
Proposal 2 — The NYSE Proposal — to approve, for purposes of complying with applicable listing rules of the New York Stock Exchange, (a) the issuance of approximately 250,000,000 shares of Class A Common Stock upon exchange of the Class V Common Stock and OpCo Units issued in connection with the Business Combination in accordance with the Exchange Agreement (as defined below) and (b) the issuance and sale of 70,385,000 shares of Class A Common Stock in a private offering of securities to certain investors in connection with the Business Combination, including shares of Class A Common Stock to certain Related Parties (as defined below and as further described in the section titled “Proposal 2 — The NYSE Proposal,” which will occur substantially concurrently with, and is contingent upon, the consummation of the transactions contemplated by the Business Combination Agreement (the “NYSE Proposal”);
Proposal 3 — The Charter Amendment Proposal — to approve an amendment and restatement of Aldel’s amended and restated certificate of incorporation (the “Current Charter”) in the form of the Proposed Charter attached to this proxy statement as Annex B to, among other things, change the name of Aldel Financial Inc. to Hagerty, Inc. and effect the amendments relating to corporate governance described below in Proposal 4 (collectively, the “Charter Amendment Proposal”);
Proposal 4 — The Advisory Charter Proposals — to approve and adopt, on a non-binding advisory basis, certain differences in the governance provisions set forth in the Proposed Charter, as compared to our Current Charter, which

TABLE OF CONTENTS
are being presented in accordance with the requirements of the U.S. Securities and Exchange Commission (the “SEC”) as six separate sub-proposals (which we refer to, collectively, as the “Advisory Charter Proposals”):
(i)
increase Aldel’s authorized shares from 401,000,000 authorized shares to 500,000,000 authorized shares of Class A common stock, 300,000,000 authorized shares of Class V common stock and 20,000,000 authorized shares of preferred stock;
(ii)
provide that each share of Class V common stock will be entitled to ten votes until the earlier of (a) the transfer of each such share other than to a Qualified Transferee (as defined in the Proposed Charter) and (b) 15 years from the date of effectiveness of the Proposed Charter;
(iii)
provide that directors may be removed from office for any reason by the affirmative vote of the holders of at least a majority of the voting power of all then-outstanding shares of capital stock of New Hagerty entitled to vote generally in the election of directors, voting together as a single class until a Control Trigger Event (as defined in the Proposed Charter) occurs, after which directors may only be removed from office for cause by the affirmative vote of the holders of at least a majority of the voting power of all then outstanding shares of capital stock of New Hagerty entitled to vote generally in the election of directors, voting together as a single class;
(iv)
provide that the Bylaws of New Hagerty may be amended by the affirmative vote of the holders of at least a majority of the voting power of all then-outstanding shares of capital stock of New Hagerty entitled to vote generally in the election of directors, voting together as a single class until a Control Trigger Event occurs, after which the Bylaws may only be amended by the affirmative vote of the holders of at least 75% of the voting power of all then outstanding shares of capital stock of New Hagerty entitled to vote generally in the election of directors, voting together as a single class;
(v)
require the affirmative vote of the holders of the majority of the voting power of the outstanding shares of capital stock for the amendment, alteration, change or repeal of any provision in the charter; provided, however, that upon a Control Trigger Event the affirmative vote of the holders of at least seventy-five percent (75%) of the voting power of all then-outstanding shares of capital stock entitled to vote generally in the election of directors, voting together as a single class, shall be required to amend, alter, repeal or adopt any provision of the charter inconsistent with the purpose and intent of Article V, Article VI, Article VII or Article IX (including, without limitation, any such Article as renumbered as a result of any amendment, alternation, repeal or adoption of any other Article); and
(vi)
delete the various provisions in Aldel’s current amended and restated certificate of incorporation applicable only to special purpose acquisition corporations (such as the obligation to dissolve and liquidate if a business combination is not consummated within a certain period of time);
Proposal 5 — The Directors Proposal — to consider and vote upon a proposal to elect, effective as of the consummation of the Business Combination, Michael Angelina, Robert Kauffman, McKeel Hagerty, Michael Crowley, Michael Tipsord, Laurie Harris, Mika Salmi, Bill Swanson and Sabrina Kay, to serve on New Hagerty’s board of directors until their respective successors are duly elected and qualified (we refer to this proposal as the “Directors Proposal”);
Proposal 6 — The Equity Incentive Plan Proposal — to approve the 2021 Equity Incentive Plan (the “Equity Incentive Plan”), a copy of which is annexed to this proxy statement as Annex C, in connection with the Business Combination (the “Equity Incentive Plan Proposal”);
Proposal 7 — The Employee Stock Purchase Plan Proposal — to approve and adopt the employee stock purchase plan (the “ESPP”), a copy of which is annexed to this proxy statement as Annex D, in connection with the Business Combination (the “Employee Stock Purchase Plan Proposal”);
Proposal 8 — The Adjournment Proposal — to approve a proposal to adjourn the Special Meeting to a later date or dates, if necessary, to permit further solicitation and vote of proxies if, based upon the tabulated vote at the time of the Special Meeting, there are not sufficient votes to approve the Business Combination Proposal, the NYSE Proposal, the Directors Proposal, the Charter Amendment Proposal, the Equity Incentive Plan Proposal or the Employee Stock Purchase Plan Proposal (the “Adjournment Proposal”).
As we previously announced, on August 17, 2021, Aldel entered into the Business Combination Agreement, by and among Aldel, Merger Sub and Hagerty.
The Business Combination Agreement provides that (a) all of the outstanding equity interests of Hagerty will be exchanged for OpCo Units and an equal number of shares of Class V Common Stock; (b) Merger Sub will be merged with and into Hagerty, whereupon the separate limited liability company existence of Merger Sub shall cease and Hagerty shall be the surviving company (Hagerty following the Merger is sometimes hereinafter referred to as the “OpCo”) and continue its existence under the Delaware Limited Liability Company Act (the “LLC Act”); (c) the existing limited liability company agreement of Hagerty

TABLE OF CONTENTS
will be amended and restated in the form attached to the Business Combination Agreement, to, among other things, make Aldel a member of the OpCo; and (d) Aldel will change its name to Hagerty, Inc. (“New Hagerty”) (the Merger and the other transactions contemplated by the Business Combination Agreement are collectively referred to as the “Business Combination”). This Business Combination is being accomplished through what is commonly referred to as an “Up-C” structure, which is often used by partnerships and limited liability companies undertaking an initial public offering. The Up-C structure allows the current equity holders of OpCo to retain their equity ownership in OpCo, an entity that is classified as a partnership for U.S. federal income tax purposes, in the form of post-merger OpCo Units, and provides potential future tax benefits for both New Hagerty and the post-merger OpCo equity holders (other than New Hagerty) when they ultimately exchange their OpCo Units. As a result of the Business Combination, New Hagerty will be the publicly traded reporting company.
Following completion of the Business Combination and assuming no holders of Class A Common Stock (the “Public Shares”) sold in the Aldel IPO (as defined below) elect to redeem their shares, Aldel Investors LLC (the “Sponsor”), the holders of Public Shares (the “Public Stockholders”), the PIPE Financing (as defined below) investors and other holders of Hagerty capital stock (the “Hagerty Equityholders”) will own approximately 1%, 3%, 21% and 75% of the outstanding common stock of New Hagerty, respectively. These percentages are calculated based on a number of assumptions (described in the accompanying proxy statement) and are subject to adjustment in accordance with the terms of the Business Combination Agreement.
The approval of the Charter Amendment Proposal requires the affirmative vote of a majority of the issued and outstanding shares of Aldel Common Stock as of the record date (the “Record Date”) for the Special Meeting. The approval of the Business Combination Proposal, the NYSE Proposal, the Equity Incentive Plan Proposal, the Employee Stock Purchase Plan Proposal and the Adjournment Proposal each require the affirmative vote of the holders of a majority of the shares of Aldel Common Stock present or represented at the Special Meeting, by ballot, proxy or electronic ballot and entitled to vote thereon at the Special Meeting. The approval of the Advisory Charter Proposals is a non-binding advisory vote, and requires the affirmative vote of the holders of a majority of the shares of Aldel Common Stock present or represented at the Special Meeting, by ballot, proxy or electronic ballot and entitled to vote thereon at the Special Meeting. Approval of the Directors Proposal will require the vote by a plurality of the shares of the Aldel Common Stock present by virtual attendance or represented by proxy and entitled to vote at the Special Meeting. If the Business Combination Proposal is not approved, the Charter Amendment Proposal, the Advisory Charter Proposals, the NYSE Proposal, the Equity Incentive Plan Proposal and the Employee Stock Purchase Plan Proposal will not be presented to the Aldel stockholders for a vote. The approval of the Business Combination Proposal, the Charter Amendment Proposal, the NYSE Proposal, the Equity Incentive Plan Proposal, the Employee Stock Purchase Plan Proposal and the Directors Proposal are preconditions to the consummation of the Business Combination (the “Condition Precedent Proposals”). The approval of the Advisory Charter Proposals is not a precondition to the consummation of the Business Combination.
Aldel’s Units, each consisting of one share of Class A common stock, par value $0.0001 per share (“Aldel Common Stock”), and one-half of one redeemable warrant, Aldel’s shares of Aldel Common Stock, and Aldel’s warrants, each exercisable for one share of Aldel Common Stock, are currently listed on the New York Stock Exchange under the symbols “ADF.U,” “ADF” and “ADF.WS” respectively.
Pursuant to the Current Charter, Aldel is providing its Public Stockholders with the opportunity to redeem, in connection with the closing of the Business Combination (the “Closing”), shares of Aldel Common 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) in the trust account (the “Trust Account”) that holds the proceeds (including interest not previously released to Aldel to pay its taxes) of Aldel’s initial public offering (the “Aldel IPO”). For illustrative purposes, based on funds in the Trust Account of approximately $116 million on           , 2021, the estimated per share redemption price would have been approximately $10.10. Public stockholders may elect to redeem their shares whether they vote for the Business Combination Proposal, against the Business Combination Proposal, if they abstain from voting, or if they fail to vote their shares. 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 Securities Exchange Act of 1934, as amended (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 15% or more of the shares of Aldel Common Stock sold in the Aldel IPO. The Sponsor, as well as the officers, directors and advisors of Aldel have agreed to waive their redemption rights with respect to any shares of Aldel’s capital stock they may hold in connection with the consummation of the Business Combination, and such shares will be excluded from the pro rata calculation used to determine the per-share redemption price. As of       , the Sponsor, directors, officers and advisors own approximately 17% of Aldel’s issued and outstanding shares of Aldel Common Stock assuming conversion on a one-for-one basis of the Class B common stock held by the Sponsor. The Sponsor, directors, officers and advisors have agreed to vote any shares of Aldel Common Stock owned by them in favor of the Business Combination Proposal.
Aldel is providing this proxy statement and accompanying proxy card to Aldel stockholders in connection with the solicitation of proxies to be voted at the Special Meeting and at any adjournments or postponements of the Special Meeting.

TABLE OF CONTENTS
Whether or not you plan to attend the Special Meeting, Aldel urges you to read this proxy statement (and any documents incorporated into this proxy statement by reference) carefully. Please pay particular attention to the section titled “Risk Factors.
After careful consideration, the members of the board of directors of Aldel have unanimously approved and adopted the Business Combination Agreement and the transactions contemplated therein and unanimously recommends that Aldel stockholders vote “FOR” adoption and approval of the Business Combination Proposal, “FOR” the NYSE Proposal, “FOR” the Directors Proposal, “FOR” the Charter Amendment Proposal, “FOR” the Advisory Charter Proposals, “FOR” the Equity Incentive Plan Proposal and “FOR” the Employee Stock Purchase Plan Proposal presented to Aldel stockholders in this proxy statement, and “FOR” the Adjournment Proposal, if presented. When you consider the board of directors’ recommendation of these proposals, you should keep in mind that the directors, officers and advisors of Aldel have interests in the Business Combination that may conflict with your interests as a stockholder. See the section titled “Proposal 1 — The Business Combination Proposal — Interests of Aldel’s Directors and Officers and Others in the Business Combination.”
Each redemption of shares of Aldel Common Stock by Aldel Public Stockholders will decrease the amount in the Trust Account, which held total assets of approximately $[116] million as of    , 2021. Net tangible assets must be maintained at a minimum of $5,000,001 upon consummation of the Business Combination.
Your vote is very important. If you are a registered stockholder, please vote your shares as soon as possible to ensure that your vote is counted, regardless of whether you expect to attend the Special Meeting online, by completing, signing, dating and returning the enclosed proxy card in the postage-paid envelope provided. 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 Business Combination Agreement will be consummated only if the Business Combination Proposal, the NYSE Proposal, the Directors Proposal, the Equity Incentive Plan Proposal, the Employee Stock Purchase Plan Proposal and the Charter Amendment Proposal are approved at the Special Meeting. The NYSE Proposal, the Directors Proposal, the Charter Amendment Proposal, the Equity Incentive Plan Proposal and the Employee Stock Purchase Plan Proposal are subject to and conditioned on the approval of the Business Combination Proposal and satisfaction of other closing conditions. The Adjournment Proposal is not subject to and conditioned on the approval of any other proposal set forth in this proxy statement.
If you sign, date and return your proxy card without indicating how you wish to vote, your proxy will be voted “FOR” the Business Combination Proposal, “FOR” the NYSE Proposal, “FOR” the Directors Proposal, “FOR” the Charter Amendment Proposal, “FOR” the Advisory Charter Proposals, “FOR” the Equity Incentive Plan Proposal and “FOR” the Employee Stock Purchase Plan Proposal to be presented at the Special Meeting and “FOR” the Adjournment Proposal, if presented. If you fail to return your proxy card or fail to submit your proxy by telephone or over the Internet, or fail to instruct your bank, broker or other nominee how to vote, and do not attend the Special Meeting online, 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 during the Special Meeting, you may withdraw your proxy and vote during the Special Meeting.
TO EXERCISE YOUR REDEMPTION RIGHTS, YOU MUST DEMAND THAT ALDEL REDEEM YOUR SHARES FOR A PRO RATA PORTION OF THE FUNDS HELD IN THE TRUST ACCOUNT AND TENDER YOUR SHARES TO ALDEL’S TRANSFER AGENT AT LEAST TWO BUSINESS DAYS PRIOR TO THE VOTE AT THE SPECIAL 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 DEPOSIT WITHDRAWAL AT CUSTODIAN (“DWAC”) 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 Aldel’s board of directors, I would like to thank you for your support and look forward to the successful completion of the Business Combination.
Sincerely,
Robert I. Kauffman
Chairman and Chief Executive Officer
Aldel Financial Inc.
Neither the Securities and Exchange Commission nor any state securities commission has approved or disapproved of the securities to be issued under the accompanying proxy statement or determined that the accompanying proxy statement is accurate or complete. Any representation to the contrary is a criminal offense.
The accompanying proxy statement is dated           , 2021 and is first being mailed to the stockholders of Aldel on or about           , 2021.

TABLE OF CONTENTS
 
Aldel Financial Inc.
105 S. Maple Street
Itasca, Illinois 60143
NOTICE OF SPECIAL MEETING OF STOCKHOLDERS
OF ALDEL FINANCIAL INC.
To Be Held On           , 2021
To the Stockholders of Aldel Financial Inc.:
NOTICE IS HEREBY GIVEN that a special meeting of stockholders (the “Special Meeting”) of Aldel Financial Inc., a Delaware corporation (“Aldel,” “we,” “our” or “us”), will be held on         , 2021, at 10:00 am, Eastern time, via a virtual meeting at the following address:
You will need the 12-digit meeting control number that is printed on your proxy card to enter the Special Meeting. Aldel recommends that you log in at least 15 minutes before the Special Meeting to ensure you are logged in when the Special Meeting starts. You are cordially invited to attend the Special Meeting for the following purposes:
1.
Proposal 1 — The Business Combination Proposal — to adopt and approve: — the Business Combination Agreement, dated as of August 17, 2021 (the “Business Combination Agreement”), by and among Aldel, Aldel Merger Sub LLC, a Delaware limited liability company and wholly owned subsidiary of Aldel (“Merger Sub”), and The Hagerty Group, LLC, a Delaware limited liability company (“Hagerty”), pursuant to which: (a) all of the outstanding equity interests of Hagerty will be exchanged for shares of Class V Common Stock and OpCo Units; (b) Merger Sub will be merged with and into Hagerty (the “Merger”), whereupon the separate limited liability company existence of Merger Sub shall cease and Hagerty shall be the surviving company (Hagerty following the Merger is sometimes hereinafter referred to as the “OpCo”) and continue its existence under the Delaware Limited Liability Company Act (the “LLC Act”); (c) the existing limited liability company agreement of Hagerty will be amended and restated in the form attached to the Business Combination Agreement, to, among other things, make Aldel a member of the OpCo; and (d) Aldel will change its name to Hagerty, Inc.(“New Hagerty”) (the Merger and the other transactions contemplated by the Business Combination Agreement are collectively referred to as the “Business Combination”). As a result of the Business Combination, New Hagerty will be the publicly traded reporting company in an “Up-C” structure. A copy of the Business Combination Agreement is attached to this proxy statement as Annex A.
We refer to this proposal as the “Business Combination Proposal.”
2.
Proposal 2 — The NYSE Proposal — to approve, for purposes of complying with applicable listing rules of the New York Stock Exchange, (a) the issuance of 250,000,000 shares of Class A Common Stock upon exchange of the Class V Common Stock and OpCo Units issued in connection with the Business Combination in accordance with the Exchange Agreement (as defined below) and (b) the issuance and sale of 70,385,000 shares of Class A Common Stock in a private offering of securities to certain investors in connection with the Business Combination, including shares of Class A Common Stock to certain Related Parties (as defined below and as further described in the section titled “Proposal 2 — The NYSE Proposal”, which will occur substantially concurrently with, and is contingent upon, the consummation of the transactions contemplated by the Business Combination Agreement (the “NYSE Proposal”).
3.
Proposal 3 — The Charter Amendment Proposal — to approve and adopt, subject to and conditional on (but with immediate effect therefrom) approval of the Business Combination Proposal, the NYSE Proposal, the Directors Proposal and the Equity Incentive Plan Proposal and the consummation of the Business Combination, an amendment and restatement of Aldel’s amended and restated certificate of incorporation (the “Current Charter”), as set out in the draft amended and restated version of the Current Charter appended to this proxy statement as Annex B (the “Proposed Charter”), to, among other things, change the name of Aldel Financial Inc. to Hagerty,
 

TABLE OF CONTENTS
 
Inc. and effect the amendments relating to corporate governance described below in Proposal 4 (collectively, the “Charter Amendment Proposal”).
4.
Proposal 4 — The Advisory Charter Proposals — to approve and adopt, on a non-binding advisory basis, certain differences in the governance provisions set forth in the Proposed Charter, as compared to our Current Charter, which are being presented in accordance with the requirements of the SEC as seven separate sub-proposals (which we refer to, collectively, as the “Advisory Charter Proposals”):
(i)
increase Aldel’s authorized shares from 401,000,000 authorized shares to 500,000,000 authorized shares of Class A common stock, 300,000,000 authorized shares of Class V common stock and 20,000,000 authorized shares of preferred stock;
(ii)
provide that each share of Class V common stock will be entitled to ten votes until the earlier of (a) the transfer of each such share other than to a Qualified Transferee (as defined in the Proposed Charter) and (b) 15 years from the date of effectiveness of the Proposed Charter;
(iii)
provide that directors may be removed from office for any reason by the affirmative vote of the holders of at least a majority of the voting power of all then-outstanding shares of capital stock of New Hagerty entitled to vote generally in the election of directors, voting together as a single class until a Control Trigger Event (as defined in the Proposed Charter) occurs, after which directors may only be removed from office for cause by the affirmative vote of the holders of at least a majority of the voting power of all then-outstanding shares of capital stock of New Hagerty entitled to vote generally in the election of directors, voting together as a single class;
(iv)
provide that the Bylaws of New Hagerty may be amended by the affirmative vote of the holders of at least a majority of the voting power of all then-outstanding shares of capital stock of New Hagerty entitled to vote generally in the election of directors, voting together as a single class until a Control Trigger Event occurs, after which the Bylaws may only be amended by the affirmative vote of the holders of at least 75% of the voting power of all then-outstanding shares of capital stock of New Hagerty entitled to vote generally in the election of directors, voting together as a single class;
(v)
require the affirmative vote of holders of the majority of the voting power of the outstanding shares of capital stock for the amendment, alteration, change or repeal of any provision in the charter; provided, however, that upon a Control Trigger Event the affirmative vote of the holders of at least 75% of the voting power of all then-outstanding shares of capital stock entitled to vote generally in the election of directors, voting together as a single class, shall be required to amend, alter, repeal or adopt any provision of the charter inconsistent with the purpose and intent of Article V, Article VI, Article VII or Article IX (including, without limitation, any such Article as renumbered as a result of any amendment, alternation, repeal or adoption of any other Article); and
(vi)
delete the various provisions in Aldel’s current amended and restated certificate of incorporation applicable only to special purpose acquisition corporations (such as the obligation to dissolve and liquidate if a business combination is not consummated within a certain period of time);
5.
Proposal 5 — The Directors Proposal — to vote to elect, effective as of the consummation of the Business Combination, Michael Angelina, Robert Kauffman, McKeel Hagerty, Michael Crowley, Michael Tipsord, Laurie Harris, Mika Salmi, Bill Swanson and Sabrina Kay, to serve on New Hagerty’s board of directors (we refer to this proposal as the “Directors Proposal”);
6.
Proposal 6 — The Equity Incentive Plan Proposal — to approve and adopt the 2021 Equity Incentive Plan (the “Equity Incentive Plan”) a copy of which is attached to the accompanying proxy statement as Annex C (the “Equity Incentive Plan Proposal”);
 

TABLE OF CONTENTS
 
7.
Proposal 7 — The Employee Stock Purchase Plan Proposal — to approve and adopt the employee stock purchase plan (the “ESPP”), a copy of which is annexed to this proxy statement as Annex D (the “Employee Stock Purchase Plan Proposal”); and
8.
Proposal 8 — The Adjournment Proposal — to consider and vote upon a proposal to adjourn the Special Meeting to a later date or dates, if necessary, to permit further solicitation and vote of proxies if, based upon the tabulated vote at the time of the Special Meeting, there are not sufficient votes to approve the Business Combination Proposal, the NYSE Proposal, the Charter Amendment Proposal, the Equity Incentive Plan Proposal or the Employee Stock Purchase Plan Proposal. We refer to this proposal as the “Adjournment Proposal” and, together with the Business Combination Proposal, the NYSE Proposal, the Directors Proposal, the Charter Amendment Proposal, the Advisory Charter Proposals, the Equity Incentive Plan Proposal and the Employee Stock Purchase Plan Proposal, as the “Proposals.”
Only holders of record of Aldel Common Stock at the close of business on            , 2021 (the “Record Date”) are entitled to notice of the Special Meeting and to vote at the Special Meeting and any adjournments or postponements of the Special Meeting. A complete list of Aldel stockholders of record entitled to vote at the Special Meeting will be available for ten days before the Special Meeting at the principal executive offices of Aldel for inspection by stockholders during ordinary business hours for any purpose germane to the Special Meeting.
Pursuant to the Current Charter, Aldel is providing Aldel Public Stockholders with the opportunity to redeem, in connection with the closing of the Business Combination (the “Closing”), shares of Aldel Common 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) in the Trust Account that holds the proceeds (including interest not previously released to Aldel to pay its taxes) of Aldel's initial public offering (the “Aldel IPO”). For illustrative purposes, based on funds in the Trust Account of approximately $116 million on           , 2021, the estimated per share redemption price would have been approximately $10.10.
Public stockholders may elect to redeem their shares whether they vote for the Business Combination Proposal, against the Business Combination Proposal, if they abstain from voting, or if they fail to vote their shares. 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 Securities Exchange Act of 1934, as amended (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, with respect to 15% or more of the shares of Common Stock sold in the Aldel IPO. Aldel Investors LLC, a Delaware limited liability company (the “Sponsor”), as well as its officers and directors have agreed to waive their redemption rights with respect to any shares of Aldel Common Stock they may hold in connection with the consummation of the Business Combination, and such shares will be excluded from the pro rata calculation used to determine the per-share redemption price. As of            , 2021, the Sponsor, directors, officers and advisors own approximately 17% of the issued and outstanding shares of Aldel Common Stock assuming conversion of all outstanding shares of Aldel Class B common stock on a one-for-one basis. The Sponsor, directors and officers have agreed to vote any shares of Aldel Common Stock owned by them in favor of the Business Combination Proposal.
Our Current Charter requires the affirmative vote of a majority of the issued and outstanding shares of Aldel Common Stock as of the Record Date for the approval of the Charter Amendment Proposal. However, we are also requiring the affirmative vote of a majority of the shares of Class A Common Stock then outstanding for the approval of the Charter Amendment Proposal. The approval of the Business Combination Proposal, the NYSE Proposal, the Equity Incentive Plan Proposal, the Employee Stock Purchase Plan Proposal and the Adjournment Proposal each require the affirmative vote of the holders of a majority of the shares of Aldel Common Stock present or represented at the Special Meeting, by ballot, proxy or electronic ballot and entitled to vote thereon at the Special Meeting. The approval of the Advisory Charter Proposals is a non-binding advisory vote, and requires the affirmative vote of the holders of a majority of the shares of Aldel Common Stock present or represented at the Special Meeting, by ballot, proxy or electronic ballot and entitled to vote thereon at the Special Meeting. Approval of the Directors Proposal will require the vote by a plurality of the shares of Aldel Common Stock present by virtual attendance or represented by proxy and entitled to vote at the Special Meeting. If the Business Combination Proposal
 

TABLE OF CONTENTS
 
is not approved, the NYSE Proposal, the Directors Proposal, the Charter Amendment Proposal, the Advisory Charter Proposals, the Equity Incentive Plan Proposal and the Employee Stock Purchase Plan Proposal will not be presented to the Aldel stockholders for a vote. The approval of the Business Combination Proposal, the NYSE Proposal, the Directors Proposal, the Charter Amendment Proposal, the Equity Incentive Plan Proposal and the Employee Stock Purchase Plan Proposal are preconditions to the consummation of the Business Combination. Aldel’s board of directors has already approved the Business Combination.
As of            , 2021, there was approximately $116 million in the Trust Account. Each redemption of shares of Aldel Common Stock by its Public Stockholders will decrease the amount in the Trust Account. Net tangible assets must be maintained at a minimum of $5,000,001 upon consummation of the Business Combination.
Your attention is directed to the proxy statement accompanying this notice (including the annexes thereto) for a more complete description of the proposed Business Combination and related transactions and each of the Proposals. We encourage you to read this proxy statement carefully. If you have any questions or need assistance voting your shares, please call us at (847) 791-6817.
     , 2021
By Order of the Board of Directors
Robert I. Kauffman
Chairman and Chief Executive Officer
 

TABLE OF CONTENTS
 
Contents
1
1
1
2
5
18
38
39
85
88
93
105
141
143
146
149
150
157
162
166
187
198
202
235
250
260
266
268
269
273
277
279
F-1
A-1
B-1
C-1
D-1
E-1
 
i

TABLE OF CONTENTS
 
ABOUT THIS PROXY STATEMENT
This document constitutes a notice of meeting and a proxy statement under Section 14(a) of the Exchange Act with respect to the special meeting of Aldel stockholders at which Aldel stockholders will be asked to consider and vote upon a proposal to approve the Business Combination by the approval and adoption of the Business Combination Agreement, among other matters.
Aldel files reports, proxy statements and other information with the SEC as required by the Exchange Act. You can read Aldel’s SEC filings, including this proxy statement, over the Internet at the SEC’s website at http://www.sec.gov.
If you would like additional copies of this proxy statement or if you have questions about the Business Combination or the proposals to be presented at the special meeting, you should contact our proxy solicitor at:
Advantage Proxy
P.O. Box 13581
Des Moines, WA 98198
Toll Free: 877-870-8565
Collect: 206-870-8565
Email: KSmith@advantageproxy.com
If you are a stockholder of Aldel and would like to request documents, please do so by   , 2021 to receive them before the Aldel special meeting of stockholders. If you request any documents from us, we will mail them to you by first class mail, or another equally prompt means.
MARKET AND INDUSTRY DATA
Certain information contained in this document relates to or is based on studies, publications, surveys and other data obtained from third-party sources and Aldel’s and Hagerty’s own internal estimates and research. While we believe these third-party sources to be reliable as of the date of this proxy statement, we have not independently verified the market and industry data contained in this proxy statement or the underlying assumptions relied on therein. Finally, while we believe our own internal research is reliable, such research has not been verified by any independent source.
TRADEMARKS
This document contains references to trademarks, trade names and service marks belonging to other entities. Solely for convenience, trademarks, trade names and service marks referred to in this proxy statement may appear without the ® or TM symbols, but such references are not intended to indicate, in any way, that the applicable licensor will not assert, to the fullest extent under applicable law, its rights to these trademarks and trade names. We do not intend our use or display of other companies’ trade names, trademarks or service marks to imply a relationship with, or endorsement or sponsorship of us by, any other companies.
 
1

TABLE OF CONTENTS
 
FREQUENTLY USED TERMS
Unless otherwise stated or unless the context otherwise requires, the terms “we,” “us,” “our,” and “Aldel” refer to Aldel Financial Inc.
In this document:
Aldel” means Aldel Financial Inc.
Aldel Common Stock” or “Common Stock” means Aldel’s Class A common stock, $0.0001 par value.
Aldel IPO” means Aldel’s initial public offering, which was consummated on April 12, 2021.
Board” means the board of directors of Aldel.
Business Combination” means the business combination pursuant to the Business Combination Agreement.
Business Combination Agreement” means the Agreement and Plan of Merger, dated as of August 17, 2021, by and among Aldel, Merger Sub and Hagerty.
Charter” or “Current Charter” means Aldel’s current amended and restated certificate of incorporation as filed with the Secretary of State of the State of Delaware on April 12, 2021.
Class V Common Stock” means the Class V common stock, par value $0.001 per share, of New Hagerty.
Closing” means the closing of the Business Combination.
Code” means the Internal Revenue Code of 1986, as amended.
Combined Entity’s Board” means the board of directors of New Hagerty.
DGCL” means the Delaware General Corporation Law.
Effective Time” means the time at which the Business Combination became effective pursuant to its terms.
Exchange Act” means the Securities Exchange Act of 1934, as amended.
Forward Purchase Shares” means the shares of Class A common stock purchased pursuant to the forward purchase agreement entered into between Aldel and Aldel Capital LLC in connection with the Aldel IPO.
Founder Shares” means the shares of our common stock initially purchased by our sponsor and FG SPAC Partners LP, an affiliate of certain of our directors, in a private placement, and which were converted into shares of Class B common stock prior to the closing of the Aldel IPO. The shares of Class B common stock issued upon the conversion of the common stock and the shares of Class A common stock that will be issued upon the automatic conversion of the shares of Class B common stock at the time of our initial business combination, as described herein, are also referred to as Founder Shares.
Hagerty” means The Hagerty Group, LLC, a Delaware limited liability company and its subsidiaries, prior to the Business Combination.
Hagerty Equityholders” refers to the holders of equity interests in Hagerty as of the time immediately before the Business Combination.
Hagerty Re” means Hagerty Reinsurance Limited, a company formed under the laws of Bermuda and wholly owned subsidiary of Hagerty.
HHC” means Hagerty Holding Corp., a Delaware close corporation.
Merger Consideration” means, as applicable, the Mixed Consideration and the Equity Consideration (each as defined below).
 
