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As filed with the United States Securities and Exchange Commission on June 28, 2021

Registration No: 333-256121

 

 

 

UNITED STATES

SECURITIES AND EXCHANGE COMMISSION

Washington, D.C. 20549

 

 

Amendment No. 1 to

FORM S-4

REGISTRATION STATEMENT

UNDER

THE SECURITIES ACT OF 1933

SOARING EAGLE ACQUISITION CORP.*

(Exact name of registrant as specified in its charter)

 

 

 

Cayman Islands   6770   N/A

(State or other jurisdiction of

incorporation or organization)

 

(Primary Standard Industrial

Classification Code Number)

 

(I.R.S. Employer

Identification Number)

 

 

955 Fifth Avenue

New York, NY 10075

Telephone: (310) 209-7280

(Address, including zip code, and telephone number, including area code, of registrant’s principal executive offices)

Eli Baker

President and Chief Financial Officer

Soaring Eagle Acquisition Corp.

955 Fifth Avenue

New York, NY 10075

Telephone: (310) 209-7280

(Name, address, including zip code, and telephone number, including area code, of agent for service)

 

 

Copies to:

 

Joel L. Rubinstein

Jonathan P. Rochwarger

White & Case LLP

1221 Avenue of the Americas

New York, NY 10020

(212) 819-8200

 

Rachel W. Sheridan

Shagufa R. Hossain

Emily E. Taylor

Latham & Watkins LLP

555 Eleventh Street NW

Suite 1000

Washington, D.C. 20004

(202) 637-2200

 

 

Approximate date of commencement of proposed sale to the public: As soon as practicable after this registration statement becomes effective and all other conditions to the transactions contemplated by the merger agreement described in the included proxy statement/prospectus have been satisfied or waived.


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

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

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

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

 

  Large accelerated filer      Accelerated filer
  Non-accelerated filer      Smaller reporting company
       Emerging growth company

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

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

 

  

Exchange Act Rule 13e-4(i)

(Cross-Border Issuer Tender Offer)

       

Exchange Act Rule 14d-1(d)

(Cross-Border Third-Party Tender Offer)

 

 

CALCULATION OF REGISTRATION FEE

 

 

Title of Each Class of

Securities to be Registered

  Amount to be
Registered(1)
  Proposed
Maximum
Offering Price
Per Share
  Proposed Maximum
Aggregate Offering Price
 

Amount of

Registration Fee

Class A common stock, par value $0.0001 per share(2)(3)

  172,500,000   $9.90(4)   $1,707,750,000(4)   $186,316(5)

Redeemable warrants(2)(6)

  34,500,000   $1.88(7)   $64,860,000(7)   $7,076(5)

Class A common stock, par value $0.0001 per share(2)(8)

  43,125,000   $9.90(4)   $426,937,500(9)   $46,579(5)

Class A common stock, par value $0.0001 per share(2)(10)

  1,059,540,417   $9.90(4)   $10,489,450,128(11)   $1,144,399(5)

Class B common stock, par value $0.0001 per share(2)(12)

  620,154,976   $9.90(4)   $6,139,534,262(13)   $669,823(5)

Total

          $18,828,531,891   $2,054,193(14)

 

 

(1)

Prior to the consummation of the business combination described in the proxy statement/prospectus forming part of this registration statement (the “proxy statement/prospectus”), Soaring Eagle Acquisition Corp., a Cayman Islands exempted company limited by shares (“SRNG”), intends to effect a deregistration under the Cayman Islands Companies Act (As Revised) and a domestication under Section 388 of the Delaware General Corporation Law, pursuant to which SRNG’s jurisdiction of incorporation will be changed from the Cayman Islands to the State of Delaware (the “Domestication”). As used herein, “New SRNG” refers to SRNG after the Domestication. All securities being registered will be issued by New SRNG, the continuing entity following the Domestication, or New Ginkgo, the continuing entity following the business combination described in this proxy statement/prospectus, which will thereafter be renamed “Ginkgo Bioworks Holdings, Inc.”, as further described in the proxy statement/prospectus. As used herein, “New Ginkgo” refers to SRNG after the consummation of the business combination described in this proxy statement/prospectus.


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(2)

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

(3)

The number of shares of common stock of New SRNG being registered represents the number of Class A ordinary shares of SRNG (“SRNG Class A ordinary shares”) that were registered pursuant to the Registration Statement on Form S-1 (333-251661) (the “IPO Registration Statement”) and offered by SRNG in its initial public offering. The SRNG public shares automatically will be converted by operation of law into shares of Class A common stock, par value $0.0001 per share, of New Ginkgo (“New SRNG Class A common stock” or “New Ginkgo Class A common stock”) in the Domestication.

(4)

Estimated solely for the purpose of calculating the registration fee, based on the average of the high and low trading prices of the SRNG Class A ordinary shares on the Nasdaq Capital Market (“Nasdaq”) on May 11, 2021 ($9.90 per SRNG Class A ordinary share) (such date being within five business days of the date that this registration statement was first filed with the SEC). This calculation is in accordance with Rule 457(f)(1) of the Securities Act.

(5)

Calculated pursuant to Rule 457 under the Securities Act by multiplying the proposed maximum aggregate offering price of securities to be registered by 0.0001091.

(6)

The number of redeemable warrants to acquire shares of New SRNG Class A common stock being registered represents the number of redeemable warrants to acquire SRNG Class A ordinary shares that were registered pursuant to the IPO Registration Statement referenced in note (3) above and offered by SRNG in its initial public offering (“SRNG public warrants”). The SRNG public warrants automatically will be converted by operation of law into redeemable warrants to acquire shares of New SRNG Class A common stock in the Domestication (“New SRNG public warrants”).

(7)

Estimated solely for the purpose of calculating the registration fee, based on the average of the high and low trading prices of SRNG public warrants on Nasdaq on May 11, 2021 ($1.88 per warrant) (such date being within five business days of the date that this registration statement was first filed with the SEC). This calculation is in accordance with Rule 457(f)(1) of the Securities Act.

(8)

The number of shares of common stock of New SRNG being registered represents the number of Class B ordinary shares of SRNG (“SRNG Class B ordinary shares”) outstanding immediately prior to the Domestication. All SRNG Class B ordinary shares will be converted into SRNG Class A ordinary shares immediately prior to the Domestication and automatically will be converted by operation of law into shares of New SRNG Class A common stock in the Domestication.

(9)

Pursuant to Rules 457(c) and 457(f)(1) promulgated under the Securities Act and solely for the purpose of calculating the registration fee, the proposed maximum aggregate offering price is calculated as the product of (i) 43,125,000 SRNG Class B ordinary shares and (ii) $9.90, the average of the high and low trading prices of SRNG Class A ordinary shares on May 11, 2021 (within five business days prior to the date of this Registration Statement). For purposes of calculating the registration fee, SRNG Class B ordinary shares are treated as having the same value as SRNG Class A ordinary shares, as each SRNG Class B ordinary share is convertible into one SRNG Class A ordinary share in connection with the Domestication.

(10)

Based on the maximum number of shares of New Ginkgo Class A common stock estimated to be issued in connection with the business combination described in the proxy statement/prospectus. Such maximum number of shares of New Ginkgo Class A common stock is based on the sum of: (a) 1,037,773,870 shares of New Ginkgo Class A common stock to be issued in connection with the merger described in the proxy statement/prospectus, (b) 201,828 shares of New Ginkgo Class A common stock to be reserved for issuance upon the exercise of options to purchase New Ginkgo Class A common stock, which are currently options of Ginkgo Bioworks, Inc. (“Ginkgo”), (c) 19,965,299 of New Ginkgo Class A common stock reserved for issuance upon the settlement of New Ginkgo restricted stock units (“RSUs”), which are currently RSUs of Ginkgo, and (d) 1,599,420 shares of New Ginkgo Class A common stock to be reserved for issuance upon the exercise of warrants held by certain investors in Ginkgo to purchase New Ginkgo Class A common stock, which are currently warrants to purchase preferred stock of Ginkgo.

(11)

Pursuant to Rules 457(c) and 457(f)(1) promulgated under the Securities Act and solely for the purpose of calculating the registration fee, the proposed maximum aggregate offering price is calculated as the product of (i) 1,059,540,417 shares of New Ginkgo Class A common stock and (ii) $9.90, the average of the high and low trading prices of SRNG Class A ordinary shares on May 11, 2021 (within five business days prior to the date of this Registration Statement). For purposes of calculating the registration fee, shares of New


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  Ginkgo Class A common stock are treated as having the same value as SRNG Class A ordinary shares, as each SRNG Class A ordinary share will become a share of New SRNG Class A common stock in the Domestication.
(12)

Based on the maximum number of shares of Class B common stock, par value $0.0001 per share, of New Ginkgo (“New Ginkgo Class B common stock”) estimated to be issued in connection with the business combination described in the proxy statement/prospectus. Such maximum number of shares of New Ginkgo Class B common stock is based on the sum of: (a) 505,832,752 shares of New Ginkgo Class B common stock to be issued in connection with the merger described in the proxy statement/prospectus, (b) 32,331,438 shares of New Ginkgo Class B common stock to be reserved for issuance upon the exercise of options to purchase New Ginkgo Class B common stock, which are currently options of Ginkgo, and (c) 81,990,786 of New Ginkgo Class A common stock reserved for issuance upon the settlement of New Ginkgo RSUs, which are currently RSUs of Ginkgo.

(13)

Pursuant to Rules 457(c) and 457(f)(1) promulgated under the Securities Act and solely for the purpose of calculating the registration fee, the proposed maximum aggregate offering price is calculated as the product of (i) 620,154,976 shares of New Ginkgo Class B common stock and (ii) $9.90, the average of the high and low trading prices of SRNG Class A ordinary shares on May 11, 2021 (within five business days prior to the date of this Registration Statement). For purposes of calculating the registration fee, shares of New Ginkgo Class B common stock are treated as having the same value as shares of New Ginkgo Class A common stock because each share of New Ginkgo Class B common stock is convertible into shares of New Ginkgo Class A common stock under certain circumstances that are more fully described in this proxy statement/prospectus and, as discussed in note (11) above, the average of the high and low trading prices of SRNG Class A ordinary shares on May 11, 2021 is used as a proxy for the price of the New Ginkgo Class A common stock.

(14)

A filing fee of $2,054,193 has been previously paid.

*

Prior to the consummation of the business combination described in the proxy statement/prospectus, SRNG intends to effect the Domestication, consisting of a deregistration under the Cayman Islands Companies Act (As Revised) and a domestication under Section 388 of the Delaware General Corporation Law, pursuant to which SRNG’s jurisdiction of incorporation will be changed from the Cayman Islands to the State of Delaware. All securities being registered will be issued by New SRNG, the continuing entity following the Domestication, or New Ginkgo, the continuing entity following the business combination described in this proxy statement/prospectus, which will thereafter be renamed “Ginkgo Bioworks Holdings, Inc.”

 

 

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

 

 

 


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The information in this preliminary proxy statement/prospectus is not complete and may be changed. These securities may not be issued until the registration statement filed with the U.S. Securities and Exchange Commission is effective. This preliminary prospectus statement/prospectus is not an offer to sell these securities and does not constitute the solicitation of an offer to buy these securities in any jurisdiction where the offer or sale is not permitted.

 

PRELIMINARY - SUBJECT TO COMPLETION DATED JUNE 28, 2021

PROXY STATEMENT FOR

EXTRAORDINARY GENERAL MEETING OF

SOARING EAGLE ACQUISITION CORP.

(A CAYMAN ISLANDS EXEMPTED COMPANY)

PROSPECTUS FOR

1,275,165,417 SHARES OF CLASS A COMMON STOCK, 620,154,976 SHARES OF CLASS B COMMON STOCK, 34,500,000 REDEEMABLE WARRANTS AND

34,500,000 SHARES OF CLASS A COMMON STOCK UNDERLYING REDEEMABLE WARRANTS

OF

SOARING EAGLE ACQUISITION CORP.

(AFTER ITS DOMESTICATION AS A CORPORATION INCORPORATED IN THE STATE OF DELAWARE), THE CONTINUING ENTITY FOLLOWING THE DOMESTICATION, WHICH

WILL BE RENAMED “GINKGO BIOWORKS HOLDINGS, INC.” IN CONNECTION WITH THE BUSINESS COMBINATION DESCRIBED HEREIN

On May 7, 2021, the board of directors of Soaring Eagle Acquisition Corp. (the “SRNG Board”), a Cayman Islands exempted company limited by shares (which shall domesticate as a Delaware corporation in connection with the consummation of the transactions contemplated hereby) (“SRNG,” “we,” “us” or “our”), approved an agreement and plan of merger, dated May 11, 2021, by and among SRNG, SEAC Merger Sub Inc., a wholly owned subsidiary of SRNG (“Merger Sub”), and Ginkgo Bioworks, Inc. (“Ginkgo”) (as it may be amended and/or restated from time to time, the “Merger Agreement”). If the Merger Agreement is approved and adopted by SRNG’s shareholders and the closing conditions contemplated by the Merger Agreement are satisfied, SRNG intends to effect a deregistration under the Cayman Islands Companies Act (As Revised) and a domestication under Section 388 of the Delaware General Corporation Law, as amended (the “DGCL”), pursuant to which SRNG’s jurisdiction of incorporation will be changed from the Cayman Islands to the State of Delaware (the “Domestication”), and, on the terms and subject to the conditions set forth in the Merger Agreement and in accordance with the DGCL, Merger Sub will merge with and into Ginkgo, with Ginkgo surviving the merger as a wholly owned subsidiary of SRNG (the “Business Combination”). In addition, in connection with the consummation of the Business Combination, SRNG will be renamed “Ginkgo Bioworks Holdings, Inc.” As used herein, “New SRNG” refers to SRNG after the Domestication and “New Ginkgo” refers to SRNG after the consummation of the Business Combination.

Under the Merger Agreement, SRNG has agreed to acquire all of the outstanding equity interests of Ginkgo for approximately $15 billion in aggregate consideration in the form of common stock of New Ginkgo (“New Ginkgo common stock”) valued at $10 per share (the “Base Equity Consideration”), plus approximately 180 million earn-out shares of New Ginkgo common stock, which are subject to forfeiture to the extent that the vesting conditions described below are not satisfied on or before the fifth anniversary of the closing of the Business Combination (the “Earn-out Consideration”). Ginkgo stockholders will receive consideration in the form of shares of Class A common stock of New Ginkgo (“New Ginkgo Class A common stock”) and/or Class B common stock of New Ginkgo (“New Ginkgo Class B common stock”), as determined in accordance with the Merger Agreement.

The Base Equity Consideration will be allocated among Ginkgo equity holders as follows: (i) each stockholder of Ginkgo holding shares of Class A common stock of Ginkgo (“Ginkgo Class A common stock”) immediately prior to the effective time of the Business Combination will receive, with respect to each share of Ginkgo Class A common stock it holds, a number of shares of New Ginkgo Class A common stock equal to the Base Equity Value Exchange Ratio (as hereinafter defined), (ii) each stockholder of Ginkgo holding shares of Class B common stock of Ginkgo (“Ginkgo Class B common stock” and, together with the Ginkgo Class A common stock, “Ginkgo common stock”) immediately prior to the effective time of the Business Combination will receive, with respect to each share of Ginkgo Class B common stock it holds, a number of shares of New Ginkgo Class B common stock equal to the Base Equity Value Exchange Ratio, (iii) each option exercisable for Ginkgo common stock (each, a “Ginkgo option”) that is outstanding immediately prior to the effective time of the Business Combination, will be assumed and converted into a newly issued option exercisable for New


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Ginkgo common stock (each, a “New Ginkgo option”) having the same terms and conditions as applied to the original Ginkgo option, with appropriate adjustments to the number of shares for which such option is exercisable and the exercise price thereof, (iv) each award of restricted common stock of Ginkgo under Ginkgo’s stock incentive plans (each, a “Ginkgo restricted stock award”) that is outstanding immediately prior to the effective time of the Business Combination will be converted into the right to receive a number of shares of restricted common stock of New Ginkgo (each, a “New Ginkgo restricted stock award”) equal to the Base Equity Value Exchange Ratio on the same terms and conditions as applied to the original Ginkgo restricted stock award, with appropriate adjustments to the number of shares to which each such New Ginkgo restricted stock award relates, (v) each award of restricted stock units of Ginkgo under Ginkgo’s stock incentive plans (each, a “Ginkgo restricted stock unit award”) that is outstanding immediately prior to the effective time of the Business Combination will be converted into the right to receive restricted stock units based on New Ginkgo common stock (each, a “New Ginkgo restricted stock unit award”) on the same terms and conditions as applied to the original Ginkgo restricted stock unit award, with appropriate adjustments to the number of shares to which each such New Ginkgo restricted stock unit relates, and (vi) each warrant to purchase shares of Ginkgo capital stock (each, a “Ginkgo warrant”) that is outstanding and unexercised immediately prior to the effective time of the Business Combination and that is not automatically exercised in full in accordance with its terms by virtue of the occurrence of the Business Combination will be assumed and converted into a warrant exercisable for shares of New Ginkgo Class A common stock (each, a “New Ginkgo assumed warrant”) having the same terms and conditions as applied to the original Ginkgo warrant immediately prior to the effective time of the Business Combination, with appropriate adjustments to the number of shares for which such New Ginkgo assumed warrant is exercisable and the exercise price thereof.

In addition, the Merger Agreement contemplates that the holders of Ginkgo common stock, Ginkgo options, Ginkgo restricted stock awards, Ginkgo restricted stock unit awards and Ginkgo warrants outstanding immediately prior to the effective time of the Business Combination will collectively be entitled to receive (or, in the case of the holders of Ginkgo options, Ginkgo restricted stock units, Ginkgo restricted stock unit awards and Ginkgo warrants, to receive New Ginkgo options, New Ginkgo restricted stock units, New Ginkgo restricted stock unit awards or New Ginkgo assumed warrants exercisable for, or based upon) a proportional amount of the Earn-out Consideration, which is divided into four equal tranches subject to vesting during the five years after the closing date of the Business Combination (the “Earn-out Period”) based on the conditions below:

 

   

if the trading price per share of New Ginkgo Class A common stock at any point during the trading hours of a trading day is greater than or equal to $12.50 for any 20 trading days within any period of 30 consecutive trading days during the Earn-out Period, 25% of the Earn-out Consideration will immediately vest;

 

   

if the trading price per share of New Ginkgo Class A common stock at any point during the trading hours of a trading day is greater than or equal to $15.00 for any 20 trading days within any period of 30 consecutive trading days during the Earn-out Period, an additional 25% of the Earn-out Consideration will immediately vest;

 

   

if the trading price per share of New Ginkgo Class A common stock at any point during the trading hours of a trading day is greater than or equal to $17.50 for any 20 trading days within any period of 30 consecutive trading days, an additional 25% of the Earn-out Consideration will immediately vest; and

 

   

if the trading price per share of New Ginkgo Class A common stock at any point during the trading hours of a trading day is greater than or equal to $20.00 for any 20 trading days within any period of 30 consecutive trading days, the remaining 25% of the Earn-out Consideration will immediately vest.

Additionally, the vesting of the Earn-out Consideration will be subject to acceleration in the event of certain transactions resulting in a change of control of New Ginkgo or the acquisition by a third party of assets of New Ginkgo representing at least 50% of New Ginkgo’s assets (by value) on a consolidated basis or generating at least 50% of New Ginkgo’s revenues on a consolidated basis, to the extent that the per-share value of the consideration received by New Ginkgo’s stockholders in such transaction or acquisition is greater than or equal to the earn-out targets described above.

To the extent that the earn-out targets described above are not achieved during the Earn-out Period, the portion of the Earn-out Consideration that remains subject to vesting and forfeiture at the end of the Earn-out Period will be forfeited to New Ginkgo for no consideration and cancelled.


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Shares of New Ginkgo Class B common stock will have the same economic terms as shares of New Ginkgo Class A common stock, except that shares of New Ginkgo Class A common stock will have one vote per share and shares of New Ginkgo Class B common stock will have 10 votes per share, and the holders of New Ginkgo Class B common stock, as a class, will have the right, for so long as the outstanding shares of New Ginkgo Class B common stock continue to represent at least 2% of all of the outstanding shares of New Ginkgo common stock, to elect 25% of the directors constituting New Ginkgo’s board of directors. Generally, each share of New Ginkgo Class B common stock will convert into one share of New Ginkgo Class A common stock (i) at the election of the holder or (ii) subject to the Stock Policies (as defined in the proposed certificate of incorporation of SRNG, a copy of which is attached to this proxy statement/prospectus as Annex B (the “Proposed Charter”), upon the holder ceasing to be an Eligible Holder (as defined in the Proposed Charter) for any reason (including by virtue of such holder ceasing to serve as a director or employee of New Ginkgo or by virtue of the transfer (subject to limited exceptions set forth in the Proposed Charter) of such share of New Ginkgo Class B common stock to a person other than an Eligible Holder) unless, in each case, a majority of the independent directors of New Ginkgo determine that such transfer or event will not result in such automatic conversion.

In connection with the entry into the Merger Agreement, Eagle Equity Partners III, LLC, a Delaware limited liability company (our “Sponsor”), agreed to forfeit 10% of its private placement warrants and to subject a portion of its promote shares, calculated based on a formula as further described in this proxy statement/prospectus, to vesting and forfeiture conditions identical to those applicable to the Earn-out Consideration. Additionally, in the event that our shareholders’ redemptions in connection with our extraordinary general meeting exceed $387.5 million in the aggregate, our Sponsor has agreed to forfeit a portion of its promote shares, calculated based on a formula as further described in this proxy statement/prospectus.

The total number of shares of New Ginkgo Class A common stock expected to be issued at the closing of the Business Combination (the “Closing”) is approximately 1,226,255,905, assuming no redemptions. The total number of shares of New Ginkgo Class B common stock expected to be issued at the Closing is approximately 554,024,323. Holders of shares of Ginkgo capital stock will hold, in the aggregate, between approximately 84.2% and approximately 91.8% of the issued and outstanding shares of New Ginkgo common stock immediately following the Closing.

SRNG’s units, Class A ordinary shares and public warrants are publicly traded on the Nasdaq Capital Market (the “Nasdaq”) under the symbols “SRNG” and “SRNGW,” respectively. SRNG intends to list the New Ginkgo Class A common stock and public warrants on the New York Stock Exchange under the symbols “DNA” and “DNA.WS”, respectively, upon the Closing. New Ginkgo will not have units traded following the Closing.

SRNG will hold an extraordinary general meeting of stockholders (an “extraordinary general meeting”) to consider and vote upon matters relating to the Business Combination. SRNG cannot complete the Business Combination unless SRNG’s shareholders consent to the Merger Agreement and the transactions contemplated thereby. SRNG is sending you this proxy statement/prospectus to ask you to vote in favor of the Merger Agreement and the other matters described in this proxy statement/prospectus.

Unless adjourned, an extraordinary general meeting of the shareholders of SRNG will be held at 10:00 a.m., Eastern time, on                 , 2021. For the purposes of Cayman Islands law and the amended and restated memorandum and articles of association of SRNG, the physical location of the extraordinary general meeting shall be at the offices of White & Case LLP at 1221 Avenue of the Americas, New York, New York 10020, or you or your proxyholder will be able to attend and vote at the extraordinary general meeting online by visiting https://                                 and using a control number assigned by Continental Stock Transfer & Trust Company. To register and receive access to the extraordinary general meeting, registered shareholders and beneficial shareholders (those holding shares through a stock brokerage account or by a bank or other holder of record) will need to follow the instructions applicable to them provided in this proxy statement/prospectus.

This proxy statement/prospectus provides you with detailed information about the Business Combination. It also contains or references information about SRNG and New Ginkgo and certain related matters. You are encouraged to read this proxy statement/


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prospectus carefully. In particular, you should read the “Risk Factors” section beginning on page 43 for a discussion of the risks you should consider in evaluating the Business Combination and how it will affect you.

If you have any questions or need assistance voting your common stock, please contact Morrow Sodali LLC (“Morrow”), our proxy solicitor, by calling (800) 662-5200, or banks and brokers can call collect at (203) 658-9400, or by emailing SRNG.info@investor.morrowsodali.com. This notice of extraordinary general meeting is and the proxy statement/prospectus relating to the Business Combination will be available at https://                                .

Neither the Securities and Exchange Commission (the “SEC”) nor any state or other securities commission has approved or disapproved of the Business Combination or the other transactions contemplated thereby, as described in this proxy statement/prospectus, or passed upon the adequacy or accuracy of the disclosure in this proxy statement/prospectus. Any representation to the contrary is a criminal offense.

This proxy statement/prospectus is dated                         , 2021, and is first being mailed to stockholders of SRNG on or about                         , 2021.


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SOARING EAGLE ACQUISITION CORP.

955 Fifth Avenue

New York, New York 10075

NOTICE OF EXTRAORDINARY GENERAL MEETING

TO BE HELD ON                 , 2021

TO THE SHAREHOLDERS OF SOARING EAGLE ACQUISITION CORP.:

NOTICE IS HEREBY GIVEN that an extraordinary general meeting (the “Special Meeting”) of Soaring Eagle Acquisition Corp., a Cayman Islands exempted company (“SRNG,” “we,” “us” or “our”), will be held at                         , New York City time, on                 , 2021 at the offices of White & Case LLP located at 1221 Avenue of the Americas, New York, NY 10020, or virtually via live webcast at                                 . You are cordially invited to attend the Special Meeting, which will be held for the following purposes:

 

(a)

Proposal No. 1—The Business Combination Proposal—to consider and vote upon a proposal to approve and adopt, by way of ordinary resolution, the agreement and plan of merger, dated as of May 11, 2021 (as may be amended, restated, supplemented or otherwise modified from time to time, the “Merger Agreement”), by and among SRNG, SEAC Merger Sub Inc., a Delaware corporation and a wholly owned subsidiary of SRNG (“Merger Sub”), and Ginkgo Bioworks, Inc. a Delaware corporation (“Ginkgo”), pursuant to which, among other things, SRNG will be domesticated as a Delaware corporation and, promptly thereafter, Merger Sub will merge with and into Ginkgo, with Ginkgo surviving the merger as a wholly owned subsidiary of SRNG (the transactions contemplated by the Merger Agreement, the “Business Combination” and such proposal, the “Business Combination Proposal”);

 

(b)

Proposal No. 2—The Domestication Proposal—to consider and vote upon a proposal to approve, by way of special resolution in accordance with Article 49 of SRNG’s amended and restated articles of association, assuming the Business Combination Proposal is approved and adopted, the transfer of SRNG by way of continuation to Delaware pursuant to Part XII of the Companies Act (Revised) of the Cayman Islands and Section 388 of the General Corporation Law of the State of Delaware and, immediately upon being de-registered in the Cayman Islands, continuing and domesticating as a corporation incorporated under the laws of the State of Delaware (we refer to such proposal as the “Domestication Proposal”);

 

(c)

Proposal No. 3—The Governing Documents Proposal—to consider and vote upon a proposal to approve and adopt, by way of special resolution, assuming the Business Combination Proposal and the Domestication Proposal are approved and adopted, the proposed certificate of incorporation of SRNG (the “Proposed Charter”), a copy of which is attached to this proxy statement/prospectus as Annex B, and the proposed bylaws of SRNG (the “Proposed Bylaws”), a copy of which is attached to this proxy statement/prospectus as Annex C, which together will replace SRNG’s amended and restated memorandum and articles of association, dated October 22, 2020 (the “Current Charter”), and will become effective upon the completion of the Domestication in connection with the closing of the Business Combination (the “Closing”) (we refer to such proposal as the “Governing Documents Proposal”);

 

(d)

Proposal No. 4—The Advisory Governing Documents Proposals—to consider and vote upon separate proposals to approve by way of a special resolution, on a non-binding advisory basis, the following material differences between the Proposed Charter and Proposed Bylaws and the Current Charter, which are being presented in accordance with the requirements of the SEC as six separate sub-proposals (we refer to such proposals as the “Advisory Governing Documents Proposals”);

 

  (i)

Advisory Governing Documents Proposal A—Under the Proposed Charter, New Ginkgo will be authorized to issue 16,000,000,000 shares of capital stock, consisting of (i) 15,800,000,000 shares of common stock, including 10,500,000,000 shares of New Ginkgo Class A common stock, par value $0.0001 per share (“New Ginkgo Class A common stock”), 4,500,000,000 shares of New Ginkgo Class B common stock, par value $0.0001 per share (“New Ginkgo Class B common stock”), and 800,000,000 shares of New Ginkgo Class C common stock, par value $0.0001 per share (“New


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  Ginkgo Class C common stock”), and (ii) 200,000,000 shares of preferred stock, par value $0.0001 per share, as opposed to the Current Charter which authorizes SRNG to issue 481,000,000 capital shares, consisting of (i) 480,000,000 ordinary shares, including 400,000,000 SRNG Class A ordinary shares, par value $0.0001 per share, and 80,000,000 SRNG Class B ordinary shares, par value $0.0001 per share, and (ii) 1,000,000 preference shares, par value $0.0001 per share;

 

  (ii)

Advisory Governing Documents Proposal B—Holders of shares of New Ginkgo Class A common stock will be entitled to cast one vote per share of New Ginkgo Class A common stock on each matter properly submitted to New Ginkgo’s stockholders entitled to vote, holders of shares of New Ginkgo Class B common stock will be entitled to cast 10 votes per share of New Ginkgo Class B common stock on each matter properly submitted to New Ginkgo’s stockholders entitled to vote and holders of shares of New Ginkgo Class C common stock will not be entitled to vote, except as otherwise expressly provided in the Proposed Charter or required by applicable law, as opposed to each SRNG Class A ordinary share and SRNG Class B ordinary share being entitled to one vote per share on each matter properly submitted to SRNG’s shareholders entitled to vote;

 

  (iii)

Advisory Governing Documents Proposal C—The number of directors constituting the New Ginkgo board of directors (the “New Ginkgo Board”) shall be fixed from time to time solely by resolution of the New Ginkgo Board and the holders of shares of New Ginkgo Class B common stock shall be entitled to nominate and elect one-quarter of the total number of directors of New Ginkgo (the “Class B Directors”) for so long as the outstanding number of shares of Class B common stock continue to represent at least 2% of the outstanding shares of New Ginkgo’s common stock, and the holders of New Ginkgo Class A common stock and New Ginkgo Class B common stock voting together as a single class shall be entitled to elect the directors of New Ginkgo other than the Class B Directors (the “Common Directors”), as opposed to the appointment of any person to the SRNG Board by ordinary resolution of the holders of SRNG Class B ordinary shares;

 

  (iv)

Advisory Governing Documents Proposal D—(i) The number of authorized shares of New Ginkgo Class A common stock, New Ginkgo Class B common stock and New Ginkgo Class C common stock may be increased by the affirmative vote of the holders of shares representing a majority of the voting power of all of the outstanding shares of capital stock of New Ginkgo entitled to vote thereon, irrespective of the provisions of Section 242(b)(2) of the DGCL (or any successor provision thereto), (ii) the number of authorized shares of New Ginkgo Class A common stock, New Ginkgo Class C common stock or New Ginkgo preferred stock may be decreased (but not below the number of shares thereof then outstanding or, in the case of the New Ginkgo Class A common stock, the number of shares of New Ginkgo Class A common stock reserved for issuance upon the conversion of shares of New Ginkgo Class B common stock) by the affirmative vote of the holders of shares representing a majority of the voting power of all of the outstanding shares of capital stock of New Ginkgo entitled to vote thereon, irrespective of the provisions of Section 242(b)(2) of the DGCL (or any successor provision thereto), and (iii) the number of authorized shares of New Ginkgo Class B common stock may be decreased (but not below the number of shares thereof then outstanding) by the affirmative vote of a majority of the voting power of all of the outstanding shares of New Ginkgo Class B common stock, as opposed to SRNG requiring an increase in share capital by ordinary resolution; and

 

  (v)

Advisory Governing Documents Proposal E—Authorization of all other changes in the Proposed Charter and the Proposed Bylaws, including (1) adopting Delaware as the exclusive forum for certain stockholder litigation and the federal district courts of the United States as the exclusive forum for certain other stockholder litigation, in each case unless New Ginkgo expressly consents in writing to the selection of an alternative forum, (2) electing not to be governed by Section 203 of the DGCL and (3) removing certain provisions related to SRNG’s status as a blank check company that will no longer be applicable upon consummation of the Business Combination.

 

  (vi)

Advisory Governing Documents Proposal F—Authorization of an amendment to the Proposed Charter in order to change the corporate name of “Soaring Eagle Acquisition Corp.” to “Ginkgo Bioworks Holdings, Inc.” in connection with the consummation of the Business Combination.


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(e)

Proposal No. 5—The Director Election Proposal—to consider and vote upon a proposal to approve, by way of ordinary resolution, assuming the Business Combination Proposal, the Domestication Proposal and the Governing Documents Proposal are approved and adopted, to elect seven directors to serve on the New Ginkgo Board; provided that as long as the outstanding number of shares of New Ginkgo Class B common stock continue to represent at least 2% of the outstanding shares of New Ginkgo’s common stock, the holders of shares of New Ginkgo Class B common stock shall be entitled to nominate and elect the Class B Directors and the holders of New Ginkgo Class A common stock and New Ginkgo Class B common stock voting together as a single class shall be entitled to elect the Common Directors, each to serve for a term expiring at the 2022 annual meeting of stockholders or until such director’s successor has been duly elected and qualified, or until such director’s earlier death, resignation, retirement, or removal (we refer to such proposal as the “Director Election Proposal”);

 

(f)

Proposal No. 6—The Stock Issuance Proposal—to consider and vote upon a proposal to approve, by way of ordinary resolution, assuming the Business Combination Proposal, the Domestication Proposal, the Governing Documents Proposal and the Director Election Proposal are approved and adopted, for the purposes of complying with the applicable listing rules of Nasdaq, the issuance of (x) shares of New Ginkgo Class A common stock pursuant to the terms of the Merger Agreement and (y) shares of New SRNG Class A common stock to certain accredited investors, including an affiliate of the Sponsor (the “PIPE Investors”) in connection with the Private Placement (as defined herein), plus any additional shares pursuant to subscription agreements we may enter into prior to Closing (we refer to such proposal as the “Stock Issuance Proposal”);

 

(g)

Proposal No. 7—The Incentive Plan Proposal—to consider and vote upon a proposal to approve by way of ordinary resolution, assuming the Business Combination Proposal, the Domestication Proposal, the Governing Documents Proposal, the Director Election Proposal and the Stock Issuance Proposal are approved and adopted, the Ginkgo Bioworks Holdings, Inc. 2021 Incentive Award Plan (the “2021 Plan”), a copy of which is attached to this proxy statement/prospectus as Annex E, including the authorization of the initial share reserve under the 2021 Plan (we refer to such proposal as the “Incentive Plan Proposal”);

 

(h)

Proposal No. 8—The ESPP Proposal—to consider and vote upon a proposal to approve by way of ordinary resolution, assuming the Business Combination Proposal, the Domestication Proposal, the Governing Documents Proposal, the Director Election Proposal, the Stock Issuance Proposal and the Incentive Plan Proposal are approved and adopted, the Ginkgo Bioworks Holdings, Inc. 2021 Employee Stock Purchase Plan (the “ESPP”), a copy of which is attached to this proxy statement/prospectus as Annex F, including the authorization of the initial share reserve under the ESPP (the “ESPP Proposal”); and

 

(i)

Proposal No. 9—The Adjournment Proposal—to consider and vote upon a proposal to approve by way of ordinary resolution the adjournment of 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, any of the Business Combination Proposal, the Domestication Proposal, the Governing Documents Proposal, the Director Election Proposal, the Stock Issuance Proposal, the Incentive Plan Proposal and the ESPP Proposal (together the “condition precedent proposals”) would not be duly approved and adopted by our shareholders or we determine that one or more of the Closing conditions under the Merger Agreement is not satisfied or waived (we refer to such proposal as the “Adjournment Proposal”).

Only holders of record of SRNG Class A ordinary shares and SRNG Class B ordinary shares (collectively, “SRNG ordinary shares”) at the close of business on                     , 2021 are entitled to notice of and to vote and have their votes counted at the Special Meeting and any further adjournments or postponements of the Special Meeting (and only such holders of SRNG Class B ordinary shares are entitled to vote on the Domestication Proposal).

We will provide you with the proxy statement/prospectus and a proxy card in connection with the solicitation of proxies to be voted at the Special Meeting and at any adjournment of the Special Meeting. Whether or not you plan to attend the Special Meeting, we urge you to read the proxy statement/prospectus (and any documents incorporated into the proxy statement/prospectus by reference) carefully. Please pay particular attention to the section entitled “Risk Factors.”

 


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After careful consideration, SRNG’s Board has determined that each of the Business Combination Proposal, the Domestication Proposal, the Governing Documents Proposal, the Advisory Governing Documents Proposals, the Director Election Proposal, the Stock Issuance Proposal, the Incentive Plan Proposal, the ESPP Proposal and the Adjournment Proposal are in the best interests of SRNG and its shareholders and unanimously recommends that you, and in the case of the Domestication Proposal, the holders of SRNG Class B ordinary shares, vote or give instruction to vote “FOR” each of those proposals.

The existence of financial and personal interests of SRNG’s directors and officers may result in a conflict of interest on the part of one or more of the directors between what they may believe is in the best interests of SRNG and its shareholders and what they may believe is best for himself or themselves in determining to recommend that shareholders vote for the proposals. See the section entitled “The Business Combination Proposal—Interests of SRNG’s Directors and Officers and Others in the Business Combination” in the proxy statement/prospectus for a further discussion.

Under the Merger Agreement, the approval of the condition precedent proposals presented at the Special Meeting is a condition to the consummation of the Business Combination. The approval of each condition precedent proposal is conditioned on the approval of all of the other condition precedent proposals. If our shareholders do not approve each of the condition precedent proposals, the Business Combination may not be consummated. The Adjournment Proposal is not conditioned on the approval of any other proposal.

In connection with our initial public offering, Eagle Equity Partners III, LLC, a Delaware limited liability company (our “Sponsor”), and our officers and directors at the time of our initial public offering entered into a letter agreement (the “SRNG Letter Agreement”) to vote their SRNG Class B ordinary shares purchased prior to our initial public offering (the “founder shares”), as well as SRNG Class A ordinary shares sold as part of the units by us in our initial public offering (the “public shares”) purchased by them during or after our initial public offering, in favor of the Business Combination Proposal, and we also expect them to vote their shares in favor of all other proposals being presented at the Special Meeting. As of the date hereof, our Sponsor owns approximately 20% of our total outstanding shares.

Pursuant to the Current Charter, a holder of public shares (a “public shareholder”) may request that SRNG redeem all or a portion of its public shares for cash if the Business Combination is consummated. As a public shareholder, and assuming the Business Combination is consummated, you will be entitled to receive cash for any public shares to be redeemed only if you:

 

  (i)

(a) hold public shares or (b) hold public shares through units and elect to separate your units into the underlying public shares and public warrants prior to exercising your redemption rights with respect to the public shares; and

 

  (ii)

prior to                 , New York City time, on                 , 2021, (a) submit a written request, including the legal name, phone number and address of the beneficial owner of the shares for which redemption is requested, to Continental Stock Transfer & Trust Company, SRNG’s transfer agent (the “transfer agent”), that SRNG redeem your public shares for cash and (b) deliver your public shares to the transfer agent, physically or electronically through Depository Trust Company (“DTC”).

As noted above, holders of units must elect to separate the underlying public shares and public warrants prior to exercising redemption rights with respect to the public shares. If holders hold their units in an account at a brokerage firm or bank, holders must notify their broker or bank that they elect to separate the units into the underlying public shares and public warrants, or if a holder holds units registered in its own name, the holder must contact the transfer agent, directly and instruct it to do so. Public shareholders may elect to redeem all or a portion of their public shares even if they vote for the Business Combination Proposal. If the Business Combination is not consummated, public shares will not be redeemed for cash, even if their holders have properly exercised redemption rights with respect to such public shares. If the Business Combination is consummated and a public shareholder properly exercises its right to redeem its public shares and timely delivers its shares to the transfer agent, we will redeem each public share for a per-share price, payable in cash, equal to the aggregate amount then on deposit in the Trust Account established in connection with our initial public


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offering (the “Trust Account”), calculated as of two business days prior to the consummation of the Business Combination, including interest earned on the funds held in the Trust Account and not previously released to us to fund our working capital requirements (subject to an aggregate limit of $3,000,000) and/or to pay our taxes, divided by the number of then issued and outstanding public shares. For illustrative purposes, as of June 15, 2021, this would have amounted to approximately $10.00 per public share. If a public shareholder exercises its redemption rights, then it will be exchanging its redeemed public shares for cash and will no longer own such shares. Any request to redeem public shares, once made, may be withdrawn at any time until the deadline for submitting redemption requests and thereafter, with our consent, until the Closing (as defined below). If a holder of a public share delivers its shares in connection with an election to redeem and subsequently decides prior to the deadline for submitting redemption requests not to elect to exercise such rights, it may simply request that SRNG instruct the transfer agent to return the shares (physically or electronically). The holder can make such request by contacting the transfer agent, at the address or email address listed in this proxy statement/prospectus. See “The Special Meeting—Redemption Rights” in the proxy statement/prospectus for a detailed description of the procedures to be followed if you wish to redeem your public shares for cash.

Notwithstanding the foregoing, a holder of public shares, together with any affiliate of such public shareholder or any other person with whom such public shareholder is acting in concert or as a “group” (as defined in Section 13(d)(3) of the Securities Exchange Act of 1934, as amended (the “Exchange Act”)), will be restricted from redeeming its public shares with respect to more than an aggregate of 20% of the public shares. Accordingly, if a public shareholder, alone or acting in concert or as a group, seeks to redeem more than 20% of the public shares, then any such shares in excess of that 20% limit would not be redeemed for cash.

Subject to approval by SRNG shareholders of the Business Combination Proposal, the Domestication Proposal, the Governing Documents Proposal and the Advisory Governing Documents Proposals, at the Closing, we will adopt a multi-class stock structure, comprised of New Ginkgo Class A common stock, which will carry one vote per share, New Ginkgo Class B common stock, which will carry 10 votes per share, and New Ginkgo Class C common stock, which will carry no voting rights (except as otherwise expressly provided in the Proposed Charter or required by applicable law). The New Ginkgo Class B common stock will have the same economic terms as the New Ginkgo Class A common stock. Upon the Closing, all stockholders of New Ginkgo will hold only shares of New Ginkgo Class A common stock, except for the employees and directors of New Ginkgo, who will hold shares of New Ginkgo Class B common stock. Immediately following the Closing, including by virtue of holdings of New Ginkgo Class B common stock, the employees and directors of New Ginkgo are currently expected to hold in the aggregate approximately                 % of the voting power of the issued and outstanding capital stock of New Ginkgo. See “Risk Factors—Risks Related to our Organizational Structure and Governance—Following the consummation of the Business Combination, only our employees and directors will be entitled to hold shares of New Ginkgo Class B common stock (including shares of New Ginkgo Class B common stock granted or otherwise issued to our employees and directors in the future), which shares will have ten votes per share. This will limit or preclude other stockholders’ ability to influence the outcome of matters submitted to stockholders for approval, including the election of directors, the approval of certain employee compensation plans, the adoption of amendments to our organizational documents and the approval of any merger, consolidation, sale of all or substantially all of our assets, or other major corporate transaction requiring stockholder approval.”

Furthermore, SRNG entered into subscription agreements (the “Subscription Agreements”) with the PIPE Investors, pursuant to which the PIPE Investors have agreed to purchase immediately prior to the Closing an aggregate of 77,500,000 shares of New SRNG Class A common stock at a purchase price of $10.00 per share (including 7,500,000 shares of New SRNG Class A common stock to an affiliate of the Sponsor).

All SRNG shareholders are cordially invited to attend the Special Meeting which will be held in person at the offices of White & Case LLP at 1221 Avenue of the Americas, New York, NY 10020 and in virtual format. To ensure your representation at the Special Meeting, however, you are urged to complete, sign, date and return the proxy card accompanying the proxy statement/prospectus as soon as possible. If you are a shareholder of record holding SRNG ordinary shares, you may also cast your vote at the Special Meeting electronically by visiting                     . If your shares are held in an account at a brokerage firm or bank, you must instruct your


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broker or bank on how to vote your shares or, if you wish to attend the Special Meeting and vote electronically, obtain a proxy from your broker or bank. The Governing Documents Proposal requires the affirmative vote of holders of a majority of at least two-thirds of the SRNG Shares represented in person or by proxy and entitled to vote thereon and who vote at the Special Meeting.

Your vote is important regardless of the number of shares you own. Whether you plan to attend the Special Meeting or not, please sign, date and return the proxy card accompanying the proxy statement/prospectus as soon as possible in the envelope provided. If your shares are held in “street name” or are in a margin or similar account, you should contact your broker to ensure that votes related to the shares you beneficially own are properly counted.

If you have any questions or need assistance voting your SRNG shares, please contact Morrow Sodali LLC (“Morrow”), our proxy solicitor, by calling (800) 662-5200, or banks and brokers can call collect at (203) 658-9400, or by emailing SRNG.info@investor.morrowsodali.com. This notice of extraordinary general meeting is and the proxy statement/prospectus relating to the Business Combination will be available at                 .

Thank you for your participation. We look forward to your continued support.

                    , 2021

IF YOU RETURN YOUR PROXY CARD WITHOUT AN INDICATION OF HOW YOU WISH TO VOTE, YOUR SHARES WILL BE VOTED IN FAVOR OF EACH OF THE PROPOSALS. TO EXERCISE YOUR REDEMPTION RIGHTS, YOU MUST (I) IF YOU HOLD SRNG CLASS A ORDINARY SHARES THROUGH UNITS, ELECT TO SEPARATE YOUR UNITS INTO THE UNDERLYING SRNG CLASS A ORDINARY SHARES AND PUBLIC WARRANTS PRIOR TO EXERCISING YOUR REDEMPTION RIGHTS WITH RESPECT TO THE PUBLIC SHARES, (II) SUBMIT A WRITTEN REQUEST, INCLUDING THE LEGAL NAME, PHONE NUMBER AND ADDRESS OF THE BENEFICIAL OWNER OF THE SHARES FOR WHICH REDEMPTION IS REQUESTED, TO THE TRANSFER AGENT THAT YOUR PUBLIC SHARES BE REDEEMED FOR CASH AND (III) DELIVER YOUR SRNG CLASS A ORDINARY SHARES TO THE TRANSFER AGENT, PHYSICALLY OR ELECTRONICALLY USING THE DEPOSITORY TRUST COMPANY’S DWAC (DEPOSIT WITHDRAWAL AT CUSTODIAN) SYSTEM, IN EACH CASE, IN ACCORDANCE WITH THE PROCEDURES AND DEADLINES DESCRIBED IN THE PROXY STATEMENT/PROSPECTUS. IF THE BUSINESS COMBINATION IS NOT CONSUMMATED, PUBLIC SHARES WILL NOT BE REDEEMED FOR CASH, EVEN IF THEIR HOLDERS HAVE PROPERLY EXERCISED REDEMPTION RIGHTS WITH RESPECT TO SUCH PUBLIC SHARES. 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. SEE “THE SPECIAL MEETING—REDEMPTION RIGHTS” IN THIS PROXY STATEMENT/PROSPECTUS FOR MORE SPECIFIC INSTRUCTIONS.


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ABOUT THIS DOCUMENT

This document, which forms part of a registration statement on Form S-4 filed with the SEC by SRNG, constitutes a prospectus of SRNG under Section 5 of the Securities Act of 1933, as amended (the “Securities Act”), with respect to the shares of New Ginkgo common stock to be issued to Ginkgo’s stockholders under the Merger Agreement. This document also constitutes a proxy statement of SRNG under Section 14(a) of the Securities Exchange Act of 1934, as amended (the “Exchange Act”).

You should rely only on the information contained or incorporated by reference into this proxy statement/prospectus. No one has been authorized to provide you with information that is different from that contained in, or incorporated by reference into, this proxy statement/prospectus. This proxy statement/prospectus is dated as of the date set forth on the cover hereof. You should not assume that the information contained in this proxy statement/prospectus is accurate as of any date other than that date. You should not assume that the information incorporated by reference into this proxy statement/prospectus is accurate as of any date other than the date of such incorporated document. Neither the mailing of this proxy statement/prospectus to SRNG shareholders nor the issuance by New Ginkgo of its common stock in connection with the Business Combination will create any implication to the contrary.

Information contained in this proxy statement/prospectus regarding SRNG has been provided by SRNG and information contained in this proxy statement/prospectus regarding Ginkgo has been provided by Ginkgo.

This proxy statement/prospectus does not constitute an offer to sell or a solicitation of an offer to buy any securities, or the solicitation of a proxy, in any jurisdiction to or from any person to whom it is unlawful to make any such offer or solicitation in such jurisdiction.

MARKET AND INDUSTRY DATA

 

This proxy statement/prospectus contains information concerning the market and industry in which Ginkgo conducts its business. Ginkgo operates in an industry in which it is difficult to obtain precise industry and market information. Ginkgo has obtained market and industry data in this proxy statement/prospectus from industry publications and from surveys or studies conducted by third parties that it believes to be reliable. However, industry and market data is subject to change and cannot always be verified with complete certainty due to limits on the availability and reliability of raw data, the voluntary nature of the data gathering process and other limitations and uncertainties inherent in any statistical survey. While Ginkgo is not aware of any misstatements regarding any industry data presented in this proxy statement/prospectus, such data involves risks and uncertainties and is subject to change based on various factors, including those discussed under the section entitled “Risk Factors” below.


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TABLE OF CONTENTS

 

ADDITIONAL INFORMATION

     1  

CERTAIN DEFINED TERMS

     2  

CAUTIONARY NOTE REGARDING FORWARD LOOKING STATEMENTS

     6  

QUESTIONS AND ANSWERS ABOUT THE BUSINESS COMBINATION AND THE SPECIAL MEETING

     8  

SUMMARY OF THE PROXY STATEMENT/PROSPECTUS

     26  

Information About the Parties to the Business Combination

     26  

The Business Combination and the Merger Agreement

     26  

Structure of the Business Combination

     27  

Merger Consideration

     28  

The Private Placement

     30  

Special Meeting of SRNG Shareholders and the Proposals

     30  

Recommendation of the SRNG Board

     31  

Regulatory Approvals

     32  

Conditions to the Completion of the Business Combination

     32  

Termination

     32  

Redemption Rights

     34  

Appraisal Rights

     34  

Proxy Solicitation

     34  

Interests of SRNG’s Directors and Officers and Others in the Business Combination

     35  

Stock Exchange Listing

     37  

Sources and Uses of Funds for the Business Combination

     37  

Accounting Treatment

     37  

Comparison of Stockholders’ Rights

     38  

Summary of Risk Factors

     38  

Emerging Growth Company

     41  

MARKET PRICE, TICKER SYMBOL AND DIVIDEND INFORMATION

     42  

SRNG

     42  

Ginkgo

     42  

RISK FACTORS

     43  

Risks Related to SRNG and the Business Combination

     43  

Risks Related to Ginkgo’s Business

     53  

Risks Related to Ginkgo’s Customers

     62  

Risks Related to the COVID-19 Pandemic

     64  

Risks Related to the Synthetic Biology Industry

     67  

Risks Related to Ginkgo’s Intellectual Property

     69  

Risks Related to Ginkgo’s Personnel, IT and Physical Infrastructure

     77  

Risks Related to Financial Reporting

     79  

Risks Related to Governmental Regulation and Litigation

     81  

Risks Related to our Organizational Structure and Governance

     94  

INFORMATION ABOUT THE PARTIES TO THE BUSINESS COMBINATION

     99  

SRNG

     99  

Merger Sub

     99  

Ginkgo

     99  

THE SPECIAL MEETING

     100  

Overview

     100  

Date, Time and Place of the Special Meeting

     100  

Proposals

     100  

 

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Record Date; Outstanding Shares; Shares Entitled to Vote

     100  

Quorum

     101  

Vote Required and SRNG Board Recommendation

     101  

Voting Your Shares

     103  

Voting Shares Held in Street Name

     103  

Revoking Your Proxy

     104  

Share Ownership and Voting by SRNG’s Officers and Directors

     104  

Redemption Rights

     104  

Appraisal Rights

     106  

Potential Purchases of Shares and/or Public Warrants

     106  

Costs of Solicitation

     106  

Other Business

     106  

Attendance

     107  

Assistance

     107  

THE BUSINESS COMBINATION PROPOSAL

     108  

Structure of the Business Combination

     108  

Consideration to Ginkgo Equity Holders

     108  

The Private Placement

     110  

Background of the Business Combination

     110  

SRNG Board Reasons for the Approval of the Business Combination

     115  

Financial Analysis

     118  

Certain Projected Financial Information

     121  

Risks Related to Ginkgo’s Business

     125  

Risks Related to the Multi-Class Share Structure

     125  

Satisfaction of 80% Test

     125  

Interests of SRNG’s Directors and Officers and Others in the Business Combination

     126  

Sources and Uses of Funds for the Business Combination

     128  

Directors and Executive Officers of Ginkgo After the Business Combination

     128  

Stock Exchange Listing

     129  

Accounting Treatment

     129  

Vote Required for Approval

     129  

Resolution to be Voted Upon

     130  

Recommendation of the SRNG Board

     130  

THE MERGER AGREEMENT

     131  

Explanatory Note Regarding the Merger Agreement

     131  

Closing and Effective Time of the Business Combination

     131  

Consideration to Ginkgo Equity Holder

     132  

Covenants and Agreements

     134  

Representations and Warranties

     141  

Conditions to Closing

     144  

Termination

     147  

Effect of Termination

     148  

Amendment

     148  

Specific Performance

     148  

ANCILLARY AGREEMENTS RELATED TO THE BUSINESS COMBINATION

     149  

Subscription Agreements

     149  

Company Stockholder Support Agreements

     149  

Sponsor Support Agreement

     149  

Registration Rights Agreement

     150  

 

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THE DOMESTICATION PROPOSAL

     151  

Overview

     151  

Reasons for the Domestication

     151  

Expected Accounting Treatment of the Domestication

     152  

Vote Required for Approval

     153  

Resolution to be Voted Upon

     153  

Recommendation of the SRNG Board

     153  

THE GOVERNING DOCUMENTS PROPOSAL

     154  

Overview

     154  

Comparison of Current Charter to Proposed Charter

     154  

Reasons for the Approval of the Governing Documents Proposal

     154  

Vote Required for Approval

     154  

Resolution to be Voted Upon

     155  

Recommendation of the SRNG Board

     155  

THE ADVISORY GOVERNING DOCUMENTS PROPOSALS

     156  

Overview

     156  

Advisory Governing Documents Proposals

     156  

Reasons for Approval of the Advisory Governing Documents Proposals

     158  

Vote Required for Approval

     161  

Resolutions to be Voted Upon

     161  

Recommendation of the SRNG Board

     162  

THE DIRECTOR ELECTION PROPOSAL

     163  

Overview

     163  

Director Nominees

     163  

Vote Required for Approval

     163  

Recommendation of the SRNG Board

     163  

THE STOCK ISSUANCE PROPOSAL

     164  

Why SRNG Needs Shareholder Approval

     164  

Vote Required for Approval

     164  

Resolution to be Voted Upon

     165  

Recommendation of the SRNG Board

     165  

THE INCENTIVE PLAN PROPOSAL

     166  

Overview

     166  

The 2021 Plan

     166  

Summary of the 2021 Plan

     166  

Eligibility and Administration

     166  

Shares Available for Awards

     167  

Awards

     168  

Certain Transactions

     169  

Repricing

     169  

Plan Amendment and Termination

     169  

Foreign Participants, Claw-Back Provisions, Transferability and Participant Payments

     169  

Material U.S. Federal Income Tax Consequences

     169  

Section 409A of the Code

     170  

New Plan Benefits

     171  

Interests of Certain Persons in this Proposal

     171  

Vote Required for Approval

     171  

Resolution to be Voted Upon

     171  

Recommendation of the SRNG Board

     171  

 

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THE ESPP PROPOSAL

     172  

Overview

     172  

The ESPP

     172  

Summary of the ESPP

     172  

Eligibility and Administration

     172  

Shares Available for Awards

     172  

Awards

     173  

Certain Transactions

     173  

ESPP Amendment and Termination

     173  

Material U.S. Federal Income Tax Consequences

     174  

New Plan Benefits

     175  

Interests of Certain Persons in this Proposal

     175  

Vote Required for Approval

     175  

Resolution to be Voted Upon

     175  

Recommendation of the SRNG Board

     175  

THE ADJOURNMENT PROPOSAL

     176  

Overview

     176  

Consequences if the Adjournment Proposal is Not Approved

     176  

Vote Required for Approval

     176  

Resolution to be Voted Upon

     176  

Recommendation of the SRNG Board

     176  

UNAUDITED PRO FORMA CONDENSED COMBINED FINANCIAL INFORMATION

     177  

Notes to Unaudited Pro Forma Condensed Combined Financial Statements

     184  

OTHER INFORMATION RELATED TO SRNG

     188  

Introduction

     188  

Initial Public Offering

     188  

Fair Market Value of Ginkgo’s Business

     189  

Shareholder Approval of Business Combination

     189  

Voting Restrictions in Connection with Shareholder Meeting

     189  

Liquidation if No Business Combination

     189  

Properties

     192  

Employees

     192  

Directors and Executive Officers

     193  

Executive Compensation and Director Compensation

     196  

Number and Terms of Office of Officers and Directors

     196  

Director Independence

     197  

Legal Proceedings

     197  

Periodic Reporting and Audited Financial Statements

     197  

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

     198  

Overview

     198  

Merger Agreement

     198  

Results of Operations and Known Trends or Future Events

     200  

Liquidity and Capital Resources

     201  

Controls and Procedures

     203  

Quantitative and Qualitative Disclosures about Market Risk

     204  

Off-Balance Sheet Arrangements; Commitments and Contractual Obligations; Quarterly Results

     204  

Contractual Obligations

     204  

JOBS Act

     204  

 

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A LETTER FROM GINKGO’S FOUNDERS

     206  

INFORMATION ABOUT GINKGO

     211  

Mission

     211  

Overview

     211  

An Introduction to Synthetic Biology

     214  

The Impact of Cell Programming

     218  

Market Opportunity

     223  

Industry Overview

     224  

Enabling Customer Success

     226  

Our Platform

     232  

Our Business Model

     242  

Our Sustainable Advantage

     245  

Our Growth Strategy

     247  

Our People & Culture

     249  

Competition

     251  

Intellectual Property

     252  

Facilities

     254  

Suppliers

     255  

Government Regulations

     256  

Legal Proceedings

     261  

Ginkgo Corporate Information

     261  

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

     262  

Overview

     262  

Generating Economic Value Through Revenue and Downstream Value Share

     264  

Key Business Metrics

     267  

Proposed Business Combination Transaction

     267  

Potential Modification of Equity Awards in Connection with Proposed Business Combination Transaction

     268  

Components of Results of Operations

     268  

Results of Operations

     272  

Non-GAAP Information

     277  

Liquidity and Capital Resources

     279  

Contractual Obligations and Commitments

     282  

Off-Balance Sheet Arrangements

     283  

Critical Accounting Policies and Estimates

     283  

JOBS Act and Emerging Growth Company Status

     290  

Recently Issued Accounting Pronouncements

     290  

Quantitative and Qualitative Disclosures About Market Risks

     290  

OWNERSHIP SUMMARY

     292  

DESCRIPTION OF NEW GINKGO SECURITIES

     293  

Authorized and Outstanding Capital Stock

     293  

Common Stock

     293  

SECURITIES ACT RESTRICTIONS ON RESALE OF COMMON STOCK

     309  

Rule 144

     309  

Restrictions on the Use of Rule 144 by Shell Companies or Former Shell Companies

     309  

 

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COMPARISON OF STOCKHOLDER RIGHTS

     310  

General

     310  

Comparison of Stockholders’ Rights

     310  

BENEFICIAL OWNERSHIP OF SECURITIES

     325  

NEW GINKGO MANAGEMENT AFTER THE BUSINESS COMBINATION

     329  

Board of Directors and Management

     329  

Corporate Governance

     332  

Role of Board in Risk Oversight

     332  

Composition of the New Ginkgo Board After the Merger

     332  

Board Committees

     332  

Code of Business Conduct

     334  

Compensation Committee Interlocks and Insider Participation

     334  

Independence of the Board of Directors

     334  

GINKGO’S EXECUTIVE AND DIRECTOR COMPENSATION

     335  

2020 Summary Compensation Table

     335  

Outstanding Equity Awards at Fiscal Year-End

     338  

Executive Compensation Arrangements

     338  

Director Compensation

     339  

Post-Combination Company Executive Officer and Director Compensation

     339  

CERTAIN RELATIONSHIPS AND RELATED PARTY TRANSACTIONS

     342  

SRNG

     342  

Ginkgo

     342  

LEGAL MATTERS

     346  

EXPERTS

     346  

DELIVERY OF DOCUMENTS TO SHAREHOLDERS

     346  

U.S. FEDERAL INCOME TAX CONSIDERATIONS

     347  

U.S. Holders

     348  

Non-U.S. Holders

     357  

SHAREHOLDER PROPOSALS AND NOMINATIONS

     362  

SHAREHOLDER COMMUNICATIONS

     364  

WHERE YOU CAN FIND MORE INFORMATION

     365  

INDEX TO FINANCIAL STATEMENTS

     F-1  

Annex A – Agreement and Plan of Merger

     A-1  

Annex B – Form of Certificate of Incorporation of Ginkgo Bioworks Holdings, Inc.

     B-1  

Annex C – Form of Bylaws of Ginkgo Bioworks Holdings, Inc.

     C-1  

Annex D – Subscription Agreement

     D-1  

Annex E – Form of Ginkgo Bioworks Holdings, Inc. 2021 Incentive Plan

     E-1  

Annex F – Form of Ginkgo Bioworks Holdings, Inc. 2021 Employee Stock Purchase Plan

     F-1  

Annex G – Memorandum and Articles of Association of Soaring Eagle Acquisition Corp.

     G-1  

 

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ADDITIONAL INFORMATION

This proxy statement/prospectus incorporates important business and financial information about SRNG from other documents that are not included in or delivered with this proxy statement/prospectus. This information is available for you to review on the website of the U.S. Securities and Exchange Commission (the “SEC”) at www.sec.gov. You can also obtain the documents incorporated by reference into this proxy statement/prospectus free of charge by requesting them in writing or by telephone from the appropriate company at the following address and telephone number:

Soaring Eagle Acquisition Corp.

955 Fifth Avenue

New York, New York 10075

Telephone: (310) 209-7280

Attention: Secretary

or

Morrow Sodali LLC

470 West Avenue, Suite 3000

Stamford, CT 06902

Telephone: (800) 662-5200

(banks and brokers can call collect at (203) 658-9400)

Email: SRNG.info@investor.morrowsodali.com

To obtain timely delivery, SRNG shareholders must request the materials no later than five business days prior to the Special Meeting.

You also may obtain additional proxy cards and other information related to the proxy solicitation by contacting the appropriate contact listed above. You will not be charged for any of these documents that you request.

For a more detailed description of the information incorporated by reference in this proxy statement/prospectus and how you may obtain it, see the section entitled “Where You Can Find More Information.

 

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CERTAIN DEFINED TERMS

Unless otherwise stated or unless the context otherwise requires, the terms “we,” “us,” “our” and “SRNG” refer to Soaring Eagle Acquisition Corp., the term “New SRNG” refers to Soaring Eagle Acquisition Corp. following the Domestication and the terms “New Ginkgo,” “combined company” and “post-combination company” refer to Ginkgo Bioworks Holdings, Inc. and its subsidiaries following the consummation of the Business Combination.

In this document:

Business Combination” means the Domestication together with the Merger.

Closing” means the closing of the Business Combination.

Closing Date” means the closing date of the Business Combination.

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

Cayman Constitutional Documents” means SRNG’s first amended and restated memorandum and articles of association.

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

DTC” means The Depository Trust Company.

ERISA” means the Employee Retirement Income Security Act of 1974, as amended.

Exchange Act” means the Securities Exchange Act of 1934, as amended.

FASB” means the Financial Accounting Standards Board.

Founder” means any of Jason Kelly, Reshma Shetty, Austin Che, Bartholomew Canton and Thomas F. Knight, Jr.

Founder Holder” means any Founder or any legal entity or trust through which (directly or indirectly, and by ownership, voting power, contract or otherwise) any Founder exercises exclusive voting control with respect to the shares of capital stock of New Ginkgo owned by such legal entity or trust.

founder shares” means the SRNG Class B ordinary shares sole prior to SRNG’s initial public offering.

GAAP” means United States generally accepted accounting principles.

GDPR” mean the European Union’s General Data Protection Regulation.

Ginkgo” means Ginkgo Bioworks, Inc., a Delaware corporation.

Ginkgo capital stock” means the Ginkgo Class A common stock, the Ginkgo Class B common stock and each other class or series of capital stock of Ginkgo (including preferred stock).

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

Ginkgo Class B common stock” means the Class B common stock, par value $0.0001 per share, of Ginkgo.

Ginkgo option” means each option to purchase shares of Ginkgo common stock.

 

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Ginkgo stockholder” means each holder of Ginkgo capital stock.

Ginkgo warrant” means each warrant to purchase shares of Ginkgo capital stock.

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

initial shareholders” means the holders of our founder shares.

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

IPO” means SRNG’s initial public offering, consummated on February 26, 2021, through the sale of 22,500,000 units at $10.00 per unit.

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

Merger Agreement” means that Agreement and Plan of Merger, dated as of May 11, 2021, by and among SRNG, Merger Sub and Ginkgo.

Merger Sub” means SEAC Merger Sub Inc., a Delaware corporation and wholly owned subsidiary of SRNG.

“Minimum Proceeds Condition” means the condition to Closing in favor of Ginkgo set forth in Section 10.3(d) of the Merger Agreement, which requires SRNG to have at the Closing at least $1,250,000,000 of available cash, consisting of cash held in the Trust Account after giving effect to the Shareholder Redemption (as defined herein), and cash received in the Private Placement and in certain other investments, if any, arranged by SRNG in accordance with the Merger Agreement and the Sponsor Support Agreement.

Morrow” means Morrow Sodali, proxy solicitor to SRNG.

Nasdaq” means the Nasdaq Capital Market.

New Ginkgo” means Ginkgo Bioworks Holdings, Inc., a Delaware corporation (which, prior to consummation of the Business Combination, was known as Soaring Eagle Acquisition Corp. (“SRNG” herein)).

New Ginkgo Board” means the board of directors of New Ginkgo.

New Ginkgo Class A common stock” means the shares of Class A common stock, par value $0.0001 per share, of New Ginkgo, which shares have the same economic terms as the shares of New Ginkgo Class B common stock, however they are only entitled to one vote per share.

New Ginkgo Class B common stock” means the shares of Class B common stock, par value $0.0001 per share, of New Ginkgo, which shares have the same economic terms as the shares of New Ginkgo Class A common stock, however they are entitled to 10 votes per share and the holders of New Ginkgo Class B common stock, as a class, will have the right, for so long as the outstanding shares of New Ginkgo Class B common stock continue to represent at least 2% of all of the outstanding shares of New Ginkgo common stock, to elect 25% of the directors constituting the New Ginkgo Board.

New Ginkgo Class C common stock” means the shares of Class C common stock, par value $0.0001 per share, of New Ginkgo, which shares have the same economic terms as the shares of New Ginkgo Class A common stock, but which will carry no voting rights (except as otherwise expressly provided in the Proposed Charter or required by applicable law).

New Ginkgo common stock” means, collectively, the New Ginkgo Class A common stock, the New Ginkgo Class B common stock and the New Ginkgo Class C common stock.

 

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New Ginkgo Management” means the management of New Ginkgo following the consummation of the Business Combination.

New SRNG” means Soaring Eagle Acquisition Corp., a Delaware corporation, following the Domestication.

Non-Redemption Agreements” means certain non-redemption agreements with certain holders of SRNG’s Class A ordinary shares, pursuant to which such holders agree not to exercise their redemption rights in connection with the Business Combination.

NYSE” means the New York Stock Exchange.

“PIPE Investors” means certain institutional investors, including affiliates of the Sponsor, who are party to the Subscription Agreements.

“Private Placement” means the issuance of an aggregate of 77,500,000 shares of New SRNG Class A common stock pursuant to the Subscription Agreements to the PIPE Investors immediately before the Closing, at a purchase price of $10.00 per share.

Private placement warrants” means the 19,250,000 warrants issued to our Sponsor concurrently with our IPO, each of which is exercisable for one SRNG Class A ordinary share. Upon the Closing, 10% of the private placement warrants will be forfeited to New Ginkgo and cancelled for no consideration.

Proposed Governing Documents” means the proposed certificate of incorporation and bylaws to be adopted by SRNG pursuant to the Governing Documents Proposal and the Advisory Governing Documents Proposals immediately prior to the Closing (and which at and after the Closing will operate as the certificate of incorporation and bylaws of New Ginkgo), a copy of each of which is attached as Annex B and Annex C to this proxy statement/prospectus.

Public shares” means SRNG Class A ordinary shares included in the units issued in the IPO.

Public shareholders” means holders of public shares.

Public warrants” means the warrants included in the units issued in the IPO, each of which is exercisable for SRNG Class A ordinary share, in accordance with its terms.

Registration Rights Agreement” means the Registration Rights Agreement, dated as of May 11, 2021 and effective at (but subject to) the Closing, by and among Ginkgo, SRNG, certain Ginkgo stockholders and certain SRNG shareholders.

Sponsor” means Eagle Equity Partners III, LLC, a Delaware limited liability company.

Sponsor Shares” means the aggregate of 43,125,000 SRNG Class B ordinary shares held by the Sponsor.

SRNG” means Soaring Eagle Acquisition Corporation, a Cayman Islands exempted company, prior to the Domestication as a corporation in the state of Delaware.

SRNG Board” means the board of directors of SRNG.

SRNG Class A ordinary shares” means the Class A ordinary shares, par value $0.0001 per share, of SRNG.

SRNG Class B ordinary shares” means the Class B ordinary shares, par value $0.0001 per share, of SRNG.

SRNG ordinary shares” means, collectively, the SRNG Class A ordinary shares and SRNG Class B ordinary shares.

 

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“Subscription Agreements” means the subscription agreements, each dated as of May 11, 2021, between SRNG and the PIPE Investors, pursuant to which SRNG has agreed to issue an aggregate of 77,500,000 shares of New SRNG Class A common stock to the PIPE Investors immediately before the Closing at a purchase price of $10.00 per share.

Transfer Agent” means Continental Stock Transfer & Trust Company.

Trust Account” means the Trust Account of SRNG that holds the proceeds from SRNG’s IPO and the private placement of the private placement warrants.

Trust Agreement” mean that certain Investment Management Trust Agreement, dated as of February 23, 2021, between SRNG and the Trustee.

Trustee” means Continental Stock Transfer & Trust Company.

Units” means the units of SRNG, each consisting of one SRNG Class A ordinary share and one-fifth of one public warrant of SRNG.

 

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CAUTIONARY NOTE REGARDING FORWARD-LOOKING STATEMENTS

This proxy statement/prospectus includes forward-looking statements regarding, among other things, the plans, strategies and prospects, both business and financial, of SRNG, Ginkgo and New Ginkgo. These statements are based on the beliefs and assumptions of the management of SRNG and Ginkgo. Although SRNG and Ginkgo believe that their respective plans, intentions and expectations reflected in or suggested by these forward-looking statements are reasonable, neither SRNG nor Ginkgo can assure you that either will achieve or realize these plans, intentions or expectations. Forward-looking statements are inherently subject to risks, uncertainties and assumptions. Generally, statements that are not historical facts, including statements concerning possible or assumed future actions, business strategies, events or results of operations, are forward-looking statements. These statements may be preceded by, followed by or include the words “believes”, “estimates”, “expects”, “projects”, “forecasts”, “may”, “will”, “should”, “seeks”, “plans”, “scheduled”, “anticipates” or “intends” or similar expressions. The forward-looking statements are based on projections prepared by, and are the responsibility of, Ginkgo’s management. Ernst & Young, Ginkgo’s independent auditor, has not examined, compiled or otherwise applied procedures with respect to the accompanying forward-looking financial information presented herein and, accordingly, expresses no opinion or any other form of assurance on it. The Ernst & Young report included in this proxy statement/prospectus relates to historical financial information of Ginkgo. It does not extend to the forward-looking information and should not be read as if it does. Forward-looking statements contained in this proxy statement/prospectus include, but are not limited to, statements about:

 

   

the ability of SRNG and Ginkgo prior to the Business Combination, and New Ginkgo following the Business Combination, to:

 

   

meet the Closing conditions to the Business Combination, including approval by shareholders of SRNG and the availability of at least $1.25 billion of cash from the proceeds received from PIPE Investors and in SRNG’s Trust Account, after giving effect to redemptions of public shares, if any,

 

   

realize the benefits expected from the Business Combination;

 

   

the occurrence of any event, change or other circumstances that could give rise to the termination of the Merger Agreement;

 

   

the ability to obtain and/or maintain the listing of New Ginkgo Class A common stock on the NYSE following the Business Combination;

 

   

New Ginkgo’s ability to raise financing in the future and to comply with restrictive covenants related to long-term indebtedness;

 

   

New Ginkgo’s ability to retain or recruit, or adapt to changes required in, its founders, senior executives, key personnel or directors following the Business Combination;

 

   

factors relating to the business, operations and financial performance of Ginkgo, including:

 

   

New Ginkgo’s ability to effectively manage its growth;

 

   

New Ginkgo’s exposure to the volatility and liquidity risks inherent in holding equity interests in certain of its customers;

 

   

rapidly changing technology and extensive competition in the synthetic biology industry that could make the products and processes New Ginkgo is developing obsolete or non-competitive unless it continues to collaborate on the development of new and improved products and processes and pursue new market opportunities;

 

   

New Ginkgo’s reliance on its customers to develop, produce and manufacture products using the engineered cells and/or biomanufacturing processes that New Ginkgo develops;

 

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New Ginkgo’s ability to comply with laws and regulations applicable to its business; and

 

   

market conditions and global and economic factors beyond New Ginkgo’s control;

 

   

intense competition and competitive pressures from other companies worldwide in the industries in which the combined company will operate;

 

   

litigation and the ability to adequately protect New Ginkgo’s intellectual property rights; and

 

   

other factors detailed under the section entitled “Risk Factors.

These and other factors that could cause actual results to differ from those implied by the forward-looking statements in this proxy statement/prospectus are more fully described under the heading “Risk Factors” and elsewhere in this proxy statement/prospectus. The risks described under the heading “Risk Factors” are not exhaustive. Other sections of this proxy statement/prospectus describe additional factors that could adversely affect the business, financial condition or results of operations of SRNG and Ginkgo prior to the Business Combination, and New Ginkgo following the Business Combination. New risk factors emerge from time to time and it is not possible to predict all such risk factors, nor can SRNG or Ginkgo assess the impact of all such risk factors on the business of SRNG and Ginkgo prior to the Business Combination, and New Ginkgo following the Business Combination, or the extent to which any factor or combination of factors may cause actual results to differ materially from those contained in any forward-looking statements. Forward-looking statements are not guarantees of performance. You should not put undue reliance on these statements, which speak only as of the date hereof. All forward-looking statements attributable to SRNG or Ginkgo or persons acting on their behalf are expressly qualified in their entirety by the foregoing cautionary statements. SRNG and Ginkgo prior to the Business Combination, and New Ginkgo following the Business Combination, undertake no obligations to update or revise publicly any forward-looking statements, whether as a result of new information, future events or otherwise, except as required by law.

 

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QUESTIONS AND ANSWERS ABOUT THE BUSINESS COMBINATION

AND THE SPECIAL MEETING

The following are answers to certain questions that you may have regarding the Business Combination and the Special Meeting. SRNG urges you to read carefully the remainder of this document because the information in this section may not provide all the information that might be important to you in determining how to vote. Additional important information is also contained in the appendices to, and the documents incorporated by reference in, this proxy statement/prospectus.

 

Q:

Why am I receiving this proxy statement/prospectus?

 

A:

SRNG is proposing to consummate the Business Combination with Ginkgo. SRNG, Merger Sub and Ginkgo have entered into the Merger Agreement, the terms of which are described in this proxy statement/prospectus. A copy of the Merger Agreement is attached hereto as Annex A. SRNG urges its shareholders to read the Merger Agreement in its entirety.

The Merger Agreement must be adopted by the SRNG shareholders in accordance with Cayman Islands law and SRNG’s Current Charter. SRNG is holding a Special Meeting to obtain that approval. SRNG shareholders will also be asked to vote on certain other matters related to the Business Combination, which are described in this proxy statement/prospectus, at the Special Meeting and to approve the adjournment of the Special Meeting, if necessary or appropriate, to solicit additional proxies in the event there are not sufficient votes at the time of the Special Meeting to adopt the Merger Agreement and approve the other proposals described in this proxy statement/prospectus and thereby approve the Business Combination.

THE VOTE OF SRNG SHAREHOLDERS IS IMPORTANT. SRNG SHAREHOLDERS ARE URGED TO SUBMIT THEIR PROXIES AS SOON AS POSSIBLE AFTER CAREFULLY REVIEWING THIS PROXY STATEMENT/PROSPECTUS AND CAREFULLY CONSIDERING EACH OF THE PROPOSALS BEING PRESENTED AT THE MEETING.

 

Q:

Why is SRNG proposing the Business Combination?

 

A:

SRNG was formed for the purpose of effecting a merger, capital stock exchange, asset acquisition, stock purchase, reorganization or other similar business combination with one or more operating businesses.

Based on its due diligence investigations of Ginkgo and the industry in which it operates, including the financial and other information provided by Ginkgo in the course of SRNG’s due diligence investigations, the SRNG Board believes that the Business Combination with Ginkgo is in the best interests of SRNG and its shareholders and presents an opportunity to increase shareholder value. However, there can be no assurances of this.

Although the SRNG Board believes that the Business Combination with Ginkgo presents a unique business combination opportunity and is in the best interests of SRNG and its shareholders, the SRNG Board did consider certain potentially material negative factors in arriving at that conclusion. See “The Business Combination Proposal—SRNG Board Reasons for the Approval of the Business Combination” for a discussion of the factors considered by the SRNG Board in making its decision.

 

Q:

When and where will the Special Meeting take place?

 

A:

The SRNG Special Meeting will be held on                 , 2021 at                 , New York City time, at the office of White & Case LLP at 1221 Avenue of the Americas, New York, NY 10020, or virtually via live webcast at                 .

In light of ongoing developments related to COVID-19, and the related protocols that governments have implemented, the SRNG Board determined that the Special Meeting will also be a virtual meeting

 

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conducted exclusively via live webcast. The SRNG Board believes that this is the right choice for SRNG and its shareholders at this time, as it permits shareholders to attend and participate in the extraordinary general meeting while safeguarding the health and safety of SRNG’s shareholders, directors and management team. You will be able to attend the extraordinary general meeting online, vote, view the list of shareholders entitled to vote at the extraordinary general meeting and submit your questions during the extraordinary general meeting by visiting                 . To participate in the virtual meeting, you will need a 12-digit control number assigned by Continental Stock Transfer & Trust Company. The meeting webcast will begin promptly at                 , New York City time. We encourage you to access the meeting prior to the start time and you should allow ample time for the check-in procedures.

 

Q:

What matters will be considered at the Special Meeting?

 

A:

The SRNG shareholders will be asked to consider and vote on the following proposals:

 

   

a proposal to approve and adopt the Merger Agreement and approve the Business Combination (the “Business Combination Proposal”);

 

   

a proposal for the holders of SRNG Class B ordinary shares to approve, assuming the Business Combination Proposal is approved and adopted, the transfer of SRNG by way of continuation to Delaware and, immediately upon being de-registered in the Cayman Islands, continuing and domesticating as a corporation incorporated under the laws of the state of Delaware (the “Domestication Proposal”);

 

   

a proposal to approve, assuming the Business Combination Proposal and the Domestication Proposal are approved and adopted, the Proposed Charter and the Proposed Bylaws, which together will replace SRNG’s Current Charter and will be in effect upon the Closing (the “Governing Documents Proposal”);

 

   

a proposal to approve, on a non-advisory basis and as required by applicable SEC guidance, certain material differences between the Proposed Charter and Proposed Bylaws and the Current Charter (the “Advisory Governing Documents Proposals”);

 

   

a proposal to approve, assuming the Business Combination Proposal, the Domestication Proposal and the Governing Documents Proposal are approved and adopted, the election of seven directors to the New Ginkgo Board (the “Director Election Proposal”);

 

   

to consider and vote upon a proposal to approve, assuming the Business Combination Proposal, the Domestication Proposal, the Governing Documents Proposal and the Director Election Proposal are approved and adopted, for the purposes of complying with the applicable listing rules of Nasdaq, the issuance of (x) shares of New Ginkgo Class A common stock pursuant to the terms of the Merger Agreement (y) shares of New SRNG Class A common stock to the PIPE Investors in connection with the Private Placement, plus any additional shares pursuant to subscription agreements we may enter into prior to Closing (the “Stock Issuance Proposal”);

 

   

to consider and vote upon a proposal to approve, assuming the Business Combination Proposal, the Domestication Proposal, the Governing Documents Proposal, the Director Election Proposal, and the Stock Issuance Proposal are approved and adopted, the 2021 Plan, including the authorization of the initial share reserve under the 2021 Plan (the “Incentive Plan Proposal”);

 

   

to consider and vote upon a proposal to approve, assuming the Business Combination Proposal, the Domestication Proposal, the Governing Documents Proposal, the Director Election Proposal, the Stock Issuance Proposal and the Incentive Plan Proposal are approved and adopted, the ESPP, including the authorization of the initial share reserve under the ESPP (the “ESPP Proposal”); and

 

   

to consider and vote upon a proposal to approve the adjournment of 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

 

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at the time of the Special Meeting, any of the condition precedent proposals would not be duly approved and adopted by our shareholders or we determine that one or more of the closing conditions under the Merger Agreement is not satisfied or waived (the “Adjournment Proposal”).

 

Q:

Is my vote important?

 

A:

Yes. The Business Combination cannot be completed unless the Merger Agreement is adopted by the SRNG shareholders holding a majority of the votes cast on such proposal and the other condition precedent proposals achieve the necessary vote outlined below. Only SRNG shareholders as of the close of business on                     , 2021 the record date for the Special Meeting, are entitled to vote at the Special Meeting. The SRNG Board unanimously recommends that such SRNG shareholders, and in the case of the Domestication Proposal, the holders of SRNG Class B ordinary shares, vote “FOR” the approval of the Business Combination Proposal, “FOR” the approval of the Domestication Proposal, “FOR” the approval of the Governing Documents Proposal, “FOR” the approval, on an advisory basis, of the Advisory Governing Documents Proposals, “FOR” the approval of the Director Election Proposal, “FOR” the approval of the Stock Issuance Proposal, “FOR” the approval of the Incentive Plan Proposal, “FOR” the approval of the ESPP Proposal and “FOR” the approval of the Adjournment Proposal.

 

Q:

If my shares are held in “street name” by my bank, brokerage firm or other nominee, will my bank, brokerage firm or other nominee automatically vote those shares for me?

 

A:

No. A “broker non-vote” occurs when a broker submits a proxy that states that the broker does not vote for some or all of the proposals because the broker has not received instructions from the beneficial owners on how to vote on the proposals and does not have discretionary authority to vote in the absence of instructions. Under the relevant rules, brokers are not permitted to vote on any of the matters to be considered at the Special Meeting. As a result, your public shares will not be voted on any matter unless you affirmatively instruct your broker, bank or nominee how to vote your shares in one of the ways indicated by your broker, bank or other nominee. You should instruct your broker to vote your shares in accordance with directions you provide.

 

Q:

What SRNG Shareholder vote is required for the approval of each proposal brought before the Special Meeting? What will happen if I fail to vote or abstain from voting on each proposal?

 

A:

The Business Combination Proposal. Approval of the Business Combination Proposal requires an ordinary resolution under Cayman Islands law, being the affirmative vote of a majority of the ordinary shares represented in person or by proxy and entitled to vote thereon and who vote at the Special Meeting. The failure to vote, abstentions and broker non-votes will have no effect on the outcome of the proposal. Our Sponsor, directors and executive officers have agreed to vote their shares in favor of the Business Combination. Accordingly, if all of our outstanding shares were to be voted, we would only need the additional affirmative vote of shares representing approximately 38% of the outstanding shares in order to approve the Business Combination. Because the Business Combination only requires a majority of the votes cast at the Special Meeting in order to be approved and because a quorum will exist at the Special Meeting if a majority of the outstanding SRNG ordinary shares as of the record date are present, the Business Combination could be approved by the affirmative vote of shares representing as little as 25% of the outstanding SRNG Shares, or approximately 6% of the SRNG Class A ordinary shares outstanding.

The Domestication Proposal. Approval of the Domestication Proposal requires a special resolution, being the affirmative vote of holders of a majority of at least two-thirds of the SRNG Class B ordinary shares represented in person or by proxy and entitled to vote thereon and who vote at the Special Meeting. The failure to vote, abstentions and broker non-votes will have no effect on the outcome of the proposal.

The Governing Documents Proposal. Approval of the Governing Documents Proposal requires a special resolution under Cayman Islands law, being the affirmative vote of holders of a majority of at least

 

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two-thirds of the ordinary shares represented in person or by proxy and entitled to vote thereon and who vote at the Special Meeting. The failure to vote, abstentions and broker non-votes will have no effect on the outcome of the proposal.

The Advisory Governing Documents Proposals. Approval of each of the Advisory Governing Documents Proposals, each of which is a non-binding vote, requires a special resolution under Cayman Islands law, being the affirmative vote of holders of a majority of at least two-thirds of the ordinary shares represented in person or by proxy and entitled to vote thereon and who vote at the Special Meeting. The failure to vote, abstentions and broker non-votes have no effect on the outcome of the proposals.

The Director Election Proposal. Approval of the Director Election Proposal requires an ordinary resolution under Cayman Islands law, being the affirmative vote of holders of a majority of the ordinary shares represented in person or by proxy and entitled to vote thereon and who vote at the Special Meeting. Under the terms of the Current Charter, only the holders of the SRNG Class B ordinary shares are entitled to vote on the election of directors to the SRNG Board. The failure to vote, abstentions and broker non-votes have no effect on the outcome of the proposal.

The Stock Issuance Proposal. Approval of the Stock Issuance Proposal requires an ordinary resolution under Cayman Islands law, being the affirmative vote of holders of a majority of the ordinary shares represented in person or by proxy and entitled to vote thereon and who vote at the Special Meeting. The failure to vote, abstentions and broker non-votes will have no effect on the outcome of the proposal.

The Incentive Plan Proposal. Approval of the Incentive Plan Proposal requires an ordinary resolution under Cayman Islands law, being the affirmative vote of holders of a majority of the ordinary shares represented in person or by proxy and entitled to vote thereon and who vote at the Special Meeting. The failure to vote and broker non-votes have no effect on the outcome of the proposal. The failure to vote, abstentions and broker non-votes will have no effect on the outcome of the proposal.

The ESPP Proposal. Approval of the ESPP Proposal requires an ordinary resolution under Cayman Islands law, being the affirmative vote of holders of a majority of the ordinary shares represented in person or by proxy and entitled to vote thereon and who vote at the Special Meeting. The failure to vote, abstentions and broker non-votes will have no effect on the outcome of the proposal.

The Adjournment Proposal. Approval of the Adjournment Proposal requires an ordinary resolution under Cayman Islands law, being the affirmative vote of holders of a majority of the ordinary shares represented in person or by proxy and entitled to vote thereon and who vote at the Special Meeting. The failure to vote, abstentions and broker non-votes have no effect on the outcome of the proposal.

 

Q:

What will New Ginkgo’s equity holders receive in connection with the Business Combination?

A: Under the Merger Agreement, SRNG has agreed to acquire all of the outstanding equity interests of Ginkgo for approximately $15 billion in aggregate consideration in the form of New Ginkgo common stock valued at $10 per share (the “Base Equity Consideration”), plus, subject to the vesting conditions based on New Ginkgo’s stock trading price as further described in this proxy statement/prospectus, up to a total of 180 million shares of New Ginkgo common stock (the “Earn-out Consideration”). Ginkgo stockholders will receive the Base Equity Consideration and the Earn-Out Consideration in the form of shares of New Ginkgo Class A common stock or New Ginkgo Class B common stock as determined in accordance with the Merger Agreement.

The Base Equity Consideration will be allocated among Ginkgo equity holders as follows: (i) each stockholder of Ginkgo holding shares of Ginkgo Class A common stock immediately prior to the effective time of the Business Combination will receive, with respect to each share of Ginkgo Class A common stock it holds, a number of shares of New Ginkgo Class A common stock equal to the Base Equity Value Exchange Ratio, (ii) each stockholder of Ginkgo holding shares of Ginkgo Class B common stock prior to the effective time of the Business Combination will receive, with respect to each share of Ginkgo Class B common stock it holds, a

 

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number of shares of New Ginkgo Class B common stock equal to the Base Equity Value Exchange Ratio, (iii) each option exercisable for Ginkgo common stock of Ginkgo (each, a “Ginkgo option”) that is outstanding immediately prior to the effective time of the Business Combination, will be assumed and converted into a newly issued option exercisable for shares of New Ginkgo common stock (each, a “New Ginkgo option”) having the same terms and conditions as applied to the original Ginkgo option, with appropriate adjustments to the number of shares for which such option is exercisable and the exercise price thereof, (iv) each award of restricted common stock of Ginkgo under Ginkgo’s stock incentive plans (each, a “Ginkgo restricted stock award”) that is outstanding immediately prior to the effective time of the Business Combination will be converted into the right to receive a number of shares of restricted common stock of New Ginkgo (each, a “New Ginkgo restricted stock award”) equal to the Base Equity Value Exchange Ratio on the same terms and conditions as applied to the original Ginkgo restricted stock award, with appropriate adjustments to the number of shares to which each such New Ginkgo restricted stock award relates, (v) each award of restricted stock units of Ginkgo under Ginkgo’s stock incentive plans (each, a “Ginkgo restricted stock unit award”) that is outstanding immediately prior to the effective time of the Business Combination will be converted into the right to receive restricted stock units based on New Ginkgo common stock (each, a “New Ginkgo restricted stock unit award”) on the same terms and conditions as applied to the original Ginkgo restricted stock unit award, with appropriate adjustments to the number of shares to which each such New Ginkgo restricted stock unit relates, and (vi) each warrant to purchase shares of Ginkgo capital stock (each, a “Ginkgo warrant”) that is outstanding and unexercised immediately prior to the effective time of the Business Combination and that is not automatically exercised in full in accordance with its terms by virtue of the occurrence of the Business Combination will be assumed and converted into a warrant exercisable for shares of New Ginkgo Class A common stock (each, a “New Ginkgo assumed warrant”) having the same terms and conditions as applied to the original Ginkgo warrant immediately prior to the effective time of the Business Combination, with appropriate adjustments to the number of shares for which such New Ginkgo assumed warrant is exercisable and the exercise price thereof.

In addition, the Merger Agreement contemplates that the holders of Ginkgo common stock, Ginkgo options, Ginkgo restricted stock awards, Ginkgo restricted stock unit awards and Ginkgo warrants outstanding immediately prior to the effective time of the Business Combination will collectively be entitled to receive or, in the case of the holders of Ginkgo options, Ginkgo restricted stock units, Ginkgo restricted stock unit awards and Ginkgo warrants, to receive New Ginkgo options, New Ginkgo restricted stock units, New Ginkgo restricted stock unit awards or New Ginkgo assumed warrants exercisable for, or based upon) a proportional amount of the Earn-out Consideration, which is divided into four equal tranches subject to the vesting during the five years after the closing date of the Business Combination (the “Earn-out Period”) based on the conditions below:

 

   

If the trading price per share of New Ginkgo Class A common stock at any point during the trading hours of a trading day is greater than or equal to $12.50 for any 20 trading days within any period of 30 consecutive trading days during the Earn-out Period, 25% of the Earn-out Consideration will immediately vest;

 

   

If the trading price per share of New Ginkgo Class A common stock at any point during the trading hours of a trading day is greater than or equal to $15.00 for any 20 trading days within any period of 30 consecutive trading days during the Earn-out Period, an additional 25% of the Earn-out Consideration will immediately vest;

 

   

If the trading price per share of New Ginkgo Class A common stock at any point during the trading hours of a trading day is greater than or equal to $17.50 for any 20 trading days within any period of 30 consecutive trading days, an additional 25% of the Earn-out Consideration will immediately vest; and

 

   

If the trading price per share of New Ginkgo Class A common stock at any point during the trading hours of a trading day is greater than or equal to $20.00 for any 20 trading days within any period of 30 consecutive trading days, the remaining 25% of the Earn-out Consideration will immediately vest.

Shares of New Ginkgo Class B common stock will have the same economic terms as shares of New Ginkgo Class A common stock, except that shares of New Ginkgo Class A common stock will have one vote

 

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per share and shares of New Ginkgo Class B common stock will have 10 votes per share, and the holders of New Ginkgo Class B common stock, as a class, will be entitled, for so long as the outstanding shares of New Ginkgo Class B common stock continue to represent at least 2% of all of the outstanding shares of New Ginkgo common stock, to elect 25% of the directors constituting the New Ginkgo Board. Generally, each outstanding share of New Ginkgo Class B common stock will convert into one share of New Ginkgo Class A common stock (i) at the election of the holder or (ii) subject to the Stock Policies (as defined in the Proposed Charter), upon the holder ceasing to be an Eligible Holder (as defined in the Proposed Charter) for any reason (including by virtue of such holder ceasing to serve as a director or employee of New Ginkgo or by virtue of the transfer (subject to limited exceptions set forth in the Proposed Charter) of such a share of New Ginkgo Class B common stock to a person other than an Eligible Holder) unless, in each case, a majority of the independent directors of the New Ginkgo Board determine that such transfer or event will not result in such automatic conversion.

 

Q:

What equity stake will current SRNG shareholders and Ginkgo stockholders hold in New Ginkgo immediately after the consummation of the Business Combination?

 

A:

It is anticipated that, upon completion of the Business Combination, the ownership interests in New Ginkgo will be as set forth in the table below:

 

     Assuming No
Redemptions
of
Public
Shares
     Assuming
Maximum
Redemptions of
Public Shares(1)
 

Ginkgo Stockholders(2)

     1,500,047,728        1,500,047,728  

SRNG Public Shareholders

     172,500,000        47,500,000  

PIPE Investors

     77,500,000        77,500,000  

Initial Stockholders(3)

     30,232,500        7,775,157  
  

 

 

    

 

 

 
     1,780,280,228        1,632,822,885  
  

 

 

    

 

 

 

 

(1)

Assumes that holders of 125,000,000 public shares exercise their redemption rights in connection with the Business Combination (maximum redemption scenario based on approximately $1.725 billion held in trust as of June 15, 2021 and a redemption price of $10.00 per share).

(2)

Assumes that the aggregate cash consideration is $17,774 million in the no redemption scenario and $16,524 million in the maximum redemption scenario, based on estimated cash on hand at closing and includes both the shares of New Ginkgo Class A common stock and New Ginkgo Class B common stock to be issued and outstanding (but not the 1,599,420 shares of New Ginkgo Class A common stock underlying the Ginkgo warrants).

(3)

Excludes 12.9 million and 18.5 million Sponsor Earn-out Shares under the no redemption scenario and the maximum redemption scenario, respectively.

The share numbers set forth above do not take into account (a) public warrants and private placement warrants that will remain outstanding immediately following the Business Combination and may be exercised thereafter (commencing the later of 30 days after the Closing and 12 months from the closing of our initial public offering, which occurred on February 26, 2021), (b) the Earn-out Consideration held by the SRNG Earn-out Group, which will be subject to vesting and forfeiture as provided in the Sponsor Support Agreement, and the Earn-out Consideration issued to the Ginkgo Earn-out Group, which will be subject to vesting and forfeiture as provided in the Merger Agreement or (c) the issuance of any shares upon completion of the Business Combination under the 2021 Plan, a copy of which is attached to this proxy statement/prospectus as Annex E. If the actual facts are different than the assumptions set forth above, the share numbers set forth above will be different.

For more information, please see the section entitled “Unaudited Pro Forma Condensed Combined Financial Information.”

 

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In addition, there are currently outstanding an aggregate of 53,750,000 warrants to acquire SRNG Class A ordinary shares, which comprise 19,250,000 private placement warrants held by our Sponsor and 34,500,000 public warrants. Upon the Closing, 10% of the private placement warrants will be forfeited to New Ginkgo and cancelled for no consideration. Each of our outstanding whole warrants is exercisable commencing the later of 30 days following the Closing for one share of New Ginkgo Class A common stock at $11.50 per share. Therefore, as of the date of this proxy statement/prospectus, if we assume that each outstanding whole warrant is exercised and one share of New Ginkgo Class A common stock is issued as a result of such exercise, with payment to New Ginkgo of the exercise price of $11.50 per whole warrant for one whole share, our fully-diluted share capital would increase by a total of              shares, with approximately $             paid to exercise the warrants.

Furthermore, subject to approval by SRNG shareholders of the Business Combination Proposal, the Domestication Proposal and the Governing Documents Proposal, in connection with the Closing, we will adopt a multi-class stock structure and certain directors and employees of New Ginkgo will receive shares of New Ginkgo Class B common stock, which will have 10:1 voting rights as compared to the shares of New Ginkgo Class A common stock, such that as of immediately following the completion of the Business Combination, the employees and directors of New Ginkgo are currently expected to hold in the aggregate (assuming no redemptions) approximately 81.9% of the voting power of the issued and outstanding capital stock of New Ginkgo. See “Risk Factors—Risks Related to our Organizational Structure and Governance—Following the consummation of the Business Combination, only our employees and directors will be entitled to hold shares of New Ginkgo Class B common stock (including shares of New Ginkgo Class B common stock granted or otherwise issued to our employees and directors in the future), which shares will have ten votes per share. This will limit or preclude other stockholders’ ability to influence the outcome of matters submitted to stockholders for approval, including the election of directors, the approval of certain employee compensation plans, the adoption of amendments to our organizational documents and the approval of any merger, consolidation, sale of all or substantially all of our assets, or other major corporate transaction requiring stockholder approval.

 

Q:

What voting power will current SRNG shareholders, Ginkgo employees and directors and other Ginkgo Stockholders hold in New Ginkgo immediately after the consummation of the Business Combination?

 

A:

It is anticipated that, upon completion of the Business Combination, the voting power in New Ginkgo will be as set forth in the table below (which was, except as noted below, prepared using the same assumptions as the immediately preceding table):

 

     Assuming No
Redemptions
of
Public
Shares
     Assuming
Maximum
Redemptions
of

Public
Shares
 

Ginkgo employees and directors

     81.9%        83.7%  

Other Ginkgo Stockholders

     14.0%        14.3%  

SRNG Public Shareholders

     2.5%        0.7%  

PIPE Investors

     1.1%        1.2%  

Sponsor

     0.4%        0.1%  
  

 

 

    

 

 

 

Total

     100%        100%  

 

Q:

What happens to the funds deposited in the Trust Account after consummation of the Business Combination?

 

A:

A total of $1.725 billion, including $60,375,000 of underwriters’ deferred discount and $25,875,000 of the proceeds of the sale of the private placement warrants, was placed in a Trust Account maintained by Continental, acting as trustee. As of June 15, 2021 there were investments and cash held in the Trust

 

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  Account of $1,725,124,302.45. These funds will not be released until the earlier of the Closing or the redemption of our public shares if we are unable to complete an initial business combination by February 26, 2023, although we may withdraw the interest earned on the funds held in the Trust Account to pay franchise and income taxes and for working capital purposes (subject to an aggregate limit of $3,000,000).

 

Q:

What happens if a substantial number of the public shareholders vote in favor of the Business Combination Proposal and exercise their redemption right?

 

A:

SRNG shareholders who vote in favor of the Business Combination may also nevertheless exercise their redemption rights. Accordingly, the Business Combination may be consummated even though the funds available in the Trust Account and the number of public shareholders are reduced as a result of redemptions by public shareholders, or, if the funds available in the Trust Account are reduced such that the Minimum Proceeds Condition is not satisfied, the Business Combination may not be consummated. In addition, in the event that there are fewer public shares and public shareholders, the trading market for New Ginkgo Class A common stock may be less liquid than the market for SRNG Class A ordinary shares was prior to consummation of the Business Combination and New Ginkgo may not be able to meet the listing standards for the NYSE or another national securities exchange. In addition, with less funds available in the Trust Account, the working capital infusion from the Trust Account into Ginkgo’s business will be reduced. As a result, the proceeds will be greater in the event that no public shareholders exercise redemption rights with respect to their public shares for a pro rata portion of the Trust Account as opposed to the scenario in which SRNG’s public shareholders exercise the maximum allowed redemption rights.

 

Q:

What amendments will be made to the Current Charter?

 

A:

We are asking SRNG shareholders to approve the Proposed Charter that will be effective upon the consummation of the Business Combination. The Proposed Charter provides for various changes that the SRNG Board believes are necessary to address the needs of the post-Business Combination company, including, among other things: (i) the increase of the total number of authorized shares of all classes of capital stock, par value of $0.0001 per share, from 481,000,000 shares to 16,000,000,000 shares, consisting of 15,800,000,000 shares of common stock, including 10,500,000,000 shares of New Ginkgo Class A common stock, par value $0.0001 per share, 4,500,000,000 shares of New Ginkgo Class B common stock, par value $0.0001 per share, 800,000,000 shares of Class C common stock, par value $0.0001 per share, and 200,000,000 shares of preferred stock, par value $0.0001 per share; (ii) the establishment of a multi-class stock structure pursuant to which New Ginkgo Class A common stock will carry one vote per share, New Ginkgo Class B common stock will carry ten votes per share and New Ginkgo Class C common stock will not carry any voting rights (except as otherwise expressly provided in the Proposed Charter or required by applicable law), as described herein and in the Proposed Charter; (iii) certain transfer restrictions relating to the Base Equity Consideration and the Earn-Out Consideration; (iv) changes to the required vote to amend the charter and bylaws; and (v) the elimination of certain provisions specific to SRNG’s status as a blank check company. In connection with the consummation of the Business Combination, we intend to adopt an amendment to the Proposed Charter in order to change the corporate name of “Soaring Eagle Acquisition Corp.” to “Ginkgo Bioworks Holdings, Inc.”

Pursuant to Cayman law and the Current Charter, SRNG is required to submit the Governing Documents Proposal to SRNG’s shareholders for approval. For additional information, see the section entitled “The Governing Documents Proposal.”

 

Q:

What material negative factors did the SRNG Board consider in connection with the Business Combination?

 

A:

The SRNG Board considered certain potentially material negative factors or material risk factors in connection with the Business Combination, including (i) the history of Ginkgo’s net losses and the fact that,

 

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  going forward, New Ginkgo will require substantial additional capital to fund its business, (ii) whether New Ginkgo will be able to enter into a definitive agreement with the U.S. International Development Finance Corporation and its overall level of indebtedness, (iii) that Ginkgo owns equity interests in several of its customers and has exposure to the volatility and liquidity risks inherent in holding such equity interests, (iv) that Ginkgo’s revenue is currently concentrated in a limited number of customers and New Ginkgo’s growth will depend on expanding that customer base, (v) rapidly changing technology and extensive competition in the synthetic biology industry, (vi) the protection of intellectual property, (vii) the challenges in adequately protecting biological materials, (viii) the important roles that Ginkgo’s founders have played in its business and the dependence that Ginkgo may have on its founders in the successful execution of its business plan, and (ix) uncertainty with regards to the regulatory framework for synthetic biology. The SRNG Board also weighed the risk around the New Ginkgo’s multi-class stock structure (with “super-voting” rights for holders of shares of New Ginkgo Class B common stock). These factors are discussed in greater detail in the section entitled “The Business Combination Proposal—SRNG Board Reasons for the Approval of the Business Combination,” as well as in the section entitled “Risk Factors—Risk Factors Relating to the Business Combination and Integration of Ginkgo’s Business.”

 

Q:

Do I have redemption rights?

 

A:

If you are a public shareholder, you have the right to request that SRNG redeem all or a portion of your public shares for cash, provided that you follow the procedures and deadlines described elsewhere in this proxy statement/prospectus under the heading “The Special Meeting—Redemption Rights.” Public shareholders may elect to redeem all or a portion of their public shares even if they vote for the Business Combination Proposal. We sometimes refer to these rights to elect to redeem all or a portion of the public shares into a pro rata portion of the cash held in the Trust Account as “redemption rights.” If you wish to exercise your redemption rights, please see the answer to the next question: “How do I exercise my redemption rights?”

Notwithstanding the foregoing, a public shareholder, together with any affiliate of such public shareholder or any other person with whom such public shareholder is acting in concert or as a “group” (as defined in Section 13(d)(3) of the Exchange Act), will be restricted from redeeming its public shares with respect to more than an aggregate of 20% of the public shares. Accordingly, if a public shareholder, alone or acting in concert or as a group, seeks to redeem more than 20% of the public shares, then any such shares in excess of that 20% limit would not be redeemed for cash.

Our Sponsor and our directors at the time of our initial public offering entered into the SRNG Letter Agreement, pursuant to which they agreed to waive their redemption rights with respect to their shares in connection with the completion of a business combination.

 

Q:

How do I exercise my redemption rights?

 

A:

If you are a public shareholder and wish to exercise your right to redeem your public shares, you must:

 

(i) (a) hold public shares or (b) hold public shares through units and elect to separate your units into the underlying public shares and public warrants prior to exercising your redemption rights with respect to the public shares; and

 

  (ii)

prior to                     , New York City time, on                     , 2021, (a) submit a written request to Continental that SRNG redeem your public shares for cash and (b) deliver your public shares to Continental, physically or electronically through The Depository Trust Company (“DTC”).

The address of Continental is listed under the question “Whom do I call if I have questions about the Special Meeting or the Business Combination?” below.

As noted above, holders of units must elect to separate the underlying public shares and public warrants prior to exercising redemption rights with respect to the public shares. If holders hold their units in an

 

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account at a brokerage firm or bank, holders must notify their broker or bank that they elect to separate the units into the underlying public shares and public warrants, or if a holder holds units registered in its own name, the holder must contact Continental directly and instruct them to do so.

Any public shareholder will be entitled to request that their public shares be redeemed for a per-share price, payable in cash, equal to the aggregate amount then on deposit in the Trust Account, calculated as of two business days prior to the consummation of the Business Combination, including interest earned on the funds held in the Trust Account and not previously released to us to fund our working capital requirements (subject to an aggregate limit of $3,000,000) and/or to pay our taxes, divided by the number of then issued and outstanding public shares. For illustrative purposes, as of June 15, 2021, this would have amounted to approximately $10.00 per public share. However, the proceeds deposited in the Trust Account could become subject to the claims of our creditors, if any, which could have priority over the claims of our public shareholders, regardless of whether such public shareholders vote for or against the Business Combination Proposal. Therefore, the per-share distribution from the Trust Account in such a situation may be less than originally anticipated due to such claims. Your vote on any proposal will have no impact on the amount you will receive upon exercise of your redemption rights. It is anticipated that the funds to be distributed to public shareholders electing to redeem their public shares will be distributed promptly after the consummation of the Business Combination.

If you are a holder of public shares, you may exercise your redemption rights by submitting your request in writing to Continental at the address listed under the question “Whom do I call if I have questions about the Special Meeting or the Business Combination?” below.

Any request for redemption, once made by a holder of public shares, may be withdrawn at any time up to the deadline for submitting redemption requests, which is                     , 2021 (two business days prior to the date of the Special Meeting), and thereafter, with our consent, until the Closing. If you deliver your shares for redemption to Continental and later decide prior to the deadline for submitting redemption requests not to elect redemption, you may request that SRNG instruct Continental to return the shares to you (physically or electronically). You may make such request by contacting Continental at the phone number or address listed at the end of this section.

Any corrected or changed written exercise of redemption rights must be received by SRNG’s secretary prior to the deadline for submitting redemption requests. No request for redemption will be honored unless the holder’s share has been delivered (either physically or electronically) to Continental prior to                     , New York City time, on                     , 2021.

If you are a holder of public shares and you exercise your redemption rights, it will not result in the loss of any SRNG warrants that you may hold.

 

Q:

If I am a holder of units, can I exercise redemption rights with respect to my units?

 

A:

No. Holders of outstanding units must elect to separate the units into the underlying public shares and public warrants prior to exercising redemption rights with respect to the public shares. If you hold your units in an account at a brokerage firm or bank, you must notify your broker or bank that you elect to separate the units into the underlying public shares and public warrants, or if you hold units registered in your own name, you must contact Continental, SRNG’s transfer agent, directly and instruct them to do so. If you fail to cause your units to be separated and delivered to Continental, SRNG’s transfer agent, prior to                     , New York City time, on                     , 2021, you will not be able to exercise your redemption rights with respect to your public shares.

 

Q:

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

 

A:

The U.S. federal income tax consequences of exercising your redemption rights with respect to your public shares depend on your particular facts and circumstances. It is possible that you may be treated as selling

 

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  your public shares for cash and, as a result, recognize gain or loss. It is also possible that the redemption may be treated as a distribution for U.S. federal income tax purposes depending on the amount of public shares that you own or are deemed to own (including through the ownership of New Ginkgo warrants). For a more complete discussion of the U.S. federal income tax considerations of an exercise of redemption rights, see “U.S. Federal Income Tax Considerations.”

Additionally, because the Domestication will occur prior to the redemption of any SRNG shareholder, U.S. Holders (as defined in “U.S. Federal Income Tax Considerations—I. U.S. Holders”) exercising redemption rights will be subject to the potential tax consequences of Section 367 of the Code as well as potential tax consequences of the U.S. federal income tax rules relating to a passive foreign investment company (“PFIC”). The tax consequences of Section 367 of the Code and the PFIC rules are discussed more fully below under “U.S. Federal Income Tax Considerations—I. U.S. Holders.”

TAX MATTERS ARE COMPLICATED, AND THE TAX CONSEQUENCES OF EXERCISING YOUR REDEMPTION RIGHTS WILL DEPEND ON THE FACTS OF YOUR OWN SITUATION. YOU SHOULD CONSULT YOUR OWN TAX ADVISOR AS TO THE SPECIFIC TAX CONSEQUENCES OF THE EXERCISE OF REDEMPTION RIGHTS TO YOU IN YOUR PARTICULAR CIRCUMSTANCES.

 

Q:

How does the SRNG Board recommend that I vote?

 

A:

The SRNG Board recommends that the SRNG shareholders, and in the case of the Domestication Proposal, the holders of SRNG Class B ordinary shares, vote “FOR” the approval of the Business Combination Proposal, “FOR” the approval of the Domestication Proposal, “FOR” the approval of the Governing Documents Proposal, “FOR” the approval, on an advisory basis, of the Advisory Governing Documents Proposals, “FOR” the approval of the Director Election Proposal, “FOR” the approval of the Stock Issuance Proposal, “FOR” the approval of the Incentive Plan Proposal, “FOR” the approval of the ESPP Proposal and “FOR” the approval of the Adjournment Proposal. For more information regarding how the SRNG Board recommends that SRNG shareholders vote, see the section entitled “The Business Combination Proposal—SRNG Board Reasons for the Approval of the Business Combination.”

 

Q:

How does our Sponsor intend to vote its shares?

 

A:

In connection with our initial public offering, our Sponsor, our directors and our executive officers at the time of our initial public offering entered into a letter agreement to vote their shares in favor of the Business Combination Proposal, and we also expect them to vote their shares in favor of all other proposals being presented at the Special Meeting. Our Sponsor owns approximately 20% of our issued and outstanding ordinary shares. Accordingly, if all of our outstanding shares were to be voted, we would need the affirmative vote of approximately 30% of the remaining shares to approve the Business Combination.

 

Q:

May our Sponsor purchase public shares or warrants prior to the Special Meeting?

 

A:

At any time prior to the Special Meeting, during a period when they are not then aware of any material nonpublic information regarding SRNG or its securities, our Sponsor, Ginkgo and/or their respective affiliates may, subject to applicable law, purchase SRNG ordinary shares and/or warrants from investors, or they may enter into transactions with such investors and others to provide them with incentives to acquire public shares or vote their public shares in favor of the Business Combination Proposal. The purpose of such share purchases and other transactions would be to increase the likelihood that the proposals presented for approval at the Special Meeting are approved. Any such share purchases and other transactions may thereby increase the likelihood of obtaining shareholder approval of the Business Combination. This may result in the completion of our Business Combination in a way that may not otherwise have been possible. While the

 

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  exact nature of any such incentives has not been determined as of the date of this proxy statement/prospectus, they might include, without limitation, arrangements to protect such investors or holders against potential loss in value of their shares, including the granting of put options and the transfer to such investors or holders of shares or rights owned by our Sponsor for nominal value.

Entering into any such arrangements may have a depressive effect on our public shares. For example, as a result of these arrangements, an investor or holder may have the ability to effectively purchase shares at a price lower than market and may therefore be more likely to sell the shares it owns, either prior to or immediately after the Special Meeting.

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 public shares by the persons described above would allow them to exert more influence over the approval of the proposals to be presented at the Special Meeting and would likely increase the chances that such proposals would be approved. As of the date of this proxy statement/prospectus, there have been no such discussions and no agreements to such effect have been entered into with any such investor or holder.

 

Q:

Who is entitled to vote at the Special Meeting?

 

A:

The SRNG Board has fixed                     , 2021 as the record date for the Special Meeting. All holders of record of SRNG Shares as of the close of business on the record date are entitled to receive notice of, and to vote at, the Special Meeting, provided that the Domestication Proposal is required to be voted on only by the holders of SRNG Class B ordinary shares, provided that those SRNG Class B ordinary shares remain outstanding on the date of the Special Meeting. Physical attendance at the Special Meeting is not required to vote. See the section entitled “Questions and Answers About the Business Combination and the Special Meeting—How can I vote my shares without attending the Special Meeting?” on page 22 for instructions on how to vote your SRNG Shares without attending the Special Meeting.

 

Q:

How many votes do I have?

 

A:

Each SRNG shareholder of record is entitled to one vote for each SRNG ordinary share held by such holder as of the close of business on the record date. As of the close of business on the record date, there were outstanding SRNG ordinary shares.

 

Q:

What constitutes a quorum for the Special Meeting?

 

A:

A quorum is the minimum number of shareholders necessary to hold a valid shareholder meeting.

A quorum will exist at the Special Meeting with respect to each matter to be considered at the Special Meeting if the holders of a majority of the outstanding SRNG Shares as of the record date are present in person (which would include presence at the virtual Special Meeting) or represented by proxy at the Special Meeting. All shares represented by proxy are counted as present for purposes of establishing a quorum. As of the record date for the extraordinary general meeting,              ordinary shares would be required to achieve a quorum.

 

Q:

Why is SRNG proposing the Domestication?

 

A:

The SRNG Board of directors believes that there are significant advantages to us that will arise as a result of a change of SRNG’s domicile to Delaware. Further, the SRNG Board believes that any direct benefit that the DGCL provides to a corporation also indirectly benefits its stockholders, who are the owners of the corporation. The SRNG Board believes that there are several reasons why transfer by way of continuation to Delaware is in the best interests of SRNG and its shareholders, including (i) the prominence, predictability and flexibility of the DGCL, (ii) Delaware’s well-established principles of corporate governance and (iii) the increased ability for Delaware corporations to attract and retain qualified directors.

 

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To effect the Domestication, we will file an application for deregistration with the Cayman Islands Registrar of Companies, together with the necessary accompanying documents, and file a certificate of corporate domestication and a certificate of incorporation with the Secretary of State of the State of Delaware, under which we will be domesticated and continue as a Delaware corporation. When we use the term “New SRNG,” we refer to Soaring Eagle Acquisition Corp. following the Domestication.

The approval of the Domestication Proposal is a condition to closing the Business Combination under the Merger Agreement. The approval of the Domestication Proposal requires a special resolution, being the affirmative vote of holders of a majority of at least two-thirds of the SRNG Class B ordinary shares represented in person or by proxy and entitled to vote thereon and who vote at the Special Meeting. Abstentions and broker non-votes, while considered present for the purposes of establishing a quorum, will not count as votes cast at the Special Meeting.

 

What

are the U.S. federal income tax consequences of the Domestication?

 

A:

As discussed more fully under “U.S. Federal Income Tax Considerations,” although it is intended for the Domestication to qualify as a reorganization within the meaning of Section 368(a)(l)(F) of the Code, i.e., an F Reorganization, which generally provides for tax-deferred treatment, the Domestication is likely to be a taxable event for U.S. Holders (as defined in “U.S. Federal Income Tax Considerations—I. U.S. Holders”) under Section 367(b) of the Code and the PFIC rules. Assuming that the Domestication qualifies as an F Reorganization, and subject to the PFIC rules discussed below and under “U.S. Federal Income Tax Considerations—I. U.S. Holders—A. Tax Effects of the Domestication to U.S. Holders—5. PFIC Considerations,” U.S. Holders will be subject to Section 367(b) of the Code and, as a result:

 

   

A U.S. Holder whose SRNG Class A ordinary shares have a fair market value of less than $50,000 on the date of the Domestication and who, on the date of the Domestication, owns (actually or constructively) less than 10% of the total combined voting power of all classes of SRNG stock entitled to vote and less than 10% of the total value of all classes of SRNG stock generally will not recognize any gain or loss and will not be required to include any part of SRNG’s earnings in income in connection with the Domestication;

 

   

A U.S. Holder whose SRNG Class A ordinary shares have a fair market value of $50,000 or more on the date of the Domestication and who, on the date of the Domestication, owns (actually or constructively) less than 10% of the total combined voting power of all classes of SRNG stock entitled to vote and less than 10% of the total value of all classes of SRNG stock generally will recognize gain (but not loss) on the exchange of SRNG Class A ordinary shares for New Ginkgo Class A common stock pursuant to the Domestication. As an alternative to recognizing gain, such U.S. Holder may file an election to include in income as a deemed dividend deemed paid by SRNG the “all earnings and profits amount” (as defined in the Treasury Regulations under Section 367 of the Code) attributable to its SRNG Class A ordinary shares provided certain other requirements are satisfied; and

 

   

A U.S. Holder who, on the date of the Domestication, owns (actually or constructively) 10% or more of the total combined voting power of all classes of SRNG stock entitled to vote or 10% or more of the total value of all classes of SRNG stock generally will be required to include in income as a deemed dividend deemed paid by SRNG the “all earnings and profits amount” attributable to its SRNG Class A ordinary shares as a result of the Domestication.

SRNG does not expect to have significant cumulative earnings and profits, if any, on the date of the Domestication.

Subject to the PFIC rules discussed below and under “U.S. Federal Income Tax Considerations—I. U.S. Holders—A. Tax Effects of the Domestication to U.S. Holders—5. PFIC Considerations,” a U.S. Holder should not be subject to U.S. federal income tax with respect to the exchange of such holder’s SRNG warrants for New Ginkgo warrants in the Domestication. However, for purposes of the Section 367(b) rules described above, a U.S. Holder’s ownership of SRNG warrants will be taken into account in determining

 

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whether such holder owns 10% or more of the total combined voting power of all classes of SRNG stock entitled to vote or 10% or more of the total value of all classes of SRNG stock.

As discussed more fully under “U.S. Federal Income Tax Considerations—I. U.S. Holders—A. Tax Effects of the Domestication to U.S. Holders—5. PFIC Considerations,” SRNG believes that it is likely classified as a PFIC for U.S. federal income tax purposes. In such case, notwithstanding the U.S. federal income tax consequences of the Domestication discussed in the foregoing, proposed Treasury Regulations under Section 1291(f) of the Code (which have a retroactive effective date), if finalized in their current form, generally would require a U.S. Holder to recognize gain on the exchange of SRNG Class A ordinary shares or SRNG warrants for New Ginkgo Class A common stock or warrants pursuant to the Domestication. Any such gain would be taxable income with no corresponding receipt of cash in the Domestication. The tax on any such gain would be imposed at the rate applicable to ordinary income and an interest charge would apply based on a complex set of rules. In addition, the proposed Treasury Regulations provide coordinating rules with other sections of the Code, including Section 367(b) of the Code, which affect the manner in which the rules under such other sections apply to transfers of PFIC stock. However, it is difficult to predict whether, in what form, and with what effective date, final Treasury Regulations under Section 1291(f) of the Code may be adopted and how any such Treasury Regulations would apply. Importantly, however, U.S. Holders that make or have made certain elections discussed further under “U.S. Federal Income Tax Considerations—I. U.S. Holders—A. Tax Effects of the Domestication to U.S. Holders—5. PFIC Considerations—d. QEF Election and Mark-to-Market Election” with respect to their SRNG Class A ordinary shares are generally not subject to the same gain recognition rules under the currently proposed Treasury Regulations under Section 1291(f) of the Code. Currently, there are no elections available under the PFIC rules that apply to SRNG warrants, and the application of the PFIC rules to SRNG warrants is unclear. For a more complete discussion of the potential application of the PFIC rules to U.S. Holders as a result of the Domestication, see “U.S. Federal Income Tax Considerations—I. U.S. Holders.

Each U.S. Holder of SRNG Class A ordinary shares or SRNG warrants is urged to consult its own tax advisor concerning the application of the PFIC rules, including the proposed Treasury Regulations, to the exchange of SRNG Class A ordinary shares and SRNG warrants for New Ginkgo Class A common stock and New Ginkgo warrants pursuant to the Domestication.

Additionally, the Domestication may cause Non-U.S. Holders (as defined in “U.S. Federal Income Tax Considerations—II. Non-U.S. Holders”) to become subject to U.S. federal income withholding taxes on any amounts treated as dividends paid in respect of such Non-U.S. Holder’s New Ginkgo Class A common stock after the Domestication.

The tax consequences of the Domestication are complex and will depend on a holder’s particular circumstances. All holders are urged to consult their tax advisors regarding the tax consequences to them of the Domestication, including the applicability and effect of U.S. federal, state, local and non-U.S. tax laws. For a more complete discussion of the U.S. federal income tax considerations of the Domestication, see “U.S. Federal Income Tax Considerations.

 

Q:

What is Ginkgo?

 

A:

Ginkgo Bioworks, Inc. is building a platform to enable customers to program cells as easily as we can program computers. Ginkgo’s platform is market agnostic and enables biotechnology applications across diverse markets, from food and agriculture to industrial chemicals to pharmaceuticals. Ginkgo is also actively supporting a number of biosecurity efforts to respond to COVID-19, including vaccine manufacturing optimization, therapeutics discovery and K-12 pooled testing.

 

Q:

What will happen to my SRNG Shares as a result of the Business Combination?

 

A:

If the Business Combination is completed, (i) each SRNG Class A ordinary share will remain outstanding and automatically become a share of New Ginkgo Class A common stock, and (ii) each SRNG Class B

 

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  ordinary share will be converted into one share of New Ginkgo Class A common stock (and the portion of converted shares that constitute Sponsor Earn-out Shares will be subject to vesting and forfeiture conditions identical to those applicable to the Earn-out Consideration issued to Ginkgo equityholders). See the sections entitled “The Business Combination Proposal—Consideration to Ginkgo Equity Holders” and “Ancillary Agreements Related to the Business Combination—Sponsor Support Agreement” for additional detail on the Sponsor Earn-out Shares.

 

Q:

Where will the New Ginkgo Class A common stock that SRNG shareholders receive in the Business Combination be publicly traded?

 

A:

Assuming the Business Combination is completed, the shares of New Ginkgo Class A common stock (including the New Ginkgo Class A common stock issued in connection with the Business Combination) will be listed and traded on the NYSE under the ticker symbol “DNA” and the public warrants will be listed and traded on the NYSE under the ticker symbol “DNA.WS”.

 

Q:

What happens if the Business Combination is not completed?

 

A:

If the Merger Agreement is not adopted by SRNG shareholders or if the Business Combination is not completed for any other reason by               , then we will seek to consummate an alternative initial business combination prior to February 26, 2023. If we do not consummate an initial business combination by February 26, 2023, we will cease all operations except for the purpose of winding up and redeem our public shares and liquidate the Trust Account, in which case our public shareholders may only receive approximately $10.00 per share and our warrants will expire worthless.

 

Q:

How can I attend and vote my shares at the Special Meeting?

 

A:

SRNG ordinary shares held directly in your name as the shareholder of record of such SRNG ordinary shares as of the close of business on                     , 2021, the record date, may be voted electronically at the Special Meeting. If you choose to attend the Special Meeting, you will need to visit                     , and enter the control number found on your proxy card, voting instruction form or notice you previously received. You may vote during the Special Meeting by following instructions available on the meeting website during the meeting. If your shares are held in “street name” by a broker, bank or other nominee and you wish to attend and vote at the Special Meeting, you will not be permitted to attend and vote electronically at the Special Meeting unless you first obtain a legal proxy issued in your name from the record owner. To request a legal proxy, please contact your broker, bank or other nominee holder of record. It is suggested you do so in a timely manner to ensure receipt of your legal proxy prior to the Special Meeting.

 

Q:

How can I vote my shares without attending the Special Meeting?

 

A:

If you are a shareholder of record of SRNG ordinary shares as of the close of business on                     , 2021, the record date, you can vote by mail by following the instructions provided in the enclosed proxy card. Please note that if you hold your shares in “street name,” which means your shares are held of record by a broker, bank or nominee, you should contact your broker to ensure that votes related to the shares you beneficially own are properly counted. In this regard, you must provide the broker, bank or nominee with instructions on how to vote your shares, or otherwise follow the instructions provided by your bank, brokerage firm or other nominee.

 

Q:

What is a proxy?

 

A:

A proxy is a legal designation of another person to vote the shares you own. If you are a shareholder of record of SRNG ordinary shares as of the close of business on the record date, and you vote by phone, by Internet or by signing, dating and returning your proxy card in the enclosed postage-paid envelope, you designate two of SRNG’s officers as your proxies at the Special Meeting, each with full power to act without the other and with full power of substitution. These two officers are Harry E. Sloan and Eli Baker.

 

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Q:

What is the difference between holding shares as a shareholder of record and as a beneficial owner?

 

A:

If your SRNG ordinary shares are registered directly in your name with Continental you are considered the shareholder of record with respect to those shares, and access to proxy materials is being provided directly to you. If your shares are held in a brokerage account or by a bank or other nominee, then you are considered the beneficial owner of those shares, which are considered to be held in street name. Access to proxy materials is being provided to you by your broker, bank or other nominee who is considered the shareholder of record with respect to those shares.

Direct holders (shareholders of record). For SRNG ordinary shares held directly by you, please complete, sign, date and return each proxy card (or cast your vote by telephone or Internet as provided on each proxy card) or otherwise follow the voting instructions provided in this proxy statement/prospectus in order to ensure that all of your SRNG ordinary shares are voted.

Shares in “street name.” For SRNG ordinary shares held in “street name” through a bank, brokerage firm or other nominee, you should follow the procedures provided by your bank, brokerage firm or other nominee to vote your shares.

 

Q:

If a SRNG shareholder gives a proxy, how will the SRNG ordinary shares covered by the proxy be voted?

 

A:

If you provide a proxy by returning the applicable enclosed proxy card, the individuals named on the enclosed proxy card will vote your SRNG ordinary shares in the way that you indicate when providing your proxy in respect of the SRNG ordinary shares you hold. When completing the proxy card, you may specify whether your SRNG ordinary shares should be voted FOR or AGAINST, or should be abstained from voting on, all, some or none of the specific items of business to come before the Special Meeting.

 

Q:

How will my SRNG ordinary shares be voted if I return a blank proxy?

 

A:

If you sign, date and return your proxy and do not indicate how you want your SRNG ordinary shares to be voted, then your SRNG ordinary shares will be voted “FOR” the approval of the Business Combination Proposal, “FOR” the approval of the Domestication Proposal, “FOR” the approval of the Governing Documents Proposal, “FOR” the approval, on an advisory basis, of the Advisory Governing Documents Proposals, “FOR” the approval of the Director Election Proposal, “FOR” the approval of the Stock Issuance Proposal, “ FOR” the approval of the Incentive Plan Proposal, “FOR” the approval of the ESPP Proposal and “FOR” the approval of the Adjournment Proposal.

 

Q:

Can I change my vote after I have submitted my proxy?

 

A:

Yes. If you are a shareholder of record of SRNG ordinary shares as of the close of business on the record date, you can change or revoke your proxy before it is voted at the meeting in one of the following ways:

 

   

submit a new proxy card bearing a later date;

 

   

give written notice of your revocation to SRNG’s Corporate Secretary, which notice must be received by SRNG’s Corporate Secretary prior to the vote at the Special Meeting; or

 

   

vote electronically at the Special Meeting by visiting                      and entering the control number found on your proxy card, voting instruction form or notice you previously received. Please note that your attendance at the Special Meeting will not alone serve to revoke your proxy.

If your shares are held in “street name” by your broker, bank or another nominee as of the close of business on the record date, you must follow the instructions of your broker, bank or other nominee to revoke or change your voting instructions.

 

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Q:

Where can I find the voting results of the Special Meeting?

 

A:

The preliminary voting results are expected to be announced at the Special Meeting. In addition, within four business days following certification of the final voting results, SRNG will file the final voting results of its Special Meeting with the SEC in a Current Report on Form 8-K.

 

Q:

Are SRNG shareholders able to exercise dissenters’ rights or appraisal rights with respect to the matters being voted upon at the extraordinary general meeting?

 

A:

Neither SRNG’s shareholders nor SRNG’s warrant holders have appraisal rights in connection with the Business Combination or the domestication under Cayman Islands law or under the DGCL.

 

Q:

Are there any risks that I should consider as a SRNG shareholder in deciding how to vote or whether to exercise my redemption rights?

 

A:

Yes. You should read and carefully consider the risk factors set forth in the section entitled “Risk Factors” beginning on page 43 . You also should read and carefully consider the risk factors of SRNG and Ginkgo contained in the documents that are incorporated by reference herein.

 

Q:

What happens if I sell my SRNG ordinary shares before the Special Meeting?

 

A:

The record date for SRNG shareholders entitled to vote at the Special Meeting is earlier than the date of the Special Meeting. If you transfer your SRNG ordinary shares before the record date, you will not be entitled to vote at the Special Meeting. If you transfer your SRNG ordinary shares after the record date but before the Special Meeting, you will, unless special arrangements are made, retain your right to vote at the Special Meeting but will transfer the right to hold New Ginkgo shares to the person to whom you transfer your shares.

 

Q:

When is the Business Combination expected to be completed?

 

A:

Subject to the satisfaction or waiver of the Closing conditions described in the section entitled “The Merger Agreement—Conditions to Closing”, including the adoption of the Merger Agreement by the SRNG shareholders at the Special Meeting, the Business Combination is expected to close in the third quarter of 2021. However, it is possible that factors outside the control of both SRNG and Ginkgo could result in the Business Combination being completed at a later time, or not being completed at all.

 

Q:

Who will solicit and pay the cost of soliciting proxies?

 

A:

SRNG has engaged a professional proxy solicitation firm, Morrow Sodali LLC (“Morrow”), to assist in soliciting proxies for the Special Meeting. SRNG has agreed to pay Morrow a fee of $                , plus disbursements. SRNG will reimburse Morrow for reasonable out-of-pocket expenses and will indemnify Morrow and its affiliates against certain claims, liabilities, losses, damages and expenses. SRNG will also reimburse banks, brokers and other custodians, nominees and fiduciaries representing beneficial owners of our ordinary shares for their expenses in forwarding soliciting materials to beneficial owners of our ordinary shares and in obtaining voting instructions from those owners. SRNG’s management team 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:

What are the conditions to completion of the Business Combination?

 

A:

The Closing is subject to certain conditions, including, among other things, (i) approval by SRNG’s shareholders and Ginkgo’s stockholders of the Merger Agreement, the Business Combination and certain other actions related thereto, (ii) the expiration or termination of the waiting period (or any extension

 

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  thereof) applicable under the Hart-Scott-Rodino Antitrust Improvements Act of 1976 (the “HSR Act”), (iii) the absence of a material adverse event with respect to Ginkgo, the material adverse effects of which are continuing, (iv) the Minimum Proceeds Condition and (v) the continued listing of the shares of New Ginkgo Class A common stock on Nasdaq or the NYSE. If any of these conditions (or any of the other conditions to the Closing set forth in the Merger Agreement) are not satisfied, the Business Combination will not be consummated, unless the unsatisfied condition is permitted by applicable law to be waived, and is waived, by the party entitled to the benefit of such condition. For example, the condition in the foregoing clause (iv) may be waived only by Ginkgo, however the condition set forth in the foregoing clause (ii) may not be waived by either Ginkgo or SRNG. Furthermore, in no event will we redeem our public shares in an amount that would cause our net tangible assets to be less than $5,000,001. See the section entitled “The Business Combination Proposal.”

 

Q:

What should I do now?

 

A:

You should read this proxy statement/prospectus carefully in its entirety, including the annexes, and return your completed, signed and dated proxy card(s) by mail in the enclosed postage-paid envelope or submit your voting instructions by telephone or via the Internet as soon as possible so that your SRNG ordinary shares will be voted in accordance with your instructions.

 

Q:

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

 

A:

Shareholders may receive more than one set of voting materials, including multiple copies of this proxy statement/prospectus 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 a vote with respect to all of your SRNG ordinary shares.

 

Q:

Whom do I call if I have questions about the Special Meeting or the Business Combination?

 

A:

If you have questions about the Special Meeting or the Business Combination, or desire additional copies of this proxy statement/prospectus or additional proxies, you may contact:

Morrow Sodali LLC

470 West Avenue, Suite 3000

Stamford, CT 06902

Tel: (800) 662-5200

Banks and brokers call collect: (203) 658-9400

E-mail: SRNG.info@investor.morrowsodali.com

You also may obtain additional information about SRNG from documents filed with the SEC by following the instructions in the section entitled “Where You Can Find More Information.” If you are a holder of public shares and you intend to seek redemption of your shares, you will need to deliver your public shares (either physically or electronically) to Continental Stock Transfer & Trust Company, SRNG’s transfer agent, at the address below prior to                 , New York City time, on                     , 2021. If you have questions regarding the certification of your position or delivery of your stock, please contact:

Mark Zimkind

Continental Stock Transfer & Trust Company

One State Street Plaza, 30th Floor

New York, New York 10004

E-mail: mzimkind@continentalstock.com

 

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SUMMARY OF THE PROXY STATEMENT/PROSPECTUS

This summary highlights selected information included in this proxy statement/prospectus and does not contain all of the information that may be important to you. You should read this entire document and its annex and the other documents to which we refer before you decide how to vote with respect to the proposals to be considered and voted on at the Special Meeting.

Information About the Parties to the Business Combination

Soaring Eagle Acquisition Corp.

955 Fifth Avenue

New York, NY 10075

(310) 209-7280

Soaring Eagle Acquisition Corp. is a blank check company whose business purpose is to effect a merger, capital stock exchange, asset acquisition, stock purchase, reorganization, or similar business combination with one or more businesses.

Ginkgo Bioworks, Inc.

27 Drydock Avenue, 8th Floor

Boston, MA 02210

(877) 442-5362

Ginkgo Bioworks, Inc. is building a platform to enable customers to program cells as easily as we can program computers. Ginkgo’s platform is market agnostic and enables biotechnology applications across diverse markets, from food and agriculture to industrial chemicals to pharmaceuticals. Ginkgo is also actively supporting a number of biosecurity efforts to respond to COVID-19, including vaccine manufacturing optimization, therapeutics discovery, and K-12 pooled testing. Ginkgo has incurred net losses since its inception. Ginkgo’s net loss attributable to its stockholders was approximately $126.6 million and $119.3 million for the fiscal years ended December 31, 2020 and 2019, respectively, and as of December 31, 2020, Ginkgo had an accumulated deficit of approximately $467.9 million. For more information, see “Risk Factors—Risks Related to Ginkgo’s Business—We have a history of net losses. We expect to continue to incur losses for the foreseeable future, and we may never achieve or maintain profitability.

SEAC Merger Sub Inc.

c/o Soaring Eagle Acquisition Corp.

955 Fifth Avenue

New York, NY 10075

(310) 209-7280

SEAC Merger Sub Inc. is a Delaware corporation and wholly owned subsidiary of Soaring Eagle Acquisition Corp. that was formed for the purpose of effecting a merger with Ginkgo.

The Business Combination and the Merger Agreement

The terms and conditions of the Business Combination are contained in the Merger Agreement, which is attached as Annex A to this proxy statement/prospectus. We encourage you to read the Merger Agreement carefully and in its entirety, as it is the legal document that governs the Business Combination.


 

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If the Merger Agreement is approved and adopted and the Business Combination is consummated, SRNG will be domesticated as a Delaware corporation and, promptly thereafter, Merger Sub will merge with and into Ginkgo, with Ginkgo surviving the merger as a wholly owned subsidiary of Ginkgo Bioworks Holdings, Inc. In addition, in connection with the consummation of the Business Combination, SRNG will be renamed “Ginkgo Bioworks Holdings, Inc.” and is referred to herein as “New Ginkgo” after the consummation of the Business Combination.

Structure of the Business Combination

Pursuant to the Merger Agreement, Merger Sub will merge with and into Ginkgo, with Ginkgo surviving the merger as a wholly owned subsidiary of New Ginkgo. Upon consummation of the foregoing transactions, Ginkgo will be a wholly owned subsidiary of New Ginkgo (formerly SRNG). In addition, immediately prior to the consummation of the Business Combination, New Ginkgo will amend and restate its charter to be the Proposed Charter and adopt a multi-class stock structure, each as described in the section of this proxy statement/prospectus titled “Description of New Ginkgo Securities.”

The following diagrams illustrate in simplified terms the current structure of SRNG and Ginkgo and the expected structure of New Ginkgo (formerly SRNG) upon the Closing.

Simplified Pre-Combination Structure

 

LOGO



 

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Simplified Post-Combination Structure(1)

 

LOGO

 

(1)

Ownership percentages assume no redemptions.

 

(2)

Ginkgo stockholders holding New Ginkgo Class A common stock and Class B common stock will hold approximately 53.1% and 31.1%, respectively, of the shares of New Ginkgo following the consummation of the Business Combination.

Merger Consideration

SRNG has agreed to acquire all of the outstanding equity interests of Ginkgo for approximately $15 billion in aggregate consideration in the form of New Ginkgo common stock valued at $10 per share (the “Base Equity Consideration”), plus, subject to the vesting conditions based on New Ginkgo’s stock trading price as further described in this proxy statement/prospectus, up to a total of 180 million shares of New Ginkgo common stock (the “Earn-out Consideration”). Ginkgo stockholders will receive consideration in the form of shares of New Ginkgo Class A common stock or New Ginkgo Class B common stock, as determined in accordance with the Merger Agreement.

The Base Equity Consideration will be allocated among Ginkgo equity holders as follows: (i) each stockholder of Ginkgo holding shares of Ginkgo Class A common stock immediately prior to the effective time of the Business Combination will receive, with respect to each share of Ginkgo Class A common stock it holds, a number of shares of New Ginkgo Class A common stock equal to the Base Equity Value Exchange Ratio, (ii) each stockholder of Ginkgo holding shares of Ginkgo Class B common stock immediately prior to the effective time of the Business Combination will receive, with respect to each share of Ginkgo Class B common stock it holds, a number of shares of New Ginkgo Class B common stock equal to the Base Equity Value Exchange Ratio, (iii) each option exercisable for Ginkgo common stock (each, a “Ginkgo option”) that is outstanding, immediately prior to the effective time of the Business Combination, will be assumed and converted into a newly issued option exercisable for shares of New Ginkgo common stock (each, a “New Ginkgo option”) having the same terms and conditions as applied to the original Ginkgo option, with appropriate adjustments to the number of shares for which such option is exercisable and the exercise price thereof, (iv) each award of restricted common stock of Ginkgo under Ginkgo’s stock incentive plans (each, a “Ginkgo restricted stock award”) that is outstanding immediately prior to the effective time of the Business Combination will be converted into the right to receive a number of shares of restricted common stock of New Ginkgo (each, a “New Ginkgo restricted stock award”) equal to the Base Equity Value Exchange Ratio having the same terms and conditions as applied to the original Ginkgo restricted stock award, with appropriate adjustments to the number


 

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of shares to which each such New Ginkgo restricted stock award relates, (v) each award of restricted stock units of Ginkgo under Ginkgo’s stock incentive plans (each, a “Ginkgo restricted stock unit award”) that is outstanding immediately prior to the effective time of the Business Combination will be converted into the right to receive restricted stock units based on common stock of New Ginkgo (each, a “New Ginkgo restricted stock unit award”) having the same terms and conditions as applied to the original Ginkgo restricted stock unit award, with appropriate adjustments to the number of shares to which each such New Ginkgo restricted stock unit relates, and (vi) each warrant to purchase shares of Ginkgo capital stock (each, a “Ginkgo warrant”) that is outstanding and unexercised immediately prior to the effective time of the Business Combination and that is not automatically exercised in full in accordance with its terms by virtue of the occurrence of the Business Combination will be assumed and converted into a warrant exercisable for shares of New Ginkgo Class A common stock (each, a “New Ginkgo assumed warrant”) on the same terms and conditions as applied to the original Ginkgo warrant immediately prior to the effective time of the Business Combination, with appropriate adjustments to the number of shares for which such New Ginkgo assumed warrant is exercisable and the exercise price thereof.

In addition, the Merger Agreement contemplates that the holders of Ginkgo common stock, Ginkgo options, Ginkgo restricted stock awards, Ginkgo restricted stock unit awards and Ginkgo warrants outstanding immediately prior to the effective time of the Business Combination will collectively be entitled to receive (or, in the case of the holders of Ginkgo options, Ginkgo restricted stock units, Ginkgo restricted stock unit awards and Ginkgo warrants, to receive New Ginkgo options, New Ginkgo restricted stock units, New Ginkgo restricted stock unit awards or New Ginkgo assumed warrants exercisable for, or based upon) a proportional amount of Earn-out Consideration, which is divided into four equal tranches subject to the vesting during the five years after the closing date of the Business Combination (the “Earn-out Period”) based on the conditions below:

 

   

if the trading price per share of New Ginkgo Class A common stock at any point during the trading hours of a trading day is greater than or equal to $12.50 for any 20 trading days within any period of 30 consecutive trading days during the Earn-out Period, 25% of the Earn-out Consideration will immediately vest;

 

   

if the trading price per share of New Ginkgo Class A common stock at any point during the trading hours of a trading day is greater than or equal to $15.00 for any 20 trading days within any period of 30 consecutive trading days during the Earn-out Period, an additional 25% of the Earn-out Consideration will immediately vest;

 

   

if the trading price per share of New Ginkgo Class A common stock at any point during the trading hours of a trading day is greater than or equal to $17.50 for any 20 trading days within any period of 30 consecutive trading days, an additional 25% of the Earn-out Consideration will immediately vest; and

 

   

if the trading price per share of New Ginkgo Class A common stock at any point during the trading hours of a trading day is greater than or equal to $20.00 for any 20 trading days within any period of 30 consecutive trading days, the remaining 25% of the Earn-out Consideration will immediately vest.

Shares of New Ginkgo Class B common stock will have the same economic terms as shares of New Ginkgo Class A common stock, except that shares of New Ginkgo Class A common stock will have one vote per share and shares of New Ginkgo Class B common stock will have 10 votes per share, and the holders of New Ginkgo Class B common stock, as a class, will have the right, for so long as the outstanding shares of New Ginkgo Class B common stock continue to represent at least 2% of all of the outstanding shares of New Ginkgo common stock, to elect 25% of the directors constituting the New Ginkgo Board. Generally, each outstanding share of New Ginkgo Class B common stock will convert into one share of New Ginkgo Class A common stock (i) at the election of the holder or (ii) subject to the Stock Policies (as defined in the Proposed Charter), upon the holder ceasing to be an Eligible Holder (as defined in the Proposed Charter) for any reason (including by virtue of such holder ceasing to serve as a director or employee of New Ginkgo or by virtue of the transfer (subject to limited exceptions set forth in the Proposed Charter) of such a share of New Ginkgo Class B common stock to a person other than an Eligible Holder) unless, in each case, a majority of the independent directors of the New Ginkgo Board determine that such transfer or event will not result in such automatic conversion.


 

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The Private Placement

SRNG entered into the Subscription Agreements with the PIPE Investors, pursuant to which, among other things, SRNG agreed to issue and sell in private placements an aggregate of 77,500,000 shares of New SRNG Class A common stock to the PIPE Investors for $10.00 per share.

The Private Placement is expected to close on the date on which the Closing occurs, prior to or substantially concurrently with the consummation of the Business Combination but after the Domestication.

Special Meeting of SRNG Shareholders and the Proposals

The Special Meeting will convene on                      , 2021 at             , New York City time, at the offices of White & Case LLP at 1221 Avenue of the Americas, New York, NY 10020, or virtually via live webcast at             . Shareholders may attend, vote and examine the list of SRNG shareholders entitled to vote at the Special Meeting by visiting              and entering the control number found on their proxy card, voting instruction form or notice they previously received. The purpose of the Special Meeting is to consider and vote on the Business Combination Proposal, the Domestication Proposal, the Governing Documents Proposal, the Advisory Governing Documents Proposals, the Director Election Proposal, the Stock Issuance Proposal, the Incentive Plan Proposal, the ESPP Proposal and the Adjournment Proposal.

Approval of the condition precedent proposals is a condition to the obligation of both SRNG and Ginkgo to complete the Business Combination.

Only holders of record of issued and outstanding SRNG ordinary shares as of the close of business on                 , 2021, the record date for the Special Meeting, are entitled to notice of, and to vote at, the Special Meeting or any adjournment or postponement of the Special Meeting. You may cast one vote for each share of SRNG ordinary shares that you owned as of the close of business on the record date.

A quorum of shareholders is necessary to hold a valid shareholder meeting. A quorum will exist at the Special Meeting with respect to each matter to be considered at the Special Meeting if the holders of a majority of the outstanding SRNG ordinary shares as of the record date are present in person (which would include presence at the virtual Special Meeting) or represented by proxy at the Special Meeting. All shares represented by proxy are counted as present for purposes of establishing a quorum.

Approval of the Business Combination Proposal requires the affirmative vote of holders of a majority of the ordinary shares represented in person or by proxy and entitled to vote thereon and who vote at the Special Meeting. The failure to vote, abstentions and broker non-votes will have no effect on the outcome of the proposal.

Approval of the Domestication Proposal requires a special resolution, being the affirmative vote of holders of a majority of at least two-thirds of the SRNG Class B ordinary shares represented in person or by proxy and entitled to vote thereon and who vote at the Special Meeting. The failure to vote, abstentions and broker non-votes will have no effect on the outcome of the proposal.

Approval of the Governing Documents Proposal requires a special resolution under Cayman Islands law, being the affirmative vote of holders of a majority of at least two-thirds of the ordinary shares represented in person or by proxy and entitled to vote thereon and who vote at the Special Meeting. The failure to vote, abstentions and broker non-votes will have no effect on the outcome of the proposal.


 

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Approval of each of the Advisory Governing Documents Proposals, each of which is a non-binding vote, requires a special resolution under Cayman Islands law, being the affirmative vote of holders of a majority of at least two-thirds of the ordinary shares represented in person or by proxy and entitled to vote thereon and who vote at the Special Meeting. The failure to vote, abstentions and broker non-votes have no effect on the outcome of the proposal.

Approval of the Director Election Proposal requires an ordinary resolution under Cayman Islands law, being the affirmative vote of holders of a majority of the ordinary shares represented in person or by proxy and entitled to vote thereon and who vote at the Special Meeting. Under the terms of the Current Charter, only the holders of the SRNG Class B ordinary shares are entitled to vote on the election of directors to our board of directors. The failure to vote, abstentions and broker non-votes have no effect on the outcome of the proposal.

Approval of the Stock Issuance Proposal requires an ordinary resolution under Cayman Islands law, being the affirmative vote of holders of a majority of the ordinary shares represented in person or by proxy and entitled to vote thereon and who vote at the Special Meeting. The failure to vote, abstentions and broker non-votes will have no effect on the outcome of the proposal.

Approval of the Incentive Plan Proposal requires an ordinary resolution under Cayman Islands law, being the affirmative vote of holders of a majority of the ordinary shares represented in person or by proxy and entitled to vote thereon and who vote at the Special Meeting. The failure to vote and broker non-votes have no effect on the outcome of the proposal. The failure to vote, abstentions and broker non-votes will have no effect on the outcome of the proposal.

Approval of the ESPP Proposal requires an ordinary resolution under Cayman Islands law, being the affirmative vote of holders of a majority of the ordinary shares represented in person or by proxy and entitled to vote thereon and who vote at the Special Meeting. The failure to vote, abstentions and broker non-votes will have no effect on the outcome of the proposal.

Approval of the Adjournment Proposal requires an ordinary resolution under Cayman Islands law, being the affirmative vote of holders of a majority of the ordinary shares represented in person or by proxy and entitled to vote thereon and who vote at the Special Meeting. The failure to vote, abstentions and broker non-votes have no effect on the outcome of the proposal.

Recommendation of the SRNG Board

The SRNG Board has determined that the Business Combination is advisable and in the best interests of the SRNG shareholders and recommends that the SRNG shareholders adopt the Merger Agreement and approve the Business Combination. The SRNG Board made its determination after consultation with its legal and financial advisors and consideration of a number of factors, as described in “The Business Combination Proposal — SRNG Board Reasons for the Approval of the Business Combination” beginning on page 115.

The SRNG Board recommends that you vote “FOR” the approval of the Business Combination Proposal, “FOR” the approval of the Domestication Proposal, “FOR” the approval of the Governing Documents Proposal, “FOR” the approval, on an advisory basis, of each of the Advisory Governing Documents Proposals, “FOR” the approval of the Director Election Proposal, “FOR” the approval of the Stock Issuance Proposal, “FOR” the approval of the Incentive Plan Proposal, “FOR” the approval of the ESPP Proposal and “FOR” the approval of the Adjournment Proposal.

For more information about the SRNG Board’s recommendation and the proposals, see the sections entitled “The Special Meeting—Vote Required and SRNG Board Recommendation” and “The Business Combination Proposal—SRNG Board Reasons for the Approval of the Business Combination.”


 

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Regulatory Approvals

The Business Combination is subject to the expiration or termination of the waiting period (or any extension thereof) applicable under the HSR Act. The waiting period expired on June 24, 2021.

Conditions to the Completion of the Business Combination

The Business Combination is subject to customary Closing conditions, including, among others, (i) the expiration or termination of the waiting period (or any extension thereof) applicable under the HSR Act, (ii) SRNG having, and having not redeemed, SRNG Class A ordinary shares or made payments in connection with the Private Placement in an amount that would cause SRNG not to have, at least $5,000,001 of net tangible assets, (iii) the required approval of SRNG shareholders having been obtained for the Business Combination, (iv) the required approval of Ginkgo stockholders having been obtained for the Business Combination, and (v) the New Ginkgo Class A Common stock to be issued in connection with the Business Combination having been approved for listing on the Nasdaq or the NYSE (as elected by Ginkgo). The obligations of SRNG to complete the Business Combination are further conditioned on other Closing conditions, including (i) no material adverse effect with respect to Ginkgo having occurred after the date of the Merger Agreement, the material adverse effects of which are continuing, (ii) the representations and warranties of Ginkgo being true as of the Closing (subject to customary materiality qualifications) and (iii) Ginkgo having complied with its agreements and covenants in the Merger Agreement in all material respects. The obligations of Ginkgo to complete the Business Combination are further conditioned on other Closing conditions, including (i) the Minimum Proceeds Condition being satisfied, (ii) the Domestication having been completed and (iii) SRNG having delivered to Ginkgo evidence reasonably acceptable to Ginkgo that the New Ginkgo Board will be constituted, immediately after closing, as provided in the Merger Agreement.

Termination

Mutual Termination Rights

The Merger Agreement may be terminated and the transactions contemplated thereby abandoned:

 

   

by mutual written consent of SRNG and Ginkgo;

 

   

by either Ginkgo or SRNG if any governmental authority of competent jurisdiction has enacted, issued, promulgated, enforced or entered any governmental order or other law which has become final and non-appealable and remains in effect and has the effect of making the consummation of the Business Combination or any other transaction contemplated in the Merger Agreement illegal or otherwise permanently preventing or prohibiting the consummation of the Merger or such other transaction; provided that the right to terminate the Merger Agreement will not be available to Ginkgo or SRNG if such party’s breach of any of its obligations under the Merger Agreement is the primary cause of the existence or occurrence of any fact or circumstance but for the existence or occurrence of which the consummation of the Business Combination or such other transaction would not be illegal or otherwise permanently prevented or prohibited;

 

   

by either Ginkgo or SRNG if the Closing has not occurred before 5:00 p.m., Eastern Time, on November 11, 2021 (such time on such date, the “Outside Deadline”); provided that (i) if any action for specific performance or other equitable relief by Ginkgo with respect to the Merger Agreement or any ancillary agreement or any of the transactions contemplated thereby is pending in the Delaware Court of Chancery of the United States District Court for the District of Delaware as of the Outside Deadline, then the Outside Deadline shall be automatically extended until 5:00 p.m., Eastern Time, on the date that is the earlier of (x) thirty (30) days after the date on which a final, non-appealable governmental order has been entered with respect to such action and (y) August 26, 2023, and such extended time shall be the Outside Deadline for all purposes under the Merger Agreement, and (ii) the right to


 

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terminate the Merger Agreement pursuant to this bullet shall not be available to Ginkgo or SRNG if such party’s breach of any of its obligations under the Merger Agreement is the primary cause of the failure of the Closing to have occurred before the Outside Deadline; or

 

   

by either Ginkgo or SRNG if the required approval of SRNG shareholders is not obtained at the Special Meeting (subject to any adjournment or postponement of the Special Meeting in accordance with the Merger Agreement).

Termination Rights of Ginkgo

The Merger Agreement may be terminated by Ginkgo and the transactions contemplated thereby abandoned if:

 

   

any of SRNG’s or Merger Sub’s representations or warranties has failed to be true and correct or if SRNG or Merger Sub has failed to perform or comply with any covenant or agreements set forth in the Merger Agreement such that the conditions described in “The Merger Agreement—Conditions to Closing—Additional Conditions to the Obligations of Ginkgo—Representations and Warranties” and “—Agreements and Covenants” would not be satisfied at the Closing, and (A) such failure, by its nature, could not be cured prior to the Outside Deadline through SRNG’s exercise of its reasonable best efforts or (B) such failure has not been cured by the earlier of (x) the date that is thirty (30) days after the date on which Ginkgo has first notified SRNG in writing of such failure (or such earlier time after SRNG’s receipt of such notice as SRNG has ceased to use reasonable best efforts to cure such failure) and (y) the Outside Deadline; provided that the right to terminate the Merger Agreement under this bullet will not be available to Ginkgo at any time at which SRNG would have the ability to terminate the Merger Agreement pursuant to its corresponding termination right described below; or

 

   

there has been any withdrawal, amendment, qualification or modification of the SRNG Board’s recommendation to the SRNG shareholders that they vote in favor of the adoption of the Merger Agreement, the approval of the Business Combination and the other proposals described in this proxy statement/prospectus, or certain other actions of the SRNG Board in furtherance of the transactions contemplated by the Merger Agreement.

Termination Rights of SRNG

The Merger Agreement may be terminated by SRNG and the transactions contemplated thereby abandoned if:

 

   

any of Ginkgo’s representations or warranties has failed to be true and correct or if Ginkgo has failed to perform or comply with any covenant or agreements set forth in the Merger Agreement such that the conditions described in “The Merger Agreement—Conditions to Closing—Additional Conditions to the Obligations of SRNG and Merger Sub—Representations and Warranties” and “—Agreements and Covenants” would not be satisfied at the Closing, and such failure (A) has not been cured by the earlier of (x) the date that is thirty (30) days after the date on which Ginkgo has first notified SRNG in writing of such failure and (y) the Outside Deadline or (B) by its nature cannot be cured prior to the Outside Deadline through exercise of its reasonable efforts; provided that the right to terminate this Agreement under this bullet will not be available to SRNG at any time at which Ginkgo would have the ability to terminate the Merger Agreement pursuant to its corresponding termination right described above; or

 

   

Ginkgo stockholder approval has not been obtained within 10 business days after the Registration Statement has been declared effective by the SEC.


 

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Redemption Rights

Pursuant to the Current Charter, a public shareholder may request that SRNG redeem all or a portion of their public shares for cash if the Business Combination is consummated. You will be entitled to receive cash for any public shares to be redeemed only if you:

 

   

(a) hold public shares or (b) hold public shares through units and elect to separate your units into the underlying public shares and public warrants prior to exercising your redemption rights with respect to the public shares; and

 

   

prior to                      , New York City time, on                      , 2021, (a) submit a written request, including the legal name, phone number and address of the beneficial owner of the shares for which redemption is requested, to the transfer agent that SRNG redeem your public shares for cash and (b) deliver your share certificates (if any) and other redemption forms (as applicable) (either physically or electronically) to the transfer agent, physically or electronically through DTC.

As noted above, holders of units must elect to separate the underlying public shares and public warrants prior to exercising redemption rights with respect to the public shares. Holders may instruct their broker to do so, or if a holder holds units registered in its own name, the holder must contact the transfer agent directly and instruct them to do so. Public shareholders may elect to redeem all or a portion of their public shares even if they vote for the Business Combination Proposal. If the Business Combination is not consummated, public shares will not be redeemed for cash, even if their holders have properly exercised redemption rights with respect to such public shares. If a public shareholder properly exercises its right to redeem its public shares and timely delivers its share certificates (if any) and other redemption forms (as applicable) to Continental Stock Transfer & Trust Company, SRNG’s transfer agent, SRNG will redeem such public shares upon or promptly after the Closing for a per-share price, payable in cash, equal to the aggregate amount then on deposit in the Trust Account, calculated as of two business days prior to the consummation of the Business Combination, including interest earned on the funds held in the Trust Account and not previously released to us to fund our working capital requirements (subject to an aggregate limit of $3,000,000) and/or to pay our taxes, divided by the number of then issued and outstanding public shares. If a public shareholder exercises its redemption rights, then it will be exchanging its redeemed public shares for cash and will no longer own such shares. See the section entitled “The Special Meeting—Redemption Rights” for a detailed description of the procedures to be followed if you wish to redeem your public shares for cash.

Notwithstanding the foregoing, a holder of public shares, together with any affiliate of such public shareholder or any other person with whom such public shareholder is acting in concert or as a “group” (as defined in Section 13(d)(3) of the Exchange Act), will be restricted from redeeming its public shares with respect to more than an aggregate of 20% of the public shares. Accordingly, if a public shareholder, alone or acting in concert or as a group, seeks to redeem more than 20% of the public shares, then any such shares in excess of that 20% limit would not be redeemed for cash.

Holders of our warrants will not have redemption rights with respect to the warrants.

Appraisal Rights

Neither SRNG’s shareholders nor SRNG’s warrant holders have appraisal rights in connection with the Business Combination or the domestication under Cayman Islands law or under the DGCL.

Proxy Solicitation

Proxies may be solicited by mail, telephone or in person. SRNG has engaged Morrow to assist in the solicitation of proxies. If a shareholder grants a proxy, it may still vote its shares at the Special Meeting if it



 

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revokes its proxy before the Special Meeting. A shareholder also may change its vote by submitting a later-dated proxy as described in the section entitled “The Special Meeting—Revoking Your Proxy.”

Interests of SRNG’s Directors and Officers and Others in the Business Combination

When you consider the recommendation of the SRNG Board in favor of approval of the Business Combination Proposal, you should keep in mind that SRNG’s Sponsor and its directors and officers have interests in the Business Combination that are different from, or in addition to, those of SRNG shareholders and warrant holders generally. These interests include, among other things, the interests listed below:

 

   

If we are unable to complete our initial business combination by February 26, 2023, we will: (i) cease all operations except for the purpose of winding up, (ii) as promptly as reasonably possible but not more than 10 business days thereafter, redeem the public shares, at a per-share price, payable in cash, equal to 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 us to fund our working capital requirements (subject to an aggregate limit of $3,000,000) (less 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 shareholders’ rights as shareholders (including the right to receive further liquidating distributions, if any) and (iii) as promptly as reasonably possible following such redemption, subject to the approval of our remaining shareholders and our board of directors, liquidate and dissolve, subject in each case to our obligations under Cayman Islands law to provide for claims of creditors and the requirements of other applicable law. There will be no redemption rights or liquidating distributions with respect to our private placement warrants, which will expire worthless if we fail to complete our initial business combination by February 26, 2023.

 

   

Our Sponsor purchased 43,125,000 founder shares prior to our initial public offering for an aggregate purchase price of $25,000, or approximately $0.0006 per share, which accounted for approximately 20% of our outstanding shares after the consummation of the initial public offering. Upon the Closing, assuming no founder shares are forfeited pursuant to the terms of the Sponsor Support Agreement as a result of shareholder redemptions exceeding a specified threshold, such founder shares will be converted into 43,125,000 shares of New Ginkgo Class A common stock.

 

   

Simultaneously with the closing of our initial public offering, we consummated the sale of 19,250,000 private placement warrants at a price of $1.50 per warrant in a private placement to our Sponsor. The warrants are each exercisable commencing 30 days following the Closing for one share of New Ginkgo Class A common stock at $11.50 per share. If we do not consummate a business combination transaction by February 26, 2023, then the proceeds from the sale of the private placement warrants will be part of the liquidating distribution to the public shareholders and the warrants held by our Sponsor will be worthless. The warrants held by our Sponsor had an aggregate market value of approximately $37.9 million based upon the closing price of $1.97 per warrant on Nasdaq on May 10, 2021. Upon the Closing, 10% of the private placement warrants will be forfeited to New Ginkgo and cancelled for no consideration.

 

   

Our Sponsor has made an investment for the founder shares at an average price per share of approximately $0.0006 prior to the consummation of our initial public offering. As a result of the significantly lower investment per share of our Sponsor as compared to the investment per share of our public shareholders (which was $10.00 per unit), a transaction that results in an increase in the value of the investment of our Sponsor in the founder shares may result in a decrease in the value of the investment of our public shareholders.

 

   

Our Sponsor, officers and directors will lose their entire investment of $28,900,000, consisting of the Sponsor’s $25,000 initial investment and the Sponsor’s $28,875,000 private placement warrant purchase price, if we do not complete a business combination by February 26, 2023.


 

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Certain of our current officers may serve as directors of New Ginkgo after the Closing. As such, in the future they may receive any cash fees, stock options or stock awards that the New Ginkgo Board determines to pay to its directors and/or officers.

 

   

Our Sponsor and our officers and directors have agreed to waive their rights to liquidating distributions from the Trust Account with respect to their founder shares if SRNG fails to complete a business combination by February 26, 2023.

 

   

In order to protect the amounts held in the Trust Account, the Sponsor has agreed that it will be liable to us if and to the extent any claims by a vendor for services rendered or products sold to us, or a prospective target business with which we have entered into a transaction agreement, reduce the amount of funds in the Trust Account. This liability will not apply with respect to any claims by a third party who executed a waiver of any right, title, interest or claim of any kind in or to any monies held in the Trust Account or to any claims under our indemnity of the underwriters of the offering against certain liabilities, including liabilities under the Securities Act.

 

   

Following the Closing, our Sponsor would be entitled to the repayment of any working capital loan and advances that have been made to SRNG and remain outstanding. As of the date of this proxy statement/prospectus, our Sponsor has not made any advances to us for working capital expenses. If we do not complete an initial business combination within the required period, we may use a portion of our working capital held outside the Trust Account to repay the working capital loans, but no proceeds held in the Trust Account would be used to repay the working capital loans.

 

   

Following the consummation of the Business Combination, New Ginkgo will indemnify our existing directors and officers and will maintain a directors’ and officers’ liability insurance policy.

 

   

Upon the Closing, subject to the terms and conditions of the Merger Agreement, our Sponsor, our officers and directors and their respective affiliates may be entitled to reimbursement for any reasonable out-of-pocket expenses related to identifying, investigating and consummating an initial business combination, and repayment of any other loans, if any, and on such terms as to be determined by SRNG from time to time, made by our Sponsor or certain of our officers and directors to finance transaction costs in connection with an intended initial business combination. To date, we have incurred no such out-of-pocket expenses.

At any time prior to the Special Meeting, during a period when they are not then aware of any material nonpublic information regarding SRNG or its securities, the Sponsor, Ginkgo and/or their respective affiliates, subject to applicable law, may purchase shares and/or warrants from investors, or they may enter into transactions with such investors and others to provide them with incentives to acquire SRNG ordinary shares or vote their SRNG ordinary shares in favor of the Business Combination Proposal. The purpose of such share purchases and other transactions would be to increase the likelihood that the proposals presented for approval at the Special Meeting are approved. Any such purchases of public shares and other transactions may thereby increase the likelihood of obtaining shareholder approval of the Business Combination. This may result in the completion of our Business Combination that may not otherwise have been possible. While the exact nature of any such incentives has not been determined as of the date of this proxy statement/prospectus, they might include, without limitation, arrangements to protect such investors or holders against potential loss in value of their shares, including the granting of put options and the transfer to such investors or holders of shares or rights owned by the Sponsor for nominal value.

Entering into any such arrangements may have a depressive effect on SRNG ordinary shares. For example, as a result of these arrangements, an investor or holder may have the ability to effectively purchase shares at a price lower than market and may therefore be more likely to sell the shares it owns, either prior to or immediately after the Special Meeting.


 

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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 proposals to be presented at the Special Meeting and would likely increase the chances that such proposals would be approved. As of the date of this proxy statement/prospectus, there have been no such discussions and no agreements to such effect have been entered into with any such investor or holder.

The existence of financial and personal interests of the SRNG directors and officers may result in a conflict of interest on the part of one or more of them between what he may believe is best for SRNG and what he may believe is best for him in determining whether or not to grant a waiver in a specific situation. See the sections entitled “Risk Factors” and “The Business Combination Proposal—Interests of SRNG’s Directors and Officers and Others in the Business Combination” for a further discussion of this and other risks.

Stock Exchange Listing

SRNG’s units, Class A ordinary shares and public warrants are publicly traded on Nasdaq under the symbols “SRNGU,” “SRNG” and “SRNGW”, respectively. SRNG intends to apply to list the New Ginkgo Class A common stock and public warrants on the NYSE under the symbols “DNA” and “DNA.WS”, respectively, upon the Closing. New Ginkgo will not have units traded following the Closing.

Sources and Uses of Funds for the Business Combination

The following table summarizes the sources and uses for funding the transactions contemplated by the Merger Agreement. Where actual amounts are not known or knowable, the figures below represent Ginkgo’s good faith estimate of such amounts assuming a Closing as of                     , 2021.

 

(in millions)    Assuming
No
Redemption
     Assuming
Maximum
Redemption
 

Sources

     

Proceeds from Trust Account

   $ 1,725      $ 475  

Private Placement

     775        775  

Sellers’ Equity

     15,000        15,000  

Ginkgo Cash on Balance Sheet(1)

     274        274  

Total Sources

     17,774        16,524  
  

 

 

    

 

 

 

Uses

 

Cash on Balance Sheet(1)

   $ 2,639      $ 1,389  

Sellers’ Equity

     15,000        15,000  

Transaction costs

     135        135  

Total Uses

     17,774        16,524  
  

 

 

    

 

 

 

 

(1)

Based on cash on hand as of April 30, 2021.

Accounting Treatment

The Business Combination will be accounted for as a reverse recapitalization in accordance with GAAP. Under this method of accounting, SRNG will be treated as the “acquired” company for accounting purposes and the Business Combination will be treated as the equivalent of Ginkgo issuing stock for the net assets of SRNG, accompanied by a recapitalization. The net assets of SRNG will be stated at historical cost, with no goodwill or other intangible assets recorded.


 

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Ginkgo has been determined to be the accounting acquirer based on evaluation of the following facts and circumstances:

 

   

Ginkgo’s existing stockholders will have the greatest voting interest in the combined entity under the no and maximum redemption scenarios with over 95% of the voting interest in each scenario;

 

   

The largest individual minority stockholder of the combined entity is an existing stockholder of Ginkgo;

 

   

Ginkgo’s directors will represent the majority of the New Ginkgo Board;

 

   

Ginkgo’s senior management will be the senior management of New Ginkgo; and

 

   

Ginkgo is the larger entity based on historical revenue and has the larger employee base.

The preponderance of evidence as described above is indicative that Ginkgo is the accounting acquirer in the Business Combination.

Comparison of Stockholders’ Rights

Following the consummation of the Business Combination, the rights of SRNG shareholders who become New Ginkgo stockholders in the Business Combination will no longer be governed by the Current Charter and instead will be governed by the Proposed Charter and the Proposed Bylaws. See “Comparison of Stockholders’ Rights.”

Summary of Risk Factors

In evaluating the proposals to be presented at the Special Meeting, SRNG shareholders should carefully read this proxy statement/prospectus and especially consider the factors discussed in the section entitled “Risk Factors”

Some of the risks related Ginkgo’s business and industry are summarized below. References in the summary below to “we,” “us,” “our” and “the Company” generally refer to Ginkgo in the present tense or New Ginkgo from and after the Business Combination.

 

   

Upon consummation of the Business Combination, we can exercise warrants for unexpired New Ginkgo Class A common stock at any time, which could occur at a disadvantageous time for stockholders and result in dilution for stockholders.

 

   

Subsequent to the Business Combination, our business could have to restructure, we may not meet expectations of investors, or we may have materially different financial results than expected, any of which could have a significant negative effect on our financial condition, results of operations and stock price, which could cause you to lose some or all of your investment.

 

   

Our New Ginkgo Class A common stock issued in connection with the Business Combination may not be approved for listing or comply with the standards of NYSE following the Closing.

 

   

Our directors may decide not to enforce the indemnification obligations of our Sponsor, resulting in a reduction in the amount of funds in the Trust Account available for distribution to our public shareholders.

 

   

Our creditors may have priority over our stockholders in the event of bankruptcy, which could limit the recovery of our stockholders in a liquidation.

 

   

If we were to be deemed an “investment company” under the Investment Company Act, applicable restrictions could make it impractical for us to continue our business as contemplated and could have a material adverse effect on our business.



 

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The multi-class structure of our common stock could affect our business operations and the price of our stock.

 

   

Our multi-class stock structure will entitle only our employees and directors to acquire and hold New Ginkgo Class B common stock which will have a greater number of votes per share than New Ginkgo Class A common stock, which may affect whether stockholders hold or purchase New Ginkgo Class A common stock.

 

   

Issuing a large number of shares of New Ginkgo Class B common stock in the future may increase the concentration of voting power with our employees and directors, which could have an adverse effect on the trading price of New Ginkgo Class A common stock.

 

   

Issuing New Ginkgo Class C common stock may increase concentration of voting power in New Ginkgo Class B common stock, which could discourage potential acquisitions of our business and could have an adverse effect on the trading price of New Ginkgo Class A common stock.