2

TABLE OF CONTENTS
 
Merger Sub” means Aldel Merger Sub LLC, a Delaware limited liability company and wholly owned subsidiary of Aldel.
New Hagerty” means Aldel after the Effective Time, renamed “Hagerty, Inc.”
New Hagerty Common Stock” means the Class A common stock, par value $0.001 per share, of New Hagerty.
OpCo” means The Hagerty Group, LLC and its subsidiaries after the Effective Time.
OpCo Units” means the units of limited liability company interests of OpCo.
OTM Warrants” means the 1,300,000 warrants issued at a price of $0.10 per warrant, each exercisable to purchase one share of Class A common stock at $15.00 per share.
PIPE Financing” means the private placement pursuant to which the PIPE Investors have collectively subscribed for 70,385,000 shares of Aldel Common Stock and 12,669,300 PIPE Warrants for an aggregate purchase price equal to $703,850,000.
PIPE Investors” means Markel, State Farm and certain other “accredited investors” ​(as defined in Rule 501 under the Securities Act) that will invest in the PIPE Financing.
PIPE Shares” means the Aldel Common Stock issued in connection with the PIPE Financing.
PIPE Warrants” means the warrants to purchase New Hagerty Common Stock issued to PIPE Investors in the PIPE Financing.
Private Placement” means the private placement to our sponsor and FG SPAC Partners LP (and/or their designees) of the Private Units and OTM Warrants that occurred simultaneously with the Aldel IPO.
Private Placement Securities” means the Private Units (including the underlying Private Shares and Private Warrants) and the OTM Warrants (including the underlying Class A shares) underlying securities.
Private Placement Warrants” means the Private Warrants and the OTM Warrants issued to our sponsor and FG SPAC Partners LP (and/or their designees) in a private placement simultaneously with the closing of the Aldel IPO.
Private Shares” means the shares of Class A common stock sold as part of the Private Units.
Private Units” means the units issued to our sponsor (and/or its designees) in a private placement simultaneously closing with the closing of the Aldel IPO, with each Private Unit consisting of one Private Share and one-half of one Private Warrant.
Private Warrants” are to the warrants sold as part of the Private Units.
Proposed Charter” means the Second Amended and Restated Certificate of Incorporation of New Hagerty that is proposed to go into effect at the Effective Time.
Public Shares” means the shares of Class A common stock sold as part of the units in the Aldel IPO (whether purchased in the offering or thereafter in the open market).
Public Stockholders” means the holders of our Public Shares, including our initial stockholders and management team to the extent our initial stockholders and/or members of our management team purchased public shares, provided that each initial stockholder’s and member of our management team’s status as a “Public Stockholder” will only exist with respect to such Public Shares.
Proposals” means the Business Combination Proposal, the NYSE Proposal, the Directors Proposal, the Charter Amendment Proposal, the Advisory Charter Proposals, the Equity Incentive Plan Proposal, the Employee Stock Purchase Plan Proposal and the Adjournment Proposal.
Redemption” means the right of the holders of Public Shares to have their shares redeemed in accordance with the procedures set forth in this proxy statement.
 
3

TABLE OF CONTENTS
 
Special Meeting” means the special meeting of the stockholders of Aldel, to be held on      , 2021, at 10:00 am, Eastern time, via a virtual meeting.
Sponsor” or “our sponsor” means Aldel Investors LLC, a Delaware limited liability company.
ThinkEquity” means ThinkEquity LLC, financial advisor to Aldel.
Trust Account” means the Trust Account of Aldel, which holds the net proceeds of the Aldel IPO, together with interest earned thereon, less amounts released to pay tax obligations and up to $100,000 of interest to pay dissolution expenses.
 
4

TABLE OF CONTENTS
 
QUESTIONS AND ANSWERS ABOUT THE PROPOSALS
The following questions and answers briefly address some commonly asked questions about the Proposals to be presented at the Special Meeting of Aldel stockholders. The following questions and answers do not include all the information that is important to stockholders of Aldel. We urge the stockholders of Aldel to read carefully this entire proxy statement, including the annexes and other documents referred to herein.
Q.
Why am I receiving this proxy statement?
A.
Aldel stockholders are being asked to consider and vote upon a proposal to adopt the Business Combination Agreement, among other Proposals. Aldel has entered into the Business Combination Agreement as a result of which (a) all of the outstanding equity interests of Hagerty will be exchanged for shares of Class V Common Stock and OpCo Units; (b) Merger Sub will be merged with and into Hagerty (the “Merger”), whereupon the separate limited liability company existence of Merger Sub shall cease and Hagerty shall be the surviving company (Hagerty following the Merger is sometimes hereinafter referred to as the “OpCo”) and continue its existence under the Delaware Limited Liability Company Act (the “LLC Act”); (c) the existing limited liability company agreement of Hagerty will be amended and restated in the form attached to the Business Combination Agreement, to, among other things, make Aldel a member of the OpCo; and (d) Aldel will change its name to Hagerty, Inc. (“New Hagerty”) (the Merger and the other transactions contemplated by the Business Combination Agreement are collectively referred to as the “Business Combination”). This Business Combination is being accomplished through what is commonly referred to as an “Up-C” structure, which is often used by partnerships and limited liability companies undertaking an initial public offering. The Up-C structure allows the current equity holders of OpCo to retain their equity ownership in OpCo, an entity that is classified as a partnership for U.S. federal income tax purposes, in the form of post-merger OpCo Units, and provides potential future tax benefits for both New Hagerty and the post-merger OpCo equity holders (other than New Hagerty) when they ultimately exchange their OpCo Units. As a result of the Business Combination, New Hagerty will be the publicly traded reporting company. A copy of the Business Combination Agreement is attached to this proxy statement as Annex A.
This proxy 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 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 and its annexes.
Below are the Proposals on which Aldel stockholders are being asked to vote.
1.
The Business Combination Proposal — To consider and vote upon a proposal to adopt and approve the Business Combination Agreement by and among Aldel, Merger Sub and Hagerty, and approve the transactions contemplated thereby, including the Business Combination, as a result of which (a) all of the outstanding equity interests of Hagerty will be exchanged for shares of Class V Common Stock and OpCo Units; (b) Merger Sub will be merged with and into Hagerty (the “Merger”), whereupon the separate limited liability company existence of Merger Sub shall cease and Hagerty shall be the surviving company (Hagerty following the Merger is sometimes hereinafter referred to as the “OpCo”) and continue its existence under the Delaware Limited Liability Company Act (the “LLC Act”); (c) the existing limited liability company agreement of Hagerty will be amended and restated in the form attached to the Business Combination Agreement, to, among other things, make Aldel a member of the OpCo; and (d) Aldel will change its name to Hagerty, Inc. (“New Hagerty”);
2.
The NYSE Proposal — To approve, for purposes of complying with applicable listing rules of the New York Stock Exchange, (a) the issuance of approximately 250,000,000 shares of Class A Common Stock upon exchange of the Class V Common Stock and OpCo Units issued in connection with the Business Combination in accordance with the Exchange Agreement and (b) the issuance and sale of 70,385,000 shares of Class A Common Stock in a private offering of securities to certain investors in connection with the Business Combination, including shares of Class A Common Stock to certain Related Parties (as defined below and as further described in the section
 
5

TABLE OF CONTENTS
 
titled “Proposal 2 — The NYSE Proposal,” which will occur substantially concurrently with, and is contingent upon, the consummation of the transactions contemplated by the Business Combination Agreement (the “NYSE Proposal”);
3.
The Charter Amendment Proposal — To approve and adopt, subject to and conditional upon (but with immediate effect therefrom) approval of the Business Combination Proposal, the NYSE Proposal, the Directors Proposal, the Equity Incentive Plan Proposal and the Employee Stock Purchase Plan Proposal and the consummation of the Business Combination, an amendment and restatement of the Current Charter, as set forth in the draft Proposed Charter appended to this proxy statement as Annex B:
4.
The Advisory Charter Proposals — To approve and adopt, on a non-binding advisory basis, certain differences in the governance provisions set forth in the Proposed Charter, as compared to our Current Charter, which are being presented in accordance with the requirements of the SEC as six separate sub-proposals:
(i)
increase Aldel’s authorized shares from 401,000,000 authorized shares to 500,000,000 authorized shares of Class A common stock, 300,000,000 authorized shares of Class V common stock, and 20,000,000 authorized shares of preferred stock;
(ii)
provide that each share of Class V common stock will be entitled to ten votes until the earlier of (a) the transfer of each such share other than to a Qualified Transferee (as defined in the Proposed Charter) and (b) 15 years from the date of effectiveness of the Proposed Charter;
(iii)
provide that directors may be removed from office for any reason by the affirmative vote of the holders of at least a majority of the voting power of all then-outstanding shares of capital stock of New Hagerty entitled to vote generally in the election of directors, voting together as a single class until a Control Trigger Event (as defined in the Proposed Charter) occurs, after which directors may only be removed from office for cause by the affirmative vote of the holders of at least a majority of the voting power of all then-outstanding shares of capital stock of New Hagerty entitled to vote generally in the election of directors, voting together as a single class;
(iv)
provide that the Bylaws of New Hagerty may be amended by the affirmative vote of the holders of at least a majority of the voting power of all then-outstanding shares of capital stock of New Hagerty entitled to vote generally in the election of directors, voting together as a single class until a Control Trigger Event occurs, after which the Bylaws may only be amended by the affirmative vote of the holders of at least 75% of the voting power of all then-outstanding shares of capital stock of New Hagerty entitled to vote generally in the election of directors, voting together as a single class;
(v)
require the affirmative vote of holders of the majority of the voting power of the all then-outstanding shares of capital stock for the amendment, alteration, change or repeal of any provision in the charter; provided, however, that upon a Control Trigger Event the affirmative vote of the holders of at least 75% of the voting power of all then-outstanding shares of capital stock entitled to vote generally in the election of directors, voting together as a single class, shall be required to amend, alter, repeal or adopt any provision of the charter inconsistent with the purpose and intent of Article V, Article VI, Article VII or Article IX (including, without limitation, any such Article as renumbered as a result of any amendment of the Proposed Charter, alternation, repeal or adoption of any other Article); and
(vi)
delete the various provisions in Aldel’s current amended and restated certificate of incorporation applicable only to special purpose acquisition corporations (such as the obligation to dissolve and liquidate if a business combination is not consummated within a certain period of time);
 
6

TABLE OF CONTENTS
 
5.
The Directors Proposal — To vote to elect, effective as of the consummation of the Business Combination, Michael Angelina, Robert Kauffman, McKeel Hagerty, Michael Crowley, Michael Tipsord, Laurie Harris, Mika Salmi, Bill Swanson and Sabrina Kay, to serve on New Hagerty’s Board;
6.
Equity Incentive Plan Proposal — To approve and adopt, the Equity Incentive Plan, a copy of which is attached to this proxy statement as Annex C;
7.
Employee Stock Purchase Plan Proposal — To approve and adopt, the Employee Stock Purchase Plan, a copy of which is attached to this proxy statement as Annex D;
8.
The Adjournment Proposal — To consider and vote upon a proposal to adjourn the Special Meeting to a later date or dates if, based upon the tabulated vote at the time of the Special Meeting, there are not sufficient votes to approve the Business Combination Proposal, the NYSE Proposal, the Directors Proposal, the Charter Amendment Proposal, the Equity Incentive Plan Proposal or the Employee Stock Purchase Plan Proposal.
Q.
Are the Proposals conditioned on one another?
A:
Unless the Business Combination Proposal is approved, the NYSE Proposal, the Charter Amendment Proposal, the Advisory Charter Proposals, the Directors Proposal, the Equity Incentive Plan Proposal and the Employee Stock Purchase Plan Proposal will not be presented to the stockholders of Aldel at the Special Meeting. The Adjournment Proposal does not require the approval of the Business Combination Proposal to be effective. It is important for you to note that in the event that the Business Combination Proposal does not receive the requisite vote for approval, then we will not consummate the Business Combination. If Aldel does not consummate the Business Combination and fails to complete an initial business combination by October 12, 2022, Aldel will be required to dissolve and liquidate its Trust Account by returning the then remaining funds in such account to its Public Stockholders.
Q.
What will happen in the Business Combination?
A:
At the Closing, (a) all of the outstanding equity interests of Hagerty will be exchanged for shares of Class V Common Stock and OpCo Units; (b) Merger Sub will be merged with and into Hagerty (the “Merger”), whereupon the separate limited liability company existence of Merger Sub shall cease and Hagerty shall be the surviving company (Hagerty following the Merger is sometimes hereinafter referred to as the “OpCo”) and continue its existence under the Delaware Limited Liability Company Act (the “LLC Act”); (c) the existing limited liability company agreement of Hagerty will be amended and restated in the form attached to the Business Combination Agreement, to, among other things, make Aldel a member of the OpCo; and (d) Aldel will change its name to Hagerty, Inc. (“New Hagerty”). In connection with the Business Combination, the cash held in the Trust Account after giving effect to any redemption of shares by Aldel’s Public Stockholders and the proceeds from the PIPE Financing will go first to the Hagerty Equityholders as the Secondary Cash Consideration and to pay certain fees and expenses in connection with the Business Combination, and for working capital and general corporate purposes. A copy of the Business Combination Agreement is attached to this proxy statement as Annex A.
Q.
What is a tax receivable agreement?
A:
In connection with the Business Combination, New Hagerty and the Hagerty Equityholders will enter into the Tax Receivable Agreement. Pursuant to the Tax Receivable Agreement, New Hagerty will pay the Hagerty Equityholders 85% of the net income tax savings that New Hagerty actually realizes as a result of the exchange of OpCo Units for cash in the business combination and future exchanges of the post-merger OpCo Units for shares of Class A common stock or cash pursuant to the Exchange Agreement, and certain other tax attributes of OpCo and tax benefits related to the Tax Receivable Agreement, including tax benefits attributable to payments under the Tax Receivable Agreement. For more information on the Tax Receivable Agreement, please see the section titled “Summary of the Proxy Statement—The Proposals—Proposal 1—The Business Combination Proposal—The Business Combination Agreement—Related Agreements—Tax Receivable Agreement.”
 
7

TABLE OF CONTENTS
 
Q.
What equity stake will current stockholders of Aldel and Hagerty Equityholders hold in New Hagerty after the Closing?
A:
It is anticipated that, upon completion of the Business Combination, Aldel’s Public Stockholders (other than the PIPE Financing investors) will retain an ownership interest of approximately 2% in New Hagerty, the PIPE Financing investors will own approximately 21% of New Hagerty (such that Public Stockholders, including PIPE Financing investors, will own approximately 23% of New Hagerty), the Sponsor will retain an ownership interest of approximately 2% in New Hagerty and the Hagerty Equityholders will own approximately 75% of the outstanding Common Stock of New Hagerty. Because, however, the Hagerty Equityholders will receive Class V Common Stock, which is entitled to ten votes for every share, the Hagerty Equityholders will own approximately 97% of the voting power of New Hagerty. The ownership percentage with respect to New Hagerty following the Business Combination does not take into account (i) the redemption of any shares by Aldel’s Public Stockholders, (ii) the issuance of any shares upon Closing under the Equity Incentive Plan, which is intended to be adopted following consummation of the Business Combination or (iii) any adjustment to the equity value of the transaction as a result of Hagerty’s or Aldel’s transaction expenses exceeding certain agreed upon amounts in the Business Combination Agreement. If the actual facts are different than these assumptions (which they are likely to be), the percentage ownership retained by Aldel’s existing stockholders in New Hagerty will be different.
See the section titled “Unaudited Pro Forma Condensed Combined Financial Information” for further information.
Q.
What will happen to Aldel’s securities upon consummation of the Business Combination?
A.
Aldel’s units, Common Stock, and Public Warrants are currently listed on the NYSE under the symbols “ADF.U,” “ADF” and “ADF.WS,” respectively. Aldel intends to apply for listing on the NYSE of the New Hagerty Common Stock and warrants, under the proposed symbols “HGTY” and “HGTY.WS,” respectively, to be effective at the consummation of the Business Combination. Aldel’s units will not be listed on the NYSE following consummation of the Business Combination and such units will automatically be separated into their component securities without any action needed to be taken on the part of the holders of such units. Furthermore, each outstanding share of Aldel’s Class B Common Stock will convert into one share of New Hagerty Common Stock at the closing of the Business Combination and the Class B Common Stock will cease to exist. Because Aldel and New Hagerty are the same legal entity, the common stock and warrants of Aldel will be the common stock and warrants of New Hagerty upon completion of the Business Combination. New Hagerty has agreed to use commercially reasonable efforts to cause the PIPE Warrants to be listed on the Over the Counter exchange, Pink Sheets or similar automated listing service.
It is a condition to the consummation of the Business Combination that the shares of New Hagerty Common Stock are approved for listing on the NYSE (subject only to official notice of issuance thereof and public holder requirements), but there can be no assurance such listing condition will be met. If such listing condition is not met, the Business Combination will not be consummated unless the listing condition is waived by the parties to the Business Combination Agreement.
Q.
Did the Board obtain a third-party valuation or fairness opinion in determining whether or not to proceed with the Business Combination?
A:
Yes, Aldel’s Board obtained a fairness opinion from ThinkEquity. For a description of the opinion issued by ThinkEquity to the Board, please see “Proposal No. 1: The Business Combination Proposal — Opinion of Aldel’s Financial Advisor.” ThinkEquity also served as the representative of the underwriters, and an underwriter in the Aldel IPO and Aldel paid to ThinkEquity underwriting discounts and commissions equal to $1,000,000 and expense reimbursements upon consummation of the Aldel IPO , as well as 57,500 units of Aldel, which will become worthless if the Business Combination or another such transaction is not consummated by Aldel. Additionally, in a no redemption scenario, based on the approximately $116,154,642 fair value of marketable securities held in the Trust Account as of August 17, 2021 (the date of the execution of the Business Combination Agreement), the $1,000,000 in underwriting fees paid by Aldel in connection with the closing of the Aldel IPO, will represent an
 
8

TABLE OF CONTENTS
 
effective underwriting fee of approximately 0.86%. In a maximum redemption scenario, the fair value of funds remaining in the Trust Account following such redemption would be approximately $30,452,717 and the effective underwriting fee would be approximately 3.28%. At Aldel’s IPO, ThinkEquity was also granted, for a period beginning on the closing of Aldel IPO and ending on the later of 24 months after closing of Aldel IPO and 12 months after the business combination of Aldel, a right of first refusal on future equity and debt offerings, as well as to act as financial advisor in connection with all proposed business combinations for a fee of up to $4,025,000 (subject to Aldel’s right to allocate up to 50% of such fee to another financial institution). In selecting ThinkEquity, the Board considered, among other things, the fact that ThinkEquity is a reputable investment banking firm with substantial experience advising companies. ThinkEquity, as part of its investment banking business, is continuously engaged in the valuation of businesses and their securities in connection with mergers and acquisitions, negotiated underwritings, secondary distributions of listed and unlisted securities, private placements and valuations for corporate and other purposes. However, ThinkEquity’s interest in the Business Combination may conflict with your interests as a stockholder. The financial interests of ThinkEquity may influence their motivation in providing a fairness opinion, and their assessment of the Transaction.
Q.
What conditions must be satisfied to complete the Business Combination?
A:
There are a number of closing conditions in the Business Combination Agreement, including the approval by the stockholders of Aldel of the Business Combination Proposal, the NYSE Proposal, the Charter Amendment Proposal, the Directors Proposal, the Equity Incentive Plan Proposal, and the Employee Stock Purchase Plan Proposal (the “Condition Precedent Proposals”). The NYSE Proposal, the Charter Amendment Proposal, the Directors Proposal, the Equity Incentive Plan Proposal and the Employee Stock Purchase Plan Proposal are subject to and conditioned on the approval of the Business Combination Proposal. The Business Combination Proposal is subject to and conditioned on the approval of the NYSE Proposal, the Directors Proposal, the Charter Amendment Proposal, the Equity Incentive Plan Proposal and the Employee Stock Purchase Plan Proposal. For a summary of the conditions that must be satisfied or waived prior to the Closing, see the section titled “Proposal 1 — The Business Combination Proposal — The Business Combination Agreement.”
Q.
Why is Aldel providing stockholders with the opportunity to vote on the Business Combination?
A:
Under the Current Charter, Aldel must provide all holders of its Public Shares with the opportunity to have their Public Shares redeemed upon the consummation of Aldel’s initial business combination either in conjunction with a tender offer or in conjunction with a stockholder vote. For business and other reasons, Aldel has elected to provide its stockholders with the opportunity to have their Public Shares redeemed in connection with a stockholder vote rather than a tender offer. Therefore, Aldel is seeking to obtain the approval of its stockholders of the Business Combination Proposal in order to allow its Public Stockholders to effectuate redemptions of their Public Shares in connection with the Closing.
Q.
Are there any arrangements to help ensure that Aldel will have sufficient funds, together with the proceeds in its Trust Account, to fund the Secondary Cash Consideration?
A:
Yes. Aldel entered into subscription agreements dated as of August 17, 2021, with the PIPE Investors, pursuant to which, among other things, Aldel agreed to issue and sell, in a private placement to close immediately prior to the Closing, an aggregate of 70,385,000 shares of Aldel Common Stock for $10.00 per share for aggregate consideration of $703,850,000.
To the extent not utilized to consummate the Business Combination, including the payment of transaction expenses and the Secondary Cash Consideration, the proceeds from the Trust Account and any remaining proceeds from the PIPE Financing will be used for general corporate purposes, including, but not limited to, working capital for operations, capital expenditures and future acquisitions. New Hagerty will agree that it will file with the SEC a registration statement registering the resale of PIPE Shares and PIPE Warrants and use its commercially reasonable efforts to have the registration statement declared effective as soon as practicable.
 
9

TABLE OF CONTENTS
 
Q.
How many votes do I have at the Special Meeting?
A:
Aldel stockholders are entitled to one vote at the Special Meeting for each share of Aldel Common Stock held of record as of         , 2021, the record date for the Special Meeting (the “Record Date”). As of the close of business on the Record Date, there were         outstanding shares of Aldel Common Stock.
Q.
What vote is required to approve the proposals presented at the Special Meeting?
A:
Our Current Charter requires the affirmative vote of a majority of the issued and outstanding shares of Aldel Common Stock as of the Record Date for the approval of the Charter Amendment Proposal. However, we are also requiring the affirmative vote of a majority of the shares of Class A Common Stock then outstanding for the approval of the Charter Amendment Proposal. Accordingly, an Aldel stockholder’s failure to vote by proxy or to vote online at the Special Meeting or an abstention will have the same effect as a vote “AGAINST” the Charter Amendment Proposal.
The approval of the Business Combination Proposal, the NYSE Proposal, the Equity Incentive Plan Proposal, the Employee Stock Purchase Plan Proposal and the Adjournment Proposal each require the affirmative vote of the holders of a majority of the shares of Aldel Common Stock present or represented at the Special Meeting, by ballot, proxy or electronic ballot, and entitled to vote thereon at the Special Meeting. The approval of the Advisory Charter Proposals is a non-binding advisory vote, and requires the affirmative vote of the holders of a majority of the shares of Aldel Common Stock present or represented at the Special Meeting, by ballot, proxy or electronic ballot, and entitled to vote thereon at the Special Meeting. Approval of the Directors Proposal will require the vote by a plurality of the shares of the Common Stock present by virtual attendance or represented by proxy and entitled to vote at the Special Meeting. An Aldel stockholder’s failure to vote by proxy or to vote online at the Special Meeting will not be counted towards the number of shares of Aldel Common Stock required to validly establish a quorum, and if a valid quorum is otherwise established, it will have no effect on the outcome of the vote on the NYSE Proposal, the Directors Proposal, the Equity Incentive Plan Proposal, the Employee Stock Purchase Plan Proposal and the Adjournment Proposal. The approval of the Advisory Charter Proposals is not a precondition to the consummation of the Business Combination.
If the Business Combination Proposal is not approved, the NYSE Proposal, the Charter Amendment Proposal, the Advisory Charter Proposals, the Directors Proposal, the Equity Incentive Plan Proposal and the Employee Stock Purchase Plan Proposal will not be presented to the Aldel stockholders for a vote. The approval of the Business Combination Proposal, the NYSE Proposal, the Charter Amendment Proposal, the Directors Proposal, the Equity Incentive Plan Proposal and the Employee Stock Purchase Plan Proposal are preconditions to the consummation of the Business Combination.
Q.
May Aldel, the Sponsor or Aldel’s directors, officers, advisors or their affiliates purchase shares in connection with the Business Combination?
A:
In connection with the stockholder vote to approve the proposed Business Combination, the Sponsor, directors, officers or advisors or their respective affiliates may privately negotiate transactions to purchase shares from stockholders who would have otherwise elected to have their shares redeemed in conjunction with a proxy solicitation pursuant to the proxy rules for a per-share pro rata portion of the Trust Account. None of Aldel’s Sponsor, directors, officers or advisors or their respective affiliates will make any such purchases when they are in possession of any material non-public information not disclosed to the seller or during a restricted period under Regulation M under the Exchange Act. Such a purchase would include a contractual acknowledgement that such stockholder, although still the record holder of Aldel shares, is no longer the beneficial owner thereof and therefore agrees not to exercise its redemption rights, and could include a contractual provision that directs such stockholder to vote such shares in a manner directed by the purchaser. In the event that the Sponsor, directors, officers or advisors or their affiliates purchase shares in privately negotiated transactions from Public Stockholders who have already elected to exercise their redemption rights, such selling stockholders would be required to revoke their prior elections to redeem their shares. Any such privately negotiated purchases may be effected at purchase prices that are below or in excess of the per-share pro rata portion of the Trust Account.
 
10

TABLE OF CONTENTS
 
Q.
What constitutes a quorum at the Special Meeting?
A:
Holders of a majority of the shares of capital stock of Aldel issued and outstanding and entitled to vote, represented in person, virtual attendance or by proxy, shall constitute a quorum at the Special Meeting. In the absence of a quorum, the stockholders present by virtual attendance or represented by proxy shall have power to adjourn the Special Meeting, without notice other than announcement at the meeting, until a quorum shall be present or represented. As of the Record Date,        shares of Aldel Common Stock would be required to achieve a quorum.
Q.
How will the Sponsor, directors and officers vote?
A:
The Sponsor, as Aldel’s initial stockholder, and certain individuals, each of whom is a member of Aldel’s Board and/or management team (“Insiders”) have agreed to vote his, her or its Founder Shares and all shares of Aldel Common Stock owned by the Sponsor or each such Insider, respectively, in favor of the Business Combination. Accordingly, it is more likely that the necessary stockholder approval will be received than would be the case if the Sponsor and Insiders agreed to vote their Founder Shares and other shares of Aldel Common Stock in accordance with the majority of the votes cast by Aldel’s Public Stockholders. While the Insiders have agreed to vote their shares in favor of the Business Combination Proposal, stockholders should consider that our Sponsor and Aldel’s directors and executive officers may have interests that are different from, or in addition to, those of other stockholders, and may be incentivized to complete the Business Combination even if it is with a less favorable target company or on less favorable terms, rather than liquidate. See the immediately following question and answer for additional information on such conflicts.
Q.
What interests do Aldel’s current officers and directors have in the Business Combination?
A:
The Sponsor, members of Aldel’s Board and its executive officers and advisors have interests in the Business Combination that are different from or in addition to (and which may conflict with) your interest. These interests include:

unless Aldel consummates an initial business combination, Aldel’s officers, directors and Sponsor will not receive reimbursement for any out-of-pocket expenses incurred by them to the extent that such expenses exceed the amount of available proceeds from the Aldel IPO and Private Placement not deposited in the Trust Account. As of June 30, 2021, no out-of-pocket expenses are owed to Aldel’s officers, directors and Sponsor;

our Sponsor and other initial stockholders have agreed not to transfer, assign or sell any of their Founder Shares until: (i) with respect to 50% of the Founder Shares, the earlier of (x) twelve months after the date of the consummation of an initial business combination or (y) the date on which the closing price of our Class A common stock equals or exceeds $12.00 per share (as adjusted for stock splits, stock dividends, reorganizations and recapitalizations) for any 20 trading days within any 30-trading day period commencing after our initial business combination and (ii) with respect to the remaining 50% of the Founder Shares, twelve months after the date of the consummation of our initial business combination; except to certain permitted transferees and under certain circumstances. Any permitted transferees will be subject to the same restrictions and other agreements of our initial stockholders with respect to any Founder Shares. We refer to such transfer restrictions throughout this proxy statement as the IPO lock-up. Notwithstanding the foregoing, if we consummate a transaction after our initial business combination which results in our stockholders having the right to exchange their shares for cash, securities or other property, the Founder Shares will be released from the IPO lock-up;

the fact that the Sponsor, as well as the officers, directors and advisors of Aldel have agreed to waive their redemption rights with respect to any shares of Aldel’s capital stock they may hold in connection with the consummation of the Business Combination and such shares will be worthless if no business combination is effected by Aldel by October 12, 2022;

the fact that the Sponsor paid an aggregate of $25,000 for its Founder Shares and such securities will have a significantly higher value at the time of the Business Combination;
 
11

TABLE OF CONTENTS
 

in connection with the closing of the Business Combination, the Sponsor and FG SPAC Partners, LP (“FGSP”) will enter into a lock-up agreement (the “Sponsor Warrant Lock-up Agreement”) with Aldel, pursuant to which the Sponsor and FGSP will agree to certain new vesting arrangements with respect to (i) the warrants to purchase Aldel common stock underlying units of Aldel that were purchased by the Sponsor or FGSP, as applicable, pursuant to that certain Private Placement Units Purchase Agreement dated as of April 8, 2021, between Aldel and the Sponsor (the “Private Placement Units Purchase Agreement”) and (ii) the warrants to purchase Aldel common stock that were purchased by FGSP (“OTM Warrants”) pursuant to that certain OTM Warrants Purchase Agreement dated as of April 8, 2021, between Aldel, FGSP and the other parties thereto (the “OTM Warrants Purchase Agreement”). See “Summary of the Proxy Statement — The Proposals — Proposal 1 — The Business Combination Proposal — Related Agreements — Sponsor Sponsor Warrant Lock-up Agreement;

certain of Aldel’s executive officers and directors and/or entities affiliated with them participated in the PIPE Investment; and

the anticipated continuation of Robert Kauffman, Aldel’s Chief Executive Officer, as a director of New Hagerty.
In light of the foregoing, the Sponsor and Aldel’s directors and executive officers will receive material benefits from the completion of the Business Combination and may be incentivized to complete the Business Combination with Hagerty rather than liquidate even if (i) Hagerty is a less favorable target company or (ii) the terms of the Business Combination are less favorable to stockholders. As a result, our Sponsor and directors and officers may have interests in the completion of the Business Combination that are materially different than, and may conflict with, the interests of other stockholders. Further, the Sponsor and Aldel’s directors and executive officers who hold Founder Shares, OTM Warrants and/or Private Units may receive a positive return on their investment(s), even if Aldel’s public stockholders experience a negative return on their investment after consummation of the Business Combination.
The Aldel Board was aware of and considered these interests and facts, among other matters, in evaluating and unanimously approving the Business Combination and in recommending to Aldel stockholders that they approve the Business Combination.
Q.
What happens if I sell my shares of Common Stock before the Special Meeting?
A:
The Record Date is earlier than the date of the Special Meeting. If you transfer your shares of Common 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 because you will no longer be able to deliver them for cancellation upon consummation of the Business Combination. If you transfer your shares of Common 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 happens if I vote against the Business Combination Proposal?
A:
Pursuant to the Current Charter, if the Business Combination Proposal is not approved and Aldel does not otherwise consummate an alternative business combination by October 12, 2022, Aldel will be required to dissolve and liquidate its Trust Account by returning the then remaining funds in such account to the Public Stockholders.
Q.
Do I have redemption rights?
A:
Pursuant to the Current Charter, holders of Public Shares may elect to have their shares redeemed for cash at the applicable redemption price per share calculated in accordance with the Current Charter. As of      , 2021, based on funds in the Trust Account of approximately $116 million, this would have amounted to approximately $10.10 per share. If a holder exercises its redemption rights, then such holder will be exchanging its shares of Aldel Common Stock for cash. Such a holder will be entitled to receive cash for its Public Shares only if it properly demands redemption and delivers its shares (either physically or electronically) to Aldel’s transfer agent prior to the Special Meeting. See the section titled
 
12

TABLE OF CONTENTS
 
Special Meeting of Aldel Stockholders — Redemption Rights” for the procedures to be followed if you wish to redeem your shares for cash.
Q.
Will how I vote affect my ability to exercise redemption rights?
A:
No. You may exercise your redemption rights whether you vote your shares of Aldel Common Stock “FOR” or “AGAINST” the Business Combination Proposal or any other Proposal described by this proxy statement or if you abstain from voting or if you fail to vote your shares. As a result, the Business Combination 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 NYSE Rules.
Q.
How do I exercise my redemption rights?
A:
In order to exercise your redemption rights, you must prior to 5:00 PM, Eastern time, on       , 2021 (two (2) business days before the Special Meeting), tender your shares physically or electronically and submit a request in writing that we redeem your Public Shares for cash to Continental Stock Transfer & Trust Company, our transfer agent, at the following address:
Continental Stock Transfer & Trust Company
One State Street Plaza, 30th Floor
New York, New York 10004 Attn: Mark Zimkind
E-mail: mzimkind@continentalstock.com
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 Aldel’s understanding that stockholders should generally allot at least two weeks to obtain physical certificates from the transfer agent. However, Aldel does not have any control over this process and it may take longer than two weeks. 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.
Any demand for redemption, once made, may be withdrawn at any time until the deadline for exercising redemption requests and thereafter, with Aldel’s consent, until the vote is taken with respect to the Business Combination. If you delivered your shares for redemption to Aldel’s transfer agent and decide within the required timeframe not to exercise your redemption rights, you may request that Aldel’s transfer agent return the shares (physically or electronically). You may make such request by contacting Aldel’s transfer agent at the phone number or address listed under the question “Who can help answer my questions?” below.
Q.
What are the material U.S. federal income tax consequences to U.S. Holders that exercise their Redemption Rights?
A:
U.S. Holders that elect to exercise their Redemption Rights generally will recognize capital gain or loss equal to the difference between the amount of cash received on the Redemption of their Public Shares and such U.S. Holder’s adjusted tax basis in such Public Shares, which generally will be equal to the cost of such Public Shares. A U.S. Holder who purchased Public Shares in the IPO generally will have a tax basis in the Public Shares that were part of the units equal to the portion of the purchase price of such units allocated to the Public Shares (such allocation based on the relative fair market value of the Public Shares and the Warrants at the time). However, in certain circumstances, the cash paid to such U.S. Holders will be treated as dividend income for U.S. federal income tax purposes. For a more complete discussion of the material U.S. federal income tax consequences to U.S. Holders that elect to exercise their Redemption Rights, see the discussion in the section titled “Material U.S. Federal Income Tax Consequences.
 
13

TABLE OF CONTENTS
 
Q.
Do I have dissenter rights if I object to the proposed Business Combination?
A:
No. There are no dissenter rights available to holders of Aldel 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 will be released to pay:

Aldel stockholders who properly exercise their redemption rights;

certain other fees, costs and expenses (including regulatory fees, legal fees, accounting fees, printer fees and other professional fees) that were incurred by Aldel or Hagerty in connection with the transactions contemplated by the Business Combination and pursuant to the terms of the Business Combination Agreement;

unpaid taxes of Aldel;

up to $100,000 of interest to pay dissolution expenses; and

for general corporate purposes including, but not limited to, working capital for operations, capital expenditures and future potential acquisitions.
Q.
What happens if the Business Combination is not consummated?
A:
There are certain circumstances under which the Business Combination Agreement may be terminated. See the section titled “Proposal 1 — The Business Combination Proposal — The Business Combination Agreement” for information regarding the parties’ specific termination rights.
If, as a result of the termination of the Business Combination Agreement or otherwise, Aldel is unable to complete the Business Combination or another initial business combination transaction by October 12, 2022 the Current Charter provides that it 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, subject to lawfully available funds therefor, redeem 100% of the Public Shares in consideration of a per-share price, payable in cash, equal to the quotient obtained by dividing (A) the aggregate amount then on deposit in the Trust Account, including interest earned on the funds held in the Trust Account and not previously released to it to pay taxes payable and up to $100,000 of interest to pay dissolution expenses, by (B) the total number of then-outstanding Public Shares, which redemption will completely extinguish rights of the Public Stockholders (including the right to receive further liquidation distributions, if any), subject to applicable law and (iii) as promptly as reasonably possible following such redemptions, subject to the approval of the remaining stockholders and the board of directors in accordance with applicable law, dissolve and liquidate, subject (in the case of (ii) and (iii) above) to its obligations under the DGCL to provide for claims of creditors and other requirements of applicable law.
Aldel expects that the amount of any distribution its Public Stockholders will be entitled to receive upon its dissolution will be approximately the same as the amount they would have received if they had redeemed their shares in connection with the Business Combination, subject in each case to Aldel’s obligations under the DGCL to provide for claims of creditors and other requirements of applicable law. Holders of Founder Shares have waived any right to any liquidation distribution with respect to those shares.
Q.
When is the Business Combination expected to be completed?
A:
The Closing is expected to take place:   (a) the third Business Day following the satisfaction or waiver of the conditions described below under the section titled “Proposal 1 — The Business Combination Proposal —  Closing Conditions”; or (b) such other date as agreed to by the parties to the Business Combination Agreement in writing, in each case, subject to the satisfaction or waiver of the closing conditions. The Business Combination Agreement may be terminated by either Aldel or Hagerty if the Closing has not occurred by February 17, 2022, subject to certain exceptions.
 
14

TABLE OF CONTENTS
 
For a description of the conditions to the completion of the Business Combination, see the section titled “The Business Combination Proposal.”
Q.
What do I need to do now?
A:
You are urged to read carefully and consider the information contained in this proxy 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 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 Aldel Common Stock on      , the Record Date, you may vote with respect to the applicable Proposals online at the Special Meeting or by completing, signing, dating and returning the enclosed proxy card in the postage-paid envelope provided. If you choose to participate in the Special Meeting, you will need the 12-digit meeting control number that is printed on your proxy card to enter the Special Meeting. Aldel recommends that you log in at least 15 minutes before the Special Meeting to ensure you are logged in when the Special Meeting starts.
If on the Record Date your shares were held, not in your name, but rather in an account at a brokerage firm, bank, dealer or other similar organization, then you are the beneficial owner of shares held in “street name” and these proxy materials are being forwarded to you by that organization. As a beneficial owner, you have the right to direct your broker or other agent on how to vote the shares in your account. You are also invited to attend the Special Meeting online. However, since you are not the stockholder of record, you may not vote your shares online at the Special Meeting unless you first request and obtain a valid legal proxy from your broker or other agent. You must then e-mail a copy (a legible photograph is sufficient) of your legal proxy to Continental Stock Transfer & Trust Company (“CST”) at proxy@continentalstock.com. Beneficial owners who e-mail a valid legal proxy will be issued a 12-digit meeting control number that will allow them to register to attend and participate in the Special Meeting. Beneficial owners who wish to attend the Special Meeting online should contact CST no later than   , 2021 to obtain this information.
Q.
What will happen if I abstain from voting or fail to vote at the Special Meeting?
A:
At the Special Meeting, Aldel 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. Abstentions will have the same effect as a vote “AGAINST” the Business Combination Proposal, the NYSE Proposal, the Directors Proposal, the Charter Amendment Proposal, the Advisory Charter Proposals, the Employee Stock Purchase Plan Proposal and the Equity Incentive Plan Proposal. Broker non-votes will not be counted as present for the purposes of establishing a quorum and will have no effect on any of the Proposals.
Q.
What will happen if I sign and return my proxy card without indicating how I wish to vote?
A:
Signed and dated proxies received by Aldel 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 which properly come before the Special Meeting.
Q.
How can I attend the Special Meeting?
A:
You may attend the Special Meeting via a virtual meeting. As a registered stockholder, you received a proxy card from CST, which contains instructions on how to attend the Special Meeting online, including the URL address, along with your 12-digit meeting control number. You will need the 12-digit meeting control number that is printed on your proxy card to enter the Special Meeting. If you do not have your 12-digit meeting control number, contact CST at 917-262-2373 or e-mail CST at proxy@continentalstock.com. Please note that you will not be able to physically attend the Special Meeting in person, but may attend the Special Meeting online by following the instructions above.
 
15

TABLE OF CONTENTS
 
You can pre-register to attend the Special Meeting online starting   , 2021. Enter the URL address into your browser, and enter your 12-digit meeting control number, name and email address. Prior to or at the start of the Special Meeting you will need to re-log in using your 12-digit meeting control number. Aldel recommends that you log in at least 15 minutes before the Special Meeting to ensure you are logged in when the Special Meeting starts.
If your shares are held in “street name,” you may attend the Special Meeting. You will need to contact CST at the number or email address above, to receive a 12-digit meeting control number and gain access to the Special Meeting or otherwise contact your broker, bank, or other nominee as soon as possible, to do so. Please allow up to 72 hours prior to the Special Meeting for processing your 12-digit meeting control number.
If you do not have Internet capabilities, you can listen only to the Special Meeting by dialing      , when prompted enter the pin #   . This is listen only, you will not be able to vote or enter questions during the Special Meeting.
Q.
If I am not going to attend the Special Meeting, should I return my proxy card instead?
A:
Yes. Whether you plan to attend the Special Meeting virtually or not, please read the enclosed proxy 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. Aldel believes the Proposals presented to the stockholders will be considered non-discretionary and therefore your broker, bank or nominee cannot vote your shares without your instruction. 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.
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 Aldel’s secretary at the address listed below so that it is received by Aldel’s secretary prior to the Special Meeting or attend the Special Meeting online and vote. You also may revoke your proxy by sending a notice of revocation to Aldel’s secretary, which must be received by Aldel’s secretary prior to the Special Meeting.
Aldel Financial Inc.
Attention: Secretary
105 S. Maple Street
Itasca, Illinois 60143
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 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.
 
16

TABLE OF CONTENTS
 
Q.
Who will solicit and pay the cost of soliciting proxies?
A:
Aldel will pay the cost of soliciting proxies for the Special Meeting. Aldel has engaged Advantage Proxy, which we refer to as the “proxy solicitor,” to assist in the solicitation of proxies for the Special Meeting. Aldel has agreed to pay the proxy solicitor a fee of $     , plus disbursements. Aldel will reimburse the proxy solicitor for reasonable out-of-pocket expenses and will indemnify the proxy solicitor and its affiliates against certain claims, liabilities, losses, damages and expenses. Aldel will also reimburse banks, brokers and other custodians, nominees and fiduciaries representing beneficial owners of shares of Aldel Common Stock for their expenses in forwarding soliciting materials to beneficial owners of the Aldel Common Stock and in obtaining voting instructions from those owners. Aldel’s directors, officers and employees 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/ or the enclosed proxy card you should contact our proxy solicitor at:
Advantage Proxy
P.O. Box 13581
Des Moines, Washington 98198
Toll Free: 877-870-8565
Collect: 206-870-8565
Email: ksmith@advantageproxy.com
To obtain timely delivery, Aldel stockholders must request the materials no later than [five (5)] business days prior to the Special Meeting.
You may also obtain additional information about Aldel 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 stock (either physically or electronically) to Aldel’s transfer agent prior to the Special Meeting in accordance with the procedures detailed under the question “— How do I exercise my redemption rights” above. If you have questions regarding the certification of your position or delivery of your stock, please contact:
Continental Stock Transfer & Trust Company
One State Street Plaza, 30th Floor
New York, New York 10004
Attn: Mark Zimkind
E-mail: mzimkind@continentalstock.com
 
17

TABLE OF CONTENTS
 
SUMMARY OF THE PROXY STATEMENT
This summary, together with the section titled, “Questions and Answers About the Proposals” summarizes certain information contained in this proxy statement and may not contain all of the information that is important to you. To better understand the Business Combination and the Proposals to be considered at the Special Meeting, you should read this entire proxy statement carefully, including the annexes. See also the section titled “Where You Can Find More Information.” 
Unless otherwise indicated or the context otherwise requires, references in this Summary of the Proxy Statement to the “Combined Entity” refer to Aldel and its consolidated subsidiaries after giving effect to the Business Combination. References to the “Company” or “Aldel” refer to Aldel Financial Inc.
Unless otherwise specified, all share calculations assume no exercise of redemption rights by the Company’s Public Stockholders.
Parties to the Business Combination
Aldel Financial Inc.
Aldel Financial Inc. is a blank check company incorporated on December 23, 2020 as a Delaware corporation 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, which we refer to throughout this proxy statement as our initial business combination.
On April 12, 2021, Aldel consummated its initial public offering (the “Aldel IPO”) of 11,500,000 units (the “Units”), including 1,500,000 Units that were issued pursuant to the underwriters’ full exercise of their over-allotment option. Each Unit consists of one share of Class A common stock of the Company, par value $0.0001 per share (the “Common Stock”), and one-half of one redeemable warrant (“Warrant”), each whole Warrant entitling the holder thereof to purchase one share of Common Stock for $11.50 per share. The Units were sold at a price of $10.00 per Unit, generating gross proceeds to the Company of $115,000,000.
Simultaneously with the closing of the Aldel IPO, Aldel consummated private placements (the “Private Placements”) in which (i) the Sponsor purchased 515,000 private units (the “Private Units”) at a price of $10.00 per Private Unit, generating total proceeds of $5,150,000, and (ii) the Sponsor and FG SPAC Partners LP, an affiliate of certain of Aldel’s directors, purchased an aggregate of 1,300,000 warrants (“OTM Warrants” and, together with the Private Units, the “Private Placement Securities”) at a price of $0.10 per warrant, each exercisable to purchase one share of Class A common stock at $15.00 per share, for an aggregate purchase price of $130,000.
The OTM Warrants are identical to the Warrants sold in the Aldel IPO, except that the OTM Warrants are non-redeemable and may be exercised on a cashless basis, in each case so long as they continue to be held by the Sponsor and FG SPAC Partners LP, or their permitted transferees. The Private Units are identical to the Units sold in the Aldel IPO, except that the Private Units are subject to transfer restrictions. The Private Placement Securities may not, subject to certain limited exceptions, be transferred, assigned or sold by the holders until 30 days after the completion of our initial business combination. The Sponsor and FG SPAC Partners LP were granted certain demand and piggyback registration rights in connection with the purchase of the Private Placement Securities.
As of April 12, 2021, a total of $116,150,000 of the net proceeds from the Aldel IPO and the Private Placements were deposited in a trust account established for the benefit of Aldel’s Public Stockholders.
The remaining $1,555,000 of the gross proceeds were held outside of the Trust Account and made available to be used for business, legal and accounting due diligence on prospective business combinations and continuing general and administrative expenses.
As of June 30, 2021, Aldel had cash of $1,447,388 outside of the Trust Account. The net proceeds deposited into the Trust Account remain on deposit in the Trust Account earning interest. As of June 30, 2021, there was $16,156,117 held in the Trust Account.
 
18

TABLE OF CONTENTS
 
In accordance with Aldel’s Current Charter, the amounts held in the Trust Account may only be used by Aldel upon the consummation of a business combination, except that there can be released to Aldel, from time to time, any interest earned on the funds in the Trust Account that it may need to pay its tax obligations. The remaining interest earned on the funds in the Trust Account will not be released until the earlier of the completion of a business combination and Aldel’s liquidation. Aldel executed the Business Combination Agreement on August 17, 2021, 2021, and it must liquidate unless a business combination is consummated by October 12, 2022 (unless such date has been extended).
A diagram showing a summary of the current ownership of Aldel’s Common stock is set forth below. For more information, please see the section below titled “Security Ownership of Certain Beneficial Owners and Management of Aldel and New Hagerty.”
[MISSING IMAGE: tm25751d4_fc-adelprebw.jpg]
Aldel’s Units began to trade on the NYSE under the symbol “ADF.U” on April 9, 2021.
The mailing address of Aldel’s principal executive office is 105 S. Maple Street, Itasca, Illinois 60143, and its telephone number is (847) 791-6817.
Merger Sub
Merger Sub is a Delaware limited liability company and wholly owned subsidiary of Aldel formed for the purpose of effecting the Business Combination. Merger Sub owns no material assets and does not operate any business.
The mailing address of Merger Sub is 105 S. Maple Street, Itasca, Illinois 60143, and its telephone number is (847) 791-6817.
Hagerty
Hagerty is a Delaware limited liability company, formed in 2009. The first Hagerty company was founded in 1984, and initially focused on providing coverage for antique boats. Hagerty’s current business is centered around the love of cars. According to estimates from social media accounts, there are more than 500 million people around the globe who express an interest in cars and, based on Hagerty’s proprietary data, approximately 69 million in the United States (“U.S.”) alone who declare themselves automotive enthusiasts. Hagerty provides insurance for classic and enthusiast vehicles and has built an automotive enthusiast platform that engages, entertains and connects with subscribing members.
Over the past three decades, Hagerty has become a global market leader in providing insurance for classic and enthusiast vehicles with over two million vehicles protected, alliances with nine of the 10 largest U.S. auto insurance companies (as ranked by S&P Global Market intelligence based upon 2020 direct premiums written), and an exceptional 84 Net Promoter Score (“NPS”), which is approximately twice the insurance industry average. For a discussion of Hagerty’s NPS, see “Information About Hagerty — Our Operating Model” and “Management’s Discussion and Analysis of Financial Condition and Results of Operations of Hagerty — Key Performance Indicators — Net Promoter Score.” While Hagerty is one of the leading providers of collector insurance, Hagerty estimates that its penetration in this market is less than 4%. However, Hagerty is well positioned to capture an ever-larger share of this growing market due, in large part, to its membership-based business model.
 
19

TABLE OF CONTENTS
 
While typical insurance businesses engage with their customers only at the point of purchase and renewal, Hagerty deploys an entire ecosystem of engagement, including both physical (magazine, events, socials, etc.) and digital (media content, social media, market news, valuation data) platforms that can result in hundreds of touchpoints annually with its members. Hagerty’s members have access to peer-to-peer collector car rentals, collector car storage, social membership experiences, exclusive automotive enthusiast experiences and events, high quality automotive media content and collector car vehicle valuation tools.
Hagerty’s operating model keeps members at the center of all Hagerty does. Hagerty focuses on five specific dimensions that create the “flywheel effect.” Those five dimensions include: (1) Hagerty’s automotive enthusiast brand which drives deep engagement; (2) integrated membership offerings creating lifelong fans; (3) long-term partnerships with insurance carriers built and strengthened by overdelivering and building trust; (4) Hagerty’s digitally driven thinking; and (5) Hagerty’s cultural focus on personal and professional growth.
[MISSING IMAGE: tm2125751d1-pht_flywhee4clr.jpg]
Hagerty believes that it is positioned well to serve the large and growing market of automotive enthusiasts by leveraging its visionary thought leadership, genuine car-loving culture, industry leading business model and omnichannel distribution. Hagerty’s omni-channel distribution of insurance services is a strategic advantage that allows Hagerty to unlock the entire total addressable market and engage with its members. Hagerty’s distribution model has three components. Approximately 45% of sales are generated through direct distribution, where Hagerty’s membership model initiates a significant percentage of new business flow. Approximately 32% of sales are generated through Hagerty’s agency and broker channel through Hagerty’s relationships with over 45,000 independent brokers and agents, including 10 of the top 10 brokers in the U.S. by revenue. The remaining 23% of sales are generated through Hagerty’s national insurance partners. This approach results in a strong economic model with fees generated as a managing general agent and quota share income from Hagerty’s wholly owned single cell captive reinsurance subsidiary. Revenue from subscriptions and memberships create multiple points of economic capture, a recurring revenue stream, and an immersive platform to engage with enthusiasts and promote the passion for driving.
The combination of Hagerty’s scalable omni-channel distribution strategy and innovative membership model has supported a strong rate of growth to date, that is projected to continue to grow through 2025.
 
20

TABLE OF CONTENTS
 
Hagerty is currently owned by Hagerty Holding Corp., owning 75% of the Hagerty Units, and Markel Corporation, holding 25% of the Hagerty Units. A diagram depicting Hagerty’s current ownership is set forth below.
[MISSING IMAGE: tm2125751d4_fc-hagertybw.jpg]
The mailing address of Hagerty is 121 Drivers Edge, Traverse City, Michigan. 49684, and its telephone number is (800) 922-4050.
The Proposals
Proposal 1 — The Business Combination Proposal
Aldel’s stockholders are being asked to adopt and approve the Business Combination Agreement pursuant to which: (a) all of the outstanding equity interests of Hagerty will be exchanged for shares of Class V Common Stock and OpCo Units; (b) Merger Sub will be merged with and into Hagerty (the “Merger”), whereupon the separate limited liability company existence of Merger Sub shall cease and Hagerty shall be the surviving company (Hagerty following the Merger is sometimes hereinafter referred to as the “OpCo”) and continue its existence under the Delaware Limited Liability Company Act (the “LLC Act”); (c) the existing limited liability company agreement of Hagerty will be amended and restated in the form attached to the Business Combination Agreement, to, among other things, make Aldel a member of the OpCo; and (d) Aldel will change its name to Hagerty, Inc. (“New Hagerty”) (the Merger and the other transactions contemplated by the Business Combination Agreement are collectively referred to as the “Business Combination”). As a result of the Business Combination, New Hagerty will be the publicly traded reporting company in an “Up-C” structure.
A diagram depicting New Hagerty’s post-Business Combination structure in a no redemption scenario is set forth below.
 
21

TABLE OF CONTENTS
 
[MISSING IMAGE: tm2125751d4_fc-postcombw.jpg]
Related Agreements
This section describes certain additional agreements entered into or to be entered into pursuant to the Business Combination Agreement, but does not purport to describe all of the terms thereof. The following summary is qualified in its entirety by reference to the complete text of each of the agreements. The full text of the Related Agreements, or forms thereof, are filed as annexes to this proxy statement, and the following descriptions are qualified in their entirety by the full text of such annexes and exhibits. Stockholders and other interested parties are urged to read such Related Agreements in their entirety prior to voting on the Proposals presented at the Special Meeting.
PIPE Subscription Agreements
In connection with the proposed Business Combination, Aldel entered into subscription agreements (the “Subscription Agreements”) with certain “qualified institutional buyers” or “accredited investors” as defined in the applicable SEC regulations (the “PIPE Financing investors”), pursuant to which the PIPE Financing investors have agreed to subscribe for and purchase, and Aldel has agreed to issue and sell to the PIPE Financing investors, an aggregate of 70,385,000 shares of Aldel Class A common stock (the “PIPE Shares”) and an aggregate of 12,669,300 warrants to purchase shares of Aldel Class A common stock (the “PIPE Warrants” and, together with the PIPE Shares, the “PIPE Securities”), for aggregate gross proceeds of $703,850,000 (the “PIPE Financing”). The PIPE Securities to be issued pursuant to the Subscription Agreements have not been registered under the Securities Act in reliance upon the exemption provided by Section 4(a)(2) of the Securities Act and/or Regulation D promulgated thereunder. The purpose of the PIPE
 
22

TABLE OF CONTENTS
 
Financing is to raise additional capital for use in connection with the Business Combination and to meet the minimum cash requirement provided in the Business Combination Agreement.
The closing of the sale of the PIPE Securities (the “PIPE Closing”) will be contingent upon the substantially concurrent consummation of the Business Combination and will occur on the date of, and immediately prior to, the consummation of the Business Combination. The PIPE Closing will be subject to customary conditions, including, but not limited to:

no governmental authority shall have enacted, issued, promulgated, enforced or entered any judgment, order, rule or regulation (whether temporary, preliminary or permanent) which is then in effect and has the effect of making consummation of the transactions contemplated by the Subscription Agreements illegal or otherwise preventing or prohibiting consummation of the transactions contemplated by the Subscription Agreements;

all representations and warranties of Aldel and the PIPE Financing investors contained in the relevant Subscription Agreement shall be true and correct in all material respects (other than those qualified by Subscriber Material Adverse Effect or Material Adverse Effect (each as defined in the relevant Subscription Agreement), which shall be true and correct in all respects) as of the date of the PIPE Closing (other than those representations and warranties expressly made as of an earlier date, which shall be true and correct in all material respects as of such date), and consummation of the date of the PIPE Closing shall constitute a reaffirmation by the PIPE Financing investor of each of the representations, warranties and agreements contained in the relevant Subscription Agreement as of the date of the PIPE Closing;

no Subscription Agreement shall have been amended, modified or waived in any manner that materially benefits any one PIPE Financing investor unless all PIPE Financing investors shall have been offered substantially similar benefits in writing;

all specified waiting periods, if any, under the Hart-Scott-Rodino Antitrust Improvements Act of 1976, as amended, shall have expired or been terminated;

no Company Material Adverse Effect shall have occurred, unless this condition has been waived by PIPE Financing investors representing a majority of the PIPE Securities to be purchased; and

all conditions precedent to the consummation of the closing of the Business Combination shall have been satisfied or waived (other than those conditions that, by their nature, may only be satisfied at the consummation of the closing of the Business Combination, but subject to satisfaction of such conditions as of the consummation of the closing of the Business Combination).
Each Subscription Agreement will terminate upon the earliest to occur of (i) such date and time as the Business Combination Agreement is terminated in accordance with its terms, (ii) upon the mutual written agreement of each of the parties to the Subscription Agreement, (iii) if any of the conditions to the PIPE Closing are not satisfied or waived on or prior to the PIPE Closing, and as a result the PIPE Closing does not occur at the closing of the Business Combination, or (iv) if the closing of the Business Combination has not occurred on or prior to February 17, 2022.
In addition, the Aldel Common Stock was originally sold in the Aldel IPO as a component of the Units for $10.00 per Unit. The Units consist of one share of Aldel Common Stock and one-half of one Warrant. As of September 24, 2021, the closing price on the NYSE of Aldel Common Stock was $10.08 per share, and the closing price of the Warrants was $2.06 per Warrant. The PIPE Financing investors agreed to subscribe for and purchase the PIPE Shares, and for certain PIPE Financing investors, PIPE warrants, for an effective price of $10 per PIPE Share, with certain PIPE Investors also receiving the PIPE Warrants at a percentage equal to 18% of Aldel Common Stock being issued in the PIPE Financing. The PIPE Warrants will be identical to the Warrants included in the units sold in the Aldel IPO, except that the PIPE Warrants will be issued in connection with the closing of the Business Combination and therefore similarly exercisable 30 days after issuance, and (i) may be exercised by the holders on a cashless basis, (ii) will be entitled to registration rights, and (iii) will not be listed on the NYSE (although New Hagerty has agreed to use its commercially reasonable efforts to cause the PIPE Warrants to be listed on the Over the Counter exchange, Pink Sheets or similar automated listing service). Aldel’s stockholders, in particular non-redeeming stockholders, may experience dilution as a consequence of, among other transactions, the issuance of
 
23

TABLE OF CONTENTS
 
Common Stock as consideration in the Business Combination and the PIPE Financing and the issuance of the PIPE Warrants, including the cashless exercise of such PIPE Warrants for Class A Common Stock. For more detail, see “Risk Factors—Risks Related to Aldel and the Business Combination— Aldel’s Public Stockholders may experience dilution as a consequence of, among other transactions, the issuance of Common Stock as consideration in the Business Combination and the PIPE Financing and the issuance of the PIPE Warrants. Having a minority share position may reduce the influence that Aldel’s current stockholders have on the management of New Hagerty.”
The Subscription Agreements provide certain registration rights to the PIPE Financing investors, other than those PIPE Financing investors who, after the closing of the Business Combination and PIPE Closing, will hold in excess of 10% of the issued and outstanding common stock of New Hagerty (such PIPE Financing investors, the “Significant Subscribers”). The registration rights for the Significant Subscribers are as set forth in the Amended and Restated Registration Rights Agreement, as described below. The registration rights for the other PIPE Financing investors, as set forth in the Subscription Agreements, provide that Aldel is required to file with the SEC, within 20 business days after the consummation of the transactions contemplated by the Business Combination Agreement, a registration statement covering the resale of the PIPE Shares, PIPE Warrants and the shares of Aldel Class A common stock underlying the PIPE Warrants. Aldel has agreed to use its commercially reasonable efforts to have such registration statement declared effective as soon as practicable after the filing thereof but no later than the earlier of (i) 90 calendar days after the filing thereof (or 120 calendar days after the filing thereof if the SEC notifies Aldel that it will “review” the registration statement) and (ii) 10 business days after Aldel is notified by the SEC that the registration statement will not be “reviewed” or will not be subject to further review.
Additionally, pursuant to the Subscription Agreements, the PIPE Financing investors agreed (i) to waive any and all right, title and interest, or any claim of any kind they have or may have in the future, in or to any monies held in the Trust Account, and (ii) not to seek recourse against the Trust Account as a result of, or arising out of, the Subscription Agreements, subject to certain qualifications set forth therein.
Sponsor Letter Agreement
In connection with the Business Combination Agreement, Aldel Investors LLC, Aldel LLC, and the directors and executive officers holding securities of Aldel (each a “Stockholder”) each entered into a support agreement (the “Sponsor Letter Agreement”) with Aldel and Hagerty, pursuant to which each Stockholder agrees to vote the shares of Aldel common stock beneficially owned by them (a) in favor of the approval and adoption of the Business Combination Agreement and the transactions contemplated thereby, (b) in favor of any other matter reasonably necessary to the consummation of the transactions contemplated by the Business Combination Agreement, (c) against the approval of any transaction that would impede or prevent the consummation of the Business Combination, and (d) against any amendment of the certificate of incorporation or bylaws of Aldel or any change in Aldel’s capitalization, corporate structure or business other than as contemplated by the Business Combination Agreement. Each Stockholder further agrees that it will (i) not exercise its right to redeem all or a portion of such Stockholder’s shares of Aldel common stock beneficially owned by them (in connection with the Business Combination or otherwise) and (ii) waive any adjustment to the conversion ratio set forth in Aldel’s organizational documents.
Amended and Restated Registration Rights Agreement
In connection with the Business Combination Agreement, Aldel (and subsequent to the Business Combination, New Hagerty), Aldel Investors LLC, FG SPAC Partners LP, ThinkEquity LLC, HHC, the Significant Subscribers and certain other parties (the “Holders” as defined therein) each entered into an Amended and Restated Registration Rights Agreement (the “Amended and Restated Registration Rights Agreement”), pursuant to which, effective as of the consummation of the Transactions, the Registration Rights Agreement, dated as of April 8, 2021, among Aldel and the other parties thereto is terminated and whereby Aldel agreed to file a shelf registration statement registering the resale of New Hagerty equity held by the Holders, and granted to the Holders certain registration rights, including customary piggyback registration rights and demand registration rights, which are subject to customary terms and conditions, including with respect to cooperation and reduction of underwritten shelf takedown provisions (subject to certain lock up restrictions referenced therein, including those documented in the Lock-up Agreement (as defined below).
 