 

   

Our focus on the long-term best interests of our company and our consideration of the interests of all of our stakeholders may conflict with short-term or medium-term financial interests and business performance, which may adversely impact the value of our common stock.

 

   

Under Delaware law, the language in Proposed Charter and Proposed Bylaws may limit shareholders actions and the available forums for such actions.

 

   

Our history of net losses is expected to continue, and we may never achieve or maintain profitability.

 

   

We will need substantial additional capital in the future in order to fund our business.

 

   

If we fail to effectively manage our rapid growth, then our business, results of operations and financial condition could be adversely affected.

 

   

Our limited operating history makes it difficult to evaluate our current business and future prospects.

 

   

We currently own and may in the future own equity interests in other operating companies, including certain of our customers; consequently, we have exposure to the volatility and liquidity risks inherent in holding their equity and overall operational and financial performance of these businesses.

 

   

Failure to pursue strategic acquisitions and investments, achieve projected milestones or maintain and expand customer partnerships could have an adverse impact on our business.

 

   

Failure to secure laboratory equipment and third-party suppliers could cause delays in our research, development or production capacity and adversely affect our business.

 

   

We are subject to regulatory and legal scrutiny for our use of genetically modified organisms, biological, hazardous, flammable and/or regulated materials and DNA sequencing synthesis.

 

   

Our reputation could be damaged by third parties’ use of our engineered cells and accompanying production processes.

 

   

International expansion of our business exposes us to business, regulatory, political, operational, financial and economic risks associated with doing business outside of the United States.

 

   

Our ability to enter into a definitive agreement with the U.S. International Development Finance Corporation and our overall level of indebtedness could adversely affect liquidity and have an adverse effect on our valuation, operations and business.

 

   

If our customers discontinue using or are not successful in developing, producing and manufacturing products using the engineered cells and/or biomanufacturing processes that we develop, our future financial position may be adversely impacted.



 

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Our revenue, results of operations, cash flows and reputation in the marketplace may suffer upon the loss of a significant customer.

 

   

Our business partners may make announcements about the status of our collaborations, and the price of our common stock may decline as a result of announcements of unexpected results or developments.

 

   

Uncertainty about COVID-19 or another global pandemic could materially affect how we and our business partners are operating and may harm our business and results of operations.

 

   

Decline in COVID-19 testing, decline in our capacity to test or disruption of our telehealth relationships may harm our business and results of operations.

 

   

We may be subject to liability if the COVID-19 tests we utilize in our testing programs provide inaccurate results.

 

   

Failure to pursue new opportunities and develop our platform could make our products obsolete or non-competitive in the market.

 

   

The market may be skeptical of our novel and complex technology and use of genetically modified materials, which could limit public acceptance of our products or processes and limit our revenues.

 

   

Failure to protect or enforce our intellectual property rights, trade secrets and inventions could harm our business, results of operations and financial condition and may result in litigation.

 

   

We may be subject to litigation alleging infringement on the patents of third parties.

 

   

Risks related to intellectual property developed under U.S. federally funded research grants and contracts.

 

   

Our use of genetic resources and sequencing may subject us to obligations under the Nagoya Protocol.

 

   

Our use of in-licensing from third parties and “open source” software could have a material and adverse impact on our business, financial condition and results of operation.

 

   

Loss of key personnel or failure to access infrastructure could delay our programs, harm our development efforts and adversely affect our business and results of operations.

 

   

We rely on our customers, joint venturers, equity investees and other third parties to deliver timely and accurate information in order to accurately report our financial results in the time frame and manner required by law.

 

   

We use estimates in determining the fair value of certain assets and liabilities. If our estimates prove to be incorrect, we may be required to write down the value of these assets or write up the value of these liabilities, which could adversely affect our financial position.

 

   

Our ability to use our net operating loss carryforwards and certain other tax attributes may be limited.

 

   

If we fail to maintain an effective system of internal control over financial reporting, we may not be able to accurately report our financial results or prevent fraud. As a result, stockholders could lose confidence in our financial and other public reporting, which would harm our business and the trading price of our common stock.

 

   

Our cash and cash equivalents could be adversely affected if the financial institutions in which we hold our cash and cash equivalents fail.

 

   

We are subject to numerous federal, state, local and international laws and regulations related to our business and operations, and the failure to comply with any of these laws and regulations, or failure to comply with new or changed laws and regulations, could adversely affect our business and our financial condition.



 

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We may incur significant costs complying with environmental, health and safety laws and regulations, and failure to comply with these laws and regulations could expose us to significant liabilities.

 

   

We may become subject to the comprehensive laws and rules governing billing and payment, noncompliance with which could result in non-payment or recoupment of overpayments for our services or other sanctions.

 

   

Our receipt of public funds subjects us to the False Claims Act, EKRA (a federal anti-kickback law) and state anti-kickback laws.

 

   

We are engaged in certain research activities involving controlled substances, the making, use, sale, importation, exportation, and distribution of which may be subject to significant regulation.

 

   

Disruptions of information technology systems or data security incidents could result in significant financial, legal, regulatory, business and reputational harm to us.

 

   

Changes in U.S. and foreign tax laws could have a material adverse effect on our business, cash flow, results of operations or financial conditions.

 

   

We may become subject to lawsuits or indemnity claims in the ordinary course of business, which could materially and adversely affect our business and results of operations.

 

   

Our business could be adversely affected by legal challenges to our telehealth partner’s business model.

Emerging Growth Company

Section 102(b)(1) of the Jumpstart Our Business Startups Act of 2012 (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 registration statement under the Securities Act 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 an election to opt out is irrevocable. We have 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, we, 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 New Ginkgo’s financial statements with those of another public company that is neither an emerging growth company nor an emerging growth company that has opted out of using the extended transition period difficult or impossible because of the potential differences in accounting standards used.

We will remain an emerging growth company until the earlier of: (1) the last day of the fiscal year (a) following the fifth anniversary of the Closing of SRNG’s initial public offering, (b) in which we have total annual gross revenue of at least $1.07 billion or (c) in which we are 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 end of the prior fiscal year’s second fiscal quarter; and (2) the date on which we have 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.



 

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MARKET PRICE, TICKER SYMBOL AND DIVIDEND INFORMATION

SRNG

Market Price and Ticker Symbol

SRNG’s units, Class A ordinary shares and public warrants are currently listed on Nasdaq under the symbols “SRNGU,” “SRNG,” and “SRNGW,” respectively.

The closing prices of SRNG’s units, Class A ordinary shares and public warrants on May 10, 2021, the last trading day before announcement of the execution of the Merger Agreement, were $10.31, $9.94 and $1.97, respectively. As of                 , 2021, the record date for the Special Meeting, the closing prices for each unit, Class A ordinary share and public warrant were $            , $             and $            , respectively.

Holders

As of                 , 2021, there were                  holders of record of our units,                  holders of record of SRNG Class A ordinary shares,                  holders of record of SRNG Class B ordinary shares and                  holders of record of our public warrants. The number of holders of record does not include a substantially greater number of “street name” holders or beneficial holders whose units, SRNG Class A ordinary shares and warrants are held of record by banks, brokers and other financial institutions.

Dividend Policy

SRNG has not paid any cash dividends on SRNG ordinary shares to date and does not intend to pay any cash dividends prior to the completion of the Business Combination. The payment of cash dividends in the future will be dependent upon New Ginkgo’s revenue and earnings, if any, capital requirements and general financial condition subsequent to completion of the Business Combination. The payment of any cash dividends subsequent to the Business Combination will be within the discretion of the New Ginkgo Board at such time.

Ginkgo

There is no public market for shares of Ginkgo’s common stock.



 

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RISK FACTORS

SRNG shareholders should carefully consider the following risk factors, together with all of the other information included in this proxy statement/prospectus, before they decide whether to vote or instruct their votes to be cast to approve the relevant proposals described in this proxy statement/prospectus.

Unless the context otherwise requires, all references in this section to the “Company,” “we,” “us” or “our” refer to the business of Ginkgo and its subsidiaries prior to the consummation of the Business Combination, which will be the business of New Ginkgo and its subsidiaries following the consummation of the Business Combination.

Risks Related to SRNG and the Business Combination

Directors and officers of SRNG have potential conflicts of interest in recommending that SRNG’s shareholders vote in favor of approval of the Business Combination and approval of the other proposals described in this proxy statement/prospectus.

When considering the SRNG Board’s recommendation that its shareholders vote in favor of the approval of the Business Combination and the other proposals described in this proxy statement/prospectus, SRNG shareholders should be aware that directors and officers of SRNG have interests in the Business Combination that may be different from, or in addition to, the interests of SRNG shareholders. These interests include:

 

   

If SRNG is unable to complete its initial business combination by February 26, 2023, SRNG will: (i) cease all operations except for the purpose of winding up, (ii) as promptly as reasonably possible but not more than 10 business days thereafter, redeem the public shares at a per-share price, payable in cash, equal to 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 SRNG to fund its working capital requirements (subject to an aggregate limit of $3,000,000) (less 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 shareholders’ rights as shareholders (including the right to receive further liquidating distributions, if any) and (iii) as promptly as reasonably possible following such redemption, subject to the approval of SRNG’s remaining shareholders and the SRNG Board, liquidate and dissolve, subject in each case to SRNG’s obligations under Cayman Islands law to provide for claims of creditors and the requirements of other applicable law. There will be no redemption rights or liquidating distributions with respect to SRNG’s warrants, which will expire worthless if SRNG fails to complete its initial business combination by February 26, 2023.

 

   

The Sponsor purchased 43,125,000 founder shares prior to SRNG’s initial public offering for an aggregate purchase price of $25,000 or approximately $0.0006 per share, which accounted for approximately 20% of our outstanding shares after the consummation of the initial public offering. Upon the Closing, assuming no founder shares are forfeited pursuant to the terms of the Sponsor Support Agreement as a result of shareholder redemptions exceeding a specified threshold, such founder shares will be converted into 43,125,000 shares of New Ginkgo Class A common stock.

 

   

Simultaneously with the closing of SRNG’s initial public offering, SRNG consummated the sale of 19,250,000 private placement warrants at a price of $1.50 per warrant in a private placement to the Sponsor. The warrants are each exercisable commencing 30 days following the Closing Date for one share of New Ginkgo Class A common stock at $11.50 per share. If SRNG does not consummate a business combination transaction by February 26, 2023, then the proceeds from the sale of the private placement warrants will be part of the liquidating distribution to the public shareholders and the warrants held by the Sponsor will be worthless. The warrants held by the Sponsor had an aggregate market value of approximately $37.9 based upon the closing price of $1.97 per warrant on Nasdaq on May 10, 2021. Upon the Closing, 10% of the private placement warrants will be forfeited to New Ginkgo and cancelled for no consideration.

 

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SRNG’s Sponsor, officers and directors will lose their entire investment of $28,900,000, consisting of the Sponsor’s $25,000 initial investment and the Sponsor’s $28,875,000 private placement warrant purchase price, if SRNG does not complete a business combination by February 26, 2023.

 

   

Certain of SRNG’s current officers may serve as directors of New Ginkgo after the Closing. As such, in the future they may receive any cash fees, stock options or stock awards that the New Ginkgo Board determines to pay to its directors and/or officers.

 

   

The Sponsor and SRNG’s officers and directors have agreed to waive their rights to liquidating distributions from the Trust Account with respect to their founder shares if SRNG fails to complete a business combination by February 26, 2023.

 

   

In order to protect the amounts held in the Trust Account, the Sponsor has agreed that it will be liable to SRNG if and to the extent any claims by a vendor for services rendered or products sold to SRNG, or a prospective target business with which SRNG have entered into a transaction agreement, reduce the amount of funds in the Trust Account. This liability will not apply with respect to any claims by a third party who executed a waiver of any right, title, interest or claim of any kind in or to any monies held in the Trust Account or to any claims under SRNG’s indemnity of the underwriters of the offering against certain liabilities, including liabilities under the Securities Act.

 

   

Following the Closing, SRNG’s Sponsor would be entitled to the repayment of any working capital loan and advances that have been made to SRNG and remain outstanding. As of the date of this proxy statement/prospectus, SRNG’s Sponsor has not made any advances to SRNG for working capital expenses. If SRNG does not complete an initial business combination within the required period, SRNG may use a portion of its working capital held outside the Trust Account to repay the working capital loans, but no proceeds held in the Trust Account would be used to repay the working capital loans.

 

   

Following the consummation of the Business Combination, New Ginkgo will indemnify SRNG’s existing directors and officers and will maintain a directors’ and officers’ liability insurance policy.

 

   

Upon the Closing, subject to the terms and conditions of the Merger Agreement, SRNG’s Sponsor, its officers and directors and their respective affiliates may be entitled to reimbursement for any reasonable out-of-pocket expenses related to identifying, investigating and consummating an initial business combination, and repayment of any other loans, if any, and on such terms as to be determined by SRNG from time to time, made by SRNG’s Sponsor or certain of its officers and directors to finance transaction costs in connection with an intended initial business combination. To date, SRNG has incurred no such out-of-pocket expenses.

These financial interests of the initial shareholders, officers and directors and entities affiliated with them may have influenced their decision to approve the Business Combination. You should consider these interests when evaluating the Business Combination and the recommendation of the SRNG Board to vote in favor of the Business Combination Proposal and other proposals to be presented to the SRNG shareholders.

The Sponsor and SRNG’s directors and executive officers have agreed to vote in favor of the Business Combination, regardless of how SRNG’s public shareholders vote.

The Sponsor and SRNG’s directors and executive officers have agreed to vote their shares in favor of the Business Combination. The Sponsor owns approximately 20% of SRNG’s outstanding shares prior to the Business Combination. Accordingly, it is more likely that the necessary shareholder approval for the Business Combination will be received than would be the case if the Sponsor had agreed to vote their shares in accordance with the majority of the votes cast by SRNG’s public shareholders.

 

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The Sponsor and SRNG’s directors, officers, advisors and their affiliates may elect to purchase shares or public warrants from public shareholders, which may influence a vote on the Business Combination and reduce the public “float” of our ordinary shares.

The Sponsor and SRNG’s directors, officers, advisors or their affiliates may purchase public shares or public warrants in privately negotiated transactions or in the open market either prior to or following the completion of the Business Combination, although they are under no obligation to do so. However, other than as expressly stated herein, they have no current commitments, plans or intentions to engage in such transactions and have not formulated any terms or conditions for any such transactions. None of the funds in the Trust Account will be used to purchase shares or public warrants in such transactions.

In the event that the Sponsor and SRNG’s directors, officers, advisors or their affiliates purchase public shares in privately negotiated transactions from public shareholders who have already elected to exercise their redemption rights, such selling shareholders would be required to revoke their prior elections to redeem their public shares. The purpose of any such purchases of public shares could be to vote such shares in favor of the Business Combination and thereby increase the likelihood of obtaining shareholder approval of the Business Combination or to satisfy a Closing condition in the Merger Agreement that requires SRNG to have a certain amount of cash at the Closing, where it appears that such requirement would otherwise not be met. Any such purchases of SRNG’s securities may result in the completion of the Business Combination that may not otherwise have been possible.

In addition, if such purchases are made, the public “float” of SRNG’s ordinary shares and the number of beneficial holders of SRNG’s securities may be reduced, possibly making it difficult to maintain or obtain the quotation, listing or trading of SRNG’s securities on a national securities exchange.

Warrants will become exercisable for New Ginkgo Class A common stock, which will increase the number of shares eligible for future resale in the public market and result in dilution to SRNG’s shareholders.

Following the Business Combination, there will be 34,500,000 outstanding public warrants to purchase 34,500,000 shares of New Ginkgo Class A common stock at an exercise price of $11.50 per share, which warrants will become exercisable commencing 30 days following the Closing Date. In addition, there will be 17,325,000 outstanding private placement warrants to purchase 17,325,000 shares of New Ginkgo Class A common stock at an exercise price of $11.50 per share, which warrants will become exercisable commencing 30 days following the Closing. To the extent such warrants are exercised, additional shares of New Ginkgo Class A common stock will be issued, which will result in dilution to the holders of New Ginkgo Class A common stock 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 adversely affect the market price of New Ginkgo Class A common stock, the impact of which is increased as the value of SRNG’s stock price increases.

New Ginkgo may redeem your unexpired warrants prior to their exercise at a time that is disadvantageous to you, thereby making your warrants worthless.

New Ginkgo will have the ability to redeem outstanding public warrants at any time after they become exercisable and prior to their expiration, at a price of $0.01 per warrant, provided that the closing price of New Ginkgo Class A common stock equals or exceeds $18.00 per share for any 20 trading days within a 30 trading-day period ending on the third trading day prior to the date we give notice of redemption. If and when the warrants become redeemable by New Ginkgo, New Ginkgo may exercise the redemption right even if it is unable to register or qualify the underlying securities for sale under all applicable state securities laws. Redemption of the outstanding warrants could force holders to (i) exercise the warrants and pay the exercise price therefor at a time when it may be disadvantageous to do so, (ii) sell the warrants at the then-current market price when the holder might otherwise wish to hold onto such warrants or (iii) accept the nominal redemption price which, at the time the outstanding warrants are called for redemption, is likely to be substantially less than the market value of the warrants. None of the private placement warrants will be redeemable by New Ginkgo so long as they are held by their initial purchasers or their permitted transferees.

 

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In addition, New Ginkgo may redeem your warrants after they become exercisable for a number of shares of New Ginkgo Class A common stock determined based on the redemption date and the fair market value of New Ginkgo Class A common stock. Any such redemption may have similar consequences to a cash redemption described above. In addition, such redemption may occur at a time when the warrants are “out-of-the- money,” in which case you would lose any potential embedded value from a subsequent increase in the value of our common stock had your warrants remained outstanding.

Even if SRNG consummates the Business Combination, there can be no assurance that the warrants will be in the money at the time they become exercisable, and they may expire worthless.

The exercise price for the outstanding warrants is $11.50 per share of New Ginkgo Class A common stock. There can be no assurance that the warrants will be in the money following the time they become exercisable and prior to their expiration, and as such, the warrants may expire worthless.

Our stockholders will experience immediate dilution as a consequence of the issuance of New Ginkgo Class A common stock and New Ginkgo Class B common stock as consideration in the Business Combination. Having a minority share position may reduce the influence that SRNG’s current shareholders have on the management of New Ginkgo.

Assuming that no public shareholders exercise their redemption rights in connection with the Business Combination, immediately after the consummation of the Business Combination, SRNG’s Sponsor and public shareholders will hold 202,732,500 shares of New Ginkgo Class A common stock, or 11.4% of the outstanding common stock. Assuming that our public shareholders exercise their redemption rights with respect to 125,000,000 public shares in connection with the Business Combination, immediately after the consummation of the Business Combination, SRNG’s Sponsor and public shareholders will hold 55,270,319 shares of New Ginkgo Class A common stock, or 3.4% of the outstanding common stock.

There are currently outstanding an aggregate of 53,750,000 warrants to acquire SRNG Class A ordinary shares, which comprise 19,250,000 private placement warrants held by SRNG’s Sponsor at the time of SRNG’s initial public offering and 34,500,000 public warrants. Upon the Closing, 10% of the private placement warrants will be forfeited to New Ginkgo and cancelled for no consideration. Each of SRNG’s outstanding whole warrants is exercisable commencing 30 days following the Closing Date for one share of New Ginkgo Class A common stock in accordance with its terms. Therefore, as of the date of this proxy statement/prospectus, if we assume that each outstanding whole warrant is exercised and one SRNG Class A ordinary share is issued as a result of such exercise, with payment of the exercise price of $11.50 per share, our fully diluted share capital would increase by a total of                  shares, with approximately $                 paid to us to exercise the warrants.

The Domestication may result in adverse tax consequences for holders of SRNG Class A ordinary shares and SRNG warrants, including holders exercising their redemption rights with respect to the SRNG Class A ordinary shares.

SRNG intends for the Domestication to qualify as a reorganization within the meaning of Section 368(a)(l)(F) of the Code, i.e., an F Reorganization. If the Domestication fails to qualify as an F Reorganization, a U.S. Holder (as defined in “U.S. Federal Income Tax Considerations—I. U.S. Holders”) of SRNG Class A ordinary shares or SRNG warrants generally would recognize gain or loss with respect to its SRNG Class A ordinary shares or SRNG warrants in an amount equal to the difference, if any, between the fair market value of the corresponding common stock or warrants of New Ginkgo received in the Domestication and the U.S. Holder’s adjusted tax basis in its SRNG Class A ordinary shares or SRNG warrants surrendered. Because the Domestication will occur prior to the redemption of U.S. Holders that exercise redemption rights with respect to SRNG Class A ordinary shares, U.S. Holders exercising such redemption rights will be subject to the potential tax consequences of the Domestication. Additionally, Non-U.S. Holders (as defined in “U.S. Federal Income Tax Considerations—II. Non-U.S. Holders”) may become subject to withholding tax on any amounts treated as dividends paid on New Ginkgo Class A common stock after the Domestication.

 

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Assuming that the Domestication qualifies as an F Reorganization, subject to the PFIC rules discussed below, U.S. Holders generally will be subject to Section 367(b) of the Code. A U.S. Holder whose SRNG Class A ordinary shares have a fair market value of less than $50,000 on the date of the Domestication and who, on the date of the Domestication, beneficially owns (actually or constructively) less than 10% of the total combined voting power of all classes of SRNG stock entitled to vote and less than 10% of the total value of all classes of SRNG stock generally will not recognize any gain or loss and will not be required to include any part of SRNG’s earnings in income as a result of the Domestication. A U.S. Holder whose SRNG Class A ordinary shares have a fair market value of $50,000 or more on the date of the Domestication and who, on the day of the Domestication, beneficially owns (actually or constructively) less than 10% of the total combined voting power of all classes of SRNG stock entitled to vote and less than 10% of the total value of all classes of SRNG stock, generally will recognize gain (but not loss) in respect of the Domestication as if such U.S. Holder exchanged its SRNG Class A ordinary shares for New Ginkgo Class A common stock in a taxable transaction, unless such U.S. Holder elects in accordance with applicable Treasury Regulations to include in income as a deemed dividend deemed paid by SRNG the “all earnings and profits amount” (as defined in the Treasury Regulations under Section 367 of the Code) attributable to the SRNG Class A ordinary shares held directly by such U.S. Holder. A U.S. Holder who, on the day of the Domestication, beneficially owns (actually or constructively) 10% or more of the total combined voting power of all classes of SRNG stock entitled to vote or 10% or more of the total value of all classes of SRNG stock, will generally be required to include in income as a deemed dividend deemed paid by SRNG the “all earnings and profits amount” (as defined in the Treasury Regulations under Section 367 of the Code) attributable to the SRNG Class A ordinary shares held directly by such U.S. Holder as a result of the Domestication. Subject to the discussion below of the PFIC rules, a U.S. Holder should not be subject to U.S. federal income tax with respect to the exchange of such holder’s SRNG warrants for New Ginkgo warrants in the Domestication. However, for purposes of the discussion above regarding Section 367(b) of the Code, a U.S. Holder’s ownership of SRNG warrants will be taken into account in determining whether such holder owns 10% or more of the total combined voting power of all classes of SRNG stock entitled to vote or 10% or more of the total value of all classes of SRNG stock.

Additionally, even if the Domestication qualifies as an F Reorganization, proposed Treasury Regulations promulgated under Section 1291(f) of the Code (which have a retroactive effective date) generally require that, a U.S. person who disposes of stock of a PFIC (including for this purpose exchanging SRNG warrants for newly issued New Ginkgo warrants in the Domestication) must recognize gain equal to the excess of the fair market value of such PFIC stock over its adjusted tax basis, notwithstanding any other provision of the Code. SRNG believes that it is likely classified as a PFIC for U.S. federal income tax purposes. As a result, these proposed Treasury Regulations, if finalized in their current form, would generally require a U.S. Holder of SRNG Class A ordinary shares to recognize gain under the PFIC rules on the exchange of SRNG Class A ordinary shares for New Ginkgo Class A common stock pursuant to the Domestication unless such U.S. Holder has made certain tax elections with respect to such U.S. Holder’s SRNG Class A ordinary shares. In addition, the proposed Treasury Regulations provide coordinating rules with other sections of the Code, including Section 367(b) of the Code, which affect the manner in which the rules under such other sections apply to transfers of PFIC stock. These proposed Treasury Regulations, if finalized in their current form, would also apply to a U.S. Holder who exchanges SRNG warrants for newly issued New Ginkgo warrants; currently, however, the elections under the PFIC rules mentioned above do not apply to SRNG warrants (for discussion regarding the unclear application of the PFIC rules to SRNG warrants, see “U.S. Federal Income Tax Considerations—I. U.S. Holders—A. Tax Effects of the Domestication to U.S. Holders —5. PFIC Considerations”). Any gain recognized from the application of the PFIC rules described above would be taxable income with no corresponding receipt of cash. The tax on any such gain would be imposed at the rate applicable to ordinary income and an interest charge would apply based on complex rules designed to offset the tax deferral to such U.S. Holder on the undistributed earnings, if any, of SRNG. It is not possible to determine at this time whether, in what form, and with what effective date, final Treasury Regulations under Section 1291(f) of the Code may be adopted or how any such Treasury Regulations would apply.

 

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

Although SRNG has conducted due diligence on Ginkgo, SRNG cannot assure you that this diligence revealed all material issues that may be present in Ginkgo’s business, that it would be possible to uncover all material issues through a customary amount of due diligence, or that factors outside of SRNG’s or New Ginkgo’s control will not later arise. As a result, New Ginkgo 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 due diligence successfully identifies certain risks, unexpected risks may arise and previously known risks may materialize in a manner not consistent with SRNG’s preliminary risk analysis. Even though these charges may be non-cash items and not have an immediate impact on our liquidity, the fact that New Ginkgo reports charges of this nature could contribute to negative market perceptions about New Ginkgo or its securities. In addition, charges of this nature may cause New Ginkgo to violate net worth or other covenants to which it may be subject. Accordingly, any SRNG shareholder who chooses to remain a stockholder of New Ginkgo following the Business Combination could suffer a reduction in the value of their shares. Such stockholders are unlikely to have a remedy for such reduction in value unless they are able to successfully claim that the reduction was due to the breach by SRNG’s officers or directors of a duty of care or other fiduciary duty owed to them, or if they are able to successfully bring a private claim under securities laws that the proxy solicitation relating to the Business Combination contained an actionable material misstatement or material omission.

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

If the benefits of the Business Combination do not meet the expectations of investors or securities analysts, the market price of SRNG’s securities prior to the Closing may decline. The market values of SRNG’s securities at the time of the Business Combination may vary significantly from their prices on the date the Merger Agreement was executed, the date of this proxy statement/prospectus, or the date on which SRNG shareholders vote on the Business Combination. Because the number of shares to be issued pursuant to the Merger Agreement is based on the per share value of the amount in the Trust Account and will not be adjusted to reflect any changes in the market price of SRNG Class A ordinary shares, the market value of New Ginkgo Class A common stock issued in the Business Combination may be higher or lower than the values of these shares on earlier dates.

In addition, following the Business Combination, fluctuations in the price of New Ginkgo’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 the stock of Ginkgo and trading in SRNG’s Class A ordinary shares has not been active. Accordingly, the valuation ascribed to New Ginkgo 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 our securities develops and continues, the trading price of New Ginkgo securities following the Business Combination could be volatile and subject to wide fluctuations in response to various factors, some of which are beyond our control. Any of the risk factors discussed in this proxy statement/prospectus could have a material adverse effect on your investment in our securities and New Ginkgo securities may trade at prices significantly below the price you paid for them. In such circumstances, the trading price of our securities may not recover and may experience a further decline.

Broad market and industry factors may materially harm the market price of our securities irrespective of our operating performance. The stock market in general, and Nasdaq specifically, has experienced extreme volatility that has often been unrelated to the operating performance of particular companies. As a result of this volatility, you may not be able to sell your securities at or above the price at which they were acquired. A loss of investor confidence in the market for the stocks of other companies which investors perceive to be similar to New Ginkgo could depress our stock price regardless of our business, prospects, financial conditions or results of operations.

 

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A decline in the market price of our securities also could adversely affect our ability to issue additional securities and our ability to obtain additional financing in the future.

Our actual financial position and results of operations may differ materially from the unaudited pro forma financial information included in this proxy statement/prospectus.

The unaudited pro forma condensed combined financial information included in this proxy statement/prospectus is presented for illustrative purposes only and is not necessarily indicative of what our actual financial position or results of operations would have been had the Business Combination been completed on the dates indicated. See “Unaudited Pro Forma Condensed Combined Financial Information” for more information.

There can be no assurance that New Ginkgo Class A common stock issued in connection with the Business Combination will be approved for listing on the NYSE following the Closing, or that we will be able to comply with the continued listing standards of the NYSE.

New Ginkgo Class A common stock and warrants are expected to be listed on the NYSE following the Business Combination. New Ginkgo’s continued eligibility for listing may depend on the number of our shares that are redeemed. If, after the Business Combination, the NYSE delists New Ginkgo Class A common stock from trading on its exchange for failure to meet the listing standards, we and our shareholders could face significant material adverse consequences including:

 

   

a limited availability of market quotations for our securities;

 

   

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

 

   

a limited amount of analyst coverage; and

 

   

a decreased ability to issue additional securities or obtain additional financing in the future.

The Current Charter states that SRNG must complete its initial business combination by February 26, 2023. If SRNG has not completed an initial business combination by then (or such later date as our shareholders may approve in accordance with the Current Charter), SRNG will: (i) cease all operations except for the purpose of winding up; (ii) as promptly as reasonably possible but not more than 10 business days thereafter, redeem the public shares, at a per-share price, payable in cash, equal to 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 SRNG to fund its working capital requirements (subject to an aggregate limit of $3,000,000) (less taxes payable and up to $100,000 of interest to pay dissolution expenses), divided by the number of then issued and outstanding public shares, which redemption will completely extinguish public shareholders’ rights as shareholders (including the right to receive further liquidating distributions, if any); and (iii) as promptly as reasonably possible following such redemption, subject to the approval of SRNG’s remaining shareholders and the SRNG Board, liquidate and dissolve, subject in each case to SRNG’s obligations under Cayman Islands law to provide for claims of creditors and the requirements of other applicable law. In such case, SRNG’s public shareholders may only receive approximately $10.00 per share and SRNG’s warrants will expire worthless.

SRNG’s directors may decide not to enforce the indemnification obligations of our Sponsor, resulting in a reduction in the amount of funds in the Trust Account available for distribution to our public shareholders.

The Sponsor has agreed that it will be liable to SRNG if and to the extent any claims by a third party for services rendered or products sold to SRNG, or a prospective target business with which SRNG has 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) $10.00 per public share and (ii) the actual

 

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amount per public share held in the Trust Account as of the date of the liquidation of the Trust Account, if less than $10.00 per public share due to reductions in the value of the trust assets, less taxes payable, provided that such liability will not apply to any claims by a third party or prospective target business who executed a waiver of any and all rights to the funds held in the Trust Account (whether or not such waiver is enforceable) nor will it apply to any claims under SRNG’s indemnity of the underwriters of SRNG’s initial public offering against certain liabilities, including liabilities under the Securities Act. While SRNG currently expects that its independent directors would take legal action on its behalf against the Sponsor to enforce its indemnification obligations to SRNG, it is possible that SRNG’s independent directors in exercising their business judgment and subject to their fiduciary duties may choose not to do so in any particular instance. If SRNG’s independent directors choose not to enforce these indemnification obligations, the amount of funds in the Trust Account available for distribution to SRNG’s public shareholders may be reduced below $10.00 per share.

If, before distributing the proceeds in the Trust Account to SRNG’s public shareholders, SRNG files a bankruptcy petition or an involuntary bankruptcy petition is filed against SRNG that is not dismissed, the claims of creditors in such proceeding may have priority over the claims of SRNG’s shareholders and the per-share amount that would otherwise be received by SRNG’s shareholders in connection with SRNG’s liquidation may be reduced.

If, before distributing the proceeds in the Trust Account to SRNG’s public shareholders, SRNG files a bankruptcy petition or an involuntary bankruptcy petition is filed against SRNG that is not dismissed, the proceeds held in the Trust Account could be subject to applicable bankruptcy law, and may be included in SRNG’s bankruptcy estate and subject to the claims of third parties with priority over the claims of SRNG’s shareholders. To the extent any bankruptcy claims deplete the Trust Account, the per-share amount that would otherwise be received by SRNG’s shareholders in connection with SRNG’s liquidation may be reduced.

If SRNG’s shareholders fail to comply with the redemption requirements specified in this proxy statement/prospectus, they will not be entitled to redeem their SRNG Class A ordinary shares for a pro rata portion of the Trust Account.

Holders of public shares are not required to affirmatively vote against the Business Combination Proposal in order to exercise their rights to redeem their shares for a pro rata portion of the Trust Account. In order to exercise their redemption rights, they are required to submit a request in writing and deliver their share certificates (if any) and other redemption forms (as applicable) to our transfer agent prior to                      , New York City time, on                      , 2021. Shareholders electing to redeem their shares will receive their pro rata portion of the funds held in the Trust Account, including interest earned on the funds held in the Trust Account and not previously released to SRNG to fund its working capital requirements (subject to an aggregate limit of $3,000,000) and/or to pay SRNG’s taxes, calculated as of two business days prior to the anticipated consummation of the Business Combination.

The ability of SRNG shareholders to exercise redemption rights with respect to a large number of shares could increase the probability that the Business Combination would be unsuccessful and that shareholders would have to wait for liquidation in order to redeem their shares.

At the time SRNG entered into the Merger Agreement and related agreements for the Business Combination, SRNG did not know how many shareholders would exercise their redemption rights, and therefore SRNG structured the Business Combination based on its expectations as to the number of shares that will be submitted for redemption. The Merger Agreement requires SRNG to have at least $1.25 billion of aggregate cash proceeds available in the Trust Account, after giving effect to redemptions of public shares, if any, and the Private Placement. If a larger number of shares are submitted for redemption than SRNG initially expected, SRNG may need to restructure the transaction to reserve a greater portion of the cash in the Trust Account. The above considerations may limit SRNG’s ability to complete the Business Combination or optimize its capital structure.

 

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The completion of the Business Combination is subject to conditions, including certain conditions that may not be satisfied on a timely basis, if at all.

The completion of the Business Combination is subject to a number of conditions. The completion of the Business Combination is not assured and is subject to risks, including the risk that approval of the Business Combination by SRNG shareholders is not obtained or that there are not sufficient funds in the Trust Account, in each case subject to certain terms specified in the Merger Agreement (as described under “The Merger Agreement—Conditions to Closing”), or that other Closing conditions are not satisfied. If SRNG does not complete the Business Combination, SRNG could be subject to various risks, including:

 

   

the parties may be liable for damages to one another under certain circumstances pursuant to the terms and conditions of the Merger Agreement;

 

   

negative reactions from the financial markets, including declines in the price of our Class A ordinary shares due to the fact that current prices may reflect a market assumption that the Business Combination will be completed; and

 

   

the attention of our management will have been diverted to the Business Combination rather than the pursuit of other opportunities in respect of an initial business combination.

Delaware law and provisions in the Proposed Charter and the Proposed Bylaws could make a takeover proposal more difficult.

If the Business Combination is consummated, New Ginkgo’s organizational documents will be governed by Delaware law. Certain provisions of Delaware law and of the Proposed Charter and the Proposed Bylaws could discourage, delay, defer or prevent a merger, tender offer, proxy contest or other change of control transaction that a stockholder might consider in its best interest, including those attempts that might result in a premium over the market price for the shares of New Ginkgo Class A common stock held by New Ginkgo’s stockholders. These provisions provide for, among other things:

 

   

the ability of the New Ginkgo Board to issue additional shares of New Ginkgo Class B common stock (including potentially to persons other than employees and directors) and one or more series of preferred stock;

 

   

certain limitations on convening special stockholder meetings;

 

   

advance notice for nominations of directors by stockholders and for stockholders to include matters to be considered at New Ginkgo’s annual meetings;

 

   

amendment of certain provisions of the organizational documents only by the affirmative vote of the holders of shares representing at least two-thirds of the voting power of all of the outstanding shares of capital stock of New Ginkgo and, in certain circumstances, amendment of certain provisions of New Ginkgo’s organizational documents only with the affirmative vote of the holders of at least two-thirds of the outstanding shares of New Ginkgo Class A common stock or New Ginkgo Class B common stock, as applicable, voting as a separate class; and

 

   

a multi-class common stock structure with one vote per share of New Ginkgo Class A common stock, 10 votes per share of New Ginkgo Class B common stock and no voting right per share of New Ginkgo Class C common stock (except as otherwise expressly provided in the Proposed Charter or required by applicable law).

These anti-takeover provisions as well as certain provisions of Delaware law could make it more difficult for a third party to acquire New Ginkgo, even if the third party’s offer may be considered beneficial by many of New Ginkgo’s stockholders. As a result, New Ginkgo’s stockholders may be limited in their ability to obtain a premium for their shares. If prospective takeovers are not consummated for any reason, New Ginkgo may experience negative reactions from the financial markets, including negative impacts on the price of New Ginkgo

 

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common stock. These provisions could also discourage proxy contests and make it more difficult for New Ginkgo’s stockholders to elect directors of their choosing and to cause New Ginkgo to take other corporate actions that New Ginkgo’s stockholders desire. See “Description of New Ginkgo Securities.”

The Proposed Bylaws designate the Court of Chancery of the State of Delaware as the sole and exclusive forum for certain types of actions and proceedings and the federal district courts of the United States as the sole and exclusive forum for certain other types of actions and proceedings, in each case, that may be initiated by New Ginkgo’s stockholders, which could limit New Ginkgo’s stockholders’ ability to obtain what such stockholders believe to be a favorable judicial forum for disputes with New Ginkgo or New Ginkgo’s directors, officers or other employees.

The Proposed Bylaws will provide that, unless New Ginkgo consents in writing to the selection of an alternative forum or if the Court of Chancery (or other state or federal court located within the State of Delaware) determines that there is an indispensable party not subject to the jurisdiction of the applicable court, the Court of Chancery (or other state or federal court located within the State of Delaware) will be, to the fullest extent permitted by law, the sole and exclusive forum for resolution for any (i) derivative action or proceeding brought on behalf of New Ginkgo; (ii) action asserting a claim of breach of a fiduciary duty owed by any current or former director, officer, employee, agent, or stockholder of New Ginkgo to New Ginkgo or New Ginkgo’s stockholders, or any claim for aiding and abetting such an alleged breach; (iii) action governed by the “internal affairs doctrine” or arising pursuant to any provision of the certificate of incorporation or the bylaws, or to interpret, apply, enforce or determine the validity of the certificate of incorporation or the bylaws; (iv) action asserting a claim against New Ginkgo or any current or former director, officer, employee, agent or stockholder of New Ginkgo arising pursuant to any provision of the DGCL or as to which the DGCL confers jurisdiction on the Court of Chancery. Unless New Ginkgo consents in writing to the selection of an alternative forum, the federal district courts of the United States of America shall, to the fullest extent permitted by law, be the sole and exclusive forum for resolution of any action, claim or proceeding arising under the Securities Act. The exclusive forum provision does not apply to suits brought to enforce any duty or liability created by the Exchange Act or the rules and regulations thereunder. If any action, claim or proceeding the subject matter of which is within the scope of the forum provisions in the Proposed Bylaws (the “Forum Provisions”) is filed in the name of any stockholders of New Ginkgo in a court other than the specified courts in the Forum Provisions, then such stockholder will, to the fullest extent permitted by applicable law, be deemed to have consented to (a) the personal jurisdiction of the applicable courts specified in the Forum Provisions in connection with any action brought in any such court to enforce the Forum Provisions and (b) having service of process made upon such stockholder in any such action by service upon such stockholder’s counsel in such action as agent for such stockholder. These choice-of-forum provisions may limit a stockholder’s ability to bring a claim in a judicial forum that he, she or it believes to be favorable for disputes with New Ginkgo or New Ginkgo’s directors, officers or other employees, which may discourage such lawsuits. Such choice-of-forum provisions may also increase the costs to bring a claim. We note that there is uncertainty as to whether a court would enforce the Forum Provisions and that investors cannot waive compliance with the federal securities laws and the rules and regulations thereunder. Section 22 of the Securities Act creates concurrent jurisdiction for state and federal courts over all suits brought to enforce any duty or liability created by the Securities Act or the rules and regulations thereunder.

Alternatively, if a court were to find the Forum Provisions of the Proposed Bylaws inapplicable or unenforceable with respect to one or more of the specified types of actions or proceedings, New Ginkgo may incur additional costs associated with resolving such matters in other jurisdictions, which could materially adversely affect New Ginkgo’s business, financial condition and results of operations and result in a diversion of the time and resources of New Ginkgo’s management and board of directors.

 

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Risks Related to Ginkgo’s Business

We have a history of net losses. We expect to continue to incur losses for the foreseeable future, and we may never achieve or maintain profitability.

We have incurred significant operating losses since our inception. Our net loss attributable to our stockholders was approximately $126.6 million and $119.3 million for the fiscal years ended December 31, 2020 and 2019, respectively. As of December 31, 2020, we had an accumulated deficit of approximately $467.9 million. We may incur losses and negative cash flow from operating activities for the foreseeable future as we continue to invest significant additional funds toward further developing our platform, the cell programs we perform on behalf of our customers and otherwise growing our business. We also expect that our operating expenses will increase as a result of becoming a public company and will continue to increase as we grow our business. We have derived a significant portion of our revenues from fees and milestone payments from technical development services provided to customers to advance programs. Historically, these fees have not been sufficient to cover the full cost of our operations. Additionally, if our customers terminate their agreements or development plans with us, our near-term revenues could be adversely affected. In addition, certain of our customer agreements provide for milestone payments, future royalties and other forms of contingent consideration, the payment of which are uncertain, as they are dependent on our ability to successfully develop engineered cells, bioprocesses, or other deliverables and our customers’ ability and willingness to successfully develop and commercialize products and processes.

In 2020, we incurred significant operating and capital expenditures in launching our biosecurity offering, which includes COVID-19 testing products and services for businesses, academic institutions, and other organizations and the development of components and processes for the development and manufacture of COVID-19 vaccines. In the first quarter of 2021, we launched our pooled testing initiative which focuses on providing end-to-end COVID-19 testing services to groups of individuals, with a focus of offering pooled testing services for K-12 schools. Given the recent launch of this biosecurity offering and limited operating history, our reliance on school funding for testing, potential disruptions from vaccine rollout generally and for adolescents in the foreseeable future, the impact of summer vacation, and the increased availability of over-the-counter testing options, this business may never recoup the losses incurred to date.

Our expenses may exceed revenues for the foreseeable future and we may not achieve profitability. If we fail to achieve profitability, or if the time required to achieve profitability is longer than we anticipate, we may not be able to expand or continue our business, and the value of New Ginkgo common stock could be negatively impacted. Our ability to achieve or sustain profitability is based on numerous factors, many of which are beyond our control, including the development of our platform, the initiation of new programs with new and existing customers, the commercial terms of our programs, our ability to advance cell engineering programs in a timely and cost-effective manner, our ability to extend new offerings to customers, our customers’ ability to scale up bioprocesses, the ability of our customers to produce and sell products, the impact of market acceptance of our customers’ products, and our and our customers’ market penetration and margins. Even if we do achieve profitability, we may not be able to sustain or increase profitability on a quarterly or annual basis.

We will need substantial additional capital in the future in order to fund our business.

We have consumed considerable amounts of capital to date, and we expect to incur continued net losses over the next several years as we continue to develop our business, advance our programs, expand and enhance our platform, and make the capital investments necessary to scale up our Foundry operations and Codebase assets. We may also use additional capital for strategic investments and acquisitions. Following the consummation of the Business Combination, we believe that our cash and cash equivalents, short-term investments, and interest earned on investments will be sufficient to meet our projected operating requirements for several years and until we reach profitability. However, these assumptions may prove to be incorrect and we could exhaust our available capital resources sooner than we currently expect. Because of the numerous risks and uncertainties associated with our programs, including risks and uncertainties that could impact the rate of progress of our programs, we are unable to estimate with certainty the amounts of capital outlays and operating expenditures associated with these activities.

 

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We do not currently have any commitments for future funding beyond the consummation of the Business Combination. We may receive fees, milestones, and royalty payments under our customer agreements, but these are not guaranteed. Additionally we may be able to sell our equity interests in certain subsidiaries or collaborations but most of these equity stakes are illiquid (e.g. in private companies) and we may not be able to find a buyer or may incur significant impairment if forced to sell these positions for liquidity. We may not receive any further funds under those agreements, the funds we receive may be lower than projected, or our program costs may be higher than projected. In addition, we may not be able to sign new customer agreements or enter into new development plans with existing customers with adequate funds to cover program development expenses. As a result of these and other factors, we do not know whether additional financing will be available when needed, or, if available, whether such financing would be on terms favorable to our stockholders or us.

If future financings involve the issuance of equity securities, our existing shareholders would suffer dilution. If we raise debt financing in the future, we may be subject to restrictive covenants that limit our ability to conduct our business. Our ability to raise funds may be adversely impacted by current or future economic conditions. If we fail to raise sufficient funds and continue to incur losses, our ability to fund our operations, take advantage of strategic opportunities, or otherwise respond to competitive pressures could be significantly limited. If adequate funds are not available, we may not be able to successfully execute our business plan or continue our business.

We have experienced rapid growth and expect our growth to continue, and if we fail to effectively manage our growth, then our business, results of operations, and financial condition could be adversely affected.

We have experienced substantial growth in our business since inception, which has placed and may continue to place significant demands on our company culture, operational infrastructure, and management. We believe that our culture has been a critical component of our success. We have invested substantial time and resources in building our team and nurturing a culture of empowerment of, and active engagement by, our employees. As we expand our business and mature as a public company, we may find it difficult to maintain our culture while managing this growth. Any failure to manage our anticipated growth and organizational changes in a manner that preserves the key aspects of our culture could be detrimental to future success, including our ability to recruit and retain personnel, and effectively focus on and pursue our objectives. This, in turn, could adversely affect our business, results of operations, and financial condition.

In addition, in order to successfully manage our rapid growth, our organizational structure has become more complex and is likely to continue to become more complex. In order to manage these increasing complexities, we will need to continue to scale and adapt our operational, financial, and management controls, as well as our reporting systems and procedures. The expansion of our systems and infrastructure will require us to commit substantial financial, operational, and management resources before our revenue increases and without any assurances that our revenue will increase.

Finally, continued growth could strain our ability to maintain reliable service levels and offerings for our customers. If we fail to achieve the necessary level of capacity, quality and efficiency in performing services and other development activities, or the necessary level of efficiency in our organizational structure as we grow, then our business, results of operations and financial condition could be adversely affected.

Our limited operating history makes it difficult to evaluate our current business and future prospects.

We have a portfolio of cell engineering programs which vary in start date, duration, complexity, and revenue potential. Additionally, our downstream economics in the form of equity interests, milestone payments, or royalty streams add an additional level of uncertainty to our possible future performance. Consequently, predictions about our future success or viability are highly uncertain and may not be as accurate as they could be if we had a longer company history of successfully developing, commercializing and generating revenue from our programs and/or downstream economic participation. With respect to our biosecurity offering, prior to 2020, we had no experience developing or commercializing testing products or services. Moreover, as described above,

 

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given the limited operating history of our biosecurity offering, our reliance on school funding for testing, potential disruptions from vaccine rollout generally and for adolescents in the foreseeable future, the impact of summer vacation, and the increased availability of over-the-counter testing options, the future performance of our COVID-19 offerings is unpredictable. Moreover, we cannot predict how long the COVID-19 pandemic will continue and, therefore, we cannot predict the duration of the revenue stream from our COVID-19 testing products and services.

Our long-term objective is to generate free cash flow from the commercialization of programs by customers across a variety of industries, as well as, from our biosecurity-focused offerings. Our estimated costs and timelines for the completion of programs are based on our experiences to date and our expectations for each stage of the program in development. Given the variety of types of programs we support and the continued growth of our platform, there is variability in timelines and costs for launching and executing programs, and completion dates can change over the course of a customer engagement. In addition, our costs and timelines may be greater or subject to variability where regulatory requirements lead to longer timelines, such as in agriculture, food, and therapeutics. In addition, we have equity interests in certain companies and there is and will continue to be variability in the financial performance of these other companies or future companies in which we may have equity interests.

As a business with a limited operating history, we may encounter unforeseen expenses, difficulties, complications, delays, and other known and unknown obstacles. We have encountered in the past, and will encounter in the future, risks and uncertainties frequently experienced by growing companies with limited operating histories in emerging and rapidly changing industries. If our assumptions regarding these risks and uncertainties, which we use to plan and operate our business, are incorrect or change, or if we do not address these risks successfully, our results of operations could differ materially from our expectations, and our business, financial condition, and results of operations could be adversely affected.

If we cannot maintain and expand current customer partnerships and enter into new customer partnerships, our business could be adversely affected.

We do not generate substantial revenue from our own products, and instead generate revenue from customer collaborations in which we provide services, and also receive downstream value in the form of royalties, equity, or milestone payments. As a result, our success depends on our ability to expand the number, size and scope of our customer collaborations. Our ability to win new business depends on many factors, including our reputation in the market, the quality of our service offerings relative to alternatives, the pricing and efficiency of our services relative to alternatives, and our technical capabilities. If we fail to maintain a position of strength in any of these factors, our ability to either sign new customer collaborations or launch new programs with existing customers may suffer and this could adversely affect our prospects. Additionally, in the process of developing programs, we generate Foundry know-how and accumulate meaningful biological and data assets, including optimized proteins and organisms, characterized genetic parts, enhanced understanding of metabolic pathways, biological, chemical, and genetic libraries, and other elements of biological data. Data and know-how generated from our programs provide the basis for expanded capabilities that we believe further supports our customer collaborations. As a result, in addition to reducing our revenue or delaying the development of our programs, the loss of one or more of our customer relationships or the failure to add new customers or programs may hinder our accumulation of such information, thus hindering our efforts to advance our technological differentiation and improve our platform.

We engage in conversations with companies regarding potential customer collaborations on an ongoing basis. We may spend considerable time and money engaging in these conversations and feasibility assessments, including, understanding the technical approach to a program, customer concerns and limitations, and legal or regulatory landscape of a potential program or offering, which may not result in a commercial agreement. Even if an agreement is reached, the resulting relationship may not be successful for many reasons, including our inability to complete a program to our customers’ specifications or within our customers’ time frames, or

 

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unsuccessful development or commercialization of products or processes by our customers. In such circumstances, our revenues and downstream value potential from such a collaboration might be meaningfully reduced.

We currently own and may in the future own equity interests in other operating companies, including certain of our customers; consequently, we have exposure to the volatility and liquidity risks inherent in holding their equity and overall operational and financial performance of these businesses.

We currently own equity interests in several of our customers. In the future, we may also own equity interests in other companies. The process by which we receive equity interests and the factors we consider in deciding whether to accept, hold or dispose of these equity positions may differ significantly from those that an independent investor would evaluate when considering equity interests in a company. Owning equity increases our exposure to the risks of the other company and, in the case of customers, beyond the products of our collaborations. Our equity ownership positions expose us to market volatility and the potential for negative returns. We may have restrictions on resale or limited markets to sell our equity ownership. In many cases, our equity position is a minority position which exposes us to further risk, as we are not able to exert control over the companies in which we hold securities.

In connection with future collaborations or joint ventures, we may, from time to time, receive warrants, or options, all of which involve special risks. To the extent we receive warrants or options in connection with future collaborations or joint ventures, we would be exposed to risks involving pricing differences between the market value of underlying securities and our exercise price for the warrants or options, a possible lack of liquidity, and the related inability to close a warrant or option position, all of which could ultimately have an adverse effect on our financial position.

We leverage our own resources and partner with strategic and financial investors in order to help early stage companies and innovators secure funding and benefit from our platform, which exposes us to a number of risks.

Since our founding, we have helped to launch new companies (such as Motif FoodWorks, Inc., Allonnia LLC and Kalo Ingredients LLC) by bringing together strategic and financial investors to secure funding for these early stage and small companies. Going forward, we intend to continue to leverage our own balance sheet and partner with investors in order to enable companies at all stages to benefit from our platform.

Partnering with and investing in early stage and small companies may expose us to a number of risks, including that early stage and small companies may have:

 

   

shorter operating histories, narrower product lines and smaller market shares than larger businesses, which tend to render small companies more vulnerable to competitors’ actions and market conditions, as well as general economic downturns;

 

   

more limited access to capital and higher funding costs, may be in a weaker financial position and may need more capital than originally anticipated to expand, compete and operate their business;

 

   

the inability to obtain financing from the public capital markets or other traditional sources, such as commercial banks, in part because loans made to these types of companies entail higher risks than loans made to companies that have larger businesses, greater financial resources or are otherwise able to access traditional credit sources on more attractive terms;

 

   

a higher likelihood of depending on the management talents and efforts of a small group of persons; therefore, the death, disability, resignation or termination of one or more of these persons could have a material adverse impact on such company and, in turn, on us;

 

   

less predictable operating results, may be engaged in rapidly changing businesses with products subject to a substantial risk of obsolescence, and may require substantial additional capital to support their operations, finance expansion or maintain their competitive position;

 

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particular vulnerabilities to changes in customer preferences and market conditions, depend on a limited number of customers, and face intense competition, including from companies with greater financial, technical, managerial and marketing resources; and

 

   

fewer administrative resources, which can lead to greater uncertainty in their ability to generate accurate and reliable financial data, including their ability to deliver audited financial statements.

Any of these factors or changes thereto could impair an early stage or small company’s financial condition, results of operation, cash flow or result in other adverse events, such as bankruptcy. This, in turn, could result in losses in our investments and a change in our income (loss) on investments.

We may pursue strategic acquisitions and investments that could have an adverse impact on our business if they are unsuccessful.

We have made acquisitions in the past and, if appropriate opportunities become available, we may acquire additional businesses, assets, technologies, or products to enhance our business in the future, but our ability to do so successfully cannot be ensured. We have also made investments in companies that we view as synergistic with our business. Although we conduct due diligence on these acquisitions and investments, such processes may fail to reveal significant liabilities and we could incur losses resulting from undiscovered liabilities of the acquired business that are not covered by indemnification we may obtain from the seller. Even if we identify suitable opportunities, we may not be able to complete such acquisitions on favorable terms or at all. Any acquisitions we make may not strengthen our competitive position, and these transactions may be viewed negatively by customers or investors. We may decide to incur debt or spend cash in connection with an acquisition, which may cause us to face liquidity concerns or be subject to restrictive covenants in the future. We may also issue common stock or other equity securities to the stockholders of the acquired company, which would reduce the percentage ownership of our existing stockholders. In addition, we may not be able to successfully integrate the acquired personnel, assets, technologies, products and/or operations into our existing business in an effective, timely, and non-disruptive manner or retain acquired personnel following an acquisition. Acquisitions may also divert management’s attention from day-to-day responsibilities, increase our expenses and reduce our cash available for operations and other uses. In addition, we may not be able to fully recover the costs of such acquisitions or be successful in leveraging any such strategic transactions into increased business, revenue, or profitability. We also cannot predict the number, timing, or size of any future acquisitions or the effect that any such transactions might have on our operating results.

Accordingly, although there can be no assurance that we will undertake or successfully complete any acquisitions, any transactions that we do complete may not yield the anticipated benefits and may be subject to the foregoing or other risks and have a material and adverse effect on our business, financial condition, results of operations, and prospects. Conversely, any failure to pursue or delay in completing any acquisition or other strategic transaction that would be beneficial to us could delay the development of our platform or advancement of our programs and, thus, potential commercialization of our customer’s products.

Our programs may not achieve milestones and other anticipated key events on the expected timelines or at all, which could have an adverse impact on our business and could cause the price of New Ginkgo common stock to decline.

We may adopt various technical, manufacturing, regulatory, commercial, and other objectives for our programs. These milestones may include our or our customer’s expectations regarding the commencement or completion of technical development, the achievement of manufacturing targets, the submission of regulatory filings, or the realization of other development, regulatory, or commercialization objectives by us or our customers. The achievement of many of these milestones may be outside of our control. All of these milestones are based on a variety of assumptions, including assumptions regarding capital resources, constraints, and priorities, progress of and results from research and development activities, and other factors, including impacts resulting from the

 

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COVID-19 pandemic, any of which may cause the timing of achievement of the milestones to vary considerably. If we, our collaborators, or our customers fail to achieve milestones in the expected timeframes, the commercialization of our programs may be delayed, our credibility may be undermined, our business and results of operations may be harmed, and the trading price of New Ginkgo common stock may decline.

We must continue to secure and maintain sufficient and stable supplies of laboratory reagents, consumables, equipment, and laboratory services. We depend on a limited number of suppliers, some of which are single-source suppliers, and contract manufacturers for critical supplies, equipment, and services for research, development, and manufacturing of our products and processes. Our reliance on these third parties exposes us to risks relating to costs, contractual terms, supply, and logistics, and the loss of any one or more of these suppliers or contract manufacturers or their failure to supply us with the necessary supplies, equipment, or services on a timely basis, could cause delays in our research, development, or production capacity and adversely affect our business.

The COVID-19 pandemic has caused substantial disruption in global supply chains and the ability of third parties to provide us services on a timely basis or at all. As a result, we have experienced shortages in some of our key equipment and supplies, including those required in our labs, as well as, disruptions in services provided by third parties, and may continue to do so in the future as a result of the pandemic, or otherwise. We may also experience price increases, quality issues and longer lead times due to unexpected material shortages, service disruptions, and other unanticipated events, which may adversely affect our supply of lab equipment, lab supplies, chemicals, reagents, supplies, and lab services. For some suppliers, we do not enter into long-term agreements and instead secure our materials and services on a purchase order basis. Our suppliers may reduce or cease their supply of materials or services to us at any time in the future. If the supply of materials or services is interrupted, our programs may be delayed.

We depend on a limited number of suppliers for critical items, including lab consumables and equipment, for the development of our programs. Some of these suppliers are single-source suppliers. We do not currently have the infrastructure or capability internally to manufacture these items at the necessary scale or at all. Although we have a reserve of supplies and although alternative suppliers exist for some of these critical products, services, and equipment, our existing processes used in our Foundries have been designed based on the functions, limitations, features, and specifications of the products, services, and equipment that we currently utilize. While we work with a variety of domestic and international suppliers, our suppliers may not be obligated to supply products or services or our arrangements may be terminated with relatively short notice periods. Additionally, we do not have any control over the process or timing of the acquisition or manufacture of materials by our manufacturers and cannot ensure that they will deliver to us the items we order on time, or at all.

In particular, we rely on Twist Bioscience Corporation for custom DNA synthesis and Thermo Fisher Scientific Inc. for certain instruments and consumables. The price and availability of DNA, chemicals, reagents, equipment, consumables, and instruments have a material impact on our ability to provide Foundry services. We also rely on third parties, such as Berkeley Lights, Inc., to develop workflows to use the equipment they provide to us. We may rely on contract manufacturers like Fermic, s.a. de.c.v for scale-up fermentation development, fermentation, and manufacturing of products for some customers.

The loss of the products, services, and equipment provided by one or more of our suppliers could require us to change the design of our research, development, and manufacturing processes based on the functions, limitations, features, and specifications of the replacement items or seek out a new supplier to provide these items. Additionally, as we grow, our existing suppliers may not be able to meet our increasing demand, and we may need to find additional suppliers. We may not be able to secure suppliers who provide lab supplies at, or equipment and services to, the specification, quantity, and quality levels that we demand (or at all) or be able to negotiate acceptable fees and terms of services with any such suppliers.

 

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As described above, some lab equipment, lab consumables, and other services and materials that we purchase are purchased from single-source or preferred suppliers, which limits our negotiating leverage and our ability to rely on additional or alternative suppliers for these items. Our dependence on these single-source and preferred suppliers exposes us to certain risks, including the following:

 

   

our suppliers may cease or reduce production or deliveries, raise prices, or renegotiate terms;

 

   

we may be unable to locate a suitable replacement on acceptable terms or on a timely basis, if at all;

 

   

if there is a disruption to our single-source or preferred suppliers’ operations, and if we are unable to enter into arrangements with alternative suppliers, we will have no other means of continuing the relevant research, development, or manufacturing operations until they restore the affected facilities or we or they procure alternative sources of supply;

 

   

delays caused by supply issues may harm our reputation, frustrate our customers, and cause them to turn to our competitors for future programs; and

 

   

our ability to progress the development of existing programs and the expansion of our capacity to begin future programs could be materially and adversely impacted if the single-source or preferred suppliers upon which we rely were to experience a significant business challenge, disruption, or failure due to issues such as financial difficulties or bankruptcy, issues relating to other customers such as regulatory or quality compliance issues, or other financial, legal, regulatory, or reputational issues.

Moreover, to meet anticipated market demand, our suppliers may need to increase manufacturing capacity, which could involve significant challenges. This may require us and our suppliers to invest substantial additional funds and hire and retain the technical personnel who have the necessary experience. Neither we nor our suppliers may successfully complete any required increase to existing research, development, or manufacturing capacity in a timely manner, or at all.

For the year ended December 31, 2020, our cost of lab equipment, lab supplies, and lab services accounted for a significant portion of our total research and development expenses. In the event of price increases by suppliers, we may attempt to pass the increased costs to our customers. However, we may not be able to raise the prices of our Foundry services sufficiently to cover increased costs resulting from increases in the cost of our materials and services, or the interruption of a sufficient supply of materials or services. As a result, materials and services costs, including any price increase for our materials and services, may negatively impact our business, financial condition, and results of operations.

Some of our suppliers and contract manufacturers are foreign entities. We may face disruptions due to the inability to obtain customs clearances in a timely manner or restrictions on shipping or international travel due to the COVID-19 pandemic. As a result of ongoing global supply chain challenges resulting in very long lead times for certain products and equipment, we may order in larger volumes in order to secure the supplies we require for our future operations, which may negatively impact our financial conditions, especially if we are unable to use the supplies ordered.

We use biological, hazardous, flammable and/or regulated materials that require considerable training, expertise and expense for handling, storage and disposal and may result in claims against us.

We work with biological and chemical materials that could be hazardous to human, animal, or plant health and safety or the environment. Our operations produce hazardous and biological waste products, and we largely contract with third parties for the disposal of these products. Federal, state, and local laws and regulations govern the use, generation, manufacture, storage, handling, and disposal of these materials and wastes. Compliance with applicable laws and regulations is expensive, and current or future laws and regulations may restrict our operations. If we do not comply with applicable laws and regulations, we may be subject to fines and penalties.

 

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In addition, we cannot eliminate the risk of (a) accidental or intentional injury or (b) release, or contamination from these materials or wastes, which could expose us to liability. Furthermore, laws and regulations are complex, change frequently, and have tended to become more stringent. We cannot predict the impact of such changes and cannot be certain of our future compliance. Accordingly, in the event of release, contamination, or injury, we could be liable for the resulting harm or penalized with fines in an amount exceeding our resources and our operations could be suspended or otherwise adversely affected. These liabilities could also include regulatory actions, litigation, investigations, remediation obligations, damage to our reputation and brand, supplemental disclosure obligations, loss of customer, consumer, and partner confidence in the safety of our laboratory operations, impairment to our business, and corresponding fees, costs, expenses, loss of revenues, and other potential liabilities, as well as, increased costs or loss of revenue or other harm to our business.

The release of genetically modified organisms or materials, whether inadvertent or purposeful, into uncontrolled environments could have unintended consequences, which may result in increased regulatory scrutiny and otherwise harm our business and financial condition.

The genetically engineered organisms and materials that we develop may have significantly altered characteristics compared to those found in the wild, and the full effects of deployment or release of our genetically engineered organisms and materials into uncontrolled environments may be unknown. In particular, such deployment or release, including an unauthorized release, could impact the environment or community generally or the health and safety of our employees, our customers’ employees, and the consumers of our customers’ products.

In addition, if a high profile biosecurity breach or unauthorized release of a biological agent occurs within our industry, our customers and potential customers may lose trust in the security of the laboratory environments in which we produce genetically modified organisms and materials, even if we are not directly affected. Any adverse effect resulting from such a release, by us or others, could have a material adverse effect on the public acceptance of products from engineered cells and our business and financial condition. Such a release could result in increased regulatory scrutiny of our facilities, platform, and programs, and could require us to implement additional costly measures to maintain our regulatory permits, licenses, authorizations and approvals. To the extent such regulatory scrutiny or changes impact our ability to execute on existing or new programs for our customers, or make doing so more costly or difficult, our business, financial condition, or results of operations may be adversely affected. In addition, we could have exposure to liability for any resulting harm, as well as to regulatory actions, litigation, investigations, remediation obligations, damage to our reputation and brand, supplemental disclosure obligations, loss of customer, consumer, and partner confidence in the safety of engineered cells materials, and organisms, impairment to our business, and corresponding fees, costs, expenses, loss of revenues, and other potential liabilities, as well as, increased costs or loss of revenue or other harm to our business.

We could synthesize DNA sequences or engage in other activity that contravenes biosecurity requirements, or regulatory authorities could promulgate more far-reaching biosecurity requirements that our standard business practices cannot accommodate, which could give rise to substantial legal liability, impede our business, and damage our reputation.

The Federal Select Agent Program (“FSAP”), involves rules administered by the Centers for Disease Control and Prevention and the Animal and Plant Health Inspection Service that regulate possession, use, and transfer of biological select agents and toxins that have the potential to pose a severe threat to public, animal, or plant health or to animal or plant products. In accordance with the International Gene Synthesis Consortium’s (“IGSC”) Harmonized Screening Protocol for screening of synthetic DNA sequence orders, we follow biosafety and biosecurity industry practices and avoid DNA synthesis activities that implicate FSAP rules by screening synthetic DNA sequence orders against the IGSC’s Regulated Pathogen Database; however, we could err in our observance of compliance program requirements in a manner that leaves us in noncompliance with FSAP or

 

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other biosecurity rules. In addition, authorities could promulgate new biosecurity requirements that restrict our operations. One or more resulting legal penalties, restraints on our business or reputational damage could have material adverse effects on our business, financial condition, or results of operations.

Third parties may use our engineered cells materials, and organisms and accompanying production processes in ways that could damage our reputation.

After our customers have received our engineered cells materials, and organisms and accompanying production processes, we do not have any control over their use and our customers may use them in ways that are harmful to our reputation. In addition, while we have established a biosecurity program designed to comply with biosafety and biosecurity requirements and export control requirements in an effort to ensure that third parties do not obtain our engineered cells or other biomaterials for malevolent purposes, we cannot guarantee that these preventative measures will eliminate or reduce the risk of the domestic and global opportunities for the misuse or negligent use of our engineered cells materials, and organisms and production processes. Accordingly, in the event of such misuse or negligent use, our reputation, future revenue, and operating results may suffer.

International expansion of our business exposes us to business, regulatory, political, operational, financial, and economic risks associated with doing business outside of the United States.

We currently market our services and deliver our programs, materials, and processes outside of the United States and may market future offerings outside of the United States. We, and our suppliers, collaborators, and customers, currently conduct business outside of the United States. From time to time, our services may include the hiring or secondment of our employees outside the United States at third party facilities or require the hiring or secondment of foreign persons within our facilities. Accordingly, we are subject to a variety of risks inherent in doing business internationally, and our exposure to these risks will increase as we continue to expand our operations and customer base. These risks include:

 

   

political, social and economic instability;

 

   

fluctuations in currency exchange rates;

 

   

higher levels of credit risk, corruption, and payment fraud;

 

   

enhanced difficulties of integrating any foreign acquisitions;

 

   

increased expenses and diversion of our management’s attention from advancing programs;

 

   

regulations that might add difficulties in repatriating cash earned outside the United States and otherwise prevent us from freely moving cash;

 

   

import and export controls and restrictions and changes in trade regulations;

 

   

compliance with the U.S. Foreign Corrupt Practices Act, the U.K. Bribery Act, and similar laws in other jurisdictions;

 

   

multiple, conflicting and changing laws and regulations such as privacy, security and data use regulations, tax laws, tariffs, trade regulations, economic sanctions and embargoes, employment laws, anti-corruption laws, regulatory requirements, reimbursement or payor regimes and other governmental approvals, permits and licenses;

 

   

failure by us, our collaborators or our customers to obtain regulatory clearance, authorization or approval for the use of our services in various countries;

 

   

additional potentially relevant third-party patent rights;

 

   

complexities and difficulties in obtaining intellectual property protection and enforcing our intellectual property;

 

   

difficulties in staffing and managing foreign operations, including difficulties related to the increased operations, travel, infrastructure and legal compliance costs associated with international locations;

 

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logistics and regulations associated with shipping chemicals, biomaterials and product samples, including infrastructure conditions and transportation delays;

 

   

financial risks, such as longer payment cycles, difficulty collecting accounts receivable, the impact of local and regional financial crises, on demand and payment for our products and exposure to foreign currency exchange rate fluctuations;

 

   

natural disasters, political and economic instability, including wars, terrorism and political unrest, the outbreak of disease, or public health epidemics, such as COVID-19, which could have an adverse impact on our employees, contractors, customers, partners, travel and the global economy;

 

   

breakdowns in infrastructure, utilities and other services;

 

   

boycotts, curtailment of trade and other business restrictions; and

 

   

the other risks and uncertainties described in this proxy statement/prospectus.

Additionally, as part of our growth strategy, we will continue to evaluate potential opportunities for international expansion. Operating in international markets requires significant resources and management attention and will subject us to regulatory, economic and political risks in addition to those we face in the United States. However, our international expansion efforts may not be successful, which could limit the size of our market or the ability to provide services or programs internationally.

In addition, due to potential costs from any international expansion efforts and potentially higher supplier costs outside of the United States, our international operations may operate with a lower margin profile. As a result, our margins may fluctuate as we expand our operations and customer base internationally.

Any of these factors could significantly harm our future international expansion and operations and, consequently, our revenue and results of operations.

Our ability to enter into a definitive agreement with the U.S. International Development Finance Corporation and our overall level of indebtedness could adversely affect liquidity and have an adverse effect on our valuation, operations and business.

On November 25, 2020, the U.S. International Development Finance Corporation (“DFC”) announced its approval to extend a loan of up to $1.1 billion to us to aid in the expansion of our commercial biosecurity offering at a global scale, contingent on our entering into a definitive loan agreement with DFC. In the event we finalize and enter into an agreement and accept a loan from the DFC, we may be subject to negative covenants limiting our ability to enter into certain transactions or incur indebtedness. We may also be required to maintain a leverage ratio and other financial metrics within certain limits. Incurring indebtedness could increase our vulnerability to sustained, adverse macroeconomic weakness and limit our ability to obtain further financing. Alternatively, if we do not enter into an agreement and accept a loan from the DFC, we may not have access to capital sufficient to scale our facilities and capabilities to the extent necessary to be competitive in the biosecurity market.

Risks Related to Ginkgo’s Customers

We rely on our customers to develop, produce and manufacture products using the engineered cells and/or biomanufacturing processes that we develop. If these initiatives by our customers are not successful or do not achieve commercial success, or if our customers discontinue their development, production and manufacturing efforts using our engineered cells and/or biomanufacturing processes, our future financial position may be adversely impacted.

We operate as a platform company. As such, we largely rely on our customers to commercialize products that may be enabled by our engineered cells and/or biomanufacturing processes. A portion of the value in our customer collaborations is earned through downstream value sharing in the form of equity, royalty streams, or milestone payments. If our customers are not successful in bringing these products to market, the downstream

 

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portion of our value will be adversely impacted. Because we do not directly control manufacturing, product or downstream process development or commercialization, we have limited ability to impact the quality of our partners’ production processes and ultimate commercial success.

In addition, our customers may simply choose not to develop or commercialize a product we have enabled in which we are entitled to downstream value sharing. In our current relationships, we would have limited or no recourse to find alternative methods to monetize these products without the original customer. Because this industry is still nascent and the regulatory environment is evolving, we have limited historical information on the probability of commercial success for bioengineered products or biomanufacturing processes in the market and have limited ability to underwrite the likelihood that our customers will be able to create valuable products or processes in their market using the results of their programs with us. If we overestimate the probability of commercial success, the price of New Ginkgo common stock may be adversely impacted as a result of lower expectations for future cash flows from customer collaborations.

Our revenue is concentrated in a limited number of customers, some of which are related parties, and our revenue, results of operations, cash flows and reputation in the marketplace may suffer upon the loss of a significant customer.

We have derived, and may continue to derive, a significant portion of our revenue from a limited number of large customers. During the year ended December 31, 2020, two customers, Motif FoodWorks, Inc. and Genomatica, Inc., each represented more than 10% of our total revenue and cumulatively represented 39.4% of our total revenue. Due to the significant time required to acquire new customers, to plan and develop new programs for customers, and to satisfactorily execute on existing programs, the loss of one or both of these customers, or the loss of any other significant customer or a significant reduction in the amount of demand from a significant customer would adversely affect our revenue, results of operations, cash flows and reputation in the marketplace. There is always a risk that existing customers will not elect to do business with us in the future or will experience financial difficulties. If our customers experience financial difficulties or business reversals which reduce or eliminate the need for our services, they may be unable or unwilling to fulfill their contracts with us. There is also the risk that our customers will attempt to impose new or additional requirements on us that reduce the profitability of the services performed by Ginkgo. Our customer concentration also increases the concentration of our accounts receivable and our exposure to payment defaults by key customers, which could expose us to substantial and potentially unrecoverable costs if we do not receive payment from key customers. Additionally, the loss of any significant customer could pose reputational harm to Ginkgo and make it more challenging to acquire new customers.

In addition, while our customer collaborations are typically multi-year, we generally do not require our customers to generate a minimum amount of annual demand and without such contracts, our customers are not obligated to use our services beyond the amounts they choose to incur. Our customers may choose to use less of our services depending on program progress, their own technological capabilities, market demand for their products and/or their own internal budget cycles. As a result, we cannot accurately predict our customers’ decisions to reduce or cease utilizing our services. Even where we enter into long-term contracts with our customers, there is no guarantee that such agreements will be negotiated on terms that are commercially favorable to us in the long-term. In addition, existing customers may choose to perform some or all of the services they expect from us internally, with another third-party partner or by using capabilities from acquisitions of assets.

In certain cases, our business partners may have discretion in determining when and whether to make announcements about the status of our collaborations, including about developments and timelines for advancing programs, and the price of New Ginkgo common stock may decline as a result of announcements of unexpected results or developments.

Generally, we and our customers must mutually agree on determining when and whether to make announcements about the status of our collaborations, including developments in our programs and timelines for

 

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commercialization of or improvements to products using engineered cells developed using our platform. However, in some cases our customers may report or otherwise may be obligated to disclose certain matters without our consent. Our partners may also wish to report such information more or less frequently than we intend to or may not wish to report such information at all. We or our partners may announce a collaboration or partnership even if there is no guarantee that we will recognize program fees. The price of New Ginkgo common stock may decline as a result of a public announcement of unexpected results or developments in our partnerships, or as a result of our partners not consenting to an announcement or withholding information.

Risks Related to the COVID-19 Pandemic

The recent COVID-19 pandemic and the global attempt to contain it may harm our business and results of operations.

The full impact of the continuing COVID-19 pandemic and related public health measures on our business will depend largely on future developments, including the duration and severity of the pandemic, which remains highly uncertain. On March 11, 2020, the World Health Organization declared the outbreak of COVID-19 caused by a novel strain of coronavirus as a pandemic, which continues to spread throughout the United States and around the world. Since then, extraordinary actions have been taken by international, federal, state and local public health and governmental authorities to contain and combat the outbreak and spread of COVID-19 throughout the world. These actions include travel bans, quarantines, capacity limitations at facilities, “stay-at-home” orders and similar mandates for many individuals to substantially restrict daily activities and for many businesses to curtail or cease normal operations.

The COVID-19 pandemic has had, and is expected to continue to have, an adverse impact on our operations, particularly as a result of preventive and precautionary measures that we, other businesses, and governments are taking. For example, as part of these efforts and in accordance with applicable government directives, we initially temporarily suspended some programs at our facilities in Boston, Massachusetts in late March 2020. In addition, we began restricting non-essential travel. As a result of the travel restrictions, we limited in-person sales and marketing activities. We have continued to operate within the rules and guidance applicable to our business during the pandemic, including by requiring physical distancing, quarantining our personnel and reducing capacity limits in our facilities; however, a continuing implementation of these restrictions could further impact our ability to operate effectively and conduct ongoing research and development, laboratory operations, sales and marketing activities or other activities or operations.

We have also incurred expenses associated with our efforts to accommodate personnel during the COVID-19 pandemic, including costs associated with the provision of COVID-19 testing to our personnel, safety accommodations, providing on-site amenities and enhanced on-site cleaning efforts. During the course of the pandemic, we will continue to incur such expenses associated with our operations.

Governmental mandates and guidelines related to COVID-19, other infectious diseases or public health crises, have impacted and we expect them to continue to impact, our personnel and operations and personnel and operations at third-party facilities in the United States and other countries. The pandemic has caused substantial disruption in global supply chains. These interruptions may require us to suspend operations or delay programs. If we continually delay programs with existing customers, we may be in breach of our contracts with existing customers or customers may decide to cease doing business with us. Difficulties and delays such as those we have experienced and may experience in the future may prevent us from meeting our operating and financial goals, both in general and within our targeted timelines, and may cause our revenues and operating results to fluctuate from period to period.

Our operations rely on the availability of laboratory scientists, engineers and facility, safety, quality and compliance personnel to work on-site. If a critical team member falls ill or needs to quarantine, or if a critical mass of our personnel falls ill or needs to quarantine, we may not be able to continue operations. The COVID-19

 

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pandemic has also had an adverse effect on our ability to attract, recruit, interview and hire at the pace we would typically expect to support our rapidly expanding operations, as well as on our ability to build out facilities to accommodate expanding operations. To the extent that any governmental authority imposes additional regulatory requirements or changes existing laws, regulations and policies that apply to our business and operations, such as additional workplace safety measures, our programs may be delayed, and we may incur further costs in bringing our business and operations into compliance with changing or new laws, regulations and policies.

Further, the effect of the COVID-19 pandemic and mitigation efforts on our customers’ and on consumer demand for their products could materially and adversely affect us, particularly to the extent our customers or potential customers experience declines in demand for their goods or services that contain or use our products or services. We may also experience a slow-down in our pipeline of new programs or a termination of existing programs if our customers or potential customers face disruptions during the pandemic.

The COVID-19 pandemic has negatively impacted the global economy, disrupted global supply chains and created significant volatility and disruption of financial markets. The ultimate impact of the COVID-19 pandemic is highly uncertain and subject to sudden change. We are following, and plan to continue to follow, recommendations from federal, state and local governments regarding workplace policies, practices and procedures. We are continuing to monitor the potential impact of the pandemic, including on global supply chains and manufacturing capacity, but we cannot be certain what the overall impact will be on our business, financial condition, results of operations and prospects on a go-forward basis.

Uncertainty regarding the ongoing demand and/or capacity (including capacity at third party clinical testing laboratories) of our COVID-19 individual and pooled sample tests could materially adversely affect our business.

Our COVID-19 testing programs are subject to inherent risks of commercial viability, such as demand for tests, price or market share erosion due to competition and the duration of the COVID-19 pandemic. We are in a highly competitive market – many companies have launched or are seeking to launch COVID-19 testing products and many of these companies already have an existing commercial and technical infrastructure to market and commercialize such offerings. We have limited experience marketing or commercializing diagnostic or pooled sample testing programs and may not be able to sufficiently support operations with our current base of personnel or recruit enough personnel to effectively commercialize COVID-19 testing programs, particularly during a pandemic, at which time the pipeline for experienced personnel will be in high demand. Moreover, as vaccines for COVID-19 and at-home or over-the-counter COVID-19 tests become more widely available, and as infection rates decrease, demand for COVID-19 testing may also decrease.

Our COVID-19 testing business relies heavily on the adoption of pooled testing in schools, and we expect our revenue from pooled sample testing in schools to decrease during the summer months when schools are closed. In addition, schools may be hesitant to adopt COVID-19 testing without positive support from parents or teachers. Although we make test validation results and protocols available to parents and teachers, they may not trust the accuracy of the tests or may have concerns about how the tests are performed, how samples are used or tracked and whether appropriate privacy measures are being taken with respect to individually identifiable health information, including genetic information. The ability for schools to pay for COVID-19 testing relies heavily on the availability of federal, state or local funding for testing. If such funding is not available or if there are restrictions on the use of such funding for our pooled sample test offerings, our COVID-19 testing business may not be commercially viable. In the event a COVID-19 vaccine is approved for children younger than sixteen years of age, the demand for COVID-19 testing in schools could diminish significantly or be eliminated.

Creating the commercial and technical infrastructure to test on a mass scale is expensive. We may also be limited in our ability to scale up based on expense or unavailability of the required materials, equipment, personnel and infrastructure necessary to deliver diagnostic or pooled sample tests on a mass scale. We may not be able to recover our investment expenses with sufficient revenue generated by our diagnostic and pooled sample testing efforts.

 

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Our ability to commercialize our testing programs is also subject to regulatory or governmental controls, decisions or actions. If the U.S. Department of Health and Human Services terminates its Declaration Justifying Emergency Use of Medical Countermeasures because the circumstances justifying emergency use no longer exist, or if the U.S. Food and Drug Administration (“FDA”) requires premarket approval, clearance or other marketing authorization for the third-party COVID-19 tests that are used in our testing services, we may be unable to market or distribute these COVID-19 tests or generate revenues from our test offerings. We may also experience price erosion if federal or state governments implement price controls.

Finally, the sale of each test is dependent on the supply of the appropriate collection devices authorized for use with the COVID-19 tests we utilize in our testing programs. Disruptions in this supply chain will have a material adverse effect on our ability to sell tests.

Uncertainty regarding the sales and delivery of our COVID-19 individual and pooled sample tests could materially adversely affect our business.

Although we have partnerships with third party clinical testing laboratories to support a high volume of pooled sample testing for COVID-19 nationally, pooled testing has not yet been adopted by all states nor have we established partnerships with clinical testing laboratories in all states. We are continuing to develop processes to scale capacity of COVID-19 pooled sample collection and testing. However, we can give no assurance that we will be able to successfully scale the pooled sample collection and test capacity or that we will be able to establish or maintain the collaborative third party relationships that support such testing capacity. In addition, even if we are able to scale to high volume testing nationwide, there can be no assurance that the testing capacity will be used.

We may be subject to tort liability if the COVID-19 tests we utilize in our testing programs provide inaccurate results.

The Public Readiness and Emergency Preparedness Act (the “PREP Act”) provides immunity for manufacturers, distributors, program planners, qualified persons, and their officials, agents, and employees from certain claims under state or federal law for a “loss” arising out of the administration or use of a “covered countermeasure” in the United States. Distributors are certain persons or entities engaged in the distribution of drugs, biologics, or devices. Program planners include persons who supervise or administer a program with respect to the administration, distribution, provision, or use of a Covered Countermeasure (as defined in the PREP Act). Covered Countermeasures include security countermeasures and “qualified pandemic or epidemic products,” including products intended to diagnose or treat pandemic or epidemic disease, such as COVID-19 diagnostic tests, as well as treatments intended to address conditions caused by such products. Covered Countermeasures must also be approved, cleared, or authorized for emergency use, or otherwise authorized for investigational use, by the FDA in order to be considered Covered Countermeasures under the PREP Act.

For these immunities to apply, the Secretary of HHS must issue a declaration in cases of public health emergency or “credible risk” of a future public health emergency. On March 10, 2020, the Secretary of HHS issued a declaration under the PREP Act and has issued subsequent amendments thereto to provide liability immunity for activities related to certain countermeasures against the ongoing COVID-19 pandemic.

We act as the authorized distributor of certain third-party COVID-19 tests and collection kits that have received Emergency Use Authorization (“EUA”) and supervise testing programs for our COVID-19 testing customers. While we believe our test distribution and program planning activities with respect to these programs would be covered under the provisions of the PREP Act, this cannot be assured. Also, there can be no assurance that the U.S. Congress will not act in the future to reduce coverage under the PREP Act or to repeal it altogether.

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our pooled testing program will qualify for PREP Act immunity. If product liability lawsuits are brought against us in connection with allegations of harm connected to our COVID-19 testing services, we may incur substantial liabilities and may be required to limit our testing services. The PREP Act is a complex law with limited judicial precedent, and thus even for the third-party COVID-19 tests and collection kits used in our testing services that are subject to EUAs, we may have to expend significant time and legal resources to obtain dismissal of a lawsuit on the basis of PREP Act immunity.

If we cannot successfully defend ourselves against claims that our COVID-19 testing services caused injuries and if we are not entitled to immunity under the PREP Act, or the U.S. Congress limits or eliminates coverage under the PREP Act, or if the liability protections under the PREP Act are not adequate to cover all claims, we may incur substantial liabilities. Regardless of merit or eventual outcome, product liability claims may result in decreased demand for our services, injury to our reputation, costs to defend litigation, loss of revenue, and substantial money awards to customers.

We are dependent on our relationships with our telehealth partner to provide healthcare services, and our business would be adversely affected if those relationships were disrupted.

Our contractual relationships with our telehealth partner who provides physician authorization for COVID-19 diagnostic and screening testing may implicate certain state laws in the United States that generally prohibit non-physician entities from practicing medicine, exercising control over physicians or engaging in certain practices such as fee-splitting with physicians. There can be no assurance that these laws will be interpreted in a manner consistent with our practices or that other laws or regulations will not be enacted in the future that could have a material and adverse effect on our business, financial condition and results of operations. Regulatory authorities, state medical boards of medicine, state attorneys general and other parties, including our telehealth partner, may assert that we are engaged in the prohibited corporate practice of medicine, and/or that its arrangements with its telehealth partner constitutes unlawful fee-splitting. If a state’s prohibition on the corporate practice of medicine or fee-splitting law is interpreted in a manner that is inconsistent with our practices, we would be required to restructure or terminate our relationship with our telehealth partner to bring our activities into compliance with such laws. A determination of non-compliance, or the termination of or failure to successfully restructure these relationships could result in disciplinary action, penalties, damages, fines, and/or a loss of revenue, any of which could have a material and adverse effect on our business, financial condition and results of operations. State corporate practice of medicine doctrines and fee-splitting prohibitions also often impose penalties on healthcare professionals for aiding the corporate practice of medicine, which could discourage our telehealth partner from providing services to us.

Risks Related to the Synthetic Biology Industry

Rapidly changing technology and emerging competition in the synthetic biology industry could make the platform, programs, and products we and our customers are developing obsolete or non-competitive unless we continue to develop our platform and pursue new market opportunities.

The synthetic biology industry is still emerging and is characterized by rapid and significant technological changes, frequent new product introductions and enhancements, and evolving industry demands and standards. Our future success will depend on our ability to sign and initiate new programs that address the evolving needs of our customers on a timely and cost-effective basis, to advance existing programs and to pursue new market opportunities that develop as a result of technological and scientific advances. Additionally, our customers may face significant competition or other risks which may adversely impact our business and results of operations.

There are a number of companies in the broader synthetic biology industry, and our future success will depend on our ability to maintain a competitive position with respect to technological advances. Technological development by others may result in our platform becoming obsolete. Our ability to compete successfully will depend on our ability to develop proprietary technologies that enable our customers to develop products using

 

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our platform in a manner that is either less expensive, faster, superior or otherwise differentiated from what a competitor’s technologies and products might enable. If we are unable to continue to successfully advance our platform or the services it provides at scale, or if our customers are unable to commercialize the products or processes made or improved upon by using our platform, our business and results of operations will be adversely impacted.

Due to the significant lead time involved in launching a new program or developing a new product or process using our platform, our customers are required to make a number of assumptions and estimates regarding the commercial feasibility of a new program, including assumptions and estimates regarding the size of an emerging product category and demand for those end-products and processes which will use our technology, the ability to scale-up manufacturing processes to produce a product on a commercial scale, the ability to penetrate that emerging product category, customer adoption of a downstream product, the existence or non-existence of products being simultaneously developed by competitors, potential market penetration and obsolescence, planned or unplanned. As a result, it is possible that we may commence a new program with a customer who wishes to develop a product or process that has been displaced by the time of launch, addresses a market that no longer exists or is smaller than previously thought, that end-consumers do not like or otherwise is not competitive at the time of launch, in each case, after the incurrence of significant opportunity costs on our part to develop such product. The ultimate success of the products developed by our customers using our services may be dependent on the success of other markets in which we or our customers do not operate in or have knowledge or expertise or which, in each case, may not reach the size anticipated by us or our customers or may be replaced by another emerging product category or eliminated entirely.

The market, including customers and potential investors, may be skeptical of our ability to deliver on programs because they are based on a relatively novel and complex technology.

The market, including customers and potential investors, may be skeptical of the viability and benefits of bioengineered products as well as Ginkgo’s enabling abilities, including our platform and programs, because they are based on a relatively novel approach and the adoption of complex technology. There can be no assurance that our platform and programs will be understood, approved, or accepted by customers, regulators and potential investors or that we will be able to sell our services profitably at competitive prices and with features sufficient to establish demand.

In addition, in order for novel products from our programs to be successfully commercialized, support from the entire relevant supply chain is needed. Relationships with all parts of the supply chain are important in order to gain visibility into market trends and feature and specification requirements and in order to ensure customers are able to successfully manufacture their products, obtain regulatory approval and gain access to key distribution channels. If we are unable to convince these potential customers, their suppliers, or the consumers who purchase products containing or made or developed using engineered cells and/or biomanufacturing processes, of the utility and value of such products or that such products are superior to the products they currently use, we will not be successful in entering these markets and our business and results of operations will be adversely affected. If potential investors are skeptical of the success of our platform or cell programs, our ability to raise capital and the value of New Ginkgo common stock may be adversely affected.

Ethical, legal and social concerns about genetically modified organisms and genetically modified materials and their resulting products could limit or prevent the use of products or processes using our technologies, limit public acceptance of such products or processes and limit our revenues.

Our technologies and the technologies of our customers involve the use of genetically modified cells, organisms and biomaterials, including, without limitation, genetically modified organisms (“GMOs”) and genetically modified microorganisms (“GMMs”), genetically modified plant or animal cells and genetically modified proteins and biomaterials (collectively, “Genetically Modified Materials”), and their respective products. The use, production and marketing of Genetically Modified Materials, are subject to laws and

 

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regulations in many countries, some of which are new and some of which are still evolving. In the United States, the FDA, the Environmental Protection Agency (“EPA”) and the U.S. Department of Agriculture (“USDA”) are the primary agencies that regulate the use of GMOs, GMMs and potential products derived from GMOs or GMMs or Genetically Modified Materials. If regulatory approval of the Genetically Modified Materials or resulting products is not secured, our business operations, financial condition and our ability to grow as a business could be adversely affected. We expect to encounter regulations regarding Genetically Modified Materials in most if not all of the countries in which our customers may seek to establish production capabilities or sell their products and the scope and nature of these regulations will likely be different from country to country. Governmental authorities could, for safety, social or other purposes, impose limits on, or implement regulation of, the use, production or marketing of Genetically Modified Materials. If our customers cannot meet the applicable requirements in other countries in which they intend to produce or sell their products, or if it takes longer than anticipated to obtain such approvals, our business could be adversely affected.

In addition, public perception regarding the safety and environmental hazards of, and ethical concerns over, Genetically Modified Materials or the processes used to create them, including gene editing or gene regulating technologies, could influence public acceptance of our and our customers’ technologies, products and processes. For instance, certain advocacy groups engage in efforts that include regulatory legal challenges and labeling campaigns for genetically modified products, as well as application of pressure to consumer retail outlets seeking a commitment not to carry genetically modified foods. These groups in the past have pressured retail food outlets and grocery store chains to publicly state that they will not carry genetically modified foods and have pressed food brands to publicly state that they will not use ingredients produced by genetically modified microbes. In addition, certain labeling-related initiatives have heightened consumer awareness of GMOs, which may make consumers less likely to purchase products containing GMO ingredients, which could have a negative impact on the commercial success of our customers’ products and programs. These concerns could result in increased expenses, regulatory scrutiny, delays or other impediments to our programs. The subject of Genetically Modified Materials has received negative publicity, which has aroused public debate. This adverse publicity has led to, and could continue to lead to, greater regulation and trade restrictions on imports of Genetically Modified Materials or their resulting products. In addition, with the acquisition of Dutch DNA, we are expanding into the European Union market, which has increased government regulation and scrutiny over genetically modified products. There is a risk that products produced using our technologies could cause adverse health effects or other adverse events, which could also lead to negative publicity, regulatory action or private litigation. If we are unable to overcome the ethical, legal and social concerns relating to genetic engineering, our programs could face increased expenses, regulatory scrutiny, delays or other impediments to deliver our programs or the commercialization of resulting products and processes.

Finally, the COVID-19 pandemic may increase biosecurity concerns by public and/or governmental stakeholders regarding genetic engineering technologies and risks around engineered viruses, microbes and organisms. Such concerns, restrictions, or governmental restrictions could limit the use of Genetically Modified Materials in our customers’ products, which could have a material adverse effect on our business, financial condition and results of operations.

Risks Related to Ginkgo’s Intellectual Property

Our business could be harmed if we are not able to adequately protect our intellectual property.

Our success depends in part on our ability to obtain and maintain intellectual property protection for our proprietary technologies. We protect our proprietary technologies through patents and trade secrets, both of which entail risk. If we are unable to obtain, maintain or protect intellectual property rights related to our technology, or if our intellectual property rights are inadequate, our competitive position, business, financial conditions, results of operations and prospects may be harmed.

 

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Risks related to our patents and patent applications.

Because of the volume and nature of our inventions, patent protection may not be practicable, available, or appropriate for some aspects of our proprietary technologies. While we own patents and pending patent applications in the United States and in foreign jurisdictions, these applications do not ensure the protection of our intellectual property. There may be prior art of which we are not aware. Additionally, obtaining, maintaining, defending and enforcing patents is costly, time consuming and complex, and we may not be able to file and prosecute all necessary or desirable patent applications, or maintain and enforce any patents that may issue from such patent applications at a reasonable cost or in a timely manner. It is also possible that we will fail to identify patentable aspects of our technologies before it is too late to obtain patent protection. Although we enter into confidentiality agreements with parties who have access to confidential or patentable aspects of our research and development output, such as our employees, collaborators, consultants, advisors and other third parties, any of these parties may breach the agreements and disclose such output before a patent application is filed, thereby jeopardizing our ability to seek patent protection.

Further, pending applications may not be issued or may be issued with claims significantly narrower than we currently seek. Patents for which claims have been allowed may be successfully challenged and invalidated. Unless and until our pending applications issue, their protective scope is impossible to determine and, even after issuance, their protective scope may be limited.

Recent changes in patent law have made patents covering life science inventions more difficult to obtain and enforce. Further legislative changes or changes in the interpretation of existing patent law could increase the uncertainty and cost surrounding the prosecution of our owned patent applications and the maintenance, enforcement or defense of our owned patents. The Leahy-Smith America Invents Act (“the Leahy-Smith Act”) included changes that affect the way patent applications are prosecuted; redefine prior art; enable third-party submission of prior art to the United States Patent and Trademark Office (“USPTO”) during patent prosecution; and provide cost-effective avenues for competitors and other third parties to challenge the validity of patents at USPTO-administered post-grant proceedings, including post-grant review, inter partes review and derivation proceedings. Thus, the Leahy-Smith Act and its continued implementation could increase the uncertainties and costs surrounding the prosecution of our patent applications and the enforcement or defense of our issued patents, all of which could have a material adverse effect on our business, financial condition, results of operations, and prospects.

Other changes in the law may further detract from the value of life science patents and facilitate challenges to our patents. In some cases, we use genetic sequence information from naturally occurring organisms, which may not be patentable. Recent U.S. Supreme Court rulings have narrowed the scope of patent protection for naturally occurring sequences and for inventions based on the observation and exploitation of natural phenomena. These decisions have weakened the rights of patent owners in certain situations. The U.S. Court of Appeals for the Federal Circuit has also issued a series of rulings that create obstacles to the patenting of groups of genetic sequences that share functional characteristics, making it more difficult to obtain claims to certain genetic constructs, particularly antibodies. These changes in the law have created uncertainty with respect to the validity and enforceability of patents covering natural and engineered sequences. Depending on future actions by the U.S. Congress, the federal courts and the USPTO, the laws and regulations governing patents could change in unpredictable ways that could have a further material adverse effect on our patent rights and our ability to protect, defend and enforce our patent rights in the future.

Further, the issuance of a patent is not conclusive as to its inventorship, scope, validity or enforceability, and our patents may be challenged in the courts or patent offices in the United States and abroad. An adverse determination in any such challenge could result in loss of exclusivity, or patent claims being narrowed, invalidated or held unenforceable, in whole or in part. Any of these results could limit our ability to stop others from using or commercializing similar or identical technology to compete directly with us. In addition, if the breadth or strength of protection provided by our patents and patent applications is threatened, regardless of the

 

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outcome, it could dissuade companies from collaborating with us. Such proceedings also may result in substantial cost and require significant time from our scientists and management, even if the eventual outcome is favorable to us.

The laws of some foreign countries do not protect intellectual property rights to the same extent as do the laws of the United States or may apply different rules concerning the assignment of intellectual property rights. Many companies have encountered significant problems in protecting and defending intellectual property rights in certain foreign jurisdictions. We may encounter similar difficulties, particularly as we expand to work with foreign employees and contractors and expand our collaboration activities into foreign markets. The legal systems of certain countries, particularly certain developing countries, do not favor the enforcement of patents by foreign holders and, in some cases, do not favor the enforcement of patents at all, particularly patents in the life sciences. This could make it difficult for us to stop the infringement of our patents. Proceedings to enforce our patent rights in foreign jurisdictions could result in substantial costs and divert our efforts and attention from other aspects of our business and could be unsuccessful.

Reductions in the scope or enforceability of our patent protection may adversely impact our customers’ ability to commercialize their products and may thus reduce our downstream value from royalties, equity, or commercial milestone payments.

Risks relating to trade secrets and other proprietary information and biomaterials.

Because patent protection may not be available or appropriate for significant aspects of the technology we are developing, our success may depend in large part on our proprietary information, including genetic and other chemical and biological data, processes, know-how, and other trade secrets developed over years of research and development, some of which are embodied in proprietary software. We rely heavily on trade secret protections, especially in cases where we believe patents or other forms of registered intellectual property protection may not be appropriate or obtainable. However, trade secrets are difficult to protect. The secrecy of the Company’s trade secrets must be maintained for them to retain their status and protection as trade secrets. While we strive to protect the secrecy of our trade secrets and other proprietary information, including by requiring our employees, customers, consultants, and contractors to enter into confidentiality agreements and instituting multilayered protections covering our digital environment and biomaterials, we may not be able to adequately protect our trade secrets or other proprietary information. We cannot guarantee that we have entered into such agreements with every party that may have or has had access to our trade secrets, biomaterials or proprietary technology and processes. Further, despite these efforts, any of these parties may breach the agreements and disclose our proprietary information, including our trade secrets, and we may not be able to obtain adequate remedies for such breaches.

We seek to preserve the integrity and confidentiality of our information by maintaining physical security of our premises and physical and electronic security of our information technology systems, but it is possible that these security measures could be breached. We also rely on systems provided by third parties, which may suffer security breaches or incidents. Such security breaches may be inadvertent or may come about due to intentional misconduct or other malfeasance or by human error or technical malfunctions, including those caused by hackers, employees, contractors, or vendors. It may be difficult or impossible to recover trade secrets or other confidential information once it is hacked, and hackers may operate from jurisdictions that will not cooperate with such efforts. Enforcing any claim that a third party unlawfully obtained and is using any of our trade secrets is expensive and time consuming, and the outcome is unpredictable. In addition, courts in some jurisdictions are less willing or unwilling to protect trade secrets even when a hacker or thief can be identified.

Our competitors may lawfully obtain or independently develop knowledge that is equivalent to one or more of our trade secrets. Were they to do so, we would be unable to prevent them from using that independently developed knowledge. Such a competitor could claim that we had learned the trade secret from them and bring an action against us on that basis. If any of our trade secrets were to be disclosed to or independently developed by a

 

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competitor or other third party, our competitive position could be materially and adversely harmed. Moreover, a competitor could file for patent protection covering intellectual property that we have chosen to protect as a trade secret. In such a case, we might be restricted or excluded from using that intellectual property even if we had developed it before our competitor did.

Our facilities hold large collections of microbial strains, cell lines and other biomaterials. Failure to implement adequate controls and protections, failure to implement adequate disposal procedures, unauthorized visitors in the labs, or customers’ failure to adequately protect biological materials can put us and our customers at risk of losing valuable assets through negligence or theft and enabling the use of those lost materials by our competitors. While we believe that we take reasonable measures to protect the security of biomaterials owned by us or our customers, it is possible that our security controls and practices may not prevent unauthorized or other improper access to such genetic material. Any unauthorized access, acquisition, use, destruction, or release of the genetically modified organisms we engineer could result in our having exposure to significant liability under our contracts, as well as to regulatory actions, litigation, investigations, remediation obligations, damage to our reputation and brand, supplemental disclosure obligations, loss of customer, consumer, or partner confidence in the security of our platform, impairment to our business, and corresponding fees, costs, expenses, loss of revenues, and other potential liabilities.

Our customers sometimes provide organisms, genetic material and/or data to us in connection with our collaborations. In the event that we fail to protect customer materials or data or inadvertently use such materials or data for unauthorized purposes, we could be liable to our customers under trade secret laws or contractual provisions.

There could be unintended consequences to the environment generally or the health and safety of our employees or the public as a result of an unauthorized release of genetically modified materials into uncontrolled environments. In addition, if a biosecurity breach or unauthorized release of genetic material were to occur within our industry, our customers and potential customers might lose trust in the security of the laboratory environments in which we produce genetically modified organisms, even if we are not directly affected. Any adverse effect resulting from such a release, by us or others, could have a material adverse effect on the public acceptance of our products and business and our financial condition. Such a release could result in enhanced regulatory activity and we could have exposure to liability for any resulting harm.

Risks relating to ownership of inventions and biomaterials.

Certain of our employees, consultants and contractors were previously employed at universities or other software or biotechnology companies, including our competitors or potential competitors. Additionally, some of our consultants or contractors may have ongoing relationships with universities. Although we try to ensure that our employees, consultants and contractors do not use the intellectual property of others in their work for us, we may be subject to claims that these individuals or other contractors have used or disclosed intellectual property, including trade secrets or other proprietary information, of another. Litigation may result from these claims.

While it is our policy to require that our employees, consultants and contractors who may be involved in the development of intellectual property execute agreements assigning such intellectual property to us, we may be unsuccessful in executing such an agreement with each party who in fact develops intellectual property that we regard as our own. Our intellectual property assignment agreements with them may not be self-executing or may be breached, and we may be forced to bring claims against third parties, or defend claims they may bring against us, to determine the ownership of what we regard as our intellectual property. Such claims could have a material adverse effect on our business, financial condition, results of operations and prospects.

If we are unsuccessful in litigating any such claims, in addition to paying monetary damages, we may lose valuable intellectual property rights or personnel, which could have a material adverse effect on our competitive business position and prospects. Such intellectual property rights could be awarded to a third party, and we could be required to obtain a license from such third party to use or commercialize our technology or products, which

 

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license might not be available on commercially reasonable terms, or at all. Even if we are successful in prosecuting or defending against such claims, litigation could result in substantial costs and be a distraction to our management and employees.

The life science academic and research community has abided by norms of free exchange of biomaterials, but recently, norms have begun to change so that parties may assert ownership and control over biomaterials that they permitted to be freely disseminated in the past. Thus, despite our best efforts to confirm our right to use biomaterials in our possession, we may use organisms that we believe to be free of encumbrance that are, in fact, subject to claims of title by others. In such a situation, litigation may be required to clear title, if it can be cleared at all. Similarly, we may be subject to claims that we have used biomaterials obtained from licensors or repositories for unauthorized purposes, or purposes not consistent with the licensing terms of the providing organization.

Risks related to the vindication or enforcement of our intellectual property rights.

Competitors and other third parties may infringe or otherwise violate our issued patents or other intellectual property. In addition, our patents may become involved in inventorship, ownership, or priority disputes. We may also become subject to claims by collaboration partners that intellectual property or biomaterials that we believe to be owned by us is actually owned by them. Any litigation concerning any of these issues would be expensive, time consuming and uncertain. There can be no assurances that we would prevail in any suit brought by us or against us by third parties, or successfully settle or otherwise resolve those claims. Significant litigation would have substantial costs, even if the eventual outcome were favorable to us, and would divert management’s attention from our business objectives.

Risks related to intellectual property developed under U.S. federally funded research grants and contracts.

Some of our inventions, data, or other intellectual property have been or may be developed during the course of research funded by the U.S. government. The U.S. government may have the right to take title to government-funded inventions if we fail to disclose the inventions to the government in a timely manner or fail to file a patent for the intellectual property within specified time limits. Further, in consequence of our receiving government funding, the U.S. government may have certain rights to intellectual property that we use in our platform or programs pursuant to the Bayh-Dole Act of 1980, as amended (the “Bayh-Dole Act”). Under the Bayh-Dole Act, U.S. government rights in certain “subject inventions” developed under a government-funded program may include a non-exclusive, irrevocable worldwide license to use inventions for any governmental purpose. In some circumstances, the U.S. government may acquire unlimited rights in data we generate. In addition, the U.S. government has the right to require us, or an assignee or exclusive licensee to U.S. Government-funded inventions, to grant licenses to any of these inventions to the government or a third party if the government determines that: (i) adequate steps have not been taken to commercialize the invention; (ii) government action is necessary to meet public health or safety needs; (iii) government action is necessary to meet requirements for public use under federal regulations; or (iv) the right to use or sell such inventions is exclusively licensed to an entity within the United States and substantially manufactured outside the United States without the U.S. government’s prior approval. Additionally, we may be restricted from granting exclusive licenses for the right to use or sell such inventions unless the licensee agrees to comply with relevant Bayh-Dole Act restrictions (e.g., manufacturing substantially all of the invention in the United States) and reporting requirements. In addition, the U.S. government may acquire title in any country in which a patent application is not filed. Certain technology and inventions are also subject to transfer restrictions during the term of these agreements with the U.S. government and for a period thereafter. These restrictions may limit sales of products or components, transfers to foreign subsidiaries for the purpose of the relevant agreements, and transfers to certain foreign third parties. If any of our intellectual property becomes subject to any of the rights or remedies available to the U.S. government or third parties pursuant to the Bayh-Dole Act, this could impair the value of our intellectual property and could adversely affect our business.

 

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Risks relating to the Nagoya Protocol.

The Nagoya Protocol on Access to Genetic Resources and the Fair and Equitable Sharing of Benefits Arising from their Utilization is a supplemental agreement to the Convention on Biological Diversity. The Protocol is designed to provide for equitable sharing of benefits arising from the utilization of genetic resources and traditional knowledge. Under the Protocol, countries possessing genetic resources (“source countries”) are tasked with setting up procedures and institutional infrastructure for researchers to obtain prior (not post-hoc) informed consent, both from the source country and from any relevant indigenous or traditional communities, for biological research. Many have been slow to adopt workable institutions permitting the rational negotiation of benefit-sharing agreements. Many source countries are now asserting that the use of digital genetic sequence information is subject to the constraints of the Nagoya Protocol or national-level benefit-sharing requirements. It is unclear whether this position will ultimately be adopted or what the implications of such adoption might be. It is unclear what a source country might assert if we used genetic sequences (i) extracted by a third party from a natural resource that was removed from its source country before that source country ratified the CBD or signed the Protocol (ii) extracted by a third party and uploaded to public sequence databases after the source country ratified the CBD; (iii) in a heterologous host organism; or (iv) as a base for further engineering, so that the sequence we use no longer conforms to the natural sequence on which it was based.

We make extensive use of public and proprietary sequence databases to support our work. While we undertake efforts to identify and comply with laws and international protocols relating to the use of genetic resources, the uncertainty surrounding the use of digital sequence information and the lack of workable institutions in many source countries for the efficient negotiation of benefit-sharing agreements may limit our use or cause uncertainty in our use of certain sequences that we obtain from public access databases or natural sources. New financial obligations may arise regarding our use of sequence information. Customers that must certify their compliance with Nagoya Protocol obligations may be reluctant to do business with us unless we engage in expensive and time-consuming benefit-sharing negotiations with source countries of publicly available genetic sequences. These changes could increase our research and development costs and adversely affect our business, financial condition, and results.

Risks that we infringe the patents of third parties or must design around such patents.

There may be patents that affect our freedom to operate in certain areas, and we may as a result choose to design around or license such patents from third parties. If we must spend significant time and money designing around or licensing patents held by others, our business and financial prospects may be harmed. We may be restricted from carrying out certain operations in our foundry, or we may be limited in our ability to design new products for our customers. We may become subject to claims by third parties alleging that we are infringing, misappropriating, or otherwise violating their intellectual property rights.

Risks that we may need to engage in intellectual property litigation.

Any litigation arising from any dispute relating to the intellectual property of third parties would be expensive, time-consuming, and uncertain. There can be no assurance that we would prevail in any such dispute. Parties making claims against us might be able to obtain injunctive or other relief, which could block our or our customers’ ability to develop, commercialize and sell products or use our technologies, and could result in the award of substantial damages against us, including treble damages, attorney’s fees, costs and expenses if we were found to have willfully infringed. In the event of a successful claim against us, we or our customers might be required to pay damages and ongoing royalties, and obtain licenses from third parties, or be prohibited from selling certain products or using certain technologies. We may not be able to obtain these licenses on acceptable or commercially reasonable terms, if at all. In addition, we or our customers could encounter delays in product or service introductions while we attempt to develop alternative or redesign existing products or technologies to avoid or resolve these claims. Our loss in any lawsuit or failure to obtain a license could prevent us from using our platform and technologies. Such a loss or failure could materially affect our business. Any litigation pertaining to these issues would have substantial costs, even if the eventual outcome is favorable to us, and would divert management’s attention from our business objectives.

 

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Risks relating to protection of our trademarks and trade names.

Our registered or unregistered trademarks or trade names may be challenged, infringed, diluted, tarnished, circumvented or declared generic or determined to be infringing on other marks. We may not be able to protect our rights to these trademarks and trade names, which we need to build name recognition among potential collaborators or customers in our markets of interest. At times, competitors may adopt trade names or trademarks similar to ours, thereby impeding our ability to build brand identity and possibly leading to market confusion. In addition, there could be potential trade name or trademark infringement, dilution or tarnishment claims brought by owners of other trademarks or trademarks that incorporate variations of our registered or unregistered trademarks or trade names. Over the long term, if we are unable to establish name recognition based on our trademarks and trade names, then we may not be able to compete effectively and our business may be adversely affected. Our efforts to enforce or protect our proprietary rights related to trademarks, trade names, trade secrets, domain names, copyrights or other intellectual property may be ineffective and could result in substantial costs and diversion of resources and could adversely affect our business, financial condition, results of operations and prospects.

General risks relating to litigation.

Any of the risks identified above could result in significant litigation. In addition to the specific litigation-related risks identified above, litigation of any kind carries certain inherent risks. Because of the substantial amount of discovery required in connection with litigation in U.S. courts, there is a risk that some of our confidential information could be compromised in the discovery process. There could be public announcements of the results of hearings, motions or other interim proceedings or developments. If securities analysts or investors perceive these results to be negative, it could have a substantial adverse effect on our share price.

Further, our agreements with some of our customers, suppliers or other entities require us to defend or indemnify these parties if they become involved in infringement claims that target our products, services or technologies, or in certain other situations. If we must defend or indemnify third parties, we could incur significant costs and expenses that could adversely affect our business, operating results or financial condition.

Intellectual property rights do not necessarily address all potential threats.    

The degree of future protection afforded by our intellectual property rights is uncertain because intellectual property rights have limitations and may not adequately protect our business or permit us to maintain our competitive advantage. The following examples are illustrative:

 

   

we may choose not to file a patent in order to maintain certain trade secrets or know-how, and a third party may subsequently file a patent covering such intellectual property;

 

   

others may independently develop similar or alternative technologies or duplicate any of our technologies without infringing our owned or licensed intellectual property rights;

 

   

the patents of others may harm our business;

 

   

we might not have been the first to make the inventions covered by the issued patents or pending patent applications that we own;

 

   

we might not have been the first to file patent applications covering certain of our inventions; and

 

   

issued patents that we hold rights to may fail to provide us with any competitive advantage, or may be held invalid or unenforceable, including as a result of legal challenges by our competitors.

Should any of these events occur, they could harm our business, financial condition, results of operations and prospects.

 

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Risks relating to in-licenses.

We rely, and expect to continue to rely on, certain services and intellectual property that we license from third parties for use in our operations, platform, products, services and offerings. We cannot be certain that our licensors are not infringing upon the intellectual property rights of others or that our suppliers and licensors have sufficient rights to the third-party technology used in our business in all jurisdictions in which we may operate. Disputes with licensors over uses or terms could result in the payment of additional royalties or penalties by us, cancellation or non-renewal of the underlying license, or litigation. In the event that we cannot renew and/or expand existing licenses, we may be required to discontinue or limit our use of the operations, platform, products, services or offerings that include or incorporate the licensed intellectual property. Any such discontinuation or limitation could have a material and adverse impact on our business, financial condition and results of operation.

Risks relating to our use of “open-source” software.

We have used “open-source” software in connection with the development and deployment of our software platform, and we expect to continue to use open-source software in the future. Open-source software is licensed by its authors or other third parties under open-source licenses, which in some instances may subject us to certain unfavorable conditions, including requirements that we offer our products that incorporate the open-source software for no cost, that we make publicly available all or part of the source code for any modifications or derivative works we create based upon, incorporating or using the open-source software, or that we license such modifications or derivative works under the terms of the particular open-source license.

Companies that incorporate open-source software into their products have, from time to time, faced claims challenging the use of open-source software and compliance with open-source license terms. We could be subject to similar suits by parties claiming ownership of what we believe to be open-source software or claiming noncompliance with open-source licensing terms. While we monitor our use of open-source software and try to ensure that none is used in a manner that would require us to disclose our proprietary source code or that would otherwise breach the terms of an open-source agreement, we cannot guarantee that we will be successful, that all open-source software is reviewed prior to use in our platform, that our developers have not incorporated open-source software into our products that we are unaware of or that they will not do so in the future.

Furthermore, there are an increasing number of open-source software license types, almost none of which have been interpreted by U.S. or foreign courts, resulting in a dearth of guidance regarding the proper legal interpretation of such licenses. As a result, there is a risk that open-source software licenses could be construed in a manner that imposes unanticipated conditions or restrictions on our ability to market or provide our products and services. If we are held to have breached or failed to fully comply with all the terms and conditions of an open-source software license, we could face infringement claims or other liability, or be required to seek costly licenses from third parties to continue providing our offerings on terms that are not economically feasible, if at all, to re-engineer all or a portion of our platform, to discontinue or delay the provision of our offerings if re-engineering could not be accomplished on a timely basis or to make generally available, in source code form, our proprietary code. Further, in addition to risks related to license requirements, use of certain open-source software carries greater technical and legal risks than does the use of third-party commercial software. For example, open-source software is generally provided without any support or warranties or other contractual protections regarding infringement or the quality of the code, including the existence of security vulnerabilities. To the extent that our platform depends upon the successful operation of open-source software, any undetected errors or defects in open-source software that we use could prevent the deployment or impair the functionality of our systems and injure our reputation. In addition, the public availability of such software may make it easier for others to compromise our platform. Any of the foregoing risks could materially and adversely affect our business, financial condition and results of operations.

 

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Risks Related to Ginkgo’s Personnel, IT and Physical Infrastructure

Loss of key personnel, including our founders and senior executives, and/or failure to attract, train and retain additional key personnel could delay our cell engineering programs and harm our platform development efforts and our ability to meet our business objectives, particularly given the substantial investment required to train certain of our employees.

Our business involves complex, global operations across a variety of markets and requires a management team and employee workforce that is knowledgeable in the many areas in which we operate. Our future success depends upon our ability to attract, train, retain and motivate highly qualified management, scientific, engineering, information technology, operations, business development and marketing personnel, among others. In addition, the market for qualified personnel is very competitive because of (a) the limited number of people available who have the necessary technical skills and understanding of our technology and products and (b) the nature of our industry which requires certain of our technical personnel to be on-site in our facilities. We compete for qualified technical personnel with other life sciences and information technology companies, as well as academic institutions and research institutions in the markets in which we operate, including Boston, Massachusetts, Cambridge, Massachusetts and Emeryville, California. In addition, as we add international operations, we will increasingly need to recruit qualified personnel outside the United States. However, doing so may also require us to comply with laws to which we are not currently subject, which could cause us to allocate or divert capital, personnel and other resources from our organization, which could adversely affect our business, financial condition, results of operations, prospects and reputation. Establishing international operations and recruiting personnel has and may continue to be impacted by COVID-19 travel and operational restrictions. Our senior leadership team is critical to our vision, strategic direction, platform development, operations and commercial efforts. Our employees, including members of our leadership team, could leave our company with little or no prior notice and would be free to work for a competitor. We also do not maintain “key man” life insurance on any of our employees. The departure of one or more of our founders, senior leadership team members or other key employees could be disruptive to our business until we are able to hire qualified successors.

Our continued platform development, growth and commercial success depends, in part, on recruiting and retaining highly-trained personnel across our various target industries and markets with the necessary background and ability to develop and use our platform and to effectively identify and sell to current and new customers. New hires require significant training and, in most cases, take significant time before they achieve full productivity. Our failure to successfully hire and integrate these key personnel into our business could adversely affect our business. To attract top talent, we believe we will need to offer competitive compensation and benefits packages, including equity incentive programs, which may require significant investment. If we are unable to offer competitive compensation this may make it more difficult for us to attract and retain key employees. Moreover, if the perceived value of our equity awards declines, it may adversely affect our ability to attract and retain key employees. If we do not maintain the necessary personnel to accomplish our business objectives, we may experience staffing constraints that adversely affect our ability to support our programs and operations.

In addition, some of our personnel are qualified foreign nationals whose ability to live and work in the U.S. is contingent upon the continued availability of appropriate visas and whose ability to work on some of our technologies may require the procurement of appropriate export licenses. Due to the competition for qualified personnel in the key markets in which we operate, we expect to continue to utilize foreign nationals to fill part of our recruiting needs. As a result, changes to United States immigration policies have and could further restrain the flow of technical and professional talent into the United States and adversely affect our ability to hire and retain qualified personnel.

 

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Our business and results of operations are dependent on adequate access to laboratory and office space and suitable physical infrastructure, including electrical, plumbing, HVAC and network infrastructure, to conduct our operations. Our headquarters and laboratories are located in a flood zone in Boston’s Seaport District. If we are unable to access enough space or we experience failures of our physical infrastructure, our business and results of operations could be adversely affected.

Our business depends on providing customers with technical services. In order to properly conduct our business, we need access to sufficient laboratory space and equipment to perform the activities necessary to advance and complete our programs. Additionally, we need to ensure that our laboratories and corporate offices remain operational at all times, which includes maintaining suitable physical infrastructure, including electrical, plumbing and HVAC, logistics and transportation systems and network infrastructure. We lease our laboratories and office spaces and we rely on the landlords for basic maintenance of our leased laboratories and office buildings. If one of our landlords has not maintained a leased property sufficiently, we may be forced into an early exit from the facility, which could be disruptive to our business. Furthermore, we may continue to acquire laboratories not built by us in order to sufficiently scale and expand our output capacity. If we discover that these buildings and their infrastructure assets are not in the condition we expected when they were acquired, we may be required to incur substantial additional costs to repair or upgrade the laboratories.

Problems in and around one or more of our laboratories or corporate offices, whether or not within our control, could result in service interruptions or significant infrastructure or equipment damage. These could result from numerous factors, including:

 

   

human error;

 

   

equipment failure;

 

   

physical, electronic and cybersecurity breaches;

 

   

fire, earthquake, hurricane, flood, tornado and other natural disasters;

 

   

extreme temperatures;

 

   

flood and/or water damage;

 

   

fiber cuts;

 

   

power loss;

 

   

terrorist acts, including acts of bioterrorism;

 

   

sabotage and vandalism; and

 

   

local epidemics or global pandemics such as the COVID-19 pandemic.

We have timeline obligations to certain customers with respect to their programs. As a result, service interruptions or significant equipment damage in our laboratories could result in difficulty maintaining program timelines for these customers and potential claims related to such failures. Because the services we provide in our laboratories are critical to many of our customers’ businesses, service interruptions or significant equipment damage in our laboratories could also result in lost revenue or other indirect or consequential damages to our customers. We cannot guarantee that a court would enforce any contractual limitations on our liability in the event that one of our customers brings a lawsuit against us as a result of a problem at one of our laboratories and we may decide to reach settlements with affected customers irrespective of any such contractual limitations. Any such settlement may result in a reduction of revenue under U.S. generally accepted accounting principles (“GAAP”). In addition, any loss of service, equipment damage or inability to meet our service obligations could reduce the confidence of our customers and could consequently impair our ability to obtain and retain customers, which would adversely affect both our ability to generate revenues and our operating results.

Furthermore, we are dependent upon internet service providers, telecommunications carriers and other website operators, some of which have experienced significant system failures and electrical outages in the past.

 

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Our customers may in the future experience difficulties due to system failures unrelated to our systems and offerings. If, for any reason, these providers fail to provide the required services, our business, financial condition and results of operations could be materially and adversely impacted.

Risks Related to Financial Reporting

We rely on our customers, joint venturers, equity investees and other third parties to deliver timely and accurate information in order to accurately report our financial results in the time frame and manner required by law.

We need to receive timely, accurate and complete information from a number of third parties in order to accurately report our financial results on a timely basis. If the information that we receive is not accurate, our consolidated financial statements may be materially incorrect and may require restatement. Although we have audit rights with these parties, performing such an audit could be expensive and time consuming and may not be adequate to reveal any discrepancies in a time frame consistent with our reporting requirements. As a result, we may have difficulty completing accurate and timely financial disclosures, which could have an adverse effect on our business.

We use estimates in determining the fair value of certain assets and liabilities. If our estimates prove to be incorrect, we may be required to write down the value of these assets or write up the value of these liabilities, which could adversely affect our financial position.

Our ability to measure and report our financial position and operating results is influenced by the need to estimate the fair value of an asset or liability. Fair value is estimated based on a hierarchy that maximizes the use of observable inputs and minimizes the use of unobservable inputs. Observable inputs are inputs that reflect the assumptions that market participants would use in pricing the asset or liability developed based on market data obtained from sources independent of the reporting entity. Unobservable inputs are inputs that reflect the reporting entity’s own assumptions about the assumptions market participants would use in pricing the asset or liability developed based on the best information available in the circumstances. We estimate the impact or outcome of future events on the basis of information available at the time of the financial statements. An accounting estimate is considered critical if it requires that management make assumptions about matters that were highly uncertain at the time the accounting estimate was made. If actual results differ from management’s judgments and assumptions, then they may have an adverse impact on our results of operations and cash flows.

Our ability to use our net operating loss carryforwards and certain other tax attributes may be limited.

We have incurred net losses since our inception and we may never achieve or sustain profitability. Generally, for U.S. federal income tax purposes, net operating losses incurred will carry forward. However, net operating loss carryforwards generated prior to January 1, 2018 are subject to expiration for U.S. federal income tax purposes. As of December 31, 2020, we had federal net operating loss carryforwards of approximately $347.8 million of which $139.2 million will begin to expire in 2029 and $208.6 million, which will carryforward indefinitely. As of December 31, 2020, we had a total state net operating loss carryforward of $282.8 million, of which $278.3 million will begin to expire in 2029. We have approximately $4.5 million of state net operating losses as of December 31, 2020 that can be carried forward indefinitely. As of December 31, 2020, we also had federal and state research and development tax credit carryforwards of approximately $13.8 million and $8.2 million, respectively, which may be available to offset future income tax liabilities. The federal research and development tax credit carryforwards would begin to expire in 2029. The state research and development tax credit carryforwards are not subject to expiration.

Under Sections 382 and 383 of the Internal Revenue Code of 1986, as amended (the “Code”), if a corporation undergoes an “ownership change,” generally defined as a greater than 50% change by value in its equity ownership by certain shareholders over a three-year period, the corporation’s ability to use its pre-ownership change net

 

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operating loss carryforwards and other pre-ownership change tax attributes, such as research tax credits, to offset its post-ownership change income or taxes may be limited. Similar provisions of state tax law may also apply to limit the use of our state net operating loss carryforwards and other state tax attributes. We have not performed an analysis to determine whether our past issuances of stock and other changes in our stock ownership may have resulted in one or more ownership changes. If it is determined that we have in the past experienced an ownership change, or if we undergo one or more ownership changes as a result of future transactions in our stock, which may be outside our control, then our ability to utilize our net operating loss carryforwards and other tax attributes may be materially limited. As a result, even if we earn taxable income, we may be unable to use a material portion of our net operating loss carryforwards and other tax attributes, which could adversely affect our future cash flows. There is also a risk that regulatory changes, such as suspensions on the use of net operating losses or other unforeseen reasons, may result in our existing net operating loss carryforwards expiring or otherwise becoming unavailable to offset future taxable income. For these reasons, we may not be able to utilize a material portion of our net operating loss carryforwards and other tax attributes even if we attain profitability.

If we fail to maintain an effective system of internal control over financial reporting, we may not be able to accurately report our financial results or prevent fraud. As a result, stockholders could lose confidence in our financial and other public reporting, which would harm our business and the trading price of New Ginkgo common stock.

As a public reporting company, we will become subject to the rules and regulations established by the SEC and NYSE. These rules and regulations will require, among other things, that we establish and periodically evaluate procedures with respect to our internal control over financial reporting. Reporting obligations as a public company are likely to place a considerable strain on our financial and management systems, processes and controls, as well as on our personnel, including senior management. In addition, as a public company, we will be required to document and test our internal control over financial reporting pursuant to Section 404 of the Sarbanes-Oxley Act so that our management can certify as to the effectiveness of our internal control over financial reporting. Management’s initial certification under Section 404 of the Sarbanes-Oxley Act will be required with our annual report on Form 10-K for the year ending December 31, 2022. In support of such certifications, we will be required to document and make significant changes and enhancements, including potentially hiring additional personnel, to our internal control over financial reporting. Likewise, our independent registered public accounting firm will not be required to attest to the effectiveness of our internal control over financial reporting until our first annual report is required to be filed with the SEC following the date we are no longer an emerging growth company. At such time as we are required to obtain auditor attestation, if we then have a material weakness, we would receive an adverse opinion regarding our internal control over financial reporting from our independent registered accounting firm.

To achieve compliance with Section 404 within the prescribed period, we will need to continue to dedicate internal resources, including hiring additional financial and accounting personnel and potentially engaging outside consultants. During our evaluation of our internal control, if we identify one or more material weaknesses in our internal control over financial reporting, we will be unable to assert that our internal control over financial reporting is effective. We have identified gaps in our internal control environment in the past and cannot provide assurances that there will not be material weaknesses or significant deficiencies in our internal control over financial reporting in the future. Any failure to maintain internal control over financial reporting could severely inhibit our ability to accurately report our financial condition, or results of operations. If we are unable to conclude that our internal control over financial reporting is effective or if our independent registered public accounting firm determines we have a material weakness or significant deficiency in our internal control over financial reporting, we could lose investor confidence in the accuracy and completeness of our financial reports, the market price of shares of New Ginkgo common stock could decline, and we could be subject to sanctions or investigations by NYSE, the SEC or other regulatory authorities. Failure to remedy any material weakness in our internal control over financial reporting or to implement or maintain other effective control systems required of public companies, could also restrict our future access to the capital markets.

 

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We have identified material weaknesses in our internal control over financial reporting in the past. A material weakness is a deficiency, or a combination of deficiencies, in internal control over financial reporting, such that there is a reasonable possibility that a material misstatement of our annual or interim financial statements will not be prevented or detected on a timely basis. If we are unable to remediate these material weaknesses, or if we identify additional material weaknesses in the future or otherwise fail to maintain an effective system of internal controls, we may not be able to accurately or timely report our financial condition or results of operations, which may adversely affect investor confidence in us and, as a result, our stock price.

Our cash and cash equivalents could be adversely affected if the financial institutions in which we hold our cash and cash equivalents fail.

We regularly maintain cash balances at third-party financial institutions in excess of the Federal Deposit Insurance Corporation insurance limit. While we monitor the cash balances in our operating accounts on a daily basis and adjust the balances as appropriate, these balances could be impacted, and there could be a material adverse effect on our business, if one or more of the financial institutions with which we deposit cash fails or is subject to other adverse conditions in the financial or credit markets. To date, we have experienced no loss or lack of access to our invested cash or cash equivalents; however, we can provide no assurance that access to our invested cash and cash equivalents will not be impacted by adverse conditions in the financial and credit markets.

Risks Related to Governmental Regulation and Litigation

Failure to comply with federal, state, local and international laws and regulations could adversely affect our business and our financial condition.

A variety of federal, state, local and international laws and regulations govern certain aspects of our business. For example, we maintain a registration from the U.S. Drug Enforcement Administration (“DEA”) for the research of certain controlled substances and permits from the Boston Public Health Commission to conduct work with recombinant DNA. Some of our programs or products made or developed using our engineered cells and/or biomanufacturing processes are subject to regulations, including those promulgated by the FDA, DEA or USDA. Products utilized in our COVID-19 testing services are subject to regulations promulgated by the FDA, the Centers for Medicare and Medicaid Services, and certain state governments. In addition, we are subject to laws relating to, among other things, anti-bribery, insider trading, sourcing of biological materials and data privacy. The legal and regulatory requirements that apply to our business may be interpreted and applied in a manner that is inconsistent from one jurisdiction to another or may conflict with other rules or our practices. As a result, our practices may not comply, or may not comply in the future with all such laws, regulations, requirements and obligations. Any failure, or perceived failure, by us to comply with any federal, state, local or international laws, regulations, industry self-regulatory principles, industry standards or codes of conduct, regulatory guidance, orders to which we may be subject or other legal obligations could adversely affect our reputation, brand and business, and may result in claims, proceedings or actions against us by governmental entities or others or other liabilities or require us to change our operations. We may also be contractually required to indemnify and hold harmless third parties from the costs or consequences of non-compliance with any laws, regulations or other legal obligations.

We may also become subject to increasing regulation in the future as we expand our business. We currently operate a laboratory in California which is subject to a different set of state laws than Massachusetts, including specific laboratory registration requirements. We may also be subject to laws and regulations of the FDA and the states regarding the distribution of COVID-19 tests and test kits in connection with our testing services. We have limited experience operating a business located outside of Massachusetts. As we continue to expand our operations and offerings domestically and globally, we will have to expend significant management and financial resources to maintain compliant practices in those locations. Non-compliance could lead to litigation, which would require substantial management and financial resources.

 

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We may incur significant costs complying with environmental, health and safety laws and regulations, and failure to comply with these laws and regulations could expose us to significant liabilities.

We use hazardous chemical and biological materials in our business and are subject to a variety of federal, state, local and international laws and regulations governing, among other matters, the use, generation, manufacture, transportation, storage, handling, disposal of, and human exposure to these materials, including regulation by governmental regulatory agencies, such as the Occupational Safety and Health Administration and the EPA. We have incurred, and will continue to incur, capital and operating expenditures and other costs in the ordinary course of our business in complying with these laws and regulations.

Although we have implemented safety procedures for storing, handling and disposing of these materials and waste products in an effort to comply with these laws and regulations, we cannot be sure that our safety measures will be compliant or capable of eliminating the risk of injury or contamination from the generation, manufacturing, use, storage, transportation, handling, disposal of and human exposure to hazardous materials and/or flammable chemicals. Failure to comply with environmental, health and safety laws could subject us to liability and resulting damages. There can be no assurance that violations of environmental, health and safety laws will not occur as a result of human error, accident, equipment failure, contamination, intentional misconduct or other causes. Compliance with applicable environmental laws and regulations may be expensive, and the failure to comply with past, present or future laws could result in the imposition of fines, regulatory oversight costs, third party property damage, product liability and personal injury claims, investigation and remediation costs, the suspension of production or a cessation of operations, and our liability may exceed our total assets. Liability under environmental laws can be imposed for the full amount of damages without regard to comparative fault for the investigation and cleanup of contamination and impacts to human health and for damages to natural resources. Contamination at properties we may own and operate and at properties to which we send hazardous materials, may result in liability for us under environmental laws and regulations.

Our business and operations may be affected by other new environmental, health and safety laws and regulations, which may require us to change our operations, or result in greater compliance costs and increasing risks and penalties associated with violations, which could impair our research, development or production efforts and harm our business.

If we fail to comply with healthcare and other governmental regulations, we could face substantial penalties and our business, financial condition and results of operations could be adversely affected.

Our business activities may be subject to regulation and enforcement by the FDA, U.S. Department of Justice, U.S. Department of Health and Human Services (“HHS”) Office of Inspector General, and other federal and state governmental authorities. Although our offerings are not currently billed to any third-party payor, including any commercial payor or government healthcare program, we may, in the future, submit claims for our COVID-19 testing services to third-party payors, including government healthcare programs. If we submit claims to third-party payors, such activity will expand the scope of federal and state healthcare laws applicable to us.

Federal and state healthcare laws and regulations that may affect our ability to conduct business include, without limitation:

 

   

the federal Anti-Kickback Statute, which prohibits, among other things, persons or entities from knowingly and willfully soliciting, offering, receiving or paying any remuneration, directly or indirectly, overtly or covertly, in cash or in kind, to induce or reward either the referral of an individual for, or the purchase, lease, order, or arranging for or recommending the purchase, lease or order of, any item or service, for which payment may be made, in whole or in part, under federal healthcare programs such as Medicare and Medicaid. A person or entity does not need to have actual knowledge of the statute or specific intent to violate it in order to have committed a violation;

 

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the federal physician self-referral prohibition, commonly known as the Stark Law, which prohibits a physician, in the absence of an applicable exception, from making a referral for certain designated health services covered by the Medicare or Medicaid program, including clinical laboratory services, if the physician or an immediate family member of the physician has a financial relationship with the entity providing the designated health services. The Stark Law also prohibits the entity furnishing the designated health services from billing, presenting or causing to be presented a claim for the designated health services furnished pursuant to the prohibited referral;

 

   

the federal civil false claims laws, including without limitation the federal False Claims Act (which can be enforced through “qui tam,” or whistleblower actions, by private citizens on behalf of the federal government), and civil monetary penalties laws, which prohibit, among other things, individuals or entities from knowingly presenting, or causing to be presented, false or fraudulent claims for payment of government funds, or knowingly making, using or causing to be made or used, a false record or statement material to an obligation to pay money to the government or knowingly and improperly avoiding, decreasing or concealing an obligation to pay money to the federal government. In addition, the government may assert that a claim including items and services resulting from a violation of the federal Anti-Kickback Statute or Stark Law constitutes a false or fraudulent claim for purposes of the civil False Claims Act;

 

   

the Eliminating Kickbacks in Recovery Act (“EKRA”), which created a new federal crime for knowingly and willfully: (1) soliciting or receiving any remuneration in return for referring a patient to a recovery home, clinical treatment facility, or laboratory; or (2) paying or offering any remuneration to induce such a referral or in exchange for an individual using the services of a recovery home, clinical treatment facility, or laboratory. Unlike the Anti-Kickback Statute, EKRA is not limited to services reimbursable under a government health care program, but instead extends to all services reimbursed by “health care benefit programs”;

 

   

the healthcare fraud statutes under HIPAA, which impose criminal and civil liability for, among other things, knowingly and willfully executing, or attempting to execute, a scheme to defraud any healthcare benefit program, or knowingly and willfully falsifying, concealing or covering up a material fact or making any materially false statement, in connection with the delivery of, or payment for healthcare benefits, items or services by a healthcare benefit program, which includes both government and privately funded benefits programs. Similar to the federal Anti-Kickback Statute, a person or entity does not need to have actual knowledge of the statute or specific intent to violate it in order to have committed a violation;

 

   

federal consumer protection and unfair competition laws, which broadly regulate platform activities and activities that potentially harm consumers; and

 

   

state law equivalents of each of the above federal laws, such as anti-kickback, self-referral, and fee-splitting, and false claims laws which may apply to items or services reimbursed by any third-party payor, including commercial insurers and self-pay patients.

Because of the breadth of these laws and the narrowness of available statutory and regulatory exemptions, exceptions, and safe harbors, it is possible that some of our activities could be subject to challenge under one or more of such laws. We may face claims and proceedings by private parties, and claims, investigations and other proceedings by governmental authorities, relating to allegations that our business practices do not comply with current or future laws or regulations involving applicable fraud and abuse or other healthcare laws and regulations, and it is possible that courts or governmental authorities may conclude that we or any of our partners have not complied with them, or that we may find it necessary or appropriate to settle any such claims or other proceedings. Any action brought against us for violation of these or other laws or regulations, even if we successfully defend against it, could cause us to incur significant legal expenses and divert our management’s

 

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attention from the operation of our business. If our operations are found to be in violation of any federal or state laws described above or any other current or future fraud and abuse or other healthcare laws and regulations that apply to us, we may be subject to claims and proceedings by private parties, investigations and other proceedings by governmental authorities, as well as penalties, including significant criminal, civil and administrative penalties, damages and fines, disgorgement, additional reporting requirements and oversight if we become subject to a corporate integrity agreement or similar agreement to resolve allegations of noncompliance with these laws or regulations, imprisonment for individuals and exclusion from participation in government programs, such as Medicare and Medicaid, as well as contractual damages and reputational harm. We could also be required to curtail or cease our operations. In addition, if any customers, healthcare professionals we engage, laboratory partners or other entities with whom we do business are found not to be in compliance with applicable laws, they may be subject to the same criminal, civil or administrative sanctions, including exclusion from government-funded healthcare programs. Any of the foregoing could seriously harm our business and financial results.

We may become subject to the comprehensive laws and rules governing billing and payment, noncompliance with which could result in non-payment or recoupment of overpayments for our services or other sanctions.

We may, in the future, submit claims for our COVID-19 testing services to third-party payors. Payors typically have differing and complex billing and documentation requirements. If we fail to comply with these payor-specific requirements, we may not be paid for our services or payment may be substantially delayed or reduced. Numerous state and federal laws would also apply to our claims for payment, including but not limited to (i) “coordination of benefits” rules that dictate which payor must be billed first when a patient has coverage from multiple payors, (ii) requirements that overpayments be refunded within a specified period of time, (iii) “reassignment” rules governing the ability to bill and collect professional fees on behalf of other providers, (iv) requirements that electronic claims for payment be submitted using certain standardized transaction codes and formats, and (v) laws requiring all health and financial information of patients to be maintained in a manner that complies with stringent security and privacy standards.

Audits, inquiries and investigations from government agencies and private insurers and health network partners can occur from time to time in the ordinary course of our business, and could result in costs to us and a diversion of management’s time and attention. New regulations and heightened enforcement activity also could negatively affect our cost of doing business and our risk of becoming the subject of an audit or investigation. Our failure to comply with rules related to billing or adverse findings from audits by government and private payors could result in, among other penalties, non-payment for services rendered or recoupments or refunds of amounts previously paid for such services. We cannot predict whether any future audits, inquiries or investigations, or the public disclosure of such matters, likely would negatively impact our business, financial condition, results of operations, cash flows and the trading price of our securities. See also “Risk Factors—Risks Related to Governmental Regulation and Litigation—If we fail to comply with healthcare and other governmental regulations, we could face substantial penalties and our business, financial condition and results of operations could be adversely affected.”

We and our laboratory partners are subject to a variety of laboratory testing standards, compliance with which is an expensive and time-consuming process, and any failure to comply could result in substantial penalties.

The third-party laboratories that we partner with are subject to the Clinical Laboratory Improvement Amendments of 1988 (“CLIA”). CLIA is a federal law that regulates clinical laboratories that perform testing on specimens derived from humans for the purpose of providing information for the diagnosis, prevention or treatment of disease. CLIA requires virtually all laboratories to be certified by the federal government and mandates compliance with various operational, personnel, facilities administration, quality and proficiency testing requirements depending on the level of complexity for which the laboratory is certified. CLIA certification is also a prerequisite to be eligible to bill state and federal healthcare programs, as well as many private third-party payors, for laboratory testing services. Our partner laboratories hold CLIA certifications for

 

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high complexity testing, which mandate compliance with various operational, personnel, facilities administration, quality and proficiency testing requirements depending on the level of complexity for which the laboratory is certified. In addition, we hold CLIA Certificates of Waiver and perform certain CLIA-waived tests on behalf of our clients, which subjects us directly to certain CLIA requirements. Sanctions for failure to comply with CLIA requirements may include suspension, revocation, or limitation of a laboratory’s CLIA certificate, as well as the imposition of significant fines or criminal penalties. Any sanction imposed under CLIA, its implementing regulations, or state or foreign laws or regulations governing licensure, or our partner laboratories’ failure to renew a CLIA certificate, a state or foreign license, or accreditation, could have a material adverse effect on our business.

In addition, our partner laboratories and our laboratories holding CLIA Certificates of Waiver are subject to state laws and regulations governing laboratory licensure. Some states have enacted state licensure laws that are more stringent than CLIA. Our ability to successfully deploy COVID-19 testing at large scale may be adversely impacted if our partner laboratories do not maintain the required regulatory licensure and operate in accordance with CLIA standards. In certain markets such as California, New York, and Pennsylvania, we or our partner laboratories may also need to obtain and maintain additional licensure from such states. It is uncertain that our partner laboratories will be granted such licensure and, in such case, we cannot offer testing to patients located in those states, which could limit our ability to offer testing on a wide scale.

It is possible that additional states may enact laboratory licensure requirements in the future, which could further limit our ability to expand our services.

If any of our partners were to lose or fail to obtain or renew their CLIA certifications or state laboratory licenses, whether as a result of a revocation, suspension or limitation, such laboratories would no longer be able to run the COVID-19 tests we offer to our customers, and our ability to successfully deploy a COVID-19 pooled sample testing program nationwide may be adversely impacted.

The testing industry is subject to complex and costly regulation and if government regulations are interpreted or enforced in a manner adverse to us, we may be subject to enforcement actions, penalties, exclusion, and other material limitations on our operations.

We offer COVID-19 testing services by partnering with third-party laboratories, diagnostic test manufacturers and manufacturers of collection kits, which are subject to extensive and frequently changing federal, state and local laws and regulations governing various aspects of our business, including significant governmental certification and licensing regulations. New laws, regulations and judicial decisions, or new interpretations of existing laws, regulations and decisions, may also limit our potential revenues, and we may need to revise our research and development or commercialization programs. The costs of defending claims associated with violations, as well as any sanctions imposed, could significantly adversely affect our financial performance.

We are required to comply with federal and state genetic testing and privacy laws. We have measures in place to collect clinical data and genetic and other biological samples, and disclose test results, from subjects who have provided appropriate informed consents. However, informed consents could be challenged in the future, and those informed consents could prove invalid, unlawful or otherwise inadequate for our purposes. Any legal challenges could consume our management and financial resources.

Current regulations governing the testing services we offer are shifting and in some cases unclear. If regulators apply different regulations to our pooled testing services or interpret the regulations differently than we do, our ability to deploy the services nationwide will be materially adversely impacted. In addition, our laboratory partners may be unsuccessful in validating, or obtaining or maintaining authorizations for, the tests we rely on to provide our COVID-19 testing services. If any third party manufacturers or laboratories offering tests that we use in our testing services are deemed by the FDA or other regulatory authorities to have violated

 

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applicable law or if the tests or test components are marketed, processed or distributed in violation of applicable law, we may be subject to enforcement action or litigation, or we may be required to find alternative tests to support our testing services, which could increase our costs and prevent us from successfully commercializing our COVID-19 testing services.

In addition, we are required to comply with applicable FDA regulations with respect to our distribution of certain COVID-19 diagnostic test kits and collection kits, including, for certain kits, compliance with applicable terms and conditions of an EUA. Such conditions may include requirements related to collection of information on the performance of the product, reporting of adverse events, recordkeeping requirements, and labeling and promotional activities. To the extent that we market or promote third-party tests or test kits outside of the uses authorized for these products or in a false or misleading manner, the tests or collection kits could be considered misbranded or adulterated and in violation of applicable law.

Advertising for any of the tests or collection kits we distribute or the testing services we offer is also subject to regulation by the Federal Trade Commission (“FTC”), under the Federal Trade Commission Act (“FTC Act”). The FTC may take enforcement action for advertising claims that are not adequately substantiated or that are false or misleading. Violations of applicable FDA requirements could result in enforcement actions, such as warning or “untitled” letters, revocation of EUAs, seizures, injunctions, civil penalties and criminal prosecutions and fines, and violation of the FTC Act could result in injunctions and other associated remedies, all of which could have a material adverse effect on our business. Most states also have similar regulatory and enforcement authority for laboratory testing and distribution of related collection kits. For example, many state laws require us to hold a specific form of license to distribute COVID-19 diagnostic test kits and collection kits into such states. These requirements vary from one state to another and frequently change. Complying with state laws and regulations may subject us to similar risks and delays as those we could experience under federal regulation.

We are subject to federal and state laws and regulations governing the protection, use, and disclosure of health information and other types of personal information, and our failure to comply with those laws and regulations or to adequately secure the information we hold could result in significant liability or reputational harm.

Numerous state and federal laws, regulations, standards and other legal obligations, including consumer protection laws and regulations, which govern the collection, dissemination, use, access to, confidentiality, security and processing of personal information, including health-related information, could apply to our operations or the operations of our partners. For example, HIPAA, as amended by the Health Information Technology for Economic and Clinical Health Act of 2009, and regulations implemented thereunder (collectively referred to as “HIPAA”) imposes privacy, security and breach notification obligations on certain healthcare providers, health plans, and healthcare clearinghouses, known as covered entities, as well as their business associates that perform certain services that involve creating, receiving, maintaining or transmitting individually identifiable health information for or on behalf of such covered entities, and their covered subcontractors. HIPAA requires covered entities and business associates to develop and maintain policies with respect to the protection of, use and disclosure of protected health information (“PHI”), including the adoption of administrative, physical and technical safeguards to protect such information, and certain notification requirements in the event of a breach of unsecured PHI. If in the future we engage in certain types of standard electronic transactions involving payors, including billing the Medicare or Medicaid programs or commercial health plans, we will be subject to HIPAA as a “covered entity.” We are currently subject to HIPAA as a “business associate” because we perform certain services involving the use or disclosure of PHI on behalf of covered entity customers with respect to our COVID-19 testing service offerings.

Additionally, under HIPAA, covered entities must report breaches of unsecured PHI to affected individuals without unreasonable delay, not to exceed 60 days following discovery of the breach by a covered entity or its agents. Notification also must be made to the U.S. Department of Health and Human Services Office for Civil Rights and, in certain circumstances involving large breaches, to the media. Business associates must report

 

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breaches of unsecured PHI to covered entities within 60 days of discovery of the breach by the business associate or its agents. A non-permitted use or disclosure of PHI is presumed to be a breach under HIPAA unless the Covered Entity or Business Associate establishes that there is a low probability the information has been compromised consistent with requirements enumerated in HIPAA.

Entities that are found to be in violation of HIPAA as the result of a breach of unsecured PHI, a complaint about privacy practices or an audit by the U.S. Department of Health and Human Services (“HHS”), may be subject to significant civil, criminal and administrative fines and penalties and/or additional reporting and oversight obligations if required to enter into a resolution agreement and corrective action plan with HHS to settle allegations of HIPAA non-compliance. HIPAA also authorizes state Attorneys General to file suit on behalf of their residents. Courts may award damages, costs and attorneys’ fees related to violations of HIPAA in such cases. While HIPAA does not create a private right of action allowing individuals to sue us in civil court for violations of HIPAA, its standards have been used as the basis for duty of care in state civil suits such as those for negligence or recklessness in the misuse or breach of PHI.

Even when HIPAA or a state law does not apply, according to the Federal Trade Commission (“FTC”), violating consumers’ privacy rights or failing to take appropriate steps to keep consumers’ personal information secure may constitute unfair and/or deceptive acts or practices in violation of Section 5(a) of the Federal Trade Commission Act. The FTC expects a company’s data security measures to be reasonable and appropriate in light of the sensitivity and volume of consumer information it holds, the size and complexity of its business, and the cost of available tools to improve security and reduce vulnerabilities.

Several states have enacted privacy laws governing the use and disclosure of health information, such as the California Confidentiality of Medical Information Act; these laws are not preempted by HIPAA to the extent they are more stringent than HIPAA. Such laws and regulations will be subject to interpretation by various courts and other governmental authorities, thus creating potentially complex compliance issues for us and our partners.

Further, in recent years, there have been a number of well-publicized data breaches involving the improper dissemination of personal information of individuals both within and outside of the healthcare industry. Laws in all 50 states require businesses to provide notice to individuals whose personally identifiable information has been disclosed as a result of a data breach. The laws are not consistent, and compliance in the event of a widespread data breach is costly. States are also constantly amending existing laws, and creating new data privacy and security laws, requiring attention to frequently changing regulatory requirements. For example, the California Consumer Privacy Act of 2018 (“CCPA”) went into effect on January 1, 2020. The CCPA creates new transparency requirements and grants California residents several new rights with respect to their personal information. Failure to comply with the CCPA may result in, among other things, significant civil penalties and injunctive relief, or potential statutory or actual damages. On November 3, 2020, California voters passed a ballot initiative for the California Privacy Rights Act (“CPRA”), which will significantly expand the CCPA. Most CPRA provisions will take effect on January 1, 2023, though the obligations will apply to any personal information collected after January 1, 2022. The CPRA will impose additional data protection obligations on covered businesses, including additional consumer rights processes, limitations on data uses, new audit requirements for higher risk data, and opt outs for certain uses of sensitive data. It will also create a new California data protection agency authorized to issue substantive regulations and could result in increased privacy and information security enforcement. The majority of the provisions will go into effect on January 1, 2023, and additional compliance investment and potential business process changes may be required. Similar laws have been proposed or passed in other states, including the Virginia Consumer Data Protection Act, which will take effect on January 1, 2023. We will need to invest substantial resources in putting in place policies and procedures to comply with these evolving state laws.

As our operations and business grow, we may become subject to or affected by new or additional data protection laws and regulations and face increased scrutiny or attention from regulatory authorities. For example, the European Union General Data Protection Regulation (“GDPR”), which went into effect in May 2018,

 

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imposes strict requirements for processing the personal data of individuals within the European Economic Area (“EEA”). Companies that must comply with the GDPR face increased compliance obligations and risk, including more robust regulatory enforcement of data protection requirements and potential fines for noncompliance of up to €20 million or 4% of the annual global revenues of the noncompliant company, whichever is greater. Among other requirements, the GDPR regulates transfers of personal data subject to the GDPR to third countries that have not been found to provide adequate protection to such personal data, including the United States, and the efficacy and longevity of current transfer mechanisms between the EU and the United States remains uncertain. For example, in 2016, the EU and United States agreed to a transfer framework for data transferred from the EU to the United States, called the Privacy Shield, but the Privacy Shield was invalidated in July 2020 by the Court of Justice of the European Union. Further, from January 1, 2021, companies have to comply with the GDPR and also the United Kingdom GDPR (the “UK GDPR”), which, together with the amended UK Data Protection Act 2018, retains the GDPR in UK national law. The UK GDPR mirrors the fines under the GDPR, i.e., fines up to the greater of €20 million (£17.5 million) or 4% of global turnover. The relationship between the United Kingdom and the European Union in relation to certain aspects of data protection law remains unclear, and it is unclear how United Kingdom data protection laws and regulations will develop in the medium to longer term, and how data transfers to and from the United Kingdom will be regulated in the long term. These changes will lead to additional costs and increase our overall risk exposure. Currently there is a four to six-month grace period agreed in the EU and United Kingdom Trade and Cooperation Agreement, ending June 30, 2021 at the latest, whilst the parties discuss an adequacy decision. The European Commission published a draft adequacy decision on February 19, 2021. If adopted, the decision will enable data transfers from EU member states to the United Kingdom for a four-year period, subject to subsequent extensions.

Although we work to comply with applicable laws, regulations and standards, contractual obligations and other legal obligations, these requirements are evolving and may be modified, interpreted and applied in an inconsistent manner from one jurisdiction to another, and may conflict with one another or other legal obligations with which Ginkgo must comply. Recently, there has been an increase in public awareness of privacy issues in the wake of revelations about the data-collection activities of various government agencies and in the number of private privacy-related lawsuits filed against companies. Any failure or perceived failure by us or our employees, representatives, contractors, consultants, collaborators, or other third parties to comply with such requirements or adequately address privacy and security concerns, even if unfounded, could result in additional cost and liability to us, damage our reputation, and adversely affect our business and results of operations.

We have pursued in the past and may pursue additional U.S. Government contracting and subcontracting opportunities in the future and as a U.S. Government contractor and subcontractor, we are subject to a number of procurement rules and regulations.

We have entered into agreements with governmental entities and contractors in the past to serve as a U.S. government contractor or subcontractor and may do so again in the future. U.S. government procurement contractors and subcontractors must comply with specific procurement regulations and other requirements. These requirements, although customary in U.S. government contracts, could impact our performance and compliance costs, including by limiting or delaying our ability to share information with business partners, customers and investors. The U.S. government has in the past and may in the future demand contract terms that are less favorable than standard arrangements with private sector customers and may have statutory, contractual, or other legal rights to terminate contracts with us for convenience or for other reasons. Generally, U.S. government contracts contain provisions permitting unilateral termination or modification, in whole or in part, at the government’s convenience. Under general principles of government contracting law, if the government terminates a contract for convenience, the government contractor may recover only its incurred or committed costs, settlement expenses and profit on work completed prior to the termination. If the government terminates a contract for default, the government contractor is entitled to recover costs incurred and associated profits on accepted items only and may be liable for excess costs incurred by the government in procuring undelivered items from another source. Any termination for default may also adversely affect our ability to contract with other government customers, as well as our reputation, business, financial condition and results of operations. In

 

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addition, changes in U.S. government budgetary priorities could lead to changes in the procurement environment, affecting availability of U.S. government contracting, subcontracting or funding opportunities, which could lead to modification, reduction or termination of our U.S. government contracts or subcontracts. If and to the extent such changes occur, they could impact our results and potential growth opportunities.

Furthermore, our U.S. government contracts grant the government the right to use technologies developed by us under the government contract or the right to share data related to our technologies, for or on behalf of the government. Under our government contracts, we may not be able to limit third parties, including our competitors, from accessing certain of these technology or data rights, including intellectual property, in providing products and services to the government.

In addition, failure by us, our employees, representatives, contractors, partners, agents, intermediaries, other customers or other third parties to comply with these regulations and requirements could result in reductions of the value of contracts, contract modifications or termination, claims for damages, refund obligations, the assessment of civil or criminal penalties and fines, loss of rights in our intellectual property and temporary suspension or permanent debarment from government contracting, all of which could negatively impact our results of operations and financial condition. Any such damages, penalties, disruptions or limitations in our ability to do business with the public sector could result in reduced sales of our products, reputational damage, penalties and other sanctions, any of which could harm our business, reputation and results of operations.

We are engaged in certain research activities involving controlled substances, including cannabinoids and other chemical intermediates, the making, use, sale, importation, exportation, and distribution of which may be subject to significant regulation by the U.S. Drug Enforcement Administration and other regulatory agencies.

We are engaged in certain research activities involving the development of microbes designed to generate cannabinoids, their precursors and other chemical intermediaries, some of which may be regulated as controlled substances in the United States. Controlled substances are subject to state, federal, and foreign laws and regulations regarding their manufacture, use, sale, importation, exportation, and distribution. Among other things, controlled substances are regulated under the federal Controlled Substances Act of 1970 (“CSA”) and implementing regulations of the U.S. Drug Enforcement Administration (“DEA”). The DEA regulates controlled substances as Schedule I, II, III, IV or V substances. Schedule I substances by definition have no established medicinal use and may generally not be marketed or sold in the United States. Schedule I substances are subject to the most stringent controls and Schedule V the least controls of the five schedules, based on their relative risk of abuse.

Cannabinoids are naturally occurring compounds found in the cannabis plant. The cannabis plant and its derivatives are highly regulated by the DEA and the USDA. Specifically, marihuana, which is defined as all parts of the plant Cannabis sativa L., whether growing or not, the seeds thereof, the resin extracted therefrom, and every compound, manufacture, salt, derivative, mixture, or preparation, is classified as a Schedule I controlled substance. However, the term does not include “hemp,” which means the cannabis plant and any part of that plant, including the seeds and all derivatives, extracts, cannabinoids, isomers, acids, salts, and salts of isomers, whether growing or not, with a delta-9 tetrahydrocannabinol (“THC”) concentration of not more than 0.3% on a dry weight basis. Thus, depending on the THC concentration of the product, the product may or may not be regulated as a controlled substance. The DEA has historically regulated synthetic cannabinoids similarly to naturally-derived cannabinoids. Consequently, even though our cannabinoids that could be produced from microbes may not be derived from the cannabis plant, the DEA may consider them to be controlled substances subject to stringent regulatory controls.

Regulations associated with controlled substances govern manufacturing, labeling, packaging, testing, dispensing, production and procurement quotas, recordkeeping, reporting, handling, shipment and disposal. These regulations include required security measures, such as background checks on employees and physical control of inventory and increase the personnel needs and the expense associated with development and commercialization of products or product candidates including controlled substances. Regulators conduct

 

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periodic inspections of entities involved in handling, manufacturing, or otherwise distributing controlled substances, and have broad enforcement authorities. If we are found to be non-compliant with applicable controlled substance registrations and related requirements, we may need to modify its business activities and/or stop handling or producing the products regulated as controlled substances, and could be subject to enforcement action, significant fines or penalties, and/or adverse publicity, among other consequences.

Various states also independently regulate controlled substances. Though state-controlled substances laws often mirror federal law, because the states are separate jurisdictions, they may separately schedule substances, as well. The failure to comply with applicable regulatory requirements could lead to enforcement actions and sanctions from the states in addition to those from the DEA or otherwise arising under federal law.

Changes in government regulations may materially and adversely affect our sales and results of operations.

The markets where we provide our services are heavily influenced by foreign, federal, state and local government regulations and policies. The U.S. or foreign governments may take administrative, legislative, or regulatory action that could materially interfere with our customer’s ability to sell products derived from engineered cells in certain countries and/or to certain customers. The uncertainty regarding future standards and policies may also affect our ability to develop our programs or to license engineered cells to customers and to initiate new programs with our customers, which could have a material adverse effect on our business, financial condition and results of operations.

Changes in U.S. trade policy more generally could trigger retaliatory actions by affected countries, which could impose restrictions on our ability to do business in or with affected countries or prohibit, reduce or discourage purchases of our services by foreign customers, leading to increased program costs, increased costs of developing or manufacturing our customers’ products and higher prices for their products in foreign markets. Changes in, and responses to, U.S. trade policy could reduce the competitiveness of our services or our customers’ products, cause our services to be less in demand and our sales to decline and adversely impact our ability to compete, which could materially and adversely impact our business, financial condition and results of operations.

We are subject to certain U.S. and foreign anti-corruption, anti-bribery and anti-money laundering laws and regulations. We can face serious consequences for violations.

We are subject to the U.S. Foreign Corrupt Practices Act of 1977, as amended (the “FCPA”), the U.S. domestic bribery statute contained in 18 U.S.C. § 201, the U.S. Travel Act, the U.K. Bribery Act and possibly other anti-corruption, anti-bribery and anti-money laundering laws and regulations in the jurisdictions in which we do business, both domestic and abroad. Anti-corruption and anti-bribery laws have been enforced aggressively in recent years. The FCPA and other anti-corruption laws generally prohibit companies, their employees, agents, representatives, business partners and third-party intermediaries from corruptly promising, authorizing, offering, or providing, directly or indirectly, anything of value to government officials, political parties, or candidates for public office for the purpose of obtaining or retaining business or securing an improper business advantage. The UK Bribery Act and other anti-corruption laws also prohibit commercial bribery not involving government officials, and requesting or accepting bribes; and anti-money laundering laws prohibit engaging in certain transactions involving criminally-derived property or the proceeds of criminal activity.

We and our third-party business partners, representatives and agents may have direct or indirect interactions with officials and employees of government agencies or state-owned or -affiliated universities or other entities (for example, to obtain necessary permits, licenses, patent registrations and other regulatory approvals), which increases our risks under the FCPA and other anti-corruption laws. We also engage contractors, consultants and other third parties from time to time to conduct business development activities abroad. We may be held liable for the corrupt or other illegal activities of our employees or third parties even if we do not explicitly authorize such activities. We expect our non-U.S. activities to increase over time, which may also increase our exposure under these laws.

 

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The FCPA also requires that we keep accurate books and records and maintain a system of adequate internal controls. While we have controls to address compliance with such laws, and will continue to review and enhance our compliance program, we cannot assure you that our employees, agents, representatives, business partners or third-party intermediaries will always comply with our policies and applicable law, for which we may be ultimately held responsible.

Any allegations or violation of the FCPA or other applicable anti-bribery, anti-corruption laws and anti-money laundering laws may result in whistleblower complaints, sanctions, settlements, investigations, prosecution, enforcement actions, substantial criminal fines and civil penalties, disgorgement of profits, imprisonment, debarment, tax reassessments, breach of contract and fraud litigation, loss of export privileges, suspension or debarment from U.S. government contracts, adverse media coverage, reputational harm and other consequences, all of which may have an adverse effect on our reputation, business, financial condition, results of operations and prospects. Responding to an investigation or action can also result in a materially significant diversion of management’s attention and resources and significant defense costs and other professional fees.

Significant disruptions to our and our service providers’ information technology systems or data security incidents could result in significant financial, legal, regulatory, business and reputational harm to us.

We are increasingly dependent on information technology systems and infrastructure, including services licensed, leased or purchased from third parties such as cloud computing infrastructure and operating systems, to operate its business. In the ordinary course of business, we collect, store, process and transmit large amounts of sensitive information, including intellectual property, proprietary business information, personal information and other confidential information. It is critical that we do so in a secure manner to maintain the confidentiality, integrity and availability of such sensitive information. We have also outsourced elements of our operations (including elements of its information technology infrastructure) to third parties, and as a result, we manage a number of third-party vendors who may have access to our networks or our confidential information.

While we take measures to safeguard and protect this information, threats to network and data security are increasingly diverse and sophisticated. As a result of the COVID-19 pandemic, we may also face increased cybersecurity risks due to our reliance on internet technology and the number of our employees working remotely, which may create additional opportunities for cybercriminals to exploit vulnerabilities. Despite our efforts, training and processes to prevent security breaches and incidents, our information technology systems, servers, and those of third parties that we use in our operations are vulnerable to cybersecurity risks, including cyberattacks such as viruses and worms, phishing attacks and other forms of social engineering, denial-of-service attacks, ransomware attacks, physical or electronic break-ins, third-party or employee theft or misuse, and other negligent actions, errors or malfeasance by employees or other third parties, and similar disruptions from unauthorized tampering with its servers and computer systems or those of third parties that we use in its operations, which could lead to interruptions, delays, loss or corruption of critical data, unauthorized access to or acquisition of health-related and other personal information. In addition, we may be the target of email scams and other social engineering attacks that attempt to acquire personal information or company assets or access to our systems. Despite our efforts to create security barriers to such threats, we may not be able to entirely mitigate these risks. Our third-party service providers face similar risks. Any cyberattack that attempts to obtain our data or assets, including data that we maintain on behalf of its customers, disrupt its service, or otherwise access its systems, or those of third parties we use, or any other security breach or incident, could adversely affect our business, financial condition and operating results, be expensive to remedy, and damage our reputation. We and our third-party service providers may face difficulties or delays in identifying or otherwise responding to any attacks or actual or potential security breaches or security incidents. We may incur significant costs and operational consequences of investigating, remediating, eliminating and putting in place additional tools and devices designed to prevent actual or perceived security breaches and other security incidents, including in response to any actual or perceived incident we may suffer, and substantial costs to comply with any notification or other legal obligations resulting from any security breaches or other security incidents. In addition, any such breaches or incidents, or the perception that they have occurred, may result in negative publicity, and could have an adverse effect on our business, financial condition, and operating results.

 

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Although we maintain insurance coverage that may cover certain liabilities in connection with security breaches and other security incidents, we cannot be certain our insurance coverage will be adequate for liabilities actually incurred, that insurance will continue to be available to us on commercially reasonable terms (if at all) or that any insurer will not deny coverage as to any future claim.

Governmental trade controls, including export and import controls, sanctions, customs requirements and related regimes, could subject us to liability or loss of contracting privileges or limit our ability to compete in certain markets.

Our programs and technologies are subject to U.S. and non-U.S. export controls. Export authorizations may be required for biotechnology products, technologies, or services to be exported outside of the United States, to a foreign person, or outside of a foreign jurisdiction. Our current or future programs or technologies are, and may in the future, be subject to the Export Administration Regulations (“EAR”). If a program, technology, or service meets certain criteria for control under the EAR, then that engineered cell, production process, resulting product, technology, or service would be exportable outside the United States or to a foreign person or from one foreign jurisdiction to another foreign jurisdiction only if we obtain the applicable export license or other applicable authorization including qualifying for a license exception, if required. Compliance with the U.S. and foreign export laws and regulations and other applicable regulatory requirements regarding the sales, shipment and use of our engineering cells, bioprocesses and other technology may affect our ability to work with foreign partners, affect the speed at which we can introduce new products into non-U.S. markets, or limit our ability to sell programs or services or license technologies into some countries.

Additionally, certain materials that we use in our programs are subject to U.S. import controls. We currently have, and may in the course of business need to procure, certain import authorizations, for example, related to plant pests, chemicals, biological agents and other controlled materials, including from the USDA, EPA and U.S. Centers for Disease Control. Compliance with applicable regulatory requirements regarding the import of such materials may limit our access to materials critical to our development activities or affect the speed at which we can advance new programs.

Our activities are also subject to the economic sanctions laws and regulations of the United States and other jurisdictions. Such controls prohibit certain transactions, potentially including financial transactions and the transfer of products, technologies and services, to sanctioned countries, governments and persons, without a license or other appropriate authorization. U.S. sanctions policy changes could affect our or our customers’ ability to interact, directly and indirectly, with targeted companies or companies in sanctioned countries.

While we take precautions to comply with U.S. and non-U.S. export control, import control and economic sanctions laws and regulations, we cannot guarantee that such precautions will prevent violations of such laws, including transfers to unauthorized persons or destinations, and including inadvertent violations as a result of a misclassification of a product, technology or service under export control laws. Violations could result in our business being subject to government investigations, denial of export or import privileges, significant fines or penalties, denial of government contracts and reputational harm. Any limitation on our ability to export our engineered cells, production processes, resulting products, technology, or services, or import materials critical to our programs would likely adversely affect our business and financial condition.

Changes in U.S. and foreign tax laws could have a material adverse effect on our business, cash flow, results of operations or financial conditions.

We are subject to tax laws, regulations and policies of the U.S. federal, state and local governments. Changes in tax laws, as well as other factors, could cause us to experience fluctuations in our tax obligations and otherwise adversely affect our tax positions and/or our tax liabilities. For example, the results of the 2020 presidential and congressional elections in the United States could result in significant changes in tax law that could adversely impact our effective tax rate. In addition, the Organisation for Economic Co-operation and Development (“OECD”) has published proposals covering various international tax-related issues, including

 

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country-by-country reporting, permanent establishment rules, transfer pricing and tax treaties. Future tax reform resulting from these developments may result in changes that could adversely affect our effective tax rate or result in higher cash tax liabilities. There can be no assurance that our tax payments, tax credits, or incentives will not be adversely affected by these or other initiatives.

We may become subject to lawsuits or indemnity claims in the ordinary course of business, which could materially and adversely affect our business and results of operations.

From time to time, we may in the ordinary course of business be named as a defendant in lawsuits, indemnity claims and other legal proceedings. These actions may seek, among other things, compensation for alleged product liability, personal injury, employment discrimination, breach of contract, property damage and other losses or injunctive or declaratory relief.

The marketing, sale and use of our services engineered cells, production processes and resulting products could lead to the filing of product liability claims were someone to allege that our services, engineered cells, production processes or resulting products failed to perform as designed or intended or caused injury or other harms. A product liability claim could result in substantial damages and be costly and time-consuming for us to defend.

Regardless of merit or eventual outcome, product liability claims may result in:

 

   

decreased demand for programs and resulting products;

 

   

loss of revenue;

 

   

substantial monetary payments;

 

   

significant time and costs to defend related litigation;

 

   

the inability to commercialize any products from our programs; and

 

   

injury to our reputation and significant negative media attention.

In the event that such actions, claims or proceedings are ultimately resolved unfavorably to us at amounts exceeding our accrued liability, or at material amounts, the outcome could materially and adversely affect our business and results of operations. In addition, payments of significant amounts, even if reserved, could adversely affect our liquidity position. We maintain product liability insurance, but this insurance may not fully protect us from the financial impact of defending against product liability claims. Any product liability claim brought against us, with or without merit, could increase our insurance rates or prevent us from securing insurance coverage in the future. Additionally, any product liability lawsuit could cause current collaborators to terminate existing agreements or potential collaborators to seek other companies, any of which could impact our business and results of operations.

Our business could be adversely affected by legal challenges to our telehealth partner’s business model.

Certain of our COVID-19 biosecurity offerings rely significantly on healthcare provider orders for testing that are placed on the basis of telemedicine encounters. The ability to conduct telehealth services in a particular state is directly dependent upon the applicable laws governing remote healthcare, the practice of medicine and healthcare delivery in general in such location which are subject to changing political, regulatory and other influences. With respect to telehealth services, state medical boards continue to implement new rules or interpret existing rules in a manner that may limit or restrict the ability of the centers to conduct their business as it has been conducted in the past. Additionally, during the COVID-19 public health emergency, many states enacted waivers and adopted other temporary measures that lifted certain restrictions on out-of-state providers and relaxed licensure requirements to allow greater access to telehealth services during the public health emergency period. At this time, we cannot predict whether these waivers or temporary measures will remain in place after the end of the public health emergency period. Accordingly, we must monitor compliance with laws in every

 

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jurisdiction in which we operate, and we cannot provide assurance that government authorities may nonetheless challenge our activities and arrangements with our telehealth partner and consider them non-compliant. Additionally, it is possible that the laws and rules governing the practice of medicine, including remote healthcare, in one or more jurisdictions may change in a manner deleterious to our business. If a successful legal challenge or an adverse change in the relevant laws were to occur, and we are unable to adapt our business model accordingly, our operations as well as the operations of our telehealth partner in the affected jurisdictions would be disrupted, which could have a material adverse effect on our business, financial condition and results of operations.

Risks Related to our Organizational Structure and Governance

We are not, and do not intend to become, regulated as an “investment company” under the Investment Company Act of 1940, as amended (“Investment Company Act”), and if we were deemed an “investment company” under the Investment Company Act following the consummation of the business combination, applicable restrictions could make it impractical for us to continue our business as contemplated and could have a material adverse effect on our business.