24

TABLE OF CONTENTS
 
Investor Rights Agreement
In connection with the Business Combination Agreement, Hagerty, State Farm, Markel and the Company entered into an Investor Rights Agreement (the “Investor Rights Agreement”), to be effective as of the consummation of the Transactions, which sets forth certain understandings between such parties with respect to certain governance matters, including the election and removal of directors and the granting of preemptive rights, among others.
Additional Agreements to be Executed at Closing
The Business Combination Agreement provides that, upon consummation of the Business Combination, New Hagerty will enter into the following additional agreements.
Tax Receivable Agreement
In connection with the Business Combination, New Hagerty will enter into a Tax Receivable Agreement with the Hagerty Equityholders (the “Tax Receivable Agreement”). OpCo intends to have in effect an election under Section 754 of the Code for each taxable year in which sales and exchanges of OpCo Units in connection with or following the Business Combination (“TRA Exchanges”) occur, which is expected to result in adjustments to the tax basis of the assets of OpCo as a result of such TRA Exchanges. The Tax Receivable Agreement generally provides for the payment by New Hagerty to the Hagerty Equityholders of 85% of the cash tax benefits, if any, that New Hagerty realizes (or in certain cases is deemed to realize), calculated using certain simplifying assumptions as a result of (i) tax basis adjustments resulting from TRA Exchanges and (ii) certain other tax benefits related to entering into the Tax Receivable Agreement, including tax benefits attributable to making payments under the Tax Receivable Agreement. These current and potential future tax basis adjustments are expected to increase (for tax purposes) the depreciation and amortization deductions available to New Hagerty and, therefore, may reduce the amount of U.S. federal, state and local tax that New Hagerty would otherwise be required to pay in the future. The tax basis adjustments upon TRA Exchanges may also decrease gains (or increase losses) on future dispositions of certain assets to the extent tax basis is allocated to those assets. Actual tax benefits realized by New Hagerty may differ from tax benefits calculated under the Tax Receivable Agreement as a result of the use of certain assumptions in the Tax Receivable Agreement, including the use of an assumed state and local income tax rate to calculate tax benefits. The payment obligation under the Tax Receivable Agreement is an obligation of New Hagerty and not of OpCo. New Hagerty will generally retain the benefit of the remaining 15% of these cash tax benefits.
We expect that the payments New Hagerty will be required to make under the Tax Receivable Agreement could be substantial. Estimating the amount and timing of New Hagerty’s realization of tax benefits subject to the Tax Receivable Agreement is by its nature imprecise. The actual increases in tax basis covered by the Tax Receivable Agreement, as well as the amount and timing of New Hagerty’s ability to use any deductions (or decreases in gain or increases in loss) arising from such increases in tax basis, are dependent upon significant future events, including but not limited to the timing of the redemptions of OpCo Units, the price of the Class A common stock of New Hagerty at the time of a TRA Exchange, the extent to which such redemptions are taxable transactions, the depreciation and amortization periods that apply to the increase in tax basis, the amount, character, and timing of taxable income New Hagerty generates in the future, the U.S. federal income tax rate then applicable, and the portion of New Hagerty’s payments under the Tax Receivable Agreement that constitute imputed interest or give rise to depreciable or amortizable tax basis. Accordingly, estimating the amount and timing of payments that may become due under the Tax Receivable Agreement is also by its nature imprecise. For purposes of the Tax Receivable Agreement, net cash savings in tax generally will be calculated by comparing New Hagerty’s actual tax liability (determined by using the actual applicable U.S. federal income tax rate and an assumed combined state and local income tax rate) to the amount New Hagerty would have been required to pay had it not been able to utilize any of the tax benefits subject to the Tax Receivable Agreement. Thus, the amount and timing of any payments under the Tax Receivable Agreement are also dependent upon significant future events, including those noted above in respect of estimating the amount and timing of New Hagerty’s realization of tax benefits.
Payments under the Tax Receivable Agreement are not conditioned on HHC’s or Markel’s continued ownership of New Hagerty. Payments under the Tax Receivable Agreement will be based on the tax reporting
 
25

TABLE OF CONTENTS
 
positions New Hagerty determines, and the Internal Revenue Service (the “IRS”) or another tax authority may challenge all or a part of the existing tax basis, tax basis increases, or other tax attributes subject to the Tax Receivable Agreement, and a court could sustain such challenge. The parties to the Tax Receivable Agreement will not reimburse New Hagerty for any payments previously made if such tax basis or other tax benefits are subsequently disallowed, except that any excess payments made to a party under the Tax Receivable Agreement will be netted against future payments otherwise to be made under the Tax Receivable Agreement, if any, after the determination of such excess.
In addition, the Tax Receivable Agreement provides that if (1) New Hagerty breaches any of its material obligations under the Tax Receivable Agreement (including in the event that New Hagerty is more than three months late making a payment that is due under the Tax Receivable Agreement, subject to certain exceptions), (2) New Hagerty is subject to certain bankruptcy, insolvency or similar proceedings, or (3) at any time, New Hagerty elects an early termination of the Tax Receivable Agreement, New Hagerty’s obligations under the Tax Receivable Agreement (with respect to all OpCo Units, whether or not such OpCo Units have been the subject of a TRA Exchange before or after such transaction) would accelerate and become payable in a lump sum amount equal to the present value of the anticipated future tax benefits calculated based on certain assumptions, including that New Hagerty would have sufficient taxable income to fully utilize the deductions arising from the tax deductions, tax basis and other tax attributes subject to the Tax Receivable Agreement.
The Tax Receivable Agreement also provides that, upon certain changes of control or other significant transactions, in the discretion of HHC and Markel, New Hagerty’s obligations under the Tax Receivable Agreement may be accelerated and become payable in a lump sum as described above. Such acceleration would be based on certain assumptions, including that New Hagerty or its successor would have sufficient taxable income to fully utilize the increased tax deductions and tax basis and other benefits covered by the Tax Receivable Agreement. As a result, upon any acceleration of New Hagerty’s obligations under the Tax Receivable Agreement (including upon a change of control), New Hagerty could be required to make payments under the Tax Receivable Agreement that are greater than 85% of its actual cash tax savings, which could negatively impact its liquidity. The change of control provisions in the Tax Receivable Agreement may also result in situations where HHC and Markel have interests that differ from or are in addition to those of other holders of Class A common stock.
Finally, because New Hagerty is a holding company with no operations of its own, its ability to make payments under the Tax Receivable Agreement depends on the ability of OpCo to make distributions to it. To the extent that New Hagerty is unable to make payments under the Tax Receivable Agreement for any reason, such payments will be deferred and will accrue interest until paid, which could negatively impact New Hagerty’s results of operations and could also affect its liquidity in periods in which such payments are made.
The foregoing description of the Tax Receivable Agreement is not complete and is qualified in its entirety by reference to the Tax Receivable Agreement, which is filed as Exhibit 10.17 to this proxy statement and is incorporated herein by reference.
Lock-up Agreement
In connection with the closing of the Business Combination, Markel and HHC will enter into a lock-up agreement (the “Lock-up Agreement”) with Aldel, pursuant to which each will agree, subject to certain customary exceptions, not to:
(i)
offer, sell, contract to sell, pledge, or otherwise dispose of, directly or indirectly, any shares of Aldel common stock or securities convertible into or exercisable or exchangeable for Aldel common stock held by them immediately after the consummation of the Business Combination, or enter into a transaction that would have the same effect, subject to certain exceptions set forth in the Lock-up Agreement;
(ii)
enter into any swap, hedge or other arrangement that transfers, in whole or in part, any of the economic consequences of ownership of any of such shares, whether any of these transactions are to be settled by delivery of such shares, in cash or otherwise; or
(iii)
publicly announce the intention to make any offer, sale, pledge or disposition, or to enter into any
 
26

TABLE OF CONTENTS
 
transaction, swap, hedge or other arrangement, or engage in any “Short Sales” ​(as defined in the Lock-up Agreement) with respect to any security of Aldel;
until the date that is the earlier of (1) the expiration of the Founder Shares Lock-up Period (as defined in that certain Letter Agreement, dated April 8, 2021, by and among Aldel and its officers, directors, Aldel Investors LLC and FG SPAC Partners LP), and (2) 180 days after the consummation of the Business Combination. Notwithstanding the foregoing, if after the consummation of the Business Combination, there is a “Change of Control” ​(as defined in the Lock-up Agreement) of Aldel, then all of the shares shall be released from the restrictions set forth therein.
Amended and Restated LLC Agreement
In connection with the proposed Business Combination, the existing limited liability company agreement of Hagerty will be amended and restated in the form of a Fourth Amended and Restated Limited Liability Company Agreement (the “LLC Agreement”), to, among other things, admit Aldel as a member of the OpCo.
Sponsor Warrant Lock-up Agreement
In connection with the closing of the Business Combination, Aldel Investors LLC (the “Sponsor”) and FG SPAC Partners, LP (“FGSP”) will enter into a lock-up agreement (the “Sponsor Warrant Lock-up Agreement”) with Aldel, pursuant to which the Sponsor and FGSP will agree as described below with respect to (i) the warrants to purchase Aldel common stock underlying units of Aldel that were purchased by the Sponsor or FGSP, as applicable, (the “Placement Warrants”) pursuant to that certain Private Placement Units Purchase Agreement dated as of April 8, 2021, between Aldel and the Sponsor (the “Private Placement Units Purchase Agreement”) and (ii) the warrants to purchase Aldel common stock that were purchased by FGSP (“OTM Warrants”) pursuant to that certain OTM Warrants Purchase Agreement dated as of April 8, 2021, between Aldel, FGSP and the other parties thereto (the “OTM Warrants Purchase Agreement”). Pursuant to the Sponsor Warrant Lock-up Agreement:
(1)
the Placement Warrants shall not be exercisable until the date on which the volume weighted average trading price of the common stock of New Hagerty exceeds $15.00 per share (as adjusted for stock splits, stock dividends, reorganizations and recapitalizations) for any 20 trading days within any 30-trading day period commencing one year after the Business Combination;
(2)
the OTM Warrants shall not be exercisable until the date on which the volume weighted average trading price of the common stock of New Hagerty exceeds $18.00 per share (as adjusted for stock splits, stock dividends, reorganizations and recapitalizations) for any 20 trading days within any 30-trading day period commencing 18 months after the Business Combination; and
(3)
prior to being exercisable, the Sponsor may transfer the Placement Warrants, subject to any requirements set forth in the Private Placement Units Purchase Agreement and the OTM Warrants Purchase Agreement, provided that such transfers may be implemented only upon the respective transferee’s written agreement to be bound by the terms and conditions of the Sponsor Warrant Lock-up Agreement.
Exchange Agreement
In connection with the proposed Business Combination, Markel, HHC, OpCo and New Hagerty will enter into an Exchange Agreement (the “Exchange Agreement”). Pursuant to the Exchange Agreement, Markel and HHC will have the right from time to time, on the terms and conditions contained in the Exchange Agreement, to exchange their Units and Class V Shares for, at the option of New Hagerty, shares of Class A common stock of New Hagerty or cash. Please see the section titled “Proposal 1 — The Business Combination Proposal — The Business Combination Agreement” for further information. Below is a brief summary of the other Proposals that Aldel stockholders are being asked to vote on at the Special Meeting.
 
27

TABLE OF CONTENTS
 
Proposal 2 — The NYSE Proposal
As part of the consideration for the Business Combination, Aldel is obligated to undertake (a) the issuance of approximately 250,000,000 shares of Class A Common Stock in connection with the Business Combination, including the issuance of shares of Class A Common Stock and OpCo Units issued in connection with the Business Combination in accordance with the Exchange Agreement (as defined below) upon exchange of the Class V Common Stock and (b) the issuance and sale of 70,385,000 shares of Class A Common Stock in a private offering of securities to certain investors in connection with the Business Combination, including shares of Class A Common Stock to certain Related Parties (as defined below and as further described in the section titled “Proposal 2 — The NYSE Proposal”, which will occur substantially concurrently with, and is contingent upon, the consummation of the transactions contemplated by the Business Combination Agreement (the “NYSE Proposal”).
Proposal 3 — The Charter Amendment Proposal
Aldel stockholders will be asked to approve and adopt, subject to and conditional on (but with immediate effect therefrom) approval of the Business Combination Proposal, the NYSE Proposal, the Directors Proposal and the Equity Incentive Plan Proposal and the consummation of the Business Combination, an amendment and restatement of the Current Charter, as set out in the Proposed Charter appended to this proxy statement as Annex B.
Proposal 4 — The Advisory Charter Proposals
Aldel stockholders will be asked to approve and adopt, on a non-binding advisory basis, certain differences in the governance provisions set forth in the Proposed Charter, as compared to our Current Charter, which are being presented in accordance with the requirements of the SEC as separate sub-proposals:
(i)
increase Aldel’s authorized shares from 401,000,000 authorized shares to 500,000,000 authorized shares of Class A common stock, 300,000,000 authorized shares of Class V common stock, and 20,000,000 authorized shares of preferred stock;
(ii)
provide that each share of Class V common stock will be entitled to ten votes until the earlier of (a) the transfer of each such share other than to a Qualified Transferee (as defined in the Proposed Charter) and (b) 15 years from the date of effectiveness of the Proposed Charter;
(iii)
provide that directors may be removed from office for any reason by the affirmative vote of the holders of at least a majority of the voting power of all then-outstanding shares of capital stock of New Hagerty entitled to vote generally in the election of directors, voting together as a single class until a Control Trigger Event (as defined in the Proposed Charter) occurs, after which directors may only be removed from office for cause by the affirmative vote of the holders of at least a majority of the voting power of all then-outstanding shares of capital stock of New Hagerty entitled to vote generally in the election of directors, voting together as a single class;
(iv)
provide that the Bylaws of New Hagerty may be amended by the affirmative vote of the holders of at least a majority of the voting power of all then-outstanding shares of capital stock of New Hagerty entitled to vote generally in the election of directors, voting together as a single class until a Control Trigger Event occurs, after which the Bylaws may only be amended by the affirmative vote of the holders of at least 75% of the voting power of all then-outstanding shares of capital stock of New Hagerty entitled to vote generally in the election of directors, voting together as a single class;
(v)
require the affirmative vote of holders of the majority of the voting power of the outstanding shares of capital stock for the amendment, alteration, change or repeal of any provision in the charter; provided, however, that upon a Control Trigger Event the affirmative vote of the holders of at least 75% of the voting power of all then-outstanding shares of capital stock entitled to vote generally in the election of directors, voting together as a single class, shall be required to amend, alter, repeal or adopt any provision of the charter inconsistent with the purpose and intent
 
28

TABLE OF CONTENTS
 
of Article V, Article VI, Article VII or Article IX (including, without limitation, any such Article as renumbered as a result of any amendment, alternation, repeal or adoption of any other Article); and
(vi)
delete the various provisions in Aldel’s current amended and restated certificate of incorporation applicable only to special purpose acquisition corporations (such as the obligation to dissolve and liquidate if a business combination is not consummated within a certain period of time).
Proposal 5 — The Directors Proposal
Aldel is proposing that its stockholders vote to elect, effective as of the consummation of the Business Combination, Michael Angelina, Robert Kauffman, McKeel Hagerty, Michael Crowley, Michael Tipsord, Laurie Harris, Mika Salmi, Bill Swanson and Sabrina Kay, to serve on New Hagerty’s board of directors.
Proposal 6 — The Equity Incentive Plan Proposal
Aldel is proposing that its stockholders approve and adopt the 2021 Equity Incentive Plan of New Hagerty, which will become effective upon the Closing. A summary of the Equity Incentive Plan is set forth in the “The Equity Incentive Plan Proposal” section of this proxy statement and a complete copy of the Equity Incentive Plan is attached hereto as Annex C.
Proposal 7 — The Employee Stock Purchase Plan Proposal
Aldel is proposing that stockholder approve and adopt the employee stock purchase plan (the “ESPP”). A summary of ESPP is set forth in the “The Employee Stock Purchase Plan Proposal” section of this proxy statement and a complete copy of the Employee Stock Purchase Plan is attached hereto as Annex D.
Proposal 8 — The Adjournment Proposal
Aldel is proposing that stockholders approve a proposal to adjourn the Special Meeting to a later date or dates, if necessary, to permit further solicitation and vote of proxies if, based upon the tabulated vote at the time of the Special Meeting, there are not sufficient votes to approve the Business Combination Proposal, the NYSE Proposal, the Charter Amendment Proposal, the Equity Incentive Plan Proposal or the Employee Stock Purchase Plan Proposal.
Date, Time and Place of Special Meeting
The Special Meeting will be held on      , 2021, at 10:00 AM, Eastern time, conducted via virtual meeting at the following address      . You will need the 12-digit meeting control number that is printed on your proxy card to enter the Special Meeting. Aldel recommends that you log in at least 15 minutes before the Special Meeting to ensure you are logged in when the Special Meeting starts. Please note that you will not be able to physically attend the Special Meeting in person.
Proxy Solicitation
Proxies may be solicited by mail. We have engaged Advantage Proxy to assist in the solicitation of proxies. If a stockholder grants a proxy, it may still vote its shares online if it revokes its proxy before the special meeting. A stockholder may also change its vote by submitting a later-dated proxy as described in the section titled “Special Meeting of Aldel Stockholders — Revoking Your Proxy.”
Quorum and Required Vote for Proposals for the Special Meeting
A quorum of Aldel stockholders is necessary to hold a valid meeting. A quorum will be present at the Special Meeting of stockholders if a majority of the shares of capital stock of Aldel issued and outstanding and entitled to vote, is represented in person, by virtual attendance or by proxy at the Special Meeting. Abstentions will count as present for the purposes of establishing a quorum. Broker non-votes will not be counted for purposes of establishing a quorum.
 
29

TABLE OF CONTENTS
 
Our Current Charter requires the affirmative vote of a majority of the issued and outstanding shares of Aldel Common Stock as of the Record Date for the approval of the Charter Amendment Proposal. However, we are also requiring the affirmative vote of a majority of holders of a majority of the shares of Class A Common Stock then outstanding for the approval of the Charter Amendment Proposal. Accordingly, an Aldel stockholder’s failure to vote by proxy or to vote online at the Special Meeting or an abstention will have the same effect as a vote “AGAINST” the Charter Amendment Proposal.
The approval of the Business Combination Proposal, the NYSE Proposal, the Equity Incentive Plan Proposal, the Employee Stock Purchase Plan Proposal and the Adjournment Proposal each require the affirmative vote of the holders of a majority of the shares of Aldel Common Stock present or represented at the Special Meeting, by ballot, proxy or electronic ballot and entitled to vote thereon at the Special Meeting. The approval of the Advisory Charter Proposals is a non-binding advisory vote, and requires the affirmative vote of the holders of a majority of the shares of Aldel Common Stock present or represented at the Special Meeting, by ballot, proxy or electronic ballot and entitled to vote thereon at the Special Meeting. An Aldel stockholder’s failure to vote by proxy or to vote online at the Special Meeting will not be counted towards the number of shares of Common Stock required to validly establish a quorum, and if a valid quorum is otherwise established, it will have no effect on the outcome of the vote on the Business Combination Proposal, the NYSE Proposal, the Directors Proposal, the Equity Incentive Plan Proposal, the Employee Stock Purchase Plan Proposal and Adjournment Proposal. Approval of the Directors Proposal will require the vote by a plurality of the shares of the Common Stock present by virtual attendance or represented by proxy and entitled to vote at the Meeting.
The NYSE Proposal, the Charter Amendment Proposal, the Directors Proposal, the Equity Incentive Plan Proposal and the Employee Stock Purchase Plan Proposal are subject to and conditioned on the approval of the Business Combination Proposal and the Business Combination Proposal is subject to and conditioned on the approval of the NYSE Proposal, the Charter Amendment Proposal, the Directors Proposal, the Equity Incentive Plan Proposal and the Employee Stock Purchase Plan Proposal. The Adjournment Proposal is not subject to and conditioned on any other Proposal and does not require the approval of any other Proposal to be effective. It is important for you to note that in the event the Business Combination Proposal, the NYSE Proposal, the Charter Amendment Proposal, the Directors Proposal, the Equity Incentive Plan Proposal and the Employee Stock Purchase Plan Proposal do not receive the requisite vote for approval, then Aldel will not consummate the Business Combination. If Aldel does not consummate the Business Combination and fails to complete an initial business combination by October 12, 2022, it will be required to dissolve and liquidate its Trust Account by returning the then remaining funds in such account to its Public Stockholders.
Recommendation to Aldel Stockholders
Our Board believes that the Proposals to be presented at the Special Meeting are in the best interests of Aldel and its stockholders and unanimously recommends that Aldel stockholders vote “FOR” the Proposals.
When you consider the recommendation of the Board in favor of approval of these Proposals, you should keep in mind that Aldel directors, officers and advisors have interests in the Business Combination that are different from or in addition to (and which may conflict with) your interests as a stockholder. These interests include, among other things:

Unless Aldel consummates an initial business combination, Aldel’s officers, directors and Sponsor will not receive reimbursement for any out-of-pocket expenses incurred by them to the extent that such expenses exceed the amount of available proceeds not deposited in the Trust Account from the Aldel IPO and Private Placement. As of June 30, 2021, no out-of-pocket expenses are owed to Aldel’s officers, directors and Sponsor;

Our initial stockholders have agreed not to transfer, assign or sell any of their Founder Shares until: (i) with respect to 50% of the Founder Shares, the earlier of (x) twelve months after the date of the consummation of an initial business combination or (y) the date on which the closing price of our Class A common stock equals or exceeds $12.00 per share (as adjusted for stock splits, stock dividends, reorganizations and recapitalizations) for any 20 trading days within any 30-trading day period commencing after our initial business combination and (ii) with respect to the remaining 50% of the
 
30

TABLE OF CONTENTS
 
Founder Shares, twelve months after the date of the consummation of our initial business combination; except to certain permitted transferees and under certain circumstances. Any permitted transferees will be subject to the same restrictions and other agreements of our initial stockholders with respect to any Founder Shares. We refer to such transfer restrictions throughout this prospectus as the IPO lock-up. Notwithstanding the foregoing, if we consummate a transaction after our initial business combination which results in our stockholders having the right to exchange their shares for cash, securities or other property, the Founder Shares will be released from the IPO lock-up;

The fact that the Sponsor, as well as the officers, directors and advisors of Aldel have agreed to waive their redemption rights with respect to any shares of Aldel’s capital stock they may hold in connection with the consummation of the Business Combination and such shares will be worthless if no business combination is effected by Aldel by October 12, 2022;

The fact that the Sponsor paid an aggregate of $25,000 for its Founder Shares and such securities will have a significantly higher value at the time of the Business Combination;

In connection with the closing of the Business Combination, the Sponsor and FG SPAC Partners, LP (“FGSP”) will enter into a lock-up agreement (the “Sponsor Warrant Lock-up Agreement”) with Aldel, pursuant to which the Sponsor and FGSP will agree to certain new vesting arrangements with respect to (i) the warrants to purchase Aldel common stock underlying units of Aldel that were purchased by the Sponsor or FGSP, as applicable, pursuant to that certain Private Placement Units Purchase Agreement dated as of April 8, 2021, between Aldel and the Sponsor (the “Private Placement Units Purchase Agreement”) and (ii) the warrants to purchase Aldel common stock that were purchased by FGSP (“OTM Warrants”) pursuant to that certain OTM Warrants Purchase Agreement dated as of April 8, 2021, between Aldel, FGSP and the other parties thereto (the “OTM Warrants Purchase Agreement”). See “Summary of the Proxy Statement — The Proposals — Proposal 1 — The Business Combination Proposal — Related Agreements — Sponsor Warrant Lock-up Agreement;

Certain of Aldel’s executive officers and directors and/or entities affiliated with them participated in the PIPE Investment; and

The anticipated continuation of Robert Kauffman, Aldel’s Chief Executive Officer, as a director of New Hagerty.
Aldel’s Financial Advisor
Aldel retained ThinkEquity to provide a fairness opinion to the Board. On August 17, 2021, ThinkEquity delivered its written fairness opinion to Aldel’s board of directors, to the effect that, as of that date and based on and subject to various assumptions, limitations, and qualifications described in the opinion, the consideration to be paid by Aldel in connection with the Business Combination is fair, from a financial point of view. ThinkEquity has, in the past, provided investment banking services to Aldel, including as underwriter in the Aldel IPO, for which services ThinkEquity received compensation, including cash as well as a right of first refusal to act as exclusive financial advisors, investment bankers, book-runners, underwriters and/or placement agents in certain future transactions of Aldel (including the Business Combination). Also, in connection with the Aldel IPO, Aldel issued to ThinkEquity 59,437 units (the “Underwriter Units”) comprised of one share of Aldel Class A Common Stock and one warrant to purchase one share of Aldel Class A Common Stock at an exercise price of $11.50 that could become worthless if the Business Combination or another business combination is not consummated. In connection with the past investment banking services provided to Aldel, several of ThinkEquity’s employees own Underwriter Units. Aldel granted ThinkEquity, for a period beginning on the closing of the Aldel IPO and ending on the later of 24 months after the closing of the Aldel IPO and 12 months after the consummation of its business combination (including the Business Combination), a right of first refusal to act as (i) exclusive financial advisor in connection with all proposed business combinations for a fee of up to $4,025,000 (subject to Aldel’s right to allocate up to 50% of such fee to another financial institution), and (ii) sole investment banker, sole book-runner and/or sole placement agent, at ThinkEquity’s sole discretion, for each and every future public and private equity and debt offering, including all equity linked financings, during such period for ThinkEquity or any successor to it or any of its subsidiaries, on terms agreed to by both ThinkEquity and Aldel in good faith. ThinkEquity has in the past provided investment banking services to certain Aldel officers and directors in their roles as officers and directors of unrelated companies in connection with
 
31

TABLE OF CONTENTS
 
unrelated transactions. Such companies include FG New America Acquisition Corp., FG Financial Group, Inc., Ballantyne Strong Inc. and BK Technologies Corporation.
In selecting ThinkEquity, the Board considered, among other things, the fact that ThinkEquity is a reputable investment banking firm with substantial experience advising companies. ThinkEquity, as part of its investment banking business, is continuously engaged in the valuation of businesses and their securities in connection with mergers and acquisitions, negotiated underwritings, secondary distributions of listed and unlisted securities, private placements and valuations for corporate and other purposes. However, ThinkEquity’s interest in the Business Combination may conflict with your interests as a stockholder. The financial interests of ThinkEquity may influence their motivation in providing a fairness opinion, and their assessment of the Business Combination. While Aldel has until October 12, 2022 to complete its initial business combination, this risk may become more acute as the deadline for Aldel completing its initial business combination nears.
The full text of the fairness opinion describes the assumptions made, matters considered, and limitations on the review undertaken by ThinkEquity. This opinion is attached as Annex E and is incorporated into this proxy statement by reference.
Holders of Aldel common stock are encouraged to read ThinkEquity’s fairness opinion carefully in its entirety. ThinkEquity provided the fairness opinion for the use and benefit of, and the fairness opinion was rendered to, Aldel’s Board. The fairness opinion is not intended and does not constitute a recommendation as to any action that Aldel Board should take in connection with the Business Combination or as to how any Aldel stockholder should vote with respect to the Business Combination. ThinkEquity’s fairness opinion addresses only the fairness, from a financial point of view, of the consideration paid by Aldel in the Business Combination and related transactions, and ThinkEquity does not express any views on any other terms, aspects, or implications of the Business Combination or the Business Combination Agreement, including, without limitation, (i) any term or aspect of the Business Combination that is not susceptible to financial analyses, (ii) the redemption obligations of Aldel under its organizational documents (the “Redemption”), (iii) the fairness of the Business Combination, or all or any portion of the total consideration, to any other security holders of Aldel, Hagerty or any other person or any creditors or other constituencies Aldel, Hagerty or any other person, (iv) the appropriate capital structure of Aldel, Hagerty or whether Aldel should be issuing debt or equity securities or a combination of both in the Business Combination, (v) any capital raising or financing transaction contemplated by Aldel or Hagerty, nor (vi) the fairness of the amount or nature, or any other aspect, of any compensation or consideration payable to or received by any officers, directors, or employees of any parties to the Business Combination or any class of such persons, relative to the Total Consideration in the Business Combination pursuant to the Business Combination Agreement, or otherwise or of any other agreements or other arrangements entered into in connection with, or contemplated by the Business Combination Agreement including, without limitation, the PIPE Subscription Agreements and the Tax Receivable Agreement to be entered into in connection with the Business Combination. ThinkEquity expressed no opinion as to the structure, terms, or effect of any other aspect of the Business Combination, including, without limitation, the tax, accounting or regulatory consequences thereof. Specifically, ThinkEquity was not requested to opine as to, and the fairness opinion does not in any manner address, the relative merits of the Business Combination as compared to any alternative business strategy that might exist. ThinkEquity did not engage in negotiations and is not aware of any alternative transactions. As such, the fairness opinion is not an opinion as to the merits of the Business Combination relative to any alternative transaction or business strategy, including the liquidation of the Trust Account or any Redemptions, or the merits of the underlying decision by the Board or Aldel to engage in or consummate the Business Combination. ThinkEquity served as one of the underwriters in the Aldel IPO and currently serves as financial advisor to Aldel. In such roles, ThinkEquity has and will receive compensation additional from Aldel. For additional information, please see the section titled “Proposal No. 1 — The Business Combination Proposal — Opinion of Aldel’s Financial Advisor.
Emerging Growth Company
Aldel is an “emerging growth company,” as defined in Section 2(a) of the Securities Act, as modified by the JOBS Act, and it may take advantage of certain exemptions from various reporting requirements that are applicable to other public companies that are not emerging growth companies, including, but not limited to, not being required to comply with the auditor attestation requirements of Section 404 of the
 
32

TABLE OF CONTENTS
 
Sarbanes-Oxley Act, reduced disclosure obligations regarding executive compensation in our periodic reports and proxy statements, and exemptions from the requirements of holding a nonbinding advisory vote on executive compensation and stockholder approval of any golden parachute payments not previously approved.
Further, Section 102(b)(1) of the JOBS Act exempts emerging growth companies from being required to comply with new or revised financial accounting standards until private companies (that is, those that have not had a Securities Act registration statement declared effective or do not have a class of securities registered under the Exchange Act) are required to comply with the new or revised financial accounting standards. The JOBS Act provides that a company can elect to opt out of the extended transition period and comply with the requirements that apply to non-emerging growth companies, but any such election to opt out is irrevocable. Aldel has elected not to opt out of such extended transition period, which means that when a standard is issued or revised and it has different application dates for public or private companies, Aldel, as an emerging growth company, can adopt the new or revised standard at the time private companies adopt the new or revised standard. This may make comparison of Aldel’s financial statements with certain other public companies difficult or impossible because of the potential differences in accounting standards used.
Aldel will remain an emerging growth company until the earlier of: (i) the last day of the fiscal year (a) following the fifth anniversary of the closing of the Aldel IPO, (b) in which we have total annual gross revenue of at least $1.07 billion, or (c) in which Aldel is deemed to be a large accelerated filer, which means the market value of our common equity that is held by non-affiliates exceeds $700 million as of the last business day of our most recently completed second fiscal quarter; and (ii) the date on which Aldel has issued more than $1.00 billion in non-convertible debt securities during the prior three-year period. References herein to “emerging growth company” have the meaning associated with it in the JOBS Act.
Smaller Reporting Company
Additionally, Aldel is a “smaller reporting company” as defined in Item 10(f)(1) of Regulation S-K. Smaller reporting companies may take advantage of certain reduced disclosure obligations, including, among other things, providing only two years of audited financial statements. Aldel will remain a smaller reporting company until the last day of the fiscal year in which (i) the market value of Aldel Common Stock held by non-affiliates exceeds $250 million as of the prior June 30, or (ii) Aldel’s annual revenues exceeded $100 million during such completed fiscal year and the market value of Aldel Common Stock held by non-affiliates exceeds $700 million as of the prior June 30.
Risk Factors Summary
In evaluating the Proposals set forth in this proxy statement, you should carefully read this proxy statement, including the annexes, and especially consider the factors discussed in the section titled “Risk Factors.
Summary of Risks Related to Hagerty’s Business and Industry

Hagerty’s future growth and profitability may be affected by new entrants into the market or current competitors developing preferred offerings.

As of June 2021, a large percentage of Hagerty’s products and services are distributed through a few relationships and the loss of business provided by any one of them could have an adverse effect on the company.

Hagerty may not be able to prevent, monitor, or detect fraudulent activity, including transactions with insurance policies or payments of claims.

Hagerty has experienced significant member growth over the past several years, and the company’s continued business and revenue growth are dependent on its ability to continuously attract and retain members and the company cannot be sure they will be successful in these efforts, or that member retention levels will not materially decline.

Future acquisitions or investments contain inherent strategic, execution, and compliance risks that could disrupt Hagerty’s business and harm the company’s financial condition.
 
33

TABLE OF CONTENTS
 

Hagerty may be subject to cyberattacks, and its reliance on third party providers for technology and services mean Hagerty’s operations could be disrupted due to the lack of resiliency in the operations of other companies, or a breach in their obligations to Hagerty, and could impair the operability of Hagerty’s website and other technology-based operations.

Hagerty is subject to key person risk because it relies on the expertise of its CEO, senior management team, and other key employees. If Hagerty is unable to attract, retain, or motivate key personnel or hire qualified personnel, its business may be severely impacted.

Hagerty’s unique company culture has contributed to its success, and if Hagerty is not able to maintain this culture in the future, its business could be harmed.

The insurance products that Hagerty develops and sells for its underwriting carriers are subject to regulatory approval, and Hagerty may incur significant expenses in connection with the development and filing of new products before revenue is generated from new products.

As a managing general agency/underwriter, Hagerty operates in a highly regulated environment for the company’s insurance product distribution and faces risks associated with compliance requirements, some of which cause Hagerty to make judgment calls that could have an adverse effect on the company.

There are limited key underwriting carrier partners in our insurance markets, and Hagerty may not be able to find suitable replacements for its existing carriers.

A regulatory environment that requires rate increases to be approved and that can dictate underwriting and pricing and mandate participation in loss sharing arrangements may adversely affect the company’s results of operations and financial condition.

Hagerty relies on external data and the company’s digital platform to collect and evaluate information that the company utilizes in producing, pricing, and underwriting insurance policies (in accordance with the rates, rules, and forms filed with regulators, where required), managing claims and customer support, and improving business processes. Any future legal or regulatory requirements that might restrict the company’s ability to collect or utilize this data could potentially have an adverse effect on the company’s business, financial condition, and prospects.

The underwriting companies that Hagerty works with, and Hagerty’s insurance agencies, are periodically subject to examinations and audits by insurance regulators, which could result in adverse findings, enforcement actions, require payments of fines or penalties, and necessitate remedial actions.

The insurance business, including the market for property and casualty insurance, is historically cyclical in nature, and there may be periods with excess underwriting capacity and unfavorable premium rates, which could adversely affect Hagerty’s business.

The reinsurance that Hagerty Re purchases to protect against catastrophic and large losses may be unavailable at current coverage terms, limits, or pricing.

Unexpected increases in the frequency or severity of claims may adversely affect Hagerty’s operations and financial condition.

Severe weather events, catastrophes, and unnatural events are unpredictable, and Hagerty may experience losses or disruptions from these events.

If the risks within the insurance programs that Hagerty offers on behalf of its underwriting carriers are not priced and underwritten accurately with competitive, yet profitable, rates, its business and financial condition could be adversely affected.

The legal and regulatory requirements applicable to Hagerty’s business are extensive. If the company is not able to comply, it could have an adverse effect on the company. Extensive regulation and potential further restrictive regulation could increase Hagerty’s operating costs and limit the company’s growth.

Future regulatory changes could limit or impact Hagerty’s business model.
 
34

TABLE OF CONTENTS
 
Summary of Risks Related to Aldel and the Business Combination

Aldel has no operating history and is subject to a mandatory liquidation and subsequent dissolution requirement. If Aldel is unable to consummate a business combination, including the Business Combination, its Public Stockholders may be forced to wait more than 18 months from the Aldel IPO before receiving distributions from the Trust Account.

Subsequent to the consummation of the Business Combination, Aldel may be required to take write-downs or write-offs, restructuring and impairment or other charges that could have a significant negative effect on its financial condition, results of operations and stock price, which could cause you to lose some or all of your investment.

The holders of Founder Shares have agreed to vote in favor of such initial business combination, regardless of how Aldel’s Public Stockholders vote.

The unaudited pro forma condensed combined financial information included in this proxy statement may not be indicative of what New Hagerty’s actual financial position or results of operations would have been.

If third parties bring claims against Aldel, the proceeds held in trust could be reduced and the per-share redemption price received by stockholders may be less than $10.10.

Aldel’s stockholders may be held liable for claims by third parties against Aldel to the extent of distributions received by them.

Neither Aldel nor its stockholders will have the protection of any indemnification, escrow, price adjustment or other provisions that allow for a post-closing adjustment to be made to the total merger consideration in the event that any of the representations and warranties made by Hagerty in the Business Combination Agreement ultimately proves to be inaccurate or incorrect.

Aldel’s ability to successfully effect the Business Combination and to be successful thereafter will be totally dependent upon the efforts of its key personnel, including Hagerty’s key personnel, all of whom are expected to remain with New Hagerty following the Business Combination. While Aldel intends to closely scrutinize any individuals it engages after the Business Combination, it cannot assure you that its assessment of these individuals will prove to be correct.

Aldel’s Sponsor, directors, officers and advisors have interests in the Business Combination which may be different from or in addition to (and which may conflict with) the interests of its stockholders.
Summary of Risks Related to New Hagerty and the Business Combination

Following the consummation of the Business Combination, Hagerty will incur significant increased expenses and administrative burdens as a public company, which could negatively impact its business, financial condition and results of operations.

New Hagerty’s failure to timely and effectively implement controls and procedures required by Section 404(a) of the Sarbanes-Oxley Act that will be applicable to the company after the Business Combination is consummated could negatively impact its business.

New Hagerty will qualify as an “emerging growth company” within the meaning of the Securities Act, and if the company takes advantage of certain exemptions from disclosure requirements available to emerging growth companies, it could make New Hagerty’s securities less attractive to investors and may make it more difficult to compare New Hagerty’s performance to the performance of other public companies.

New Hagerty’s business and operations could be negatively affected if it becomes subject to any securities litigation or shareholder activism, which could cause New Hagerty to incur significant expense, hinder execution of business and growth strategy and impact its stock price.

Because New Hagerty does not anticipate paying any cash dividends in the foreseeable future, capital appreciation, if any, would be your sole source of gain.

Future offerings of debt or offerings or issuances of equity securities by New Hagerty may adversely affect the market price of New Hagerty’s Common Stock or otherwise dilute all other stockholders.
 
35

TABLE OF CONTENTS
 

New Hagerty will qualify as, and intends to elect to be treated as, a “controlled company” within the meaning of the NYSE listing standards and, as a result, the company’s stockholders may not have certain corporate governance protections that are available to stockholders of companies that are not controlled companies.

The dual class structure of New Hagerty’s common stock may adversely affect the trading market for its Class A common stock following the closing of the transaction.

The dual class structure of New Hagerty’s common stock will have the effect of concentrating voting power with the Hagerty’s Equityholders, which will limit your ability to influence the outcome of important transactions, including a change in control.
Summary of Risks Related to Tax

New Hagerty will be a holding company and its only material asset after completion of the business combination will be its interest in OpCo, and it will therefore be dependent upon distributions made by OpCo to pay taxes, and make payments under the Tax Receivable Agreement and for other expenses.

New Hagerty will be required to pay the Hagerty Equityholders and any other persons that become parties to the Tax Receivable Agreement for certain tax benefits New Hagerty may receive, and the amounts payable may be substantial.

To the extent New Hagerty receives tax distributions in excess of its actual tax liabilities and retains such excess cash, the Hagerty Equityholders may benefit from such accumulated cash balances if they exercise their exchange rights.

If OpCo were to become a publicly traded partnership taxable as a corporation for U.S. federal income tax purposes, New Hagerty and OpCo might be subject to potentially significant tax inefficiencies, and New Hagerty would not be able to recover payments previously made by it under the Tax Receivable Agreement even if the corresponding tax benefits were subsequently determined to have been unavailable due to such status.

Increases in applicable tax rates, changes in applicable tax laws or disagreements with tax authorities can adversely affect New Hagerty’s business, financial condition or results of operations.
 
36

TABLE OF CONTENTS
 
SELECTED HISTORICAL CONSOLIDATED FINANCIAL INFORMATION OF HAGERTY
The following information is only a summary and should be read in conjunction with Hagerty’s consolidated financial statements and related notes contained elsewhere in this proxy statement and information discussed under “Hagerty’s Management’s Discussion and Analysis of Financial Condition and Results of Operations.” The historical results included below and elsewhere in this proxy statement are not indicative of Hagerty’s future performance. The selected consolidated statements of income data for the years ended December 31, 2020, 2019 and 2018 and the selected consolidated balance sheet data as of December 31, 2020 and 2019 are each derived from Hagerty’s audited consolidated financial statements appearing elsewhere in this proxy statement. The selected consolidated statement of income data for the six months ended June 30, 2021 and 2020, and the selected consolidated balance sheet data as of June 30, 2021 are derived from Hagerty’s unaudited condensed consolidated financial statements appearing elsewhere in this proxy statement. The Hagerty unaudited interim condensed consolidated financial statements were prepared on the same basis as its audited financial statements. The historical results are not necessarily indicative of the results to be expected in the future.
Consolidated Statement of Income Data:
Six Months Ended
June 30,
Year Ended
December 31,
(in thousands)
2021
2020
2020
2019
2018
Revenues
Commission and fee revenue
$ 137,816 $ 118,008 $ 236,443 $ 201,779 $ 174,293
Earned premium
133,671 103,408 220,502 157,394 97,020
Membership and other revenue
25,122 20,905 42,603 38,100 30,386
Total Revenues
296,609 242,321 499,548 397,274 301,699
Operating Expenses
Salaries and benefits
79,847 65,850 137,508 114,290 97,109
Ceding commission
64,067 49,613 105,974 75,567 46,553
Losses and loss adjustment expenses
55,346 42,484 91,025 64,400 40,859
Sales expense
48,712 42,880 86,207 84,189 70,015
General and administrative services
30,064 23,247 51,188 39,029 30,797
Depreciation and amortization
9,396 4,976 11,800 8,950 7,755
Total Operating Expenses
287,431 229,050 483,702 386,425 293,087
Operating Income
9,178 13,271 15,846 10,848 8,612
Other Income (Expense)
(624) (174) (986) 608 (17)
Income Before Income Tax Expense
8,554 13,096 14,860 11,456 8,596
Income tax expense
(2,902) (2,424) (4,820) (7,250) (122)
Net Income
$ 5,653 $ 10,673 $ 10,039 $ 4,206 $ 8,474
Consolidated Balance Sheet Data:
As of June 30,
2021
As of December 31,
(in thousands)
2020
2019
Total assets
$ 759,066 $ 610,710 $ 443,278
Total liabilities
638,954 493,389 332,817
Total equity
120,112 117,321 110,461
 
37

TABLE OF CONTENTS
 
SUMMARY HISTORICAL FINANCIAL INFORMATION OF ALDEL
The following table contains summary historical financial data as of and for the year ended December 31, 2020, and as of and for the six months ended June 30, 2021. The statements of operations data for the year ended December 31, 2020 and the six months ended June 30, 2021, and the balance sheet data as of December 31, 2020 and June 30, 2021, are derived from the audited and unaudited financial statements of the Company, respectively, which are included elsewhere in this proxy statement. The information below is only a summary and should be read in conjunction with the sections entitled “The Company’s Management’s Discussion and Analysis of Financial Condition and Results of Operations” and “Information About the Company” and in our financial statements, and the notes and schedules related thereto, which are included elsewhere in this proxy statement.
Year ended
December 31, 2020
Six months ended
June 30, 2021
(from inception to year-end)
Statement of Operations Data:
General and administrative expenses
$ 1,470 $ 279,750
Net loss
(1,470) (1,605,202)
Loss per share – basic and diluted
$ $ (0.35)
Statement of Cash Flow Data:
Net cash used in operating activities
$ $ (1,152,852)
Net cash used in investing activities
(116,156,117)
Net cash provided by financing activities
$ $ 118,756,357
As of
December 31, 2020
As of
June 30, 2021
Balance Sheet Data:
Total cash
$ $ 1,447,388
Total assets
55,000 118,591,691
Total liabilities
56,470 7,359,931
Total stockholders’ equity
$ (1,470) $ 5,000,010
 
38

TABLE OF CONTENTS
 
RISK FACTORS
The following risk factors will apply to our business and operations following the completion of the Business Combination. These risk factors are not exhaustive and investors are encouraged to perform their own investigation with respect to the business, prospects, financial condition and operating results of Hagerty and our business, prospects, financial condition and operating results following the completion of the Business Combination. You should carefully consider the following risk factors in addition to the other information included in this proxy statement, including matters addressed in the section titled “Cautionary Note Regarding Forward-Looking Statements,” before deciding how to vote your shares of Common Stock. The following discussion should be read in conjunction with our financial statements and the consolidated financial statements of Hagerty and notes to the consolidated financial statements included herein.
Risks Related to Hagerty
Unless the context otherwise requires, references in this subsection “— Risks Related to Hagerty” to “we”, “us” and “our” generally refer to Hagerty in the present tense or New Hagerty from and after the Business Combination.
General Risks Related to Hagerty’s Business
Our future growth and profitability may be affected by new entrants into the market or current competitors developing preferred offerings.
Our business is rapidly growing and evolving, and we have many competitors across our different offerings. The markets in which we operate are highly competitive and there can be no assurance that we will continue to compete effectively within our industry. We face competition from large, well-capitalized national and international companies, including other insurance providers, technology companies, automotive media companies, other well-financed companies seeking new opportunities, or new competitors with technological or other innovations. Many of our competitors have substantial resources, experienced management, strong marketing, underwriting and pricing capabilities. Because collector auto insurance constitutes a significant portion of our overall business, we may be more sensitive than other providers of insurance to, and more adversely affected by, trends that could decrease auto insurance rates or reduce demand for auto insurance over time, such as industry advances in mileage-based or usage-based insurance offerings, changes in vehicle technology, autonomous or semi-autonomous vehicles, or vehicle sharing arrangements. In addition, there are limited barriers to entry in the automotive lifestyle business. Accordingly, more established brands with significantly more resources may compete against us in the automotive lifestyle business in the future. If we are unable to compete effectively, we may not be able to grow our business and our financial condition and results of operations may be adversely affected.
As a result of a number of factors, including increasing competition, negative brand or reputational impact, changes in geographic mix or product mix, and the continued expansion of our business into a variety of new areas, we may not be able to continue to grow our revenues at a high rate or at all. We may also experience a decline in our revenue growth rate as our revenues increase to higher levels. Our revenue growth may be impacted if there is a deceleration or decline in demand for our products and services due to changing market dynamics or demographic shifts.
As of June 2021, a large percentage of Hagerty’s products and services are distributed through a few relationships and the loss of business provided by any one of them could have an adverse effect on us.
In addition to our direct sales efforts and independent channels, we market our insurance products through several insurance distribution partners. For the year ended December 31, 2020, approximately 16% of our commission revenues globally were attributable to four distribution partner marketing relationships. For two of these distribution partners, we have 10-year arrangements, one of which has an expiration date in 2029 and the other in 2030. The other relationships have shorter durations. Upon expiration or termination of these agreements, these partners may decide not to continue to distribute our products and services or may be unwilling to do so on terms acceptable to us. For a more complete discussion of our distribution partnerships, see “Information About Hagerty — Distribution, Marketing and Strategic Relationships.” If we are not successful in maintaining existing relationships and in continuing to expand our distribution
 
39

TABLE OF CONTENTS
 
relationships, or if we encounter regulatory, technological, or other impediments to delivering our services to members through these relationships, our ability to retain members and grow our business could be adversely impacted. In addition, the broker/agent relationships many of the partners we work with may change and their own internal strategy about how products are marketed may change, and, where we do not have exclusivity, we face competition by providers who seek to build or strengthen the relationships with our distribution partners, which could cause a loss of focus on or exposure to our products and services, adversely impacting new sales.
We may not be able to prevent, monitor, or detect fraudulent activity, including transactions with insurance policies or payments of claims.
If we fail to maintain adequate systems and processes to prevent, monitor, and detect fraud, including employee fraud, agent fraud, fraudulent policy acquisitions, vendor fraud, fraudulent claims activity, or if an inadvertent error occurs because of human or system error, our business could be materially adversely impacted. Fraud schemes have become increasingly more sophisticated and are ever evolving into different avenues of fraudulent activity. While we believe that any past incidents of fraudulent activity have been relatively isolated, we cannot be certain that our systems and processes will always be adequate as fraudulent activity and schemes continue to evolve. Our employees are required to take anti-fraud training, and we use a variety of tools to protect against fraud, but the trainings and these tools may not always be successful at preventing fraud.
Instances of fraud may result in increased costs, including possible settlement and litigation expenses, and could have a material adverse effect on our business and reputation. In addition, failure to monitor and detect fraud and otherwise comply with state Special Investigation Unit requirements can result in regulatory fines or penalties.
We have experienced significant member growth over the past several years, and our continued business and revenue growth are dependent on our ability to continuously attract and retain members and we cannot be sure we will be successful in these efforts, or that member retention levels will not materially decline.
If consumers do not perceive our service offerings to be of value, including if we introduce new or adjust existing features, adjust pricing, coverage or service offerings, or change the mix of offerings in a manner that is not favorably received by consumers, we may not be able to attract and retain members. We may, from time to time, adjust the pricing or the pricing model itself, which may not be well received by consumers, and which may result in existing members canceling their membership or obtaining services from a competitor and may result in fewer new members joining our programs. In addition, many of our members are referred to us through word-of-mouth from existing members. If our efforts to satisfy our existing members are not successful, we may not be able to attract members, and as a result, our ability to maintain and/or grow our business will be adversely affected.
A large percentage of our revenues are derived from sales through direct-to-consumer sales, including through digital channels. If we fail to meet consumer expectations for the customer experience through digital or other sales channels, our growth may be impacted through the loss of existing members or inability to attract new members.
Future acquisitions or investments contain inherent strategic, execution, and compliance risks that could disrupt our business and harm our financial condition.
We may pursue acquisitions or investments to grow our business in line with our strategic objectives. There is no guarantee that these acquisitions or investments (whether for internal technology or products used or for external uses) will achieve the desired return sought. Or, these acquisitions or investments could cause additional risk due to the liabilities or unforeseen expenses such acquisitions or investments may bring, such as higher than expected costs due to market competition for the acquisition/investment, regulatory approval requirements, delays in implementation, lost opportunities that could have been pursued with cash being used, litigation or regulatory enforcement post-acquisition or investment, contingent liabilities, implementation cost, misalignment of culture, loss of technology through theft or trade secrets exchanged, loss of key partners/vendors, currency exchange rate for foreign investment, timing within overall economic environment, carrying costs, and tax liabilities. Additionally, the risks from future acquisitions or
 
40

TABLE OF CONTENTS
 
investments could result in impairment charges against goodwill or increases in the liabilities on our consolidated balance sheet, as well as missed earnings results.
We may be subject to cyberattacks, and our reliance on third party providers for technology and service mean Hagerty’s operations could be disrupted due to the lack of resiliency in the operations of other companies, or a breach in their obligations to us, and could impair the operability of our website and other technology-based operations.
Cyberattacks, denial-of-service attacks, ransomware attacks, business email compromises, computer malware, viruses, social engineering (including phishing) and other malicious internet-based activity are prevalent in our industry and such attacks continue to increase. We also utilize third-party providers to host, transmit, or otherwise process electronic data in connection with our business activities. We or our vendors and business partners may experience attacks, unavailable systems, unauthorized access or disclosure due to employee or other theft or misuse, denial-of-service attacks, sophisticated attacks by nation-state and nation-state supported actors, and advanced persistent threat intrusions. Despite our efforts to ensure the security, privacy, integrity, confidentiality, availability, and authenticity of information technology networks and systems, processing and information, we may not be able to anticipate, or to implement, preventive and remedial measures effective against all data security and privacy threats. We cannot guarantee that the recovery systems, security protocols, network protection mechanisms, and other security measures that we have integrated into our systems, networks, and physical facilities, which are designed to protect against, detect and minimize security breaches, or those of our vendors and business partners, will be adequate to prevent or detect service interruption, system failure, data loss or theft, or other material adverse consequences. No security solution, strategy, or measures can address all possible security threats or block all methods of penetrating a network or otherwise perpetrating a security incident. The risk of unauthorized circumvention of our security measures, or those of our third-party providers, clients, and partners has been heightened by advances in computer and software capabilities and the increasing sophistication of hackers who employ complex techniques, including without limitation, the theft or misuse of personal and financial information, counterfeiting, “phishing” or social engineering incidents, ransomware, extortion, publicly announcing security breaches, account takeover attacks, denial or degradation of service attacks, malware, fraudulent payment, and identity theft.
For example, we experienced an unauthorized access into our online insurance quote system in 2021 whereby attackers used personal information already in their possession to obtain additional consumer data, including driver's license numbers, through Hagerty's Instant Quote feature. The issue has been remediated. While no Hagerty systems or databases were compromised or significantly disrupted as part of this incident and the costs associated with the incident and our remediation efforts were not material, Hagerty could be subject to litigation or regulatory enforcement actions, including fines or other penalties from state regulatory agencies related to this event or other cyber-attacks in the future
If cyberattacks on our systems occur in the future our reputation could suffer irreparable harm, causing our current and prospective customers to decline to use Hagerty’s services. Further, we may be required to expend significant financial and operational resources in response to a security breach, including repairing system damage, increasing security protection costs by deploying additional personnel and protection technologies, and defending against and resolving legal and regulatory claims, all of which could be costly and divert resources and the attention of our management and key personnel away from Hagerty’s business operations.
We are subject to key person risk because we rely on the expertise of our CEO, senior management team, and other key employees. If we are unable to attract, retain, or motivate key personnel or hire qualified personnel, our business may be severely impacted.
Our success depends on the ability to attract, retain, and motivate a highly skilled and diverse management team and workforce. Our CEO is well known and respected in our industry. He is an integral part of the Hagerty brand and his departure would likely create difficulty with respect to both the perception and execution of our business. Additionally, the loss of a member of our senior management team, specialized insurance experts or key personnel might significantly delay or prevent the achievement of our strategic business objectives and could harm our business. We rely on a small number of highly-specialized
 
41

TABLE OF CONTENTS
 
insurance experts, the loss of any one of whom could have a disproportionate impact on our business. Our compensation arrangements, such as our equity award programs, may not always be successful in attracting new employees and retaining and motivating our existing employees. Moreover, if and when the stock options or other equity awards are substantially vested, employees under such equity arrangements may be more likely to leave, particularly when the underlying shares have seen a value appreciation.
Our inability to ensure that the Company has the depth and breadth of management and personnel with the necessary skills and experience could impede our ability to deliver growth objectives and execute our operational strategy. As we continue to expand and grow, we will need to promote or hire additional staff, and it may be difficult to attract or retain such individuals in a timely manner and without incurring significant additional costs. Furthermore, several members of our management team were hired recently. If we are not able to integrate these new team members or if they do not perform adequately, our business may be harmed.
Hagerty’s unique company culture has contributed to our success, and if we are not able to maintain this culture in the future, our business could be harmed.
Hagerty’s culture supports a high level of employee engagement, which translates into a service model that produces a high level of customer satisfaction and retention. We face a number of challenges that may affect our ability to sustain our culture, including:

failure to identify, attract, reward, and retain people in leadership positions in our organization who share and further our culture, values, and mission;

the increasing size and geographic diversity of our workforce and our ability to promote a uniform and consistent culture across all our offices and employees;

competitive pressures to move in directions that may divert us from our mission, vision, and values;

the continued challenges of a rapidly evolving industry; and

the increasing need to develop expertise in new areas of business needed to execute our growth plans and strategy.
If we are not successful in instilling our culture in new employees, or maintaining our culture as we grow, our operations may be disrupted and our financial performance may suffer.
Some of our membership products are newer and have limited operating history, which makes it difficult to forecast operating results. We may not show profitability from these newer products as quickly as we anticipate or at all.
The success of new product and service introductions depends on a number of factors, including timely and successful development, market acceptance, our ability to manage the risks associated with new product production ramp-up issues, the availability of application software for new products, the effective management of purchase commitments and vendor relationships in line with anticipated product demand, the availability of products in appropriate quantities and at expected costs to meet anticipated demand, and the risk that new products and services may have quality or other defects or deficiencies. Accordingly, we cannot determine in advance the ultimate effect of new product and service introductions and transitions. If our new products or services are not well received, or if we are unable to introduce them in a cost-effective manner, we may not be able to realize a profit on those products and services and may, in fact, recognize losses for some time. This could have an adverse effect on our financial condition and results of operations.
We are subject to payment processing risks which could adversely affect our results of operations.
We currently rely on a limited number of payment processing services, including the processing of payments from credit cards and debit cards, and our business would be disrupted if any of the vendors become unwilling or unable to provide these services to us, and we are unable to find a suitable replacement on a timely basis. If we or our processing vendors fail to maintain adequate systems for the authorization and processing of credit card transactions, it could cause one or more of the major credit card companies to disallow our continued use of their payment products. In addition, if these systems fail to work properly
 
42

TABLE OF CONTENTS
 
and, as a result, we do not charge our customers’ credit cards on a timely basis, or at all, our business, results of operations, and financial condition could be harmed.
The payment methods that we offer also subject us to potential fraud and theft by criminals, who are becoming increasingly more sophisticated, seeking to obtain unauthorized access to, or exploit weaknesses that may exist in the payment systems. There are potential legal, contractual, and regulatory risks if we are not able to properly process payments. If we are unable to comply with applicable rules or requirements for the payment methods that we accept, or if payment-related data is compromised due to an incident or a breach, we may be liable for significant costs incurred by payment card issuing banks and other third parties, subject to fines and higher transaction fees, subject to potential litigation or enforcement action, or our ability to accept or facilitate certain types of payments may be impaired.
In addition, our customers could lose confidence in certain payment types, which may result in a shift to other payment types or potential changes to our payment systems that may result in higher costs. If we fail to adequately control fraudulent credit card transactions, we could face civil liability, diminished public perception of our security measures, and significantly higher credit card-related costs, each of which could harm our business, results of operations, and financial condition.
As we continue to grow operations in different geographic locations, additional risk related to foreign currencies may have an impact on revenue and our results of operations.
We have foreign operations, and in some instances, collect from customers in foreign currencies. The exchange rates we use to consolidate our foreign entities may be less favorable to us than the actual exchange rates used to convert the funds into U.S. dollars. These foreign exchange risks could have a material negative impact on our financial condition and results of operations.
As Hagerty continues to grow through the partnerships, acquisitions, and the execution of events, we may be inherently absorbing or taking on additional risk.
Our continued involvement in event acquisitions and partnerships may give rise to increased brand and reputational risk. If we are unable to successfully onboard associated employees, contractors, and volunteers and incorporate them into Hagerty’s culture, we may fail to maintain continuity of experience across our event offerings. We may experience an increase in financial liability and potential litigation due to a heightened exposure inherent in the operation of public events.
Hagerty’s technology platforms may not function properly, which might subject us to loss of business and revenue, breach of contractual obligations, and place us out of compliance with state and federal rules and regulations.
We utilize numerous technology platforms throughout our business for various functions, including to gather customer data in order to determine whether or not to write and how to price our insurance products, to process many of our claims, to issues and service our membership products, and to provide valuation services. Our technology platforms are expensive and complex. The continuous development, maintenance, and operation of our technology platforms may entail unforeseen difficulties, including material performance problems or undetected defects or errors. We may encounter technical obstacles, and it is possible that we may discover additional problems that prevent our technology from operating properly. If our platforms do not function reliably, we may incorrectly select our customers, bill our customers, price insurance products, incorrectly pay or deny insurance claims made by our customers. These errors could result in inadequate insurance premiums paid relative to claims made, resulting in increased financial losses. These errors could also cause customer dissatisfaction with us, which could cause customers to cancel or fail to renew their insurance policies with us or make it less likely that prospective customers obtain new insurance policies from us. Additionally, technology platform errors may lead to unintentional bias and discrimination in the underwriting process, which could subject us to legal or regulatory liability and harm our brand and reputation. Any of these eventualities could result in a material adverse effect on our business, results of operations, and financial condition.
 
43

TABLE OF CONTENTS
 
Hagerty’s future success depends on the ability to continue to develop and implement technology, and to maintain the confidentiality of this technology.
Our future success depends on our ability to continue to develop, implement, and maintain the confidentiality of our proprietary technology. Changes to existing laws, their interpretation or implementation, or the introduction of new laws could impede our use of this technology or require that we disclose our proprietary technology to our competitors, which could negatively impact our competitive position and result in a material adverse effect on our business, results of operations, and financial condition. In most jurisdictions, government regulatory authorities have the power to interpret and amend laws and regulations applicable to the processing of data. Such authorities may require Hagerty to incur substantial costs in order to comply with such laws and regulations. Regulatory statutes are broad in scope and subject to differing interpretation. In some areas of our business, we act on the basis of our own or the industry’s interpretations of applicable laws or regulations, which may conflict from jurisdiction to jurisdiction. In the event those interpretations eventually prove different from the interpretations of regulatory authorities, Hagerty may be penalized or precluded from carrying on our previous activities. Our errors and omissions insurance coverage covering certain security and privacy damages and claim expenses may not be sufficient to compensate for all liabilities we may incur.
We may not be able to prevent or address the misappropriation of Hagerty-owned data.
From time to time, third parties may misappropriate our data through website scraping, bots, or other means and aggregate this data on their websites with data from other companies. In addition, copycat websites or mobile apps may misappropriate data and attempt to imitate our brand or the functionality of our website or our mobile app. If we become aware of such websites or mobile apps, we intend to employ technological or legal measures in an attempt to halt their operations. However, we may be unable to detect all such websites or mobile apps in a timely manner and, even if we could, technological and legal measures may be insufficient to halt their operations.
In some cases, particularly in the case of websites operating outside of the U.S., our available remedies may not be adequate to protect us against the effect of the operation of such websites or mobile apps. Regardless of whether we can successfully enforce our rights against the operators of these websites or mobile apps, any measures that we may take could require us to expend significant financial or other resources, which could harm our business, results of operations, or financial condition. In addition, to the extent that such activity creates confusion among consumers or advertisers, our brand and business could be harmed.
The COVID-19 pandemic has caused, and may continue to cause, a disruption to our operations and may impact our business, key metrics, and results of operations in numerous ways that remain unpredictable.
The effects of the COVID-19 pandemic, and U.S. and international responses, are wide-ranging, costly, disruptive and rapidly changing. The COVID-19 pandemic has had, and may continue to have, material effects on our operations. Factors that give rise, or may give rise, to those effects include, or may include, the following, as well as others that we cannot predict:

Executive, legislative or regulatory mandates or judicial decisions which are unknown to us that may require increased levels of insurance or may extend the scope of insurance coverages.