An entity generally will be deemed to be an “investment company” for purposes of the Investment Company Act if:

 

   

it is an “orthodox” investment company because it is or holds itself out as being engaged primarily, or proposes to engage primarily, in the business of investing, reinvesting or trading in securities; or

 

   

it is an inadvertent investment company because, absent an applicable exemption, (i) it owns or proposes to acquire investment securities having a value exceeding 40% of the value of its total assets (exclusive of U.S. government securities and cash items) on an unconsolidated basis, or (ii) it owns or proposes to acquire investment securities having a value exceeding 45% of the value of its total assets (exclusive of U.S. government securities and cash items) and/or more than 45% of its income is derived from investment securities on a consolidated basis with its wholly owned subsidiaries.

We believe that we are engaged primarily in the business of providing cell engineering services to customers from across a variety of industries and not in the business of investing, reinvesting or trading in securities. We hold ourselves out as a synthetic biology company and do not propose to engage primarily in the business of investing, reinvesting or trading in securities. Accordingly, we do not believe that we are, or following this Business Combination will be, an “orthodox” investment company as defined in Section 3(a)(1)(A) of the Investment Company Act and described in the first bullet point above. Furthermore, we believe that less than 40% of our total assets (exclusive of U.S. government securities and cash items) on an unconsolidated basis after this offering will be composed of assets that could be considered investment securities. Accordingly, we do not believe that we are, or following this Business Combination will be, an inadvertent investment company by virtue of the 40% tests in Section 3(a)(1)(C) of the Investment Company Act as described in the second bullet point above. In addition, we believe that we are not an investment company under Section 3(b)(1) of the Investment Company Act because we are primarily engaged in a non-investment company business.

The Investment Company Act and the rules thereunder contain detailed parameters for the organization and operation of investment companies. Among other things, the Investment Company Act and the rules thereunder limit or prohibit transactions with affiliates, impose limitations on the issuance of debt and equity securities, generally prohibit the issuance of options and impose certain governance requirements. We intend to conduct our operations so that we will not be deemed to be an investment company under the Investment Company Act or otherwise conduct our business in a manner that does not subject us to the registration and other requirements of the Investment Company Act. In order to ensure that we are not deemed to be an investment company, we may be limited in the assets that we may continue to own and, further, may need to dispose of or acquire certain assets at such times or on such terms as may be less favorable to us than in the absence of such requirement. If anything were to happen which would cause us to be deemed to be an investment company under the Investment

 

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Company Act (such as significant changes in the value of our programs or a change in circumstance that results in a reclassification of our interests in our programs for purposes of the Investment Company Act), the requirements imposed by the Investment Company Act could make it impractical for us to continue our business as currently conducted, which would materially adversely affect our business, financial condition and results of operations. In addition, if we were to become inadvertently subject to the Investment Company Act, any violation of the Investment Company Act could subject us to material adverse consequences, including potentially significant regulatory penalties and the possibility that certain of our contracts could be deemed unenforceable.

Following the consummation of the Business Combination, only our employees and directors will be entitled to hold shares of New Ginkgo Class B common stock (including shares of New Ginkgo Class B common stock granted or otherwise issued to our employees and directors in the future), which shares will have ten votes per share. This will limit or preclude other stockholders’ ability to influence the outcome of matters submitted to stockholders for approval, including the election of directors, the approval of certain employee compensation plans, the adoption of certain amendments to our organizational documents and the approval of any merger, consolidation, sale of all or substantially all of our assets, or other major corporate transaction requiring stockholder approval.

Following the consummation of the Business Combination, shares of New Ginkgo Class B common stock will have ten votes per share, whereas shares of New Ginkgo Class A common stock will have one vote per share and shares of New Ginkgo Class C common stock will have no voting rights (except as otherwise expressly provided in the Proposed Charter or required by applicable law). Immediately following the consummation of the Business Combination, our Founders will hold in the aggregate     % of the total voting power of our outstanding capital stock, our directors and executive officers will hold in the aggregate     % of the total voting power of our outstanding capital stock, and our directors and employees (including our Founders and executive officers) will hold in the aggregate     % of the total voting power of our outstanding capital stock. Accordingly, holders of shares of New Ginkgo Class B common stock will be able to significantly influence the outcome of matters submitted to our stockholders for approval, including the election of directors, the approval of certain employee compensation plans, the adoption of amendments to our organizational documents and the approval of any merger, consolidation, sale of all or substantially all of our assets or other major corporate transaction requiring stockholder approval. This concentrated voting power will limit or preclude other stockholders’ ability to influence the outcome of these matters. Holders of New Ginkgo Class B common stock may have interests that differ from holders of New Ginkgo Class A common stock and may vote in a way with which holders of New Ginkgo Class A common stock disagree and which may be adverse to the interests of holders of New Ginkgo Class A common stock. This concentrated voting power is likely to have the effect of limiting the likelihood of an unsolicited merger proposal, unsolicited tender offer or proxy contest for the removal of directors. As a result, our governance structure and the adoption of the Proposed Charter may have the effect of depriving our stockholders of an opportunity to sell their shares at a premium over prevailing market prices and make it more difficult to replace our directors and management. Furthermore, this concentrated voting power could discourage a potential investor from acquiring New Ginkgo Class A common stock due to the limited voting power of such stock relative to New Ginkgo Class B common stock, which could also adversely affect the trading price of New Ginkgo Class A common stock.

Our multi-class stock structure is intended to preserve our existing founder-led governance structure, to promote employee retention and engagement, to facilitate continued innovation and the risk-taking that it requires, to permit us to continue to prioritize our long-term goals rather than short-term results, to enhance the likelihood of continued stability in the composition of our board of directors and its policies, and to discourage certain types of transactions that may involve an actual or threatened acquisition of the company, all of which we believe are essential to the long-term success of our company and to long-term stockholder value. We expect to maintain this concentrated voting power among our founders and employees for the foreseeable future, including by issuing additional shares of New Ginkgo Class B common stock to our employees pursuant to our equity compensation plans following the Closing.

 

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Future transfers of shares of New Ginkgo Class B common stock to persons other than an Eligible Holder, or the holder of shares of New Ginkgo Class B common stock ceasing to be an Eligible Holder, will generally result in those shares converting to shares of Class A common stock on a one-to-one basis, subject to certain exceptions and unless a majority of the independent directors of the New Ginkgo Board determine that such transfer or event will not result in such automatic conversion. Each share of New Ginkgo Class B common stock is also convertible at any time at the option of the holder into one share of New Ginkgo Class A common stock. The conversion of New Ginkgo Class B common stock to New Ginkgo Class A common stock over time will have the effect of increasing the relative voting power of those holders of New Ginkgo Class B common stock who retain their shares of New Ginkgo Class B common stock in the long term. As a result, the relative voting power of holders of New Ginkgo Class A common stock is expected to remain limited for a significant period of time, and it is possible that one or more of the persons or entities holding New Ginkgo Class B common stock could gain significant voting control as other holders of New Ginkgo Class B common stock sell or otherwise convert their shares into New Ginkgo Class A common stock. In addition, the conversion of New Ginkgo Class B common stock to New Ginkgo Class A common stock would dilute holders of New Ginkgo Class A common stock in terms of voting power within the New Ginkgo Class A common stock. Because holders of Class C common stock have no voting rights (except as otherwise expressly provided in the Proposed Charter or required by applicable law), if we issue New Ginkgo Class C common stock in the future, the holders of New Ginkgo Class B common stock may be able to significantly influence the outcome of matters submitted to our stockholders for approval for a longer period of time than would be the case if we issued New Ginkgo Class A common stock rather than New Ginkgo Class C common stock in such transactions. See “Description of New Ginkgo Securities” for descriptions of New Ginkgo Class A common stock, New Ginkgo Class B common stock and New Ginkgo Class C common stock and the rights associated with each.

The Proposed Charter will authorize a large number of shares of New Ginkgo Class B common stock for issuance in the future. The future issuance of shares of New Ginkgo Class B common stock may have the effect of further concentrating voting power with our employees and other Class B shareholders, and could have an adverse effect on the trading price of New Ginkgo Class A common stock.

Under the Proposed Charter, which will become effective upon the completion of the Domestication in connection with the consummation of the Business Combination, we will be authorized to issue 4,500,000,000 shares of New Ginkgo Class B common stock, which are entitled to ten votes per share. We currently intend to issue additional shares of New Ginkgo Class B common stock in the future to existing and newly hired employees pursuant to our equity compensation plans. Our authorized but unissued shares of New Ginkgo Class B common stock are available for issuance to Eligible Holders with the approval of our board of directors without stockholder approval, except as may be required by the Listing Rules of the NYSE. In addition, our authorized but unissued shares of New Ginkgo Class B common stock are available for issuance to persons other than Eligible Holders only with the approval of majority of our Class B Directors. If we issue additional shares of New Ginkgo Class B common stock in the future, holders of shares of New Ginkgo Class A common stock, which are entitled to one vote per share, will experience disproportionate voting power dilution relative to economic dilution, and the holders of New Ginkgo Class B common stock may be able to significantly influence the outcome of matters submitted to our stockholders for approval for a longer period of time than would be the case if we issued shares of New Ginkgo Class A common stock.

See “Risk Factors—Risks Relating to our Organizational Structure and Governance—Following the consummation of the Business Combination, only our employees and directors will be entitled to hold shares of New Ginkgo Class B common stock (including shares of New Ginkgo Class B common stock granted or otherwise issued to our employees and directors in the future), which shares will have ten votes per share. This will limit or preclude other stockholders’ ability to influence the outcome of matters submitted to stockholders for approval, including the election of directors, the approval of certain employee compensation plans, the adoption of amendments to our organizational documents and the approval of any merger, consolidation, sale of all or substantially all of our assets or other major corporate transaction requiring stockholder approval.”

 

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Under the Proposed Charter, we will be authorized to issue 800,000,000 shares of New Ginkgo Class C common stock, which have no voting rights (except as otherwise expressly provided in the Proposed Charter or required by applicable law). Any future issuance of New Ginkgo Class C common stock may have the effect of extending voting power in New Ginkgo Class B common stock, and may discourage potential acquisitions of our business and could have an adverse effect on the trading price of New Ginkgo Class A common stock.

Under the Proposed Charter, we will be authorized to issue 800,000,000 shares of New Ginkgo Class C common stock, which have no voting rights (except as required by law). We may in the future issue shares of New Ginkgo Class C common stock for a variety of corporate purposes, including financings, acquisitions and investments. Our authorized but unissued shares of New Ginkgo Class C common stock are available for issuance with the approval of our board of directors without stockholder approval, except as may be required by the Listing Rules of the NYSE. Because the New Ginkgo Class C common stock carries no voting rights (except as otherwise expressly provided in the Proposed Charter or required by applicable law), is not convertible into any other capital stock, and is not listed for trading on an exchange or registered for sale with the SEC, shares of New Ginkgo Class C common stock may be less liquid and less attractive to any future recipients of these shares than shares of New Ginkgo Class A common stock, although we may seek to list the New Ginkgo Class C common stock for trading and register shares of New Ginkgo Class C common stock for sale in the future. In addition, because our New Ginkgo Class C common stock has no voting rights (except as otherwise expressly provided in the Proposed Charter or required by applicable law), if we issue New Ginkgo Class C common stock in the future, the holders of New Ginkgo Class B common stock may be able to significantly influence the outcome of matters submitted to our stockholders for approval for a longer period of time than would be the case if we issued New Ginkgo Class A common stock rather than New Ginkgo Class C common stock in such transactions. In addition, if we issue New Ginkgo Class C common stock in the future, such issuances would have a dilutive effect on the economic interests of New Ginkgo Class A common stock and New Ginkgo Class B common stock. Any such issuance of New Ginkgo Class C common stock could also cause the trading price of New Ginkgo Class A common stock to decline.

We cannot predict the effect the multi-class structure of our common stock may have on the trading price of New Ginkgo Class A common stock.

The holding of low-voting stock, such as New Ginkgo Class A common stock, may not be permitted by the investment policies of certain institutional investors or may be less attractive to the portfolio managers of certain institutional investors. In addition, certain index providers have announced restrictions on including companies with multiple-class share structures in certain of their indices. In July 2017, FTSE Russell and S&P Dow Jones announced that they would cease to allow most newly public companies with dual- or multi-class capital structures to be included in their indices. Affected indices include the Russell 2000 and the S&P 500, S&P MidCap 400 and S&P SmallCap 600, which together make up the S&P Composite 1500. Under the announced policies, our multi-class capital structure would make New Ginkgo Class A common stock ineligible for inclusion in certain indices, and as a result, mutual funds, exchange-traded funds and other investment vehicles that attempt to passively track those indices would not invest in our common stock. These policies may depress our valuation compared to those of other similar companies that are included. Because of our multi-class stock structure, New Ginkgo Class A common stock will likely continue to be excluded from certain of these indices, and we cannot assure you that other stock indices will not take similar actions. Given the sustained flow of investment funds into passive strategies that seek to track certain indices, exclusion from stock indices would likely preclude investment by many of these funds in New Ginkgo Class A common stock and could make shares of New Ginkgo Class A common stock less attractive to other investors. As a result, the trading price of shares of New Ginkgo Class A common stock could be adversely affected.

 

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Our focus on the long-term best interests of our company and our consideration of all of our stakeholders, including our stockholders, workforce, customers, suppliers, academic researchers, governments, communities and other stakeholders that we may identify from time to time, may conflict with short-term or medium-term financial interests and business performance, which may adversely impact the value of our common stock.

We believe that focusing on the long-term best interests of our company and our consideration of all of our stakeholders, including our stockholders, workforce, customers, suppliers, academic researchers, governments, communities and other stakeholders we may identify from time to time, is essential to the long-term success of our company and to long-term stockholder value. Therefore, we have made decisions, and may in the future make decisions, that we believe are in the long-term best interests of our company and our stockholders, even if such decisions may negatively impact the short- or medium-term performance of our business, results of operations, and financial condition or the short- or medium-term performance of New Ginkgo Class A common stock. Our commitment to pursuing long-term value for the company and its stockholders, potentially at the expense of short- or medium-term performance, may materially adversely affect the trading price of New Ginkgo Class A common stock, including by making owning New Ginkgo Class A common stock less appealing to investors who are focused on returns over a shorter time horizon. Our decisions and actions in pursuit of long-term success and long-term stockholder value, which may include our multi-class stock structure, making investments in research and development and our employees, and investing in and introducing new products and services, may not result in the long-term benefits that we expect, in which case our business, results of operations and financial condition, as well as the trading price of New Ginkgo Class A common stock, could be materially adversely affected.

 

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INFORMATION ABOUT THE PARTIES TO THE BUSINESS COMBINATION

SRNG

SRNG is a blank check company whose business purpose is to effect a merger, capital stock exchange, asset acquisition, stock purchase, reorganization or similar business combination with one or more businesses. For more information regarding SRNG, see the section entitled “Other Information Related to SRNG.”

Merger Sub

Merger Sub is a wholly owned subsidiary of SRNG formed solely for the purpose of effecting the Business Combination. Merger Sub was incorporated under the DGCL on April 30, 2021. Merger Sub owns no material assets and does not operate any business.

Ginkgo

Ginkgo Bioworks, Inc. is building a platform to enable customers to program cells as easily as we can program computers. Ginkgo’s platform is market agnostic and enables biotechnology applications across diverse markets, from food and agriculture to industrial chemicals to pharmaceuticals. Ginkgo is also actively supporting a number of biosecurity efforts to respond to COVID-19, including vaccine manufacturing optimization, therapeutics discovery, and K-12 pooled testing.

 

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THE SPECIAL MEETING

Overview

This proxy statement/prospectus is being provided to SRNG shareholders as part of a solicitation of proxies by the SRNG Board for use at the Special Meeting to be convened on             , 2021 and at any adjournments or postponements of such meeting. This proxy statement/prospectus is being furnished to SRNG shareholders on or about             , 2021. In addition, this proxy statement/prospectus constitutes a prospectus for New Ginkgo in connection with the issuance by New Ginkgo of common stock to be delivered to Ginkgo’s stockholders in connection with the Business Combination.

Date, Time and Place of the Special Meeting

The Special Meeting will take place at the offices of White & Case LLP at 1221 Avenue of the Americas, New York, NY 10020 and also be conducted via live webcast starting at             , New York City time, on             , 2021, or at such other date, time and place to which such meeting may be adjourned or postponed, to consider and vote upon the proposals. Shareholders may attend the extraordinary general meeting in person or online, vote, view the list of shareholders entitled to vote at the extraordinary general meeting and submit your questions during the extraordinary general meeting by visiting              and entering your 12-digit control number, which is either included on the proxy card you received or obtained through Continental Stock Transfer & Trust Company.

Proposals

At the Special Meeting, SRNG shareholders will vote upon:

 

   

the Business Combination Proposal;

 

   

the Domestication Proposal;

 

   

the Governing Documents Proposal;

 

   

the Advisory Governing Documents Proposals;

 

   

the Director Election Proposal;

 

   

the Stock Issuance Proposal;

 

   

the Incentive Plan Proposal;

 

   

the ESPP Proposal; and

 

   

the Adjournment Proposal.

 

THE SRNG BOARD HAS UNANIMOUSLY DETERMINED THAT THE BUSINESS COMBINATION PROPOSAL AND THE OTHER PROPOSALS TO BE PRESENTED AT THE SPECIAL MEETING ARE ADVISABLE AND IN THE BEST INTERESTS OF THE SRNG SHAREHOLDERS AND RECOMMENDS THAT YOU VOTE “FOR” EACH OF THE PROPOSALS DESCRIBED ABOVE.

Record Date; Outstanding Shares; Shares Entitled to Vote

SRNG has fixed the close of business on             , 2021 as the “record date” for determining SRNG shareholders entitled to notice of and to attend and vote at the Special Meeting. As of the close of business on             , 2021, there were              SRNG ordinary shares outstanding and entitled to vote. Each SRNG ordinary share is entitled to one vote per share at the Special Meeting.

 

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Quorum

A quorum of SRNG shareholders is necessary to hold a valid shareholder meeting. A quorum will exist at the Special Meeting with respect to each matter to be considered at the Special Meeting if the holders of a majority of SRNG ordinary shares are present in person (which would include presence at the virtual Special Meeting) or represented by proxy at the Special Meeting. All shares represented by proxy are counted as present for purposes of establishing a quorum.

Vote Required and SRNG Board Recommendation

The Business Combination Proposal

SRNG shareholders are being asked to consider and vote on a proposal to adopt the Merger Agreement and thereby approve the Business Combination. You should carefully read this proxy statement/prospectus in its entirety for more detailed information concerning the Business Combination. In particular, your attention is directed to the full text of the Merger Agreement, which is attached as Annex A to this proxy statement/prospectus.

Approval of the Business Combination Proposal requires an ordinary resolution under Cayman Islands law, being the affirmative vote of holders of a majority of the ordinary shares represented in person or by proxy and entitled to vote thereon and who vote at the Special Meeting. The failure to vote, abstentions and broker non-votes will have no effect on the outcome of the proposal. The Sponsor and SRNG’s directors and executive officers have agreed to vote their shares in favor of the Business Combination pursuant to a letter agreement that was executed at the time of the IPO. The Business Combination cannot be completed unless the Business Combination Proposal is adopted by the affirmative vote of holders of a majority of the ordinary shares represented in person or by proxy and entitled to vote thereon and who vote at the Special Meeting. Holders of SRNG Class A ordinary shares and SRNG Class B ordinary shares will vote together as a single class on all matters submitted to a vote of our shareholders, except as required by law.

THE SRNG BOARD RECOMMENDS THAT YOU VOTE “FOR” THE BUSINESS COMBINATION PROPOSAL.

The Domestication Proposal

Approval of the Domestication Proposal requires a special resolution, being the affirmative vote of holders of a majority of at least two-thirds of the SRNG Class B ordinary shares represented in person or by proxy and entitled to vote thereon and who vote at the Special Meeting. The failure to vote, abstentions and broker non-votes will have no effect on the outcome of the proposal.

THE SRNG’S BOARD RECOMMENDS THAT YOU VOTE “FOR” THE DOMESTICATION PROPOSAL.

The Governing Documents Proposal

Approval of the Governing Documents Proposal requires a special resolution under Cayman Islands law, being the affirmative vote of holders of a majority of at least two-thirds of the ordinary shares represented in person or by proxy and entitled to vote thereon and who vote at the Special Meeting. The failure to vote, abstentions and broker non-votes will have no effect on the outcome of the proposal.

THE SRNG BOARD RECOMMENDS THAT YOU VOTE “FOR” THE GOVERNING DOCUMENTS PROPOSAL.

The Advisory Governing Documents Proposals

Approval of each of the Advisory Governing Documents Proposals, each of which is a non-binding vote, requires a special resolution under Cayman Islands law, being the affirmative vote of holders of a majority

 

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of at least two-thirds of the ordinary shares represented in person or by proxy and entitled to vote thereon and who vote at the Special Meeting. The failure to vote, abstentions and broker non-votes have no effect on the outcome of the proposals.

THE SRNG BOARD RECOMMENDS THAT YOU VOTE “FOR” THE ADVISORY GOVERNING DOCUMENTS PROPOSALS.

The Director Election Proposal

Approval of the Director Election Proposal requires an ordinary resolution under Cayman Islands law, being the affirmative vote of a majority of the ordinary shares represented in person or by proxy and entitled to vote thereon and who vote at the Special Meeting. Under the terms of the Current Charter, only the holders of the SRNG Class B ordinary shares are entitled to vote on the election of directors to our board of directors. The

failure to vote, abstentions and broker non-votes have no effect on the outcome of the proposal.

THE SRNG BOARD RECOMMENDS THAT YOU VOTE “FOR” THE DIRECTOR ELECTION PROPOSAL.

The Stock Issuance Proposal

Approval of the Stock Issuance Proposal requires an ordinary resolution under Cayman Islands law, being the affirmative vote of holders of a majority of the ordinary shares represented in person or by proxy and entitled to vote thereon and who vote at the Special Meeting. The failure to vote, abstentions and broker non-votes will have no effect on the outcome of the proposal.

THE SRNG BOARD RECOMMENDS THAT YOU VOTE “FOR” THE STOCK ISSUANCE PROPOSAL.

The Incentive Plan Proposal

Approval of the Incentive Plan Proposal requires an ordinary resolution under Cayman Islands law, being the affirmative vote of holders of a majority of the ordinary shares represented in person or by proxy and entitled to vote thereon and who vote at the Special Meeting. The failure to vote and broker non-votes have no effect on the outcome of the proposal. The failure to vote, abstentions and broker non-votes will have no effect on the outcome of the proposal.

THE SRNG BOARD RECOMMENDS THAT YOU VOTE “FOR” THE INCENTIVE PLAN PROPOSAL.

The ESPP Proposal

Approval of the ESPP Proposal requires an ordinary resolution under Cayman Islands law, being the affirmative vote of holders of a majority of the ordinary shares represented in person or by proxy and entitled to vote thereon and who vote at the Special Meeting. The failure to vote, abstentions and broker non-votes will have no effect on the outcome of the proposal.

THE SRNG BOARD RECOMMENDS THAT YOU VOTE “FOR” THE ESPP PROPOSAL.

Adjournment Proposal

If the chairman of the Special Meeting does not adjourn the Special Meeting, then, subject to the terms of the Merger Agreement, SRNG shareholders may be asked to vote on a proposal to adjourn the Special Meeting, or any postponement thereof, to another time or place if necessary or appropriate (i) due to the absence of a quorum at the Special Meeting, (ii) to prevent a violation of applicable law, (iii) to provide to

 

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SRNG shareholders any supplement or amendment to this proxy statement/prospectus and/or (iv) to solicit additional proxies if SRNG reasonably determines that it is advisable or necessary to do so in order to obtain SRNG shareholder approval required to consummate the Business Combination pursuant to the Merger Agreement.

Approval of the Adjournment Proposal requires an ordinary resolution under Cayman Islands law, being the affirmative vote of holders of a majority of the ordinary shares represented in person or by proxy and entitled to vote thereon and who vote at the Special Meeting. The failure to vote, abstentions and broker non-votes have no effect on the outcome of the proposal.

THE SRNG BOARD RECOMMENDS THAT YOU VOTE “FOR” THE ADJOURNMENT PROPOSAL.

Voting Your Shares

SRNG shareholders may vote electronically at the Special Meeting by visiting                      or by proxy. SRNG recommends that you submit your proxy even if you plan to attend the Special Meeting. If you vote by proxy, you may change your vote by submitting a later dated proxy before the deadline or by voting electronically at the Special Meeting.

If your SRNG ordinary shares are owned directly in your name with our transfer agent, Continental Share Transfer & Trust Company, you are considered, with respect to those shares, the “shareholder of record.” If your shares are held in a stock brokerage account or by a bank or other nominee or intermediary, you are considered the beneficial owner of shares held in “street name” and are considered a “non-record (beneficial) shareholder.”

If you are a SRNG shareholder of record you may use the enclosed proxy card to tell the persons named as proxies how to vote your shares. If you properly complete, sign and date your proxy card, your shares will be voted in accordance with your instructions. The named proxies will vote all shares at the meeting for which proxies have been properly submitted and not revoked. If you sign and return your proxy card but do not mark your card to tell the proxies how to vote, your shares will be voted “FOR” the proposals to adopt the Merger Agreement and the other proposals presented at the Special Meeting.

Your shares will be counted for purposes of determining a quorum if you vote:

 

   

by submitting a properly executed proxy card or voting instruction form by mail; or

 

   

electronically at the Special Meeting.

Abstentions will be counted for determining whether a quorum is present for the Special Meeting.

Voting instructions are printed on the proxy card or voting information form you received. Either method of submitting a proxy will enable your shares to be represented and voted at the Special Meeting.

Voting Shares Held in Street Name

If your SRNG ordinary shares are held in an account through a broker, bank or other nominee or intermediary, you must instruct the broker, bank or other nominee how to vote your shares by following the instructions that the broker, bank or other nominee provides you along with this proxy statement/prospectus. Your broker, bank or other nominee may have an earlier deadline by which you must provide instructions to it as to how to vote your SRNG ordinary shares, so you should read carefully the materials provided to you by your broker, bank or other nominee or intermediary.

If you do not provide voting instructions to your bank, broker or other nominee or intermediary, your shares will not be voted on any proposal on which your bank, broker or other nominee does not have discretionary authority to vote. In these cases, the bank, broker or other nominee or intermediary will not be able to vote your shares on those matters for which specific authorization is required. Brokers do not generally have discretionary authority to vote on any of the proposals.

 

 

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Broker non-votes are shares held by a broker, bank or other nominee or intermediary that are present or represented by proxy at the Special Meeting, but with respect to which the broker, bank or other nominee or intermediary is not instructed by the beneficial owner of such shares how to vote on a particular proposal and the broker does not generally have voting power on such proposal. Because brokers, banks and other nominees or intermediaries do not generally have discretionary voting with respect to any of the proposals, if a beneficial owner of SRNG ordinary shares held in “street name” does not give voting instructions to the broker, bank or other nominee for any proposal, then those shares will not be present or represented by proxy at the Special Meeting.

Revoking Your Proxy

If you are a SRNG shareholder of record, you may revoke your proxy at any time before it is voted at the Special Meeting by:

 

   

timely delivering a written revocation letter to the Corporate Secretary of SRNG;

 

   

signing and returning by mail a proxy card with a later date so that it is received prior to the Special Meeting; or

 

   

attending the Special Meeting and voting electronically by visiting the website established for that purpose at                      and entering the control number found on your proxy card, voting instruction form or notice you previously received. Attendance at the Special Meeting will not, in and of itself, revoke a proxy.

If you are a non-record (beneficial) SRNG shareholder, you should follow the instructions of your bank, broker or other nominee regarding the revocation of proxies.

Share Ownership and Voting by SRNG’s Officers and Directors

As of the record date, the SRNG directors and officers and their affiliates had the right to vote                      SRNG Shares, representing approximately 20% of the SRNG ordinary shares then outstanding and entitled to vote at the meeting. The Sponsor and SRNG’s directors and executive officers at the time of SRNG’s initial public offering have entered into a letter agreement with us to vote “FOR” the approval of the Business Combination Proposal, and “FOR’ the approval of the Domestication Proposal, and we expect them to vote “FOR” the approval of the Governing Documents Proposal, “FOR” the approval, on an advisory basis, of each of the Advisory Governing Documents Proposals, “FOR” the approval of the Director Election Proposal, “FOR” the approval of the Stock Issuance Proposal, “FOR” the approval of the Incentive Plan Proposal, “FOR” the approval of the ESPP Proposal and “FOR” the approval of the Adjournment Proposal.

Redemption Rights

Public shareholders may seek to redeem the public shares that they hold, regardless of whether they vote for or against the proposed Business Combination or do not vote at the Special Meeting. Any public shareholder may request redemption of their public shares for a per-share price, payable in cash, equal to the aggregate amount then on deposit in the Trust Account, calculated as of two business days prior to the consummation of the Business Combination, including interest earned on the funds held in the Trust Account and not previously released to us to fund our working capital requirements (subject to an aggregate limit of $3,000,000) and/or to pay our taxes, divided by the number of then issued and outstanding public shares. If a holder properly seeks redemption as described in this section and the Business Combination is consummated, the holder will no longer own these shares following the Business Combination.

Notwithstanding the foregoing, a public shareholder, together with any affiliate of such holder or any other person with whom such holder is acting in concert or as a “group” (as defined in Section 13(d)(3) of the Exchange Act) will be restricted from seeking redemption rights with respect to 20% or more of the shares of the public shares. Accordingly, if a public shareholder, alone or acting in concert or as a group, seeks to redeem more than 20% of the public shares, then any such shares in excess of that 20% limit would not be redeemed for cash.

 

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SRNG’s Sponsor will not have redemption rights with respect to any SRNG ordinary shares owned by them, directly or indirectly.

You will be entitled to receive cash for any public shares to be redeemed only if you:

 

   

hold public shares or (b) hold public shares through units and elect to separate your units into the underlying public shares and public warrants prior to exercising your redemption rights with respect to the public shares; and

 

   

prior to                 , New York City time, on                     , 2021, (a) submit a written request, including the legal name, phone number and address of the beneficial owner of the shares for which redemption is requested, to the transfer agent that SRNG redeem your public shares for cash and (b) deliver your public shares to the transfer agent, physically or electronically through DTC.

If you hold the shares in street name, you will have to coordinate with your broker to have your shares certificated or delivered electronically. Public shares that have not been tendered (either physically or electronically) in accordance with these procedures will not be redeemed for cash. There is a nominal cost associated with this tendering process and the act of certificating the shares or delivering them through the DWAC system. The transfer agent will typically charge the tendering broker $80 and it would be up to the broker whether or not to pass this cost on to the redeeming public shareholder. In the event the proposed Business Combination is not consummated this may result in an additional cost to shareholders for the return of their public shares.

Holders of units must elect to separate the underlying public shares and public warrants prior to exercising redemption rights with respect to the public shares. If holders hold their units in an account at a brokerage firm or bank, holders must notify their broker or bank that they elect to separate the units into the underlying public shares and public warrants, or if a holder holds units registered in its own name, the holder must contact the transfer agent, directly and instruct them to do so.

Any request to redeem public shares, once made, may be withdrawn at any time until the deadline for submitting redemption requests and thereafter, with SRNG’s consent, until the Closing. Furthermore, if a holder of a public share delivers its certificate in connection with an election of its redemption and subsequently decides prior to the deadline for submitting redemption requests not to elect to exercise such rights, it may simply request that SRNG instruct the transfer agent to return the certificate (physically or electronically). The holder can make such request by contacting the transfer agent, at the address or email address listed in this proxy statement/prospectus.

If the Business Combination is not approved or completed for any reason, then public shareholders who elected to exercise their redemption rights will not be entitled to redeem their shares. In such case, SRNG will promptly return any public shares previously delivered by public holders.

For illustrative purposes, the cash held in the Trust Account on June 15, 2021 was $1,725,124,302.45 or approximately $10.00 per public share. Prior to exercising redemption rights, public shareholders should verify the market price of SRNG ordinary shares as they may receive higher proceeds from the sale of their SRNG ordinary shares in the public market than from exercising their redemption rights if the market price per share is higher than the redemption price. SRNG cannot assure its shareholders that they will be able to sell their SRNG ordinary shares in the open market, even if the market price per share is higher than the redemption price stated above, as there may not be sufficient liquidity in its securities when its shareholders wish to sell their shares.

If a public shareholder exercises its redemption rights, then it will be exchanging its redeemed public shares for cash and will no longer own those public shares. You will be entitled to receive cash for your public shares only if you properly exercise your right to redeem your public shares and deliver your share certificates (if any)

 

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along with the redemption forms (as applicable) (either physically or electronically) to the transfer agent, in each case prior to             , New York City time, on             , 2021, the deadline for submitting redemption requests, and the Business Combination is consummated.

Immediately following the Closing, New Ginkgo will pay public shareholders who properly exercised their redemption rights in respect of their public shares.

Appraisal Rights

Neither SRNG shareholders nor SRNG warrant holders have appraisal rights in connection with the Business Combination under Cayman Islands law.

Potential Purchases of Shares and/or Public Warrants

At any time prior to the Special Meeting, during a period when they are not then aware of any material nonpublic information regarding SRNG or its securities, the Sponsor, Ginkgo and/or its affiliates, subject to applicable law, may purchase shares and/or warrants from investors, or they may enter into transactions with such investors and others to provide them with incentives to acquire SRNG ordinary shares or vote their SRNG ordinary shares in favor of the Business Combination Proposal. The purpose of such share purchases and other transactions would be to increase the likelihood that the proposals presented for approval at the Special Meeting are approved. Any such stock purchases and other transactions may thereby increase the likelihood of obtaining shareholder approval of the Business Combination. This may result in the completion of our Business Combination in a way that may not otherwise have been possible. While the exact nature of any such incentives has not been determined as of the date of this proxy statement/prospectus, they might include, without limitation, arrangements to protect such investors or holders against potential loss in value of their shares, including the granting of put options and the transfer to such investors or holders of shares or rights owned by the Sponsor shareholders for nominal value.

Costs of Solicitation

SRNG will bear the cost of soliciting proxies from SRNG shareholders.

SRNG will solicit proxies by mail. In addition, the directors, officers and employees of SRNG may solicit proxies from SRNG shareholders by telephone, electronic communication, or in person, but will not receive any additional compensation for their services. SRNG will make arrangements with brokerage houses and other custodians, nominees, and fiduciaries for forwarding proxy solicitation material to the beneficial owners of SRNG Shares held of record by those persons and will reimburse them for their reasonable out-of-pocket expenses incurred in forwarding such proxy solicitation materials.

SRNG has engaged a professional proxy solicitation firm, Morrow, to assist in soliciting proxies for the Special Meeting. SRNG has agreed to pay Morrow a fee of $                    , plus disbursements. SRNG will reimburse Morrow for reasonable out-of-pocket expenses and will indemnify Morrow and its affiliates against certain claims, liabilities, losses, damages and expenses. SRNG will also reimburse banks, brokers and other custodians, nominees and fiduciaries representing beneficial owners of our ordinary shares for their expenses in forwarding soliciting materials to beneficial owners of our ordinary shares and in obtaining voting instructions from those owners. SRNG’s management team 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.

Other Business

SRNG is not aware of any other business to be acted upon at the Special Meeting. If, however, other matters are properly brought before the Special Meeting, the proxies will have discretion to vote or act on those matters according to their best judgment and they intend to vote the shares as the SRNG Board may recommend.

 

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Attendance

Only SRNG shareholders on the record date or persons holding a written proxy for any shareholder or account of SRNG as of the record date may attend the Special Meeting. The Special Meeting will be held at the offices of White & Case LLP at 1221 Avenue of the Americas, New York, NY 10020 and in a virtual format at             . You will not be able to attend the Special Meeting physically. If you hold your SRNG Shares in your name as a shareholder of record and you wish to attend the Special Meeting, please visit              and enter the control number found on your proxy card. If your SRNG ordinary shares are held in “street name” in a brokerage account or by a bank, broker or other holder of record and you wish to attend the Special Meeting, you must obtain a legal proxy from the bank, broker or other holder of record in order to vote your shares electronically at the Special Meeting.

Assistance

If you need assistance in completing your proxy card or have questions regarding the Special Meeting, please contact Morrow Sodali LLC, the proxy solicitation agent for SRNG, by calling (800) 662-5200, or banks and brokers can call collect at (203) 658-9400, or by emailing SRNG.info@investor.morrowsodali.com.

 

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THE BUSINESS COMBINATION PROPOSAL

The SRNG shareholders are being asked to approve the Merger Agreement and the transactions contemplated thereby, including the Business Combination. All SRNG shareholders should read carefully this proxy statement/prospectus in its entirety for more detailed information concerning the Merger Agreement, which is attached as Annex A to this proxy statement/prospectus. You are urged to read carefully the Merger Agreement in its entirety before voting on this Business Combination Proposal.

SRNG may consummate the Business Combination only if all of the condition precedent proposals are approved by the SRNG shareholders present in person (which would include presence at the virtual Special Meeting) or represented by proxy at the Special Meeting and entitled to vote thereon.

Structure of the Business Combination

Pursuant to the Merger Agreement, Merger Sub, a wholly owned subsidiary of SRNG, will merge with and into Ginkgo, with Ginkgo surviving the Business Combination. Upon consummation of the foregoing transactions, Ginkgo will be the wholly owned subsidiary of New Ginkgo (formerly SRNG). In addition, New Ginkgo (formerly SRNG) will amend and restate its charter to be the Proposed Charter and adopt the multi-class stock structure, each as described in the section of this proxy statement/prospectus titled “Description of New Ginkgo Securities.”

Consideration to Ginkgo Equity Holders

The aggregate base equity consideration (the “Aggregate Base Equity Consideration”) to be issued to the then current equity holders in Ginkgo will be a number of shares of New Ginkgo common stock calculated as the (a) sum of (i) $15 billion plus (ii) the aggregate exercise price of each of the Ginkgo options and the Ginkgo warrants that will be assumed by New Ginkgo, plus (iii) SRNG transaction expenses in excess of $108 million, divided by (b) $10.00.

In addition, the holders of Ginkgo common stock, Ginkgo options, Ginkgo restricted stock unit awards and Ginkgo warrants outstanding immediately prior to the effective time of the Business Combination will collectively be entitled to receive the Earn-out Consideration, which is divided into four equal tranches subject to vesting during the Earn-out Period:

 

   

if the trading price per share of New Ginkgo Class A common stock at any point during the trading hours of a trading day is greater than or equal to $12.50 for any 20 trading days within any period of 30 consecutive trading days during the Earn-out Period, 25% of the Earn-out Consideration will immediately vest;

 

   

if the trading price per share of New Ginkgo Class A common stock at any point during the trading hours of a trading day is greater than or equal to $15.00 for any 20 trading days within any period of 30 consecutive trading days during the Earn-out Period, an additional 25% of the Earn-out Consideration will immediately vest;

 

   

if the trading price per share of New Ginkgo Class A common stock at any point during the trading hours of a trading day is greater than or equal to $17.50 for any 20 trading days within any period of 30 consecutive trading days, an additional 25% of the Earn-out Consideration will immediately vest; and

 

   

if the trading price per share of New Ginkgo Class A common stock at any point during the trading hours of a trading day is greater than or equal to $20.00 for any 20 trading days within any period of 30 consecutive trading days, the remaining 25% of the Earn-out Consideration will immediately vest.

The consideration to be paid in, or in connection with, the Business Combination in respect of each Ginkgo Class A common stock that is issued and outstanding immediately prior to the effective time of the Business Combination (but after the Ginkgo Recapitalization (as described below)) shall be (i) a number of shares of New

 

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Ginkgo Class A common stock equal to the ratio (such ratio, the “Base Equity Value Exchange Ratio”) determined by dividing the Aggregate Base Equity Consideration by the aggregate number of shares of Ginkgo common stock (a) issued and outstanding immediately prior to the effective time after giving effect to the Ginkgo Recapitalization (as described below) and (b) that would be issued upon the cash settlement (as opposed to “net settlement”) of all Ginkgo warrants that will be assumed by New Ginkgo, all Ginkgo options that are vested Ginkgo equity awards and all Ginkgo Restricted Stock Unit Awards that are vested Ginkgo equity awards, in each case, that are issued and outstanding immediately prior to the effective time of the Business Combination, if such Ginkgo warrants, Ginkgo options and Ginkgo restricted stock unit awards were exercised or settled in full upon payment of the full cash exercise price immediately prior to the effective time (such number of shares of Ginkgo common stock, the “Fully Diluted Share Count”) and (ii) subject to the Vesting Conditions, a number of shares of New Ginkgo Class A common stock equal to the ratio (such ratio, the “Earn-out Exchange Ratio”) determined by dividing the Earn-out Consideration by the Fully Diluted Share Count.

The base consideration to be paid in, or in connection with, the Business Combination in respect of each Ginkgo Class B common stock that is issued and outstanding immediately prior to the effective time of the Business Combination (but after the Ginkgo Recapitalization (as described below)) shall be a number of New Ginkgo Class B common stock equal to the Base Equity Value Exchange Ratio and, subject to the Vesting Condition, a number of shares of New Ginkgo Class B common stock equal to the Earn-out Exchange Ratio.

At the effective time of the Business Combination, each Ginkgo restricted stock award that is outstanding immediately prior to the effective time of the Business Combination shall be converted into the right to receive restricted common stock of New Ginkgo on the same terms and conditions as applicable to such Ginkgo restricted stock award; except that such New Ginkgo restricted stock award will relate to such number of shares of New Ginkgo common stock as is determined in accordance with the two preceding paragraphs.

At the effective time of the Business Combination, each option exercisable for Ginkgo Class A common stock that is outstanding immediately prior to the effective time of the Business Combination shall be assumed and converted into a newly issued option exercisable for shares of New Ginkgo Class A common stock (on the same terms and conditions as the original Ginkgo option); except that the number of shares underlying such New Ginkgo option will be the sum of (a) the product of (i) the number of shares of Ginkgo Class A common stock subject to such Ginkgo option multiplied by (ii) the Base Equity Value Exchange Ratio and (b) subject to the Vesting Conditions, the product of (i) the number of shares of Ginkgo Class A common stock subject to such Ginkgo option multiplied by (ii) the product of (x) the Earn-out Exchange Ratio multiplied by (y) a discount factor to be determined by Ginkgo in good faith (the “Option Earn-out Exchange Ratio”), and except that the exercise price per share of such New Ginkgo option will be equal to the quotient of (A) the exercise price per share of such Ginkgo option in effect immediately prior to the effective time of the Business Combination divided by (B) a number equal to the sum of the Base Equity Value Exchange Ratio and the Option Earn-out Exchange Ratio (the “Option Exercise Price Exchange Ratio”).

At the effective time of the Business Combination, each option exercisable for Ginkgo Class B common stock that is outstanding immediately prior to the effective time of the Business Combination shall be assumed and converted into a newly issued option exercisable for shares of New Ginkgo Class B common stock (on the same terms and conditions as the original Ginkgo option); except that the number of shares underlying such New Ginkgo option will be the sum of (a) the product of (i) the number of shares of Ginkgo Class B common stock subject to such Ginkgo option multiplied by (ii) the Base Equity Value Exchange Ratio and (b) subject to the Vesting Conditions, the product of (i) the number of shares of Ginkgo Class B common stock subject to such Ginkgo option multiplied by (ii) the Option Earn-out Exchange Ratio, and except that the exercise price per share of such New Ginkgo option will be equal to the quotient of (A) the exercise price per share of such Ginkgo option in effect immediately prior to the effective time of the Business Combination divided by (B) the Option Exercise Price Exchange Ratio.

At the effective time of the Business Combination, each preferred warrant to purchase shares of Ginkgo capital stock that is outstanding and unexercised immediately prior to the effective time of the Business Combination that is not automatically exercised in full in accordance with its terms by virtue of the occurrence of

 

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the Business Combination will be assumed and converted into a warrant exercisable for New Ginkgo Class A common stock on the same terms and conditions in effect immediately prior to the effective time of the Business Combination, except that the number of shares underlying such New Ginkgo preferred warrant will be the sum of (a) the product of (i) the number of shares of Ginkgo Class A common stock subject to such Ginkgo preferred warrant multiplied by (ii) the Base Equity Value Exchange Ratio and (b) subject to the Vesting Conditions, the product of (i) the number of shares of Ginkgo Class A common stock subject to such Ginkgo preferred warrant multiplied by (ii) the Earn-out Exchange Ratio, and except that the exercise price per share of such Ginkgo preferred warrant will be equal to the quotient of (A) the exercise price per share of such Ginkgo preferred warrant in effect immediately prior to the effective time of the Business Combination divided by (B) the sum of the Base Equity Value Exchange Ratio and the Earn-out Exchange Ratio.

At the effective time of the Business Combination each Ginkgo restricted stock unit award that is outstanding immediately prior to the effective time of the Business Combination shall be converted into the right to receive restricted stock units based on common stock of New Ginkgo on the same terms and conditions as applicable to such Ginkgo restricted stock unit award, except that the number of shares underlying such New Ginkgo restricted stock unit award will be the sum of (a) the product of (i) the number of shares of Ginkgo common stock subject to such Ginkgo restricted stock unit award multiplied by (ii) the Base Equity Value Exchange Ratio and (b) subject to the Vesting Conditions, the product of (i) the number of shares of Ginkgo common stock subject to such Ginkgo restricted stock unit award multiplied by (ii) the Earn-out Exchange Ratio; provided that (1) all shares of New Ginkgo common stock resulting from this conversion shall be (x) in the form of shares of New Ginkgo Class B common stock to the extent resulting from shares of Ginkgo Class B common stock prior to the effective time of the Business Combination and (y) in the form of shares of New Ginkgo Class A common stock to the extent resulting from shares of Ginkgo Class A shares prior to the effective time of the Business Combination and (2) all Earn-out Consideration resulting from the foregoing clause (b) shall be issued in the form of restricted stock instead of restricted stock units, subject to the terms and conditions of the award agreement that would apply to restricted stock instead of restricted stock units (as reasonably determined by Ginkgo).

The Private Placement

SRNG entered into the Subscription Agreements with the PIPE Investors, pursuant to which, among other things, SRNG agreed to issue and sell in private placements an aggregate of 77,500,000 shares of New SRNG Class A common stock to the PIPE Investors for $10.00 per share.

The Private Placement is expected to close on the date on which the Closing occurs, prior to or substantially concurrently with the consummation of the Business Combination but after the Domestication.

Background of the Business Combination

SRNG is a blank check, Nasdaq-listed Cayman Islands exempted company incorporated in Cayman Islands on October 22, 2020 and formed for the purpose of effecting a merger, capital share exchange, asset acquisition, share purchase, reorganization or similar business combination with one or more businesses. Our intention was to capitalize on the substantial deal sourcing, investing and operating expertise of our management team to identify and combine with one or more businesses in high-growth industries.

On February 26, 2021, SRNG consummated its initial public offering (“IPO”) of 172,500,000 units, with each unit consisting of one SRNG ordinary share and one-fifth of one warrant, generating total gross proceeds of $1,725,000,000. Prior to the consummation of the IPO, the Sponsor purchased 43,125,000 founder shares for an aggregate purchase price of $25,000, or approximately $0.0006 per share. Simultaneously with the consummation of the IPO, SRNG consummated the private sale of 19,250,000 private placement warrants to the Sponsor, each of which entitles the holder to purchase one SRNG Class A ordinary share at an exercise price of $11.50 per share, at a price of $1.50 per warrant, generating gross proceeds of approximately $28,875,000.

 

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Prior to the consummation of the IPO, neither SRNG, nor anyone on its behalf, engaged in any substantive discussions, directly or indirectly, with any potential business combination target with respect to an initial business combination with SRNG.

After SRNG’s IPO, SRNG’s officers and directors commenced an active search for prospective businesses or assets to acquire in its initial business combination. Representatives of SRNG were contacted by, and representatives of SRNG contacted, numerous individuals, financial advisors and other entities who offered to present ideas for business combination opportunities. SRNG’s officers and directors and their affiliates also brought to SRNG’s attention target business candidates. During this search process, SRNG reviewed other business combination opportunities and entered into substantive discussions with one potential target company other than Ginkgo. This potential target was in the technology industry, and discussions with that potential target did not progress substantially.

On March 2, 2021, Joshua Kazam, a member of the SRNG Board was contacted, on behalf of Ginkgo, by Allen & Company LLC (“Allen & Company”), financial advisor to Ginkgo, and was informed that Ginkgo was considering a possible business combination with a SPAC. On the same day, Mr. Kazam informed Harry Sloan, Chief Executive Officer of SRNG, and Eli Baker, President and Chief Financial Officer of SRNG, of the potential opportunity and suggested an introductory virtual meeting with Ginkgo.

On March 2, 2021, at Ginkgo’s direction, Allen & Company arranged a virtual meeting between Jason Kelly, CEO and Co-Founder of Ginkgo, and Anna Marie Wagner, Senior Vice President of Corporate Development representing Ginkgo, and Messrs. Sloan and Baker from SRNG, along with Mr. Kazam. Dr. Kelly gave a high-level presentation to the SRNG team, which was followed by a discussion about Ginkgo’s business, its current size and growth and Ginkgo’s interest in pursuing a SPAC transaction. The parties noted that Mr. Kazam’s track record and partnership with Dr. Arie Belldegrun, a pioneer in immunotherapies, could bring additional value to a potential business combination between Ginkgo and SRNG. Both parties agreed that it would be desirable to explore a potential business combination and that the next step would be for SRNG and Ginkgo to enter into a non-disclosure agreement.

On March 3, 2021, Ginkgo and SRNG entered into a non-disclosure agreement governing the sharing of certain confidential information and arranged for a formal presentation by Ginkgo to SRNG and its financial advisor, Goldman Sachs & Co. LLC (“Goldman Sachs”), on March 5, 2021. During this time, Mr. Kazam organized a meeting between the SRNG management team and Dr. Belldegrun to discuss Ginkgo and a potential business combination with Ginkgo. Dr. Belldegrun agreed to attend the meeting on March 5, 2021 in order to share with SRNG his independent assessment as to the scientific and strategic aspects of Ginkgo’s business, given his familiarity with the field of synthetic biology and his relationships with many of Ginkgo’s customers.

On March 5, 2021, Dr. Kelly, Ms. Wagner and Mark Dmytruk, the Chief Financial Officer of Ginkgo gave a presentation in a virtual meeting to SRNG management and its advisor, Goldman Sachs. Dr. Belldegrun and Mr. Kazam also participated in this virtual meeting, which concluded with the parties’ mutual desire to continue discussions.

Following the meeting on March 5, 2021, Messrs. Sloan and Baker connected Dr. Kelly with Dr. Belldegrun to plan for a visit by Dr. Belldegrun to tour Ginkgo’s Foundry in Boston and meet with Dr. Kelly in-person.

Also on March 5, 2021, SRNG and its advisors were given access to a Virtual Data Room (“VDR”) provided by Ginkgo. SRNG also directed its outside legal counsel, White & Case LLP (“White & Case”), to review certain documents and assembled working groups to evaluate the materials and begin formulating deal points regarding a potential business combination with Ginkgo.

On March 7, 2021, Dr. Belldegrun and Mr. Kazam met with Dr. Kelly and other members of his team at Ginkgo’s headquarters and Foundry in Boston. Dr. Belldegrun was given a tour of the facilities and the

 

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opportunity to review Ginkgo’s Foundry process. Dr. Belldegrun and Dr. Kelly discussed the vision of Ginkgo and synthetic biology more generally, especially its specific application to pharmaceutical and immunotherapy industries. They discussed a potential transaction with SRNG and the process of Ginkgo becoming a public company. Dr. Belldegrun concluded the visit with a favorable view of Ginkgo’s unique platform offering.

Following these positive discussions between SRNG management and Ginkgo management, SRNG engaged Goldman Sachs to provide financial advice on the potential business combination transaction and the industry generally and assistance with SRNG’s financial analysis of Ginkgo and the negotiation of the transaction. As described below, Goldman Sachs was also later engaged as a PIPE placement agent by SRNG.

Following Dr. Belldegrun’s meeting with Dr. Kelly, Dr. Belldegrun and Mr. Sloan had multiple discussions about the potential for Ginkgo and Dr. Belldegrun’s favorable views on what Ginkgo had created, in particular its prospects in the area of pharmaceutical and immunotherapies. Given Dr. Belldegrun’s scientific and commercial knowledge in this field, Mr. Sloan inquired of Dr. Belldegrun whether he and Mr. Kazam would be interested in strategically partnering with SRNG and co-sponsoring SRNG’s potential business combination with Ginkgo, together with SRNG’s sponsor, Eagle Equity Partners III, LLC (the “Sponsor”). The discussion on the co-sponsorship relationship ensued over the next several weeks, with Dr. Belldegrun assisting New Ginkgo and accepting a position as a member of the New Ginkgo Board following the Closing. To further align the interests of Dr. Belldegrun and Mr. Kazam with New Ginkgo, approximately 25% of the interests in the Sponsor’s founder shares and private placement warrants were granted to entities controlled by Dr. Belldegrun or Mr. Kazam.

Beginning on March 8, 2021 and over the next several weeks, Ginkgo provided SRNG and its representatives access to due diligence materials, including financial information for SRNG to use in its financial analysis. Representatives of SRNG and Ginkgo held telephone conferences and virtual meetings to discuss a number of commercial and legal elements of the business to assist SRNG, with the assistance of its advisors, in developing SRNG’s financial analysis of Ginkgo. SRNG and Ginkgo and their respective representatives also discussed important structural elements of a potential transaction, including a capital structure providing for high-vote shares to be held by the co-founders and other current and future employees of Ginkgo, which structure SRNG and Ginkgo believed would facilitate New Ginkgo’s ability to focus on generating long-term value for New Ginkgo and its shareholders. Messrs. Sloan and Mr. Baker apprised the board members individually of these discussions.

During this period, SRNG, with the assistance of Goldman Sachs, conducted due diligence on Ginkgo’s business in order to generate a view on its historical financial performance and growth, and its financial projections and key drivers. In the course of its analysis, SRNG noted the unique position of Ginkgo as a facilitator in the nascent market for delivering cell programming technology and the accelerating growth of that market. SRNG, with the assistance of its advisors, also evaluated both the U.S. and international total addressable market for Ginkgo’s vertical applications, based on third-party data sources.

Additionally, SRNG engaged The Boston Consulting Group (“BCG”) and Deepwave Ventures (“Deepwave”), both known for their work in synthetic biology, to perform scientific and technical due diligence on Ginkgo’s platform and key points of competitive differentiation. As part of their mandate, BCG and Deepwave were instructed to review and assess Ginkgo’s cell programming technology and how effectively Ginkgo manages and re-deploys collected data via its Codebase.

On March 9, 2021, SRNG sent Ginkgo an initial illustrative draft term sheet contemplating the potential business combination between SRNG and Ginkgo in advance of an in-person visit by SRNG’s management to Ginkgo.

On March 11, 2021, SRNG management, together with Mr. Kazam, visited Ginkgo’s Foundry in Boston and toured the facility with Dr. Kelly, Barry Canton, the Chief Technology Officer of Ginkgo, and other technical

 

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members of the Ginkgo team. During this meeting, the SRNG management team also met with other key Ginkgo executives, including Patrick Boyle, Head of Codebase, Claire Laporte, Head of Intellectual Property, and Karen Tepichin, General Counsel.

On March 15, 2021, Ginkgo sent SRNG a revised draft of the term sheet. In the following weeks, the parties, together with their respective counsel, discussed the term sheet and exchanged several drafts. Messrs. Sloan and Baker, together with SRNG’s advisors, led the negotiation of the principal terms of the term sheet on behalf of SRNG. The principal terms discussed included Ginkgo’s pre-money valuation, non-material purchase price adjustments, the minimum cash closing condition, a “material adverse effect” closing condition, the arrangements relating to the forfeiture and earn-out of the Sponsor’s promote shares and private placement warrants, the post-closing capital structure in which Ginkgo’s current and future employees would be entitled to hold high-vote common stock (with 10 votes per share), board representation and the exclusive negotiation period.

Following a series of valuation discussions between SRNG and Ginkgo, the parties agreed on a base pre-money equity valuation of $15 billion, plus the Earn-out Consideration of up to 180 million New Ginkgo shares (which, if fully earned, would represent approximately $1.8 billion of incremental equity value at the original purchase price). The valuation was based on a number of factors including fundamental analysis by SRNG, the competitive nature of the process in which Ginkgo had received term sheets from a number of other special purpose acquisition companies, and a mutual desire to raise a successful PIPE and minimize redemptions prior to closing. SRNG also initially proposed that the pre-money equity valuation of Ginkgo be subject to adjustment on a “debt free, cash free” basis. After discussion, the parties agreed that any adjustment would be immaterial in the context of the agreed pre-money valuation of Ginkgo while introducing additional complexity to the transaction, and therefore no adjustment would be applicable.

Ginkgo management felt strongly that SRNG’s interests and economics should be closely tied to the success of the transaction and the parties negotiated a structure in which a portion of the Sponsor’s promote shares will be converted into the Sponsor Earn-out Shares, which will be subject to certain vesting conditions, as more fully described in the section entitled “Description of the Business Combination”.

On March 18, 2021, SRNG and Ginkgo management met and discussed Ginkgo’s commercial strategies.

On March 26, 2021, Ginkgo management and SRNG’s representatives held a due diligence session, during which the parties discussed Ginkgo’s customer programs, including past successes and lessons learned.

On April 5, 2021, SRNG held a special meeting of its board of directors to discuss a potential business combination with Ginkgo and provided the board members with a draft of the term sheet. At the board meeting, Messrs. Sloan and Baker presented the opportunity for a potential business combination with Ginkgo, the principal business terms in the term sheet, the co-sponsorship arrangement with Dr. Belldegrun and Mr. Kazam and the potential timing for a business combination.

Following the above due diligence sessions and meetings with Ginkgo and after SRNG’s board meeting on April 5, 2021, SRNG came to a favorable view about Ginkgo’s business. On April 6, 2021, SRNG and Ginkgo entered into a non-binding term sheet setting forth the principal terms of the Business Combination. Among other provisions, the term sheet set forth a Ginkgo pre-money equity valuation of $15 billion, earn-out consideration of up to 180 million New Ginkgo shares to pre-closing Ginkgo equity holders, a commitment by the Soaring Eagle Sponsors to invest up to $100 million in the PIPE, a minimum cash closing condition, a multi-class capital stock structure for New Ginkgo, certain customary closing conditions, and terms relating to the forfeiture and earn-out of the Sponsor’s promote shares and private placement warrants which were later memorialized in the SRNG Letter Agreement.

 

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On April 6, 2021, SRNG’s representatives and Ginkgo management held a due diligence session and discussed Ginkgo’s historical financial statements, its 2021 financials, its current programs and customers and its pipeline for new programs and new customers in various industries.

On April 6, 2021 and April 7, 2021, representatives of SRNG conducted calls with certain material customers of Ginkgo in several industries, including pharmaceuticals, agriculture and food, biotech, and flavors and fragrances. These customer calls provided positive feedback and supported SRNG’s view that, in the field of synthetic biology, Ginkgo’s technology platform for cell programming across industries has a competitive advantage. Further, these customer interviews also indicated that several customers were interested in pursuing additional projects with Ginkgo.

On April 7, 2021, SRNG entered into a private placement agent engagement letter with Goldman Sachs (SRNG’s financial advisor in connection with the Business Combination), Morgan Stanley & Co. LLC (“Morgan Stanley”) and Allen & Company (both Morgan Stanley and Allen & Company also serve as Ginkgo’s financial advisors in connection with the Business Combination).

In the following weeks until the announcement of the Business Combination, SRNG continued its due diligence of Ginkgo. SRNG, along with White & Case and Goldman Sachs, conducted a review of the VDR provided by Ginkgo, which covered commercial, technical, financial, legal, and other topics. SRNG, Goldman Sachs and White & Case had several calls with Ginkgo’s management, which covered topics relating to general corporate matters, audit and internal control, material contracts, intellectual property, employees and benefits, environmental and other customary areas.

On April 20, 2021, Latham & Watkins LLP, counsel to Ginkgo, provided an initial draft of the Merger Agreement to White & Case, which contained principal transaction terms generally consistent with the non-binding term sheet. The parties and their respective counsel negotiated the Merger Agreement and ancillary documents in the ensuing weeks and exchanged multiple drafts.

In parallel with SRNG’s due diligence efforts and negotiation of the Merger Agreement and other ancillary agreements, SRNG and Ginkgo management held virtual meetings with a select group of potential investors. The potential investors were wall-crossed by representatives of Goldman Sachs, Morgan Stanley or Allen & Company (in each case, acting as PIPE co-placement agents for SRNG). SRNG was successful in obtaining private placement commitments of $775 million. As part of the allocation process, SRNG and Ginkgo jointly determined allocations, and many investors’ indicative subscriptions were cut back due to oversubscription, including that of Eagle Equity Partners III- G LLC, an affiliate of the Sponsor, which had committed $100 million as part of the term sheet but was also cut back to $75 million.

On May 7, 2021, the SRNG Board held a special board meeting via video conference to discuss the Business Combination, private placement commitments and the terms of the definitive agreements. Presentation materials and proposed drafts of the definitive agreements were made available to the board members ahead of the meeting. Mr. Baker briefed the SRNG Board on the material transaction terms, which remained the same as those set forth in the non-binding term sheet previously distributed to the SRNG Board, and discussed the status of the proposed private placement and the rationale for the Business Combination. Following Mr. Baker’s presentation, representatives of Goldman Sachs discussed with the SRNG Board certain capital markets and financial considerations relating to the Business Combination, and representatives from BCG and Deepwave presented to the SRNG Board findings from their respective scientific and technical due diligence review of Ginkgo. Dr. Belldegrun was also invited to participate in a portion of the meeting and presented to the SRNG Board his views of Ginkgo. Representatives from White & Case reviewed with the SRNG Board its fiduciary duties and presented to the SRNG Board its legal due diligence findings. Following these presentations and deliberation among the board members, all board members (except Mr. Kazam, who recused himself from voting on this matter) voted in favor of approving the Business Combination, including the Merger Agreement, the Subscription Agreements and the transactions contemplated in the Business Combination. In approving the

 

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transactions, the SRNG Board determined that the aggregate fair market value of the proposed Business Combination was at least 80% of the assets held in the trust account.

On the morning of May 11, 2021, the parties entered into the Merger Agreement and SRNG entered into subscription agreements for the private placement with the applicable investors. On the same day but after the execution of the Merger Agreement and related documents, SRNG and Ginkgo issued a joint press release announcing the Business Combination.

As previously noted, Goldman Sachs was engaged by SRNG to act as financial advisor to SRNG in connection with the Business Combination and will receive compensation for such services. In addition, Allen & Company and Morgan Stanley were each engaged by Ginkgo to act as financial advisor to Ginkgo in connection with the Business Combination and each will receive compensation in connection therewith.

SRNG also engaged Goldman Sachs to act as co-placement agent with Allen & Company and Morgan Stanley on the $775 million PIPE. Goldman Sachs provided the SRNG Board with a disclosure letter describing the various roles that Goldman Sachs has served for Ginkgo and any other material relationships that Goldman Sachs has with Ginkgo. In addition, Goldman Sachs was an underwriter on the initial public offering of SRNG and will receive the deferred discounts upon consummation of the Business Combination in connection therewith. Allen & Company also provided SRNG and Ginkgo with disclosure letters describing its roles with Ginkgo and SRNG and any other material relationships that it had with Ginkgo and SRNG, including the existing investment by Allen & Company and certain of its employees in Ginkgo. After carefully considering the potential benefits of engaging each of Morgan Stanley and Allen & Company for both roles, SRNG and Ginkgo each consented to Morgan Stanley’s and Allen & Company’s roles as financial advisor to Ginkgo in connection with the Business Combination and as co-placement agent to SRNG in connection with the PIPE and waived any potential conflicts in connection with such dual roles.

SRNG Board Reasons for the Approval of the Business Combination

On May 7, 2021, the SRNG Board (i) approved the signing of the Merger Agreement and the transactions contemplated thereby and (ii) directed that the Merger Agreement, related transaction documentation and other proposals necessary to consummate the Business Combination be submitted to our shareholders for approval and adoption, and recommended that our shareholders approve and adopt the Merger Agreement, related transaction documentation and such other proposals. Before reaching its decision, the SRNG Board reviewed the results of the due diligence performed on Ginkgo, which included:

 

   

Research on the growth and application of the synthetic biology industry and its specific applications for providing many commercial and biological solutions.

 

   

Extensive meetings (virtually and in-person) and calls with the Ginkgo management team and representatives regarding operations, company services, major customers, financial prospects, the pipeline of potential new programs and applications and possible acquisitions, among other customary due diligence matters;

 

   

“Channel checks” or interviews with Ginkgo’s customers in different industries, including but not limited to pharma, agriculture, manufacturing, and consumer products;

 

   

Engagement of BCG and Deepwave to review and assess the underlying science and technology processes employed by Ginkgo as well as an assessment of the maturity of the synthetic biology field;

 

   

Legal and commercial review of Ginkgo’s material business contracts and certain other legal and commercial due diligence;

 

   

Legal review of Ginkgo’s patents and trademarks;

 

   

Regulatory review of Ginkgo’s products and services in the United States and certain international regions;

 

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Financial and accounting due diligence; and

 

   

Financial analysis of Ginkgo with assistance of its financial advisors, including a sensitivity analysis based on key drivers to Ginkgo’s business.

The SRNG Board considered a wide variety of factors in connection with its evaluation of the Business Combination. In light of the complexity of those factors, the SRNG Board did not consider it practicable to, nor did it attempt to, quantify or otherwise assign relative weights to the specific factors it took into account in reaching its decision. Different individual members of the SRNG Board may have given different weight to different factors in their evaluation of the Business Combination.

In the prospectus for its IPO, SRNG identified the following general criteria and guidelines that it believed would be important in evaluating prospective target businesses, although SRNG indicated it may enter into a business combination with a target business that does not meet these criteria and guidelines:

 

   

Targets That Can Benefit from SRNG’s Management Team’s Relationships and Experience. SRNG’s efforts to identify a prospective initial business combination target will not be limited to a particular industry, sector or geographic region. While it may pursue an initial business combination opportunity in any industry or sector, SRNG intends to capitalize on the ability of its management team to identify and combine with a business or businesses that can benefit from its management team’s established global relationships and operating experience.

 

   

High-Growth Industries and Markets. SRNG will seek out opportunities in sectors and industries that have experienced, and continue to experience, high growth, as well as in faster-growing segments of developed markets and emerging international markets. SRNG’s management has extensive experience operating media businesses and leading transactions in international markets.

 

   

Business with Revenue and/or Earnings Growth Potential. SRNG will seek to acquire one or more businesses that have multiple, diverse potential drivers of revenue and/or earnings growth.

 

   

Companies with Potential for Free Cash Flow Generation. SRNG will seek to acquire one or more businesses that have the potential to generate strong and stable free cash flow now or in the future.

These illustrative criteria were not intended to be exhaustive. SRNG stated in its IPO prospectus that any evaluation relating to the merits of a particular initial business combination would be based, to the extent relevant, on these general guidelines as well as other considerations, factors and criteria that our management may deem relevant. In the event that it decided to enter into a business combination with a target business that does not meet the above criteria and guidelines, SRNG indicated that it would disclose that the target business does not meet the above criteria in SRNG’s shareholder communications related to its initial business combination.

In considering the Business Combination, the SRNG Board concluded that it met all the above criteria. In particular, the SRNG Board considered the following positive factors, although not weighted or in any order of significance:

Strong Benefit from Management Team’s Relationships and Experience. Through SRNG’s partnership with Dr. Belldegrun, who will be joining the New Ginkgo Board upon the consummation of the Business Combination, SRNG would be able to help Ginkgo mature its strategy around pharmaceuticals and therapeutics, particularly the highly valuable areas of cell and gene therapy, to which its platform is ideally suited. SRNG believes Dr. Belldegrun’s experience and relationships in and around this sector will be a great strategic advantage. In addition, SRNG believes that its experience, track record and strong investor relationships across sectors would be valuable in helping smoothly execute this transaction.

High-Growth Industry. The synthetic biology market is substantial and growing rapidly. Synthetic biology is also applicable across a broad range of markets. According to a recent report published by McKinsey Global

 

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Institute, over the next 10 to 20 years, bioengineered products could have a direct economic impact of approximately $2 trillion to $4 trillion globally per year. Applications in the agriculture and food domain alone, including the development of alternative proteins including lab-grown meat, could have direct annual impact approximately $0.8 trillion to $1.2 trillion over the next 10 to 20 years. Additionally, the existing market for research and development (“R&D”) services supporting the development of these products is very large (estimated over $30 billion) and expected to grow about 20% per year. The synthetic biology industry is still in its early days, with funding dramatically increasing year-over-year. In 2020, synthetic biology funding hit $8 billion, a large increase from approximately $3.5 billion in 2019. Ginkgo is well-positioned to capitalize on an expanding total addressable market of synthetic biology (“TAM”).

Industry Leader. Ginkgo is a leader in combining advances in bioengineering, data analysis, machine learning, and industrialization of operations to accelerate the use of cell programming across a vast number of markets and applications. Despite the early stage for cell programming as a service, Ginkgo has created the only horizontal platform and ecosystem for cell programming across industries, which is poised to capture value as the market for synthetic biology matures. Other companies that have invested in synthetic biology technologies have typically focused on developing fully-owned products and therefore, instead of investing in platform scale and relationships, have dedicated their resources towards product development. In the SRNG Board’s view, Ginkgo has created significant barriers to entry around its business.

Client Engagement. Ginkgo has built a scaled technology platform with marquee clients and “proof points” across industries. Market defining customers have validated the platform across a wide range of end markets, including consumer, technology, industrials, environment, agriculture, food and nutrition, and pharmaceuticals and biotech. Over 75 major customer programs across diverse industries have run on Ginkgo’s platform. SRNG’s management spoke with several clients of Ginkgo, who corroborated the value proposition that Ginkgo provides to its customers.

Scalability and Significant Revenue and Earnings Growth Potential. Ginkgo’s platform has enabled it to achieve an attractive financial profile, characterized by strong existing growth and continued prospects of accelerated growth. In 2020, Ginkgo achieved revenue of $77 million and projects revenue of $150 million in 2021. Ginkgo has the technological and commercial advantage in establishing scale in the Foundry and corresponding Codebase. Ginkgo’s lab operations, which measures work done on the platform, have increased 2.4 times prior to the COVID-19 pandemic. Ginkgo’s strain tests metric, which measures the output of the platform, have increased 3-4 times annually prior to the COVID-19 pandemic. This is expected to further grow and expand. Ginkgo has demonstrated the ability to migrate existing cell engineering R&D and capture a share of downstream TAM, regardless of end-market.

Predictable Near-Term Revenue plus Downstream Value Share. The structure of Ginkgo’s customer contracts provides Ginkgo with upfront payments to cover R&D costs for customer programs, which provides a predictable revenue stream that is independent of program success. Additionally, Ginkgo typically negotiates a downstream value share in the form of royalty interests, milestones, or equity interests, permitting Ginkgo to participate in future upsides generated by its customers’ commercialization of Ginkgo’s technology at no additional cost to Ginkgo.

Compelling Unit Economics. Ginkgo’s platform drives a strong economy of scale and therefore attractive and improving unit economics. Ginkgo has been able to cover an increasing portion of its operational costs through the upfront fees paid by customers while maintaining downstream economics. This scale economic is driven by efficiencies in the Foundry, where the average cost per genetic engineering unit operation has decreased by 50% annually and the number of designs tested increases by over 3x annually. Additionally, Ginkgo’s scale data asset, or Codebase, is a source of long-term competitive advantage, with 3.4 billion+ unique gene sequences pulled from all public databases, and 440 million proprietary gene sequences acquired.

Experienced and Motivated Management Team. The Ginkgo co-founders have a proven ability to lead the scientific and commercial field of synthetic biology. Dr. Kelly, Reshma Shetty, President and Chief Operating

 

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Officer, Barry Canton, Chief Technology Officer, and Austin Che, Head of Strategy, have been working together for nearly 20 years on the vision of synthetic biology alongside Tom Knight, who remains a Fellow with Ginkgo. Dr. Kelly was recently featured in Fortune’s 40 Under 40 for Healthcare in 2020. The thought-leading founders and management have a proven ability to lead the scientific and commercial field of synthetic biology and have each stepped into leadership roles to which they are well suited and are able to drive significant influence at Ginkgo.

Financial Analysis

Given SRNG’s experience in investing, the SRNG Board did not seek a third-party valuation, and did not receive any valuation report or opinion from a third party in connection with the Business Combination. Instead, the SRNG Board relied on, among other things, the following in consideration of the Business Combination: (i) due diligence on Ginkgo’s business operations; (ii) extensive research reports and data related to the synthetic biology industries in the United States and internationally; and (iii) SRNG management’s collective experience in public markets transactions in constructing and evaluating financial models and projections and conducting valuations of businesses.

As part of its financial review, SRNG management performed extensive due diligence regarding the applications of synthetic biology and Ginkgo’s ability to share in downstream value creation through its customers. SRNG believes that Ginkgo’s ability to add new programs to its platform represents a key value driver, as Ginkgo’s contracts typically include both an upfront Foundry revenue component as well as downstream value participation in the form of royalties, milestones, or equity. The platform’s “network effect” of an accelerating Codebase and accumulated learning position Ginkgo for growth of projects and new customers, as that accumulated data makes its offerings more unique and differentiated.

In order to arrive at a recommended valuation for launch, the SRNG management team conducted the DCF Analysis and Selected Public Company Analysis (as described below). Based on those analysis and given the growth prospects of Ginkgo, the size and growth of the TAM, other compelling aspects of the Business Combination and the validation of such valuation in the oversubscribed PIPE placement process involving a number of well-respected institutional investors, the SRNG Board and the SRNG management team determined that the $15 billion valuation was supportable by either the Foundry revenue or the downstream value share. In addition, the SRNG Board recognized that the flexibility of Ginkgo’s business model could result in Ginkgo realizing significant upside by realizing the potential of both the Foundry at scale as well as the downstream value share.

Discounted Cash Flow Analysis Based on Downstream Value Only

The first approach used by SRNG management in its financial analysis of Ginkgo employed a discounted cash flow analysis (“DCF Analysis”) of the cash flows associated with new programs added to the platform using the New Program Projections provided to SRNG by Ginkgo as described in the section below entitled “Certain Projected Financial Information.” Based on their due diligence, SRNG management determined that Ginkgo’s projections provided a reasonable framework for analysis based on the underlying drivers and trends in the business, the recent proof points and successes achieved, and momentum in new business areas. SRNG management, along with advisers including the Boston Consulting Group (BCG) and Goldman Sachs, spent significant time with the Ginkgo management team and reviewing Ginkgo’s historical data and internal projection model to build confidence in Ginkgo’s projections. However, given the growth in Ginkgo’s projections and the inherent uncertainty in the downstream value capture for businesses that are relatively early in their commercialization, SRNG management applied sensitivities to a number of variables, including the NPV per program and the number and timing of programs added, as further described below.

The DCF Analysis is designed to provide an implied value of an asset using estimates of the future unlevered free cash flows generated by the asset (in this case, new programs), taking into consideration the time

 

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value of money with respect to those future cash flows by calculating their “present value.” The “unlevered free cash flows” refers to a calculation of the future cash flows generated by the new programs without including in such calculation any debt servicing costs. “Present value” refers to the current value of the future cash flows generated by the new programs, and is obtained by discounting those cash flows to the present using a discount rate that takes into account macro-economic assumptions and estimates of risk, the opportunity cost of capital and other appropriate factors. “Terminal value” refers to the present value of all future cash flows generated by the asset for periods beyond the projection period.

In applying the DCF Analysis, SRNG conservatively assumed that (a) Ginkgo operates its Foundry to pass 100% of scale efficiencies to customers, which drives program growth and the scope of the downstream opportunity, without accounting for Ginkgo’s potential ability to drive margin and generate free cash flow from the Foundry (i.e., assuming for purposes of this analysis no free cash flow generation from the Foundry, even though Ginkgo’s management expects to earn a margin on the Foundry business), and (b) Ginkgo’s downstream value share in new programs in the form of equity or royalty interests will flow to Ginkgo at approximately 100% contribution margin (i.e. without material expenses borne by Ginkgo). The DCF Analysis did not account for Ginkgo’s emerging businesses such as the biosecurity business, which is projected by Ginkgo to generate approximately $50 million in revenue in 2021 and has the potential to become another revenue driver for the business in the near term.

Specifically, SRNG used the number of new programs added to the platform in each year, multiplied by an estimated net present value (“NPV”) per program of $15 million, to calculate the baseline estimated pre-tax unlevered free cash flows attributable to downstream value share for each year from 2021 through 2025, as set forth in the table below ($ in millions):

 

     2021      2022      2023      2024      2025  

# New Programs

     23        60        136        268        508  

Risk-Adjusted NPV Per Program

   $ 15      $ 15      $ 15      $ 15      $ 15  

Pre-tax Unlevered Free Cash Flows

   $ 345      $ 899      $ 2,044      $ 4,017      $ 7,614  

While Ginkgo intends to monetize its interests in the programs in a tax-efficient manner, for purposes of the DCF Analysis, SRNG assumed an illustrative cash tax rate of 25% and subtracted such cash tax amount from the estimated pre-tax unlevered free cash flows to arrive at the estimated unlevered free cash flows attributable to downstream value share for calendar years 2021 through 2025. SRNG also calculated a range of terminal values by applying a perpetuity growth rate ranging from 0% to 5% to the estimated unlevered free cash flows attributable to downstream value share for calendar year 2025. SRNG selected this perpetuity growth rate range based on the application of its professional judgment and experience. The estimated unlevered free cash flows and the range of terminal values were then discounted to present values as of June 30, 2021 using a range of discount rates from 17.5% to 25%, which range of discount rates were selected, upon the application of SRNG’s professional judgment and experience, to reflect Ginkgo’s estimated weighted average cost of capital (“WACC”). This was intended to be a conservative but conventional discount for these types of projections.

Key variables in this DCF Analysis included the NPV per program, the number and timing of programs added, and financial assumptions such as the WACC and perpetuity growth rate. SRNG management performed sensitivity analyses around these variables to arrive at a range of implied values. SRNG also took into account the estimated value of Ginkgo’s existing equity portfolio (valued by Ginkgo on the basis of the most recent market valuation for those assets at approximately $500 million) to arrive at an indicative range of valuation outcomes. Based on the above-described analysis, SRNG derived an implied value reference range for Ginkgo of approximately $16 billion to $27 billion.

Selected Public Company Analysis Based on Foundry Only

As a secondary method of financial analysis, SRNG reviewed certain trading data for several selected public companies (the “Selected Public Company Analysis”). As an alternative reference to the DCF Analysis, this

 

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methodology does not account for any potential future downstream value associated with new programs for Ginkgo, but instead focuses solely on the more visible, near-term revenues associated with Ginkgo’s Foundry business and assumes that Ginkgo drives margin on the Foundry similar to the EBITDA margins of contract research organizations or peers in the life science space, which are approximately 20% to 30%. Similar to the DCF Analysis, this methodology also does not account for Ginkgo’s emerging businesses such as biosecurity.

Although Ginkgo does not have a direct operating comparable as a horizontal platform in synthetic biology, SRNG management, with the assistance of Goldman Sachs, determined that two groupings were most analogous: certain life sciences companies (“Life Science Leaders”), for their perceived high-growth potential and industry match, and certain software and data analytics companies (“Software and Data Companies”), for their perceived high-growth potential and returns to scale.

In selecting the most analogous public companies, SRNG’s management noted that Ginkgo is a unique company, with its technology underpinned by life sciences applications and its business model analogous to data technology companies. Therefore, SRNG’s management identified these two traditionally distinct sets of comparable companies for purposes of the Selected Public Company Analysis.

More specifically, the identification of Life Science Leaders was based on these companies’ ability to drive significant advances in how cells are analyzed and reprogrammed for various applications. Ginkgo, through its Foundry, integrates technology tools from several Life Sciences Leaders to provide an integrated technology platform for the reprogramming of cells. Further, the output value derived from Ginkgo (i.e. the highly proprietary strains of genetic code delivered via a single strain or enzyme) is comparable to the specific project based work in the life sciences sector. This integration highlights the industry relationship and dependence between Ginkgo and the Life Sciences Leaders. Similar to Ginkgo, the Life Sciences Leaders are also expected to experience strong revenue growth, with a median 2021E-2024E consensus revenue CAGR of 32%.

The identification of the Software and Data Companies is based on these companies’ businesses of incorporating data and information technology as a platform or service to their clients or end users, typically across a range of end market applications (or with specific applications in the life sciences sector). Further, these Software and Data Companies incorporate artificial intelligence tools to improve their data capture for purposes of efficiency and product improvement, with such improvement expected to compound as their offerings or platform grow in scale. Similarly, Ginkgo deploys proprietary software and data to drive learnings that may yield improvements to Ginkgo’s cell programming platform across a range of end-markets. As a consequence of these similarities, SRNG’s management believed that Ginkgo’s business model is most analogous to the Software and Data Companies. Within that sector, SRNG identified companies that were also expected to experience strong revenue growth, with a median 2021E-2024E consensus revenue CAGR of 33%.

Life Science Leaders included the following:

 

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10x Genomics, Inc.

 

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AbCellera Biologics Inc.

 

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Adaptive Biotechnologies Corporation

 

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Berkeley Lights, Inc.

 

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Pacific Biosciences of California, Inc.

 

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Twist Bioscience Corporation

Software and Data Companies included the following:

 

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Datadog, Inc.

 

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Palantir Technologies Inc.

 

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Schrodinger, Inc.

 

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  -

Snowflake Inc.

 

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Veeva Systems Inc.

The following is the trading data (as of May 3, 2021) of those selected public companies, based on publicly available information, considered by SRNG and the SRNG Board:

 

     CY 2024 TEV / Revenue      CY 2021 - 24E Revenue CAGR  

Life Science Leaders

(Median)

     18.7x        32

Software and Data

(Median)

     16.6x        33

Based on how these selected companies trade and Ginkgo’s anticipated growth profile as presented in the section below entitled “Certain Projected Financial Information”, SRNG used a range of total enterprise value to estimated 2024 revenue multiples of 17.5x to 20.0x derived from trading data of these selected companies (the “2024E TEV/Revenue Multiples”). SRNG then calculated a range of illustrative Ginkgo 2024 estimated Foundry revenues, adjusted to illustrate revenue potential if Ginkgo were to drive a margin at a level consistent with the selected companies rather than passing 100% cost-savings to its customers (the “Adjusted 2024 Ginkgo Foundry Revenues”). For this purpose, it was assumed that Ginkgo would drive EBITDA margin on the Foundry business similar to the EBITDA margins of 20% to 30% applicable to contract research organizations or peer life sciences companies such as the Life Sciences Leaders. SRNG then applied the 2024E TEV/Revenue Multiples to the Adjusted 2024 Ginkgo Foundry Revenues and then added the estimated value of Ginkgo’s existing equity portfolio of approximately $500 million.

Based on the above-described analysis, SRNG derived an implied value reference range for Ginkgo of approximately $15 billion to $20 billion.

Sum-of-the-Parts Analysis

As an additional valuation reference, SRNG management also considered a sum-of-the-parts analysis (the “SOTP Analysis”), which reflected the value associated with both downstream value share of new programs (as calculated using a similar methodology as the DCF Analysis) and revenues from Ginkgo’s Foundry business (calculated using a similar methodology to the Selected Public Company Analysis but assuming for purposes of the SOTP Analysis that Ginkgo would pass a portion of incremental efficiencies to its and would purposefully operate the Foundry at a lower margin). As with the prior methodologies, this methodology also does not include any value for Ginkgo’s emerging businesses such as biosecurity.

Conclusions

Based on the DCF Analysis and Selected Public Company Analysis, the SRNG Board determined that $15 billion was an attractive entry point valuation, with the stability of the Foundry revenue and the potentially much larger, but less predictable, downstream value share. While the SRNG Board did not rely on the SOTP Analysis in making its determination, it was noted that the SOTP Analysis is indicative of potential higher value of Ginkgo if Ginkgo were to balance growth between the Foundry revenues and downstream value share and deliver an optimal level of blended growth.

Certain Projected Financial Information

In connection with its consideration of the Business Combination, the SRNG Board was provided with the projections prepared by the management of Ginkgo set forth below under the heading “Projected Foundry Revenues,” (the “Foundry Projections”), “Projected New Programs Revenues” (the “New Program Projections”) and under the heading “Projected P&L” (the “Revenues Projections” and collectively with the Foundry Projections and New Program Projections, the “Ginkgo Projections”).

 

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The Ginkgo Projections are included in this proxy statement/prospectus solely to provide SRNG’s shareholders access to information made available in connection with the SRNG Board’s consideration of the Business Combination. The Ginkgo Projections should not be viewed as public guidance. Furthermore, the Ginkgo Projections do not take into account any circumstances or events occurring after the date on which the Ginkgo Projections were presented, which was April 11, 2021.

The Ginkgo Projections were not prepared with a view toward complying with the guidelines established by the SEC or the American Institute of Certified Public Accountants with respect to prospective financial information. The Ginkgo Projections have not been audited. Neither the independent registered public accounting firms of Ginkgo nor SRNG or any other independent accountants, have compiled, examined or performed any procedures with respect to the Ginkgo Projections contained herein, nor have they expressed any opinion or any other form of assurance on such information or their achievability, and the independent accounting firms of Ginkgo and SRNG assume no responsibility for, and disclaim any association with, the Ginkgo Projections, as further described in the “Cautionary Note Regarding Forward-Looking Statements” on page 6.

The Ginkgo Projections were prepared in good faith by Ginkgo management based on estimates and assumptions believed to be reasonable with respect to the expected future financial performance of Ginkgo at the time the Ginkgo Projections were prepared and speak only as of that time.

While presented with numerical specificity, the Ginkgo Projections are forward-looking and reflect numerous estimates and assumptions including, but not limited to, future industry performance under various industry scenarios as well as assumptions for competition, general business, economic, market and financial conditions and matters specific to the businesses of Ginkgo, all of which are difficult to predict and many of which are beyond the preparing parties’ control, including, among other things, the matters described in the sections entitled “Cautionary Note Regarding Forward-Looking Statements” and “Risk Factors.”

Ginkgo has not warranted the accuracy, reliability, appropriateness or completeness of the Ginkgo Projections to anyone, including SRNG. Neither Ginkgo’s management nor any of its respective representatives has made or makes any representations to any person regarding the ultimate performance of Ginkgo relative to the Ginkgo Projections. The Ginkgo Projections are not fact nor a guarantee of actual future performance. The future financial results of Ginkgo may differ materially from those reflected in the Ginkgo Projections due to factors beyond Ginkgo’s or SRNG’s ability to control or predict.

The Ginkgo Projections are not included in this proxy statement/prospectus in order to induce any SRNG shareholders to vote in favor of any of the proposals at the special meeting.

We encourage you to review the financial statements of Ginkgo included in this proxy statement/prospectus, as well as the financial information in the section of this proxy statement/prospectus entitled “Unaudited Pro Forma Condensed Combined Financial Information” and to not rely on any single financial measure.

None of SRNG, Ginkgo and any of their respective affiliates intends to, and, except to the extent required by applicable law, each expressly disclaims any obligation to, update, revise or correct the Ginkgo Projections to reflect circumstances existing or arising after the date such Ginkgo Projections were generated or to reflect the occurrence of future events, even in the event that any or all of the assumptions underlying the Ginkgo Projections are shown to be inappropriate or any of the Ginkgo Projections otherwise would not be realized.

 

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The key elements of the Ginkgo Projections provided to SRNG are summarized below:

Projected Foundry Revenue

LOGO

Projected New Program Revenue

LOGO

Projected P&L

 

($M)    2020(1)      2021      2022      2023      2024      2025  

Foundry Billable Revenue

   $ 64      $ 100      $ 175      $ 341      $ 628      $ 1,099  

        % growth

     18      57      75      95      84      75

memo: GAAP Adjustments

   $ (4         GAAP adjustments not projected  

Foundry Revenue (GAAP)

   $ 59      $ 100      $ 175      $ 341      $ 628      $ 1,099  

(+) Biosecurity

   $ 17      $ 50        Emerging business, projections not provided  

Total GAAP Revenue

   $ 77      $ 150      $ 175      $ 341      $ 628      $ 1,099  

Adjusted EBITDA

   $ (123    $ (157    $ (156    $ (136    $ (47    $ 166  

Capital Expenditures(2)

   $ (72    $ (66    $ (118    $ (146    $ (193    $ (234

 

(1)

2020A financials are draft audited and subject to final adjustments and line item classifications

(2)

2020 CapEx of $72M includes $14M of CapEx that is included in Accounts Payable and Accrued Expenses at December 31, 2020

The primary driver of the Ginkgo Projections is the scaling of the Foundry, which is in turn a key driver of Foundry Revenue. In particular, capacity increases in the Foundry can be driven by both physical footprint increases as well as “organic” growth or utilization in each Foundry – in other words, increasing the capacity per square foot. This “organic” growth is driven by improvements in technologies, including higher-throughput robotics as well as better workflow processing with Ginkgo’s proprietary software.

Ginkgo’s projections assume that physical footprint will increase by approximately 25 to 30% annually between 2021 and 2025, which is largely in line with the square footage growth the company has experienced

 

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over the past several years, though build-outs tend to be large and so there can be meaningful variations year-to-year. The “organic” capacity increases described above are reflected by Ginkgo’s assumption that it can generate more revenue (or take on more programs) per unit of space. So while Ginkgo assumes a 25 to 30% increase in physical footprint, they assume an 82% CAGR in annual Foundry Revenues. This accelerated revenue growth relative to physical footprint is driven by:

 

   

organic capacity increases per unit area driven by technology improvements, as well as increases in utilization; and

 

   

higher throughput of programs from the development of novel biological tools and process efficiencies, which consolidates program fees into a shorter period and allows more programs to flow through the Foundry.

The two components listed above are the primary drivers of the concept of “Knight’s Law” – which is an internal metric Ginkgo uses, and reflects that the capacity, as measured by the number of strain tests, an output of the Foundry, has increased by 3 to 4x per year historically, despite much more modest increases in physical footprint.

Another major strategic assumption in the projections is that Ginkgo assumes that significant cost savings will be passed along to customers in the form of lower prices per unit operation. While this was not explicitly presented in the projections SRNG reviewed from Ginkgo, Ginkgo did assume declining revenues per year per program as well as accelerating programs (the combination of which lead to further decreases in the lifetime revenues per program are decreasing even more). This was a key strategic choice for Ginkgo, as it believes it can accelerate adoption of the platform by decreasing the cost of biological engineering. SRNG noted the flexibility in the projections to drive near-term Foundry Revenues (by maintaining the current pricing) or to focus on scaling programs more quickly by passing cost savings along to customers.

Based on these assumptions, Ginkgo assumed an increase in the number of new programs added to the platform annually, growing from just over 20 new programs per year in 2021 to over 500 new programs per year in 2025. While not explicitly modeled, Ginkgo expects these new programs to come from a mix of new and existing customers, with the potential for significant “inside sales” to its larger and/or fast-growing customers. The key growth drivers presented for the number of new programs include a reduction in the cost for new cell programs (which Ginkgo believes will both expand the market for cell programming as well as increase Ginkgo’s ability to win new business versus other options), the ability to further penetrate the large R&D budgets of existing customers, the ability to grow alongside existing customers who are reliant on Ginkgo for all cell programming work, and technology improvements that make it easier for potential customers to interact with and manage cell programming projects at Ginkgo directly (what Ginkgo refers to as “self-service portals”). Ginkgo is also interested in using its balance sheet to help reduce the barriers to adoption by less well-capitalized companies.

Program execution is the key driver of downstream value capture and is one of the most critical components of Ginkgo’s projections. Drivers of downstream value for a given program include (a) the value of the end product being enabled, (b) the probability of technical and commercial success, (c) Ginkgo’s negotiated value share and (d) the ramp up / ramp down timing of end product sales. Cash flows from downstream value share are expected to be approximately 100% contribution margin as Ginkgo incurs minimal ongoing support or delivery costs. The equity value of a company on which Ginkgo has a claim would incorporate the market view on all of the variables listed above (product value, probability of success, etc.). Ginkgo calculated that the equity values associated with their 34 equity-based programs totaled over $500 million, thus representing an average NPV of approximately $15 million per program.

The SRNG Board also gave consideration to the following negative factors (which are more fully described in the “Risk Factors” section of this proxy statement/prospectus), although not weighted or in any order of significance:

 

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The risk that SRNG’s public shareholders would vote against the Business Combination Proposal or exercise their redemption rights.

The SRNG Board considered the risk that some of SRNG’s current public shareholders would vote against the Business Combination Proposal or decide to exercise their redemption rights, thereby depleting the amount of cash available in the Trust Account to an amount below the minimum required to consummate the Business Combination. The SRNG Board concluded, however, that this risk was substantially mitigated because SRNG will have secured PIPE commitments in the amount of $775 million, or approximately 62% of the minimum proceeds necessary for closing. Further, the fact that public stockholders may vote for the Business Combination Proposal while also exercising their redemption rights mitigates against any incentive a public shareholder might have to vote against the Business Combination Proposal, especially to the extent that they hold public warrants which would be worthless if the Business Combination is not completed.

SRNG’s management and directors may have different interests in the Business Combination than the public shareholders.

The SRNG Board also considered the fact that members of SRNG’s management and the SRNG Board may have interests that are different from, or are in addition to, the interests of SRNG’s shareholders generally, including the matters described under “Interests of SRNG’s Directors and Officers and Others in the Business Combination” below. However, the SRNG Board concluded that the potentially disparate interests would be mitigated because (i) these interests were disclosed in SRNG’s initial public offering prospectus, (ii) these disparate interests would exist or may be even greater with respect to a business combination with another target company and (iii) a portion of the SRNG Class B ordinary shares held by the Sponsor has been deferred to an earn-out structure based on a certain gradient of gross proceeds raised and future share price performance of New Ginkgo, although the 150,000 founder shares that will be held by SRNG’s other directors are not subject to this earn-out.

Risks Related to Ginkgo’s Business

With respect to Ginkgo’s business, SRNG’s management and the SRNG Board considered several potential risk factors, including (i) the history of Ginkgo’s net losses and the fact that, going forward, New Ginkgo will require substantial additional capital to fund its business, (ii) whether Ginkgo will be able to enter into a definitive agreement with the U.S. International Development Finance Corporation and its overall level of indebtedness, (iii) that Ginkgo owns equity interests in several of its customers and has exposure to the volatility and liquidity risks inherent in holding such equity, (iv) that Ginkgo’s revenue is currently concentrated in a limited number of customers and growth will depend on expanding that customer base, (v) rapidly changing technology and extensive competition in the synthetic biology industry, (vi) the protection of intellectual property, (vii) the challenges in adequately protecting biological materials, (viii) the important roles that Ginkgo’s founders have played so far in its business and dependence of Ginkgo may have on its founders in the successful execution of its business plan, and (ix) uncertainty regarding the regulatory framework for synthetic biology.

Risks Related to the Multi-Class Share Structure

The SRNG Board also considered the risks of concentrating voting power in the employees and directors of Ginkgo pursuant to the contemplated multi-class share structure (pursuant to which current and future employees and certain directors of Ginkgo will be entitled to hold high-vote (10:1) shares of New Ginkgo Class B common stock), but determined that such risks were outweighed by the benefits that this structure would provide for the long-term value of the company and its shareholders.

Satisfaction of 80% Test

After consideration of the factors identified and discussed in the section entitled “The Business Combination Proposal—SRNG Board Reasons for the Approval of the Business Combination,” the SRNG Board concluded

 

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that the Business Combination met all of the requirements disclosed in the prospectus for its initial public offering with respect to SRNG’s initial business combination, including that the Business Combination had a fair market value of at least 80% of the balance of the funds in the Trust Account at the time of execution of the Merger Agreement.

Interests of SRNG’s Directors and Officers and Others in the Business Combination

When you consider the recommendation of the SRNG Board in favor of approval of the Business Combination Proposal, you should keep in mind that SRNG’s Sponsor and its directors and officers have interests in the Business Combination that are different from, or in addition to, those of SRNG’s shareholders and warrant holders generally. These interests include, among other things, the interests listed below:

 

   

If SRNG is unable to complete its initial business combination by February 26, 2023, it will: (i) cease all operations except for the purpose of winding up, (ii) as promptly as reasonably possible but no more than 10 business days thereafter, redeem the public shares, at a per-share price, payable in cash, equal to 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 SRNG to fund its working capital requirements (subject to an aggregate limit of $3,000,000) (less 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 shareholders’ rights as shareholders (including the right to receive further liquidating distributions, if any), and (iii) as promptly as reasonably possible following such redemption, subject to the approval of its remaining shareholders and the SRNG Board, liquidate and dissolve, subject in each case to SRNG’s obligations under Cayman Islands law to provide for claims of creditors and the requirements of other applicable law.

 

   

There will be no redemption rights or liquidating distributions with respect to our private placement warrants, which will expire worthless if we fail to complete our initial business combination by February 26, 2023.

 

   

SRNG’s Sponsor purchased 43,125,000 founder shares prior to SRNG’s initial public offering for an aggregate purchase price of $25,000, or approximately $0.0006 per share, which accounted for approximately 20% of SRNG’s outstanding shares after the consummation of its initial public offering. Upon the Closing, assuming no founder shares are forfeited pursuant to the terms of the Sponsor Support Agreement as a result of shareholder redemptions exceeding a specified threshold, such founder shares will be converted into 43,125,000 shares of New Ginkgo Class A common stock.

 

   

Simultaneously with the closing of its initial public offering, SRNG consummated the sale of 19,250,000 private placement warrants at a price of $1.50 per warrant in a private placement to our Sponsor. The warrants are each exercisable commencing 30 days following the Closing for one share of New Ginkgo Class A common stock at $11.50 per share. If SRNG does not consummate a business combination transaction by February 26, 2023, then the proceeds from the sale of the private placement warrants will be part of the liquidating distribution to the public shareholders and the warrants held by SRNG’s Sponsor will be worthless. The warrants held by SRNG’s Sponsor had an aggregate market value of approximately $37.9 million based upon the closing price of $1.97 per warrant on Nasdaq on May 10, 2021. Upon the Closing, 10% of the private placement warrants will be forfeited to New Ginkgo and cancelled for no consideration.

 

   

The Sponsor and SRNG’s officers and directors will lose their entire investment of $28,900,000, consisting of the Sponsor’s $25,000 initial investment and the Sponsor’s $28,875,000 private placement warrant purchase price, if SRNG does not complete a business combination by February 26, 2023.

 

   

Certain of SRNG’s officers and directors may serve as directors of New Ginkgo after the Closing. As such, in the future they may receive any cash fees, stock options or stock awards that the New Ginkgo Board determines to pay to its directors and/or officers.

 

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The Sponsor has made an investment for the founder shares at an average price per share of approximately $0.0006 prior to the consummation of our initial public offering. As a result of the significantly lower investment per share of our Sponsor as compared to the investment per share of our public shareholders (which was $10.00 per unit), a transaction that results in an increase in the value of the investment of SRNG’s Sponsor in the founder shares may result in a decrease in the value of the investment of SRNG’s public shareholders.

 

   

SRNG’s Sponsor and officers and directors have agreed to waive their rights to liquidating distributions from the Trust Account with respect to their founder shares if SRNG fails to complete a business combination by February 26, 2023.

 

   

In order to protect the amounts held in the Trust Account, the Sponsor has agreed that it will be liable to SRNG if and to the extent any claims by a vendor for services rendered or products sold to SRNG, or a prospective target business with which it has entered into a transaction agreement, reduce the amount of funds in the Trust Account. This liability will not apply with respect to any claims by a third party who executed a waiver of any right, title, interest or claim of any kind in or to any monies held in the Trust Account or to any claims under our indemnity of the underwriters of the offering against certain liabilities, including liabilities under the Securities Act.

 

   

Following the Closing, the Sponsor would be entitled to the repayment of any working capital loan and advances that have been made to SRNG and remain outstanding. As of the date of this proxy statement/prospectus, the Sponsor has not made any advances to SRNG for working capital expenses. If SRNG does not complete an initial business combination within the required period, SRNG may use a portion of its working capital held outside the Trust Account to repay the working capital loans, but no proceeds held in the Trust Account would be used to repay the working capital loans.

 

   

Following the consummation of the Business Combination, New Ginkgo will indemnify SRNG’s existing directors and officers and will maintain a directors’ and officers’ liability insurance policy.

 

   

Upon the Closing, subject to the terms and conditions of the Merger Agreement, the Sponsor, SRNG’s officers and directors and their respective affiliates may be entitled to reimbursement for any reasonable out-of-pocket expenses related to identifying, investigating and consummating an initial business combination, and repayment of any other loans, if any, and on such terms as to be determined by SRNG from time to time, made by the Sponsor or certain of SRNG’s officers and directors to finance transaction costs in connection with an intended initial business combination. To date, SRNG has incurred no such out-of-pocket expenses.

Interests of Others in the Business Combination

Goldman Sachs (together with its affiliates), Morgan Stanley (together with its affiliates) and Allen & Company (together with its affiliates) are each full-service financial institutions engaged in various activities, which may include sales and trading, commercial and investment banking, advisory, investment management, investment research, principal investing, hedging, market making, brokerage and other financial and non-financial activities and services. From time to time, Goldman Sachs , Morgan Stanley and Allen & Company and their respective affiliates have provided various investment banking and other commercial dealings unrelated to the Business Combination or the PIPE to Ginkgo and its affiliates, and/or SRNG and its affiliates, and has received customary compensation in connection therewith. In addition, each of Goldman Sachs, Morgan Stanley and Allen & Company and their respective affiliates may provide investment banking and other commercial dealings to SRNG, Ginkgo and their respective affiliates in the future, for which they would expect to receive customary compensation.

In addition, in the ordinary course of its business activities, Goldman Sachs, Morgan Stanley and Allen & Company and their respective affiliates, officers, directors and employees may make or hold a broad array of investments and actively trade debt and equity securities (or related derivative securities) and financial

 

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instruments (including bank loans) for their own account and for the accounts of their customers. Such investments and securities activities may involve securities and/or instruments of SRNG or Ginkgo, or their respective affiliates. Goldman Sachs, Morgan Stanley and Allen & Company and their respective affiliates may also make investment recommendations and/or publish or express independent research views in respect of such securities or financial instruments and may hold, or recommend to clients that they acquire, long and/or short positions in such securities and instruments.

Sources and Uses of Funds for the Business Combination

The following table summarizes the sources and uses for funding the transactions contemplated by the Merger Agreement. Where actual amounts are not known or knowable, the figures below represent Ginkgo’s good faith estimate of such amounts assuming a Closing as of                     , 2021.

 

(in millions)

   Assuming No
Redemption
     Assuming
Maximum
Redemption
 

Sources

 

Proceeds from Trust Account

   $ 1,725      $ 475  

Private Placement

     775        775  

Sellers’ Equity

     15,000        15,000  

Ginkgo Cash on Balance Sheet(1)

     274        274  
  

 

 

    

 

 

 

Total Sources

   $ 17,774      $ 16,524  
  

 

 

    

 

 

 

Uses

 

Cash on Balance Sheet(1)

   $ 2,639      $ 1,389  

Sellers’ Equity

     15,000        15,000  

Transaction costs

     135        135  
  

 

 

    

 

 

 

Total Uses

   $ 17,774      $ 16,524  
  

 

 

    

 

 

 

 

(1)

Based on cash on hand as of April 30, 2021.

Directors and Executive Officers of New Ginkgo After the Business Combination

Subject to the occurrence of the Closing and any limitation with respect to any specific individual imposed under applicable laws and the listing requirements of NYSE or Nasdaq (whichever is applicable and, for the avoidance of doubt, after giving effect to any exemptions available to a controlled company), effective as of the Closing, SRNG will take all actions necessary or appropriate (including securing resignations or removals and making such appointments as are necessary) to cause the New Ginkgo Board to consist of the persons designated by Ginkgo in writing prior to Closing (including the person contemplated to be on the New Ginkgo Board pursuant to the Director Nomination Agreement). On the Closing Date, SRNG shall enter into customary indemnification agreements reasonably satisfactory to Ginkgo with the individuals to be elected as members of the New Ginkgo Board, which indemnification agreements shall continue to be effective immediately following the Closing.

Except as otherwise directed in writing by Ginkgo, and conditioned upon the occurrence of the Closing, SRNG will take all actions necessary or appropriate (including securing resignations or removals and making such appointments as are necessary) to cause the persons constituting the officers of Ginkgo prior to the effective time of the Business Combination to be the officers of New Ginkgo (and holding the same titles as held at Ginkgo) until the earlier of their resignation or removal or until their respective successors are duly appointed.

Ginkgo will take all necessary action prior to the effective time of the Business Combination such that (a) each director of Ginkgo in office immediately prior to the effective time of the Business Combination shall cease to be a director immediately following the effective time of the Business Combination (including by

 

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causing each such director to tender an irrevocable resignation as a director, effective as of the effective time of the Business Combination) and (b) certain directors or executive officers of Ginkgo, determined by Ginkgo and communicated to SRNG in writing prior to the Closing Date, shall be appointed to the New Ginkgo Board, effective as of immediately following the effective time of the Business Combination, and, as of such time, shall be the only the directors of New Ginkgo (including by causing the Ginkgo board of directors to adopt resolutions prior to the effective time of the Business Combination that expand or decrease the size of the Ginkgo board of directors, as necessary, and appoint such persons to the vacancies resulting from the incumbent directors’ respective resignations or, if applicable, the newly created directorships upon any expansion of the size of the Ginkgo board of directors). Each person appointed as a director of New Ginkgo pursuant to the preceding sentence shall remain in office as a director of New Ginkgo until his or her successor is elected and qualified or until his or her earlier resignation or removal.

Except as otherwise directed in writing by Ginkgo, the persons constituting the officers of Ginkgo prior to the effective time of the Business Combination will continue to be the officers of the New Ginkgo (and will hold the same titles as held at Ginkgo) until the earlier of their resignation or removal or until their respective successors are duly appointed.

Stock Exchange Listing

SRNG’s units, Class A ordinary shares and public warrants are publicly traded on Nasdaq Capital Market under the symbols “SRNGU”, “SRNG” and “SRNGW”, respectively. SRNG intends to apply to list the New Ginkgo Class A common stock and public warrants on the NYSE under the symbols “DNA” and “DNA.WS”, respectively, upon the Closing. New Ginkgo will not have units traded following the Closing.

Accounting Treatment

The Business Combination is expected to be accounted for as a reverse recapitalization in accordance with GAAP. Under this method of accounting, SRNG will be treated as the “acquired” company for accounting purposes and the business combination will be treated as the equivalent of Ginkgo issuing stock for the net assets of SRNG, accompanied by a recapitalization. The net assets of SRNG will be stated at historical cost, with no goodwill or other intangible assets recorded.

Ginkgo is expected to be the accounting acquirer based on evaluation of the following facts and circumstances:

 

   

Ginkgo’s existing stockholders will have the greatest voting interest in the combined entity under the no and maximum redemption scenarios with over 95% of the voting interest in each scenario;

 

   

The largest individual minority stockholder of the combined entity is an existing stockholder of Ginkgo;

 

   

Ginkgo’s directors will represent the majority of the New Ginkgo Board;

 

   

Ginkgo’s senior management will be the senior management of New Ginkgo; and

 

   

Ginkgo is the larger entity based on historical revenue and has the larger employee base.

The preponderance of evidence as described above is indicative that Ginkgo is the accounting acquirer in the Business Combination.

Vote Required for Approval

This Business Combination Proposal (and consequently, the Merger Agreement and the transactions contemplated thereby, including the Business Combination) will be approved and adopted only with the affirmative vote of a majority of the votes cast by SRNG shareholders present in person (which would include presence at the virtual Special Meeting) or represented by proxy at the Special Meeting and entitled to vote thereon. Abstentions and broker non-votes have no effect on the outcome of the proposal.

 

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The Business Combination is conditioned upon the approval of the Business Combination Proposal, subject to the terms of the Merger Agreement. If the Business Combination Proposal is not approved, the other proposals (except the Adjournment Proposal, as described below) will not be presented to the shareholders for a vote.

SRNG’s Sponsor along with SRNG’s directors and officers have agreed to vote the founder shares and any public shares owned by them in favor of the Business Combination Proposal. See “Ancillary Agreements Related to the Business Combination” for more information.

Resolution to Be Voted Upon

The full text of the resolution to be passed is as follows:

RESOLVED, as an ordinary resolution, that the Company’s entry into the Merger Agreement, dated as of May 11, 2021 (the “Merger Agreement”), by and among SRNG; SEAC Merger Sub Inc., a Delaware corporation and a wholly owned subsidiary of SRNG (“Merger Sub”), and Ginkgo Bioworks, Inc. a Delaware corporation (“Ginkgo”) (a copy of which is attached to the proxy statement/prospectus as Annex A), pursuant to which, among other things, following the Domestication of SRNG to Delaware as described below, Merger Sub will merge with and into Ginkgo, with Ginkgo surviving the merger as a wholly owned subsidiary of SRNG, in accordance with the terms and subject to the conditions of the Merger Agreement, be approved, ratified and confirmed in all respects.”

Recommendation of the SRNG Board

THE SRNG BOARD UNANIMOUSLY RECOMMENDS THAT THE SRNG SHAREHOLDERS VOTE “FOR” THE APPROVAL OF THE BUSINESS COMBINATION PROPOSAL.

The existence of financial and personal interests of SRNG’s directors may result in a conflict of interest on the part of one or more of the directors between what they may believe is in the best interests of SRNG and its shareholders and what they may believe is best for himself or themselves in determining to recommend that shareholders vote for the proposals. See the section entitled “—Interests of SRNG’s Directors and Officers and Others in the Business Combination” for a further discussion.

 

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THE MERGER AGREEMENT

The following describes certain aspects of the Business Combination, including the material provisions of the Merger Agreement. The following description of the Merger Agreement is subject to, and qualified in its entirety by reference to, the Merger Agreement, which is attached to this proxy statement/prospectus as Annex A, and is incorporated by reference into this proxy statement /prospectus. We urge you to read the Merger Agreement carefully and in its entirety, as it is the legal document governing the Business Combination.

Explanatory Note Regarding the Merger Agreement

The Merger Agreement and this summary are included to provide you with information regarding the terms of the Merger Agreement. The Merger Agreement contains representations, warranties and covenants that the respective parties thereto made to each other. The representations, warranties and covenants made in the Merger Agreement by the respective parties were qualified and subject to important limitations agreed to by the parties in connection with negotiating the terms of the Merger Agreement. In particular, in your review of the representations, warranties and covenants contained in the Merger Agreement and described in this summary, it is important to bear in mind that the representations, warranties and covenants were negotiated with the principal purpose of establishing circumstances in which a party to the Merger Agreement may have the right not to consummate the Business Combination if the representations, warranties and covenants of the other party were to be untrue due to a change in circumstance or otherwise, and allocating risk between the parties to the Merger Agreement, rather than establishing or attempting to set forth matters as facts. The representations, warranties and covenants also may be subject to a contractual standard of materiality different from that generally applicable to stockholders and reports and documents filed with the SEC and some were qualified by the matters contained in the confidential disclosure schedules that SRNG and Ginkgo each delivered in connection with the Merger Agreement and certain documents filed with the SEC. Moreover, information concerning the subject matter of the representations, warranties and covenants, which do not purport to be accurate as of the date of this proxy statement/prospectus, may have changed since the date of the Merger Agreement.

For the foregoing reasons, the representations, warranties and covenants or any descriptions of those provisions should not be read alone or relied upon as presenting the actual state of facts or condition of the respective parties, or any of their respective subsidiaries or affiliates. Instead, such provisions or descriptions should be read only in conjunction with the other information provided elsewhere in this document or incorporated by reference into this proxy statement/prospectus. Please see the section entitled “Where You Can Find More Information.” SRNG will provide additional disclosures in its public reports to the extent it is aware of the existence of any material facts that are required to be disclosed under federal securities laws and that might otherwise contradict the terms and information contained in the Merger Agreement and will update such disclosure as required by federal securities laws.

Closing and Effective Time of the Business Combination

Prior to the Closing, Ginkgo will (subject to the receipt of requisite approvals from its stockholders) effect a recapitalization (the “Ginkgo Recapitalization”) such that immediately prior to the effective time, Ginkgo’s authorized capital stock shall consist solely of Ginkgo Class A common stock and Ginkgo Class B common stock.

Prior to and as a condition of the Business Combination, no later than one day prior to the Closing, SRNG will changes its jurisdiction of incorporation by effecting a deregistration under the Cayman Islands Companies Act and a domestication under Section 388 of the DGCL, pursuant to which SRNG’s jurisdiction of incorporation will be changed from the Cayman Islands to the State of Delaware. See “The Domestication Proposal.”

Unless SRNG and Ginkgo otherwise mutually agree, the Closing will take place on the date which is two business days after the first day on which all of the closing conditions set forth in the Merger Agreement have

 

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been satisfied or waived (other than those conditions that by their terms are to be satisfied at the closing of the Business Combination) (such date, the “Closing Date”). See “The Merger Agreement—Conditions to Closing” for a more complete description of the conditions that must be satisfied prior to closing of the Business Combination.

At the Closing, Ginkgo and Merger Sub will effect the Business Combination by filing a certificate of merger with the Secretary of State of the State of Delaware, and the Business Combination will become effective at the time the certificate of merger is accepted for filing by the Secretary of State of the State of Delaware. The time at which the Business Combination becomes effective is sometimes referred to in this proxy statement/prospectus as the “effective time.”

As of the date of this proxy statement/prospectus, the parties expect that the Business Combination will be effective during the third quarter of 2021. However, there can be no assurance as to when or if the Business Combination will occur.

If the Business Combination is not completed by 5:00 p.m., Eastern Time, on November 10, 2021 (“Outside Deadline”), the Merger Agreement may be terminated by either SRNG or Ginkgo. However, a party may not terminate the Merger Agreement pursuant to the provision described in this paragraph if such party’s breach of any of its obligations under the Merger Agreement is the primary cause of the failure of the Closing to have occurred before the Outside Deadline. See “The Merger Agreement—Termination.”

Consideration to Ginkgo Equity Holders

The aggregate base equity consideration (the “Aggregate Base Equity Consideration”) to be issued at the Closing to the then current equity holders of Ginkgo will be a number of shares of New Ginkgo common stock calculated as (a) the sum of (i) $15 billion plus (ii) the aggregate exercise price of Ginkgo options and Ginkgo warrants that will be assumed by New Ginkgo, plus (iii) SRNG’s transaction expenses in excess of $108 million, divided by (b) $10.00.

In addition, the holders of Ginkgo common stock, Ginkgo options, Ginkgo restricted stock unit awards and Ginkgo warrants outstanding immediately prior to the effective time of the Business Combination will collectively be entitled to receive the Earn-out Consideration, which is divided into four equal tranches subject to vesting during the Earn-out Period:

 

   

if the trading price per share of New Ginkgo Class A common stock at any point during the trading hours of a trading day is greater than or equal to $12.50 for any 20 trading days within any period of 30 consecutive trading days during the Earn-out Period, 25% of the Earn-out Consideration will immediately vest;

 

   

if the trading price per share of New Ginkgo Class A common stock at any point during the trading hours of a trading day is greater than or equal to $15.00 for any 20 trading days within any period of 30 consecutive trading days during the Earn-out Period, an additional 25% of the Earn-out Consideration will immediately vest;

 

   

if the trading price per share of New Ginkgo Class A common stock at any point during the trading hours of a trading day is greater than or equal to $17.50 for any 20 trading days within any period of 30 consecutive trading days, an additional 25% of the Earn-out Consideration will immediately vest; and

 

   

if the trading price per share of New Ginkgo Class A common stock at any point during the trading hours of a trading day is greater than or equal to $20.00 for any 20 trading days within any period of 30 consecutive trading days, the remaining 25% of the Earn-out Consideration will immediately vest.

The consideration to be paid in, or in connection with, the Business Combination in respect of each Ginkgo Class A common stock that is issued and outstanding immediately prior to the effective time of the Business Combination (but after the Ginkgo Recapitalization) shall be (i) a number of shares of New Ginkgo Class A common stock equal to the ratio (such ratio, the “Base Equity Value Exchange Ratio”) determined by dividing

 

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the Aggregate Base Equity Consideration by the aggregate number of shares of Ginkgo common stock (a) issued and outstanding immediately prior to the effective time of the Business Combination after giving effect to the Ginkgo Recapitalization and (b) that would be issued upon the cash settlement (as opposed to “net settlement”) of all Ginkgo warrants that will be assumed by New Ginkgo, all Ginkgo options that are vested equity awards and all Ginkgo restricted stock unit awards that are vested equity awards, in each case, that are issued and outstanding immediately prior to the effective time of the Business Combination, if such Ginkgo warrants, Ginkgo options and Ginkgo restricted stock unit awards were exercised or settled in full upon payment of the full cash exercise price immediately prior to the effective time of the Business Combination (such number of shares of Ginkgo common stock, the “Fully Diluted Share Count”) and (ii) subject to the Vesting Conditions, a number of shares of New Ginkgo Class A common stock equal to the ratio (such ratio, the “Earn-out Exchange Ratio”) determined by dividing the Earn-out Consideration by the Fully Diluted Share Count.

The base consideration to be paid in, or in connection with, the Business Combination in respect of each Ginkgo Class B common stock that is issued and outstanding immediately prior to the effective time of the Business Combination (but after the Ginkgo Recapitalization) shall be a number of New Ginkgo Class B common stock equal to the Base Equity Value Exchange Ratio and, subject to the Vesting Conditions, a number of shares of New Ginkgo Class B common stock equal to the Earn-out Exchange Ratio.

At the effective time, each Ginkgo restricted stock award that is outstanding immediately prior to the effective time of the Business Combination shall be converted into the right to receive restricted stock awards of New Ginkgo on the same terms and conditions as applicable to such Ginkgo restricted stock award; except that such New Ginkgo restricted stock award will relate to such number of shares of New Ginkgo common stock as is determined in accordance with the two preceding paragraphs.

At the effective time of the Business Combination, each Ginkgo option exercisable for Ginkgo Class A common stock that is outstanding immediately prior to the effective time of the Business Combination shall be assumed and converted into a newly issued option exercisable for shares of New Ginkgo Class A common stock (subject to the same terms and conditions as the original Ginkgo option); except that the number of shares underlying such New Ginkgo option will be the sum of (a) the product of (i) the number of shares of Ginkgo Class A common stock subject to such Ginkgo option multiplied by (ii) the Base Equity Value Exchange Ratio and (b) subject to the Vesting Conditions, the product of (i) the number of shares of Ginkgo Class A common stock subject to such Ginkgo option multiplied by (ii) the product of (x) the Earn-out Exchange Ratio multiplied by (y) a discount factor to be determined by Ginkgo in good faith (the “Option Earn-out Exchange Ratio”), and except that the exercise price per share of such New Ginkgo option will be equal to the quotient of (A) the exercise price per share of such Ginkgo option in effect immediately prior to the effective time of the Business Combination divided by (B) a number equal to the sum of the Base Equity Value Exchange Ratio and the Option Earn-out Exchange Ratio (the “Option Exercise Price Exchange Ratio”).

At the effective time of the Business Combination, each Ginkgo option exercisable for Ginkgo Class B common stock that is outstanding immediately prior to the effective time of the Business Combination shall be assumed and converted into a newly issued option exercisable for shares of New Ginkgo Class B common stock (subject to the same terms and conditions as the original Ginkgo option); except that the number of shares underlying such New Ginkgo option will be the sum of (a) the product of (i) the number of shares of Ginkgo Class B common stock subject to such Ginkgo option multiplied by (ii) the Base Equity Value Exchange Ratio and (b) subject to the Vesting Conditions, the product of (i) the number of shares of Ginkgo Class B common stock subject to such Ginkgo option multiplied by (ii) the Option Earn-out Exchange Ratio, and except that the exercise price per share of such New Ginkgo option will be equal to the quotient of (A) the exercise price per share of such Ginkgo option in effect immediately prior to the effective time of the Business Combination divided by (B) the Option Exercise Price Exchange Ratio.

At the effective time of the Business Combination, each preferred warrant to purchase shares of Ginkgo preferred capital stock that is outstanding and unexercised immediately prior to the effective time of the

 

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Business Combination that is not automatically exercised in full in accordance with its terms by virtue of the occurrence of the Business Combination will be assumed and converted into a warrant exercisable for New Ginkgo Class A common stock on the same terms and conditions in effect immediately prior to the effective time of the Business Combination, except that the number of shares underlying such New Ginkgo preferred warrant will be the sum of (a) the product of (i) the number of shares of Ginkgo Class A common stock subject to such Ginkgo preferred warrant multiplied by (ii) the Base Equity Value Exchange Ratio and (b) subject to the Vesting Conditions, the product of (i) the number of shares of Ginkgo Class A common stock subject to such Ginkgo preferred warrant multiplied by (ii) the Earn-out Exchange Ratio, and except that the exercise price per share of such Ginkgo preferred warrant will be equal to the quotient of (A) the exercise price per share of such Ginkgo preferred warrant in effect immediately prior to the effective time of the Business Combination divided by (B) the sum of the Base Equity Value Exchange Ratio and the Earn-out Exchange Ratio.

At the effective time of the Business Combination each Ginkgo restricted stock unit award that is outstanding immediately prior to the effective time of the Business Combination shall be converted into the right to receive restricted stock units based on common stock of New Ginkgo on the same terms and conditions as applicable to such Ginkgo restricted stock unit award, except that the number of shares underlying such New Ginkgo restricted stock unit award will be the sum of (a) the product of (i) the number of shares of Ginkgo common stock subject to such Ginkgo Restricted Stock Unit Award multiplied by (ii) the Base Equity Value Exchange Ratio and (b) subject to the Vesting Conditions, the product of (i) the number of shares of Ginkgo common stock subject to such Ginkgo Restricted Stock Unit Award multiplied by (ii) the Earn-out Exchange Ratio; provided that (1) all shares of New Ginkgo common stock resulting from this conversion shall be (x) in the form of shares of New Ginkgo Class B common stock to the extent resulting from shares of Ginkgo Class B common stock prior to the effective time of the Business Combination and (y) in the form of shares of New Ginkgo Class A common stock to the extent resulting from shares of Ginkgo Class A common stock prior to the effective time of the Business Combination and (2) all Earn-out Consideration resulting from the foregoing clause (b) shall be issued in the form of restricted stock instead of restricted stock units, subject to the terms and conditions of the award agreement that would apply to restricted stock instead of restricted stock units (as reasonably determined by Ginkgo).

Covenants and Agreements

Conduct of Ginkgo Businesses Prior to the Completion of the Business Combination

Ginkgo has agreed that, prior to Closing, it will use commercially reasonable efforts to operate its and its subsidiaries’ business in the ordinary course and use reasonable best efforts to preserve the present business and operations and goodwill of Ginkgo.

In addition to the general covenants above, Ginkgo has agreed that prior to the effective time of the Business Combination, subject to specified exceptions including those set forth in the confidential disclosure schedules delivered by Ginkgo, it will not, and cause its subsidiaries not to:

 

   

amend, restate, supplement or otherwise modify any provision of the governing documents of Ginkgo;

 

   

incorporate, form or organize any new direct or indirect subsidiary or engage in any new line of business that is materially different from the general nature of the businesses of the Company and its Subsidiaries as of the date of the Merger Agreement;

 

   

(i) pay, make, declare or set aside any dividend or distribution in respect of any equity security of Ginkgo, (ii) split, combine, reclassify or otherwise amend or modify any terms of any equity security of Ginkgo or any of its subsidiaries, other than any such transaction by a wholly owned subsidiary of Ginkgo that remains a wholly owned subsidiary of Ginkgo after consummation of such transaction, (iii) purchase, repurchase, redeem (or offer to purchase, repurchase, redeem or otherwise acquire) or otherwise acquire any issued and outstanding equity securities of Ginkgo or any of its subsidiaries (other than in certain specified exceptions), (iv) grant, issue, transfer, sell or otherwise dispose, or authorize to issue sell, or otherwise dispose any equity securities of Ginkgo (other than any grant of

 

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any equity awards under any Ginkgo incentive plan in the ordinary course of business consistent with past practice), or (v) issue, deliver, sell, authorize, pledge or otherwise encumber, or agree to any of the foregoing with respect to, any equity securities or enter into other agreements or commitments of any character obligating it to issue any equity securities;

 

   

enter into, modify or amend in any material respect or terminate (other than by expiration in accordance with the terms of any contract without an auto-renewal or similar term) any material contract or any real property lease, in each case, other than in the ordinary course of business;

 

   

(i) issue or sell any debt securities or warrants or other rights to acquire any debt securities of Ginkgo or any of its subsidiaries or guarantee any debt securities of another entity, (ii) incur or assume any indebtedness for borrowed money, or (iii) guarantee any indebtedness for borrowed money of a third party, except, in the case of each of the foregoing clauses (i) through (iii), in an aggregate amount not to exceed $500,000;

 

   

sell, assign, transfer, convey, lease or otherwise dispose of any material tangible assets or properties of Ginkgo or any of its subsidiaries, except for (i) dispositions of obsolete or worthless equipment, (ii) transactions between Ginkgo and any of its subsidiaries or between any two or more of Ginkgo’s subsidiaries, and (iii) transactions in the ordinary course of business;

 

   

make or commit to make any capital expenditures other than in an amount not exceeding $100,000,000 in the aggregate;

 

   

acquire by merger or consolidation with, or merge or consolidate with, or purchase substantially all or a material portion of the assets of, any corporation, partnership, association, joint venture or other business organization or division thereof;

 

   

waive, release, settle, compromise or otherwise resolve any action, claims or proceedings, except in the ordinary course of business or where such waivers, releases, settlements or compromises involve only the payment of monetary damages in an amount less than $10,000,000 (net of any amounts covered by insurance) in the aggregate;

 

   

authorize, recommend, propose or announce an intention to adopt a plan of, or otherwise enter into or effect any, complete or partial liquidation, dissolution, restructuring, recapitalization or other reorganization of Ginkgo or its subsidiaries (other than the Business Combination);

 

   

(i) make or change any material election in respect of taxes, (ii) amend, modify or otherwise change any filed material tax return, (iii) adopt or request permission of any taxing authority to change any accounting method in respect of material taxes, (iv) enter into any closing agreement in respect of material taxes or enter into any tax sharing or similar agreement (other than customary commercial contracts entered into in the ordinary course of business not primarily related to taxes), (v) settle any claim or assessment in respect of material taxes, (vi) surrender or allow to expire any right to claim a refund of material taxes or (vii) consent to any extension or waiver of the limitation period applicable to any claim or assessment in respect of material taxes or in respect of any material tax attribute that would reasonably be expected to give rise to any claim or assessment of taxes;

 

   

take any action, or knowingly fail to take any action, where such action or failure to act could reasonably be expected to prevent the Business Combination from qualifying as a “reorganization” within the meaning of Section 368(a) of the Internal Revenue Code of 1986 and other regulations promulgated by the United States Department of the Treasury;

 

   

except in the ordinary course of business consistent with past practice or as otherwise required by any existing Ginkgo benefit plan or certain contracts, (i) grant any severance, retention, change-of-control or termination or similar pay, except in connection with the promotion, hiring or termination of employment of any employee in the ordinary course of business, (ii) terminate, adopt, enter into or amend any material Ginkgo benefit plan or (iii) increase the cash compensation or bonus opportunity of any employee, officer, director or other individual service provider;

 

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enter into, amend extend or terminate any collective bargaining agreement or similar labor agreement or recognize or certify any labor union, labor organization, or group of employees of Ginkgo or its subsidiaries as the bargaining representative for any employees of Ginkgo or its subsidiaries;

 

   

implement any employee layoffs, plant closings, or similar events that individually or in the aggregate would give rise to any obligations or liabilities on the part of Ginkgo under the federal Work Adjustment and Retraining Notification Act or any similar state or local “mass layoff” or “plant closing” laws;

 

   

enter into or materially amend any agreement with, or pay, distribute or advance any assets or property to, any of its officers, directors, employees, partners, stockholders or other affiliates, other than payments or distributions (i) relating to obligations in respect of arms-length commercial transactions pursuant to certain affiliate agreements or (ii) in the ordinary course of business consistent with past practice;

 

   

except as required by GAAP (or any interpretation thereof) or applicable law, make any change in accounting methods, principles or practices;

 

   

(i) transfer, sell, assign, license, sublicense, covenant not to assert, encumber, subject to a lien (other than a permitted lien), abandon, allow to lapse, or otherwise dispose of, any right, title or interest in the intellectual property owned by Ginkgo or its subsidiaries (other than non-exclusive licenses to intellectual property owned by Ginkgo or its subsidiaries granted in the ordinary course of business, exclusive licenses to customers with respect to intellectual property developed for or utilized by such customers pursuant to agreements entered in the ordinary course of business or intellectual property owned by Ginkgo or its subsidiaries abandoned in the ordinary course of business consistent with past practice in Ginkgo’s reasonable business judgment); (ii) waive or cancel any rights in the intellectual property owned by Ginkgo or its subsidiaries or any other intellectual property used by Ginkgo or its subsidiaries; (iii) disclose any trade secrets to any third party that is not subject to a confidentiality agreement; or (iv) subject any source code for any Ginkgo software to any copyleft license; or

 

   

enter into any agreement to take any action prohibited under the foregoing.

Conduct of SRNG Prior to the Completion of the Business Combination

SRNG has agreed to a more limited set of restrictions on its business prior to the effective time of the Business Combination. Other than the general covenants pursuant to which SRNG will use reasonable best efforts to operate its business in the ordinary course and consistent with past practice, SRNG has agreed that prior to the effective time of the Business Combination, except as expressly contemplated by the Business Combination, it will not:

 

   

amend, restate, supplement or otherwise modify or waive any provision of (or seek any approval from the shareholders of SRNG to amend, restate, supplement or otherwise modify or waive any provision of) (i) the Investment Management Trust Agreement, dated as of February 23, 2021, between SRNG and Continental Stock Transfer & Trust Company, (ii) SRNG warrants, (iii) the Warrant Agreement, dated as of February 23, 2021, between SRNG and Continental Stock Transfer & Trust Company (the “Warrant Agreement”) or (iv) its or its subsidiaries’ governing documents, except as contemplated in the Merger Agreement;

 

   

(i) pay, make, declare or set aside any dividend or distribution in respect of any equity security of SRNG or Merger Sub, (ii) split, combine, reclassify or otherwise amend or modify any terms of any equity security of SRNG or Merger Sub or (iii) purchase, repurchase, redeem or otherwise acquire (or offer to purchase, repurchase, redeem or otherwise acquire) any issued and outstanding security of SRNG or Merger Sub, other than to provide eligible SRNG shareholders with the opportunity to effect certain share redemptions as required by SRNG’s governing documents;

 

   

(i) make or change any material election in respect of taxes, (ii) amend, modify or otherwise change any filed material tax return, (iii) adopt or request permission of any taxing authority to change any

 

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accounting method in respect of material taxes, (iv) enter into any closing agreement in respect of material taxes or enter into any tax sharing or similar agreement (other than customary commercial contracts entered into in the ordinary course of business not primarily related to taxes), (v) settle any claim or assessment in respect of taxes, (vi) surrender or allow to expire any right to claim a refund of material taxes; or (vii) consent to any extension or waiver of the limitation period applicable to any claim or assessment in respect of material taxes or in respect of any material tax attribute that would reasonably be expected to give rise to any claim or assessment of taxes;

 

   

take any action, or knowingly fail to take any action, where such action or failure to act could reasonably be expected to prevent the Business Combination from qualifying as a “reorganization” within the meaning of Section 368(a) of the Internal Revenue Code of 1986 and other regulations promulgated by the United States Department of the Treasury;

 

   

enter into, renew, terminate, amend, restate, supplement or otherwise modify or waive any provision of any transaction or contract with any of SRNG’s or Merger Sub’s affiliates, insiders or any person or entity in which Sponsor has a direct or indirect legal, contractual or beneficial ownership interest of 5% or greater;

 

   

other than SRNG’s transaction expenses, incur, assume or otherwise become liable for (whether directly or indirectly, absolutely or contingently or otherwise) any indebtedness or liability or guarantee any indebtedness or liability of another person or entity, or issue or sell any debt securities or warrants or other rights to acquire any debt securities of SRNG or Merger Sub or guarantee any debt securities of another entity, other than indebtedness for borrowed money incurred in the ordinary course of business consistent with past practice and not exceeding $100,000 in the aggregate;

 

   

(i) issue any equity securities of SRNG, other than the issuance of the aggregate equity value consideration and the issuance of the aggregate earn-out value consideration, (ii) grant any options, warrants or other equity-based awards with respect to equity securities of SRNG not outstanding on the date of the Merger Agreement or (iii) amend, modify or waive any of the material terms or rights set forth in any SRNG warrants, including any amendment, modification or reduction of the warrant price set forth therein; or

 

   

enter into any agreement to take any action prohibited under the foregoing.

HSR Act and Regulatory Approvals

Ginkgo and SRNG have agreed to comply promptly but in no event later than 10 business days after the date of the Merger Agreement with the notification and reporting requirements of the HSR Act. Ginkgo and SRNG have agreed to substantially comply with any information or document requests by any antitrust authorities pursuant to the HSR Act.

Ginkgo and SRNG have agreed to request early termination of any waiting period under the HSR Act and exercise its reasonable best efforts to (i) obtain termination or expiration of the waiting period under the HSR Act and (ii) prevent the entry, in any action brought by an antitrust authority or any other entity, of any governmental order which would prohibit, make unlawful or delay the consummation of the transactions contemplated in the Merger Agreement.

Ginkgo and SRNG have agreed to cooperate in good faith with governmental authorities and use their respective reasonable best efforts to undertake promptly any and all action required to complete lawfully the transactions contemplated by the Merger Agreement as soon as practicable (but in any event prior to the Outside Deadline) and any and all action necessary or advisable to avoid, prevent, eliminate or remove the actual or threatened commencement of any proceeding in any forum by or on behalf of any governmental authority or the issuance of any governmental order that would delay, enjoin, prevent, restrain or otherwise prohibit the consummation of the Business Combination.

 

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To the extent not prohibited by law, Ginkgo and SRNG have agreed to promptly furnish to the other copies of any notices or written communications received by, them or any of their respective affiliates from any third party or governmental authority with respect to the transactions contemplated by the Merger Agreement, and Ginkgo and SRNG have agreed to permit counsel to the other an opportunity to review in advance, and Ginkgo and SRNG (respectively) have agreed to consider in good faith the views of such counsel in connection with, any proposed communications by Ginkgo and SRNG (respectively) and/or its affiliates to any governmental authority concerning the transactions contemplated by the Merger Agreement; provided, that neither party shall extend any waiting period or comparable period under the HSR Act or enter into any agreement with any governmental authority without the written consent of the other. To the extent not prohibited by law, Ginkgo and SRNG have agreed to provide the other and their respective counsel the opportunity, on reasonable advance notice, to participate in any substantive meetings or discussions, either in person or by telephone, between Ginkgo and SRNG (respectively) and/or any of its affiliates, agents or advisors, on the one hand, and any governmental authority, on the other hand, concerning or in connection with the transactions contemplated in the Merger Agreement.

Ginkgo and SRNG have each agreed to be responsible for 50% of the filing fees payable to the antitrust authorities in connection with the transactions contemplated in the Merger Agreement.

Proxy Solicitation

As promptly as practicable after the execution of the Merger Agreement, Ginkgo and SRNG have agreed (i) to jointly prepare, and SRNG will file with the SEC, mutually acceptable materials which shall include the proxy statement to be filed with the SEC as part of the registration statement and sent to the SRNG shareholders at the SRNG shareholders’ meeting, and (ii) that SRNG will prepare (with Ginkgo’s reasonable cooperation) and file with the SEC the registration statement, in which the proxy statement will be included as a prospectus (the “proxy statement/registration statement”), in connection with the registration under the Securities Act of SRNG’s common stock and warrants to be issued pursuant to its domestication in Delaware and as consideration for the Business Combination.

Ginkgo and SRNG have agreed to use its reasonable best efforts to cause the proxy statement/registration statement to comply with the rules and regulations promulgated by the SEC, to have the registration statement declared effective under the Securities Act as promptly as practicable after such filing and to keep the registration statement effective as long as is necessary to consummate the transactions contemplated in the Merger Agreement.

SRNG has agreed to use its reasonable best efforts to obtain all necessary state securities laws or “blue sky” governmental authorizations required to carry out the transactions contemplated in the Merger Agreement, and Ginkgo will furnish all information concerning itself, its subsidiaries, and any of their respective equity holders as may be reasonably requested in connection with any such action.

Ginkgo and SRNG have agreed to furnish to the other party all information concerning itself and its subsidiaries, officers, directors, managers and equity holders and information regarding such other matters as may be reasonably necessary or advisable or as may be reasonably requested in connection with the proxy statement/registration statement, a Current Report on Form 8-K pursuant to the Exchange Act in connection with the transactions contemplated by the Merger Agreement, or any other statement, filing, notice or application made by or on behalf of SRNG, Ginkgo or any of their respective subsidiaries to any governmental authority or to Nasdaq or the NYSE, as applicable, in connection with the Business Combination and the other transactions contemplated in the Merger Agreement. SRNG will cause the proxy statement/registration statement to be mailed to the SRNG shareholders promptly after the registration statement is declared effective under the Securities Act.

SRNG has further agreed to, as promptly as practicable after the registration statement is declared effective under the Securities Act, (x) cause the proxy statement to be disseminated to SRNG shareholders in compliance

 

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with applicable laws, (y) duly give notice of and convene and hold a meeting of the SRNG shareholders and (z) solicit proxies from the holders of its Cayman ordinary shares to vote in favor of each of the transaction proposals and provide SRNG shareholders with the opportunity to effect a SRNG share redemption.

Warrant Consent Solicitation

SRNG has agreed to, as promptly as practicable following the execution and delivery of the Merger Agreement, SRNG will prepare a consent solicitation in accordance with SRNG warrants, the Warrant Agreement, SRNG’s governing documents, applicable laws and Nasdaq rules, in a form approved by Ginkgo, to be delivered to the holders of SRNG warrants for the purpose of soliciting approvals or consents from such holders to effect such amendments to the Warrant Agreement in order to qualify SRNG warrants for classification as equity instruments (rather than liabilities) of SRNG from and after the effectiveness of such amendments under GAAP and other applicable accounting standards.

Ginkgo Consent Solicitation

Ginkgo has agreed to, as promptly as reasonably practicable after the registration statement becomes effective (and in any event within two (2) business days), Ginkgo will recommend and solicit approval and adoption of the Merger Agreement and the transactions contemplated therein. If Ginkgo obtains the stockholder approval, then as promptly as reasonably practicable following the receipt of the written consent, Ginkgo will prepare and deliver to its stockholders who have not consented the notice required by applicable rules.

No Solicitation

From the date of the Merger Agreement to the earlier of the Closing or the valid termination of the Merger Agreement, Ginkgo will not, and will cause its subsidiaries not to, and will instruct and use reasonable best efforts to cause its and their respective representatives not to, (a) initiate, solicit, enter into or continue discussions, negotiations or transactions with, or respond to any inquiries or proposals by, any person or entity with respect to, or provide any non-public information or data concerning Ginkgo or any of Ginkgo’s subsidiaries to any person or entity relating to, any acquisition proposal or afford to any person or entity access to the business, properties, assets, information or personnel of Ginkgo or any of Ginkgo’s subsidiaries in connection with an acquisition proposal, (b) enter into any acquisition agreement, merger agreement or similar definitive agreement, or any letter of intent, memorandum of understanding or agreement in principle, or any other agreement relating to an acquisition proposal, (c) grant any waiver, amendment or release under any confidentiality agreement or the anti-takeover laws of any state for purposes of facilitating an acquisition proposal, (d) otherwise knowingly encourage or facilitate any such inquiries, proposals, discussions, or negotiations or any effort or attempt by any person to make an acquisition proposal, or (e) resolve or agree to do any of the foregoing.

Ginkgo will promptly (and in any event within two (2) business days after receipt thereof) notify, SRNG in writing of the receipt of any inquiry, proposal, offer or request for information received after the date of the Merger Agreement that constitutes an acquisition proposal and keep SRNG reasonably informed of any material developments with respect to any such inquiry, proposal, offer, request for information or acquisition proposal (including any material changes thereto).

SRNG Exclusivity

From the date of the Merger Agreement to the earlier of the Closing or the valid termination of the Merger Agreement, SRNG will not, and shall cause its subsidiaries not to, and will instruct and use reasonable best efforts to cause its and their respective representatives, not to, (i) make any proposal or offer that constitutes a business combination proposal, (ii) initiate, solicit, enter into or continue discussions, negotiations or transactions with, or encourage or respond to any inquiries or proposals by, any person with respect to a business combination

 

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proposal, or (iii) enter into any acquisition agreement, business combination, merger agreement or similar definitive agreement, or any letter of intent, memorandum of understanding or agreement in principle, or any other agreement relating to a business combination proposal, in each case, other than to or with Ginkgo and its representatives.

From and after the date of the Merger Agreement, SRNG will, and will instruct its officers and directors to, and SRNG shall instruct and cause its representatives, its affiliates and their respective representatives to, immediately cease and terminate all discussions and negotiations with any persons that may be ongoing with respect to a business combination proposal (other than Ginkgo and its representatives).

The Listing

Prior to the Closing, SRNG will use reasonable best efforts to cause SRNG’s common stock to be issued in connection with the transactions contemplated by the Merger Agreement to be approved for listing on the Nasdaq or the NYSE, as elected by Ginkgo, prior to the Closing under a ticker symbol to be selected by Ginkgo, including by submitting prior to the Closing an initial listing application (the “Listing Application”) with the Nasdaq or the NYSE, as applicable, with respect to such Acquiror Delaware Class A common stock. SRNG and Ginkgo will promptly furnish all information concerning itself and its affiliates as may be reasonably requested by the other such party and will otherwise reasonably assist and cooperate with the other such party in connection with the preparation and filing of the initial Listing Application. From the date of the Merger Agreement to the earlier of the Closing or the valid termination of the Merger Agreement, SRNG has agreed to maintain its listing on the Nasdaq.

Indemnification of Directors and Officers

From and after the effective time of the Business Combination, SRNG agrees that it will indemnify and hold harmless each present and former director and officer of (i) Ginkgo and each of its subsidiaries (in each case, solely to the extent acting in their capacity as such and to the extent such activities are related to the business of Ginkgo being acquired under the Merger Agreement) and (ii) SRNG and each of its subsidiaries against any costs or expenses (including reasonable attorneys’ fees), judgments, fines, losses, claims, damages or liabilities incurred in connection with any action, whether civil, criminal, administrative or investigative, arising out of or pertaining to matters existing or occurring at or prior to the effective time of the Business Combination, whether asserted or claimed prior to, at or after the effective time of the Business Combination, to the fullest extent Ginkgo, SRNG or any of their respective subsidiaries, would have been permitted under applicable laws and its governing documents in effect on the date of the Merger Agreement to indemnify such parties listed above. Without limiting the foregoing, SRNG will, and will cause its subsidiaries to (i) maintain for a period of not less than six (6) years following the closing date of the Business Combination provisions in its governing documents concerning the indemnification, exoneration and exculpation (including provisions relating to expense advancement) of SRNG’s and its subsidiaries’ former and current officers, directors, employees, and agents that are no less favorable to those persons than the provisions of the governing documents of Ginkgo, SRNG or their respective subsidiaries, as applicable, in each case, as in effect on the date of the Merger Agreement and (ii) not amend, repeal or otherwise modify such provisions in any respect that would adversely affect the rights of those persons thereunder, in each case, except as required by law. SRNG will assume, and be liable for, each of these covenants.

For a period of six years following the closing date of the Business Combination, SRNG will maintain in effect directors’ and officers’ liability insurance covering those persons who are currently covered by SRNG’s, Ginkgo’s or any of their respective subsidiaries’ directors’ and officers’ liability insurance policies on terms substantially the same as (and in any event not less favorable in the aggregate than) the terms of such current insurance coverage, except that in no event will SRNG be required to pay an annual premium for such insurance in excess of 300% of the aggregate annual premium payable by SRNG or Ginkgo, as applicable, for such insurance policy for the year ended December 31, 2021.

 

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Other Covenants and Agreements

The Merger Agreement contains other covenants and agreements, including covenants related to:

 

   

Ginkgo providing, subject to certain specified restrictions and conditions, to SRNG and its respective representatives reasonable access to Ginkgo’s and its subsidiaries’ properties, books, contracts, tax returns, records and appropriate officers and employees;

 

   

Ginkgo waiving claims to the Trust Account in the event that the Business Combination does not consummate;

 

   

SRNG and Ginkgo agreeing to take all actions necessary or appropriate to cause appointments of (i) certain directors to the New Ginkgo Board and (ii) certain officers of New Ginkgo;

 

   

SRNG keeping current and timely filing all reports required to be filed or furnished with the SEC and otherwise complying in all material respects with its reporting obligations under applicable laws;

 

   

SRNG taking all steps as may be required to cause any acquisition or disposition of any equity security of SRNG that occurs or is deemed to occur by reason of the transactions contemplated by the Merger Agreement by each individual who is or may become subject to the reporting requires of Section 16(a) of the Exchange Act in connection with the transactions contemplated by the Merger Agreement to be exempt under Rule 16b-3 promulgated under the Exchange Act, including by taking steps in accordance with the No-Action Letter, dated January 12, 1999, issued by the SEC regarding such matters;

 

   

cooperation between Ginkgo and SRNG in obtaining any material third-party consents and approvals required to consummate the Business Combination;

 

   

agreement relating to the intended tax treatment of the transactions contemplated by the Merger Agreement; and

 

   

confidentiality and publicity relating to the Merger Agreement and the transactions contemplated thereby.

Representations and Warranties

The Merger Agreement contains representations and warranties made by Ginkgo to SRNG relating to a number of matters, including the following:

 

   

corporate organization, qualification to do business, good standing and corporate power;

 

   

subsidiaries;

 

   

requisite corporate authority to enter into the Merger Agreement and to complete the contemplated transactions;

 

   

absence of conflicts with organizational documents, applicable laws or certain agreements and instruments as a result of entering into the Merger Agreement or consummating the Business Combination;

 

   

required governmental and regulatory consents necessary in connection with the Business Combination;

 

   

capitalization of Ginkgo and its subsidiaries;

 

   

financial statements;

 

   

absence of undisclosed liabilities;

 

   

absence of a material adverse effect since December 31, 2020;

 

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legal proceedings and absence of governmental orders;

 

   

compliance with applicable law;

 

   

material contracts;

 

   

employee compensation and benefits matters;

 

   

labor matters;

 

   

tax matters;

 

   

broker’s and finder’s fees related to the Business Combination;

 

   

insurance;

 

   

licenses;

 

   

equipment and tangible property;

 

   

real property;

 

   

intellectual property and information technology systems;

 

   

privacy and cybersecurity;

 

   

environmental matters;

 

   

anti-corruption and anti-money laundering compliance;

 

   

sanctions and international trade compliance;

 

   

information supplied for inclusion in the Proxy Statement/Registration Statement;

 

   

top customers;

 

   

top vendors;

 

   

sufficiency of assets;

 

   

related party transactions; and

 

   

Investment Company Act.

Certain of these representations and warranties are qualified as to “materiality” or “material adverse effect.” For purposes of the Merger Agreement, a “material adverse effect” with respect to Ginkgo means any event, state of facts, development, circumstance, occurrence or effect that has had or would reasonably be expected to have, individually or in the aggregate, a material adverse effect on the results of the operations or financial condition of the Company and its Subsidiaries, taken as a whole; provided, however, that in no event will any of the following, alone or in combination, be deemed to constitute, or be taken into account in determining whether there has been or would be, a “material adverse effect”: (a) any change or proposed change in applicable laws or GAAP or any interpretation thereof, (b) any change in interest rates or economic, political, business, financial, commodity, currency or market conditions generally, (c) the taking or omission of any action required by or expressly and affirmatively permitted by this Agreement or any ancillary agreement or with the written consent of SRNG, (d) any natural disaster (including hurricanes, storms, tornados, flooding, tsunamis, earthquakes, mudslides, wildfires, volcanic eruptions or similar occurrences), pandemic or epidemic or other public health crisis (including COVID-19), “force majeure” event or calamity (whether or not caused by any Person), state of emergency declared by any governmental authority, change in climate or weather conditions, or any action (including the issuance of any directive, pronouncement or guideline) by any governmental authority or self-regulatory organization in response to any of the foregoing (or change in any such action previously taken), (e) any act of terrorism, war, outbreak or escalation of hostilities, commencement or escalation of military action, act of mass protest or state of civil unrest, or any action (including the issuance of any directive, pronouncement

 

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or guideline) by any governmental authority or self-regulatory organization in response to any of the foregoing (or change in any such action previously taken), (f) municipal, state, national or international political conditions, (g) any failure of Ginkgo, to meet any projection, forecast or budget (provided that this clause (g) shall not prevent a determination that any event not otherwise excluded from this definition of Company Material Adverse Effect underlying such failure constitutes a company material adverse effect with respect to Ginkgo), (h) any event generally affecting the industries or markets in which Ginkgo or any of its subsidiaries operates (including increases in the cost of products, supplies, materials or other goods or labor or other services), (i) the announcement or performance of the Merger Agreement or any ancillary agreement or the consummation of any of the transactions contemplated thereby, including, as a result thereof, any termination of, reduction in or other adverse impact on relationships, contractual or otherwise, with any lessor, lessee, licensor, licensee, customer, distributor, vendor, supplier, partner, employee or other service provider or other business relation of Ginkgo or any of its subsidiaries, (j) any Liability or Action to the extent expressly described in Ginkgo’s disclosure letter, (k) any action taken by, or at the request of, SRNG, the Sponsor or any of their respective affiliates; provided, further, that any event referred to in any of the foregoing clauses (a), (b), (d), (e), (f) and (h) may be taken into account in determining whether a material adverse effect has occurred to the extent that it has a disproportionate and adverse effect on the results of operations or financial condition of Ginkgo and its subsidiaries, taken as a whole, relative to companies in the industry in which Ginkgo and its subsidiaries conduct their respective operations, but only to the extent of the incremental disproportionate effect on Ginkgo and its subsidiaries, taken as a whole, relative to companies in the industry in which Ginkgo and its subsidiaries conduct their respective operations.

The Merger Agreement also contains representations and warranties made by SRNG and Merger Sub to Ginkgo relating to a number of matters, including the following:

 

   

corporate organization, qualification to do business, good standing and corporate power;

 

   

requisite corporate authority to enter into the Merger Agreement and to complete the contemplated transactions;

 

   

absence of conflicts with governing documents, applicable laws or certain agreements and instruments as a result of entering into the Merger Agreement or consummate the Business Combination;

 

   

required governmental and regulatory consents necessary in connection with the Business Combination;

 

   

absence of legal proceedings and governmental orders;

 

   

filing of documents with the SEC, compliance with the applicable requirements of the Securities Act, the Exchange Act, the Sarbanes-Oxley Act and other securities laws, the accuracy of information contained in the documents filed with the SEC;

 

   

internal controls, listing, financial statements;

 

   

undisclosed liabilities;

 

   

absence of material adverse effect since December 31, 2020;

 

   

Trust Account;

 

   

Investment Company Act, Jumpstart Our Business Startups Act;

 

   

capitalization;

 

   

PIPE investment;

 

   

broker’s and finder’s fees related to the Business Combination;

 

   

indebtedness and SPAC expenses;

 

   

tax matters;

 

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business activities; absence of operations;

 

   

the Nasdaq stock market quotation;

 

   

registration statement, proxy statement and Proxy Statement/Registration Statement;

 

   

no additional representations and warranties;

The representations and warranties in the Merger Agreement do not survive the effective time of the Business Combination and, as described below under “—Termination”, if the Merger Agreement is validly terminated, there will be no liability under the representations and warranties of the parties, or otherwise under the Merger Agreement, unless a party willfully breached the Merger Agreement prior to such termination.

This summary and the copy of the Merger Agreement attached to this proxy statement/Prospectus as Annex A are included solely to provide investors with information regarding the terms of the Merger Agreement. They are not intended to provide factual information about the parties or any of their respective subsidiaries or affiliates. The Merger Agreement contains representations and warranties by SRNG, Merger Sub and Ginkgo, which were made only for purposes of that agreement and as of specific dates set forth therein. The representations, warranties and covenants in the Merger Agreement were made solely for the benefit of the parties to the Merger Agreement, may be subject to limitations agreed upon by the contracting parties, including being qualified by confidential disclosures made for the purposes of allocating contractual risk between the parties to the Merger Agreement instead of establishing these matters as facts, and may be subject to standards of materiality applicable to the contracting parties that differ from those generally applicable to investors. Investors are not third-party beneficiaries under the Merger Agreement, and in reviewing the representations, warranties and covenants contained in the Merger Agreement or any descriptions thereof in this summary, it is important to bear in mind that such representations, warranties and covenants or any descriptions thereof were not intended by the parties to the Merger Agreement to be characterizations of the actual state of facts or condition of SRNG, Ginkgo or any of their respective subsidiaries or affiliates. Moreover, information concerning the subject matter of the representations, warranties and covenants may change after the date of the Merger Agreement, which subsequent information may or may not be fully reflected in public disclosures.

Conditions to Closing

The completion of the Business Combination is subject to various conditions. There can be no assurance as to whether or when all of the conditions will be satisfied or waived.

Conditions to Each Party’s Obligations

The obligations of the parties to consummate, or cause to be consummated, the Business Combination are subject to the satisfaction of the following conditions, any one or more of which may be waived (if legally permitted) in writing by all of such parties:

 

   

SRNG Shareholder Approval. The adoption and approval by SRNG shareholders of the Merger Agreement, the Business Combination and other proposals set forth in this Proxy Statement/Prospectus.

 

   

Ginkgo Stockholder Approval. The adoption and approval by Ginkgo stockholders of the Merger Agreement, the Business Combination and other proposals set forth in this proxy statement/prospectus.

 

   

Registration Statement. The Registration Statement shall have been declared effective under the Securities Act, no stop order suspending the effectiveness of the Registration Statement shall have been issued by the SEC which remains in effect and no proceeding seeking such a stop order shall have been initiated by the SEC which remains pending.

 

   

HSR Act. The applicable waiting period under the HSR Act in respect of the Business Combination shall have expired or been terminated.

 

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No Prohibition. There shall not be in effect any governmental order or other law from any governmental authority of competent jurisdiction that enjoins, prohibits or makes illegal the consummation of the Business Combination or any other transaction contemplated in the Merger Agreement.

 

   

Net Tangible Assets. SRNG shall have, and shall not have redeemed its Class A ordinary shares in an amount that would cause SRNG not to have, at least $5,000,001 of net tangible assets (as determined in accordance with Rule 3a51-1(g)(1) under the Exchange Act) after giving effect to any payments required to be made in connection with SRNG’s share redemptions and the PIPE investment amount.

 

   

Listing. New Ginkgo’s Class A common stock to be issued in connection with the transactions contemplated by the Merger Agreement shall have been approved for listing on Nasdaq or the NYSE, as elected by Ginkgo, subject only to official notice of issuance thereof.

Additional Conditions to the Obligations of SRNG and Merger Sub

The obligations of SRNG and Merger Sub to consummate, or cause to be consummated, the Business Combination are subject to the satisfaction of the following additional conditions, any one or more of which may be waived in writing by SRNG:

 

   

Representations and Warranties.

 

   

Certain representations and warranties of Ginkgo regarding capitalization of Ginkgo shall be true and correct (disregarding any limitation or exception as to “materiality” or “material adverse effect” or any similar limitations set forth therein) in all but de minimis respects as of the Closing as though then made (except to the extent any such representation and warranty expressly speaks as of an earlier time, in which case such representation or warranty shall be true and correct (disregarding any limitation or exception as to “materiality” or “material adverse effect” or any similar qualification set forth therein) in all but de minimis respects as of such earlier date).

 

   

Each of the representations and warranties of Ginkgo regarding organization, due authorization, no conflicts, capitalization (other than stated above), subsidiaries and broker’s fees shall be true and correct (disregarding any limitation or exception as to “materiality” or “material adverse effect” or any similar limitations set forth therein) in all material respects as of the Closing as though then made, except to the extent that any such representation or warranty expressly speaks as of an earlier time, in which case such representation or warranty shall be true and correct (disregarding any limitation or exception as to “materiality” or “material adverse effect” or any similar qualification set forth therein) in all material respects as of such earlier time.

 

   

The representations and warranties of Ginkgo regarding the absence of a material adverse effect, shall be true and correct in all respects as of the Closing date as though then made.

 

   

All of the other representations and warranties of Ginkgo shall be true and correct (without giving any effect to any limitation as to “materiality” or “material adverse effect” or any similar limitation set forth therein) as of the Closing as though then made (except to the extent any such representation and warranty expressly relate to an earlier date, and in such case, shall be true and correct (disregarding any limitation or exception as to “materiality” or “material adverse effect” or any similar limitations set forth therein) on and as of such earlier date), except, in either case, where the failure of such representations and warranties to be so true and correct does not constitute a material adverse effect.

 

   

Agreements and Covenants. All agreements and covenants of Ginkgo required under the Merger Agreement to be performed or complied with as of or prior to the Closing shall have been performed or complied with in all material respects.

 

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Material Adverse Effect. There shall not have occurred any material adverse effect with respect to Ginkgo after the date of the Merger Agreement.

 

   

Officer’s Certificate. Ginkgo shall have delivered to SRNG a certificate signed by an officer of Ginkgo, dated as of the Closing Date, certifying that, to the knowledge and belief of such officer, the conditions relating to the accuracy of Ginkgo’s representations and warranties, the performance or compliance of Ginkgo’s agreements and covenants under the Merger Agreement and the absence of any material adverse effect with respect to Ginkgo after the date of the Merger Agreement have been satisfied.

Additional Conditions to the Obligations of Ginkgo

The obligations of Ginkgo to consummate the Business Combination is subject to the satisfaction of the following additional conditions, any one or more of which may be waived in writing by Ginkgo:

 

   

Representations and Warranties.

 

   

Each of the representations and warranties of SRNG and Merger Sub contained in the Merger Agreement (other than the representations and warranties related to capitalization of SRNG and Merger Sub) (without giving effect to any limitation as to “materiality”, “material adverse effect” or any similar limitation set forth therein) shall be true and correct in all material respects as of the Closing, as then made, except to the extent that any such representation or warranty expressly speaks as of an earlier time, in which case such representation or warranty shall be true and correct (disregarding any limitation or exception as to materiality, material adverse effect or similar qualification set forth therein) in all material respects as of such earlier time.

 

   

The representations and warranties of SRNG and Merger Sub regarding the capitalization of SRNG and Merger Sub shall be true and correct in all but de minimis respects as of the date of the Closing.

 

   

Agreements and Covenants. All agreements and covenants of SRNG and Merger Sub required under the Merger Agreement to be performed or complied with as of or prior to the Closing shall have been performed or complied with in all material respects.

 

   

Officer’s Certificate. SRNG and Merger Sub shall have delivered to Ginkgo a certificate signed by an officer of SRNG and an officer of Merger Sub, dated the Closing Date, certifying that, to the knowledge and belief of such officer, the conditions relating to the accuracy of SRNG’s and Merger Sub’s representations and warranties and the performance or compliance of Ginkgo’s agreements and covenants under the Merger Agreement have been satisfied.

 

   

Minimum Cash Condition. The aggregate cash available to SRNG at the closing of the Business Combination from the Trust Account (after giving effect to the redemption of SRNG Class A ordinary shares in connection with the offer of redemption made to its shareholders, but before giving effect to the payment of the outstanding transaction expenses of SRNG and Ginkgo) and the PIPE investment shall not be less than $1,250,000,000.

 

   

Domestication. The Domestication shall have been completed and a time-stamped copy of the certificate of Domestication issued by the Secretary of State of the State of Delaware shall have been delivered to Ginkgo.

 

   

New Ginkgo Board. SRNG shall have delivered to Ginkgo evidence reasonably acceptable to Ginkgo that the New Ginkgo Board will be constituted, immediately after Closing as provided in the Merger Agreement.

 

   

Registration Rights Agreement. SRNG and Sponsor shall have duly executed and delivered a counterpart of the Registration Rights Agreement to the other parties thereto.

 

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Termination

Mutual Termination Rights

The Merger Agreement may be terminated and the transactions contemplated thereby abandoned by:

 

   

mutual written consent of SRNG and Ginkgo;

 

   

either Ginkgo or SRNG if any governmental authority of competent jurisdiction has enacted, issued, promulgated, enforced or entered any governmental order or other law which has become final and non-appealable and remains in effect and has the effect of making the consummation of the Business Combination or any other transaction contemplated in the Merger Agreement illegal or otherwise permanently preventing or prohibiting the consummation of the Merger or such other transaction; provided that the right to terminate the Merger Agreement will not be available to Ginkgo or SRNG if such party’s breach of any of its obligations under the Merger Agreement is the primary cause of the existence or occurrence of any fact or circumstance but for the existence or occurrence of which the consummation of the Business Combination or such other transaction would not be illegal or otherwise permanently prevented or prohibited;

 

   

either Ginkgo or SRNG if the Closing has not occurred before 5:00 p.m., Eastern Time, on November 11, 2021; provided that (i) if any action for specific performance or other equitable relief by Ginkgo with respect to the Merger Agreement or any ancillary agreement or any of the transactions contemplated thereby is pending in the Delaware Court of Chancery of the United States District Court for the District of Delaware as of the Outside Deadline, then the Outside Deadline shall be automatically extended until 5:00 p.m., Eastern Time, on the date that is the earlier of (x) 30 days after the date on which a final, non-appealable governmental order has been entered with respect to such action and (y) August 26, 2023, and such extended time shall be the “Outside Deadline” for all purposes under this Agreement, and (ii) the right to terminate the Merger Agreement pursuant to this bullet shall not be available to Ginkgo or SRNG if such party’s breach of any of its obligations under the Merger Agreement is the primary cause of the failure of the Closing to have occurred before the Outside Deadline; or

 

   

either Ginkgo or SRNG if the required approval of SRNG shareholders is not obtained at SRNG’s Special Meeting (subject to any adjournment or postponement of SRNG’s Special Meeting in accordance with the Merger Agreement).

Termination Rights of Ginkgo

The Merger Agreement may be terminated by Ginkgo and the transactions contemplated thereby abandoned if:

 

   

any of SRNG’s or Merger Sub’s representations or warranties has failed to be true and correct or if Acquiror or Merger Sub has failed to perform or comply with any covenant or agreements set forth in the Merger Agreement such that certain conditions would not be satisfied at the Closing, and (A) such failure, by its nature, could not be cured prior to the Outside Deadline through SRNG’s exercise of its reasonable best efforts or (B) such failure has not been cured by the earlier of (x) the date that is 30 days after the date on which Ginkgo has first notified SRNG in writing of such failure (or such earlier time after SRNG’s receipt of such notice as SRNG has ceased to use reasonable best efforts to cure such failure) and (y) the Outside Deadline; provided that the right to terminate the Merger Agreement under this bullet will not be available to Ginkgo at any time at which SRNG would have the ability to terminate the Merger Agreement pursuant to its corresponding termination right described below; or

 

   

there has been any withdrawal, amendment, qualification or modification of the SRNG Board’s recommendation to the SRNG shareholders that they vote in favor of the adoption of the Merger

 

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Agreement, the approval of the Business Combination and the other proposals described in this proxy statement/prospectus, or certain other actions of the SRNG Board in furtherance of the transactions contemplated by the Merger Agreement.

Termination Rights of SRNG

The Merger Agreement may be terminated by SRNG and the transactions contemplated thereby abandoned if:

 

   

any of Ginkgo’s representations or warranties has failed to be true and correct or if Ginkgo has failed to perform or comply with any covenant or agreements set forth in the Merger Agreement such that certain conditions would not be satisfied at the Closing, and such failure (A) has not been cured by the earlier of (x) the date that is 30 days after the date on which SRNG has first notified Ginkgo in writing of such failure and (y) the Outside Deadline or (B) by its nature cannot be cured prior to the Outside Deadline through exercise of its reasonable efforts; provided that the right to terminate this Agreement under this bullet will not be available to SRNG at any time at which Ginkgo would have the ability to terminate the Merger Agreement pursuant to its corresponding termination right described above; or

 

   

Ginkgo stockholder approval has not been obtained within 10 business days after the Registration Statement has been declared effective by the SEC.

Effect of Termination

If the Merger Agreement is validly terminated, the Merger Agreement will become void and have no further force or effect, without any liability on the part of any of the parties unless a party willfully breaches the Merger Agreement prior to such termination. The provisions regarding certain miscellaneous matters shall survive any termination of the Merger Agreement and shall remain legal, valid, binding and enforceable obligations of the Parties in accordance with their respective terms.

Amendment

The Merger Agreement may be amended or modified, in whole or in part, only by a duly agreement in writing which makes reference to the Merger Agreement and has been duly authorized, executed and delivered by each of the parties to the Merger Agreement; provided that, after the Closing, any such amendment or modification shall also require the written consent of the holders of a majority of the shares of New Ginkgo class B common stock. Any purported amendment or modification of this Agreement effected in a manner that does not comply with the preceding sentence shall be void and of no effect.

Specific Performance

The parties to the Merger Agreement agree that they shall be entitled to an injunction or injunctions to prevent breaches of the Merger Agreement and to specific enforcement of the terms and provisions of the Merger Agreement, in addition to any other remedy to which any party is entitled at law or in equity.

 

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ANCILLARY AGREEMENTS RELATED TO THE BUSINESS COMBINATION

Subscription Agreements

SRNG entered into subscription agreements (the “Subscription Agreements”), each dated as of May 11, 2021, with certain accredited investors, including an affiliate of the Sponsor, pursuant to which, among other things, the Company agreed to issue and sell, in private placements to close immediately prior to the Closing, an aggregate of 77,500,000 shares of New SRNG Class A common stock for $10.00 per share, including 7,500,000 shares of New SRNG Class A common stock to an affiliate of the Sponsor (the “PIPE Investment Amount”).

Company Stockholder Support Agreements

In connection with the execution of the Merger Agreement, certain Ginkgo stockholders (the “Ginkgo Supporting Stockholders”) entered into stockholder support agreements with SRNG and Merger Sub (the “Ginkgo Stockholder Support Agreements”). Under the Ginkgo Stockholder Support Agreements, each Ginkgo Supporting Stockholder agreed to execute and deliver, within two business days after receiving notice from SRNG or Ginkgo that the SEC has declared the registration statement effective, a written consent with respect to the outstanding shares of Ginkgo common stock and preferred stock held by such Ginkgo Supporting Stockholder adopting the Merger Agreement and approving the Business Combination and the recapitalization transaction in connection with the Business Combination. The shares of Ginkgo common stock and preferred stock that are owned by the Ginkgo Supporting Stockholders and subject to the Ginkgo Stockholder Support Agreements represent approximately 90% of the outstanding voting power of Ginkgo common stock and preferred stock (on an as converted basis) and represent the requisite votes required to adopt the Merger Agreement and approve the Business Combination and the recapitalization transaction in connection with the Business Combination. In addition, the Ginkgo Stockholder Support Agreements prohibit the Ginkgo Supporting Stockholders from engaging in activities that have the effect of soliciting a competing acquisition proposal.

Sponsor Support Agreement

In connection with the execution of the Merger Agreement, the Sponsor entered into an Agreement (the “Sponsor Support Agreement”) with Ginkgo and SRNG pursuant to which the Sponsor agreed, among other things, to vote all SRNG ordinary shares beneficially owned by the Sponsor in favor of each of the transaction proposals (including the proposals set forth in this proxy statement/prospectus) in connection with the Business Combination at any SRNG shareholder meeting, to use commercially reasonable efforts to take all actions reasonably necessary to consummate the Business Combination and to not take any action that would reasonably be expected to materially delay or prevent the satisfaction of the conditions to the Business Combination set forth in the Merger Agreement.

The Sponsor Support Agreement provides that the Sponsor will not redeem any SRNG ordinary shares and will not commence or participate in, and will take all actions necessary to opt out of any class in any class action with respect to, any action, derivative or otherwise, against SRNG, Ginkgo, any of their respective related persons, relating to the negotiation, execution or delivery of the Merger Agreement or any of the transactions contemplated in the Merger Agreement.

If the SRNG shareholders’ redemption of SRNG Class A ordinary shares in connection with the Business Combination (“Shareholder Redemption”) is in the amount of no greater than $387.5 million, the Sponsor will initially receive a number of shares of New Ginkgo Class A common stock equal to 70% of the SRNG Class B ordinary shares it owns prior to the Closing, or 30,082,500 shares (the “Upfront Shares”). If the Shareholder Redemption is in an amount of greater than $387.5 million, the Upfront Shares initially received by the Sponsor in connection with the Business Combination will be further reduced by a “Restructured Amount,” which is equal to the total number of Class B ordinary shares held by the Sponsor immediately prior to the Closing (which is 42,975,000 shares) multiplied by a percentage, the numerator of which is the dollar amount of the Shareholder

 

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Redemption as offset by the amount of certain incremental proceeds (if any) raised by SRNG outside of the PIPE Investment and the denominator of which is the sum of SRNG’s trust account balance (before giving effect to the Shareholder Redemption) and the aggregate gross proceeds of the PIPE Investment received by SRNG prior to or at the Closing.

In connection with the Business Combination, a number of the Sponsor Shares equal to the difference between 30% of the number of Class B ordinary shares held by the Sponsor prior the Closing (or 12,892,500 shares), minus the excess (if any) of the Restructured Amount over the Upfront Shares, plus 25% of the Restructured Amount, will be converted into earn-out shares that will be subject to vesting conditions (the “Sponsor Earn-Out Shares”). The Sponsor Earn-out Shares are divided into four equal tranches that will vest in accordance with the same milestones applicable to the Seller Earn-out Shares described above under the section “Merger Agreement.”

The Sponsor also agreed that, at the Closing, it will forfeit 10% of the private place warrants it holds immediately prior to the Closing and that, contingent upon the Closing, it will waive any anti-dilution right pursuant to the organizational documents of SRNG.

Registration Rights Agreement

In connection with the Closing, SRNG will enter into an Amended and Restated Registration Rights Agreement among New Ginkgo, Sponsor and certain former stockholders of Ginkgo (“New Ginkgo Holders”). Pursuant to the Registration Rights Agreement, New Ginkgo will be required to register for resale securities held by the stockholders party thereto on the terms and subject to the conditions set forth therein. In the event that any New Ginkgo Holder holds registrable securities that are not registered for resale, New Ginkgo shall only be required to update the registration statement at the request of the Sponsor or a New Ginkgo Holder twice per calendar year for each of the Sponsor and New Ginkgo Holders. The New Ginkgo Holders have certain “piggyback” registration rights with respect to registrations initiated by New Ginkgo. New Ginkgo will bear the expenses incurred in connection with the filing of any registration statements pursuant to the Registration Rights Agreement.

 

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THE DOMESTICATION PROPOSAL

Overview

In connection with the Business Combination, SRNG is asking its holders of SRNG Class B ordinary shares to approve the Domestication Proposal. Under the Merger Agreement, the approval of the Domestication Proposal is also a condition to the consummation to the Business Combination.

As a condition to closing the Business Combination, the SRNG Board has unanimously approved, and the holders of SRNG Class B ordinary shares are being asked to consider and vote upon a proposal to approve, a change of SRNG’s jurisdiction of incorporation by deregistering as a Cayman Islands exempted company and continuing and domesticating as a corporation incorporated under the laws of the State of Delaware. To effect the Domestication, SRNG will file an application to deregister with the Cayman Islands Registrar of Companies, together with the necessary accompanying documents, and file a certificate of incorporation and a certificate of corporate domestication with the Secretary of State of the State of Delaware, under which SRNG will be domesticated and continue as a Delaware corporation.

In connection with the Domestication, on the Closing Date prior to the Effective Time, each issued and outstanding SRNG Class A ordinary share will be converted, on a one-for-one basis, into a share of New SRNG Class A common stock and each issued and outstanding SRNG Class B ordinary share will be converted, on a one-for-one basis, into a share of New SRNG Class A common stock.

The Domestication Proposal, if approved, will approve a change of SRNG’s jurisdiction of incorporation from the Cayman Islands to the State of Delaware. Accordingly, while SRNG is currently incorporated as an exempted company under the Cayman Islands Companies Act, upon the Domestication, New Ginkgo will be governed by the DGCL. Additionally, if the Domestication Proposal is approved, then SRNG will also ask its shareholders to approve the Governing Documents Proposal (discussed below), which, if approved, will replace SRNG’s current memorandum and articles of association under the Cayman Islands Companies Act with a new certificate of incorporation (in the form of the Proposed Charter) and new bylaws (in the form of the Proposed Bylaws) of New Ginkgo under the DGCL. The SRNG Board encourages shareholders to carefully consult the information on the Proposed Charter and the Proposed Bylaws set out below under “Comparison of Corporate Governance and Shareholder Rights.” The Proposed Charter and the Proposed Bylaws differ in certain material respects from the Existing Governing Documents and we encourage shareholders to carefully consult the information set out below under “Advisory Governing Documents Proposals,” the Current Charter of SRNG, attached hereto as Annex G, the Proposed Charter of New Ginkgo, attached hereto as Annex B, and the Proposed Bylaws of New Ginkgo, attached hereto as Annex C.

Reasons for the Domestication

The SRNG Board believes that there are significant advantages to us that will arise as a result of a change of our domicile to Delaware. Further, the SRNG Board believes that any direct benefit that the DGCL provides to a corporation also indirectly benefits its stockholders, who are the owners of the corporation. The SRNG Board believes that there are several reasons why a reincorporation in Delaware is in the best interests of SRNG and its shareholders. As explained in more detail below, these reasons can be summarized as follows:

 

   

Prominence, Predictability, and Flexibility of Delaware Law. For many years, Delaware has followed a policy of encouraging incorporation in its state and, in furtherance of that policy, has been a leader in adopting, construing, and implementing comprehensive, flexible corporate laws responsive to the legal and business needs of corporations organized under its laws. Many corporations have chosen Delaware initially as a state of incorporation or have subsequently changed corporate domicile to Delaware. Because of Delaware’s prominence as the state of incorporation for many major corporations, both the legislature and courts in Delaware have demonstrated the ability and a willingness to act quickly and effectively to meet changing

 

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business needs. The DGCL is frequently revised and updated to accommodate changing legal and business needs and is more comprehensive, widely used and interpreted than other state corporate laws. This favorable corporate and regulatory environment is attractive to businesses such as ours.

 

   

Well-Established Principles of Corporate Governance. There is substantial judicial precedent in the Delaware courts as to the legal principles applicable to measures that may be taken by a corporation and to the conduct of a company’s board of directors, such as under the business judgment rule and other standards. Because the judicial system is based largely on legal precedents, the abundance of Delaware case law provides clarity and predictability to many areas of corporate law. We believe such clarity would be advantageous to New Ginkgo and its board of directors and management to make corporate decisions and take corporate actions with greater assurance as to the validity and consequences of those decisions and actions. Further, investors and securities professionals are generally more familiar with Delaware corporations and the laws governing such corporations, increasing their level of comfort with Delaware corporations relative to companies organized in other jurisdictions. The Delaware courts have developed considerable expertise in dealing with corporate issues, and a substantial body of case law has developed construing Delaware law and establishing public policies with respect to corporate legal affairs. Moreover, Delaware’s vast body of law on the fiduciary duties of directors provides appropriate protection for New Ginkgo’s stockholders from possible abuses by directors and officers.

 

   

Increased Ability to Attract and Retain Qualified Directors. Reincorporation from the Cayman Islands to Delaware is attractive to directors, officers, and stockholders alike. New Ginkgo’s incorporation in Delaware may make New Ginkgo more attractive to future candidates for our board of directors, because many such candidates are already familiar with Delaware corporate law from their past business experience. To date, we have not experienced difficulty in retaining directors or officers, but directors of public companies are exposed to significant potential liability. Thus, candidates’ familiarity and comfort with Delaware laws—especially those relating to director indemnification (as discussed below)—draw such qualified candidates to Delaware corporations. The SRNG Board therefore believes that providing the benefits afforded directors by Delaware law will enable New Ginkgo to compete more effectively with other public companies in the recruitment of talented and experienced directors and officers. Moreover, Delaware’s vast body of law on the fiduciary duties of directors provides appropriate protection for our stockholders from possible abuses by directors and officers.

The frequency of claims and litigation pursued against directors and officers has greatly expanded the risks facing directors and officers of corporations in carrying out their respective duties. The amount of time and money required to respond to such claims and to defend such litigation can be substantial. While both Cayman Islands and Delaware law permit a corporation to include a provision in its governing documents to reduce or eliminate the monetary liability of directors for breaches of fiduciary duty in certain circumstances, SRNG believes that, in general, Delaware law is more developed and provides more guidance than Cayman law on matters regarding a company’s ability to limit director liability. As a result, SRNG believes that the corporate environment afforded by Delaware will enable the surviving corporation to compete more effectively with other public companies in attracting and retaining new directors.

Expected Accounting Treatment of the Domestication

There will be no accounting effect or change in the carrying amount of the consolidated assets and liabilities of SRNG as a result of the Domestication. The business, capitalization, assets and liabilities and financial statements of New Ginkgo immediately following the Domestication will be the same as those of SRNG immediately prior to the Domestication.

 

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Vote Required for Approval

The approval of the Domestication Proposal requires a special resolution, being the affirmative vote of holders of a majority of at least two-thirds of the SRNG Class B ordinary shares represented in person or by proxy and entitled to vote thereon and who vote at the Special Meeting. The failure to vote, abstentions and broker non-votes will have no effect on the outcome of the proposal.

The Domestication Proposal is conditioned on the approval and adoption of each of the other condition precedent proposals.

Resolution to Be Voted Upon

The full text of the resolution to be passed is as follows:

RESOLVED, as a special resolution, that SRNG be transferred by way of continuation to Delaware pursuant to Part XII of the Companies Act (as revised) of the Cayman Islands and Section 388 of the General Corporation Law of the State of Delaware and, immediately upon being deregistered in the Cayman Islands, SRNG be continued and domesticated as a corporation under the laws of the state of Delaware.”

Recommendation of the SRNG Board

THE SRNG BOARD UNANIMOUSLY RECOMMENDS THAT SRNG SHAREHOLDERS VOTE “FOR” THE APPROVAL OF THE DOMESTICATION PROPOSAL.

The existence of financial and personal interests of one or more of SRNG’s directors may result in a conflict of interest on the part of such director(s) between what they may believe is in the best interests of SRNG and its shareholders and what they may believe is best for himself or themselves in determining to recommend that shareholders vote for the proposals. See the section entitled “The Business Combination Proposal—Interests of SRNG’s Directors and Officers and Others in the Business Combination” for a further discussion.

 

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THE GOVERNING DOCUMENTS PROPOSAL

Overview

In connection with the Business Combination, SRNG is asking its shareholders to approve the adoption of the Proposed Charter, in the form attached hereto as Annex B. If the Business Combination and the Governing Documents Proposal are approved, the Proposed Charter would replace the Current Charter.

The Governing Documents Proposal is conditioned on the approval of the Business Combination Proposal and the other condition precedent proposals. Therefore, if the Business Combination Proposal is not approved, the Governing Documents Proposal will have no effect, even if approved by the SRNG shareholders.

Comparison of Current Charter to Proposed Charter

The following is a summary of the key changes effected by the Proposed Charter relative to the Current Charter. This summary is qualified in its entirety by reference to the full text of the Proposed Charter, a copy of which is included as Annex B:

 

   

increase the total number of authorized shares of all classes of capital stock, consisting of (i) 15,800,000,000 shares of common stock, including 10,500,000,000 shares of New Ginkgo Class A common stock, par value $0.0001 per share, 4,500,000,000 shares of New Ginkgo Class B common stock, par value $0.0001 per share, and 800,000,000 shares of New Ginkgo Class C common stock, par value $0.0001 per share and (ii) 200,000,000 shares of preferred stock, par value $0.0001 per share, as opposed to the Current Charter authorizing SRNG to issue 481,000,000 capital shares, consisting of (i) 480,000,000 ordinary shares, including 400,000,000 SRNG Class A ordinary shares, par value $0.0001 per share, and 80,000,000 SRNG Class B ordinary shares, par value $0.0001 per share, and (ii) 1,000,000 preference shares, par value $0.0001 per share;

 

   

amend the terms of the shares, in particular to provide that each share of New Ginkgo Class A common stock has one vote and each share of New Ginkgo Class B common stock has 10 votes;

 

   

amend the terms for the authorizations of shares of New Ginkgo; and

 

   

eliminate certain provisions specific to SRNG’s status as a blank check company.

In addition, in connection with the consummation of the Business Combination, we intend to adopt an amendment to the Proposed Charter in order to change the corporate name of “Soaring Eagle Acquisition Corp.” to “Ginkgo Bioworks Holdings, Inc.”

Reasons for the Approval of the Governing Documents Proposal

In the judgment of the SRNG Board, the Proposed Charter and the Proposed Bylaws are necessary to address the needs of the post Business Combination company. In particular:

 

   

the greater number of authorized shares of capital stock is desirable for New Ginkgo to have sufficient shares to complete the Business Combination and have additional authorized shares for financing its business, for acquiring other businesses, for forming strategic partnerships and alliances and for stock dividends and stock splits; and

 

   

the provisions that relate to the operation of SRNG as a blank check company prior to the consummation of its initial business combination will not be applicable to New Ginkgo (such as the obligation to dissolve and liquidate if a business combination is not consummated in a certain period of time).

Vote Required for Approval

Approval of the Governing Documents Proposal requires a special resolution under Cayman Islands law, being the affirmative vote of holders of a majority of at least two-thirds of the ordinary shares represented in

 

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person or by proxy and entitled to vote thereon and who vote at the Special Meeting. The failure to vote, abstentions and broker non-votes will have no effect on the outcome of the proposal.

Resolution to Be Voted Upon

The full text of the resolution to be passed is as follows

RESOLVED, as a special resolution, that the Memorandum and Articles of Association of SRNG currently in effect be amended and restated by the deletion in their entirety and the substitution in their place of the Proposed Charter (a copy of which is attached to this proxy statement/prospectus as Annex B and the Proposed Bylaws (a copy of which is attached to this proxy statement/prospectus as Annex C), with such principal changes as described in Advisory Governing Documents Proposals A through E, with effect from the registration of SRNG in the State of Delaware as a corporation governed by the laws of the State of Delaware.”

Recommendation of the SRNG Board

THE SRNG BOARD OF DIRECTORS UNANIMOUSLY RECOMMENDS THAT SRNG SHAREHOLDERS VOTE “FOR” THE APPROVAL OF THE GOVERNING DOCUMENTS PROPOSAL.

The existence of financial and personal interests of one or more of SRNG’s directors may result in a conflict of interest on the part of such director(s) between what they may believe is in the best interests of SRNG and its shareholders and what they may believe is best for himself or themselves in determining to recommend that shareholders vote for the proposals. See the section entitled “The Business Combination Proposal—Interests of SRNG’s Directors and Officers and Others in the Business Combination” for a further discussion.

 

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THE ADVISORY GOVERNING DOCUMENTS PROPOSALS

Overview

In connection with the Business Combination, SRNG is asking its shareholders to vote, on a nonbinding advisory basis, upon proposals to approve certain governance provisions contained in the Proposed Charter and the Proposed Bylaws. This separate vote is not otherwise required by Cayman Islands law separate and apart from the Governing Documents Proposal but, pursuant to SEC guidance, SRNG is required to submit these provisions to its shareholders separately for approval, allowing shareholders the opportunity to present their separate views on important governance provisions. However, the shareholder votes regarding these proposals are advisory votes, and are not binding on SRNG or the SRNG Board (separate and apart from the approval of the Governing Documents Proposal). In the judgment of the SRNG Board, these provisions are necessary to adequately address the needs of the post-Business Combination company. Furthermore, the Business Combination is not conditioned on the separate approval of the Advisory Governing Documents Proposals (separate and apart from approval of the Governing Documents Proposal).

Advisory Governing Documents Proposals

 

Advisory Governing Documents Proposal

  

SRNG Current Charter

  

Proposed Charter

Advisory Proposal A -

Changes in Share Capital

   Under the Current Charter, SRNG is currently authorized to issue 481,000,000 capital shares, consisting of (a) 480,000,000 ordinary shares, including 400,000,000 SRNG Class A ordinary shares, par value $0.0001 per share, and 80,000,000 SRNG Class B ordinary shares, par value $0.0001 per share, and (b) 1,000,000 preference shares, par value $0.0001 per share.    Under the Proposed Charter, New Ginkgo will be authorized to issue 16,000,000,000 shares of capital stock, consisting of (a) 10,500,000,000 shares of New Ginkgo Class A common stock, par value $0.0001 per share, 4,500,000,000 shares of New Ginkgo Class B common stock, par value $0.0001 per share, 800,000,000 shares of New Ginkgo Class C common stock, par value $0.001 per share and (b) 200,000,000 shares of preferred stock, par value $0.0001 per share.

Advisory Proposal B -

Voting Rights of Common Stock

   Under the Current Charter, the holders of SRNG Class A ordinary shares and SRNG Class B ordinary shares are entitled to one vote for each such share on each matter properly submitted to SRNG’s shareholders entitled to vote.    Under the Proposed Charter, (i) holders of New Ginkgo Class A common stock will be entitled to cast one vote per share of New Ginkgo Class A common stock, (ii) holders of New Ginkgo Class B common stock will be entitled to cast 10 votes per share of New Ginkgo Class B common stock and (iii) holders of shares of New Ginkgo Class C common stock will not be entitled to vote (except as otherwise expressly provided in the Proposed Charter or required by applicable law).

 

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Advisory Governing Documents Proposal

  

SRNG Current Charter

  

Proposed Charter

Advisory Proposal C -

Required Vote to Change Number of Directors

   The Current Charter provides that by ordinary resolution, holders of SRNG Class B ordinary shares may increase and decrease the number of directors, appoint any person to be a director, or remove any director. Holders of SRNG Class A ordinary shares are not entitled to vote on the appointment or removal of any director. The directors may appoint any person to be a director, provided that the appointment does not cause the number of directors to exceed the maximum number of directors.    The Proposed Charter provides that the number of directors on the New Ginkgo Board shall be fixed from time to time solely by resolution of the New Ginkgo Board, provided that the holders of shares of New Ginkgo Class B common stock shall be entitled to nominate and elect one-quarter of the total number of directors of New Ginkgo (the “Class B Directors”) for so long as the outstanding number of shares of Class B common stock continue to represent at least 2% of the outstanding shares of New Ginkgo’s common stock, and the holders of New Ginkgo Class A common stock and New Ginkgo Class B common stock voting together as a single class shall be entitled to elect the directors of New Ginkgo other than the Class B Directors.

Advisory Proposal D -

Share Authorization

   Under the Current Charter, SRNG’s authorized share capital may be increased by ordinary resolution.    Under the Proposed Charter, (i) the number of authorized shares of New Ginkgo Class A common stock, New Ginkgo Class B common stock, New Ginkgo Class C common stock and New Ginkgo preferred stock may be increased by the affirmative vote of the holders of shares representing a majority of the voting power of all of the outstanding shares of capital stock of New Ginkgo entitled to vote thereon, (ii) the number of authorized shares of New Ginkgo Class A common stock, New Ginkgo Class C common stock or New Ginkgo preferred stock may be decreased (but not below the number of shares thereof then outstanding or, in the case of the New Ginkgo Class A common stock, the number of shares of New Ginkgo Class A common stock reserved for issuance upon conversion of all outstanding

 

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Advisory Governing Documents Proposal

  

SRNG Current Charter

  

Proposed Charter

      shares of New Ginkgo Class B common stock) by the affirmative vote of the holders of shares representing a majority of the voting power of all of the outstanding shares of capital stock of New Ginkgo entitled to vote thereon, and (iii) the number of authorized shares of New Ginkgo Class B common stock may be decreased (but not below the number of shares thereof then outstanding) by the affirmative vote a majority of the voting power of all of the outstanding shares of New Ginkgo Class B common stock.

Advisory Proposal E -

Other Changes in Connection with Adoption of Proposed Charter

   The current charter includes various provisions relating to SRNG’s status as a blank check company prior to the consummation of a business combination.    Under the Proposed Charter, New Ginkgo (i) will adopt Delaware as the exclusive forum for certain stockholder litigation and the federal district courts of the United States as the exclusive forum for certain other stockholder litigation, in each case unless New Ginkgo expressly consents in writing to the selection of an alternative forum, (ii) will elect not to be governed by Section 203 of the DGCL and (iii) will remove certain provisions related to SRNG’s status as a blank check company that will no longer be applicable upon consummation of the Business Combination.

Reasons for Approval of the Advisory Governing Documents Proposals

Advisory Governing Documents Proposal A - Changes in Authorized Share Capital

The principal purpose of this proposal is to provide for an authorized capital structure of New Ginkgo that will enable it to continue as an operating company governed by the DGCL and provide adequate authorized share capital to, among other things, (i) accommodate the issuance of shares of New Ginkgo Class A common stock and New Ginkgo Class B common stock as stock consideration in the Business Combination, (ii) accommodate the issuance of shares of New Ginkgo Class A common stock and New Ginkgo Class B common stock under the EIP and the ESPP (which authorize the issuance of shares of New Ginkgo Class A common stock, shares of New Ginkgo Class B common stock, or a combination thereof) as we determine from time to time is necessary to attract and retain talented employees, (iii) accommodate the issuance of shares of New Ginkgo Class A common stock upon optional or mandatory conversion of shares of New Ginkgo Class B common stock and (iv) provide flexibility for future issuances of shares of New Ginkgo stock, including New Ginkgo Class C common stock, if

 

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determined by the New Ginkgo Board to be in the best interests of New Ginkgo after the consummation of the Business Combination without incurring the risk, delay and potential expense incident to obtaining stockholder approval to increase the authorized share capital.

The SRNG Board believes that it is important for New Ginkgo to have available for issuance a number of authorized shares of common stock and preferred stock sufficient to support our growth and to provide flexibility for future corporate needs (including, if needed, for employee compensation, financings and/or acquisitions).

Advisory Governing Documents Proposal B - Voting Rights of Common Stock

The Proposed Charter provides that holders of shares of New Ginkgo Class B common stock will have 10 votes on each matter properly submitted to the stockholders entitled to vote and holders of shares of New Ginkgo Class A common stock will have one vote on each matter properly submitted to the stockholders entitled to vote, whereas holders of New Ginkgo Class C common stock will not be entitled to vote on any matter (except as otherwise expressly provided in the Proposed Charter or required by applicable law). New Ginkgo Class B common stock will be permitted to be held only by New Ginkgo’s directors and employees (or by trusts or legal entities through which the right to vote the shares of New Ginkgo Class B common stock held thereby is exercised exclusively by one or more of New Ginkgo’s directors or employees), except that the Proposed Charter permits authorized but unissued shares of New Ginkgo Class B common stock to be issued to other persons with only the approval of a majority of our Class B Directors. We may in the future issue shares of New Ginkgo Class C common stock for a variety of corporate purposes, including financings, acquisitions and investments. Upon the consummation of the Business Combination, the Founders and their affiliated trusts will hold in the aggregate approximately         % of the total voting power of our outstanding capital stock, and New Ginkgo’s directors and employees will hold in the aggregate approximately         % of the total voting power of our outstanding capital stock. We expect to maintain this concentrated voting power among our Founders and employees for the foreseeable future, including by issuing additional shares of New Ginkgo Class B common stock to our employees pursuant to our equity compensation plans following the Closing.

The SRNG Board believes that our proposed multi-class stock structure will preserve Ginkgo’s existing founder-led governance structure, promote employee retention and engagement, facilitate continued innovation and the risk-taking that it requires, permit us to continue to prioritize our long-term goals rather than short-term results, enhance the likelihood of continued stability in the composition of our board of directors and its policies, and discourage certain types of transactions that may involve an actual or threatened acquisition of our company, all of which we believe is essential to the long-term success of our company and to long-term stockholder value.

Advisory Governing Documents Proposal C - Right of Holders of New Ginkgo Class B Common Stock to Elect Certain Directors

The principal purpose of this proposal is to provide the holders of New Ginkgo Class B common stock the rights to elect a certain number of directors. The SRNG Board believes that the right of the holders of New Ginkgo Class B common stock (for so long as the outstanding shares of New Ginkgo Class B common stock continue to represent at least 2% of the outstanding shares of New Ginkgo common stock) to nominate and elect the Class B Directors, representing one-quarter of the total number of New Ginkgo’s directors, while the holders of New Ginkgo Class A common stock and New Ginkgo Class B common stock voting together as a single class are entitled to elect the directors of New Ginkgo other than the Class B Directors, will help preserve Ginkgo’s existing founder-led governance structure and promote employee retention and engagement, which we believe is essential to the long-term success of our company and to long-term stockholder value.

Advisory Governing Documents Proposal D - Vote Required to Change Authorized Share Capital

The principal purpose of this proposal is to provide for the holders of shares representing a majority of the voting power of all of the outstanding shares of New Ginkgo capital stock entitled to vote thereon to generally

 

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have the right to increase or decrease the authorized number of shares of New Ginkgo Class A common stock, New Ginkgo Class B common stock, New Ginkgo Class C common stock or New Ginkgo preferred stock, without a separate vote of the affected class of shares (except that decreases in the authorized number of shares of New Ginkgo Class B common stock must be approved by a majority of the voting power of all of the outstanding shares of New Ginkgo Class B common stock), which the SRNG Board believes is important to effectively manage future changes to the authorized share capital of New Ginkgo. Additionally, the SRNG Board believes that it is important to require that decreases in the authorized number of shares of New Ginkgo Class B common stock be approved by a majority of the voting power of all of the outstanding shares of New Ginkgo Class B common stock in order to preserve the benefits that we believe result from our proposed multi-class stock structure, as described above under “—Advisory Governing Documents Proposal B—Voting Rights of Common Stock.”

Advisory Governing Documents Proposal E – Authorization of Other Changes in the Governing Documents

Exclusive Forum

Adopting Delaware as the exclusive forum for certain stockholder litigation is intended to assist New Ginkgo in avoiding multiple lawsuits in multiple jurisdictions regarding the same matter. The ability to require such claims to be brought in a single forum will help to ensure consistent consideration of the issues, the application of a well-known body of case law and high level of judicial expertise, and should promote efficiency and cost savings in the resolutions of such claims. The SRNG Board believes that the Delaware courts are best suited to address disputes involving such matters, given that, after the Domestication, New Ginkgo will be incorporated in Delaware, Delaware law generally will apply to such matters and the Delaware courts have developed considerable expertise with respect to such matters, as well as a substantial and influential body of case law construing Delaware’s corporate law and long-standing precedent regarding corporate governance. Delaware also offers a specialized Court of Chancery to address corporate law matters, with streamlined procedures and processes which help provide relatively quick decisions. This accelerated schedule can minimize the time, cost and uncertainty of litigation for all parties. This provides stockholders and the post-combination company with more predictability regarding the outcome of intra-corporate disputes. In the event the Court of Chancery does not have jurisdiction, the other state and federal courts located in Delaware would be the most appropriate forums because these courts have more expertise on matters of Delaware law compared to other jurisdictions. Notwithstanding the foregoing, the exclusive forum provisions of the Proposed Bylaws will not apply to suits brought to enforce any liability or duty created by the Exchange Act, or any other claim for which the federal district courts of the United States of America shall be the sole and exclusive forum.

In addition, this provisions would promote judicial fairness, avoid conflicting results, and make New Ginkgo’s defense of applicable claims less disruptive and more economically feasible, principally by avoiding duplicative discovery.

Adopting the federal district courts of the United States as the exclusive forum for resolution of any complaint asserting a cause of action arising under the Securities Act is intended to assist New Ginkgo in resolving such disputes in a consistent manner with greater uniformity of procedures and precedents. The ability to require such claims to be brought within a single judicial system will help to ensure consistent consideration of the issues and consistent application of a relatively known body of case law and perceived level of expertise. The SRNG Board believes that the federal district courts of the United States are best suited to address disputes involving actions arising under the Securities Act, given that the Securities Act is promulgated by the federal government. This provides stockholders and the post-combination company with more predictability regarding the outcome of disputes arising under the Securities Act.

Provisions Related to Status as a Blank Check Company

The elimination of certain provisions related to our status as a blank check company is desirable because these provisions will serve no purpose following the consummation of the Business Combination.

 

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For example, the Proposed Charter does not include the requirement to dissolve New Ginkgo in the event that an initial business combination has not been completed within the timeframe specified in SRNG’s memorandum and articles of association and instead allows New Ginkgo to continue as a corporate entity with perpetual existence following consummation of the Business Combination. Perpetual existence is the usual period of existence for public corporations, and we believe it is the most appropriate period of existence for New Ginkgo following the Business Combination. In addition, certain other provisions in our current articles require that proceeds from SRNG’s initial public offering be held in the trust account until a business combination or liquidation of SRNG has occurred. These provisions cease to apply when the Business Combination is consummated and therefore are not included in the Proposed Charter or the Proposed Bylaws.

Advisory Governing Documents Proposal F – Authorization of Corporate Name Change

Corporate Name

The SRNG Board believes that changing SRNG’s corporate name from “Soaring Eagle Acquisition Corp.” to “Ginkgo Bioworks Holdings, Inc.” is desirable to reflect the Business Combination with Ginkgo and to clearly identify New Ginkgo as the publicly traded entity. In connection with the consummation of the Business Combination, we intend to adopt an amendment to the Proposed Charter in order to change the corporate name of “Soaring Eagle Acquisition Corp.” to “Ginkgo Bioworks Holdings, Inc.”

Vote Required for Approval

Approval of each of the Advisory Governing Documents Proposals, each of which is a non-binding vote, requires a special resolution under Cayman Islands law, being the affirmative vote of holders of a majority of at least two-thirds of the ordinary shares represented in person or by proxy and entitled to vote thereon and who vote at the Special Meeting. The failure to vote, abstentions and broker non-votes have no effect on the outcome of the proposals.

Resolutions to Be Voted Upon

The full text of the resolutions to be passed is as follows

RESOLVED, as a special resolution, that each of the following material differences between the Current Charter and the Proposed Charter and the Proposed Bylaws be approved on a non-binding advisory basis:

 

   

to authorize the change in the authorized capital stock of SRNG from 400,000,000 Class A ordinary shares, par value $0.0001 per share (the “SRNG Class A ordinary shares”), 80,000,000 SRNG Class B ordinary shares, par value $0.0001 per share (the “SRNG Class B ordinary shares” and, together with the SRNG Class A ordinary shares, the “SRNG ordinary shares”), and 1,000,000 preference shares, par value $0.0001 per share, to 16,000,000,000 shares of capital stock of New Ginkgo (the “New Ginkgo capital stock”), consisting of 10,500,000,000 shares of Class A common stock, par value $0.0001 per share, of New Ginkgo (the “New Ginkgo Class A common stock”), 4,500,000,000 shares of Class B common stock, par value $0.0001 per share, of New Ginkgo (the “New Ginkgo Class B common stock”), 800,000,000 shares of Class C common stock, par value $0.0001 per share, of New Ginkgo (the “New Ginkgo Class C common stock”) and 200,000,000 shares of preferred stock, par value $0.0001 per share, of New Ginkgo (the “New Ginkgo preferred stock”);

 

   

to approve the provisions authorizing holders of shares of (i) New Ginkgo Class A common stock to cast one vote per share of New Ginkgo Class A common stock and holders of shares of New Ginkgo Class B common stock to cast 10 votes per share of New Ginkgo Class B common stock on each matter properly submitted to New Ginkgo’s stockholders entitled to vote and (ii) holders of shares of New Ginkgo Class C common stock not being entitled to vote;

 

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to authorize the provisions permitting that the number of New Ginkgo Board be fixed from time to time solely by resolution of the New Ginkgo Board, provided that the holders of shares of New Ginkgo Class B common stock shall be entitled to nominate and elect the Class B Directors, representing one-quarter of the total number of New Ginkgo’s directors, for so long as the outstanding number of shares of Class B common stock continue to represent at least 2% of the outstanding shares of New Ginkgo’s common stock, and the holders of New Ginkgo Class A common stock and New Ginkgo Class B common stock voting together as a single class shall be entitled to elect the directors of New Ginkgo other than the Class B Directors;

 

   

to authorize provisions providing for the increase and decrease of the New Ginkgo capital stock;

 

   

to provide for certain additional changes, including, among other things, (i) adopting Delaware as the exclusive forum for certain stockholder litigation and the federal district courts of the United States as the exclusive forum for certain other stockholder litigation in each case unless New Ginkgo expressly consents in writing to the selection of an alternative forum and (ii) removing certain provisions related to SRNG’s status as a blank check company that will no longer be applicable upon consummation of the Business Combination, all of which the SRNG Board believes are necessary to adequately address the needs of New Ginkgo after the Business Combination.

FURTHER RESOLVED, as a special resolution, that the Proposed Charter be further amended in connection with the consummation of the Business Combination in order to change the corporate name of “Soaring Eagle Acquisition Corp.” to “Ginkgo Bioworks Holdings, Inc.”

Recommendation of the SRNG Board

THE SRNG BOARD UNANIMOUSLY RECOMMENDS THAT SRNG SHAREHOLDERS VOTE “FOR” THE APPROVAL OF EACH OF THE ADVISORY GOVERNING DOCUMENTS PROPOSALS.

The existence of financial and personal interests of one or more of SRNG’s directors may result in a conflict of interest on the part of such director(s) between what they may believe is in the best interests of SRNG and its shareholders and what they may believe is best for himself or themselves in determining to recommend that shareholders vote for the proposals. See the section entitled “The Business Combination Proposal—Interests of SRNG’s Directors and Officers and Others in the Business Combination” for a further discussion.

 

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THE DIRECTOR ELECTION PROPOSAL

Overview

The SRNG Board is currently divided into three classes, with only one class of directors being elected in each year and each class (except for those directors appointed prior to SRNG’s first annual meeting of shareholders) serving a three-year term.

If the condition precedent proposals are approved, SRNG’s Board will nominate each of Jason Kelly, Reshma Shetty, Arie Belldegrun, Marijn Dekkers, Christian Henry, Shyam Sankar and Harry Sloan to serve on the New Ginkgo Board, effective upon Closing. Each director will serve for a term expiring at the 2022 annual meeting of stockholders or until such director’s successor has been duly elected and qualified, or until such director’s earlier death, resignation, retirement, or removal.

Director Nominees

If the condition precedent approvals are approved, SRNG shareholders are being asked to consider and vote upon a proposal to elect seven directors to serve, effective at the Closing, on the New Ginkgo Board until 2022, in each case, in accordance with the Proposed Charter. The following nominees will only be elected if the condition precedent proposals are approved by the shareholders at the Special Meeting: Jason Kelly, Reshma Shetty, Arie Belldegrun, Marijn Dekkers, Christian Henry, Shyam Sankar and Harry Sloan.

For more information on the experience of each of these director nominees, please see the section entitled, “New Ginkgo Management after the Business Combination” of this proxy statement/prospectus.

Vote Required for Approval

Approval of the Director Election Proposal requires an ordinary resolution under Cayman Islands law, being the affirmative vote of holders of a majority of the ordinary shares represented in person or by proxy and entitled to vote thereon and who vote at the Special Meeting. Under the terms of the Current Charter, only the holders of the SRNG Class B ordinary shares are entitled to vote on the election of directors to SRNG’s board of directors. The failure to vote, abstentions and broker non-votes have no effect on the outcome of the proposal.

Resolution to Be Voted Upon

The full text of the resolution to be passed is as follows:

RESOLVED, as an ordinary resolution, that the persons named below be elected to serve on New Ginkgo’s board of directors following the Closing:

Name of Director

Jason Kelly

Reshma Shetty

Arie Belldegrun

Marijn Dekkers

Christian Henry

Shyam Sankar

Harry Sloan

Recommendation of the SRNG Board

THE SRNG BOARD UNANIMOUSLY RECOMMENDS THAT ITS SHAREHOLDERS VOTE “FOR” THE APPROVAL OF THE DIRECTOR ELECTION PROPOSAL.

The existence of financial and personal interests of one or more of SRNG’s directors may result in a conflict of interest on the part of such director(s) between what they may believe is in the best interests of SRNG and its shareholders and what they may believe is best for himself or themselves in determining to recommend that shareholders vote for the proposals. See the section entitled “The Business Combination Proposal—Interests of SRNG’s Directors and Officers and Others in the Business Combination” for a further discussion.

 

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THE STOCK ISSUANCE PROPOSAL

In connection with the Business Combination, we intend to effect the issuance of shares of New Ginkgo Class A common stock to the stockholders of Ginkgo pursuant to the Merger Agreement.

Why SRNG Needs Shareholder Approval

We are seeking stockholder approval in order to comply with The Nasdaq Stock Market Listing Rules 5635(a), (b) and (d). Under The Nasdaq Stock Market Listing Rule 5635(a), shareholder approval is required prior to the issuance of securities in connection with the acquisition of another company if such securities are not issued in a public offering and (A) have, or will have upon issuance, voting power equal to or in excess of 20% of the voting power outstanding before the issuance of common stock (or securities convertible into or exercisable for common stock); or (B) the number of shares of common stock to be issued is or will be equal to or in excess of 20% of the number of shares of common stock outstanding before the issuance of the stock or securities. Collectively, New Ginkgo may issue securities representing 20% or more of our outstanding common stock or 20% or more of the voting power, in each case outstanding before the issuance, pursuant to the issuance of common stock in connection with the Business Combination.

Under The Nasdaq Stock Market Listing Rule 5635(b), shareholder approval is required when any issuance or potential issuance will result in a “change of control” of the issuer. Although Nasdaq has not adopted any rule on what constitutes a “change of control” for purposes of Rule 5635(b), Nasdaq has previously indicated that the acquisition of, or right to acquire, by a single investor or affiliated investor group, as little as 20% of the common stock (or securities convertible into or exercisable for common stock) or voting power of an issuer could constitute a change of control.

Under The Nasdaq Stock Market Listing Rule 5635(d), shareholder approval is required for a transaction other than a public offering involving the sale, issuance or potential issuance by an issuer of common stock (or securities convertible into or exercisable for common stock) at a price that is less than the greater of book or market value of the stock if the number of shares of common stock to be issued is or may be equal to 20% or more of the common stock, or 20% or more of the voting power, outstanding before the issuance.

Upon the consummation of the Business Combination, SRNG expects to issue up to an estimated (i) 77,500,000 shares of New SRNG Class A common stock to the PIPE Investors in connection with the PIPE Investment, (ii) 554,024,323 shares of New Ginkgo Class B common stock to Ginkgo’s employees and directors and (iii) 946,023,405 shares of New Ginkgo Class A common stock to other holders of Ginkgo’s common stock. For further details, see “Ownership Summary.”

Accordingly, the aggregate number of shares of New SRNG common stock that SRNG will issue in connection with the Business Combination and the PIPE Investment will exceed 20% of both the voting power and the shares of New SRNG common stock outstanding before such issuance and may result in a change of control of the registrant, and for these reasons, SRNG is seeking the approval of SRNG shareholders for the issuance of shares of New SRNG common stock pursuant in connection with the Business Combination and the PIPE Investment.

Vote Required for Approval

If the Business Combination Proposal is not approved, the Stock Issuance Proposal will not be presented at the Special Meeting. The approval of the Stock Issuance Proposal requires the majority of the votes cast by the SRNG shareholders present in person (which would include presence at the virtual Special Meeting) or represented by proxy at the Special Meeting.

Failure to submit a proxy at the Special Meeting or a broker non-vote will have no effect on the Stock Issuance Proposal.

The Business Combination is conditioned upon the approval of the Stock Issuance Proposal, subject to the terms of the Merger Agreement. Notwithstanding the approval of the Stock Issuance Proposal, if the Business Combination is not consummated for any reason, the actions contemplated by the Stock Issuance Proposal will not be effected.

 

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SRNG’s Sponsor has agreed to vote the founder shares and any public shares owned by them in favor of the Stock Issuance Proposal. See “Ancillary Agreements Related to the Business Combination—Sponsor Support Agreement” for more information.

Resolution to Be Voted Upon

The full text of the resolution to be passed is as follows:

RESOLVED, as an ordinary resolution, that, for the purposes of complying with the applicable provisions of the Nasdaq Stock Market Listing Rules, the issuance of shares of New Ginkgo common stock pursuant to the Merger Agreement and the PIPE Investment, including to the Sellers and the PIPE Investors, be approved in all respects.”

Recommendation of the SRNG Board

THE SRNG BOARD UNANIMOUSLY RECOMMENDS THAT ITS SHAREHOLDERS VOTE “FOR” THE STOCK ISSUANCE PROPOSAL.

The existence of financial and personal interests of one or more of SRNG’s directors may result in a conflict of interest on the part of such director(s) between what they may believe is in the best interests of SRNG and its shareholders and what they may believe is best for himself or themselves in determining to recommend that shareholders vote for the proposals. See the section entitled “The Business Combination Proposal—Interests of SRNG’s Directors and Officers and Others in the Business Combination” for a further discussion.

 

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THE INCENTIVE PLAN PROPOSAL

Overview

At the Special Meeting, SRNG shareholders will be asked to approve the New Ginkgo 2021 Incentive Award Plan (the “2021 Plan”). On                , 2021 the SRNG Board approved the 2021 Plan, subject to shareholder approval. The 2021 Plan will become effective, if at all, upon the Closing, subject to consummation of the Business Combination and subject to shareholder approval. If the 2021 Plan is not approved by SRNG shareholders, or if the Merger Agreement is terminated prior to the consummation of the Business Combination, the 2021 Plan will not become effective. The 2021 Plan is described in more detail below. A copy of the 2021 Plan is attached as Annex E to this proxy statement/prospectus.

The 2021 Plan

The purpose of the 2021 Plan is to enhance our ability to attract, retain and motivate persons who make (or are expected to make) important contributions by providing these individuals with equity ownership opportunities and/or equity-linked compensatory opportunities. Equity awards and equity-linked compensatory opportunities are intended to motivate high levels of performance and align the interests of directors, employees and consultants with those of shareholders by giving directors, employees and consultants the perspective of an owner with an equity or equity-linked stake in New Ginkgo and providing a means of recognizing their contributions to our success. The SRNG Board believes that equity awards are necessary for New Ginkgo to remain competitive in its industry and are essential to recruiting and retaining the highly qualified employees.

Summary of the 2021 Plan

This section summarizes certain principal features of the 2021 Plan. The summary is qualified in its entirety by reference to the complete text of the 2021 Plan, a copy of which is attached as Annex E to this proxy statement/prospectus. We urge our shareholders to carefully read the entire 2021 Plan before voting on this proposal.

Eligibility and Administration

Our employees, consultants and directors, and employees and consultants of our subsidiaries, may be eligible to receive awards under the 2021 Plan. Immediately following the Closing, New Ginkgo is expected to have approximately              employees,              non-employee directors and              other individual service providers who may be eligible to receive awards under the 2021 Plan.

The 2021 Plan will be administered by the New Ginkgo Board, which may delegate its duties and responsibilities to one or more committees of its directors and/or officers (collectively, the “plan administrator”), subject to the limitations imposed under the 2021 Plan, Section 16 of the Exchange Act, stock exchange rules and other applicable laws. Following the Closing, we expect the compensation committee of the New Ginkgo Board to administer the 2021 Plan.

The plan administrator will have the authority to take all actions and make all determinations under the 2021 Plan, to interpret the 2021 Plan and award agreements, to impose a mandatory holding period pursuant to which some or all participants may not dispose of or transfer shares issued under the 2021 Plan for a period of time determined by the plan administrator in its discretion, and to adopt, amend and repeal rules for the administration of the 2021 Plan as it deems advisable. The plan administrator will also have the authority to determine which eligible service providers receive awards, grant awards and set the terms and conditions of all awards under the 2021 Plan, including any vesting and vesting acceleration provisions, subject to the conditions and limitations in the 2021 Plan.

 

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The plan administrator may, without the approval of the shareholders, grant one or more awards under the 2021 Plan to any employee, director or consultant (including any employee, director or consultant who is a substantial security holder (i.e., those controlling 5% or more of the shares or voting power)) that represent, directly or indirectly, 1% or more of the common stock of New Ginkgo or 1% or more of the voting power of New Ginkgo.

Shares Available for Awards

The aggregate number of shares of New Ginkgo common stock that will be available for issuance under the 2021 Plan, which may be issued as New Ginkgo Class A common stock or New Ginkgo Class B common stock, will initially be equal to the sum of (i) 200,000,000 shares of New Ginkgo common stock, (ii) any shares of common stock which remain available for future grants under the 2014 Stock Incentive Plan as of immediately prior to approval of the 2021 Plan by the shareholders, (iii) any shares of common stock which are subject to awards under the Ginkgo Bioworks, Inc. 2008 Stock Incentive Plan and/or 2014 Stock Incentive Plan (together, the “Prior Plan”) which become available for issuance under the 2021 Plan pursuant to its terms, (iv) any Remaining Earn-out Shares (as defined in the Merger Agreement), plus (v) an annual increase for ten years on the first day of each calendar year beginning January 1, 2022, equal to the lesser of (A) 4% of the aggregate number of shares of common stock outstanding on the final day of the immediately preceding calendar year and (B) such smaller number of shares as is determined by the New Ginkgo Board. The maximum number of shares of common stock that may be issued pursuant to the exercise of incentive stock options (“ISOs”) granted under the 2021 Plan will be 200,000,000 shares. The Founders will not be eligible to receive New Ginkgo Class B common stock under the 2021 Plan. In addition, prior to or in connection with issuing any shares of New Ginkgo common stock under the 2021 Plan, the plan administrator may convert awards previously granted covering shares of Class B common stock to Class A common stock or convert awards previously granted covering shares of Class A common stock to Class B common stock.

If an award under the 2021 Plan or any Prior Plan is forfeited (including repurchases at or below original cost), expires or is settled for cash, any shares subject to such award may, to the extent of such forfeiture, expiration or cash settlement, become, or again be available for, new grants under the 2021 Plan. The payment of dividend equivalents in cash in conjunction with any awards will not reduce the shares available for grant under the 2021 Plan. Furthermore, shares purchased on the open market with the cash proceeds from the exercise of options, and shares tendered or withheld to satisfy the exercise price or tax withholding obligation for any award under the 2021 Plan or any Prior Plan will become, or again be available for, award grants under the 2021 Plan.

Awards granted under the 2021 Plan upon the assumption of, or in substitution for, awards authorized or outstanding under a qualifying equity plan maintained by an entity with which New Ginkgo enters into a merger or similar corporate transaction will not reduce the shares available for grant under the 2021 Plan but will count against the maximum number of shares that may be issued upon the exercise of ISOs.

The 2021 Plan provides that the sum of any cash compensation and the aggregate grant date fair value (determined as of the date of the grant under Financial Accounting Standards Board Accounting Standards Codification Topic 718, or any successor thereto) of all awards granted to a non-employee director as compensation for services as a non-employee director during any fiscal year may not exceed the amount equal to $1,000,000, increased to $1,250,000 in the fiscal year in which the 2021 Plan’s effective date occurs or in the fiscal year of a non-employee director’s initial service as a non-employee director. The value of any cash or equity-based compensation granted prior to the effective date of the 2021 Plan shall not count against these limits. The plan administrator may make exceptions to these limits for individual non-employee directors in extraordinary circumstances, as the plan administrator may determine in its discretion, provided that the non-employee director receiving such additional compensation may not participate in the decision to award such compensation or in other contemporaneous compensation decisions involving non-employee directors.

 

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Awards

The 2021 Plan provides for the grant of stock options, including ISOs and nonqualified stock options (“NSOs”), stock appreciation rights (“SARs”), restricted stock, dividend equivalents, restricted stock units (“RSUs”) and other stock or cash-based awards. Certain awards under the 2021 Plan may constitute or provide for payment of “nonqualified deferred compensation” under Section 409A of the Code, which may impose additional requirements on the terms and conditions of such awards. All awards under the 2021 Plan will be evidenced by award agreements, which will detail the terms and conditions of awards, including any applicable vesting and payment terms and post-termination exercise limitations. Awards other than cash awards generally will be settled in shares of New Ginkgo common stock, but the applicable award agreement may provide for cash settlement of any award. A brief description of each award type follows.

 

   

Stock Options and SARs. Stock options provide for the purchase of shares of New Ginkgo common stock in the future at an exercise price set on the grant date. ISOs, in contrast to NSOs, may provide tax deferral beyond exercise and favorable capital gains tax treatment to their holders if certain holding period and other requirements of the Code are satisfied. SARs entitle their holder, upon exercise, to receive from us an amount equal to the appreciation of the shares subject to the award between the grant date and the exercise date. Unless otherwise determined by the plan administrator, the exercise price of a stock option or SAR may not be less than 100% of the fair market value of the underlying share on the grant date (or 110% in the case of ISOs granted to certain significant shareholders), except with respect to certain substitute awards granted in connection with a corporate transaction. Unless otherwise determined by the plan administrator, the term of a stock option or SAR may not be longer than ten years (or five years in the case of ISOs granted to certain significant shareholders).

 

   

Restricted Stock. Restricted stock is an award of non-transferable shares of New Ginkgo common stock that remain forfeitable unless and until specified conditions are met and which may be subject to a purchase price. The terms and conditions applicable to restricted stock will be determined by the plan administrator, subject to the conditions and limitations contained in the 2021 Plan.

 

   

RSUs. RSUs are contractual promises to deliver shares of New Ginkgo common stock in the future or an equivalent in cash and other consideration determined by the plan administrator, which may also remain forfeitable unless and until specified conditions are met and may be accompanied by the right to receive the equivalent value of dividends paid on shares of New Ginkgo common stock prior to the delivery of the underlying shares (i.e. dividend equivalent rights). The plan administrator may provide that the delivery of the shares (or payment in cash) underlying RSUs will be deferred on a mandatory basis or at the election of the participant. The terms and conditions applicable to RSUs will be determined by the plan administrator, subject to the conditions and limitations contained in the 2021 Plan.

 

   

Other Stock or Cash Based Awards. Other stock or cash-based awards are awards of cash, fully vested shares of New Ginkgo common stock and other awards valued wholly or partially by referring to, or otherwise based on, shares of New Ginkgo common stock. Other stock or cash-based awards may be granted to participants and may also be available as a payment form in the settlement of other awards, as standalone payments and as payment in lieu of compensation to which a participant is otherwise entitled. The plan administrator will determine the terms and conditions of other stock or cash-based awards, which may include any purchase price, performance goal, transfer restrictions and vesting conditions.

 

   

Dividend Equivalents. Dividend equivalents represent the right to receive the equivalent value of dividends paid on shares of New Ginkgo common stock and may be granted in tandem with RSUs. Dividend equivalents are credited as of the dividend record dates during the period between the date an award is granted and the date such award vests, is exercised, is distributed or expires, as determined by the plan administrator.

 

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Certain Transactions

In connection with certain corporate transactions and events affecting New Ginkgo common stock, including a change in control, or change in any applicable laws or accounting principles, the plan administrator has broad discretion to take action under the 2021 Plan to prevent the dilution or enlargement of intended benefits, facilitate the transaction or event or give effect to the change in applicable laws or accounting principles. This includes canceling awards for cash (other than with respect to non-employee directors) or property, accelerating the vesting of awards, providing for the assumption or substitution of awards by a successor entity, adjusting the number and type of shares subject to outstanding awards and/or with respect to which awards may be granted under the 2021 Plan and replacing or terminating awards under the 2021 Plan. In the event an award is not assumed or replaced with a comparable award in connection with a change in control, any portion of the award that vests primarily based on providing services for a period of time (as opposed to achieving performance goals) will vest in full in connection with the change in control. In addition, in the event of certain non-reciprocal transactions with shareholders, the plan administrator will make equitable adjustments to the 2021 Plan and outstanding awards as it deems appropriate to reflect the transaction.

Repricing

Stockholder approval will not be required for any amendment that reduces the exercise price or base price of any stock option or SAR, or cancels any stock option or SAR that has an exercise price or base price that is greater than the then-current fair market value of New Ginkgo common stock in exchange for cash, other awards or stock options or SARs with an exercise price or base price per share that is less than the exercise price or base price per share of the original stock options or SARs.

Plan Amendment and Termination

The New Ginkgo Board may amend or terminate the 2021 Plan at any time; however, no amendment, other than an amendment that increases the number of shares available under the 2021 Plan, may materially and adversely affect an award outstanding under the 2021 Plan without the consent of the affected participant, and stockholder approval will be obtained for any amendment to the extent necessary to comply with applicable laws. The 2021 Plan will remain in effect until terminated by the New Ginkgo Board; provided that any portion of the 2021 Plan that constitutes a “formula” under the NYSE listing requirements shall only remain in effect until the tenth anniversary of the date the shareholders last approved the 2021 Plan and ISOs may not be granted after the tenth anniversary of the earlier of the date of the adoption of the 2021 Plan or the date of the approval of the 2021 Plan by the shareholders. No awards may be granted under the 2021 Plan after its termination.

Foreign Participants, Claw-Back Provisions, Transferability and Participant Payments

The plan administrator may modify award terms, establish subplans and/or adjust other terms and conditions of awards, subject to the share limits described above, in order to facilitate grants of awards subject to the laws and/or stock exchange rules of countries outside of the United States. All awards will be subject to any company claw-back policy. Except as the plan administrator may determine or provide in an award agreement, awards under the 2021 Plan are generally non-transferrable, except by will or the laws of descent and distribution, or, subject to the plan administrator’s consent, pursuant to a domestic relations order, and are generally exercisable only by the participant. With regard to tax withholding, exercise price or repurchase obligations arising in connection with awards, the plan administrator may, in its discretion, accept cash, wire transfer or check, shares of New Ginkgo common stock that meet specified conditions, a “market sell order,” or such other consideration as it deems suitable.

Material U.S. Federal Income Tax Consequences

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principles that apply and is provided only for general information. Some kinds of taxes, such as state, local and foreign income taxes and federal employment taxes, are not discussed. This summary is not intended as tax advice to participants, who should consult their own tax advisors.

 

   

Non-Qualified Stock Options. If a participant is granted an NSO under the 2021 Plan, the participant should not have taxable income on the grant of the option. Generally, the participant should recognize ordinary income at the time of exercise in an amount equal to the fair market value of the shares acquired on the date of exercise, less the exercise price paid for the shares. The participant’s basis in New Ginkgo common stock for purposes of determining gain or loss on a subsequent sale or disposition of such shares generally will be the fair market value of New Ginkgo common stock on the date the participant exercises such option. Any subsequent gain or loss will be taxable as a long-term or short-term capital gain or loss. New Ginkgo or its subsidiaries or affiliates generally should be entitled to a federal income tax deduction at the time and for the same amount as the participant recognizes ordinary income.

 

   

Incentive Stock Options. A participant receiving ISOs should not recognize taxable income upon grant. Additionally, if applicable holding period requirements are met, the participant should not recognize taxable income at the time of exercise. However, the excess of the fair market value of the shares of New Ginkgo common stock received over the option exercise price is an item of tax preference income potentially subject to the alternative minimum tax. If stock acquired upon exercise of an ISO is held for a minimum of two years from the date of grant and one year from the date of exercise and otherwise satisfies the ISO requirements, the gain or loss (in an amount equal to the difference between the fair market value on the date of disposition and the exercise price) upon disposition of the stock will be treated as a capital gain or loss, and New Ginkgo will not be entitled to any deduction. If the holding period requirements are not met, the ISO will be treated as one that does not meet the requirements of the Code for ISOs and the participant will recognize ordinary income at the time of the disposition equal to the excess of the amount realized over the exercise price, but not more than the excess of the fair market value of the shares on the date the ISO is exercised over the exercise price, with any remaining gain or loss being treated as capital gain or capital loss. New Ginkgo or its subsidiaries or affiliates generally are not entitled to a federal income tax deduction upon either the exercise of an ISO or upon disposition of the shares acquired pursuant to such exercise, except to the extent that the participant recognizes ordinary income on disposition of the shares.

 

   

Other Awards. The current federal income tax consequences of other awards authorized under the 2021 Plan generally follow certain basic patterns: SARs are taxed and deductible in substantially the same manner as NSOs; non-transferable restricted stock subject to a substantial risk of forfeiture results in income recognition equal to the excess of the fair market value over the price paid, if any, only at the time the restrictions lapse (unless the recipient elects to accelerate recognition as of the date of grant through a Section 83(b) election); RSUs, dividend equivalents and other stock or cash-based awards are generally subject to tax at the time of payment. New Ginkgo or its subsidiaries or affiliates generally should be entitled to a federal income tax deduction at the time and for the same amount as the participant recognizes ordinary income.

Section 409A of the Code

Certain types of awards under the 2021 Plan may constitute, or provide for, a deferral of compensation subject to Section 409A of the Code. Unless certain requirements set forth in Section 409A of the Code are complied with, holders of such awards may be taxed earlier than would otherwise be the case (e.g., at the time of vesting instead of the time of payment) and may be subject to an additional 20% penalty tax (and, potentially, certain interest, penalties and additional state taxes). To the extent applicable, the 2021 Plan and awards granted under the 2021 Plan are intended to be structured and interpreted in a manner intended to either comply with or be exempt from Section 409A of the Code and the Department of Treasury regulations and other interpretive

 

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guidance that may be issued under Section 409A of the Code. To the extent determined necessary or appropriate by the plan administrator, the 2021 Plan and applicable award agreements may be amended to further comply with Section 409A of the Code or to exempt the applicable awards from Section  409A of the Code.

New Plan Benefits

Grants under the 2021 Plan will be made at the discretion of the plan administrator and are not currently determinable. The value of the awards granted under the 2021 Plan will depend on a number of factors, including the fair market value of New Ginkgo common stock on future dates, the exercise decisions made by the participants and the extent to which any applicable performance goals necessary for vesting or payment are achieved.

Securities Authorized for Issuance

As of December 31, 2020, SRNG had no equity compensation plans or outstanding equity awards. The following table is presented as of December 31, 2020 in accordance with SEC requirements:

 

Plan Category

   Number of
Securities to
be Issued
Upon
Exercise of
Outstanding
Options,
Warrants
and Rights
     Weighted
Average
Exercise
Price of
Outstanding
Options,
Warrants
and Rights
     Number of
Securities
Remaining
Available for
Future
Issuance
Under Equity
Compensation
Plans
 

Equity compensation plans approved by security holders

     —          —          —    

Equity compensation plans not approved by security holders

     —          —          —    

Interests of Certain Persons in this Proposal

SRNG’s directors and executive officers may be considered to have an interest in the approval of the 2021 Plan because they may in the future receive awards under the 2021 Plan. Nevertheless, the SRNG Board believes that it is important to provide incentives and rewards for superior performance and the retention of executive officers and experienced directors by adopting the 2021 Plan.

Vote Required for Approval

The approval of the Incentive Plan Proposal requires an ordinary resolution under Cayman Islands law, being the affirmative vote of a majority of the ordinary shares represented in person or by proxy and entitled to vote thereon and who vote at the extraordinary general meeting. Abstentions and broker non-votes, while considered present for the purposes of establishing a quorum, will not count as votes cast at the extraordinary general meeting.

The Incentive Award Plan Proposal is conditioned on the approval of each of the condition precedent proposals. Therefore, if each of the condition precedent proposals is not approved, the Incentive Plan Proposal will have no effect, even if approved by holders of ordinary shares.

Resolution to Be Voted Upon

The full text of the resolution to be passed is as follows:

RESOLVED, as an ordinary resolution, that the Company’s adoption of the New Ginkgo 2021 Incentive Award Plan thereunder, be approved, ratified and confirmed in all respects.”

Recommendation of the SRNG Board

THE SRNG BOARD UNANIMOUSLY RECOMMENDS THAT THE SRNG SHAREHOLDERS VOTE “FOR” THE APPROVAL OF THE INCENTIVE PLAN PROPOSAL.

 

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THE ESPP PROPOSAL

Overview

At the Special Meeting, SRNG shareholders will be asked to approve the New Ginkgo 2021 Employee Stock Purchase Plan (the “ESPP”). On                , 2021 the SRNG Board approved the ESPP, subject to shareholder approval. The ESPP will become effective, if at all, upon the Closing, subject to consummation of the Business Combination and subject to shareholder approval. If the ESPP is not approved by SRNG’s shareholders, or if the Merger Agreement is terminated prior to the consummation of the Business Combination, the ESPP will not become effective. The ESPP is described in more detail below. A copy of the ESPP is attached as Annex F to this proxy statement/prospectus.

The ESPP

The ESPP is comprised of two distinct components in order to provide increased flexibility to grant options to purchase shares under the ESPP. Specifically, the ESPP authorizes (1) the grant of options that are intended to qualify for favorable U.S. federal tax treatment under Section 423 of the Code (the “Section 423 Component”), and (2) the grant of options that are not intended to be tax-qualified under Section 423 of the Code (the “Non-Section 423 Component”). Where permitted under local law and custom, we expect that the Non-Section 423 Component will generally be operated and administered on terms and conditions similar to the Section 423 Component.

Summary of the ESPP

This section summarizes certain principal features of the ESPP. The summary is qualified in its entirety by reference to the complete text of the ESPP, a copy of which is attached as Annex F to this proxy statement/prospectus. We urge our shareholders to carefully read the entire ESPP before voting on this proposal

Eligibility and Administration

We expect that all of New Ginkgo’s employees will be eligible to participate in the ESPP. However, with respect to the Section 423 Component, an employee may not be granted rights to purchase stock under the ESPP if the employee, immediately after the grant, would own (directly or through attribution) stock possessing 5% or more of the total combined voting power or value of all classes of New Ginkgo’s common stock. Immediately following the Closing, New Ginkgo is expected to have approximately      employees who may be eligible to participate in the ESPP.

The ESPP will be administered by the New Ginkgo Board, which may delegate its duties and responsibilities to one or more committees of its directors (collectively, the “ESPP administrator”). Among other things, the ESPP administrator will have authority to interpret the terms of the ESPP, determine eligibility of participants and impose a mandatory holding period pursuant to which employees may not dispose of or transfer shares purchased under the ESPP for a period of time determined by the ESPP administrator in its discretion. Following the Closing, we expect the compensation committee of the New Ginkgo Board to administer the ESPP.

Shares Available for Awards.

A total of 20,000,000 shares of New Ginkgo common stock (which may be issued as New Ginkgo Class A common stock or New Ginkgo Class B common stock) will initially be reserved for issuance under the ESPP. In addition, the number of shares available for issuance under the ESPP will increase annually for ten years on the first day of each calendar year beginning January 1, 2022 by an amount equal to the lesser of (A) 1% of the aggregate number of shares of common stock outstanding on the final day of the immediately preceding calendar year and (B) such smaller number of shares as is determined by the New Ginkgo Board, provided that no more than 100,000,000 shares may be issued under the Section 423 Component. Prior to or in connection with issuing any shares of New Ginkgo common stock under the ESPP, the ESPP administrator may convert awards covering shares of New Ginkgo Class B common stock to New Ginkgo Class A common stock or convert awards covering shares of New Ginkgo Class A common stock to New Ginkgo Class B common stock.

 

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Awards

Stock will be offered under the ESPP during offering periods. The length of the offering periods under the ESPP will be determined by the ESPP administrator and may be up to twenty-seven months long. Employee payroll deductions will be used to purchase shares on each purchase date during an offering period. The purchase dates for each offering period will be the final trading day in the offering period. Offering periods under the ESPP will commence when determined by the ESPP administrator. The ESPP administrator may, in its discretion, modify the terms of future offering periods. In non-U.S. jurisdictions where participation in the ESPP through payroll deductions is prohibited, the ESPP administrator may provide that an eligible employee may elect to participate through contributions to the participant’s account under the ESPP in a form acceptable to the ESPP administrator in lieu of or in addition to payroll deductions.

The ESPP permits participants to purchase common stock through payroll deductions of up to a specified percentage of their eligible compensation. The ESPP administrator will establish a maximum number of shares that may be purchased by a participant during any offering period. In addition, no employee will be permitted to accrue the right to purchase stock under the Section 423 Component at a rate in excess of $25,000 worth of shares during any calendar year during which such a purchase right is outstanding (based on the fair market value per share of New Ginkgo’s common stock as of the last trading day prior to the first day of the offering period).

On the first trading day of each offering period, each participant will automatically be granted an option to purchase shares of New Ginkgo’s common stock. The option will expire at the end of the applicable offering period, and will be exercised at that time to the extent of the payroll deductions accumulated during the offering period. The purchase price of the shares, in the absence of a contrary designation, will be 85% of the lower of the fair market value of New Ginkgo’s common stock on the last trading day prior to the first trading day of the offering period or on the last trading day prior to the purchase date. Participants may voluntarily end their participation in the ESPP at any time during a specified period prior to the end of the applicable offering period, and will be paid their accrued payroll deductions that have not yet been used to purchase shares of common stock. Participation ends automatically upon a participant’s termination of employment.

A participant may not transfer rights granted under the ESPP other than by will or the laws of descent and distribution, and are generally exercisable only by the participant.

Certain Transactions

In the event of certain non-reciprocal transactions or events affecting New Ginkgo’s common stock, the ESPP administrator will make equitable adjustments to the ESPP and outstanding rights. In the event of certain unusual or non-recurring events or transactions, including a change in control, the ESPP administrator may provide for (1) either the replacement of outstanding rights with other rights or property or termination of outstanding rights in exchange for cash, (2) the assumption or substitution of outstanding rights by the successor or survivor corporation or parent or subsidiary thereof, if any, (3) the adjustment in the number and type of shares of stock subject to outstanding rights, (4) the use of participants’ accumulated payroll deductions to purchase stock on a new purchase date prior to the next scheduled purchase date and termination of any rights under ongoing offering periods or (5) the termination of all outstanding rights.

ESPP Amendment and Termination

The ESPP administrator may amend, suspend or terminate the ESPP at any time. However, stockholder approval will be obtained for any amendment that increases the aggregate number or changes the type of shares that may be sold pursuant to rights under the ESPP or changes the corporations or classes of corporations whose employees are eligible to participate in the ESPP.

 

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Material U.S. Federal Income Tax Consequences

The following is a general summary under current law of the principal United States federal income tax consequences related to participation in the ESPP. This summary deals with the general federal income tax principles that apply and is provided only for general information. Some kinds of taxes, such as state, local and foreign income taxes and federal employment taxes, are not discussed. This summary is not intended as tax advice to participants, who should consult their own tax advisors.

As described above, the ESPP has a Section 423 Component and a Non-Section 423 Component. The tax consequences for a participant will depend on whether the participant participates in the Section 423 Component or the Non-Section 423 Component.

Tax Consequences to U.S. Participants in the Section 423 Component

The Section 423 Component, and the rights of participants to make purchases thereunder, is intended to qualify under the provisions of Sections 423 of the Code. Under the applicable Code provisions, no income will be taxable to a participant until the shares purchased under the ESPP are sold or otherwise disposed of. This means that participant will not recognize taxable income on the date the participant is granted an option under the ESPP. In addition, the participant will not recognize taxable income upon the purchase of shares.

Upon sale or other disposition of the shares, the participant will generally be subject to tax in an amount that depends upon the length of time such shares are held by the participant prior to disposing of them. If the shares are sold or otherwise disposed of more than two years from the first day of the relevant offering period (and more than one year from the date the shares are purchased), or if the participant does while holding the shares, then the participant (or the participant’s estate) generally will recognize ordinary income measured as the lesser of:

 

  (i)

the excess of the fair market value of the common stock at the time of such sale or disposition (or death) over the purchase price of such shares, or

 

  (ii)

an amount equal to the applicable discount from the fair market value of the shares as of the first day of the applicable offering period.

Any additional gain should be treated as long-term capital gain. If the shares are held for at least the holding periods described above but are sold for a price that is less than the purchase price, there will be no ordinary income and the difference will be a long-term capital loss. New Ginkgo will not be entitled to an income tax deduction with respect to the grant or exercise of a right to purchase shares, or the sale of such shares by a participant, where such participant holds such shares for at least the holding periods described above.

Any sale or other disposition of shares before the expiration of the holding periods described above will be a “disqualifying disposition,” and the participant will recognize ordinary income at the time of such disposition generally measured as the excess of the fair market value of the shares on the date the shares are purchased over the purchase price, and New Ginkgo will be entitled to an income tax deduction for such ordinary income. Any additional gain or loss on such sale or disposition will be long-term or short-term capital gain or loss, depending on the holding period following the date the shares were purchased by the participant prior to such sale or disposition, and New Ginkgo will not be entitled to an income tax deduction for any such capital gain.

Tax Consequences to U.S. Participants in the Non-Section 423 Component

A participant in the Non-Section 423 Component will have compensation income equal to the value of the common stock on the day the participant purchased the common stock less the purchase price.

When a participant sells the common stock the participant purchased under the Non-Section 423 Component, the participant also will have a capital gain or loss equal to the difference between the sales proceeds and the value of the common stock on the day it was purchased. This capital gain or loss will be long-term if the participant held the common stock for more than one year and otherwise will be short-term.

 

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With respect to U.S. participants, New Ginkgo is entitled to a deduction for amounts taxed as ordinary income to a participant to the extent of ordinary income recognized upon a purchase made under the Non-Section 423 Component.

New Plan Benefits

Participation in the ESPP is voluntary and each eligible employee will make his or her own decision regarding whether and to what extent to participate in the ESPP. Additionally, benefits under the ESPP will depend on the participants’ enrollment and contribution elections, and the fair market value of the shares at various future dates. Therefore, it is not possible to determine the benefits that will be received in the future by participants in the ESPP.

Interests of Certain Persons in this Proposal

SRNG’s executive officers may be considered to have an interest in the approval of the ESPP because they may in the future be eligible to participate in the ESPP. Nevertheless, the SRNG Board believes that it is important to provide incentives and rewards for superior performance and the retention of all employees by adopting the ESPP.

Vote Required for Approval

The approval of the ESPP Proposal requires an ordinary resolution under Cayman Islands law, being the affirmative vote of holders of a majority of the ordinary shares represented in person or by proxy and entitled to vote thereon and who vote at the extraordinary general meeting. Abstentions and broker non-votes, while considered present for the purposes of establishing a quorum, will not count as votes cast at the extraordinary general meeting.

The ESPP Proposal is conditioned on the approval of each of the condition precedent proposals. Therefore, if each of the condition precedent proposals is not approved, the ESPP Proposal will have no effect, even if approved by holders of SRNG ordinary shares.

The Sponsor and SRNG’s directors and officers have agreed to vote the Founder Shares and any Public Shares owned by them in favor of the ESPP Proposal. See “Ancillary Agreements Related to the Business Combination—Sponsor Support Agreement” for more information.

Resolution to Be Voted Upon

The full text of the resolution to be passed is as follows:

RESOLVED, as an ordinary resolution, that the Company’s adoption of the New Ginkgo 2021 Employee Stock Purchase Plan, be approved, ratified and confirmed in all respects.

Recommendation of the SRNG Board

THE SRNG BOARD UNANIMOUSLY RECOMMENDS THAT THE SRNG SHAREHOLDERS VOTE “FOR” THE APPROVAL OF THE ESPP PROPOSAL.

 

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THE ADJOURNMENT PROPOSAL

Overview

The Adjournment Proposal, if adopted, will allow the SRNG Board to adjourn the SRNG Special Meeting to a later date or dates, if necessary, to permit further solicitation of proxies if, based upon the tabulated vote at the time of the SRNG Special Meeting, there are not sufficient votes to approve the Business Combination Proposal, the Domestication Proposal, the Governing Documents Proposal, the Director Election Proposal, the Stock Issuance Proposal or the Incentive Plan Proposal, or holders of SRNG Class A ordinary shares have elected to redeem an amount of SRNG Class A ordinary shares such that SRNG would have less than $5,000,001 of net tangible assets. Pursuant to the Merger Agreement, SRNG has agreed not to adjourn the Special Meeting to a date that is more than 30 days after the originally scheduled date of the Special Meeting (except as otherwise required by applicable law) or later than three business days prior to the date on which the Outside Deadline occurs. In no event will the SRNG Board adjourn the SRNG Special Meeting or consummate the Business Combination beyond the date by which it may properly do so under SRNG’s existing charter and Cayman Islands law.

Consequences if the Adjournment Proposal is Not Approved

If the Adjournment Proposal is not approved by SRNG’s shareholders, the SRNG Board may not be able to adjourn the SRNG Special Meeting to a later date in the event that there are insufficient votes for the approval of the Business Combination Proposal, the Domestication Proposal, the Governing Documents Proposals, the Director Election Proposal, the Stock Issuance Proposal or the Incentive Plan Proposal, or holders of SRNG Class A ordinary shares have elected to redeem an amount of SRNG Class A ordinary shares such that SRNG would have less than $5,000,001 of net tangible assets. If we do not consummate the Business Combination and fail to complete an initial business combination by February 26, 2023 (subject to the requirements of law), we will be required to dissolve and liquidate our Trust Account by returning the then remaining funds in such account to the public shareholders.

Vote Required for Approval

Approval of the Adjournment Proposal requires an ordinary resolution under Cayman Islands law, being the affirmative vote of a majority of the ordinary shares represented in person or by proxy and entitled to vote thereon and who vote at the Special Meeting. The failure to vote, abstentions and broker non-votes have no effect on the outcome of the proposal.

The Business Combination is not conditioned upon the approval of the Adjournment Proposal.

The Sponsor has agreed to vote the founder shares and any public shares owned by them in favor of the Adjournment Proposal (if necessary). See “Ancillary Agreements Related to the Business Combination—Sponsor Support Agreement” for more information.

Resolution to Be Voted Upon

The full text of the resolution to be passed is as follows:

RESOLVED, as an ordinary resolution, that the adjournment of the extraordinary general meeting to a later date or dates, if necessary, to permit further solicitation and vote of proxies in the event that there are insufficient votes for the approval of one or more proposals at the extraordinary general meeting be approved.”

Recommendation of the SRNG Board

THE SRNG BOARD UNANIMOUSLY RECOMMENDS THAT ITS SHAREHOLDERS VOTE “FOR” THE APPROVAL OF THE ADJOURNMENT PROPOSAL.

The existence of financial and personal interests of one or more of SRNG’s directors may result in a conflict of interest on the part of such director(s) between what they may believe is in the best interests of SRNG and its shareholders and what they may believe is best for himself or themselves in determining to recommend that shareholders vote for the proposals. See the section entitled “The Business Combination Proposal—Interests of SRNG’s Directors and Officers and Others in the Business Combination” for a further discussion.

 

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UNAUDITED PRO FORMA CONDENSED COMBINED FINANCIAL INFORMATION

The following unaudited pro forma condensed combined financial information present the combination of the financial information of SRNG and the Company adjusted to give effect to the Business Combination. The following unaudited pro forma condensed combined financial information has been prepared in accordance with Article 11 of Regulation S-X as amended by the final rule, Release No. 33-10786 “Amendments to Financial Disclosures about Acquired and Disposed Businesses”.

SRNG is a blank check company incorporated as a Cayman Islands exempted company on October 22, 2020. In February 2021 SRNG effectuated a change in the name of the entity from Spinning Eagle Acquisition Corp to Soaring Eagle Acquisition Corp. SRNG was formed for the purpose of effecting a merger, share exchange, asset acquisition, share purchase, reorganization or similar business combination with one or more businesses. The registration statement for SRNG’s public offering was declared effective on February 23, 2021. On February 26, 2021, SRNG consummated the public offering. SRNG has Public and Private Warrants outstanding. Public Warrants may only be exercised for a whole number of shares. The Public Warrants will become exercisable 30 days after the completion of a Business Combination. The Public Warrants will expire five years from the completion of a Business Combination, or earlier upon redemption or liquidation. The Private Placement Warrants are identical to the Public Warrants, except that (x) the Private Placement Warrants and the Class A ordinary shares issuable upon the exercise of the Private Placement Warrants will not be transferable, assignable or salable until 30 days after the completion of a Business Combination, subject to certain limited exceptions, (y) the Private Placement Warrants will be exercisable on a cashless basis and be non-redeemable so long as they are held by the initial purchasers or their permitted transferees and (z) the Private Placement Warrants and the Class A ordinary shares issuable upon exercise of the Private Placement Warrants will be entitled to registration rights. If the Private Placement Warrants are held by someone other than the initial purchasers or their permitted transferees, the Private Placement Warrants will be redeemable by the Company and exercisable by such holders on the same basis as the Public Warrants. Refer to SRNG’s audited and unaudited interim consolidated financial statements included elsewhere in this proxy statement/prospectus for further details on the terms of the Public and Private Placement Warrants.

Ginkgo Bioworks, Inc. designs custom programming cells to enable customers to leverage biology to create impactful products across a range of industries.

The unaudited pro forma condensed combined balance sheet as of March 31, 2021 combines the historical balance sheets of SRNG and the Company, on a pro forma basis as if the Business Combination, summarized below, had been consummated on March 31, 2021. The unaudited pro forma condensed combined statements of operations for the year ended December 31, 2020 and the three months ended March 31, 2021 combine the historical statements of operations of SRNG and the Company for such periods, on a pro forma basis as if the Business Combination, summarized below, had been consummated on January 1, 2020, the beginning of the earliest period presented, giving effect to:

 

   

the reverse recapitalization between SRNG and the Company; and

 

   

the issuance and sale of 77,500,000 shares of New SRNG Class A common stock at a purchase price of $10.00 per share and an aggregate purchase price of $775.0 million pursuant to the PIPE Investment.

The unaudited pro forma condensed combined financial statements were derived as described below and should be read in conjunction with:

 

   

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

 

   

the historical audited financial statements of the Company as of and for the year ended December 31, 2020 and the related notes included elsewhere in this proxy statement;

 

   

the historical unaudited financial statements of the Company as of and for the three months ended March 31, 2021 and the related notes included elsewhere in this proxy statement/prospectus;

 

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the historical audited financial statements of SRNG as of and for the period from October 22, 2020 (inception) to December 31, 2020 and the related notes included elsewhere in this proxy statement;

 

   

the historical unaudited financial statements of SRNG as of and for the three months ended March 31, 2021 and the related notes included elsewhere in this proxy statement/prospectus; and

 

   

other information relating to SRNG and the Company contained in this proxy statement, including the Merger Agreement.

The unaudited pro forma condensed combined financial information contained herein assumes that SRNG shareholders approve the proposed Business Combination. The SRNG shareholders may elect to redeem their SRNG Class A ordinary shares for cash even if they approve the proposed Business Combination. SRNG cannot predict how many of its public shareholders will exercise their right to have their SRNG Class A ordinary shares redeemed for cash. As a result, the unaudited pro forma condensed combined financial statements present two redemption scenarios as follows:

 

   

Assuming No Redemption: This presentation assumes that no SRNG public shareholders exercise redemption rights with respect to their SRNG Class A ordinary shares for a pro rata share of the funds in the Trust Account.

 

   

Assuming Maximum Redemption: This presentation assumes that SRNG public shareholders holding approximately 125.0 million SRNG Class A ordinary shares will exercise their redemption rights for an aggregate payment of $1,250.0 million (based on the estimated per share redemption price of approximately $10.00 per share) from the Trust Account. The Merger Agreement includes a condition to closing the Business Combination that, at the Closing, SRNG will have a minimum of $1,250.0 million in cash comprising (i) the cash held in the trust account after giving effect to the SRNG share redemptions (ii) proceeds from the Private Placement and (iii) Net Ancillary Investment Amount, which is currently zero.

Description of the Business Combination

The aggregate merger consideration to be received by the Company stockholders in connection with the Business Combination is expected to be approximately an aggregate of $15.0 billion, which will include shares of New Ginkgo Class A common stock and New Ginkgo Class B common stock, respectively, valued at $10.00 per share to the Company stockholders. The shares of New Ginkgo Class B common stock will have the same economic terms as the shares of New Ginkgo Class A common stock, except that the shares of New Ginkgo Class A common stock will have 1 vote per share and the shares of New Ginkgo Class B common stock will have 10 votes per share. Generally, the outstanding shares of New Ginkgo Class B common stock will convert to shares of New Ginkgo Class A common stock when the holder thereof ceases to be a director or employee of New Ginkgo or upon transfer to a person who is not a director or employee of New Ginkgo. The Merger Agreement also contemplates that the holders of Ginkgo common stock, Ginkgo options, Ginkgo restricted stock awards, Ginkgo restricted stock unit awards, and Ginkgo preferred warrants outstanding immediately prior to the effective time of the Business Combination will collectively be entitled to receive up to approximately 180,000,000 earn-out shares of New Ginkgo common stock, which are divided into four equal tranches subject to vesting terms during the five-year period following the closing date of the Business Combination.

The Company also obtained PIPE Investment commitments from certain investors for a private placement of at least 77,500,000 shares of SRNG Class A common stock pursuant to the terms of the Subscription Agreements for an aggregate purchase price equal to $775.0 million.

If the SRNG shareholders’ redemption of SRNG Class A common stock in connection with the Business Combination is in the amount of no greater than $387.5 million, the Sponsor will initially receive a number of shares of Class A common stock of New Ginkgo equal to 70% of the SRNG Class B common stock it owns prior to the Closing, or 30,082,500 shares (the “Upfront Shares”). Therefore, 30,232,500 outstanding shares, which

 

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include 150,000 SRNG director shares under a no redemption scenario, are shown below in the capitalization at the Closing table within the “SRNG sponsor stockholders” line. If the Shareholder Redemption is in an amount greater than $387.5 million, the Upfront Shares initially received by the Sponsor in connection with the Business Combination will be further reduced by a “Restructured Amount,” which is equal to 42,975,000 Class B common stock held by the Sponsor immediately prior to the Closing multiplied by a percentage, the numerator of which is the dollar amount of the Shareholder Redemption, as offset by the amount of any incremental proceeds raised by SRNG outside of the PIPE Investment, and the denominator of which is the sum of SRNG’s trust account balance (before giving effect to the Shareholder Redemption) and the PIPE Investment amount of $775 million. The capitalization table below reflects the base Upfront Shares, adjusted based on the formula noted above, under the no redemption and maximum redemption scenarios.

In connection with the Business Combination, the Sponsor will, subject to certain vesting conditions, be entitled receive a number of earn-out shares (the “Sponsor Earn-out Shares”) up to the difference between 30% of the number of Class B common stock held by the Sponsor prior to the Closing (or 12,892,500 shares), minus the excess (if any) of the Restructured Amount over the Upfront Shares, plus 25% of the Restructured Amount. The Sponsor Earn-out Shares are divided into four equal tranches that will vest in accordance with the same milestones applicable to the Seller Earn-out Shares described above under the section “Merger Agreement.” The capitalization table below reflects the Earn-Out shares, adjusted based on the formula noted above, under the no redemption and maximum redemption scenarios.

The Sponsor also agreed that, at the Closing, it will forfeit 10% of the private placement warrants it holds immediately prior to the Closing and that, contingent upon the Closing, it will waive any anti-dilution right pursuant to the organizational documents of SRNG.

The following summarizes the pro forma shares of New Ginkgo Class A common stock and New Ginkgo Class B common stock outstanding under the two scenarios:

 

    Assuming No
Redemption
    Assuming Maximum
Redemption
 

actuals

  Shares     %     Shares     %  

SRNG public stockholders

    172,500,000       9.7     47,495,544       2.9

SRNG sponsor stockholders

    30,232,500       1.7     7,774,775       0.6
 

 

 

   

 

 

   

 

 

   

 

 

 

Total SRNG

    202,732,500       11.4     55,270,319       3.5

Ginkgo Class A Common Stock

    946,023,405       53.1     946,023,405       57.9

Ginkgo Class B Common Stock

    554,024,323       31.1     554,024,323       33.9
 

 

 

   

 

 

   

 

 

   

 

 

 

Total Ginkgo

    1,500,047,728       84.2     1,500,047,728       91.8

PIPE Investors

    77,500,000       4.4     77,500,000       4.7
 

 

 

   

 

 

   

 

 

   

 

 

 

Total shares outstanding at close, excluding shares below

    1,780,280,228       100.0     1,632,818,047       100.0

Ginkgo Earn-out Consideration

    180,000,000         180,000,000    

Sponsor Earn-out Shares

    12,892,500         18,506,931    

SRNG Shares Underlying Public and Private Warrants

    51,825,000         51,825,000    
 

 

 

     

 

 

   

Total Shares at Closing (including shares above)

    2,024,997,728         1,883,149,978    

 

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UNAUDITED PRO FORMA CONDENSED COMBINED BALANCE SHEET

AS OF MARCH 31, 2021

(in thousands)

 

                Assuming No Redemptions
Scenario
    Assuming Maximum
Redemptions Scenario
 
    Ginkgo
(Historical)
    SRNG
(Historical)
    Transaction
Accounting
Adjustments
          Pro Forma
Combined
    Transaction
Accounting
Adjustments
          Pro Forma
Combined
 

Assets

               

Current assets

               

Cash and cash equivalents

  $ 308,128     $ 1,917     $ 1,725,045       (a   $ 2,673,568     $ (1,250,045     (j   $ 1,423,523  
    —         —         775,000       (b     —         —           —    
    —         —         (60,375     (c     —         —           —    
    —         —         (74,625     (d     —         —           —    
    —         —         (1,522     (h     —         —           —    

Accounts receivable, net

    24,389       —         —           24,389       —           24,389  

Accounts receivable, net from related parties

    7,058       —         —           7,058       —           7,058  

Inventory, net

    3,417       —         —           3,417       —           3,417  

Prepaid expenses and other current assets

    19,205       1,069       —           20,274       —           20,274  
 

 

 

   

 

 

   

 

 

     

 

 

   

 

 

     

 

 

 

Total current assets

    362,197       2,986       2,363,523         2,728,706       (1,250,045       1,478,661  

Cash held in trust account

    —         1,725,045       (1,725,045     (a     —         —           —    

Property and equipment, net

    141,919       —         —           141,919       —           141,919  

Investments

    64,122       —         —           64,122       —           64,122  

Equity method investments

    47,595       —         —           47,595       —           47,595  

Intangible assets, net

    3,157       —         —           3,157       —           3,157  

Goodwill

    1,857       —         —           1,857       —           1,857  

Loans receivable, net of current portion

    11,635       —         —           11,635       —           11,635  

Other non-current assets

    11,017       —         —           11,017       —           11,017  
 

 

 

   

 

 

   

 

 

     

 

 

   

 

 

     

 

 

 

Total assets

  $ 643,499     $ 1,728,031     $ 638,478       $ 3,010,008     $ (1,250,045     $ 1,759,963  
 

 

 

   

 

 

   

 

 

     

 

 

   

 

 

     

 

 

 

Liabilities and Stockholders’ Equity

               

Current liabilities

               

Accounts payable

  $ 14,229     $ —       $ —         $ 14,229     $ —         $ 14,229  

Accounts payable and accrued expenses

    —         1,522       (1,522     (h     —         —           —    

Accrued expenses and other current liabilities

    51,533       —         —           51,533       —           51,533  

Deferred revenue

    33,249       —         —           33,249       —           33,249  
 

 

 

   

 

 

   

 

 

     

 

 

   

 

 

     

 

 

 

Total current liabilities

    99,011       1,522       (1,522       99,011       —           99,011  
 

 

 

   

 

 

   

 

 

     

 

 

   

 

 

     

 

 

 

Non-current liabilities

               

Deferred underwriting compensation

    —         60,375       (60,375     (c     —         —           —    

Deferred rent, net of current portion

    13,366       —         —           13,366       —           13,366  

Deferred revenue, net of current portion

    114,159       —         —           114,159       —           114,159  

Lease financing obligation

    16,439       —         —           16,439       —           16,439  

Warrant Liabilities

    —         88,343       —           88,343       —           88,343  

Other non-current liabilities

    4,955       —         —           4,955       —           4,955  
 

 

 

   

 

 

   

 

 

     

 

 

   

 

 

     

 

 

 

Total liabilities

    247,930       150,240       (61,897       336,273       —           336,273  
 

 

 

   

 

 

   

 

 

     

 

 

   

 

 

     

 

 

 

 

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Table of Contents
                Assuming No Redemptions
Scenario
    Assuming Maximum
Redemptions Scenario
 
    Ginkgo
(Historical)
    SRNG
(Historical)
    Transaction
Accounting
Adjustments
          Pro Forma
Combined
    Transaction
Accounting
Adjustments
          Pro Forma
Combined
 

Commitments and contingencies:

               

Class A common stock subject to possible redemption

    —         1,572,791       (1,572,791     (e     —         —           —    

Stockholders’ Equity

               

Class A ordinary shares, $0.0001 par value

    —         2       8       (b     123       (13     (j     108  
    —         —         2       (e     —         (2     (j     —    
    —         —         4       (f     —         —           —    
    —         —         107       (i     —         —           —    

Class B ordinary shares, $0.0001 par value

    —         4       (4     (f     55       —           55  
    —         —         55       (i     —         —           —    

Series B convertible preferred stock, $0.01 par value

    41       —         (41     (i     —         —           —    

Series C convertible preferred stock, $0.01 par value

    47       —         (47     (i     —         —           —    

Series D convertible preferred stock, $0.01 par value

    61       —         (61     (i     —         —           —    

Series E convertible preferred stock, $0.01 par value

    35       —         (35     (i     —         —           —    

Common stock, $0.01 par value

    79       —         (79     (i     —         —           —    

Additional paid in capital

    929,286       —         774,992       (b     3,208,141       337       (d     1,958,448  
    —         —         (74,021     (d     —         2       (j     —    
    —         —         1,572,789       (e     —         (1,250,032     (j     —    
    —         —         4,994       (g     —         —           —    
    —         —         100       (i     —         —           —    

Accumulated deficit

    (541,447     4,994       (4,994     (g     (542,051     (337     (d     (542,388
    —         —         (604     (d     —         —           —    
 

 

 

   

 

 

   

 

 

     

 

 

   

 

 

     

 

 

 

Total Ginkgo Bioworks, Inc. stockholders’ equity

    388,102       5,000       2,273,166         2,666,268       (1,250,045       1,416,223  

Non-controlling interest

    7,467       —         —           7,467       —           7,467  
 

 

 

   

 

 

   

 

 

     

 

 

   

 

 

     

 

 

 

Total stockholders’ equity

    395,569       5,000       2,273,166         2,673,735       (1,250,045       1,423,690  
 

 

 

   

 

 

   

 

 

     

 

 

   

 

 

     

 

 

 

Total Liabilities and Stockholders’ Equity

  $ 643,499     $ 1,728,031     $ 638,478       $ 3,010,008     $ (1,250,045     $ 1,759,963  
 

 

 

   

 

 

   

 

 

     

 

 

   

 

 

     

 

 

 

 

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UNAUDITED PRO FORMA CONDENSED COMBINED STATEMENT OF OPERATIONS

FOR THE THREE MONTHS ENDED MARCH 31, 2021

(in thousands, except share and per share data)

 

    Ginkgo
(Historical)
    SRNG
(Historical)
    Assuming No Redemptions
Scenario
    Assuming Maximum
Redemptions Scenario
 
    Transaction
Accounting
Adjustments
    Pro Forma
Combined
    Transaction
Accounting
Adjustments
    Pro Forma
Combined
 

Foundry revenue

  $ 22,504     $ —       $ —       $ 22,504     $ —       $ 22,504  

Biosecurity revenue

           

Product

    5,775       —         —         5,775       —         5,775  

Service

    15,818       —         —         15,818       —         15,818  
 

 

 

   

 

 

   

 

 

   

 

 

   

 

 

   

 

 

 

Total revenue

    44,097       —         —         44,097       —         44,097  
 

 

 

   

 

 

   

 

 

   

 

 

   

 

 

   

 

 

 

Costs and operating expenses

           

Cost of Biosecurity product revenue

    9,935       —         —         9,935       —         9,935  

Cost of Biosecurity service revenue

    13,765       —         —         13,765       —         13,765  

Research and development

    59,585       —         —         59,585       —         59,585  

General and administrative

    17,927       295       —         18,222       —         18,222  
 

 

 

   

 

 

   

 

 

   

 

 

   

 

 

   

 

 

 

Total operating expenses

    101,212       295       —         101,507       —         101,507  
 

 

 

   

 

 

   

 

 

   

 

 

   

 

 

   

 

 

 

Loss from operations

    (57,115     (295     —         (57,410     —         (57,410
 

 

 

   

 

 

   

 

 

   

 

 

   

 

 

   

 

 

 

Other income (expense), net:

           

Interest income

    111       —         —         111       —         111  

Interest expense

    (586     —         —         (586     —         (586

Loss on equity method investments

    (19,620     —         —         (19,620     —         (19,620

Gain on investments

    3,618       —         —         3,618       —         3,618  

Change in fair value of warrant liabilities

    —         9,533       —         9,533       —         9,533  

Offering costs related to warrant liabilities

    —         (3,520     (604 )  (bb)      (4,124     (337 )  (bb)      (4,461

Net gain from investments held in trust account

    —         45       —         45       —         45  

Other expense, net

    (1,345     —         —         (1,345     —         (1,345
 

 

 

   

 

 

   

 

 

   

 

 

   

 

 

   

 

 

 

Total other income (expense), net

    (17,822     6,058       (604     (12,368     (337     (12,705

Loss before income taxes

    (74,937     6,058       (604     (69,483     (337     (69,820

Income tax (benefit) provision

    (159     —         (1 )  (cc)      (160     (1 )  (cc)      (161
 

 

 

   

 

 

   

 

 

   

 

 

   

 

 

   

 

 

 

Net loss and comprehensive loss

    (74,778     6,058       (603     (69,323     (336     (69,659
 

 

 

   

 

 

   

 

 

   

 

 

   

 

 

   

 

 

 

Net loss and comprehensive loss attributable to non-controlling interest

    (1,209     —         —         (1,209     —         (1,209
 

 

 

   

 

 

   

 

 

   

 

 

   

 

 

   

 

 

 

Net loss and comprehensive loss attributable to Ginkgo Bioworks, Inc. stockholders

  $ (73,569   $ 6,058     $ (603   $ (68,114   $ (336   $ (68,450
 

 

 

   

 

 

   

 

 

   

 

 

   

 

 

   

 

 

 

Net loss per share attributable to Ginkgo Bioworks, Inc. common stockholders, basic and diluted

  $ (9.33     —         —         —         —         —    

Weighted average common shares outstanding, basic and diluted

    7,885,537       —         —         —         —         —    

Pro forma weighted average common stock outstanding—Class A Common Stock

    —         —         —         1,226,255,905       —         1,078,793,724  

Net loss per Class A Common Stock—basic and diluted

    —         —         —       $ (0.04     —       $ (0.04

Pro forma weighted average common stock outstanding—Class B Common Stock

    —         —         —         554,024,323       —         554,024,323  

Net loss per Class B Common Stock—basic and diluted

    —         —         —       $ (0.04     —       $ (0.04

 

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Table of Contents

UNAUDITED PRO FORMA CONDENSED COMBINED STATEMENT OF OPERATIONS

FOR THE YEAR ENDED DECEMBER 31, 2020

(in thousands, except share and per share data)

 

                      Assuming No
Redemptions Scenario
    Assuming Maximum Redemptions
Scenario
 
    Ginkgo
(Historical)
    SRNG
(Historical)
    IPO
Consummation
    Transaction
Accounting
Adjustments
    Pro Forma
Combined
    Transaction
Accounting
Adjustments
    Pro Forma
Combined
 
                (aa)                          

Foundry revenue

  $ 59,221     $ —       $ —       $ —       $ 59,221     $ —       $ 59,221  

Biosecurity revenue

             

Product

    8,707       —         —         —         8,707       —         8,707  

Service

    8,729       —         —         —         8,729       —         8,729  
 

 

 

   

 

 

   

 

 

   

 

 

   

 

 

   

 

 

   

 

 

 

Total revenue

    76,657       —         —         —         76,657       —         76,657  
 

 

 

   

 

 

   

 

 

   

 

 

   

 

 

   

 

 

   

 

 

 

Costs and operating expenses

             

Cost of Biosecurity product revenue

    6,705       —         —         —         6,705       —         6,705  

Cost of Biosecurity service revenue

    8,906       —         —         —         8,906       —         8,906  

Research and development

    159,767       —         —         —         159,767       —         159,767  

General and administrative

    38,306       5         —         38,311       —         38,311  
 

 

 

   

 

 

   

 

 

   

 

 

   

 

 

   

 

 

   

 

 

 

Total operating expenses

    213,684       5       —         —         213,689       —         213,689  
 

 

 

   

 

 

   

 

 

   

 

 

   

 

 

   

 

 

   

 

 

 

Loss from operations

    (137,027     (5     —         —         (137,032     —         (137,032
 

 

 

   

 

 

   

 

 

   

 

 

   

 

 

   

 

 

   

 

 

 

Other income (expense), net:

             

Interest income

    2,582       —         —         —         2,582       —         2,582  

Interest expense

    (2,385     —         —         —         (2,385     —         (2,385

Loss on equity method investments

    (3,059     —         —         —         (3,059     —         (3,059

Loss on investments

    (1,070     —         —         —         (1,070     —         (1,070

Excess fair value over cash proceeds for Private Placement Warrants

    —         —         (9,817 )  (aa)      —         (9,817     —         (9,817

Warrant related issuance and deal costs

    —         —         (3,520 )  (aa)      (736 )  (bb)      (4,256     (411     (4,668

Other income, net

    16,125       —         —         —         16,125       —         16,125  
 

 

 

   

 

 

   

 

 

   

 

 

   

 

 

   

 

 

   

 

 

 

Total other income (expense), net

    12,193       —         (13,338     (736     (1,881     (411     (2,292

Loss before provision for income taxes

    (124,834     (5     (13,338     (736     (138,913     (411     (139,324

Provision for income taxes

    1,889       —         —         (11 )  (cc)      1,878       (6 )  (cc)      1,872  
 

 

 

   

 

 

   

 

 

   

 

 

   

 

 

   

 

 

   

 

 

 

Net loss and comprehensive loss

    (126,723     (5     (13,338     (725     (140,791     (405     (141,196
 

 

 

   

 

 

   

 

 

   

 

 

   

 

 

   

 

 

   

 

 

 

Net loss and comprehensive loss attributable to non-controlling interest

    (114     —         —         —         (114     —         (114
 

 

 

   

 

 

   

 

 

   

 

 

   

 

 

   

 

 

   

 

 

 

Net loss and comprehensive loss attributable to Ginkgo Bioworks, Inc. stockholders

  $ (126,609   $ (5   $ (13,338   $ (725   $ (140,677   $ (405   $ (141,082
 

 

 

   

 

 

   

 

 

   

 

 

   

 

 

   

 

 

   

 

 

 

Net loss per share attributable to Ginkgo Bioworks, Inc. common stockholders, basic and diluted

  $ (16.18     —         —         —         —         —         —    

Weighted average common shares outstanding, basic and diluted

    7,824,465       —         —         —         —         —         —    

Pro forma weighted average common stock outstanding—Class A Common Stock

    —         —         —         —         1,226,255,905       —         1,078,798,562  

Net loss per Class A Common Stock—basic and diluted

    —         —         —         —       $ (0.08     —       $ (0.09

Pro forma weighted average common stock outstanding—Class B Common Stock

    —         —         —         —         554,024,323       —         554,024,323  

Net loss per Class B Common Stock—basic and diluted

    —         —         —         —       $ (0.08     —       $ (0.09

 

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NOTES TO UNAUDITED PRO FORMA CONDENSED COMBINED FINANCIAL STATEMENTS

1. Basis of Presentation

The unaudited pro forma condensed combined financial information was prepared in accordance with Article 11 of Regulation S-X as amended by the final rule, Release No. 33-10786 “Amendments to Financial Disclosures about Acquired and Disposed Businesses,” using the assumptions set forth in the notes to the unaudited pro forma condensed combined financial information. The unaudited pro forma condensed combined financial information has been adjusted to include Transaction Accounting Adjustments, which reflect the application of the accounting required by U.S. GAAP, linking the effects of the Business Combination, described above, to the SRNG and Company historical financial statements (“Transaction Accounting Adjustments”).

The Business Combination will be accounted for as a reverse recapitalization, in accordance with U.S. GAAP. Under this method of accounting, SRNG will be treated as the “acquired” company for financial reporting purposes. Accordingly, the Business Combination will be treated as the equivalent of the Company issuing stock for the net assets of SRNG, accompanied by a recapitalization. The net assets of SRNG will be stated at historical cost, with no goodwill or other intangible assets recorded. Operations prior to the Business Combination will be those of the Company.

The Company has been determined to be the accounting acquirer based on evaluation of the following facts and circumstances under both the no redemption and maximum redemption scenarios:

 

   

the Company’s existing stockholders will have the largest voting interest in the combined company under the no redemption and maximum redemption scenarios;

 

   

the Company’s former executive management will make up all of the management of New Ginkgo;

 

   

the Company’s existing directors and individuals designated by, or representing, Company stockholders will constitute a majority of the initial New Ginkgo Board following the consummation of the Business Combination;

 

   

New Ginkgo will assume the name “Ginkgo Bioworks Holdings, Inc.;” and

 

   

the Company is the larger entity based on revenue. Additionally, the Company has a larger employee base and substantive operations.

The unaudited pro forma condensed combined balance sheet as of March 31, 2021 assumes that the Business Combination occurred on March 31, 2021. The unaudited pro forma condensed combined statement of operations for the year ended December 31, 2020 and the three months ended March 31, 2021 give pro forma effect to the Business Combination as if it had been completed on January 1, 2020. All periods are presented on the basis of the Company as the accounting acquirer.

The pro forma adjustments are based on the information currently available and reflect assumptions and estimates underlying the pro forma adjustments as described in the accompanying notes. Additionally, the unaudited pro forma condensed combined financial information is based on preliminary accounting conclusions, which are subject to change. As the unaudited pro forma condensed combined financial information has been prepared based on these preliminary estimates and accounting, the final amounts recorded may differ materially from the information presented. The unaudited pro forma condensed combined financial information does not purport to represent the actual results of operations that Ginkgo would have achieved had SRNG and the Company been combined during the periods presented in the unaudited pro forma condensed combined financial statements and is not intended to project the future results of operations that Ginkgo may achieve. The unaudited pro forma condensed combined financial information does not reflect any anticipated synergies, operating efficiencies, tax savings, or cost savings that may be associated with Ginkgo.

 

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The modification of Ginkgo’s equity awards is subject to New Ginkgo Board approval; as such, the unaudited pro forma condensed combined financial information does not reflect this adjustment as the board approval has not yet occurred.

There were no intercompany balances or transactions between SRNG and the Company as of March 31, 2021 and for the year ended December 31, 2020 and the three months ended March 31, 2021 of this unaudited pro forma condensed combined financial information. Accordingly, no pro forma adjustments were required to eliminate the activities between SRNG and the Company.

The pro forma condensed combined provision for income taxes does not necessarily reflect the amounts that would have resulted had SRNG and the Company filed consolidated income tax returns during the periods presented.

2. Accounting Policies

Upon consummation of the Business Combination, management will perform a comprehensive review of the two entities’ accounting policies. As a result of that review, management may identify differences between the accounting policies of the two entities which, when conformed, could have a material impact on the financial statements of Ginkgo. Based on its initial analysis, management did not identify any significant differences that would have a material impact on the unaudited pro forma condensed combined financial information. As a result, the unaudited pro forma condensed combined financial information does not assume any differences in accounting policies.

3. Transaction Accounting Adjustments to Unaudited Pro Forma Condensed Combined Financial Information

Transaction Accounting Adjustments to Unaudited Pro Forma Condensed Combined Balance Sheet

The Transaction Accounting Adjustments included in the unaudited pro forma condensed combined balance sheet as of March 31, 2021 are as follows:

 

  a)

Reflects the reclassification of $1,725.0 million of cash held in the Trust Account that becomes available to consummate the Business Combination

 

  b)

Reflects the proceeds of $775.0 million from the issuance and sale of 77,500,000 shares of New SRNG Class A common stock at $10.00 per share in the PIPE Investment

 

  c)

Reflects the settlement of $60.4 million of SRNG’s deferred underwriters’ fees

 

  d)

Reflects the payment of the remaining $74.6 million estimated transaction costs (the other $60.4 million of the total $135.0 million is explained in tickmark c above). Of the $74.6 million estimated transaction costs, $0.3 million was accrued as of March 31, 2021, $74.0 million is capitalized against APIC and $0.6 million of estimated costs are not eligible to be capitalized, which have been expensed through accumulated deficit in the unaudited pro forma condensed combined balance sheet. In maximum redemption scenario, an incremental $0.3 million is recorded in accumulated deficit and APIC

 

  e)

Reflects the reclassification of SRNG Class A ordinary shares subject to possible redemption to permanent equity

 

  f)

Reflects the reclassification of Founder Shares from Class B common stock to Class A common stock at the Closing

 

  g)

Reflects the elimination of SRNG historical accumulated deficit

 

  h)

Reflects the repayment of $1.5 million of accounts payable and accrued expenses to be settled by close

 

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  i)

Reflects the recapitalization of Ginkgo’s equity and issuance of 1,500.0 million shares under no redemption and maximum redemption of common stock at $0.0001 par value for the reverse recapitalization. Under no redemption and maximum redemption, 946.0 million and 554.0 million is Class A common stock and Class B common stock, respectively. Shares outstanding includes shares for Ginkgo’s outstanding common stock, convertible preferred stock, restricted stock units, warrants, preferred warrants, and options. Shares subject to further vesting and exercise terms are excluded as shown in the capitalization table herein

 

  j)

Represents the redemption of the maximum number of shares of 125.0 million SRNG Class A ordinary shares for $1,250.0 million allocated to Class A ordinary shares and additional paid-in capital using par value of $0.0001 per share and at a redemption price of $10.00 per share (based on the fair value of the cash and investments held in the Trust Account of $1,725.0 million.)

Transaction Accounting Adjustments to Unaudited Pro Forma Condensed Combined Statements of Operations

The Transaction Accounting Adjustments included in the unaudited pro forma condensed combined statement of operations for the three months ended March 31, 2021 and the year ended December 31, 2020 are as follows:

aa) Reflects the adjustment for the excess fair value over cash proceeds received for the private placement warrants that were issued in conjunction with the consummation of SRNG’s public offering on February 26, 2021 along with the allocation of IPO transaction costs to the warrants

bb) Reflects the portion of estimated transaction costs for the Business Combination not eligible for capitalization under the no redemption scenario and the maximum redemption scenario. Transaction costs are reflected as if incurred on January 1, 2020, the date the Business Combination occurred for the purposes of the unaudited pro forma condensed combined statement of operations. This is a non-recurring item

cc) Reflects income tax effect of pro forma adjustments using the estimated effective tax rate of (0.2)% and 1.5% for the three months ended March 31, 2021 and year ended December 31, 2020. In its historical periods, Ginkgo concluded that it is more likely than not that it will not recognize the full benefits of federal and state net deferred tax assets and as a result established a valuation allowance. For pro forma purposes, it is assumed that this conclusion will continue at the close date of the Business Combination and as such, the effective tax rate for each period is reflected

4. Net Loss per Share

Represents the net loss per share calculated using the historical weighted average shares outstanding, and the issuance of additional shares in connection with the Business Combination, assuming the shares were outstanding since January 1, 2020. As the Business Combination and related transactions are being reflected as if they had occurred at the beginning of the periods presented, the calculation of weighted average shares outstanding for basic and diluted net loss per share assumes that the shares issuable relating to the Business Combination have been outstanding for the entire periods presented. When assuming maximum redemption, this calculation is adjusted to eliminate such shares for the entire period. New Ginkgo Class A common stock and New Ginkgo Class B common stock have the same dividend participation rights and economic terms. As a result, the unaudited pro forma condensed combined financial statements follow the two-class method when computing net loss per share.

 

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The unaudited pro forma condensed combined financial information has been prepared assuming two alternative levels of redemption for the three months ended March 31, 2021 and the year ended December 31, 2020 (in thousands, except share and per share data):

 

     Three months ended
March 31, 2021
    Year ended
December 31, 2020
 

(in thousands, except share and per share data)

   Assuming No
Redemptions
    Assuming Max
Redemptions
    Assuming No
Redemptions
    Assuming Max
Redemptions
 

Pro forma net loss

   $ (68,114   $ (68,450   $ (140,677   $ (141,082

Pro forma net loss attributable to Class A Common Stock

   $ (46,917   $ (45,225   $ (96,898   $ (93,212

Pro forma net loss attributable to Class B Common Stock

   $ (21,197   $ (23,226   $ (43,779   $ (47,870

Pro forma weighted average common stock outstanding—Class A Common Stock

     1,226,255,905       1,078,793,724       1,226,255,905       1,078,798,562  

Pro forma weighted average common stock outstanding—Class B Common Stock

     554,024,323       554,024,323       554,024,323       554,024,323  

Basic and diluted net loss per Class A Common Stock

   $ (0.04   $ (0.04   $ (0.08   $ (0.09

Basic and diluted net loss per Class B Common Stock

   $ (0.04   $ (0.04   $ (0.08   $ (0.09

Pro forma weighted average shares outstanding—basic and diluted

        

SRNG public stockholders

     172,500,000       47,495,544      

SRNG sponsor stockholders

     30,232,500       7,774,775      
  

 

 

   

 

 

     

Total SEAC

     202,732,500       55,270,319      

Ginkgo Class A Common Stock

     946,023,405       946,023,405      

Ginkgo Class B Common Stock

     554,024,323       554,024,323      
  

 

 

   

 

 

     

Total Ginkgo(4)

     1,500,047,728       1,500,047,728      

PIPE investors

     77,500,000       77,500,000      
  

 

 

   

 

 

     

Pro forma weighted average shares outstanding—basic and diluted(1)(2)(3)

     1,780,280,228       1,632,818,047      
  

 

 

   

 

 

     

 

(1)

For the purposes of applying the treasury stock method for calculating diluted earnings per share, it was assumed that all outstanding warrants sold in the IPO and warrants sold in the private placement are exchanged for 51.8 million shares of Class A common stock. However, since this results in anti-dilution, the effect of such exchange was not included in the calculation of basic or diluted loss per share.

 

(2)

Excludes 180.0 million and 12.9 million under the no redemption (18.5 million under the maximum redemption scenario) Earnout Shares for Ginkgo and SRNG, respectively as these are not participating securities (shares cannot be used to vote and dividends are forfeitable if the Earnout terms are not met) and result in anti-dilution.

 

(3)

Excludes 3.3 million and 58.5 million of Class A and Class B shares, respectively, underlying unvested restricted stock units for Ginkgo, as they result in anti-dilution.

 

(4)

Includes the shares underlying rollover vested options and preferred warrants, inclusion does not impact the ending loss per share amount.

 

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OTHER INFORMATION RELATED TO SRNG

Introduction

SRNG is a blank check company incorporated on October 22, 2020 as a Cayman Islands exempted company whose business purpose is to effect a merger, capital share exchange, asset acquisition, share purchase, reorganization or similar business combination with one or more businesses. Prior to executing the Merger Agreement, SRNG’s efforts were limited to organizational activities, completion of its initial public offering and the evaluation of possible business combinations.

Initial Public Offering

SRNG has neither engaged in any operations nor generated any revenue to date. Based on SRNG’s business activities, SRNG is a “shell company” as defined under the Exchange Act because it has no operations and nominal assets consisting almost entirely of cash.

On February 26, 2021, SRNG consummated its initial public offering of 172,500,000 units (the “units”), including the issuance of 22,500,000 units as a result of the underwriters’ exercise of their over-allotment option. Each unit consists of one Class A ordinary share and one-fifth of one redeemable warrant. Each whole warrant entitles the holder thereof to purchase one share of Class A ordinary share for $11.50 per share, subject to adjustment. The units were sold at an offering price of $10.00 per unit, generating gross proceeds, before expenses, of $1,725,000,000. Prior to the consummation of the initial public offering, on October 28, 2020, the Sponsor purchased 43,125,000 SRNG Class B ordinary shares for an aggregate purchase price of $25,000, or approximately $0.0006 per share. The number of founder shares issued was determined based on the expectation that the initial public offering would be a maximum of 172,500,000 units and therefore that such founder shares would represent, on an as-converted basis, 20% of the outstanding shares of Class A ordinary shares under the initial public offering.

Simultaneously with the consummation of the initial public offering, SRNG consummated the private sale of an aggregate of 19,250,000 warrants, each exercisable to purchase one SRNG Class A ordinary share at $11.50 per share, to Sponsor at a price of $1.50 per warrant, generating gross proceeds, before expenses, of approximately $28,875,000 (the “private placement warrants”). The private placement warrants are identical to the warrants included in the units sold in the initial public offering, except that, so long as they are held by their initial purchasers or their permitted transferees, (i) they will not be redeemable by SRNG, (ii) they (including the shares of Class A ordinary shares issuable upon exercise of these warrants) may not, subject to certain limited exceptions, be transferred, assigned or sold until 30 days after SRNG completes its initial business combination, (iii) they may be exercised by the holders on a cashless basis and (iv) they will be entitled to registration rights.

Upon the closing of the initial public offering and the private placement warrants, $1,725,000,000 was placed in a Trust Account maintained by Continental Stock Transfer & Trust Company, acting as trustee. Except for the withdrawal of interest to pay taxes, if any, and to fund SRNG’s working capital requirements (subject to an aggregate limit of $3,000,000), the Current Charter provides that none of the funds held in trust will be released from the Trust Account until the earlier of (i) the completion of an initial business combination; (ii) the redemption of any of the Class A Ordinary Shares included in the units sold in the IPO (the “public shares”) properly submitted in connection with a shareholder vote to amend the Company’s Amended Charter (A) to modify the substance or timing of the Company’s obligation to redeem 100% of the public shares if it does not complete its initial business combination within 24 months from the closing of the IPO or (B) with respect to any other material provisions relating to shareholders’ rights or pre-initial business combination activity or (iii) the redemption of the Company’s public shares if it is unable to complete its initial business combination within 24 months from the closing of the IPO, subject to applicable law. The proceeds held in the Trust Account may only be invested in United States “government securities” within the meaning of Section 2(a)(16) of the Investment Company Act of 1940, as amended (the “Investment Company Act”), having a maturity of 185 days or less or in money market funds meeting certain conditions under Rule 2a-7 promulgated under the Investment Company Act which invest only in direct U.S. government treasury obligations.

 

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The net proceeds deposited into the Trust Account remain on deposit in the Trust Account earning interest. As of June 15, 2021, there was $1,725,124,302.45 in investments and cash held in the Trust Account.

Fair Market Value of Ginkgo’s Business

SRNG’s initial business combination must occur with one or more target businesses that together have an aggregate fair market value of at least 80% of the assets held in the Trust Account (excluding the deferred underwriting commissions and taxes payable on the income earned on the Trust Account) at the time of the agreement to enter into the Business Combination. SRNG will not complete a business combination unless it acquires a controlling interest in a target company or is otherwise not required to register as an investment company under the Investment Company Act. The SRNG Board determined that this test was met in connection with the proposed Business Combination.

Shareholder Approval of Business Combination

Under the Current Charter, in connection with any proposed business combination, SRNG must seek shareholder approval of an initial business combination at a meeting called for such purpose at which public shareholders may seek to redeem their public shares, subject to the limitations described in the prospectus for SRNG’s initial public offering. Accordingly, in connection with the Business Combination, the SRNG shareholders may seek to redeem the public shares that they hold in accordance with the procedures set forth in this proxy statement/prospectus.

Voting Restrictions in Connection with Shareholder Meeting

In connection with SRNG’s initial public offering, SRNG’s Sponsor, directors and executive officers at the time of its initial public offering entered into a letter agreement to vote their shares in favor of the Business Combination Proposal and SRNG also expects them to vote their shares in favor of all other proposals being presented at the Special Meeting. As of the date hereof, SRNG’s Sponsor owns approximately 20% of the total outstanding SRNG Shares.

At any time prior to the Special Meeting, during a period when they are not then aware of any material nonpublic information regarding SRNG or its securities, the Sponsor, and Ginkgo and/or its affiliates, subject to applicable law, may purchase shares and/or warrants from investors, or they may enter into transactions with such investors and others to provide them with incentives to acquire SRNG Class A ordinary shares or vote their shares in favor of the Business Combination Proposal. The purpose of such share purchases and other transactions would be to increase the likelihood that the proposals presented to shareholders for approval at the Special Meeting are approved. Any such share purchases and other transactions may thereby increase the likelihood of obtaining shareholder approval of the Business Combination. This may result in the completion of the Business Combination in a way that may not otherwise have been possible. While the exact nature of any such incentives has not been determined as of the date of this proxy statement/prospectus, they might include, without limitation, arrangements to protect such investors or holders against potential loss in value of their shares, including the granting of put options and the transfer to such investors or holders of shares or rights owned by the Sponsor for nominal value.

Liquidation if No Business Combination

SRNG has until February 26, 2023 to complete an initial business combination. If it is unable to complete its initial business combination by that date (or such later date as its shareholders may approve in accordance with the Current Charter), SRNG 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 the public shares, at a per-share price, payable in cash, equal to the aggregate amount then on deposit in the trust account, including interest earned on the funds held in the trust account (less taxes payable and up to $100,000 of interest to pay dissolution expenses),

 

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divided by the number of then outstanding public shares, which redemption will completely extinguish public shareholders’ rights as shareholders (including the right to receive further liquidation distributions, if any) and (iii) as promptly as reasonably possible following such redemption, subject to the approval of SRNG’s remaining shareholders and its board of directors, liquidate and dissolve, subject, in each case to its obligations under Cayman Islands law to provide for claims of creditors and in all cases subject to the other requirements of applicable law. There will be no redemption rights or liquidating distributions with respect to the private placement warrants, which will expire worthless if SRNG fails to complete its initial business combination by February 26, 2023.

The Sponsor, officers and directors have entered into a letter agreement with SRNG, pursuant to which they have waived their rights to liquidating distributions from the trust account with respect to any founder shares held by them if SRNG fails to complete its initial business combination by February 26, 2023. However, if the Sponsor or management team acquire public shares in or after the initial public offering, they will be entitled to liquidating distributions from the trust account with respect to such public shares if SRNG fails to complete its initial business combination by February 26, 2023.

The Sponsor, officers and directors have agreed, pursuant to a written agreement with SRNG, that they will not propose any amendment to the Current Charter (A) to modify the substance or timing of SRNG’s obligation to allow redemption in connection with its initial business combination or to redeem 100% of its public shares if SRNG does not complete its initial business combination within the completion window or (B) with respect to any other material provisions relating to shareholders’ rights or pre-initial business combination activity, unless SRNG provides its public shareholders with the opportunity to redeem their public shares upon approval of any such amendment at a per-share price, payable in cash, equal to 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 SRNG to fund its working capital requirements (subject to an aggregate limit of $3,000,000) and less taxes payable, divided by the number of then outstanding public shares. However, SRNG may not redeem its public shares in an amount that would cause its net tangible assets to be less than $5,000,001. If this optional redemption right is exercised with respect to an excessive number of public shares such that SRNG cannot satisfy the net tangible asset requirement, SRNG would not proceed with the amendment or the related redemption of its public shares at such time.

SRNG expects that all costs and expenses associated with implementing its plan of dissolution, as well as payments to any creditors, will be funded from amounts remaining out of the approximately $800,000 of proceeds held outside the trust account, although SRNG cannot assure you that there will be sufficient funds for such purpose. However, if those funds are not sufficient to cover the costs and expenses associated with implementing its plan of dissolution, to the extent that there is any interest accrued in the trust account not required to pay income taxes on interest income earned on the trust account balance, SRNG may request the trustee to release to it an additional amount of up to $100,000 of such accrued interest to pay those costs and expenses.

If SRNG was to expend all of the net proceeds of the initial public offering and the sale of the private placement warrants, other than the proceeds deposited in the trust account, and without taking into account interest, if any, earned on the trust account, the per-share redemption amount received by shareholders upon its dissolution would be approximately $10.00. The proceeds deposited in the trust account could, however, become subject to the claims of SRNG’s creditors which would have higher priority than the claims of its public shareholders. SRNG cannot assure you that the actual per-share redemption amount received by shareholders will not be substantially less than $10.00. While SRNG intends to pay such amounts, if any, SRNG cannot assure you that SRNG will have funds sufficient to pay or provide for all creditors’ claims.

Although SRNG will seek to have all vendors, service providers, prospective target businesses and other entities with which it does business execute agreements with SRNG waiving any right, title, interest or claim of any kind in or to any monies held in the trust account for the benefit of its public shareholders, there is no

 

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guarantee that they will execute such agreements or even if they execute such agreements that they would 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 an advantage with respect to a claim against its 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, SRNG management will consider whether competitive alternatives are reasonably available to us 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 the company under the circumstances. Examples of possible instances where SRNG 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. WithumSmith+Brown, PC, SRNG’s independent registered public accounting firm, and the underwriters of the initial public offering will not execute agreements with SRNG waiving such claims to the monies held in the trust account. 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 SRNG and will not seek recourse against the trust account for any reason. In order to protect the amounts held in the trust account, SRNG’s sponsor has agreed that it will be liable to SRNG if and to the extent any claims by a third party for services rendered or products sold to SRNG, or a prospective target business with which SRNG has 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) $10.00 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 $10.00 per share due to reductions in the value of the trust assets, less taxes payable, provided that such liability will not apply to any claims by a third party or prospective 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 the indemnity of the underwriters of SRNG’s initial public offering against certain liabilities, including liabilities under the Securities Act. However, SRNG has not asked its sponsor to reserve for such indemnification obligations, nor has it independently verified whether its sponsor has sufficient funds to satisfy its indemnity obligations and SRNG believes that its sponsor’s only assets are securities of SRNG. Therefore, SRNG cannot assure you that its sponsor would be able to satisfy those obligations. As a result, if any such claims were successfully made against the trust account, the funds available for SRNG’s initial business combination and redemptions could be reduced to less than $10.00 per public share. In such event, SRNG may not be able to complete its initial business combination, and you would receive such lesser amount per share in connection with any redemption of your public shares. None of SRNG’s officers or directors will indemnify SRNG for claims by third parties including, without limitation, claims by vendors and prospective target businesses.

In the event that the proceeds in the trust account are reduced below the lesser of (i) $10.00 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 $10.00 per share due to reductions in the value of the trust assets, in each case less taxes payable, and the Sponsor asserts that it is unable to satisfy its indemnification obligations or that it has no indemnification obligations related to a particular claim, SRNG’s independent directors would determine whether to take legal action against our sponsor to enforce its indemnification obligations. While SRNG currently expect that our independent directors would take legal action on its behalf against SRNG’s sponsor to enforce the Sponsor’s indemnification obligations to SRNG, it is possible that SRNG’s independent directors in exercising their business judgment may choose not to do so in any particular instance if, for example, the cost of such legal action is deemed by the independent directors to be too high relative to the amount recoverable or if the independent directors determine that a favorable outcome is not likely. Accordingly, SRNG cannot assure you that due to claims of creditors the actual value of the per-share redemption price will not be less than $10.00 per share.

SRNG will seek to reduce the possibility the Sponsor will have to indemnify the trust account due to claims of creditors by endeavoring to have all vendors, service providers, prospective target businesses or other entities

 

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with which SRNG does business execute agreements with SRNG waiving any right, title, interest or claim of any kind in or to monies held in the trust account. The Sponsor will also not be liable as to any claims under its indemnity of the underwriters of the initial public offering against certain liabilities, including liabilities under the Securities Act. SRNG will have access to up to approximately $2,200,000 from the proceeds of the initial public offering with which to pay any such potential claims (including costs and expenses incurred in connection with its liquidation, currently estimated to be no more than approximately $100,000). In the event that SRNG liquidates and it is subsequently determined that the reserve for claims and liabilities is insufficient, shareholders who received funds from its trust account could be liable for claims made by creditors.

If SRNG files a bankruptcy or winding-up petition or an involuntary bankruptcy or winding-up petition is filed against SRNG that is not dismissed, the proceeds held in the trust account could be subject to applicable bankruptcy or insolvency law, and may be included in our bankruptcy estate and subject to the claims of third parties with priority over the claims of SRNG’s shareholders. To the extent any bankruptcy claims deplete the trust account, SRNG cannot assure you it will be able to return $10.00 per share to its public shareholders. Additionally, if SRNG files a bankruptcy or winding-up petition or an involuntary bankruptcy or winding-up petition is filed against SRNG that is not dismissed, any distributions received by shareholders could be viewed under applicable debtor/creditor and/or bankruptcy or insolvency laws as either a “preferential transfer” or a “fraudulent conveyance.” As a result, a bankruptcy or insolvency court could seek to recover some or all amounts received by SRNG’s shareholders. Furthermore, the SRNG Board may be viewed as having breached its fiduciary duty to its creditors and/or may have acted in bad faith, and thereby exposing itself and SRNG to claims of punitive damages, by paying public shareholders from the trust account prior to addressing the claims of creditors. SRNG cannot assure you that claims will not be brought against it for these reasons.

SRNG’s public shareholders will be entitled to receive funds from the trust account only (i) in the event of the redemption of our public shares if SRNG does not complete its initial business combination within the completion window, (ii) in connection with a shareholder vote to amend the Current Charter (A) to modify the substance or timing of SRNG’s obligation to allow redemption in connection with SRNG’s initial business combination or to redeem 100% of SRNG’s public shares if it does not complete its initial business combination within the completion window or (B) with respect to any other material provisions relating to shareholders’ rights or pre-initial business combination activity or (iii) if they redeem their respective shares for cash upon the completion of its initial business combination. In no other circumstances will a shareholder have any right or interest of any kind to or in the trust account. In the event SRNG seeks shareholder approval in connection with its initial business combination, a shareholder’s voting in connection with the business combination alone will not result in a shareholder’s redeeming its shares to SRNG for an applicable pro rata share of the trust account. Such shareholder must have also exercised its redemption rights described above. These provisions of SRNG’s Current Charter, like all provisions of SRNG’s Current Charter, may be amended with a shareholder vote.

Properties

SRNG currently sub-leases its executive offices at 955 Fifth Avenue, New York, NY, 10075 from Global Eagle Acquisition LLC, an entity affiliated with the Sponsor and the members of SRNG’s management team. SRNG has agreed to reimburse such entity for office space, secretarial and administrative services provided to members of its management team in an amount not to exceed $15,000 per month in the event such space and/or services are utilized and SRNG does not pay a third party directly for such services. SRNG believes, based on rents and fees for similar services, that this amount is at least as favorable as it could have obtained from an unaffiliated person. SRNG considers its current office space adequate for its current operations.

Employees

SRNG currently has two executive officers: Harry E. Sloan and Eli Baker. These individuals are not obligated to devote any specific number of hours to SRNG’s matters but they intend to devote as much of their time as they deem necessary to SRNG’s affairs until it has completed an initial business combination. The

 

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amount of time they will devote in any time period will vary based on whether a target business has been selected for an initial business combination and the stage of the Business Combination process it is in. SRNG does not intend to have any full time employees prior to the completion of its initial business combination.

Directors and Executive Officers

SRNG’s directors and executive officers are as follows:

 

Name

   Age     

Position

Harry E. Sloan

     71     

Chief Executive Officer and Chairman

Eli Baker

     46     

President, Chief Financial Officer and Secretary

Scott M. Delman

     62     

Director

Joshua Kazam

     44     

Director

Isaac Lee

     50     

Director

Timothy Leiweke

Dennis A. Miller

    

64

64

 

 

  

Director

Director

Laurence E. Paul

     56     

Director

Harry E. Sloan has been SRNG’s Chief Executive Officer and Chairman since October 2020. Most recently Mr. Sloan served as Chief Executive Officer and Chairman of Flying Eagle Acquisition Corp. (NYSE: FEAC) (“Flying Eagle”), which raised $690,000,000 in its initial public offering in March 2020 and in December 2020 completed its initial business combination with Skillz Inc., a technology company that enables game developers to monetize their content through fun and fair multi-player competition. Mr. Sloan remains a director of Skillz Inc. Prior to Flying Eagle, Mr. Sloan was a founding investor of Diamond Eagle Acquisition Corp. (“Diamond Eagle”), which raised $400 million in its initial public offering in May 2019 and in April 2020 completed its initial business combination with DraftKings, Inc., a digital sports entertainment and gaming company known for its industry-leading daily fantasy sports and mobile sports betting platforms, and SBTech (Global) Limited, an international turnkey provider of cutting-edge sports betting and gaming technologies. Mr. Sloan now serves as the Vice Chairman of DraftKings, Inc. Prior to Diamond Eagle, Mr. Sloan was a founding investor of Platinum Eagle Acquisition Corp. (“Platinum Eagle”), which raised $325,000,000 in its initial public offering in January 2018, completed its initial business combination in March 2019 with Target Logistics Management, LLC and RL Signor Holdings, LLC and changed its name to Target Hospitality Corp. Target Hospitality is a vertically integrated specialty rental and hospitality services company. Prior to Platinum Eagle, Mr. Sloan was a founding investor of Double Eagle Acquisition Corp. (“Double Eagle”), which raised $500,000,000 in its initial public offering in September 2015. Double Eagle completed its business combination in November 2017, in which its wholly-owned subsidiary acquired 90% of the shares of Williams Scotsman. In the transaction, Double Eagle changed its name to WillScot Corporation. WillScot Corporation is a specialty rental services market leader providing modular space and portable storage solutions to diverse end markets across North America. Mr. Sloan previously served as chairman and chief executive officer of Silver Eagle Acquisition Corp. from April 2013 until the consummation of its initial business combination in March 2015 with Videocon d2h Limited (“Videocon”). From May 2016 to April 2018, Mr. Sloan served on the board of directors of Videocon, where he was a member of its Nomination, Remuneration and Compensation Committee. Mr. Sloan also served as chairman and chief executive officer of Global Eagle Acquisition Corp. from February 2011 until the consummation of its business combination in January 2013, and he remains a director of the combined company, Global Eagle Entertainment Inc. From October 2005 to August 2009, Mr. Sloan served as chairman and chief executive officer of Metro-Goldwyn-Mayer, Inc. (“MGM”), a motion picture, television, home entertainment, and theatrical production and distribution company, and thereafter continued as non-executive chairman until December 2010. MGM filed for bankruptcy protection in 2010. From 1990 to 2002, Mr. Sloan was chairman and chief executive officer of SBS Broadcasting, S.A., a European broadcasting group, operating commercial television, premium pay channels, radio stations and related print businesses in Western and Central and Eastern Europe, which he founded in 1990 and continued as executive chairman until 2005. In 1999, SBS Broadcasting, S.A. became the largest shareholder of Lions Gate Entertainment Corp. (NYSE: LFG.A) (“Lions Gate”), an

 

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independent motion picture and television production company. Mr. Sloan served as chairman of the board of Lions Gate from April 2004 to March 2005. From 1983 to 1989, Mr. Sloan was co-chairman of New World Entertainment Ltd., an independent motion picture and television production company. In January 2011, Mr. Sloan joined the board of Promotora de Informaciones, S.A. (OTCMKTS: PRISY), Spain’s largest media conglomerate which owns El Pais, the leading newspaper in the Spanish-speaking world, as well as pay television, radio and digital properties. He has served on the board of ZeniMax Media Inc., an independent producer of interactive gaming and web content, since 1999. He currently serves on the UCLA Anderson School of Management Board of Visitors and the Executive Board of UCLA Theatre, Film and Television. Mr. Sloan received his B.A. degree from UCLA and J.D. degree from Loyola Law School.

Eli Baker has been SRNG’s President and Chief Financial Officer since October 2020. Mr. Baker is a Partner in Eagle Equity Partners (and its related companies). Most recently Mr. Baker served as President and Chief Financial Officer of Flying Eagle through the consummation of its business combination with Skillz, Inc. in December 2020. Mr. Baker also served as president, chief financial officer and secretary of Diamond Eagle from March 2019 until the consummation of its business combination with DraftKings, Inc., in April 2020. Mr. Baker served as the president, chief financial officer and secretary of Platinum Eagle from July 2017 until the consummation of its business combination with Target Hospitality in March 2019, and remains a member of Target Hospitality’s board of directors. Mr. Baker served as Double Eagle’s vice president, general counsel and secretary from June 2015 through its business combination in November 2017. Mr. Baker was also a director of Silver Eagle from July 2014 through Silver’ Eagle’s business combination in March 2015. Since June 2016, Mr. Baker has served as a co-founder and partner of Manifest Investment Partners, LLC, a growth equity/venture fund that focuses in early stage technology-enabled business. Mr. Baker continues to be co-managing director and a partner in Hemisphere Capital Management LLC, a private finance company that specializes in special opportunity equity and credit investments in the media and entertainment industry. Mr. Baker is a former lawyer and earned his B.A. degree from the University of California, Berkeley and his J.D. degree from the University of California at Hastings Law School.

Scott M. Delman has served on the SRNG Board since the completion of its initial public offering. Mr. Delman served on Flying Eagle’s board of directors from March 2020 through the consummation of its business combination with Skillz, Inc. in December 2020. Mr. Delman also served on Diamond Eagle’s board of directors from December 2019 until the consummation of its business combination with DraftKings, Inc., in April 2020. Mr. Delman is the founder of Blue Spruce Productions, a producer of top Broadway and West End theatrical events, and is also the Managing Partner of DGZ Capital, a private equity firm that acquires ownership stakes in alternative investment firms. Prior to forming DGZ Capital, Mr. Delman was co-founder and President of Capital Z Investments, where he initiated and managed a multi-billion-dollar investment program to sponsor the creation of new alternative asset management companies. Capital Z Investments has invested over $2.0 billion in more than 25 investment firms throughout North America, Europe and Asia. Mr. Delman has served on the boards and advisory councils of various academic, corporate, cultural and public policy organizations such as Third Way, the New America Foundation, The Truman Project, Manhattan Theatre Club, Yale Drama School and the Williamstown Theatre Festival. Mr. Delman graduated with honors from Yale College in 1982 and received his M.B.A. degree from Harvard Business School in 1986. Mr. Delman also served as a Visiting Senior Fellow at Harvard University’s JFK School for Government in 2006 and 2007, where he focused on the intersection between international capital markets and national security.

Joshua Kazam has served on the SRNG Board since the completion of its initial public offering. Mr. Kazam served on Flying Eagle’s board of directors from March 2020 through the consummation of its business combination with Skillz, Inc. in December 2020. Mr Kazam also served on Diamond Eagle’s board of directors from May 2019 until the consummation of its business combination with DraftKings, Inc., in April 2020. Mr. Kazam served as a director of Platinum Eagle from its initial public offering through the completion of its initial business combination in March 2019. Mr. Kazam is a co-founder and has been a Partner of Two River Consulting, LLC (“Two River”) since fall of 2004. Mr. Kazam is also a co-founder, officer and director of Allogene Therapeutics, Inc. (Nasdaq: ALLO), of Kronos Bio Inc. (Nasdaq: KRON), and TS Innovation

 

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Acquisitions and a co-founder of Vida Ventures. Mr. Kazam co-founded and served on the Board of Directors of Kite Pharma, Inc. from its inception in 2009 until it was acquired by Gilead Sciences Inc. (Nasdaq: GILD) in October 2017. Mr. Kazam also serves as a director of several privately held companies, including Iconovir Bio, Hubble Contacts, Byheart, Inc. and Breakthrough Properties, LLC. Mr. Kazam is a Member of the Wharton School’s Undergraduate Executive Board and serves on the Board of Directors of the Desert Flower Foundation. Mr. Kazam received his B.S. degree in Economics from the Wharton School of the University of Pennsylvania.

Isaac Lee has served on the SRNG Board since the completion of its initial public offering. Mr. Lee is a journalist, entrepreneur, and a film and television producer. He is the founder of EXILE, a media company acquiring and developing premium original content for audiences across the U.S. and Latin America. Previously, Mr. Lee served as the Chief Content Officer for Univision and Televisa (the #1 media company in Spanish in the world). For almost 8 years, Mr. Lee ran the news department at Univision. Before Univision, Mr. Lee founded AnimalPolitico, the leading political and investigative news site in Mexico. He also founded and led PageOne Media, publisher of PODER magazine in the U.S., Mexico, Colombia, Chile, Peru, and Venezuela, which was sold in 2006. When Mr. Lee was 25 he was appointed editor-in-chief of Cromos, the oldest magazine in Latin America and at 26 he was appointed editor-in-chief of Semana, Colombia’s most influential magazine. In scripted content, Mr. Lee produced the feature film Paraĺso Travel, three seasons of El Chapo for Netflix as well as the mini-series for TVE Operación Jaque, which was nominated for an international Emmy. He made the first deal with Amazon in Mexico and developed five series for Netflix. In non-scripted, Mr. Lee has produced several documentaries, including the award-winning documentary Science Fair (NatGeo), Outpost (HBO), Residente (Netflix) and Jaque (NatGeo). Mr. Lee is a Board Member of the Associated Press, the Committee to Protect Journalists and Columbia Journalism Review. Mr. Lee is also a member of the Board of Advisors of the Institute of Politics of the University of Chicago, trustee of the Hirshhorn Museum and an active member of the Council On Foreign Relations.

Timothy Leiweke has served on the SRNG Board since the completion of its initial public offering. Mr. Leiweke founded Oak View Group (“OVG”) in 2015 and continues to serve as the company’s Chief Executive Officer. With over 30 years of global sports and entertainment experience, Mr. Leiweke is a widely respected industry leader and has been deeply involved in the evolution of NHL, NBA and MLS. Mr. Leiweke partnered with music industry titan Irving Azoff to launch OVG, a developmental and investment company comprised of an Arena & Stadium Alliance, a sponsorship subsidiary, a security advisory group, and a venture fund division which most recently acquired Pollstar publication and conferences. Prior to OVG, Mr. Leiweke served as President and Chief Executive Officer of Maple Leaf Sports & Entertainment. In his first year with Maple Leaf Sports & Entertainment, Mr. Leiweke led a transformation of the Toronto Raptors, which resulted in a record for wins and back-to-back Division Championships. With Toronto FC, Mr. Leiweke orchestrated a dramatic overhaul, which ignited the club’s first ever playoff berth in 2015. It was during this time that Mr. Leiweke ranked fifth on the Sports Business Journal’s 50 Most Influential and eighth on Billboard’s 100 Most Powerful in Music—the only President & CEO to rank on both lists. During his 18 years at the helm of Anschutz Entertainment Group (“AEG”), Mr. Leiweke led the company’s evolution into a global live entertainment organization capable of developing, producing, marketing and managing sports and entertainment programming in its venues worldwide. It was through Mr. Leiweke’s vision that the $2.5 billion L.A. LIVE complex was built in Downtown Los Angeles, adjacent to the STAPLES Center and the Los Angeles Convention Center. In addition, Mr. Leiweke was the architect of AEG’s global expansion, including development of O2 Arenas and the stadiums in London, China and Germany. Mr. Leiweke then built AEG Live into the second largest promoter in the world with artists including Paul McCartney, Taylor Swift, Rolling Stones, Black Eyed Peas, Kenny Chesney, Celine Dion, The Eagles and Katy Perry. AEG Live also became one of the world’s largest festival organizers through partnerships with the Coachella and Stagecoach Festivals. Deeply committed to the community, Mr. Leiweke and his family dedicate their time to a range of charitable initiatives. Through their work, the Leiwekes have been recognized by numerous organizations, including the Anti-Defamation League’s 2007 Humanitarian Award, Father of the Year by the American Diabetes Association and the Muscular Dystrophy Association’s Man of the Year.

 

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Dennis A. Miller has served on the SRNG Board since the completion of its initial public offering. Mr. Miller served on the board of directors of Global Eagle Acquisition Corp. from May 2011 until the consummation of its business combination in January 2013. Mr. Miller currently serves on the board of Nexstar Broadcasting. Mr. Miller also served on the boards of Radio One, Inc. from September 2011 until 2015 and Storage Upreit Partners, LP from February 2012 until February 2014. In 2005, Mr. Miller became a General Partner of Spark Capital LLC, a venture fund focusing on the tech industry, and is currently a venture partner. In 2000, Mr. Miller became a managing director of Constellation Ventures, the venture partner business anchored by Bear Stearns. From 1998 to 2000, Mr. Miller was executive vice president of Lions Gate. Prior to joining Lions Gate, from 1995 to 1998, Mr. Miller was executive vice president of Sony Pictures Entertainment. While at Sony Pictures Entertainment, Mr. Miller was responsible for all television operations and was actively involved with strategic planning and new media. From 1990 to 1996, Mr. Miller was executive vice president of Turner Network Television (“TNT”), a cable television channel, and in 1993 he took on the additional responsibility for the Turner Entertainment Company, a subsidiary of Turner Broadcasting System, Inc. Mr. Miller received his J.D. Degree from Boalt Law School in 1982 and his B.A. degree in political science from the University of California, San Diego in 1978.

Laurence E. Paul, M.D., has served on the SRNG Board since the completion of its initial public offering. Dr. Paul has been the co-founder and managing principal of Laurel Crown Partners since 2001. Dr. Paul also served on Flying Eagle’s board of directors from May 2020 through the consummation of its business combination with Skillz, Inc. in December 2020. Dr. Paul has extensive experience in private equity investing, the identification, negotiation and purchase of new portfolio companies, sale of existing entities and general strategic and financial involvement and oversight of portfolio companies. From 1994 to 2001, Dr. Paul worked at Donaldson, Lufkin & Jenrette and then Credit Suisse (NYSE: CS) in investment banking, including as a managing director in the Investment Banking Division. Dr. Paul is currently a member of the board of directors for several non-profit organizations and portfolio companies including: Harvard Medical School’s Board of Fellows, Harvard Alumni Association, Children’s Hospital of Los Angeles, Pittsburgh Steelers Football Club, Pro Football Hall of Fame, Crew Knitwear, Kova International, and Vereco. From 2006 to 2017, Dr. Paul was a member of the Board of Governors of the American Red Cross, during which time he served in many roles including Vice Chairman of the board and chairman of the audit committee. Dr. Paul holds a B.A. from Harvard College, an M.D. from Harvard Medical School and an M.B.A. from Stanford University.

Executive Compensation and Director Compensation

None of SRNG’s executive officers or directors have received any cash compensation for services rendered to SRNG. SRNG agrees to reimburse an affiliate of its Sponsor for office space, secretarial and administrative services provided to members of its management team in an amount not to exceed $15,000 per month in the event such space and/or services are utilized and SRNG does not pay a third party directly for such services. The Sponsor, executive officers and directors, or any of their respective affiliates will be reimbursed for any out-of-pocket expenses incurred in connection with activities on SRNG’s behalf, such as identifying potential target businesses and performing due diligence on suitable business combinations. The audit committee will review on a quarterly basis all payments that were made to the Sponsor, executive officers or directors, or SRNG or their affiliates. Any such payments prior to an initial business combination will be made from (i) funds held outside the Trust Account or (ii) interest earned on the Trust Account and released to us to fund the working capital requirements (subject to an aggregate maximum release of $3,000,000).

Number and Terms of Office of Officers and Directors

The SRNG Board consists of six members and is divided into three classes with only one class of directors being elected in each year, and with each class (except for those directors appointed prior to SRNG’s first annual general meeting of shareholders) serving a three-year term. In accordance with Nasdaq corporate governance requirements, SRNG is not required to hold an annual general meeting until one year after SRNG’s first fiscal year end following its listing on Nasdaq. The term of office of the first class of directors, consisting of Scott M.

 

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Delman, Joshua Kazam and Isaac Lee, will expire at SRNG’s first annual general meeting of shareholders. The term of office of the second class of directors, consisting of Timothy Leiweke, Dennis A. Miller and Laurence E. Paul, will expire at the second annual general meeting of shareholders. The term of office of the third class of directors, consisting of Harry E. Sloan and Eli Baker, will expire at the third annual general meeting of shareholders.

SRNG’s officers are appointed by the board of directors and serve at the discretion of the board of directors, rather than for specific terms of office. The SRNG Board is authorized to appoint officers as it deems appropriate pursuant to the Current Charter.

Director Independence

The rules of Nasdaq require that a majority of the SRNG Board be independent within one year of its initial public offering. An “independent director” is defined generally as a person who, in the opinion of the company’s board of directors, has no material relationship with the listed company (either directly or as a partner, shareholder or officer of an organization that has a relationship with the company). The SRNG Board of directors has determined that Messrs. Delman, Kazam, Lee, Leiweke, Miller and Paul are “independent directors” as defined in the Nasdaq listing standards and applicable SEC rules. SRNG’s independent directors will have regularly scheduled meetings at which only independent directors are present.

Legal Proceedings

There is no material litigation, arbitration or governmental proceeding currently pending against SRNG or any members of its management team in their capacity as such, and SRNG and the members of its management team have not been subject to any such proceeding in the 12 months preceding the date of this proxy statement/prospectus.

Periodic Reporting and Audited Financial Statements

SRNG has registered its securities under the Exchange Act and has reporting obligations, including the requirement to file annual and quarterly reports with the Securities and Exchange Commission. In accordance with the requirements of the Exchange Act, SRNG’s annual reports contain consolidated financial statements audited and reported on by SRNG’s independent registered public accounting firm.

 

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MANAGEMENT’S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION AND

RESULTS OF OPERATIONS OF SRNG

The following discussion and analysis of the financial condition and results of operations of Soaring Eagle Acquisition Corp. (for purposes of this section, “SRNG,” “we,” “us” and “our”) should be read in conjunction with the financial statements and related notes of SRNG included elsewhere in this prospectus/proxy statement. This discussion contains forward-looking statements reflecting our current expectations, estimates and assumptions concerning events and financial trends that may affect our future operating results or financial position. Actual results and the timing of events may differ materially from those contained in these forward-looking statements due to a number of factors, including those discussed in the sections entitled “Risk Factors” and “Cautionary Note Regarding Forward-Looking Statements” appearing elsewhere in this prospectus/proxy statement.

Overview

We are a blank check company incorporated as a Cayman Islands exempted company on October 22, 2020 and formed for the purpose of effecting a merger, capital share exchange, asset acquisition, share purchase, reorganization or similar business combination with one or more businesses. Simultaneously with the consummation of our initial public offering, we consummated the private sale of an aggregate of 19,250,000 warrants, each exercisable to purchase one Class A ordinary share, par value $0.0001 per share at $11.50 per share, to Eagle Equity Partners II, LLC at a price of $1.50 per warrant, generating gross proceeds, before expenses, of approximately $28,875,000. We intend to consummate an initial business combination using cash from the proceeds of our initial public offering that closed on February 26, 2021 and the Private Placement, and from additional issuances of, if any, our equity and our debt, or a combination of cash, equity and debt.

As indicated in the accompanying financial statements, at March 31, 2021, we had $1,917,469 in cash and $0 in deferred offering costs. At December 31, 2020, we had $0 in cash, and deferred offering costs of $1,254,190. Further, we expect to incur significant costs in the pursuit of our initial business combination. We cannot assure you that our plans to raise capital or to complete our initial business combination will be successful.

Merger Agreement

On May 11, 2021, we entered into the Merger Agreement with Merger Sub and Ginkgo. If the Merger Agreement is adopted by SRNG’s shareholders, and the transactions contemplated by the Merger Agreement are consummated, Merger Sub will merge with and into Ginkgo with Ginkgo surviving the merger as a wholly owned subsidiary of SRNG. In addition, in connection with and following the consummation of the Business Combination, SRNG will be renamed “Ginkgo Bioworks Holdings, Inc.” and is referred to herein as “New Ginkgo” as of the time following such change of name.

Ginkgo Bioworks, Inc. is building a platform to enable customers to program cells as easily as we can program computers. Ginkgo’s platform is market agnostic and enables biotechnology applications across diverse markets, from food and agriculture to industrial chemicals to pharmaceuticals. Ginkgo is also actively supporting a number of biosecurity efforts to respond to COVID-19, including vaccine manufacturing optimization, therapeutics discovery, and K-12 pooled testing.

Under the Merger Agreement, SRNG has agreed to acquire all of the outstanding equity interests of Ginkgo for (i) the Base Equity Consideration, consisting of approximately $15 billion in aggregate consideration in the form of New Ginkgo common stock valued at $10 per share, plus (ii) the Earn-Out Consideration, consisting of approximately 180 million earn-out shares of New Ginkgo common stock, which are subject to forfeiture to the extent that the vesting conditions described below are not satisfied on or before the fifth anniversary of the closing of the Business Combination. Ginkgo stockholders will receive consideration in the form of shares of New Ginkgo Class A common stock or New Ginkgo Class B common stock, as determined in accordance with the Merger Agreement.

 

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The Base Equity Consideration will be allocated among Ginkgo equity holders as follows: (i) each stockholder of Ginkgo holding shares of Ginkgo Class A common stock or Ginkgo Class B common stock immediately prior to the effective time of the Business Combination will receive, with respect to each share of Ginkgo Class A common stock it holds, a number of shares of New Ginkgo Class A common stock equal to the Base Equity Value Exchange Ratio, (ii) each stockholder of Ginkgo holding shares of Ginkgo Class B common stock immediately prior to the effective time of the Business Combination will receive, with respect to each share of Ginkgo Class B common stock it holds, a number of shares of New Ginkgo Class B common stock equal to the Base Equity Value Exchange Ratio, (iii) each Ginkgo option that is outstanding, immediately prior to the effective time of the Business Combination, will be assumed and converted into a New Ginkgo option with the same terms and conditions as applied to the original Ginkgo option, with appropriate adjustments to the number of shares for which such option is exercisable and the exercise price thereof, (iv) each Ginkgo restricted stock award that is outstanding immediately prior to the effective time of the Business Combination will be converted into a New Ginkgo restricted stock award equal to the Base Equity Value Exchange Ratio on the same terms and conditions as applicable to such Ginkgo restricted stock award, with appropriate adjustments to the number of shares to which each such New Ginkgo restricted stock award relates, (v) each Ginkgo restricted stock unit award that is outstanding immediately prior to the effective time of the Business Combination will be converted into a New Ginkgo restricted stock unit on the same terms and conditions as applicable to such Ginkgo restricted stock unit award, with appropriate adjustments to the number of shares to which each such New Ginkgo restricted stock unit relates, and (vi) each Ginkgo warrant that is outstanding and unexercised immediately prior to the effective time of the Business Combination and that is not automatically exercised in full in accordance with its terms by virtue of the occurrence of the Business Combination will be assumed and converted into a New Ginkgo assumed warrant on the same terms and conditions as applied to the original Ginkgo warrant immediately prior to the effective time of the Business Combination, with appropriate adjustments to the number of shares for which such New Ginkgo assumed warrant is exercisable and the exercise price thereof.

In addition, the Merger Agreement contemplates that the holders of Ginkgo common stock, Ginkgo options, Ginkgo restricted stock awards, Ginkgo restricted stock unit awards and Ginkgo warrants outstanding immediately prior to the effective time of the Business Combination will collectively be entitled to receive the Earnout Consideration, which is divided into four equal tranches subject to vesting during the Earn-out Period based on the conditions below:

 

   

if the trading price per share of New Ginkgo Class A common stock at any point during the trading hours of a trading day is greater than or equal to $12.50 for any 20 trading days within any period of 30 consecutive trading days during the Earn-out Period, 25% of the Earn-out Consideration will immediately vest;

 

   

if the trading price per share of New Ginkgo Class A common stock at any point during the trading hours of a trading day is greater than or equal to $15.00 for any 20 trading days within any period of 30 consecutive trading days during the Earn-out Period, an additional 25% of the Earn-out Consideration will immediately vest;

 

   

if the trading price per share of New Ginkgo Class A common stock at any point during the trading hours of a trading day is greater than or equal to $17.50 for any 20 trading days within any period of 30 consecutive trading days, an additional 25% of the Earn-out Consideration will immediately vest; and

 

   

if the trading price per share of New Ginkgo Class A common stock at any point during the trading hours of a trading day is greater than or equal to $20.00 for any 20 trading days within any period of 30 consecutive trading days, the remaining 25% of the Earn-out Consideration will immediately vest.

Additionally, the vesting of the Earn-out Consideration will be subject to acceleration in the event of certain transactions resulting in a change of control of New Ginkgo or the acquisition by a third party of assets of New Ginkgo representing at least 50% of New Ginkgo’s assets (by value) on a consolidated basis or generating at least 50% of New Ginkgo’s revenues on a consolidated basis, to the extent that the per-share value of the consideration received by New Ginkgo’s stockholders in such transaction or acquisition is greater than or equal to any of the earn-out targets described above.

 

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To the extent that any of the earn-out targets described above are not achieved the Earn-out Period, the portion of the Earn-out Consideration that remains subject to vesting and forfeiture at the end of the Earn-out Period will be forfeited to New Ginkgo for no consideration and cancelled.

New Ginkgo Class B common stock will have the same economic terms as the New Ginkgo Class A common stock, except that the shares of New Ginkgo Class A common stock will have one vote per share and the shares of New Ginkgo Class B common stock will have 10 votes per share. Generally, the outstanding shares of New Ginkgo Class B common stock will convert to New Ginkgo Class A common stock when the holder thereof ceases to be a director or employee of New Ginkgo or upon transfer to a person who is not a director or employee of New Ginkgo.

The parties to the Merger Agreement have made customary representations, warranties and covenants in the Merger Agreement, including, among others, covenants with respect to the conduct of SRNG, Merger Sub, Ginkgo and its subsidiaries prior to the closing of the Business Combination.

The closing of the Business Combination is subject to certain customary conditions, including, among other things: (i) approval by SRNG’s stockholders and Ginkgo’s stockholders of the Merger Agreement, the Business Combination and certain other actions related thereto; (ii) the expiration or termination of the waiting period (or any extension thereof) applicable under the Hart-Scott-Rodino Antitrust Improvements Act of 1976; (iii) SRNG having at least $1.25 billion of cash at the closing of the Business Combination, consisting of (A) cash held in its trust account after giving effect to redemptions of public shares, if any, but before giving effect to the payment of Ginkgo’s and SRNG’s outstanding transaction expenses, (B) the aggregate gross purchase price received by the Company pursuant to the Subscription Agreements (as defined below) and (C) the amount of any equity investments in Ginkgo between the date of the Merger Agreement and the closing of the Business Combination; and (iv) the shares of New Ginkgo Class A common stock to be issued in connection with the Business Combination having been approved for listing on Nasdaq or the New York Stock Exchange, subject only to official notice of issuance thereof.

The Merger Agreement may be terminated by SRNG or Ginkgo under certain circumstances, including, among others, (i) by mutual written consent of SRNG and Ginkgo, (ii) by either SRNG or Ginkgo if the closing of the Business Combination has not occurred on or before November 11, 2021, and (iii) by either SRNG or Ginkgo if SRNG has not obtained the required approval of its shareholders.

The Business Combination also calls for additional agreements, including, among others, the Subscription Agreements, Share Commitments, as described elsewhere in this proxy statement/prospectus.

Results of Operations and Known Trends or Future Events

We have neither engaged in any significant operations nor generated any revenues to date. Our only activities since inception have been organizational activities, activities relating to our initial public offering, activities relating to identifying and evaluating prospective acquisition candidates and activities relating to general corporate matters. We will not generate any operating revenues until after completion of our initial business combination. We will generate non-operating income in the form of interest income on cash and cash equivalents after this offering. There has been no significant change in our financial or trading position and no material adverse change has occurred since the date of our audited financial statements other than the proceeds received from the IPO which have been reflected in SRNG’s audited balance as of February 26, 2021.

For the three months ended March 31, 2021, SRNG had net income of $5,761,600 which consisted of a non-cash loss of $9,817,500 related to the excess of fair value over the cash received for private placement warrants, $3,520,347 related to offering costs related to warrant liabilities and $295,117 in general and administrative expenses. These losses and expenses were partially offset by $44,564 unrealized gain earned on the Trust Account and a non-cash income of $19,350,000 for decrease in fair value of warrant liabilities. General and administrative expenses of $295,117 is primarily comprised of filing fees and insurance expense.

 

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Liquidity and Capital Resources

Our liquidity needs have been satisfied prior to the completion of the IPO through receipt of a $25,000 capital contribution from our Sponsor in exchange for the issuance of the founder shares to our Sponsor and $300,000 in available loans from our Sponsor.

As of March 31, 2021, SRNG had an unrestricted cash balance of $1,917,469 as well as cash and accrued interest held in trust of $44,564. Our working capital needs will be satisfied through the funds, held outside of the Trust Account, from the IPO. Interest on funds held in the Trust Account may be used to fund our working capital requirements (subject to an aggregate limit of $3,000,000) and/or to pay taxes. Further, the Sponsor or an affiliate of the Sponsor or certain of our officers and directors may, but are not obligated to, loan us funds as may be required. Such loans may be convertible into warrants of the post-Business Combination entity at a price of $1.50 per warrant at the option of the lender. Such warrants would be identical to the private placement warrants. The terms of such loans have not been determined and no written agreements exist with respect to such loans.

A total of $1,725,000,000, comprised of $1,699,125,000 of the proceeds from the IPO (which amount includes $60,375,000 of the underwriters’ deferred discount) and $25,875,000 of the proceeds of the sale of the Private Placement Warrants, was placed in a U.S.-based trust account at J.P. Morgan Chase Bank, N.A. maintained by Continental Stock Transfer & Trust Company, acting as trustee. The proceeds held in the trust account will be invested only in U.S. government treasury obligations with a maturity of 185 days or less or in money market funds meeting certain conditions under Rule 2a-7 under the Investment Company Act which invest only in direct U.S. government treasury obligations. The remaining approximately $800,000 was not held in the trust account. In the event that our offering expenses exceed our estimate of $2,200,000, we may fund such excess with funds not to be held in the trust account. In such case, the amount of funds we intend to be held outside the trust account would decrease by a corresponding amount. Conversely, in the event that the offering expenses are less than our estimate of $2,200,000, the amount of funds we intend to be held outside the trust account would increase by a corresponding amount.

We intend to use substantially all of the funds held in the trust account, including any amounts representing interest earned on the trust account (excluding deferred underwriting commissions) to complete our initial business combination. We may withdraw interest to pay our taxes, if any. Our annual income tax obligations will depend on the amount of interest and other income earned on the amounts held in the trust account. We expect the interest earned on the amount in the trust account will be sufficient to pay our income taxes. To the extent that our equity or debt is used, in whole or in part, as consideration to complete our initial business combination, the remaining proceeds held in the trust account will be used as working capital to finance the operations of the target business or businesses, make other acquisitions and pursue our growth strategies.

In addition, we have entered into forward purchase agreements pursuant to which, if we conduct a private placement transaction in connection with our initial business combination, we will offer the forward purchasers the opportunity to purchase forward purchase shares in connection with our initial business combination. If each of the forward purchasers accepts such offer, it will commit to purchase at least a minimum aggregate amount of forward purchase shares at $10.00 per share equal to no less than (i) the percentage of units purchased by such purchaser in the initial public offering out of the total number of Units sold by the Company in the initial public offering (excluding any Units sold pursuant to the exercise of the underwriters’ over-allotment option) multiplied by (ii) the total number of Class A Shares sold in such private placement transaction in connection with our initial business combination (including such forward purchase shares and any Class A ordinary shares sold pursuant to any other forward purchase agreements). Each forward purchase agreement is subject to conditions, including each forward purchaser specifying the amount of shares no less than the minimum aggregate amount it wishes to purchase after we notify such forward purchaser of our offer to it to purchase forward purchase shares. We may specify, in our sole discretion and at any time prior to or after such forward purchaser has indicated its specified amount, an amount below the specified amount that we are willing to sell to such forward purchaser. Such forward purchaser may choose to accept or reject our offer to purchase the forward purchase shares in its

 

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sole discretion. The forward purchase shares will be identical to the Class A ordinary shares included in the units being sold in the initial public offering, except the forward purchase shares will be subject to certain registration rights. The proceeds from the sale of these forward purchase shares, together with the amounts available to us from the trust account (after giving effect to any redemptions of public shares) and any other equity or debt financing obtained by us in connection with the business combination, may be used to satisfy the cash requirements of the business combination, including funding the purchase price and paying expenses and retaining specified amounts to be used by the post-business combination company for working capital or other purposes.

Each of the forward purchasers has indicated to us an interest to purchase up to 9.9% of the units sold in the (excluding any units sold pursuant to the exercise of the underwriters’ over-allotment option) at the public offering price. However, indications of interest are not binding agreements or commitments to purchase and the forward purchasers may decide not to purchase any units in the initial public offering. In addition, the underwriters could determine to sell fewer units to each forward purchaser than it indicated an interest in purchasing or could determine not to sell any units to each forward purchaser.

Prior to the completion of our initial business combination, we will have available to us the approximately $800,000 of proceeds held outside the trust account. We will use these funds to primarily identify and evaluate target businesses, perform business due diligence on prospective target businesses, travel to and from the offices, plants or similar locations of prospective target businesses or their representatives or owners, review corporate documents and material agreements of prospective target businesses, and structure, negotiate and complete a business combination.

We do not believe we will need to raise additional funds following the initial public offering in order to meet the expenditures required for operating our business prior to our initial business combination. However, if our estimates of the costs of identifying a target business, undertaking in-depth due diligence and negotiating an initial business combination are less than the actual amount necessary to do so, we may have insufficient funds available to operate our business prior to our initial business combination. In order to fund working capital deficiencies or finance transaction costs in connection with an intended initial business combination, the Sponsor or an affiliate of the Sponsor or certain of our officers and directors may, but are not obligated to, loan us funds as may be required. If we complete our initial business combination, we would repay such loaned amounts. In the event that our initial business combination does not close, we may use a portion of the working capital held outside the trust account to repay such loaned amounts but no proceeds from our trust account would be used for such repayment. Such loans may be convertible into private placement warrants of the post business combination entity at a price of $1.50 per warrant at the option of the lender. Such warrants would be identical to the private placement warrants. The terms of such loans, if any, have not been determined and no written agreements exist with respect to such loans. Prior to the completion of our initial business combination, we do not expect to seek loans from parties other than the Sponsor or an affiliate of the Sponsor as we do not believe third parties will be willing to loan such funds and provide a waiver against any and all rights to seek access to funds in our trust account.

We expect our primary liquidity requirements during that period to include approximately $216,000 for legal, accounting, due diligence, travel and other expenses associated with structuring, negotiating and documenting successful business combinations; and approximately $224,000 for Nasdaq and other regulatory fees. We will also reimburse an affiliate of the Sponsor for office space and administrative services provided to members of our management team in an amount not to exceed $15,000 per month in the event such space and/or services are utilized and we do not pay a third party directly for such services.

These amounts are estimates and may differ materially from our actual expenses. In addition, we could use a portion of the funds not being placed in trust to pay commitment fees for financing, fees to consultants to assist us with our search for a target business or as a down payment or to fund a “no-shop” provision (a provision designed to keep target businesses from “shopping” around for transactions with other companies or investors on

 

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terms more favorable to such target businesses) with respect to a particular proposed business combination, although we do not have any current intention to do so. If we entered into an agreement where we paid for the right to receive exclusivity from a target business, the amount that would be used as a down payment or to fund a “no-shop” provision would be determined based on the terms of the specific business combination and the amount of our available funds at the time. Our forfeiture of such funds (whether as a result of our breach or otherwise) could result in our not having sufficient funds to continue searching for, or conducting due diligence with respect to, prospective target businesses.

Moreover, we may need to obtain additional financing to complete our initial business combination, either because the transaction requires more cash than is available from the proceeds held in our trust account or because we become obligated to redeem a significant number of our public shares upon completion of the business combination, in which case we may issue additional securities or incur debt in connection with such business combination. In addition, we intend to target businesses with enterprise values that are greater than we could acquire with the net proceeds of the initial public offering and the sale of the private placement units, and, as a result, if the cash portion of the purchase price exceeds the amount available from the trust account, net of amounts needed to satisfy any redemptions by public shareholders, we may be required to seek additional financing to complete such proposed initial business combination. We may also obtain financing prior to the closing of our initial business combination to fund our working capital needs and transaction costs in connection with our search for and completion of our initial business combination. There is no limitation on our ability to raise funds through the issuance of equity or equity-linked securities or through loans, advances or other indebtedness in connection with our initial business combination, including pursuant to forward purchase agreements or backstop agreements we may enter into following consummation of the initial public offering. Subject to compliance with applicable securities laws, we would only complete such financing simultaneously with the completion of our initial business combination. If we are unable to complete our initial business combination because we do not have sufficient funds available to us, we will be forced to cease operations and liquidate the trust account. In addition, following our initial business combination, if cash on hand is insufficient, we may need to obtain additional financing in order to meet our obligations.

Controls and Procedures

We are not currently required to maintain an effective system of internal controls as defined by Section 404 of the Sarbanes-Oxley Act. We will be required to comply with the internal control requirements of the Sarbanes-Oxley Act for the fiscal year ending December 31, 2021. Only in the event that we are deemed to be a large accelerated filer or an accelerated filer and no longer an emerging growth company would we be required to comply with the independent registered public accounting firm attestation requirement. Further, for as long as we remain an emerging growth company as defined in the JOBS Act, we intend to 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 independent registered public accounting firm attestation requirement.

Prior to the closing of the initial public offering, we did not complete an assessment, nor did our independent registered public accounting firm tested our systems, of internal controls. We expect to assess the internal controls of our target business or businesses prior to the completion of our initial business combination and, if necessary, to implement and test additional controls as we may determine are necessary in order to state that we maintain an effective system of internal controls. A target business may not be in compliance with the provisions of the Sarbanes-Oxley Act regarding the adequacy of internal controls. Many small and mid-sized target businesses we may consider for our initial business combination may have internal controls that need improvement in areas such as:

 

   

staffing for financial, accounting and external reporting areas, including segregation of duties;

 

   

reconciliation of accounts;

 

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proper recording of expenses and liabilities in the period to which they relate;

 

   

evidence of internal review and approval of accounting transactions;

 

   

documentation of processes, assumptions and conclusions underlying significant estimates; and

 

   

documentation of accounting policies and procedures.

Because it will take time, management involvement and perhaps outside resources to determine what internal control improvements are necessary for us to meet regulatory requirements and market expectations for our operation of a target business, we may incur significant expenses in meeting our public reporting responsibilities, particularly in the areas of designing, enhancing, or remediating internal and disclosure controls. Doing so effectively may also take longer than we expect, thus increasing our exposure to financial fraud or erroneous financing reporting.

Once our management’s report on internal controls is complete, we will retain our independent registered public accounting firm to audit and render an opinion on such report when required by Section 404 of the Sarbanes-Oxley Act. The independent registered public accounting firm may identify additional issues concerning a target business’s internal controls while performing their audit of internal control over financial reporting.

Quantitative and Qualitative Disclosures about Market Risk

The net proceeds of the initial public offering and the sale of the private placement warrants held in the trust account will be invested in U.S. government treasury obligations with a maturity of 185 days or less or in money market funds meeting certain conditions under Rule 2a-7 under the Investment Company Act which invest only in direct U.S. government treasury obligations. Due to the short-term nature of these investments, we believe there will be no associated material exposure to interest rate risk.

Off-Balance Sheet Arrangements; Commitments and Contractual Obligations; Quarterly Results

As of March 31, 2021 and December 31, 2020, respectively, we did not have any off-balance sheet arrangements as defined in Item 303(a)(4)(ii) of Regulation S-K and did not have any commitments or contractual obligations. No unaudited quarterly operating data is included in this prospectus as we have not conducted any operations to date.

Contractual Obligations

As of March 31, 2021, we did not have any long-term debt, capital or operating lease obligations. We entered into an administrative services agreement in which we will pay the Sponsor for office space and secretarial and administrative services provided to members of our management team, in an amount not to exceed $15,000 per month.

JOBS Act

The JOBS Act contains provisions that, among other things, relax certain reporting requirements for qualifying public companies. We will qualify as an “emerging growth company” and under the JOBS Act will be allowed to comply with new or revised accounting pronouncements based on the effective date for private (not publicly traded) companies. We are electing to delay the adoption of new or revised accounting standards, and as a result, we may not comply with new or revised accounting standards on the relevant dates on which adoption of such standards is required for non-emerging growth companies. As a result, our financial statements may not be comparable to companies that comply with new or revised accounting pronouncements as of public company effective dates.

Additionally, we are in the process of evaluating the benefits of relying on the other reduced reporting requirements provided by the JOBS Act. Subject to certain conditions set forth in the JOBS Act, if, as an

 

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“emerging growth company,” we choose to rely on such exemptions we may not be required to, among other things, (i) provide an independent registered public accounting firm’s attestation report on our system of internal controls over financial reporting pursuant to Section 404, (ii) provide all of the compensation disclosure that may be required of non-emerging growth public companies under the Dodd-Frank Wall Street Reform and Consumer Protection Act, (iii) comply with any requirement that may be adopted by the PCAOB regarding mandatory audit firm rotation or a supplement to the report of the independent registered public accounting firm providing additional information about the audit and the financial statements (auditor discussion and analysis), and (iv) disclose certain executive compensation related items such as the correlation between executive compensation and performance and comparisons of the CEO’s compensation to median employee compensation. These exemptions will apply for a period of five years following the completion of the initial public offering or until we are no longer an “emerging growth company,” whichever is earlier.

 

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A LETTER FROM GINKGO’S FOUNDERS

Dear stockholders, team, customers, suppliers, friends and community,

Biology is special. Many of the most important things in our lives come from biology. Our food. Our oxygen. Most of our medicines. Our pets. Our families.

Our children are born with wonder about the living world of animals and plants, but we encourage them to grow out of their dinosaur-loving phase and to focus on our human-built world of technology instead. Perhaps it is time to change that.

We have previously called biology “the most powerful manufacturing technology on the planet,” but it is incorrect to call biology a technology. Technologies are invented by humans. We didn’t invent biology—biology invented us. If you compare biology to our human-engineered technologies, our technologies come up laughably short. Biology grows, building itself with no need for factories. Biology repairs itself, healing wounds and illness. If you look at it under a microscope, its atomic structures put our most precise construction techniques, like semiconductor manufacturing, to shame. To top it off, biological materials are perfectly recyclable. And most importantly, biology self-replicates—it is alive.

To be fair, humans have only spent about ten thousand years developing technologies. Biology has had a 4 billion year head-start on us. Humans, however, have recently invented two very important technologies—reading and writing DNA.

In 1952, Rosalind Franklin took the first X-ray picture of DNA. Her image showed that DNA was a double helix, a twisted ladder of paired “letters” that made a molecular code. The code was made up of A’s, T’s, C’s, and G’s instead of 0’s and 1’s like computer code, but it was digital, and its structure implied that someday we would be able to read and write it.

In 1976, Genentech (which originally held Ginkgo’s new stock ticker, DNA), brought DNA writing to the world by building on the academic work of its founder Herbert Boyer, who “cut-and-pasted” the first gene from one species to another in 1973. Genentech launched the first biotech therapeutic, human insulin for diabetics, and then vertically integrated to become a pharmaceutical company. Today, more than a third of new therapeutic drugs are made from biotechnology.

The tools for DNA writing have greatly expanded since 1976—CRISPR allows targeted DNA edits, DNA printing allows long pieces of DNA to be written from scratch—and every day, the cost and scale of our ability to write DNA improves. The cost of reading DNA has fallen more than a million-fold since the completion of the Human Genome Project twenty years ago. The era of Moore’s Law is coming to a close, but biology’s exponentials are just beginning.

At Ginkgo we are unifying these tools into a horizontal platform for programming cells across organisms. We make this platform available to customers who want to program cells for applications in food, medicine, cosmetics, agriculture, materials, or any other market. We believe that biology can impact all industries that produce physical goods, because biology makes stuff, and it evolves to solve new problems. Today the world faces many problems, and we hope that biology can help us meet those challenges.

But biology is not (yet) easy to engineer. We started Ginkgo in 2008, bootstrapping off of small government grants, and know first-hand how hard and expensive it is to program cells. It took us many years from when we built our first lab with equipment foraged out of MIT dumpsters before our costs per experiment were lower than what skilled PhDs could do by hand in well-resourced labs. These costs limited what cell programmers believed possible. As we scaled our platform, we were able to support more applications; our goal is to continue to open up the design of biology to more people to pursue more possibilities, limited only by imagination.

 

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This is a unique moment in our relationship with biology. The COVID-19 pandemic has shown how a tiny bit of RNA code can upend our entire world and how mRNA vaccines can give us hope that we can bring the pandemic under control. It is also a reminder that while biology is programmable like a computer, it is not predictable like a computer. At Ginkgo, we have not left our dinosaur-loving phase, and we remember the lessons of Jurassic Park well: life finds a way. Life—biology—deserves our respect, and we must think not only about what we can do with cell programming, but also what we should do. Engineers often say that technology is neutral; we believe that we cannot remain neutral when it comes to the use of powerful technologies—we must care how our platform is used.

Cell programming is helping us return to “normal” with the unprecedented speed of new vaccines reaching people’s arms. But “normal” must change—“normal” is what made it possible for a pandemic to spread unchecked around the world. “Normal” is leading to the rapid, catastrophic warming of our planet. We believe we are coming up on an era of significant change for the human species. We have recognized the limitations of human-engineered technologies as they negatively impact the environment—and we are working to fix it. We are looking to the stars and planning how to make our species multi-planetary—a task that will need a lot of new biology as biology provides all of Earth’s life support! Cell programming will be a key technology enabling a new normal and a fundamental change in how we relate to nature, to disease, and to technology.

Ginkgo’s mission is to make biology easier to engineer. We were the kids dreaming about dinosaurs and learning how to program computers. Today we dream that kids in the future will be learning how to program cells.

What we do

All of biology runs on common code in the form of DNA. We have built a platform to program cells like we program computersby changing the DNA code inside them.

Everything alive today evolved from the same ancestor that first emerged approximately four billion years ago, each generation passing its DNA and the machinery to read it onto the next. Because of this common origin, today all organisms use similar machinery to read DNA and produce everything encoded in the sequence of A’s, T’s, G’s, and C’s. A common code means there can be a common set of tools for programming that code. This was true for operating systems and programming languages in computers; we believe the same will be true for programming cells.

We make our platform available to customers via cell programs.