Regulatory actions:

prohibiting or postponing the cancellation or non-renewal of insurance policies in accordance with policy terms or requiring renewals on current terms, conditions, previous rates, or at a rate decrease;

requiring the coverage of losses irrespective of policy terms or exclusions;

requiring or encouraging premium refunds;

granting extended grace periods for premium payments; and

extending due dates to pay past due premiums;
 
44

TABLE OF CONTENTS
 

Disruptions, delays, and increased costs and risks related to working remotely, having limited or no access to our facilities, workplace re-entry, employee safety concerns, and reductions or interruptions of critical or essential services. Those effects may include, among others:

exposure to additional and increased risks related to internal controls, data security, and information privacy, for both us and for our suppliers, vendors, and other third-parties with whom we do business;

illnesses suffered by key employees, or a significant percentage of our workforce or the workforce of our agents, brokers, suppliers, or outsourcing providers, which could prevent or delay the performance of critical business functions;

illnesses suffered by employees who have continued to work, or who have or will return to work, in our facilities may expose us to increased risk of employment related claims and litigation;

reduced demand for our insurance and non-insurance products, events, and services due to reduced global economic activity, which could adversely impact our revenues and cash flows;

adverse impacts on our revenues and cash flows due to premium refunds or delayed receipt of premium payments or delayed payment of reinsurance recoverables; and

expedited claims payments in response to regulatory requirements;

Increases in the number of potential fraudulent claims made under insurance policies due to the economic hardships experienced by companies and individuals as a result of the COVID-19 pandemic; and

Increases in local, state, and federal taxes to pay for costs incurred by governmental expenditures associated with the COVID-19 pandemic.
One or more of these factors resulting from the COVID-19 pandemic, and others we cannot anticipate, could have material adverse effects on Hagerty’s results of operations and financial condition; and the extent of these effects will depend, at least in part, on the scope, severity, duration, and subsequent recurrences of the pandemic. In addition, the Company may take steps to mitigate potential risks or liabilities that may arise from the COVID-19 pandemic and related developments, and some of those steps may have a material adverse effect on the Company’s results of operations and financial condition. Even if an unfavorable outcome does not materialize, these factors and actions the Company may take in response may have a material adverse impact on the Company’s reputation and result in substantial expense and disruption.
In addition, it is important to note and emphasize, the COVID-19 pandemic also may have the effect of triggering or intensifying many of the risks described elsewhere in the Risk Factors.
Changes in social attitudes may make ownership of collector vehicles less desirable, leading to a drop in demand for Hagerty products and services.
Changing consumer preferences and social attitude toward options such as electric vehicles and/or autonomous driving could have a material impact on our business. The traditional business model of car sales is starting to be complemented by a range of diverse, on-demand mobility solutions, especially in dense urban environments that proactively discourage private-car use. This shift, along with a significant rise in the annual growth of car sharing members and autonomous and electric vehicles in the markets we currently conduct business, could have a trickle-down effect to the collector car space and create a drop in demand for our products and services, which could have a material adverse effect on our business, financial condition, and results of operations.
An inadequate strategy to address and respond to issues of diversity, equity, and inclusion could leave the company insufficiently prepared for significant cultural shifts affecting our marketplace and may create a negative brand image, leading to the alienation of our associates and clients.
Companies must achieve diversity if they want to acquire and retain talent, build employee engagement, and improve business performance. Diversity, equity, and inclusion have been shown to drive higher innovation, enhanced job performance, less employee turnover, and greater profits. If there is not a focus on
 
45

TABLE OF CONTENTS
 
developing a cohesive strategy to create a sense of belonging with clear and impactful diversity, equity, and inclusion initiatives, the company could potentially put itself in a position where the brand and/or sales are impacted as a result of a failure to create a successful strategy.
Hagerty is exposed to interest rate risk through the course of our normal operations. Rising interest rates could have a negative impact on our cash flows as interest expense would likely increase on the variable rate debt.
Our consolidated balance sheets include assets and liabilities with estimated fair values that are subject to market risks. Our primary market risk has been interest rate risks, which impacts the fair value of our liabilities as well as interest rate risks associated with our investments in fixed income securities.
In recent years, interest rates have been at or near historic lows. A protracted low interest rate environment would continue to place pressure on our net investment income, particularly as it relates to fixed income securities and short-term investments, which, in turn, may adversely affect our operating results.
Future increases in interest rates could cause the values of our fixed income securities portfolios to decline, with the magnitude of the decline depending on the maturity of the securities included in our portfolio and the amount by which interest rates increase. Some fixed income securities have call or prepayment options, which create possible reinvestment risk in declining rate environments.
Risks for all types of securities are managed through the application of our investment policy, which establishes investment parameters that include, but are not limited to, maximum percentages of investment in certain types of securities and minimum levels of credit quality. We cannot be certain that our investment objectives will be achieved, and results may vary substantially over time. In addition, although we seek to employ investment strategies that are not correlated with our insurance and reinsurance exposures, losses in our investment portfolio may occur at the same time as underwriting losses and, therefore, exacerbate the adverse effect of the losses on us.
We may require additional capital in the future, which may not be available or may only be available on unfavorable terms. We may also encounter difficulty in obtaining funds to meet our commitments.
Hagerty is exposed to the credit risk, or liquidity risk, through our banking partners. If Hagerty were to experience operating losses and is not able to generate additional liquidity through a capital raise or other cash infusion, we may need to secure additional sources of funds, which may or may not be available. Additionally, a failure to generate additional liquidity could negatively impact Hagerty’s ability to operate its business.
To the extent that cash flows generated by our operations are insufficient to fund future operating requirements, or that our capital position is adversely impacted by a decline in the fair value of our investment portfolio, losses from catastrophe events or otherwise, we may need to raise additional funds. We also may be required to liquidate fixed maturity securities, which may result in realized investment losses. Any further sources of capital, including capacity needed for letters of credit, if available at all, may be on terms that are unfavorable to us. Our access to additional sources of capital will depend on a variety of factors, such as market conditions, the general availability of credit, the availability of credit to the industries in which we operate, our results of operations, financial condition, credit ratings and credit capacity, as well as pending litigation or regulatory investigations. Our ability to borrow under our revolving credit facility and letter of credit facilities is contingent on our compliance with the covenants and other requirements under those facilities. Similarly, our access to capital may be impaired if regulatory authorities or rating agencies take negative actions against us. Additionally, to reduce the risk of a bank failure, Hagerty engages only with high-quality counterparties with high credit ratings. Our inability to obtain adequate capital when needed could have a negative impact on our ability to invest in, or take advantage of opportunities to expand our businesses, such as possible acquisitions or the creation of new ventures, and inhibit our ability to refinance our existing indebtedness on terms acceptable to us. Any of these effects could have a material adverse effect on our results of operations and financial condition.
Hagerty’s day-to-day operations create transactions, events, and conditions that may give rise to the need for accounting estimates to be recognized or disclosed in the financial statements. There is a risk that these estimates could create a material misstatement for accounting purposes.
The preparation of the financial statements requires our management to make a number of estimates and assumptions relating to the reported amounts of assets and liabilities, the disclosure of contingent
 
46

TABLE OF CONTENTS
 
assets and liabilities at the date of the consolidated financial statements and the reported amounts of revenue and expenses during the period. We evaluate our significant estimates on an ongoing basis, including, but not limited to, estimates related to provision for unpaid for losses and loss adjustment expenses, and allowance for premium write-offs. We base our estimates on historical experience and on various other assumptions that we believe to be reasonable under the circumstances, the results of which form the basis for making judgments about the carrying value of assets and liabilities that are not readily apparent from other sources. Actual results could differ from those estimates.
The most significant estimate that is susceptible to notable change in the near-term relates to the provisions for unpaid losses and loss adjustment expenses (including those losses incurred but not reported (IBNR)). Although some variability is inherent in this estimate, the Company believes that the current estimate is reasonable in all material respects. This estimate is reviewed regularly and adjusted as necessary. Adjustments related to changes in estimates are reflected in the Company’s results of operations in the period in which those estimates changed.
Risks Related to Hagerty’s Insurance Services
The insurance products that Hagerty develops and sells for our underwriting carriers are subject to regulatory approval, and Hagerty may incur significant expenses in connection with the development and filing of new products before revenue is generated from new products.
The insurance products that Hagerty develops and sells require regulatory approvals in each respective jurisdiction. This product development and filing cycle can take time. The product development and filing process can be challenging and expensive. The process can also be delayed, given the unknown timelines in which insurance departments might take to review and approve filings. Questions and objections from insurance departments can also delay the product launch date. Moreover, there could be an inability to obtain regulatory approval on a product filing.
The nature of the product development and filing cycles may cause us to experience delays between the time we incur expenses associated with research and development and the time we generate revenues, if any, from the new products. If we spend a significant amount of resources on research and development, and our efforts do not lead to the successful introduction or improvement of products that are competitive in the marketplace, this could materially and adversely affect our business and results of operations.
Additionally, there could be a change in the anticipated customer demand for a product we are developing before the product is released. Customer demand could decrease after the development cycle has begun. A decrease in customer demand for a new or improved product could cause us to fall short of our sales targets, and we might not be able to avoid the substantial costs associated with the product’s development or improvement. If we are unable to complete product development and filing cycles successfully, in a timely manner, that meets customer demand for new or improved products, and generate revenues from these future products, the growth of our business could be harmed.
As a managing general agency/underwriter, we operate in a highly regulated environment for our insurance product distribution and face risks associated with compliance requirements, some of which cause us to make judgment calls that could have an adverse effect on us.
The insurance industry in which we operate is subject to extensive regulation. We are subject to regulation and supervision both federally and in each applicable local state or provincial jurisdiction. In general, these regulations are designed to protect members, policyholders, and insureds and to protect the integrity of the financial markets, rather than to protect stockholders or creditors. Our ability to conduct business in these jurisdictions depends on our compliance with the rules and regulations promulgated by federal and state or provincial regulatory bodies and other regulatory authorities. Maintaining compliance with rules and regulations is often complex and challenging, and it sometimes requires us to make a judgment call regarding the level of risk associated with a requirement, which could have an adverse effect on us.
There can be no assurance that we will be able to adapt effectively and timely to any changes in law. A failure to comply with regulatory requirements, or changes in regulatory requirements or interpretations, can result in actions by regulators, potentially leading to penalties and enforcement actions, and in extreme
 
47

TABLE OF CONTENTS
 
cases, revocation of an authority to do business in one or more jurisdictions. This could result in adverse publicity and potential damage to our brand and reputation in the marketplace. In addition, we could face lawsuits by members, insureds, and other parties for alleged violations of these laws and regulations.
State insurance laws grant supervisory agencies, including state insurance departments, broad administrative authority. Canadian insurance regulators and, in the United States, state insurance regulators and the National Association of Insurance Commissioners continually review existing laws and regulations, some of which affect our business. These supervisory agencies regulate many aspects of the insurance business, including the licensing of insurance brokers and agents and other insurance intermediaries; the handling of third-party funds held in a fiduciary capacity; and trade practices, such as marketing, advertising, and compensation arrangements entered into by insurance brokers and agents. Individuals who engage in the solicitation, negotiation, or sale of insurance, or provide certain other insurance services, generally are required to be licensed individually. Insurance laws and regulations govern whether licensees may share commissions with unlicensed entities and individuals. We believe that generally any payments we make to third parties are in compliance with applicable laws. However, should any regulatory agency take a contrary position and prevail, we will be required to change the manner in which we pay fees to individuals and entities for placing insurance policies through us.
Regulatory review or the issuance of interpretations of existing laws and regulations may result in the enactment of new laws and regulations that could adversely affect our operations or our ability to conduct business profitably. It is difficult to predict whether, and to what degree, changes resulting from new laws and regulations will affect the industry or our business.
There are limited key underwriting carrier partners in our insurance markets, and we may not be able to find suitable replacements for our existing carriers.
Hagerty works with a limited number of carriers in the United States, Canada, and the United Kingdom for its personal lines insurance products, and there is a risk that if one or more of the carriers becomes impaired or terminates its relationship with Hagerty that Hagerty’s profitability may be adversely affected. If a carrier partner relationship terminates or there is loss of strategic support or alignment, we may be unable to transition to a new relationship without disruption, increased cost, lost profits, or lost market share, or a combination of the foregoing.
We derive a large portion of our revenue from commissions and quota share reinsurance on the sale of personal lines insurance products issued under an exclusive relationship with a single carrier in the United States (Essentia Insurance Company, a Markel subsidiary), Canada (Elite Insurance Company (“Elite Insurance Company”), a subsidiary of Aviva Canada, Inc. (“Aviva”)) and the United Kingdom (primarily Markel International Insurance Company Limited, a Markel subsidiary). If that carrier were to experience liquidity problems or other financial (such as rating agency downgrades) or operational difficulties, we could encounter business disruptions as a result, and our results of operations may suffer.
Our contract with Markel, and our contract with State Farm regarding the upcoming State Farm Classic Plus program, contain provisions that allow those partners to terminate our agreements with them at any time upon the occurrence of a change of control. One of the events triggering a change of control would occur if the Hagerty family ceases to own shares representing a majority of our voting power. Accordingly, if we experience a change of control, including as a result of the Hagerty family’s sale of a sufficient number of shares to result in their controlling less than a majority of their voting power, we could lose our agreements with one or both of these partners, which could have a material adverse effect on our business, operations and financial results.
A regulatory environment that requires rate increases to be approved and that can dictate underwriting and pricing and mandate participation in loss sharing arrangements may adversely affect our results of operations and financial condition.
Political events and positions can affect the insurance market on occasion, including efforts to reduce rates to a level that may prevent us from being profitable or may not allow us to reach our goals. If the loss ratio for the insurance programs that we administer is favorable to that of the industry, regulatory authorities could impose rate restrictions, require payment of premium refunds to policyholders, or could challenge or
 
48

TABLE OF CONTENTS
 
delay efforts to raise rates. Rate changes may be required for us to achieve our goals related to profitability and return on equity. If we were to experience challenges in obtaining approvals for rate changes, that could limit us in reaching our targeted goals and profitability. For example, with the COVID-19 pandemic, state regulators and legislators were under increased political pressure to provide financial relief to policyholders, and several states did require premium relief/refunds, depending on loss severity and frequency, while other states highly recommended that premium relief/refunds be given to policyholders. Additionally, certain states have enacted laws that require an insurer conducting business in that state to participate in assigned risk plans, reinsurance facilities, and joint underwriting associations. Certain states also require insurers to offer coverage to all consumers, often restricting an insurer’s ability to charge the price it might otherwise charge. Laws and regulations of many states also limit an insurer’s ability to withdraw from one or more lines of insurance there, except pursuant to a plan that is approved by the state insurance department. This limitation can prolong and provide additional challenges for strategic business plans related to conversions, transfers, and book rolls. Although Hagerty is not an insurer, our business, results of operations, or financial condition could be adversely affected by any of these factors, as they are applicable to the insurance programs we administer.
We rely on external data and our digital platform to collect and evaluate information that we utilize in producing, pricing, and underwriting insurance policies (in accordance with the rates, rules, and forms filed with regulators, where required), managing claims and customer support, and improving business processes. Any future legal or regulatory requirements that might restrict our ability to collect or utilize this data could potentially have an adverse effect on our business, financial condition, and prospects.
We use our digital platform to collect data points that we evaluate in pricing and underwriting insurance policies, managing claims and customer support, and improving business processes. Our business model is dependent on our ability to collect vehicle usage and driving data. If federal, state, or international regulators were to determine that the type of data we collect, the process we use for collecting this data, or how we use it, unfairly discriminates against a protected class of people, regulators could move to prohibit or restrict our collection or use of this data. In addition, if legislation were to restrict our ability to collect driving data, it could impair our capacity to underwrite insurance cost effectively, negatively impacting our revenue and earnings.
The underwriting companies that Hagerty works with, and Hagerty’s insurance agencies, are periodically subject to examinations and audits by insurance regulators, which could result in adverse findings, enforcement actions, require payments of fines or penalties, and necessitate remedial actions.
In the United States, Hagerty’s insurance agencies operate as a managing general agent (MGA) for Essentia Insurance Company, a Missouri-domiciled insurance company that is a wholly owned subsidiary of Markel (“Essentia”). Essentia is currently domiciled in Missouri and has a classic auto insurance program and a classic boat insurance program in all 50 United States, plus the District of Columbia. Hagerty operates as the MGA for the programs in all 51 jurisdictions. Hagerty also operates a similar auto insurance program in Canada (underwritten by Elite Insurance Company) and in the United Kingdom (primarily underwritten by Markel International Insurance Company, a wholly owned subsidiary of Markel).
Additionally, under its license as a Class 3A insurer, Hagerty Re must meet and maintain the relevant solvency margin, and liquidity and other ratios applicable under Bermuda law. Hagerty Re’s license limits it to accepting only business produced through Hagerty’s managing general agency/underwriters that is underwritten by carriers rated A- or better by A.M. Best or similar rating agency.
Insurance regulators periodically subject the underwriting companies that we work with to audits and examinations to assess compliance with applicable laws and regulations, financial condition, and the conduct of regulated activities. These examinations and audits may be conducted during a jurisdiction’s normal review cycle, or because of a targeted investigation. Hagerty’s insurance agencies can also be subject to regulatory audits and exams. A formal examination or audit provides insurance regulators with a significant opportunity to review and scrutinize the underwriting companies we work with, the insurance programs we administer, and our operations.
As a result of an examination or an audit, an insurance regulator could determine that an underwriting company’s financial condition or capital resources are less than satisfactory. An insurance regulator could
 
49

TABLE OF CONTENTS
 
also determine that there are other aspects of either the underwriting company or our operations that are less than satisfactory, or that either us or the underwriting company that we work with are in violation of applicable laws or regulations. These types of examination or audit findings could lead an insurance regulator to require either us or the underwriting company that we work with to take one or more remedial actions or otherwise subject us to regulatory scrutiny, impose fines and penalties, or take further actions.
We cannot predict with precision the likelihood, nature, or extent, including the associated costs, of any necessary remedial actions, or any financial impact that could result from an examination or audit. Any regulatory or enforcement action or any regulatory order imposing remedial, injunctive, or other corrective action against us or any of the underwriting companies we work with resulting from these examinations or audits could have a material adverse effect on our business, reputation, financial condition, or results of operations.
The insurance business, including the market for property and casualty insurance, is historically cyclical in nature, and there may be periods with excess underwriting capacity and unfavorable premium rates, which could adversely affect our business.
Hagerty operates primarily in North America and the seasonality of driving in that region has caused a large portion of our revenue to be generated in the Spring and Summer months of each year. This in turn impacts operational cash flows and could produce volatility in our earnings. Fluctuations in our operating results could be due to a number of other factors, many of which may be outside of our control, including competition, frequency, and severity of catastrophic events, levels of capacity, adverse litigation trends, regulatory constraints, general economic conditions, and other factors. The supply of insurance is related to prevailing prices, the level of insured losses, and the level of capital available to the industry that, in turn, may fluctuate in response to changes in rates of return on investments being earned in the insurance industry. As a result, the auto insurance business historically has been a cyclical industry characterized by periods of intense price competition due to excessive underwriting capacity, as well as periods when shortages of capacity increased premium levels. We operate in a specialty sector of the auto insurance market and need to be mindful of these and other factors which could impact our operations. Demand for insurance depends on numerous factors, including the frequency and severity of catastrophic events, levels of capacity, the introduction of new capital providers, and general economic conditions. All of these factors fluctuate and may contribute to price declines generally in the insurance industry. We cannot predict with certainty whether market conditions affecting the auto insurance market and the insurance market in general will improve, remain constant, or deteriorate. Negative market conditions may impair our ability to underwrite insurance at rates we consider appropriate and commensurate relative to the risk assumed. Additionally, negative market conditions could result in a decline in policies sold, an increase in the frequency or severity of claims and premium defaults, and an uptick in the frequency of fraud, including the falsification of claims. If we cannot underwrite insurance at appropriate rates, our ability to transact business will be materially and adversely affected. Any of these factors could lead to an adverse effect on our business, results of operations, and financial condition.
The reinsurance that Hagerty Re purchases to protect against catastrophic and large losses may be unavailable at current coverage terms, limits, or pricing.
The business that Hagerty Re reinsures is exposed to catastrophic events that are inherently unpredictable and may cause capacity in the reinsurance market to become scarcer leading to rate increases or changes in coverage terms, or a combination of both. This in turn may cause Hagerty Re to retain more risk, be unable to accept risk and grow, or require greater capital investment that may not be available, in each case resulting in lower profits, as well as a material effect on the Company’s results of operations and financial condition.
Unexpected increases in the frequency or severity of claims may adversely affect our operations and financial condition.
We may experience increases in claim frequency on occasion. Short-term trends with an increase in claim frequency may not continue over the longer term. Any changes in claim frequency might be derived from changes in miles driven, driving behaviors, macroeconomics, weather-related events, or other factors. A significant increase in claim frequency could have an adverse effect on our results of operations and financial conditions.
 
50

TABLE OF CONTENTS
 
We could also experience increases in the severity of claims. Changes in bodily injury claim severity can be impacted by inflation in medical costs, litigation trends and precedents, regulation, and the overall safety of automobile travel. Changes in auto property damage claim severity can be driven by inflation in the cost to repair vehicles, including parts and labor rates, the mix of vehicles that are declared total losses, the availability of parts to repair vehicles, and an increase in value for collector vehicles. Unanticipated increases in claim severity can arise from events that are inherently difficult to predict. Although we pursue various loss management initiatives to mitigate future increases in claim severity, there can be no assurances that these initiatives will successfully identify or reduce the effect of future increases in claim severity. A significant increase in claim severity could have an adverse effect on our results of operations and financial conditions.
Severe weather events, catastrophes, and unnatural events are unpredictable, and Hagerty may experience losses or disruptions from these events.
Our business may be exposed to catastrophic events such as tornadoes, tsunamis, tropical storms (including hurricanes), earthquakes, windstorms, hailstorms, severe thunderstorms, wildfires and other fires, as well as non-natural events such as explosions, riots, pandemics, terrorism, or war, which could cause operating results to vary significantly from one period to the next. We may incur catastrophe losses in our business in excess of: (1) those experienced in prior years, (2) the average expected level used in pricing, (3) current reinsurance coverage limits, or (4) loss estimates from external tornado, hail, hurricane, and earthquake models at various levels of probability. In addition, we are subject to customer insurance claims arising from weather events such as winter storms, rain, hail, and high winds.
The incidence and severity of weather conditions are largely unpredictable. There is generally an increase in the frequency and severity of customer insurance claims when severe weather conditions occur. The incidence and severity of severe weather conditions and catastrophes are inherently unpredictable and the occurrence of one catastrophe does not render the possibility of another catastrophe greater or lower. The extent of losses from a catastrophe is a function of both the total amount of insured exposure in the area affected by the event and the severity of the event. In particular, severe weather and other catastrophes could significantly increase our costs due to a surge in claims following such events and/or legal and regulatory changes in response to catastrophes that may impair our ability to limit our liability under our policies. Severe weather conditions and catastrophes can cause greater losses, which can cause our liquidity and financial condition to deteriorate. In addition, reinsurance placed in the market also carries some counterparty credit risk.
Climate change may affect the occurrence of certain natural events, such as an increase in the frequency or severity of wind and thunderstorm events, eruptions of volcanoes, and tornado or hailstorm events due to increased convection in the atmosphere; more frequent wildfires and subsequent landslides in certain geographies; higher incidence of deluge flooding and the potential for an increase in severity of the hurricane events due to higher sea surface temperatures. Additionally, climate change may cause an impact on the demand, price and availability of insurance, as well as the value of our investment portfolio. Due to significant variability associated with future changing climate conditions, we are unable to predict the impact climate change will have on our business.
If the risks within the insurance programs that we offer on behalf of our underwriting carriers are not priced and underwritten accurately with competitive, yet profitable, rates, our business and financial condition could be adversely affected.
As an MGA for Essentia, we operate under delegated underwriting authority in the United States. In general, the premiums for the insurance policies in our program are established at the time a policy is issued and, therefore, before all of the underlying costs are known. The accuracy of the pricing is subject to our ability to adequately assess risks, estimate losses, and comply with insurance laws and regulations. Like others in the industry, we rely on estimates and assumptions in setting the premium rates. We also utilize the data that we gather through our interactions with customers.
Establishing adequate premium rates is necessary, together with investment income, if any, to generate sufficient revenue to offset losses, loss adjustment expenses, and other costs. If we do not accurately assess the risks that are underwritten, adequate premiums may not be charged to cover losses and expenses, which would adversely affect our results of operations and our profitability. Moreover, if we determine that the
 
51

TABLE OF CONTENTS
 
prices are too low, insurance regulations may prevent non-renewing insurance contracts, non-renewing customers, or raising prices. Alternatively, we could set the premiums too high, which could reduce our competitiveness and lead to lower revenues, which could have a material adverse effect on our business, results of operations, and financial condition.
Pricing involves the acquisition and analysis of historical loss data and the projection of future trends, loss costs, expenses, and inflation trends, among other factors, for each of the products in multiple risk levels and many different markets. In order to accurately price the policies, we must, among other factors:

collect and properly and accurately analyze a substantial volume of data from our customers;

develop, test, and apply appropriate actuarial projections and rating formulas;

review and evaluate competitive product offerings and pricing dynamics;

closely monitor and timely recognize changes in trends;

project both frequency and severity of our customers’ losses with reasonable accuracy; and

in many jurisdictions, obtain regulatory approval for the resulting rates.
There are no assurances that we will have success in implementing a pricing methodology accurately in accordance with our assumptions. Our ability to accurately price policies is subject to a number of risks and uncertainties, including, but not limited to:

insufficient, inaccurate, or unreliable data;

incorrect or incomplete analysis of available data;

uncertainties generally inherent in estimates and assumptions;

our inability to implement appropriate actuarial projections and rating formulas or other pricing methodologies;

incorrect or incomplete analysis of the competitive environment;

regulatory constraints on rate increases or coverage limitations;

our inability to accurately estimate investment yields and the duration of our liability for loss and loss adjustment expenses; and

unanticipated litigation, court decisions, and legislative or regulatory actions or changes to the existing regulatory landscape.
To address the potential errors or desired or required changes in our current business model, we may be compelled to increase the amount allocated to cover policy claims, or to address other economic factors resulting in an increase in future premium rates, or to additionally or alternatively adopt different underwriting standards. Any of these changes may result in a decline in new business and renewals and, as a result, have a material adverse effect on our business, results of operations, and financial condition.
Reinsurance subjects Hagerty Re to counterparty risk where reinsurers fail to pay or timely pay claims due to insolvency or otherwise fail to honor their obligations.
Hagerty Re is legally obligated to pay claims under the reinsurance agreements where Hagerty Re has assumed risk, regardless of whether Hagerty Re is able to secure its own reinsurance for ceded reinsurance coverages. Reinsurer insolvency or payment default by one of Hagerty Re’s ceded reinsurance when reimbursement is sought by Hagerty Re for such coverage may have a material effect on Hagerty Re’s profitability and financial situation and its ability to accept risk or may cause it to require capital investments that may not be available.
Unexpected changes in the interpretation of coverage or provisions, including loss limitations and exclusions, in the insurance policies we sell and service could have a material adverse effect on our financial condition and operation.
There can be no assurances that specifically negotiated loss limitations or exclusions in the policies we sell and service will be enforceable in the manner we intend. As industry practices and legal, judicial, social,
 
52

TABLE OF CONTENTS
 
and other conditions change, unexpected and unintended issues related to claims and coverage may emerge. While these limitations and exclusions help us assess and mitigate our loss exposure, it is possible that a court or regulatory authority could nullify or void a limitation or exclusion, or legislation could be enacted modifying or barring the use of such limitations or exclusions. These types of governmental actions could result in higher than anticipated losses and loss adjustment expenses, which could have a material adverse effect on our financial condition or results of operations. In addition, court decisions have eliminated long standing coverage limitations by a narrow reading of policy exclusions. Under the insurance laws, the insurer typically has the burden of proving an exclusion applies and any ambiguities in the terms of a loss limitation or exclusion provision are typically construed against the insurer. These types of cases and the issues they raise may adversely affect our business by either broadening coverage beyond our underwriting intent or by increasing the frequency or severity of claims. In some instances, these changes may not become apparent until sometime after we have issued insurance contracts that are affected by the changes. As a result, the full extent of liability under the insurance contract may not be known for many years after a contract is issued. There could also be additional exposure with claims for other household vehicles that are not covered under an insurance policy issued by us, such as for someone’s regular use vehicle. It is possible that our underwriting companies that we write business through may share in liability with these types of claims on certain instances.
Hagerty Re’s actual ultimate loss liability could potentially be greater than our loss and loss adjustment expense reserves, which could have a material adverse effect on financial condition and operational results.
Significant periods of time often elapse between the occurrence of an insured or reinsured loss, the reporting of the loss to us, and our payment of that loss. To recognize liabilities for unpaid losses, we establish reserves as balance sheet liabilities representing estimates of amounts needed to pay reported and unreported losses and the related loss adjustment expenses. The process of estimating loss reserves is a difficult and complex exercise involving many variables and subjective judgments. This process may also become more difficult if we experience a period of rising inflation. As part of the reserving process, we review historical data and consider the impact of such factors as:

trends in claim frequency and severity;

changes in operations;

emerging economic and social trends;

trends in insurance rates;

inflation or deflation; and

changes in the regulatory and litigation environments.
This process assumes that past experience, adjusted for the effects of current developments and anticipated trends, is an appropriate basis for predicting future events. There is no precise method, however, for evaluating the impact of any specific factor on the adequacy of reserves, and actual results will differ from original estimates. As part of the reserving process, we regularly review our loss reserves and make adjustments as necessary. Future increases in loss reserves for our underwriting operations will, and for our program’s services operations may, result in additional charges to earnings, which may be material. Our estimates could prove to be inadequate, and this underestimation could have a material adverse effect on our financial condition.
Hagerty Re is required to maintain its reserves and financial condition in accordance with Bermuda law and the Bermuda Solvency Capital Requirement (BCSR) administered by the Bermuda Monetary Authority. Inadequate reserves may adversely affect earnings, as well as the ability to continue to accept risk, and Hagerty Re’s ability to maintain its financial condition and meet solvency requirements with possible loss of its license in Bermuda. Under Bermuda law, Hagerty Re is prohibited from declaring or making payment of a dividend if it fails to meet its minimum solvency margin or minimum liquidity ratio. Prior approval from the Bermuda Monetary Authority is also required if Hagerty Re’s proposed dividend payments would exceed 25% of its prior year-end total statutory capital and surplus.
 