A cell program is the work we do for our customer. To date, we have launched more than 75 major cell programs for customers on our platform. These include a cell program in partnership with Bayer Crop Science to program cells to produce nitrogen fertilizer for crops, a cell program with Roche to discover new antibiotics, a cell program with Motif Foodworks to develop animal-free ingredients for food products, a cell program with Genomatica to produce renewable chemicals, and many more. Customers work with Ginkgo organism engineers to determine the specification of the organism or cell they would like designed and then in a period that can last several years, a cell program is conducted to deliver the engineered cell and accompanying process to grow the cells.

We have a platform to deliver cell programs that improves with scale. Our Foundry has a physical infrastructure scale economic and our Codebase has a data scale economic.

Cell programming is done in thousands of biotech and academic labs today and is challenging because every design takes weeks to “compile” (by writing and assembling DNA and putting it into cells) and months to “debug” (via analytical experiments and data analysis and learning). Designing, building, and optimizing increasingly complex cell programs requires countless prototypes and many false starts before completing a project.

 

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We are determined to offer our customers both world-leading cell programming capabilities and the lowest average cost per experiment in the lab. On its face, this goal might seem paradoxical. Traditional biology labs face a well-known trade-off between improving their R&D capabilities (by building new labs and hiring more scientists) on the one hand and reducing their R&D spending on the other. How can Ginkgo be trying to do both?

The answer is that we are transforming cell programming infrastructure—including the methods traditionally performed by hand by PhD-trained scientists—into largely a fixed expense in our automated Foundries. We use automation in our Foundries to replace by-hand work and systematic data collection to replace ad hoc data retainment, leading to a reusable Codebase. Thus, our cell programming costs as a percentage of our commercial business will shrink as we grow.

We are paid by customers in two ways: Foundry revenue and downstream value share. The market opportunity for each is very large.

During the course of a cell program, we are paid for usage of our platform. This Foundry revenue comes from the R&D budgets allocated for cell engineering R&D work, which industry sources estimate will be $40 billion this year and expect to grow at a compound annual growth rate (“CAGR”) of approximately 20% each year from 2021 to 2023. Ginkgo’s Foundry revenue in 2020 was $59 million and we added 17 new cell programs to the platform. This remains a very small fraction of the many thousands of independent R&D projects being worked on today.

We also share in the downstream value created by cell programs completed on our platform. This value share typically comes in the form of a royalty or equity stake in our customers’ products or company. This aligns our incentives with our customers and allows us to benefit from the tremendous potential value of products created using our platform. Industry sources estimate that the total market for bioengineered products will be $2 to $4 trillion in the next 10 to 20 years.

Our growth comes from starting new cell programs. We plan to scale to 100s of new programs annually in the next few years. In doing this, we will aim to become the industry standard ecosystem for programming cells.

Building a horizontal platform is no easy feat, and we will run into many operational and technical challenges as we seek to scale our business. However, we also believe that we benefit from a flywheel of improving customer value proposition with scale, which we believe will drive more cell programming projects to be launched on our platform, further improving our platform capability. However it is not enough to offer our customers the best platform for programming cells to develop their applications; we must also offer them a community.

Cell programmers launching new applications face a common set of challenges outside the lab. They need manufacturing, distribution channels, regulatory and intellectual property filings, and more. Ginkgo’s annual conference, Ginkgo Ferment, brings together this community and allows Ginkgo to connect our customers with service providers, investors, regulatory leaders, and more. Great platforms create a durable advantage by enabling their customers to generate significant economic value relative to the cost of using the platform. We subscribe to this philosophy and as we intend to be the industry standard platform for cell programming; our success will be informed by the success of our customers.

While our progress has been exciting, we are still building real technology and hope to constantly be continually push the limits of what is possible.

If we stay true to our mission and remain ambitious, we will face setbacks, both technically and commercially, and we will need to continue to evolve our approach to our business. While we can identify and work towards solving certain technical roadblocks in advance, cells are still challenging to program and we expect that many cell programs will fail. The inherent challenges in the science may also slow down adoption of biological technologies or Ginkgo’s platform.

 

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To our stakeholders

As practitioners of synthetic biology, we have a responsibility to ensure our platform is used for positive purposes. We intend to consider the interests of many different stakeholders when making decisions and advancing our mission to make biology easier to engineer, because their collective success is key for our business to thrive. Below are principles on how we will serve each of our stakeholders.

 

   

To our stockholders: We are seeking to build a company with enduring long-term value. We will not make decisions based on short-term market or accounting considerations. We will make decisions to ensure Ginkgo is the long-term market leader. Advancing our mission is resource intensive. We expect to continue to re-invest cash back into the business to scale our platform and expand into new markets, with a focus on long-term value for the company and its stockholders. Market leadership will enable us to scale, which is critical for our platform’s growth. Growth increases our future free cash flows and stockholder value.

 

   

To our customers: We are a platform company. We are here to help you program and commercialize cells for your applications of interest, freeing you to focus on the parts of your business that only you can do. We don’t seek to develop our own applications and we don’t pick winners. In addition to our automation scale efficiencies, we can best enable all customers to be successful by reusing genetic parts and chassis strains across customer programs. This knowledge and technology has long been fragmented and siloed within individual labs and companies, where its full benefits across markets are rarely realized. All of our customers can benefit from the improvements in our Foundry and Codebase.

 

   

To our team: The Ginkgo team is and will be our greatest strength. The team is deeply passionate and engaged in our mission. We want that to continue. That’s why we have chosen to implement a multi-class stock structure that permits all employees (current and future), not just founders, to hold high-vote (10 votes per share) common stock. Ownership is the first step in caring how our platform is used, and as employees, we have an outsized influence on how our platform is developed and deployed. We trust that employees, alongside a strong independent board, will make the best decisions for the long-term value of Ginkgo and our mission. We believe that a diverse and inclusive team is the best way to ensure that our platform is used for the benefit of all.

 

   

To our suppliers: For many years, we have been bringing together the most advanced automated technologies in our Foundry for reading DNA, writing DNA, assembling DNA, engineering proteins, growing and evolving cells, and measuring and characterizing their performance. We have a history of making long-term purchase commitments for strategic technologies. We want you to be healthy and flourish. We welcome the opportunity to partner with you and collaborate on advancing these technologies.

 

   

To the academic community: Thank you. Ginkgo would not be where it is today without the ideas you’ve pioneered and the students you’ve educated. We value transparency, and we look forward to a continued mutually beneficial exchange of people, ideas and resources.

 

   

To governments around the world: We believe that biology is the key to a more sustainable economy and the long term health of people and the planet. We are facing global-scale challenges in food, water, climate, and disease. Our food, health, environment, and materials depend on biology, and biology offers opportunities for renewable, regenerative technologies. The sector of the economy based on biological tools and manufacturing—the bioeconomy—is growing rapidly and will have an outsized impact in coming years. Likewise, as we’ve learned from the COVID-19 pandemic, biology doesn’t recognize borders: the only robust national biosecurity is global biosecurity.

 

 

To everyone: Biology is beautiful and life is precious. We deeply respect biology and approach our work with humility. A future where we can grow everything requires care, transparency, and many voices. Let’s grow everything together.

 

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Ginkgo would never have made as much progress on its mission as it has without the many people who supported us on this rollercoaster ride. Thank you to all those who believed in us and those who didn’t but helped us anyway :-)

There will be dragons,

Austin, Barry, Jason, Reshma and Tom

 

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INFORMATION ABOUT GINKGO

Unless the context otherwise requires, all references in this section to the “Company,” “we,” “us,” or “our” refer to the business of Ginkgo Bioworks, Inc. and its subsidiaries prior to the consummation of the Business Combination.

Mission

Our mission is to make biology easier to engineer. That has never changed. Every choice we’ve made with respect to our business model, our platform, our people and our culture is grounded in whether it will advance our mission. Biology inherently offers incredible capabilities that we can only imagine in human-made technologies—self-assembly, self-repair, self-replication—capabilities that can enable more renewable and innovative approaches for nearly every industry. To realize this potential, we are building a platform for cell programming by bringing together unparalleled scale, software, automation, data science and reusable biological knowledge, enabling responsible solutions for the next generation of foods, pharmaceuticals, materials and more.

Overview

Ginkgo is building the industry-standard horizontal platform for cell programming. Our founders are engineers from diverse fields who, more than 20 years ago, were inspired by an astonishing feature of biology: it runs on digital code. It’s just A, T, C, and G rather than 0 and 1. But where computer bits are used to communicate information, genetic code is inherently physical and as it is read, physical structures are made. We program computers to manipulate bits, but we program cells to manipulate atoms. Cells are the building blocks of our food, our environment and even ourselves.

We use our platform to program cells on behalf of our customers. These “cell programs” are designed to enable biological production of products as diverse as novel therapeutics, key food ingredients, and chemicals currently derived from petroleum. We have worked on over 75 major programs through the first quarter of 2021 in end markets as diverse as specialty chemicals, agriculture, food, consumer products, and pharmaceuticals. Biology did not evolve by end market. All of these applications run on cells which have a common code—DNA—and a common programming platform can enable all of them. Because of this shared platform, we are able to drive scale and learning efficiencies while maintaining flexibility and diversity in our program areas. Ultimately, customers come to us because they believe we maximize the probability of successfully developing their products.

Customers look to Ginkgo to overhaul their manufacturing processes or develop new products through biology. They might, for example, be looking to produce a particular chemical via fermentation, at a lower cost, with enhanced supply chain reliability or sustainability. Or perhaps the customer needs a microbe that will live and grow on the roots of corn and convert nitrogen in the air into usable fertilizer for a plant, resulting in improved plant growth. Or a customer might need an antibody that binds to and neutralizes a certain target, along with a way to produce those antibodies at scale. All of these programs and more run on a common platform at Ginkgo.

The foundation of our platform includes two core assets that execute a wide variety of cell programs for customers according to their specifications: our Foundry and our Codebase.

 

   

Our Foundry wraps proprietary software and automation around core cell engineering workflows—designing DNA, writing DNA, inserting that DNA into cells, testing to measure cell performance—and leverages data analytics and data science to inform each iteration of design. The software, automation and data analysis pipelines we leverage in the Foundry drive a strong scale economic: we have scaled the output of the Foundry by roughly 3X annually since we started measuring it around 2015 and over that time, the average cost per unit operation has fallen by approximately 50% every year. We expect to be able to pass these savings along to our customers, allowing them to take more “shots on goal” with their programs.

 

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Our Codebase includes both our physical (engineered cells and genetic parts) and digital (genetic sequences and performance data) biological assets, and accumulates as we execute more cell programs on the platform. Every program, whether successful or not, generates valuable Codebase and helps inform future experimental designs and provides reusable genetic parts, making our cell program designs more efficient.

 

 

LOGO

Figure 1: Our platform is used to design, write, and debug DNA code in engineered organisms to execute programs for our customers. Our Foundry leverages proprietary software, automation, and data analytics to reduce the cost of cell programming. Our Codebase consists of reusable biological assets that helps accelerate the engineering process.

 

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As the platform scales, we have observed a virtuous cycle between our Foundry, our Codebase, and the value we deliver to customers. Sketched below, we believe this virtuous cycle sustains Ginkgo’s growth and differentiated value proposition.

 

   

Foundry: As we take on more work in the Foundry, we benefit from scale economics, which over time may lead to lower program costs. We expect that these lower costs, in turn, will drive additional demand for our cell programming capabilities.

 

   

Codebase: Cell programs also generate Codebase, which can drive better experimental direction and improve the odds of technical success, further increasing our customer value proposition, which we believe will result in additional demand.

Put simply: we believe that as the platform improves with scale, it drives more scale, which drives further platform improvements, and so on. We believe this positive feedback loop has the potential to drive compounding value creation in the future, as every new program we add contributes to both near-term revenues and has the potential to add significant downstream economics.

 

 

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Figure 2: Ginkgo’s virtuous cycle: as we scale, we see greater efficiency and higher odds of technical success, which helps drive further scaling as our value proposition improves.

Our business model mirrors the structure of our platform and we are compensated in two primary ways. First, we charge usage fees for Foundry services, in much the same way that cloud computing companies charge usage fees for utilization of computing capacity or contract research organizations (CROs) charge for services. The total addressable market (TAM) for our Foundry revenue includes the market for biotech labor and tools, which industry sources estimate will be approximately $40 billion in 2021 and which is expected to grow at a CAGR of approximately 20% from 2021 to 2023. This revenue stream represented $59 million in 2020. Additionally, we negotiate a value share with our customers (typically in the form of royalties, milestones, and/or equity interests) in order to align our economics with the success of the programs enabled by our platform. As we add new programs, our portfolio of programs with this “downstream” value potential grows. Through these value shares, we are tapping into what industry sources expect to be a $2 to $4 trillion market for bioengineered products.

 

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We believe that cell programming has the potential to be as ubiquitous in the physical world as computer programming has become in the digital world. We believe products in the future will be grown rather than made. To enable that vision, we are building a horizontal platform to make biology easier to engineer. Our business model is aligned with this strategy and with the success of our customers, setting us on what we believe is a path towards sustainable innovation for years to come.

An Introduction to Synthetic Biology

To fully tell the story of cell programming, we have to start four billion years ago. All living things evolved from a single cell, a tiny bubble containing the code that enabled it to assemble and reproduce itself. But, importantly, that process of reproduction wasn’t perfect; each copy introduced new mutations in the code. These changes are responsible for one of the most powerful and defining features of biology: evolution. Over eons, that first cell and all its progeny copied themselves, and their DNA evolved to create new functions: to eat new kinds of foods and to produce new kinds of chemicals, structures, and behaviors. As reproduction became more, well, interactive, organisms developed tools to borrow DNA from each other, accelerating the pace of evolution. These functions, and thus the genetic code programming the functions, stuck around when they helped the organisms survive and create more descendants. This went on and on for four billion years, leaving us the wild codebase of DNA that enables the diversity of life forms we see on the planet today.

Synthetic biology’s story begins mere decades ago, as biologists began to decode the molecular secrets of DNA. The billions-year-old tools of cells—enzymes that cut, copy, and paste sequences of DNA code—are now being leveraged by humans to read, write, and edit DNA in the lab. Polymerases that copy DNA are used to enable PCR tests for COVID-19 and the CRISPR/Cas system from bacteria now enables editing of human genomes to potentially cure genetic diseases.

Today we are using these tools to learn from the full breadth of evolution and biodiversity to write new biological code. Simple soil bacteria produce everything from vital antibiotics to the smell of fresh rain. We can reuse elements of these DNA programs to make new products. Biochemistry is extraordinarily versatile; we’ve reused genetic code libraries across applications as diverse as fine fragrances, baking, and consumer electronics. We may be able to develop programs that can digest human-made “forever chemicals” that biology never encountered before.

As cell programmers, we operate with humility and respect for biology. Our tools are simply borrowed, and the history of biotechnology is a mere blink of an eye compared to the history of living things. Today, we write rudimentary code. We believe that someday our children will write poetry in DNA.

Programming life

 

 

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Like computers, cells run on digital code. DNA strands are sequences composed of four chemical bases, or nucleotides, represented by the letters A, T, C and G. The letters along the strand encode the proteins that make up the cell and perform biochemical functions. The translation of DNA g RNA g Protein is known as the “central dogma” of molecular biology.

The Central Dogma of Molecular Biology

 

 

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“Traditional” genetic engineering uses special types of proteins from bacteria that can cut and paste DNA to move sequences from one organism to another. In 1982, Genentech Inc. partnered with Eli Lilly and Company to bring these techniques to market, producing human insulin inside the bacteria, E. coli. Genetic engineers were able to cut the code for the human insulin protein and paste it into the genome of E. coli and “boot up” the sequence: the bacteria could now produce the human protein, which could then be extracted, purified, and used by diabetics. This life-saving development replaced a vastly more expensive and supply-constrained method of extracting insulin from animal pancreases.

Relatively simple proteins like insulin can be produced by transferring one gene sequence into a simple microorganism. Many other biochemicals require much more complex cell programming and are produced by a series of special proteins, called enzymes, working together. These enzymes transform a starting material, or “feedstock,” such as sugar, into a final product, such as an antibiotic, vitamin, or other valuable small molecule. In this way, biology also programs chemistry. Cell programmers can design such multi-enzyme “pathways” and transfer them into a cell to boot up. For example, the cell programs we’re writing for Cronos Group, Inc. to produce cannabinoids require many different enzymes to convert feedstock into cannabinoids such as cannabidiol (CBD).

Once the cell is programmed to produce a new molecule, it can produce the molecule and also replicate itself, creating an exponentially growing number of product-producing cells. Many products of genetic engineering are manufactured in facilities that look like breweries, taking advantage of the centuries old process of industrial fermentation to grow cells at high density, and transforming simple sugars into valuable products that can be extracted and commercialized.

Improved tools for cell programming, including automation, miniaturization, and data science, alongside the decreasing cost of DNA synthesis - writing DNA - are opening up new possibilities for cell programming. For each new program, Ginkgo’s organism engineers design, print, and test hundreds or thousands of different sequences for each step of a pathway, exploring the breadth of biological design space and improving the probability of success. We provide more details about our platform in the sections that follow.

 

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Figure 3: An overview of a simple cell program.

 

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The Impact of Cell Programming

The power of biology has never been more apparent. Synthetic biology was featured on the cover of The Economist in April of 2019. Just two years later, hundreds of millions of people are receiving a novel type of vaccine created by companies such as Pfizer and Moderna and made up of a form of biological code, mRNA. Our own cells read that code to produce viral proteins and stimulate our immune response to fight back against the SARS-CoV-2 virus. We no longer question if biotechnology will transform a given industry, we simply question whether we are creative enough to imagine how, and whether we are ready to utilize biology responsibly.

ESG is in our DNA

Biology affects all of us, and we believe cell programming will change the world. Our customers are developing products with far reaching implications in health and the environment. This potential for extraordinary impact, which reaches to the core of who we are and everything about our natural world, requires extraordinary care in how the tools of cell programming are built and used. Technologies reflect the values of the organizations that build them, so our commitment to Environmental, Social, and Governance (ESG) priorities and care must underscore everything we do.

We also must recognize that biotechnologies have not always reflected the values necessary for sustainable and equitable impact and, as a result, remain controversial. Indeed, companies that produce genetically modified organisms (GMOs) for human consumption are restricted from certain ESG indices, placing genetic engineering as a major ESG risk alongside the production of weapons, tobacco products, and fossil fuels. We hope to chart a new course built on care so that the world can benefit from the power of biological engineering while avoiding potential risks.

Environmental

We face an urgent environmental crisis that is forcing us to reconsider how we make everything, from our homes, to our food, to our clothing. For centuries, we’ve treated nature as an infinite resource and infinite trash can, extracting raw materials, shaping them through industrial processes that spew out greenhouse gases, and then throwing them away. But these resources are not infinite and there is no “away.” The results have been disastrous—climate change, loss of biodiversity, and pollution have impacted every corner of our world and continue to threaten our way of life.

Cell programming and biological manufacturing are working to address some of the issues that are most contributing to climate change today, from fossil fuel dependency to agricultural emissions, and land use to plastic pollution. Ultimately, biology offers a fundamental shift in how things are made and disposed of: a world where things grow and decay, creating circular, regenerative processes.

There is significant concern that genetic engineering itself creates a form of genetic “pollution” in the environment, with genes from one context introduced into another. This is a concern we take seriously and consider deeply throughout the lifecycle of our programs to ensure that genes introduced will not cause damage—for example, by spreading antibiotic resistance or toxins. We care because the environmental release of certain genetically engineered microbes can also offer tremendous environmental benefit. For example:

 

   

Crop-associated microbes programmed with the nitrogen fixing properties of common soil bacteria may be able to reduce the use of chemical fertilizers, which today contribute 5% of global greenhouse gas emissions and account for 4% of natural gas consumption. This is the work of Joyn Bio, LLC our joint venture with Bayer CropScience LP.

 

   

Microbes programmed to clean up wastewater or contaminated land is the work of Allonnia, LLC, a company we formed in partnership with Battelle.

 

   

And we are just getting started… we believe biology is our best tool to reverse the damage to our planet and chart us on a path towards sustainability in the future.

 

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Social

Technology isn’t neutral. Our values and biases are embedded in the technologies we make, in the applications we consider, and in the ways we address problems. Inclusion of those who have historically been left out of the development of new technologies is essential to building equitable and positive outcomes. Just as biological ecosystems thrive with more diversity, the inclusion of many different voices is essential to growing our company and to ensuring that the viewpoints of historically marginalized people are included in the development of our platform. We have many active efforts in recruiting and retaining diverse talent and will continue to invest in this work (see “—Our People & Culture”).

Marginalized people who have been left out of the development of technologies are also the groups most likely to bear the greatest harm, whether from climate change, pollution, or health disparities. The COVID-19 pandemic has made this inequality starkly clear—in the United States, it has been communities of color that have been disproportionately impacted by the pandemic and have had the least access to testing, treatment, and vaccination.

In March of 2020, we committed to $25 million of pro bono work to help accelerate novel diagnostics, therapeutics, and vaccines to help fight COVID-19. Our early work included efforts to improve the manufacturing of vaccines, with a goal to lower costs and increase accessibility of vaccines worldwide. Shortly thereafter, we launched Concentric by Ginkgo, a service to provide public health testing infrastructure for communities that need it most. Our pooled testing service was designed with accessibility and privacy as core design principles, to bring low-cost, easy-to-use testing to K-12 schools in the places that have been most affected by the pandemic. We partnered with school districts such as Baltimore City schools to make sure that our service was designed to serve the community and to build trust with groups who have been excluded, exploited and mistreated by biomedical research in the past.

These values and initiatives are not just a top-down corporate policy, they are an intrinsic part of our culture. Grassroots fundraising challenges to support local and international aid organizations are a regular feature of our internal messaging channels. One of our software engineers even programmed a free tool, @vaccinetime on Twitter, that has helped thousands of Massachusetts residents find vaccine appointments.

Governance

Our culture is built on care, transparency, diversity, employee ownership and engagement, and a deep, humble respect for biology. Transparency is essential to how we operate, to enable sharing of the insights and tools that enable our platform to grow, as well as to build trust and accountability with all of our stakeholders. We have advocated for more transparency in our industry, including supporting GMO labeling, and seek to educate policymakers and the general public about the benefits and risks of synthetic biology through our advocacy efforts.

The individuals who work at Ginkgo and build our platform care deeply about how that platform is used and the impact our company will have in the world. We believe a workforce with strong equity ownership will make the wise decisions needed to build long-term value for our company, and a company whose long-term impacts make them proud. That is why we have implemented a multi-class stock structure that permits all employees (current and future), not just founders, to hold high-vote (10 votes per share) common stock. We believe that our multi-class stock structure will help maintain the long-term mentality we have benefited from as a founder-led company.

For more information, see “Risk Factors—Risks Relating to our Organizational Structure and Governance— Following the consummation of the Business Combination, only our employees and directors will be entitled to hold shares of New Ginkgo Class B common stock (including shares of our Class B common stock granted or otherwise issued to our employees and directors in the future), which shares will have 10 votes per share. This will limit or preclude other stockholders’ ability to influence the outcome of matters submitted to stockholders for approval, including the election of directors, the approval of certain

 

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employee compensation plans, the adoption of amendments to our organizational documents and the approval of any merger, consolidation, sale of all or substantially all of our assets, or other major corporate transaction requiring stockholder approval.

We have selected independent directors with decades of experience serving as leaders in the life sciences and technology industries. Our board of directors and management team will leverage that experience and consider the interests of stockholders, customers, employees, suppliers, academic researchers, governments, communities, and other stakeholders to pursue long-term value for our company and drive the sustained health of our global community. For more information, see “Risk Factors—Risks Relating to our Organizational Structure and Governance—Our focus on the long-term best interests of our company and our consideration of all of our stakeholders, including our stockholders, workforce, customers, suppliers, academic researchers, governments, communities and other stakeholders that we may identify from time to time, may conflict with short-term or medium-term financial interests and business performance, which may adversely impact the value of our common stock.

Cell programming is expected to transform all industries

Biology grows. Biology adapts and evolves. Biology heals itself and regenerates. Biology is also, remarkably, programmable, offering us the tools to work with biology to transform how we make stuff. With cell programming, we help our customers across industries grow better products. What does “better” mean? Better products might be more sustainable, have more stable and resilient supply chains, be more accessible, have higher quality and more consistency, and come with lower economic and environmental costs of manufacturing. They can also be truly transformative, fundamentally changing the field of possibilities for what products can do. We have supported many companies that are leveraging our cell programming platform to address some of the world’s most challenging environmental and social issues.

Pharma & Biotech

Biopharma has been a nexus of tremendous innovation in cell programming and synthetic biology. Just in the past year, we have seen the creation and broad adoption of a novel form of biological prophylactic in the form of nucleic acid vaccines. These vaccines contain genetic code that our bodies read to produce viral proteins and stimulate an immune response and antibody production. New nucleic acid vaccines can be programmed quickly, such as the booster vaccines being developed against emerging SARS-CoV-2 variants, offering the potential for rapid response to other future pathogens. They can also be programmed to target a number of other diseases. In the wake of the success of nucleic acid vaccines during the COVID-19 pandemic, new programs for HIV and cancer vaccines, among others, are accelerating.

Biologic medicines like insulin and other protein drugs and antibodies are also produced via cell programming, making a difference in the treatment of countless diseases. Over 30% of the therapies approved by the FDA last year were biologics. New modalities enabled by cell programming, such as cell and gene therapies, microbiome therapies, regenerative medicine, and living medicines are beginning to come online. We believe human health and the ways we treat disease will be transformed by improvements in cell programming technology.

Ginkgo has been active in this field in recent years and we expect to significantly expand our support of therapeutic applications over coming years. From companies developing “living medicines” (Synlogic) to those involved in COVID-19 vaccine production (Moderna and others) to those developing novel antibiotics (Roche), we are using our platform to deliver transformational innovations across a range of disease areas.

Industrials & Environment

Since the industrial revolution, manufacturing techniques have been extractive, wasteful, and unsustainable. Not only must we innovate new manufacturing methods in order to keep up with growing demand, we must also work to remediate issues we have caused historically, by cleaning up our environment and addressing climate change.

 

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Ginkgo is not only working with customers to create cell programs that enable cost-efficient, renewable, and sustainable production of chemicals and materials, such as our work with Genomatica, Inc., but we have also spun out participated in the formation of Allonnia, LLC, a company focused on environmental remediation. Plastic waste and many of the pollutants that plague industrial manufacturing and extraction sites are novel in the course of evolutionary history, so biology has not yet evolved to degrade them efficiently. Cell programming can enable the discovery and development of new enzymes capable of degrading recalcitrant pollutants and recycling waste while entirely reimagining manufacturing for the future.

Food & Agriculture

Food is inherently biological: it comes from life and sustains life. Cell programming can be leveraged to improve the availability of essential food and nutrition to a growing population, decrease the environmental impact and cost of food production, and provide consumers with increased choice.

We are working with some of the largest multinational agriculture companies, including Bayer (through our joint venture, Joyn Bio) and Corteva, to develop cell programs that would make crop production more efficient and sustainable, reducing synthetic nitrogen fertilizer and pesticide usage. In food, we have been active in flavors and sweeteners, and we are the principal cell programming platform for Motif FoodWorks, Inc., a company that is making animal proteins without the need for industrial farming of animals.

Consumer & Technology

Most physical goods have biological origins—from the petrochemicals in our fabrics to fine chemicals extracted from plants—but industry does not necessarily leverage biology, or leverage biology efficiently, to produce these items. Petrochemicals, for example, are used in everything from our fabrics to our cosmetics to our paints. These chemicals and polymers are generally created in complex chemical and physical reactions from crude oil but crude oil is just the result of millions of years of decomposition of previously living matter (they are fossil fuels after all). These biological building blocks can instead be programmed in a living organism to produce these items sustainably, without extracting natural resources. Even in areas where industry does leverage biology, such as extracting raw materials or fine chemicals from plants, the current approaches are woefully inefficient or rife with social consequences.

We have helped some of the world’s largest fragrance companies use fermentation to much more efficiently produce rare molecules typically extracted from plants. In a related field, we are also supporting Cronos in their effort to biosynthesize cannabinoids, with the goal of reducing cost, improving purity and predictability, and enabling production of rare molecules. We have also recently spun out a new company, Kalo, which is focusing on leveraging biology, from proteins to the microbiome, to build a suite of innovative and efficacious personal care products.

 

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Cell programming is addressing our most challenging environmental and social issues Pharma & Biotech Antibody therapeutic development Nucleic acid vaccine production Antibiotic discovery and manufacturing Microbiome therapeutics Gene and cell therapies Industrials & Environment Wastewater remediation Renewable chemicals Pollutant degradation Sustainable building materials Carbon sequestration Food & Agriculture Animal protein replacement Brewing & baking Fertilizer reduction Pest Control Animal feed and aquaculture Consumer & Technology Flavors, fragrances, cannabinoids Skin microbiome Haircare and skincare proteins Textiles and dyes Electronic coatings

Figure 4: Summary of major markets and examples of application areas as well as current and former partners in these fields.

 

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Market Opportunity

For several decades in the computing industry, software ran entirely in local environments: companies built and ran their own servers and customized their applications. The dominance of software-as-a-service (“SaaS”) software and cloud computing over the past decade has demonstrated the value in having common architectures and enabling horizontal platforms. What users may have sacrificed in customizability, they more than gained in innovation, efficiency, and scalability. We believe Ginkgo is ushering in a similar transition in cell programming, a programming discipline with the power to shape living things and grow applications across the physical world.

The value of these applications will measure in the trillions of dollars

Given the breadth of application areas and the potential of biology (see “—The Impact of Cell Programming”), we believe that the end markets for bioengineered products will be enormous. Industry sources estimate that in the next 10 to 20 years, there will be approximately $2 to $4 trillion of annual direct economic impact from these products, with significant secondary effects. But these applications reflect only what we can already imagine. As we develop a greater ability to program biology and direct it towards novel and more challenging applications, the spectrum of possibilities will undoubtedly grow. Computers were used for little more than counting for decades; we firmly believe the most valuable applications of cell programming are not yet apparent.

 

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Annual Direct Economic Impact By Domain 2030-2040 (partial estimate) $1.2T $1.2T $700B $300B $300B $500B $800B $200B $200B $100B High estimate low estimate + significant secondary effects not measured Health Food & Agriculture Consumer Materials & Energy Other

Figure 5: Industry sources estimate a $2 to $4 trillion total addressable market for bioengineered products between 2030 and 2040.

Large existing market for “on prem” cell programming research and development

Cell programming today is done in a highly inefficient, distributed manner reminiscent of the early days of computing. Essentially every organization looking to innovate in biology builds its own biology labs in the same way that companies used to set up their own servers. Scientists spend hours moving liquids around rather than designing novel experiments in the same way that computer programmers once spent most of their time physically writing and debugging code (by punching cards, for example) than designing new applications. Intellectual property lies fallow on the shelves of one institution, with no obvious mechanism to explore whether that IP might be useful to researchers in other domains. Ginkgo’s platform breaks down these silos and democratizes access to the most advanced technologies in the field, enabling customers of all sizes to more efficiently drive innovation.

 

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According to industry sources, approximately $40 billion will be spent in 2021 on cell programming research and development. This work is being done in a distributed manner, sacrificing benefits from scale and learning economies. Approximately 60% of the spend today is on labor—scientists designing and executing experiments—while the remaining 40% of this is spent on “tools”—things like DNA synthesis, reagents, and equipment. Ginkgo brings efficiencies to both elements of this existing market.

 

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Labor: When scientists are able to leverage advanced automation, they are able to both reduce error rates and free time otherwise spent performing manual work (e.g. pipetting liquids from one plate to another). Freed from the burden of manual programming, scientists have more time to practice the art of cell programming: designing the direction of experimentation, mining data for new insights or exploring new techniques or application areas. This in turn increases the demand for programs as scientists retain a greater capacity for innovation and generate more ideas to test.

 

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Tools: Ginkgo’s scale provides a cost advantage in two primary ways. First, we reduce the amount of capital investment required by our customers—an early stage company building on our platform may never need to build a molecular biology lab. Second, our proprietary technologies and scale economics drive down the marginal cost of each experiment. Combined, this has the impact of transforming what is typically a large fixed cost investment for a cell programmer into a much lower variable cost. This is akin to an IT department not having to build and maintain a costly bank of servers and instead paying a marginal usage-based fee to their cloud computing vendor. Additionally, and perhaps even more impactful, our Codebase provides host cells, genetic parts and associated data for our customers that are unavailable elsewhere and which may reduce the total amount of work required.

As the cost of compute declined exponentially in computer programming, the demand for compute increased exponentially as developers dreamed up more and more sophisticated applications. We expect the same to be true in cell programming: as our platform scales in capability and capacity, we hope that the range of applications accessible to cell programming will likewise expand in breadth and sophistication.

Industry Overview

We believe that Ginkgo is changing the structure of the biotechnology industry. In much the same way that cloud computing centralized hosting services and ushered in a wave of SaaS software companies, Ginkgo is scaling the capabilities needed to program cells. By making these tools more accessible, we hope to usher in a wave of innovation in both “hardware” (life science tools) and “software” (cell programs).

At Ginkgo, we have always admired the symbiotic and regenerative nature of biology, which sits in stark contrast to the often extractive nature of existing technologies. We are often asked who we think the “winners” and “losers” in the industry will be as Ginkgo scales, as if it is a given that our growth must come at the expense of others in the ecosystem. We reject that notion. As our platform scales, we seek to drive benefits for all existing players in this ecosystem:

 

   

Innovators—whether in academic labs, startups, or global conglomerates—benefit from faster and more successful R&D efforts

 

   

Scientists are freed to unleash their creativity (we understand the pain of spending years pipetting at the bench too!)

 

   

Life science tools and manufacturing companies benefit from having a clear technical roadmap and known demand to justify investments

 

   

Society benefits from responsible innovation, driving more sustainable, cost effective, and high-performance products

 

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Program Layer Ginkgo provides program management and technical execution to product companies across all industries Ginkgo is building the leading horizontal platform for cell programming across all industries platform layer Ginkgo is the interface between a series of complex technologies and a customer spec Technology Layer Ginkgo integrates standard hardware and wraps it in proprietary software and automation

Figure 6: Schematic of the synthetic biology industry structure. Ginkgo connects and integrates the hardware and tools provided in the technology layer, creating a platform that can be used by cell programming

customers who are building products for end-market use.

Program Layer: Ginkgo enables and accelerates product companies, which historically have had to vertically integrate

Ginkgo is not a product company; we are an enabling platform for product companies in a range of end markets. We do not seek to “pick winners” and focus instead on building our platform rather than investing in product-specific risk. Platforms require scale and a relentless focus on innovation while taking a product to market requires many specialized functions that vary depending on the product:

 

   

A novel food ingredient requires food scientists to test and enhance taste and functionality

 

   

A therapeutic requires clinicians to conduct animal and human studies to test safety and efficacy

 

   

A novel material requires materials scientists to evaluate elasticity, durability, conductivity, or other required features

 

   

An agricultural product requires field trials

 

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Once the product is developed, major investments are also needed to manufacture, distribute, and market the product. These are the jobs of our customers, the product companies.

Historically, product companies have had to invest in their own R&D capabilities, building their own labs and hiring their own scientists. This investment is inefficient due to lack of scale and drains resources away from application testing and product development. Ginkgo’s platform is not application-specific. The same engineering tools can be used for programs in completely different application areas: cells all run on the same genetic code. As product companies develop their products on Ginkgo’s platform, they gain efficiencies and increase their probability of success. New companies that build on our platform never need to make the fixed capital investments to start a lab from scratch; they are able to leapfrog and compete effectively against established companies.

Technology Layer: Ginkgo collaborates with life science tools companies to drive technology advancements

Because we’re constantly thinking about how to enable the next several years of exponential scaling of our platform, we have good insights into future bottlenecks and welcome the opportunity to collaborate to build technologies that will break through those barriers. We are the largest customer for many of our strategic suppliers and, as such, play an important role in advancing new technologies. As a result, we are often able to secure preferred access, often including custom development and leading economic terms, to next-generation technologies and pass those benefits along to customers.

We expect to continue to invest in and support the development of emerging technologies in this space. In certain areas where Ginkgo has unique needs, we may acquire technologies directly, as we did with Gen9, Inc.’s DNA assembly platform, which was particularly valuable for more complex DNA synthesis needs. In many other areas, we will support new and existing technology companies by placing anchor orders and partnering to develop technology roadmaps that break new ground.

By acting as a horizontal platform, Ginkgo can focus on what we do best (cell programming), our customers can focus on what they do best (bringing products to market in their industry), and our suppliers can focus on what they do best (building great hardware and tools). Biology did not evolve by industry and so cell programming is able to benefit from the scale and efficiency of a horizontal platform. Vertical integration is no longer required, allowing each layer of the ecosystem to flourish as we collectively enable more rapid growth across the industry.

Enabling Customer Success

Ginkgo serves diverse customers across a variety of end-markets. Some of these customers may have in-house biological R&D teams and others may have never thought biotechnology applied to their business. In either case, they come to us with a challenge—whether it is supply chain volatility, a race to develop an innovative new product, or an existential threat facing an industry on the wrong side of history—and we partner to enable a biological solution. We begin our relationship by working collaboratively to design the set of specifications for the end product(s) our customer desires. Our cell programmers then take that set of specifications and design an engineering plan to create a cell program that meets or exceeds that set of specifications. When we finish, our customers receive the final engineered organism (which either produces or is their product of interest) and a full “tech transfer” package for manufacturing and downstream processing (which they can implement themselves or pass to a contract manufacturer with our support). Our customers then take these organisms and/or purified products through the final stages of product development (e.g., formulations, clinical trials, field trials, etc.).

Our commercial team is organized to both establish new relationships with potential customers (traditional business development) as well as maintain and expand relationships with our existing customers (which we call “alliance management”).

 

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Our business development team has both expertise in relevant industries (Consumer & Technology, Industrial & Environment, Agriculture, Food & Nutrition, Pharma & Biotech and Government & Defense) as well as expertise in our Foundry capabilities and synthetic biology. With this background we are able to identify industry or consumer challenges where biology can serve as a solution. Our categories of customers, independent of industry, include potential customers who have R&D teams with some synthetic biology capabilities where choosing Ginkgo can bring automation, scale and codebase beyond their own; potential customers who are considering but have not yet built lab-scale capabilities where a partnership with Ginkgo allows them to spend their capital on commercialization efforts; and potential customers who are not yet working in synthetic biology whose industries or products stand to be disrupted by biological solutions. Our business development team, with support from our Codebase and Foundry team members, crafts solutions for each of these types of customers through a strategic discussion of customer needs and fit with Ginkgo capabilities.

To grow existing customers, our alliance management team, through close collaboration on our existing programs, seeks technical and business opportunities for our customers that serve as the basis for consideration of future programs. As our programs demonstrate technical success, our existing customers often bring their next strategic R&D needs to our attention.

Over 75 major programs across diverse industries have run on our platform

While most biotechnology companies focus on building products within a fairly narrow scope, Ginkgo has uniquely pursued a partnered strategy across all end-markets. This was not easy. For many years, our platform was less efficient than the status quo of an expert scientist working by-hand at a lab bench. In the early days, the only end markets willing to take a chance on our platform were those without in-house biotechnology capabilities. But as Ginkgo’s platform improved over time and with scale, we were able to win contracts in increasingly sophisticated end markets with more in-house biotechnology expertise. Today, our platform is diversified across all major end-markets with marquee customers and a range of focus areas within each.

 

 

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Cumulative Major 3rd Party Programs Gaining traction within increasingly sophisticated end markets Consumer & Technology +Industrial & Environment + Agriculture +Food & Nutrition +Pharma & Biotech Diversified platform 2015 2016 2017 2018 2019 2020 Government & Defense

Figure 7: Cumulative “major” programs run by third-party customers on Ginkgo’s platform (excluding proof of concept projects and other exploratory work). Today, Ginkgo has a diverse set of programs across all major end-markets.

Our customers include large multinational organizations with multibillion dollar R&D budgets as well as startups who are depending on us for essentially all of their bioengineering needs. While these customers and their focus areas may look very different, they are all important and valuable to Ginkgo. All of these programs leverage a common infrastructure, and as we demonstrate the value of this platform, we have the ability to grow significantly with our customers.

 

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Ability to grow with our customers and increasingly complement existing R&D budgets

Ginkgo has grown substantially through inside sales with our existing customers. Some of our customers, such as Motif FoodWorks, never needed to build in-house cell engineering capabilities and so as they grow and expand their product pipeline, their demand for our platform should increase and they will benefit from our improving scale efficiencies over time as well. The relative value of our platform compared to the next best option (building a lab, bioengineering team, and intellectual property from scratch) is immense, which yields extremely high retention rates for customers in this category.

Other customers may already have in-house cell programming capabilities. As Ginkgo demonstrates the value-add of our platform by successfully delivering on programs, we have the opportunity to grow our collaborations with them, complementing their core R&D capabilities. We don’t view this as a “replacement” of customer scientists with Ginkgo’s platform. Rather, we hope to expand our customers’ capacity and need for innovation—giving them more “shots on goal” and enabling them to invest more heavily in R&D as the ROI of each dollar spent increases.

We have demonstrated this with several customers. With one customer, an initial proof of concept program has turned into a broader strategic relationship with over nine programs today. With another, we launched a relationship with two programs, quickly expanding it to five by the end of the following year. The growth we have seen with our oldest customers means we continue to have significant customer concentration as it takes time for new customers to ramp up their use of Ginkgo’s platform. During 2020, two of our customers each contributed greater than 10% of revenue and collectively they accounted for 39% of total revenue. We believe customer concentration will decline over time even as we expect to continue to grow our relationships with existing large customers. However, our ability to grow with our customers requires us to maintain satisfied customers, and program or other operational setbacks could impede our ability to meet customer expectations and grow our business.

Powerful proof points across categories

Our platform has now been validated by sophisticated customers across a range of industries. As we launch programs in new areas, those provide a toehold for future sales in that space. As an example, our pro bono project for Moderna, Inc. at the start of the COVID-19 pandemic to enhance production of a key raw ingredient through process engineering provided a proof point and initiated us into this emerging segment, leading to a commercial relationship with another nucleic acid vaccine company, as well as a program to produce a key processing enzyme for mRNA vaccines.

It is still incredibly challenging to break into new industries and our ability to expand into new sectors may be harder than we expect. However, our recent progress in therapeutics has been a significant milestone given that we are ultimately competing against very strong in-house capabilities. We believe that as more proof points emerge across industries, the barriers to adoption will diminish.

While many of the programs we run on the platform are kept highly confidential, below we share some examples of the diverse set of programs running on our platform.

 

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Ginkgo stories together with Motif, were engineering proteins to produce healthier, more sustainable food options what if our food could be more accessible, healthier, harm-free, and have a lower environmental impact? Ginkgo partnered with Motif Foodworks to develop commercial yeast strains and processes for protein production at the kilogram scale. The target protein would be used to make foods more delicious and sustainable. Leveraging our Codebase and Foundry, Ginkgos engineers studied and screened 300+ distinct candidate proteins in order to identify candidates with the greatest functional benefit. Following the screening process, top performing proteins were engineered with novel expression systems to maximize their expression in optimized strains. Scale Q1 Q2 Q3 Identify potential proteins Screen for best candidate protein Strain engineering & pathway balancing Q4 1 year 2 years Iterative strain construction & testing Prototype strains ready commercial strains The future of food is being powered by Ginkgo Bioworks. We developed 6 strains, and produced samples for benchmarking and early application testing. We designed built, and validated improved variants over the next 9 months. The final chassis strains showed a 300% improvement over the unmodified chassis strain, increasing productivity, reducing cost, and improving scalability over rounds of engineering. Ginkgo developed commercial strains from scratch with a total projected 3 years time-to-market for the final food product. The strains performance exceeded Motifs specifications by greater than 70%. We also identified a set of novel protein expression systems that exceed performance of best-in-class systems by 5-20 fold. Ginkgos foundry can be easily repurposed to create additional food products, thereby shortening the time-to-market for each. We are always learning from the creativity of biology and the full breadth of biodiversity to enable better, more sustainable products.

 

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GINKGO STORIES Together with Roche, we're developing novel medicines to combat antibiotic-resistant bacteria What if synthetic biology paired with a genome mining platform could unlock the next-generation of therapeutics? Antibiotic resistance is a growing worldwide problem, endangering thousands of people across the globe and threatening modern medicine. Annually, over 700,000 people die from antibiotic resistant infections. The United Nations projects that this figure could reach 10 million by 20501. Through our collaboration with Roche, a global pioneer in pharmaceuticals and diagnostics focused on advancing science to improve people's lives, Ginkgo is focused on discovering new classes of antibacterials. Our method is to mine bacterial genomes for novel pathways, and then engineer these pathways to produce molecules that we can test for antibacterial activity. Our partnership with Roche aims to bring the most successful of these molecules to the clinic. Why partner with Ginkgo? The integration of Warp Drive Bio's genome mining platform with Ginkgo's state of the art sequencing capabilities, extensive biological codebase, bioinformatics and machine learning tools for gene discovery and strain engineering expertise brings forth unprecedented power to accelerate the search for new therapeutics, including next-generation antibiotics. The genomic database includes more than 135,000 bacterial strains. These strains have the potential to encode more than four million biosynthetic gene clusters, which can be used not only for the discovery of novel antibiotics and other therapeutics, but also for applications across food, agriculture and fragrances. 100+Classes of new potential antibiotics The genome mining platform enables access to valuable natural products that have previously gone undiscovered due to historical technology limitations. The company's proprietary genomic search engine combs databases of microbial genomes to reveal those "hidden natural products that cannot be detected under normal laboratory conditions. This deep expertise in genomics-based natural products discovery may be the key to unlocking new products that can help combat the rise of antibiotic-resistant diseases. The discovery of next-generation antibiotics is being powered by Ginkgo Bioworks

 

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GINKGO STORIES Together with Synlogic, we're programming microbes in an effort to treat complex diseases in the gut What if the power of biology could allow medicines to sense and respond to health conditions directly in your gut? For approximately 2 years, Synlogic had been prototyping a strain and pathway to consume leucine. bur initial modeling suggested that more activity was needed for target therapeutic effect. To optimize the complex Pathway to increase consumption, Ginkgo sourced, synthesized and screened 3,600 enzymes to identify the best performing enzymes. Using the best enzymes, we designed and screened a combinatorial library of 350 Pathways. These enzyme libraries revealed highly variable specificity for the various branched chain amino acids amongst the high-activity enzymes. This degree of specificity between similar substrates can be very challenging to design. Going forward, these libraries will accelerate future branched chain amino acid projects. Rapid pathway development Enzyme 1 Enzyme 2 Enzyme 3 Leucine Byproduct PARENT PATHWAY PERFORMANCE Metagenomic enzyme sourcing and synthesis High throughout screening of > 1200 enzymes per class use top enzymes design combinatorial library of 350 pathways High-throughout screening of pathways using targeted metabolomics Leucine Time post bacteria administration (hours) Supporting Pre-Clinical Development With a simpler biological design, Ginkgo improved the Synlogic strain's ability to consume leucine by nearly 7x. Furthermore, the Synlogic and Ginkgo optimized strain SYN594l lowered protein induced leucine consumption in non-human primates.

 

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Our Platform

Ginkgo’s platform combines a strong technical foundation with an ecosystem of supporting resources to maximize our partners’ odds of technical and commercial success. In the nucleus of our platform are our Foundry and Codebase, which our scientists leverage to complete customer programs. The Foundry is, in its simplest form, a very large, highly efficient biology lab, enabled by over a decade of investment in proprietary workflows, custom software, robotic automation, and data science and analytics. It is paired with our Codebase, a collection of biological “parts” and database of biological data, which helps our scientists program cells. But great technology alone is not enough and we are building a community and ecosystem around our technical platform that provides our partners with end-to-end support.

Our Foundry brings a scale economic to cell programming

Cell programming projects involve a conceptually similar engineering cycle regardless of the specific product or market. Based on customer specifications, Ginkgo’s program team develops designs of proteins, pathways and gene networks (see Figure 3) that might meet the specification, leveraging public and proprietary biological knowledge bases (see “—Our Codebase—organizing the world’s biological code”). Those conceptual designs are developed using computer-aided design tools until the exact DNA sequences for those designs have been determined. Those DNA sequences are then “printed,” assembled and inserted into a cell to execute the new DNA code. These prototype cells are then studied and the output or performance of each is measured and compared to the customer’s desired specification. Learnings using data analytics and data science tools inform a new round of prototypes and this cycle is repeated until either the specification has been met or the customer decides to end the program.

The likelihood of technical success increases with each iterative engineering cycle and with the number of prototypes that are explored per cycle. However, with traditional tools for genetic engineering, each of these cycles can be slow, expensive and error prone. Many projects across the industry run out of budget or time. Conventional R&D teams often look to stay within budget by running rapid engineering cycles using largely manual tools and small numbers of prototypes per cycle. However, the inability to broadly explore the potential design space (there are more possible sequences of a 200 amino acid protein encoded in 600 DNA letters than there are stars in the observable universe) and the reliance on manual tools is a difficult handicap to overcome. Since people can only work so hard and since engineering cycles can’t be shortened beyond the duration of the physical steps, this approach has limited potential to improve in the future.

At Ginkgo, we invest in improving the tools and technology for programming cells in order to maximize program success within the constraints of customer timelines and budgets. We do so by scaling the number of prototypes that can be evaluated in each engineering cycle in an effort to reduce the number of cycles required to meet the customer’s specification and ultimately shorten project timelines. A typical screen for one enzyme step in a program might evaluate 1,000 to 2,000 variants to optimize function, of which the top 10 to 100 might be short-listed for further study. A relatively basic program might have 3 to 5 enzymes working in concert, and so in the process of optimizing the entire pathway, thousands or tens of thousands of enzymes and pathway combinations might be designed, built, and tested in the Foundry. The methods we use to increase scale also tend to reduce the average cost per prototype, which means that more prototypes can be evaluated for a given program budget.

Because diverse cell programs share similarities in process and code, many programs can be run simultaneously in a carefully designed centralized facility. This facility, where we use our investments in advanced cell programming technologies to manage diverse programs, is what we call our Foundry.

We make it possible to centralize many cell programming projects in our Foundry by deconstructing programs into a set of common steps and then standardizing those steps. For each step, we have built a specialized functional team that performs that step for all programs. Those teams define a set of standardized services that can be used in concert to execute an end-to-end cell programming process. Each team has access to

 

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scientific, software, and robotic engineering resources to replace manual ad hoc operations with standardized, automated, and optimized services. In addition to enabling scale, this approach ensures standard operating procedures, know-how, and human skill become encoded in software that can be more effectively debugged, monitored, controlled, and optimized.

 

 

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Design Experimental Design Metagenomic Search Protein Engineering Pathway Balancing Computational Modeling Build Megabase-Scale DNA Synthesis Cloning & Assembly Transformation/Transfection Strain & Plasmid Verification Gene Editing Test Assay Dev.& Miniaturization Enzyme Screening Metabolomics & Proteomics Genomics & Transcriptomics Strain Evolution Ferment Fermentation Culturing Bioprocess Scale-Up Bioprocess Scale-Down Process Development Learn Predict build and transformation success for sequence candidate Generate novel strain designs based on historical performance Scale-up and Scale-Down modeling and assay validation

Figure 8: A non-exhaustive summary of the functions performed throughout the lifecycle of a program in the Foundry. At each stage, learnings are generated, driving improved design cycles and functional optimizations.

While the engineering strategies described above have historically been relatively uncommon in the life sciences, they are obviously not our invention. Rather, we are inspired by the lessons from other engineering disciplines and seek to apply those to biology. Automotive manufacturing, semiconductor fabrication, and data centers, among many others, demonstrate how automation, data, economies of scale, and continuous improvement can produce compounding gains in scale, costs, and quality. Critically, routine performance of these strategies across dozens of projects gives us the data and experience needed to drive continuous improvement.

As described above, a key strategy in our Foundry is to increase the scale of our operations so that we can run more programs and more prototypes in parallel (i.e., large batch sizes). This approach benefits from operational efficiencies and economies of scale across many dimensions:

 

   

Fixed Cost Amortization: Our Foundry is an inherently physical facility and as we scale and improve utilization, we are able to amortize this fixed cost across more work.

 

   

Continuous Learning and Improvement: The cumulative amount of work done as we scale leads to a better understanding about how to program cells. Much of this is then encoded in our Codebase, described below.

 

   

Purchasing Economies: By partnering with Ginkgo, our technology partners and suppliers can generate more value from a single account than they could from multiple smaller accounts, and that extra value is shared with Ginkgo.

 

   

Technology Specialization: Certain technologies that we leverage in the Foundry (such as acoustic liquid handling, automated bioreactors, and advanced mass spectrometry systems) are not easily leveraged or practical for smaller organizations. But for an engineering organization of our size, those investments can drive material improvements in cost efficiency.

These efficiencies and economies of scale can be observed empirically from a relationship we refer to as “Knight’s Law,” named after Tom Knight, one of our co-founders, and loosely inspired by Moore’s Law for semiconductors. As shown below, we have seen an exponential increase in the output of the Foundry over time

 

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alongside an exponential decline in the average cost per unit of output. While this trend was interrupted by temporary lab shutdowns during the COVID-19 pandemic and reduced capacity due to social distancing, we are continuing to drive our business internally towards achieving these metrics. We continue to build our internal metrics around Knight’s Law and believe we can continue to drive this kind of capacity growth in the foreseeable future, though it is dependent on the development of new technologies, which inherently carries risk, and, like Moore’s Law, we will likely hit a limit over time. This feature compares to a conventional facility, where scaling is driven predominantly by the addition of employees, an exponential increase in work would be infeasible and the cost per unit of work would decline little, if at all.

 

 

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LAB Operations: measuring work done on the platform 1,000,000 100,000 10,000 1,000 100 2014 2015 2016 2017 2018 2019 2020 2021 Doly lab Operation 2-3x annual increase pre-COVID STRAIN TESTS: MEASURING THE OUTPUT OF THE PLATFORM DEVELOPMENT AND ADOPTION OF NEW TECHNOLOGIES ENABLES ORDER OF MAGNITUDE IMPROVEMENTS IN CAPACITY 10,000,000 1,000,000 100,000 10,000 1,000 100 10 2015 2016 2017 2018 2019 2020 2021 Doly Strain Tests 3-x annual increase pre-COVID

Figure 9: The output of the platform increased by over 3X per year for 5 years, and while we expect that kind of scaling to continue, there is no guarantee that we will be able to do so.

 

 

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$10,000 $1,000 $100 $10 $1 2015 2016 2017 2018 2019 2020 2021 2025 Cost per Strain Test (rolling 3mo avg) FOUNDRY IS 5-10X CHEAPER THAN THE STATUS QUO ESTIMATED BY HAND COST BY 2025, WE SHOULD BE TWO ORDERS OF MAGNITUDE MORE EFFICIENT THAN BY HAND COVID impact Note; Cov1include all operational and R6D-related activities (i.e both current programs and investments in future capacity)

Figure 10: As the output of the platform has increased, our total R&D / operational costs per unit of output has decreased by approximately 50% per year.

We are frequently asked, and spend much time thinking about, whether it will be possible for compounding gains in output and productivity to continue for many years in the future. It is important to note that given

 

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significantly advanced tools, most steps in cell programming could be miniaturized to a point where single molecules of DNA and single cells are being manipulated and monitored. At that ultimate degree of miniaturization, the costs and timelines of cell programming could be reduced orders of magnitude from where they are today. Newly available microfluidic technologies, such as those developed by our partner, Berkeley Lights, Inc., point to the reality of this future of cell programming at the single-cell level. Additionally, because many of the enabling tools of cell programming are biological in nature (e.g., polymerases and CRISPR), we are able to point the platform at itself, developing new biological tools to reduce the number of steps or the complexity of a certain operation. For example, we could develop better gene editing enzymes or novel ways to screen cells in a multiplexed format using biological sensors. It is easy to theorize about these types of developments, however they are hard to execute, we will undoubtedly run into roadblocks along the way and we will have to invest significantly in developing new technologies in order to enable the types of improvements we seek to achieve.

Recent advances in machine learning, molecular simulation, and other computational techniques also hold great promise to improve our ability to program cells. We believe our Foundry is well-positioned to build the kind of large, well-structured datasets that such computational approaches need to succeed. In time, we believe computational approaches will reduce the need for certain kinds of experiments (for example, we already use machine learning to make protein and enzyme design projects more efficient). If computational approaches can replace certain sets of experiments, we expect to use the recovered Foundry capacity to work on ever more complex cell programming challenges. The reality is that the cells that we program today accomplish relatively simple functions, such as: “produce as much of molecule X as possible.” Programming cells for complex functions, such as live-cell therapeutics, responsive building materials, multicellular organisms, etc., will require sophisticated sub-systems for environmental sensing, intracellular information processing and feedback, and a multidimensional program that responds to such environmental stimuli. Only when we can deliver such sophisticated programmed cells, will we have truly unlocked the potential of biology and we see the Foundry as being an integral part of the platform for doing so.

Our Codebase—organizing the world’s biological code

Codebase is a familiar term to software developers but is a new concept in biology. Modern software firms develop their own (typically proprietary) codebase of source code and code libraries that can be leveraged by their software developers to more easily create new applications than they could starting from scratch. Additionally, vast repositories of debugged code are shared publicly so that programmers across application areas can leverage prior art in order to innovate faster. This allows software developers to focus their time and effort on developing new features rather than recreating existing logic. Ginkgo’s Codebase is our attempt to characterize functional biological code (reusable genetic parts and strains) that can similarly be repurposed in new cell programs. In addition to the raw performance data we generate through our Foundry experiments (more than 10 million strain tests run to date), we have also incorporated many public databases for genetic sequences and have a proprietary data set of over 440 million additional sequences that we leverage in our designs.

Engineering biology is complex—one of the reasons that Foundry scale is important is that it remains highly difficult to predict the performance of a biological “part” in a given context from a DNA sequence alone. The genomics revolution has outpaced biologists’ ability to test the functionality of each DNA sequence as it was discovered, particularly because most of the community is still performing biological experiments by hand without the benefit of automation. Each program performed at Ginkgo involves testing thousands or millions of DNA sequences; with a small fraction of those ending up in our final engineered cells. For that reason, high-performance biological sequences—the handful of designs from thousands of candidate designs that meet our performance goals for an experiment—are hard-won assets and form a key component of Ginkgo’s Codebase. Not to be discounted, the “losing” designs are still valuable, helping inform more effective campaigns in the future that avoid known failure modes.

 

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Natural organism data is added to Codebase once activity is confirmed Design & learning Data from previous experience is used to design new sequences for testing Codebase High performance sequences from previous programs Better genetic Parts Better strains Enzymes Tested Best Candidate Selected Measuring Enzyme Activity Engineered enzyme sequences and associated performance data feeds back into Codebase Engineered Strains Organisms and associated performance data feeds back into Codebase

Figure 11: Our Codebase incorporates both biological assets from nature as well as engineered assets and data from our Foundry experiments. Because the Foundry enables us to test many thousands of prototype enzymes, pathways, and strains in individual engineering cycles, we are able to quickly expand the range of characterized biological assets in our Codebase.

 

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In some ways Codebase is a “parts catalog” that we can draw from when developing a new organism. As Ginkgo performs more projects, we contribute new parts to our Codebase that can be reused in new contexts. For example, we developed novel synthetic promoters (DNA sequences that can turn on the expression of a gene of interest) that allowed us to increase production of proteins in yeast. Initially, we tested thousands of designs to arrive at a select number of promoters with high performance. Now those high-performing promoters can be reused in any program that involves producing a protein in yeast; they are a modular piece of genetic code. Over the past 20 years, our team has supported efforts to build these kinds of parts libraries—the iGEM Parts Registry and AddGene are two notable examples of initiatives to make reusable parts available to researchers in the community. But despite these efforts, we continue to see intellectual property siloed within organizations across the biotechnology industry, leaving many without the additional intellectual property they need to develop their programs. Ginkgo’s Codebase allows our customers to draw from a broader set of biological assets than any single company would develop for a given application. The scale and diversity of our programs have allowed us to develop a large Codebase that grows with the addition of each new program and can be opened to the broad swath of partners and cell programmers using our platform.

Cell programmers must consider not only the genes in the programs that they design, but also the ways that they interact with the cell that “runs” the program. Therefore, Codebase is more than just the individual modular parts we use to design biological programs. The organisms that have been optimized to run the programs, whether because they have been engineered for robust growth or because they are particularly adept at producing certain classes of products, are known as “chassis” strains. These strains can be reused across multiple programs, significantly reducing the amount of work needed to optimize a program and engineer a commercially viable organism. The breadth of Ginkgo’s customer base allows us to use these chassis strains in many more contexts than traditional industrial biotech players.

For example:

 

   

We have developed highly productive organisms for the production of food proteins (incorporating some of the synthetic promoters described above). These same chassis strains can be repurposed for the production of any protein or enzyme, spanning applications as diverse as enzymes for degrading pollutants to structural proteins for personal care products.

 

   

Our collaboration with Cronos Group Inc. involves the production of many different cannabinoids; these cannabinoids share common precursor molecules such that a single chassis strain can be modified to produce each product.

 

   

Ginkgo recently acquired the assets of Novogy, Inc., a company that had been focused on the engineering of oleaginous yeasts to produce fuels and lubricants. At Ginkgo, these assets can be applied not only to fuels and lubricants but also fine flavors and fragrances, food oils, and even materials. A consequence of evolution is that biochemistry has repurposed the same biochemical pathways many times over in different contexts, allowing chassis strains to be redeployed in many similarly diverse contexts at Ginkgo.

Our Foundry and Codebase are inextricably linked. Our Foundry scale allows us to generate unparalleled Codebase assets. These Codebase assets help us improve our designs and provide reusable parts and chassis strains that improve the efficiency and probability of success of our cell programming efforts in the Foundry. As the capabilities of the platform improve, it drives further demand, which increases the rate of learning in our Codebase. The continuous learning and improvements inherent in this relationship is one of the key features of our platform.

 

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Ginkgo stories Leveraging scale to optimize enzyme activity situation Our Client was seeking an enzyme that could enhance an underperforming, in-house program in the industrials space. Ginkgo created a diverse library of 1700+ enzyme variants, informed by our Codebase. Impact Our program reduced enzyme requirement by 80% and improved performance. Without Ginkgos capacity for testing or broad Codebase, the best enzyme wouldnt likely have been discovered or selected for testing enzyme activity New IP 5x efficiency gain Clients Prior Best enzymes tested

An ecosystem to support cell programmers

Ginkgo has long recognized that it is critical to build a true ecosystem around our technical platform. We have been inspired by the leading horizontal platforms in information technology, such as Microsoft Windows and Amazon Web Services, which built real developer communities and provided a range of value-added services on top of their core technology. Like these pathbreakers, who set the stage for a generation of computer developers, we too are trying to ensure that the cell programmers who build applications on our platform have the tools they need to succeed beyond the lab.

 

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Capital capital access Foundry Credits Ferment Consortium Manufacturing Robust tech-transfer Manufacturing support IP & Regulatory IP Filings Open-Source tools Legislative change Community Conference & community Product showcase Partners Facilitating: Investments, acquisitions, partnerships Trust & credibility Biosecurity ESG

Access to capital

As in the early days of computer programming, it is still extremely expensive to program biology. For that reason, it can be easier for larger companies to make investments in innovation around this space. But Ginkgo’s platform gives small companies and innovators access to the same horsepower as larger players and obviates the need to invest in fixed laboratory assets, providing an even greater strategic benefit. To help address this discrepancy, Ginkgo has assisted in launching new companies (such as Motif FoodWorks, Inc. and Allonnia, LLC) by bringing together strategic and financial investors to secure funding for these early stage companies. Going forward, we intend to leverage our own balance sheet and to partner with investors, enabling companies at all stages to benefit from our platform. We believe that, as Ginkgo’s customers demonstrate increasing success, there will be an explosion of capital for cell programming applications and a recognition of Ginkgo’s platform as the industry standard backbone for these development efforts.

Manufacturing support

Our job is to ensure that our cell programs can be executed at scale and we support our customers to ensure successful commercial scale manufacturing. We have built relationships with a number of leading contract manufacturing organizations and have demonstrated that we can transfer our lab-developed protocols to commercial scale (e.g., 50,000+ L fermentation tanks) with predictable performance. We have an in-house deployment team dedicated to supporting our customers’ scale-up and downstream processing needs. We have even helped certain customers, such as Cronos Group, Inc., acquire and build out their own in-house manufacturing capabilities and certain programs, such as our work with Moderna, Inc., focus on manufacturing process optimization.

Intellectual property protection and regulatory support

Ginkgo takes responsibility for the intellectual property generated through customer collaborations. Our scientific team works continuously with our intellectual property team to file patent applications and monitor for freedom to operate. We are also active in helping shape and influence the evolving regulatory

 

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landscape for biological engineering. While our customers are responsible for handling their own regulatory procedures on a product-by-product basis, our broader view and sphere of influence can help build understanding of and support for novel product classes.

Building a community of cell programmers

We launched Ferment, our annual conference, in 2018. The conference highlights developments and thought leadership in the field and brings together scientists, entrepreneurs, investors, and suppliers. Our conference in 2019 brought over 350 participants to our headquarters in Boston. Even prior to launching Ginkgo, our founders focused on building community within the emerging field of cell programming. Tom Knight, one of our founders, was among the professors who launched the International Genetically Engineered Machines (iGEM) Competition in 2004 which has now had over 50,000 students and instructors from over 50 countries go through the competition (including dozens of Ginkgo employees and all five founders!).

Facilitating partnerships within our community

Because Ginkgo serves both large market incumbents and smaller startups, our community also serves to facilitate introductions between innovators and those looking to invest in innovation. We believe that investors and large strategic companies have come to recognize Ginkgo’s platform as a key enabler of innovation and are keen to get to know the companies that are building with us. Those relationships can be the source of funding and go-to-market support for the earlier stage companies building on the platform, increasing the odds that they develop successful products.

We invest in building trust and credibility for the entire industry

The most powerful technologies require the most care. Biology is too powerful for us to not care about how our platform is used. We have and will continue to invest heavily to build and maintain trust in bioengineering as a technology platform across all layers of the industry. At the platform layer, we have focused on building robust biosecurity measures. At the application layer, we are proud to enable a diverse set of programs that drive towards environmental sustainability. We are committed to ESG (i.e., environmental, social, and corporate governance) practices and broad stakeholder engagement at a corporate level. We are also engaged in deep conversations around the implications and ethics of biotechnologies through many public forums, helping shape our platform to promote sustainability in our global community.

 

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GINKGO STORIES Producing cultured ingredients at scale A leading company for production of natural ingredients was looking for cost-saving opportunities. Ginkgo identified a plan to fine-tune existing pathways in yeast to produce multiple flavors more efficiently, then optimized the conditions for scale-up. Ginkgos Foundry utilizes the ambr250 disposable reactor system to inform design of experiments and reduce operating costs via automation, allowing us to run hundreds of bioreactors simultaneously. Using the information generated to rationally improve the strain and fermentation process conditions, Ginkgo exceeded the clients desired product titer by 50%. Ginkgos system enables high throughput screening without comprising data quality The conditions optimized at a volume of 250 mL were effectively translated into pilot and commercial scale, and the cultured ingredients reached commercial production with our manufacturing partners.

 

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Our Business Model

The key input into our unit economics is a cell program. For each of these cell programs, we generate economic value in two primary ways. First, we charge usage-based fees for work done in the Foundry, similar to how one might pay a cloud computing platform based on the amount of compute required to run a SaaS application. Second, we share in the downstream value of the programs that are completed on our platform. This value share can be in the form of royalties on future sales (much like traditional biopharma models), equity, or even lump-sum commercial milestone payments. Because we typically incur no downstream costs (e.g., manufacturing or product development, which our customers manage), these value share payments flow through with approximately 100% contribution margin. This flexible business model allows for more predictable near-term revenue while not sacrificing our ability to create long-term value with asymmetric upside.

Illustrative Program Economics

 

 

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Foundry Upfront payments to cover R&D costs for customer programs Yr 1 Yr 2 Yr 3 Highly predictable revenue stream independent of program success Downstream Value Value sharing via customer equity, royalties, and/or milestones on completed programs Foundry Royalty Stream OR Equity Equity represents the risk-adjusted NPV of a potential royalty stream Yr 4 Yr 5 Yr 6 Yr 7 Yr 8 Yr 0 Yr 4 Yr 5 Yr 6 Yr 7 Yr 8 Cash flows dependent on customer success; ~100% contribution margin as Ginkgo incurs minimal ongoing support or delivery costs

Figure 12: Ginkgo generates economics from programs in two primary ways. First, customers pay upfront fees to cover initial R&D costs for a program. Second, Ginkgo shares in the downstream value (typically in the form of a royalty stream or equity share) generated by programs.

Foundry Revenue

The first stage of a cell program consists of R&D work being performed on Ginkgo’s platform, leveraging our Foundry and Codebase. R&D is inherently risky and our customers recognize that this is a cost they will incur regardless of success and whether they are working on the program in-house or with a partner. Ginkgo provides a much more efficient platform to conduct this R&D work, encouraging companies to build on or adopt our platform.

We estimate that the unit costs of our Foundry cell engineering services are several times less expensive on average than the status quo (a customer doing equivalent R&D in-house, by-hand) and we expect that cost advantage to grow over time. We typically earn revenue tied to the units of work that we perform on behalf of our customers’ programs. Initially, as we were building and validating the platform, these revenue covered less than 20% of the costs incurred to execute a program as the platform was less efficient than the status quo. As our platform has matured and efficiency improved, we have steadily increased the portion of program R&D costs that are covered upfront by customers and we now expect that new programs are structured to fully cover our direct costs, which will eventually enable us to earn a modest margin. Our Foundry revenue provides a strong foundation of predictable revenue that is independent of any commercialization efforts by our partners.

 

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As we continue to scale the Foundry and build Codebase, we expect to drive further efficiencies and decrease our average unit costs. This presents us with a strategic choice going forward. We could retain these efficiencies and increase our margins or we could pass these efficiencies on to our customers, increasing the number of shots on goal and, therefore, the likelihood of program success given a fixed budget. We believe the right choice for long-term value creation is to pass the savings to our customers, reducing the barriers to adoption and driving increased demand for our platform. Our Foundry revenues are thus impacted by a number of drivers:

 

   

Number of active programs: We hope to dramatically increase the number of programs working on our platform over time, and if we are successful, we believe this will drive increasing Foundry revenue.

 

   

Units of work per program per year: If our Foundry becomes more efficient and we generate more scale, we expect to be able to do more work per program in a fixed period of time, improving chances of program success.

 

   

Average price per unit of work: If we bring on innovative technologies or step change improvements in existing Foundry services, we plan to pass capability and cost improvements on to our customers. If these new technologies or services are adopted across programs, we believe the average price per unit of work will continue to fall over time.

 

   

Number of years per program: If our platform improves, we expect program duration to decrease over time. Some programs may still be charting new territories and take several years, but programs that are able to leverage substantial pre-existing Codebase (e.g., our Nth program in bulk protein production) should have shorter duration and, in general, greater Foundry capabilities should shorten program durations.

The expected impact of these drivers is represented below:

 

 

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Growing our Business& # Active Programs Increasing Units of work per program per year increasing Avg. price per units of work Decreasing Annual Revenue Increasing &while improving our customer value proposition years per program Decreasing Customer cost per program per year Likely Flat or Decreasing Customer cost per program Decreasing

Figure 13: Illustrative drivers of Ginkgo’s long-term financial model and customer value proposition.

The multi-year nature of an average cell programming project means that our Foundry revenue are predictable and recurring in nature. Additionally, given the lead times inherent in developing technical plans as part of a sales process, we have good visibility into new Foundry revenue bookings. This provides a strong foundation for the business and allows us to be patient while we wait for downstream economics.

 

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Downstream Value Share

As the key enabling technology for our customers’ products, we are able to earn a share of the value of the products that are created using our platform. We are quite flexible and have structured a variety of value sharing mechanisms, including royalties, equity, and lump-sum commercial milestone payments. Because the economics to us should be roughly equivalent, we are generally agnostic on which form of downstream value capture we receive and the decision is typically based on customer size and preference, with archetypes described below.

 

 

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Because Ginkgo typically will have completed the program (and received associated Foundry revenue) prior to realizing downstream value, cash flows from the downstream value capture component generally fall straight to the bottom line as we incur minimal to no ongoing support or delivery costs once the strain is commercialized. This dynamic creates opportunities for outsized returns as our clients successfully commercialize products built on our platform. As we add more programs to the platform over time, we expect downstream value share to contribute income, and therefore we believe our overall margins and cash flow profile will grow significantly.

Biosecurity: A complement to our platform and emerging source of value

With a mission to make biology easier to engineer, we have always recognized the imperative to invest in biosecurity as a key component of our platform. We care how our platform is used and investments in biosecurity help us ensure that cell programming is conducted and deployed responsibly. The COVID-19 pandemic demonstrated the disruptive power of biology and has created a paradigm shift with respect to biosecurity in both public and private institutions that we believe will drive significant growth in demand for these capabilities. Our Biosecurity offering generated $17 million in revenue in 2020 and is expected to continue growing in the near-term, however, demand for COVID-19 testing remains uncertain for the second half of 2021. Our dedication to biosecurity is deeper than our emergency response to the current global pandemic. The rise of the internet and computing capabilities heralded a need for cybersecurity. Learning from this experience, and given the power of biology, we believe innovation in biosecurity must keep pace with innovations in bioengineering.

Consideration for biosecurity is ingrained into our platform tools. For example, we are members of the International Gene Synthesis Consortium (“IGSC”), which has developed harmonized protocols to screen synthetic DNA for concerning sequences. The IGSC protocols are typically used by DNA synthesis providers to help detect and prevent external customers from misusing DNA synthesis services. At Ginkgo, most of the DNA that we synthesize in-house is also designed and used in-house, not shipped to external customers. We still apply the IGSC screening protocols to these Ginkgo developed sequences as an additional biosecurity safeguard. We also have an extensive history working with the Department of Defense, the Defense Advanced Research Projects Agency (“DARPA”), and the Intelligence Advanced Research Projects Agency (“IARPA”) on programs related to building a robust biosecurity

 

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infrastructure. Many of these programs, such as the IARPA FELIX program, aim to develop experimental and computational tools that detect or prevent misuse of bioengineering. During the COVID-19 pandemic, we built a robust “endpoint security network” of nationwide K-12 viral testing to help with school reopening plans—and we are now one of the largest providers of K-12 COVID-19 public health testing in the country. This work with educational institutions—organizations that represent the centers of our community—is a meaningful first step in building the pathogen monitoring capabilities critical to the prevention and mitigation of biological risks.

SARS-CoV-2 will not be the last pathogen we face with pandemic potential, but if we make the right investments, it may be the last that catches us unprepared. Industry sources estimate that at steady state, $20 to $40 billion should be spent on pandemic preparedness annually. The near-term growth of this sector is highly dependent on international government initiatives and investment and Ginkgo has been supporting and engaging with domestic and international organizations and governments to help shape the understanding of a robust biosecurity program. Given our experience to date, we believe there is a meaningful commercial opportunity in biosecurity that will persist beyond the current COVID-19 pandemic, driven by increased awareness of the need for prevention and response systems. We are well placed to take a leadership position as the biosecurity platform of choice, and we believe that our technology leadership requires that we play an important role in helping the world manage these challenges.

Our Sustainable Advantage

We have defined a unique business model over the past 12 years. The biotechnology industry has been product-centric for decades, with early horizontal platforms in life sciences frequently vertically integrating upon the development of the first successful product on their platform. As Ginkgo has embarked on this journey, we have studied and learned from innovators and established platform companies in other industries as we built our platform and business. We now benefit from significant historical investments, a virtuous cycle that grows with scale, and a strong business model that is aligned with our customers’ outcomes. These establish a strong sustainable advantage that we believe will help establish Ginkgo as a true industry standard.

Decade-plus head start in creating an industry standard platform

Hardware, software and biological tools need to be tightly integrated to replicate our platform. We have spent over 12 years building the software, automation and data science to best support a high throughput, generalized platform and expect to continue investing in this area. Our software, automation and data infrastructure cannot be easily replicated without bringing together a number of rare, specialized skillsets. In addition, without the scale and demand to stress test a high throughput platform, we expect any newly developed platform would be suboptimal. We estimate that it took us over eight years of investment and iteration to reach cost parity with “by hand” cell programming. We believe competitors will find it difficult to justify the investment in the software, automation and data science needed for high throughput operations before they acquire matching high demand.

Scale economics provide a structural cost advantage

As the only scaled horizontal platform in this space, we have the broadest number of programs that can be run on our platform, providing the highest potential for scale economics. Other companies choose to target specific markets and vertically integrate into products with high expected value. This has a tendency to overfit the capabilities of their R&D team to their targets. As discussed above, our continued scaling and investment in flexible tools that can apply to a broad range of end markets helps us drive efficiencies in the Foundry and Codebase across our diverse programs. Furthermore, as we scale, we are able to leverage advanced technologies that are only practical at scale and also may obtain preferred pricing with a number of suppliers. Competitors may be unable to source equivalent technology or negotiate similar pricing without first achieving scale, a feat that is difficult to do with a narrowly focused R&D platform.

Strong network and learning effects

In addition to a raw scale economic, we also accumulate knowledge and reusable Codebase from each program that runs on the platform. Every program benefits from the programs that came before and generates benefits for

 

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other current and future programs. These learnings and reusable assets are cumulative, extremely hard to replicate, and increasingly valuable to our customers. Because our learnings are generated by the work we execute in our Foundry, the unmatched scale of our Foundry also means we are learning at a faster rate than any up-and-coming competitor. Thus, there is a recursive element to our platform: as the platform gets better, it also improves faster—we are excited to make this advantage of our platform available to our ecosystem of cell programmers.

Ginkgo’s value creation is aligned closely with customer success

Our platform drives value for customers along two dimensions: reducing the cost of laboratory work via automation and increasing the probability of technical success due to cumulative data and learnings. Our financial model is aligned with those factors. As we gain efficiency, we drive further demand for cell programming, which drives our Foundry revenue up. As both demand and probability of success increase, our risk-adjusted value share also increases. Our model only requires we share in a small fraction of the downstream value created by our programs, providing our customers the opportunity to generate and retain significant value. Ultimately, this encourages broader adoption of our platform across industries.

Furthermore, we seek to maintain close relationships with our customers, supporting their work, and earning their loyalty and satisfaction. The breadth and highly integrated nature of our platform makes it inefficient for a customer to simultaneously work with Ginkgo and any theoretical competitor. As there is not yet a standard interface for cell programming, it requires an upfront investment to learn how to choose and design programs to make the best use of our platform. Thus, customer retention is high and there are substantial switching costs.

We are uniquely positioned to attract the top cell programmers

Just as the top software programmers want to work with the latest technologies, we believe the top cell programmers will be attracted to our industry leading platform and access to its unique capabilities. Our ability to hire and retain the best cell programmers as internal users and developers of our platform pushes us to continually improve and also builds a base of Ginkgo-trained experts. If these Ginkgo trained cell programmers move on to roles and opportunities in product-specific companies, we expect they will become ambassadors for the Ginkgo approach in their next role, expanding our reach into potential customers.

 

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History of investing in credibility and trust

Let’s face it, GMOs have an image problem. This image problem has led to activities by the first generation of genetic engineering companies that backfired: lobbying against transparency in labeling laws, trying to “rebrand” GMOs with different terminology, and other efforts that have failed to build trust and engagement with stakeholders. We have taken a different approach. Rather than avoid the term, we’ve championed transparent labeling, sought to engage and build trust through open dialog, and enthusiastically embraced the potential for genetically modified organisms to do great things. We don’t seek to make GMOs acceptable through branding; we aim to make GMOs that people love.

 

 

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I GMO

Doing so requires care and attention to both the technical and social aspects of our platform and its impacts. This means investing in biosecurity and, as noted above, embedding it into our platform and how we operate. This also means engaging with the social complexities of science and technology with a diverse group of people. We strive for a company culture built on a foundation of diversity, equity and inclusion (see also the sections titled “—The Impact of Cell Programming—ESG is in our DNA” and “—Our People & Culture”), and aim to engage different perspectives through our creative residency and through our magazine, Grow. Through both our internal and external efforts, we seek to engage with the realities of what has made genetic engineering an ESG risk historically, and work towards equitable and positive impact.

Our Growth Strategy

We are seeking to usher in a new paradigm for cell programming. It took us over eight years of basic research and investment in software, automation, data science and scale to reach parity with the status quo of individual scientists conducting experiments by hand at a lab bench. It took us several more years to demonstrate business model maturity: delivering a platform with enough value-add to customers that we could cover the cost of cell engineering R&D programs while building Codebase and sharing in the downstream value of our programs. We believe that we are now at an inflection point where we believe we have the opportunity to become the industry standard. We see several drivers of this evolution and growth.

 

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Scale our platform and continue to drive efficiencies and improvements

As discussed above, our platform improves with scale and to date we have observed a positive feedback loop between our Foundry and Codebase. As we scale capacity and demand on the Foundry, we expect our average unit costs to fall, creating a better value proposition for our customers as their program budgets stretch further and drive more demand. Similarly, Foundry output also grows our Codebase, which supports better program execution, creating a better value proposition for our customers as well.

We occupy over 300,000 square feet and maintain state-of-the-art machinery and laboratory equipment. We have built more than 50 custom integrated work cells, consisting of robotic automation systems, mass spectrometry, fermenters, sequencers, and more. We have the capabilities to engineer dozens of species of organisms from bacteria to fungi to mammalian cells. We have worked on enabling products as varied as polymers, bacterial therapeutics, bulk protein production, novel antibiotics, fine chemicals, and more.

We have been able to work on a diversity of programs while consistently driving efficiencies in the Foundry with scale. We expect to accelerate growth in capacity by integrating new technologies across our existing footprint, building new Foundry space, and investing in software, automation and data to increase utilization.

Leveraging our proof points to grow within all industries

We have now established proof points of success in a diverse set of end markets, in several cases far exceeding our customers’ specifications. When engaging with existing customers or potential new customers in similar or adjacent industry verticals, we can point to these case studies of success to demonstrate the value of our platform. This reduces the barriers to adoption, helps us grow our customer base, and increases the number of new programs under contract. Importantly, the reusable Codebase we generate from these new programs enables us to stay ahead of vertically focused competitors.

Grow with existing customers

Once we establish a relationship with a customer, there is significant room to expand the scope of our program engagements. We are able to grow with our customers and/or expand into other existing pockets of R&D spending. We have seen customers expand from one early program to five or ten programs a few years later and each new logo we add has the potential to become a true platform partner.

When we work with companies from their inception (or at least from the inception of their biotech investments), we enable them to avoid significant fixed cost investments and benefit from our economies of scale. Our relationship with these customers is extremely strong as we are the core technology powering their R&D efforts. As a result, when these customers scale, their usage of our platform typically scales commensurately. For companies with existing, established biological capabilities, as we demonstrate the value of our flexible platform, we are able to grow our relationships to complement their core capabilities and increase the probability of success.

Reduce barriers to adoption by integrating with external R&D teams

It can be easy to fall into the trap of assuming that new disruptive technologies must subsume existing ways of working. When hosted servers and software-as-a-service started rising in prominence, corporate IT teams had to wrestle with changing integrations and demands. Some information technology departments were resistant to moving “off-prem” because they felt they were effectively outsourcing their jobs. In response, the leaders in this field, such as Dell, would sometimes hire their customers’ information technology departments and find them jobs within Dell simply to get past this internal resistance. The reality was that these technologies were ushering in a much more substantial era for information technology, which dramatically increased the demand for this type of talent. This centralization of the model (from every company having large information technology departments building customized code to a broader array of specialized software vendors) didn’t come at the

 

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expense of information technology and digital technologies, but enabled its flourishing across all industries. We see something similar happening in biotechnology today. Internal R&D teams are typically both very excited to learn about the power of our platform but are also understandably nervous about what “outsourcing” work to Ginkgo might mean for the future of their teams. We have the opportunity to help them see the benefit in a true partnership with Ginkgo.

The vast majority of programs being run on the platform today are being run and managed by Ginkgo program teams—in-house scientists and engineers who are managing the R&D project to meet a customer’s specifications. But we now have a couple early examples of certain customers, those with more in-house biotech expertise, interacting directly with our platform. Over time, we would like to build in enough standardized interfaces that a distributed network of scientists could access the platform directly through a well-defined integration and self-service layer. This transition will allow our program teams to devote more of their efforts to developing Codebase assets, enabling more rapid scaling, and reducing the barriers to adoption by our customers. There are significant technical hurdles for us to overcome in developing this technology, but it is on our near-term roadmap and we are constantly thinking about how to “productize” individual workflows on the platform.

Build an ecosystem

As described above in “—Our Platform,” we believe we are building the industry standard developer platform for cell programming. In much the same way that early computing platforms and operating systems built real communities around their platforms in the 80s and 90s, we intend to build a community of developers building on the Ginkgo platform. As we invest to expand this ecosystem of services for cell programmers building on the Ginkgo platform, our value proposition to cell programmers increases and we become more ubiquitous.

Our People & Culture

A company is made of people. We have sought to bring together a diverse and multidisciplinary group of people who share in our mission to make biology easier to engineer. Today, our extensive cross-functional team is collaborating to build our ecosystem, from organism designers to automation engineers, software developers to people operations, business development to facilities management, finance to molecular biology.

A culture built on care

We’ve strived to grow a culture based on care. As engineers, it is easy to fall into the trap of thinking of ourselves simply as tool builders. Tools can be used in many different ways, both good and bad, and engineers often discuss their tools as value neutral. But tools reflect the social beliefs and biases of the people who make them: today this is becoming increasingly apparent, with more and more evidence of algorithmic bias being built into AI systems, facial recognition, and much more.

As designers of the largest horizontal platform for cell programming, we are keenly aware of the need to care about how our platform is used. More significant than the impacts we have seen from digital platforms on our social world, biology is our health, our bodies, our food, and our environment. As we build the tools for programming biology, we must also care how those tools are used, and ensure that the risks and benefits are transparently and equitably shared.

A diverse, world-class team

As of March 31, 2021 we had 495 full time employees. Building a horizontal platform for cell engineering requires collaboration between diverse skills and functions. It also requires deep technical expertise. Our employees are dedicated to the following functions:

 

   

Platform functions including organism engineering, design, DNA synthesis and assembly, genome engineering, protein engineering and characterization, transformation and transfection, next generation

 

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sequencing, assay development, ultra high throughput screening, analytical chemistry, synthetic chemistry, directed evolution, and fermentation

 

   

Platform infrastructure functions including automation, software, development operations, product management, data engineering, data analysis, and data science

 

   

Deployment functions including upstream and downstream process engineering, project engineering; quality assurance and quality control

 

   

Commercial functions including marketing, business development, alliance management, and corporate development

 

   

Shared enabling functions including legal, people operations, finance, information technology, information security, facilities, environmental health and safety, procurement, shipping and receiving, inventory management, laboratory operations and media preparation

In addition to our full-time employees, our success would not be possible without the collaboration and support of the broad network of partners, contractors, contingent workers and temporary staff who make up the Ginkgo team.

Technologies reflect the values of the people who build them. Diversity, equity, and inclusion are valuable and necessary in their own right, but we believe that it is essential to build a diverse team where people from different backgrounds are included and empowered to speak up and shape the growth of this technology. We are committed to growing a diverse team and continuing to empower an inclusive culture with strong employee ownership and engagement.

The full breadth of Ginkgo’s diversity and inclusion cannot be captured in demographic statistics, just as demographic categories cannot capture the full spectrum of diversity of human experience, however, we collect and report these numbers for transparency and as a lagging indicator of our efforts. As of March 31, 2021, 42% of our full time employees self-identify as an underrepresented gender (not cis male) and 12% self-identify as coming from an underrepresented racial or ethnic group in science and engineering (Blacks or African Americans, Hispanics or Latinos, American Indians or Alaska Natives, and Native Hawaiians and other Pacific Islanders). We are not yet satisfied with these numbers and all teams have objectives around increasing diversity and building a culture of inclusion to ensure that diverse perspectives thrive.

Laying the groundwork for strong employee engagement in the future

As a private, founder-led company, we have been able to infuse the organization with long-term strategic thinking. The long-term engagement and mentality of our employees can be seen in our turnover: voluntary attrition is well below the industry average. As we make the transition to a public company, we are trying to be thoughtful about how to maintain our culture and level of engagement.

The individuals who work at Ginkgo and build our platform care deeply about how that platform is used and the impact our company will have in the world. At the time of the closing of the transaction our team will own over 30% of Ginkgo shares outstanding and we hope to maintain the long-term mentality we have benefited from as a founder-led company even after Ginkgo becomes a public company. We believe a workforce with strong equity ownership will make the wise decisions needed to build long-term value for our company and build a company whose long-term impacts make them proud. That is why we have implemented a multi-class stock structure that permits all employees (current and future), not just founders, to hold high-vote (10 votes per share) common stock. We believe that our multi-class stock structure will help maintain this long-term mentality and encourage long-term equity ownership by our employees, thereby resulting in increasing employee ownership over time. For more information, see “Risk Factors—Risks Relating to our Organizational Structure and Governance—Following the consummation of the Business Combination, only our employees and directors will be entitled to hold shares of New Ginkgo Class B common stock (including shares of New Ginkgo Class B common stock granted or otherwise issued to our employees and directors in the future), which shares will have ten votes per share. This will limit or preclude other stockholders’ ability to influence the outcome of matters

 

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submitted to stockholders for approval, including the election of directors, the approval of certain employee compensation plans, the adoption of amendments to our organizational documents and the approval of any merger, consolidation, sale of all or substantially all of our assets, or other major corporate transaction requiring stockholder approval.

Competition

To our knowledge, there are currently no other companies that serve all industries covered by our horizontal cell programming platform. The solutions and applications offered by potential competitors vary in size, breadth, and scope, and given our broad set of application areas, we could face competition in many different forms. We also face competition from customers’ internal R&D departments and other research solution providers that largely conduct genetic engineering by-hand. We also compete against companies that seek to utilize synthetic biology technologies to develop specific products or target certain end markets. Additionally, competing platforms may emerge from various sources, including from joint ventures and partnerships between well-capitalized technology and life sciences companies. We identify the following three groups as our principal set of competitors:

The Status Quo: “on prem” cell programming efforts

The main source of competition we encounter is from potential customers choosing to build or maintain in-house cell engineering teams and capabilities. This status quo includes building out laboratory space and then hiring a team of highly trained scientists to conduct research “by-hand” with limited scale efficiencies. Some internal R&D operations maintain a full suite of capabilities and can design, build and test relatively complex pathways while others may have certain internal capabilities and need to outsource other elements to contract research organizations. We believe this is far less efficient for the customer and likely to yield worse outcomes as customers get fewer shots on goal for a given program budget.

That said, it can still be very difficult for companies to choose to trust Ginkgo with their R&D efforts versus building more traditional “on prem” labs. Smaller companies may feel like they’re “betting the farm” on Ginkgo while larger companies may be sensitive to displacing existing R&D teams. As such, a key focus area for us is reducing the barriers to adoption for the platform by de-risking the upfront investment for earlier-stage companies and by helping larger companies integrate their scientists closely into our workflows and empower their scientists to manage requests directly so we feel more like a resource and partner than a fully outsourced provider. Investing in these areas is a key focus area for us going forward.

Examples of traditional “synthetic biology” companies that have been vertically integrated from their founding with a focus on building products using synthetic biology include Amyris, Zymergen, Genomatica, Novozymes, DuPont, and DSM. Additionally, the vast majority of therapeutics companies that are leveraging genetic engineering have in-house capabilities, including Biogen, Novo Nordisk, Vertex, Regeneron, Bayer, and many others. These companies may be viewed as competitors to Ginkgo because they are creating products, using cell programming, that may compete with the products Ginkgo is enabling for our customers. However, as a horizontal platform, we view these companies not as competitors but as potential customers and focus not on “beating” them but rather on demonstrating our incremental value.

Verticalized cell engineering platforms

Within certain end markets, Ginkgo may compete against vertically-focused biotechnology companies providing cell engineering research and development capabilities to customers within a narrow set of end markets. While we believe the siloed nature of these companies limits their long-term potential, in the near-term, we may have a harder time penetrating those end markets given the incumbent vertical specialists in that space. The vast majority of these companies exist within therapeutic end markets given the history of cell engineering in that field. In theory, the expertise and learnings they develop from work in one field could be leveraged into

 

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neighboring end markets if these companies decided to adopt (and invest in) a more horizontal strategy. Examples of these vertically-focused platforms include AbCellera (antibody discovery), Codexis (enzymes), Senti Bio (cell therapy for oncology applications) and WuXi biologics (therapeutics).

Other possible entrants

We may also face competition from new entrants in the market, including well-capitalized technology companies with possible strategic interests in synthetic biology and its capabilities. Such companies may emerge as competitors given their access to capital, capacity to create multi-disciplinary teams across biology, chemistry, computer science and engineering, and flexibility to enter strategic ventures with life sciences companies.

Intellectual Property

Overview: Foundry and Codebase

As discussed above, Ginkgo’s two core platform assets include:

 

   

Ginkgo’s Foundry, which enables high-throughput cell programming; and

 

   

Ginkgo’s Codebase, which includes reusable biological assets that can be used to accelerate cell programs.

Ginkgo protects each of these core assets—the Foundry and the Codebase—through a combination of patents and trade secret protections.

Patents

As of March 31, 2021, we had approximately 52 patent “families,” including patents held by the Company as well as by its wholly owned subsidiary Gen9, Inc. Some of these are represented by a Patent Cooperation Treaty (PCT) application with related national applications, as well as over 21 provisional applications. We have over 50 issued U.S. and over 150 issued foreign patents, which includes European nationalizations, and approximately 40 pending U.S. non-provisional and approximately 115 pending foreign patent applications, including patents and patent applications acquired from third parties. The patent applications we file enrich our platform with the Codebase we have developed during our collaborations, providing us with a reusable platform asset in parallel with our Foundry. We intend to continue developing our patent portfolio and will do so both through organic growth and through the acquisition of portfolios from third parties.

In addition to our proprietary methods and technologies, we also non-exclusively in-license certain intellectual property assets from third parties.

We intend to pursue additional intellectual property protection to the extent that we believe that it would be beneficial and cost-effective. We cannot provide any assurance that any of our current or future patent applications will result in the issuance of patents. We also cannot assure the scope of any of our future issued patents or warrant that any of our patents will prevent others from commercializing infringing products or technology.

Trade secrets

Ginkgo’s technology-related intellectual property that is not patent-protected is maintained as trade secrets. We employ a variety of safeguards to protect our trade secrets, including contractual arrangements that impose obligations of confidentiality and security, digital security measures, and physical security precautions.

 

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With respect to contractual arrangements, we protect our proprietary information by requiring our employees, consultants, contractors, and other advisers to execute nondisclosure and assignment of invention agreements upon commencement of their employment or engagement. Agreements with our employees also bar them from bringing the proprietary rights of third parties to us.

We require confidentiality and material transfer agreements from third parties that receive our confidential data or materials, and we also incorporate confidentiality and material transfer precautions into our collaboration agreements. For example, in the course of a cell program, we might transfer samples of intermediate strains to the customer for testing and scale-up work and then transfer a final commercial strain upon completion of our work. To protect both intermediate and final strains, we use strain transfer agreements that document the contractual restrictions and controls we have put into place, typically including, in the case of intermediate strains, covenants requiring the customer to return or destroy all strain samples after testing.

We also seek to preserve the integrity and confidentiality of our data and trade secrets by maintaining physical security of our premises and physical and electronic security of our information technology systems. Our privacy and information security program is designed and implemented, both within our internal systems and on our platform, in an effort to address the security and confidentiality of sensitive or confidential data related to our trade secrets, partners, customers, and employees. We maintain a documented information and physical security program with a dedicated team of professionals that focuses on technical measures such as application, network, system, and physical security, as well as policy measures related to privacy compliance, internal training and education, and documented incident response protocols.

Trademarks and domain names

Although our business is directed at sophisticated corporate customers rather than end consumers, we have trademark rights and registrations in our name, logo, and other brand indicia in the United States and other jurisdictions around the world. We also have registered domain names for websites that we use in our business, such as www.ginkgobioworks.com.

Intellectual property transaction structure

We earn revenue from collaboration agreements with customers under which we perform cell programming activities. Through our cell programs, we develop cells that produce or are products for our customers, which they market in their verticals.

With respect to intellectual property, we have relatively standard transaction structures that apply to cell programs for a customer. In this situation, our collaboration agreements typically provide that Ginkgo will own all collaboration-related intellectual property (“Foreground IP”) concerning cell programming. To protect our collaboration partners’ investment in the collaboration and to provide them with a competitive advantage from working with Ginkgo, Ginkgo provides a limited exclusive license to patents within the Foreground IP that cover the product, usually within a specified field. However, our terms may vary in certain special circumstances.

We do not provide exclusive licenses to unpatented Foreground IP (i.e., trade secrets and other knowhow) that results from a collaboration. In our typical deal structure, we also do not provide exclusive licenses to our “background” intellectual property — i.e., the intellectual property, whether patented or unpatented, that we developed before entering into a collaboration or develop independently from our work in the collaboration. We believe that our transaction structures allow us to maximize the reuse of Codebase across programs and ensure that technology we develop does not lie fallow.

In-License Agreements

Amyris Partnership Agreement

On October 20, 2017, we entered into a partnership agreement (the “Partnership Agreement”) with Amyris, Inc. (“Amyris”), which, as amended from time to time, terminated all prior agreements between Ginkgo and

 

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Amyris. In the Partnership Agreement, Amyris, among other things, granted us a non-exclusive license effective as of June 28, 2016 (the date of an earlier agreement between the parties) under all of Amyris’s rights in and to certain specified microbial strains, and under all patents and applications associated with such microbial strains, to make, have made, use, sell, offer to sell and import any products other than farnesene and/or farnesene derivatives that are chemically produced from farnesene. The license is subject to any previous exclusive licenses provided to third parties and is royalty-free, fully paid-up, sublicensable, non-exclusive and perpetual (i.e., it survives termination or expiration of the Partnership Agreement except in the case of our insolvency).

Strateos Collaboration Agreement

On October 2, 2017, we entered into a collaboration agreement (the “Strateos Collaboration Agreement”) with Strateos, Inc. f/k/a Transcriptic, Inc. (“Strateos”), which was amended and restated on April 20, 2021. Under the Strateos Collaboration Agreement, Strateos granted us a non-exclusive, perpetual, irrevocable, fully paid-up, royalty-free license under certain intellectual property rights to use its software platform in a range of activities relating to our business, including, among other things, developing and commercializing cell lines, developing data packages, providing foundry and analytical services and performing diagnostic testing. In connection with the Strateos Collaboration Agreement, we paid Strateos an up-front fee of $3.0 million and agreed to pay an additional $9.0 million in fees during the 5-year term of the agreement in consideration for services provided by Strateos under the agreement, of which more than $7.0 million has already been paid. Either party may terminate the Strateos Collaboration Agreement without cause upon six months’ written notice to the other party. Either party may also terminate the agreement for the other party’s material breach, insolvency or change of control to a direct competitor of the terminating party. After expiration of the agreement, either party’s termination of the agreement for convenience or the other party’s insolvency, or our termination of the agreement for Strateos’ material breach or Strateos’ change of control to one of our direct competitors, we will retain a license to use Strateos’ software. We retain such rights for an 18-month period in the event the agreement is terminated by Strateos for certain material breaches of the agreement, but we do not retain such rights in the event of Strateos’ termination due to our change of control to a Strateos direct competitor, our leak or other unauthorized disclosure of Strateos’ code, or a material breach of our obligations involving payment, intellectual property or confidentiality.

Facilities

Ginkgo’s headquarters are located in the Seaport district of Boston, Massachusetts and comprise a set of non-cancellable operating leases within a single facility totaling 217,000 square feet of office and laboratory space. These lease agreements expire in 2030 and each contain one option to extend the lease for a five-year period at then-market rates. We also lease a total of 96,000 square feet of office and lab space in Cambridge, Massachusetts and Emeryville, California.

In anticipation of expanding facility needs to support future growth, in April 2021, we entered into a lease consisting of approximately 152,000 square feet of new office and laboratory space being developed in Boston, Massachusetts near our headquarters. The lease commencement date is estimated to be June 1, 2024, subject to certain extensions, and expires on the fifteenth anniversary of the lease commencement date. The lease includes one option to extend the lease for ten years at then-market rates as well as certain expansion rights.

We currently lease all of our facilities and do not own any real property. We believe our facilities are adequate and suitable for our current needs and that the new lease described above provides significant expansion space. To support future organic growth or merger and acquisition activity, we may enter into new leases, assume lease obligations or acquire property both domestically and internationally and believe that, if needed, suitable or alternative space will be available.

 

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Suppliers

Ginkgo’s suppliers for cell programming operations comprise primarily manufacturers and distributors of life science tools, consumables and equipment as well as certain specific providers of contract research, development and manufacturing services. We will sometimes enter into long-term, strategic partnerships with innovative suppliers. Because of the significant scale of our Foundry’s operations, we believe we are often an early adopter and the largest customer at scale of certain new life science tools and technologies. Our supply agreements with Twist Bioscience Corporation (“Twist”) and Berkeley Lights, Inc. (“Berkeley Lights”), as further described below, are examples of such strategic supplier relationships. We will also occasionally acquire technology or Codebase assets for strategic reasons and because we can integrate the technology effectively into our platform — Gen9, Inc. and Warp Drive Bio, Inc. are two examples.

Our suppliers for our biosecurity offering include manufacturers and distributors of lateral flow assay (LFA) test kits, including our collaboration with Access Bio, Inc. and COVID-19 sample collection kits. We have developed a national network of third party labs for provision of COVID-19 molecular testing services. We also utilize third parties for certain other services, including physician authorizations and on-site test administration, in the provision of our end-to-end COVID-19 testing offering.

Our software, automation, data, information technology, development operations (“DevOps”) and information security functions utilize various third party software and information technology service providers, including AWS, for data storage and processing. We also routinely engage a variety of third parties for professional services, contract employment services and consulting services.

Twist Bioscience Corporation

In March 2018, we entered into a non-cancelable supply agreement (the “2018 Agreement”) with Twist, which requires us to purchase synthetic DNA at specified volumes on a quarterly basis over a four-year term. To the extent we fail to meet our quarterly minimum purchase obligations, we are required to pay a fee per unit of shortfall. The products we may purchase that contribute toward achieving our quarterly minimum purchase obligation can vary based on our discretion, subject to advance notice provided to Twist.

Our quarterly minimum purchase obligation may be adjusted for the following reasons: (i) due to a lack of availability of certain products for purchase in a given quarter; (ii) due to a lack of certain features available; (iii) delays in shipments over two consecutive quarters beyond the agreed upon lead times; and (iv) if the average yield of certain products measured over two consecutive quarters is greater than a specified yield. We receive volume discounts on purchases based on specified volume thresholds over the term of the supply agreement.

The 2018 Agreement can only be terminated (i) upon mutual agreement of both parties, (ii) by us upon a specified change of control, (iii) upon a material breach of the contract by either party, or (iv) by Twist in the event that we fail to place orders for more than a certain percentage of our required quarterly minimums under the 2018 Agreement for two consecutive quarters. The purchase minimums in the 2018 Agreement create an enforceable obligation only in conjunction with each purchase order.

Berkeley Lights

In September 2019, we signed a collaboration agreement (the “Berkeley Collaboration”) with Berkeley Lights, a cell biology company focused on enabling and accelerating the rapid development and commercialization of microbial biotherapeutics and other cell-based products for its customers. Under the Berkeley Collaboration, we incorporate Berkeley Lights’ platform into the Foundry to accelerate the engineering of biotherapeutics and cell-based products. Under the Berkeley Collaboration, both parties agree to use diligent efforts to jointly develop certain workflow plans.

We are obligated to pay Berkeley Lights at least $109.0 million, and up to $150.0 million, over the term period of the Berkeley Collaboration from October 2019 through September 2026 for (i) payments for Berkeley

 

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Lights’ efforts under the workflow development plans and (ii) payments for purchases of certain equipment, associated consumables, and other goods and services. We have the option to buy down our purchase obligations after the second contract year by making a one-time payment to Berkeley Lights. We are also required to pay to Berkeley Lights certain license fees for the use of Berkeley Lights’ platform and certain milestone payments of up to $11.5 million payable when a therapeutic discovered using certain workflows reaches specified development and regulatory milestones. For more details on the minimum purchase commitments under the Berkeley Collaboration, see Note 10, “Commitments and Contingencies,” of our audited consolidated financial statements included elsewhere in this proxy statement/prospectus.

Under the Berkeley Collaboration, we are granted an exclusivity period for each workflow developed for us by Berkeley Lights, but Berkeley Lights has the option to buy down the exclusivity period, after which the parties will equally share the development costs of the associated workflow.

The Berkeley Collaboration will continue until the seventh anniversary of its effective date, subject to certain automatic extension provisions, including for delays resulting from Berkeley Lights’ failure to supply products or services conforming with the Berkeley Collaboration. The collaboration will automatically terminate if we, at any time after the second contract year, elect to exercise our buy down right. In addition, either party may terminate the Berkeley Collaboration (i) for the material breach by the other party (including, with respect to Ginkgo, a material supply failure), (ii) upon the occurrence of certain insolvency related events of the other party, and (iii) for certain force majeure events.

Government Regulations

Our business, or the business of our customers, may be regulated by the U.S. Food and Drug Administration (“FDA”) and other federal authorities in the United States, including the U.S. Federal Trade Commission (“FTC”), U.S. Department of Agriculture (“USDA”), U.S. Drug Enforcement Administration (“DEA”) and Environmental Protection Agency (“EPA”), as well as comparable authorities in foreign jurisdictions and various state and local authorities in the United States. Failure to comply with applicable regulations may result in enforcement actions, civil or criminal sanctions, and adverse publicity.

FDA regulation

We provide cell engineering and product discovery services to customers engaged in the manufacture of foods, cosmetics and pharmaceutical products. The FDA regulates the research, development, testing, quality control, import, export, safety, effectiveness, storage, recordkeeping, premarket review, approval or licensure, processing, formulation, manufacturing, packaging, labeling, advertising, promotion, marketing, distribution, sale, post-market monitoring and reporting of our customers’ pharmaceuticals, cosmetics and food products, and the FTC also regulates the advertising and promotion of these products.

We also act as the authorized distributor of certain COVID-19 diagnostic test and collection kits manufactured by independent third parties, and we work with laboratory partners that provide clinical laboratory testing services as part of the COVID-19 testing services we offer, and these tests and test kits are subject to regulation by the FDA. In particular, the tests and test kits used in our COVID-19 testing services may be subject to regulation by the FDA as medical devices, and may be required to comply with the requirement that such products have obtained clearance, approval, or other marketing authorizations, such as an Emergency Use Authorization (“EUA”), before they can be commercialized, as well as post-market requirements such as adverse event reporting and restrictions on labeling, marketing, and distribution.

Medical products, including COVID-19 tests, that are granted an EUA or other marketing authorization must comply fully with the terms and conditions provided in the EUA or other marketing authorization. For example, EUAs for COVID-19 tests may include conditions of authorization applicable to the EUA holder, authorized distributors and authorized laboratories. Noncompliance with applicable requirements could result in

 

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negative consequences, including adverse publicity, judicial or administrative enforcement, warning letters or untitled letters from the FDA, mandated corrective promotional materials, advertising or communications with doctors, and civil or criminal penalties, among others. The FDA can also withdraw marketing authorization for the applicable product, and in the case of a product subject to an EUA, the authorization to market the product under the EUA lasts only as long as the declared public health emergency.

We do not hold any EUAs or other marketing authorizations for COVID-19 tests or perform any COVID-19 testing ourselves as part of our testing services, and we rely on our test suppliers and contract laboratories to comply with the regulatory requirements applicable to their tests and testing activities, including the potential requirement for premarket review and affirmative marketing authorizations, to the extent required. In some cases, however, the third-party laboratories we partner with to conduct pooled testing may not hold EUAs or other marketing authorizations from the FDA for their tests and instead may validate and perform their tests as laboratory developed tests (“LDTs”). An LDT is an in vitro diagnostic test that is intended for clinical use and is designed, manufactured, and used within a single laboratory. Although the FDA takes the position that LDTs are classified as medical devices, the FDA has historically exercised enforcement discretion and has not enforced its requirements, including premarket review, with respect to LDTs. The FDA’s policy toward the regulation of LDTs has been subject to frequent discussion and, in the case of COVID-19 LDTs, has changed throughout the COVID-19 public health emergency.

DEA regulation

We are engaged in the research, development, and export of certain products that may be regulated as controlled substances, including microbes designed to generate precursors to cannabinoids or other chemical intermediates. The Controlled Substances Act of 1970, as amended from time to time, establishes registration, security, recordkeeping, reporting, storage, distribution and other requirements administered by the DEA. The DEA is concerned with the control of handlers of controlled substances, and with the equipment and raw materials used in their manufacture and packaging, in order to prevent loss and diversion into illicit channels of commerce. The DEA regulates controlled substances as Schedule I, II, III, IV or V substances. Schedule I substances by definition have no established medicinal use, and may not be marketed or sold in the United States. Schedule I substances are considered to present the highest risk of abuse, and Schedule V substances the lowest relative risk of abuse among controlled substances. Marijuana is classified as a Schedule I controlled substance. However, the term does not include “hemp,” which means the cannabis plant and any part of that plant, including the seeds and all derivatives, extracts, cannabinoids, isomers, acids, salts, and salts of isomers, whether growing or not, with a delta-9 tetrahydrocannabinol concentration of not more than 0.3% on a dry weight basis.

Annual registration is required for any facility that manufactures, distributes, dispenses, imports or exports any controlled substance. The registration is specific to the particular location, business activity and controlled substance schedule. For example, separate registrations are needed for import and manufacturing, and each registration will specify which controlled substance schedule is authorized for that activity.

The DEA typically inspects a facility to review its security measures prior to issuing a registration. The DEA requires “effective controls and procedures” to guard against theft and diversion of controlled substances. Security requirements vary by controlled substance schedule (with the most stringent requirements applying to Schedule I and Schedule II substances), type of business activity conducted, quantity of substances handled, and a variety of other factors. Required security measures include background checks on employees and physical control of inventory. While the specific means by which effective controls and procedures are achieved may vary, security practices may include use of cages, surveillance cameras and inventory reconciliations. Records must be maintained for the handling of all controlled substances, and, in certain scenarios, periodic reports made to the DEA. Reports must also be made for thefts or losses of any controlled substance, and disposal of controlled substances must adhere to various methods authorized by the regulations. In addition, special authorization and notification requirements apply to imports and exports.

 

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Laboratory Licensing and Certification Requirements

The clinical laboratories we partner with for our COVID-19 testing program are subject to federal oversight under Clinical Laboratory Improvement Amendments of 1988 (“CLIA”), which requires all clinical laboratories to meet certain quality assurance, quality control and personnel standards. Laboratories also must undergo proficiency testing and are subject to inspections. Standards for testing under CLIA are based on the complexity of the tests performed by the laboratory, with tests classified as “high complexity,” “moderate complexity,” or “waived.” Laboratories performing high complexity testing are required to meet more stringent requirements than moderate complexity laboratories. Certain of our partner laboratories must undergo on-site surveys at least every two years, which may be conducted by the Centers for Medicare and Medicaid Services (“CMS”) under the CLIA program or by a private CMS approved accrediting agency. In addition, we hold CLIA Certificates of Waiver and perform certain CLIA-waived tests on behalf of our clients, which subjects us directly to certain CLIA requirements. The sanction for failure to comply with CLIA requirements may be suspension, revocation or limitation of a laboratory’s CLIA certificate, which is necessary to conduct business, as well as significant fines and criminal penalties.

The operations of our partner laboratories and our laboratories holding CLIA Certificates of Waiver are also subject to state and local laboratory regulation. CLIA provides that a state may adopt laboratory regulations different from or more stringent than those under federal law, and a number of states have implemented their own laboratory regulatory requirements. State laws may require that laboratory personnel meet certain qualifications, specify certain quality controls, or require maintenance of certain records. No assurances can be given that we or our partner laboratories will pass all future licensure or certification inspections.

Federal Select Agent Regulations

Our research facilities that synthesize DNA sequences or perform other activities could become subject to the Federal Select Agent Program (“FSAP”), which involves rules administered by the Centers for Disease Control and Prevention (“CDC”) and the USDA Animal and Plant Health Inspection Service (“APHIS”). The FSAP regulates the possession, use, and transfer of biological select agents and toxins that have the potential to pose a severe threat to public health, animal or plant health, or animal or plant products. FSAP regulatory requirements include: (i) registration with the CDC and/or APHIS for research facilities that deal with the select agents and toxins; (ii) submission to periodic biosafety and security inspections; and (iii) reporting of theft, loss or release of select agents. Federal agency enforcement actions for violations of FSAP regulations can include the initiation of corrective actions, complete or partial suspension or revocation of select agent registrations or civil or criminal liability.

Genetically Modified Materials Regulations

Our technologies and the technologies of our customers involve the use of genetically modified cells, organisms and biomaterials, including, without limitation, genetically modified organisms (“GMOs”) and genetically modified microorganisms (“GMMs”), genetically modified plant or animal cells and genetically modified proteins and biomaterials (collectively, “Genetically Modified Materials”), and their respective products. In the United States, the FDA, APHIS and the EPA are the primary agencies that regulate the use of GMOs, GMMs and potential products derived from GMOs or GMMs or Genetically Modified Materials, pursuant to the Coordinated Framework for the Regulation of Biotechnology (“Coordinated Framework”).

The FDA reviews the safety of food consumed by humans and of feed consumed by animals under the Federal Food, Drug and Cosmetic Act (“FDCA”). Under the FDCA, food and feed manufacturers are responsible for ensuring that the products they market, including those developed through genetic engineering, are safe and properly labeled. In addition, the FDA must approve the use of any food additives, including GMOs, before marketing.

APHIS examines whether a plant itself presents a “plant pest” risk under the Plant Protection Act (“PPA”). Specifically, APHIS is responsible for regulating the introduction (i.e., importation, interstate movement or

 

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release into the environment) of certain GMOs and plants under the plant pest provisions in the PPA to ensure that they do not pose a plant pest risk APHIS finalized changes to the PPA’s implementing regulations with respect to certain GMOs in May 2020. A person or organization may request a regulatory status review from APHIS to determine whether a GMO is unlikely to pose a plant pest risk and, therefore, is not regulated under the plant pest provisions of the PPA or the regulations codified at 7 C.F.R. Part 340; requesting a regulatory status review tends to assume the GMO at issue does not otherwise fall within a regulatory exemption. If the GMO does not qualify for an exemption or if the APHIS regulatory status review process finds that the plant poses a plausible plant pest risk, then the GMO may require an APHIS permit regulations were issued in May 2020 to clarify the process. A regulated article may be subject to APHIS for the environmental release, importation, or interstate movement of the GMO or its progeny.

EPA regulates, under the Federal Insecticide, Fungicide and Rodenticide Act (“FIFRA”), the pesticides (including plant incorporated protectants) that are used with crops, including GMO herbicide-tolerant crops.

FIFRA generally requires all pesticides to be registered before distribution or sale, unless they are exempted. Under FIFRA, a pesticide registrant must demonstrate that the pesticide at issue, when used pursuant to its specifications, “will not generally cause unreasonable adverse effects on the environment” to secure a registration. EPA must approve each distinct pesticide product, each distinct use pattern, and each distinct use site. In addition to EPA’s FIFRA authority, EPA also regulates potential human health impacts from pesticides under the FDCA. EPA does so by establishing “tolerance levels” (i.e., “the amount of pesticide that may remain on food products”) under the FDCA.

Telehealth regulation

Our telehealth provider partner is subject to various federal, state and local certification and licensing laws, regulations and approvals, relating to, among other things, the adequacy of health care, the practice of medicine and other health professions (including the provision of remote care and cross-coverage practice), equipment, personnel, operating policies and procedures and the prerequisites for ordering laboratory tests. Some states have enacted regulations specific to providing services to patients via telehealth. Such regulations include, among other things, informed consent requirements that some states require providers to obtain from their patients before providing telehealth services. Health professionals who provide professional services using telehealth modalities must, in most instances, hold a valid license to practice the applicable health profession in the state in which the patient is located. In addition, certain states require a physician providing telehealth to be physically located in the same state as the patient. Any failure to comply with these laws and regulations could result in civil or criminal penalties against telehealth providers.

State corporate practice of medicine and fee splitting laws

Our relationship with our telehealth provider partner, who provides physician oversight and support to individuals seeking COVID-19 diagnostic or screening testing, including evaluating each request for testing, communicating and providing consultation services for certain test results, is subject to various state laws, which are intended to prevent unlicensed persons from interfering with or influencing a physician’s professional judgment, and prohibiting the sharing of professional services income with non-professional or business interests. These laws vary from state to state and are subject to broad interpretation and enforcement by state regulators. A determination of non-compliance could lead to adverse judicial or administrative action against us and/or our telehealth provider partner, civil or criminal penalties, receipt of cease and desist orders from state regulators, loss of provider licenses, or a restructuring of our arrangement with our telehealth provider partner.

Healthcare fraud and abuse laws

Although none of our COVID-testing offerings are currently billed to any third-party payor, including any commercial payor or government healthcare program, by us or any of our laboratory or telehealth provider partners, we may nonetheless be subject to a number of federal and state healthcare regulatory laws that restrict

 

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business practices in the healthcare industry. These laws include, but are not limited to, federal and state anti-kickback, false claims, and other healthcare fraud and abuse laws.

The federal Anti-Kickback Statute prohibits, among other things, individuals or entities from knowingly and willfully offering, paying, soliciting or receiving remuneration, directly or indirectly, overtly or covertly, in cash or in kind to induce or in return for purchasing, leasing, ordering or arranging for or recommending the purchase, lease or order of any item or service reimbursable under Medicare, Medicaid or other federal healthcare programs. A person or entity does not need to have actual knowledge of this statute or specific intent to violate it in order to have committed a violation.

The federal civil and criminal false claims laws, including the civil False Claims Act, and civil monetary penalties laws prohibit, among other things, any individual or entity from knowingly presenting, or causing to be presented, a false claim for payment to the federal government, knowingly making, using or causing to be made or used a false record or statement material to a false or fraudulent claim to the federal government, or from knowingly making a false statement to avoid, decrease or conceal an obligation to pay money to the federal government. In addition, the government may assert that a claim including items or services resulting from a violation of the federal Anti-Kickback Statute or the federal physician self-referral prohibition, commonly known as the Stark Law, constitutes a false or fraudulent claim for purposes of the civil False Claims Act.

In addition to the Anti-Kickback Statute and the Stark Law, the United States recently enacted a law known as the Eliminating Kickbacks in Recovery Act, or EKRA, which created a new federal crime for knowingly and willfully: (1) soliciting or receiving any remuneration in return for referring a patient to a recovery home, clinical treatment facility, or laboratory; or (2) paying or offering any remuneration to induce such a referral or in exchange for an individual using the services of a recovery home, clinical treatment facility, or laboratory. Unlike the Anti-Kickback Statute, EKRA is not limited to services reimbursable under a government health care program, but instead extends to all services reimbursed by “health care benefit programs.”

The federal Health Insurance Portability and Accountability Act of 1996, as amended by Health Information Technology for Economic and Clinical Health Act (“HIPAA”) created additional federal criminal statutes that prohibit, among other things, knowingly and willfully executing a scheme to defraud any healthcare benefit program, including private third-party payors and knowingly and willfully falsifying, concealing or covering up a material fact or making any materially false, fictitious or fraudulent statement in connection with the delivery of or payment for healthcare benefits, items or services. Similar to the U.S. federal Anti-Kickback Statute, a person or entity does not need to have actual knowledge of the statute or specific intent to violate it in order to have committed a violation.

Similar state and local laws and regulations may also restrict business practices in the medical device and clinical laboratory industries, such as state anti-kickback and false claims laws, which may apply to business practices, including but not limited to, research, distribution, sales and marketing arrangements and claims involving healthcare items or services reimbursed by non-governmental third-party payors, including private insurers, or by patients themselves; and state laws that require companies to comply with the industry’s voluntary compliance guidelines and the relevant compliance guidance promulgated by the federal government, or otherwise restrict payments that may be made to healthcare providers and other potential referral sources.

Violation of any of such laws or any other governmental regulations that apply may result in significant criminal, civil and administrative penalties including damages, fines, imprisonment, disgorgement, additional reporting requirements and oversight if we become subject to a corporate integrity agreement or similar agreement to resolve allegations of non-compliance with these laws, contractual damages, reputational harm, diminished profits and future earnings, disgorgement, exclusion from participation in government healthcare programs and the curtailment or restructuring of our operations.

 

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Federal and state data privacy and security regulations

Numerous state, federal and foreign laws, including consumer protection laws and regulations, govern the collection, dissemination, use, access to, confidentiality and security of personal information, including health-related information. In the United States, numerous federal and state laws and regulations, including data breach notification laws, health information privacy and security laws, including HIPAA, and federal and state consumer protection laws and regulations (e.g., Section 5 of the Federal Trade Commission Act), that govern the collection, use, disclosure, and protection of health-related and other personal information could apply to our operations or the operations of our partners. HIPAA, and its respective implementing regulations, imposes obligations on “covered entities,” including certain health care providers, health plans, and health care clearinghouses, and their respective “business associates” that create, receive, maintain or transmit individually identifiable health information for or on behalf of a covered entity, as well as their covered subcontractors with respect to safeguarding the privacy, security and transmission of individually identifiable health information. Violations of the HIPAA privacy and security regulations may result in civil and criminal penalties. The U.S. Department of Health and Human Services (“HHS”) is required to conduct periodic compliance audits of covered entities and their business associates. HIPAA also authorizes State Attorneys General to bring civil actions seeking either an injunction or damages in response to violations of HIPAA privacy and security regulations.

In addition, certain state laws, such as the California Confidentiality of Medical Information Act, the California Consumer Privacy Act of 2018 (“CCPA”) and the California Privacy Rights Act (“CPRA”) govern the privacy and security of personal information, including health-related information in certain circumstances, some of which are more stringent than HIPAA and many of which differ from each other in significant ways and may not have the same effect, thus complicating compliance efforts. Failure to comply with these laws, where applicable, can result in the imposition of significant civil and/or criminal penalties and private litigation. Privacy and security laws, regulations, and other obligations are constantly evolving, may conflict with each other (thus complicating compliance efforts), and can result in investigations, proceedings, or actions that lead to significant civil or criminal penalties and restrictions on data processing.

Legal Proceedings

We are currently in legal proceedings and may, from time to time, become involved in legal proceedings and regulatory actions arising in the ordinary course of our business. We are not currently subject to any material legal proceedings. For additional information on risks relating to litigation, please see the sections titled “Risk Factors—Risks Related to Ginkgo’s Intellectual Property—Risks that we may need to engage in intellectual property litigation,” “—General risks related to litigation” and “Risk Factors—Risks Related to Government Regulation and Litigation.”

Ginkgo Corporate Information

Ginkgo was incorporated in 2008 as Ginkgo Bioworks, Inc., a Delaware corporation. Ginkgo’s principal executive office is located at 27 Drydock Avenue, Boston, Massachusetts 02210, and Ginkgo’s telephone number is (877) 422-5362. Ginkgo’s corporate website address is www.ginkgobioworks.com. The information contained on, or accessible through, its corporate website is not incorporated into this proxy statement/prospectus and should not be considered part of this proxy statement/prospectus. The inclusion of the corporate website address is an inactive textual reference only.

 

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

The following discussion and analysis of our financial condition and results of operations should be read in conjunction with the consolidated financial statements and related notes thereto included elsewhere in this proxy statement/prospectus. This discussion contains forward-looking statements that reflect our plans, estimates and beliefs that involve risks and uncertainties. As a result of many factors, such as those set forth under “Risk Factors” and “Cautionary Note Regarding Forward-Looking Statements” sections elsewhere in this proxy statement/prospectus, our actual results may differ materially from those anticipated in these forward-looking statements.

Overview

Our mission is to make biology easier to engineer.

Ginkgo is building the industry-standard horizontal platform for cell programming. We use our platform to program cells on behalf of our customers. These “cell programs” are designed to enable biological production of products as diverse as novel therapeutics, key food ingredients, and chemicals currently derived from petroleum. We have worked on over 75 major programs through the first quarter of 2021 in end markets as diverse as specialty chemicals, agriculture, food, consumer products, and pharmaceuticals. Biology did not evolve by end market. All of these applications run on cells which have a common code—DNA—and a common programming platform can enable all of them. Because of this shared platform, we are able to drive scale and learning efficiencies while maintaining flexibility and diversity in our program areas. Ultimately, customers come to us because they believe we maximize the probability of successfully developing their products.

Customers look to Ginkgo to overhaul their manufacturing processes or develop new products through biology. They might, for example, be looking to produce a particular chemical via fermentation, at a lower cost, with enhanced supply chain reliability or sustainability. Or perhaps the customer needs a microbe that will live and grow on the roots of corn and convert nitrogen in the air into usable fertilizer for a plant, resulting in improved plant growth. Or a customer might need an antibody that binds to and neutralizes a certain target, along with a way to produce those antibodies at scale. All of these programs and more run on a common platform at Ginkgo.

The foundation of our platform includes two core assets that execute a wide variety of cell programs for customers according to their specifications: our Foundry and our Codebase.

 

   

Our Foundry wraps proprietary software and automation around core cell engineering workflows—designing DNA, writing DNA, inserting that DNA into cells, testing to measure cell performance—and leverages data analytics and data science to inform each iteration of design. The software, automation and data analysis pipelines we leverage in the Foundry drive a strong scale economic: we have scaled the output of the Foundry by roughly 3X annually since we started measuring it around 2015 and over that time, the average cost per unit operation has fallen by approximately 50% every year. We expect to be able to pass these savings along to our customers, allowing them to take more “shots on goal” with their programs.

 

   

Our Codebase includes both our physical (engineered cells and genetic parts) and digital (genetic sequences and performance data) biological assets, and accumulates as we execute more cell programs on the platform. Every program, whether successful or not, generates valuable Codebase and helps inform future experimental designs and provides reusable genetic parts, making our cell program designs more efficient.

 

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As the platform scales, we have observed a virtuous cycle between our Foundry, our Codebase, and the value we deliver to customers. We believe this virtuous cycle sustains Ginkgo’s growth and differentiated value proposition.

 

   

Foundry: As we take on more work in the Foundry, we benefit from scale economics, which over time may lead to lower program costs. We expect that these lower costs, in turn, will drive additional demand for our cell programming capabilities.

 

   

Codebase: Cell programs also generate Codebase, which can drive better experimental direction and improve the odds of technical success, further increasing our customer value proposition, which we believe will result in additional demand.

Put simply: we believe that as the platform improves with scale, it drives more scale, which drives further platform improvements, and so on. We believe this positive feedback loop has the potential to drive compounding value creation in the future as every new program we add contributes to both near-term revenues and has the potential to add significant downstream economics.

Our commercial team is organized to both establish new relationships with potential customers (traditional business development) as well as maintain and expand relationships with our existing customers (which we call “alliance management”). We recognize the cross-functional efforts required to sign any new contract and so our business development teams do not receive a commission or cash bonus based on target sales, but rather a base salary and annual equity grants driven by overall contribution and performance, in line with how we compensate other members of our team.

Our business development team has both expertise in relevant industries (Consumer & Technology, Industrial & Environment, Agriculture, Food & Nutrition, Pharma & Biotech and Government & Defense) as well as expertise in our Foundry capabilities and synthetic biology. With this background we are able to identify industry or consumer challenges where biology can serve as a solution. Our categories of customers, independent of industry, include potential customers who have research and development (“R&D”) teams with some synthetic biology capabilities where choosing Ginkgo can bring automation, scale and codebase beyond their own; potential customers who are considering but have not yet built lab-scale capabilities where a partnership with Ginkgo allows them to spend their capital on commercialization efforts; and potential customers who are not yet working in synthetic biology whose industries or products stand to be disrupted by biological solutions. Our business development team, with support from our Codebase and Foundry team members, crafts solutions for each of these types of customers through a strategic discussion of customer needs and fit with Ginkgo capabilities.

To grow existing customers, our alliance management team, through close collaboration on our existing programs, seeks technical and business opportunities for our customers that serve as the basis for consideration of future programs. As our programs demonstrate technical success, our existing customers often bring their next strategic R&D needs to our attention.

Our business model mirrors the structure of our platform and we are compensated in two primary ways. First, we charge usage fees for Foundry services, in much the same way that cloud computing companies charge usage fees for utilization of computing capacity or contract research organizations (CROs) charge for services. The total addressable market (TAM) for our Foundry revenue includes the market for biotech labor and tools, which industry sources estimate will be approximately $40 billion in 2021 and which is expected to grow at a CAGR of approximately 20% from 2021 to 2023. Foundry revenue was $59.2 million for the year ended December 31, 2020 and $22.5 million for the three months ended March 31, 2021. Additionally, we negotiate a value share with our customers (typically in the form of royalties, milestones, and/or equity interests) in order to align our economics with the success of the programs enabled by our platform. As we add new programs, our portfolio of programs with this “downstream” value potential grows. Through these value shares, we are tapping into what industry sources expect to be a $2 to $4 trillion market for bioengineered products.

 

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With a mission to make biology easier to engineer, we have always recognized the imperative to invest in biosecurity as a key component of our platform. We care how our platform is used and investments in biosecurity help us ensure that cell programming is conducted and deployed responsibly. The COVID-19 pandemic demonstrated the disruptive power of biology and has created a paradigm shift with respect to biosecurity in both public and private institutions that we believe will drive significant growth in demand for these capabilities. Our Biosecurity offering generated $17.4 million in revenue for the year ended December 31, 2020 and $21.6 million for the three months ended March 31, 2021. Biosecurity revenue is expected to continue growing in the near-term, however, demand for COVID-19 testing remains uncertain for the second half of 2021. Our dedication to biosecurity is deeper than our emergency response to the current global pandemic. The rise of the internet and computing capabilities heralded a need for cybersecurity. Learning from this experience and given the power of biology, we believe innovation in biosecurity must keep pace with innovations in bioengineering.

SARS-CoV-2 will not be the last pathogen we face with pandemic potential, but if we make the right investments, it may be the last that catches us unprepared. Industry sources estimate that at steady state, $20 to $40 billion should be spent on pandemic preparedness annually. The near-term growth of this sector is highly dependent on international government initiatives and investment and Ginkgo has been supporting and engaging with domestic and international organizations and governments to help shape the understanding of a robust biosecurity program. Given our experience to date, we believe there is a meaningful commercial opportunity in biosecurity that will persist beyond the current COVID-19 pandemic, driven by increased awareness of the need for prevention and response systems. We are well placed to take a leadership position as the biosecurity platform of choice, and we believe that our technology leadership requires that we play an important role in helping the world manage these challenges.

We believe that cell programming has the potential to be as ubiquitous in the physical world as computer programming has become in the digital world. We believe products in the future will be grown rather than made. To enable that vision, we are building a horizontal platform to make biology easier to engineer. Our business model is aligned with this strategy and with the success of our customers, setting us on what we believe is a path towards sustainable innovation for years to come.

Generating Economic Value Through Revenue and Downstream Value Share

Our cell programming platform is a key enabling technology and source of intellectual property for our customers’ products. We earn both Foundry revenue for our research and development (“R&D”) services as well as a share of the value of products created using our platform.

We structure Foundry revenue and downstream value share arrangements to include some combination of the following:

 

   

Foundry revenue, also referred to as Foundry usage fees, in the form of:

 

   

upfront payments upon consummation of the agreement that are recognized over our period of performance;

 

   

reimbursement for costs incurred for R&D services;

 

   

milestone payments upon the achievement of specified technical criteria;

plus,

 

 

downstream value share revenue in the form of:

 

   

milestone payments upon the achievement of specified commercial criteria;

 

   

royalties on sales of products from or comprising engineered organisms;

 

   

royalties related to cost of goods sold reductions realized by our customers;

or,

 

   

downstream value share in the form of equity interests in our customer.

 

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Downstream value share in the form of equity interest appreciation is not recognized as revenue but is expected to contribute to future cash flows upon liquidation, the amount and timing of which is inherently unpredictable.

Downstream value share arrangements which involve equity interests fall into two categories: Platform Ventures and Structured Partnerships.

Platform Ventures

Platform Ventures allow leading multinationals to partner with Ginkgo and financial investors to form new ventures in identified market segments with potential to benefit from synthetic biology. In exchange for an equity position in the venture, we contribute license rights to our proprietary cell programming technology and intellectual property, while our partners contribute relevant industry expertise, other resources and venture funding. We also provide R&D services for which we receive cash payments for our costs incurred, plus a margin. Platform Ventures include:

Joyn Bio, LLC

Founded in 2017, Joyn Bio, LLC (“Joyn”) was formed to focus on engineered microbes for use in agricultural applications. Along with certain of our investors, we formed Cooksonia, LLC (“Cooksonia”) which holds a 50% equity interest in Joyn. Bayer CropScience LP contributed cash commitments of $80 million plus intellectual property and holds the remaining 50% equity interest in Joyn. We provided license rights to our intellectual property and platform at inception in return for our equity interest in Joyn, which was recorded at an initial fair value of $97.9 million. The carrying value of our equity method investment in Joyn was $24.9 million as of March 31, 2021. Ginkgo also entered into a Foundry Services Agreement (“Joyn FSA”) with Joyn under which we provide R&D services. Joyn paid us a non-refundable $20.0 million prepayment for services to be provided under the Joyn FSA and made an additional $15.0 million prepayment for services during the year ended December 31, 2019.

Motif FoodWorks, Inc.

Founded in 2018, Motif FoodWorks, Inc. (“Motif”) was formed to focus on the application of synthetic biology to reduce the reliance on animal products in the food industry. We entered into an intellectual property contribution agreement that granted Motif rights to our intellectual property, subject to mutually agreed upon technical development plans. In return for our contribution of intellectual property and access to our platform, we received shares of common stock in Motif. The initial fair value of our common stock investment in Motif was $65.1 million which has subsequently been reduced to a carrying value of zero as a result of the allocation of losses under our accounting for equity method investments. Motif was capitalized through Series A preferred stock financings that raised approximately $119 million in gross proceeds from an investor group which included certain of our investors, Louis Dreyfus Company and Fonterra Co-operative Group Limited. In June 2021, Motif raised an additional $226 million through a Series B preferred stock financing. Ginkgo also entered into a Technical Development Agreement with Motif under which we provide R&D services in return for cash consideration on a cost-plus fixed margin basis.

Allonnia, LLC

Founded in 2019, Allonnia, LLC (“Allonnia”) was formed to focus on the application of synthetic biology in the waste bioremediation and biorecovery industries. We entered into an intellectual property contribution agreement that granted Allonnia rights to our intellectual property, subject to mutually agreed upon technical development plans. In return for our contribution of intellectual property and access to our platform, we received common units in Allonnia with a right to additional units subject to additional closings of Allonnia’s Series A preferred units. The initial fair value of our common units received in Allonnia was $24.5 million, subsequently increased by $12.7 million in 2021, all of which has been reduced

 

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to a carrying value of zero as a result of the allocation of losses under our accounting for equity method investments. Allonnia was capitalized through Series A preferred unit financings that raised approximately $52 million in gross proceeds from an investor group which included certain of our investors and Battelle Memorial Institute. Ginkgo also entered into a Technical Development Agreement with Allonnia under which we provide R&D services in return for cash consideration on a cost-plus fixed margin basis.

Kalo Ingredients, LLC

Founded in 2021, Kalo Ingredients, LLC (“Kalo”) was formed to focus on the application of synthetic biology in the beauty and personal care products industry. In March 2021, we entered into an intellectual property contribution agreement that granted Kalo rights to our intellectual property, subject to mutually agreed upon technical development plans. In return for our contribution of intellectual property and access to our platform, Kalo has agreed to issue Ginkgo up to 9,000,000 common units, 1,755,000 of which was issued upon execution of the Kalo common unit issuance agreement and the remainder will be issued based on additional closings of Kalo’s Series A preferred units. The initial fair value of our common units received in Kalo was $11.9 million which has subsequently been reduced to a carrying value of zero as a result of the allocation of losses under our accounting for equity method investments. Kalo was capitalized through a Series A preferred unit financing that raised approximately $58 million in gross proceeds from an investor group which included certain of our investors and industry strategic investors. Ginkgo also entered into a Technical Development Agreement with Kalo under which we will provide R&D services in return for cash consideration on a cost-plus fixed margin basis.

See Notes 8 and 17 of our audited consolidated financial statements and Notes 7 and 15 of our unaudited condensed consolidated financial statements included elsewhere in this proxy statement/prospectus for further details of our investments in and the material terms of our agreements with Joyn, Motif, Allonnia and Kalo.

Structured Partnerships

Structured Partnerships allow Ginkgo to partner with existing entities with complementary assets for high potential synthetic biology applications. Structured Partnerships include:

Genomatica, Inc.

Genomatica, Inc. (“Genomatica”) is a biotechnology company specializing in the development and manufacturing of intermediate and specialty chemicals from both sugar and alternative feedstocks. In 2016 and 2018, we entered into separate preferred stock purchase agreements in which we offered cash and R&D services to Genomatica in exchange for its preferred shares. The initial cost of the investment in Genomatica’s preferred stock was $55.0 million, which is the carrying value of the investment at March 31, 2021 as we account for the investment at historical cost.

Synlogic, Inc.

Synlogic, Inc. (“Synlogic”) is a publicly traded clinical-stage biopharmaceutical company focused on advancing drug discovery and development for synthetic biology-derived medicines. In 2019, we entered into several agreements with Synlogic whereby we purchased Synlogic common shares and warrants to purchase Synlogic common stock and agreed to provide R&D services to Synlogic. At inception, the fair value of the Synlogic equity method investment and warrants was recorded at $35.8 million and $14.4 million, respectively. As of March 31, 2021, the fair value of the Synlogic equity method investment and warrants was $22.7 million and $9.1 million, respectively.

See Notes 8 and 17 of our audited consolidated financial statements and Note 7 of our unaudited condensed consolidated financial statements included elsewhere in this proxy statement/prospectus for further details of our investments in and the material terms of our agreements with Genomatica and Synlogic.

 

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Key Business Metrics

A cell program (or “program”) is the work we do for our customers to enable their product(s) of interest. Programs are defined by a technical development plan. We generally exclude proof-of-concept projects and other exploratory work undertaken on a customer’s behalf from the program count. In the near-term, programs deliver predictable multi-year revenue from platform usage fees. Over the long-term, program growth drives a physical infrastructure scale economic through our Foundry, a data and learning scale economic through our Codebase and accumulation of downstream value share. Our key business metrics comprise New Programs, Current Active Programs, and Cumulative Programs.

 

         Three Months ended March 31,              LTM1              Year ended December 31,      
     2021      2020      2021      2020      2019  

New Programs

     4        6        16        18        16  

Current Active Programs

     44        39        50        49        36  

Cumulative Programs

     78        62        78        74        56  

 

1 

Last 12 Months ended March 31, 2021

New Programs

New Programs represent the number of unique programs commenced within the reporting period. As new programs have multi-year durations, we view this metric as an indication of future Foundry revenue growth.

Current Active Programs

Current Active Programs represent the number of unique programs for which we performed R&D services in the reporting period. We view this metric as an indication of current period and future Foundry revenue.

Cumulative Programs

Cumulative Programs represent the cumulative number of unique programs Ginkgo has commenced. We view this metric as an indication of our competitive advantage and as a leading indicator of the mid- to long-term potential economic value derived from downstream value share arrangements. The cumulative number of programs also contributes to Codebase, which accumulates with each additional program we conduct over time and drives better experimental direction and improves the odds of technical success in current and future programs.

We believe the preceding metrics are important to understand our current business. These metrics may change or be substituted for additional or different metrics as our business develops. For example, as our program mix changes, our data gathering abilities expand or our understanding of key business drivers develops, we anticipate updating these metrics or their definitions to reflect such changes.

Proposed Business Combination Transaction

We entered into the Merger Agreement with Soaring Eagle Acquisition Corp. (“SRNG”) on May 11, 2021. Pursuant to the Merger Agreement and assuming a favorable vote of SRNG’s stockholders, Merger Sub, a newly formed subsidiary of SRNG, will be merged with and into Ginkgo. Upon the consummation of the proposed Business Combination, the separate corporate existence of Merger Sub shall cease, and Ginkgo will survive the merger as a wholly owned subsidiary of SRNG, which will be renamed “Ginkgo Bioworks Holdings, Inc.”

The Business Combination is expected to be accounted for as a reverse recapitalization in accordance with accounting principles generally accepted in the United States of America (“U.S. GAAP”). Under the guidance in ASC 805, Business Combinations (“ASC 805”), SRNG is expected to be treated as the “acquired” company for accounting and financial reporting purposes. We expect to be deemed the accounting predecessor of the

 

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combined business, and Ginkgo, as the parent company of the combined business, will be the successor SEC registrant, meaning that our financial statements for previous periods will be disclosed in the registrant’s future periodic reports filed with the SEC. The Business Combination is expected to have a significant impact on our future reported financial position and results of operations as a consequence of the reverse recapitalization. The most significant changes in Ginkgo’s future reported financial position and results of operations are expected to be an estimated net increase in cash (as compared to our unaudited condensed consolidated balance sheet as of March 31, 2021) of between approximately $1,250 million, assuming maximum shareholder redemptions permitted under the Merger Agreement, and $2,500 million, assuming no shareholder redemptions. Each redemption scenario includes approximately $775 million in proceeds from the private placement (“PIPE Investment”) to be consummated substantially simultaneously with the closing of the Business Combination, but excludes additional transaction costs for the Business Combination. The estimated transaction costs for the Business Combination are approximately $135 million, of which $60 million represents deferred underwriter fees related to SRNG’s initial public offering. See “—Unaudited Pro Forma Combined Financial Information” section of this proxy statement/prospectus.

As a result of the Business Combination, we expect to become the successor to an SEC-registered and publicly-listed company, which will require us to hire additional personnel and implement procedures and processes to address public company regulatory requirements and customary practices. We expect to incur additional expenses as a public company for, among other things, directors’ and officers’ liability insurance, director fees, and additional internal and external accounting, legal and administrative resources.

Potential Modification of Equity Awards in Connection with Proposed Business Combination Transaction

Our restricted stock units have been granted with both a service-based vesting condition and a performance-based vesting condition. We have historically not recognized any stock-based compensation expense associated with these awards as the achievement of the performance condition associated with the restricted stock units include a change in control or an initial public offering (both as defined in the underlying award agreement) that was not deemed probable of occurring. As a result, a significant amount of stock-based compensation expense related to the restricted stock units remains unrecognized as of March 31, 2021.

The Business Combination does not meet the performance condition required for the vesting of our outstanding restricted stock units. In contemplation of the Business Combination, we may modify the vesting conditions to allow for those restricted stock units to vest. If modified, we will assess the accounting implications in accordance with ASC 718, Compensation-Stock Compensation (“ASC 718”), which will likely require us to remeasure the affected awards at the date of modification. We anticipate a substantial increase to stock-based compensation following any such modification.

Components of Results of Operations

Revenue

Foundry Revenue

We generate Foundry revenue through the execution of license and collaboration agreements whereby customers obtain license rights to our proprietary technology and intellectual property for use in the development and commercialization of engineered organisms and derived products. Under these agreements, we typically provide R&D services for cell programming with the goal of producing an engineered cell that meets a mutually agreed specification. Our customers obtain license rights to the output of our services, which are primarily the optimized strains or cell lines, in order to manufacture and commercialize products derived from that licensed strain or cell line. Generally, the terms of these agreements provide that we receive some combination of (i) upfront payments upon consummation of the agreement that are recognized over our period of performance, (ii) reimbursement for costs incurred for R&D services, (iii) milestone payments upon the achievement of specified technical and/or commercial criteria, (iv) royalties on sales of products from or comprising engineered

 

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organisms arising from the license and collaboration agreement and (v) royalties related to cost of goods sold reductions realized by our customers. For the three months ended March 31, 2021 and 2020 and the years ended December 31, 2020 and 2019, royalties did not comprise a material amount of our revenue.

Foundry revenue includes transactions with Platform Ventures (Motif, Joyn, Allonnia and Kalo) as well as other Structured Partnerships (Genomatica and Synlogic) where, as part of these transactions, we received an equity interest in such entities. Specifically related to the Platform Ventures, in these transactions, we received upfront non-cash consideration in the form of common equity interests in these entities, while the Platform Ventures each received cash equity investments from industry-leading strategic partners and financial investors. We view the upfront non-cash consideration as prepayments for licenses which will be granted in the future as we complete mutually agreed upon technical development plans. In these instances, we also receive cash payments for our costs incurred for the R&D services performed by us, plus a margin. We are not compensated through additional milestone or royalty payments under these arrangements. Our transactions with Genomatica and Synlogic included the purchase of equity securities and the provision of R&D services. As we perform R&D services under the mutually agreed upon development plans, we recognize a reduction in the prefunded obligation based on a cost incurred, plus margin. Because of our equity holdings in these entities, each is considered as a related party. These arrangements are further described in Notes 8, 17 and 21 of our audited consolidated financial statements and in Notes 7, 8, 15 and 17 of our unaudited condensed consolidated financial statements included elsewhere in this proxy statement/prospectus.

Downstream value share in the form of equity interest appreciation is not recognized as revenue but is expected to contribute to future cash flows upon liquidation, the amount and timing of which is inherently unpredictable. Equity investees are accounted for as equity method investments or cost method investments.

Biosecurity Revenue

In the second quarter of 2020, in response to the COVID-19 pandemic, we launched our commercial offering of COVID-19 testing products and services for businesses, academic institutions, and other organizations in which we generate product and service revenue. We generate product revenue through the sale of lateral flow assay (“LFA”) diagnostic test kits which we sell to our customers on a standalone basis. We generate service revenue through the sale of our end-to-end COVID-19 testing services which consist of multiple promised goods and services including sample collection kits, physician authorizations, onsite test administration, outsourced laboratory polymerase chain reaction (“PCR”) analysis, and access to results reported through a web-based portal.

Generally, the terms of these agreements provide that we receive compensation: (i) upon delivery of diagnostic test kits when no service is provided and (ii) when services are included, upon the reporting of results to the customer.

Beginning in the first quarter of 2021, we launched our pooled testing initiative which focuses on providing end-to-end COVID-19 testing and reporting services to groups of individuals. We are currently offering pooled testing services for K-12 schools across the United States; however, we believe that pooled testing services may have a strong value proposition in other use cases including large employers, universities, travel hubs and other congregate settings as it provides a convenient and cost-effective testing option to our customers.

For the remainder of 2021, we expect that our Biosecurity revenue mix will transition away from product (LFA test kits) revenue to primarily service (individual and pooled PCR testing) revenue.

 

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Costs and Operating Expenses

Cost of Biosecurity Product Revenue

Cost of Biosecurity product revenue consists of costs associated with the sale of LFA diagnostic test kits, which includes costs incurred to purchase test kits from third parties, as well as shipping, handling and insurance costs.

Cost of Biosecurity Service Revenue

Cost of Biosecurity service revenue consists of costs associated with the provision of our end-to-end COVID-19 testing services, which includes costs incurred to provide sample collection kits, physician authorizations, onsite test administration, outsourced laboratory PCR analysis, access to results reported through our proprietary web-based portal and reporting of results to public health authorities.

Research and Development Expenses

The nature of our business, and primary focus of our activities, generates a significant amount of R&D expenses. R&D expenses represent costs incurred by us for the following:

 

   

development, operation, expansion and enhancement of our Foundry and Codebase; and

 

   

development of new offerings, such as Biosecurity.

The activities above incur the following expenses:

 

   

laboratory supplies, consumables and related services provided under agreements with third parties and in-licensing arrangements;

 

   

personnel compensation and benefits; and

 

   

rent, facilities, depreciation, software, professional fees and other direct and allocated overhead expenses.

We expense R&D costs as incurred. As we grow our active programs and customer base and invest in our Foundry and Codebase, we anticipate that our R&D expenses will continue to increase. The nature, timing, and estimated costs required to support our growth will be dependent on advances in technology, our ability to attract new customers and the rate of market penetration within our existing customer industries.

General and Administrative Expenses

General and administrative (“G&A”) expenses consist primarily of costs for personnel in executive, business development, finance, human resources, legal and other corporate administrative functions. G&A expenses also include legal fees incurred relating to corporate, intellectual property and patent matters, professional fees incurred for accounting, auditing, tax and administrative consulting services, insurance costs, and facility-related costs not otherwise included in R&D expenses.

We expect our G&A expenses will continue to increase as we pursue organic and inorganic growth initiatives. The increases will likely relate to additional personnel, system costs and increased costs related to finance and legal matters, along with increased expenses related to operating as a publicly traded company, such as fees related to audit, legal and tax services, regulatory compliance programs and investor relations.

Interest Income

Interest income consists primarily of interest earned on our cash and cash equivalents.

 

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Interest Expense

Interest expense consists primarily of interest related to our lease financing obligation.

Loss on Equity Method Investments

Loss on equity method investments includes our share of losses from certain of our equity method investments under the Hypothetical Liquidation at Book Value (“HLBV”) method and the change in fair value of our equity method investment under which we have elected to account for under the fair value option.

Loss on Investments

Loss on investments includes the change in fair value of our warrant to purchase Synlogic common stock under which we have elected to account for under the fair value option.

Other Income, net

Other income, net primarily consists of income generated from achieving milestones under our agreement with the National Institutes of Health (“NIH”), gains related to payments made by Amyris, Inc. (“Amyris”) under a settlement agreement, a gain on the termination of our collaboration arrangement with Glycosyn, LLC (“Glycosyn”) and the change in fair value of our convertible notes with Access Bio, Inc. (“Access Bio”) and promissory note with Glycosyn under which we have elected to account for under the fair value option.

Provision for Income Taxes

Income taxes are recorded in accordance with ASC 740, Income Taxes (“ASC 740”), which provides for deferred taxes using an asset and liability approach. We recognize deferred tax assets and liabilities for the expected future tax consequences of events that have been included in our audited consolidated financial statements or tax returns. Deferred tax assets and liabilities are determined based on the difference between the financial statement and tax bases of assets and liabilities using enacted tax rates in effect for the year in which the differences are expected to reverse. A valuation allowance against deferred tax assets is recorded if, based on the weight of the available evidence, it is more likely than not that some or all the deferred tax assets will not be realized. For all periods presented, we have recorded a valuation allowance against the deferred tax assets that are not expected to be realized.

We account for uncertain tax positions using a more-likely-than-not threshold for recognizing and resolving uncertain tax positions. The evaluation of uncertain tax positions is based on factors, including, but not limited to, changes in the law, the measurement of tax positions taken or expected to be taken in tax returns, the effective settlement of matters subject to audit, new audit activity and changes in facts or circumstances related to a tax position.

As of December 31, 2020, we had federal net operating loss carryforwards of approximately $347.8 million, of which $139.2 million begin to expire in 2029. We have approximately $208.6 million of federal net operating loss carryforwards as of December 31, 2020 that can be carried forward indefinitely. As of December 31, 2020, we had state net operating loss carryforwards of approximately $282.8 million, of which $278.3 million begin to expire in 2029. We have approximately $4.5 million of state net operating losses as of December 31, 2020 that can be carried forward indefinitely.

Income taxes are determined at the applicable tax rates adjusted for non-deductible expenses, R&D tax credits and other permanent differences. Our income tax provision may be significantly affected by changes to our estimates.

 

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Net Loss Attributable to Non-Controlling Interest

Net loss attributable to non-controlling interest is the result of minority investments in Cooksonia, which is the holding company for our investment in Joyn, in which we have a controlling financial interest, and consists of the portion of net loss of Cooksonia that is not attributable to us.

Results of Operations

Comparison of the Three Months Ended March 31, 2021 and 2020

The following table summarizes our unaudited condensed consolidated statements of operations for each period presented:

 

     Three Months Ended
March 31,
   

 

 

(in thousands)

   2021     2020     Change  

Foundry revenue(1)

   $ 22,504     $ 21,134     $ 1,370  

Biosecurity revenue:

      

Product

     5,775       —         5,775  

Service

     15,818       —         15,818  
  

 

 

   

 

 

   

 

 

 

Total revenue

     44,097       21,134       22,963  
  

 

 

   

 

 

   

 

 

 

Operating expenses:

      

Cost of Biosecurity product revenue

     9,935       —         9,935  

Cost of Biosecurity service revenue

     13,765       —         13,765  

Research and development

     59,585       30,236       29,349  

General and administrative

     17,927       6,568       11,359  
  

 

 

   

 

 

   

 

 

 

Total operating expenses

     101,212       36,804       64,408  
  

 

 

   

 

 

   

 

 

 

Loss from operations

     (57,115     (15,670     (41,445

Other expense, net:

      

Interest income

     111       1,819       (1,708

Interest expense

     (586     (606     20  

Loss on equity method investments

     (19,620     (7,087     (12,533

Gain (loss) on investments

     3,618       (2,191     5,809  

Other (expense) income, net

     (1,345     136       (1,481
  

 

 

   

 

 

   

 

 

 

Total other expense, net

     (17,822     (7,929     (9,893
  

 

 

   

 

 

   

 

 

 

Loss before income taxes

     (74,937     (23,599     (51,338

Income tax (benefit) provision

     (159     1,869       (2,028
  

 

 

   

 

 

   

 

 

 

Net loss and comprehensive loss

     (74,778     (25,468     (49,310

Net loss and comprehensive loss attributable to non-controlling interest

     (1,209     (496     (713
  

 

 

   

 

 

   

 

 

 

Net loss and comprehensive loss attributable to Ginkgo Bioworks, Inc. stockholders

   $ (73,569   $ (24,972   $ (48,597
  

 

 

   

 

 

   

 

 

 

 

(1)

See Note 17 of our unaudited condensed consolidated financial statements included elsewhere in this proxy statement/prospectus for further details of revenues generated with related parties; also summarized below.

Foundry Revenue

Foundry revenue was $22.5 million for the three months ended March 31, 2021 and $21.1 million for the three months ended March 31, 2020. The increase of $1.4 million in Foundry revenue was primarily attributable to the progress of programs with existing and new customers.

 

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Revenue from equity investees (Platform Ventures and Structured Partnerships) decreased from $15.5 million for the three months ended March 31, 2020 to $12.7 million for the three months ended March 31, 2021. See Note 17 of our unaudited condensed consolidated financial statements included elsewhere in this proxy statement/prospectus for additional information related to transactions with related parties.

The total number of Current Active Programs increased from 39 in the three months ended March 31, 2020 to 44 in the three months ended March 31, 2021 across 20 customers. In the three months ended March 31, 2021, 4 New Programs commenced. Cumulative Programs were 78 as of March 31, 2021 and 62 as of March 31, 2020.

While downstream value share revenue was immaterial for the three months ended March 31, 2021 and 2020, as we increase Cumulative Programs and to the extent our customers successfully commercialize products built on our platform, downstream value share is expected to comprise a larger proportion of Foundry revenue. Downstream value share in the form of equity interest appreciation is not recognized as revenue but is expected to contribute to future cash flows upon liquidation, the amount and timing of which is inherently unpredictable. Equity investees are accounted for as equity method investments or cost method investments.

Biosecurity Revenue

Biosecurity revenue was $21.6 million for the three months ended March 31, 2021, which consisted of $5.8 million of product revenue from sales of our LFA diagnostic test kits and $15.8 million of service revenue from our end-to-end COVID-19 testing services. No Biosecurity revenue was recognized during the three months ended March 31, 2020. The amount and components of Biosecurity revenue are dependent on the demand for COVID-19 related testing services which is uncertain in 2021 and beyond. For the remainder of 2021, we expect that our Biosecurity revenue mix will transition away from product (LFA test kits) revenue to primarily service (individual and pooled PCR testing) revenue.

Cost of Biosecurity Product and Service Revenue

Cost of Biosecurity product and service revenue was $23.7 million for the three months ended March 31, 2021. No cost of Biosecurity product and service revenue was incurred during the three months ended March 31, 2020. During the three months ended March 31, 2021, we incurred $9.9 million of product costs associated with purchases of LFA diagnostic test kits and $13.8 million of service costs related to our end-to-end COVID-19 testing services.

Research and Development Expenses

Research and development expenses were $59.6 million for the three months ended March 31, 2021 and $30.2 million for the three months ended March 31, 2020. The increase of $29.4 million was primarily attributable to increases in laboratory supplies and related third-party services expense of $9.0 million, personnel-related compensation and benefits expense of $8.0 million, and professional fees of $3.2 million. The remaining increase was attributed to rent, facilities, depreciation, software and other direct and allocated overhead expenses. Increases in research and development expenses supported the Foundry operations, enhancements of Foundry and Codebase and development of our Biosecurity offering.

General and Administrative Expenses

General and administrative expenses were $17.9 million for the three months ended March 31, 2021 and $6.6 million for the three months ended March 31, 2020. The increase of $11.3 million was primarily attributable to increases in professional fees of $4.7 million and personnel-related compensation and benefits expense of $4.3 million. Increases in general and administrative expenses supported the growth of Foundry and Biosecurity revenue and activities related to public company readiness.

 

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Interest Income

Interest income was $0.1 million for the three months ended March 31, 2021 and $1.8 million for the three months ended March 31, 2020. The decrease of $1.7 million was primarily attributable to a decrease in interest rates and balance of our cash held in money market accounts.

Interest Expense

Interest expense was $0.6 million for the three months ended March 31, 2021 and $0.6 million for the three months ended March 31, 2020. There was no change in interest expense between the periods as the expense incurred related to our lease financing obligation remained largely unchanged.

Loss on Equity Method Investments

Loss on equity method investments was $19.6 million for the three months ended March 31, 2021, which was primarily attributable to our equity method investments in Joyn, Allonnia, Synlogic and Kalo, and $7.1 million for the three months ended March 31, 2020, which was primarily attributable to our equity method investments in Joyn and Synlogic. The fair value of the equity we received in Kalo of $11.9 million during the three months ended March 31, 2021, which represented the initial carrying value of our equity method investment in Kalo, was reduced to zero during the period as a result of the application of the HLBV method. The fair value of the additional equity we received in Allonnia of $12.7 million during the three months ended March 31, 2021 was reduced to zero during the period as a result of the application of the HLBV method. Under the HLBV method, we absorb losses as a common unit holder prior to preferred unit holders due to a substantive profit-sharing agreement where the preferred unit holders receive preferential distribution rights. Because we have no commitment to fund the losses of Kalo or Allonnia, no further losses on these equity method investments were recognized during the three months ended March 31, 2021. The loss of $28.6 million on equity method investments during the three months ended March 31, 2021 was partially offset by a $9.0 million gain on Synlogic common stock, which we have elected to account for under the fair value option and which resulted from an increase in the stock price of Synlogic during the three months ended March 31, 2021.

Gain (Loss) on Investments

Gain on investments was $3.6 million for the three months ended March 31, 2021, compared to a loss of $2.2 million for the three months ended March 31, 2020. The change of $5.8 million was attributable to the change in fair value of our warrant to purchase Synlogic common stock, which we have elected to account for under the fair value option, and which resulted from an increase in the stock price of Synlogic during the three months ended March 31, 2021.

Other (Expense) Income, net

Other expense was $1.3 million for the three months ended March 31, 2021, compared to $0.1 million of income for the three months ended March 31, 2020. The change of $1.4 million was primarily attributable to a $2.0 million loss resulting from the change in fair value of our Access Bio convertible notes, partially offset by a $0.5 million increase in payments received under our settlement agreement with Amyris.

Net Loss Attributable to Non-Controlling Interest

Net loss attributable to non-controlling interest was $1.2 million for the three months ended March 31, 2021 and $0.5 million for the three months ended March 31, 2020. The increase of $0.7 million was related to the attribution of losses related to the minority investors’ equity interest in Cooksonia, associated with Cooksonia’s investment in Joyn.

 

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Comparison of the Years Ended December 31, 2020 and 2019

The following table summarizes our consolidated statements of operations for each period presented:

 

     Year Ended December 31,        
(in thousands)    2020     2019     Change  

Foundry revenue(1)

   $ 59,221     $ 54,184     $ 5,037  

Biosecurity revenue:

      

Product

     8,707       —         8,707  

Service

     8,729       —         8,729  
  

 

 

   

 

 

   

 

 

 

Total revenue

     76,657       54,184       22,473  
  

 

 

   

 

 

   

 

 

 

Costs and operating expenses:

      

Cost of Biosecurity product revenue

     6,705       —         6,705  

Cost of Biosecurity service revenue

     8,906       —         8,906  

Research and development

     159,767       96,299       63,468  

General and administrative

     38,306       29,483       8,823  
  

 

 

   

 

 

   

 

 

 

Total operating expenses

     213,684       125,782       87,902  
  

 

 

   

 

 

   

 

 

 

Loss from operations

     (137,027     (71,598     (65,429

Other income (expense), net:

      

Interest income

     2,582       5,756       (3,174

Interest expense

     (2,385     (2,421     36  

Loss on equity method investments

     (3,059     (46,936     43,877  

Loss on investments

     (1,070     (7,797     6,727  

Other income, net

     16,125       3,161       12,964  
  

 

 

   

 

 

   

 

 

 

Total other income (expense), net

     12,193       (48,237     60,430  
  

 

 

   

 

 

   

 

 

 

Loss before provision for income taxes

     (124,834     (119,835     (4,999

Provision for income taxes

     1,889       22       1,867  
  

 

 

   

 

 

   

 

 

 

Net loss

     (126,723     (119,857     (6,866

Net loss attributable to non-controlling interest

     (114     (530     416  
  

 

 

   

 

 

   

 

 

 

Net loss attributable to Ginkgo Bioworks, Inc. stockholders

   $ (126,609   $ (119,327   $ (7,282
  

 

 

   

 

 

   

 

 

 

 

(1)

See Note 21 of our consolidated financial statements included elsewhere in this proxy statement/prospectus for further details of revenues generated with related parties; also summarized below.

Foundry Revenue

Foundry revenue was $59.2 million for the year ended December 31, 2020 and $54.2 million for the year ended December 31, 2019. The increase of $5.0 million in Foundry revenue was primarily attributable to the progress of programs with existing and new customers, which was offset by lower utilization of services due to the temporary impact the COVID-19 pandemic had on our Foundry and new business development.

Beginning in 2017, Ginkgo’s commercial growth strategy expanded to include Platform Ventures (Joyn, Motif and Allonnia) and Structured Partnerships (Genomatica and Synlogic). Revenue from equity investees increased from $35.3 million in 2019 to $42.5 million in 2020 and has contributed to greater end market diversification. See Note 21 of our audited consolidated financial statements included elsewhere in this proxy statement/prospectus for additional information related to transactions with related parties.

The total number of Current Active Programs increased from 36 in 2019 to 49 in 2020 across 22 customers In 2020, 18 New Programs were commenced. Cumulative Programs increased from 56 in 2019 to 74 in 2020.

 

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While downstream value share revenue was immaterial for the years ended December 31, 2020 and 2019, as we increase Cumulative Programs and to the extent our customers successfully commercialize products built on our platform, downstream value share is expected to comprise a larger proportion of Foundry revenue. Downstream value share in the form of equity interest appreciation is not recognized as revenue but is expected to contribute to future cash flows upon liquidation, the amount and timing of which is inherently unpredictable. Equity investees are accounted for as equity method investments or cost method investments.

Biosecurity Revenue

Biosecurity revenue was $17.4 million for the year ended December 31, 2020, which consisted of $8.7 million of product revenue and $8.7 million of service revenue that we recognized in connection with sales of our LFA diagnostic test kits and end-to-end COVID-19 testing services. No Biosecurity revenue was recognized during the year ended December 31, 2019. The amount and components of Biosecurity revenue are dependent on the demand for COVID-19 related testing services which is uncertain in 2021 and beyond.

Cost of Biosecurity Product and Service Revenue

Cost of Biosecurity product and service revenue was $15.6 million for the year ended December 31, 2020. No cost of Biosecurity product and service revenue was incurred during the year ended December 31, 2019. During the year ended December 31, 2020, we incurred $6.7 million of product costs associated with purchases of LFA diagnostic test kits and $8.9 million of service costs related to our end-to-end COVID-19 testing services.

Research and Development Expenses

Research and development expenses were $159.8 million for the year ended December 31, 2020 and $96.3 million for the year ended December 31, 2019. The increase of $63.5 million was primarily attributable to increases in laboratory supplies and related third-party services expense of $31.1 million, personnel-related compensation and benefits expense of $13.2 million, and professional fees of $5.3 million. The remaining increase was attributed to rent, facilities, depreciation, software and other direct and allocated overhead expenses. Increases in research and development expenses supported the Foundry operations, enhancements of Foundry and Codebase, and development of our Biosecurity offering.

General and Administrative Expenses

General and administrative expenses were $38.3 million for the year ended December 31, 2020 and $29.5 million for the year ended December 31, 2019. The increase of $8.8 million was primarily attributable to increases in professional fees of $4.8 million and personnel-related compensation and benefits expense of $2.7 million. Increases in general and administrative expenses supported the growth of Foundry and Biosecurity revenue and activities related to public company readiness.

Interest Income

Interest income was $2.6 million for the year ended December 31, 2020 and $5.8 million for the year ended December 31, 2019. The decrease of $3.2 million was primarily attributable to a decrease in interest rates on our cash held in money market accounts.

Interest Expense

Interest expense was $2.4 million for each of the years ended December 31, 2020 and 2019. There was no change in interest expense between the periods as the expense incurred related to our lease financing obligation remained largely unchanged.

 

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Loss on Equity Method Investments

Loss on equity method investments was $3.1 million for the year ended December 31, 2020, which was primarily attributable to our equity method investments in Synlogic, and $46.9 million for the year ended December 31, 2019, which was primarily related to the loss on our equity method investments in Synlogic and Allonnia recognized during the year ended December 31, 2019. The fair value of the equity we received in Allonnia of $24.5 million during the year ended December 31, 2019, which represented the initial carrying value of our equity method investment in Allonnia, was reduced to zero during the period as a result of the application of the HLBV method. Under the HLBV method, we absorb losses as a common unit holder prior to preferred unit holders due to a substantive profit-sharing agreement where the preferred unit holders receive preferential distribution rights. Because we have no commitment to fund the losses of Allonnia, no further losses on this equity method investment were recognized during 2020. The decrease in the loss on the Synlogic equity method investment, which we have elected to account for under the fair value option, resulted from a more significant decrease in the stock price of Synlogic during 2019 as compared to 2020.

Loss on Investments

Loss on investments was $1.1 million for the year ended December 31, 2020 and $7.8 million for the year ended December 31, 2019. The decrease of $6.7 million was attributable to a decrease in the change in fair value of our warrant to purchase Synlogic common stock, which we have elected to account for under the fair value option, which resulted from a more significant decrease in the stock price of Synlogic during 2019 as compared to 2020.

Other Income, net

Other income, net was $16.1 million for the year ended December 31, 2020 and $3.2 million for the year ended December 31, 2019. The increase of $12.9 million was primarily attributable to an increase in the payments received under our settlement agreement with Amyris of $6.7 million and the achievement of milestones under our agreement with the NIH during the year ended December 31, 2020 of $6.6 million, partially offset by a decrease of $1.5 million from the gain on the termination of our collaboration arrangement with Glycosyn during the year ended December 31, 2019.

Net Loss Attributable to Non-Controlling Interest

Net loss attributable to non-controlling interest was $0.1 million for the year ended December 31, 2020 and $0.5 million for the year ended December 31, 2019. The decrease of $0.4 million was related to the attribution of losses related to the minority investors’ equity interest in Cooksonia, associated with Cooksonia’s investment in Joyn.

Non-GAAP Information

In addition to our results determined in accordance with U.S. GAAP, we believe that EBITDA and Adjusted EBITDA, each non-GAAP financial measures, are useful in evaluating our operational performance. We use this non-GAAP financial information to evaluate our ongoing operations and for internal planning and forecasting purposes. We believe that this non-GAAP financial information, when taken collectively, may be helpful to investors in assessing our operating performance.

We define EBITDA as net loss attributable to Ginkgo Bioworks, Inc. stockholders before the impact of interest income, interest expense, provision for income taxes and depreciation and amortization.

We define Adjusted EBITDA as EBITDA adjusted for stock-based compensation expense, gain or loss on equity method investments, gain or loss on investments and other income and expenses.

 

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We believe that the use of EBITDA and Adjusted EBITDA provides an additional tool for investors to use in evaluating ongoing operating results and trends because it eliminates the effect of financing activities, investing activities, and certain non-cash charges and other items. Adjusted EBITDA includes non-cash adjustments such as stock-based compensation, gain or loss on equity method investments, gain or loss on the fair value measurements of our investments and other items such as adjustment related to the gain on the termination of our collaboration agreement with Glycosyn. Adjusted EBITDA also considers cash components which are not part of our ongoing operating results, such as gains related to settlement payments from Amyris and certain funding received from NIH to invest in our Biosecurity development related to the COVID-19 pandemic. We believe Adjusted EBITDA, although not a replacement for financial performance measures reported under U.S. GAAP, provides investors with a means to compare our financial measures with those of comparable companies, which may present similar non-GAAP financial measures to investors. However, you should be aware that when evaluating EBITDA and Adjusted EBITDA we may generate future income or incur future expenses similar to those excluded when calculating these measures. In addition, our presentation of these measures should not be construed as an inference that our future results will be unaffected by future income or future expenses similar to those excluded when calculating these measures. Our computation of these measures, especially Adjusted EBITDA, may not be comparable to other similarly titled measures computed by other companies because not all companies calculate these measures in the same fashion.

Because of these limitations, EBITDA and Adjusted EBITDA should not be considered in isolation or as a substitute for performance measures calculated in accordance with U.S. GAAP. We compensate for these limitations by relying primarily on our U.S. GAAP results and using EBITDA and Adjusted EBITDA on a supplemental basis. You should review the reconciliation of net loss attributable to Ginkgo Bioworks, Inc. stockholders to EBITDA and Adjusted EBITDA below and not rely on any single financial measure to evaluate our business.

The following table reconciles net loss attributable to Ginkgo Bioworks, Inc. stockholders to EBITDA and Adjusted EBITDA for the three months ended March 31, 2021 and 2020 and for the years ended December 31, 2020 and 2019, respectively:

 

     Three Months Ended
March 31,
     Year Ended
December 31,
 

(in thousands)

   2021      2020      2020      2019  

Net loss attributable to Ginkgo Bioworks, Inc. stockholders

   $ (73,569    $ (24,972    $ (126,609    $ (119,327

Interest income

     (111      (1,819      (2,582      (5,756

Interest expense

     586        606        2,385        2,421  

Income tax (benefit) provision

     (159      1,869        1,889        22  

Depreciation and amortization

     5,629        3,154        13,864        10,755  
  

 

 

    

 

 

    

 

 

    

 

 

 

EBITDA

     (67,624      (21,162      (111,053      (111,885

Stock-based compensation

     118        123        476        771  

Loss on equity method investments(1)

     18,411        6,591        2,945        46,406  

(Gain) loss on investments(2)

     (3,618      2,191        1,070        7,797  

Other(3)

     1,575        (36      (14,860      (3,118
  

 

 

    

 

 

    

 

 

    

 

 

 

Adjusted EBITDA

     (51,138      (12,293      (121,422      (60,029
  

 

 

    

 

 

    

 

 

    

 

 

 

 

(1)

For the three months ended March 31, 2021 and 2020, includes i) losses on equity method investments under the HLBV method of $28.6 million and $1.6 million, respectively, net of losses attributable to non-controlling interests and ii) gain (loss) on equity method investment under the fair value option of $9.0 million and ($5.5) million, respectively. For the years ended December 31, 2020 and 2019, includes i) losses on equity method investments under the HLBV method of $0.4 million and $27.5 million, respectively, net of losses attributable to non-controlling interests and ii) loss on equity method investment under the fair value option of $2.7 million and $19.4 million, respectively.

(2)

Includes (gain) loss on the change in fair value of our warrant to purchase Synlogic common stock, which we have elected to account for under the fair value option.

 

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(3)

For the three months ended March 31, 2021 includes $0.5 million received pursuant to our settlement agreement with Amyris offset by a $2.0 million mark-to-market adjustment on Access Bio convertible notes. For the three months ended March 31, 2020, includes payment received pursuant to our settlement agreement with Amyris. For the year ended December 31, 2020, includes $6.6 million in income generated through our agreement with the National Institutes of Health (“NIH”) and $8.3 million received pursuant to our settlement agreement with Amyris. For the year ended December 31, 2019, includes $1.6 million received pursuant to our settlement agreement with Amyris and a $1.5 million gain on the termination of our collaboration arrangement with Glycosyn.

Liquidity and Capital Resources

Since our formation in 2008, we have incurred significant operating losses. Net losses attributable to us were $73.6 million for the three months ended March 31, 2021 and $126.6 million for the year ended December 31, 2020. As of March 31, 2021 our accumulated deficit was $541.4 million. We expect to continue to incur significant expenses and operating losses for the foreseeable future.

We anticipate that our expenses will increase significantly in connection with our ongoing activities, as we:

 

   

continue our R&D, activities under existing and new programs and further invest in our Foundry and Codebase;

 

   

hire additional personnel and secure facilities to support our expanding R&D efforts;

 

   

develop and expand our offerings, including Biosecurity;

 

   

upgrade and expand our operational, financial and management systems and support our operations;

 

   

acquire companies, assets or intellectual property that advance our company objectives;

 

   

maintain, expand, and protect our intellectual property; and

 

   

incur additional costs associated with operating as a public company.

Sources of Liquidity

Since our inception, our sources of liquidity have been predominantly from proceeds from equity offerings, convertible notes offerings, payments received for R&D services under license and collaboration arrangements; including those received on an upfront basis and upon accomplishment of milestones, payments received from Biosecurity product sales and services provided, and government grants. As of March 31, 2021, we had cash and cash equivalents of $308.1 million which we believe will be sufficient to enable us to fund our projected operations through at least the next 12 months from the date of the filing of this proxy statement/prospectus. We have based this estimate on assumptions that may prove to be wrong, and we could utilize our available capital resources sooner than we expect. The net proceeds from the Business Combination and PIPE Investment will provide a further source of liquidity.

Until required for use in our business, we typically invest our cash in money market funds that are highly liquid and readily convertible to cash. We attempt to minimize the risks related to our cash and cash equivalents by maintaining balances in accounts only with accredited financial institutions and, consequently, we do not believe we are subject to unusual credit risk beyond the normal credit risk associated with ordinary commercial banking relationships.

Until we can generate sufficient revenue from customers, we expect to finance future cash needs through public or private equity or debt offerings and potential future license and collaboration arrangements from which we receive upfront fees, milestone payments and other forms of consideration. Additional capital may not be available on reasonable terms, if at all. If we are unable to raise additional capital in sufficient amounts or on terms acceptable to us, we may significantly delay, scale back, or discontinue the development of our proprietary

 

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platform. If we raise additional funds through the issuance of additional equity or debt securities, it could result in dilution to our existing stockholders or increased fixed payment obligations, and any such securities may have rights senior to those of our common stock. If we incur indebtedness, we could become subject to covenants that would restrict our operations and potentially impair our competitiveness, such as limitations on our ability to incur additional debt, limitations on our ability to acquire, sell or license intellectual property rights and other operating restrictions that could adversely impact our ability to conduct our business. If we raise funds through strategic collaborations or licensing arrangements with third parties, we may have to relinquish valuable rights to our proprietary technologies, future revenue streams, research programs, or grant licenses on terms that may not be favorable to us. If we are unable to raise additional funds through equity or debt financings when needed, we may be required to delay, limit or terminate our efforts to develop our proprietary platform, which could have adverse impact on our business and financial prospects.

Cash Flows

The following table provides information regarding our cash flows for each period presented:

 

     Three Month Ended
March 31,
     Year Ended
December 31,
 

(in thousands)

   2021      2020      2020      2019  

Net cash (used in) provided by:

           

Operating activities

   $ (48,131    $ (24,012    $ (135,830    $ (44,663

Investing activities

     (23,046      (3,279      (67,121      (74,602

Financing activities

     (433      (3,585      90,318        410,385  
  

 

 

    

 

 

    

 

 

    

 

 

 

Net increase (decrease) in cash, cash equivalents and restricted cash

   $ (71,610    $ (30,876    $ (112,633    $ 291,120  
  

 

 

    

 

 

    

 

 

    

 

 

 

Operating Activities

Net cash used in operating activities for the three months ended March 31, 2021 consisted of net loss of $74.8 million, offset by a net change in our operating assets and liabilities of $3.1 million and non-cash adjustments of $23.6 million. The net change in our operating assets and liabilities was primarily due to a decrease in current and non-current deferred revenue of $5.5 million and an increase in accounts receivable and accounts receivable from related parties of $9.5 million, partially offset by a decrease in prepaid expenses and other current assets of $1.6 million and an increase in accrued expenses and other current liabilities of $16.8 million. Non-cash adjustments primarily consisted of depreciation and amortization of $5.6 million, loss on equity method investments of $19.6 million and loss on changes in the fair value of loans receivable of $1.8 million, partially offset by a gain on investments of $3.6 million.

Net cash used in operating activities for the three months ended March 31, 2020 consisted of net loss of $25.5 million and a net change in our operating assets and liabilities of $11.1 million, offset by non-cash adjustments of $12.6 million. The net change in our operating assets and liabilities was primarily due to a decrease in current and non-current deferred revenue of $10.5 million, an increase in prepaid expenses and other current assets of $2.1 million and a decrease in accrued expenses and other current liabilities of $1.2 million, partially offset by a decrease in other non-current assets of $2.4 million. Non-cash adjustments primarily consisted of depreciation and amortization of $3.2 million, loss on equity method investments of $7.1 million and loss on investments of $2.2 million.

Net cash used in operating activities for the year ended December 31, 2020 consisted of net loss of $126.7 million and a net change in our operating assets and liabilities of $26.5 million, offset by non-cash adjustments of $17.4 million. The net change in our operating assets and liabilities was primarily due to a

 

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decrease in current and non-current deferred revenue of $19.4 million, an increase in accounts receivable and accounts receivable from related parties of $14.2 million and an increase in prepaid expenses and other current assets of $11.4 million, partially offset by an increase in accounts payable of $7.0 million and an increase in accrued expenses and other current liabilities of $8.7 million. Non-cash adjustments primarily consisted of depreciation and amortization of $13.9 million, loss on equity method investments of $3.1 million and loss on investments of $1.1 million, partially offset by changes in the fair value of loans receivable of $1.1 million.

Net cash used in operating activities for the year ended December 31, 2019 consisted of net loss of $119.9 million, offset by a net change in our operating assets and liabilities of $10.6 million and non-cash adjustments of $64.6 million. The net change in our operating assets and liabilities was primarily due to an increase in non-current deferred rent of $9.1 million, an increase in current and non-current deferred revenue of $4.9 million, an increase in accrued expenses and other current liabilities of $4.2 million, partially offset by an increase in prepaid expenses and other current assets of $4.0 million and an increase in other non-current assets of $2.4 million. Non-cash adjustments primarily consisted of loss on equity method investments of $46.9 million, depreciation and amortization of $10.8 million and loss on investments of $7.8 million, partially offset by the gain on the termination of our collaboration arrangement with Glycosyn of $1.5 million.

Investing Activities

Net cash used in investing activities for the three months ended March 31, 2021 primarily consisted of purchases of property and equipment of $21.9 million associated with Foundry capacity and capability investments.

Net cash used in investing activities for the three months ended March 31, 2020 primarily consisted of purchases of property and equipment of $3.3 million associated with Foundry capacity and capability investments.

Net cash used in investing activities for the year ended December 31, 2020 primarily consisted of purchases of property and equipment of $57.8 million, including costs associated with Foundry capacity and capability investments and purchase of Access Bio’s convertible notes of $10.0 million.

Net cash used in investing activities for the year ended December 31, 2019 primarily consisted of purchases of property and equipment of $22.2 million and $50.1 million of cash paid for our investment in Synlogic.

Financing Activities

Net cash used in financing activities for the three months ended March 31, 2021 primarily consisted of principal payments on capital lease obligations and payments of deferred offering costs.

Net cash used in financing activities for the three months ended March 31, 2020 primarily consisted of payments of issuance costs on Series E convertible preferred stock.

Net cash provided by financing activities for the year ended December 31, 2020 primarily consisted of the net proceeds from the issuance of our Series E convertible preferred stock.

Net cash provided by financing activity for the year ended December 31, 2019 primarily consisted of the net proceeds from the issuance of convertible promissory notes and Series E convertible preferred stock.

 

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Contractual Obligations and Commitments

The following table summarizes our contractual obligations as of December 31, 2020 and the effects that such obligations are expected to have on our liquidity and cash flows in future periods:

 

     Payments Due by Period  
(in thousands)    Total      Less than
1 Year
     1-3 Years      3-5 Years      More
than 5
Years
 

Drydock leases(1)

   $ 124,812      $ 10,224      $ 24,074      $ 27,458      $ 63,056  

Operating leases, excluding Drydock leases(2)

     56,276        6,464        16,220        17,001        16,591  

Capital leases(3)

     840        500        340        —          —    

Purchase obligations(4)

     96,500        10,000        29,625        35,000        21,875  
  

 

 

    

 

 

    

 

 

    

 

 

    

 

 

 

Total contractual cash obligations

   $ 278,428      $ 27,188      $ 70,259      $ 79,459      $ 101,522  
  

 

 

    

 

 

    

 

 

    

 

 

    

 

 

 

 

(1)

We lease building space at 21, 23, 25 and 27 Drydock Avenue in Boston, Massachusetts where our primary operations are located. The non-cancelable operating leases each expire in January 2030 with options to extend each of the leases for one five-year period at then-market rates. The amounts reflected in the table above represent the minimum rental commitments under the non-cancelable operating leases and do not include the optional extensions.

(2)

We have various non-cancelable operating lease and sublease agreements for office and lab space in Boston and Cambridge, Massachusetts and Emeryville, California; which expire at various times through September 2030, subject to certain extension options. The amounts reflected in the table above represent the minimum rental commitments under the non-cancelable operating leases and do not include the optional extensions.

(3)

We have various capital leases for lab equipment used in our R&D activities which expire at various times through November 2023.

(4)

The amounts represent non-cancelable fixed payment obligations under our collaboration agreement with Berkeley Lights, Inc. For the purposes of the above table, due to the differences in timing of the contract years relative to the calendar year, we have assumed that these costs will be incurred ratably over the respective contract years. Refer to Note 11 of our audited consolidated financial statements appearing elsewhere in this proxy statement/prospectus for additional details.

Under our license and collaboration agreements, we are committed to providing certain R&D services related to license rights to our proprietary technology and intellectual property granted to our customers. The expenses we expect to incur as part of our commitments under our license and collaboration agreements, a portion of which are subject to reimbursement from our customers, are not included in the above table as they are contingent upon the occurrence of future events and the timing and likelihood of such potential expenses are not known with certainty.

In March 2018, we entered into a non-cancelable supply agreement with Twist Bioscience Corporation (“Twist”). Pursuant to the supply agreement, we are required to purchase certain products at specified volumes on a quarterly basis over a four-year term. To the extent we fail to meet our quarterly minimum purchase obligations, we are required to pay a fee per unit of shortfall. The products we may purchase that contribute toward achieving the quarterly minimum purchase obligation can vary based on our discretion, subject to advance notice provided to Twist. Our quarterly minimum purchase obligation may be adjusted for the following reasons: (i) due to a lack of availability of certain products for purchase in a given quarter; (ii) due to a lack of certain features available; (iii) delays in shipments over two consecutive quarters beyond the agreed upon lead times; and (iv) if the average yield of certain products measured over two consecutive quarters is greater than a specified yield. We receive volume discounts on purchases based on specified volume thresholds over the term of the supply agreement. Additionally, we receive a discount on each order of certain products, dependent upon the volume of certain other products we purchase in a given order. Refer to Note 11 of our consolidated financial statements appearing elsewhere in this proxy statement/prospectus for additional details. As of December 31,

 

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2020, we have incurred approximately $27.1 million under our supply agreement with Twist. We have budgeted approximately $15.0 million as of December 31, 2020 for purchases to be made during the year ended December 31, 2021. We have excluded the cash payments from the table above as the expected timing and amount of our future obligation is uncertain.

In April 2021, we entered into a lease consisting of approximately 152,000 square feet of office and laboratory space being developed in Boston, Massachusetts. The lease commencement date is estimated to be June 1, 2024, subject to certain extensions, and expires on the fifteenth anniversary of the lease commencement date. Annual base rent for the first lease year will be approximately $12.9 million, subject to annual rent increases over the term of the lease. The lease includes one option to extend the lease for ten years at then-market rates, subject to certain adjustments, and will be secured by a letter of credit of $9.1 million. The table above does not reflect the future cash payments due under the new lease. During the three months ended March 31, 2021, we entered into new capital leases that resulted in total incremental non-cancelable capital lease payments under the new capital leases of $3.3 million through the remainder of the lease terms. The table above does not reflect the future cash payments due under the new capital leases.

In April 2021, we entered into a definitive Share Sale and Purchase Agreement (“Purchase Agreement”) with Have Fungi B.V. (“HF”) and a Technical Development Agreement (“TDA”) with Dutch DNA Biotech B.V. (“DDNA”), each a Dutch company located in the Netherlands. Under the Purchase Agreement, we will pay HF a purchase price in an amount equal to EUR 10 million, 33,291 shares of Ginkgo common stock, plus net debt and working capital adjustments, to acquire 100% ownership in the capital of DDNA. In addition, under the Purchase Agreement, Ginkgo agrees to earn-out payments to HF and certain designees upon achievement of one or more technical and commercialization milestones based on the performance of DDNA, including pursuant to the TDA, in an aggregate amount not to exceed $20.0 million during the earn-out term. During the three months ended March 31, 2021, we made a $1.2 million prepayment towards the cash purchase price of DDNA. We expect to finalize the transaction by the beginning of the third quarter of 2021.

We have agreements with certain vendors for various products and services for which we are not contractually able to terminate for convenience and avoid any and all future obligations to the vendors. Such agreements provide for termination fees, penalties or wind-down costs. Under such agreements, we are contractually obligated to make certain payments to vendors to reimburse them for their unrecoverable outlays incurred prior to cancellation. The exact amounts of such obligations are dependent on the timing of termination and the exact terms of the relevant agreement and cannot be reasonably estimated. We do not include these payments in the table above as they are not fixed and estimable.

In addition, we enter into standard indemnification agreements and/or indemnification sections in other agreements in the ordinary course of business. Pursuant to these agreements, we agree to indemnify, hold harmless and reimburse the indemnified party for losses suffered or incurred by the indemnified party, generally our business partners. The term of these indemnification agreements is generally perpetual upon execution of the agreement. The maximum potential amount of future payments we could be required to make under these indemnification agreements cannot be reasonably estimated and therefore are not included in the table above.

Off-Balance Sheet Arrangements

We did not have during the periods presented, and we do not currently have any off-balance sheet arrangements, as defined in the rules and regulations of the SEC. Although we have holdings in variable interest entities, we are not obligated to fund the losses of such entities. Additionally, there is no obligation arising out of our holdings in variable interest entities where the entity provides material financing, liquidity, market risk or credit risk support to, or engages in leasing, hedging or R&D services with us.

Critical Accounting Policies and Estimates

Our management’s discussion and analysis of our financial condition and results of operations is based on our consolidated financial statements, which have been prepared in accordance with U.S. GAAP. The preparation

 

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of these consolidated financial statements requires us to make judgments and estimates that affect the reported amounts of assets, liabilities, revenues and expenses and the disclosure of contingent assets and liabilities in our consolidated financial statements. We base our estimates on historical experience, known trends and events and various other factors that we believe to be reasonable under the circumstances, the results of which form the basis for making judgments about the carrying values of assets and liabilities that are not readily apparent from other sources. Actual results may differ from these estimates under different assumptions or conditions. On an ongoing basis, we evaluate our judgments and estimates in light of changes in circumstances, facts and experience. The effects of material revisions in estimates, if any, are reflected in our consolidated financial statements prospectively from the date of change in estimates.

While our significant accounting policies are described in more detail in the notes to our audited consolidated financial statements appearing elsewhere in this proxy statement/prospectus, we believe the following accounting policies used in the preparation of our consolidated financial statements require the most significant judgments and estimates.

Revenue Recognition

We account for revenue in accordance with ASC 606, Revenue from Contracts with Customers (“ASC 606”). Under ASC 606, we recognize revenue when the customer obtains control of the promised goods or services, at an amount that reflects the consideration we expect to receive in exchange for those goods or services. To determine revenue recognition for arrangements that are within the scope of ASC 606, we perform the following five steps: (i) identify the contract(s) with a customer, (ii) identify the promises and distinct performance obligations in the contract, (iii) determine the transaction price, (iv) allocate the transaction price to the performance obligations in the contract, and (v) recognize revenue when (or as) we satisfy the performance obligations.

Foundry Revenue

We generate license and service revenue through the execution of license and collaboration agreements whereby customers obtain license rights to our proprietary technology and intellectual property for use in the research, development and commercialization of engineered organisms and derived products. Under these agreements, we typically provide R&D services, which includes the provision of a license to our intellectual property. Additionally, the customer obtains license rights to the output of our services in order to commercialize the resulting output of such services. Generally, the terms of these agreements provide that we receive some combination of: (1) Foundry usage fees in the form of (i) upfront payments upon consummation of the agreement or other fixed payments, (ii) reimbursement for costs incurred for R&D services and (iii) milestone payments upon the achievement of specified technical criteria, plus (2) downstream value share payments in the form of (iv) milestone payments upon the achievement of specified commercial criteria, (v) royalties on sales of products from or comprising engineered organisms arising from the collaboration or licensing agreement and (vi) royalties related to cost of goods sold reductions realized by our customers.

Our collaboration and licensing agreements often contain multiple promises, including (i) licenses and assignments of intellectual property and materials and (ii) R&D services, and we determine whether each of the promises is a distinct performance obligation based on the nature of each agreement. As we are generally performing R&D services that are highly integrated and interrelated to the licenses and assignments of intellectual property and materials, the promises are generally inseparable. As such, we typically combine the R&D services, licenses, and assignments into a single performance obligation. However, for certain agreements, we only grant licenses or effects such transfers and assignments upon the successful completion of the R&D services or delivery of a developed product. For these agreements, we typically consider (i) the R&D services and (ii) the licenses, transfers, and assignments as distinct performance obligations, as each is transferred separately and has a separately identifiable benefit.

 

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Options to acquire additional goods and services are evaluated to determine if such options provide a material right to the counterparty that it would not have received without entering into the contract. If so, the option is accounted for as a separate performance obligation. If not, the option is considered a marketing offer which is accounted for as a separate contract upon the counterparty’s election.

At contract inception, we determine the transaction price, including fixed consideration and any estimated amounts of variable consideration. Any upfront cash payment received upon consummation of the agreement is fixed and generally nonrefundable. Variable consideration is subject to a constraint, and amounts are included in the transaction price to the extent that it is probable that a significant reversal in the amount of cumulative revenue recognized will not occur when the uncertainty associated with the variable consideration is subsequently resolved. Variable consideration may include reimbursement for costs incurred for our R&D efforts, milestone payments upon the achievement of certain technical and commercial criteria, and royalties on sales of products from or comprising engineered organisms arising from the agreement. With respect to the R&D reimbursements and milestone payments, we use the most likely amount method to estimate variable consideration. With respect to agreements that include royalties on sales or other contingent payments based on sales, we apply the royalty recognition constraint which requires a constraint until the royalty or value-sharing transaction occurs. Certain agreements contain payment in the form of equity or other non-cash consideration. Any non-cash consideration is measured at the fair value of the non-cash consideration at contract inception.

For agreements with promises that are combined into a single performance obligation, the entire transaction price is allocated to the single performance obligation. For agreements with multiple performance obligations, the transaction price is allocated to the performance obligations using the relative standalone selling price methodology. For agreements featuring variable consideration, we allocate variable consideration to one or more, but not all, performance obligations if certain conditions are met. Specifically, we assess whether the variable consideration relates solely to our efforts to satisfy the performance obligation and whether allocating such variable consideration entirely to the performance obligation is consistent with the overall allocation objective. If these conditions are not met, we allocate the variable consideration based on the relative standalone selling price methodology. The key assumptions utilized in determining the standalone selling price for each performance obligation include development timelines, estimated R&D costs, commercial markets, likelihood of exercise (in the case of options considered to be material rights), and probabilities of success.

For agreements where the licenses or assignments are considered separate performance obligations or represent the only performance obligation, we recognize revenue at the point in time that we effectively grant the license as the licenses or assignments represent functional intellectual property. For agreements where the licenses and the R&D services represent a combined performance obligation, we recognize revenue over the period of performance based on costs incurred to date as compared to total estimated costs.

We evaluate our measure of progress to recognize revenue at each reporting period and, as necessary, adjust the measure of performance and related revenue recognition. Our measure of performance and revenue recognition involves significant judgment and assumptions, including, but not limited to, estimated costs and timelines to complete our performance obligations. We evaluate contract modifications and amendments to determine whether any changes should be accounted for prospectively or on a cumulative catch-up basis. We utilize the right to invoice practical expedient when we have a right to consideration in an amount that corresponds directly with the value of our performance to date.

Royalties received under the agreements are recognized as revenue when sales have occurred as we apply the sales or usage-based royalties recognition constraint. We have determined the application of this exception is appropriate because the license granted in the agreement is the predominant item to which the royalties relate.

As we receive upfront payments for technical services under certain of our arrangements, we evaluate whether any significant financing components exist given the term over which the fees will be earned may exceed one year. Based on the nature of our agreements, there are no significant financing components as the

 

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purpose of the upfront payment is not to provide financing, but rather to secure technical services, exclusivity rights, and Foundry capacity, or the timing of transfer of those goods or services is at the discretion of the customer.

Deferred revenue represents consideration received by us in excess of revenue recognized and primarily results from transactions where we receive upfront payments and non-cash equity consideration. In instances where we have received consideration in advance for an undefined number of technical development plans (“TDPs”) under our customer agreements, we record the advance payments as deferred revenue, net of current portion on our consolidated balance sheets. Upon the execution of a specific TDP, we reclassify the estimated consideration to be earned under that TDP within the next twelve months as current deferred revenue. We also classify unexercised material rights as deferred revenue, net of current portion on our consolidated balance sheets. When a TDP is executed, and the material right is exercised, the amount allocated to the material right, which will be earned within the next twelve months, is reclassified to current deferred revenue. All other deferred revenue is classified as current or non-current based on the timing of when we expect to earn the underlying revenue based upon the projected progress of activities under the TDP.

Biosecurity Revenue

In 2020, we launched our commercial offering of COVID-19 testing products and services for businesses, academic institutions, and other organizations. In the first quarter of 2021, we launched our pooled testing initiative which focuses on providing end-to-end COVID-19 testing services to groups of individuals, with a focus of offering pooled testing services for K-12 schools. We sell COVID-19 test kits on a standalone basis or as part of an end-to-end testing service. We record product revenue from sales of LFA diagnostic test kits. We record service revenue from sales of our end-to-end COVID-19 testing services, which consist of multiple promised goods and services including sample collection kits, physician authorizations, onsite test administration, outsourced laboratory PCR analysis, and access to results reported through a web-based portal. We recognize our product and service revenue using the five-step model under ASC 606.

Product revenue from the sale of LFA diagnostic test kits is recognized when the test kits are shipped, and risk of loss is transferred to the carrier. Our diagnostic test kits are generally not subject to a customer right of return except for product recalls under the rules and regulations of the FDA. We have elected to include shipping and handling fees billed to customers as a component of Biosecurity revenue.

Service revenue from our end-to-end COVID-19 testing services is recognized upon completion of the tests and release of the test results on the web-based portal. We have identified one performance obligation in our testing services contracts that represents a series of distinct goods or services that are substantially the same and that have the same pattern of transfer to the customer, with each test as a distinct service within the series. As the price for the testing services is fixed under each customer contract, we have elected the practical expedient to recognize revenue at the amount which we have the right to invoice for services performed. Our testing services contracts are generally one year or less in length and contain fixed unit pricing. Under typical payment terms for testing services, amounts are billed in advance based on contractual billing terms or monthly in arrears for services performed.

Variable Interest Entities

We evaluate our variable interests in variable interest entities (“VIEs”) and consolidate VIEs when we are the primary beneficiary. We determine whether we are the primary beneficiary of each VIE based on our assessment of whether we possess both (i) the power to direct the activities that most significantly affect the VIE’s economic performance and (ii) the obligation to absorb losses that could be significant to the VIE or the right to receive benefits that could be significant to the VIE. We reevaluate the accounting for our VIEs upon the occurrence of events that could change the primary beneficiary conclusion.

 

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With respect to our investments in Motif, Allonnia, Genomatica and Kalo, we have concluded these entities represent variable interest entities. However, although we hold board representation and are involved in the ongoing development activities of the entities via participation on joint steering committees, we have concluded that we are not the primary beneficiary of these entities. We have reached this conclusion due to the fact that: (i) we do not control the board of directors of Motif, Allonnia, Genomatica or Kalo and no voting or consent agreements exist between ourselves and other members of each respective board of directors or other investors, (ii) the holders of preferred security interests in Motif, Allonnia, Genomatica and Kalo hold certain rights that require their consent prior to the taking of certain actions, which include certain significant operating and financing decisions and (iii) our representation on the joint steering committee of each respective entity does not give us control over the development activities of either Motif, Allonnia, Genomatica or Kalo as all votes must pass by consensus and there are no agreements in place that would require either entity to vote in alignment with ourselves. As our involvement in Motif, Allonnia, Genomatica and Kalo does not give us the power to control the decisions with respect to the development or other activities, which are the most significant activities of Motif, Allonnia, Genomatica or Kalo, we have accordingly concluded that we are not the primary beneficiary. Additionally, with respect to Cooksonia’s investment in Joyn, as Cooksonia does not control Joyn’s board of directors, it does not have the power to control the decisions related to the development activities of Joyn, which are the most significant activities of Joyn. Accordingly, Cooksonia is not the primary beneficiary of Joyn.

With respect to Cooksonia, we have concluded that we hold a variable interest in this entity through our equity interest and we are the primary beneficiary of Cooksonia as we control the most significant activities of Cooksonia. These conclusions were based on the fact that: (i) we control 100% of the board of directors of Cooksonia and (ii) we hold a controlling financial interest in Cooksonia. Due to the fact that we are the primary beneficiary of Cooksonia, we have consolidated the financial statements of Cooksonia in accordance with ASC 810, Consolidation (“ASC 810”), into our consolidated financial statements and have recognized a non-controlling interest associated with the minority equity interest held by other investors of Cooksonia.

Impairment of Long-Lived Assets

We review our long-lived assets for impairment whenever events or changes in circumstances indicate that the carrying value of an asset may not be recoverable. Recoverability is measured by comparing the book values of the assets to the expected future net undiscounted cash flows that the assets are expected to generate. If such assets are considered to be impaired, the impairment to be recognized is measured by the amount by which the book values of the assets exceed their fair value.

Determination of Fair Value of Non-cash Consideration in Platform Ventures

The fair value of non-cash consideration received in relation to our Platform Ventures is in return for the license rights conveyed to the counterparty. We value the non-cash consideration, which is generally common stock or common units, at inception of the agreements using an option pricing method (“OPM”). The OPM used a back-solve methodology to infer the total equity value based on the pricing of the preferred financing round associated with the formation of the respective Platform Ventures, which was contemporaneous with the intellectual property agreements that conveyed our license rights to such Platform Ventures.

Determination of Fair Value of Loans Receivable

We have elected the fair value option under ASC 825, Financial Instruments (“ASC 825”), to account for our loans receivable. We use various valuation techniques to fair value our loans receivable, which are dependent on the terms of the underlying agreements, and record the gains or loss arising from the change in fair value as a component of other income (expense), net in our consolidated statements of operations and comprehensive loss. As of March 31, 2021 and December 31, 2020, our loans receivable balance primarily consisted of our revolving promissory note with Glycosyn and a series of convertible notes with Access Bio. As of December 31, 2019, the loan receivable balance consisted only of our revolving promissory note with Glycosyn. We used a probability-

 

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weighted discounted cash flow valuation approach to value our revolving promissory note with Glycosyn. Under this approach, the present value of the expected cash flows was calculated under four settlement scenarios and then weighted based on the probability of each scenario. A discount rate was also applied. Both the probability and timing of each scenario and the discount rate represented significant inputs used in valuing the revolving promissory note. We used a Monte-Carlo simulation model to determine the value of our convertible notes with Access Bio, which modeled the future stock price of Access Bio over the term of the convertible notes to assess the value of the various settlement features. The significant assumptions used in determining the simulated future stock price included the expected timing of the conversion, which was assumed at maturity, and expected volatility. The significant assumptions used in determining the value of the convertible notes under a redemption at maturity scenario was the discount rate and expected volatility. Refer to Note 3 of our consolidated financial statements appearing elsewhere in this proxy statement/prospectus for additional details.

Determination of Fair Value of Common Stock

Given the absence of an active market for our common stock, the fair value of shares of common stock underlying our stock-based awards was determined on each grant date by Ginkgo, considering our most recently available third-party valuations of common stock and our assessment of additional objective and subjective factors that we believed were relevant and which may have changed from the date of the most recent valuation through the grant date. Historically, these independent third-party valuations of our equity instruments were performed contemporaneously with identified value inflection points. The third-party valuations were prepared in accordance with the framework of the American Institute of Certified Public Accountants’ Technical Practice Aid, Valuation of Privately Held Company Equity Securities Issued as Compensation (the “Practice Aid”). The Practice Aid identifies various available methods for allocating enterprise value across classes and series of capital stock to determine the estimated fair value of common stock at each valuation date.

In addition to considering the results of these third-party valuations, we considered various objective and subjective factors to determine the fair value of our equity instruments as of each grant date, which may be later than the most recently available third-party valuation date, including:

 

   

the lack of liquidity of our equity as a private company;

 

   

the prices of our convertible preferred stock sold to outside investors in arm’s length transactions and the rights, preferences and privileges of our convertible preferred stock as compared to those of our common stock, including the liquidation preferences of our convertible preferred stock;

 

   

the progress of our R&D efforts to develop our proprietary platform;

 

   

our stage of development and business strategy and the material risks related to our business and industry;

 

   

the valuation of publicly traded companies in the life sciences and biotechnology sectors, as well as recently completed mergers and acquisitions of peer companies;

 

   

any external market conditions and trends within the life sciences industry;

 

   

the likelihood of achieving a liquidity event given prevailing market conditions; and

 

   

the analysis of initial public offerings and the market performance of similar companies in the life sciences industry.

The assumptions underlying these valuations represent management’s best estimates, which involve inherent uncertainties and the application of management judgment. As a result, if factors or expected outcomes change and we use significantly different assumptions or estimates, the fair value of our stock-based awards could be materially different. Upon the consummation of the Business Combination, the fair value of our common stock will be determined based on the quoted market price on the NYSE.

 

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We estimate the fair value of our common stock using a hybrid method which uses market approaches to estimate our enterprise value. The hybrid method is a probability-weighted expected return method (“PWERM”) where the equity value in at least one scenario is allocated using an OPM.

Under the PWERM, the value of common stock is estimated based on an analysis of future values assuming various possible future liquidity events. The value of common stock is based on the probability-weighted present value of expected future investment returns considering the possible outcomes and the rights and privileges of each class of equity. The future investment returns are discounted back to the valuation date at a risk-adjusted discount rate which is then weighted based on the probability of the respective outcome.

Under the OPM, each class of stock is treated as a call option on our equity value, with exercise prices based on the liquidation preferences of our convertible preferred stock. Under this methodology, the common stock has value only if the funds available for distribution to the holders exceeds the value of the liquidation preferences of the convertible preferred stock at the time of the liquidity event. The Black-Scholes model is used to price the call options which includes assumptions for the time to liquidity and volatility of equity value. A discount for lack of marketability is then applied to the common stock value.

For awards granted from January 2021 through March 31, 2021, we utilized the hybrid method to estimate the value of our common stock underlying our stock-based awards. We considered two scenarios: (i) a scenario in which the conversion of the convertible preferred stock to common stock occurs through an initial public offering (“IPO”) or a merger with a special purpose acquisition company (“SPAC”), and (ii) a remain-private scenario. We estimated equity value using the guideline public company method and by considering the values indicated by preliminary letters of intent received from potential investors. In the IPO/SPAC transaction scenario, conversion of the convertible preferred stock to common stock was assumed. In the remain private scenario, equity value was allocated among the convertible preferred stock and common stock using the OPM. In addition to considering these two scenarios, we considered the prices paid for our common stock and Series B convertible preferred stock in secondary transactions and we included these prices in our weighted average conclusion of value.

For awards granted from August 2020 through December 31, 2020, when using the hybrid method, we considered two scenarios: (i) a scenario in which the conversion of the convertible preferred stock to common stock occurred through an IPO or SPAC transaction, and (ii) a remain private scenario. In both scenarios, we estimated an equity value in a potential IPO or SPAC transaction based on the guideline public company method under a market approach. We then converted the estimated future value to present value using a risk-adjusted discount rate. In the IPO or SPAC transaction scenario, conversion of the convertible preferred stock to common stock was assumed. In the remain private scenario, equity value was allocated among the convertible preferred stock and common stock using the OPM. In addition to considering these two scenarios, we considered the prices paid for our common stock and Series B convertible preferred stock in secondary transactions and we included these prices in our weighted average conclusion of value.

For awards granted from January 1, 2019 through July 2020, when using the hybrid method we considered two scenarios: (i) a fully diluted scenario, in which the per-share common stock value was assumed to equal the price of the convertible preferred stock in a recent round of financing, and (ii) a remain private scenario, in which we used the OPM to back-solve to the price of our convertible preferred stock in a recent round of financing. In the fully diluted scenario, conversion of the convertible preferred stock to common stock was assumed. In the remain private scenario, equity value was allocated among the convertible preferred stock and common stock using the OPM. In addition to considering these two scenarios, for certain valuations during the period, we considered the prices paid for our common stock in secondary transactions and we included these prices in our weighted average conclusion of value. These appraisals resulted in valuations of our common stock of $111.85 per share as of December 31, 2019, $183.73 per share as of September 30, 2020, $193.97 per share as of December 31, 2020 and $246.46 per share as of March 2, 2021.

There are significant judgments and estimates inherent in determining the fair value of the common stock. These judgments and estimates include factors, both subjective and objective, including: (i) a discount for lack of

 

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marketability; (ii) external market data; (iii) historical activity by us in selling equity to outside investors; (iv) our stage of development; (v) rights and preferences of our equity securities that rank senior to common stock; and (vi) the likelihood of the various scenarios, among others. Changes to these assumptions could result in different fair values of common stock.

JOBS Act and Emerging Growth Company Status

In April 2012, the JOBS Act was enacted. As an emerging growth company (“EGC”) under the JOBS Act, we may delay the adoption of certain accounting standards until such time as those standards apply to private companies. Other exemptions and reduced reporting requirements under the JOBS Act for EGCs include presentation of only two years of audited financial statements in a registration statement for an initial public offering, an exemption from the requirement to provide an auditor’s report on internal controls over financial reporting pursuant to Section 404(b) of the Sarbanes-Oxley Act of 2002, an exemption from any requirement that may be adopted by the Public Company Accounting Oversight Board regarding mandatory audit firm rotation and less extensive disclosure about our executive compensation arrangements. Additionally, the JOBS Act provides that an EGC can take advantage of an extended transition period for complying with new or revised accounting standards. This allows an EGC to delay the adoption of certain accounting standards until those standards would otherwise apply to private companies. We have elected to avail ourselves of the extended transition period and, therefore, while we are an EGC we will not be subject to new or revised accounting standards while they become applicable to other public companies that are not EGCs, unless we choose to early adopt a new or revised accounting standard.

We will remain classified as an EGC until the earlier of: (i) the last day of our first fiscal year in which we have total annual gross revenues of $1.07 billion or more, (ii) the last day of the fiscal year following the fifth anniversary of completion of the IPO of SRNG, (iii) the date on which we have issued more than $1.0 billion of non-convertible debt instruments during the previous three fiscal years or (iv) the date on which we are deemed a “large accelerated filer” under the rules of the SEC.

Recently Issued Accounting Pronouncements

We have reviewed all recently issued standards and have determined that, other than as disclosed in Note 2 of our consolidated financial statements appearing elsewhere in this proxy statement/prospectus, such standards will not have a material impact on our financial statements or do not otherwise apply to our current operations.

Quantitative and Qualitative Disclosures about Market Risks

Interest Rate Fluctuation Risk

We are exposed to market risk related to changes in interest rates. Our primary exposure to market risk is interest rate sensitivity, which is affected by changes in the general level of U.S. interest rates, particularly because our cash equivalents are invested in short-term U.S. Treasury obligations. However, because of the short-term nature of the instruments in our portfolio, an immediate change in market interest rates of 100 basis points would not have a material impact on the fair market value of our cash and cash equivalents or on our financial position or results of operations.

Foreign Currency Fluctuation Risk

We are not currently exposed to significant market risk related to changes in foreign currency exchange rates; however, we have contracted with and may continue to contract with foreign vendors. Our operations may be subject to fluctuations in foreign currency exchange rates in the future.

 

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Inflation Fluctuation Risk

Inflation generally affects us by increasing our cost of labor. We do not believe that inflation had a material effect on our business, financial condition or results of operations during the three months ended March 31, 2021 and 2020 or during the years ended December 31, 2020 and 2019.

 

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OWNERSHIP SUMMARY

The following table sets forth the ownership summary of New Ginkgo on a pro forma basis as of June 15, 2021, after giving effect to the Business Combination and assuming (i) that no public shares are redeemed and (ii) that 125,000,000 public shares, the maximum number, are redeemed.

Please refer to the historical financial statements of SRNG and Ginkgo as well as the section entitled “Unaudited Pro Forma Condensed Combined Financial Information.”

 

     Assuming No
Redemptions
   %    Assuming
Maximum
Redemptions(1)
   %

Ginkgo Stockholders(2)

   1,500,047,728      84.2%    1,500,047,728      91.8%
  

 

  

 

  

 

  

 

SRNG Public Shareholders

      172,500,000        9.7%         47,495,544        2.9%
  

 

  

 

  

 

  

 

PIPE Investors

        77,500,000        4.4%         77,500,000        4.7%
  

 

  

 

  

 

  

 

Sponsor(3)

        30,232,500        1.7%           7,774,775        0.6%
  

 

  

 

  

 

  

 

   1,780,280,228    100.0%    1,632,818,047    100.0%
  

 

  

 

  

 

  

 

 

(1)

Assumes that holders of 125,000,000 public shares exercise their redemption rights in connection with the Business Combination (maximum redemption scenario based on $1.725 billion held in trust as of June 15, 2021 and a redemption price of $10.00 per share).

(2)

Assumes that the aggregate cash consideration is $17,774 million in the no redemption scenario and $16,524 million in the maximum redemption scenario, based on cash on hand at Closing, and includes both the shares of New Ginkgo Class A common stock and New Ginkgo Class B common stock to be issued and outstanding (but not the 1,599,420 shares of New Ginkgo Class A common stock underlying the Ginkgo warrants).

(3)

Excludes the 12.9 million and 18.5 million Sponsor Earn-out Shares under the no redemption scenario and the, maximum redemption scenario, respectively.

The share numbers and ownership percentages set forth above do not take into account (a) public warrants and private placement warrants that will remain outstanding immediately following the Business Combination and may be exercised thereafter (commencing 30 days after the Closing of the Business Combination), (b) the Earn-out Consideration to be held in escrow and subject to release to the SRNG Earn-out Group and the Ginkgo Earn-out Group in accordance with the terms of the Merger Agreement or (c) the issuance of any shares upon completion of the Business Combination under the 2021 Plan, a copy of which is attached to this proxy statement/prospectus as Annex E. If the actual facts are different than the assumptions set forth above, the share numbers and ownership percentages set forth above will be different.

 

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DESCRIPTION OF NEW GINKGO SECURITIES

As a result of the Business Combination, SRNG shareholders who receive shares of New Ginkgo Class A common stock or New Ginkgo Class B common stock in the transactions will become New Ginkgo stockholders. Your rights as New Ginkgo stockholders will be governed by Delaware law and by New Ginkgo’s certificate of incorporation and bylaws. The following description of the material terms of New Ginkgo’s securities, including the New Ginkgo common stock to be issued in the Business Combination, reflects the anticipated state of affairs upon completion of the Business Combination. We urge you to read the applicable provisions of Delaware law and the Proposed Charter and Proposed Bylaws (which are attached as Annex B and Annex C, respectively, to this proxy statement/prospectus) carefully and in their entirety because they describe your rights as a holder of shares of New Ginkgo Class A common stock or New Ginkgo Class B common stock.

Authorized and Outstanding Capital Stock

New Ginkgo’s certificate of incorporation will authorize the issuance of 16,000,000,000 shares of all classes of New Ginkgo’s capital stock, consisting of:

 

   

200,000,000 shares of undesignated preferred stock, par value $0.0001 per share;

 

   

10,500,000,000 shares of New Ginkgo Class A common stock, par value $0.0001 per share;

 

   

4,500,000,000 shares of New Ginkgo Class B common stock, par value $0.0001 per share; and

 

   

800,000,000 shares of New Ginkgo Class C common stock, par value $0.0001 per share.

As of                     , 2021, the record date, SRNG had outstanding              SRNG Class A ordinary shares,              SRNG Class B ordinary shares, and              warrants, consisting of              public warrants and              private placement warrants.

Assuming that none of SRNG’s outstanding Class A ordinary shares are redeemed in connection with the Business Combination and the respective numbers of SRNG shares and SRNG warrants outstanding immediately prior to the consummation of the Business Combination are the same as they were on the record date, we expect that, immediately after the consummation of the Business Combination, there will be outstanding approximately 1,226,255,905 shares of New Ginkgo Class A common stock, approximately 554,024,323 shares of New Ginkgo Class B common stock, and approximately 51,825,000 warrants to purchase shares of New Ginkgo Class A common stock. Assuming that 125,000,000 of SRNG’s outstanding Class A ordinary shares are redeemed in connection with the Business Combination and the respective numbers of SRNG shares and SRNG warrants outstanding immediately prior to the consummation of the Business Combination are the same as they were on the record date, we expect that, immediately after the consummation of the Business Combination, there will be outstanding approximately 1,078,794,724 shares of New Ginkgo Class A common stock, approximately 554,024,323 shares of New Ginkgo Class B common stock, and approximately 51,825,500 warrants to purchase shares of New Ginkgo Class A common stock.

Common Stock

New Ginkgo will have three classes of authorized common stock: New Ginkgo Class A common stock, New Ginkgo Class B common stock, and New Ginkgo Class C common stock. Generally, New Ginkgo Class B common stock can only be issued to, transferred to, and held by New Ginkgo’s directors and employees, or trusts or legal entities through which the right to vote the shares of New Ginkgo Class B common stock held thereby is exercised exclusively by one or more of New Ginkgo’s directors or employees (any such director, employee, trust or legal entity, an “Eligible Holder”), unless otherwise determined by a majority of the Class B Directors then serving.

 

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Voting Rights

New Ginkgo Class A Common Stock

Holders of New Ginkgo Class A common stock will be entitled to one (1) vote for each share of New Ginkgo Class A common stock held of record by such holder on all matters voted upon by New Ginkgo stockholders.

New Ginkgo Class B Common Stock

Holders of New Ginkgo Class B common stock will be entitled to ten (10) votes for each share of New Ginkgo Class B common stock held of record by such holder on all matters voted upon by New Ginkgo stockholders.

New Ginkgo Class C Common Stock

Except as expressly provided in New Ginkgo’s certificate of incorporation or required by applicable law, holders of New Ginkgo Class C common stock generally will not be entitled to vote on matters voted upon by New Ginkgo stockholders. Solely to the extent that a holder of New Ginkgo Class C common stock is expressly entitled to vote on any matter pursuant to New Ginkgo’s certificate of incorporation or by applicable law, the holder will be entitled to one (1) vote for each share of New Ginkgo Class C common stock held of record by such holder.

Stockholder Votes

Holders of New Ginkgo common stock generally will vote together as a single class on all matters submitted to a vote of New Ginkgo stockholders (including the election and removal of directors), unless otherwise provided in New Ginkgo’s certificate of incorporation or required by applicable law. Any action or matter submitted to a vote of the New Ginkgo stockholders will be approved if the number of votes cast in favor of the action or matter exceeds the number of votes cast in opposition to the action or matter, except that New Ginkgo’s directors will be elected by a plurality of the votes cast. Holders of New Ginkgo Class A common stock will not be entitled to cumulate their votes in the election of New Ginkgo’s directors.

Delaware law could require holders of a class of New Ginkgo’s capital stock to vote separately as a class on any proposed amendment of New Ginkgo’s certificate of corporation if the amendment would increase or decrease the par value of the shares of that class or would alter or change the powers, preferences or special rights of the shares of that class in a manner that affects them adversely.

Holders of New Ginkgo common stock will not be entitled to vote on any amendment to New Ginkgo’s certificate of incorporation that relates solely to the terms of one or more series of New Ginkgo’s preferred stock and on which the holders of such affected series are entitled to vote, either separately as a class or together with the holders of one or more other series of New Ginkgo’s preferred stock, pursuant to New Ginkgo’s certificate of incorporation or by applicable law.

Stockholder Action by Written Consent

The Proposed Charter provides that New Ginkgo’s stockholders may act by written consent only if (a) the action to be taken or effected has been approved by the affirmative vote of all of the directors of New Ginkgo then serving or (b) the holders of New Ginkgo Class B common stock collectively beneficially own shares representing a majority of the voting power of all of the outstanding shares of capital stock of New Ginkgo. In all other circumstances, any action required or permitted to be taken by New Ginkgo’s stockholders must be effected at a duly called annual or special meeting of stockholders and may not be taken or effected by written consent.

 

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Special Meetings of Stockholders

The Proposed Charter provides that, except as otherwise required by applicable law, special meetings of New Ginkgo’s stockholders may be called only by the New Ginkgo Board, the chairman of the New Ginkgo Board, New Ginkgo’s chief executive officer or president, or, at any time that the holders of New Ginkgo Class B common stock collectively beneficially own shares representing a majority of the voting power of all of the outstanding shares of capital stock of New Ginkgo, the holders of shares representing a majority of the voting power of all of the outstanding shares of capital stock of New Ginkgo.

Economic Rights

Except as otherwise expressly provided in New Ginkgo’s certificate of incorporation or required by applicable law, shares of each class of New Ginkgo common stock will have the same rights, powers and preferences and rank equally, share ratably and be identical in all respects as to all matters, including the following:

Dividends and Distributions; Rights upon Liquidation

Subject to the rights of holders of any outstanding series of New Ginkgo preferred stock, the holders of shares of each class of New Ginkgo common stock will be entitled to receive ratably, on a per share basis, any dividend or distribution (including upon the liquidation, dissolution or winding up of New Ginkgo) paid by New Ginkgo, unless otherwise approved by the affirmative vote of the holders of a majority of each of the outstanding shares of New Ginkgo Class A common stock, the outstanding shares of New Ginkgo Class B common stock, and the outstanding shares of New Ginkgo Class C common stock, each voting separately as a class, except that, if a dividend or distribution is paid in the form of shares (or options, warrants or other rights to acquire shares) of New Ginkgo common stock, then holders of New Ginkgo Class A common stock will receive shares (or options, warrants or other rights to acquire shares) of New Ginkgo Class A common stock, holders of New Ginkgo Class B common stock will receive shares (or options, warrants or other rights to acquire shares) of New Ginkgo Class B common stock, and holders of shares of Class C common stock will receive shares (or options, warrants or other rights to acquire shares) of New Ginkgo Class C common stock.

Subdivisions, Combinations and Reclassifications

If New Ginkgo subdivides or combines any class of New Ginkgo common stock with any other class of New Ginkgo common stock, then each class of New Ginkgo common stock must be subdivided or combined in the same proportion and manner, unless otherwise approved by the affirmative vote of the holders of a majority of each of the outstanding shares of New Ginkgo Class A common stock, the outstanding shares of New Ginkgo Class B common stock, and the outstanding shares of New Ginkgo Class C common stock, each voting separately as a class.

Mergers and Other Extraordinary Transactions

The Proposed Charter provides that, in the event of certain extraordinary transactions affecting New Ginkgo (including certain transactions resulting in a change of control of New Ginkgo, the acquisition by a third party of assets of New Ginkgo generating at least 50% of New Ginkgo’s revenues on a consolidated basis, or any merger or consolidation of New Ginkgo), shares of each class of New Ginkgo common stock will be entitled to receive ratably, on a per share basis, any consideration paid or otherwise distributed to, or rights received by, New Ginkgo stockholders, or into which such shares are converted or for which such shares are exchanged, in connection with such extraordinary transaction (including with respect to the form, amount and timing thereof), unless different treatment of the shares of each such class is approved by the affirmative vote of the holders of a majority of the outstanding shares of Class A Common Stock, the holders of a majority of the outstanding shares of Class B Common Stock and the holders of a majority of the outstanding shares of Class C Common Stock,

 

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each voting separately as a class, except that, to the extent that such consideration is paid in the form of securities or other equity interests, holders of New Ginkgo Class B common stock may receive a class, series or other form of such securities or other equity interests each having voting power that is ten (10) times greater than the voting power of any security or other equity interest received by holders of New Ginkgo Class A common stock and holders of New Ginkgo Class C may receive a class, series or other form of such securities or other equity interests having no voting power.

Additionally, the Proposed Charter prohibits New Ginkgo from entering into any agreement with respect to a tender or exchange offer by a third party unless such agreement provides for consideration to be paid or distributed to, or rights to be received by, New Ginkgo stockholders in the manner provided in the paragraph immediately above.

Equal Value upon Disposition

The Proposed Charter provides that, in the case of any disposition of New Ginkgo Class B common stock for value, the value paid in respect of such share of New Ginkgo Class B common stock must be equal to the prevailing price per share of Class A common stock at the time of such disposition for value. New Ginkgo may (and expects to) from time to time establish restrictions, policies and procedures relating to transfers and dispositions of shares of New Ginkgo Class B common stock as it deems necessary or advisable.

Transfer Restrictions

Lock-up Applicable to Founders and Employees

The Proposed Charter provides that, subject to customary exceptions and the other exceptions described in the following sentences, the Founders and their affiliated trusts and any New Ginkgo stockholder who is an employee of New Ginkgo or any of its wholly owned subsidiaries at the time of the Closing, and any transferee of any of the foregoing, will be unable to transfer their shares of New Ginkgo Class A common stock or New Ginkgo Class B common stock received as consideration in the merger (including upon the settlement of any equity award of New Ginkgo into which any equity award of Ginkgo was converted in the merger), other than the Earn-out Consideration, for a period of one year following the closing of the Business Combination. The transfer restrictions described in the foregoing sentence will not apply to an aggregate of 10% of the total number of shares subject to such transfer restrictions, excluding (from this exception to such transfer restrictions) any shares of New Ginkgo Class A common stock or New Ginkgo Class B common stock received upon the settlement of any equity award of New Ginkgo into which any equity award of Ginkgo that was, immediately prior to the effective time of the merger, subject to any unsatisfied service- or time-based vesting condition was converted in the merger. Additionally, solely in the case of any holder of any equity award of New Ginkgo (including any such equity award into which any equity award of Ginkgo was converted in the merger), the transfer restrictions described in the first sentence of this paragraph will be lifted, beginning on the earlier of March 1, 2022 and the date that is 15 calendar days before the date on which any tax relating to such equity award (other than any equity or portion thereof that is exempted from such transfer restrictions by virtue of the immediately preceding sentence) will become due under applicable law (as reasonably determined by New Ginkgo), solely to the extent necessary to yield aggregate net proceeds to such holder in connection with the transfer of such holder’s shares of New Ginkgo Class A common stock or shares of New Ginkgo Class B common stock (assuming, in each case, that such shares would be sold for value at the prevailing trading price of shares of New Ginkgo Class A common stock at the time of such transfer) sufficient to cover the aggregate amount of ordinary income, employment or similar taxes payable in connection with such equity award (as reasonably determined by New Ginkgo).

Lock-up Applicable to Other Stockholders

The Proposed Charter provides that, subject to customary exceptions and the other exceptions described in the following sentence, stockholders of the corporation other than those described in the paragraph immediately

 

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above will be unable to transfer their shares of New Ginkgo Class A common stock or New Ginkgo Class B common stock received as consideration in the merger (including upon the settlement of any equity award of New Ginkgo into which an equity award of Ginkgo was converted in the merger), other than the Earn-out Consideration, for a period of 180 days following the closing of the Business Combination. Solely in the case of any holder of any equity award of New Ginkgo (including any such equity award into which any equity award of Ginkgo was converted in the merger), the transfer restrictions described in the foregoing sentence will be lifted, beginning on the earlier of March 1, 2022 and the date that is 15 calendar days before the date on which any tax relating to such equity award will become due under applicable law (as reasonably determined by New Ginkgo), solely to the extent necessary to yield aggregate net proceeds to such holder in connection with the transfer of such holder’s shares of New Ginkgo Class A common stock or shares of New Ginkgo Class B common stock (assuming, in each case, that such shares would be sold for value at the prevailing trading price of shares of New Ginkgo Class A common stock at the time of such transfer) sufficient to cover the aggregate amount of ordinary income, employment or similar taxes payable in connection with such equity awards (as reasonably determined by New Ginkgo).

Conversion

Optional Conversion

Holders of New Ginkgo Class B common stock will have the right to convert shares of their New Ginkgo Class B common stock into fully paid and non assessable shares of New Ginkgo Class A common stock, on a one-to-one basis, at the option of the holder at any time upon written notice to New Ginkgo’s transfer agent.

Automatic Conversion

Generally, shares of New Ginkgo Class B common stock will convert automatically into New Ginkgo Class A common stock upon the holder of such shares ceasing to be an Eligible Holder (whether as a result of the holder’s termination, resignation or removal as a director or employee of New Ginkgo, the transfer of such shares to an individual, trust or entity that is not an Eligible Holder, a person other than a director or employee of New Ginkgo gaining any direct or indirect right to vote such shares, or otherwise), unless otherwise determined by the affirmative vote of a majority of the directors of New Ginkgo then serving who qualify as “independent” in accordance with the requirements of the securities exchange on which equity securities of New Ginkgo are then listed for trading. A determination by the secretary of the New Ginkgo that an event has occurred that triggers the automatic conversion of New Ginkgo Class B common stock into New Ginkgo Class A common stock will be conclusive and binding; however, a holder of New Ginkgo Class B common stock (or New Ginkgo Class A common stock into which New Ginkgo Class B common stock has converted) who believes in good faith that such determination is in error may appeal such determination to the New Ginkgo Board, in which case, the determination of the New Ginkgo Board (including as to whether or not to review such determination) will be conclusive and binding.

Conversion Policies and Procedures

New Ginkgo may (and expects to) establish from time to time certain restrictions, policies and procedures relating to the general administration of its multi-class stock structure and the conversion of New Ginkgo Class B common shares to New Ginkgo Class A common shares. Adoption or amendment of any such policy or procedure must be approved by the affirmative vote of a majority of New Ginkgo’s directors and, if any Class B Director is then serving, at least one Class B Director (defined below).

Registration Rights

Certain New Ginkgo stockholders will be party to a registration rights agreement with New Ginkgo that will be effective upon the consummation of the Business Combination. The registration rights agreement will grant

 

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certain New Ginkgo stockholders the right to require, subject to certain conditions and limitations, that New Ginkgo register for resale securities held by such stockholders and certain “piggback” registration rights with respect to registrations initiated by New Ginkgo. The registration of shares of New Ginkgo Class A common stock pursuant to the exercise of the registration rights provided under the registration rights agreement would enable the applicable New Ginkgo stockholders to resell such shares without restriction under the Securities Act when the applicable registration statement is declared effective. New Ginkgo will bear the expenses incurred in connection with the filing of any registration statements pursuant to the registration rights agreement.

Other Rights

The Proposed Charter and the Proposed Bylaws do not provide for any preemptive or subscription rights with respect to the New Ginkgo common stock, and there are no redemption or sinking fund provisions applicable to the New Ginkgo common stock. Upon completion of the Business Combination, all the outstanding shares of New Ginkgo common stock will be validly issued, fully paid and non-assessable.

Preferred Stock

The Proposed Charter authorizes the New Ginkgo Board, to the fullest extent permitted by applicable law, to issue up to an aggregate of 200,000,000 shares of New Ginkgo preferred stock in one or more series from time to time by resolution, without further action by New Ginkgo’s stockholders, and to fix the powers (which may include full, limited or no voting power), designations, preferences and relative, participating, optional or other special rights, if any, of the shares of each such series (which rights may be greater than the rights of any or all of the classes of New Ginkgo common stock) and any qualifications, limitations or restrictions thereof. The issuance of New Ginkgo preferred stock could adversely affect the voting power of holders of New Ginkgo common stock and the likelihood that such holders will receive dividend payments or payments upon liquidation. In addition, the issuance of preferred stock could have the effect of delaying, deterring or preventing a change of control or other corporate action. No shares of preferred stock are expected to be outstanding immediately following the consummation of the Business Combination, and there is no present plan to issue any shares of preferred stock.

Other Constituencies

In acknowledgment of our goal of serving all of our stakeholders over the long term, the Proposed Charter provides that, in addition to any other considerations which the New Ginkgo Board, any committee thereof, or any individual director lawfully may take into account in determining whether to take or refrain from taking corporate action on any matter, including making or declining to make any recommendation to our stockholders, our board of directors, any committee thereof, or any individual director may, in his, her, or its discretion, consider the long-term as well as the short-term interests of New Ginkgo, taking into account and considering, as deemed appropriate, the effects of such action on our (a) stockholders and (b) other stakeholders, including our workforce, customers, suppliers, academic researchers, governments and communities, in the case of (b), as may be identified or revised by the New Ginkgo Board from time to time. The Proposed Charter also provides that nothing in the Proposed Charter or any other governing document, policy, or guideline adopted by us will (i) create any duty owed by any director to any person or entity to consider, or afford any particular weight to, any of the foregoing matters or to limit his or her consideration thereof or (ii) other than as vested in our stockholders to the extent provided under applicable law, be construed as creating any rights against any director or us. These constituency provisions grant discretionary authority only to the extent consistent with and permitted by law, and do not confer third-party beneficiary status on any person or entity.

Election, Appointment and Removal of Directors

Until the time at which the outstanding shares of New Ginkgo Class B common stock cease to represent at least 2% of all of the outstanding shares of New Ginkgo common stock, the holders of New Ginkgo Class B

 

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common stock, voting separately as a class, will be entitled to nominate and elect a number of directors equal to 25% (rounded up to the nearest whole number) of the total number of directors constituting the New Ginkgo Board (each such director, a “Class B Director”). All other directors of New Ginkgo will be elected by the holders of all classes of New Ginkgo common stock, voting together as a single class.

The total number of directors constituting the New Ginkgo Board will be fixed from time to time by New Ginkgo’s board of directors, but will be subject to adjustment to ensure that the total number of directors that the holders of New Ginkgo Class B common stock are entitled to nominate and elect is at least 25% of the total number of directors constituting the New Ginkgo Board.

The Proposed Charter provides that any Class B Director may be removed from office (a) with cause, only by the affirmative vote of the holders of shares representing a majority of the voting power of all of the outstanding shares of New Ginkgo Class B common stock and (b) without cause, by the affirmative vote of the holders of shares representing a majority of the voting power of all of the outstanding shares of capital stock of New Ginkgo, voting together as a single class. Any director of New Ginkgo other than a Class B Director may be removed from office, with or without cause, by the affirmative vote of the holders of shares representing a majority of the voting power of all of the outstanding shares of capital stock of New Ginkgo, voting together as a single class.

The Proposed Charter provides that vacant directorships, including vacancies resulting from any increase in the total number of directors constituting the New Ginkgo Board, may be filled only by the New Ginkgo Board. Vacancies with respect to any Class B Director may be filled only by the remaining Class B Directors.

Committees of the Board of Directors

The New Ginkgo Board will establish and maintain an audit committee, a nominating and corporate governance committee and a compensation committee, and may establish such other committees as it determines from time to time. For so long as any Founder serving as a director of New Ginkgo holds shares of New Ginkgo Class B common stock, such director will not be permitted to serve as a member of the compensation committee of the New Ginkgo Board. Subject to applicable requirements of the securities exchange on which equity securities of New Ginkgo are then listed for trading, at any time that any Class B Director is serving as a director of New Ginkgo, each committee (other than the compensation committee) of the New Ginkgo Board must include at least one Class B Director unless a majority of the Class B Directors then serving approve the formation and composition of such committee.

Action by the New Ginkgo Board of Directors to Terminate a Founder

New Ginkgo may not terminate the employment of any Founder for cause, or materially and adversely reduce the responsibilities, title or position of such Founder for cause, without the prior written consent of such Founder, or make any determination that an event has occurred with respect to such Founder that constitutes “cause” (as that term or any similar concept may be defined or used in any agreement relating to the employment of such Founder by New Ginkgo or any of its subsidiaries or any policy of New Ginkgo or any of its subsidiaries applicable to the employment of such Founder), unless such termination, reduction or determination has been approved by at least 75% of the directors of New Ginkgo then in office.

New Ginkgo may not terminate the employment of any Founder other than for cause, or materially and adversely reduce the responsibilities, title or position of such Founder other than for cause, without the prior written consent of such Founder, unless such termination or reduction has been approved by at least 75% of the directors of New Ginkgo then in office and, if any Founder who is not the subject of the action requiring such approval is then serving as a director of New Ginkgo, at least one director of New Ginkgo who is a Founder.

 

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Anti-Takeover Effects of the Proposed Charter and the Proposed Bylaws

The Proposed Charter and Proposed Bylaws contain certain provisions that may delay, discourage or impede efforts by another person or entity to acquire control of New Ginkgo. We believe that these provisions, which are summarized below, will discourage coercive takeover practices or inadequate takeover bids. These provisions are also designed to encourage persons or entities seeking to acquire control of us to first negotiate with the New Ginkgo Board, which we believe may result in improvement of the terms of any such acquisition in favor of New Ginkgo’s stockholders. However, these provisions also give the New Ginkgo Board the power to discourage acquisitions that some stockholders may favor.

Authorized but Unissued Capital Stock

The authorized but unissued shares of our common stock and our preferred stock will be available for future issuance without stockholder approval, subject to any limitations imposed by the listing standards of the securities exchange on which New Ginkgo’s equity securities are then listed for trading. These additional shares of capital stock may be used for a variety of corporate purposes, including growth acquisitions, corporate finance transactions, and issuances under our EIP and ESPP. The existence of authorized but unissued and unreserved capital stock could discourage or impede an attempt to obtain control of New Ginkgo by means of a proxy contest, tender offer, merger, or otherwise.

Amendment of Certificate of Incorporation or Bylaws

The DGCL generally provides that the affirmative vote of a majority of the outstanding shares entitled to vote on amendments to a corporation’s certificate of incorporation or bylaws is required to approve such amendment, unless a corporation’s certificate of incorporation or bylaws, as applicable, imposes a higher voting standard.

The Proposed Charter provides that certain provisions thereof may be adopted, amended, altered or repealed only upon the affirmative vote of the holders of at least two-thirds of the voting power of all of the outstanding shares of capital stock of New Ginkgo. Such provisions include those relating to (i) stockholder action by written consent, (ii) special meetings of stockholders, (iii) the New Ginkgo Board (including the election, appointment and removal of directors), (iv) termination of the employment of any Founder, material and adverse reduction of the responsibilities, title or position of any Founder without the prior written consent of such Founder, or determination that an event has occurred with respect to any Founder that constitutes “cause”, (v) limitation of the personal liability of New Ginkgo’s directors, and (vi) New Ginkgo’s waiver of the corporate opportunity doctrine.

The Proposed Charter provides that New Ginkgo’s bylaws may be adopted, amended, altered or repealed by the New Ginkgo Board or by the affirmative vote of the holders of at least two-thirds of the voting power of all of the outstanding shares of capital stock of New Ginkgo (or, if the New Ginkgo Board has recommended that stockholders approve such modification to New Ginkgo’s bylaws, the affirmative vote of a majority of the voting power of all of the outstanding shares of capital stock of New Ginkgo).

These provisions may have the effect of deterring hostile takeovers or delaying or preventing changes of control of New Ginkgo or its management such as a merger, reorganization or tender offer. These provisions are intended to enhance the likelihood of continued stability in the composition of the New Ginkgo Board and its policies and to discourage certain types of transactions that may involve an actual or threatened acquisition of New Ginkgo and to reduce New Ginkgo’s vulnerability to an unsolicited acquisition proposal. These provisions are also intended to discourage certain tactics that may be used in proxy fights. However, such provisions could have the effect of discouraging others from making tender offers for New Ginkgo’s shares and, as a consequence, may inhibit fluctuations in the market price of the Company’s shares that could result from actual or rumored takeover attempts. Such provisions may also have the effect of preventing changes in management.

 

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Multi-Class Structure

As described above, the Proposed Charter provides for a multi-class stock structure, which will give New Ginkgo’s directors and employees (including the Founders) and certain of their affiliated entities and trusts, for so long as they continue to collectively beneficially own shares representing a majority of the voting power of all of the outstanding shares of capital stock of New Ginkgo, significant influence over all matters requiring stockholder approval, including the election of New Ginkgo’s directors and significant corporate transactions, such as a merger or other sale of New Ginkgo or all or substantially all of its assets.

No Cumulative Voting for Directors

The DGCL provides that stockholders are not entitled to cumulate votes in the election of directors unless a corporation’s certificate of incorporation provides otherwise. The Proposed Charter does not provide for cumulative voting. As a result, the holders of shares of New Ginkgo common stock representing a majority of the voting power of all of the outstanding shares of capital stock of New Ginkgo will be able to elect all of the directors (other than the Class B Directors) then standing for election.

Vacancies on the New Ginkgo Board

The Proposed Charter authorizes only the New Ginkgo Board to fill vacant directorships, including vacancies resulting from any increase in the total number of directors constituting the New Ginkgo Board. In addition, the total number of directors constituting the New Ginkgo Board is permitted to be changed only by the New Ginkgo Board, subject to the requirement that at least 25% of the total number of New Ginkgo’s directors be Class B Directors (for so long as the outstanding shares of New Ginkgo Class B common stock continue to represent at least 2% of all the outstanding shares of New Ginkgo common stock). These provisions could prevent a stockholder from increasing the total number of New Ginkgo’s directors and then gaining control of the New Ginkgo Board.

Requirements to Terminate Employment of Founders

The Proposed Charter requires that any termination by New Ginkgo of the employment of any Founder other than for cause, or material and adverse reduction of the responsibilities, title or position of such of such Founder other than for cause without the prior written consent of such Founder, be approved by at least 75% of the directors of New Ginkgo then in office and, if any Founder who is not the subject of the action requiring such approval is then serving as a director of New Ginkgo, at least one director of New Ginkgo who is a Founder. This provision, together with the right of the holders of New Ginkgo Class B common stock to nominate and elect 25% of the New Ginkgo Board, could make it more difficult for a stockholder that gains control of the New Ginkgo Board to effect changes in New Ginkgo’s management.

Special Meetings of Stockholders, Action by Written Consent, and Advance Notice Requirements for Stockholder Proposals

Special Meetings of Stockholders

The Proposed Charter permits special meetings of New Ginkgo’s stockholders to be called only by the New Ginkgo Board, the chairman of the New Ginkgo Board, New Ginkgo’s chief executive officer or president, or, at any time that the holders of New Ginkgo Class B common stock collectively beneficially own shares representing a majority of the voting power of all of the outstanding shares of capital stock of New Ginkgo, the holders of shares representing a majority of the voting power of all of the outstanding shares of capital stock of New Ginkgo. These provisions might delay the ability of New Ginkgo’s stockholders to force consideration of a proposal or to take any action, including with respect to the removal of any of New Ginkgo’s directors from office.

 

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Stockholder Action by Written Consent

The Proposed Charter provides that New Ginkgo’s stockholders may act by written consent only if (a) the action to be taken or effected has been approved by the affirmative vote of all of the directors of New Ginkgo then serving or (b) the holders of New Ginkgo Class B common stock collectively beneficially own shares representing a majority of the voting power of all of the outstanding shares of capital stock of New Ginkgo. As a result, if the holders of New Ginkgo Class B common stock were to cease to collectively beneficially own shares representing a majority of the voting power of all of the outstanding shares of capital stock of New Ginkgo, New Ginkgo’s stockholders would not be able to take action by written consent on any matter and would only be able to take action at an annual or special meeting of stockholders, unless the New Ginkgo Board had unanimously approved the action to be taken or effected.

Advance Notice Requirement for Stockholder Proposals and Director Nominations

The Proposed Bylaws establish an advance notice procedure for stockholder proposals to be brought before an annual meeting of stockholders, including proposed nominations of candidates for election to the New Ginkgo Board. In order for any matter to be “properly brought” before a meeting (and thereby considered or acted upon at such meeting), a stockholder will have to comply with certain advance notice requirements and provide New Ginkgo with certain information. Stockholders at an annual meeting will only be permitted to consider proposals or nominations specified in the notice of meeting or brought before the meeting by or at the direction of the New Ginkgo Board or by a stockholder of record on the record date for the meeting who is entitled to vote at the meeting and has delivered a timely notice, in the form and manner specified in the Proposed Bylaws, of such stockholder’s intention to bring such business before the meeting. These provisions might preclude New Ginkgo’s stockholders from bringing matters before our annual meeting of stockholders or from nominating candidates for election to the New Ginkgo Board, or might discourage or impede an attempt by a potential acquirer of New Ginkgo to conduct a solicitation of proxies to elect the acquirer’s own slate of directors or otherwise obtain control of New Ginkgo.

Business Combinations

New Ginkgo has elected not to be subject to Section 203 of the DGCL. Under Section 203 of the DGCL, a corporation will not be permitted to engage in a business combination with any interested stockholder for a period of three years following the time that such interested stockholder became an interested stockholder, unless:

(1)    prior to such time, the board of directors of the corporation approved either the business combination or the transaction which resulted in the stockholder becoming an interested stockholder;

(2)    upon consummation of the transaction which resulted in the stockholder becoming an interested stockholder, the interested stockholder owned at least 85% of the voting stock of the corporation outstanding at the time the transaction commenced, excluding for purposes of determining the voting stock outstanding (but not the outstanding voting stock owned by the interested stockholder) those shares owned (i) by persons who are directors and also officers and (ii) employee stock plans in which employee participants do not have the right to determine confidentially whether shares held subject to the plan will be tendered in a tender or exchange offer; or

(3)    at or subsequent to such time the business combination is approved by the board of directors and authorized at an annual or special meeting of stockholders, and not by written consent, by the affirmative vote of at least 6623% of the outstanding voting stock which is not owned by the interested stockholder.

Generally, a “business combination” includes a merger, asset or stock sale or other transaction resulting in a financial benefit to the interested stockholder. Subject to certain exceptions, an “interested stockholder” is a person who, together with that person’s affiliates and associates, owns, or within the previous three years owned, 15% or more of New Ginkgo’s outstanding voting stock. For purposes of this section only, “voting stock” has the meaning given to it in Section 203 of the DGCL.

 

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Because New Ginkgo has opted out of Section 203 of the DGCL in the Proposed Charter, Section 203 of the DGCL will not apply to New Ginkgo.

Warrants

Ginkgo Warrants

At the effective time of the Merger, each warrant to purchase shares of Ginkgo capital stock (each, a “Ginkgo Warrant”) that is outstanding and unexercised immediately prior to the effective time of the Merger (after giving effect to the Company Recapitalization, pursuant to which each Ginkgo Warrant to purchase shares of Ginkgo preferred stock will become a Ginkgo Warrant to purchase shares of Ginkgo Class A common stock), other than such Ginkgo Warrants that are automatically exercised in full in accordance with their terms by virtue of the occurrence of the Merger immediately prior to the effective time of the Merger, will be assumed by New Ginkgo and converted into a warrant to purchase shares of New Ginkgo Class A common stock on the same terms and subject to the same conditions (including as to vesting and exercisability) as are in effect with respect to such Ginkgo Warrant immediately prior to the effective time, with appropriate adjustments to the number of shares of New Ginkgo Class A common stock underlying such warrant and the exercise price applicable thereto to account for the merger.

SRNG Warrants

At the effective time of the Domestication, each warrant to purchase SRNG ordinary shares (each, a “SRNG Warrant”) that is issued and outstanding immediately prior to the effective time of the Domestication and not terminated pursuant to its terms will be converted into a warrant to purchase shares of New Ginkgo common stock on the same terms and conditions (including as to vesting and exercisability) as are in effect with respect to such SRNG Warrant immediately prior to the effective time.

There are currently outstanding an aggregate of 53,750,000 warrants to acquire SRNG Class A ordinary shares, which comprise 19,250,000 private placement warrants held by SRNG’s Sponsor and 34,500,000 public warrants.

Public Stockholders’ Warrants

There are currently outstanding an aggregate of 53,750,000 warrants, which, following the consummation of the Business Combination, will entitle the holder to acquire New Ginkgo Class A common stock. Each whole warrant will entitle the registered holder to purchase one share of New Ginkgo Class A common stock at a price of $11.50 per share, subject to adjustment as discussed below, beginning 30 days after the consummation of the Business Combination, provided that New Ginkgo has an effective registration statement under the Securities Act covering the New Ginkgo Class A common stock issuable upon exercise of the warrants and a current prospectus relating to such New Ginkgo Class A common stock is available (or New Ginkgo permits holder to exercise their respective warrants on a cashless basis under the circumstances specified in the warrant agreement) and such shares are registered, qualified or exempt from registration under the securities, or blue sky, laws of the state of residence of the holder. Pursuant to the warrant agreement, a holder may exercise its warrants only for a whole number of shares of New Ginkgo Class A common stock. This means only a whole warrant may be exercised at a given time by a warrant holder. No fractional warrants will be issued upon separation of the units and only whole warrants will trade. Accordingly, unless holder has at least five units, such holder will not be able to receive or trade a whole warrant. The warrants will expire five years after the completion of the Business Combination, at 5:00 p.m., New York City time, or earlier upon redemption or liquidation.

Redemption of Warrants for Cash

Once the warrants become exercisable, New Ginkgo may call the warrants for redemption for cash:

 

   

in whole and not in part;

 

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at a price of $0.01 per warrant;

 

   

upon not less than 30 days’ prior written notice of redemption (the “30-day redemption period”) to each warrant holder; and

 

   

if, and only if, the reported closing price of the New Ginkgo Class A common stock equals or exceeds $18.00 per share (as adjusted for stock sub-divisions, stock capitalizations, reorganizations, recapitalizations and the like) for any 20 trading days within a 30-trading day period ending three business days before New Ginkgo sends the notice of redemption to the warrant holders.

If and when the warrants become redeemable by New Ginkgo, New Ginkgo may exercise its redemption right even if New Ginkgo is unable to register or qualify the underlying securities for sale under all applicable state securities laws.

New Ginkgo has established the last of the redemption criterion discussed above to prevent a redemption call unless there is at the time of the call a significant premium to the warrant exercise price. If the foregoing conditions are satisfied and New Ginkgo issues a notice of redemption of the warrants, each warrant holder will be entitled to exercise his, her or its warrant prior to the scheduled redemption date. However, the price of the New Ginkgo Class A common stock may fall below the $18.00 redemption trigger price (as adjusted for stock sub-divisions, stock capitalizations, reorganizations, recapitalizations and the like) as well as the $11.50 warrant exercise price after the redemption notice is issued.

Redemption Procedures and Cashless Exercise

If New Ginkgo calls the warrants for redemption as described above, New Ginkgo’s management will have the option to require any holder that wishes to exercise his, her or its warrant to do so on a “cashless basis.” In determining whether to require all holders to exercise their warrants on a “cashless basis,” New Ginkgo’s management will consider, among other factors, New Ginkgo’s cash position, the number of warrants that are outstanding and the dilutive effect on New Ginkgo’s stockholders of issuing the maximum number of shares of New Ginkgo Class A common stock issuable upon the exercise of its warrants. If New Ginkgo management takes advantage of this option, all holders of warrants would pay the exercise price by surrendering their warrants for that number of shares of New Ginkgo Class A common stock equal to the quotient obtained by dividing (x) the product of the number of New Ginkgo Class A common stock underlying the warrants, multiplied by the excess of the “fair market value” of the New Ginkgo Class A common stock over the exercise price of the warrants by (y) the fair market value. The “fair market value” will mean the average reported closing price of the New Ginkgo Class A common stock for the 10 trading days ending on the third trading day prior to the date on which the notice of redemption is sent to the holders of warrants. If the New Ginkgo management takes advantage of this option, the notice of redemption will contain the information necessary to calculate the number of shares of New Ginkgo Class A common stock to be received upon exercise of the warrants, including the “fair market value” in such case. Requiring a cashless exercise in this manner will reduce the number of shares to be issued and thereby lessen the dilutive effect of a warrant redemption.

New Ginkgo believes this feature is an attractive option to New Ginkgo if New Ginkgo does not need the cash from the exercise of the warrants after the Business Combination. If New Ginkgo calls the New Ginkgo warrants for redemption and New Ginkgo’s management does not take advantage of this option, the holders of the private placement warrants and their permitted transferees would still be entitled to exercise their private placement warrants for cash or on a cashless basis using the same formula described above that other warrant holders would have been required to use had all warrant holders been required to exercise their warrants on a cashless basis, as described in more detail below.

A holder of a warrant may notify New Ginkgo in writing in the event it elects to be subject to a requirement that such holder will not have the right to exercise such warrant, to the extent that after giving effect to such exercise, such person (together with such person’s affiliates), to the warrant agent’s actual knowledge, would

 

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beneficially own in excess of 4.9% or 9.8% (as specified by the holder) of the New Ginkgo Class A common stock outstanding immediately after giving effect to such exercise.

If the number of outstanding shares of New Ginkgo Class A common stock is increased by a share capitalization payable in shares of New Ginkgo Class A common stock, or by a split-up of common stock or other similar event, then, on the effective date of such share capitalization, split-up or similar event, the number of shares of New Ginkgo Class A common stock issuable on exercise of each warrant will be increased in proportion to such increase in the outstanding shares of New Ginkgo common stock. A rights offering to holders of common stock entitling holders to purchase New Ginkgo Class A common stock at a price less than the fair market value will be deemed a share capitalization of a number of shares of New Ginkgo Class A common stock equal to the product of  (i) the number of shares of New Ginkgo Class A common stock actually sold in such rights offering (or issuable under any other equity securities sold in such rights offering that are convertible into or exercisable for New Ginkgo Class A common stock) and (ii) the quotient of  (x) the price per share of New Ginkgo Class A common stock paid in such rights offering and (y) the fair market value. For these purposes (i) if the rights offering is for securities convertible into or exercisable for shares of New Ginkgo Class A common stock, in determining the price payable for New Ginkgo Class A common stock, there will be taken into account any consideration received for such rights, as well as any additional amount payable upon exercise or conversion and (ii) fair market value means the volume weighted average price of shares of New Ginkgo Class A common stock as reported during the 10 trading day period ending on the trading day prior to the first date on which the New Ginkgo Class A common stock trades on the applicable exchange or in the applicable market, regular way, without the right to receive such rights.

In addition, if New Ginkgo, at any time while the warrants are outstanding and unexpired, pays a dividend or make a distribution in cash, securities or other assets to the holders of New Ginkgo Class A common stock on account of such New Ginkgo Class A common stock (or other securities into which the warrants are convertible), other than (a) as described above, (b) certain ordinary cash dividends, (c) to satisfy the redemption rights of the holders of Class A common stock in connection with the Business Combination, or (d) in connection with the redemption of New Ginkgo’s public shares upon New Ginkgo’s failure to complete the Business Combination, then the warrant exercise price will be decreased, effective immediately after the effective date of such event, by the amount of cash and/or the fair market value of any securities or other assets paid on each share of New Ginkgo Class A common stock in respect of such event.

If the number of outstanding shares of New Ginkgo Class A common stock is decreased by a consolidation, combination or reclassification of New Ginkgo Class A common stock or other similar event, then, on the effective date of such consolidation, combination, reverse share split, reclassification or similar event, the number of shares of New Ginkgo Class A common stock issuable on exercise of each warrant will be decreased in proportion to such decrease in outstanding share of New Ginkgo Class A common stock.

Whenever the number of shares of New Ginkgo Class A common stock purchasable upon the exercise of the warrants is adjusted, as described above, the warrant exercise price will be adjusted by multiplying the warrant exercise price immediately prior to such adjustment by a fraction (x) the numerator of which will be the number of shares of New Ginkgo Class A common stock purchasable upon the exercise of the warrants immediately prior to such adjustment, and (y) the denominator of which will be the number of shares of New Ginkgo Class A common stock so purchasable immediately thereafter.

In case of any reclassification or reorganization of the outstanding New Ginkgo Class A common stock (other than those described above or that solely affects the par value of such New Ginkgo Class A common stock), or in the case of any merger or consolidation of New Ginkgo with or into another corporation (other than a consolidation or merger in which New Ginkgo is the continuing corporation and that does not result in any reclassification or reorganization of the issued and outstanding New Ginkgo Class A common stock), or in the case of any sale or conveyance to another corporation or entity of the assets or other property of New Ginkgo as an entirety or substantially as an entirety in connection with which New Ginkgo is dissolved, the holders of the

 

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warrants will thereafter have the right to purchase and receive, upon the basis and upon the terms and conditions specified in the warrants and in lieu of the New Ginkgo Class A common stock immediately theretofore purchasable and receivable upon the exercise of the rights represented thereby, the kind and amount of shares of New Ginkgo Class A common stock or other securities or property (including cash) receivable upon such reclassification, reorganization, merger or consolidation, or upon a dissolution following any such sale or transfer, that the holder of the warrants would have received if such holder had exercised their warrants immediately prior to such event. If less than 70% of the consideration receivable by the holders of New Ginkgo Class A common stock in such a transaction is payable in the form of New Ginkgo Class A common stock in the successor entity that is listed for trading on a national securities exchange or is quoted in an established over-the-counter market, or is to be so listed for trading or quoted immediately following such event, and if the registered holder of the warrant properly exercises the warrant within thirty days following public disclosure of such transaction, the warrant exercise price will be reduced as specified in the warrant agreement based on the Black-Scholes Warrant Value (as defined in the warrant agreement) of the warrant. The purpose of such exercise price reduction is to provide additional value to holders of the warrants when an extraordinary transaction occurs during the exercise period of the warrants pursuant to which the holders of the warrants otherwise do not receive the full potential value of the warrants.

The warrants will be issued in registered form under a warrant agreement between Continental Stock Transfer & Trust Company, as warrant agent, and New Ginkgo. The warrant agreement provides that the terms of the warrants may be amended without the consent of any holder for the purpose of (i) curing any ambiguity or correct any defective provision, or mistake, including to conform the provisions of the warrant agreement to the description of the terms of the warrants and the warrant agreement set forth herein, (ii) adjusting the provisions relating to cash dividends on New Ginkgo Class A common stock as contemplated by and in accordance with the warrant agreement or (iii) adding or changing any provisions with respect to matters or questions arising under the warrant agreement as the parties to the warrant agreement may deem necessary or desirable and that the parties deem to not adversely affect the rights of the registered holders of the warrants, provided that the approval by the holders of at least 50% of the then outstanding public warrants is required to make any change that adversely affects the interests of the registered holders of public warrants, and, solely with respect to any amendment to the terms of the private placement warrants, a majority of the then outstanding private placement warrants. You should review a copy of the warrant agreement, which will be filed as an exhibit to the registration statement of which this prospectus is a part, for a complete description of the terms and conditions applicable to the warrants.

The warrants may be exercised upon surrender of the warrant certificate on or prior to the expiration date at the offices of the warrant agent, with the exercise form on the reverse side of the warrant certificate completed and executed as indicated, accompanied by full payment of the exercise price (or on a cashless basis, if applicable), by certified or official bank check payable to New Ginkgo, for the number of warrants being exercised. The warrant holders do not have the rights or privileges of holders of common stock and any voting rights until they exercise their warrants and receive New Ginkgo Class A common stock. After the issuance of New Ginkgo Class A common stock upon exercise of the warrants, each holder will be entitled to one vote for each share held of record on all matters to be voted on by stockholders.

Private Placement Warrants

The private placement warrants (including the New Ginkgo Class A common stock issuable upon exercise of the private placement warrants) will not be transferable, assignable or salable until thirty (30) days after the Business Combination (except in limited circumstances) and they will not be redeemable by New Ginkgo for cash so long as they are held by the Sponsor, members of the Sponsor or their permitted transferees.

The initial purchasers of the private placement warrants, or their permitted transferees, have the option to exercise the private placement warrants on a cashless basis. Except as described in this section, the private placement warrants have terms and provisions that are identical to those of the warrants sold in the Business Combination, including that they may be redeemed for shares of New Ginkgo Class A common stock. If the

 

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private placement warrants are held by holders other than the Sponsor or their permitted transferees, the private placement warrants will be redeemable by New Ginkgo and exercisable by the holders on the same basis as the warrants included in the units being sold in the Business Combination.

Exclusive Forum

The Proposed Bylaws provide that, unless New Ginkgo otherwise consents in writing, the Court of Chancery (the “Chancery Court”) of the State of Delaware (or, in the event that the Chancery Court does not have subject matter jurisdiction, another state or federal court located within the State of Delaware) will, to the fullest extent permitted by law, be the sole and exclusive forum for resolution of (a) any derivative action or proceeding brought on behalf of New Ginkgo, (b) any action asserting a claim of breach of a fiduciary duty owed by any current or former director, officer, employee, agent or stockholder of New Ginkgo to New Ginkgo or any of New Ginkgo’s stockholders, or any claim for aiding and abetting such an alleged breach, (c) any action governed by the “internal affairs doctrine” or arising pursuant to any provision of New Ginkgo’s certificate of incorporation or bylaws, or to interpret, apply, enforce or determine the validity of New Ginkgo’s certificate of incorporation or bylaws, or (d) any action asserting a claim against New Ginkgo or any current or former director, officer, employee, agent or stockholder of New Ginkgo (i) arising pursuant to any provision of the DGCL or (ii) as to which the DGCL confers jurisdiction on the Chancery Court. The foregoing will not apply, however, to any action, claim or proceeding as to which the Chancery Court (or, if applicable, another state or federal court located within the State of Delaware) determines that there is an indispensable party not subject to the jurisdiction of such court (and the indispensable party does not consent to the personal jurisdiction of the such court within ten (10) days following such determination).

Notwithstanding the foregoing, unless New Ginkgo otherwise consents in writing, the federal district courts of the United States will be the exclusive forum for the resolution of any action, claim or proceeding arising under the Securities Act of 1933, as amended.

Limitations on Liability and Indemnification of Officers and Directors

The DGCL authorizes corporations to limit or eliminate the personal liability of directors and stockholders of corporations for monetary damages for breaches of directors’ fiduciary duties, subject to certain exceptions. The Proposed Charter includes a provision that eliminates, to the fullest extent permitted by the DGCL (as currently in effect or as it may in the future be amended), the personal liability of New Ginkgo’s directors for damages for any breach of fiduciary duty as a director.

The Proposed Bylaws provide that, to the fullest extent permitted by the DGCL (as currently in effect or as it may in the future be amended), New Ginkgo must indemnify and hold harmless and advance expenses to any of its directors and officers who is involved in any action, suit or proceeding by reason of the fact that he or she is or was a director or officer of New Ginkgo or, while serving as a director or officer of New Ginkgo, is or was serving at the request of New Ginkgo as a director, officer, employee or agent of another corporation or of a partnership, joint venture, trust, enterprise or non-profit entity. New Ginkgo also is expressly authorized to carry directors’ and officers’ liability insurance providing indemnification for New Ginkgo’s directors, officers, and certain employees for some liabilities. New Ginkgo believes that these indemnification and advancement provisions and insurance are useful to attract and retain qualified directors and executive officers.

The limitation of liability, advancement and indemnification provisions in the Proposed Charter and the Proposed Bylaws may discourage stockholders from bringing lawsuits against New Ginkgo’s directors for breach of their fiduciary duty. These provisions also may have the effect of reducing the likelihood of derivative litigation against New Ginkgo’s directors and officers, even though such an action, if successful, might otherwise benefit New Ginkgo and its stockholders. In addition, your investment in New Ginkgo may be adversely affected to the extent that New Ginkgo pays the costs of settlement and damage awards against directors and officer pursuant to these indemnification provisions.

 

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There is currently no pending material litigation or proceeding involving any of New Ginkgo’s directors,

officers, or employees for which indemnification is sought.

Corporate Opportunities

The Proposed Charter provides for the renouncement by New Ginkgo of any interest or expectancy of New Ginkgo in, or being offered an opportunity to participate, in any matter, transaction, or interest that is presented to, or acquired, created, or developed by, or which otherwise comes into the possession of, any director of New Ginkgo who is not an employee of New Ginkgo or any of its subsidiaries, unless such matter, transaction, or interest is presented to, or acquired, created, or developed by, or otherwise comes into the possession of, that director first in that director’s capacity as a director of New Ginkgo.

Dissenters’ Rights of Appraisal and Payment

Under the DGCL, with certain exceptions, New Ginkgo’s stockholders will have appraisal rights in connection with a merger or consolidation of New Ginkgo. Pursuant to the DGCL, stockholders who properly demand and perfect appraisal rights in connection with such merger or consolidation will have the right to receive payment of the fair value of their shares as determined by the Delaware Court of Chancery.

Stockholders’ Derivative Actions

Under the DGCL, any of New Ginkgo’s stockholders may bring an action in New Ginkgo’s name to procure a judgment in New Ginkgo’s favor, also known as a derivative action, provided that the stockholder bringing the action is a holder of New Ginkgo’s shares at the time of the transaction to which the action relates or such stockholder’s stock thereafter devolved by operation of law.

Transfer Agent and Warrant Agent

Continental Stock Transfer & Trust Company will be the transfer agent for New Ginkgo Class A Common Stock and the warrant agent for New Ginkgo warrants.

Listing of New Ginkgo Class A Common Stock and New Ginkgo Warrants

Application will be made for the shares of New Ginkgo Class A common stock and the New Ginkgo warrants to be approved for listing on the NYSE under the symbols “DNA” and “DNA.WS,” respectively.

 

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SECURITIES ACT RESTRICTIONS ON RESALE OF COMMON STOCK

Rule 144

Pursuant to Rule 144 under the Securities Act (“Rule 144”), a person who has beneficially owned restricted Class A common stock or warrants of New Ginkgo for at least six months would be entitled to sell their securities provided that (i) such person is not deemed to have been an affiliate of New Ginkgo at the time of, or at any time during the three months preceding, a sale and (ii) New Ginkgo is subject to the Exchange Act periodic reporting requirements for at least three months before the sale and has filed all required reports under Section 13 or 15(d) of the Exchange Act during the 12 months (or such shorter period as it was required to file reports) preceding the sale.

Persons who have beneficially owned restricted New Ginkgo Class A common stock or warrants of New Ginkgo for at least six months but who are affiliates of New Ginkgo at the time of, or at any time during the three months preceding, a sale would be subject to additional restrictions, by which such person would be entitled to sell within any three-month period only a number of securities that does not exceed the greater of:

 

   

1% of the total number of shares of New Ginkgo Class A common stock then outstanding; or

 

   

the average weekly reported trading volume of New Ginkgo’s Class A common stock during the four calendar weeks preceding the filing of a notice on Form 144 with respect to the sale.

Sales by affiliates of New Ginkgo under Rule 144 are also limited by manner of sale provisions and notice requirements and by the availability of current public information about New Ginkgo.

Restrictions on the Use of Rule 144 by Shell Companies or Former Shell Companies

Rule 144 is not available for the resale of securities initially issued by shell companies (other than business-combination related shell companies) or issuers that have been at any time previously a shell company. However, Rule 144 also includes an important exception to this prohibition if the following conditions are met:

 

   

the issuer of the securities that was formerly a shell company has ceased to be a shell company;

 

   

the issuer of the securities is subject to the reporting requirements of Section 13 or 15(d) of the Exchange Act;

 

   

the issuer of the securities has filed all Exchange Act reports and material required to be filed, as applicable, during the preceding 12 months (or such shorter period that the issuer was required to file such reports and materials) other than Form 8-K reports; and

 

   

at least one year has elapsed from the time that the issuer filed current Form 10-type information with the SEC reflecting its status as an entity that is not a shell company.

As a result, the Sponsor will be able to sell its founder shares and private placement warrants, as applicable, pursuant to Rule 144 without registration one year after SRNG has completed its initial business combination.

Following the Closing, New Ginkgo will no longer be a shell company, and so, once the conditions listed above are satisfied, Rule 144 will become available for the resale of the above-noted restricted securities.

 

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COMPARISON OF STOCKHOLDER RIGHTS

General

SRNG is an exempted company incorporated under the Cayman Islands Companies Act. The Cayman Island Companies Act and the Current Charter (the “Cayman Constitutional Documents”) govern the rights of SRNG shareholders. As a result of the Business Combination, SRNG shareholders who receive shares of New Ginkgo Class A common stock or New Ginkgo Class B common stock will become New Ginkgo stockholders. New Ginkgo will be incorporated under the laws of the State of Delaware and the rights of New Ginkgo stockholders will be governed by the laws of the State of Delaware, including the DGCL, the Proposed Charter and the Proposed Bylaws (the “New Ginkgo Constitutional Documents”). Thus, following the Business Combination, the rights of SRNG shareholders who become New Ginkgo stockholders in the Business Combination will no longer be governed by the Cayman Islands Companies Act and the Cayman Constitutional Documents and instead will be governed by the DGCL and the New Ginkgo Constitutional Documents.

Comparison of Stockholders’ Rights

Set forth below is a summary comparison of material differences between the rights of SRNG shareholders under the Cayman Constitutional Documents (left column), and the rights of New Ginkgo’s stockholders under forms of the New Ginkgo Constitutional Documents (right column). The summary set forth below is not intended to be complete or to provide a comprehensive discussion of each company’s governing documents. This summary is qualified in its entirety by reference to the full text of the Current Charter a copy of which is attached to this proxy statement/prospectus as Annex G, the Proposed Charter, a copy of which is attached as Annex B, and the New Ginkgo bylaws, a copy of which is attached as Annex C. You should also review the Cayman Islands Companies Act and the DGCL to understand how these laws apply to SRNG and New Ginkgo, respectively.

 

SRNG

  

New Ginkgo

Authorized Share Capital

  

Under the Cayman Constitutional Documents, SRNG is currently authorized to issue 481,000,000 shares, consisting of (a) 480,000,000 ordinary shares, including 400,000,000 SRNG Class A ordinary shares, par value $0.0001 per share, and 80,000,000 SRNG Class B ordinary shares, par value $0.0001 per share, and (b) 1,000,000 preference shares, par value $0.0001 per share.

 

Under the Cayman Constitutional Documents, an increase in share capital occurs by ordinary resolution.

  

New Ginkgo will be authorized to issue 16,000,000,000 shares of capital stock, consisting of (i) 15,800,000,000 shares of common stock including 10,500,000,000 shares of New Ginkgo Class A common stock, par value $0.0001 per share, 4,500,000,000 shares of New Ginkgo Class B common stock, par value $0.0001 per share, and 800,000,000 shares of New Ginkgo Class C common stock, par value $0,0001 per share and (ii) 200,000,000 shares of preferred stock, par value $0.0001 per share.

 

Upon consummation of the Business Combination, we expect there will be approximately 1,226,255,905 shares of New Ginkgo Class A common stock and approximately 554,024,323 shares of New Ginkgo Class B common stock (in each case, assuming no redemptions) outstanding. Following consummation of the Business Combination, New Ginkgo is not expected to have any preferred stock outstanding.

 

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Rights of Preferred Stock   
The directors may allot, issue, grant options over or otherwise dispose of Shares (including fractions of a Share) with or without preferred, deferred or other rights or restrictions, whether in regard to dividends or other distributions, voting, return of capital or otherwise and to such persons, at such times and on such other terms as they think proper, and may also (subject to the Statute and the Articles) vary such rights, save that the Directors shall not allot, issue, grant options over or otherwise dispose of Shares (including fractions of a Share) to the extent that it may affect the ability of SRNG to carry out a Class B Share Conversion set out in the Articles.    The New Ginkgo Board may fix for any class or series of preferred stock such powers (which may include full, limited, or no voting powers), and such designations, preferences and relative, participating, optional or other special rights and such qualifications, limitations or restrictions thereof, as may be stated in the resolutions of the New Ginkgo Board providing for the issuance of such class or series.
Number and Qualification of Directors   
The Cayman Constitutional Documents provide that prior to the closing of a business combination the appointment of the SRNG Board is permitted by ordinary resolution of the holders of SRNG Class B ordinary shares.    Subject to any rights of holders of preferred with respect to the election of directors, between New Ginkgo and certain of its stockholders, the number of directors will be fixed from time to time solely by resolution adopted by the New Ginkgo Board, provided that, if at any time the number of directors that the holders of New Ginkgo Class B common stock are entitled to nominate and elect pursuant to the terms of the Proposed Charter is less than one-quarter of the total number of directors, then the number of directors the holders of New Ginkgo Class B common stock are entitled to nominate and elect will be automatically increased to the extent necessary so that the number of directors that the holders of New Ginkgo Class B common stock are entitled to nominate and elect is no less than one-quarter of the total number of directors of New Ginkgo.
Classification of the Board of Directors   
The Directors shall be divided into three (3) classes designated as Class I, Class II and Class III, respectively. Directors shall be assigned to each class in accordance with a resolution or resolutions adopted by the SRNG Board. At the first annual general meeting of SRNG, the term of office of the Class I Directors shall expire and Class I Directors shall be elected for a full term of three (3) years. At the second annual general meeting of SRNG, the term of office of the Class II Directors shall expire and Class II Directors shall be elected for a full term of three (3) years. At the third annual general meeting of SRNG, the term of office of the Class III Directors shall expire and Class III Directors shall be elected for a full term of three (3) years. At each succeeding annual general meeting of    Delaware law permits a corporation to classify its board of directors into as many as three classes with staggered terms of office. However, the Proposed Charter does not provide for a classified board of directors, and thus all directors will be elected each year for one-year terms.

 

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SRNG, directors shall be elected for a full term of three (3) years to succeed the directors of the class whose terms expire at such annual general meeting. Notwithstanding the foregoing provisions of the Current Charter, each director shall hold office until the expiration of his term, until his successor shall have been duly elected and qualified or until his earlier death, resignation or removal. No decrease in the number of directors constituting the board of directors shall shorten the term of any incumbent director.   
Election of Directors   

Prior to the closing of a Business Combination, SRNG may by Ordinary Resolution of the holders of the Class B Shares increase and decrease the number of Directors and appoint any person to be a director or may by Ordinary Resolution of the holders of the Class B Shares remove any director. For the avoidance of doubt, prior to the closing of a Business Combination holders of Class A Shares shall have no right to vote on the appointment or removal of any director, even if such director will be appointed in connection with the closing of a Business Combination.

 

Each director shall hold office until the expiration of his term, until his successor shall have been duly elected and qualified or until his earlier death, resignation or removal. No decrease in the number of directors constituting the board of directors shall shorten the term of any incumbent director.

  

Subject to the rights of holders of preferred stock with respect to the election of directors, the holders of New Ginkgo Class A common stock and New Ginkgo Class B common stock, voting as one class, shall elect directors; provided, that for so long (and only for so long) as the outstanding shares of New Ginkgo Class B common stock continue to represent at least 2% of all of the outstanding shares of New Ginkgo common stock, the holders of New Ginkgo Class B common stock, voting separately as a class, shall be entitled to nominate and elect a number of directors equal to one-quarter of the total number of directors New Ginkgo.

 

Each director of New Ginkgo shall hold office until the expiration of the term for which he or she is elected and or until his or her successor is duly elected and qualified, subject to such director’s earlier death, resignation, disqualification or removal.

 

At a duly called or convened stockholder meeting for the election of directors at which a quorum is present, a plurality of the votes cast will be sufficient for the election of a director.

Removal of Directors   
Prior to the closing of a Business Combination, SRNG may by Ordinary Resolution of the holders of the Class B Shares increase and decrease the number of Directors and appoint any person to be a director or may by Ordinary Resolution of the holders of the Class B Shares remove any director. Prior to the closing of a Business Combination holders of Class A Shares shall have no right to vote on the appointment or removal of any director, even if such director will be appointed in connection with the closing of a Business Combination. After the closing of a Business Combination, SRNG may by Ordinary Resolution appoint any person to be a director or may by Ordinary Resolution remove any director.   

Subject to the rights of the holders of any series of preferred stock with respect to the election (or removal) of directors, any director (other than the Class B Directors) may be removed from office, with or without cause, by the affirmative vote of the holders of shares representing a majority of the voting power of all the outstanding shares of capital stock of New Ginkgo entitled to vote thereon, together voting as a single class.

 

Any Class B Director may be removed from office (i) without cause, by the affirmative vote of the holders of shares representing a majority of the voting power of all of the outstanding shares of New

 

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   Ginkgo Class B common stock and (ii) with cause, by the affirmative vote of the holders of shares representing a majority of the voting power of all of the outstanding shares of capital stock of New Ginkgo entitled to vote thereon, voting together as a single class.
Voting   
Under the Cayman Constitutional Documents, the holders of SRNG Class A ordinary shares and SRNG Class B ordinary shares are entitled to one vote for each such share on each matter properly submitted to SRNG’s shareholders entitled to vote.   

Holders of New Ginkgo Class A common stock will be entitled to cast one vote per share of New Ginkgo Class A common stock, holders of New Ginkgo Class B common stock will be entitled to cast 10 votes per share of New Ginkgo Class B common stock, and holders of New Ginkgo Class C common stock generally will not be entitled to vote with respect to their shares of New Ginkgo Class C common stock, except as otherwise expressly provided in the Proposed Charter or required by applicable law. Except as otherwise required by applicable law or the Proposed Charter, holders of all classes of New Ginkgo common stock vote together as a single class.

 

Except as otherwise required by applicable law, holders of New Ginkgo Class A common stock and New Ginkgo Class B common stock will not be entitled to vote on any amendment to the Proposed Charter that relates solely to the terms of one or more outstanding series of New Ginkgo preferred stock if the holders of such affected series of New Ginkgo preferred stock are entitled, either separately or together as a class with the holders of one or more other such series, to vote thereon pursuant to the Proposed Charter or applicable law.

Cumulative Voting   
Cayman Islands law does not prohibit cumulative voting, and SRNG’s Current Charter does not provide for cumulative voting.    Delaware law allows for cumulative voting only if provided for in the Proposed Charter; however, the Proposed Charter does not authorize cumulative voting.
Vacancies on the Board of Directors   
Prior to the closing of a Business Combination, SRNG may by Ordinary Resolution of the holders of the Class B Shares increase and decrease the number of Directors and appoint any person to be a director or may by Ordinary Resolution of the holders of the Class B Shares remove any director. For the avoidance of doubt, prior to the closing of a Business Combination holders of Class A Shares shall have no right to vote on the appointment or removal of any director, even if such    Subject to the rights of the holders of any series of preferred stock with respect to the election of directors, vacancies occurring with respect to any director (other than the Class B Directors) for any reason and newly created directorships resulting from an increase in the authorized number of any director (other than the Class B Directors) may be filled only by vote of a majority of the remaining members of the New Ginkgo board of directors, although less than a quorum, or by a sole remaining director.

 

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director will be appointed in connection with the closing of a Business Combination.   

 

Vacancies occurring with respect to any Class B Director for any reason and newly created directorships resulting from an increase in the authorized number of Class B Directors may be filled only by vote of a majority of the remaining Class B Directors, although less than a quorum, or by a sole remaining Class B Director.

Special Meeting of the Board of Directors   
No similar provision.    Special meetings of the New Ginkgo Board may be called by the chairperson of the New Ginkgo Board, the chief executive officer of New Ginkgo, the president of New Ginkgo, the secretary of New Ginkgo or a majority of the total number of directors constituting the New Ginkgo Board.
Stockholder Action by Written Consent   

An Ordinary Resolution means a resolution passed by a simple majority of the Members as, being entitled to do so, vote in person or, where proxies are allowed, by proxy at a general meeting, and includes a unanimous written resolution.

 

A Special Resolution includes a unanimous written resolution.

   Subject to the rights of the holders of any series of preferred stock, any action required or permitted to be taken by the stockholders of New Ginkgo must be effected at a duly called annual or special meeting of the stockholders, and may not be taken or effected by a written consent of stockholders in lieu thereof, unless (i) such action has been recommended or approved pursuant to a resolution adopted by the affirmative vote of all of the directors of New Ginkgo then in office or (ii) the holders of New Ginkgo Class B common stock that collectively beneficially own shares representing a majority of the voting power of all of the outstanding shares of capital stock of the New Ginkgo.
Amendment to Certificate of Incorporation   
SRNG may by Special Resolution alter or add to the Memorandum and Articles of Association.   

Subject to any vote or assent of any stockholder or the holders of any class or series of capital stock of New Ginkgo required by any provision of the Proposed Charter or applicable law, the affirmative vote of the holders of shares representing at least two-thirds of the voting power of all of the outstanding shares of capital stock of the Corporation are required to adopt, amend, alter or repeal any provision of the Proposed Charter that is inconsistent with the provisions of the Proposed Charter relating to stockholder actions, the New Ginkgo Board, limitation of personal liability of New Ginkgo’s directions, corporate opportunities or amendment of the Proposed Charter.

 

Under the Proposed Charter, so long as any shares of New Ginkgo Class B common stock remain outstanding, the New Ginkgo shall not, without the

 

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prior affirmative vote of the holders of two-thirds of the outstanding shares of New Ginkgo Class B common stock, voting as a separate class, in addition to any other vote required by applicable law or the Proposed Charter, amend the Proposed Charter (1) in a manner that adversely alters, changes or is inconsistent with any of the voting, conversion, dividend or liquidation provisions applicable to the shares of New Ginkgo Class B common stock or other rights, powers or preferences of the holders of New Ginkgo Class B common stock, (2) to provide for any holder of New Ginkgo Class A common stock to have more than one vote per share or any rights to a separate class vote of the holders of shares of New Ginkgo common stock other than as provided by the Proposed Charter or required by the DGCL, (3) to reclassify any outstanding shares of New Ginkgo Class A common stock into shares having rights as to dividends or liquidation that are senior to the New Ginkgo Class B common stock or the right to have more than one vote per share or any right to a separate class vote of the holders of such shares other than as provided by the Proposed Charter or required by the DGCL, (4) to authorize, or issue any shares of, any class or series of capital stock of New Ginkgo (other than New Ginkgo Class B common stock) having the right to more than one vote per share or any right to a separate class vote of the holders of such shares other than as provided by the Proposed Charter or required by the DGCL or (5) in a manner that otherwise adversely impact the rights, powers, preferences or privileges of the shares of New Ginkgo Class B common stock in a manner that is disparate from the manner in which it affects the rights, powers, preferences or privileges of the shares of New Ginkgo Class A common stock.

 

Under the Proposed Charter, so long as any shares of New Ginkgo Class A common stock remain outstanding, the prior affirmative vote of the holders of at least two-thirds of the outstanding shares of New Ginkgo Class A common stock, voting as a separate class, in addition to any other vote required by applicable law or the Proposed Charter, is required to amend the Proposed Charter (1) in a manner that adversely alters or changes or is inconsistent with any of the voting, conversion, dividend or liquidation provisions applicable to the New Ginkgo Class A common stock or other powers, preferences, or special rights of the shares of New Ginkgo Class A common stock; (2) to provide for any holder of New

 

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   Ginkgo Class B common stock to have more than 10 votes per share or any rights to a separate class vote of the holders of shares of New Ginkgo Class B common stock other than as provided by the Proposed Charter or required by the DGCL, (3) to reclassify any outstanding shares of New Ginkgo Class B common stock into shares having rights as to dividends or liquidation that are senior to the New Ginkgo Class A common stock or the right to have more than 10 votes per share or any right to a separate class vote of the holders of such shares other than as provided by the Proposed Charter or required by the DGCL; or (4) in a manner that otherwise adversely impacts or affects the rights, powers or preferences of the New Ginkgo Class A common stock in a manner that is disparate from the manner in which it affects the rights, powers or preferences of the New Ginkgo Class B common stock.
Amendment of the Bylaws   
No similar provision.   

The New Ginkgo Board is expressly authorized to adopt, amend, alter or repeal any provision of the bylaws, provided that the changes are not in any manner inconsistent with the laws of the State of Delaware or New Ginkgo’s certificate of incorporation.

 

New Ginkgo stockholders may amend any provision of the bylaws; provided, that such action requires the affirmative vote of the holders of at least two-thirds of the voting power of all outstanding shares of capital stock of New Ginkgo; provided further, however, that if the Board recommends that stockholders approve such amendment or repeal at such meeting of stockholders, such amendment or repeal will only require the affirmative vote of a majority of the voting power of all of the outstanding shares of capital stock New Ginkgo.

Quorum   
No business shall be transacted at any general meeting unless a quorum is present. The holders of a majority of the Shares being individuals present in person or by proxy or if a corporation or other non-natural person by its duly authorized representative or proxy shall be a quorum.   

Board of Directors. A majority of the total number of directors of New Ginkgo shall constitute a quorum; provided, that at any time that a Class B Director is serving as a director of New Ginkgo, at least one Class B Director shall be required to be present at a meeting of the New Ginkgo Board to constitute a quorum.

 

Stockholders. The presence, in person or by proxy, at a stockholders meeting of the holders of shares of issued and outstanding capital stock of New Ginkgo representing a majority of the voting power of all

 

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   issued and outstanding shares of capital stock of New Ginkgo entitled to vote thereat constitutes a quorum; provided, however, that where a separate vote by a class or classes of capital stock is required, the holders of a majority in voting power of the shares of such class and entitled to vote on such matter, present in person or represented by proxy, shall constitute a quorum.
Interested Directors   
A director may hold any other office or place of profit under SRNG (other than the office of auditor) in conjunction with his office of director for such period and on such terms as to remuneration and otherwise as the directors may determine.    New Ginkgo renounces any interest or expectancy of New Ginkgo in, or in being offered an opportunity to participate in, any matter, transaction or interest that is presented to, or acquired, created or developed by any director of New Ginkgo who is not an employee or officer of New Ginkgo or any of its subsidiaries, unless such matter, transaction or interest is presented to, or acquired, created or developed by, or otherwise comes into the possession of such director solely in such director’s capacity as a director of New Ginkgo.
Special Stockholder Meetings   
No similar provision.    Special meetings of the New Ginkgo stockholders may be called at any time only by (1) the New Ginkgo Board, (2) the chairman of the New Ginkgo Board, (3) the chief executive officer or president of New Ginkgo or (4) at any time that the holders of New Ginkgo Class B Common Stock collectively beneficially own shares representing a majority of the voting power of all of the outstanding shares of capital stock of New Ginkgo, the holders of shares representing a majority of the voting power of all of the outstanding shares of capital stock of New Ginkgo.
Notice of Stockholder Meetings   
At least five clear days’ notice shall be given of any general meeting. Every notice shall specify the place, the day and the hour of the meeting and the general nature of the business to be conducted at the general meeting and shall be given in the manner mentioned in the Current Charter or in such other manner if any as may be prescribed by SRNG, provided that a general meeting of SRNG shall, whether or not the notice specified in the Current Charter has been given and whether or not the provisions of the Current Charter regarding general meetings have been complied with, be deemed to have been duly convened if it is so agreed: (a) in the case of an annual general meeting, by all of the Members entitled to attend and vote thereat; and (b) in   

Except as otherwise provided by law or the Proposed Constitutional Documents, notice of each meeting of the New Ginkgo stockholders shall be given not less than ten (10) nor more than sixty (60) days before the date of the meeting to each stockholder entitled to vote at such meeting as of the record date for determining the New Ginkgo stockholders entitled to notice of the meeting.

 

Without limiting the manner by which notice otherwise may be given to New Ginkgo stockholders, any notice to New Ginkgo stockholders given by New Ginkgo shall be effective if given by electronic mail in accordance with the DGCL. The notices of all

 

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the case of an extraordinary general meeting, by a majority in number of the Members having a right to attend and vote at the meeting, together holding not less than ninety-five per cent in par value of the Shares giving that right.    meetings shall state the place, if any, date and time of the meeting, the means of remote communications, if any, by which stockholders and proxyholders may be deemed to be present in person and vote at such meeting, and the record date for determining the stockholders entitled to vote at the meeting (if such date is different from the record date for stockholders entitled to notice of the meeting). The notice of a special meeting shall state, in addition, the purpose or purposes for which the meeting is called.
Stockholder Proposals (Other than Nomination of Persons for Election as Directors)

To be properly brought before an annual general meeting, business (other than nominations of directors) must be: (a) specified in the notice of the annual general meeting (or any supplement thereto) given to Members by or at the direction of the directors in accordance with the Articles; (b) otherwise properly brought before the annual general meeting by or at the direction of the directors; or (c) otherwise properly brought before the annual general meeting by a Member who: (i) is a Minimum Member at the time of giving of the notice provided for in the Current Charter and at the time of the annual general meeting; (ii) is entitled to vote at such annual general meeting; and (iii) complies with the notice procedures set forth in the Current Charter.

 

For any such business to be properly brought before any annual general meeting pursuant the Current Charter, the Member must have given timely notice thereof in writing, either by personal delivery or express or registered mail (postage prepaid), to SRNG not earlier than the close of business on the 120th day and not later than the close of business on the 90th day prior to the one-year anniversary of the date of the annual general meeting for the immediately preceding year. However, in the event that the date of the annual general meeting is more than 30 days before or after such anniversary date, in order to be timely, a Member’s notice must be received by SRNG not later than the later of: (x) the close of business 90 days prior to the date of such annual general meeting; and (y) if the first public announcement of the date of such advanced or delayed annual general meeting is less than 100 days prior to such date, 10 days following the date of the first public announcement of the annual general meeting date. In no event shall the public announcement of an adjournment or postponement of an annual general meeting, or such adjournment or postponement, commence a new time period or otherwise extend any time period for the giving of a Member’s notice as described herein.

  

No business may be conducted at an annual meeting of New Ginkgo stockholders, other than business that is either (i) specified in New Ginkgo notice of meeting delivered by or at the direction of the New Ginkgo Board, (ii) otherwise brought before the annual meeting by or at the direction of the New Ginkgo Board or the chairperson of the New Ginkgo Board or (iii) otherwise properly brought before the annual meeting by any stockholder of New Ginkgo who is entitled to vote at the meeting, who complies with the notice procedures set forth in the bylaws and who is a stockholder of record at the time such notice is delivered to the Secretary of New Ginkgo.

 

A New Ginkgo stockholder seeking to bring business before an annual meeting must (i) give timely notice thereof in proper written form to the Secretary of New Ginkgo and (ii) provide any updates or supplements to such notice at the times and in the forms required by the New Ginkgo bylaws. To be timely, a stockholder’s notice must be received at the principal executive offices of New Ginkgo not less than ninety (90) or more than one-hundred twenty (120) days prior to the one-year anniversary of the preceding year’s annual meeting; provided however if the date of the annual meeting is more than thirty (30) days before or more than sixty (60) days after such anniversary date, the notice must be delivered not later than the ninetieth (90th) day prior to such annual meeting or, if later, the tenth day following the day on which public disclosure of such meeting was first made. The adjournment or postponement of an annual meeting or public announcement thereof will not commence a new time period (or extend any time period) for the giving of a stockholder’s notice.

 

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Stockholder Nominations of Persons for Election as Directors
Nominations of persons for election as Directors may be made at an annual general meeting only by: (a) the Directors; or (b) is a Minimum Member at the time of giving of the notice provided for in the Current Charter and at the time of the annual general meeting; (ii) is entitled to vote for the appointments at such annual general meeting; and (iii) complies with the notice procedures set forth in the Current Charter (notwithstanding anything to the contrary the Current Charter shall be the exclusive means for a Member to make nominations of persons for election of directors at an annual general meeting). Any Member entitled to vote for the elections may nominate a person or persons for election as directors only if written notice of such Member’s intent to make such nomination is given in accordance with the procedures set forth in the Current Charter, either by personal delivery or express or registered mail (postage prepaid), to SRNG not earlier than the close of business on the 120th day and not later than the close of business on the 90th day prior to the one-year anniversary of the date of the annual general meeting for the immediately preceding year. However, in the event that the date of the annual general meeting is more than 30 days before or after such anniversary date, in order to be timely, a Member’s notice must be received by SRNG not later than the later of: (x) the close of business 90 days prior to the date of such annual general meeting; and (y) if the first public announcement of the date of such advanced or delayed annual general meeting is less than 100 days prior to such date, 10 days following the date of the first public announcement of the annual general meeting date. In no event shall the public announcement of an adjournment or postponement of an annual general meeting, or such adjournment or postponement, commence a new time period or otherwise extend any time period for the giving of a Member’s notice as described herein. Members may nominate a person or persons (as the case may be) for election to the directors only as provided in the Current Charter and only for such class(es) as are specified in the notice of annual general meeting as being up for election at such annual general meeting.    Nominations of persons for election to the New Ginkgo Board may be made by any stockholder of New Ginkgo who provides a timely notice, is a stockholder of record on the date of giving such notices and on the record date for the determination of stockholders entitled to vote at such a meeting, and is entitled to vote at such meeting and on such election. Timely notice requires that the notice must be received in writing by the secretary of New Ginkgo at New Ginkgo’s principal executive officers either (i) in the case of an election of directors at an annual meeting, not less than ninety (90) days nor more than one hundred twenty (120) days prior to the first anniversary of the preceding year’s annual meeting (in most cases) or (ii) in the case of an election of directors at a special meeting, not earlier than one hundred twentieth (120th) day prior to such special meeting and not later than the close of business on the later of (a) the ninetieth (90th) day prior to such special meeting and (b) the tenth (10th) day following the day on which public disclosure of the date of such special meeting for the election of directors is first made
Limitation of Liability of Directors and Officers   
No Indemnified Person shall be liable to SRNG for any loss or damage incurred by SRNG as a result (whether direct or indirect) of the carrying out of their functions unless that liability arises through the actual fraud, wilful neglect or wilful default of such Indemnified    The DGCL permits limiting or eliminating the monetary liability of a director to a corporation or its stockholders, except with regard to breaches of the duty of loyalty, intentional misconduct, unlawful

 

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Person. No person shall be found to have committed actual fraud, wilful neglect or wilful default under the Current Charter unless or until a court of competent jurisdiction shall have made a finding to that effect.   

repurchases or dividends, or improper personal benefit.

 

The Proposed Charter provides that no director will be personally liable, except to the extent an exemption from liability or limitation is not permitted under the DGCL.

Indemnification of Directors, Officers   
Every director and officer (which for the avoidance of doubt, shall not include auditors of SRNG), together with every former Director and former Officer (each an “Indemnified Person”) shall be indemnified out of the assets of SRNG against any liability, action, proceeding, claim, demand, costs, damages or expenses, including legal expenses, whatsoever which they or any of them may incur as a result of any act or failure to act in carrying out their functions other than such liability (if any) that they may incur by reason of their own actual fraud, wilful neglect or wilful default. No Indemnified Person shall be liable to SRNG for any loss or damage incurred by SRNG as a result (whether direct or indirect) of the carrying out of their functions unless that liability arises through the actual fraud, wilful neglect or wilful default of such Indemnified Person. No person shall be found to have committed actual fraud, wilful neglect or wilful default under the Current Charter unless or until a court of competent jurisdiction shall have made a finding to that effect.   

The DGCL generally permits a corporation to indemnify its directors and officers acting in good faith. Under the DGCL, the corporation through its stockholders, directors or independent legal counsel, will determine that the conduct of the person seeking indemnity conformed with the statutory provisions governing indemnity.

 

The Proposed Charter provides that New Ginkgo will indemnify each director and officer to the fullest extent permitted by applicable law.

Dividends   
Subject to the Cayman Law and the current Charter and except as otherwise provided by the rights attached to any Shares, the directors may resolve to pay dividends and other distributions on Shares in issue and authorize payment of the dividends or other distributions out of the funds of SRNG lawfully available therefor. A dividend shall be deemed to be an interim dividend unless the terms of the resolution pursuant to which the directors resolve to pay such dividend specifically state that such dividend shall be a final dividend. No dividend or other distribution shall be paid except out of the realized or unrealized profits of SRNG, out of the share premium account or as otherwise permitted by law.   

Unless further restricted in a corporation’s certificate of incorporation, the DGCL permits a corporation to declare and pay dividends out of either (i) surplus, or (ii) if no surplus exists, net profits for the fiscal year in which the dividend is declared and/or the preceding fiscal year (provided that the amount of capital of the corporation is not less than the aggregate amount of the capital represented by the issued and outstanding stock of all classes having a preference upon the distribution of assets). The DGCL defines surplus as the excess, at any time, of the net assets of a corporation over its stated capital. In addition, the DGCL provides that a corporation may redeem or repurchase its shares only when the capital of the corporation is not impaired and only if such redemption or repurchase would not cause any impairment of the capital of a corporation.

 

The Proposed Charter provides that, subject to the rights of any holders of preferred stock then outstanding, New Ginkgo common stock shall be

 

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SRNG

  

New Ginkgo

   treated equally, identically, and ratably, on a per share basis, with respect to any dividends that may be declared and paid from time to time by the New Ginkgo Board out of any assets of New Ginkgo legally available for dividends, unless different treatment of the shares of each such class is approved by the affirmative vote of the holders of a majority of the outstanding shares of New Ginkgo Class A common stock, by the affirmative vote of the holders of a majority of the outstanding shares of New Ginkgo Class B common stock and by the affirmative vote of the holders of a majority of the outstanding shares of New Ginkgo Class C common stock, each voting separately as a class; provided, however, that, in the event that a dividend is paid in the form of New Ginkgo common stock (or rights to acquire such stock), holders of New Ginkgo Class A common stock shall receive New Ginkgo Class A common stock (or rights to acquire such stock, as the case may be), holders of New Ginkgo Class B common stock shall receive New Ginkgo Class B common stock (or rights to acquire such stock, as the case may be) and holders of New Ginkgo Class C common stock shall receive New Ginkgo Class C common stock (or rights to acquire such stock, as the case may be).
Liquidation   

If SRNG shall be wound up, the liquidator shall apply the assets of SRNG in satisfaction of creditors’ claims in such manner and order as such liquidator thinks fit. Subject to the rights attaching to any Shares, in a winding up: (a) if the assets available for distribution amongst the Members shall be insufficient to repay the whole of SRNG’s issued share capital, such assets shall be distributed so that, as nearly as may be, the losses shall be borne by the Members in proportion to the par value of the Shares held by them; or (b) if the assets available for distribution amongst the Members shall be more than sufficient to repay the whole of SRNG’s issued share capital at the commencement of the winding up, the surplus shall be distributed amongst the Members in proportion to the par value of the Shares held by them at the commencement of the winding up subject to a deduction from those Shares in respect of which there are monies due, of all monies payable to SRNG for unpaid calls or otherwise.

 

If SRNG shall be wound up the liquidator may, subject to the rights attaching to any Shares and with the approval of a Special Resolution of SRNG and any other approval required by the Statute, divide amongst the

   Subject to applicable law and the preferential or other rights of any holders of preferred stock then outstanding, the Proposed Charter provides that in the event of the liquidation or winding up of New Ginkgo, whether voluntary or involuntary, holders of New Ginkgo common stock will be entitled to receive ratably all assets of New Ginkgo available for distribution to its stockholders unless disparate or different treatment of the shares of each such class with respect to distributions upon any liquidation, dissolution, distribution of assets, or winding up is approved by the affirmative vote of the holders of a majority of the outstanding shares of each class of New Ginkgo common stock, each voting separately as a class.

 

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SRNG

  

New Ginkgo

Members in kind the whole or any part of the assets of SRNG (whether such assets shall consist of property of the same kind or not) and may for that purpose value any assets and determine how the division shall be carried out as between the Members or different classes of Members. The liquidator may, with the like approval, vest the whole or any part of such assets in trustees upon such trusts for the benefit of the Members as the liquidator, with the like approval, shall think fit, but so that no Member shall be compelled to accept any asset upon which there is a liability.   
Supermajority Voting Provisions   
Subject to other provisions of the Current Charter, if at any time the share capital of SRNG is divided into different classes of Shares, all or any of the rights attached to any class (unless otherwise provided by the terms of issue of the Shares of that class) may, whether or not SRNG is being wound up, be varied without the consent of the holders of the issued Shares of that class where such variation is considered by the directors not to have a material adverse effect upon such rights; otherwise, any such variation shall be made only with the consent in writing of the holders of not less than two thirds of the issued Shares of that class (other than with respect to a waiver of the provisions of the Class B Share Conversion Article of the Current Charter, which as stated therein shall only require the consent in writing of the holders of a majority of the issued Shares of that class), or with the approval of a resolution passed by a majority of not less than two thirds of the votes cast at a separate meeting of the holders of the Shares of that class. For the avoidance of doubt, the directors reserve the right, notwithstanding that any such variation may not have a material adverse effect, to obtain consent from the holders of Shares of the relevant class. To any such meeting all the provisions of the Articles relating to general meetings shall apply mutatis mutandis, except that the necessary quorum shall be one person holding or representing by proxy at least one third of the issued Shares of the class and that any holder of Shares of the class present in person or by proxy may demand a poll   

In addition to any other vote required by applicable law, the affirmative vote of two-thirds of the voting power of the outstanding shares of New Ginkgo common stock will be required in order for the stockholders to amend the New Ginkgo bylaws; provided further, however, that if the New Ginkgo Board recommends that stockholders approve such amendment or repeal at such meeting of stockholders, such amendment or repeal shall only require the affirmative vote of a majority of the voting power of all of the outstanding shares of capital stock New Ginkgo.

 

In addition to any other vote required by applicable law, the affirmative vote of two-thirds of the voting power of the outstanding shares of New Ginkgo Class A common stock will be required in order for the stockholders of New Ginkgo to (1) amend the Proposed Charter in certain circumstances, or (2) to reclassify any outstanding shares of New Ginkgo Class B common stock to have more than 10 votes per share or any right to a separate class vote other than as provided by the Proposed Charter or the DGCL.

 

So long as any share of Class B common stock remains outstanding, in addition to any other vote required by applicable law, the affirmative vote of two-thirds of the voting power of the outstanding shares of New Ginkgo Class B common stock will be required in order for the stockholders of New Ginkgo to (1) amend the Proposed Charter in certain circumstances, or (2) to reclassify any outstanding shares of New Ginkgo Class A common stock to have more than one vote per share or any right to a separate class vote other than as provided by the Proposed Charter or the DGCL.

 

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SRNG

  

New Ginkgo

Anti-Takeover Provisions and Other Stockholder Protections
The Current Charter does not provide restrictions on takeovers of SCH by a related shareholder following a business combination.    The anti-takeover provisions and other stockholder protections included in the Proposed Charter include a prohibition on stockholder action by written consent (unless such action has been recommended by the New Ginkgo Board or the holders of New Ginkgo Class B common stock collectively beneficially own shares representing a majority of the voting power of all of the outstanding shares of capital stock of the Corporation) and blank check preferred stock.
Preemptive Rights
There are no preemptive rights relating to the SRNG ordinary shares.    There are no preemptive rights relating to the shares of New Ginkgo common stock.
Fiduciary Duties of Directors   

A director owes fiduciary duties to a company, including to exercise loyalty, honesty and good faith to SRNG as a whole.

 

In addition to fiduciary duties, directors of SRNG owe a duty of care, diligence and skill. Such duties are owed to SRNG but may be owed direct to creditors or shareholders in certain limited circumstances.

  

Under Delaware law, the standards of conduct for directors have developed through Delaware court case law. Generally, directors must exercise a duty of care and duty of loyalty and good faith to the company and its stockholders. Members of the board of directors or any committee designated by the board of directors are similarly entitled to rely in good faith upon the records of the corporation and upon such information, opinions, reports and statements presented to the corporation by corporate officers, employees, committees of the board of directors or other persons as to matters such member reasonably believes are within such other person’s professional or expert competence, provided that such other person has been selected with reasonable care by or on behalf of the corporation. Such appropriate reliance on records and other information protects directors from liability related to decisions made based on such records and other information.

 

The New Ginkgo Board may exercise all such authority and powers of New Ginkgo and do all such lawful acts and things as are not by statute or the New Ginkgo Constitutional Documents directed or required to be exercised or done solely by the stockholders.

Inspection of Books and Records   
The directors shall determine whether and to what extent and at what times and places and under what conditions or regulations the accounts and books of SRNG or any of them shall be open to the inspection of Members not being directors and no Member (not being a director) shall have any right of inspecting any account or book or document of SRNG except as conferred by    Under the DGCL, any stockholder or beneficial owner has the right, upon written demand under oath stating the proper purpose thereof, either in person or by attorney or other agent, to inspect and make copies and extracts from the corporation’s stock ledger, list of stockholders and its other books and

 

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SRNG

  

New Ginkgo

Statute or authorized by the directors or by SRNG in general meeting.    records for a proper purpose during the usual hours for business.
Choice of Forum   
No similar provision.   

The Proposed Bylaws generally designate the Court of Chancery of the State of Delaware as the sole and exclusive forum, to the fullest extent permitted by law, for resolution of (i) any derivative action or proceeding brought on behalf of New Ginkgo, (ii) any action asserting a claim of breach of a fiduciary duty owed by any current or former director, officer, employee, agent or stockholder of New Ginkgo, or any claim for aiding and abetting such an alleged breach, (iii) any action governed by the “internal affairs doctrine” or arising pursuant to any provision of the Proposed Constitutional Documents, or to interpret, apply, enforce or determine the validity of either of the Proposed Constitutional Documents, and (iv) any action asserting a claim against New Ginkgo or any current or former director, officer, employee, agent or stockholder of New Ginkgo arising pursuant to any provision of the DGCL or as to which the DGCL confers jurisdiction on the Court of Chancery. In addition, notwithstanding anything to the contrary in the foregoing, the federal district courts of the United States are the exclusive forum for the resolution of any action, suit or proceeding asserting a cause of action under the Securities Act. The exclusive forum provisions set forth in the Proposed Bylaws do not apply to suits brought to enforce any liability or duty created by the Exchange Act.

 

To the fullest extent permitted by law, any stockholder of New Ginkgo that brings an action within the scope of the exclusive forum provisions described above in a court other than the applicable courts described above will be deemed to have consented to the personal jurisdiction of the applicable courts described above in connection with any action brought to enforce such exclusive forum provisions and to having service of process made upon such stockholder’s counsel.

 

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BENEFICIAL OWNERSHIP OF SECURITIES

The following table sets forth information known to SRNG regarding (i) the beneficial ownership of SRNG ordinary shares as of May 7, 2021 (pre-Business Combination) and (ii) the expected beneficial ownership following the consummation of the Business Combination (post-Business Combination) of New Ginkgo common stock (assuming a “no redemption” scenario and a “maximum redemption” scenario as described below) by:

 

   

each of SRNG’s current executive officers and directors, and all executive officers and directors of SRNG as a group, in each case pre-Business Combination;

 

   

each person who will become a named executive officer or director of New Ginkgo, and all executive officers and directors of New Ginkgo as a group, in each case post-Business Combination;

 

   

each person who is known to be the beneficial owner of more than 5% of a class of SRNG ordinary shares pre-Business Combination; and

 

   

each person who is expected to be the beneficial owner of more than 5% of a class of New Ginkgo common stock post-Business Combination.

Beneficial ownership is determined according to the rules of the SEC, which generally provide that a person has beneficial ownership of a security if he, she or it possesses sole or shared voting or investment power over that security, including options and warrants that are currently exercisable or exercisable within 60 days. Unless otherwise indicated, SRNG believes that all persons named in the table below have sole voting and investment power with respect to the voting securities beneficially owned by them.

The beneficial ownership of SRNG ordinary shares pre-Business Combination is based on 215,625,000 SRNG ordinary shares (including 172,500,000 public shares and 43,125,000 founder shares) issued and outstanding as of May 7, 2021.

The expected beneficial ownership of New Ginkgo common stock post-Business Combination assumes two scenarios: (i) no public shares are redeemed and, (ii) the maximum number of 147,462,181 public shares are redeemed. Based on the foregoing assumptions, and including the 77,500,000 New Ginkgo shares of Class A common stock issued in connection with the Private Placement, we have estimated that there would be 1,226,255,905 shares of New Ginkgo Class A common stock and 554,024,323 shares of New Ginkgo Class B common stock issued and outstanding in the “no redemption” scenario and 1,078,793,724 shares of New Ginkgo Class A common stock and 554,024,323 shares of New Ginkgo Class A common stock issued and outstanding in the “maximum redemption” scenario. If the actual facts are different from the foregoing assumptions, ownership figures in the combined company and the columns under Post-Business Combination in the table that follows will be different.

 

    Before the Business Combination     After the Business Combination
          Assuming No Redemption   Assuming Maximum Redemption
    SRNG
Class A
ordinary
shares
    SRNG Class B
ordinary shares
   

% of
Total
Voting
Power**

    New
Ginkgo Class A
common stock
    New
Ginkgo Class B
common stock
   

% of
Total
Voting
Power**

  New
Ginkgo Class A
common stock
    New
Ginkgo Class B
common stock
   

% of
Total
Voting
Power**

Name and
Address of

Beneficial
Owner

  Shares     %     Shares     %     Shares     %     Shares     %     Shares     %     Shares     %  

Directors and Executive Officers of SRNG

Eagle Equity Partners II, LLC(1)(2)

    —         —         43,125,000       100       20.0       30,232,500       2.5       —         —       *     30,232,500       2.8       —         —       *

 

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Table of Contents
    Before the Business Combination     After the Business Combination  
          Assuming No Redemption     Assuming Maximum Redemption  
    SRNG
Class A
ordinary
shares
    SRNG Class B
ordinary shares
   

% of
Total
Voting
Power**

    New
Ginkgo Class A
common stock
    New
Ginkgo Class B
common stock
   

% of
Total
Voting
Power**

    New
Ginkgo Class A
common stock
    New
Ginkgo Class B
common stock
   

% of
Total
Voting
Power**

 

Name and
Address of
Beneficial Owner

  Shares     %     Shares     %     Shares     %     Shares     %     Shares     %     Shares     %  

Harry E. Sloan(1)

    —         —         —         —         —         —         —         —         —         —         —           —         —         —    

Eli Baker(1)

    —         —         —         —         —         —         —         —         —         —         —           —         —         —    

Scott M. Delman(1)

    —         —         —         —         —         —         —         —         —         —         —           —         —         —    

Joshua Kazam(1)

    —         —         —         —         —         —         —         —         —         —         —           —         —         —    

Alan Mnuchin(1)

    —         —         —         —         —         —         —         —         —         —         —           —         —         —    

Laurence E. Paul(1)

    —         —         —         —         —         —         —         —         —         —         —           —         —         —    

All Directors and Executive Officers of SRNG as a Group (7 Individuals)

    —         —         43,125,000       100       20.0       30,232,500       2.5       —         —         *       30,232,500       2.8       —         —         *  

Directors and Executive Officers of New Ginkgo After Consummation of the Business Combination

 

Jason Kelly(3)

    —         —         —         —         —         —         —         71,873,672       13.0       10.6       —         —         71,873,672       13.0       10.9  

Reshma Shetty(4)

    —         —         —         —         —         —         —         71,873,672       13.0       10.6       —         —         71,873,672       13.0       10.9  

Mark Dymtruk

    —         —         —         —         —         —         —         —         —         —         —         —         —         —         —    

Arie Belldegrun(1)

    —         —         —         —         —         —         —         —         —         —         —         —         —         —         —    

Marijn Dekkers(5)

    —         —         —         —         —         5,158,798       *       —         —         *       5,158,798       *       —         —         *  

Christian Henry

    —         —         —         —         —         —         —         —         —         —         —         —         —         —         —    

Shyam Sankar

    —         —         —         —         —         —         —         —         —         —         —         —         —         —         —    

Harry E. Sloan

    —         —         —         —         —         —         —         —         —         —         —         —         —         —         —    

All Directors and Executive Officers of New Ginkgo as a Group (8 Individuals)

    —         —         —         —         —         5,158,798       *       143,747,343       25.9       21.3       5,158,798       *       143,747,343       25.9       21.8  

5% Beneficial Owners of New Ginkgo

                             

Entities affiliated with Anchorage Capital Group(6)

    —         —         —         —         —         66,872,108       5.5       —         —         1.0       66,872,108       6.2       —         —         1.0  

Bartholomew Canton(7)

    —         —         —         —         —         —         —         71,873,672       13.0       10.6       —         —         71,873,672       13.0       10.9  

Austin Che(8)

    —         —         —         —         —         —         —         71,873,672       13.0       10.6       —         —         71,873,672       13.0       10.9  

Entities affiliated with Baillie Gifford & Co.(9)

    —         —         —         —         —         80,981,146       .6.6       —         —         1.2       80,981,146       7.5       —         —         1.2  

Cascade Investment, L.L.C. (10)

    —         —         —         —         —         135,857,867       11.1       —         —         2.0      
135,857,867
 
    12.6       —         —         2.1  

 

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    Before the Business Combination     After the Business Combination  
          Assuming No Redemption     Assuming Maximum Redemption  
    SRNG Class A
ordinary shares
    SRNG
Class B
ordinary
shares
   

% of
Total
Voting
Power**

    New
Ginkgo Class A
common stock
    New
Ginkgo Class B
common stock
   

% of
Total
Voting
Power**

    New
Ginkgo Class A
common stock
    New
Ginkgo Class B
common stock
   

% of
Total
Voting
Power**

 

Name and Address
of
Beneficial Owner

  Shares     %     Shares     %     Shares     %     Shares     %     Shares     %     Shares     %  

Eagle Equity Partners II, LLC(2)

    —         —         —         —         —         30,232,500       2.5       —         —         *       30,232,500       2.8       —         —         *  

General Atlantic (GK), L.P.(11)

    —         —         —         —         —         102,559,867       8.4       —         —         1.5       102,559,867       9.5       —         —         1.5  

Thomas Knight(12)

    —         —         —         —         —         —         —         72,545,682       13.1       10.7       —         —         72,545,682       13.1       11.0  

Senator Global Opportunity Master Fund LP(13)

    750,000       *       —         —         —         71,690,253       5.8       —         —         1.1       71,690,253       6.6       —         —         1.1  

Viking Global Opportunities Illiquid Investments Sub-Master LP(14)

    —         —         —         —         —         302,811,356       24.7       —         —         4.5       302,811,356       28.1       —         —         4.6  

 

*

Less than one percent.

**

Percentage of total voting power before the Business Combination represents voting power with respect to all shares of SRNG Class A ordinary shares and SRNG Class B ordinary shares, as a single class. Before the Business Combination, each share of SRNG Class A ordinary shares and SRNG Class B ordinary shares will be entitled to one vote per share. Percentage of total voting power after the Business Combination represents voting power with respect to all shares of New Ginkgo Class A common stock and New Ginkgo Class B common stock, as a single class. After the Business Combination, each share of New Ginkgo Class B common stock will be entitled to 10 votes per share and each share of New Ginkgo Class A common stock will be entitled to one vote per share. For more information about the voting rights of New Ginkgo common stock after the Business Combination, see “Description of New Ginkgo Securities

(1)

The business address of each of these shareholders is 955 Fifth Avenue, New York, NY, 10075.

(2)

Eagle Equity Partners III, LLC is the record holder of the shares reported herein. There are three managing members of Eagle Equity Partners III, LLC. Each managing member has one vote, and the approval of a majority is required to approve an action. Under the so-called “rule of three,” if voting and dispositive decisions regarding an entity’s securities are made by three or more individuals, and voting or dispositive decisions require the approval of a majority of those individuals, then none of the individuals is deemed a beneficial owner of the entity’s securities. Based on the foregoing, no individual managing member of Eagle Equity Partners III, LLC exercises voting or dispositive control over any of the securities held by the entity, even those in which he holds a pecuniary interest. Accordingly, none of them will be deemed to have or share beneficial ownership of such shares. Pre-Business Combination amounts consist entirely of founder shares, which will automatically convert into shares of New Ginkgo Class A common stock in connection with the Closing. Post-Business Combination amounts consist of founder shares, except Earnout Shares.

(3)

Consists of (a) 61,406,741 shares of New Ginkgo Class B common stock held by Dr. Kelly and (b) 10,466,931 shares of New Ginkgo Class B common stock held by The Kelly 2016 Grantor Retained Annuity Trust, for which Dr. Kelly serves as trustee.

(4)

Consists of shares of New Ginkgo Class B common stock held by The Reshma Padmini Shetty Revocable Living Trust – 2014, over which Dr. Shetty has sole voting and dispositive power.

(5)

Consists of shares of New Ginkgo Class A common stock held by Novalis LifeSciences Investments I, L.P. (“Novalis Lifesciences”). Mr. Dekkers, the Manager of the general partner of Novalis LifeSciences, has sole voting and dispositive power over the shares held by Novalis LifeSciences and, as a result, may be deemed to share beneficial ownership of the shares held by Novalis LifeSciences. The address for this stockholder is 1 Liberty Lane, Suite 100, Hampton, NH 03842.

(6)

Consists of (a) 33,436,054 shares of New Ginkgo Class A common stock held by Anchorage Illiquid Opportunities Master VI (A), L.P. and (b) 33,436,054 shares of New Ginkgo Class A common stock held by Anchorage Illiquid Opportunities Offshore Master V, L.P. Anchorage Advisors Management, L.L.C. is the sole managing member of Anchorage Capital Group, L.L.C. (“Anchorage”), which in turn is the investment manager of AIOM VI and AIOM V. Mr. Kevin Ulrich is the Chief Executive Officer of Anchorage and the senior managing member of Anchorage Advisors Management, L.L.C. As such, each of the foregoing persons may be deemed to have voting and dispositive power over the shares held by AIOM VI and AIOM V. Each of the foregoing persons disclaims beneficial ownership of the shares held by AIOM VI and AIOM V, except of any pecuniary interests therein. The address for these stockholders is 610 Broadway, 6th Floor, New York, NY 10012.

 

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Table of Contents
(7)

Consists of shares of New Ginkgo Class B common stock held by The Bartholomew Canton Revocable Living Trust – 2014, over which Dr. Canton has sole voting and dispositive power.

(8)

Consists of shares of New Ginkgo Class B common stock held by Austin Che Revocable Trust, over which Dr. Che has sole voting and dispositive power.

(9)

Consists of (a) 2,336,193 shares of New Ginkgo Class A common stock held by Baillie Gifford US Growth Trust PLC (“USGrowth”) and (b) 78,644,95 shares of New Ginkgo Class A common stock held by Scottish Mortgage Investment Trust PLC. (“SMIT”) As agent for each of USGrowth and SMIT, Baillie Gifford & Co. may be deemed to share the power to direct the disposition and vote of, and therefore to own the shares held by USGrowth and SMIT. Baillie Gifford & Co. disclaims beneficial ownership of all shares held by USGrowth and SMIT. Each of USGrowth and SMIT are publicly traded companies. The address for these stockholders is c/o Baillie Gifford & Co, 1 Greenside Row, Edinburgh EH 1 3 AN, United Kingdom.

(10)

Consists of shares of New Ginkgo Class A common stock. All shares of New Ginkgo Class A common stock to be held by Cascade Investment, L.L.C. following the Closing may be deemed to be beneficially owned by William H. Gates III as the sole member of Cascade, L.L.C. The address for this stockholder is 2365 Carillon Point, Kirkland, WA 98033.

(11)

Consists of shares of New Ginkgo Class A common stock. The limited partners that share beneficial ownership of the shares held by General Atlantic (GK), L.P. (“GA GK”) are the following General Atlantic investment funds (the “GA Funds”): General Atlantic Partners 100, L.P. (“GAP 100”), General Atlantic Partners (Bermuda) EU, L.P. (“GAP Bermuda EU”), GAP Coinvestments III, LLC (“GAPCO III”), GAP Coinvestments IV, LLC (“GAPCO IV”), GAP Coinvestments V, LLC (“GAPCO V”) and GAP Coinvestments CDA, L.P. (“GAPCO CDA”). The general partner of General Atlantic (GK), L.P. is General Atlantic (SPV) GP, LLC (“GA SPV”). The general partner of GAP Bermuda EU is General Atlantic GenPar (Bermuda), L.P. (“GenPar Bermuda”). GAP (Bermuda) Limited is the general partner of GenPar Bermuda. The general partner of GAP 100 is General Atlantic GenPar, L.P. (“GA GenPar”) and the general partner of GA GenPar is General Atlantic LLC (“GA LLC”). GA LLC is the managing member of GAPCO III, GAPCO IV and GAPCO V, the general partner of GAPCO CDA and is the sole member of GA SPV. There are nine members of the management committee of GA LLC and GAP (Bermuda) Limited (the “GA Management Committee”). GA GK, GA LLC, GAP (Bermuda) Limited, GA GenPar, GenPar Bermuda, GA SPV, GAP 100, GAPCO III, GACO IV, GAPCO V and GAPCO CDA (collectively, the “GA Group”) are a “group” within the meaning of Rule 13d-5 of the Securities Exchange Act of 1934, as amended. Each of the members of the GA Management Committee disclaims ownership of the shares except to the extent that he has a pecuniary interest therein. The address for this stockholder is c/o General Atlantic Service Company, L.P., 55 East 52nd Street, 33rd Floor, New York, NY 10055.

(12)

Consists of (a) 8,768,999 shares of New Ginkgo Class B common stock held by Mr. Knight; (b) 4,905,899 shares of New Ginkgo Class B common stock held by The Frances Y. Knight Family Trust dated December 16, 2020, of which Peter P. Brown and Francis Y. Knight are trustees and have shared voting and dispositive power; (c) 6,243,050 shares of New Ginkgo Class B common stock held The Knight Family Trust dated August 20, 2019, of which Peter P. Brown and Francis Y. Knight are trustees and have shared voting and dispositive power; (d) 8,025,560 shares of New Ginkgo Class B common stock held The Thomas F. Knight Jr. Grantor Retained Annuity Trust (2) dated December 16, 2020, of which Peter P. Brown and Mr. Knight are trustees and have shared voting and dispositive power; and (e) 44,602,174 shares of New Ginkgo Class B common stock held The Thomas F. Knight Jr. Grantor Retained Annuity Trust, of which Peter P. Brown and Mr. Knight are trustees and have shared voting and dispositive power.

(13)

Consists of shares of New Ginkgo Class A common stock. The address for this stockholder is 510 Madison Avenue, 28th Floor, New York, NY 10022. Senator Investment Group LP (“Senator”), is investment manager of the stockholder, Senator Global Opportunity Master Fund LP, and may be deemed to have voting and dispositive power with respect to the shares. The general partner of Senator is Senator Management LLC (the “Senator GP”). Douglas Silverman controls Senator GP, and, accordingly, may be deemed to have voting and dispositive power with respect to the shares held by this stockholder. Mr. Silverman disclaims beneficial ownership of the shares held by the stockholder.

(14)

Consists of shares of New Ginkgo Class A common stock. Viking Global Opportunities Illiquid Investments Sub-Master LP (the “Opportunities Fund”) has the authority to dispose of and vote the New Ginkgo Class A common stock that will be directly owned by it, which power may be exercised by its general partner, Viking Global Opportunities Portfolio GP LLC (“Opportunities GP”), and by Viking Global Investors LP (“VGI”), which provides managerial services to Opportunities Fund. O. Andreas Halvorsen, David C. Ott and Rose Shabet, as Executive Committee members of Viking Global Partners LLC (the general partner of VGI) and Viking Global Opportunities GP LLC, the sole member of Opportunities GP, have shared authority to direct the voting and disposition of investments beneficially owned by VGI, Opportunities GP and the Opportunities Fund. The address for each of the entities is c/o Viking Global Investors LP, is 55 Railroad Avenue, Greenwich, CT 06830.

 

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NEW GINKGO MANAGEMENT AFTER THE BUSINESS COMBINATION

Board of Directors and Management

The following is a list of the persons who are anticipated to be New Ginkgo’s directors and executive officers following the Business Combination and their ages and anticipated positions following the Business Combination.

 

Name

       Age         

Position

Jason Kelly

     40      Chief Executive Officer, Founder and Director Nominee

Reshma Shetty

     40      President, Chief Operating Officer, Founder and Director Nominee

Mark Dmytruk

     50      Chief Financial Officer

Arie Belldegrun

     71      Director Nominee

Marijn Dekkers

     63      Director Nominee

Christian Henry

     53      Director Nominee

Shyam Sankar

     39      Director Nominee

Harry E. Sloan

     71      Director Nominee

Jason Kelly, one of our founders, has served as a member of our board of directors and as the Chief Executive Officer since Ginkgo’s founding in 2008. Dr. Kelly has served as a director of CM Life Sciences II Inc. (Nasdaq: CMII), a special purpose acquisition company with a focus on the life sciences sector, since its initial public offering in February 2021. Dr. Kelly has a Ph.D. in Biological Engineering and a B.S. in Chemical Engineering and Biology from the Massachusetts Institute of Technology. We believe that Dr. Kelly is qualified to serve on our board of directors as a Founder and due to his knowledge of our company and our business.

Reshma Shetty, one of our founders, has served as a member of our board of directors and as President and Chief Operating Officer since Ginkgo’s founding in 2008. Dr. Shetty currently serves on the Bio Advisory Group at the non-profit Nuclear Threat Initiative. Dr. Shetty has a Ph.D. in Biological Engineering from the Massachusetts Institute of Technology and a B.S. in Computer Science from the University of Utah. We believe that Dr. Shetty is qualified to serve on our board of directors as a Founder and due to her knowledge of our company and our business.

Mark Dmytruk has been the Chief Financial Officer of Ginkgo since November 2020. From 2017 to 2020, Mr. Dmytruk served as Executive Vice President, Corporate Strategy and Development, for Syneos Health, a global Contract Research Organization and Contract Commercial Organization serving the biopharmaceutical industry. Syneos Health was formed through the merger of inVentiv Health and INC Research in 2017, and prior to the merger Mr. Dmytruk served at inVentiv Health as Chief of Staff from 2014 to 2017 and President, Patient Outcomes Division, from 2011 to 2014. Prior to inVentiv Health, Mr. Dmytruk served in a variety of roles at Thermo Fisher Scientific (and its predecessor, Fisher Scientific) from 2001 to 2011. As Vice President of Corporate Development, Mr. Dmytruk led the company’s M&A function, contributing to its industry-changing strategy and transformational growth. He also served as Vice President of Finance for the Athena Diagnostics business unit of Thermo Fisher Scientific prior to its sale to Quest Diagnostics. Mr. Dmytruk began his career at Ernst & Young in Canada. Mr. Dmytruk has an M.B.A. from the Sloan School of Management at the Massachusetts Institute of Technology and a Bachelor of Commerce from the University of Alberta.

Arie Belldegrun is expected to become a member of Ginkgo’s board of directors following the Business Combination. Dr. Belldegrun is a leader in the field of cell and gene therapy. Dr. Belldegrun is the Executive Chairman and Co-Founder of Allogene Therapeutics, a clinical stage biotechnology company focused on pioneering the development of allogeneic chimeric antigen receptor T cell (AlloCAR T) therapies for cancer. He also founded Kite Pharma, a biopharmaceutical company engaged in the development of innovative cancer immunotherapies, where he served as Chairman, President and Chief Executive Officer until the acquisition of

 

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Kite by Gilead Sciences in October 2017. Dr. Belldegrun is the Chairman of Bellco Capital. He also serves as Chairman of Two River Group, UroGen Pharma and Kronos Bio and as Co-Chairman of Breakthrough Properties. He serves as Co-Founder and Director of IconOVir Bio, Inc and is also co-Founder and Senior Managing Director of Vida Ventures, a life science venture group with offices in Boston and Los Angeles. Dr. Belldegrun is the director of the UCLA Institute of Urologic Oncology at the David Geffen School of Medicine at UCLA, where he also is a Research Professor, holding the Roy and Carol Doumani Chair in Urologic Oncology. Prior to joining UCLA, Dr. Belldegrun was at the National Cancer Institute/National Institute of Health as a research fellow in surgical oncology and immunology. Dr. Belldegrun received his M.D. from the Hebrew University Hadassah Medical School in Israel, after which he completed his post-graduate studies in Immunology at the Weizmann Institute of Science and his residency in urologic surgery at Harvard Medical School. Dr. Belldegrun is certified by the American Board of Urology and is a Fellow of the American College of Surgeons and the American Association of Genitourinary Surgeons. Dr. Belldegrun has authored several books on oncology and more than 500 scientific and medical papers related to urological cancer, immunotherapy, gene therapy and cancer vaccines. We believe that Dr. Belldegrun is qualified to serve on our board of directors due to his extensive knowledge as a leader in the field of cell and gene therapy.

Marijn Dekkers has served as Chairman of Ginkgo’s board of directors since April 2019. Dr. Dekkers is the Founder and Chairman of Novalis LifeSciences LLC, an investment and advisory firm for the Life Science industry that he founded in 2017. From 2010 to 2016, Dr. Dekkers served as Chief Executive Officer of Bayer AG. Prior to his time at Bayer, from 2002 to 2009, he served as Chief Executive Officer of Thermo Fisher Scientific. Dr. Dekkers serves as a director on several companies in the life sciences industry, which include serving as Chairman at AGBiome and a member of the board of directors at Vizgen, Quanterix, Cerevel Therapeutics, Enko, BioQ Pharma, Georgetown University and the Foundation for the National Institutes of Health. Dr. Dekkers began his career in 1985 as a research scientist at General Electric’s Corporate R&D Center. Dr. Dekkers received his PhD and M.S. in chemical engineering from the University of Eindhoven and his B.S in chemistry from the Radboud University. We believe that Dr. Dekkers is qualified to serve on our board of directors due to his extensive knowledge of the life sciences industry, his familiarity with our company and his prior director service.

Christian Henry has served as a member of our board of directors since November 2016. Mr. Henry has served as President and Chief Executive Officer of Pacific Biosciences of California, Inc., a leading sequencing company, since September 2020. From 2005 to January 2017, Mr. Henry was a member of the executive team of Illumina, Inc., a global leader in sequencing. During this tenure at Illumina, he served in a number of roles, including Executive Vice President & Chief Commercial Officer, Senior Vice President of Genomic Solutions, Senior Vice President and General Manager of Life Sciences and Senior Vice President and Chief Financial Officer. Prior to joining Illumina in 2005, Mr. Henry served as the Chief Financial Officer of Tickets.com, Inc. from 2003 to 2005. From 1999 to 2003, Mr. Henry served as Vice President, Finance and Corporate Controller of Affymetrix, Inc. (acquired by Thermo Fisher Scientific in 2016). In 1997, Mr. Henry joined Nektar Therapeutics (formerly Inhale Therapeutic Systems, Inc.) as Corporate Controller, and later as its Chief Accounting Officer from 1997 to 1999. In 1996, Mr. Henry served as General Accounting Manager of Sugen, Inc. Mr. Henry began his career in 1992 at Ernst & Young LLP, where he was a Senior Accountant through 1996. Mr. Henry currently serves as a director and Chairman of the board of WAVE Life Sciences Ltd., and as a director of CM Life Sciences Holdings III LLC. Mr. Henry previously served as Chairman of the board of Pacific Biosciences from August 2018 to September 2020. Mr. Henry holds a B.A. in biochemistry and cell biology from the University of California, San Diego and an M.B.A., with a concentration in finance, from the University of California, Irvine. We believe that Mr. Henry is qualified to serve on our board of directors due to his over 20 years of experience in growing companies in the life sciences industry.

Shyam Sankar has served as a member of our board of directors since December 2015. Mr. Sankar is the Chief Operating Officer and Executive Vice President at Palantir Technologies Inc., where he has worked in various positions since 2006. Prior to his time at Palantir, Mr. Sankar served as the Vice President of Network Management and Director of Business Development for Xoom Corporation. Mr. Sankar has a deep operational

 

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background overseeing the development of complex technology from near inception to massive scale. Mr. Sankar received his M.S. in management science and engineering from Stanford University and his B.S. in electrical and computer engineering from Cornell University. We believe that Mr. Sankar is qualified to serve on our board of directors due to his business acumen, leadership experience, and operational background, having overseen the development and expansion of a software company from its near inception through its public listing.

Harry E. Sloan is expected to become a member of Ginkgo’s board of directors following the Business Combination. Mr. Sloan is the Chairman and Chief Executive Officer of Eagle Equity Partners II, LLC and has served as Chief Executive Officer and Chairman of Soaring Eagle Acquisition Company, a special purpose acquisition company that is one of the sponsors of this Business Combination, since October 2020. Most recently Mr. Sloan served as Chief Executive Officer and Chairman of Flying Eagle Acquisition Corp. (NYSE: FEAC) (“Flying Eagle”), which raised $690 million in its initial public offering in March 2020 and in December 2020 completed its initial business combination with Skillz Inc., a technology company that enables game developers to monetize their content through fun and fair multi-player competition. Mr. Sloan remains a director of Skillz Inc. Prior to Flying Eagle, Mr. Sloan was a founding investor of Diamond Eagle Acquisition Corp. (“Diamond Eagle”), which raised $400 million in its initial public offering in May 2019 and in April 2020 completed its initial business combination with DraftKings, Inc., a digital sports entertainment and gaming company known for its industry-leading daily fantasy sports and mobile sports betting platforms, and SBTech (Global) Limited, an international turnkey provider of cutting-edge sports betting and gaming technologies. Mr. Sloan now serves as the Vice Chairman of DraftKings, Inc. Prior to Diamond Eagle, Mr. Sloan was a founding investor of Platinum Eagle Acquisition Corp. (“Platinum Eagle”), which raised $325 million in its initial public offering in January 2018, completed its initial business combination in March 2019 with Target Logistics Management, LLC and RL Signor Holdings, LLC and changed its name to Target Hospitality Corp. Target Hospitality is a vertically integrated specialty rental and hospitality services company. Prior to Platinum Eagle, Mr. Sloan was a founding investor of Double Eagle Acquisition Corp. (“Double Eagle”), which raised $500 million in its initial public offering in September 2015. Double Eagle completed its business combination in November 2017, in which its wholly-owned subsidiary acquired 90% of the shares of Williams Scotsman. In the transaction, Double Eagle changed its name to WillScot Corporation. WillScot Corporation is a specialty rental services market leader providing modular space and portable storage solutions to diverse end markets across North America. Mr. Sloan previously served as chairman and chief executive officer of Silver Eagle Acquisition Corp. from April 2013 until the consummation of its initial business combination in March 2015 with Videocon d2h Limited (“Videocon”). From May 2016 to April 2018, Mr. Sloan served on the board of directors of Videocon, where he was a member of its Nomination, Remuneration and Compensation Committee. Mr. Sloan also served as chairman and chief executive officer of Global Eagle Acquisition Corp. from February 2011 until the consummation of its business combination in January 2013, and he remains a director of the combined company, Global Eagle Entertainment Inc. From October 2005 to August 2009, Mr. Sloan served as chairman and chief executive officer of Metro-Goldwyn-Mayer, Inc. (“MGM”), a motion picture, television, home entertainment, and theatrical production and distribution company, and thereafter continued as non-executive chairman until December 2010. MGM filed for bankruptcy protection in 2010. From 1990 to 2002, Mr. Sloan was chairman and chief executive officer of SBS Broadcasting, S.A., a European broadcasting group, operating commercial television, premium pay channels, radio stations and related print businesses in Western and Central and Eastern Europe, which he founded in 1990 and continued as executive chairman until 2005. In 1999, SBS Broadcasting, S.A. became the largest shareholder of Lions Gate Entertainment Corp. (NYSE: LFG.A) (“Lions Gate”), an independent motion picture and television production company. Mr. Sloan served as chairman of the board of Lions Gate from April 2004 to March 2005. From 1983 to 1989, Mr. Sloan was co-chairman of New World Entertainment Ltd., an independent motion picture and television production company. In January 2011, Mr. Sloan joined the board of Promotora de Informaciones, S.A. (OTCMKTS: PRISY), Spain’s largest media conglomerate which owns El Pais, the leading newspaper in the Spanish-speaking world, as well as pay television, radio and digital properties. He has served on the board of ZeniMax Media Inc., an independent producer of interactive gaming and web content, since 1999. Mr. Sloan is an Associate Professor at the University of California at Los Angeles’s (UCLA) Anderson School of Management and serves on the UCLA Anderson School of Management Board of Visitors and the Executive Board of UCLA Theatre, Film and

 

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Television. Mr. Sloan is also a Trustee of The McCain Institute. Mr. Sloan received his B.A. degree from UCLA and J.D. degree from Loyola Law School. We believe that Mr. Sloan is qualified to serve on our board of director due to his public company experience, including with other similarly structured blank check companies, business leadership, operational experience and contacts.

Corporate Governance

New Ginkgo will structure its corporate governance in a manner that Ginkgo and SRNG believe will closely align its interests with those of its stockholders following the Business Combination. Notable features of this corporate governance include:

 

   

New Ginkgo will have independent director representation on its audit, compensation and nominating and corporate governance committees immediately at the time of the Business Combination, and its independent directors will meet regularly in executive sessions without the presence of its corporate officers or non-independent directors;

 

   

at least one of its directors will qualify as an “audit committee financial expert” as defined by the SEC; and

 

   

it will implement a range of other corporate governance best practices, including placing limits on the number of directorships held by its directors to prevent “overboarding” and implementing a robust director education program.

Role of Board in Risk Oversight

The New Ginkgo Board will have extensive involvement in the oversight of risk management related to New Ginkgo and its business and will accomplish this oversight through the regular reporting to the board of directors by the audit committee. The audit committee will represent the New Ginkgo Board by periodically reviewing New Ginkgo’s accounting, reporting and financial practices, including the integrity of its financial statements, the surveillance of administrative and financial controls and its compliance with legal and regulatory requirements. Through its regular meetings with management, including the finance, legal, internal audit and information technology functions, the audit committee will review and discuss all significant areas of New Ginkgo’s business and summarize for the New Ginkgo Board all areas of risk and the appropriate mitigating factors. In addition, the New Ginkgo Board will receive periodic detailed operating performance reviews from management.

Composition of the New Ginkgo Board After the Merger

New Ginkgo’s business and affairs will be managed under the direction of its board of directors. Following the adoption of the Proposed Charter in connection with the Business Combination, the New Ginkgo Board will be declassified and all of New Ginkgo’s directors will be elected each year for one-year terms.

Board Committees

After the completion of the Business Combination, the standing committees of the New Ginkgo Board will consist of an audit committee, a compensation committee and a nominating and corporate governance committee. The New Ginkgo Board may from time to time establish other committees.

New Ginkgo’s president and chief executive officer and other executive officers will regularly report to the non-executive directors and the audit, the compensation and the nominating and corporate governance committees to ensure effective and efficient oversight of our activities and to assist in proper risk management and the ongoing evaluation of management controls.

 

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Audit Committee

Upon the completion of the Business Combination, we expect New Ginkgo to have an audit committee, consisting of                 , who will be serving as the chairperson,                  and                  . Each proposed member of the audit committee qualifies as an independent director under the NYSE corporate governance standards and the independence requirements of Rule 10A-3 under the Exchange Act. Following the Business Combination, the New Ginkgo Board will determine which member of its audit committee qualifies as an “audit committee financial expert” as such term is defined in Item 407(d)(5) of Regulation S-K and possesses financial sophistication, as defined under the rules of NYSE.

The purpose of the audit committee will be to prepare the audit committee report required by the SEC to be included in New Ginkgo’s proxy statement and to assist the board of directors in overseeing and monitoring (1) the quality and integrity of the financial statements, (2) compliance with legal and regulatory requirements, (3) New Ginkgo’s independent registered public accounting firm’s qualifications and independence, (4) the performance of New Ginkgo’s internal audit function and (5) the performance of New Ginkgo’s independent registered public accounting firm.

The New Ginkgo Board will adopt a written charter for the audit committee which will be available on New Ginkgo’s website upon the completion of the Business Combination.

Compensation Committee

Upon the completion of the Business Combination, we expect New Ginkgo to have a compensation committee, consisting of                 , who will be serving as the chairperson,                  and                  .

The purpose of the compensation committee is to assist the board of directors in discharging its responsibilities relating to (1) setting New Ginkgo’s compensation program and compensation of its executive officers and directors, (2) monitoring New Ginkgo’s incentive and equity-based compensation plans and (3) preparing the compensation committee report required to be included in New Ginkgo’s proxy statement under the rules and regulations of the SEC.

The New Ginkgo Board will adopt a written charter for the compensation committee which will be available on New Ginkgo’s website upon the completion of the Business Combination.

Nominating and Corporate Governance Committee

Upon the completion of the Business Combination, we expect New Ginkgo to have a nominating and corporate governance committee, consisting of                  , who will be serving as the chairperson,                  and                  . The purpose of the nominating and corporate governance committee will be to assist the board of directors in discharging its responsibilities relating to (1) identifying individuals qualified to become new board of directors members, consistent with criteria approved by the board of directors, (2) reviewing the qualifications of incumbent directors to determine whether to recommend them for reelection and selecting, or recommending that the board of directors select, the director nominees for the next annual meeting of shareholders, (3) identifying board of directors members qualified to fill vacancies on any board of directors committee and recommending that the board of directors appoint the identified member or members to the applicable committee, (4) reviewing and recommending to the board of directors corporate governance principles applicable to New Ginkgo, (5) overseeing the evaluation of the board of directors and management and (6) handling such other matters that are specifically delegated to the committee by the board of directors from time to time.

The New Ginkgo Board will adopt a written charter for the nominating and corporate governance committee which will be available on New Ginkgo’s website upon completion of the Business Combination.

 

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Code of Business Conduct

New Ginkgo will adopt a new code of business conduct that applies to all of its directors, officers and employees, including its principal executive officer, principal financial officer and principal accounting officer, which will be available on New Ginkgo’s website upon the completion of the Business Combination. New Ginkgo’s code of business conduct is a “code of ethics”, as defined in Item 406(b) of Regulation S-K. Please note that New Ginkgo’s Internet website address is provided as an inactive textual reference only. New Ginkgo will make any legally required disclosures regarding amendments to, or waivers of, provisions of its code of ethics on its Internet website.

Compensation Committee Interlocks and Insider Participation

No member of the compensation committee was at any time during fiscal year 2020, or at any other time, one of our officers or employees. None of our executive officers has served as a director or member of a compensation committee (or other committee serving an equivalent function) of any entity, one of whose executive officers served as a director of our board of directors or member of our compensation committee.

Independence of the Board of Directors

NYSE rules generally require that independent directors must comprise a majority of a listed company’s board of directors. Based upon information requested from and provided by each proposed director concerning his or her background, employment and affiliations, including family relationships, we have determined that                 , representing                  of New Ginkgo’s                  proposed directors, will be “independent” as that term is defined under the applicable rules and regulations of the SEC and the listing requirements and rules of the NYSE.

 

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GINKGO’S EXECUTIVE AND DIRECTOR COMPENSATION

This section discusses the material components of the executive compensation program for Ginkgo’s executive officers who are named in the “2020 Summary Compensation Table” below. As an emerging growth company, Ginkgo complies with the executive compensation disclosure rules applicable to “smaller reporting companies,” as such term is defined in the rules promulgated under the Securities Act, which require compensation disclosure for Ginkgo’s principal executive officer and Ginkgo’s two most highly compensated executive officers other than its principal executive officer. These three officers are referred to as Ginkgo’s named executive officers.

In 2020, Ginkgo’s “named executive officers” and their positions were as follows:

 

   

Jason Kelly, Chief Executive Officer;

 

   

Reshma Shetty, President and Chief Operating Officer; and

 

   

Mark Dmytruk, Chief Financial Officer.

On November 9, 2020, Mr. Dmytruk commenced employment with Ginkgo as its Chief Financial Officer.

This discussion may contain forward-looking statements that are based on Ginkgo’s current plans, considerations, expectations and determinations regarding future compensation programs. The actual compensation programs that Ginkgo adopts following the completion of the Business Combination may differ materially from the currently planned programs summarized in this discussion.

2020 Summary Compensation Table

The following table sets forth information concerning the compensation of Ginkgo’s named executive officers for the year ended December 31, 2020.

 

Name and Principal Position

   Year      Salary
($)
     Bonus
($)(1)
     Stock
Awards
($)(2)
     All Other
Compensation
($)(3)
     Total ($)  

Jason Kelly

     2020        250,000        414,841        9,854,097        14,250        10,533,188  

Chief Executive Officer

                 

Reshma Shetty

     2020        250,000        415,386        9,854,097        14,250        10,533,733  

President and Chief Operating Officer

                 

Mark Dmytruk

     2020        63,750        —          —          2,861        66,611  

Chief Financial Officer (4)

                 

 

(1)

Amounts reflect discretionary bonuses granted to each of Dr. Kelly and Dr. Shetty during 2020.

(2)

Amounts reflect the full grant-date fair value of restricted stock units granted during 2020 computed in accordance with ASC Topic 718, rather than the amounts paid to or realized by the named individual. We provide information regarding the assumptions used to calculate the value of all restricted stock units made to named executive officers in Note 15 to the consolidated financial statements included in this proxy statement/prospectus.

(3)

For Dr. Kelly, Dr. Shetty and Mr. Dmytruk, amounts represent matching contributions under Ginkgo’s 401(k) plan.

(4)

Mr. Dmytruk joined Ginkgo on November 9, 2020 as its Chief Financial Officer, and his salary was pro-rated for his partial year of service during 2020.

 

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NARRATIVE TO SUMMARY COMPENSATION TABLE

2020 Salaries

The named executive officers receive a base salary to provide a fixed component of compensation reflecting the executive’s skill set, experience, role and responsibilities. The 2020 annual base salaries for Ginkgo’s named executives officers were:

 

Name    2020 Annual Base
Salary ($)
 

Jason Kelly

     250,000  

Reshma Shetty

     250,000  

Mark Dmytruk

     425,000  

In March 2020, Dr. Kelly’s base salary and Dr. Shetty’s base salary were each increased, effective January 1, 2020, from $120,000 to $250,000. Mr. Dmytruk’s base salary was negotiated in connection with his commencement of employment with Ginkgo in November 2020.