53

TABLE OF CONTENTS
 
Our expansion into different insurance products and jurisdictions may subject us to additional costs and expenses, and our plans might not be as profitable as projected.
We believe that growth of our business and revenue depends in part upon our ability to: retain our existing customers and add new customers in our current, as well as new geographic markets; add new insurance programs and products; and by adding and continuing to grow non-insurance automotive enthusiast-related products.
Expanding into new geographic markets and introducing new products takes time, requires us to navigate and comply with extensive regulations, and may happen more slowly than we expect or than it has occurred in the past. If we were to lose customers, our value might diminish. A future loss of customers could lead to higher loss ratios, loss ratios that cease to decline, or declining revenue — any of which would adversely impact our profitability. If we are unable to remain competitive on customer experience, pricing, or insurance coverage options, our ability to grow and retain our business may also be adversely affected. In addition, we might not accurately predict risk segmentation of new and renewal customers or potential customers, which could also reduce our profitability.
While a key part of our business strategy is to retain and add customers in our existing markets, we may also seek to expand our operations into new markets and new products. In doing so, we may incur losses or otherwise not be successful in entering new markets or introducing new products. Our expansion into new markets and new products may place us in unfamiliar competitive environments and involve various risks, including competition, government regulation, the need to invest significant resources, and the possibility that returns on such investments might not be achieved for several years, or at all.
We may not be successful in these efforts, and even if we are successful, these efforts may increase or create the following risks, among others:

we might not be able to effectively use search engines, social media platforms, content-based online advertising, and other online sources for generating traffic to our website;

potential customers in a particular marketplace could generally not meet the underwriting guidelines;

demand for new products or expansion into new markets may not meet our expectations;

new products and expansion into new markets may increase or change our risk exposures, and the data and models we use to manage those exposures may not be as effective as those we use in existing markets or with existing products;

models underlying automated underwriting and pricing decisions may not be effective;

efforts to develop new products or expand into new markets or to change commission terms may create or increase distribution channel conflicts;

in connection with the conversion of existing policyholders to a new product, some policyholders’ pricing may increase while the pricing for other policyholders may decrease, the net impact of which could negatively impact retention and profit margins;

changes to our business processes or workflow, including the use of new technologies, may give rise to execution risk;

our products might not be competitive in terms of customer experience, pricing, or insurance coverage options;

there could be barriers in obtaining the governmental and regulatory approvals, licenses, or other authorizations necessary for expansion into new markets or in relation to our products (such as line, form, underwriting, and rating approvals), or such approvals contain conditions that impose restrictions on our operations (such as limitations on growth);

our digital platform might experience disruptions;

we could suffer reputational harm to our brand resulting from negative publicity, whether accurate or inaccurate;
 
54

TABLE OF CONTENTS
 

we may not be able to offer new and competitive products, to provide effective updates to our existing products, or to keep pace with technological improvements in our industry;

we might not be able to maintain traditional retail agent relationships;

customers may have difficulty installing, updating, or otherwise accessing our website on mobile devices or web browsers as a result of actions by us or third parties;

customers may be unable or unwilling to adopt or embrace new technology;

technical or other problems may frustrate the customer experience, particularly if those problems prevent us from generating quotes or paying claims in a fast and reliable manner;

we might not be able to address customer concerns regarding the content, data privacy, and security generally or for our digital platform specifically;

we may not identify or enter joint ventures with strategic partners or we may enter into joint ventures that do not produce the desired results; or

there may be challenges in, and the cost of, complying with various laws and regulatory standards, including with respect to the insurance business and insurance distribution, capital and outsourcing requirements, data privacy, tax, and regulatory restrictions.
These efforts may require additional investments by us, some of which could be significant. These costs may also include hiring additional personnel, as well as engaging third-party service providers, and other research and development costs. If we grow our geographic footprint or product offering at a slower rate than expected, or if we are unable to overcome the challenges listed above, our business, results of operations, and financial condition could be materially and adversely affected.
Our reliance on technology and intellectual property from third parties for pricing and underwriting insurance policies, handling claims, and maximizing automation, could cause an adverse impact on our business and operations if these third parties become unavailable or provide us with inaccurate information.
We use data, technology, and intellectual property licensed from unaffiliated third parties in certain components of our products, including insurance industry proprietary information that we license, and we may license additional third-party technology and intellectual property in the future. Any errors or defects in this third-party technology and intellectual property could result in errors that could harm our brand and business. In addition, licensed technology and intellectual property may not continue to be available on commercially reasonable terms, or at all. Also, should a company refuse to license its proprietary information to us on the same terms that it offers to our competitors, we could be placed at a significant competitive disadvantage. If any technology and intellectual property we license from others becomes unavailable, we may not be able to find replacement technologies at a reasonable cost or at all, which could materially harm our business and results of operations.
Denial of claims or the failure to accurately and timely pay claims on behalf of our underwriting carriers could have an adverse impact on our own business, financial condition, and prospects.
We must accurately and timely evaluate and pay claims that are made under the insurance policies in our program. There are many factors that could affect our ability to pay claims accurately and timely, including the efficiency of our claims processing, the training and experience of our claim’s adjusters, and our ability to develop or select and implement appropriate procedures and systems to support our claims functions.
The risks included in our insurance programs are typically those of an antique, classic, or collectable nature. Adjusting claims on these types of risks often require specialized knowledge of collector vehicles, so our claims staff is trained to have collectable expertise to provide an efficient, yet comprehensive, claims experience. The manner in how we handle claims is a differentiating factor for our business, and an inability to be able to continue to offer a timely and comprehensive claims experience could undermine our brand and position in the insurance marketplace. Additionally, any failure to pay claims accurately or timely could also lead to regulatory and administrative actions or material litigation, loss or reduction in reinsurance
 
55

TABLE OF CONTENTS
 
recoverable, or result in damage to our reputation, any one of which could materially and adversely affect our business, financial condition, results of operations, and prospects.
If our claims adjusters are unable to effectively process our volume of claims in the manner that our customers expect, our ability to grow our business while maintaining high levels of customer satisfaction could be compromised, which in turn, could adversely affect our reputation and operating margins.
A downward change in Essentia’s financial strength rating may adversely affect Hagerty’s ability to conduct business as currently conducted.
Essentia’s ability to underwrite business is dependent upon its financial strength rating as evaluated by independent rating agencies. In the event that Essentia is downgraded, we believe our ability to write business through Essentia would be adversely affected. In the normal course of business, we evaluate Essentia’s capital needs to support the amount of business it writes in order to maintain its financial strength ratings.
Hagerty Re is subject to regulatory requirements to maintain its license in Bermuda as a Class 3A insurer.
Hagerty Re is registered as a Class 3A insurer under the Bermuda Insurance Act. The Bermuda Monetary Authority issues regulations and other guidance prescribing requirements that Bermuda-licensed insurance companies, like Hagerty Re, are required to comply with. For example, the BMA requires Bermuda-licensed insurers to maintain a minimum level of capital and surplus, comply with restrictions on dividends, make financial statement filings, prepare a financial condition report, maintain a head office in Bermuda from which insurance business will be directed and managed and allow for the performance of certain periodic examinations of financial condition. These statutes and regulations may restrict Hagerty Re's ability to write reinsurance policies, distribute funds and pursue its investment strategy.
Under its license as a Class 3A insurer, Hagerty Re must meet and maintain the relevant solvency margin, and liquidity and other ratios applicable under Bermuda law. For example, Hagerty Re’s license limits it to reinsuring business that is underwritten by carriers rated A- or better by A.M. Best or similar rating agencies. Additional operational requirements for Hagerty Re in Bermuda include:

Complying with economic substance requirements which include maintaining a principal office in Bermuda and having a certain number of Bermuda-domiciled managers involved in overseeing operations;

obtaining prior approval for changes in ownership / transfers of shares;

having restrictions on dividends;

complying with Bermuda know-your-customer and anti-bribery type laws;

having audited financial statements and being subject to Bermuda Monetary Authority examination; and

carrying out operations in accordance with its filed and approved business plan.
Failure to operate properly in accordance with Bermuda law could cause Hagerty Re’s license to be restricted or revoked along with possible supervisory control of Hagerty Re and its assets and termination of reinsurance agreements with its ceding carriers. Additionally, Bermuda insurance statutes, regulations and the policies of the Bermuda Monetary Authority are less restrictive than U.S. insurance statutes and regulations. We cannot assure you that insurance supervisors in the U.S. will not review Hagerty Re’s activities and determine that Hagerty Re is subject to a U.S. jurisdiction’s licensing requirements or determine that our U.S.-domiciled underwriting partners cannot transact business with us. Any such determination would have an adverse impact on Hagerty Re’s operations and financial condition.
Legal, Regulatory, and Political Risks
The legal and regulatory requirements applicable to our business are extensive. If we are not able to comply, it could have an adverse effect on us. Extensive regulation and potential further restrictive regulation could increase our operating costs and limit our growth.
We are subject to extensive laws, regulations, and supervision in the jurisdictions in which we transact business. These laws are complex and subject to change. Changes can sometimes lead to additional expenses,
 
56

TABLE OF CONTENTS
 
increased legal exposure, increased required capital and surplus, delays in implementing desired rate increases or business operations, and additional limits on our ability to grow or achieve targeted goals and profitability. Our business is highly dependent on the ability to engage on a daily basis in financial and operational activities, many of which are highly complex, including, but not limited to, insurance underwriting, claim processing, and providing products and services to businesses and consumers in a hospitable and efficient manner. These activities are subject to internal guidelines and policies, as well as legal and regulatory requirements, including, but not limited to, those related to:

privacy regulation and data security;

anti-corruption and anti-bribery;

restrictions on advertising and marketing;

restrictions on rebating and inducements related to insurance transactions;

restrictions on sharing insurance commissions and payments of referral fees;

restrictions related to underwriting and pricing of insurance.

approval of policy forms and premiums;

restrictions on the adjustment and settlement of insurance claims;

restrictions on the sale, solicitation, and negotiation of insurance;

rules regarding licensing, affiliations, and appointments;

state-mandated premium rebates, refunds, or reductions as a result of potentially lower risk exposure due to the COVID-19 pandemic and related emergency orders;

regulation of corporate governance and risk management; and

periodic examinations of operations, finances, market conduct and claims practices.
While we believe that we have adopted adequate and effective risk management and compliance programs, compliance risks remain, especially as we become subject to additional rules and regulations. The requirement to oversee and monitor the increasing speed and volume of regulatory changes could hinder our ability to appropriately review, analyze, and implement processes to ensure compliance in a timely manner. Failure to comply with, or to obtain, appropriate authorizations or exemptions under any applicable laws and regulations could result in restrictions on our ability to do business or undertake activities that are regulated in one or more of the jurisdictions in which we conduct business. Any such failure could also subject us to fines, penalties, equitable relief, and changes to our business practices.
Future regulatory changes could limit or impact our business model.
Compliance with applicable laws and regulations is time consuming and personnel- and systems-intensive. The current political environment, and the current high level of government intervention and regulatory reform may lead to substantial new regulations and compliance obligations. Any changes in, or the enactment of new, applicable laws and regulations may increase the complexity of the regulatory environment in which we operate, which could materially increase our direct and indirect compliance costs and other expenses of doing business and have a material adverse effect on our results of operations and financial condition. Although state insurance regulators have primary responsibility for administering and enforcing insurance regulations in the U.S., such laws and regulations are further administered and enforced by a number of additional governmental authorities, each of which exercises a degree of interpretive latitude, including state securities administrators; state attorneys general, as well as federal agencies including the SEC, the Financial Industry Regulatory Authority, the Federal Reserve Board, the Federal Insurance Office, the U.S. Department of Labor, the U.S. Department of Justice, and the National Labor Relations Board. Similarly, there are governmental authorities in UK, such as the Financial Conduct Authority (FCA); the Bermuda Monetary Authority (BMA) in Bermuda; and numerous federal and provincial governmental and oversight organizations in Canada. Consequently, compliance with any particular regulator’s or enforcement authority’s interpretation of a legal issue may not result in compliance with another’s interpretation of the same issue, particularly when compliance is judged in hindsight. Such
 
57

TABLE OF CONTENTS
 
regulations or enforcement actions are often responsive to current consumer and political sensitivities, which may arise after a major event. Such rules and regulations may result in rate suppression, limit our ability to manage our exposure to unprofitable or volatile risks, or lead to fines, premium refunds, or other adverse consequences.
The federal government may also regulate aspects of our business, such as the protection of consumer confidential information or the use of consumer insurance (credit) scores to underwrite and assess the risk of customers under the Fair Credit Reporting Act, or FCRA, in the U.S. Among other things, for insurance purposes, the FCRA requires that (i) there is a permissible purpose before obtaining and using a consumer report for underwriting purposes, and (ii) there is compliance with related notice and recordkeeping requirements. Failure to comply with federal requirements under the FCRA or any other applicable federal laws could subject us to regulatory fines and other sanctions. In addition, there is risk that a particular regulator’s or enforcement authority’s interpretation of a legal issue or the scope of a regulator’s authority may change over time to our detriment. There is also a risk that changes in the overall legal environment may cause us to change our views regarding the actions we need to take from a legal risk management perspective. This would necessitate changes to our practices that may adversely impact our business.
In some cases, these laws and regulations are designed to protect or benefit the interests of a specific constituency rather than a range of constituencies. State insurance laws and regulations are generally intended to protect the interests of purchasers or users of insurance products, rather than the holders of securities that we issue. Failure to comply with state insurance laws and regulations in the future could also have a material adverse effect on our business, operating results, and financial condition.
Additionally, changes in the regulatory landscape, whether it be on a state, federal, or global level, related to autonomous vehicles and regulations around petroleum-based vehicles could significantly alter our core insurance model, and we may have to make changes to our insurance program to comply with regulatory changes in this space. This would require changes to our operations, which could adversely impact our business.
Furthermore, the federal government could pass a law expanding its authority to regulate the insurance industry, expanding federal regulation over our business to our detriment. These laws and regulations may limit our ability to grow, to raise additional capital, or to improve the profitability of our business.
New legislation or legal requirements impacting the internet and the applicable use of mobile applications may affect how we communicate with our customers and could have an adverse effect on our business model, financial condition, and operations.
We rely on our mobile application to execute our business strategy. We are subject to general business regulations and laws, as well as federal and state regulations and laws specifically governing the internet and the use of mobile applications in particular. Existing and future laws and regulations may impede the growth of the internet or other online services and increase the cost of providing online services. These regulations and laws may involve taxes, tariffs, privacy and data security, anti-spam, content protection, electronic contracts and communications, electronic signatures and consents, consumer protection, and social media marketing. It is at times not clear how existing laws governing issues such as property ownership, sales, and other taxes and consumer privacy apply to the internet and the use of mobile applications in particular, as the vast majority of these laws were adopted prior to the advent of the internet and the use of mobile applications and do not contemplate or address the unique issues raised by the internet. It is possible that general business regulations and laws, or those specifically governing the internet and the use of mobile applications in particular, may be interpreted and applied in a manner that is inconsistent from one jurisdiction to another and may conflict with other rules or our practices. We cannot be sure that our practices have complied, currently comply, or will comply fully with all such laws and regulations. Any failure, or perceived failure, by us to comply with any of these laws or regulations could result in damage to our reputation, a loss in business, and proceedings or actions against us by governmental entities or others. Any such proceeding or action could hurt our reputation, force us to spend significant amounts in defense of these proceedings, distract our management, increase our costs of doing business, and decrease the use of our mobile application or website by consumers and suppliers and may result in the imposition of monetary liability. We may also be contractually liable to indemnify and hold harmless third parties from the costs or consequences of non-compliance with any such laws or regulations.
 
58

TABLE OF CONTENTS
 
Our intellectual property rights are extremely valuable and if they are not properly protected, our products, services, and brand could be adversely impacted.
As we continue expanding our development of intellectual property across all channels, we may be unable to adequately protect and/or obtain appropriate rights, leading to increased risk. Competitors may target certain products or services and seek to assert competing rights. If appropriate contractual measures are not maintained, employees, contractors, and vendors may divulge trade secrets or claim ownership over our intellectual property.
New legislation or legal requirements impacting the use of petroleum-based and/or supporting autonomous vehicles could significantly challenge and impact our core insurance model and company purpose.
A significant majority of our members currently drive gas-powered vehicles and engage in automotive enthusiast activities where they are able to drive and enjoy their vehicles. Changes in the law that create higher barriers to the use and enjoyment of their vehicles may in turn reduce the need or desire for many of our products and services, leading to lost revenue and lower profits and the inability to deliver on our purpose in an impactful manner.
Risks Related to Aldel and the Business Combination
Aldel has no operating history and is subject to a mandatory liquidation and subsequent dissolution requirement. If Aldel is unable to consummate a business combination, including the Business Combination, its Public Stockholders may be forced to wait more than 18 months from the Aldel IPO before receiving distributions from the Trust Account.
Aldel is a blank check company, and it has no operating history and is subject to a mandatory liquidation and subsequent dissolution requirement. Aldel has until October 12, 2022 to complete a business combination. Aldel has no obligation to return funds to investors prior to such date unless (i) it consummates a business combination prior thereto or (ii) it seeks to amend its Current Charter prior to consummation of a business combination, and only then in cases where investors have sought to convert or sell their shares to Aldel. Only after the expiration of this full time period will Public Stockholders be entitled to distributions from the Trust Account if Aldel is unable to complete a business combination. Accordingly, investors’ funds may be unavailable to them until after such date and, to liquidate their investment, public security holders may be forced to sell their Public Shares, potentially at a loss. In addition, if Aldel fails to complete an initial business combination by October 12, 2022, there will be no redemption unless Aldel amends its Current Charter to extend its life and certain other agreements it has entered into.
Subsequent to the consummation of the Business Combination, Aldel may be required to take write-downs or write-offs, restructuring and impairment or other charges that could have a significant negative effect on its financial condition, results of operations and stock price, which could cause you to lose some or all of your investment.
Although Aldel has conducted due diligence on Hagerty, Aldel cannot assure you that this diligence revealed all material issues that may be present in Hagerty’s business, that it would be possible to uncover all material issues through a customary amount of due diligence, or that factors outside of Aldel’s and Hagerty’s control will not later arise. As a result, we may be forced to later write-down or write-off assets, restructure its operations, or incur impairment or other charges that could result in losses. Even if Aldel’s due diligence successfully identifies certain risks, unexpected risks may arise and previously known risks may materialize in a manner not consistent with Aldel’s preliminary risk analysis. Even though these charges may be non-cash items and may not have an immediate impact on our liquidity, the fact that we report charges of this nature could contribute to negative market perceptions about New Hagerty’s securities. In addition, charges of this nature may cause New Hagerty to be unable to obtain future financing on favorable terms or at all.
The holders of Founder Shares have agreed to vote in favor of such initial business combination, regardless of how Aldel’s Public Stockholders vote.
Unlike some other blank check companies in which the initial stockholders agree to vote their Founder Shares in accordance with the majority of the votes cast by the Public Stockholders in connection with an
 
59

TABLE OF CONTENTS
 
initial business combination, the holders of the Founder Shares have agreed (i) to vote any such shares in favor of any proposed business combination, including the Business Combination and (ii) to waive redemption rights with respect to any shares of Common Stock owned or to be owned by such holder, and that such holder will not seek redemption with respect to or otherwise sell, such shares in connection with any vote to approve a business combination, amend the provisions of the Charter, or a tender offer by Aldel prior to a business combination. As a result, Aldel would need only       , or approximately     %, of the       public shares outstanding to be voted in favor of the Business Combination in order to have such transaction approved (assuming that only a quorum was present at the meeting). Accordingly, it is more likely that the necessary stockholder approval will be received than would be the case if the Sponsor agreed to vote its Founder Shares in accordance with the majority of the votes cast by Aldel’s Public Stockholders.
The unaudited pro forma condensed combined financial information included in this proxy statement may not be indicative of what New Hagerty’s actual financial position or results of operations would have been.
The unaudited pro forma condensed combined financial information in this proxy statement is presented for illustrative purposes only and is not necessarily indicative of what New Hagerty’s actual financial position or results of operations would have been had the Business Combination been completed on the dates indicated. The preparation of the pro forma financial information is based upon available information and certain assumptions and estimates that Aldel and Hagerty currently believe are reasonable and reflect adjustments believed to be necessary and appropriate and some of which are based upon estimates. See the section titled “Unaudited Pro Forma Condensed Combined Financial Information” for more information.
If third parties bring claims against Aldel, the proceeds held in trust could be reduced and the per-share redemption price received by stockholders may be less than $10.10.
Aldel’s placing of funds in trust may not protect those funds from third party claims against Aldel. Although Aldel will seek to have all vendors, service providers, prospective target businesses and other entities with which it does business execute agreements with it waiving any right, title, interest or claim of any kind in or to any monies held in the Trust Account, such parties may not execute such agreements, or even if they execute such agreements they may not be prevented from bringing claims against the Trust Account, including, but not limited to, fraudulent inducement, breach of fiduciary responsibility or other similar claims, as well as claims challenging the enforceability of the waiver, in each case in order to gain advantage with respect to a claim against Aldel’s assets, including the funds held in the Trust Account. If any third party refuses to execute an agreement waiving such claims to the monies held in the Trust Account, Aldel’s management will consider whether competitive alternatives are reasonably available to it and will only enter into an agreement with such third party if management believes that such third party’s engagement would be in the best interests of Aldel under the circumstances.
Examples of possible instances where Aldel may engage a third party that refuses to execute a waiver include the engagement of a third party consultant whose particular expertise or skills are believed by management to be significantly superior to those of other consultants that would agree to execute a waiver or in cases where management is unable to find a service provider willing to execute a waiver. In addition, there is no guarantee that such entities will agree to waive any claims they may have in the future as a result of, or arising out of, any negotiations, contracts or agreements with Aldel and will not seek recourse against the Trust Account for any reason. Upon redemption of the Public Shares, if Aldel is unable to complete its initial business combination within the prescribed timeframe, or upon the exercise of a redemption right in connection with its initial business combination, Aldel will be required to provide for payment of claims of creditors that were not waived that may be brought against Aldel within the 10 years following redemption. Accordingly, the per-share redemption amount received by Public Stockholders could be less than the $10.10 per Public Share initially held in the Trust Account, due to claims of such creditors. Our Sponsor has agreed that it will be liable to Aldel if and to the extent any claims by a third party for services rendered or products sold to Aldel, or a prospective target business with which Aldel entered into a written letter of intent, confidentiality or other similar agreement or business combination agreement, reduce the amount of funds in the Trust Account to below the lesser of (i) $10.10 per Public Share and (ii) the actual amount per Public Share held in the Trust Account as of the date of the liquidation of the Trust Account, if less than $10.10 per Public Share due to reductions in the value of the Trust Account assets, less taxes payable, provided that such liability will not apply to any claims by a third party or prospective
 
60

TABLE OF CONTENTS
 
target business who executed a waiver of any and all rights to the monies held in the Trust Account (whether or not such waiver is enforceable) nor will it apply to any claims under Aldel’s indemnity of the underwriters of the Aldel IPO against certain liabilities, including liabilities under the Securities Act. However, Aldel has not asked our Sponsor to reserve for such indemnification obligations, nor has Aldel independently verified whether our Sponsor has sufficient funds to satisfy its indemnity obligations. Therefore, we cannot assure you that our Sponsor would be able to satisfy those obligations.
Additionally, if Aldel is forced to file a bankruptcy case or an involuntary bankruptcy case is filed against Aldel’s which is not dismissed, the proceeds held in the Trust Account could be subject to applicable bankruptcy law, and may be included in Aldel’s bankruptcy estate and subject to the claims of third parties with priority over the claims of Aldel’s stockholders. To the extent any bankruptcy claims deplete the Trust Account, Aldel may not be able to return to Aldel’s Public Stockholders at least $10.10 per share. As a result, if any such claims were successfully made against the Trust Account, the funds available for Aldel’s initial business combination, including the Business Combination, and redemptions could be reduced to less than $10.10 per Public Share.
Aldel’s stockholders may be held liable for claims by third parties against Aldel to the extent of distributions received by them.
The Current Charter provides that Aldel will continue in existence only until October 12, 2022. If Aldel has not completed a business combination by such date, Aldel 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 100% of the outstanding Public Shares, at a per-share price, payable in cash, equal to the aggregate amount then on deposit in the Trust Account, including any interest earned on the funds held in the Trust Account net of interest that may be used by Aldel to pay its taxes payable and up to $100,000 of interest to pay dissolution expenses, divided by the number of then-outstanding Public Shares, which redemption will completely extinguish Public Stockholders’ rights as stockholders (including the right to receive further liquidation distributions, if any), subject to applicable law, and (iii) as promptly as reasonably possible following such redemption, subject to the approval of Aldel’s remaining stockholders and the Board, dissolve and liquidate, subject (in the case of (ii) and (iii) above) to Aldel’s obligations under Delaware law to provide for claims of creditors and the requirements of other applicable law.
If Aldel is forced to file a bankruptcy case or an involuntary bankruptcy case is filed against Aldel which is not dismissed, any distributions received by stockholders could be viewed under applicable debtor/ creditor and/or bankruptcy laws as either a “preferential transfer” or a “fraudulent conveyance.” As a result, a bankruptcy court could seek to recover all amounts received by Aldel’s stockholders. Furthermore, because Aldel intends to distribute the proceeds held in the Public Shares to Aldel’s Public Stockholders promptly after expiration of the time Aldel has to complete an initial business combination, this may be viewed or interpreted as giving preference to Aldel’s Public Stockholders over any potential creditors with respect to access to or distributions from Aldel’s assets. Furthermore, the Board may be viewed as having breached their fiduciary duties to Aldel’s creditors and/or may have acted in bad faith, and thereby exposing itself and Aldel to claims of punitive damages, by paying Public Stockholders from the Trust Account prior to addressing the claims of creditors. Aldel cannot assure you that claims will not be brought against it for these reasons.
Going public through a merger rather than an underwritten offering presents risks to unaffiliated investors. Subsequent to completion of the Business Combination, the Combined Company may be required to take write-downs or write-offs, restructure its operations, or take impairment or other charges, any of which that could have a significant negative effect on the Combined Company’s financial condition, results of operations and the Class A Common Stock price, which could cause you to lose some or all of your investment.
Going public through a merger rather than an underwritten offering, as Hagerty is seeking to do through the Business Combination, presents risks to unaffiliated investors. Such risks include the absence of a due diligence investigation conducted by an underwriter that would be subject to liability for any material misstatements or omissions in a registration statement. Due diligence reviews typically include an independent investigation of the background of the company, any advisors and their respective affiliates, review of the offering documents and independent analysis of the business plan and any underlying financial assumptions.
 
61

TABLE OF CONTENTS
 
Because the Combined Company will become a public reporting company by means of consummating the Business Combination rather than by means of a traditional underwritten initial public offering, there is no independent third-party underwriter selling the shares of Class A Common Stock of the Combined Company’s, and, accordingly, the Combined Company’s stockholders (including Aldel’s public stockholders) will not have the benefit of an independent review and due diligence investigation of the type normally performed by an unaffiliated, independent underwriter in a public securities offering.
Although Aldel has conducted due diligence on the Hagerty’s business, Aldel cannot assure you that this due diligence has identified all material issues that may be present in Hagerty’s business, that it would be possible to uncover all material issues through a customary amount of due diligence, or that factors outside of Hagerty’s business and outside of Aldel’s and Hagerty’s control will not later arise. As a result of these factors, the Combined Company may be forced to later write-down or write-off assets, restructure operations, or incur impairment or other charges that could result in reporting losses. Further, although Aldel performed a due diligence review and investigation of Hagerty in connection with the Business Combination, Aldel has different incentives and objectives in the Business Combination than an underwriter would in a traditional initial public offering, and therefore Aldel’s due diligence review and investigation should not be viewed as equivalent to the review and investigation that an underwriter would be expected to conduct. Even if Aldel’s due diligence successfully identifies certain risks, unexpected risks may arise and previously known risks may materialize in a manner not consistent with Aldel’s preliminary risk analysis. Even though these charges may be non-cash items and not have an immediate impact on the Combined Company’s liquidity, the fact that we report charges of this nature could contribute to negative market perceptions about the Combined Company or its securities. In addition, charges of this nature may cause us to violate net worth or other covenants to which we may be subject as a result of assuming pre-existing debt held by a target business or by virtue of our obtaining debt financing thereafter. Accordingly, any Aldel stockholders or warrant holders who choose to remain stockholders or warrant holders following the business combination could suffer a reduction in the value of their securities. These stockholders or warrant holders are unlikely to have a remedy for the reduction in value.
In addition, because the Combined Company will not become a public reporting company by means of a traditional underwritten initial public offering, security or industry analysts may not provide, or may be less likely to provide, coverage of the Combined Company. Investment banks may also be less likely to agree to underwrite securities offerings on behalf of the Combined Company than they might if the Combined Company became a public reporting company by means of a traditional underwritten initial public offering, because they may be less familiar with the Combined Company as a result of more limited coverage by analysts and the media. The failure to receive research coverage or support in the market for the Combined Company’s Class A Common Stock could have an adverse effect on the Combined Company’s ability to develop a liquid market for the Class A Common Stock.
Neither Aldel nor its stockholders will have the protection of any indemnification, escrow, price adjustment or other provisions that allow for a post-closing adjustment to be made to the total merger consideration in the event that any of the representations and warranties made by Hagerty in the Business Combination Agreement ultimately proves to be inaccurate or incorrect.
The representations and warranties made by Hagerty and Aldel to each other in the Business Combination Agreement will not survive the consummation of the Business Combination. As a result, Aldel and its stockholders will not have the protection of any indemnification, escrow, price adjustment or other provisions that allow for a post-closing adjustment to be made to the total merger consideration if any representation or warranty made by Hagerty in the Business Combination Agreement proves to be inaccurate or incorrect. Accordingly, to the extent such representations or warranties are incorrect, Aldel would have no indemnification claim with respect thereto and its financial condition or results of operations could be adversely affected.
Aldel’s ability to successfully effect the Business Combination and to be successful thereafter will be totally dependent upon the efforts of its key personnel, including Hagerty’s key personnel, all of whom are expected to remain with New Hagerty following the Business Combination. While Aldel intends to closely scrutinize any individuals it engages after the Business Combination, it cannot assure you that its assessment of these individuals will prove to be correct.
Aldel’s ability to successfully effect the Business Combination is dependent upon the efforts of key personnel, including key personnel of Hagerty. Although Aldel expects all of such key personnel to remain
 
62

TABLE OF CONTENTS
 
with New Hagerty following the Business Combination, it is possible that Aldel will lose some key personnel, the loss of which could negatively impact the operations and profitability of New Hagerty. While Aldel intends to closely scrutinize any individuals it engages after the Business Combination, it cannot assure you that its assessment of these individuals will prove to be correct. These individuals may be unfamiliar with the requirements of operating a public company which could cause Aldel to have to expend time and resources helping them become familiar with such requirements. This could be expensive and time-consuming and could lead to various regulatory issues which may adversely affect its operations.
The Sponsor and Aldel’s directors and executive officers who hold Founder Shares, OTM Warrants and/or Private Units may receive a positive return on the Founder Shares, OTM Warrants and/or Private Units even if Aldel’s public stockholders experience a negative return on their investment after consummation of the Business Combination.
If Aldel is able to complete a business combination within the required time period, the Sponsor and Aldel’s directors and executive officers who hold Founder Shares, OTM Warrants and/or Private Units may receive a positive return on their investments which were acquired prior to the Aldel IPO, or concurrently with completion of the Aldel IPO, even if Aldel’s public stockholders experience a negative return on their investment in Aldel common stock after consummation of the Business Combination.
Aldel’s Sponsor, directors, officers and advisors have interests in the Business Combination which may be different from or in addition to (and which may conflict with) the interests of its stockholders.
Aldel’s Sponsor, directors, officers, advisors and their respective affiliates and associates have interests in and arising from the Business Combination that are different from or in addition to (and which may conflict with) the interests of Aldel’s Public Stockholders, which may result in a conflict of interest. These interests include:

Unless Aldel consummates an initial business combination, Aldel’s officers, directors and sponsor will not receive reimbursement for any out-of-pocket expenses incurred by them to the extent that such expenses exceed the amount of available proceeds not deposited in the Trust Account from the Aldel IPO and Private Placement;