2020 Bonuses

Dr. Kelly and Dr. Shetty were each granted one-time bonuses in April 2020, equal to $414,841 and $415,386, respectively. The bonuses were intended to make the executives whole for taxes paid in 2019 on the excess of the price paid by Ginkgo to repurchase certain shares held by the executives over the fair market value of those shares on the date of such repurchase. Mr. Dmytruk did not receive a bonus in 2020.

Equity Compensation

Dr. Kelly and Dr. Shetty each received restricted stock units under Ginkgo’s 2014 Incentive Plan (the “2014 Plan”) during 2020. The restricted stock units vest upon the satisfaction of both an “event condition” and a “service condition” on or before the seventh anniversary of the grant date. The event condition will be satisfied on the first to occur of (i) a change in control or (ii) the earlier of (x) the date six months after the closing of a public offering or (y) March 15 of the calendar year following the effective date of a public offering. The service condition was satisfied on January 1, 2021. Vesting of the restricted stock units is subject to continued service with Ginkgo through each applicable vesting date; provided that, if Dr. Kelly or Dr. Shetty ceases to provide services to Ginkgo prior to the occurrence of the event condition, then all restricted stock units for which the service condition has been satisfied shall vest upon the subsequent occurrence of the event condition if the event condition occurs prior to the seventh anniversary of the grant date. Mr. Dmytruk did not receive a grant of restricted stock units in 2020.

The following table sets forth the restricted stock units granted to Ginkgo’s named executive officers during 2020 under the 2014 Plan.

 

Named Executive Officer

   2020 Restricted
Stock Units Granted
 

Jason Kelly

     88,101  

Reshma Shetty

     88,101  

Mark Dmytruk

     0  

Dr. Kelly and Dr. Shetty each entered into a Founder Equity Grant Agreement with Ginkgo on January 1, 2020, which provides for the opportunity to receive future grants of restricted stock units in connection with a financing, a liquidity event, and continued employment following a public offering. A “financing” is defined in the Founder Equity Grant Agreements as Ginkgo’s issuance and sale of its preferred equity interests for bona fide financing purposes. A “liquidity event” is defined in the Founder Equity Grant Agreements as the first to occur of a “change in control” or a “public offering” (each as defined in the restricted stock unit award agreements).

 

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Under their Founder Equity Grant Agreements, Dr. Kelly and Dr. Shetty are eligible to receive grants of restricted stock units in the event that there is a financing or a liquidity event, in each case, prior to the end of the applicable performance period and subject to such executive’s continued service with Ginkgo through such event. The performance period began on January 1, 2020, and will end on the first to occur of a liquidity event and January 1, 2023, unless extended under certain circumstances. The number of restricted stock units granted in connection with a financing or a liquidity event prior to the end of the performance period will be determined according to one or more formulas set forth in the Founder Equity Grant Agreement. Dr. Kelly and Dr. Shetty may waive the grant of certain restricted stock units, in which case, such restricted stock units will be available for restricted stock unit grants to other Ginkgo employees on such terms as determined by the board.

Restricted stock units granted in connection with a financing will vest upon the first to occur of (i) a change in control or (ii) the earlier of (x) the date six months after the closing of a public offering or (y) March 15 of the calendar year following the effective date of a public offering, irrespective of whether the holder is continuously providing services through the vesting date. Restricted stock units granted in connection with a liquidity event will be fully vested on the date of grant.

The maximum number of restricted stock units that may be granted to each of Dr. Kelly and Dr. Shetty under his or her applicable Founder Equity Grant Agreement is 1,469,880, which includes the 88,101 restricted stock units granted to each of Dr. Kelly and Dr. Shetty on January 1, 2020 and any restricted stock units Dr. Kelly or Dr. Shetty elects to waive. However, any restricted stock units granted following a public offering (described below) will not count towards the individual award limit.

Following a public offering, Dr. Kelly and Dr. Shetty will be eligible under their Founder Equity Grant Agreements to receive grants of 48,996 restricted stock units on each anniversary following such public offering until the tenth anniversary of the public offering, subject to such executive’s continued service with Ginkgo through each applicable grant date and approval by the board or a committee thereof. The restricted stock units granted after a public offering will vest in twelve equal quarterly installments following the applicable grant date, subject to the executive’s continued service with Ginkgo through each applicable vesting date.

As of December 31, 2020, other than the restricted stock units granted on January 1, 2020 described above, no restricted stock units have been granted under the Founder Equity Grant Agreements. We may grant all or a portion of the restricted stock units to Dr. Kelly and Dr. Shetty under the Founder Equity Grant Agreements prior to the Business Combination. The amount of the grants have not yet been determined.

Other Elements of Compensation

Retirement Plan

Ginkgo maintains a 401(k) retirement savings plan for its employees, including Ginkgo’s named executive officers, who satisfy certain eligibility requirements. Ginkgo’s named executive officers are eligible to participate in the 401(k) plan on the same terms as other full-time employees. Under this plan, Ginkgo provides a non-elective safe harbor contribution to all eligible participants equal to up to 5% of eligible compensation, which fully vests once such eligible participant has completed two years of continuous service. Ginkgo believes that providing a vehicle for tax-deferred retirement savings though Ginkgo’s 401(k) plan adds to the overall desirability of Ginkgo’s executive compensation package and further incentivizes Ginkgo’s employees, including Ginkgo’s named executive officers, in accordance with Ginkgo’s compensation policies.

Employee Benefits and Perquisites

Health/Welfare Plans. During their employment, Ginkgo’s named executive officers are eligible to participate in Ginkgo’s employee benefit plans and programs, including medical, dental, vision, life, and disability benefits, to the same extent as Ginkgo’s other full-time employees, subject to the terms and eligibility requirements of those plans.

 

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Outstanding Equity Awards at Fiscal Year-End

The following table summarizes the number of shares of Ginkgo common stock underlying outstanding equity incentive plan awards for each named executive officer as of December 31, 2020. Mr. Dmytruk did not hold any outstanding equity awards in Ginkgo as of December 31, 2020.

 

            Stock Awards(1)  

Name

   Grant
Date
     Equity Incentive
Plan Awards:
Number of
Unearned
Shares, Units or
Other Rights
That Have Not
Vested (#)
    Equity Incentive
Plan Awards:
Market or
Payout Value of
Unearned
Shares, Units or
Other Rights
That Have Not
Vested ($)(3)
 

Jason Kelly

     1/1/2020        88,101 (2)      17,088,951  

Reshma Shetty

     1/1/2020        88,101 (2)      17,088,951  

(1) The amounts in this table represent grants of restricted stock units to each of the named executive officers. For a description of the restricted stock units, please see the section titled “Narrative to Summary Compensation Table – Equity Compensation” above.

(2) Represents restricted stock units which conditionally vest based on continued service, although the restricted stock units will not become fully vested and payable until the first to occur of (i) a change in control or (ii) the earlier of (x) the date six months after the closing of a public offering or (y) March 15 of the calendar year following the effective date of a public offering. The service condition is satisfied in substantially equal monthly installments until the first anniversary of the grant date. Vesting of the restricted stock units is subject to continued service with Ginkgo through each applicable vesting date; provided that, if a named executive officer ceases to provide services to Ginkgo prior to the occurrence of the event condition, then all restricted stock units for which the service condition has been satisfied shall vest upon the subsequent occurrence of the event condition if the event condition occurs prior to the seventh anniversary of the grant date.

(3) Amount shown is based on a price per share of $193.97, which is based on a third-party valuation of Ginkgo common stock as of December 31, 2020.

Executive Compensation Arrangements

Jason Kelly and Reshma Shetty. Neither Dr. Kelly nor Dr. Shetty have entered into employment agreements, offer letters or severance agreements with Ginkgo.

Mark Dmytruk. On November 9, 2020, Mr. Dmytruk commenced employment with Ginkgo under an offer letter dated October 7, 2020. Mr. Dmytruk’s offer letter provides for base salary, eligibility to receive a grant of 45,000 restricted stock units, which were granted in March 2021, and participation in our standard benefit plans. Mr. Dmytruk’s offer letter does not contain a fixed employment term.

Pursuant to the terms of Mr. Dmytruk’s offer letter, if Mr. Dmytruk’s employment is terminated by Ginkgo without “cause” (as defined in the offer letter), Mr. Dmytruk will be entitled to receive (i) 12 months’ severance pay based on his base salary rate on the date of such termination, to be paid in installments over the 12-month period following the termination date and (ii) up to 12 months’ company-paid health benefits continuation pursuant to COBRA, in each case subject to Mr. Dmytruk’s execution of a general release of claims in favor of Ginkgo.

Mr. Dmytruk also entered into a separate agreement pursuant to which he is subject to employee and customer non-solicitation covenants during the term of his employment or other service with Ginkgo and for one year thereafter. The agreement also includes standard invention assignment and confidential information covenants.

 

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Director Compensation

The following table sets forth information concerning the compensation of Ginkgo’s non-employee directors for their service on the board of directors for the year ended December 31, 2020. Ginkgo’s non-employee directors were not entitled to annual fees or other cash compensation during 2020.

 

Name

   Stock
Awards
($)(1)
     All Other
Compensation
($)
     Total ($)  

Marijn Dekkers

     —          —          —    

Shyam Sankar

     671,100        —          671,100  

Christian Henry

     671,100        —          671,100  

Evan Lodes

     —          —          —    

 

(1)

Amounts reflect the full grant-date fair value of restricted stock units granted during 2020 computed in accordance with ASC Topic 718, rather than the amounts paid to or realized by the named individual. We provide information regarding the assumptions used to calculate the value of all restricted stock units made to our directors in Note 15 to the consolidated financial statements included in this proxy statement/prospectus.

The restricted stock units granted to Mr. Sankar and Mr. Henry in 2020 vest upon the satisfaction of both an “event condition” and a “service condition” on or before the seventh anniversary of the grant date. The event condition will be satisfied on the first to occur of (i) a change in control or (ii) the earlier of (x) the date six months after the closing of a public offering or (y) March 15 of the calendar year following the effective date of a public offering. The service condition is satisfied in substantially equal monthly installments over three years ending in June 2023. Vesting of the restricted stock units is subject to continued service with Ginkgo through each applicable vesting date; provided that, if Mr. Sankar or Mr. Henry ceases to provide services to Ginkgo prior to the occurrence of the event condition, then all restricted stock units for which the service condition has been satisfied shall vest upon the subsequent occurrence of the event condition if the event condition occurs prior to the seventh anniversary of the grant date.

The table below shows the aggregate numbers of unvested stock awards held as of December 31, 2020 by each non-employee director who was serving as of December 31, 2020.

 

Name

   Unvested
Restricted
Stock Units
Outstanding
at Fiscal
Year End
 

Marjin Dekkers

     27,947  

Shyam Sankar

     4,000  

Christian Henry

     5,834  

Evan Lodes

     —    

Post-Combination Company Executive Officer and Director Compensation

Executive Compensation

Following the closing of the Business Combination, we intend to develop an executive compensation program that is consistent with Ginkgo’s existing compensation policies and philosophies, which are designed to align compensation with business objectives and the creation of stockholder value, while enabling us to attract, motivate and retain individuals who contribute to our long-term success.

Decisions on the executive compensation program will be made by the compensation committee of the board of directors, which will be established at the closing of the Business Combination. The material terms of the post-combination company executive compensation program are not yet known.

 

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Director Compensation

Following the closing of the Business Combination, the New Ginkgo Board will implement an annual compensation program for its non-employee directors pursuant to which the non-employee directors will be entitled to cash and equity compensation in such amounts necessary to attract and retain non-employee directors that have the talent and skills to foster long-term value creation and enhance the sustainable development of the company. The compensation payable under the program is intended to be competitive in relation to both the market in which the company operates and the nature, complexity and size of New Ginkgo’s business.

Following the closing of the Business Combination, New Ginkgo’s non-employee directors will receive the following amounts for their services on the New Ginkgo Board under the non-employee director compensation program:

Cash Compensation

 

   

An annual director fee of $50,000;

 

   

If the director serves as lead independent director or chair or on a committee of the New Ginkgo Board, an additional annual fee as follows:

 

     

Chair of the New Ginkgo Board, $36,000

 

     

Lead independent director, $25,000;

 

     

Chair of the audit committee, $20,000;

 

     

Audit committee member other than the chair, $10,000;

 

     

Chair of the compensation committee, $15,000;

 

     

Compensation committee member other than the chair, $7,500;

 

     

Chair of the nominating and corporate governance committee, $10,000;

 

     

Nominating and Corporate Governance committee member other than the chair, $5,000.

Director fees will be payable in arrears in four equal quarterly installments, provided that the amount of each payment will be prorated for any portion of a calendar quarter that a non-employee director is not serving on the New Ginkgo Board and no fee will be payable in respect of any period prior to the closing of the Business Combination. The New Ginkgo Board may permit non-employee directors to elect to receive equity compensation in lieu of cash compensation.

Equity Compensation

 

   

Each non-employee director who is initially elected or appointed to the New Ginkgo Board on or after the closing of the Business Combination (other than those non-employee directors who served on the board of Ginkgo Bioworks, Inc. prior to the closing of the Business Combination) will receive (i) an initial option to purchase shares of New Ginkgo Class A common stock with a grant date fair value of $400,000 (as determined under the program) (the “Initial Option”), (ii) an additional initial option to purchase shares of New Ginkgo Class A common stock with a grant date fair value of $200,000 (as determined under the program) (the “Additional Initial Option”), and (iii) a number of restricted stock units determined by dividing $200,000 by the fair market value of a share of New Ginkgo Class A common stock (the “Additional Initial RSU”). In the event that a non-employee director’s date of initial election or appointment does not occur on the same date as an annual meeting of New Ginkgo’s stockholders, the value of the Additional Initial Option and the Additional Initial RSU will be pro-rated in accordance with the terms of the program.

 

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If the non-employee director has served on the New Ginkgo Board as of the date of an annual meeting of New Ginkgo’s stockholders that occurs after the closing of the Business Combination and will continue to serve as a non-employee director immediately following such meeting, such non-employee director will receive (i) an option to purchase shares of New Ginkgo Class A common stock with a grant date fair value of $200,000 (as determined under the program) (the “Subsequent Option”) and (ii) a number of restricted stock units determined by dividing $200,000 by the fair market value of a share of New Ginkgo Class A common stock (the “Subsequent RSU”).

Stock options granted under the program will have an exercise price equal to the fair market value of New Ginkgo’s Class A common stock on the date of grant and will expire not later than ten years after the date of grant. Each Initial Option granted to a non-employee director will vest and become exercisable in substantially equal installments on each of the first three anniversaries of the date of grant. Each Additional Initial Option and the Additional Initial RSUs granted to a non-employee director will vest and become exercisable, as applicable, in a single installment on the day before the next annual meeting of New Ginkgo’s stockholders occurring after the date of the director’s initial election or appointment to the New Ginkgo Board. Each Subsequent Option and the Subsequent RSUs will vest and become exercisable, as applicable, in a single installment on the earlier of the first anniversary of the date of grant or the day before the next annual meeting of New Ginkgo’s stockholders occurring after the date of grant. Vesting of the options and restricted stock units granted under the program is subject to the non-employee director’s continued service through each applicable vesting date. In the event of a change in control of New Ginkgo, the options and restricted stock units granted under the program will vest in full.

 

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CERTAIN RELATIONSHIPS AND RELATED PARTY TRANSACTIONS

SRNG

On October 28, 2020, SRNG’s Sponsor purchased an aggregate of 43,125,000 founder shares in exchange for a capital contribution of $25,000, or approximately $0.0006 per share.

SRNG’s Sponsor purchased an aggregate of 19,250,000 private placement warrants in connection with SRNG’s initial public offering, at a price of $1.50 per warrant, or $28,875,000 in the aggregate. Each private placement warrant entitles the holder to purchase one Class A ordinary share at $11.50 per share. The private placement warrants (including the Class A ordinary shares issuable upon exercise of the private placement warrants) may not, subject to certain limited exceptions, be transferred, assigned or sold until 30 days after the completion of the Business Combination.

SRNG currently sub-leases its executive offices at 955 Fifth Avenue, New York, NY, 10075 from Global Eagle Acquisition LLC, an affiliate of our Sponsor. Commencing upon consummation of its initial public offering, SRNG reimburses Global Eagle Acquisition LLC for office space, secretarial and administrative services provided to members of its management team in an amount not to exceed $15,000 per month. Upon completion of SRNG’s initial business combination or liquidation, it will cease paying these monthly fees.

SRNG’s officers and directors are entitled to reimbursement for any out-of-pocket expenses incurred in connection with activities on SRNG’s behalf such as identifying potential target businesses and performing due diligence on suitable business combinations. SRNG’s audit committee reviews on a quarterly basis all payments that were made to SRNG’s Sponsor, SRNG’s officers, directors or its or their affiliates.

In addition, in order to finance transaction costs in connection with an intended initial business combination, SRNG’s Sponsor or an affiliate of its Sponsor or certain of its officers and directors may, but are not obligated to, loan SRNG funds as may be required on a non-interest basis. If SRNG completes the Business Combination, it would repay such loaned amounts. In the event that the Business Combination does not close, SRNG may use a portion of the working capital held outside the Trust Account to repay such loaned amounts but no proceeds from its Trust Account would be used for such repayment. The warrants would be identical to the private placement warrants. Except as set forth above, the terms of such loans, if any, have not been determined and no written agreements exist with respect to such loans.

On May 10, 2021, an affiliate of SRNG’s Sponsor entered into a Subscription Agreement with the Company, pursuant to which it agreed to purchase an aggregate of 7,500,000 shares of New SRNG Class A common stock at $10.00 per share, for an aggregate purchase price of $75,000,000, from the Company in a private placement to close immediately prior to Closing. The affiliate of SRNG’s Sponsor expects to assign its obligations to purchase the shares to one or more of its beneficial members and/or their affiliates prior to the Closing.

Ginkgo

Series E Preferred Stock Financing

From September 2019 through July 2021, Ginkgo sold an aggregate of 1,942,610 shares of its Series E preferred stock to the related persons listed below at a purchase price of $150.19 per share, except as described below with respect to the conversion of convertible promissory notes. The following table summarizes purchases of Series E preferred stock from Ginkgo by such related persons:

 

Name

   Shares of Series E
Preferred Stock
     Total Purchase Price  

Entities affiliated with Anchorage Capital Group(1)

     105,500      $ 15,053,013.70  

Entities affiliated with Baillie Gifford & Co.(2)

     200,479      $ 29,104,580.72  

Cascade Investment, L.L.C.(3)

     268,376      $ 38,719,465.07  

General Atlantic (GK), L.P.(4)

     513,449      $ 76,109,273.68  

Novalis Life Sciences Investments I, LP(5)

     52,755      $ 7,527,123.29  

Senator Global Opportunity Master Fund LP(6)

     70,489      $ 10,057,534.25  

Viking Global Opportunities Illiquid Investments Sub-Master LP(7)

     731,562      $ 106,379,678.54  

 

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(1)

Entities affiliated with Anchorage Capital Group hold more than 5% of Ginkgo’s outstanding capital stock.

(2)

Entities affiliated with Baillie Gifford & Co. hold more than 5% of Ginkgo’s outstanding capital stock.

(3)

Cascade Investment, L.L.C. holds more than 5% of Ginkgo’s outstanding capital stock.

(4)

General Atlantic (GK), L.P. holds more than 5% of Ginkgo’s outstanding capital stock.

(5)

Marijn Dekkers, a member of Ginkgo’s board of directors, is an affiliate of Novalis Life Sciences Investments I, LP.

(6)

Senator Global Opportunity Master Fund LP holds more than 5% of Ginkgo’s outstanding capital stock. Evan Lodes, a member of Ginkgo’s board of directors, is an affiliate of Senator Global Opportunity Master Fund LP.

(7)

Viking Global Opportunities Illiquid Investments Sub-Master LP holds more than 5% of Ginkgo’s outstanding capital stock.

Convertible Note Financing

In certain cases, the payment of the Total Purchase Price above consisted or, or included, the conversion of convertible promissory notes held by the related persons. From June 2019 through July 2019, Ginkgo sold an aggregate of $160,500,000 in principal amount of convertible promissory notes to the related persons listed below. Interest on the principal amount of the convertible promissory notes accrued at the rate of 3.0% per year. The outstanding principal and accrued interest of such convertible promissory notes converted into shares of Series E preferred stock at a discounted purchase price of $142.68 per share and are reflected in the above table. The following table summarizes the convertible promissory notes issued by Ginkgo to such related persons:

 

Name

   Principal Amount  

Entities affiliated with Anchorage Capital Group(1)

   $ 15,000,000  

Entities affiliated with Baillie Gifford & Co.(2)

   $ 19,000,000  

Cascade Investment, L.L.C.(3)

   $ 30,000,000  

General Atlantic (GK), L.P.(4)

   $ 19,000,000  

Novalis Life Sciences Investments I, LP(5)

   $ 7,500,000  

Senator Global Opportunity Master Fund LP(6)

   $ 10,000,000  

Viking Global Opportunities Illiquid Investments Sub-Master LP(7)

   $ 60,000,000  

 

(1)

Entities affiliated with Anchorage Capital Group hold more than 5% of Ginkgo’s outstanding capital stock.

(2)

Entities affiliated with Baillie Gifford & Co. hold more than 5% of Ginkgo’s outstanding capital stock.

(3)

Cascade Investment, L.L.C. holds more than 5% of Ginkgo’s outstanding capital stock.

(4)

General Atlantic (GK), L.P. holds more than 5% of Ginkgo’s outstanding capital stock.

(5)

Marijn Dekkers, a member of Ginkgo’s board of directors, is an affiliate of Novalis Life Sciences Investments I, LP.

(6)

Senator Global Opportunity Master Fund LP holds more than 5% of Ginkgo’s outstanding capital stock. Evan Lodes, a member of Ginkgo’s board of directors, is an affiliate of Senator Global Opportunity Master Fund LP.

(7)

Viking Global Opportunities Illiquid Investments Sub-Master LP holds more than 5% of Ginkgo’s outstanding capital stock.

Series D Preferred Stock Financing

In June 2018, Ginkgo sold 52,400 shares of its Series D preferred stock at a purchase price of $47.71 per share for an aggregate purchase price of $2,500,004.00 to Novalis Life Sciences Investments I, LP. Marijn Dekkers, a member of Ginkgo’s board of directors, is an affiliate of Novalis Life Sciences Investments I, LP.

 

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Founder Equity Grant Agreements

In January 2020, Ginkgo entered into Founder Equity Grant Agreements with each of Jason Kelly, Reshma Shetty, Austin Che and Bartholomew Canton. Dr. Kelly and Dr. Shetty are each a director, officer and holder of more than 5% of Ginkgo’s outstanding capital stock. Dr. Canton and Dr. Che are each a holder of more than 5% of Ginkgo’s outstanding capital stock. Dr. Canton is also a family member of Dr. Shetty. Also in January 2020, each of Dr. Kelly, Dr. Shetty, Dr. Canton and Dr. Che received a restricted stock unit award under the Prior Plan. The terms of the Founder Equity Grants Agreements and the foregoing restricted stock unit awards are described in the section titled “Ginkgo’s Executive and Director Compensation” in this proxy statement/prospectus.

Founder Equity Repurchases

In July 2018, Ginkgo repurchased 90,017 shares of common from each of Jason Kelly, Reshma Shetty, Austin Che and Bartholomew Canton at a price of $47.71 per share, which was the then most-recent price per share at which Ginkgo has sold convertible preferred stock to investors, for a total purchase price for each of $4,294,711.07. Dr. Kelly and Dr. Shetty are each a director, officer and holder of more than 5% of Ginkgo’s outstanding capital stock. Dr. Canton and Dr. Che are each a holder of more than 5% of Ginkgo’s outstanding capital stock. Dr. Canton is also a family member of Dr. Shetty.

Agreement in Connection with Platform Ventures

In September 2019, Ginkgo entered into an agreement with Cascade Investment L.L.C., an affiliated entity of General Atlantic (GK), L.P., and Viking Global Opportunities Illiquid Investments Sub-Master LP, each of which hold more than 5% of Ginkgo’s outstanding capital stock, pursuant to which such related persons were provided with the first right to invest up to an aggregate of $350.0 million for the financial investment portion of new companies launched by Ginkgo as part of its Platform Ventures (such as Allonnia, LLC). The agreement was terminated in May 2021. Initial investments in new companies launched by Ginkgo in connection with the agreement were approximately $12.9 million from Cascade Investment L.L.C., $19.5 million from entities affiliated with General Atlantic (GK), L.P., and $57.8 million from entities affiliated with Viking Global Opportunities Illiquid Investments Sub-Master LP.

Investors’ Rights Agreement

Ginkgo is party to the Third Amended and Restated Investors’ Rights Agreement, dated as of September 9, 2019, which grants registration rights and information rights, among other things, to certain holders of its capital stock, including (i) entities affiliated with Anchorage Capital Group, entities affiliated with Baillie Gifford & Co., Cascade Investment, L.L.C, General Atlantic (GK), L.P., and Viking Global Opportunities Illiquid Investments Sub-Master LP, each of which currently hold more than 5% of Ginkgo’s capital stock; (ii) Novalis Life Sciences Investments I, L.P., which is affiliated with Marijn Dekkers, a Ginkgo director; and (iii) Senator Global Opportunity Master Fund LP, which currently holds more than 5% of Ginkgo’s capital stock and is affiliated with Evan Lodes, a Ginkgo director. This agreement will terminate upon the Closing.

Right of First Refusal and Co-Sale Agreement

Ginkgo is party to the Third Amended and Restated Right of First Refusal and Co-Sale Agreement, dated as of September 9, 2019, which grants the right to purchase shares of Ginkgo capital stock which certain other stockholders propose to sell to other parties to, among others (i) entities affiliated with Anchorage Capital Group, entities affiliated with Baillie Gifford & Co., Cascade Investment, L.L.C, General Atlantic (GK), L.P., and Viking Global Opportunities Illiquid Investments Sub-Master LP, each of which currently hold more than 5% of Ginkgo’s capital stock; (ii) Novalis Life Sciences Investments I, L.P., which is affiliated with Marijn Dekkers, a Ginkgo director; and (iii) Senator Global Opportunity Master Fund LP, which currently holds more than 5% of Ginkgo’s capital stock and is affiliated with Evan Lodes, a Ginkgo director. This agreement will terminate upon the Closing.

 

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Voting Agreement

Ginkgo is party to the Third Amended and Restated Voting Agreement, dated as of September 9, 2019, pursuant to which certain holders of its capital stock, including (i) entities affiliated with Anchorage Capital Group, entities affiliated with Baillie Gifford & Co., Cascade Investment, L.L.C, General Atlantic (GK), L.P., and Viking Global Opportunities Illiquid Investments Sub-Master LP, each of which currently hold more than 5% of Ginkgo’s capital stock; (ii) Novalis Life Sciences Investments I, L.P., which is affiliated with Marijn Dekkers, a Ginkgo director; and (iii) Senator Global Opportunity Master Fund LP, which currently holds more than 5% of Ginkgo’s capital stock and is affiliated with Evan Lodes, a Ginkgo director. This agreement will terminate upon the Closing.

Director and Officer Indemnification

Ginkgo’s certificate of incorporation authorizes indemnification and advancement of expenses for its directors and officers to the fullest extent permitted by the DGCL.

PIPE Investment

In May 2021, certain Ginkgo related persons entered into Subscription Agreements with SRNG in connection with the Private Placement. The following table summarizes purchases in the Private Placement by such related persons:

 

Name

   SRNG Class A
ordinary shares
     Total Purchase Price  

Entities affiliated with Baillie Gifford & Co.(1)

     10,300,000      $ 103,000,000.00  

Cascade Investment, L.L.C.(2)

     3,000,000      $ 30,000,000  

General Atlantic (GK), L.P.(3)

     250,000      $ 2,500,000  

Senator Global Opportunity Master Fund LP(4)

     700,000      $ 7,000,000  

Viking Global Opportunities Illiquid Investments Sub-Master LP(5)

     2,000,000      $ 20,000,000  

 

(1)

Entities affiliated with Baillie Gifford & Co. hold more than 5% of Ginkgo’s outstanding capital stock.

(2)

Cascade Investment, L.L.C. holds more than 5% of Ginkgo’s outstanding capital stock.

(3)

General Atlantic (GK), L.P. holds more than 5% of Ginkgo’s outstanding capital stock.

(4)

Senator Global Opportunity Master Fund LP holds more than 5% of Ginkgo’s outstanding capital stock. Evan Lodes, a member of Ginkgo’s board of directors, is an affiliate of Senator Global Opportunity Master Fund LP.

(5)

Viking Global Opportunities Illiquid Investments Sub-Master LP holds more than 5% of Ginkgo’s outstanding capital stock.

 

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LEGAL MATTERS

White & Case LLP will pass upon the validity of the New Ginkgo Class A common stock issued in connection with the Business Combination and certain other legal matters related to this proxy statement/prospectus.

EXPERTS

The financial statements of Soaring Eagle Acquisition Corp. as of December 31, 2020 and for the period from October 22, 2020 (date of inception) through December 31, 2020 included in this proxy statement/prospectus have been audited by WithumSmith+Brown, PC, independent registered public accounting firm, as set forth in their report thereon, appearing elsewhere herein, and are included in reliance upon such report given on the authority of such firm as experts in accounting and auditing.

The consolidated financial statements of Ginkgo Bioworks, Inc. at December 31, 2020 and 2019, and for each of the years then ended, included in the proxy statement/prospectus of Soaring Eagle Acquisition Corp., which is referred to and made a part of this Prospectus and Registration Statement, have been audited by Ernst & Young LLP, independent registered public accounting firm, as set forth in their report appearing elsewhere herein, and are included in reliance upon such report given on the authority of such firm as experts in accounting and auditing.

DELIVERY OF DOCUMENTS TO SHAREHOLDERS

Pursuant to the rules of the SEC, SRNG and services that it employs to deliver communications to its shareholders are permitted to deliver to two or more shareholders sharing the same address a single copy of the proxy statement/prospectus. Upon written or oral request, SRNG will deliver a separate copy of the proxy statement/prospectus to any stockholder at a shared address to which a single copy of the proxy statement/prospectus was delivered and who wishes to receive separate copies in the future. Shareholders receiving multiple copies of the proxy statement/prospectus may likewise request that SRNG deliver single copies of the proxy statement/prospectus in the future. Shareholders may notify SRNG of their requests by calling or writing SRNG at its principal executive offices 955 Fifth Avenue, New York, NY 10075.

 

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U.S. FEDERAL INCOME TAX CONSIDERATIONS

The following discussion is a summary of certain U.S. federal income tax considerations (i) for U.S. Holders and Non-U.S. Holders (each as defined below, and together, “Holders”) of SRNG Class A ordinary shares and SRNG warrants (each, a “SRNG Security”) of the Domestication and (ii) for Holders of SRNG Class A ordinary shares that elect to have the New Ginkgo Class A common stock they receive in connection with the Domestication redeemed for cash if the Business Combination is completed. This section applies only to Holders that hold their SRNG Securities as “capital assets” for U.S. federal income tax purposes (generally, property held for investment). For purposes of this discussion, because the components of a SRNG unit are generally separable at the option of the Holder, the Holder of a SRNG unit generally should be treated, for U.S. federal income tax purposes, as the owner of the underlying SRNG Class A ordinary share and SRNG warrant components of the SRNG unit. Accordingly, the separation of a SRNG unit into a SRNG Class A ordinary share and the one-fifth of one SRNG warrant underlying the SRNG unit generally should not be a taxable event for U.S. federal income tax purposes. This position is not free from doubt, and no assurance can be given that the IRS would not assert, or that a court would not sustain, a contrary position. Holders of SRNG Securities are urged to consult their tax advisors concerning the U.S. federal, state, local and any non-U.S. tax consequences of the transactions contemplated by the Domestication and the Business Combination (including any redemption of the New Ginkgo Class A common stock) with respect to any SRNG Class A ordinary shares and SRNG warrants held through SRNG units (including alternative characterizations of SRNG units).

This discussion does not address the U.S. federal income tax consequences to the Sponsor or its affiliates, officers or directors. This discussion is limited to U.S. federal income tax considerations and does not address estate or any gift tax considerations or considerations arising under the tax laws of any state, local or non-U.S. jurisdiction or under any applicable income tax treaty. This discussion does not describe all of the U.S. federal income tax consequences that may be relevant to you in light of your particular circumstances, including the alternative minimum tax, the Medicare tax on certain investment income and the different consequences that may apply if you are subject to special rules under U.S. federal income tax law that apply to certain types of investors, such as:

 

   

banks, financial institutions or financial services entities;

 

   

broker-dealers;

 

   

taxpayers that are subject to the mark-to-market accounting rules with respect to the SRNG Securities;

 

   

tax-exempt entities;

 

   

governments or agencies or instrumentalities thereof;

 

   

insurance companies;

 

   

regulated investment companies or real estate investment trusts;

 

   

partnerships (including entities or arrangements treated as partnerships for U.S. federal income tax purposes);

 

   

U.S. expatriates or former long-term residents of the United States;

 

   

persons that actually or constructively own five percent or more (by vote or value) of SRNG Class A ordinary shares (except as specifically provided below);

 

   

persons that acquired their SRNG Securities pursuant to an exercise of employee share options, in connection with employee share incentive plans or otherwise as compensation;

 

   

persons that hold their SRNG Securities as part of a straddle, constructive sale, hedge, wash sale, conversion or other integrated or similar transaction;

 

   

U.S. Holders (as defined below) whose functional currency is not the U.S. dollar; or

 

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“specified foreign corporations” (including “controlled foreign corporations”), “passive foreign investment companies” or corporations that accumulate earnings to avoid U.S. federal income tax.

If a partnership (or any entity or arrangement treated as a partnership for U.S. federal income tax purposes) holds SRNG Securities, the tax treatment of such partnership and a person treated as a partner of such partnership will generally depend on the status of the partner and the activities of the partnership. Partnerships holding any SRNG Securities and persons that are treated as partners of such partnerships should consult their tax advisors as to the particular U.S. federal income tax consequences to them of the Domestication and the exercise of redemption rights with respect to their SRNG Class A ordinary shares.

This discussion is based on the Code, proposed, temporary and final Treasury Regulations promulgated thereunder, and judicial and administrative interpretations thereof, all as of the date hereof. All of the foregoing is subject to change or differing interpretations, which change could apply retroactively and could affect the tax considerations described herein.

We have not sought, and do not intend to, seek any rulings from the IRS as to any U.S. federal income tax considerations described herein. There can be no assurance that the IRS will not take positions inconsistent with the considerations discussed below or that any such positions would not be sustained by a court.

THIS DISCUSSION IS ONLY A SUMMARY OF CERTAIN U.S. FEDERAL INCOME TAX CONSIDERATIONS ASSOCIATED WITH THE DOMESTICATION AND EXERCISE OF REDEMPTION RIGHTS WITH RESPECT TO THE SRNG CLASS A ORDINARY SHARES. EACH HOLDER SHOULD CONSULT ITS OWN TAX ADVISOR WITH RESPECT TO THE PARTICULAR TAX CONSEQUENCES TO SUCH HOLDER OF THE DOMESTICATION AND THE BUSINESS COMBINATION, INCLUDING THE APPLICABILITY AND EFFECTS OF U.S. FEDERAL NON-INCOME, STATE AND LOCAL AND NON-U.S. TAX LAWS AND ANY APPLICABLE INCOME TAX TREATY.

 

I.

U.S. Holders

As used herein, a “U.S. Holder” is a beneficial owner of a SRNG Security who or that is, for U.S. federal income tax purposes:

 

   

an individual who is a citizen or resident of the United States;

 

   

a corporation (or other entity that is treated as a corporation) that is created or organized (or treated as created or organized) in or under the laws of the United States or any state thereof or the District of Columbia;

 

   

an estate whose income is subject to U.S. federal income tax regardless of its source; or

 

   

a trust if (1) a U.S. court can exercise primary supervision over the administration of such trust and one or more “United States persons” (as defined in Section 7701(a)(30) of the Code) have the authority to control all substantial decisions of the trust or (2) it has a valid election in place to be treated as a United States person.

A. Tax Effects of the Domestication to U.S. Holders

1. Generally

The U.S. federal income tax consequences of the Domestication will depend primarily upon whether the domestication qualifies as a “reorganization” within the meaning of Section 368 of the Code.

Under Section 368(a)(1)(F) of the Code, a reorganization is a “mere change in identity, form, or place of organization of one corporation, however effected” (an “F Reorganization”). Pursuant to the Domestication, SRNG will change its jurisdiction of incorporation from the Cayman Islands to Delaware, and, in connection with the Closing, will change its name to “Ginkgo Bioworks Holdings, Inc.”

 

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SRNG intends for the Domestication to qualify as an F Reorganization. SRNG has not requested, and does not intend to request, a ruling from the IRS as to the U.S. federal income tax consequences of the Domestication. Consequently, no assurance can be given that the IRS will not assert, or that a court would not sustain, a position contrary to any of those set forth below. Accordingly, each U.S. Holder of SRNG Securities is urged to consult its tax advisor with respect to the particular tax consequence of the Domestication to such U.S. Holder.

Assuming the Domestication qualifies as an F Reorganization, U.S. Holders of SRNG Securities generally should not recognize gain or loss for U.S. federal income tax purposes on the Domestication, except as provided below under the sections entitled “—3. Effects of Section 367 to U.S. Holders of SRNG Class A Ordinary Shares and —5. PFIC Considerations,” and the Domestication should be treated for U.S. federal income tax purposes as if SRNG (i) transferred all of its assets and liabilities to New Ginkgo in exchange for all of the outstanding common stock and warrants of New Ginkgo; and (ii) then distributed the common stock and warrants of New Ginkgo to the holders of securities of SRNG in liquidation of SRNG. The taxable year of SRNG will be deemed to end on the date of the Domestication.

Subject to the discussion below under the section entitled “—5. PFIC Considerations,” if the Domestication fails to qualify as an F Reorganization, a U.S. Holder of SRNG Securities generally would recognize gain or loss with respect to its SRNG Securities in an amount equal to the difference, if any, between the fair market value of the corresponding common stock and warrants of New Ginkgo received in the Domestication and the U.S. Holder’s adjusted tax basis in its corresponding SRNG Securities surrendered.

Because the Domestication will occur prior to the redemption of U.S. Holders that exercise redemption rights with respect to SRNG Class A ordinary shares, U.S. Holders exercising such redemption rights will be subject to the potential tax consequences of the Domestication. All U.S. Holders considering exercising redemption rights with respect to SRNG Class A ordinary shares are urged to consult with their tax advisors with respect to the potential tax consequences to them of the Domestication and exercise of redemption rights.

Following the Domestication, a U.S. Holder generally would be required to include in gross income as U.S. source dividend income the amount of any distribution of cash or other property paid on the New Ginkgo Class A common stock to the extent the distribution is paid out of New Ginkgo’s current or accumulated earnings and profits (as determined under U.S. federal income tax principles). U.S. Holders are urged to consult with their tax advisors regarding this and any other tax considerations of owning stock and warrants of a U.S. corporation, i.e., New Ginkgo, rather than a non-U.S. corporation following the Domestication.

2. Basis and Holding Period Considerations

Assuming the Domestication qualifies as an F Reorganization, subject to the discussion below under the section entitled “—5. PFIC Considerations”: (i) the tax basis of a share of New Ginkgo Class A common stock or a New Ginkgo warrant received by a U.S. Holder in the Domestication will equal the U.S. Holder’s tax basis in the SRNG Class A ordinary share or SRNG warrant surrendered in exchange therefor, increased by any amount included in the income of such U.S. Holder as a result of Section 367 of the Code (as discussed below) and (ii) the holding period for a share of New Ginkgo Class A common stock or a New Ginkgo warrant received by a U.S. Holder will include such U.S. Holder’s holding period for the SRNG Class A ordinary share or SRNG warrant surrendered in exchange therefor.

If the Domestication fails to qualify as an F Reorganization, the U.S. Holder’ basis in the Class A common stock and warrants of New Ginkgo would be equal to the fair market value of such Class A common stock and warrants of New Ginkgo on the date of the Domestication, and such U.S. Holder’ holding period for such Class A common stock and warrants of New Ginkgo would begin on the day following the date of the Domestication. Shareholders who hold different blocks of SRNG Securities (generally, SRNG Securities purchased or acquired on different dates or at different prices) should consult their tax advisors to determine how the above rules apply to them, and the discussion above does not specifically address all of the consequences to U.S. Holders who hold different blocks of SRNG Securities.

 

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3. Effects of Section 367 to U.S. Holders of SRNG Class A Ordinary Shares

Section 367 of the Code applies to certain transactions involving foreign corporations, including a domestication of a foreign corporation in a transaction that qualifies as an F Reorganization. Subject to the discussion below under the section entitled “—5. PFIC Considerations,” Section 367 of the Code imposes U.S. federal income tax on certain U.S. persons in connection with transactions that would otherwise be tax-deferred. Section 367(b) of the Code will generally apply to U.S. Holders on the date of the Domestication. Because the Domestication will occur prior to the redemption of U.S. Holders that exercise redemption rights with respect to their SRNG Class A ordinary shares, U.S. Holders exercising such redemption rights will be subject to the potential tax consequences of Section 367 of the Code and the PFIC rules, as discussed below under the section entitled “—5. PFIC Considerations,” as a result of the Domestication.

 

  a.

U.S. Holders Who Own 10 Percent or More (By Vote or Value) of SRNG Stock

Subject to the discussion below under the section entitled “—5. PFIC Considerations,” a U.S. Holder who beneficially owns (actually or constructively) 10% or more of the total combined voting power of all classes of SRNG stock entitled to vote or 10% or more of the total value of all classes of SRNG stock (a “10% U.S. Shareholder”) on the date of the Domestication must include in income as a dividend deemed paid by SRNG the “all earnings and profits amount” attributable to the SRNG Class A ordinary shares it directly owns within the meaning of Treasury Regulations under Section 367 of the Code. A U.S. Holder’s ownership of SRNG warrants will be taken into account in determining whether such U.S. Holder is a 10% U.S. Shareholder. Complex attribution rules apply in determining whether a U.S. Holder is a 10% U.S. Shareholder and all U.S. Holders are urged to consult their tax advisors with respect to these attribution rules.

A 10% U.S. Shareholder’s “all earnings and profits amount” with respect to its SRNG Class A ordinary shares is the net positive earnings and profits of SRNG (as determined under Treasury Regulations under Section 367) attributable to such SRNG Class A ordinary shares (as determined under Treasury Regulations under Section 367) but without regard to any gain that would be realized on a sale or exchange of such SRNG Class A ordinary shares. Treasury Regulations under Section 367 provide that the “all earnings and profits amount” attributable to a shareholder’s stock is determined according to the principles of Section 1248 of the Code. In general, Section 1248 of the Code and the Treasury Regulations thereunder provide that the amount of earnings and profits attributable to a block of stock (as defined in Treasury Regulations under Section 1248 of the Code) in a foreign corporation is the ratably allocated portion of the foreign corporation’s earnings and profits generated during the period the shareholder held the block of stock.

SRNG does not expect to have significant, if any, cumulative net earnings and profits on the date of the Domestication. If SRNG’s cumulative net earnings and profits through the date of the Domestication is less than or equal to zero, then a 10% U.S. Shareholder should not be required to include in gross income an “all earnings and profits amount” with respect to its SRNG Class A ordinary shares. However, the determination of earnings and profits is a complex determination and may be impacted by numerous factors. It is possible that the amount of SRNG’s cumulative net earnings and profits could be positive through the date of the Domestication, in which case a 10% U.S. Shareholder would be required to include its “all earnings and profits amount” in income as a deemed dividend deemed paid by SRNG under Treasury Regulations under Section 367 as a result of the Domestication.

 

  b.

U.S. Holders Whose SRNG Class A Ordinary Shares Have a Fair Market Value of $50,000 or More and Who Own Less Than 10% (By Vote or Value) of SRNG Stock

Subject to the discussion below under the section entitled “—5. PFIC Considerations,” a U.S. Holder whose SRNG Class A ordinary shares have a fair market value of $50,000 or more on the date of the Domestication and who, on the date of the Domestication, is not a 10% U.S. Shareholder generally will recognize gain (but not loss) with respect to its SRNG Class A ordinary shares in the Domestication or, in the alternative, may elect to recognize the “all earnings and profits” amount attributable to such U.S. Holder’s SRNG Class A ordinary shares as described below.

 

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Subject to the discussion below under the section entitled “—5. PFIC Considerations, unless a U.S. Holder makes the “all earnings and profits election” as described below, such U.S. Holder generally must recognize gain (but not loss) with respect to New Ginkgo Class A common stock received in the Domestication in an amount equal to the excess of the fair market value of such New Ginkgo Class A common stock over the U.S. Holder’s adjusted tax basis in the SRNG Class A ordinary shares deemed surrendered in exchange therefor. U.S. Holders who hold different blocks of SRNG Class A ordinary shares (generally, SRNG Class A ordinary shares purchased or acquired on different dates or at different prices) should consult their tax advisors to determine how the above rules apply to them.

In lieu of recognizing any gain as described in the preceding paragraph, a U.S. Holder may elect to include in income as a deemed dividend paid by SRNG the “all earnings and profits amount” attributable to its SRNG Class A ordinary shares under Section 367(b) of the Code. There are, however, strict conditions for making this election. This election must comply with applicable Treasury Regulations and generally must include, among other things:

 

  (i)

a statement that the Domestication is a Section 367(b) exchange (within the meaning of the applicable Treasury Regulations);

 

  (ii)

a complete description of the Domestication;

 

  (iii)

a description of any stock, securities or other consideration transferred or received in the Domestication;

 

  (iv)

a statement describing the amounts required to be taken into account for U.S. federal income tax purposes;

 

  (v)

a statement that the U.S. Holder is making the election that includes (A) a copy of the information that the U.S. Holder received from SRNG establishing and substantiating the U.S. Holder’s “all earnings and profits amount” with respect to the U.S. Holder’s SRNG Class A ordinary shares and (B) a representation that the U.S. Holder has notified SRNG (or New Ginkgo) that the U.S. Holder is making the election; and

 

  (vi)

certain other information required to be furnished with the U.S. Holder’s tax return or otherwise furnished pursuant to the Code or the Treasury Regulations.

In addition, the election must be attached by an electing U.S. Holder to such U.S. Holder’s timely filed U.S. federal income tax return for the year of the Domestication, and the U.S. Holder must send notice of making the election to SRNG or New Ginkgo no later than the date such tax return is filed. In connection with this election, SRNG may in its discretion provide each U.S. Holder eligible to make such an election with information regarding SRNG’s earnings and profits upon written request.

SRNG does not expect to have significant, if any, cumulative earnings and profits through the date of the Domestication and if that proves to be the case, U.S. Holders who make this election are not expected to have a significant income inclusion under Section 367(b) of the Code, provided that the U.S. Holder properly executes the election and complies with the applicable notice requirements. However, as noted above, if it were determined that SRNG had positive earnings and profits through the date of the Domestication, a U.S. Holder that makes the election described herein could have an “all earnings and profits amount” with respect to its SRNG Class A ordinary shares, and thus could be required to include that amount in income as a deemed dividend deemed paid by SRNG under applicable Treasury Regulations as a result of the Domestication.

EACH U.S. HOLDER IS URGED TO CONSULT ITS TAX ADVISOR REGARDING THE CONSEQUENCES TO IT OF MAKING AN ELECTION TO INCLUDE IN INCOME THE “ALL EARNINGS AND PROFITS AMOUNT” ATTRIBUTABLE TO ITS SRNG CLASS A ORDINARY SHARES UNDER SECTION 367(b) OF THE CODE AND THE APPROPRIATE FILING REQUIREMENTS WITH RESPECT TO SUCH AN ELECTION.

 

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  c.

U.S. Holders Whose SRNG Class A Ordinary Shares Have a Fair Market Value Less Than $50,000 and Who Own Less Than 10% (By Vote or Value) of SRNG Stock.

A U.S. Holder who is not a 10% U.S. Shareholder and whose SRNG Class A ordinary shares have a fair market value of less than $50,000 on the date of the Domestication should not be required to recognize any gain or loss or include any part of the “all earnings and profits amount” in income under Section 367 of the Code in connection with the Domestication. However, such U.S. Holder may be subject to taxation under the PFIC rules as discussed below under the section entitled “—5. PFIC Considerations.

4. Tax Consequences for U.S. Holders of SRNG Warrants

Assuming the Domestication qualifies as an F Reorganization, subject to the considerations described under the section entitled “—3. Effects of Section 367 to U.S. Holders of SRNG Class A Ordinary Shares—a. U.S. Holders Who Own 10 Percent or More (By Vote or Value) of SRNG Stock” above relating to a U.S. Holder’s ownership of SRNG warrants being taken into account in determining whether such U.S. Holder is a 10% U.S. Shareholder for purposes of Section 367(b) of the Code, and the considerations described below under the section entitled “—5. PFIC Considerations” relating to the PFIC rules, a U.S. Holder of SRNG warrants should not be subject to U.S. federal income tax with respect to the exchange of their SRNG warrants for New Ginkgo warrants in the Domestication.

ALL U.S. HOLDERS ARE URGED TO CONSULT THEIR TAX ADVISORS WITH RESPECT TO THE EFFECT OF SECTION 367 OF THE CODE TO THEIR PARTICULAR CIRCUMSTANCES.

5. PFIC Considerations

Regardless of whether the Domestication qualifies as an F Reorganization (and, if the Domestication qualifies as an F Reorganization, in addition to the discussion under the section entitled “—3. Effects of Section 367 to U.S. Holders of SRNG Class A Ordinary Shares” above), the Domestication could be a taxable event to U.S. Holders under the PFIC provisions of the Code if SRNG is considered a PFIC.

 

  a.

Definition of a PFIC

A foreign (i.e., non-U.S.) corporation will be classified as a PFIC for U.S. federal income tax purposes if either (i) at least 75% of its gross income in a taxable year, including its pro rata share of the gross income of any corporation in which it is considered to own at least 25% of the shares by value, is passive income or (ii) at least 50% of its assets in a taxable year (generally determined based on fair market value and averaged quarterly over the year), including its pro rata share of the assets of any corporation in which it is considered to own at least 25% of the shares by value, are held for the production of, or produce, passive income. Passive income generally includes dividends, interest, rents and royalties (other than rents or royalties derived from the active conduct of a trade or business) and gains from the disposition of passive assets. The determination of whether a foreign corporation is a PFIC is made annually. Pursuant to a “startup exception,” a foreign corporation will not be a PFIC for the first taxable year the foreign corporation has gross income (the “startup year”) if (1) no predecessor of the foreign corporation was a PFIC; (2) the foreign corporation satisfies the IRS that it will not be a PFIC for either of the first two taxable years following the startup year; and (3) the foreign corporation is not in fact a PFIC for either of those years.

 

  b.

PFIC Status of SRNG

[Based upon the composition of its income and assets, and upon a review of its financial statements, SRNG believes that it likely will not be eligible for the startup exception and therefore likely has been a PFIC since its first taxable year and will likely be considered a PFIC for the taxable year which ends as a result of the Domestication.]

 

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  c.

Effects of PFIC Rules on the Domestication

Even if the Domestication qualifies as an F Reorganization, Section 1291(f) of the Code requires that, to the extent provided in Treasury Regulations, a U.S. person who disposes of stock of a PFIC (including for this purpose, under a proposed Treasury Regulation that generally treats an “option” (which would include a SRNG warrant) to acquire the stock of a PFIC as stock of the PFIC, exchanging warrants of a PFIC for newly issued warrants in connection with a domestication transaction) recognizes gain notwithstanding any other provision of the Code. No final Treasury Regulations are currently in effect under Section 1291(f) of the Code. However, proposed Treasury Regulations under Section 1291(f) of the Code have been promulgated with a retroactive effective date. If finalized in their current form, those proposed Treasury Regulations would require gain recognition to U.S. Holders of SRNG Class A ordinary shares and SRNG warrants as a result of the Domestication if:

 

  (i)

SRNG were classified as a PFIC at any time during such U.S. Holder’s holding period in such SRNG Class A ordinary shares or SRNG warrants; and

 

  (ii)

the U.S. Holder had not timely made (a) a QEF Election (as defined below) for the first taxable year in which the U.S. Holder owned such SRNG Class A ordinary shares or in which SRNG was a PFIC, whichever is later (or a QEF Election along with a purging election), or (b) an MTM Election (as defined below) with respect to such SRNG Class A ordinary shares. Currently, applicable Treasury Regulations provide that neither a QEF Election nor an MTM Election can be made with respect to warrants.

The tax on any such recognized gain would be imposed based on a complex set of computational rules designed to offset the tax deferral with respect to the undistributed earnings of SRNG. Under these rules (the “excess distributions regime”):

 

   

the U.S. Holder’s gain will be allocated ratably over the U.S. Holder’s holding period for such U.S. Holder’s SRNG Class A ordinary shares or SRNG warrants;

 

   

the amount of gain allocated to the U.S. Holder’s taxable year in which the U.S. Holder recognized the gain, or to the period in the U.S. Holder’s holding period before the first day of the first taxable year in which SRNG was a PFIC, will be taxed as ordinary income;

 

   

the amount of gain allocated to other taxable years (or portions thereof) of the U.S. Holder and included in such U.S. Holder’s holding period would be taxed at the highest tax rate in effect for that year and applicable to the U.S. Holder; and

 

   

an additional tax equal to the interest charge generally applicable to underpayments of tax will be imposed on the U.S. Holder in respect of the tax attributable to each such other taxable year (described in the third bullet above) of such U.S. Holder.

In addition, the proposed Treasury Regulations provide coordinating rules with Section 367(b) of the Code, whereby, if the gain recognition rule of the proposed Treasury Regulations applied to a disposition of PFIC stock that results from a transfer with respect to which Section 367(b) of the Code requires the U.S. Holder to recognize gain or include an amount in income as a deemed dividend deemed paid by SRNG, the gain realized on the transfer is taxable as an excess distribution under these rules, and the excess, if any, of the amount to be included in income under Section 367(b) of the Code over the gain realized under these rules is taxable as provided under Section 367(b) of the Code. See the discussion above under the section entitled “—3. Effects of Section 367 to U.S. Holders of SRNG Class A Ordinary Shares.

It is difficult to predict whether, in what form and with what effective date, final Treasury Regulations under Section 1291(f) of the Code may be adopted or how any such final Treasury Regulations would apply. Therefore, U.S. Holders of SRNG Class A ordinary shares that have not made a timely and effective QEF Election (or a QEF Election along with a purging election) or an MTM Election (each as defined below) may, pursuant to the

 

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proposed Treasury Regulations, be subject to taxation under the PFIC rules on the Domestication with respect to their SRNG Class A ordinary shares and SRNG warrants in the manner set forth above. A U.S. Holder that made a timely and effective QEF Election (or a QEF Election along with a purging election) or an MTM Election with respect to its SRNG Class A ordinary shares is referred to herein as an “Electing Shareholder” and a U.S. Holder that is not an Electing Shareholder is referred to herein as a “Non-Electing Shareholder.”

The application of the PFIC rules to U.S. Holders of SRNG warrants is unclear. As discussed above, a proposed Treasury Regulation issued under the PFIC rules generally treats an “option” (which would include a SRNG warrant) to acquire the stock of a PFIC as stock of the PFIC, while a final Treasury Regulation issued under the PFIC rules provides that the QEF Election does not apply to options and no MTM Election (as defined below) is currently available with respect to options. Therefore, it is possible that the proposed Treasury Regulations if finalized in their current form would apply to cause gain recognition on the exchange of SRNG warrants for New Ginkgo warrants pursuant to the Domestication.

Any gain recognized by a Non-Electing Shareholder of SRNG Class A ordinary shares or a U.S. Holder of SRNG warrants as a result of the Domestication pursuant to PFIC rules would be taxable income to such U.S. Holder, taxed under the PFIC rules in the manner set forth above, with no corresponding receipt of cash.

As noted above, the Domestication could be a taxable event under the PFIC rules regardless of whether the Domestication qualifies as an F Reorganization if SRNG is considered a PFIC. If the Domestication fails to qualify as an F Reorganization, absent a QEF Election (or a QEF Election along with a purging election) or an MTM Election, a U.S. Holder would be taxed under the PFIC rules in the manner set forth above.

ALL U.S. HOLDERS ARE URGED TO CONSULT THEIR TAX ADVISORS REGARDING THE EFFECTS OF THE PFIC RULES ON THE DOMESTICATION, INCLUDING THE IMPACT OF ANY PROPOSED OR FINAL TREASURY REGULATIONS.

 

  d.

QEF Election and Mark-to-Market Election

The impact of the PFIC rules on a U.S. Holder of SRNG Class A ordinary shares will depend on whether the U.S. Holder has made a timely and effective election to treat SRNG as a “qualified electing fund” under Section 1295 of the Code for the taxable year that is the first year in the U.S. Holder’s holding period of SRNG Class A ordinary shares during which SRNG qualified as a PFIC (a “QEF Election”) or, if in a later taxable year, the U.S. Holder made a QEF Election along with a purging election. One type of purging election creates a deemed sale of the U.S. Holder’s SRNG Class A ordinary shares at their then fair market value and requires the U.S. Holder to recognize gain pursuant to such purging election subject to the special PFIC tax and interest charge rules described above. As a result of any such purging election, the U.S. Holder would increase the adjusted tax basis in its SRNG Class A ordinary shares by the amount of the gain recognized and, solely for purposes of the PFIC rules, would have a new holding period in its SRNG Class A ordinary shares. U.S. Holders are urged to consult their tax advisors as to the application of the rules governing purging elections to their particular circumstances.

A U.S. Holder’s ability to make a timely and effective QEF Election (or a QEF Election along with a purging election) with respect to SRNG is contingent upon, among other things, the provision by SRNG of a “PFIC Annual Information Statement” to such U.S. Holder. SRNG will endeavor to provide PFIC Annual Information Statements, upon written request, to U.S. Holders of SRNG Class A ordinary shares with respect to each taxable year for which SRNG determines it is a PFIC. There is no assurance, however, that SRNG will timely provide such information. As discussed further above, a U.S. Holder is not able to make a QEF Election with respect to SRNG warrants under applicable final Treasury Regulations. An Electing Shareholder generally would not be subject to the adverse PFIC rules discussed above with respect to their SRNG Class A ordinary shares. As a result, such an Electing Shareholder generally should not recognize gain or loss as a result of the Domestication (except to the extent described under “—3. Effects of Section 367 to U.S. Holders of SRNG

 

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Class A Ordinary Shares” and subject to the discussion above under “—A. Tax Effects of the Domestication to U.S. Holders”), but rather would include annually in gross income its pro rata share of the ordinary earnings and net capital gain of SRNG, whether or not such amounts are actually distributed.

The impact of the PFIC rules on a U.S. Holder of SRNG Class A ordinary shares may also depend on whether the U.S. Holder has made a mark-to-market election under Section 1296 of the Code. U.S. Holders who hold (actually or constructively) stock of a foreign corporation that is classified as a PFIC may annually elect to mark such stock to its market value if such stock is “marketable stock,” generally, stock that is regularly traded on a national securities exchange that is registered with the SEC, including Nasdaq (an “MTM Election”). No assurance can be given that the SRNG Class A ordinary shares are considered to be marketable stock for purposes of the MTM Election or whether the other requirements of this election are satisfied. If such an election is available and has been made, such U.S. Holders will generally not be subject to the excess distributions regime discussed above with respect their SRNG Class A ordinary shares in connection with the Domestication. Instead, in general, the U.S. Holder will include as ordinary income each year the excess, if any, of the fair market value of its SRNG Class A ordinary shares at the end of its taxable year over its adjusted basis in its SRNG Class A ordinary shares. The U.S. Holder also will recognize an ordinary loss in respect of the excess, if any, of its adjusted basis in its SRNG Class A ordinary shares over the fair market value of its SRNG Class A ordinary shares at the end of its taxable year (but only to the extent of the net amount of previously included income as a result of the MTM Election). The U.S. Holder’s basis in its SRNG Class A ordinary shares will be adjusted to reflect any such income or loss amounts, and any further gain recognized on a sale or other taxable disposition of its SRNG Class A ordinary shares will be treated as ordinary income. However, if the MTM Election is not made by a U.S. Holder with respect to the first taxable year of its holding period for the PFIC stock, then the excess distributions regime discussed above will apply to certain dispositions of, distributions on and other amounts taxable with respect to SRNG Class A ordinary shares, including in connection with the Domestication. An MTM Election is not available with respect to warrants, including the SRNG warrants.

THE RULES DEALING WITH PFICS ARE VERY COMPLEX AND ARE IMPACTED BY VARIOUS FACTORS IN ADDITION TO THOSE DESCRIBED ABOVE, INCLUDING THE APPLICATION OF THE RULES ADDRESSING OVERLAPS IN THE PFIC RULES AND THE SECTION 367(b) RULES AND THE RULES RELATING TO CONTROLLED FOREIGN CORPORATIONS. ALL U.S. HOLDERS ARE URGED TO CONSULT THEIR TAX ADVISORS REGARDING THE CONSEQUENCES TO THEM OF THE PFIC RULES, INCLUDING, WITHOUT LIMITATION, WHETHER A QEF ELECTION (OR A QEF ELECTION ALONG WITH A PURGING ELECTION), AN MTM ELECTION OR ANY OTHER ELECTION IS AVAILABLE AND WHETHER AND HOW ANY OVERLAP RULES APPLY, AND THE CONSEQUENCES TO THEM OF ANY SUCH ELECTION OR OVERLAP RULE AND THE IMPACT OF ANY PROPOSED OR FINAL PFIC TREASURY REGULATIONS.

B. Tax Effects to U.S. Holders of Exercising Redemption Rights

1. Generally

The U.S. federal income tax consequences to a U.S. Holder of SRNG Class A ordinary shares (which will be exchanged for New Ginkgo Class A common stock in the Domestication) that exercises its redemption rights with respect to its SRNG Class A ordinary shares to receive cash in exchange for all or a portion of its New Ginkgo Class A common stock received in the Domestication will depend on whether the redemption qualifies as a sale of shares of New Ginkgo Class A common stock under Section 302 of the Code. If the redemption qualifies as a sale of shares of New Ginkgo Class A common stock by a U.S. Holder, the tax consequences to such U.S. Holder are as described below under the section entitled “—3. Taxation of Redemption Treated as a Sale of New Ginkgo Class A Common Stock. If the redemption does not qualify as a sale of shares of New Ginkgo Class A common stock, a U.S. Holder will be treated as receiving a corporate distribution with the tax consequences to such U.S. Holder as described below under the section entitled “—2. Taxation of Redemption Treated as a Distribution.

 

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Whether a redemption of shares of New Ginkgo Class A common stock qualifies for sale treatment will depend largely on the total number of shares of New Ginkgo stock treated as held by the redeemed U.S. Holder before and after the redemption (including any stock constructively owned by the U.S. Holder as a result of owning New Ginkgo warrants and any New Ginkgo Class A common stock that a U.S. Holder would directly or indirectly acquire pursuant to the Business Combination or the PIPE Investment) relative to all of the New Ginkgo stock outstanding both before and after the redemption, including New Ginkgo Class B common stock. The redemption of New Ginkgo Class A common stock generally will be treated as a sale of New Ginkgo Class A common stock (rather than as a corporate distribution) if the redemption (1) is “substantially disproportionate” with respect to the U.S. Holder, (2) results in a “complete termination” of the U.S. Holder’s interest in New Ginkgo or (3) is “not essentially equivalent to a dividend” with respect to the U.S. Holder. These tests are explained more fully below.

In determining whether any of the foregoing tests result in a redemption qualifying for sale treatment, a U.S. Holder takes into account not only shares of New Ginkgo stock actually owned by the U.S. Holder, but also shares of New Ginkgo stock that are constructively owned by it under certain attribution rules set forth in the Code. A U.S. Holder may constructively own, in addition to stock owned directly, stock owned by certain related individuals and entities in which the U.S. Holder has an interest or that have an interest in such U.S. Holder, as well as any stock that the holder has a right to acquire by exercise of an option, which would generally include New Ginkgo Class A common stock which could be acquired pursuant to the exercise of New Ginkgo warrants. Moreover, any New Ginkgo Class A common stock that a U.S. Holder directly or constructively acquires pursuant to the Business Combination or the PIPE Investment generally should be included in determining the U.S. federal income tax treatment of the redemption.

In order to meet the substantially disproportionate test, the percentage of New Ginkgo’s outstanding voting stock actually and constructively owned by the U.S. Holder immediately following the redemption of shares of New Ginkgo Class A common stock must, among other requirements, be less than eighty percent (80%) of the percentage of New Ginkgo’s outstanding voting stock actually and constructively owned by the U.S. Holder immediately before the redemption (taking into account both redemptions by other holders of New Ginkgo Class A common stock and the New Ginkgo Class A common stock (and, potentially, New Ginkgo Class B common stock) to be issued pursuant to the Business Combination or the PIPE Investment, as applicable). There will be a complete termination of a U.S. Holder’s interest if either (1) all of the shares of New Ginkgo stock actually and constructively owned by the U.S. Holder are redeemed or (2) all of the shares of New Ginkgo Class A common stock actually owned by the U.S. Holder are redeemed and the U.S. Holder is eligible to waive, and effectively waives in accordance with specific rules, the attribution of stock owned by certain family members and the U.S. Holder does not constructively own any other shares of New Ginkgo stock (including any stock constructively owned by the U.S. Holder as a result of owning New Ginkgo warrants). The redemption of New Ginkgo Class A common stock will not be essentially equivalent to a dividend if the redemption results in a “meaningful reduction” of the U.S. Holder’s proportionate interest in New Ginkgo. Whether the redemption will result in a meaningful reduction in a U.S. Holder’s proportionate interest in New Ginkgo will depend on the particular facts and circumstances. However, the IRS has indicated in a published ruling that even a small reduction in the proportionate interest of a small minority stockholder in a publicly held corporation where such stockholder exercises no control over corporate affairs may constitute such a “meaningful reduction.”

If none of the foregoing tests is satisfied, then the redemption of shares of New Ginkgo Class A common stock will be treated as a corporate distribution to the redeemed U.S. Holder and the tax effects to such a U.S. Holder will be as described below under the section entitled “—2. Taxation of Redemption Treated as a Distribution. After the application of those rules, any remaining tax basis of the U.S. Holder in the redeemed New Ginkgo Class A common stock will be added to the U.S. Holder’s adjusted tax basis in its remaining New Ginkgo Class A common stock, or, if it has none, to the U.S. Holder’s adjusted tax basis in its New Ginkgo warrants or possibly in other New Ginkgo Class A common stock constructively owned by it.

 

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2. Taxation of Redemption Treated as a Distribution

If the redemption of a U.S. Holder’s shares of New Ginkgo Class A common stock is treated as a corporate distribution, as discussed above under the section entitled “—1. Generally,” the amount of cash received in the redemption generally will constitute a dividend for U.S. federal income tax purposes to the extent paid from New Ginkgo’s current or accumulated earnings and profits, as determined under U.S. federal income tax principles. Distributions in excess of New Ginkgo’s current and accumulated earnings and profits will constitute a return of capital that will be applied against and reduce (but not below zero) the U.S. Holder’s adjusted tax basis in its shares of New Ginkgo Class A common stock. Any remaining excess will be treated as gain realized on the sale of New Ginkgo Class A common stock and will be treated as described below under the section entitled “—3. Taxation of Redemption Treated as a Sale of New Ginkgo Class A Common Stock.

3. Taxation of Redemption Treated as a Sale of New Ginkgo Class A Common Stock

If the redemption of a U.S. Holder’s shares of New Ginkgo Class A common stock is treated as a sale, as discussed above under the section entitled “ —1. Generally, a U.S. Holder generally will recognize capital gain or loss in an amount equal to the difference between the amount of cash received in the redemption and the U.S. Holder’s adjusted tax basis in the shares of New Ginkgo Class A common stock redeemed. Any such capital gain or loss generally will be long-term capital gain or loss if the U.S. Holder’s holding period for the New Ginkgo Class A common stock so disposed of exceeds one year. Long-term capital gains recognized by non-corporate U.S. Holders generally will be eligible to be taxed at reduced rates. The deductibility of capital losses is subject to limitations.

U.S. Holders who hold different blocks of New Ginkgo Class A common stock (including as a result of holding different blocks of SRNG Class A ordinary shares purchased or acquired on different dates or at different prices) should consult their tax advisors to determine how the above rules apply to them.

Because the Domestication will occur prior to the redemption of U.S. Holders that exercise redemption rights, U.S. Holders exercising redemption rights will be subject to the potential tax consequences of Section 367 of the Code and the PFIC rules as a result of the Domestication (discussed further above).

ALL U.S. HOLDERS ARE URGED TO CONSULT THEIR TAX ADVISORS AS TO THE TAX CONSEQUENCES TO THEM OF A REDEMPTION OF ALL OR A PORTION OF THEIR NEW GINKGO CLASS A COMMON STOCK PURSUANT TO AN EXERCISE OF REDEMPTION RIGHTS.

4. Information Reporting and Backup Withholding

Payments of cash to a U.S. Holder as a result of the redemption of New Ginkgo Class A common stock may be subject to information reporting to the IRS and possible U.S. backup withholding. Backup withholding will not apply, however, to a U.S. Holder who furnishes a correct taxpayer identification number and makes other required certifications, or who is otherwise exempt from backup withholding and establishes such exempt status.

Backup withholding is not an additional tax. Amounts withheld as backup withholding may be credited against a U.S. Holder’s U.S. federal income tax liability, and the U.S. Holder generally may obtain a refund of any excess amounts withheld under the backup withholding rules by timely filing the appropriate claim for refund with the IRS and furnishing any required information.

 

II.

Non-U.S. Holders

As used herein, a “Non-U.S. Holder” is a beneficial owner of a SRNG Security who or that is, for U.S. federal income tax purposes:

 

   

a non-resident alien individual, other than certain former citizens and residents of the United States subject to U.S. tax as expatriates;

 

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a foreign corporation; or

 

   

an estate or trust that is not a U.S. Holder;

but generally does not include an individual who is present in the United States for 183 days or more in the taxable year of the disposition of SRNG Securities or New Ginkgo Class A common stock or warrants, as applicable. Such individuals should consult their tax advisors regarding the U.S. federal income tax consequences of the Domestication and redemption of New Ginkgo Class A common stock received in connection with the Domestication.

 

  A.

Effects of the Domestication to Non-U.S. Holders

The Domestication is not expected to result in any U.S. federal income tax consequences to Non-U.S. Holders of SRNG Securities.

The following describes U.S. federal income tax considerations relating to the ownership and disposition of New Ginkgo Class A common stock and New Ginkgo warrants by a Non-U.S. Holder after the Domestication.

 

  B.

Distributions

In general, any distributions (including constructive distributions, but not including certain distributions of New Ginkgo common stock or rights to acquire New Ginkgo common stock) made to a Non-U.S. Holder of shares of New Ginkgo Class A common stock, to the extent paid out of New Ginkgo’s current or accumulated earnings and profits (as determined under U.S. federal income tax principles), will constitute dividends for U.S. federal income tax purposes and, provided such dividends are not effectively connected with the Non-U.S. Holder’s conduct of a trade or business within the United States, New Ginkgo will be required to withhold tax from the gross amount of the dividend at a rate of 30%, unless such Non-U.S. Holder is eligible for a reduced rate of withholding tax under an applicable income tax treaty and provides proper certification of its eligibility for such reduced rate (usually on an IRS Form W-8BEN or W-8BEN-E). In the case of any constructive dividend, it is possible that this tax would be withheld from any amount owed to a Non-U.S. Holder by the applicable withholding agent, including cash distributions on other property or sale proceeds from warrants or other property subsequently paid or credited to such Non-U.S. Holder. Any distribution not constituting a dividend will be treated first as reducing (but not below zero) the Non-U.S. Holder’s adjusted tax basis in its shares of New Ginkgo Class A common stock and, to the extent such distribution exceeds the Non-U.S. Holder’s adjusted tax basis, as gain realized from the sale or other disposition of the New Ginkgo Class A common stock, which will be treated as described under —C. Sale, Taxable Exchange or Other Taxable Disposition of New Ginkgo Class A Common Stock and Warrants” below. In addition, if New Ginkgo determines that it is likely to be classified as a “United States real property holding corporation” (see “Sale, Taxable Exchange or Other Taxable Disposition of New Ginkgo Class A Common Stock and Warrants” below), New Ginkgo may withhold 15% of any distribution that exceeds its current and accumulated earnings and profits.

The withholding tax generally does not apply to dividends paid to a Non-U.S. Holder who provides a Form W-8ECI, certifying that the dividends are effectively connected with the Non-U.S. Holder’s conduct of a trade or business within the United States. Instead, the effectively connected dividends will be subject to regular U.S. federal income tax as if the Non-U.S. Holder were a U.S. resident, subject to an applicable income tax treaty providing otherwise. A Non-U.S. Holder that is treated as a foreign corporation for U.S. federal income tax purposes and receives effectively connected dividends may also be subject to an additional “branch profits tax” imposed at a rate of 30% (or a lower applicable treaty rate).

 

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  C.

Sale, Taxable Exchange or Other Taxable Disposition of New Ginkgo Class A Common Stock and Warrants

A Non-U.S. Holder generally will not be subject to U.S. federal income or withholding tax in respect of gain recognized on a sale, taxable exchange or other taxable disposition of its New Ginkgo Class A common stock or New Ginkgo warrants (including an expiration or redemption of the New Ginkgo warrants, or a redemption of New Ginkgo Class A common stock that is treated as a sale or exchange as described under “—D. Tax Effects to Non-U.S. Holders of Exercising Redemption Rights”), unless:

 

  (i)

the gain is effectively connected with the conduct by the Non-U.S. Holder of a trade or business within the United States (and, under certain income tax treaties, is attributable to a U.S. permanent establishment or fixed base maintained by the Non-U.S. Holder); or

 

  (ii)

New Ginkgo is or has been a “United States real property holding corporation” (a “USRPHC”) for U.S. federal income tax purposes, as discussed below, at any time during the shorter of the five-year period ending on the date of disposition or redemption or the Non-U.S. Holder’s holding period for the applicable security, except, in the case where shares of the New Ginkgo Class A common stock are “regularly traded on an established securities market” (within the meaning of applicable Treasury Regulations, referred to herein as “regularly traded”), the Non-U.S. Holder (i) has owned, directly or constructively, at all times within the shorter of the five-year period preceding the disposition of such New Ginkgo Class A common stock or such Non-U.S. Holder’s holding period for such New Ginkgo Class A common stock, 5% or less of the New Ginkgo Class A common stock or (ii) has owned, directly or constructively, at all times within the shorter of the five-year period preceding the disposition of the warrants or such Non-U.S. Holder’s holding period for such warrants, 5% or less of the total fair market value of New Ginkgo warrants, provided New Ginkgo warrants are considered to be regularly traded. It is unclear how the rules for determining the 5% threshold for this purpose would be applied with respect to the New Ginkgo Class A common stock and warrants, including how a Non-U.S. Holder’s ownership of New Ginkgo warrants impacts the 5% threshold determination with respect to its shares of New Ginkgo Class A common stock. In addition, special rules may apply in the case of a disposition of New Ginkgo warrants if New Ginkgo Class A common stock is considered to be regularly traded, but the warrants are not considered to be regularly traded. There can be no assurance that New Ginkgo Class A common stock is or has been treated as regularly traded on an established securities market for this purpose or as to whether New Ginkgo Class A common stock or New Ginkgo warrants will be considered to be regularly traded in the future. Non-U.S. Holders should consult their own tax advisors regarding the application of the foregoing rules in light of their particular facts and circumstances.

Unless an applicable treaty provides otherwise, gain described in the first bullet point above will be subject to tax at generally applicable U.S. federal income tax rates as if the Non-U.S. Holder were a U.S. resident. Any gains described in the first bullet point above of a Non-U.S. Holder that is treated as a foreign corporation for U.S. federal income tax purposes may also be subject to an additional “branch profits tax” imposed at a thirty percent (30%) rate (or a lower applicable income tax treaty rate).

If the second bullet point above applies to a Non-U.S. Holder, gain recognized by such Holder will be subject to tax at generally applicable U.S. federal income tax rates. In addition, New Ginkgo may be required to withhold U.S. federal income tax at a rate of fifteen percent (15%) of the amount realized upon such disposition or redemption. It is not expected that New Ginkgo would be a USRPHC after the Domestication or immediately after the Business Combination is completed. However, because New Ginkgo’s status as a USPRHC depends on the composition its business assets, which may change, no assurance can be provided as to whether New Ginkgo would be treated as a USRPHC in any future year.

 

  D.

Tax Effects to Non-U.S. Holders of Exercising Redemption Rights

The U.S. federal income tax consequences to a Non-U.S. Holder of SRNG Class A ordinary shares that exercises its redemption rights to receive cash from the trust account in exchange for all or a portion of its New Ginkgo Class A common stock received in the Domestication will depend on whether the redemption qualifies as

 

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a sale of the New Ginkgo common stock redeemed, as described above under “I. U.S. Holders—B. Tax Effects to U.S. Holders of Exercising Redemption Rights—1. Generally. If such a redemption qualifies as a sale of New Ginkgo common stock, the U.S. federal income tax consequences to the Non-U.S. Holder will be as described above under —C. Sale, Taxable Exchange or Other Taxable Disposition of New Ginkgo Class A Common Stock and Warrants. If such a redemption does not qualify as a sale of New Ginkgo Class A common stock, the Non-U.S. Holder will be treated as receiving a corporate distribution, the U.S. federal income tax consequences of which are described above under “—B. Distributions.”

Because it may not be certain at the time a Non-U.S. Holder is redeemed whether such Non-U.S. Holder’s redemption will be treated as a sale of shares or a corporate distribution, and because such determination will depend in part on a Non-U.S. Holder’s particular circumstances, the applicable withholding agent may not be able to determine whether (or to what extent) a Non-U.S. Holder is treated as receiving a dividend for U.S. federal income tax purposes. Therefore, the applicable withholding agent may withhold tax at a rate of 30% (or such lower rate as may be specified by an applicable income tax treaty) on the gross amount of any consideration paid to a Non-U.S. Holder in redemption of such Non-U.S. Holder’s New Ginkgo Class A common stock, unless (i) the applicable withholding agent has established special procedures allowing Non-U.S. Holders to certify that they are exempt from such withholding tax and (ii) such Non-U.S. Holders are able to certify that they meet the requirements of such exemption (e.g., because such Non-U.S. Holders are not treated as receiving a dividend under the Section 302 tests described above under the section entitled “I. U.S. Holders—B. Tax Effects to U.S. Holders of Exercising Redemption Rights—1. Generally”). However, there can be no assurance that any applicable withholding agent will establish such special certification procedures. If an applicable withholding agent withholds excess amounts from the amount payable to a Non-U.S. Holder, such Non-U.S. Holder generally may obtain a refund of any such excess amounts by timely filing an appropriate claim for refund with the IRS. Non-U.S. Holders should consult their own tax advisors regarding the application of the foregoing rules in light of their particular facts and circumstances and any applicable procedures or certification requirements.

 

  E.

Information Reporting Requirements and Backup Withholding

Information returns will be filed with the IRS in connection with payments of distributions and the proceeds from a sale or other disposition of New Ginkgo Class A common stock and New Ginkgo warrants. A Non-U.S. Holder may have to comply with certification procedures to establish that it is not a United States person in order to avoid information reporting and backup withholding requirements. The certification procedures required to claim a reduced rate of withholding under a treaty generally will satisfy the certification requirements necessary to avoid the backup withholding as well. Backup withholding is not an additional tax. The amount of any backup withholding from a payment to a Non-U.S. Holder will be allowed as a credit against such Non-U.S. Holder’s U.S. federal income tax liability and may entitle such Non-U.S. Holder to a refund, provided that the required information is timely furnished to the IRS.

Foreign Account Tax Compliance Act

Provisions commonly referred to as “FATCA” impose withholding of 30% on payments of dividends (including constructive dividends) on New Ginkgo Class A common stock and New Ginkgo warrants to “foreign financial institutions” (which is broadly defined for this purpose and in general includes investment vehicles) and certain other non-U.S. entities unless various U.S. information reporting and due diligence requirements (generally relating to ownership by U.S. persons of interests in or accounts with those entities) have been satisfied by, or an exemption applies to, the payee (typically certified as to by the delivery of a properly completed IRS Form W-8BEN-E). Foreign financial institutions located in jurisdictions that have an intergovernmental agreement with the United States governing FATCA may be subject to different rules. Under certain circumstances, a Non-U.S. Holder might be eligible for refunds or credits of such withholding taxes, and a Non-U.S. Holder might be required to file a U.S. federal income tax return to claim such refunds or credits. Thirty percent withholding under FATCA would have applied to payments of gross proceeds from the sale or other disposition of property that produces U.S.-source interest or dividends, but the IRS released proposed

 

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regulations that, if finalized in their proposed form, would eliminate the obligation to withhold on gross proceeds. Such proposed regulations also delayed withholding on certain other payments received from other foreign financial institutions that are allocable, as provided for under final Treasury Regulations, to payments of U.S.-source dividends, and other fixed or determinable annual or periodic income. Although these proposed Treasury Regulations are not final, taxpayers generally may rely on them until final Treasury Regulations are issued. However, there can be no assurance that final Treasury Regulations will provide the same exceptions from FATCA withholding as the proposed Treasury Regulations. Holders should consult their tax advisors regarding the effects of FATCA on their ownership and disposition of New Ginkgo Class A common stock and warrants.

 

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SHAREHOLDER PROPOSALS AND NOMINATIONS

In addition to any other requirements under applicable law and the New Ginkgo bylaws, for business to be properly brought before an annual meeting by a stockholder (the “Proposing Person”), the New Ginkgo bylaws provide that the stockholder must give timely notice in written form to New Ginkgo’s secretary. Notice, to be timely, must be delivered to, or mailed and received, at New Ginkgo’s principal executive officers not less than 90 days, but no more than 120 days, prior to the one-year anniversary of the preceding year’s annual meeting of stockholders; provided that, if no annual meeting was held in the preceding year, to be timely, a stockholder’s notice must be so delivered, or mailed and received, not earlier than the close of business on the 120th day prior to such annual meeting and not later than the close of business on the later of the 90th day prior to such annual meeting or the 10th day following the day on which public disclosure of the date of such annual meeting was first made by New Ginkgo; provided, further, that if, and only if, the annual meeting is not scheduled to be held within a period that commences within 30 days before such anniversary date and ends within 60 days after such anniversary date, to be timely, notice by the stockholder must be received by the close of business on the later of the 90th day prior to such annual meeting or the 10th day following the day on which public disclosure of the date of such annual meeting was first made.

Any notice must include the following information: (i) as to each Proposing Person, (1) the name and address of such Proposing Person; (2) the class or series and number of shares of New Ginkgo that are, directly or indirectly, owned of record or beneficially owned by such Proposing Person (including any shares of any class or series of New Ginkgo as to which such Proposing Person has a right to acquire beneficial ownership at any time in the future); and (3) a representation that the stockholder is a holder of record of stock of New Ginkgo entitled to vote at the meeting and intends to be present in person at the meeting to propose such business; (ii) as to each Proposing Person, (1) the full notional amount of any securities that, directly or indirectly, underlie any “derivative security” that constitutes a “call equivalent position” (“Synthetic Equity Position”) and that is, directly or indirectly, held or maintained by such Proposing Person with respect to any shares of any class or series of shares of New Ginkgo; (2) any material pending or threatened legal proceeding in which such Proposing Person is a party or material participant involving New Ginkgo or any of its officers or directors, or any affiliate of New Ginkgo; (3) any other material relationship between such Proposing Person, on the one hand, and New Ginkgo or any affiliate of New Ginkgo, on the other hand; (4) any direct or indirect material interest in any contract or agreement of such Proposing Person with New Ginkgo or any affiliate of New Ginkgo (including, in any such case, any employment agreement, collective bargaining agreement or consulting agreement); (5) a representation that such Proposing Person intends or is part of a group which intends to deliver a proxy statement or form of proxy to holders of at least the percentage of New Ginkgo’s outstanding capital stock required to approve or adopt the proposal or otherwise solicit proxies from stockholders in support of such proposal; and (6) any other information relating to such Proposing Person that would be required to be disclosed in a proxy statement or other filing required to be made in connection with solicitations of proxies or consents by such Proposing Person in support of the business proposed to be brought before the meeting pursuant to Section 14(a) of the Exchange Act, provided, however, that these disclosures shall not include any such disclosures with respect to the ordinary course business activities of any broker, dealer, commercial bank, trust company or other nominee who is a Proposing Person solely as a result of being the stockholder directed to prepare and submit the notice required by New Ginkgo’s Bylaws on behalf of a beneficial owner; (iii) As to each item of business that the Proposing Person proposes to bring before an annual meeting, (1) brief description of the business desired to be brought before the annual meeting, the reasons for conducting such business at the annual meeting and any material interest in such business of each Proposing Person, (2) the text of the proposal or business and (3) a reasonably detailed description of all agreements, arrangements and understandings (x) between or among any of the Proposing Persons or (y) between or among any Proposing Person and any other record or beneficial holder(s) or persons(s) who have a right to acquire beneficial ownership at any time in the future of the shares of any class or series of New Ginkgo or any other person or entity (including their names) in connection with the proposal of such business by such stockholder; and (4) any other information relating to such item of business required to be disclosed in a proxy statement or other filings required to be made in connection with solicitations of proxies in support of the business proposed to be brought before the meeting pursuant to Section 14(a) of the

 

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Exchange Act; provided, however, that these disclosures shall not include any such disclosures with respect to the ordinary course business activities of any broker, dealer, commercial bank, trust company or other nominee who is a Proposing Person solely as a result of being the stockholder directed to prepare and submit the notice required by New Ginkgo’s Bylaws on behalf of a beneficial owner. Any notice relating to the nomination of directors must also contain information, agreements and questionnaires with respect to such stockholder and its candidate for nomination as required in the New Ginkgo Bylaws.

A stockholder shall update and supplement its notice to New Ginkgo’s secretary, if necessary, so that the information provided or required to be provided in such notice as described above will be true and correct as of the record date for notice of the annual meeting and as of the date that is 10 days prior to the annual meeting or any adjournment or postponement thereof and such update and supplement shall be delivered to, or mailed and received by, the secretary at the principal executive offices of New Ginkgo not later than five business days after the record date or stockholders entitled to vote at the meeting and not later than eight business days prior to the date for the meeting or, if practicable, any adjournment or postponement thereof.

 

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SHAREHOLDER COMMUNICATIONS

Shareholders and interested parties may communicate with the SRNG Board, any committee chairperson or the non-management directors as a group by writing to the SRNG Board or committee chairperson in care of Soaring Eagle Acquisition Corp., 955 Fifth Avenue, New York, New York 10075.

Following the Business Combination, such communications should be sent to New Ginkgo, 27 Drydock Avenue, 8th Floor, Boston, Massachusetts 02210. Each communication will be forwarded, depending on the subject matter, to the board of directors, the appropriate committee chairperson or all non-management directors.

 

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WHERE YOU CAN FIND MORE INFORMATION

SRNG has filed with the SEC a registration statement on Form S-4, as amended, under the Securities Act with respect to the securities offered by this proxy statement/prospectus. This proxy statement/prospectus does not contain all of the information included in the registration statement. For further information pertaining to SRNG and its securities, you should refer to the registration statement and to its exhibits. Whenever reference is made in this proxy statement/prospectus to any of SRNG’s or Ginkgo’s contracts, agreements or other documents, the references are not necessarily complete, and you should refer to the annexes to the proxy statement/prospectus and the exhibits filed with the registration statement for copies of the actual contract, agreement or other document.

Upon the effectiveness of the registration statement of which this proxy statement/prospectus forms a part, New Ginkgo will be subject to the information and periodic reporting requirements of the Exchange Act and will file annual, quarterly and current reports, proxy statements and other information with the SEC. SRNG files reports, proxy statements and other information with the SEC as required by the Exchange Act. You can read SRNG’s or New Ginkgo’s SEC filings, including New Ginkgo’s registration statement and SRNG’s proxy statement/prospectus, over the internet at the SEC’s website at http://www.sec.gov.

If you would like additional copies of this proxy statement/prospectus or if you have questions about the Business Combination or the proposals to be presented at the Special Meeting, you should contact SRNG by telephone or in writing:

Soaring Eagle Acquisition Corp.

955 Fifth Avenue

New York, NY 10075

(310) 209-7280

You may also obtain these documents by requesting them in writing or by telephone from SRNG’s proxy solicitation agent at the following address and telephone number:

Morrow Sodali LLC

470 West Avenue

Stamford, CT 06902

Telephone: (800) 662-5200

(banks and brokers can call collect at (203) 658-9400)

Email: SRNG.info@investor.morrowsodali.com

If you are a shareholder of SRNG and would like to request documents, please do so no later than five business days before the Special Meeting in order to receive them before the Special Meeting. If you request any documents from SRNG, SRNG will mail them to you by first-class mail, or another equally prompt means.

This document is a prospectus of New Ginkgo and a proxy statement of SRNG for SRNG’s Special Meeting of shareholders. Neither Ginkgo nor SRNG has authorized anyone to give any information or make any representation about the Business Combination, New Ginkgo or SRNG that is different from, or in addition to, that contained in this proxy statement/prospectus or in any of the materials that SRNG has incorporated by reference into this proxy statement/prospectus. Therefore, if anyone does give you information of this sort, you should not rely on it. The information contained in this document speaks only as of the date of this document unless the information specifically indicates that another date applies.

 

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INDEX TO FINANCIAL STATEMENTS

SOARING EAGLE ACQUISITION CORP.

 

     Page  

Audited Financial Statements:

  

Report of Independent Registered Public Accounting Firm

     F-2  

Balance Sheet as of December 31, 2020

     F-3  

Statement of Operations for the period from October  22, 2020 through December 31, 2020

     F-4  

Statement of Changes in Shareholder’s Equity for the period from October 22, 2020 through December 31, 2020

     F-5  

Statement of Cash Flows for the period from October  22, 2020 through December 31, 2020

     F-6  

Notes to Financial Statements

     F-7  

 

Unaudited Financial Statements:

  

Condensed Balance Sheet as of March 31, 2021 (Unaudited) and December 31, 2020

     F-17  

Condensed Statements of Operations as of March 31, 2021 (Unaudited)

     F-18  

Condensed Statement of Changes in Shareholders’ Equity for the three months ended March 31, 2021 (Unaudited)

     F-19  

Condensed Statement of Cash Flows for the three months ended March 31, 2021 (Unaudited)

     F-20  

Notes to Financial Statements

     F-21  

GINKGO BIOWORKS, INC. AND SUBSIDIARIES

Index to Consolidated Financial Statements as of and for the Years Ended December 31, 2020 and 2019

 

     Page  

Report of Independent Registered Public Accounting Firm

     F-35  

Consolidated Balance Sheets

     F-36  

Consolidated Statements of Operations and Comprehensive Loss

     F-38  

Consolidated Statements of Stockholders’ Equity

     F-39  

Consolidated Statements of Cash Flows

     F-42  

Notes to Consolidated Financial Statements

     F-44  

Index to Unaudited Interim Condensed Consolidated Financial Statements as of March 31, 2021 and for the Three Months Ended March 31, 2021 and 2020

 

     Page  

Condensed Consolidated Balance Sheets

     F-98  

Condensed Consolidated Statements of Operations and Comprehensive Loss

     F-100  

Condensed Consolidated Statements of Stockholders’ Equity

     F-101  

Condensed Consolidated Statements of Cash Flows

     F-102  

Notes to Condensed Consolidated Financial Statements

     F-104  

 

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Report of Independent Registered Public Accounting Firm

To the Shareholder and the Board of Directors of

Soaring Eagle Acquisition Corp.

Opinion on the Financial Statements

We have audited the accompanying balance sheet of Soaring Eagle Acquisition Corp. (the “Company”) as of December 31, 2020, and the related statements of operations, changes in shareholder’s equity and cash flows for the period from October 22, 2020 (date of inception) through December 31, 2020, and the related notes (collectively referred to as the “financial statements”). In our opinion, the financial statements present fairly, in all material respects, the financial position of the Company as of December 31, 2020, and the results of its operations and its cash flows for the period from October 22, 2020 (inception) through December 31, 2020, in conformity with accounting principles generally accepted in the United States of America.

Basis for Opinion

These financial statements are the responsibility of the Company’s management. Our responsibility is to express an opinion on the Company’s financial statements based on our audit. We are a public accounting firm registered with the Public Company Accounting Oversight Board (United States) (the “PCAOB”) and are required to be independent with respect to the Company in accordance with the U.S. federal securities laws and the applicable rules and regulations of the Securities and Exchange Commission and the PCAOB.

We conducted our audit in accordance with the standards of the PCAOB. Those standards require that we plan and perform the audit to obtain reasonable assurance about whether the financial statements are free of material misstatement, whether due to error or fraud. The Company is not required to have, nor were we engaged to perform, an audit of its internal control over financial reporting. As part of our audit we are required to obtain an understanding of internal control over financial reporting but not for the purpose of expressing an opinion on the effectiveness of the Company’s internal control over financial reporting. Accordingly, we express no such opinion.

Our audit included performing procedures to assess the risks of material misstatement of the financial statements, whether due to error or fraud, and performing procedures that respond to those risks. Such procedures included examining, on a test basis, evidence regarding the amounts and disclosures in the financial statements. Our audit also included evaluating the accounting principles used and significant estimates made by management, as well as evaluating the overall presentation of the financial statements. We believe that our audit provides a reasonable basis for our opinion.

/s/ WithumSmith+Brown, PC

We have served as the Company’s auditor since 2020.

New York, New York

February 11, 2021

 

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SOARING EAGLE ACQUISITION CORP.

BALANCE SHEET

DECEMBER 31, 2020

 

ASSETS:

 

Current asset:

  

Cash

   $  

Deferred offering costs

     1,254,190  
  

 

 

 

Total assets

   $ 1,254,190  
  

 

 

 
LIABILITIES AND SHAREHOLDER’S EQUITY:

 

Current liabilities:

  

Accrued expenses

   $ 777,857  

Promissory Note—Related Party

     300,000  

Advance from Sponsor

     156,333  
  

 

 

 

Total current liabilities

     1,234,190  
Commitments and contingencies

 

Shareholder’s equity:

  

Preference shares, $0.0001 par value; 1,000,000 shares authorized; none issued and outstanding

      

Class A ordinary shares, $0.0001 par value; 400,000,000 shares authorized; none issued and outstanding

      

Class B ordinary shares, $0.0001 par value; 80,000,000 shares authorized; 43,125,000 shares issued and outstanding (1)

     4,312  

Additional paid-in capital

     20,688  

Accumulated deficit

     (5,000
  

 

 

 

Total Shareholder’s equity

     20,000  
  

 

 

 

Total liabilities and Shareholder’s equity

   $ 1,254,190  
  

 

 

 

 

(1)

This number includes an aggregate of up to 5,625,000 shares of Class B ordinary shares subject to forfeiture if the over-allotment option is not exercised by the underwriters.

See accompanying notes to financial statements

 

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SOARING EAGLE ACQUISITION CORP.

STATEMENT OF OPERATIONS

FOR THE PERIOD FROM OCTOBER 22, 2020 (DATE OF INCEPTION) THROUGH DECEMBER 31, 2020

 

Revenue

      

General and administrative expenses

   $ 5,000  
  

 

 

 

Net loss

   $ (5,000
  

 

 

 

Weighted average shares outstanding(1)

     37,500,000  
  

 

 

 

Basic and fully diluted net loss per ordinary share

   $  
  

 

 

 

 

(1)

This number excludes an aggregate of up to 5,625,000 Class B ordinary shares subject to forfeiture if the over-allotment option is not exercised by the underwriters (see Note 5).

The accompanying notes are an integral part of these financial statements.

 

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SOARING EAGLE ACQUISITION CORP.

STATEMENT OF CHANGES IN SHAREHOLDER’S EQUITY

FOR THE PERIOD FROM OCTOBER 22, 2020 (DATE OF INCEPTION) THROUGH DECEMBER 31, 2020

 

    Class B
Ordinary Shares
    Additional
Paid-in
Capital
    Accumulated
Deficit
    Total
Shareholder’s
Equity
 
    Shares     Amount  

Issuance of Class B ordinary shares to initial shareholder at approximately $0.0006 per share(1)

    43,125,000     $ 4,312     $ 20,688     $     $ 25,000  

Net loss

                      (5,000     (5,000
 

 

 

   

 

 

   

 

 

   

 

 

   

 

 

 

Balances at December 31, 2020

    43,125,000     $ 4,312     $ 20,688     $ (5,000   $ 20,000  
 

 

 

   

 

 

   

 

 

   

 

 

   

 

 

 

 

(1)

This number includes an aggregate of up to 5,625,000 Class B ordinary shares that are subject to forfeiture if the over-allotment option is not exercised by the underwriters (see Note 5).

The accompanying notes are an integral part of these financial statements.

 

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SOARING EAGLE ACQUISITION CORP.

STATEMENT OF CASH FLOWS

FOR THE PERIOD FROM OCTOBER 22, 2020 (DATE OF INCEPTION) THROUGH DECEMBER 31, 2020

 

Cash flows from operating activities:

  

Net loss

   $ (5,000

Adjustments to reconcile net loss to net cash provided by operating activities:

  

Formation expenses paid by Sponsor in exchange for Class B ordinary shares

     5,000  
  

 

 

 

Net cash provided by operating activities

      
  

 

 

 

Net change in cash

      

Cash at beginning of period

      
  

 

 

 

Cash at end of period

   $  
  

 

 

 

Supplemental Schedule of Non-Cash Financing Activities:

  

Offering costs paid by Sponsor in exchange for Class B ordinary shares

   $ 20,000  
  

 

 

 

Deferred offering costs paid through Advance from Sponsor

   $ 156,333  
  

 

 

 

Deferred offering costs paid through Promissory Note—Related Party

   $ 300,000  
  

 

 

 

Deferred offering costs included in accrued expenses

   $ 777,857  
  

 

 

 

The accompanying notes are an integral part of these financial statements.

 

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SOARING EAGLE ACQUISITION CORP.

NOTES TO FINANCIAL STATEMENTS

Note 1—Organization and Plan of Business Operations

Spinning Eagle Acquisition Corp. (the “Company”) is a blank check company incorporated as a Cayman Islands exempted company on October 22, 2020. In February 2021 the Company effectuated a change in the name of the entity from Spinning Eagle Acquisition Corp to Soaring Eagle Acquisition Corp. The Company was formed for the purpose of effecting a merger, share exchange, asset acquisition, share purchase, reorganization or similar business combination with one or more businesses (“Business Combination”).

Although the Company is not limited to a particular industry or geographic region for purposes of completing a Business Combination, the Company intends to capitalize on the ability of its management team to identify and combine with a business or businesses that can benefit from its management team’s established global relationships and operating experience. The Company is an early stage and emerging growth company and, as such, the Company is subject to all of the risks associated with early stage and emerging growth companies.

As of December 31, 2020, the Company had not commenced any operations. All activity for the period from October 22, 2020 (date of inception) through December 31, 2020 relates to the Company’s formation and the proposed initial public offering (“Proposed Offering”), which is described below. The Company will not generate any operating revenues until after the completion of a Business Combination, at the earliest. The Company will generate non-operating income in the form of interest income from the proceeds derived from the Proposed Offering. The Company has selected December 31 as its fiscal year end.

The Company’s ability to commence operations is contingent upon obtaining adequate financial resources through a Proposed Offering of 150,000,000 units (the “Units” and, with respect to the Class A ordinary shares included in the Units being offered, the “Public Shares”) at $10.00 per Unit (or 172,500,000 Units if the underwriters’ over-allotment option is exercised in full), which is discussed in Note 3, and the sale of 17,000,000 warrants (or 19,250,000 warrants if the underwriters’ over-allotment option is exercised on full) (the “Private Placement Warrants”) at a price of $1.50 per Private Placement Warrant in a private placement to Eagle Equity Partners III, LLC (the “Sponsor”), that will close simultaneously with the Proposed Offering.

The Company’s management has broad discretion with respect to the specific application of the net proceeds of the Proposed Offering and the sale of the Private Placement Warrants, although substantially all of the net proceeds are intended to be applied generally toward completing a Business Combination. The Company must complete one or more Business Combinations with having an aggregate fair market value equal to at least 80% of the net assets held in the Trust Account (as defined below) (excluding the deferred underwriting commissions and taxes payable on the income earned on the Trust Account) at the time of the agreement to enter into the initial Business Combination. The Company will only complete a Business Combination if the post-Business Combination company owns or acquires 50% or more of the issued and outstanding voting securities of the target or otherwise acquires a controlling interest in the target business sufficient for it not to be required to register as an investment company under the Investment Company Act of 1940, as amended (the “Investment Company Act”). There is no assurance that the Company will be able to successfully effect a Business Combination. Upon the closing of the Proposed Offering, management has agreed that $10.00 per Unit sold in the Proposed Offering, including proceeds of the sale of the Private Placement Warrants, will be held in a trust account (“Trust Account”) and invested in U.S. government securities, within the meaning set forth in Section 2(a)(16) of the Investment Company Act, with a maturity of 185 days or less, or in any open-ended investment company that holds itself out as a money market fund meeting certain conditions of Rule 2a-7 of the Investment Company Act, as determined by the Company, until the earlier of: (i) the completion of a Business Combination and (ii) the distribution of the funds in the Trust Account to the Company’s shareholders, as described below.

 

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SOARING EAGLE ACQUISITION CORP.

NOTES TO FINANCIAL STATEMENTS

 

The Company will provide its shareholders with the opportunity to redeem all or a portion of their Public Shares upon the completion of a Business Combination either (i) in connection with a general meeting called to approve the Business Combination or (ii) without a shareholder vote by means of a tender offer. The decision as to whether the Company will seek shareholder approval of a Business Combination or conduct a tender offer will be made by the Company. The shareholders will be entitled to redeem their shares for a pro rata portion of the amount held in the Trust Account (initially $10.00 per share), calculated as of two business days prior to the completion of a Business Combination, including any pro rata interest earned on the funds held in the Trust Account and not previously released to the Company to pay its tax obligations. There will be no redemption rights upon the completion of a Business Combination with respect to the Company’s warrants. The Class A ordinary shares will be recorded at redemption value and classified as temporary equity upon the completion of the Proposed Offering, in accordance with Accounting Standards Codification (“ASC”) Topic 480 “Distinguishing Liabilities from Equity.”

If the Company seeks shareholder approval, the Company will complete a Business Combination only if it receives an ordinary resolution under Cayman Islands law approving a Business Combination, which requires the affirmative vote of a majority of the Company’s ordinary shares which are represented in person or by proxy and are voted at a general meeting of the Company. If a shareholder vote is not required under applicable law or stock exchange listing requirements and the Company does not decide to hold a shareholder vote for business or other reasons, the Company will, pursuant to its Amended and Restated Memorandum and Articles of Association, conduct the redemptions pursuant to the tender offer rules of the Securities and Exchange Commission (“SEC”), and file tender offer documents containing substantially the same information as would be included in a proxy statement with the SEC prior to completing a Business Combination. If the Company seeks shareholder approval in connection with a Business Combination, the Sponsor has agreed to vote its Founder Shares (as defined in Note 5) and any Public Shares purchased in or after the Proposed Offering in favor of approving a Business Combination and to waive its redemption rights with respect to any such shares in connection with a shareholder vote to approve a Business Combination. However, in no event will the Company redeem its Public Shares in an amount that would cause its net tangible assets to be less than $5,000,001. In such case, the Company would not proceed with the redemption of its Public Shares and the related Business Combination, and instead may search for an alternate Business Combination. Additionally, each public shareholder may elect to redeem its Public Shares, without voting, and if they do vote, irrespective of whether they vote for or against a proposed Business Combination.

Notwithstanding the foregoing, if the Company seeks shareholder approval of a Business Combination and it does not conduct redemptions pursuant to the tender offer rules, the Company’s Amended and Restated Memorandum and Articles of Association provides that a public shareholder, together with any affiliate of such shareholder or any other person with whom such shareholder 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 its shares with respect to more than an aggregate of 20% of the Public Shares without the Company’s prior written consent.

The Sponsor has agreed (a) to waive its redemption rights with respect to any Founder Shares and Public Shares held by it in connection with the completion of a Business Combination and (b) not to propose an amendment to the Amended and Restated Memorandum and Articles of Association (i) to modify the substance or timing of the Company’s obligation to redeem 100% of the Public Shares if the Company does not complete a Business Combination within the Completion Window (as defined below) or (ii) with respect to any other provision relating to shareholders’ rights or pre-initial business combination activity, unless the Company provides the public shareholders with the opportunity to redeem their Public Shares in conjunction with any such amendment and (iii) to waive its rights to liquidating distributions from the Trust Account with respect to the Founder Shares if the Company fails to complete a Business Combination.

 

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SOARING EAGLE ACQUISITION CORP.

NOTES TO FINANCIAL STATEMENTS

 

The Company will have within 24 months from the closing of the Proposed Offering, or 30 months from the closing of the Proposed Offering if the Company has executed a definitive agreement for its initial Business Combination within 24 months from the closing of the Proposed Offering (the “Completion Window”) to complete a Business Combination. If the Company is unable to complete a Business Combination within the Completion Window, the Company will (i) cease all operations except for the purpose of winding up, (ii) as promptly as reasonably possible but no more than 10 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 interest earned (less 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 shareholders’ rights as shareholders (including the right to receive further liquidation distributions, if any), and (iii) as promptly as reasonably possible following such redemption, subject to the approval of the remaining shareholders and the Company’s board of directors, dissolve and liquidate, subject in each case to its obligations under Cayman Islands law to provide for claims of creditors and the requirements of other applicable law.

The Sponsor has agreed to waive its liquidation rights with respect to the Founder Shares if the Company fails to complete a Business Combination within the Completion Window. However, if the Sponsor acquires Public Shares in or after the Proposed Offering, such Public Shares will be entitled to liquidating distributions from the Trust Account if the Company fails to complete a Business Combination within the Completion Window. The underwriters have agreed to waive their rights to their deferred underwriting commission (see Note 6) held in the Trust Account in the event the Company does not complete a Business Combination within the Completion Window and, in such event, such amounts will be included with the funds held in the Trust Account that will be available to fund the redemption of the Public Shares. In the event of such distribution, it is possible that the per share value of the assets remaining available for distribution will be less than the Proposed Offering price per Unit ($10.00).

The Sponsor has agreed that it will be liable to the Company, if and to the extent any claims by a third party for services rendered or products sold to the Company, or by a prospective target business with which the Company has 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 (1) $10.00 per Public Share and (2) 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 $10.00 per Public Share due to reductions in the value of trust assets, less taxes payable. This liability will not apply to any claims by a third party or prospective target business who executed a waiver of any and all rights to the monies held in the Trust Account nor will it apply to any claims under the Company’s indemnity of the underwriters of the Proposed Offering against certain liabilities, including liabilities under the Securities Act of 1933, as amended (the “Securities Act”). Moreover, in the event that an executed waiver is deemed to be unenforceable against a third party, the Sponsor will not be responsible to the extent of any liability for such third-party claims. The Company will seek to reduce the possibility that the Sponsor will have to indemnify the Trust Account due to claims of creditors by endeavoring to have all vendors, service providers (other than the Company’s independent public accountants), prospective target businesses or other entities with which the Company does business, execute agreements with the Company waiving any right, title, interest or claim of any kind in or to monies held in the Trust Account.

Note 2—Summary of Significant Accounting Policies

Basis of presentation

The accompanying financial statements of the Company are presented in U.S. dollars in conformity with accounting principles generally accepted in the United States of America and pursuant to the rules and regulations of the Securities and Exchange Commission (“SEC”). In connection with the Company’s assessment

 

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SOARING EAGLE ACQUISITION CORP.

NOTES TO FINANCIAL STATEMENTS

 

of going concern considerations in accordance with ASU 2014-15, “Disclosures of Uncertainties about an Entity’s Ability to Continue as a Going Concern” as of December 31, 2020, the Company does not have sufficient liquidity to meet its current obligations. However, management has determined that the Company has access to funds from the Sponsor entity that are sufficient to fund the working capital needs of the Company until the earlier of the consummation of the Proposed Offering or a minimum one year from the date of issuance of these financial statements.

Emerging growth company

The Company is an “emerging growth company,” as defined in Section 2(a) of the Securities Act, as modified by the Jumpstart Our Business Startups Act of 2012 (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 Sarbanes-Oxley Act of 2002, reduced disclosure obligations regarding executive compensation in its periodic reports and proxy statements, and exemptions from the requirements of holding a nonbinding advisory vote on executive compensation and shareholder 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. The Company 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, the Company, 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 the Company’s financial statements with another public company which is neither an emerging growth company nor an emerging growth company which has opted out of using the extended transition period difficult or impossible because of the potential differences in accounting standards used.

Use of estimates

The preparation of financial statements in conformity with GAAP requires management to make estimates and assumptions that affect the reported amounts of assets and liabilities and disclosure of contingent assets and liabilities at the date of the financial statements and the reported amounts of expenses during the reporting period.

Making estimates requires management to exercise significant judgment. It is at least reasonably possible that the estimate of the effect of a condition, situation or set of circumstances that existed at the date of the financial statements, which management considered in formulating its estimate, could change in the near term due to one or more future confirming events. Accordingly, the actual results could differ significantly from those estimates.

Cash and cash equivalents

The Company considers all short-term investments with an original maturity of three months or less when purchased to be cash equivalents. The Company did not have any cash equivalents as of December 31, 2020.

 

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SOARING EAGLE ACQUISITION CORP.

NOTES TO FINANCIAL STATEMENTS

 

Deferred offering costs

Deferred offering costs consist of underwriting, legal, accounting and other expenses incurred through the balance sheet date that are directly related to the Proposed Offering and that will be charged to shareholder’s equity upon the completion of the Proposed Offering. Should the Proposed Offering prove to be unsuccessful, these deferred costs, as well as additional expenses incurred, will be charged to operations.

Income taxes

The Company accounts for income taxes under ASC 740, “Income Taxes” (“ASC 740”), which prescribes a recognition threshold and measurement process for financial statement recognition and measurement of a tax position taken or expected to be taken in a tax return. For those benefits to be recognized, a tax position must be more-likely-than-not to be sustained upon examination by taxing authorities. The Company recognizes accrued interest and penalties related to unrecognized tax benefits as income tax expense. There were no unrecognized tax benefits and no amounts accrued for interest and penalties as of December 31, 2020. The Company is currently not aware of any issues under review that could result in significant payments, accruals or material deviation from its position. The Company is subject to income tax examinations by major taxing authorities since inception.

There is currently no taxation imposed on income by the Government of the Cayman Islands. In accordance with Cayman income tax regulations, income taxes are not levied on the Company. Consequently, income taxes are not reflected in the Company’s financial statements. The Company’s management does not expect that the total amount of unrecognized tax benefits will materially change over the next twelve months.

Net loss per ordinary share

Net loss per ordinary share is computed by dividing net loss by the weighted average number of ordinary shares outstanding during the period, excluding ordinary shares subject to forfeiture. Weighted average shares were reduced for the effect of an aggregate of 5,625,000 ordinary shares that are subject to forfeiture if the over- allotment option is not exercised by the underwriters (see Note 6). At December 31, 2020, the Company did not have any dilutive securities and other contracts that could, potentially, be exercised or converted into ordinary shares and then share in the earnings of the Company. As a result, diluted loss per ordinary share is the same as basic loss per ordinary share for the period presented.

Concentration of credit risk

Financial instruments that potentially subject the Company to concentrations of credit risk consist of a cash account in a financial institution, which, at times, may exceed the Federal Depository Insurance Coverage of $250,000. The Company has not experienced losses on this account and management believes the Company is not exposed to significant risks on such account.

Fair value of financial instruments

The fair value of the Company’s assets and liabilities, which qualify as financial instruments under ASC Topic 820, “Fair Value Measurements and Disclosures,” approximates the carrying amounts represented in the accompanying balance sheet, primarily due to their short-term nature.

Recently issued accounting standards

Management does not believe that any recently issued, but not yet effective, accounting standards, if currently adopted, would have a material effect on the Company’s financial statements.

 

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SOARING EAGLE ACQUISITION CORP.

NOTES TO FINANCIAL STATEMENTS

 

Note 3—Proposed Offering

Pursuant to the Proposed Offering, the Company will offer for sale up to 150,000,000 Units (or 172,500,000 Units if the underwriters’ over-allotment option is exercised in full) at a purchase price of $10.00 per Unit. Each Unit will consist of one Class A ordinary share and one-fifth of one redeemable warrant (“Public Warrant”). Each whole Public Warrant will entitle the holder to purchase one Class A ordinary share at an exercise price of $11.50 per share, subject to adjustment (see Note 7).

Note 4—Private Placement

The Sponsor has committed to purchase an aggregate of 17,000,000 Private Placement Warrants (or 19,250,000 Private Placement Warrants if the underwriters’ over-allotment is exercised in full) at a price of $1.50 per Private Placement Warrant, for an aggregate purchase price of $25,500,000 (or $28,875,000 if the over-allotment option is exercised in full), from the Company in a private placement that will occur simultaneously with the closing of the Proposed Offering. Each Private Placement Warrant is exercisable for one Class A ordinary share at a price of $11.50 per share, subject to adjustment (see Note 7). The proceeds from the sale of the Private Placement Warrants will be added to the net proceeds from the Proposed Offering held in the Trust Account. If the Company does not complete a Business Combination within the Completion Window, the proceeds from the sale of the Private Placement Warrants held in the Trust Account will be used to fund the redemption of the Public Shares (subject to the requirements of applicable law) and the Private Placement Warrants will expire worthless.

Note 5—Related Party Transactions

Founder Shares

On October 28, 2020, the Sponsor paid an aggregate of $25,000 to cover certain offering and formation costs of the Company in consideration for 43,125,000 of the Company’s Class B ordinary shares (the “Founder Shares”). The Founder Shares include an aggregate of up to 5,625,000 shares subject to forfeiture by the Sponsor to the extent that the underwriters’ over-allotment is not exercised in full or in part, so that the number of Founder Shares will collectively represent 20% of the Company’s issued and outstanding shares upon the completion of the Proposed Offering.

The Sponsor has agreed, subject to limited exceptions, not to transfer, assign or sell any of its Founder Shares until the earlier to occur of: (A) one year after the completion of a Business Combination; and (B) subsequent to a Business Combination, (x) if the closing price of the Class A ordinary shares equals or exceeds $12.00 per share (as adjusted for share sub-divisions, share capitalizations, reorganizations, recapitalizations and the like) for any 20 trading days within any 30-trading day period, provided such release shall not occur earlier than 180 days after a Business Combination, or (y) the date on which the Company completes a liquidation, merger, amalgamation, share exchange, reorganization or other similar transaction that results in all of the Company’s shareholders having the right to exchange their Class A ordinary shares for cash, securities or other property.

Promissory Note—Related Party

On October 27, 2020, the Company issued the Promissory Note to the Sponsor, pursuant to which the Company may borrow up to an aggregate principal amount of $300,000, The Promissory Note is non-interest bearing and payable on the earlier of (i) December 31, 2021 and (ii) the completion of the Proposed Offering. As of December 31, 2020, the amount outstanding under the Promissory Note was $300,000.

 

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SOARING EAGLE ACQUISITION CORP.

NOTES TO FINANCIAL STATEMENTS

 

Advance from Sponsor

As of December 31, 2020, the Sponsor paid on behalf of the Company an aggregate of $156,333 for costs related to the Proposed Offering.

Administrative Services Agreement

Commencing on the effective date of the Proposed Offering, the Company will enter into an agreement pursuant to which it will pay an affiliate of the Sponsor $15,000 per month for office space, utilities, secretarial and administrative support services. Upon completion of a Business Combination or its liquidation, the Company will cease paying these monthly fees.

Related Party Loans

In order to finance transaction costs in connection with a Business Combination, the Sponsor or an affiliate of the Sponsor, or certain of the Company’s officers and directors may, but are not obligated to, loan the Company funds as may be required (“Working Capital Loans”). Such Working Capital Loans would be evidenced by promissory notes. The notes may be repaid upon completion of a Business Combination, without interest, or, at the lender’s discretion, such loans may be converted upon completion of a Business Combination into warrants of the post Business Combination entity at a price of $1.50 per warrant at the option of the lender. Such warrants would be identical to the Private Placement Warrants. In the event that a Business Combination does not close, the Company may use a portion of proceeds held outside the Trust Account to repay the Working Capital Loans but no proceeds held in the Trust Account would be used to repay the Working Capital Loans. There have been no borrowings under this arrangement to date.

Note 6—Commitments and Contingencies

Registration Rights

The holders of the Founder Shares, Private Placement Warrants and warrants that may be issued upon conversion of the Working Capital Loans (and any Class A ordinary shares issuable upon the exercise of the Private Placement Warrants and warrants that may be issued upon conversion of Working Capital Loans and upon conversion of the Founder Shares) will be entitled to registration rights pursuant to a registration rights agreement to be signed prior to or on the effective date of the Proposed Offering requiring the Company to register a sale of any of the securities held by them, including any other securities of the Company acquired by them prior to the consummation of the Company’s initial Business Combination. The holders of these securities will be entitled to make up to three demands, excluding short form demands, that the Company register such securities. In addition, the holders have certain “piggy-back” registration rights with respect to registration statements filed subsequent to the completion of a Business Combination. The Company will bear the expenses incurred in connection with the filing of any such registration statements.

Risks and Uncertainties

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

 

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SOARING EAGLE ACQUISITION CORP.

NOTES TO FINANCIAL STATEMENTS

 

Underwriting Agreement

The Company will grant the underwriters a 45-day option to purchase up to 22,500,000 additional Units to cover over-allotments at the Proposed Offering price, less the underwriting discounts and commissions.

The underwriters will be entitled to a cash underwriting discount of $0.15 per Unit, or $22,500,000 in the aggregate (or $25,875,000 if the underwriters’ over-allotment is exercised in full), payable upon the closing of the Proposed Public Offering. In addition, the underwriters will be entitled to a deferred fee of $0.35 per Unit, or $52,500,000 in the aggregate (or $60,375,000 if the underwriters’ over-allotment is exercised in full). The deferred fee will become payable to the underwriters from the amounts held in the Trust Account solely in the event that the Company completes a Business Combination, subject to the terms of the underwriting agreement.

Note 7—Shareholder’s Equity

Preference Shares—The Company is authorized to issue 1,000,000 preferred shares with a par value of $0.0001. The Company’s board of directors will be authorized to fix the voting rights, if any, designations, powers, preferences, the relative, participating, optional or other special rights and any qualifications, limitations and restrictions thereof, applicable to the shares of each series. The board of directors will be able to, without shareholder approval, issue preferred shares with voting and other rights that could adversely affect the voting power and other rights of the holders of the ordinary shares and could have anti-takeover effects. At December 31, 2020, there were no preference shares issued and outstanding.

Class A Ordinary Shares—The Company is authorized to issue 400,000,000 Class A ordinary shares, with a par value of $0.0001 per share. Holders of Class A ordinary shares are entitled to one vote for each share. At December 31, 2020, there were no Class A ordinary shares issued and outstanding.

Class B Ordinary Shares—The Company is authorized to issue 80,000,000 Class B ordinary shares, with a par value of $0.0001 per share. Holders of the Class B ordinary shares are entitled to one vote for each share. At December 31, 2020, there were 43,125,000 Class B ordinary shares issued and outstanding, of which an aggregate of up to 5,625,000 shares are subject to forfeiture to the extent that the underwriters’ over-allotment option is not exercised in full or in part so that the number of Founder Shares will equal 20% of the Company’s issued and outstanding ordinary shares after the Proposed Offering.

Only holders of the Class B ordinary shares will have the right to vote on the appointment of directors prior to the Business Combination. Holders of Class A ordinary shares and holders of Class B ordinary shares will vote together as a single class on all other matters submitted to a vote of the Company’s shareholders except as otherwise required by law.

The Class B ordinary shares will automatically convert into Class A ordinary shares concurrently with or immediately following the completion of a Business Combination on a one-for-one basis, subject to adjustment. In the case that additional Class A ordinary shares or equity-linked securities are issued or deemed issued in connection with a Business Combination, the number of Class A ordinary shares issuable upon conversion of all Founder Shares will equal, in the aggregate, 20% of the total number of Class A ordinary shares outstanding after such conversion (after giving effect to any redemptions of Class A ordinary shares by public shareholders), including the total number of Class A ordinary shares issued, or deemed issued or issuable upon conversion or exercise of any equity-linked securities or rights issued or deemed issued, by the Company in connection with or in relation to the consummation of a Business Combination, excluding any Class A ordinary shares or equity- linked securities exercisable for or convertible into Class A ordinary shares issued, or to be issued, to any seller in a Business Combination and any Private Placement Warrants issued to the Sponsor, officers or directors upon conversion of Working Capital Loans; provided that such conversion of Founder Shares will never occur on a less than one-for-one basis.

 

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SOARING EAGLE ACQUISITION CORP.

NOTES TO FINANCIAL STATEMENTS

 

Warrants—Public Warrants may only be exercised for a whole number of shares. No fractional warrants will be issued upon separation of the Units and only whole warrants will trade. The Public Warrants will become exercisable 30 days after the completion of a Business Combination. The Public Warrants will expire five years from the completion of a Business Combination, or earlier upon redemption or liquidation.

The Company will not be obligated to deliver any Class A ordinary shares pursuant to the exercise of a Public Warrant and will have no obligation to settle such Public Warrant exercise unless a registration statement under the Securities Act with respect to the Class A ordinary shares underlying the warrants is then effective and a prospectus relating thereto is current, subject to the Company satisfying its obligations with respect to registration. No warrant will be exercisable and the Company will not be obligated to issue a Class A ordinary share upon exercise of a warrant unless the Class A ordinary share issuable upon such warrant exercise has been registered, qualified or deemed to be exempt under the securities laws of the state of residence of the registered holder of the warrants.

The Company has agreed that as soon as practicable, but in no event later than 20 business days after the closing of a Business Combination, it will use its commercially reasonable efforts to file with the SEC a post-effective amendment to the registration statement of which this prospectus forms a part or a new registration statement for the registration, under the Securities Act, of the Class A ordinary shares issuable upon exercise of the warrants. The Company will use its best efforts to cause the same to become effective and to maintain the effectiveness of such registration statement, and a current prospectus relating thereto, until the expiration of the warrants in accordance with the provisions of the warrant agreement. If a registration statement covering the Class A ordinary shares issuable upon exercise of the warrants is not effective by the 60th business day after the closing of a Business Combination, warrant holders may, until such time as there is an effective registration statement and during any period when the Company will have failed to maintain an effective registration statement, exercise warrants on a “cashless basis” in accordance with Section 3(a)(9) of the Securities Act or another exemption. In addition, if the Class A ordinary shares are at the time of any exercise of a warrant not listed on a national securities exchange such that they satisfy the definition of a “covered security” under Section 18(b)(1) of the Securities Act, the Company may, at its option, require holders of the Public Warrants who exercise their warrants to do so on a “cashless basis” in accordance with Section 3(a)(9) of the Securities Act and, in the event the Company elects to do so, the Company will not be required to file or maintain in effect a registration statement, but it will use its best efforts to register or qualify the shares under applicable blue sky laws to the extent an exemption is not available.

Once the warrants become exercisable, the Company may redeem the outstanding Public Warrants:

 

   

in whole and not in part;

 

   

at a price of $0.01 per Public Warrant;

 

   

upon not less than 30 days’ prior written notice of redemption to each warrant holder; and

 

   

if, and only if, the reported closing price of the ordinary shares equals or exceeds $18.00 per share (as adjusted for share sub-divisions, share capitalizations, reorganizations, recapitalizations and the like) for any 20 trading days within a 30-trading day period ending three business days before the Company send to the notice of redemption to the warrant holders.

If and when the warrants become redeemable by the Company, the Company may exercise its redemption right even if it is unable to register or qualify the underlying securities for sale under all applicable state securities laws.

 

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SOARING EAGLE ACQUISITION CORP.

NOTES TO FINANCIAL STATEMENTS

 

If the Company calls the Public Warrants for redemption, as described above, its management will have the option to require any holder that wishes to exercise the Public Warrants to do so on a “cashless basis,” as described in the warrant agreement. The exercise price and number of ordinary shares issuable upon exercise of the Public Warrants may be adjusted in certain circumstances including in the event of a share dividend, extraordinary dividend or recapitalization, reorganization, merger or consolidation. However, except as described below, the Public Warrants will not be adjusted for issuances of ordinary shares at a price below its exercise price. Additionally, in no event will the Company be required to net cash settle the Public Warrants. If the Company is unable to complete a Business Combination within the Completion Window and the Company liquidates the funds held in the Trust Account, holders of Public Warrants will not receive any of such funds with respect to their Public Warrants, nor will they receive any distribution from the Company’s assets held outside of the Trust Account with respect to such Public Warrants. Accordingly, the Public Warrants may expire worthless.

The Private Placement Warrants will be identical to the Public Warrants underlying the Units being sold in the Proposed Offering, except that (x) the Private Placement Warrants and the Class A ordinary shares issuable upon the exercise of the Private Placement Warrants will not be transferable, assignable or salable until 30 days after the completion of a Business Combination, subject to certain limited exceptions, (y) the Private Placement Warrants will be exercisable on a cashless basis and be non-redeemable so long as they are held by the initial purchasers or their permitted transferees and (z) the Private Placement Warrants and the Class A ordinary shares issuable upon exercise of the Private Placement Warrants will be entitled to registration rights. If the Private Placement Warrants are held by someone other than the initial purchasers or their permitted transferees, the Private Placement Warrants will be redeemable by the Company and exercisable by such holders on the same basis as the Public Warrants.

Note 8—Subsequent Events

The Company evaluated subsequent events and transactions that occurred after the balance sheet date up to February 11, 2021, the date that the financial statements were issued. Based upon this review, all subsequent events have been adequately disclosed in the financial statements.

 

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SOARING EAGLE ACQUISITION CORP.

CONDENSED BALANCE SHEETS

 

     March 31, 2021      December 31, 2020  
     (Unaudited)         

ASSETS:

     

Current assets:

     

Cash

   $ 1,917,469      $ —    

Prepaid expenses

     1,068,638        —    
  

 

 

    

 

 

 

Total current assets

     2,986,107        —    

Deferred offering costs

     —          1,254,190  

Cash and investments held in Trust Account

     1,725,044,564        —    
  

 

 

    

 

 

 

Total Assets

   $ 1,728,030,671      $ 1,254,190  
  

 

 

    

 

 

 

LIABILITIES AND SHAREHOLDERS’ EQUITY:

     

Current liabilities:

     

Accounts payable and accrued expenses

   $ 1,421,817      $ 777,857  

Promissory Note - Related Party

     —          300,000  

Due to Sponsors

     —          156,333  
  

 

 

    

 

 

 

Total current liabilities

     1,421,817        1,234,190  

Warrant liabilities

     88,342,500        —    

Deferred underwriting compensation

     60,375,000        —    
  

 

 

    

 

 

 

Total Liabilities

     150,139,317        1,234,190  
  

 

 

    

 

 

 

Commitments and Contingencies

     

Class A ordinary shares subject to possible redemption; 157,279,135 shares at approximately $10.00 per share

     1,572,791,350        —    

Shareholders’ equity:

     

Preferred stock, $0.0001 par value; 1,000,000 shares authorized; none issued and outstanding

     —          —    

Class A ordinary shares, $0.0001 par value; 400,000,000 shares authorized; 15,220,865 shares issued and outstanding, (excluding 157,279,135 shares subject to possible redemption)

     1,522        —    

Class B ordinary shares, $0.0001 par value; 80,000,000 shares authorized; 43,125,000 shares issued and outstanding

     4,312        4,312  

Additional paid-in capital

     —          20,688  

Retained Earnings (accumulated deficit)

     4,994,170        (5,000
  

 

 

    

 

 

 

Total Shareholders’ Equity

     5,000,004        20,000  
  

 

 

    

 

 

 

Total Liabilities and Shareholders’ Equity

   $ 1,728,030,671      $ 1,254,190  
  

 

 

    

 

 

 

The accompanying notes are an integral part of these unaudited condensed financial statements.

 

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SOARING EAGLE ACQUISITION CORP.

CONDENSED STATEMENT OF OPERATIONS

FOR THE THREE MONTHS ENDED MARCH 31, 2021

(Unaudited)

 

General and administrative expenses

   $ 295,117  
  

 

 

 

Loss from operations

     (295,117

Other income (expense):

  

Change in fair value of warrant liabilities

     9,532,500  

Offering costs related to warrant liabilities

     (3,520,347

Net gain from investments held in trust account

     44,564  
  

 

 

 

Income before provision for income taxes

     5,761,600  

Provision for income taxes

     —    
  

 

 

 

Net income

   $ 5,761,600  
  

 

 

 

Two Class Method:

  

Weighted average number of Class A ordinary shares outstanding

     172,500,000  
  

 

 

 

Net income per Class A ordinary share - basic and diluted

   $ 0.00  
  

 

 

 

Weighted average shares outstanding of Class B ordinary shares

     39,562,500  
  

 

 

 

Net income per Class B ordinary share - basic and diluted

   $ 0.14  
  

 

 

 

The accompanying notes are an integral part of these unaudited condensed financial statements.

 

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SOARING EAGLE ACQUISITION CORP.

CONDENSED STATEMENT OF CHANGES IN SHAREHOLDERS’ EQUITY

FOR THE THREE MONTHS ENDED MARCH 31, 2021

(Unaudited)

 

                            Additional
Paid-in
Capital
    Retained
Earnings
(Accumulated
Deficit)
    Total
Shareholders’
Equity
 
    Ordinary Shares  
    Class A     Class B  
    Shares     Amount     Shares     Amount  

Balance - December 31, 2020

    —       $ —         43,125,000     $  4,312     $ 20,688       (5,000   $ 20,000  

Sale of Class A ordinary shares in initial public offering, less fair value of public warrants

    172,500,000       17,250       —         —         1,655,982,750       —         1,656,000,000  

Underwriters’ discount and offering expenses

    —         —         —         —         (83,990,246     —         (83,990,246

Class A ordinary shares subject to possible redemption

    157,279,135       (15,728     —         —         (1,572,013,192     (762,430     (1,572,791,350

Net income

    —               —         —         —         5,761,600       5,761,600  
 

 

 

   

 

 

   

 

 

   

 

 

   

 

 

   

 

 

   

 

 

 

Balance - March 31, 2021

    15,220,865     $ 1,522       43,125,000     $ 4,312     $ —       $  4,994,170     $ 5,000,004  
 

 

 

   

 

 

   

 

 

   

 

 

   

 

 

   

 

 

   

 

 

 

The accompanying notes are an integral part of these unaudited condensed financial statements.

 

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SOARING EAGLE ACQUISITION CORP.

CONDENSED STATEMENT OF CASH FLOWS

FOR THE THREE MONTHS ENDED MARCH 31, 2021

(Unaudited)

 

Cash flows from operating activities:

  

Net income

   $ 5,761,600  

Adjustments to reconcile net income to net cash used in operating activities:

  

Net gain from investments held in trust account

     (44,564

Offering costs related to warrant liabilities

     3,520,347  

Change in fair value of warrant liabilities

     (9,532,500

Changes in operating assets and liabilities:

  

Increase in prepaid expenses

     (1,068,638

Increase in accounts payable and accrued expenses

     893,317  
  

 

 

 

Net cash used in operating activities

     (470,438
  

 

 

 

Cash flows from investing activities:

  

Principal deposited in Trust Account

     (1,725,000,000
  

 

 

 

Net cash used in investing activities

     (1,725,000,000
  

 

 

 

Cash flows from financing activities:

  

Proceeds from private placement of warrants

     28,875,000  

Proceeds from sale of units in initial public offering

     1,725,000,000  

Payment of underwriters’ discount

     (25,875,000

Payment of offering costs

     (155,760

Repayment of advances received from Sponsor

     (300,000

Repayment of advances received from Promissory note

     (156,333
  

 

 

 

Net cash provided by financing activities

     1,727,387,907  
  

 

 

 

Increase in cash during period

     1,917,469  

Cash at beginning of period

     —    
  

 

 

 

Cash at end of period

   $ 1,917,469  
  

 

 

 

Supplemental disclosure of non-cash financing activities:

  

Deferred underwriting compensation

   $ 60,375,000  
  

 

 

 

Initial fair value of warrant liabilities

   $ 97,875,000  
  

 

 

 

Initial value of Class A ordinary shares subject to possible redemption

   $ 1,553,691,900  
  

 

 

 

Changes in value of Class A ordinary shares subjection to redemption

   $ 19,199,450  
  

 

 

 

Deferred offering costs included in accounts payable and accrued expenses

   $ 628,500  
  

 

 

 

Loss on initial sale of private placement warrants

   $ 9,817,500  
  

 

 

 

The accompanying notes are an integral part of these unaudited condensed financial statements.

 

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SOARING EAGLE ACQUISITION CORP.

NOTES TO UNAUDITED CONDENSED FINANCIAL STATEMENTS

Note 1—Organization and Plan of Business Operations

Soaring Eagle Acquisition Corp. (the “Company”) is a blank check company incorporated as a Cayman Islands exempted company on October 22, 2020. In February 2021 the Company effectuated a change in the name of the entity from Spinning Eagle Acquisition Corp to Soaring Eagle Acquisition Corp. The Company was formed for the purpose of effecting a merger, share exchange, asset acquisition, share purchase, reorganization or similar business combination with one or more businesses (“Business Combination”).

Although the Company is not limited to a particular industry or geographic region for purposes of completing a Business Combination, the Company intends to capitalize on the ability of its management team to identify and combine with a business or businesses that can benefit from its management team’s established global relationships and operating experience. The Company is an early stage and emerging growth company and, as such, the Company is subject to all of the risks associated with early stage and emerging growth companies.

As of March 31, 2021, the Company had not commenced any operations. All activity for the period from October 22, 2020 (inception) through March 31, 2021 relates to the Company’s formation and the initial public offering (“Public Offering”), which is described below. The Company will not generate any operating revenues until after the completion of a Business Combination, at the earliest. The Company will generate non-operating income in the form of interest income from the proceeds derived from the Public Offering. The Company has selected December 31 as its fiscal year end.

The registration statement for the Company’s Public Offering was declared effective on February 23, 2021. On February 26, 2021, the Company consummated the Public Offering of 172,500,000 units (the “Units”), which includes the exercise by the underwriter of its over-allotment option in full in the amount of 22,500,000 Units, at $10.00 per Unit, generating gross proceeds of $1,725,000,000 which is described in Note 4.

Transaction costs amounted to $87,510,593, consisting of $25,875,000 of underwriting fees, $60,375,000 of deferred underwriting fees and $1,260,593 of other offering costs. In addition, at March 31, 2021, cash of $1,917,469 was held outside of the Trust Account (as defined below) and is available for the payment of offering costs and for working capital purposes.

Following the closing of the Public Offering on February 26, 2021, an amount of $1,725,000,000 ($10.00 per Unit) from the net proceeds of the sale of the Units in the Public Offering and the sale of the private placement warrants (the “Private Placement Warrants”) was placed in a trust account (the “Trust Account”), and which will be invested in U.S. government securities, within the meaning set forth in Section 2(a)(16) of the Investment Company Act of 1940, as amended (the “Investment Company Act”), with a maturity of 185 days or less, or in any open-ended investment company that holds itself out as a money market fund investing solely in U.S. Treasuries and meeting certain conditions under Rule 2a-7 of the Investment Company Act, as determined by the Company, until the earliest of: (i) the completion of a Business Combination and (ii) the distribution of the funds in the Trust Account to the Company’s shareholders, as described below.

The Company’s management has broad discretion with respect to the specific application of the net proceeds of the Public Offering and the sale of the Private Placement Warrants, although substantially all of the net proceeds are intended to be applied generally toward completing a Business Combination. The Company must complete one or more Business Combinations having an aggregate fair market value equal to at least 80% of the net assets held in the Trust Account (as defined below) (excluding the deferred underwriting commissions and taxes payable on the income earned on the Trust Account) at the time of the agreement to enter into the

 

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initial Business Combination. The Company will only complete a Business Combination if the post-Business Combination company owns or acquires 50% or more of the issued and outstanding voting securities of the target or otherwise acquires a controlling interest in the target business sufficient for it not to be required to register as an investment company under the Investment Company Act. There is no assurance that the Company will be able to successfully effect a Business Combination.

The Company will provide its shareholders with the opportunity to redeem all or a portion of their Public Shares upon the completion of a Business Combination either (i) in connection with a general meeting called to approve the Business Combination or (ii) without a shareholder vote by means of a tender offer. The decision as to whether the Company will seek shareholder approval of a Business Combination or conduct a tender offer will be made by the Company. The shareholders will be entitled to redeem their shares for a pro rata portion of the amount held in the Trust Account (initially $10.00 per share), calculated as of two business days prior to the completion of a Business Combination, including any pro rata interest earned on the funds held in the Trust Account and not previously released to the Company to pay its tax obligations. There will be no redemption rights upon the completion of a Business Combination with respect to the Company’s warrants. Certain of the Class A ordinary shares were recorded at redemption value and classified as temporary equity upon the completion of the Public Offering, in accordance with Accounting Standards Codification (“ASC”) Topic 480 “Distinguishing Liabilities from Equity.”

If the Company seeks shareholder approval, the Company will complete a Business Combination only if it receives an ordinary resolution under Cayman Islands law approving a Business Combination, which requires the affirmative vote of a majority of the Company’s ordinary shares which are represented in person or by proxy and are voted at a general meeting of the Company. If a shareholder vote is not required under applicable law or stock exchange listing requirements and the Company does not decide to hold a shareholder vote for business or other reasons, the Company will, pursuant to its Amended and Restated Memorandum and Articles of Association, conduct the redemptions pursuant to the tender offer rules of the SEC, and file tender offer documents containing substantially the same information as would be included in a proxy statement with the SEC prior to completing a Business Combination. If the Company seeks shareholder approval in connection with a Business Combination, Eagle Equity Partners III, LLC (the “Sponsor”) has agreed to vote its Founder Shares (as defined in Note 6) and any Public Shares purchased in or after the Public Offering in favor of approving a Business Combination and to waive its redemption rights with respect to any such shares in connection with a shareholder vote to approve a Business Combination. However, in no event will the Company redeem its Public Shares in an amount that would cause its net tangible assets to be less than $5,000,001. In such case, the Company would not proceed with the redemption of its Public Shares and the related Business Combination, and instead may search for an alternate Business Combination. Additionally, each public shareholder may elect to redeem its Public Shares, without voting, and if they do vote, irrespective of whether they vote for or against a proposed Business Combination.

Notwithstanding the foregoing, if the Company seeks shareholder approval of a Business Combination and it does not conduct redemptions pursuant to the tender offer rules, the Company’s Amended and Restated Memorandum and Articles of Association provides that a public shareholder, together with any affiliate of such shareholder or any other person with whom such shareholder 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 its shares with respect to more than an aggregate of 20% of the Public Shares without the Company’s prior written consent.

The Sponsor has agreed (a) to waive its redemption rights with respect to any Founder Shares and Public Shares held by it in connection with the completion of a Business Combination and (b) not to propose an amendment to the Amended and Restated Memorandum and Articles of Association (i) to modify the substance or timing of the Company’s obligation to redeem 100% of the Public Shares if the Company does not complete a Business Combination within the Completion Window (as defined below) or (ii) with respect to any other provision relating to shareholders’ rights or pre-initial business combination activity, unless the Company

 

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provides the public shareholders with the opportunity to redeem their Public Shares in conjunction with any such amendment and (iii) to waive its rights to liquidating distributions from the Trust Account with respect to the Founder Shares if the Company fails to complete a Business Combination.

The Company will have until February 26, 2023, or August 26, 2023 if the Company has executed a definitive agreement for its initial Business Combination within 24 months from the closing of the Public Offering (the “Completion Window”), to complete a Business Combination. If the Company is unable to complete a Business Combination within the Completion Window, the Company will (i) cease all operations except for the purpose of winding up, (ii) as promptly as reasonably possible but no more than 10 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 interest earned (less 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 shareholders’ rights as shareholders (including the right to receive further liquidation distributions, if any), and (iii) as promptly as reasonably possible following such redemption, subject to the approval of the remaining shareholders and the Company’s board of directors, dissolve and liquidate, subject in each case to its obligations under Cayman Islands law to provide for claims of creditors and the requirements of other applicable law.

The Sponsor has agreed to waive its liquidation rights with respect to the Founder Shares if the Company fails to complete a Business Combination within the Completion Window. However, if the Sponsor acquires Public Shares in or after the Public Offering, such Public Shares will be entitled to liquidating distributions from the Trust Account if the Company fails to complete a Business Combination within the Completion Window. The underwriter has agreed to waive their rights to their deferred underwriting commission (see Note 7) held in the Trust Account in the event the Company does not complete a Business Combination within the Completion Window and, in such event, such amounts will be included with the funds held in the Trust Account that will be available to fund the redemption of the Public Shares. In the event of such distribution, it is possible that the per share value of the assets remaining available for distribution will be less than the Public Offering price per Unit ($10.00).

The Sponsor has agreed that it will be liable to the Company, if and to the extent any claims by a third party for services rendered or products sold to the Company, or by a prospective target business with which the Company has 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 (1) $10.00 per Public Share and (2) 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 $10.00 per Public Share due to reductions in the value of trust assets, less taxes payable. This liability will not apply to any claims by a third party or prospective target business who executed a waiver of any and all rights to the monies held in the Trust Account nor will it apply to any claims under the Company’s indemnity of the underwriter of the Public Offering against certain liabilities, including liabilities under the Securities Act of 1933, as amended (the “Securities Act”). Moreover, in the event that an executed waiver is deemed to be unenforceable against a third party, the Sponsor will not be responsible to the extent of any liability for such third-party claims. The Company will seek to reduce the possibility that the Sponsor will have to indemnify the Trust Account due to claims of creditors by endeavoring to have all vendors, service providers (other than the Company’s independent public accountants), prospective target businesses or other entities with which the Company does business, execute agreements with the Company waiving any right, title, interest or claim of any kind in or to monies held in the Trust Account.

Note 2 — Revision of Previously Issued Financial Statement

On April 12, 2021, the Staff of the Securities and Exchange Commission together issued a statement regarding the accounting and reporting considerations for warrants issued by special purpose acquisition companies entitled “Staff Statement on Accounting and Reporting Considerations for Warrants Issued by Special Purpose Acquisition Companies (“SPACs”)” (the “SEC Statement”). Specifically, the SEC Statement focused on

 

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certain settlement terms and provisions related to certain tender offers following a Business Combination, which terms are similar to those contained in the warrant agreement, dated as of February 23, 2021, between the Company and Continental Stock Transfer & Trust Company, a New York corporation, as warrant agent (the “Warrant Agreement”). As a result of the SEC Statement, the Company reevaluated the accounting treatment of (i) the 34,500,000 Public Warrants and (ii) the 19,250,000 Private Placement Warrants (See Note 4 and Note 5). The Company previously accounted for all Warrants as components of equity.

In further consideration of the guidance in Accounting Standards Codification (“ASC”) 815-40, Derivatives and Hedging; Contracts in Entity’s Own Equity, the Company concluded that a provision in the Warrant Agreement related to certain tender or exchange offers precludes the Warrants from being accounted for as components of equity. As the Warrants meet the definition of a derivative as contemplated in ASC 815, the Warrants should be recorded as derivative liabilities on the balance sheet and measured at fair value at issuance (on the date of the IPO) and at each reporting date in accordance with ASC 820, Fair Value Measurement, with changes in fair value recognized in the unaudited condensed statement of operations in the period of change.

After consultation with the Company’s management, the audit committee of the Company’s Board of Directors concluded that it is appropriate to revise the Company’s previously issued audited balance sheet as of February 26, 2021 as previously reported in its Form 8-K. The revised classification and reported values of the Warrants as accounted for under ASC 815-40 are included in the financial statements herein.

The following table summarizes the effect of the revision on each balance sheet line item as of the date:

 

     As Previously
Reported
    Adjustment     As Revised  

Balance Sheet at February 26, 2021

      

Warrant Liabilities

   $ —       $ 107,692,500     $ 107,692,500  

Class A ordinary shares subject to possible redemption

     161,384,400       (107,692,500     1,553,691,900  

Class A ordinary shares

     636       1,077       1,713  

Additional paid-in capital

     5,000,059       13,336,770       18,336,829  

Accumulated deficit

   $ (5,000   $ (13,337,847   $ (13,342,847

Note 3—Summary of Significant Accounting Policies

Basis of presentation

The accompanying unaudited condensed financial statements of the Company are presented in U.S. dollars in conformity with accounting principles generally accepted in the United States of America and pursuant to the rules and regulations of the SEC.

Emerging growth company

The Company is an “emerging growth company,” as defined in Section 2(a) of the Securities Act, as modified by the Jumpstart Our Business Startups Act of 2012 (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 Sarbanes-Oxley Act of 2002, reduced disclosure obligations regarding executive compensation in its periodic reports and proxy statements, and exemptions from the requirements of holding a nonbinding advisory vote on executive compensation and shareholder 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

 

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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. The Company 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, the Company, 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 the Company’s financial statements with another public company which is neither an emerging growth company nor an emerging growth company which has opted out of using the extended transition period difficult or impossible because of the potential differences in accounting standards used.

Use of estimates

The preparation of the unaudited condensed financial statements in conformity with GAAP requires management to make estimates and assumptions that affect the reported amounts of assets and liabilities and disclosure of contingent assets and liabilities at the date of the financial statements and the reported amounts of expenses during the reporting period.

Making estimates requires management to exercise significant judgment. It is at least reasonably possible that the estimate of the effect of a condition, situation or set of circumstances that existed at the date of the financial statements, which management considered in formulating its estimate, could change in the near term due to one or more future confirming events. Accordingly, the actual results could differ significantly from those estimates.

Cash and Cash Equivalents

The Company considers all short-term investments with an original maturity of three months or less when purchased to be cash equivalents. The Company had no cash equivalents as of March 31, 2021 and December 31, 2020.

Investment Held in Trust Account

The Company’s portfolio of investments is comprised solely of U.S. government securities, within the meaning set forth in Section 2(a)(16) of the Investment Company Act, with a maturity of 185 days or less, or investments in money market funds that invest in U.S. government securities, or a combination thereof. The Company’s investments held in the Trust Account are classified as trading securities. Trading securities are presented on the balance sheet at fair value at the end of each reporting period. Gains and losses resulting from the change in fair value of these securities is included in income from investments held in Trust Account in the accompanying unaudited condensed statement of operations. The estimated fair values of investments held in the Trust Account are determined using available market information.

Offering costs

Offering costs consist of legal, accounting, underwriting fees and other costs incurred through the Public Offering that are directly related to the Public Offering. Offering costs amounting to $83,990,246 net of $3,520,347 in warrant issuance cost which was expensed, were charged to shareholders’ equity upon the completion of the Public Offering.

Derivative Warrant Liabilities

The Company does not use derivative instruments to hedge exposures to cash flow, market, or foreign currency risks. The Company evaluates all of its financial instruments, including issued stock purchase warrants, to determine if such instruments are derivatives or contain features that qualify as embedded derivatives, pursuant to ASC 480 and ASC 815-15. The classification of derivative instruments, including whether such instruments should be recorded as liabilities or as equity, is re-assessed at the end of each reporting period.

 

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The 34,500,000 Public Warrants (as defined below) and 19,250,000 Private Placement Warrants are recognized as derivative liabilities in accordance with ASC 815-40. Accordingly, the Company recognizes the warrant instruments as liabilities at fair value and adjust the instruments to fair value at each reporting period. The liabilities are subject to re-measurement at each balance sheet date until exercised, and any change in fair value is recognized in the statement of operations. The fair value of the Public Warrants issued in connection with the Public Offering and Private Placement Warrants were initially measured at fair value using a Monte Carlo simulation model and subsequently, the fair value of the Private Placement Warrants have been estimated using a Monte Carlo simulation model each measurement date. The fair value of Public Warrants issued in connection with the Public Offering have subsequently been measured based on the listed market price of such warrants.

Class A Ordinary Shares Subject to Possible Redemption

The Company accounts for its Class A ordinary shares subject to possible redemption in accordance with the guidance in ASC Topic 480 “Distinguishing Liabilities from Equity.” Class A ordinary shares subject to mandatory redemption is classified as a liability instrument and is measured at fair value. Conditionally redeemable ordinary shares (including ordinary shares that features redemption rights that is either within the control of the holder or subject to redemption upon the occurrence of uncertain events not solely within the Company’s control) is classified as temporary equity. At all other times, ordinary shares are classified as shareholders’ equity. The Company’s Class A ordinary shares feature certain redemption rights that are considered to be outside of the Company’s control and subject to occurrence of uncertain future events. Accordingly, at March 31, 2021, Class A ordinary shares subject to possible redemption is presented at redemption value as temporary equity, outside of the shareholders’ equity section of the Company’s balance sheet.

Income taxes

The Company accounts for income taxes under ASC 740, “Income Taxes” (“ASC 740”), which prescribes a recognition threshold and measurement process for financial statement recognition and measurement of a tax position taken or expected to be taken in a tax return. For those benefits to be recognized, a tax position must be more-likely-than-not to be sustained upon examination by taxing authorities. The Company recognizes accrued interest and penalties related to unrecognized tax benefits as income tax expense. There were no unrecognized tax benefits and no amounts accrued for interest and penalties as of March 31, 2021. The Company is currently not aware of any issues under review that could result in significant payments, accruals or material deviation from its position. The Company is subject to income tax examinations by major taxing authorities since inception.

There is currently no taxation imposed on income by the Government of the Cayman Islands. In accordance with Cayman income tax regulations, income taxes are not levied on the Company. Consequently, income taxes are not reflected in the Company’s financial statements. The Company’s management does not expect that the total amount of unrecognized tax benefits will materially change over the next twelve months.

Concentration of credit risk

Financial instruments that potentially subject the Company to concentrations of credit risk consist of a cash account in a financial institution, which, at times, may exceed the Federal Depository Insurance Coverage of $250,000. The Company has not experienced losses on this account and management believes the Company is not exposed to significant risks on such account.

Fair value of financial instruments

Fair value is defined as the price that would be received for sale of an asset or paid for transfer of a liability, in an orderly transaction between market participants at the measurement date. GAAP establishes a three-tier fair

 

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value hierarchy, which prioritizes the inputs used in measuring fair value. The hierarchy gives the highest priority to unadjusted quoted prices in active markets for identical assets or liabilities (Level 1 measurements) and the lowest priority to unobservable inputs (Level 3 measurements). These tiers include:

 

   

Level 1, defined as observable inputs such as quoted prices (unadjusted) for identical instruments in active markets;

 

   

Level 2, defined as inputs other than quoted prices in active markets that are either directly or indirectly observable such as quoted prices for similar instruments in active markets or quoted prices for identical or similar instruments in markets that are not active; and

 

   

Level 3, defined as unobservable inputs in which little or no market data exists, therefore requiring an entity to develop its own assumptions, such as valuations derived from valuation techniques in which one or more significant inputs or significant value drivers are unobservable.

In some circumstances, the inputs used to measure fair value might be categorized within different levels of the fair value hierarchy. In those instances, the fair value measurement is categorized in its entirety in the fair value hierarchy based on the lowest level input that is significant to the fair value measurement.

As of March 31, 2021 and December 31, 2020, the fair value of the Company’s assets and liabilities, which qualify as financial instruments under ASC Topic 820, “Fair Value Measurements and Disclosures,” approximates the carrying amounts represented in the accompanying balance sheet, primarily due to their short-term nature. The Company’s marketable securities held in Trust Account is comprised of investments in U.S. Treasury securities money market funds and are recognized at fair value. The fair value of investments held in Trust Account is determined using quoted prices in active markets.

Warrant Liability

The Company accounts for warrants for shares of the Company’s Class A ordinary share that are not indexed to its own stock as liabilities at fair value on the balance sheet in accordance with ASC 815-40. The warrants are subject to remeasurement at each balance sheet date and any change in fair value is recognized as a component of other income (expense), net on the statement of operations. The Company will continue to adjust the liability for changes in fair value until the earlier of the exercise or expiration of the Class A ordinary share warrants. At that time, the portion of the warrant liability related to the Class A ordinary share warrants will be reclassified to additional paid-in capital.

Net Income (Loss) Per Ordinary Share

We apply the two-class method in calculating earnings per share. Net income (loss) per ordinary share, basic and diluted for Class A ordinary shares subject to possible redemption is calculated by dividing the interest income earned on the Trust Account, net of applicable taxes, if any, by the weighted average number of shares of Class A common stock subject to possible redemption outstanding for the period. Net income per share, basic and diluted for Class B ordinary share for the three months ended March 31, 2021 is calculated by dividing the general and administration expenses of $295,117, change in fair value of warrant liabilities of $9,532,500 and $3,520,347 offering costs related to warrant liabilities, resulting in a net income of $5,717,036 by the weighted average number of Class B ordinary share outstanding for the period presented.

Recently issued accounting standards

Management does not believe that any recently issued, but not yet effective, accounting standards, if currently adopted, would have a material effect on the Company’s financial statements.

Note 4—Public Offering

Pursuant to the Public Offering, the Company sold 172,500,000 Units, which includes an exercise by the underwriter of its over-allotment option in full in the amount of 22,500,000 Units, at a purchase price of $10.00

 

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per Unit. Each Unit consists of one Class A ordinary share and one-fifth of one redeemable warrant (“Public Warrant”). Each whole Public Warrant entitles the holder to purchase one Class A ordinary share at an exercise price of $11.50 per whole share (see Note 7).

Note 5—Private Placement

Simultaneously with the closing of the Public Offering, the Sponsor purchased an aggregate of 19,250,000 Private Placement Warrants at a price of $1.50 per Private Placement Warrant, for an aggregate purchase price of $28,875,000. Each Private Placement Warrant is exercisable for one Class A ordinary share at a price of $11.50 per share, subject to adjustment (see Note 8). The proceeds from the sale of the Private Placement Warrants were added to the net proceeds from the Public Offering held in the Trust Account. If the Company does not complete a Business Combination within the Completion Window, the proceeds from the sale of the Private Placement Warrants held in the Trust Account will be used to fund the redemption of the Public Shares (subject to the requirements of applicable law) and the Private Placement Warrants will expire worthless.

Note 6—Related Party Transactions

Founder Shares

On October 28, 2020, the Sponsor paid an aggregate of $25,000 to cover certain offering and formation costs of the Company in consideration for 43,125,000 of the Company’s Class B ordinary shares (the “Founder Shares”). The Founder Shares included an aggregate of up to 5,625,000 shares subject to forfeiture by the Sponsor to the extent that the underwriter’s over-allotment was not exercised in full or in part, so that the number of Founder Shares would collectively represent 20% of the Company’s issued and outstanding shares upon the completion of the Public Offering. The underwriter exercised its over-allotment option in full on February 26, 2021; thus, these 5,625,000 Founder Shares were no longer subject to forfeiture.

The Sponsor has agreed, subject to limited exceptions, not to transfer, assign or sell any of its Founder Shares until the earlier to occur of: (A) one year after the completion of a Business Combination; and (B) subsequent to a Business Combination, (x) if the closing price of the Class A ordinary shares equals or exceeds $12.00 per share (as adjusted for share sub-divisions, share capitalizations, reorganizations, recapitalizations and the like) for any 20 trading days within any 30-trading day period, provided such release shall not occur earlier than 180 days after a Business Combination, or (y) the date on which the Company completes a liquidation, merger, amalgamation, share exchange, reorganization or other similar transaction that results in all of the Company’s shareholders having the right to exchange their Class A ordinary shares for cash, securities or other property.

Promissory Note—Related Party

On October 27, 2020, the Company issued the Promissory Note to the Sponsor, pursuant to which the Company may borrow up to an aggregate principal amount of $300,000, The Promissory Note is non-interest bearing and payable on the earlier of (i) December 31, 2021 and (ii) the completion of the Public Offering. As of March 31, 2021, borrowings under the Promissory Note totaling $300,000 were repaid in full and accordingly, as of March 31, 2021, there was no amount outstanding under the Note.

Advance from Sponsor

Prior to the Initial Public Offering, the Sponsor paid on behalf of the Company an aggregate of $156,333 for offering costs. As of March 31, 2021, the advance was repaid in full.

Administrative Services Agreement

Commencing on February 23, 2021, the Company entered into an agreement pursuant to which it will pay an affiliate of the Sponsor $15,000 per month for office space, utilities, secretarial and administrative support

 

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services. Upon completion of a Business Combination or its liquidation, the Company will cease paying these monthly fees. During the three months ended March 31, 2021, the Company incurred $15,000 in expenses for services provided by the Sponsor in connection with the aforementioned agreement.

Related Party Loans

In order to finance transaction costs in connection with a Business Combination, the Sponsor or an affiliate of the Sponsor, or certain of the Company’s officers and directors may, but are not obligated to, loan the Company funds as may be required (“Working Capital Loans”). Such Working Capital Loans would be evidenced by promissory notes. The notes may be repaid upon completion of a Business Combination, without interest, or, at the lender’s discretion, such loans may be converted upon completion of a Business Combination into warrants of the post Business Combination entity at a price of $1.50 per warrant at the option of the lender. Such warrants would be identical to the Private Placement Warrants. In the event that a Business Combination does not close, the Company may use a portion of proceeds held outside the Trust Account to repay the Working Capital Loans but no proceeds held in the Trust Account would be used to repay the Working Capital Loans. There have been no borrowings under this arrangement to date.

Note 7—Commitments and Contingencies

Registration Rights

The holders of the Founder Shares, Private Placement Warrants and warrants that may be issued upon conversion of the Working Capital Loans (and any Class A ordinary shares issuable upon the exercise of the Private Placement Warrants and warrants that may be issued upon conversion of Working Capital Loans and upon conversion of the Founder Shares) will be entitled to registration rights pursuant to a registration rights agreement signed on the effective date of the Public Offering requiring the Company to register a sale of any of the securities held by them, including any other securities of the Company acquired by them prior to the consummation of the Company’s initial Business Combination. The holders of these securities will be entitled to make up to three demands, excluding short form demands, that the Company register such securities. In addition, the holders have certain “piggy-back” registration rights with respect to registration statements filed subsequent to the completion of a Business Combination. The Company will bear the expenses incurred in connection with the filing of any such registration statements.

Risks and Uncertainties

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

Underwriting Agreement

The underwriter was entitled to a cash underwriting discount of $0.15 per Unit, or $25,875,000, paid upon the closing of the Public Offering. In addition, the underwriter will be entitled to a deferred fee of $0.35 per Unit, or $60,375,000. The deferred fee will become payable to the underwriter from the amounts held in the Trust Account solely in the event that the Company completes a Business Combination, subject to the terms of the underwriting agreement.

Note 8—Shareholders’ Equity

Preference Shares—The Company is authorized to issue 1,000,000 preferred shares with a par value of $0.0001. The Company’s board of directors will be authorized to fix the voting rights, if any, designations,

 

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powers, preferences, the relative, participating, optional or other special rights and any qualifications, limitations and restrictions thereof, applicable to the shares of each series. The board of directors will be able to, without shareholder approval, issue preferred shares with voting and other rights that could adversely affect the voting power and other rights of the holders of the ordinary shares and could have anti-takeover effects. At March 31, 2021, there were no preference shares issued and outstanding.

Class A Ordinary Shares—The Company is authorized to issue 400,000,000 Class A ordinary shares, with a par value of $0.0001 per share. Holders of Class A ordinary shares are entitled to one vote for each share. At March 31, 2021, there were 172,500,000 Class A ordinary shares issued and outstanding.

Class B Ordinary Shares—The Company is authorized to issue 80,000,000 Class B ordinary shares, with a par value of $0.0001 per share. Holders of the Class B ordinary shares are entitled to one vote for each share. At March 31, 2021, there were 43,125,000 Class B ordinary shares issued and outstanding.

Only holders of the Class B ordinary shares will have the right to vote on the appointment of directors prior to the Business Combination. Holders of Class A ordinary shares and holders of Class B ordinary shares will vote together as a single class on all other matters submitted to a vote of the Company’s shareholders except as otherwise required by law.

The Class B ordinary shares will automatically convert into Class A ordinary shares concurrently with or immediately following the completion of a Business Combination on a one-for-one basis, subject to adjustment. In the case that additional Class A ordinary shares or equity-linked securities are issued or deemed issued in connection with a Business Combination, the number of Class A ordinary shares issuable upon conversion of all Founder Shares will equal, in the aggregate, 20% of the total number of Class A ordinary shares outstanding after such conversion (after giving effect to any redemptions of Class A ordinary shares by public shareholders), including the total number of Class A ordinary shares issued, or deemed issued or issuable upon conversion or exercise of any equity-linked securities or rights issued or deemed issued, by the Company in connection with or in relation to the consummation of a Business Combination, excluding any Class A ordinary shares or equity- linked securities exercisable for or convertible into Class A ordinary shares issued, or to be issued, to any seller in a Business Combination and any Private Placement Warrants issued to the Sponsor, officers or directors upon conversion of Working Capital Loans; provided that such conversion of Founder Shares will never occur on a less than one-for-one basis.

Note 9—Warrants

Public Warrants may only be exercised for a whole number of shares. No fractional warrants will be issued upon separation of the Units and only whole warrants will trade. The Public Warrants will become exercisable 30 days after the completion of a Business Combination. The Public Warrants will expire five years from the completion of a Business Combination, or earlier upon redemption or liquidation.

The Company will not be obligated to deliver any Class A ordinary shares pursuant to the exercise of a Public Warrant and will have no obligation to settle such Public Warrant exercise unless a registration statement under the Securities Act with respect to the Class A ordinary shares underlying the warrants is then effective and a prospectus relating thereto is current, subject to the Company satisfying its obligations with respect to registration. No warrant will be exercisable and the Company will not be obligated to issue a Class A ordinary share upon exercise of a warrant unless the Class A ordinary share issuable upon such warrant exercise has been registered, qualified or deemed to be exempt under the securities laws of the state of residence of the registered holder of the warrants.

The Company has agreed that as soon as practicable, but in no event later than 20 business days after the closing of a Business Combination, it will use its commercially reasonable efforts to file with the SEC a post-effective amendment to the registration statement of which this prospectus forms a part or a new registration

 

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statement for the registration, under the Securities Act, of the Class A ordinary shares issuable upon exercise of the warrants. The Company will use its best efforts to cause the same to become effective and to maintain the effectiveness of such registration statement, and a current prospectus relating thereto, until the expiration of the warrants in accordance with the provisions of the warrant agreement. If a registration statement covering the Class A ordinary shares issuable upon exercise of the warrants is not effective by the 60th business day after the closing of a Business Combination, warrant holders may, until such time as there is an effective registration statement and during any period when the Company will have failed to maintain an effective registration statement, exercise warrants on a “cashless basis” in accordance with Section 3(a)(9) of the Securities Act or another exemption. In addition, if the Class A ordinary shares are at the time of any exercise of a warrant not listed on a national securities exchange such that they satisfy the definition of a “covered security” under Section 18(b)(1) of the Securities Act, the Company may, at its option, require holders of the Public Warrants who exercise their warrants to do so on a “cashless basis” in accordance with Section 3(a)(9) of the Securities Act and, in the event the Company elects to do so, the Company will not be required to file or maintain in effect a registration statement, but it will use its best efforts to register or qualify the shares under applicable blue sky laws to the extent an exemption is not available.

Once the warrants become exercisable, the Company may redeem the outstanding Public Warrants:

 

   

in whole and not in part;

 

   

at a price of $0.01 per Public Warrant;

 

   

upon not less than 30 days’ prior written notice of redemption to each warrant holder; and

 

   

if, and only if, the reported closing price of the ordinary shares equals or exceeds $18.00 per share (as adjusted for share sub-divisions, share capitalizations, reorganizations, recapitalizations and the like) for any 20 trading days within a 30-trading day period ending three business days before the Company send to the notice of redemption to the warrant holders.

If and when the warrants become redeemable by the Company, the Company may exercise its redemption right even if it is unable to register or qualify the underlying securities for sale under all applicable state securities laws.

If the Company calls the Public Warrants for redemption, as described above, its management will have the option to require any holder that wishes to exercise the Public Warrants to do so on a “cashless basis,” as described in the warrant agreement. The exercise price and number of ordinary shares issuable upon exercise of the Public Warrants may be adjusted in certain circumstances including in the event of a share dividend, extraordinary dividend or recapitalization, reorganization, merger or consolidation. However, except as described below, the Public Warrants will not be adjusted for issuances of ordinary shares at a price below its exercise price. Additionally, in no event will the Company be required to net cash settle the Public Warrants. If the Company is unable to complete a Business Combination within the Completion Window and the Company liquidates the funds held in the Trust Account, holders of Public Warrants will not receive any of such funds with respect to their Public Warrants, nor will they receive any distribution from the Company’s assets held outside of the Trust Account with respect to such Public Warrants. Accordingly, the Public Warrants may expire worthless.

The Private Placement Warrants will be identical to the Public Warrants underlying the Units being sold in the Public Offering, except that (x) the Private Placement Warrants and the Class A ordinary shares issuable upon the exercise of the Private Placement Warrants will not be transferable, assignable or salable until 30 days after the completion of a Business Combination, subject to certain limited exceptions, (y) the Private Placement Warrants will be exercisable on a cashless basis and be non-redeemable so long as they are held by the initial purchasers or their permitted transferees and (z) the Private Placement Warrants and the Class A ordinary shares issuable upon exercise of the Private Placement Warrants will be entitled to registration rights. If the Private Placement Warrants are held by someone other than the initial purchasers or their permitted transferees, the Private Placement Warrants will be redeemable by the Company and exercisable by such holders on the same basis as the Public Warrants.

 

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Note 10—Fair Value Measurements

The fair value of the Public Warrants issued in connection with the Public Offering and Private Placement Warrants were initially measured at fair value using a Monte Carlo simulation model and subsequently, the fair value of the Private Placement Warrants have been estimated using a Monte Carlo simulation model each measurement date. For the three months ended March 31, 2021, the Company recognized a charge to the statement of operations resulting from an increase in the fair value of liabilities of $9,532,500 million presented as change in fair value of warrant liabilities in the accompanying statement of operations.

The following table presents information about the Company’s financial assets that are measured at fair value on a recurring basis as of March 31, 2021 by level within the fair value hierarchy:

 

Description    Quoted Prices
in Active
Markets
(Level 1)
     Significant
Other
Observable
Inputs
(Level 2)
     Significant
Other
Unobservable
Inputs
(Level 3)
 

Assets:

        

Investments held in Trust Account—U.S. Treasury Securities (1)

   $ 1,725,043,935      $ —        $ —    
  

 

 

    

 

 

    

 

 

 

Liabilities:

        

Public warrant liabilities

   $ —        $ —        $ 56,580,000  
  

 

 

    

 

 

    

 

 

 

Private warrant liabilities

   $ —        $ —        $ 31,762,500  
  

 

 

    

 

 

    

 

 

 

(1) Excludes $629 of cash balance held within the Trust Account.

The estimated fair value of the Private Placement Warrants, and the Public Warrants prior to being separately listed and traded, is determined using Level 3 inputs. Inherent in a Monte Carlo simulation are assumptions related to expected stock-price volatility, expected life, risk-free interest rate and dividend yield. The Company estimates the volatility of its common stock warrants based on implied volatility from the Company’s traded warrants and from historical volatility of select peer company’s common stock that matches the expected remaining life of the warrants. The risk-free interest rate is based on the U.S. Treasury zero-coupon yield curve on the grant date for a maturity similar to the expected remaining life of the warrants. The expected life of the warrants is assumed to be equivalent to their remaining contractual term. The dividend rate is based on the historical rate, which the Company anticipates remaining at zero.

The following table provides quantitative information regarding Level 3 fair value measurements inputs as their measurement dates:

 

     At
issuance
    As of
March 31,
2021
 

Exercise price

   $ 11.50     $ 11.50  

Stock price

   $ 10.45     $ 9.79  

Volatility

     21.3     22.5

Term

     6.00       5.50  

Risk-free rate

     0.95     1.06

Dividend yield

     —       —  

 

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The change in the fair value of the warrant liabilities for the three months ended March 31, 2021 is summarized as follows:

 

Level 3 warrant liabilities as of December 31, 2020

   $ —    

Issuance of Public and Private Warrants on February 26, 2021

     97,875,000  

Change in fair value of warrant liabilities

     (9,532,000
  

 

 

 

Level 3 warrant liabilities as of March 31, 2021

   $ 88,342,500  
  

 

 

 

Transfers to/from Levels 1, 2 and 3 are recognized at the end of the reporting period. The estimated fair value of the Public Warrants will be transferred from a Level 3 measurement to a Level 1 fair value measurement in April 2021, when the Public Warrants were separately listed and traded.

Note 11—Subsequent Events

The Company evaluated subsequent events and transactions that occurred after the balance sheet date up to May 24, 2021, the date that these financial statements were issued. Based upon this review, all subsequent events have been adequately disclosed in these unaudited condensed financial statements.

Business Combination

On May 11, 2021, Soaring Eagle Acquisition Corp., a Cayman Islands exempted company limited by shares (“SRNG” or the “Company”), entered into an agreement and plan of merger by and among SRNG, SEAC Merger Sub Inc., a wholly owned subsidiary of SRNG (“Merger Sub”), and Ginkgo Bioworks, Inc. (“Ginkgo”) (as it may be amended, restated, supplemented or otherwise modified from time to time, the “Merger Agreement”). The merger was approved by SRNG’s board of directors on May 7, 2021. If the Merger Agreement is approved by SRNG’s and Ginkgo’s stockholders, and the closing conditions contemplated by the Merger Agreement are satisfied, then, among other things, (i) prior to the closing of the Business Combination, SRNG shall domesticate as a Delaware corporation in accordance with Section 388 of the Delaware General Corporation Law, as amended (“DGCL”), and the Cayman Islands Companies Act (As Revised) (the “Domestication”) and (ii) upon the terms and subject to the conditions of the Merger Agreement, in accordance with the DGCL, Merger Sub will merge with and into Ginkgo, with Ginkgo surviving the merger as a wholly owned subsidiary of SRNG (the “Business Combination”). In addition, in connection with the consummation of the Business Combination, SRNG will be renamed “Ginkgo Bioworks Holdings, Inc.” and is referred to herein as “New Ginkgo” as of the time following such change of name.

Under the Merger Agreement, SRNG has agreed to acquire all of the outstanding equity interests in Ginkgo for approximately $15 billion in aggregate base equity consideration in the form of New Ginkgo common stock (at $10 per share) to be paid at the effective time of the Business Combination, plus approximately 180,000,000 earn-out shares of New Ginkgo common stock, which are subject to forfeiture to the extent that the vesting conditions described below are not satisfied on or before the fifth anniversary of the closing.