Our initial stockholders have agreed not to transfer, assign or sell any of their Founder Shares until: (i) with respect to 50% of the Founder Shares, the earlier of (x) twelve months after the date of the consummation of an initial business combination or (y) the date on which the closing price of our Class A common stock equals or exceeds $12.00 per share (as adjusted for stock splits, stock dividends, reorganizations and recapitalizations) for any 20 trading days within any 30-trading day period commencing after our initial business combination and (ii) with respect to the remaining 50% of the Founder Shares, twelve months after the date of the consummation of our initial business combination; except to certain permitted transferees and under certain circumstances. Any permitted transferees will be subject to the same restrictions and other agreements of our initial stockholders with respect to any Founder Shares. We refer to such transfer restrictions throughout this prospectus as the IPO lock-up. Notwithstanding the foregoing, if we consummate a transaction after our initial business combination which results in our stockholders having the right to exchange their shares for cash, securities or other property, the Founder Shares will be released from the IPO lock-up;

the fact that the Sponsor, as well as the officers, directors and advisors of Aldel have agreed to waive their redemption rights with respect to any shares of Aldel’s capital stock they may hold in connection with the consummation of the Business Combination and such shares will be worthless if no business combination is effected by Aldel by October 12, 2022;

the fact that the Sponsor paid an aggregate of $25,000 for its Founder Shares and such securities will have a significantly higher value at the time of the Business Combination;

in connection with the closing of the Business Combination, the Sponsor and FG SPAC Partners, LP (“FGSP”) will enter into a lock-up agreement (the “Sponsor Warrant Lock-up Agreement”) with Aldel, pursuant to which the Sponsor and FGSP will agree to certain new vesting arrangements with respect to (i) the warrants to purchase Aldel common stock underlying units of Aldel that were purchased by the Sponsor or FGSP, as applicable, pursuant to that certain Private Placement Units
 
63

TABLE OF CONTENTS
 
Purchase Agreement dated as of April 8, 2021, between Aldel and the Sponsor (the “Private Placement Units Purchase Agreement”) and (ii) the warrants to purchase Aldel common stock that were purchased by FGSP (“OTM Warrants”) pursuant to that certain OTM Warrants Purchase Agreement dated as of April 8, 2021, between Aldel, FGSP and the other parties thereto (the “OTM Warrants Purchase Agreement”). See “Summary of the Proxy Statement — The Proposals — Proposal 1 — The Business Combination Proposal — Related Agreements — Sponsor Warrant Lock-up Agreement.

certain of Aldel’s executive officers and directors and/or entities affiliated with them participated in the PIPE Investment; and

the anticipated continuation of Robert Kauffman, Aldel’s Chief Executive Officer, as a director of New Hagerty.
A market for New Hagerty’s securities may not continue, which would adversely affect the liquidity and price of its securities.
Following the Business Combination, the price of New Hagerty’s securities may fluctuate significantly due to the market’s reaction to the Business Combination and general market and economic conditions. An active trading market for New Hagerty’s securities following the Business Combination may never develop or, if developed, it may not be sustained. In addition, the price of New Hagerty’s securities after the Business Combination can vary due to general economic conditions and forecasts, New Hagerty’s general business condition and the release of New Hagerty’s financial reports. Additionally, if New Hagerty’s securities are not listed on, or become delisted from NYSE for any reason, and are quoted on the OTC Bulletin Board, an inter-dealer automated quotation system for equity securities that is not a national securities exchange, the liquidity and price of New Hagerty’s securities may be more limited than if New Hagerty were quoted or listed on NYSE or another national securities exchange. You may be unable to sell your securities unless a market can be established or sustained.
The market price of shares of New Hagerty’s securities after the Business Combination may be affected by factors different from those currently affecting the prices of Aldel’s securities.
Prior to the Business Combination, Aldel has had limited operations. Upon completion of the Business Combination, New Hagerty’s business, prospects, financial conditions, or results of operations will depend in part upon the performance of Hagerty’s businesses, which are affected by factors that are different from those currently affecting the business, prospects, financial conditions, or results of operations of Aldel.
There can be no assurance that New Hagerty will be able to comply with the continued listing standards of NYSE.
New Hagerty’s continued eligibility for listing may depend on the number of its shares that are redeemed. If, after the Business Combination, NYSE delists New Hagerty’s securities from trading on its exchange for failure to meet the listing standards, New Hagerty and its stockholders could face significant material adverse consequences including:

a limited availability of market quotations for New Hagerty’s securities;

a determination that New Hagerty Common Stock is a “penny stock” which will require brokers trading in its Common Stock to adhere to more stringent rules, possibly resulting in a reduced level of trading activity in the secondary trading market for New Hagerty Common Stock;

a limited amount of analyst coverage; and

a decreased ability to issue additional securities or obtain additional financing in the future.
If the Business Combination’s benefits do not meet the expectations of investors, stockholders or financial analysts, the market price of New Hagerty’s securities may decline.
If the benefits of the Business Combination do not meet the expectations of investors or securities analysts, the market price of New Hagerty’s securities may decline. The market values of New Hagerty’s
 
64

TABLE OF CONTENTS
 
securities at the time of the consummation of the Business Combination may vary significantly from their prices on the date the Business Combination Agreement was executed, the date of this proxy statement, or the date on which Aldel’s stockholders vote on the Business Combination.
In addition, following the Business Combination, fluctuations in the price of New Hagerty’s securities could contribute to the loss of all or part of your investment. Prior to the Business Combination, there has not been a public market for Hagerty’s stock. Accordingly, the valuation ascribed to Hagerty and Aldel Common Stock in the Business Combination may not be indicative of the price that will prevail in the trading market following the Business Combination. If an active market for New Hagerty’s securities develops and continues, the trading price of New Hagerty’s securities following the Business Combination could be volatile and subject to wide fluctuations in response to various factors, some of which are beyond New Hagerty’s control. Any of the factors listed below could have a material adverse effect on your investment in New Hagerty’s securities and New Hagerty’s securities may trade at prices significantly below the price you paid for them. In such circumstances, the trading price of Aldel’s securities may not recover and may experience a further decline.
Factors affecting the trading price of New Hagerty’s securities following the Business Combination may include:

actual or anticipated fluctuations in New Hagerty’s quarterly financial results or the quarterly financial results of companies perceived to be similar to New Hagerty;

changes in the market’s expectations about New Hagerty’s operating results;

success of competitors;

New Hagerty’s operating results failing to meet the expectation of securities analysts or investors in a particular period;

changes in financial estimates and recommendations by securities analysts concerning New Hagerty or the market in general;

operating and stock price performance of other companies that investors deem comparable to New Hagerty;

New Hagerty’s ability to develop product candidates;

changes in laws and regulations affecting New Hagerty’s business;

commencement of, or involvement in, litigation involving New Hagerty;

changes in New Hagerty’s capital structure, such as future issuances of securities or the incurrence of additional debt;

the volume of shares of New Hagerty’s securities available for public sale;

any major change in New Hagerty’s Board or management;

sales of substantial amounts of Common Stock by Aldel’s directors, executive officers or significant stockholders or the perception that such sales could occur; and

general economic and political conditions such as recessions, interest rates, fuel prices, international currency fluctuations and acts of war or terrorism.
Broad market and industry factors may materially harm the market price of New Hagerty’s securities irrespective of its operating performance. The stock market in general and NYSE in particular have experienced price and volume fluctuations that have often been unrelated or disproportionate to the operating performance of the particular companies affected. The trading prices and valuations of these stocks, and of New Hagerty’s securities, may not be predictable. A loss of investor confidence in the market for the stocks of other companies which investors perceive to be similar to New Hagerty could depress New Hagerty’s stock price regardless of New Hagerty’s business, prospects, financial conditions or results of operations. A decline in the market price of New Hagerty’s securities also could adversely affect New Hagerty’s ability to issue additional securities and New Hagerty’s ability to obtain additional financing in the future.
 
65

TABLE OF CONTENTS
 
Following the Business Combination, if securities or industry analysts do not publish or cease publishing research or reports about New Hagerty, its business, or its market, or if they change their recommendations regarding New Hagerty’s securities adversely, the price and trading volume of New Hagerty’s securities could decline.
The trading market for New Hagerty’s securities will be influenced by the research and reports that industry or securities analysts may publish about Aldel, its business, its market, or its competitors. Securities and industry analysts do not currently, and may never, publish research on Aldel or New Hagerty. If no securities or industry analysts commence coverage of New Hagerty, Aldel’s stock price and trading volume would likely be negatively impacted. If any of the analysts who may cover New Hagerty change their recommendation regarding Aldel’s stock adversely, or provide more favorable relative recommendations about Aldel’s competitors, the price of New Hagerty’s securities would likely decline. If any analyst who may cover New Hagerty were to cease coverage of New Hagerty or fail to regularly publish reports on it, Aldel could lose visibility in the financial markets, which could cause its stock price or trading volume to decline.
The future sales of shares by existing stockholders and future exercise of registration rights may adversely affect the market price of New Hagerty’s common stock.
Sales of a substantial number of shares of New Hagerty’s common stock in the public market could occur at any time. If New Hagerty’s stockholders sell, or the market perceives that New Hagerty’s stockholders intend to sell, substantial amounts of New Hagerty’s common stock in the public market, the market price of New Hagerty’s common stock could decline.
Pursuant to the Amended and Restated Registration Rights Agreement entered into in connection with the Business Combination Agreement, which will be effective as of the consummation of the Business Combination, Aldel agreed to file a shelf registration statement registering the resale of New Hagerty equity held by the holders party thereto, and granted to such holders certain registration rights, including customary piggyback registration rights and demand registration rights, which are subject to customary terms and conditions, including with respect to cooperation and reduction of underwritten shelf takedown provisions (subject to certain lock-up restrictions). See “Summary of the Proxy Statement — The Proposals — The Business Combination Proposal — Related Agreements — Amended and Restated Registration Rights Agreement.” Additionally, the Subscription Agreements provide certain registration rights to the PIPE Financing investors; they provide that Aldel is required to file with the SEC, within twenty (20) business days after the consummation of the transactions contemplated by the Business Combination Agreement, a registration statement covering the resale of the PIPE Shares, PIPE Warrants and the shares of Aldel Class A common stock underlying the PIPE Warrants. Aldel further has agreed to use its commercially reasonable efforts to have such registration statement declared effective as soon as practicable after the filing thereof but no later than the earlier of (i) 90 calendar days after the filing thereof (or 120 calendar days after the filing thereof if the SEC notifies Aldel that it will “review” the registration statement) and (ii) 10 business days after Aldel is notified by the SEC that the registration statement will not be “reviewed” or will not be subject to further review.
Aldel’s Public Stockholders may experience dilution as a consequence of, among other transactions, the issuance of Common Stock as consideration in the Business Combination and the PIPE Financing and the issuance of the PIPE Warrants, including the cashless exercise of such PIPE Warrants for Class A Common Stock. Having a minority share position may reduce the influence that Aldel’s current stockholders have on the management of New Hagerty.
It is anticipated that, upon the Closing, Aldel’s Public Stockholders (other than the PIPE Financing investors) will retain an ownership interest of approximately 3% in New Hagerty, the PIPE Financing investors will own approximately 21% of New Hagerty (such that Public Stockholders, including PIPE Financing investors, will own approximately 24% of New Hagerty), the Sponsor will retain an ownership interest of approximately 1% in New Hagerty and the Hagerty Equityholders will own approximately 75% of the outstanding common stock of New Hagerty.
The ownership percentage with respect to New Hagerty following the Business Combination does not take into account the redemption of any shares by Aldel’s Public Stockholders. If the actual facts are different
 
66

TABLE OF CONTENTS
 
than these assumptions (which they are likely to be), the percentage ownership retained by Aldel’s existing stockholders in New Hagerty will be different.
In addition, after the Business Combination, Hagerty employees and consultants are expected to be granted equity awards under the Equity Incentive Plan and purchase rights under the ESPP. You will experience additional dilution when those equity awards and purchase rights become vested and settled or exercisable, as applicable, for shares of New Hagerty’s common stock. Also, the PIPE Warrants allow for cashless exercise at any time, and therefore, the cashless exercise of such PIPE Warrants for Class A Common Stock will further dilute any existing holders of Class A Common Stock.
The issuance of additional common stock will significantly dilute the equity interests of existing holders of Aldel securities and may adversely affect prevailing market prices for our public shares.
Public stockholders who purchased units as part of Aldel IPO for $10.00 may experience dilution if they elect not to redeem in connection with the Business Combination. The table below shows the effect of proceeds from PIPE Financing and associated expenses assuming (i) no redemptions, (ii) $50,000,000 redemptions, and (iii) maximum redemptions that may occur, and shows:

The per share value to a Public Stockholder that elects not to redeem, which factors in the per share value following the dilution from PIPE Financing expenses (gross PIPE proceeds are at $10 per PIPE Share) and the value of the redeemable warrants held by such Public Stockholder.

The per share value to a Public Stockholder that elects to redeem their Public Shares in connection with the Business Combination for their pro-rata share of cash in the Trust Account plus the value of the redeemable warrants held by such Public Stockholder.
Per Share Value
Trust Account fair value as of August 17, 2021
$ 116,154,642
Total Public Shares
11,500,000
Trust Account value per Public Share
$ 10.10
No
Redemptions
$50 Million
Redemptions
Maximum
Redemptions
Redemptions ($)
$ $ 50,000,000 $ 85,701,925
Redemptions (Shares)
- 4,950,297 8,485,000
Cash left in Trust Account post redemptions
$ 116,154,642 $ 66,154,642 $ 30,452,717
Proceeds from PIPE Financing @ $10 per PIPE Share
$ 703,850,000 $ 703,850,000 $ 703,850,000
Estimated expenses of PIPE Financing
$ 5,144,250 $ 5,144,250 $ 5,144,250
Net proceeds from PIPE Financing
$ 698,705,750 $ 698,705,750 $ 698,705,750
PIPE Shares
70,385,000 70,385,000 70,385,000
Cash left in Trust Account post redemptions plus PIPE Financing proceeds
$ 814,860,392 $ 764,860,392 $ 729,158,467
Public Shares post redemptions plus PIPE Shares
81,885,000 76,934,703 73,400,000
Per share value(1)
$ 9.95 $ 9.94 $ 9.93
Value of Non-Redeemed Shares
Per share value
$ 9.95 $ 9.94 $ 9.93
Value of one-half of one redeemable warrant held by Public Stockholders(2)
$ 1.00 $ 1.00 $ 1.00
Total value of non-redeemed share
$ 10.95 $ 10.94 $ 10.93
Value of Redeemed Shares
Per share value
$ 10.10 $ 10.10 $ 10.10
Value of one-half of one redeemable warrant held by Public Stockholders(2)
$ 1.00 $ 1.00 $ 1.00
Total value of redeemed share
$ 11.10 $ 11.10 $ 11.10
 
67

TABLE OF CONTENTS
 
(1)
Before issuance of shares to Hagerty Equityholders and payment Business Combination expenses.
(2)
Based on price of $1.99, the closing trading price on NYSE as of September 23, 2021, of $11.50 exercise price warrants held by Public Stockholders.
Aldel has public warrants and Private Warrants outstanding, and will have PIPE Warrants outstanding at Closing, each exercisable for $11.50 per share i.e. these warrants are not dilutive to our Public Stockholders until the stock price exceeds $11.50. Additionally, Aldel has OTM Warrants outstanding that are exercisable for $15 per share, and will not be dilutive to our Public Stockholders until the stock price exceeds $15.
Public Stockholders will also face dilution from the Founder Shares, which will automatically convert into shares of Class A common stock at the Closing on a one-for-one basis, resulting in the issuance of 2,875,000 shares of Class A common stock in the aggregate. While we offered our units at an offering price of $10.00 per unit in the Aldel IPO and the amount in our Trust Account was initially $10.10 per Public Share, implying an initial value of $10.10 per Public Share, our Sponsor paid only a nominal purchase price of $25,000 for the 2,875,000 Founder Shares outstanding or approximately $0.009 per share. As a result, the value of your Public Shares may be significantly diluted in the event we consummate the Business Combination. The table below illustrates how the conversion of the Founder Shares and other sources of possible dilution affect the Public Stockholder ownership percentage in the combined entity.
The table below shows possible sources of dilution and the extent of such dilution that non-redeeming Aldel Public Stockholders could experience in connection with the Closing of the Business Combination. In an effort to illustrate the extent of such dilution, the table below assumes (i) the exercise of all public warrants, Private Warrants, and PIPE Warrants which are exercisable for one whole share of Class A common stock at a price of $11.50 per share, (ii) the exercise of all OTM Warrants which are exercisable for one whole share of Class A common stock at a price of $15 per share, (iii) the conversion of all Founder Shares at the Closing on a one-for-one basis, into 2,875,000 shares of Class A common stock in the aggregate, (iv) the issuance of 70,385,000 PIPE Shares, (v) the issuance of shares to the Hagerty Equityholders. The table is presented assuming (i) no redemptions, (ii) $50,000,000 in redemptions, and (iii) maximum redemptions that may occur.
No Redemptions
$50 Million Redemptions
Max Redemptions
Number of
Shares
Ownership
%
Number of
Shares
Ownership
%
Number of
Shares
Ownership
%
Current Shares Outstanding
Public Shares issued in Aldel IPO
11,500,000 3.2% 11,500,000 3.3% 11,500,000 3.3%
Redemptions in connection with the Business Combination
0.0% (4,950,297) -1.4% (8,485,000) -2.4%
Shares held by Public Stockholders post-redemptions
11,500,000 3.2% 6,549,703 1.9% 3,015,000 0.9%
Founder Shares issued to Sponsor pre-Aldel IPO
2,875,000 0.8% 2,875,000 0.8% 2,875,000 0.8%
Private Shares issued to Sponsor at close of Aldel IPO
515,000 0.1% 515,000 0.1% 515,000 0.1%
Aldel Common Stock issued to underwriter at close of Aldel
IPO
57,500 0.0% 57,500 0.0% 57,500 0.0%
Shares issued in connection with the
Business Combination and assumed
exercise of warrants
Shares of Class V Common Stock issued to Hagerty Equityholders
250,000,000 70.4% 252,999,388 71.6% 255,000,000 72.5%
PIPE Shares issued to PIPE
Investors
70,385,000 19.8% 70,385,000 19.9% 70,385,000 20.0%
 
68

TABLE OF CONTENTS
 
No Redemptions
$50 Million Redemptions
Max Redemptions
Number of
Shares
Ownership
%
Number of
Shares
Ownership
%
Number of
Shares
Ownership
%
$11.50 strike warrants held by Public
Stockholders
5,750,000 1.6% 5,750,000 1.6% 5,750,000 1.6%
$11.50 strike Private Warrants held by
Sponsor
257,500 0.1% 257,500 0.1% 257,500 0.1%
$15.00 strike OTM Warrants held by Sponsor
1,300,000 0.4% 1,300,000 0.4% 1,300,000 0.4%
$11.50 strike warrants held by underwriter
28,750 0.0% 28,750 0.0% 28,750 0.0%
PIPE Warrants held by PIPE Investors
12,669,300 3.6% 12,669,300 3.6% 12,669,300 3.6%
Total
355,338,050 100.0% 353,387,141 100.0% 351,853,050 100.0%
Aldel may not be able to complete the PIPE Financing in connection with the Business Combination.
Aldel may not be able to complete the PIPE Financing on terms that are acceptable to Aldel or Hagerty, or at all. If Aldel does not complete the PIPE Financing, Aldel may not be able to consummate the Business Combination. The terms of any alternative financing may be more onerous to New Hagerty than the PIPE Financing, and Aldel may be unable to obtain alternative financing on terms that are acceptable to it, or at all. The failure to secure additional financing could have a material adverse effect on the continued development or growth of New Hagerty.
The consummation of the Business Combination is subject to a number of conditions and if those conditions are not satisfied or waived, the Business Combination Agreement may be terminated in accordance with its terms and the Business Combination may not be completed.
The Business Combination Agreement is subject to a number of conditions which must be fulfilled in order to complete the Business Combination. Those conditions include: approval of the proposals required to effect the Business Combination by Aldel stockholders, as well as receipt of requisite regulatory approval, absence of orders prohibiting completion of the Business Combination, effectiveness of the registration statement with respect to the Business Combination, approval of the shares of New Hagerty common stock to be issued to existing Hagerty Equityholders for listing on the NYSE, meeting certain conditions as to minimum available cash at the time of consummation of the Business Combination, the accuracy of the representations and warranties by both parties (subject to the materiality standards set forth in the Business Combination Agreement), and the performance by both parties of their covenants and agreements. These conditions to the closing of the Business Combination may not be fulfilled in a timely manner or at all, and, accordingly, the Business Combination may not be completed. In addition, the parties can mutually decide to terminate the Business Combination Agreement at any time, before or after stockholder approval, or Aldel or Hagerty may each elect to terminate the Business Combination Agreement in certain other circumstances. SeeThe Business Combination Agreement — Termination.
Either Aldel or Hagerty may waive one or more of the conditions to the Business Combination or certain of the other transactions contemplated by the Business Combination Agreement.
Either Aldel or Hagerty may agree to waive, in whole or in part, some of the conditions to our obligations to consummate the Business Combination or certain of the other transaction contemplated by the Business Combination Agreement, to the extent permitted by their constituent documents applicable laws. For example, it is a condition to Aldel’s obligations to consummate the Business Combination that certain of Hagerty’s representations and warranties are true and correct in all respects as of the closing date, except where the failure of such representations and warranties to be true and correct, taken as a whole, does not result in a material adverse effect. However, if Aldel’s board of directors determines that it is in the best interest of the Aldel stockholders to waive any such breach, then the board may elect to waive that condition and consummate the Business Combination. No party is able to waive the condition that Aldel stockholders approve the Business Combination Proposal.
 
69

TABLE OF CONTENTS
 
Even if we consummate the Business Combination, the Public Warrants may never be in the money, and they may expire worthless.
The exercise price for our warrants is $11.50 per share. There can be no assurance that the public warrants will be in the money prior to their expiration and, as such, the warrants may expire worthless. The terms of our warrants may be amended in a manner that may be adverse to the holders. The warrant agreement between Continental Stock Transfer & Trust Company, as warrant agent, and us provides that the terms of the warrants may be amended without the consent of any holder to cure any ambiguity or correct any defective provision, but requires the approval by the holders of at least 65% of the then-outstanding public warrants to make any change that adversely affects the interests of the registered holders. Accordingly, we may amend the terms of the warrants in a manner adverse to a holder if holders of at least 65% of the then-outstanding public warrants approve of such amendment. Our ability to amend the terms of the warrants with the consent of at least 65% of the then-outstanding public warrants is unlimited. Examples of such amendments could be amendments to, among other things, increase the exercise price of the warrants, shorten the exercise period or decrease the number of shares of our common stock purchasable upon exercise of a warrant.
We may redeem your unexpired warrants, or the PIPE Warrants, after issuance, prior to their exercise at a time that is disadvantageous to you or the PIPE Investors, thereby making your warrants worthless.
We have the ability to redeem outstanding warrants (excluding any Placement Warrants held by our Sponsor or its permitted transferees) at any time after they become exercisable and prior to their expiration, at $0.01 per warrant, provided that the last reported sales price (or the closing bid price of our common stock in the event the shares of our common stock are not traded on any specific trading day) of the common stock equals or exceeds $18.00 per share (as adjusted for stock splits, stock dividends, reorganizations and the like) on each of 20 trading days within the 30 trading-day period ending on the third business day prior to the date on which we send proper notice of such redemption, provided that on the date we give notice of redemption and during the entire period thereafter until the time we redeem the warrants, we have an effective registration statement under the Securities Act covering the shares of common stock issuable upon exercise of the warrants and a current prospectus relating to them is available. If and when the warrants become redeemable by us, we may exercise our redemption right even if we are unable to register or qualify the underlying securities for sale under all applicable state securities laws. Redemption of the outstanding warrants could force a warrant holder: (i) to exercise its warrants and pay the exercise price therefor at a time when it may be disadvantageous for it to do so, (ii) to sell its warrants at the then-current market price when it might otherwise wish to hold its warrants or (iii) to accept the nominal redemption price which, at the time the outstanding warrants are called for redemption, will be substantially less than the market value of its warrants.
Certain warrants to purchase our common stock will become exercisable following the Business Combination, which could increase the number of shares eligible for future resale in the public market and result in dilution to our stockholders.
Outstanding warrants to purchase an aggregate of 18,448,050 shares of our common stock will become exercisable on the 30th day following the closing of the Business Combination in accordance with the terms of the warrant agreement governing those securities. These warrants consist of 5,750,000 warrants originally included in the units issued in our IPO, 28,750 warrants included in Units issued to ThinkEquity in Aldel IPO, and 12,669,300 warrants issued in connection with the PIPE Financing. Each warrant entitles its holder to purchase one share of our common stock at an exercise price of $11.50 per share and will expire at 5:00 p.m., New York time, five years after the Closing or earlier upon redemption of our common stock or our liquidation. In addition, pursuant to the Sponsor Warrant Lock-up Agreement, to be entered into in connection with the closing of the Business Combination, certain other warrants will vest at other times upon certain triggers. See “Summary of the Proxy Statement — The Proposals — Proposal 1 — The Business Combination Proposal — Related Agreements — Sponsor Warrant Lock-up Agreement.”  To the extent warrants are exercised, additional shares of our common stock will be issued, which will result in dilution to our then existing stockholders and increase the number of shares eligible for resale in the public market. Sales of substantial numbers of such shares in the public market could depress the market price of our common stock.
 
70

TABLE OF CONTENTS
 
Activities taken by Aldel’s affiliates to purchase, directly or indirectly, Public Shares will increase the likelihood of approval of the Business Combination Proposal and the other Proposals and may affect the market price of the Aldel’s securities.
Aldel’s Sponsor, directors, officers, advisors or their affiliates may purchase shares in privately negotiated transactions either prior to or following the consummation of the Business Combination. None of Aldel’s Sponsor, directors, officers, advisors or their affiliates will make any such purchases when such parties are in possession of any material non-public information not disclosed to the seller or during a restricted period under Regulation M under the Exchange Act. Although none of Aldel’s Sponsor, directors, officers, advisors or their affiliates currently anticipate paying any premium purchase price for such Public Shares, in the event such parties do, the payment of a premium may not be in the best interest of those stockholders not receiving any such additional consideration. There is no limit on the number of shares that could be acquired by Aldel’s Sponsor, directors, officers, advisors or their affiliates, or the price such parties may pay.
If such transactions are effected, the consequence could be to cause the Business Combination to be approved in circumstances where such approval could not otherwise be obtained. Purchases of shares by the persons described above would allow them to exert more influence over the approval of the Business Combination Proposal and other proposals and would likely increase the chances that such Proposals would be approved. If the market does not view the Business Combination positively, purchases of Public Shares may have the effect of counteracting the market’s view, which would otherwise be reflected in a decline in the market price of Aldel’s securities. In addition, the termination of the support provided by these purchases may materially adversely affect the market price of Aldel’s securities.
As of the date of this proxy statement, no other agreements with respect to the private purchase of Public Shares by Aldel or the persons described above have been entered into with any such investor or holder. Aldel will file a Current Report on Form 8-K with the SEC to disclose private arrangements 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.
Changes in laws or regulations, or a failure to comply with any laws and regulations, may adversely affect Aldel’s business, investments and results of operations.
Aldel is subject to laws, regulations and rules enacted by national, regional and local governments. In particular, Aldel is required to comply with certain SEC, NYSE and other legal or regulatory requirements. Compliance with, and monitoring of, applicable laws, regulations and rules may be difficult, time consuming and costly. Those laws, regulations and rules and their interpretation and application may also change from time to time and those changes could have a material adverse effect on Aldel’s business, investments and results of operations. In addition, a failure to comply with applicable laws, regulations and rules, as interpreted and applied, could have a material adverse effect on Aldel’s business and results of operations.
Stockholder litigation and regulatory inquiries and investigations are expensive and could harm Aldel’s business, financial condition and operating results and could divert management attention.
In the past, securities class action litigation and/or stockholder derivative litigation and inquiries or investigations by regulatory authorities have often followed certain significant business transactions, such as the sale of a company or announcement of any other strategic transaction, such as the Business Combination. Any stockholder litigation and/or regulatory investigations against Aldel, whether or not resolved in Aldel’s favor, could result in substantial costs and divert Aldel’s management’s attention from other business concerns, which could adversely affect Aldel’s business and cash resources and the ultimate value Aldel’s stockholders receive as a result of the Business Combination.
The Initial Stockholders who own shares of Common Stock and Private Units will not participate in liquidation distributions and, therefore, they may have a conflict of interest in determining whether the Business Combination is appropriate.
As of the Record Date, the Initial Stockholders owned an aggregate of 3,390,000 shares of Common Stock excluding shares of common stock purchased in the Aldel IPO or in any open market purchases.
 
71

TABLE OF CONTENTS
 
They have waived their right to redeem these shares, or to receive distributions with respect to these shares upon the liquidation of the Trust Account if Aldel is unable to consummate a business combination. Based on a market price of $      per share of Common Stock on      , 2021, the value of these shares was approximately $      million. The shares of Common Stock and Private Units acquired prior to the Aldel IPO will be worthless if Aldel does not consummate a business combination. Consequently, our directors’ and officers’ discretion in identifying and selecting Hagerty as a suitable target business may result in a conflict of interest when determining whether the terms, conditions and timing of the Business Combination are appropriate and in Aldel’s public stockholders’ best interest.
Aldel has incurred and expects to incur significant costs associated with the Business Combination. Whether or not the Business Combination is completed, the incurrence of these costs will reduce the amount of cash available to be used for other corporate purposes by the Combined Company if the Business Combination is completed or by Aldel if the Business Combination is not completed.
Aldel has incurred significant costs associated with the Business Combination. Whether or not the Business Combination is completed, Aldel expects to incur approximately $       million in expenses. These expenses will reduce the amount of cash available to be used for other corporate purposes by the Combined Company if the Business Combination is completed or by Aldel if the Business Combination is not completed.
Aldel may waive one or more of the conditions to the Business Combination without resoliciting stockholder approval for the Business Combination.
Aldel may agree to waive, in whole or in part, some of the conditions to its obligations to complete the Business Combination, to the extent permitted by applicable laws. The Board will evaluate the materiality of any waiver to determine whether amendment of this proxy statement and resolicitation of proxies is warranted. In some instances, if the Board determines that a waiver is not sufficiently material to warrant resolicitation of stockholders, Aldel has the discretion to complete the Business Combination without seeking further stockholder approval.
The shares of the Class A Common Stock to be received by Aldel’s stockholders as a result of the Business Combination will have different rights from shares of Class A Common Stock.
Following completion of the Business Combination, the Public Stockholders will no longer be stockholders of Aldel but will instead be stockholders of New Hagerty. There will be important differences between your current rights as an Aldel stockholder and your rights as a New Hagerty stockholder. See “Comparison of Corporate Governance and Stockholder Rights” for a discussion of the different rights associated with the shares of common stock.
If Aldel fails to consummate the PIPE Investment, it may not have enough funds to complete the Business Combination.
As a condition to closing the Business Combination, the Business Combination Agreement provides that Aldel must have not less than $450.0 million, including from, but not limited to, the Trust Account and from PIPE Investment proceeds. While Aldel has entered into Subscription Agreements to raise an aggregate of approximately $704 million immediately prior to the Closing, there can be no assurance that the counterparties to the Subscription Agreements will perform their obligations thereunder. If Aldel fails to consummate the PIPE, it is unlikely that Aldel will have sufficient funds to meet the condition to Closing in the Business Combination Agreement.
If the Adjournment Proposal is not approved, and an insufficient number of votes have been obtained to approve the Business Combination Proposal, the Board will not have the ability to adjourn the Special Meeting to a later date in order to solicit further votes, and, therefore, the Business Combination will not be approved, and, therefore, the Business Combination may not be consummated.
The Board is seeking approval to adjourn the Special Meeting to a later date or dates if, at the Special Meeting, based upon the tabulated votes, there are insufficient votes to approve the Business Combination Proposal. If the Adjournment Proposal is not approved, the Board will not have the ability to adjourn the
 
72

TABLE OF CONTENTS
 
Special Meeting to a later date and, therefore, will not have more time to solicit votes to approve the Business Combination Proposal. In such event, the Business Combination may not be completed.
During the pendency of the Business Combination, Aldel will not be able to enter into a business combination