The base equity consideration will be allocated among Ginkgo’s equityholders as follows: (i) each stockholder of Ginkgo holding shares of Class A common stock or Class B common stock of Ginkgo immediately prior to the effective time of the Business Combination (including as a result of the automatic exercise of Ginkgo Preferred Warrants (defined below) by virtue of the occurrence of the Business Combination pursuant to the terms of such warrants) will receive, with respect to each share of Class A common stock or Class B common stock of Ginkgo such person holds, a number of shares of Class A common stock or Class B common stock, as applicable, of New Ginkgo calculated, in each case, based on the equity value exchange ratio as set forth in the Merger Agreement, (ii) each option exercisable for Class A common stock or Class B common stock

 

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of Ginkgo that is outstanding immediately prior to the effective time of the Business Combination will be assumed and converted into a newly issued option exercisable for shares of Class A common stock or Class B common stock, as applicable, of New Ginkgo (subject to the same terms and conditions as the original Ginkgo option and with appropriate adjustments to the number of shares for which such option is exercisable and the exercise price thereof), (iii) each award of restricted common stock of Ginkgo under Ginkgo’s stock incentive plans (a “Ginkgo Restricted Stock Award”) that is outstanding immediately prior to the effective time of the Business Combination will be converted into the right to receive restricted common stock of New Ginkgo on the same terms and conditions as applicable to such Ginkgo Restricted Stock Award, (iv) each award of restricted stock units of Ginkgo under Ginkgo’s stock incentive plans (a “Ginkgo Restricted Stock Unit Award”) that is outstanding immediately prior to the effective time of the Business Combination will be converted into the right to receive restricted stock units based on common stock of New Ginkgo on the same terms and conditions as applicable to such Ginkgo Restricted Stock Unit Award and with appropriate adjustments to the number of shares to which each such restricted stock unit relates, and (v) each preferred warrant to purchase shares of Ginkgo capital stock (a “Ginkgo Preferred Warrant”) that is outstanding and unexercised immediately prior to the effective time of the Business Combination that is not automatically exercised in full in accordance with its terms by virtue of the occurrence of the Business Combination will be assumed and converted into a warrant exercisable for Class A common stock of New Ginkgo on the same terms and conditions as applicable to such Ginkgo Preferred Warrant immediately prior to the effective time of the Business Combination, with appropriate adjustments to the number of shares for which such preferred warrant is exercisable and the exercise price thereof.

As described above, the Merger Agreement also contemplates that the holders of Ginkgo common stock, Ginkgo options, Ginkgo Restricted Stock Awards, Ginkgo Restricted Stock Unit Awards, and Ginkgo preferred warrants outstanding immediately prior to the effective time of the Business Combination will collectively be entitled.

Additional information regarding Ginkgo, the Business Combination and the transactions is available in the preliminary proxy statement/prospectus filed with the SEC on May 14, 2021.

 

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REPORT OF INDEPENDENT REGISTERED PUBLIC ACCOUNTING FIRM

To the Stockholders and the Board of Directors of Ginkgo Bioworks, Inc.

Opinion on the Financial Statements

We have audited the accompanying consolidated balance sheets of Ginkgo Bioworks, Inc. and subsidiaries (the Company) as of December 31, 2020 and 2019, the related consolidated statements of operations and comprehensive loss, stockholders’ equity and cash flows for the years then ended, and the related notes (collectively referred to as the “consolidated financial statements”). In our opinion, the consolidated financial statements present fairly, in all material respects, the financial position of the Company at December 31, 2020 and 2019, and the results of its operations and its cash flows for the years then ended in conformity with U.S. generally accepted accounting principles.

Basis for Opinion

These financial statements are the responsibility of the Company’s management. Our responsibility is to express an opinion on the Company’s financial statements based on our audits. We are a public accounting firm registered with the Public Company Accounting Oversight Board (United States) (PCAOB) and are required to be independent with respect to the Company in accordance with the U.S. federal securities laws and the applicable rules and regulations of the Securities and Exchange Commission and the PCAOB.

We conducted our audits in accordance with the standards of the PCAOB and in accordance with auditing standards generally accepted in the United States of America. Those standards require that we plan and perform the audit to obtain reasonable assurance about whether the financial statements are free of material misstatement, whether due to error or fraud. Our audits included performing procedures to assess the risks of material misstatement of the financial statements, whether due to error or fraud, and performing procedures that respond to those risks. Such procedures included examining, on a test basis, evidence regarding the amounts and disclosures in the financial statements. Our audits also included evaluating the accounting principles used and significant estimates made by management, as well as evaluating the overall presentation of the financial statements. We believe that our audits provide a reasonable basis for our opinion.

/s/ Ernst & Young LLP

We have served as the Company’s auditor since 2018.

Boston, Massachusetts

May 14, 2021

 

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Ginkgo Bioworks, Inc. and Subsidiaries

Consolidated Balance Sheets

(in thousands, except share and per share data)

 

     As of December 31,  
     2020      2019  

Assets

     

Current assets:

     

Cash and cash equivalents

   $ 380,801      $ 495,287  

Accounts receivable, net

     16,694        3,461  

Accounts receivable, net from related parties (Note 21)

     5,212        4,217  

Inventory, net

     2,736        —    

Prepaid expenses and other current assets

     21,099        8,960  
  

 

 

    

 

 

 

Total current assets

     426,542        511,925  

Property and equipment, net

     121,435        63,132  

Investments

     60,504        61,574  

Equity method investments

     42,620        45,679  

Intangible assets, net

     3,294        3,843  

Goodwill

     1,857        1,857  

Loans receivable, net of current portion

     13,298        3,724  

Other non-current assets

     5,603        5,584  
  

 

 

    

 

 

 

Total assets

   $ 675,153      $ 697,318  
  

 

 

    

 

 

 

Liabilities and Stockholders’ Equity

     

Current liabilities:

     

Accounts payable

   $ 13,893      $ 2,439  

Accrued expenses and other current liabilities

     30,505        15,816  

Deferred revenue

     28,823        21,819  
  

 

 

    

 

 

 

Total current liabilities

     73,221        40,074  

Non-current liabilities:

     

Deferred rent, net of current portion

     12,678        11,633  

Deferred revenue, net of current portion

     99,652        126,079  

Lease financing obligation

     16,518        16,767  

Other non-current liabilities

     3,032        912  
  

 

 

    

 

 

 

Total liabilities

     205,101        195,465  
  

 

 

    

 

 

 

Commitments and contingencies (Note 11)

     

Stockholders’ equity:

     

Series B convertible preferred stock, $0.01 par value; 4,143,251 shares authorized as of December 31, 2020 and 2019; 4,138,185 shares issued and outstanding as of December 31, 2020 and 2019; liquidation value as of December 31, 2020 and 2019 of $53,093

     41        41  

Series C convertible preferred stock, $0.01 par value; 4,658,503 shares authorized, issued and outstanding as of December 31, 2020 and 2019; liquidation value as of December 31, 2020 and 2019 of $98,900

     47        47  

Series D convertible preferred stock, $0.01 par value; 6,162,631 shares authorized as of December 31, 2020 and 2019; 6,146,911 shares issued and outstanding as of December 31, 2020 and 2019; liquidation value as of December 31, 2020 and 2019 of $293,269

     61        61  

 

The accompanying notes are an integral part of these consolidated financial statements.

 

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Ginkgo Bioworks, Inc. and Subsidiaries

Consolidated Balance Sheets

(in thousands, except share and per share data)

 

     As of December 31,  
     2020     2019  

Series E convertible preferred stock, $0.01 par value; 4,172,102 and 2,907,037 shares authorized as of December 31, 2020 and 2019, respectively; 3,460,005 and 2,831,342 shares issued and outstanding as of December 31, 2020 and 2019, respectively; liquidation value as of December 31, 2020 and 2019 of $519,658 and $425,239, respectively

   $ 35     $ 28  

Common stock, $0.01 par value; 35,000,000 shares authorized as of December 31, 2020 and 2019, respectively; 7,859,702 and 7,820,543 shares issued as of December 31, 2020 and 2019, respectively; 7,851,164 and 7,806,772 shares outstanding as of December 31, 2020 and 2019, respectively

     79       79  

Additional paid in capital

     928,991       834,076  

Accumulated deficit

     (467,878     (341,269
  

 

 

   

 

 

 

Total Ginkgo Bioworks, Inc. stockholders’ equity

     461,376       493,063  

Non-controlling interest

     8,676       8,790  
  

 

 

   

 

 

 

Total stockholders’ equity

     470,052       501,853  
  

 

 

   

 

 

 

Total liabilities and stockholders’ equity

   $ 675,153     $ 697,318  
  

 

 

   

 

 

 

 

 

The accompanying notes are an integral part of these consolidated financial statements.

 

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Ginkgo Bioworks, Inc. and Subsidiaries

Consolidated Statements of Operations and Comprehensive Loss

(in thousands, except share and per share data)

 

     Year Ended December 31,  
     2020     2019  

Foundry revenue (1)

   $ 59,221     $ 54,184  

Biosecurity revenue:

    

Product

     8,707       —    

Service

     8,729       —    
  

 

 

   

 

 

 

Total revenue

     76,657       54,184  
  

 

 

   

 

 

 

Costs and operating expenses:

    

Cost of Biosecurity product revenue

     6,705       —    

Cost of Biosecurity service revenue

     8,906       —    

Research and development

     159,767       96,299  

General and administrative

     38,306       29,483  
  

 

 

   

 

 

 

Total operating expenses

     213,684       125,782  
  

 

 

   

 

 

 

Loss from operations

     (137,027     (71,598

Other income (expense), net:

    

Interest income

     2,582       5,756  

Interest expense

     (2,385     (2,421

Loss on equity method investments

     (3,059     (46,936

Loss on investments

     (1,070     (7,797

Other income, net

     16,125       3,161  
  

 

 

   

 

 

 

Total other income (expense), net

     12,193       (48,237
  

 

 

   

 

 

 

Loss before provision for income taxes

     (124,834     (119,835

Provision for income taxes

     1,889       22  
  

 

 

   

 

 

 

Net loss and comprehensive loss

     (126,723     (119,857

Net loss and comprehensive loss attributable to non-controlling interest

     (114     (530
  

 

 

   

 

 

 

Net loss and comprehensive loss attributable to Ginkgo Bioworks, Inc. stockholders

   $ (126,609   $ (119,327
  

 

 

   

 

 

 

Net loss per share attributable to Ginkgo Bioworks, Inc. common stockholders, basic and diluted

   $ (16.18   $ (15.29
  

 

 

   

 

 

 

Weighted average common shares outstanding, basic and diluted

     7,824,465       7,802,141  
  

 

 

   

 

 

 

(1) See Note 21 for revenue from related parties

    

 

The accompanying notes are an integral part of these consolidated financial statements.

 

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Ginkgo Bioworks, Inc. and Subsidiaries

Consolidated Statements of Stockholders’ Equity

(in thousands, except share data)

 

    Series B Convertible     Series C Convertible     Series D Convertible     Series E Convertible  
    Preferred Stock     Preferred Stock     Preferred Stock     Preferred Stock  
    Shares     Amount     Shares     Amount     Shares     Amount     Shares     Amount  

Balance as of December 31, 2018

    4,138,185     $ 41       4,658,503     $ 47       6,146,911     $ 61       —       $   —    

Exercise of stock options

    —         —         —         —         —         —         —         —    

Issuance of Series E convertible preferred stock, net of issuance
costs of $4,830

    —         —         —         —         —         —         1,422,408       14  

Recognition of beneficial conversion feature related to issuance of convertible promissory notes

    —         —         —         —         —         —         —         —    

Reacquisition of beneficial conversion feature related to convertible promissory notes

    —         —         —         —         —         —         —         —    

Conversion of convertible promissory notes into Series E convertible preferred stock

    —         —         —         —         —         —         1,408,934       14  

Vesting of restricted stock awards

    —         —         —         —         —         —         —         —    

Repurchase of common stock

    —         —         —         —         —         —         —         —    

Retirement of treasury stock

    —         —         —         —         —         —         —         —    

Issuance of warrants to purchase convertible preferred stock

    —         —         —         —         —         —         —         —    

Stock-based compensation expense

    —         —         —         —         —         —         —         —    

Net loss and comprehensive loss

    —         —         —         —         —         —         —         —    
 

 

 

   

 

 

   

 

 

   

 

 

   

 

 

   

 

 

   

 

 

   

 

 

 

Balance as of December 31, 2019

    4,138,185     $ 41       4,658,503     $ 47       6,146,911     $ 61       2,831,342     $ 28  

Exercise of stock options

    —         —         —         —         —         —         —         —    

Issuance of Series E convertible preferred stock, net of issuance costs of $0

    —         —         —         —         —         —         628,663       7  

Vesting of restricted stock awards

    —         —         —         —         —         —         —         —    

Stock-based compensation expense

    —         —         —         —         —         —         —         —    

Net loss and comprehensive loss

    —         —         —         —         —         —         —         —    
 

 

 

   

 

 

   

 

 

   

 

 

   

 

 

   

 

 

   

 

 

   

 

 

 

Balance as of December 31, 2020

    4,138,185     $ 41       4,658,503     $ 47       6,146,911     $ 61       3,460,005     $ 35  
 

 

 

   

 

 

   

 

 

   

 

 

   

 

 

   

 

 

   

 

 

   

 

 

 

 

The accompanying notes are an integral part of these consolidated financial statements.

 

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Ginkgo Bioworks, Inc. and Subsidiaries

Consolidated Statements of Stockholders’ Equity

(in thousands, except share data)

 

                            Additional
Paid-In
Capital
                Total
Stockholders’
Equity
 
    Common Stock     Treasury Stock     Accumulated
Deficit
    Non-Controlling
Interest
 
    Shares     Amount     Shares     Amount  

Balance as of December 31, 2018

    8,555,710     $ 86       (756,633   $ (24,449   $ 450,268     $ (221,942   $ 9,320     $ 213,432  

Exercise of stock options

    10,200       —         —         —         7       —         —         7  

Issuance of Series E convertible preferred stock, net of issuance costs of $4,830

    —         —         —         —         208,787       —         —         208,801  

Recognition of beneficial conversion feature related to issuance of convertible promissory notes

    —         —         —         —         198,957       —         —         198,957  

Reacquisition of beneficial conversion feature related to convertible promissory notes

    —         —         —         —         (211,608     —         —         (211,608

Conversion of convertible promissory notes into Series E convertible preferred stock

    —         —         —         —         211,594       —         —         211,608  

Vesting of restricted stock awards

    7,495       —         —         —         —         —         —         —    

Repurchase of common stock

    —         —         (10,000     (408     —         —         —         (408

Retirement of treasury stock

    (766,633     (7     766,633       24,857       (24,850     —         —         —    

Issuance of warrants to purchase convertible preferred stock

    —         —         —         —         150       —         —         150  

Stock-based compensation expense

    —         —         —         —         771       —         —         771  

 

The accompanying notes are an integral part of these consolidated financial statements.

 

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Ginkgo Bioworks, Inc. and Subsidiaries

Consolidated Statements of Stockholders’ Equity

(in thousands, except share data)

 

                            Additional
Paid-In
Capital
                Total
Stockholders’
Equity
 
    Common Stock     Treasury Stock     Accumulated
Deficit
    Non-Controlling
Interest
 
    Shares     Amount     Shares     Amount  

Net loss and comprehensive loss

    —         —         —         —         —         (119,327     (530     (119,857
 

 

 

   

 

 

   

 

 

   

 

 

   

 

 

   

 

 

   

 

 

   

 

 

 

Balance as of December 31, 2019

    7,806,772     $ 79       —       $ —       $ 834,076     $ (341,269   $ 8,790     $ 501,853  

Exercise of stock options

    39,159       —         —         —         26       —         —         26  

Issuance of Series E convertible preferred stock, net of issuance costs of $0

    —         —         —         —         94,413       —         —         94,420  

Vesting of restricted stock awards

    5,233       —         —         —         —         —         —         —    

Stock-based compensation expense

    —         —         —         —         476       —         —         476  

Net loss and comprehensive loss

    —         —         —         —         —         (126,609     (114     (126,723
 

 

 

   

 

 

   

 

 

   

 

 

   

 

 

   

 

 

   

 

 

   

 

 

 

Balance as of December 31, 2020

    7,851,164     $ 79       —       $ —       $ 928,991     $ (467,878   $ 8,676     $ 470,052  
 

 

 

   

 

 

   

 

 

   

 

 

   

 

 

   

 

 

   

 

 

   

 

 

 

 

The accompanying notes are an integral part of these consolidated financial statements.

 

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Consolidated Statements of Cash Flows

(in thousands)

 

     Year Ended December 31,  
     2020     2019  

Cash flow from operating activities:

    

Net loss

   $ (126,723   $ (119,857

Adjustments to reconcile net loss to net cash used in operating activities:

    

Depreciation and amortization

     13,864       10,755  

Stock-based compensation

     476       771  

Loss attributable to equity method investments

     3,059       46,936  

Non-cash interest expense related to payments on lease financing obligations

     —         51  

Non-cash interest expense related to amortization of debt discount on convertible promissory notes

     —         71  

Gain on extinguishment of convertible promissory notes

     —         (71

Loss attributable to investments

     1,070       7,797  

Accrued interest income on loan receivable

     —         (163

Gain on termination of Glycosyn, LLC agreement

     —         (1,530

Change in fair value of loans receivable

     (1,061     —    

Changes in operating assets and liabilities:

    

Accounts receivable, net

     (13,233     378  

Accounts receivable, net from related parties (Note 21)

     (995     (2,221

Prepaid expenses and other current assets

     (11,352     (4,031

Inventory, net

     (2,736     —    

Other non-current assets

     1,834       (2,361

Accounts payable

     7,019       664  

Accrued expenses and other current liabilities

     8,665       4,170  

Deferred revenue, current and non-current

     (19,423     4,883  

Deferred rent, non-current

     1,045       9,095  

Other non-current liabilities

     2,661       —    
  

 

 

   

 

 

 

Net cash used in operating activities

     (135,830     (44,663

Cash flow from investing activities:

    

Purchases of property and equipment

     (57,821     (22,219

Purchase of loan receivable from Access Bio, Inc.

     (10,000     —    

Issuance of loans receivable

     (100     (2,250

Cash paid for investment in Synlogic, Inc.

     —         (50,133

Proceeds from loans receivable

     800       —    
  

 

 

   

 

 

 

Net cash used in investing activities

     (67,121     (74,602

Cash flow from financing activities:

    

Proceeds from exercise of stock options

     26       7  

Repurchase of common stock

     —         (408

Principal payment on capital lease obligations

     (598     (736

Proceeds from lease financing obligations

     —         476  

Principal payment on lease financing obligations

     (150     (92

Proceeds from issuance of convertible promissory notes, net of issuance costs

     —         198,957  

Proceeds from issuance of Series E convertible preferred stock, net of issuance costs

     91,040       212,181  
  

 

 

   

 

 

 

Net cash provided by financing activities

     90,318       410,385  

Net increase (decrease) in cash, cash equivalents and restricted cash

     (112,633     291,120  

 

The accompanying notes are an integral part of these consolidated financial statements.

 

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Ginkgo Bioworks, Inc. and Subsidiaries

Consolidated Statements of Cash Flows

(in thousands)

 

     Year Ended December 31,  
     2020      2019  

Cash, cash equivalents and restricted cash, beginning of period

   $ 498,510      $ 207,390  
  

 

 

    

 

 

 

Cash, cash equivalents and restricted cash, end of period

   $ 385,877      $ 498,510  
  

 

 

    

 

 

 

Supplemental disclosure of cash flow information:

     

Cash paid for interest

   $ 2,572      $ 2,348  

Cash paid for income taxes

   $ —        $ 31  

Supplemental disclosure of non-cash investing and financing activities:

     

Purchases of equipment through capital leases

   $ —        $ 406  

Purchases of property and equipment included in accounts payable and accrued expenses

   $ 14,458      $ 605  

Conversion of convertible promissory notes into Series E convertible preferred stock

   $ —        $ 211,608  

Series E convertible preferred stock issuance costs included in accrued expenses

   $ —        $ 3,380  

Issuance of loan receivable upon amendment of Glycosyn, LLC agreement

   $ —        $ 2,744  

Allonnia, LLC equity interest received for intellectual property

   $ —        $ 24,480  

Loan receivable received as consideration under customer arrangement

   $ 375      $ —    

The following table provides a reconciliation of the cash, cash equivalents and restricted cash balances as of each of the periods shown above:

 

     As of December 31,  
     2020      2019  

Cash and cash equivalents

   $ 380,801      $ 495,287  

Restricted cash

     5,076        3,223  
  

 

 

    

 

 

 

Total cash, cash equivalents and restricted cash

   $ 385,877      $ 498,510  
  

 

 

    

 

 

 

 

The accompanying notes are an integral part of these consolidated financial statements.

 

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Table of Contents

Ginkgo Bioworks, Inc. and Subsidiaries

Notes to Consolidated Financial Statements

 

1. Organization and Basis of Presentation

Business

The mission of Ginkgo Bioworks, Inc. (“Ginkgo Bioworks”, “Ginkgo”, or the “Company”) is to make biology easier to engineer. The Company designs custom cells for customers across multiple markets. Since inception, the Company has devoted its efforts to improving its platform for programming cells to enable customers to leverage biology to create impactful products across a range of industries. The Company’s platform comprises (i) equipment, robotic automation, software, data pipelines and tools, and standard operating procedures for high throughput genetic engineering, fermentation, and analytics (referred to collectively as the “Foundry”), (ii) a library of proprietary genetic assets and associated performance data (referred to collectively as “Codebase”), and (iii) the Company’s team of expert users, developers and operators of the Foundry and Codebase.

Liquidity and Capital Resources

As of December 31, 2020, the Company had $380.8 million in cash and cash equivalents. The Company’s sources of liquidity have been predominantly from proceeds from equity offerings, convertible note offerings, fees received for research and development services under license and collaboration arrangements, including those received on an upfront basis and upon accomplishment of milestones, fees received from Biosecurity product sales and services provided and government grants. These sources of liquidity have enabled the Company to expand the physical footprint and capacity of the Foundry and grow its personnel to expand capabilities and enter new markets.

The Company has incurred significant operating losses from inception through December 31, 2020, resulting in negative cash flows from operating activities and an accumulated deficit of $467.9 million as of December 31, 2020. The Company expects to continue to incur net losses into the foreseeable future. Successful transition to profitable operations is dependent upon achieving technical and commercial milestones under existing customer agreements, continuing to increase Foundry output while reducing the unit cost of that output, and expanding the number of engineered organisms under development with customers. The Company plans to continue to fund its losses from operations through future debt and equity financings, liquidation of equity holdings, and new customer and collaborative arrangements. The Company believes that its current cash and cash equivalents will provide adequate liquidity through one year from the date that these consolidated financial statements are issued.

The Company’s future liquidity needs may vary materially from those currently planned and will depend on many factors, including the achievement of technical and commercial milestones under existing customer arrangements, the receipt of cash and equity from new customers and in connection with collaborative arrangements, the investments required to further scale the Foundry and Codebase, and the expenses needed to attract and retain personnel.

Risks and Uncertainties

The Company is subject to a number of risks including rapid technological change, regulatory change, technical feasibility, commercial viability, public perception of genetically modified organisms, uncertain market acceptance of products derived from engineered organisms, alternative means of production, data and cybersecurity breaches, and dependence on key vendors and personnel.

Impact of the COVID-19 Pandemic

In December 2019, an outbreak of a novel strain of coronavirus (“COVID-19”) originated in Wuhan, China, and has since spread globally. On March 11, 2020, the World Health Organization characterized COVID-19 as a

 

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Ginkgo Bioworks, Inc. and Subsidiaries

Notes to Consolidated Financial Statements

 

pandemic and, on March 13, 2020, the United States declared a national emergency with respect to COVID-19. Since then, extraordinary actions have been taken by authorities to contain and manage the outbreak and spread of COVID-19 around the world.

Consistent with the actions taken by governmental authorities, the Company has taken steps to protect its workforce and support the community efforts. From approximately March 2020 to approximately June 2020, the Company operated at a reduced capacity. The Company also restricted non-essential travel and allowed most of its workforce in general and administration functions to perform their duties remotely. In June 2020, the Company resumed modified on-site operations for its lab workers following the Center for Disease Control and Prevention’s guidance with facial covering requirements, rearranging facilities to follow social distancing protocols, performing active daily health checks, and undertaking regular and thorough disinfection of surfaces and tools.

The COVID-19 pandemic caused some disruption in the Company’s operations and the Company experienced partial suspensions and delays in servicing certain customer contracts. However, the Company believes that the COVID-19 pandemic did not have a material adverse impact to its financial position or results of operations.

The Company continues to monitor and assess the effects of the COVID-19 pandemic on its business, financial condition, results of operations and cash flows.

2. Summary of Significant Accounting Policies

Basis of Presentation

The accompanying consolidated financial statements have been prepared in conformity with accounting principles generally accepted in the United States of America (“U.S. GAAP”). Any reference in these notes to applicable guidance is meant to refer to the authoritative U.S. GAAP as found in the Accounting Standards Codification (“ASC”) and Accounting Standards Updates (“ASU”) of the Financial Accounting Standards Board (“FASB”). All adjustments, consisting of normal recurring adjustments, necessary for a fair presentation have been included.

Emerging Growth Company Status

The Company is an emerging growth company, as defined in the Jumpstart Our Business Startups Act of 2012 (the “JOBS Act”). Under the JOBS Act, emerging growth companies can delay adopting new or revised accounting standards issued subsequent to the enactment of the JOBS Act until such time as those standards apply to private companies. The Company has elected to use this extended transition period for complying with new or revised accounting standards that have different effective dates for public and private companies until the earlier of the date that (i) the Company is no longer an emerging growth company or (ii) the Company affirmatively and irrevocably opts out of the extended transition period provided in the JOBS Act. As a result, these consolidated financial statements may not be comparable to companies that comply with the new or revised accounting pronouncements as of public company effective dates.

Principles of Consolidation

The Company’s wholly owned subsidiaries include Ginkgo Bioworks Security Corporation (“GBSC”), Gen9, Inc. (“Gen9”) and Stegodon Corporation, which, along with Ginkgo Bioworks, Inc., were incorporated under the laws of the State of Delaware. The Company also has a controlling financial interest in Cooksonia, LLC (“Cooksonia”) which is the holding entity for the Company’s investment in Joyn Bio, LLC (“Joyn”). The

 

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Ginkgo Bioworks, Inc. and Subsidiaries

Notes to Consolidated Financial Statements

 

accompanying consolidated financial statements reflect the Company’s operations and those of subsidiaries in which the Company has a controlling financial interest. All intercompany accounts and transactions have been eliminated.

Variable Interest Entities

The Company evaluates its variable interests in variable interest entities (“VIE”) and consolidates VIEs when the Company is the primary beneficiary. The Company determines whether it is the primary beneficiary of each VIE based on its assessment of whether the Company possesses both (i) the power to direct the activities that most significantly affect the VIE’s economic performance and (ii) the obligation to absorb losses that could be significant to the VIE or the right to receive benefits that could be significant to the VIE. The Company reevaluates the accounting for its VIEs upon the occurrence of events that could change the primary beneficiary conclusion. As of December 31, 2020 and 2019, the maximum risk of loss related to the Company’s VIEs was limited to the carrying value of its investment in such entities.

Use of Estimates

The preparation of financial statements in conformity with U.S. GAAP requires management to make estimates and assumptions that affect the reported amounts of assets and liabilities, the disclosure of contingent assets and liabilities at the date of the consolidated financial statements, and the reported amounts of revenues and expenses during the reporting period. Significant estimates and assumptions used in preparation of these consolidated financial statements include, among others, those related to the fair value of equity instruments and equity awards, revenue recognition, the fair value of loans receivable, the fair value of certain investments, including equity method investments, accrued expenses, and income taxes.

The Company bases its estimates on historical experience and other market-specific or relevant assumptions that it believes to be reasonable under the circumstances. Reported amounts and disclosures reflect the overall economic conditions that management believes are most likely to occur, and the anticipated measures management intends to take. Actual results could differ materially from those estimates. All revisions to accounting estimates are recognized in the period in which the estimates are revised.

Segment Information

The Company and the Chief Operating Decision Maker (“CODM”), which is comprised of the Chief Executive Officer and the Chief Operating Officer, view the Company’s operations and manage the business as a single operating segment. Strategic decisions are managed centrally, and consistent with this decision-making process, the CODM uses consolidated financial information for purposes of evaluating performance, allocating resources, as well as forecasting future period financial results. The majority of the Company’s long-lived assets are held in the United States.

For the year ended December 31, 2020, two customers, both of which were related parties, accounted for 27.1% and 12.3%, respectively, of the Company’s total revenue. No other customers exceeded more than 10% of the Company’s total revenue during the year ended December 31, 2020.

For the year ended December 31, 2019, three customers that were related parties and one customer that was not a related party accounted for 35.0%, 17.3%, 11.5% and 13.5%, respectively, of the Company’s total revenue. No other customers exceeded more than 10% of the Company’s total revenue during the year ended December 31, 2019.

 

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Ginkgo Bioworks, Inc. and Subsidiaries

Notes to Consolidated Financial Statements

 

Concentration of Credit Risk

Financial instruments that potentially subject the Company to a concentration of credit risk consist primarily of cash and cash equivalents, accounts receivable, and loans receivable. The Company’s cash is maintained in bank deposit accounts and money market funds, which, at times, may exceed federally insured limits. The Company believes that it is not exposed to significant credit risk as its deposits are held in financial institutions in the United States that management believes to be of high credit quality. The Company’s loans receivable are comprised of both collateralized convertible notes, which limits the Company’s credit risk, as well as uncollateralized convertible notes. The Company’s accounts receivable primarily consists of amounts owed under its license and collaboration agreements. The Company has not experienced any material write-offs related to its accounts receivable since inception.

Cash and Cash Equivalents

The Company considers all highly liquid investments with original maturities of three months or less at the date of purchase to be cash equivalents. Cash and cash equivalents include cash held in banks and amounts held in money market accounts. The carrying value of the Company’s cash and cash equivalents approximate fair value due to their short-term maturities.

Restricted Cash

Restricted cash primarily includes cash balances collateralizing letters of credit associated with leases for the Company’s facilities and is included in other non-current assets on the Consolidated Balance Sheets.

Accounts Receivable, net

Accounts receivable consists of credit extended to customers in the normal course of business and is reported at the estimated net realizable value. Accounts receivable includes unbilled amounts that have been recognized in revenue but have not yet been invoiced based on timing differences and the terms of the underlying arrangements.

The Company maintains an allowance for doubtful accounts to provide for the estimated amounts of receivables that will not be collected. The allowance is based upon an assessment of customer creditworthiness, historical payment experience, the age of outstanding receivables and collateral to the extent applicable. The Company re-evaluates such allowance on a regular basis and adjusts the allowance as needed. Once a receivable is deemed to be uncollectible, such balance is charged against the allowance.

Inventory, net

Inventory mainly consists of diagnostic testing kits purchased from suppliers. The Company values inventory at the lower of cost or net realizable value using the first-in first-out method. Inventory has been reduced by an allowance for lost and defective inventory based on an analysis of quantities on hand.

Loans Receivable

The Company has elected the fair value option under ASC 825, Financial Instruments (“ASC 825”) to account for its loans receivable. The Company classifies the current portion of the loans receivable balance as a component of prepaid expenses and other current assets on the Consolidated Balance Sheets, with the current portion determined based on the principal balance of the loan that matures within one year from the balance sheet date. The Company records the loans receivable at fair value and recognizes changes in fair value as a component of other income (expense), net in the Consolidated Statements of Operations and Comprehensive Loss.

 

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Ginkgo Bioworks, Inc. and Subsidiaries

Notes to Consolidated Financial Statements

 

Property and Equipment, net    

Property and equipment are stated at cost less accumulated depreciation and amortization. Depreciation and amortization are computed using the straight-line method over the estimated useful lives of the assets or the remaining lease term with respect to leasehold improvement assets. Estimated lives of property and equipment are as follows:

 

    Estimated Useful Life

Computer equipment and software

  2 to 5 years

Furniture and fixtures

  7 years

Lab equipment

  1 to 5 years

Facilities

  15 to 30 years

Leasehold improvements

  Shorter of useful life or
remaining lease term

Expenditures for maintenance and repairs are expensed as incurred. When assets are retired or otherwise disposed of, the related cost and accumulated depreciation or amortization is removed from the accounts and any resulting gain or loss is reflected in other income, net in the Consolidated Statements of Operations and Comprehensive Loss.

Construction in progress relates to assets which have not been placed in service as of period end. Facilities relate to assets acquired under the Company’s build-to-suit arrangement. Refer to Note 11 for discussion of the build-to-suit lease.

Equity Method Investments

The Company utilizes the equity method to account for its investments in common stock, or in-substance common stock, of the Company’s strategic partnerships when it possesses the ability to exercise significant influence, but not control, over the operating and financial policies of the investee. The Company uses judgment when determining the level of influence over the operating and financial policies of the investee considering key factors including, among others, the Company’s ownership interest, representation on the board of directors, participation in policy-making decisions and material contractual arrangements and obligations. Income and losses are allocated based upon relative ownership interest unless there is a substantive profit-sharing agreement in place.

For investments with a substantive profit-sharing agreement, the Company utilizes the Hypothetical Liquidation at Book Value (“HLBV”) method to allocate income and losses from the equity method investment. Under the HLBV method, the Company utilizes the capital account at the end of the period assuming the book value of the entity was liquidated or sold minus the same calculation at the beginning of the period. The difference is the share of earnings or losses attributable to the equity method investment.

Under the equity method, if there is a commitment for the Company to fund the losses of its equity method investees, the Company would continue to record its share of losses resulting in a negative equity method investment, which would be presented as a liability on the Consolidated Balance Sheets. Commitments may be explicit and may include formal guarantees, legal obligations, or arrangements by contract. Implicit commitments may arise from reputational expectations, intercompany relationships, statements by the Company of its intention to provide support, a history of providing financial support or other facts and circumstances. When the Company has no commitment to fund the losses of its equity method investees, the carrying value of its equity method investments will not be reduced below zero. The Company had no commitment to fund additional losses of its equity method investments during the years ended December 31, 2020 and 2019.

 

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Ginkgo Bioworks, Inc. and Subsidiaries

Notes to Consolidated Financial Statements

 

The Company evaluates its equity method investments for impairment whenever events or circumstances indicate that the carrying value of the investment may not be recoverable. The Company considers the investee’s financial position, forecasts and economic outlook, and the estimated duration and extent of losses to determine whether a recovery is anticipated. An impairment that is other-than-temporary is recognized in the period identified. The Company has not recognized an impairment loss relative to its equity method investments for the years ended December 31, 2020 and 2019.

The Company may elect the fair value option for its equity method investments on an investment-by-investment basis. For all equity method investments accounted for under the fair value option, the Company carries the equity method investment at fair value. The Company records all subsequent changes in the values of its equity method investments in the Consolidated Statements of Operations and Comprehensive Loss as a component of loss on equity method investments.

Investments

Investments include warrants and non-marketable equity securities where the Company does not possess the ability to exercise significant influence over the investee.

The Company has elected to account for the warrants using the fair value option. Subsequent changes in fair values are presented as a component of loss on investments in the Consolidated Statements of Operations and Comprehensive Loss.

Investments in non-marketable equity securities for which the fair value option is not elected and that do not have readily determinable fair values are carried at cost, less any impairments, plus or minus changes resulting from observable price changes in orderly transactions for the identical or a similar investment of the same issuer. Each period the Company assesses relevant transactions to identify observable price changes, and the Company regularly monitors these investments to evaluate whether there is an indication an investment is impaired. The Company evaluates whether an investment’s fair value is less than its carrying value using an estimate of fair value, if such an estimate is available. For periods in which there is no estimate of fair value for an investment, the Company evaluates whether an event or change in circumstances has occurred that may have a significant adverse effect on the value of the investment. The Company has not recognized an impairment loss, nor any upward or downward adjustments resulting from observable price changes in identical or similar investments, for the years ended December 31, 2020 and 2019.

Fair Value Measurements

The Company categorizes its assets and liabilities measured at fair value in accordance with the authoritative accounting guidance that establishes a consistent framework for measuring fair value and requires disclosures for each major asset and liability category measured at fair value on either a recurring or nonrecurring basis.

ASC 820, Fair Value Measurement (“ASC 820”), establishes a fair value hierarchy for instruments measured at fair value that distinguishes between assumptions based on market data (observable inputs) and the Company’s own assumptions (unobservable inputs). Observable inputs are inputs that market participants would use in pricing the asset or liability based on market data obtained from sources independent of the Company. Unobservable inputs are inputs that reflect the Company’s assumptions about the inputs that market participants would use in pricing the asset or liability and are developed based on the best information available in the circumstances.

 

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Ginkgo Bioworks, Inc. and Subsidiaries

Notes to Consolidated Financial Statements

 

ASC 820 identifies fair value as the exchange price, or exit price, representing the amount that would be received to sell an asset or paid to transfer a liability in an orderly transaction between market participants. As a basis for considering market participant assumptions in fair value measurements, ASC 820 establishes a three-tier fair value hierarchy that distinguishes among the following:

 

   

Level 1- Quoted prices (unadjusted) in active markets for identical assets or liabilities;

 

   

Level 2- Inputs other than quoted prices included within Level 1 that are either directly or indirectly observable; and

 

   

Level 3- Unobservable inputs in which little or no market activity exists, therefore requiring an entity to develop its own assumptions about the assumptions that market participants would use in pricing.

To the extent that the valuation is based on models or inputs that are either less observable or unobservable in the market, the determination of fair value requires more judgment. Accordingly, the degree of judgment exercised by the Company in determining fair value is greatest for instruments categorized in Level 3. A financial instrument’s level within the fair value hierarchy is based on the lowest level of any input that is significant to the fair value measurement.

The Company valued its money market fund holdings, loans receivable, and certain equity method investments and investments accounted for pursuant to the fair value option on a recurring basis.

The carrying amounts of the Company’s other financial instruments, which include accounts receivable, certain prepaid expenses and other current assets, accounts payable and accrued expenses and other current liabilities, approximate their fair values, primarily due to their short-term nature.

Impairment of Long-Lived Assets

The Company reviews its long-lived assets for impairment whenever events or changes in circumstances indicate that the carrying value of an asset may not be recoverable. Recoverability is measured by comparing the book values of the assets to the expected future net undiscounted cash flows that the assets are expected to generate. If such assets are considered to be impaired, the impairment to be recognized is measured by the amount by which the book values of the assets exceed their fair value. The Company has not recognized any impairment losses during the years ended December 31, 2020 and 2019.

Intangible Assets, net

Intangible assets, net consist of certain definite-lived assets including patents, processes and know-how related to technology acquired through a business combination. The Company amortizes such intangible assets on a straight-line basis over their estimated useful life.

The Company reviews intangible assets for impairment whenever events or changes in circumstances have occurred which could indicate that the carrying value of the assets are not recoverable. Recoverability is measured by comparing the carrying value of the intangible assets to the future undiscounted cash flows expected to be generated by the asset. In determining the expected future cash flows, the Company uses assumptions believed to be reasonable, but which are unpredictable and inherently uncertain. Actual future cash flows may differ from the estimates used in impairment testing. The Company recognizes an impairment loss when and to the extent that the estimated fair value of an intangible asset is less than its carrying value. The Company has not recognized an impairment loss for the years ended December 31, 2020 and 2019.

 

 

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Ginkgo Bioworks, Inc. and Subsidiaries

Notes to Consolidated Financial Statements

 

Goodwill

Goodwill represents the excess of acquisition cost over the fair market value of the net assets acquired. The Company assesses the carrying value of goodwill for impairment on at least an annual basis, the assessment of which requires significant judgment. The Company first considers qualitative factors that indicate impairment may have occurred. Such indicators may include deterioration in economic conditions, adverse market conditions, technological obsolescence, other factors that are indicative of negative or declining cash flows, or an increase in costs over multiple periods in excess of those already factored into the fair value assessment. If the qualitative assessment indicates a reduction in the carrying value is more likely than not to have occurred, the Company performs a quantitative assessment, comparing the fair value of the reporting unit to its carrying value, including goodwill. In the Company’s case, the entire organization represents a single reporting unit. If the carrying value of the reporting unit exceeds the fair value, an impairment has occurred, and an impairment loss is recognized. The fair value of the reporting unit is primarily determined based on the income approach. The income approach is a valuation technique in which fair value is based on the forecasted future cash flows, discounted at the appropriate rate of return commensurate with the risk as well as current rates of return for equity and debt capital as of the valuation date. The Company has not recognized an impairment loss for the years ended December 31, 2020 and 2019.

Deferred Rent

Deferred rent consists of the difference between cash paid and rent expense recognized on a straight-line basis for the facilities that the Company occupies under operating leases. The Company classifies the current portion of the deferred rent balance as a component of accrued expenses and other current liabilities on the Consolidated Balance Sheets.

Treasury Stock

The Company recorded repurchases of common stock at cost in treasury stock, which is presented as a reduction to stockholders’ equity in the Consolidated Statements of Stockholders’ Equity. When the repurchase price of treasury stock exceeded the fair value of the common stock, the Company recognized the incremental amount as compensation expense in the Consolidated Statements of Operations and Comprehensive Loss. During the year ended December 31, 2019, all shares of treasury stock were returned to authorized and unissued shares of common stock and no shares of common stock remained in treasury as of December 31, 2020 and 2019.

Revenue Recognition

The Company accounts for revenue in accordance with ASC 606, Revenue from Contracts with Customers (“ASC 606”). Under ASC 606, the Company recognizes revenue when the customer obtains control of the promised goods or services at an amount that reflects the consideration the Company expects to receive in exchange for those goods or services. To determine revenue recognition for arrangements that are within the scope of ASC 606, the Company performs the following five steps: (i) identify the contract(s) with a customer, (ii) identify the promises and distinct performance obligations in the contract, (iii) determine the transaction price, (iv) allocate the transaction price to the performance obligations in the contract, and (v) recognize revenue when (or as) the Company satisfies the performance obligations.

Foundry Revenue

The Company generates license and service revenue through the execution of license and collaboration agreements whereby customers obtain license rights to the Company’s proprietary technology and intellectual property for use in the research, development and commercialization of engineered organisms, and derived

 

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Ginkgo Bioworks, Inc. and Subsidiaries

Notes to Consolidated Financial Statements

 

products. Under these agreements, the Company typically provides research and development services, which includes the provision of a license to the Company’s intellectual property. Additionally, the customer obtains license rights to the output of the Company’s services in order to commercialize the resulting output of such services. Generally, the terms of these agreements provide that the Company receives some combination of: (1) Foundry usage fees in the form of (i) upfront payments upon consummation of the agreement or other fixed payments, (ii) reimbursement for costs incurred for research and development services and (iii) milestone payments upon the achievement of specified technical criteria, plus (2) downstream value share payments in the form of (iv) milestone payments upon the achievement of specified commercial criteria, (v) royalties on sales of products from or comprising engineered organisms arising from the collaboration or licensing agreement and (vi) royalties related to cost of goods sold reductions realized by customers.

The Company’s collaboration and licensing agreements often contain multiple promises, including (i) licenses and assignments of intellectual property and materials and (ii) research and development services, and the Company determines whether each of the promises is a distinct performance obligation based on the nature of each agreement. As the Company is generally performing research and development services that are highly integrated and interrelated to the licenses and assignments of intellectual property and materials, the promises are generally inseparable. As such, the Company typically combines the research and development services, licenses, and assignments into a single performance obligation. However, for certain agreements, the Company only grants licenses or effects such transfers and assignments upon the successful completion of the research and development services or delivery of a developed product. For these agreements, the Company typically considers (i) the research and development services and (ii) the licenses, transfers, and assignments as distinct performance obligations, as each is transferred separately and has a separately identifiable benefit.

Options to acquire additional goods and services are evaluated to determine if such options provide a material right to the counterparty that it would not have received without entering into the contract. If so, the option is accounted for as a separate performance obligation. If not, the option is considered a marketing offer which is accounted for as a separate contract upon the counterparty’s election.

At contract inception, the Company determines the transaction price, including fixed consideration and any estimated amounts of variable consideration. Any upfront cash payment received upon consummation of the agreement is fixed and generally non-refundable. Variable consideration is subject to a constraint, and amounts are included in the transaction price to the extent that it is probable that a significant reversal in the amount of cumulative revenue recognized will not occur when the uncertainty associated with the variable consideration is subsequently resolved. Variable consideration may include reimbursement for costs incurred for the Company’s research and development efforts, milestone payments upon the achievement of certain technical and commercial criteria, and royalties on sales of products from or comprising engineered organisms arising from the agreement. With respect to the research and development reimbursements and milestone payments, the Company uses the most likely amount method to estimate variable consideration. With respect to agreements that include royalties on sales or other contingent payments based on sales, the Company applies the royalty recognition constraint which requires a constraint until the royalty or value-sharing transaction occurs. Certain agreements contain payment in the form of equity or other non-cash consideration. Any non-cash consideration is measured at the fair value of the non-cash consideration at contract inception.

For agreements with promises that are combined into a single performance obligation, the entire transaction price is allocated to the single performance obligation. For agreements with multiple performance obligations, the transaction price is allocated to the performance obligations using the relative standalone selling price methodology. For agreements featuring variable consideration, the Company allocates variable consideration to one or more, but not all, performance obligations if certain conditions are met. Specifically, the Company assesses whether the variable consideration relates solely to its efforts to satisfy the performance obligation and

 

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Notes to Consolidated Financial Statements

 

whether allocating such variable consideration entirely to the performance obligation is consistent with the overall allocation objective. If these conditions are not met, the Company allocates the variable consideration based on the relative standalone selling price methodology. The key assumptions utilized in determining the standalone selling price for each performance obligation include development timelines, estimated research and development costs, commercial markets, likelihood of exercise (in the case of options considered to be material rights), and probabilities of success.

For agreements where the licenses or assignments are considered separate performance obligations or represent the only performance obligation, the Company recognizes revenue at the point in time that the Company effectively grants the license as the licenses or assignments represent functional intellectual property. For agreements where the licenses and the research and development services represent a combined performance obligation, the Company recognizes revenue over the period of performance based on costs incurred to date as compared to total estimated costs.

The Company evaluates its measure of progress to recognize revenue at each reporting period and, as necessary, adjusts the measure of performance and related revenue recognition. The Company’s measure of performance and revenue recognition involves significant judgment and assumptions, including, but not limited to, estimated costs and timelines to complete its performance obligations. The Company evaluates contract modifications and amendments to determine whether any changes should be accounted for prospectively or on a cumulative catch-up basis. The Company utilizes the right to invoice practical expedient when it has a right to consideration in an amount that corresponds directly with the value of the Company’s performance to date.

Royalties received under the agreements are recognized as revenue when sales have occurred as the Company applies the sales or usage-based royalties recognition constraint. The Company has determined the application of this exception is appropriate because the license granted in the agreement is the predominant item to which the royalties relate.

As the Company receives upfront payments for technical services under certain of its arrangements, the Company evaluates whether any significant financing components exist given the term over which the fees will be earned may exceed one year. Based on the nature of the Company’s agreements, there are no significant financing components as the purpose of the upfront payment is not to provide financing, but rather to secure technical services, exclusivity rights, and Foundry capacity, or the timing of transfer of those goods or services is at the discretion of the customer.

Deferred revenue represents consideration received by the Company in excess of revenue recognized and primarily results from transactions where the Company receives upfront payments and non-cash equity consideration. In instances where the Company has received consideration in advance for an undefined number of technical development plans (“TDPs”) under its customer agreements, the Company records the advance payments as deferred revenue, net of current portion on the Consolidated Balance Sheets. Upon the execution of a specific TDP, the Company reclassifies the estimated consideration to be earned under that TDP within the next twelve months as current deferred revenue. The Company also classifies unexercised material rights as deferred revenue, net of current portion on the Consolidated Balance Sheets. When a TDP is executed, and the material right is exercised, the amount allocated to the material right, which will be earned within the next twelve months, is reclassified to current deferred revenue. All other deferred revenue is classified as current or non-current based on the timing of when the Company expects to earn the underlying revenue based upon the projected progress of activities under the TDP.

 

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Notes to Consolidated Financial Statements

 

Collaboration Arrangements

For arrangements that do not represent contracts with a customer, the Company analyzes its collaboration transactions to assess whether they are within the scope of ASC 808, Collaborative Arrangements (“ASC 808”), to determine whether such arrangements involve joint operating activities performed by parties that are both active participants in the activities and exposed to significant risks and rewards that are dependent on the commercial success of such activities. To the extent the arrangement is within the scope of ASC 808, the Company assesses whether aspects of the arrangement between the Company and its collaboration partner are within the scope of other accounting literature. If the Company concludes that some or all aspects of the arrangement represent a transaction with a customer, the Company accounts for those aspects of the arrangement within the scope of ASC 606.

Biosecurity Revenue

In 2020, the Company launched its commercial offering of COVID-19 testing products and services for businesses, academic institutions, and other organizations. The Company sells COVID-19 test kits on a standalone basis or as part of an end-to-end testing service. The Company records product revenue from sales of lateral flow assay (“LFA”) diagnostic test kits. The Company records service revenue from sales of its end-to-end COVID-19 testing services, which consist of multiple promised goods and services including sample collection kits, physician authorizations, onsite test administration, outsourced laboratory polymerase chain reaction (“PCR”) analysis, and access to results reported through a web-based portal. The Company recognizes its product and service revenue using the five-step model under ASC 606.

Product revenue from the sale of LFA diagnostic test kits is recognized when the test kits are shipped, and risk of loss is transferred to the carrier. The Company’s diagnostic test kits are generally not subject to a customer right of return except for product recalls under the rules and regulations of the FDA. The Company has elected to include shipping and handling fees billed to customers as a component of Biosecurity revenue.

Service revenue from the Company’s end-to-end COVID-19 testing services is recognized upon completion of the tests and release of the test results on the web-based portal. The Company has identified one performance obligation in its testing services contracts that represents a series of distinct goods or services that are substantially the same and that have the same pattern of transfer to the customer, with each test as a distinct service within the series. As the price for the testing services is fixed under each customer contract, the Company has elected the practical expedient to recognize revenue at the amount which it has the right to invoice for services performed. The Company’s testing services contracts are generally one year or less in length, contain fixed unit pricing and are billed in advance.

Cost of Biosecurity Revenue

Cost of Biosecurity product revenue consists of costs associated with the sale of LFA diagnostic test kits, which includes costs paid to purchase test kits from third parties, as well as shipping, handling, and insurance costs. Cost of Biosecurity service revenue consists of costs associated with the provision of the Company’s end-to-end COVID-19 testing services, which includes costs paid to provide sample collection kits, physician authorizations, onsite test administration, outsourced laboratory PCR analysis, and access to results reported through a web-based portal.

 

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Notes to Consolidated Financial Statements

 

Research and Development Costs

Research and development costs are expensed as incurred. Research and development costs consist of direct and indirect internal costs related to specific projects, acquired intellectual property deemed to be in-process research and development, as well as fees paid to other entities that conduct certain research and development activities on the Company’s behalf.

Patent Costs

The Company expenses all costs as incurred in connection with the filing, prosecution, maintenance, defense, and enforcement of patent applications, including direct application fees and related legal and consulting expenses. Patent costs are included in general and administrative expenses within the Consolidated Statements of Operations and Comprehensive Loss.

Stock-Based Compensation

The Company accounts for equity awards, including grants of restricted stock awards (“RSAs”), restricted stock units (“RSUs”) and stock options in accordance with ASC 718, Compensation – Stock Compensation (“ASC 718”), which requires all equity-based payments to be recognized as stock-based compensation based on their grant date fair values. The determination of grant date fair value of the RSAs and RSUs is calculated as the fair value of the underlying common stock, less any applicable purchase price.

The Company estimates the fair value of its common stock using a hybrid method which uses market approaches to estimate the Company’s enterprise value. The hybrid method is a probability-weighted expected return method (“PWERM”) where the equity value in at least one scenario is allocated using an option pricing method (“OPM”).

Under the PWERM, the value of the common stock is estimated based on an analysis of future values assuming various possible future liquidity events. The value of the common stock is based on the probability-weighted present value of expected future investment returns considering the possible outcomes and the rights and privileges of each class of equity. The future investment returns are discounted back to the valuation date at a risk-adjusted discount rate which is then weighted based on the probability of the respective outcome.

Under the OPM, each class of stock is treated as a call option on the Company’s equity value, with exercise prices based on the liquidation preferences of the convertible preferred stock. Under this methodology, the common stock has value only if the funds available for distribution to the holders exceeds the value of the liquidation preferences of the convertible preferred stock at the time of the liquidity event. The Black-Scholes model is used to price the call options which includes assumptions for the time to liquidity and volatility of equity value. A discount for lack of marketability is then applied to the common stock value.

For awards granted from August 2020 through December 31, 2020, when using the hybrid method, the Company considered two scenarios: (i) a scenario in which the conversion of the convertible preferred stock to common stock occurred through an initial public offering (“IPO”) or a merger with a special purpose acquisition company (“SPAC”) transaction, and (ii) a remain private scenario. In both scenarios, the Company estimated an equity value in a potential IPO or SPAC transaction based on the guideline public company method under a market approach. The Company then converted the estimated future value to present value using a risk-adjusted discount rate. In the IPO or SPAC transaction scenario, conversion of the convertible preferred stock to common stock was assumed. In the remain private scenario, equity value was allocated among the convertible preferred stock and common stock using the OPM. In addition to considering these two scenarios, the Company considered the prices paid for its common stock and Series B convertible preferred stock in secondary transactions and the Company included these prices in its weighted average conclusion of value.

 

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Notes to Consolidated Financial Statements

 

For awards granted from January 1, 2019 through July 2020, when using the hybrid method the Company considered two scenarios: (i) a fully diluted scenario, in which the per-share common stock value was assumed to equal the price of the convertible preferred stock in a recent round of financing, and (ii) a remain private scenario, in which the Company used the OPM to back-solve to the price of the Company’s convertible preferred stock in a recent round of financing. In the fully diluted scenario, conversion of the convertible preferred stock to common stock was assumed. In the remain private scenario, equity value was allocated among the convertible preferred stock and common stock using the OPM. In addition to considering these two scenarios, for certain valuations during the period, the Company considered the prices paid for its common stock in secondary transactions and included these prices in its weighted average conclusion of value.

There are significant judgments and estimates inherent in determining the fair value of the common stock. These judgments and estimates include factors, both subjective and objective, including: (i) a discount for lack of marketability; (ii) external market data; (iii) historical activity by the Company in selling equity to outside investors; (iv) the Company’s stage of development; (v) rights and preferences of the Company’s equity securities that rank senior to common stock; and (vi) the likelihood of the various scenarios, among others. Changes to these assumptions could result in different fair values of common stock.

The Company grants equity awards with both service-based and performance-based vesting conditions. For awards with service-based vesting conditions, the Company recognizes stock-based compensation expense over the requisite service period, which is generally the vesting period, on a straight-line basis. For awards with performance-based vesting conditions, the Company recognizes stock-based compensation only when achievement of the performance condition is deemed probable. The Company classifies stock-based compensation expense in the Consolidated Statements of Operations and Comprehensive Loss in the same manner in which the grantee’s payroll costs are classified or in which the grantee’s service payments are classified. The Company recognizes forfeitures as they occur.

Income Taxes

The Company accounts for income taxes using the asset and liability method, which requires the recognition of deferred tax assets and liabilities for the expected future tax consequences of events that have been recognized in the consolidated financial statements or in the Company’s tax returns. Under this method, deferred tax assets and liabilities are determined based on differences between the financial statement carrying amounts and the tax bases of the assets and liabilities using the enacted tax rates in effect in the years in which the differences are expected to reverse. A valuation allowance against deferred tax assets is recorded if, based on the weight of the available evidence, it is more likely than not that some or all of the deferred tax assets will not be realized. Potential for recovery of deferred tax assets is evaluated by considering several factors, including estimating the future taxable profits expected, estimating future reversals of existing taxable temporary differences, considering taxable profits in carryback periods, and considering prudent and feasible tax planning strategies.

The Company accounts for uncertain tax positions using a more-likely-than-not threshold for recognizing and resolving uncertain tax positions. The evaluation of uncertain tax positions is based on factors including, but not limited to, changes in the law, the measurement of tax positions taken or expected to be taken in tax returns, the effective settlement of matters subject to audit, new audit activity, and changes in facts or circumstances related to a tax position. As of December 31, 2020 and 2019, the Company did not have any uncertain tax positions.

Comprehensive Loss

Comprehensive loss is defined as the change in equity during a period from transactions and other events and circumstances from non-owner sources. Comprehensive loss is equal to net loss in all periods presented.

 

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Notes to Consolidated Financial Statements

 

Net Loss per Share

The Company follows the two-class method when computing net loss per share attributable to Ginkgo Bioworks, Inc. common stockholders as the Company has issued shares that meet the definition of participating securities. The two-class method determines net loss per share for each class of common and participating securities according to dividends declared or accumulated and participation rights in undistributed earnings. The two-class method requires earnings for the period to be allocated between common and participating securities based upon their respective rights to share in the earnings as if all earnings for the period had been distributed. During periods of loss, there is no allocation required under the two-class method since the participating securities do not have a contractual obligation to fund the losses of the Company.

Basic net loss per share attributable to Ginkgo Bioworks, Inc. common stockholders is computed by dividing the net loss attributable to Ginkgo Bioworks, Inc. common stockholders by the weighted average number of common shares outstanding for the period. Diluted net loss per share attributable to Ginkgo Bioworks, Inc. common stockholders is computed by dividing the net loss attributable to Ginkgo Bioworks, Inc. common stockholders by the weighted average number of common shares outstanding for the period, including the effect of potentially dilutive common shares. For purposes of this calculation, outstanding options to purchase shares of common stock, unvested RSAs, unvested RSUs, shares of convertible preferred stock and warrants to purchase shares of convertible preferred stock are considered potentially dilutive common shares. Treasury stock is excluded from the weighted average number of common shares outstanding used in the calculation of basic and diluted net loss per share attributable to Ginkgo Bioworks, Inc. common stockholders. The Company has generated a net loss in all periods presented, therefore, basic and diluted net loss per share attributable to Ginkgo Bioworks, Inc. common stockholders is the same as the inclusion of the potentially dilutive securities would be anti-dilutive. Net loss and comprehensive loss attributable to Ginkgo Bioworks, Inc. stockholders was equal to net loss attributable to Ginkgo Bioworks, Inc. common stockholders in the periods presented.

Recent Accounting Pronouncements

Recently Adopted Accounting Pronouncements

In November 2019, the FASB issued ASU No. 2019-08, Compensation—Stock Compensation (Topic 718) and Revenue from Contracts with Customers (Topic 606)—Codification Improvements—Share-Based Consideration Payable to a Customer (“ASU 2019-08”), which requires that an entity measure and classify share-based payment awards granted to a customer by applying the guidance in ASC 718. The amount recorded as a reduction of the transaction price is required to be measured on the basis of the grant-date fair value of the share-based payment award in accordance with ASC 718. The Company adopted ASU 2019-08 on January 1, 2020 and the adoption did not have a material impact on the Company’s consolidated financial statements and related disclosures.

In August 2018, the FASB issued ASU 2018-13, Fair Value Measurement (Topic 820): Disclosure Framework—Changes to the Disclosure Requirements for Fair Value Measurement (“ASU 2018-13”), which modifies the disclosure requirements on fair value measurements with respect to Level 3 rollforwards, timing of liquidation of investments in certain entities that calculate net asset value, and measurement uncertainty. The Company adopted ASU 2018-13 on January 1, 2020 and the adoption did not have a material impact on its consolidated financial statements and related disclosures.

In July 2017, the FASB issued ASU 2017-11, Earnings Per Share (Topic 260), Distinguishing Liabilities from Equity (Topic 480), Derivatives and Hedging (Topic 815) I. Accounting for Certain Financial Instruments with Down Round Features II. Replacement of the Indefinite Deferral for Mandatorily Redeemable Financial Instruments of Certain Nonpublic Entities and Certain Mandatorily Redeemable Noncontrolling Interests with a

 

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Notes to Consolidated Financial Statements

 

Scope Exception (“ASU 2017-11”). Part I of this standard applies to entities that issue financial instruments such as warrants, convertible debt, or convertible preferred stock that contain down-round features. Part II of this standard replaces the indefinite deferral for certain mandatorily redeemable noncontrolling interests and mandatorily redeemable financial instruments of nonpublic entities contained within ASC 480 with a scope exception and does not impact the accounting for these mandatorily redeemable instruments. The Company adopted ASU 2017-11 on January 1, 2020 and the adoption did not have a material impact on its consolidated financial statements and related disclosures.

In November 2018, the FASB issued ASU 2018-18, Collaborative Arrangements (Topic 808): Clarifying the Interaction between Topic 808 and Topic 606 (“ASU 2018-18”). The provisions of ASU 2018-18 clarify when certain transactions between collaborative arrangement participants should be accounted for under ASC 606 and incorporate unit-of-account guidance consistent with ASC 606 to aid in this determination. The Company early adopted ASU 2018-18 on January 1, 2020 and the adoption did not have a material impact on its consolidated financial statements and related disclosures.

Recently Issued Accounting Pronouncements

From time to time, new accounting pronouncements are issued by the FASB and adopted by the Company as of the specified effective date. Unless otherwise discussed, the Company believes that the impact of recently issued standards that are not yet effective will not have a material impact on its financial position or results of operations upon adoption.

In August 2020, the FASB issued ASU 2020-06, Debt—Debt with Conversion and Other Options (Subtopic 470-20) and Derivatives and Hedging- Contracts in Entity’s Own Equity (Subtopic 815-40) (“ASU 2020-06”) which simplifies the accounting for convertible instruments by eliminating the requirement to separate embedded conversion features from the host contract when the conversion features are not required to be accounted for as derivatives under Topic 815, or that do not result in substantial premiums accounted for as paid-in capital. By removing the separation model, a convertible debt instrument will be reported as a single liability instrument with no separate accounting for embedded conversion features. This new standard also removes certain settlement conditions that are required for contracts to qualify for equity classification and simplifies the diluted earnings per share calculations by requiring that an entity use the if-converted method and that the effect of potential share settlement be included in diluted earnings per share calculations. This new standard will be effective for the Company on January 1, 2024, with early adoption permitted no earlier than January 1, 2021. The Company is currently evaluating the impact that the implementation of this standard will have on its consolidated financial statements and related disclosures.

In January 2020, the FASB issued ASU 2020-01, Investments—Equity Securities (Topic 321), Investments—Equity Method and Joint Ventures (Topic 323), and Derivatives and Hedging (Topic 815)—Clarifying the Interactions between Topic 321, Topic 323, and Topic 815 (a consensus of the FASB Emerging Issues Task Force) (“ASU 2020-01”). ASU 2020-01 addresses accounting for the transition into and out of the equity method and provides clarification of the interaction of rules for equity securities, the equity method of accounting, and forward contracts and purchase options on certain types of securities. The guidance is effective for the Company on January 1, 2022. The Company is currently evaluating the impact that the implementation of this standard will have on its consolidated financial statements and related disclosures.

In December 2019, the FASB issued ASU 2019-12, Simplifying the Accounting for Income Taxes (ASU 2019-12”). The provisions of ASU 2019-12 eliminate certain exceptions related to the approach for intraperiod tax allocation and deferred tax liabilities for outside basis differences and clarify when a step-up in the tax basis of goodwill should be considered part of a business combination or a separate transaction. It also clarifies and

 

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Notes to Consolidated Financial Statements

 

simplifies other aspects of the accounting for income taxes. The guidance is effective for the Company on January 1, 2022, with early adoption permitted. The Company is currently evaluating the impact that the implementation of this standard will have on its consolidated financial statements and related disclosures. In October 2018, the FASB issued ASU 2018-17, Consolidation (Topic 810): Targeted Improvements to Related Party Guidance for Variable Interest Entities (“ASU 2018-17”). The provisions of ASU 2018-17 modify the guidance under ASC 810 related to the evaluation of indirect interests held through related parties under common control when determining whether fees paid to decision makers and service providers are variable interests. Indirect interests held through related parties that are under common control are no longer considered to be the equivalent of direct interests in their entirety and instead should be considered on a proportional basis. This guidance more closely aligns with accounting of how indirect interests held through related parties under common control are considered for determining whether a reporting entity must consolidate a VIE. The guidance is effective for the Company on January 1, 2021, with early adoption permitted. The Company is currently evaluating the impact that the implementation of this standard will have on its consolidated financial statements and related disclosures.

In June 2016, the FASB issued ASU 2016-13, Financial Instruments-Credit Losses (Topic 326): Measurement of Credit Losses on Financial Instruments, and subsequently issued multiple amendments to the standard (collectively, “ASU 2016-13”). The provisions of ASU 2016-13 modify the impairment model to utilize an expected loss methodology in place of the currently used incurred loss methodology and require a consideration of a broader range of reasonable and supportable information to inform credit loss estimates. The guidance is effective for the Company on January 1, 2023, with early adoption permitted. The Company is currently evaluating the impact that the implementation of this standard will have on its consolidated financial statements and related disclosures.

In February 2016, the FASB issued ASU 2016-02, Leases (Topic 842), Amendments to the FASB Accounting Standards Codification, which supersedes the existing guidance for lease accounting. The FASB has issued several updates to the standard which: (i) clarify how to apply certain aspects of the new standard, (ii) provide an additional transition method for adoption of the new standard, (iii) provide a practical expedient for certain lessor accounting, and (iv) amend certain narrow aspects of the guidance (collectively, “ASC 842”). ASC 842 requires the identification of arrangements that should be accounted for as leases by lessees. In general, for lease arrangements exceeding a twelve-month term, these arrangements must now be recognized as assets and liabilities on the balance sheet of the lessee. Under ASC 842, a right-of-use asset and lease obligation will be recorded for all leases, whether operating or financing, while the income statement will reflect lease expense for operating leases and amortization/interest expense for financing leases. The balance sheet amount recorded for existing leases at the date of adoption of ASC 842 is calculated using the applicable incremental borrowing rate at the date of adoption. The guidance is effective for the Company on January 1, 2022, with early adoption permitted. The Company anticipates the implementation of this standard will have a material impact on its consolidated financial statements and related disclosures.

 

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Notes to Consolidated Financial Statements

 

3. Fair Value Measurements

No transfers between levels have occurred during the periods presented. The following tables present information about the Company’s financial assets measured at fair value on a recurring basis (in thousands):

 

     As of December 31, 2020  
     Total      Level 1      Level 2      Level 3  

Assets:

           

Money market funds, included in cash and cash equivalents

   $ 372,537      $ 372,537      $ —        $ —    

Synlogic, Inc. common stock, included in equity method investments

     13,696        13,696        —          —    

Synlogic, Inc. warrant, included in investments

     5,504        —          5,504        —    

Loans receivable, included in prepaid expenses and other current assets

     2,268        —          —          2,268  

Loans receivable, net of current portion

     13,298        —          —          13,298  
  

 

 

    

 

 

    

 

 

    

 

 

 

Total

   $ 407,303      $ 386,233      $ 5,504      $ 15,566  
  

 

 

    

 

 

    

 

 

    

 

 

 

 

     As of December 31, 2019  
     Total      Level 1      Level 2      Level 3  

Assets:

           

Money market funds, included in cash and cash equivalents

   $ 480,178      $ 480,178      $ —        $ —    

Synlogic, Inc. common stock, included in equity method investments

     16,359        16,359        —          —    

Synlogic, Inc. warrant, included in investments

     6,574        —          6,574        —    

Loan receivable, included in prepaid expenses and other current assets

     1,106        —          —          1,106  

Loan receivable, net of current portion

     3,724        —          —          3,724  
  

 

 

    

 

 

    

 

 

    

 

 

 

Total

   $ 507,941      $ 496,537      $ 6,574      $ 4,830  
  

 

 

    

 

 

    

 

 

    

 

 

 

As of December 31, 2020, loans receivable primarily consisted of a revolving promissory note with Glycosyn, LLC (“Glycosyn”) which is secured by the assets of Glycosyn, including certain intellectual property such as patents and copyrights held by Glycosyn, (“Glycosyn Promissory Note”) and a series of convertible notes with Access Bio, Inc. (“Access Bio Convertible Notes”). As of December 31, 2019, the loan receivable balance consisted of the Glycosyn Promissory Note. The fair value of the Glycosyn Promissory Note and Access Bio Convertible Notes were determined based on significant inputs not observable in the market, which represent a Level 3 measurement within the fair value hierarchy. Significant changes in these unobservable inputs in isolation could have resulted in a significantly lower or higher fair value measurement. Refer to Note 4 for additional details on loans receivable.

The Company used a probability-weighted discounted cash flow valuation approach to determine the fair value of the Glycosyn Promissory Note. Using this approach, the present value of the expected future cash flows were calculated under four settlement scenarios and then were weighted based on the estimated probability of each scenario. The four settlement scenarios considered in the valuation were (i) a qualified financing which resulted in a 20% conversion discount, (ii) repayment upon change in control, (iii) a dissolution scenario and (iv) repayment in accordance with the terms of the note. The significant assumptions used in valuing the Glycosyn Promissory Note during the years ended December 31, 2020 and 2019 included the expected timing

 

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Notes to Consolidated Financial Statements

 

and probability of each scenario and the discount rate. For the year ended December 31, 2020, a discount rate of 15% was applied and the probability and timing of each scenario ranged from 10% to 40% and spanned 1 to 2.5 years, respectively. For the year ended December 31, 2019, a discount rate of 15% was applied and the probability and timing of each scenario ranged from 20% to 40% and spanned 1 to 3.5 years, respectively. The weighted average timing of the scenarios weighted based on the probability of each scenario for the years ended December 31, 2020 and 2019 was 1.2 years and 2.3 years, respectively.

The Company used a Monte-Carlo simulation model to determine the fair value of the Access Bio Convertible Notes. The future stock price of Access Bio, Inc. (“Access Bio”) was simulated over the term of the note to assess the value of the settlement features which included (i) conversion into stock at a discount determined under a reset provision tied to the performance of Access Bio’s stock price and (ii) redemption at maturity. The significant assumptions used in determining the simulated future stock price included the expected timing of the conversion, which is assumed at maturity, and expected volatility. The significant assumptions used in determining the fair value of the Access Bio Convertible Notes under a redemption at maturity scenario was the discount rate and expected volatility. For the year ended December 31, 2020 the discount rate that was used to determine fair value of the Access Bio Convertible Notes under the maturity scenario was 32.8%. For the year ended December 31, 2020, the volatility rate used to determine the fair value of the Access Bio Convertible Notes was 83.1% and 88.5% which represented the volatility rate at the inception and as of December 31, 2020, respectively.

The following table provides a reconciliation of all assets measured at fair value using Level 3 significant unobservable inputs (in thousands):

 

     Loans
Receivable
 

Balance as of December 31, 2018

   $ 750  

Issuance of loan receivable

     4,994  

Change in fair value

     (914
  

 

 

 

Balance as of December 31, 2019

   $ 4,830  
  

 

 

 

Purchase of loan receivable

     10,000  

Issuance of loans receivable

     475  

Proceeds from loans receivable

     (800

Change in fair value

     1,061  
  

 

 

 

Balance as of December 31, 2020

   $ 15,566  
  

 

 

 

4. Loans Receivable

Glycosyn Promissory Note

In October 2018, the Company provided a revolving promissory note to Glycosyn in connection with the Company’s entering into a Foundry Terms of Service Agreement with Glycosyn (Note 17). Under the Glycosyn Promissory Note, the Company provided a revolving promissory note which could have been drawn up to $4.0 million for any purpose through December 31, 2019. The Glycosyn Promissory Note initially matured on the earlier of December 31, 2020, or the termination of the Foundry Terms of Service Agreement. Interest accrued on all outstanding amounts at a rate equal to the prime rate and all payments made on the Glycosyn Promissory Note were applied to accrued interest first. The Glycosyn Promissory Note is convertible at a discount, at the Company’s election, into equity securities of Glycosyn upon Glycosyn’s first issuance of equity

 

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securities, other than an underwritten public offering, from which Glycosyn receives gross proceeds of at least $10.0 million. In addition, Glycosyn is obligated to immediately repay the outstanding balance of the loan, plus accrued interest, upon a change in control event. In December 2019, the existing terms of the Glycosyn Promissory Note were amended to add an additional $2.7 million to the principal sum of the note upon Glycosyn exercising its option to terminate the Foundry Terms of Service Agreement (Note 17). In addition, under the amended terms of the Glycosyn Promissory Note, Glycosyn is required to make quarterly payments under the loan commencing in March 2020 with the first two payments as interest-only. The amended Glycosyn Promissory Note accrues interest at a rate of 7.5% per annum and matures in June 2023, unless earlier converted by the Company into equity securities of Glycosyn. The loan conversion and change in control provisions remained unchanged under the amended Glycosyn Promissory Note. As of December 31, 2019, there was $5.7 million outstanding under the Glycosyn Promissory Note, of which the entire portion represented the unpaid principal balance. The fair value of the Glycosyn Promissory Note was $4.8 million as of December 31, 2019, of which $1.1 million was included in prepaid expenses and other current assets with the remaining amount included in loans receivable, net of current portion on the Consolidated Balance Sheet. The fair value adjustment of $0.9 million, which was recognized as part of the gain on the termination of the Glycosyn Foundry Terms of Service Agreement, was recorded as component of other income (expense), net on the Consolidated Statements of Operations and Comprehensive Loss for the year ended December 31, 2019.

During the year ended December 31, 2020, Glycosyn made principal and interest payments totaling $0.8 million against the Glycosyn Promissory Note. As of December 31, 2020, there was $5.4 million outstanding under the Glycosyn Promissory Note, of which $5.3 million represented the unpaid principal balance. The fair value of the Glycosyn Promissory Note was $4.5 million as of December 31, 2020, of which $2.0 million was included in prepaid expenses and other current assets with the remaining amount included in loans receivable, net of current portion on the Consolidated Balance Sheet. The gain on the change in fair value of $0.5 million for the year ended December 31, 2020 was recorded as a component of other income (expense), net on the Consolidated Statements of Operations and Comprehensive Loss.

In January 2021, the Company entered into an amendment to the Glycosyn Promissory Note (Note 22).

Access Bio Convertible Notes

In November 2020, the Company entered into a convertible note subscription agreement with Access Bio, a supplier of the Company’s diagnostic test kits. The Access Bio Convertible Notes are due in November 2022 in the aggregate principal amount of $10.0 million plus a 2% rate of return compounded annually. The Access Bio Convertible Notes are convertible into a number of shares of common stock of Access Bio, a company listed on the Korea Stock Exchange, of up to $10.0 million based on a fixed foreign currency exchange rate and a conversion price subject to certain adjustments, including reset adjustments each quarter based on the trading price of Access Bio’s stock. The adjusted conversion price cannot be reduced to less than 70% of the initial conversion price as a result of the reset adjustments and the reset adjustments cannot increase the effective conversion ratio. The Access Bio Convertible Notes are convertible at the Company’s election any time following the first anniversary of the issuance date of the notes, but prior to the 30th day before the maturity date. Additionally, subject to certain provisions, the Company has the option to cause Access Bio to repurchase, or Access Bio has the option to repurchase, a portion of the outstanding balance under the notes (or up to the entire balance in the case of the Company’s option) at a price to ensure a 2% rate of return compounded annually. As of December 31, 2020, the fair value of the Access Bio Convertible Notes was $10.7 million, the entire balance of which was recorded in loans receivable, net of current portion on the Consolidated Balance Sheet. The gain on the change in fair value of $0.7 million was recorded as a component of other income (expense), net on the Consolidated Statements of Operations and Comprehensive Loss for the year ended December 31, 2020.

 

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Notes to Consolidated Financial Statements

 

5. Prepaid Expenses and Other Current Assets

Prepaid expenses and other current assets consisted of the following (in thousands):

 

     As of December 31,  
     2020      2019  

Prepaid expenses

   $ 10,854      $ 2,553  

Prepaid inventory

     6,536        —    

Loans receivable

     2,268        1,106  

Other current assets

     1,441        5,301  
  

 

 

    

 

 

 

Prepaid expenses and other current assets

   $ 21,099      $ 8,960  
  

 

 

    

 

 

 

6. Inventory, net

Inventory, net consisted of the following (in thousands):

 

     As of December 31,  
     2020      2019  

Finished goods

   $ 2,756      $ —    

Less: Inventory reserve

     (20      —    
  

 

 

    

 

 

 

Inventory, net

   $ 2,736      $ —    
  

 

 

    

 

 

 

7. Property and Equipment, net

Property and equipment, net consisted of the following (in thousands):

 

     As of December 31,  
     2020      2019  

Facilities

   $ 12,762      $ 12,762  

Furniture and fixtures

     2,165        1,031  

Lab equipment

     51,072        38,093  

Computer equipment and software

     6,204        2,442  

Leasehold improvements

     40,435        29,369  

Construction in progress

     42,575        894  
  

 

 

    

 

 

 

Total property and equipment

     155,213        84,591  

Less: Accumulated depreciation

     (33,778      (21,459
  

 

 

    

 

 

 

Property and equipment, net

   $ 121,435      $ 63,132  
  

 

 

    

 

 

 

As of December 31, 2020 and 2019, capital leases totaling $3.3 million were included in lab equipment, with related accumulated depreciation of $2.4 million and $1.7 million, respectively. The increase in construction in progress during the year ended December 31, 2020 was primarily due to the build-out of a new high-throughput testing facility.

Depreciation expense related to property and equipment for the years ended December 31, 2020 and 2019 totaled $12.6 million and $9.6 million, respectively, inclusive of $0.7 million and $0.6 million, respectively, related to capital leases.

 

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Notes to Consolidated Financial Statements

 

8. Investments and Equity Method Investments

Investments and equity method investments consisted of the following (in thousands):

 

     As of December 31,  
     2020      2019  

Investments:

     

Genomatica, Inc. preferred stock

   $ 55,000      $ 55,000  

Synlogic, Inc. warrant

     5,504        6,574  
  

 

 

    

 

 

 

Total

   $ 60,504      $ 61,574  
  

 

 

    

 

 

 

Equity method investments:

     

Joyn Bio, LLC

   $ 28,924      $ 29,320  

Synlogic, Inc.

     13,696        16,359  
  

 

 

    

 

 

 

Total

   $ 42,620      $ 45,679  
  

 

 

    

 

 

 

The carrying value of the Company’s equity method investments in Motif Foodworks, Inc. (“Motif”) and Allonnia, LLC (“Allonnia”) as of December 31, 2020 and 2019 was zero and as such, were excluded from the table above.

Loss on investments and equity method investments consisted of the following (in thousands):

 

     Year Ended December 31,  
     2020      2019  

Loss on investments:

     

Synlogic, Inc. warrant

   $ (1,070    $ (7,797
  

 

 

    

 

 

 

Total

   $ (1,070    $ (7,797
  

 

 

    

 

 

 

Loss on equity method investments:

     

Joyn Bio, LLC

   $ (396    $ (1,730

Glycosyn, LLC

     —          (1,323

Synlogic, Inc.

     (2,663      (19,403

Allonnia, LLC

     —          (24,480
  

 

 

    

 

 

 

Total

   $ (3,059    $ (46,936
  

 

 

    

 

 

 

The combined summarized financial information for the Company’s equity method investments, which includes Joyn, Synlogic, Inc. (“Synlogic”), Motif, Allonnia and Glycosyn consisted of the following (in thousands):

 

     As of December 31,  
     2020      2019  

Assets

   $ 319,311      $ 397,280  

Liabilities

   $ 42,441      $ 39,832  

 

     Year Ended December 31,  
     2020      2019  

Revenue

   $ 545      $ 3,579  

Total operating expenses

   $ (125,742    $ (134,444

Loss from operations

   $ (125,197    $ (130,865

Net loss

   $ (123,480    $ (125,290

 

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Notes to Consolidated Financial Statements

 

The summarized financial information for Glycosyn as of and for the year ended December 31, 2020 and as of December 31, 2019 has been excluded from the tables above as the Company no longer held an equity interest in Glycosyn as of December 31, 2019. Refer to Note 17 for additional discussion of the Company’s equity interest in Glycosyn and its other equity method investments.

9. Goodwill and Intangible Assets, net

During the years ended December 31, 2020 and 2019, there was no change in the carrying value of goodwill.

Intangible assets, net consisted of the following (in thousands):

 

     Gross
Carrying
Value
     Accumulated
Amortization
     Net  

Balances as of December 31, 2020

        

Acquired technology

   $ 5,490      $ (2,196    $ 3,294  

Balances as of December 31, 2019

        

Acquired technology

   $ 5,490      $ (1,647    $ 3,843  

Acquired technology had a weighted average remaining amortization period of 6 and 7 years as of December 31, 2020 and 2019, respectively. Amortization expense was $0.5 million for each of the years ended December 31, 2020 and 2019. Future amortization expense for each of the remaining years in the useful life of the intangible assets will be $0.5 million per year.

 

10.

Accrued Expenses and Other Current Liabilities

Accrued expenses and other current liabilities consisted of the following (in thousands):

 

     As of December 31,  
     2020      2019  

Accrued compensation and benefits

   $ 3,037      $ 4,864  

Accrued professional fees

     6,381        4,398  

Accrued financing costs

     —          3,380  

Capital lease obligation

     485        598  

Accrued property and equipment

     10,017        597  

Accrued lab supplies

     4,276        535  

Accrued external research and development expenses

     3,907        423  

Other current liabilities

     2,402        1,021  
  

 

 

    

 

 

 

Accrued expenses and other current liabilities

   $ 30,505      $ 15,816  
  

 

 

    

 

 

 

11. Commitments and Contingencies

Lease Obligations

The Company has entered into various noncancelable operating leases for office and lab space in Boston and Cambridge, Massachusetts and Emeryville, California to support its research and development activities and operations which expire at various dates through September 2030. The Company’s Emeryville, California lease commenced in January 2021. The leases contain periods of free rent, escalating rent, tenant improvement incentives, renewal periods, and expansion options for additional suites. The Company recognizes rent expense on a straight-line basis over the term of each respective lease, inclusive of the free rent periods and reduced by the amortization of the tenant incentives.

 

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Notes to Consolidated Financial Statements

 

The Company’s headquarters and primary operations are located in Boston, Massachusetts and are comprised of a number of leases across 21, 23, 25 and 27 Drydock Avenue, which represent the Company’s most significant lease arrangements. The following summarizes the key terms of such leases:

21-23-25 Drydock Avenue

In March 2016, the Company entered into a noncancelable operating lease for approximately 87,000 square feet of office and lab space. The lease is comprised of five separate suites, the first of which was delivered to the Company in April 2016. The Company currently occupies three suites totaling approximately 52,000 square feet and the Company anticipates occupying the remaining suites in 2021 and 2022. The lease contains periods of free rent for each suite and tenant improvement incentives totaling $5.3 million. Base rent is subject to annual increases through the term of the lease. The lease expires in January 2030 and contains one option to extend the lease for a five-year period at then-market rates. The lease is secured by a letter of credit which totaled $1.4 million and $1.7 million as of December 31, 2020 and 2019, respectively. The cash collateralizing the letter of credit is classified in other non-current assets on the Consolidated Balance Sheets. The letter of credit will be increased to $1.5 million upon delivery of the fourth suite.    

At the time the Company took possession of the first three suites, the premises were in shell condition and required substantial work prior to occupancy. The Company was deemed the accounting owner during the construction period as the improvements constituted structural elements of the project. Accordingly, the Company capitalized the fair value of the leased space upon delivery from the landlord and recorded a corresponding lease financing obligation. The Company also capitalized the construction costs, leasehold improvements, and interest incurred during the construction period. Construction was complete, and the assets were placed in service, for the first three suites in September 2016, December 2017, and January 2019, respectively. Upon completion of the construction, the Company evaluated the lease and determined it did not meet the criteria for sale-leaseback treatment. Accordingly, the Company depreciates the capitalized assets and recognizes interest expense related to the lease financing obligation using the effective interest rate method over the lease term. For the years ended December 31, 2020 and 2019, the Company recognized $0.4 million of depreciation expense and $2.3 million of interest expense related to the lease.

During the year ended December 31, 2019, the Company recorded leased assets of $3.1 million and tenant improvements of $6.0 million related to assets placed in service during the period. No leased assets were placed in service during the year ended December 31, 2020. As of December 31, 2020 and 2019, the aggregate lease financing obligation for the capitalized suites totaled $16.8 million.

27 Drydock Avenue

Beginning in December 2011, the Company entered into a series of noncancelable operating leases with the same landlord for an aggregate of approximately 130,000 square feet of office and lab space. The Company anticipates occupying approximately 9,000 additional square feet in 2022. The leases contain periods of free rent and provides for aggregate tenant improvement allowances of $13.4 million. As of December 31, 2020 and 2019, the aggregate unamortized balance of tenant improvement allowances under the leases was $8.1 million and $8.9 million, respectively. Base rent for each lease is subject to annual increases through the respective term of the leases. The leases expire in January 2030 and each contain one option to extend the leases for a five-year period at then-market rates. The leases are secured by a letter of credit which totaled $1.6 million and $1.5 million as of December 31, 2020 and 2019, respectively. The cash collateralizing the letter of credit is classified in other non-current assets on the Consolidated Balance Sheets.

 

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Notes to Consolidated Financial Statements

 

The Company subleases a portion of its office and laboratory space to Joyn and Motif. The Company is not relieved of its obligations under the head lease and, therefore, accounts for the arrangements as subleases. The sublease with Joyn runs coterminous with the Foundry Services Agreement (Note 17) and the sublease with Motif has a five-year term that commenced in November 2020. The sublessees are obligated to pay to the Company base rent plus operating expenses. The Company collects approximately $0.2 million and $0.7 million per year under the subleases with Joyn and Motif, respectively, and presents sublease income as a component of other income (expense), net on the Consolidated Statements of Operations and Comprehensive Loss.

The Company recognized rent expense of $7.0 million and $6.1 million for the years ended December 31, 2020 and 2019, respectively, of which $0.3 million was incurred during the year ended December 31, 2020 under leases in which the Company was a sublessee. The Company incurred no rent expense as a sublessee during the year ended December 31, 2019. Future minimum lease payments under noncancelable operating lease agreements, inclusive of payments for the lease financing obligations, as of December 31, 2020 are as follows (in thousands):

 

Years Ending December 31,    Minimum
Lease
Payments
 

2021

   $ 16,688  

2022

     19,089  

2023

     21,205  

2024

     21,962  

2025

     22,497  

Thereafter

     79,647  
  

 

 

 

Total

   $ 181,088  
  

 

 

 

The Company enters into certain capital leases for lab equipment used in research and development activities. Lease terms range from three to five years, may include bargain purchase options, and have fixed monthly rental payments. Future minimum lease payments under capital leases as of December 31, 2020 are as follows (in thousands):

 

Years Ending December 31,    Minimum
Lease
Payments
 

2021

   $ 500  

2022

     238  

2023

     102  

2024

     —    

2025

     —    

Thereafter

     —    
  

 

 

 

Total noncancelable payments

   $ 840  

Less: Imputed interest expense

     (43
  

 

 

 

Present value of future minimum lease payments

   $ 797  
  

 

 

 

Collaboration Agreement with Berkeley Lights, Inc.

In September 2019, the Company signed a collaboration agreement with Berkeley Lights, Inc. (“Berkeley Lights”), a leading digital cell biology company focused on enabling and accelerating the rapid development and

 

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Notes to Consolidated Financial Statements

 

commercialization of microbial biotherapeutics and other cell-based products for its customers. Under the collaboration agreement, the Company has agreed to incorporate Berkeley Lights’ Platform into the Foundry to accelerate the engineering of biotherapeutics and cell-based products. Under the collaboration agreement, both parties will use diligent efforts to perform their respective responsibilities to develop workflow development plans, including with respect to the Company’s collaborative development of workflows for Berkeley Lights’ Platform. The initial development of workflows will be focused on yeast and mammalian cells. Additionally, the Company is obligated to pay Berkeley Lights at least $109.0 million, and up to $150.0 million, over the term of the collaboration agreement for (i) payments for Berkeley Lights’ efforts under the workflow development plans and (ii) payments for purchases of certain equipment, associated consumables, and other goods and services.

Minimum purchase commitments for contract years one and two, which represents an 18-month period, are binding commitments that must be met each year. For contract years three through seven, the minimum purchase commitments are binding commitments, however the minimum purchase commitment is measured on a cumulative basis. Therefore, any amounts paid by the Company in excess of the given contract year’s purchase commitment may be credited towards subsequent years’ minimum purchase commitment until such excess amount has been fully credited against the minimum cumulative purchase commitment. Minimum purchase commitments under the collaboration agreement are as follows (in thousands):

 

Contract Years    Minimum
Purchase
Commitment
 

October 1, 2019 - September 30, 2020

   $ 10,000  

October 1, 2020 - March 31, 2022

     15,000  

April 1, 2022 - March 31, 2023

     14,000  

April 1, 2023 - March 31, 2024

     17,500  

April 1, 2024 - March 31, 2025

     17,500  

Thereafter

     35,000  
  

 

 

 

Total

   $ 109,000  
  

 

 

 

The collaboration agreement contains provisions requiring the Company to pay to Berkeley Lights certain license fees for the use of Berkeley Lights’ Platform and certain milestone payments of up to $11.5 million payable when a therapeutic discovered using certain workflows reaches specified development and regulatory milestones. License fees owed to Berkeley Lights are variable based on volume usage of Berkeley Lights’ Platform. All such license fees and milestone payments are applied against the satisfaction of the minimum purchase commitment. Further, if Berkeley Lights achieves certain performance targets, the minimum purchase commitment will increase to $150.0 million.

The Company has the option to buy down its purchasing obligations after the second contract year by making a one-time payment to Berkeley Lights. The amount of the buy down payment is dependent upon the cumulative payments made to Berkeley Lights at such time and the number of completed workflows. Additionally, the Company is granted an exclusivity period for each workflow developed for the Company by Berkeley Lights under the collaboration agreement. Berkeley Lights has the option to buy down the exclusivity period by making a one-time payment to the Company equal to a percentage of the development costs incurred by the Company related to the specific workflow. Thereafter, the parties will equally share the development costs of the associated workflow. The Company concluded the payments received from Berkeley Lights related to the buy down of an exclusivity period represent reimbursements for research and development costs and therefore account for the payments as a reduction of research and development expenses.

 

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Notes to Consolidated Financial Statements

 

The collaboration agreement will continue until the seventh anniversary of the effective date, subject to certain automatic extension provisions, including for delays resulting from a Berkeley Lights failure to supply products or services conforming with the collaboration agreement. The collaboration will automatically terminate if the Company, at any time after the second contract year, elects to exercise its buy down right. In addition, either party may terminate the collaboration agreement (i) for the material breach by the other party (including, with respect to the Company, a material supply failure), (ii) upon the occurrence of certain insolvency related events of the other party, and (iii) for certain force majeure events.

The Company made an upfront payment of $10.0 million, which was fully creditable against certain other payments owed to Berkeley Lights during the term of the collaboration agreement. As of December 31, 2019, $5.2 million of the upfront payment remained in prepaid expenses and other current assets on the Consolidated Balance Sheet and during the year ended December 31, 2020, the Company utilized the remaining portion of the upfront payment. During the years ended December 31, 2020 and 2019, the Company purchased lab equipment from Berkeley Lights totaling $2.0 million and $4.0 million, respectively. Such lab equipment is included in property and equipment, net on the Consolidated Balance Sheets. During the years ended December 31, 2020 and 2019 the Company recorded expense related to services received from Berkeley Lights totaling $7.7 million and $0.8 million, respectively, net of buy downs. Expenses incurred under the collaboration agreement are recorded as research and development expenses, net of Berkeley Lights’ buy down payments, in the Consolidated Statements of Operations and Comprehensive Loss. During the year ended December 31, 2020, Berkeley Lights exercised their option to buy down two workflows for total consideration of $1.7 million. Through December 31, 2020, the Company purchased a total of $14.5 million of equipment, services, and consumables under the collaboration agreement with Berkeley Lights.

Supply Agreement with Twist Bioscience Corporation

In March 2018, the Company signed a supply agreement with Twist Bioscience Corporation (“Twist”) to provide synthetic DNA and certain other services. Under the supply agreement, the Company is obligated to purchase specified volumes of synthetic DNA subject to quarterly minimums over the term of the agreement. The products purchased that contribute to achieving the quarterly minimum purchase commitment can vary based on the Company’s discretion, subject to advanced notice provided to Twist. The term of the supply agreement is four years. The Company’s quarterly minimum purchase commitment may be adjusted for the following reasons: (i) due to a lack of availability of certain products for purchase in a given quarter; (ii) due to lack of certain service features available; (iii) delays in shipments over two consecutive quarters beyond the agreed upon lead times; and (iv) if the average yield of certain products measured over two consecutive quarters is greater than a specified yield. The Company receives volume discounts on purchases based on specified volume thresholds over the term of the supply agreement. Additionally, the Company receives a discount on each order of certain products, dependent upon the volume of certain other products it purchases in a given order. If, at each six-month period over the term of the supply agreement, the Company fails to meet its aggregate quarterly minimum purchase commitment for the prior six months, the Company is obligated to pay Twist a fee per unit of the shortfall.

During the years ended December 31, 2020 and 2019, the Company incurred $10.4 million and $8.3 million, respectively, of research and development expenses under its supply agreement with Twist.

Purchase Orders

The Company has agreements with third parties for certain services for which the Company is not contractually able to terminate for convenience to avoid future obligations to the respective vendors. Such agreements may provide for termination fees, penalties, or costs to wind-down the arrangement. Under such agreements, the

 

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Notes to Consolidated Financial Statements

 

Company is contractually obligated to make payments, primarily to reimburse the vendor for their expenditures that are not recoverable and incurred prior to any cancellation of the respective agreement. The actual amounts the Company could pay in the future to these vendors under the various agreements may differ from the amounts under the purchase orders due to these cancellation provisions.

Indemnification Agreements

The Company enters into standard indemnification agreements and has agreements with indemnification clauses in the ordinary course of business. Under such arrangements, the Company indemnifies, holds harmless and agrees to reimburse the indemnified party for losses suffered or incurred by the indemnified party, who are generally the Company’s business partners. The terms of these indemnification arrangements are generally perpetual and effective any time after contract execution. The maximum potential liability resulting from these indemnification arrangements may be unlimited. The Company has never incurred costs to defend lawsuits or settle claims related to these indemnification arrangements and the Company does not believe that the outcome of any claims under such arrangements will have a material effect on its financial position, results of operations or cash flows, and have not accrued any liabilities related to such obligations as of December 31, 2020 or 2019.

Legal Proceedings

The Company is not currently party to any material legal proceedings. As of each reporting date, the Company evaluates whether or not a potential loss amount or range of loss amounts is reasonably estimable and probable of being incurred and whether such amounts meet the requirements to be accrued or disclosed pursuant to ASC 450, Contingencies (“ASC 450”). The Company expenses costs related to such legal proceedings as incurred.

 

12.

Convertible Promissory Notes

In June 2019, the Company entered into a Note Purchase Agreement (“NPA”) with certain existing investors. In connection with the NPA, the Company issued convertible promissory notes (“Convertible Promissory Notes”) resulting in aggregate proceeds of $199.0 million, net of issuance costs of $1.0 million. The Convertible Promissory Notes carried interest at the rate of 3% per annum and had a maturity date of June 21, 2021. Pursuant to the NPA, all of the outstanding principal and interest under the Convertible Promissory Notes were to be automatically converted into (i) preferred stock issued in connection with the Company’s next financing that resulted in at least $50.0 million of gross proceeds (“NPA Qualified Financing”) at a 5% discount, (ii) common stock issued in connection with the filing of an effective registration statement pursuant to an initial public offering, or (iii) cash equal to the greater of (x) one and a half times the outstanding principal and interest accrued immediately prior to a sale or change in control event (as defined in the NPA) in which the Company or one of its subsidiaries was a party, or (y) the amount each investor would have received if the outstanding principal and accrued interest had been converted into Series D convertible preferred stock immediately prior to such sale or change in control event. On the maturity date, the Convertible Promissory Notes were to be automatically converted into shares of Series D convertible preferred stock, at a predetermined conversion rate, which was less than the fair value of Series D convertible preferred stock at the date of issuance of the Convertible Promissory Notes. The Company determined that at the Convertible Promissory Notes’ commitment date, this conversion feature was beneficial to the investors and, as such, calculated and recorded a beneficial conversion feature (“BCF”). The intrinsic value of the BCF, which was calculated utilizing the fair value of the underlying Series D convertible preferred stock and effective conversion price on the commitment date, was $199.0 million and was recorded as a debt discount with an offset to additional paid in capital.

 

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Notes to Consolidated Financial Statements

 

The debt discount was amortized to interest expense using the effective interest method through the maturity date of the Convertible Promissory Notes. For the year ended December 31, 2019, the Company recorded interest expense of $0.1 million in the Consolidated Statements of Operations and Comprehensive Loss related to the amortization of the debt discount.

The Company’s Series E convertible preferred stock issuance in September 2019 (Note 13) met the criteria of an NPA Qualified Financing. Accordingly, the Convertible Promissory Notes were converted into Series E convertible preferred stock. In connection with the NPA Qualified Financing and the associated conversion, the Company was required to account for the repurchase of the BCF. The total repurchase price associated with the reacquisition of the BCF in connection with the settlement of the Convertible Promissory Notes was the issuance of 1,408,934 shares of Series E convertible preferred stock valued at $211.6 million. The intrinsic value of the BCF upon the NPA Qualified Financing was measured based on the intrinsic value of the conversion option at the settlement date which was in excess of the repurchase price. Therefore, the entire $211.6 million was allocated to the reacquisition of the BCF which was recorded as a reduction to additional paid in capital. As a result of the extinguishment of the Convertible Promissory Notes, the Company recorded a gain of $0.1 million that is reflected in other income (expense), net in the Consolidated Statements of Operations and Comprehensive Loss for the year ended December 31, 2019.

 

13.

Convertible Preferred Stock

As of December 31, 2020, the Fourth Amended and Restated Certificate of Incorporation, as amended, (“Amended Certificate of Incorporation”) authorized the Company to issue 19,136,487 shares of $0.01 par value convertible preferred stock, of which 4,143,251 shares have been designated as Series B convertible preferred stock (“Series B Preferred Stock”), 4,658,503 shares have been designated as Series C convertible preferred stock (“Series C Preferred Stock”), 6,162,631 shares have been designated as Series D convertible preferred stock (“Series D Preferred Stock”), and 4,172,102 shares have been designated as Series E convertible preferred stock (“Series E Preferred Stock”, and collectively with the Series B, Series C, and Series D Preferred Stock, “Convertible Preferred Stock”). In May of 2020, the Company increased the number of shares of Convertible Preferred Stock authorized for issuance from 17,871,422 shares to 19,136,487 shares and increased the number of shares of Series E Preferred Stock authorized for issuance from 2,907,037 shares to 4,172,102 shares.

Series B Preferred Stock

In 2015, the Company entered into a Series B convertible preferred stock purchase agreement (“Series B Stock Purchase Agreement”) under which the Company issued 4,156,516 shares of Series B Preferred Stock to various investors at $12.83 per share for aggregate proceeds of $51.5 million, net of issuance costs of $0.1 million. The proceeds consisted of $44.0 million in cash and the conversion of $7.5 million of convertible promissory notes. During 2016, the Company repurchased 18,331 shares of Series B Preferred Stock from an investor for an amount of $0.4 million which were subsequently retired.

Series C Preferred Stock

In 2016, the Company entered into a Series C convertible preferred stock purchase agreement (“Series C Stock Purchase Agreement”) under which the Company issued 4,658,503 shares of Series C Preferred Stock to various investors at $21.23 per share for aggregate proceeds of $98.8 million, net of issuance costs of $0.1 million.

 

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Notes to Consolidated Financial Statements

 

Series D Preferred Stock

In 2017, the Company entered into a Series D convertible preferred stock purchase agreement (“Series D Stock Purchase Agreement”) under which the Company issued 6,095,020 shares of Series D Preferred Stock to various investors at $47.71 per share for aggregate proceeds of $290.7 million, net of issuance costs of $0.1 million. The proceeds consisted of $225.9 million in cash and the conversion of $64.8 million of convertible promissory notes. In 2018, the Company issued an additional 52,400 shares of Series D Preferred Stock to an investor at $47.71 per share for aggregate proceeds of $2.5 million. In addition, during 2018, the Company repurchased 509 shares of Series D Preferred Stock which were subsequently retired.

Series E Preferred Stock

In 2019, the Company entered into a Series E convertible preferred stock purchase agreement (“Series E Stock Purchase Agreement”) under which the Company issued 2,831,342 shares of Series E Preferred Stock to various investors at $150.19 per share. The issuance consisted of 1,422,408 shares of Series E Preferred Stock for aggregate proceeds of $208.8 million, net of $4.8 million in issuance costs and the conversion of $201.0 million of principal and accrued interest associated with the Convertible Promissory Notes which converted at a 5% discount into 1,408,934 shares of Series E Preferred Stock. In May and July of 2020, the Company issued an additional 628,663 shares of Series E Preferred Stock to various investors at $150.19 per share for aggregate proceeds of $94.4 million. No issuance costs were incurred related to these sales.

The Company assessed the Convertible Preferred Stock for any beneficial conversion features or embedded derivatives that would require bifurcation from the Convertible Preferred Stock and receive separate accounting treatment. Based on the Company’s determination that the Convertible Preferred Stock is an “equity host”, it determined that all features of the Convertible Preferred Stock were either clearly and closely related to the equity host or did not meet the definition of a derivative, and therefore do not require bifurcation as a derivative liability. On the date of issuance, the estimated fair value of common stock into which the Convertible Preferred Stock was convertible was less than the effective conversion price of the Convertible Preferred Stock, and as such, there was no beneficial conversion feature at the commitment dates.

As the Convertible Preferred Stock may only become redeemable upon a deemed liquidation event, the occurrence of which is solely within the Company’s control, the Company classifies the Convertible Preferred Stock in stockholders’ equity. The Convertible Preferred Stock was recorded at par and is not subsequently remeasured.

The Convertible Preferred Stock consisted of the following (in thousands, except share data):

 

     As of December 31, 2020  
     Preferred
Stock
Authorized
     Preferred
Stock
Issued and
Outstanding
     Carrying
Value
     Liquidation
Value
     Common
Stock
Issuable
Upon
Conversion
 

Series B

     4,143,251        4,138,185      $ 41      $ 53,093        4,138,185  

Series C

     4,658,503        4,658,503        47        98,900        4,658,503  

Series D

     6,162,631        6,146,911        61        293,269        6,146,911  

Series E

     4,172,102        3,460,005        35        519,658        3,460,005  
  

 

 

    

 

 

    

 

 

    

 

 

    

 

 

 

Total

     19,136,487        18,403,604      $ 184      $ 964,920        18,403,604  
  

 

 

    

 

 

    

 

 

    

 

 

    

 

 

 

 

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Notes to Consolidated Financial Statements

 

     As of December 31, 2019  
     Preferred
Stock
Authorized
     Preferred
Stock
Issued
and
Outstanding
     Carrying
Value
     Liquidation
Value
     Common
Stock
Issuable
Upon
Conversion
 

Series B

     4,143,251        4,138,185      $ 41      $ 53,093        4,138,185  

Series C

     4,658,503        4,658,503        47        98,900        4,658,503  

Series D

     6,162,631        6,146,911        61        293,269        6,146,911  

Series E

     2,907,037        2,831,342        28        425,239        2,831,342  
  

 

 

    

 

 

    

 

 

    

 

 

    

 

 

 

Total

     17,871,422        17,774,941      $ 177      $ 870,501        17,774,941  
  

 

 

    

 

 

    

 

 

    

 

 

    

 

 

 

The rights, preferences, and privileges of the holders of Convertible Preferred Stock are listed below:

Conversion

Shares of Series B, C, D and E Preferred Stock are convertible at any time at the option of the holder, without the payment of additional consideration, into such number of common stock as is determined by dividing the original issuance price by the conversion price in effect at the time. The conversion price is $12.83 for Series B Preferred Stock, $21.23 for Series C Preferred Stock, $47.71 for Series D Preferred Stock, and $150.19 for Series E Preferred Stock, each subject to adjustment for any stock dividends, stock split, combination or similar recapitalization or reorganization.

Conversion is automatic upon the consummation of an underwritten public offering resulting in a price per share of at least $187.74, as adjusted for any stock dividends, stock split, combination or similar recapitalization or reorganization, that results in gross proceeds of at least $50.0 million, or upon the date and time, or the occurrence of an event, specified by vote or written consent of the holders of a majority of the then outstanding shares of Convertible Preferred Stock, voting as a single class on an as-converted basis, 72% of the then outstanding shares of Series D Preferred Stock, voting as a separate class, and a majority of the then outstanding shares of Series E Preferred Stock, voting as a separate class. At such time, all outstanding shares of Convertible Preferred Stock automatically convert into shares of common stock at the then effective conversion rate.

Dividends

The Series B, C, D, and E Preferred Stock have no stated dividend rate and, as such, do not accrue dividends over time. However, the holders of Series B, C, D, and E Preferred Stock have the right to certain dividends in the event that the Company declares, pays, or sets aside any dividends on shares of any class or series of capital stock. No dividends have been declared or paid by the Company since its inception.

Redemption

The Series B, C, D, and E Preferred Stock is only redeemable upon the occurrence of a deemed liquidation event, which includes a merger, consolidation, or sale of substantially all of the Company’s assets, the occurrence of which is solely within the Company’s control.

Liquidation Value

In the event of any voluntary or involuntary liquidation, dissolution or winding up of Ginkgo or deemed liquidation event, the holders of Series B, C, D, and E Preferred Stock then outstanding are entitled to be paid on

 

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a pari passu basis out of the assets of Ginkgo available for distribution to the Company’s stockholders before any payment shall be made to the holders of common stock by reason of their ownership thereof, an amount per share equal to the greater of (i) the applicable original issue price, plus any dividends declared but unpaid thereon, or (ii) such amount per share as would have been payable had all shares of Convertible Preferred Stock been converted into common stock immediately prior to such liquidation, dissolution, winding up or deemed liquidation event. If upon any such liquidation, dissolution or winding up of Ginkgo or deemed liquidation event, the assets of Ginkgo available for distribution to the Company’s stockholders shall be insufficient to pay the holders of shares of Convertible Preferred Stock the full amount to which they shall be entitled, the holders of shares of Convertible Preferred Stock shall share ratably in any distribution of the assets available for distribution in proportion to the respective amounts which would otherwise be payable in respect of the shares held by them. Once the preferential distribution has been completed, the preferred holders do not participate in any additional distributions with the common holders.

Voting Rights

Each holder of outstanding shares of Convertible Preferred Stock is entitled to cast the number of votes equal to the number of whole shares of common stock into which the shares of Convertible Preferred Stock held by such holder are convertible as of the record date for determining stockholders entitled to vote on such matter. Except as provided by law or by the other provisions of the Amended Certificate of Incorporation, holders of Convertible Preferred Stock shall vote together with the holders of common stock as a single class.

 

14.

Common Stock

As of December 31, 2020, the Amended Certificate of Incorporation authorized the Company to issue 35,000,000 shares of $0.01 par value common stock.

The voting, dividend, and liquidation rights of the holders of common stock are subject to and qualified by the rights, powers, and preferences of the holders of the Convertible Preferred Stock. The rights, preferences, and privileges of the holders of common stock are listed below:

Voting Rights

The holders of common stock are entitled to one vote for each share of common stock held at all meetings of stockholders and written actions in lieu of meetings.

Dividends

The holders of shares of common stock are entitled to receive dividends, if and when declared by the Company. Cash dividends may not be declared or paid to holders of shares of common stock until all dividends on Series B, C, D and E Preferred Stock have been paid in accordance with their terms. No dividends have been declared or paid by the Company since its inception.

Liquidation Value

In the event of any voluntary or involuntary liquidation, dissolution or winding up of Ginkgo or deemed liquidation event, after the payment of all preferential amounts required to be paid to the holders of Series B, C, D and E Preferred Stock, the remaining assets available for distribution to stockholders would be distributed among the holders of shares of common stock, pro rata, based on the number of shares held by each such holder.

 

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Notes to Consolidated Financial Statements

 

Treasury Stock

During the year ended December 31, 2019, the Company repurchased 10,000 shares of common stock from its employees. The Company reclassified the shares as treasury stock, which is shown as a reduction of stockholders’ equity, for the fair value of the common stock repurchased and recorded payroll expense of $0.1 million equal to the difference between the repurchase price and the fair value of the common stock on the repurchase date. Upon the repurchase, the Company returned all shares of treasury stock to authorized and unissued shares of common stock in which the carrying value of the treasury stock was recorded as a reduction to common stock and additional paid-in capital in the Consolidated Balances Sheet. As of December 31, 2020 and 2019, no shares of common stock remained in treasury.

Common Stock Reserved for Future Issuances

 

     As of December 31,  
     2020      2019  

Shares reserved for Series B Preferred Stock outstanding

     4,138,185        4,138,185  

Shares reserved for future issuances of Series B Preferred Stock attached to warrants to purchase Series B Preferred Stock

     5,066        5,066  

Shares reserved for Series C Preferred Stock outstanding

     4,658,503        4,658,503  

Shares reserved for Series D Preferred Stock outstanding

     6,146,911        6,146,911  

Shares reserved for future issuances of Series D Preferred Stock attached to warrants to purchase Series D Preferred Stock

     15,720        15,720  

Shares reserved for Series E Preferred Stock outstanding

     3,460,005        2,831,342  

Shares reserved for exercises of outstanding stock options under the 2008 Stock Incentive Plan

     679,596        718,755  

Shares reserved for vesting of restricted stock units under the 2014 Stock Incentive Plan

     2,545,458        1,428,674  

Shares reserved for issuances under the 2014 Stock Incentive Plan

     97,462        369,246  
  

 

 

    

 

 

 

Total common stock reserved for future issuances

     21,746,906        20,312,402  
  

 

 

    

 

 

 

 

15.

Stock-Based Compensation

In 2008, the Company adopted the 2008 Stock Incentive Plan (the “2008 Plan”) and in 2014 the Company adopted the 2014 Stock Incentive Plan (the “2014 Plan”, collectively with the 2008 Plan, the “Plans”). Pursuant to the 2014 Plan, the Company may grant incentive and nonqualified stock options, RSUs, RSAs and other stock-based awards to employees, officers, directors, consultants, and advisors. No additional awards may be granted under the 2008 Plan. The Plans are administered by the board of directors, who have the power and authority to determine the terms of the grants. The shares of common stock underlying any awards that are forfeited, cancelled, repurchased, or otherwise terminated by the Company under the Plans will be added back to the shares available for issuance under the 2014 Plan. In April 2020, the board of directors approved an increase to the

 

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Notes to Consolidated Financial Statements

 

aggregate number of shares reserved for issuance under the 2014 Plan of 845,000 shares. As of December 31, 2020, the maximum number of shares of common stock that are reserved for issuance under the 2008 and 2014 Plans is 978,673 and 2,664,186, respectively, of which no shares and 97,462 shares of common stock are available for future issuance under the 2008 Plan and 2014 Plan, respectively.

Stock Options

As of December 31, 2020, the Company has only issued stock option awards under the 2008 Plan, of which all were granted prior to January 1, 2019 and had a ten-year contractual term. Upon stock option exercise, the Company issues new shares and delivers them to the participant.

A summary of stock option activity under the 2008 Plan is presented below:

 

     Number
of Shares
     Weighted
Average
Exercise
Price
per Share
     Weighted
Average
Remaining
Contractual
Term
     Aggregate
Intrinsic
Value(1)
 
                   (in years)      (in thousands)  

Outstanding as of December 31, 2019

     718,755      $ 0.67        4.20      $ 79,915  

Exercised

     (39,159      0.67        
  

 

 

    

 

 

    

 

 

    

 

 

 

Outstanding as of December 31, 2020

     679,596      $ 0.66        3.20      $ 131,370  
  

 

 

    

 

 

    

 

 

    

 

 

 

Exercisable as of December 31, 2020

     679,596      $ 0.66        3.20      $ 131,370  
  

 

 

    

 

 

    

 

 

    

 

 

 
(1) The aggregate intrinsic value of stock options is calculated as the difference between the exercise price of the underlying stock options and the estimated fair value of the common stock for those stock options that had exercise prices lower than the estimated fair value of the common stock as of December 31, 2020 and 2019.

 

The aggregate intrinsic value of stock options exercised during the years ended December 31, 2020 and 2019 was $5.3 million and $1.1 million, respectively. No stock options were granted during the years ended December 31, 2020 and 2019.

Restricted Stock Units

The Company has granted RSUs to employees and non-employees under the 2014 Plan which are subject to two vesting conditions: (i) a service-based vesting condition under which the awards vest based on continued service over a period of time, and (ii) a performance-based vesting condition whereby the awards vest based on a liquidity event in the form of either a change of control or an initial public offering, each as defined in the 2014 Plan. RSUs awarded to new hires generally vest based on service over four years from the date of hire with 25% vesting on the first anniversary of the date of hire, and the remaining on a pro rata basis each month over the next three years. Additional RSU grants generally vest based on service in equal monthly installments over a four-year term. Both new hire and additional RSU grants are also subject to the performance-based vesting condition. Employees are able to retain RSUs vested with respect to the service condition upon departure, and such RSUs remain subject to the performance-based vesting condition. RSUs issued under the 2014 Plan expire seven years from the date of grant.

 

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Notes to Consolidated Financial Statements

 

A summary of the RSU activity under the 2014 Plan is presented below:

 

     Number of
Shares
     Weighted
Average
Grant Date
Fair Value
 

Nonvested as of December 31, 2019

     1,428,674      $ 48.35  

Granted

     1,165,119        131.64  

Forfeited

     (48,335      92.94  
  

 

 

    

 

 

 

Nonvested as of December 31, 2020

     2,545,458      $ 85.63  
  

 

 

    

 

 

 

The weighted average remaining contractual term for the nonvested RSUs as of December 31, 2020 was 5.13 years. The weighted average grant date fair value of the RSUs granted during the year ended December 31, 2019 was $87.13 per share.

Restricted Stock Awards

The Company has granted RSAs to employees and consultants under the 2014 Plan with a service-based condition that generally vest in equal monthly installments over a four-year term.

A summary of the RSA activity under the 2014 Plan is presented below:

 

     Number of
Shares
     Weighted
Average
Grant Date
Fair Value
 

Nonvested as of December 31, 2019

     13,771      $ 97.63  

Vested

     (5,233      97.63  
  

 

 

    

 

 

 

Nonvested as of December 31, 2020

     8,538      $ 97.63  
  

 

 

    

 

 

 

The aggregate fair value of the RSAs that vested during the years ended December 31, 2020 and 2019 was $0.5 million and $0.7 million, respectively.

Stock-Based Compensation

Stock-based compensation expense was allocated as follows (in thousands):

 

     Years Ended December 31,  
     2020      2019  

Research and development

   $ 79      $ 64  

General and administrative

     397        707  
  

 

 

    

 

 

 

Total

   $ 476      $ 771  
  

 

 

    

 

 

 

During the years ended December 31, 2020 and 2019, the Company recognized $0.5 million and $0.8 million, respectively, in stock-based compensation expense related to the RSAs. The Company has not recognized any stock-based compensation expense related to the RSUs as of December 31, 2020 as satisfaction of the performance-based vesting condition was not deemed probable. All outstanding stock options were fully vested prior to January 1, 2019 and, accordingly, no stock-based compensation expense was recognized for these awards during the years ended December 31, 2020 and 2019.

 

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Notes to Consolidated Financial Statements

 

As of December 31, 2020, total unrecognized stock-based compensation expense related to the RSUs and RSAs was $218.0 million and $0.8 million, respectively. The total unrecognized stock-based compensation expense related to the RSAs will be recognized over a weighted average period of 1.88 years.

16. Revenue Recognition

Disaggregation of Revenue

The following table sets forth the percentage of Foundry revenues by industry based on total Foundry revenue:

 

     Year Ended December 31,  
     2020     2019  

Food and nutrition

     35     39

Industrial and environmental

     29     13

Agriculture

     13     18

Consumer and technology

     12     19

Other

     11     11
  

 

 

   

 

 

 

Total

     100     100
  

 

 

   

 

 

 

The following table sets forth the percentage of revenue by geographic location based on total revenue:

 

     Year Ended December 31,  
     2020     2019  

North America

     95     95

Rest of world

     5     5
  

 

 

   

 

 

 

Total

     100     100
  

 

 

   

 

 

 

Contract Balances

The Company recognizes a contract asset when the Company transfers goods or services to a customer before the customer pays consideration or before payment is due, excluding any amounts presented as accounts receivable. The Company did not have any contract assets as of and for the years ended December 31, 2020 and 2019.

Contract liabilities, or deferred revenue, primarily consist of payments received in advance of performance under the contract or when the Company has an unconditional right to consideration under the terms of the contract before it transfers goods or services to the customer. The Company’s collaborative arrangements with its investees and related parties typically include upfront payments consisting of cash or non-cash consideration for future research and development services and non-cash consideration in the form of equity securities for licenses that will be transferred in the future. The Company records the upfront cash payments and fair value of the equity securities as deferred revenue.

The Company also invoices customers based on contractual billing schedules, which results in the recording of deferred revenue to the extent payment is received prior to the Company’s performance of the related services. Contract liabilities are recognized as revenue as (or when) the Company performs under the contract.

Of the Company’s $147.9 million in deferred revenue at December 31, 2019, $25.5 million was recognized as revenue during 2020. Of the Company’s $127.2 million in deferred revenue at December 31, 2018, $16.8 million was recognized as revenue during 2019.

 

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Notes to Consolidated Financial Statements

 

Performance Obligations

The aggregate amount of the transaction price that was allocated to performance obligations that have not yet been satisfied or are partially satisfied as of December 31, 2020 and 2019 was $20.7 million and $35.3 million, respectively. The Company has elected the practical expedient not to provide the remaining performance obligation disclosures related to contracts for which the Company recognizes revenue on a cost-plus basis in the amount to which it has the right to invoice. As of December 31, 2020, of the performance obligations not yet satisfied or partially satisfied, 94% is expected to be recognized as revenue during the years ended December 31, 2021 to 2023. The remainder cannot be reasonably estimated due to uncertainty about the timing of development milestones.

17.    Significant Collaboration Transactions

Allonnia, LLC

Summary of Arrangement

Allonnia was formed in 2019 and focuses on the application of synthetic biology in the bioremediation space, leveraging Ginkgo’s proprietary platform to develop solutions for waste bioremediation and the biorecovery of rare earth elements or other substances from waste streams or waste deposits. In December 2019, the Company entered into (i) an Intellectual Property Contribution Agreement (“Allonnia IP Agreement”) that granted Allonnia a license to certain of the Company’s intellectual property, (ii) a Technical Development Agreement (“Allonnia TDA”) that establishes the terms under which the Company is providing technical development services, and (iii) a Common Unit Issuance Agreement (“CUIA”) which provides for the issuance of common units of Allonnia to the Company in exchange for the license rights granted under the Allonnia IP Agreement. Contemporaneous with these agreements, Allonnia entered into a Series A Preferred Unit Purchase Agreement under which Allonnia sold 2,970,000 Series A Preferred Units to certain of the Company’s investors, as well as a third-party investor, for aggregate proceeds of approximately $33.0 million. Allonnia also agreed to issue an additional 630,000 Series A Preferred Units to a strategic partner as compensation for the delivery of future services to Allonnia. The Series A Preferred Unit Purchase Agreement also provides for the sale and issuance of up to an additional 5,400,000 Series A Preferred Units subsequent to the initial closing. Subsequently, during the year ended December 31, 2020, Allonnia issued an additional 1,844,911 Series A Preferred Units, 1,664,911 of which were sold for aggregate proceeds of $18.5 million and 180,000 of which were issued in exchange for the rights to certain intellectual property which will vest based on the achievement of milestones associated with the development of the intellectual property received. In 2021, Allonnia issued an additional 22,500 Series A Preferred Units for aggregate proceeds of $0.2 million and closed their Series A Preferred Unit financing. As a result, the Company received an additional 1,867,411 common units in full satisfaction of the additional common unit right described in the following paragraph (Note 22).

Under the Allonnia IP Agreement, the Company licensed intellectual property to Allonnia for use in the development or the production of its products that the parties will subsequently agree to develop under TDPs. The license rights provide Allonnia with the ability to commercialize the specified products from the corresponding strain or enzyme, which can only be developed by the Company under the Allonnia TDA. The Company received 3,600,000 common units as consideration for the license upon execution of the agreement. In addition, the Company is entitled to receive up to an additional 5,400,000 common units upon the issuance of additional Series A Preferred Units by Allonnia.

Under the Allonnia TDA, the parties jointly agree, through equal representation on a joint steering committee, on TDPs for specific strains and enzymes, in which the Company will perform agreed upon development services in return for consideration on a cost-plus basis for all services provided. As of December 31, 2020, the Company has entered into three TDPs with Allonnia.

 

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Accounting Analysis

The Company concluded that Allonnia is a variable interest entity in which it holds a variable interest through its common unit interest. Allonnia was designed to function as a stand-alone entity with its own board of directors, employees, and operational infrastructure. While the Company was involved with the creation of Allonnia, has board representation, and is involved in the ongoing development activities of Allonnia through its participation on a joint steering committee (as provided for under the Allonnia TDA), the Company concluded this involvement does not give it the power to control the decisions with respect to the development activities of Allonnia, which are the most significant activities of Allonnia. The Company does not control Allonnia’s board of directors and there are no voting or consent agreements between the Company and the other members of Allonnia’s board of directors or the holders of the Series A Preferred Units. Further, the Company’s representation on the joint steering committee does not give it control over Allonnia’s development activities as all votes of the joint steering committee must pass by consensus and there is no agreement in place that would require Allonnia to vote in alignment with the Company. Accordingly, the Company is not the primary beneficiary of Allonnia as it does not control the decisions that most significantly impact Allonnia’s economic performance.

The common unit investment in Allonnia is considered an equity method investment as a result of the Company’s ability to exercise significant influence over the financial and operating policies through its ownership of common units. The initial carrying value of the equity method investment in Allonnia is the fair value of the common units of $24.5 million received in exchange for the Allonnia IP Agreement which, as discussed below, was accounted for as deferred revenue at inception. The fair value of Allonnia’s common units was determined at inception of the agreements using the option pricing method. The option pricing method used a back-solve methodology to infer the total equity value based on the pricing of the Series A Preferred Unit financing, which was contemporaneous with the Allonnia IP Agreement. Further, the Company determined the rights to up to an additional 5,400,000 common units did not meet the definition of a freestanding financial instrument and are not representative of a derivative. The right to the additional common units is considered variable consideration that is fully constrained at inception and until the contingencies related to the issuance of the additional shares are resolved. This contingency was resolved in 2021 when the Company and Allonnia agreed upon the additional 1,867,411 common units to be issued under the agreements (Note 22).

The Series A Preferred Units issued by Allonnia receive a liquidation preference prior to common units. As such, the Company concluded that this represents a substantive profit-sharing arrangement, and the Company is recognizing earnings and losses on the equity method investment using the HLBV method. The Company recorded a loss on equity method investment of $24.5 million from inception through December 31, 2019. The loss allocated to the Company primarily relates to Allonnia’s accounting for the non-cash consideration related to the Allonnia IP Agreement as in-process research and development, which resulted in the full value of the Company’s intellectual property contribution being expensed in the period ended December 31, 2019. As of December 31, 2019, the carrying value of the equity method investment in Allonnia has been reduced to zero. There is no commitment for the Company to provide further financial support to Allonnia and therefore the carrying value of the equity method investment will not be reduced below zero. As a result, no loss was recognized during the year ended December 31, 2020 on the equity method investment.

The relationship with Allonnia is a vendor-customer relationship and is within the scope of ASC 606 as the provision of services and corresponding license rights are considered a part of the Company’s ordinary activities and the common units represent non-cash consideration. While the Allonnia TDA has been executed by the parties and provides the payments terms for future services, the Allonnia TDA does not provide for any transfer of goods or services between the parties. However, the Company will provide licenses and services upon execution of the contemplated TDPs. Accordingly, the Company concluded that the Allonnia TDA met the

 

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Notes to Consolidated Financial Statements

 

definition of a contract under ASC 606 and each TDP executed under the Allonnia TDA will be accounted for in accordance with ASC 606. There were no TDPs entered into during the year ended December 31, 2019, therefore, the non-cash consideration of $24.5 million is recorded as deferred revenue, net of current portion on the Consolidated Balance Sheet as of December 31, 2019.

The Company’s performance obligations under the contract consist of a combined service and license performance obligation related to the initial TDP executed in February 2020 and nine material rights, related to the estimated additional TDPs the parties expect to execute under the Allonnia TDA. The material rights represent an advance payment for the license rights which will be granted upon the execution of each TDP. As there is no additional payment for these license rights upon execution of a TDP, the Company has determined that there is a material right associated with each of the contemplated future TDPs. The Company has allocated $2.5 million of the upfront non-cash consideration to each of the ten performance obligations under the contract based on the estimated standalone selling price of the performance obligations. Unexercised material rights are recorded as non-current deferred revenue until such time as the parties execute a TDP.

Upon the execution of each TDP, the Company is obligated to provide development services under the TDP and a license to applicable patents and other intellectual property to the ingredient developed under the plan. The license and research and development services under a TDP are highly interdependent and interrelated with one another. Without the Company’s knowledge, expertise, and platform, there would not be a licensable strain or other commercializable product to transfer to Allonnia. Further, Allonnia has rights to all development intellectual property created as part of each TDP, irrespective of the result of the development. Therefore, each executed TDP consists of one combined performance obligation for the license and research and development services to be performed by the Company.

For each TDP, the transaction price consists of variable consideration for the most likely amount of estimated consideration to be received under the cost-plus arrangement and the $2.5 million allocation of the fixed non-cash consideration. As the services performed by the Company create or enhance an asset that Allonnia controls as the asset is created or enhanced, the Company satisfies the performance obligation and recognizes revenue over time. The Company uses an input method that compares total costs incurred relative to total estimated cost to complete to estimate progress under the contract. Any revisions to the estimated total budgeted costs to complete, and the resulting impact to revenue recognition, are reflected in the period of the change through a cumulative catch-up adjustment. In 2021, the constraint was removed from the additional non-cash consideration. The additional consideration of $12.7 million was allocated to all of the performance obligations under its arrangement with Allonnia consistent with the initial relative selling price allocation and a cumulative catch up was recognized for the TDPs in process (Note 22).

As of December 31, 2020 and 2019, the Company had a deferred revenue balance of $26.1 million and $24.5 million, respectively, with Allonnia. During the year ended December 31, 2020, the Company recognized $5.0 million from services provided to Allonnia. No revenue was recognized by the Company during the year ended December 31, 2019.

Glycosyn, LLC

Summary of Arrangement

In October 2018, the Company entered into a series of arrangements with Glycosyn, a biotech company developing components of human milk, to optimize and scale the production of human milk oligosaccharides (“HMOs”) for a suite of products that foster a healthy gut microbial ecology. Glycosyn has developed a portfolio of HMOs that can be produced at lab scale and the focus of the collaboration is to utilize the Company’s platform to more effectively optimize and enhance these existing HMOs-producing strains to scale up production, as well as develop new HMOs products.

 

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The Glycosyn arrangements include (i) a Class C Unit Purchase Agreement (“Glycosyn Purchase Agreement”), (ii) a Foundry Terms of Service Agreement (“Glycosyn FSA”), and (iii) the Glycosyn Promissory Note.

Under the Glycosyn Purchase Agreement, the Company purchased 80,142 Class C Units at a purchase price of $124.78 per unit for an aggregate purchase price of $10.0 million. Payment for the Class C Units was made with $1.0 million in cash paid at closing and the right for Glycosyn to utilize up to $9.0 million in Foundry services (“Glycosyn Prepaid Services”). The Class C Units have a liquidation preference over all other outstanding units equal to $10.0 million, plus any accrued or declared and unpaid distributions.

The Glycosyn FSA outlines the general terms and conditions under which the Company will perform services for Glycosyn. These services will, in turn, be performed under an executed TDP agreed to by both parties. Under an executed TDP, the Company will use commercially reasonable efforts to develop strains for the production of Glycosyn products. Further, the Company will grant Glycosyn certain licenses to any resulting product from each TDP to commercialize in the field of biosynthesis of oligosaccharides in microorganisms while the Company retains license rights outside of the field. The Company will charge for services based on its costs plus a fixed margin and apply amounts earned against the Glycosyn Prepaid Services. The first $1.0 million of services will be applied to the Glycosyn Prepaid Services. Thereafter, 25% of every invoice is applied to the Glycosyn Prepaid Services and 75% is payable in cash. Prior to its termination discussed below, the parties had executed one TDP.

The Glycosyn FSA can be terminated by mutual agreement, change in control or insolvency at any time during the term of the agreement. Glycosyn may terminate for convenience following the one-year anniversary, provided notice is received by the Company no later than thirty days following the one-year anniversary. Upon termination by mutual agreement, change in control, or insolvency, the Company is required to repay 50% of any unused Glycosyn Prepaid Services in cash or with Class C Units of Glycosyn at an amount equal to their then-current fair value. Upon termination for convenience by Glycosyn, the Company would be entitled to keep an amount equal to the cumulative amount invoiced against the Glycosyn Prepaid Services and the remainder would be payable to Glycosyn in cash or with Class C Units of Glycosyn at an amount based on their then current fair value.

In 2019, Glycosyn exercised their option to terminate the agreement in accordance with its contractual rights at the one-year anniversary. In connection with the termination notice, the parties negotiated a Unit Repurchase Agreement and Amendment to the FSA which was executed on December 31, 2019 and resulted in (i) the Company returning all of its Class C Units holdings to Glycosyn, (ii) termination of all the Company’s obligations under the Glycosyn FSA, (iii) agreement to perform certain services in the future on a cost-plus fixed margin basis, (iv) an increase to the amount owed on the Glycosyn Promissory Note from $3.1 million to $5.7 million, which was the outstanding balance as of December 31, 2019, and (v) a modification to the terms of the Glycosyn Promissory Note to increase the interest rate, modify the payment terms and extend the maturity. As of December 31, 2020, the outstanding balance on the promissory note was $5.4 million. Refer to Note 4 for discussion of the Glycosyn Promissory Note.

Accounting Analysis

Prior to the termination, the Company accounted for its investment in Glycosyn’s Class C Units as an equity method investment as it held an approximate 18% equity interest in Glycosyn. The Company recorded the initial carrying value of its equity method investment at fair value, which the Company determined was $10.0 million. The fair value was determined by the Company with the assistance of a third-party valuation specialist and utilizes a discounted cash flow analysis of Glycosyn’s projected cash flows and the preferences of the LLC units in a distribution scenario. As the Class C Units receive a preferential distribution, the Company concluded that the shares contain a substantive profit-sharing arrangement. Accordingly, the Company recognized its share of

 

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Notes to Consolidated Financial Statements

 

earnings or losses from its equity method investment in Glycosyn using the HLBV method. During the year ended December 31, 2019, prior to the termination, the Company recorded a loss on equity method investment in Glycosyn of $1.3 million. Immediately prior to termination of the Glycosyn FSA, the carrying value of the equity method investment was $8.5 million.

While the Glycosyn FSA has been executed by the parties and provides the payment terms for future services, the Glycosyn FSA does not provide for any transfer of goods or services between the parties. However, there is an obligation that the Company will provide licenses and services upon execution of a TDP. Accordingly, at inception, the Company recorded deferred revenue of $9.0 million equal to the fair value of the equity received less the cash paid. Upon execution of a TDP, the Company will reduce the deferred revenue by the portion of the transaction price funded by the Glycosyn Prepaid Services. During the year ended December 31, 2019, the Company recognized $0.7 million of revenue related to the Glycosyn FSA. At the time of the termination of the Glycosyn FSA, the outstanding balance related to the Glycosyn Prepaid Services was $8.4 million, which was eliminated in conjunction with the termination of the Glycosyn FSA. Upon termination, the Company recognized a gain on termination of $1.5 million primarily attributable to the increase in loan receivable which is carried at fair value. The gain was recorded as a component of other income (expense), net on the Consolidated Statements of Operations and Comprehensive Loss for the year ended December 31, 2019.

Motif FoodWorks, Inc.

Summary of Arrangement

Motif was incorporated in 2018 to focus on the application of synthetic biology in the food industry, leveraging the Ginkgo’s proprietary platform to develop alternative protein ingredients that reduce reliance on animal products. In September 2018, the Company entered into (i) an Intellectual Property Contribution Agreement (“Motif IP Agreement”) with Motif that granted Motif a license to certain of the Company’s intellectual property and (ii) a Technical Development Agreement (“Motif TDA”) that establishes the terms under which the Company is providing technical development services.

Under the Motif IP Agreement, the Company licensed intellectual property to Motif for use in strain development to produce ingredients that the parties will subsequently agree to develop under TDPs. The license rights provide Motif with the ability to commercialize the specified ingredients from the corresponding strain, which can only be developed by the Company under the Motif TDA. In return for the license to the intellectual property, Motif granted the Company 9,000,900 shares of common stock. Concurrent with the Motif IP Agreement, Motif also sold 8,100,720 shares of Series A preferred stock to certain of the Company’s investors, as well as third-party investors, for aggregate proceeds of approximately $90.0 million.

The Motif TDA governs the procurement of the Company’s expertise and technical development services to collaborate in the research, development, and commercialization of specified ingredients. Under the Motif TDA, the parties jointly agree on TDPs for specific ingredients, in which the Company will perform agreed upon development services in return for consideration on a cost-plus fixed margin basis for all services provided. At inception, the Company estimated that it would execute ten TDPs with Motif.

Accounting Analysis

The Company concluded that Motif is a variable interest entity in which it holds a variable interest through its common stock interest. Motif was designed to function as a stand-alone entity with its own board of directors, employees, and operational infrastructure. While the Company was involved with the creation of Motif, has

 

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board representation, and is involved in the ongoing development activities of Motif through its participation on a joint steering committee (as provided for under the Motif TDA), the Company concluded this involvement does not give it the power to control the decisions with respect to the development activities of Motif, which are the most significant activities of Motif. The Company does not control Motif’s board of directors and there are no voting or consent agreements between the Company and the other members of Motif’s board of directors or other investors. Further, the Company’s representation on the joint steering committee does not give it control over Motif’s development activities as all votes of the joint steering committee must pass by consensus and there is no agreement in place that would require Motif to vote in alignment with the Company. Accordingly, the Company is not the primary beneficiary of Motif as it does not control the decisions that most significantly impact Motif’s economic performance.

The investment in Motif common stock is considered an equity method investment as a result of the Company’s ability to exercise significant influence over the financial and operating policies through its common stock ownership. The initial carrying value of the equity method investment in Motif is the fair value of the common stock received in exchange for the Motif IP Agreement of $65.1 million which, as discussed below, is being accounted for as non-cash consideration under ASC 606. As Motif’s Series A preferred stockholders receive a liquidation preference prior to common stock, the Company concluded that this represents a substantive profit-sharing arrangement. Accordingly, the Company is recognizing earnings and losses on the equity method investment using the HLBV method. The Company recorded a loss on equity method investment of $65.1 million from inception through December 31, 2018 which reduced the carrying value to zero. The loss allocated to the Company primarily relates to Motif’s accounting for the non-cash consideration related to the Motif IP Agreement as in-process research and development, which resulted in the full value of Company’s intellectual property contribution being expensed in the period ended December 31, 2018, at which time the carrying value of the equity method investment in Motif had been reduced to zero. There is no commitment for the Company to provide further financial support to Motif and therefore the carrying value of the equity method investment will not be reduced below zero. As a result, no loss was recognized during the years ended December 31, 2020 and 2019 on the equity method investment.

The overall arrangement with Motif is a vendor-customer relationship and is within the scope of ASC 606 as the provision of development services and corresponding license rights are considered a part of the Company’s ordinary activities. The licenses contemplated under the Motif IP Agreement are contingent upon a TDP being agreed to by the parties under the Motif TDA and only relate to strains that are developed under a TDP. While the TDPs require approval by the parties, the parties initially estimated that ten TDPs would be negotiated under the arrangement.

The Company’s performance obligations under the Motif IP Agreement consist of ten material rights, related to the initial set of ingredients that the parties desired to develop in the first two years. The material rights represent an advance payment for the license rights which will be granted upon the execution of each TDP. As there is no additional payment for these license rights upon execution of a TDP, the Company has determined that there is a material right associated with each of the contemplated TDPs. The common stock received under the Motif IP Agreement is considered non-cash consideration and has been recognized at fair value. The Company determined the fair value of the common stock was $65.1 million at inception of the agreement with the assistance of a third-party valuation specialist, which was initially recorded as non-current deferred revenue. The option pricing model used a back-solve methodology to determine the total equity value based on the pricing of the Series A financing, which was contemporaneous with the Motif IP Agreement. The Company has allocated $6.5 million to each of the ten material rights. The Company allocated the transaction price based on the estimated standalone selling price of the material rights which is, in turn, based on the intrinsic value of the right and the probability of exercise.

 

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Notes to Consolidated Financial Statements

 

Upon the execution of each TDP, the Company is obligated to provide development services under the TDP and a license to applicable patents and other intellectual property to the ingredient developed under the plan. The license and research and development services under a TDP are highly interdependent and interrelated with one another. Without the Company’s knowledge, expertise and platform, there would not be a licensable strain or other commercializable product to transfer to Motif. Further, Motif has rights to all development intellectual property created as part of each TDP, irrespective of the result of the development. Therefore, each executed TDP consists of one combined performance obligation for the license and research and development services to be performed by the Company.

For each TDP, the transaction price consists of variable consideration for the most likely amount of estimated consideration to be received under the cost-plus arrangement and the $6.5 million which was allocated to the associated material right under the Motif IP Agreement. As the services performed by the Company create or enhance an asset (i.e., the specified ingredient) that Motif controls as the asset is created or enhanced, the Company satisfies the performance obligation and recognizes revenue over time. The Company uses an input method that compares total costs incurred relative to total estimated cost to complete to estimate progress under the contract. Any revisions to the estimated total budgeted costs to complete, and the resulting impact to revenue recognition, are reflected in the period of the change through a cumulative catch-up adjustment.

As of December 31, 2020 and 2019, the Company had a deferred revenue balance of $54.0 million and $62.5 million, respectively, with Motif. The Company recognized revenue of $20.8 million and $19.0 million from services provided to Motif during the years ended December 31, 2020 and 2019, respectively.

Genomatica, Inc.

2016 Genomatica Agreement

In 2016, the Company purchased Series A preferred stock of Genomatica, Inc. (“Genomatica”), a biotechnology company specializing in the development and manufacturing of intermediate and specialty chemicals from both sugar and alternative feedstocks. The Company also entered into a Collaboration Agreement with Genomatica (“Genomatica Collaboration”) in connection with the financing. The Genomatica Collaboration was entered into to share expertise on biotechnology solutions. Specifically, Genomatica provided the Company with scale-up and process optimization functions, and the Company has provided Genomatica with certain technology development functions generally centered on high throughput strain engineering capabilities. The Genomatica Collaboration’s focus was on obtaining new customers for either party that could benefit from the combined expertise of both parties, and the agreement provides for profit-sharing allocations between Genomatica and the Company depending on the category of the potential product. Each party is responsible for their own costs incurred under an agreed upon TDP.

2018 Genomatica Agreement

In September 2018, the Company entered into a stock purchase agreement with Genomatica under which it received $40.0 million of Series B preferred stock from Genomatica. In lieu of cash consideration, the Company entered into a Foundry Terms of Service Agreement (“Genomatica FSA”) with Genomatica in which the Company would provide up to $40.0 million in services at no charge to Genomatica (“Initial Prepayment”). The Genomatica FSA terminated the Genomatica Collaboration and changed the pricing terms for work performed under TDPs to a cost-plus fixed margin agreement. Genomatica can apply a portion of the $40.0 million in prepaid services to outstanding invoices under the Genomatica FSA, subject to certain limitations that require cash payment for services over certain monthly thresholds. Further, while the Genomatica FSA replaced the Genomatica Collaboration, any fees that would have been paid to or by the Company under contracts previously governed by the Genomatica Collaboration continue to be shared between the parties. These amounts are either

 

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(i) added to, if payable to the Company, or (ii) reduced from, if payable to Genomatica, the balance of the prepaid services over the term of the arrangement, with certain restrictions. At the time of the execution of the Genomatica FSA, there was $19.1 million of potential consideration payable to the Company under the Genomatica Collaboration, which upon payment will contribute to the prepaid services balance, and $4.6 million of potential payments to Genomatica, which upon payment will reduce the prepaid services balance. As of December 31, 2020, and 2019, the Company has received $6.9 million under the Genomatica FSA.

Accounting Analysis

The Company concluded that Genomatica is a variable interest entity in which it holds a variable interest through its preferred stock interest. While the Company holds a seat on Genomatica’s board of directors and participates in board decisions via such participation, it does not have the ability to control the board as there is no voting or consent agreement between the Company and other members of the board or preferred stockholders. Further, while the Company participates on the joint steering committee that governs the Genomatica FSA, all votes must be unanimous and there is no agreement in place that would require Genomatica to vote in alignment with the Company. Accordingly, the Company is not the primary beneficiary of Genomatica as it does not control the decisions that most significantly impact Genomatica’s economic performance.

The Company concluded the preferred stock investment was not in-substance common stock and therefore did not qualify for accounting as an equity method investment. Rather, the Company concluded the preferred stock investment should be accounted for as an equity security as it represents an ownership interest in Genomatica that is not mandatorily redeemable nor does the Company have the unilateral right to redeem the preferred stock. Genomatica’s preferred stock is not exchange-traded and does not have a readily determinable fair value. Therefore, the Company accounts for the Genomatica preferred stock under the measurement alternative for equity investments that do not have a readily determinable fair value, which in this case is at historical cost. As of December 31, 2020, and 2019, the cost of the investment in Genomatica’s preferred stock was $55.0 million and is included in investments on the Consolidated Balance Sheets. As of December 31, 2020 and 2019, no adjustments have been recognized related to the preferred stock investment as a result of the application of the measurement alternative.

Under the Genomatica Collaboration, the Company was entitled to receive a portion of fees earned from third party customers of Genomatica that were within the scope of the agreement. The Company accounted for the collaboration under ASC 808, however the Company applied ASC 606 by analogy for measurement and recognition purposes. Under the Genomatica Collaboration, the Company’s promises consisted of (i) licenses to the Company’s intellectual property, related to the specified development work, and (ii) research and development services. The Company determined that there was a single, combined performance obligation consisting of research services and licenses to certain intellectual property. The Company recognized the revenue for the combined performance obligation using an over-time input method, as the Company’s performance under the contract created or enhanced the target product or strain as such product or strain was developed. The Company measured progress based on the cost incurred relative to total forecasted cost.

The Genomatica FSA represents a modification to the Genomatica Collaboration that resulted in a change in transaction price from milestones to a cost-plus fixed margin structure. The Genomatica FSA did not result in the addition of any distinct promised goods or services, and the Company’s remaining obligation post-modification was to finish the partially satisfied development work that had commenced under the Genomatica Collaboration. This performance obligation was satisfied during the year ended December 31, 2019.

As of December 31, 2020 and 2019, the Company had a deferred revenue balance of $30.1 million and $38.1 million, respectively, with Genomatica. During the years ended December 31, 2020 and 2019, the Company recognized revenue from services provided to Genomatica of $9.4 million and $6.2 million, respectively.

 

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Joyn Bio, LLC

Summary of Arrangement

In September 2017, the Company and certain other investors formed Cooksonia for the purposes of holding the Company’s investment in Joyn. Concurrently, Cooksonia entered into a commitment agreement with Bayer CropScience LP (“Bayer”) to form Joyn. Joyn is focused on research, development, discovery, and commercialization of engineered microbes for use in agriculture. The initial program uses advanced techniques in biology to study and engineer naturally occurring soil microbes and their nitrogen-fixing genes to enable crops to produce their own fixed nitrogen and reduce the nitrogen fertilizer required.

The Company contributed $5.0 million in cash and certain intellectual property to Cooksonia in exchange for a 70% equity interest in Cooksonia (“Class A Units”). Cooksonia received $20.0 million in cash from another investor, who is a related party of the Company, for a 20% equity interest in Cooksonia (“Class B Units”). Cooksonia also received certain intellectual property from Genomatica and issued Genomatica a 10% equity interest in Cooksonia (“Cooksonia Class C Units”) and paid Genomatica $5.0 million in cash. Subsequently, Cooksonia contributed $20.0 million and all intellectual property received from the Company and Genomatica in exchange for a 50% equity interest in Joyn. Bayer contributed $20.0 million in cash funding plus specified intellectual property. In addition, Bayer committed to contribute up to an additional $60.0 million to be paid subject to certain funding procedures. In return, Bayer obtained a 50% equity interest in Joyn. The agreements may be terminated by mutual agreement, following a change in control, and for breach.

Joyn is governed by a Board of Managers (“Joyn Board”) comprised of equal representation of the Company and Bayer. The Joyn Board has all the rights, powers, obligations, and authority to manage the business and affairs of Joyn.

The Company also entered into a Foundry Services Agreement (“Joyn FSA”) with Joyn under which the Company will provide Joyn with technical services and preferred access to the Company’s facilities. Joyn paid the Company a non-refundable $20.0 million prepayment for services to be provided under the Joyn FSA (“Joyn Prepaid Services”). The Joyn Prepaid Services can be utilized for technical services performed by the Company, its subcontractors, and third parties involved in the performance of the overall technical services. Amounts due to the Company are applied to the balance of Joyn Prepaid Services as earned. During the year ended December 31, 2019, Joyn made an additional $15.0 million prepayment for services (“Joyn Additional Prepaid Services”). Under certain Joyn termination scenarios, any amount of unused Joyn Additional Prepaid Services shall be repaid by the Company to Joyn. There were no additional prepayments during the year ended December 31, 2020.

Accounting Analysis

From inception, the Company’s investment in Cooksonia has represented a controlling financial interest, resulting in consolidation of Cooksonia within Company’s consolidated financial statements. The Company concluded that Cooksonia is a variable interest entity and that it holds a variable interest in Cooksonia through its Class A Units. The Company is the primary beneficiary of Cooksonia as it controls the decisions that most significantly impact economic performance as the Company controls 100% of the board of directors and holds 70% of the equity in Cooksonia. The initial cash and in-kind contributions the Company made to Cooksonia have been recorded at carrying value as the transaction was with entities under common control. All assets of Cooksonia after the initial investments, net of the amounts paid to Genomatica, were contributed to Joyn for a 50% equity interest in Joyn. The Company presents the non-controlling interest attributable to the other investors’ equity interest in Cooksonia as a component of stockholder’s equity. The initial carrying value of the Company’s equity interest in Cooksonia was $13.1 million, comprised of the initial $5.0 million cash investment

 

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and an $8.1 million adjustment for Cooksonia’s claim on net assets in accordance with ASC 810, Consolidation (“ASC 810”) recognized to reflect a certain investor’s liquidation preference in a termination event that represents a substantive profit-sharing agreement. The initial carrying value of the non-controlling interest was comprised of cash and intellectual property contributions from the other investors of $29.7 million, less the $8.1 million adjustment for the non-controlling interest holders’ claim on the net assets of Cooksonia.

With respect to Cooksonia’s investment in Joyn, as Cooksonia does not control the Joyn Board, it does not have the power to control the decisions related to the development activities of Joyn, which are the most significant activities of Joyn. Accordingly, the Company concluded that Cooksonia is not the primary beneficiary of Joyn as it does not control the decisions that most significantly impact Joyn’s economic performance.

Cooksonia accounts for its 50% equity interest in Joyn as an equity method investment based on the size of its equity interest and its influence on the board of directors. The equity method investment in Joyn was recorded at an initial carrying value of $97.9 million, which is the fair value of Cooksonia’s interest in Joyn. The fair value was determined by management with the assistance of a third-party valuation specialist. The option pricing model used a back-solve methodology to determine the total equity value based on the pricing of the Class B Units which were exchanged for cash. The license of intellectual property to Joyn has been accounted for under ASC 606 as described below. Upon liquidation, the net assets of Joyn are not distributed in accordance with each party’s respective ownership interest. Depending on the circumstances or type of liquidation event, Bayer or Cooksonia may receive certain preference payments or priority in the assets that are distributed. These preferences represent a substantive profit-sharing arrangement and, accordingly, Cooksonia recognizes earnings and losses on its equity method investment using the HLBV method. For the years ended December 31, 2020 and 2019, Cooksonia recognized a loss of $0.4 million and $1.7 million on its equity method investment, comprised of Cooksonia’s changes in claim on the net assets of Joyn as of December 31, 2020 and 2019, respectively.

For the years ended December 31, 2020 and 2019, Cooksonia’s net loss was $0.4 million and $1.7 million (comprised solely of the loss from its equity method investment in Joyn), of which $0.1 million and $0.5 million was attributable to the non-controlling interests, respectively. As of December 31, 2020 and 2019, Cooksonia recognized its equity method investment in Joyn at $28.9 million and $29.3 million, respectively, which was the sole asset held by Cooksonia as of each period end and is included in the Consolidated Balance Sheets for the respective periods. No liabilities were held by Cooksonia as of December 31, 2020 and 2019.

The Company accounts separately under ASC 606 for Cooksonia’s contribution of its intellectual property and the services performed by the Company under technical project plans governed by the Joyn FSA. The Company accounts for the intellectual property sale and the technical services separately as the two agreements were not negotiated with a single commercial objective, the consideration under each agreement is not interdependent, and the intellectual property contribution from Cooksonia is separate and distinct from the research and development services performed under the Joyn FSA.

The Company considers the granting of licenses to the Company’s intellectual property as part of its ordinary business activities and, therefore, Cooksonia’s contribution of intellectual property to Joyn represents a contract with a customer. The intellectual property contains multiple licenses for which control transfers at inception and all revenue associated with the licenses was recognized during the year ended December 31, 2017.

The Joyn FSA functions as a master services agreement that provides the framework for the ongoing research and development services relationship between the Company and Joyn. The Joyn FSA does not create a contract under ASC 606 as it does not identify goods or services to be performed nor does it define consideration under the contract. Upon the execution of a technical project plan under the Joyn FSA, the arrangement qualifies as a contract under ASC 606.

 

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The Company accounts for each technical project separately. Each technical project plan provides for distinct services in the context of the contract, has been separately negotiated with Joyn, focuses on different specified strains with separate scopes of work, and has its own budget. The sole performance obligation under each individual technical project plan consists of the research and development services as the requisite licenses were transferred prior to the execution of the technical project plans. The transaction price for each technical project plan is determined at plan inception based on the consideration that the Company negotiated in exchange for the services to be provided. The Company’s performance under each technical project plan creates or enhances assets under Joyn’s control. Joyn receives the benefits of the output of the research and development services which allow Joyn to make strategic business decisions on the direction of each product candidate. Therefore, the Company satisfies the respective performance obligations and recognizes revenue over time.

For the years ended December 31, 2020 and 2019, the Company recognized revenue from services provided to Joyn of $7.3 million and $9.3 million, respectively, for which the balance was applied against deferred revenue. As of December 31, 2020 and 2019, the Company had a deferred revenue balance of $9.9 million and $17.1 million, respectively, with Joyn, which represented the remaining balance of prepaid services as of each respective date. As of December 31, 2020, $9.9 million of the deferred revenue balance remains refundable under certain termination scenarios.

Amyris, Inc.

During 2017, the Company terminated its collaborative relationship with Amyris, Inc. (“Amyris”) as provided in the Amyris Collaboration Agreement and executed a settlement arrangement (“Partnership Agreement”) under which the Company is entitled to receive (i) value share payments owed to the Company under the Amyris Collaboration Agreement, (ii) payments of $0.8 million each quarter commencing on December 31, 2018 through the quarter ended September 30, 2022, and (iii) payments due under an interest bearing $12.0 million promissory note.

The parties amended the agreements during the year ended December 31, 2020 to defer certain payments and provide Amyris waivers for noncompliance with certain covenants. As of December 31, 2020, the Company was owed (i) the $12.0 million principal balance on the promissory note which matures on October 19, 2022 and (ii) payments under the Partnership Agreement, as amended, which includes quarterly payments of $0.2 million to $0.3 million through September 2022 and an end of term payment of $9.8 million on October 19, 2022.

The Company concluded that all amounts due are a settlement for accounting purposes as the payments are being made without any obligation from the Company to Amyris. The balance due on the promissory note and right to payments due under the Partnership Agreement are not recognized in the Company’s financial statements until the gain is realized. The Company recognizes any payments made under the Partnership Agreement and promissory note, including interest, when cash is received as other income (expense), net. During the years ended December 31, 2020 and 2019 the Company received payments of $8.3 million and $1.6 million, respectively, which are recorded as a component of other income (expense), net in the Consolidated Statements of Operations and Comprehensive Loss.

Synlogic, Inc.

Summary of Arrangement

In June 2019, the Company entered into several agreements with Synlogic, a publicly traded clinical-stage biopharmaceutical company focused on advancing drug discovery and development for synthetic biology-derived medicines. The Company entered into a Subscription Agreement with Synlogic whereby it purchased 6,340,771 shares of common stock at $9.00 per share for a total purchase price of $57.1 million, which represented a 19.9% equity interest in Synlogic. The Company also entered into a Warrant Agreement whereby it received the right to purchase 2,548,117 shares of common stock of Synlogic at an exercise price of $9.00 per share. The Company

 

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made a non-refundable prepayment related to the exercise price of the warrant equal to $8.99 per share for a total payment of $22.9 million. The warrant is only exercisable to the extent the Company’s interest in Synlogic does not exceed 19.99%. The Company also entered into a Foundry Services Agreement (“Synlogic FSA”) whereby Synlogic provided $30.0 million in cash as a non-refundable prepayment for Foundry services. The prepaid Foundry services can be utilized for development of collaboration strains. Services performed under the services agreement will be applied to the prepaid amount based on the contractual rates included in the contract, based on costs incurred plus a fixed margin. Work will be performed under the Synlogic FSA pursuant to TDPs. Each TDP will pursue the development of a specific collaboration strain and/or production protocol. The Synlogic FSA will terminate upon the earlier of the exhaustion of the prepayment amount in full or the fifth anniversary of the effective date of the agreement and may be extended in certain circumstances.

Accounting Analysis

The overall arrangement with Synlogic includes the Subscription Agreement whereby the Company purchased shares of Synlogic common stock, the Warrant Agreement whereby the Company prepaid a significant portion of the exercise price of the warrant to purchase Synlogic common stock, which is non-refundable, and the Synlogic FSA whereby the Company will perform services for Synlogic. The Company concluded that these agreements should be considered one arrangement for accounting purposes as they were entered into at the same time and negotiated as a package with a single commercial objective.

The common stock investment in Synlogic is considered an equity method investment as the Company does not have a controlling financial interest in Synlogic but does have the ability to influence the financial and operating policies through its ownership of common stock. The Company has elected to apply the fair value option to account for the equity method investment. At inception, the fair value of the equity method investment in Synlogic was recorded at $35.8 million as a component of equity method investments on the Consolidated Balance Sheet. As of December 31, 2020 and 2019, the fair value of the equity method investment in Synlogic was $13.7 million and $16.4 million, respectively. For the years ended December 31, 2020 and 2019, the Company recorded a loss on its equity method investment of $2.7 million and $19.4 million, respectively, representing the decrease in fair value of Synlogic common stock, which is reflected in loss on equity method investments in the Consolidated Statements of Operations and Comprehensive Loss.

The Company has also elected to apply the fair value option to account for the warrant to purchase Synlogic common stock. At inception, the warrant was recorded at $14.4 million as a component of investments on the Consolidated Balance Sheet. As of December 31, 2020 and 2019, the fair value of the warrant was $5.5 million and $6.6 million, respectively, calculated as the value of the underlying common stock, less the related unpaid exercise price. For the years ended December 31, 2020 and 2019, the Company recorded a loss of $1.1 million and $7.8 million, respectively, representing the decrease in fair value of the warrant, which are reflected in loss on investments in the Consolidated Statements of Operations and Comprehensive Loss.

The Company elected to apply the fair value option to these instruments as the fair value of Synlogic’s common stock is objectively determinable based on quoted market prices in an active market for the identical securities. The Company’s equity method investment in Synlogic is the only equity method investment where the underlying equity instruments are traded in an active market.

For the Synlogic FSA and related TDPs, the Company concluded that the TDPs represent contracts with a customer and will be accounted for under ASC 606. At inception, Synlogic prepaid $30.0 million for services under the Synlogic FSA. The prepaid services were reduced by $29.8 million, which represents the excess of the aggregate $80.0 million the Company paid to purchase Synlogic’s common stock and warrant over the respective

 

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fair values of those instruments. This resulted in deferred revenue at inception of $0.2 million which is being recognized over the period which the Company will provide services to Synlogic. The Company recognized revenue for services provided to Synlogic of $0.1 million for the year ended December 31, 2020 and less than $0.1 million for the year ended 2019. The Company had a deferred revenue balance with Synlogic that totaled $0.1 million each as of December 31, 2020 and 2019.

National Institutes of Health

In July 2020, the Company was awarded a letter contract with the National Institutes of Health (“NIH”) under NIH’s Rapid Acceleration of Diagnostics (“RADx”) initiative. The goal of RADx was to support a range of new lab-based and point-of-care tests that could significantly increase the number, type and availability of COVID-19 tests performed each day in the United States. This contract, which had a total award value of up to $40.5 million, was intended to increase the testing capacity for COVID-19. As of December 31, 2020, the Company had achieved milestone-based payments of $6.6 million under the NIH letter contract, which were recorded in other income, net in the Consolidated Statements of Operations and Comprehensive Loss for the year ended December 31, 2020. In October 2020, the parties agreed not to execute a definitive agreement for the additional milestones and no further amounts are expected to be recognized under this contract.

Octant, Inc.

In November 2020, the Company entered into a development and collaboration agreement with Octant, Inc. (“Octant”) to develop and disseminate a diagnostic test for COVID-19. Under the agreement, the Company made an upfront, non-refundable payment of $5.0 million in exchange for a license to Octant’s proprietary SwabSeq sequencing platform, which can be used to detect the presence of COVID-19. The SwabSeq technology can also be further developed for broader testing efforts for other respiratory illnesses, including the common cold and flu. As part of the arrangement, the Company will pay to Octant profit-sharing fees based on a percentage of the adjusted gross revenues earned at certain of its testing facilities utilizing SwabSeq technology. The $5.0 million upfront payment was determined to be in-process research and development expense and was fully expensed when incurred. There were no profit-sharing payments related to this arrangement for the year ended December 31, 2020.

18. Employee Benefit Plan

The Company has a 401(k) retirement plan covering substantially all employees. Under the retirement plan, employees make voluntary contributions and the Company makes a 5% non-elective contribution for all employees based on compensation, subject to IRS contribution limits. For the years ended December 31, 2020 and 2019, the Company contributed $2.2 million and $1.6 million, respectively, to the retirement plan.

19. Income Taxes

For the years ended December 31, 2020 and 2019, the loss before provision for incomes taxes consisted of the following (in thousands):

 

     Years Ended December 31,  
     2020      2019  

Domestic

   $ (124,834    $ (119,835

Foreign

     —          —    
  

 

 

    

 

 

 

Total

   $ (124,834    $ (119,835
  

 

 

    

 

 

 

 

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For the years ended December 31, 2020 and 2019, the Company incurred the following income tax expense (in thousands):

 

     Years Ended December 31,  
     2020      2019  

Income tax expense:

     

Current federal income tax

   $ —        $ —    

Current state income tax

     26        22  

Deferred federal income tax

     581        —    

Deferred state income tax

     1,282        —    
  

 

 

    

 

 

 

Income tax expense

   $ 1,889      $ 22  
  

 

 

    

 

 

 

A reconciliation of income tax expense computed at the statutory corporate income tax rate to the effective income tax rate for the years ended December 31, 2020 and 2019 is as follows:

 

     Years Ended December 31,  
     2020     2019  

Tax expense computed at the federal statutory rate

     21.0     21.0

State taxes

     4.5     4.2

Change in valuation allowance

     (31.3 %)      (25.2 %) 

Equity investments

     (0.6 %)      (5.7 %) 

Tax credits

     4.8     4.4

Non-deductible expenses

     (0.2 %)      (0.1 %) 

Other expenses

     0.3     1.4
  

 

 

   

 

 

 

Total income tax expense

     (1.5 %)      0.0
  

 

 

   

 

 

 

The Company’s deferred tax assets and liabilities consist of the following (in thousands):

 

     Years Ended December 31,  
     2020      2019  

Deferred tax assets:

     

Net operating loss carryforwards

   $ 91,467      $ 61,300  

Tax credit carryforwards

     20,338        14,443  

Accrued expenses

     1,265        390  

Deferred revenue

     28,590        29,575  

Amortizable intangibles

     4,198        3,218  

Tenant allowance

     2,206        2,174  
  

 

 

    

 

 

 

Deferred tax assets before valuation allowance

     148,064        111,100  

Valuation allowance

     (143,827      (104,745
  

 

 

    

 

 

 

Deferred tax assets

     4,237        6,355  

Deferred tax liabilities:

     

Equity-based compensation

     —          (88

Property and equipment

     (830      (862

Basis differences

     (5,270      (5,405
  

 

 

    

 

 

 

Deferred tax liabilities

     (6,100      (6,355
  

 

 

    

 

 

 

Net deferred taxes

   $ (1,863    $ —    
  

 

 

    

 

 

 

 

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Activity in the deferred tax assets valuation allowance is summarized as follows (in thousands):

 

     Beginning of
Period
     Additions      Reductions/
Charges
     End of
Period
 

Deferred tax assets valuation allowance:

           

Year Ended December 31, 2020

   $ 104,745      $ 39,082      $ —        $ 143,827  

Year Ended December 31, 2019

   $ 74,511      $ 30,234      $ —        $ 104,745  

The Company has evaluated the positive and negative evidence bearing upon its ability to realize the deferred tax assets. The Company considered its history of cumulative net losses incurred since inception and has concluded that it is more likely than not that it will not realize the benefits of the deferred tax assets. Accordingly, a valuation allowance has been established against the deferred tax assets as of December 31, 2020 and 2019 that are not expected to be realized. The Company reevaluates the positive and negative evidence at each reporting period. The valuation allowance increased on a net basis by approximately $39.1 million during the year ended December 31, 2020 due primarily to an increase in net operating losses and tax credits.

As of December 31, 2020, the Company had federal net operating loss carryforwards of approximately $347.8 million, of which $139.2 million begin to expire in 2029. The Company has approximately $208.6 million of federal net operating losses as of December 31, 2020 that can be carried forward indefinitely. As of December 31, 2020, the Company had state net operating loss carryforwards of approximately $282.8 million, of which $278.3 million begin to expire in 2029. The Company has approximately $4.5 million of state net operating losses as of December 31, 2020 that can be carried forward indefinitely.

As of December 31, 2020, the Company had federal research and development tax credit carryforwards of approximately $13.8 million which begin to expire in 2029. As of December 31, 2020, the Company also had state research and development tax credit carryforwards of approximately $8.2 million which begin to expire in 2028.

Under Sections 382 and 383 of the U.S. Internal Revenue Code, if a corporation undergoes an ownership change, the corporation’s ability to use its pre-change net operating loss carryforwards and other pre-change tax attributes, such as research tax credits, to offset its post-change income and taxes may be limited. In general, an ownership change generally occurs if there is a cumulative change in its ownership by 5% stockholders that exceeds 50 percentage points over a rolling three-year period. Similar rules may apply under U.S. state tax laws. The Company may have experienced an ownership change in the past and may experience ownership changes in the future as a result of future transactions in its share capital, some of which may be outside of the Company’s control. As a result, if the Company earns net taxable income, the Company ability to use its pre-change net operating loss carryforwards, or other pre-change tax attributes, to offset U.S. federal and state taxable income and taxes may be subject to significant limitations.

The Company files tax returns as prescribed by the tax laws of the jurisdictions in which the Company operates. In the normal course of business, the Company is subject to examination by federal and state jurisdictions, where applicable. There are currently no pending tax examinations. As of December 31, 2020, the Company’s tax years are still open under statute from 2017 to the present.

The Company accounts for uncertain tax positions using a more likely than not threshold for recognizing and resolving uncertain tax positions. The evaluation of uncertain tax positions is based on factors that include, but are not limited to, changes in tax law, the measurement of tax positions taken or expected to be taken in tax returns, the effective settlement of matters subject to audit, new audit activity and changes in facts or circumstances related to a tax position. The Company evaluates uncertain tax positions on an annual basis and adjusts the level of the liability to reflect any subsequent changes in the relevant facts surrounding the uncertain positions. The Company accounts for interest and penalties related to uncertain tax positions as part of its

 

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provision for income taxes. As of December 31, 2020 and 2019, the Company had no recorded liabilities for uncertain tax positions and had no accrued interest or penalties related to uncertain tax positions. The Company does not expect a material change in unrecognized tax benefits in the next twelve months.

20. Net Loss per Share

The following potential common shares, presented based on amounts outstanding at each period end, were excluded from the calculation of diluted net loss per share attributable to Ginkgo Bioworks, Inc. common stockholders for the periods indicated because including them would have been anti-dilutive:

 

     Year Ended December 31,  
     2020      2019  

Series B Preferred Stock

     4,138,185        4,138,185  

Series C Preferred Stock

     4,658,503        4,658,503  

Series D Preferred Stock

     6,146,911        6,146,911  

Series E Preferred Stock

     3,460,005        2,831,342  

Warrants to purchase Series B Preferred Stock

     5,066        5,066  

Warrants to purchase Series D Preferred Stock

     15,720        15,720  

Outstanding stock options

     679,596        718,755  

Unvested RSUs

     2,545,458        1,428,674  

Unvested RSAs

     8,538        13,771  

 

21.

Related Parties

Related party transactions included in the Consolidated Balance Sheets, excluding the Company’s investments and equity method investments, are summarized below (in thousands):

 

     Joyn      Motif      Genomatica      Allonnia      Synlogic      Total  

Balances as of December 31, 2020

                 

Accounts receivable, net

   $ —        $ 2,403      $ 1,500      $ 1,309      $   —        $ 5,212  

Prepaid expenses and other current assets

   $ 24      $ 232      $ —        $ 13      $ —        $ 269  

Deferred revenue, current and non-current

   $ 9,862      $ 53,952      $ 30,128      $ 26,064      $ 72      $ 120,078  

Balances as of December 31, 2019

                 

Accounts receivable, net

   $ 163      $ 4,054      $ —        $ —        $ —        $ 4,217  

Deferred revenue, current and non-current

   $ 17,135      $ 62,513      $ 38,059      $ 24,480      $ 144      $ 142,331  

Related party transactions included in the Consolidated Statements Operations and Comprehensive Loss, excluding the losses on the Company’s investments and equity method investments, are summarized below (in thousands):

 

     Joyn      Motif      Genomatica      Allonnia      Synlogic      Glycosyn      Total  

For the Year Ended December 31, 2020

                    

Foundry revenue

   $ 7,273      $ 20,798      $ 9,431      $ 4,960      $ 73      $ —        $ 42,535  

Other income, net

   $ 407      $ 314      $ —        $ —        $   —        $ —        $ 721  

For the Year Ended December 31, 2019

                    

Foundry revenue

   $ 9,349      $ 18,986      $ 6,248      $ —        $ 17      $ 668      $ 35,268  

Interest income

   $ —        $ —        $ —        $ —        $ —        $ 163      $ 163  

Other income, net

   $ 222      $ 42      $ —        $ —        $ —        $ 1,530      $ 1,794  

 

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Related party transactions included in the changes in operating assets and liabilities in the Consolidated Statements of Cash Flows are summarized below (in thousands):

 

     Joyn     Motif     Genomatica     Allonnia     Synlogic     Glycosyn     Total  

For the Year Ended December 31, 2020

              

Accounts receivable, net

   $ 163     $ 1,651     $ (1,500   $ (1,309   $ —       $ —       $ (995

Prepaid expenses and other current assets

   $ (24   $ (232   $ —       $ (13   $ —       $ —       $ (269

Deferred revenue, current and non-current

   $ (7,273   $ (8,561   $ (7,931   $ 1,584     $ (72   $ —       $ (22,253

For the Year Ended December 31, 2019

              

Accounts receivable, net

   $ (54   $ (2,035   $ 8     $ —       $   —       $ (140   $ (2,221

Deferred revenue, current and non-current

   $ 5,719     $ 9     $ (2,232   $ —       $ 144     $ (528   $ 3,112  

As the Company no longer held an equity interest in Glycosyn as of December 31, 2019, it was no longer considered a related party of the Company as of that date. Therefore, the related party transactions for Glycosyn as of and for the year ended December 31, 2020 and as of December 31, 2019 are presented as zero in the tables above. Refer to Note 8 for additional details on the Company’s investments and equity method investments held in its related parties. Refer to Note 17 for additional discussion of the Company’s arrangement with Glycosyn.

22. Subsequent Events

The Company evaluated subsequent events and transactions that occurred after the balance sheet date up to May 14, 2021, the date that the financial statements were available to be issued. Based on this review, other than as described below, the Company did not identify any subsequent events that would have required adjustment or disclosure in the financial statements.

(a) Amendment to Glycosyn Promissory Note

In January 2021, the existing terms of the Glycosyn Promissory Note were amended to add an additional $0.2 million to the principal balance and to extend the number of interest-only payments to include the quarterly payments due on or before December 31, 2020 and March 31, 2021. The amendment also added a provision to increase the interest rate from 7.5% to 12.5% (or the maximum allowable by law, whichever is less) in the event of default by Glycosyn.

(b) Allonnia Series A Preferred Unit Financing

In January 2021, Allonnia issued an additional 22,500 Series A Preferred Units for aggregate proceeds of $0.2 million and closed their Series A Preferred Unit financing. As a result, the Company received 1,867,411 common units in Allonnia for total consideration of $12.7 million.

(c) Kalo Ingredients, LLC

In March 2021, Kalo Ingredients, LLC (“Kalo”) was formed to focus on the application of synthetic biology in the personal care products industry. In March 2021, the Company entered into (i) an IP Property Contribution

 

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Agreement (“Kalo IP Agreement”) that granted Kalo a license to certain of the Company’s intellectual property, (ii) a Technical Development Agreement (“Kalo TDA”) that establishes the terms under which the Company will provide technical development services, and (iii) a Common Unit Issuance Agreement (“Kalo CUIA”) which compensates the Company for its intellectual property contribution and increases Kalo’s access to the Company’s intellectual property in exchange for more common units.

Under the Kalo IP Agreement, the Company licensed intellectual property to Kalo for use in the development or the production of its products that the parties will subsequently agree to develop under TDPs. The license rights provide Kalo with the ability to commercialize the specified products from the corresponding strain or enzyme, which can only be developed by the Company under the Kalo TDA. In return for the license to the intellectual property, Kalo has agreed to issue the Company up to 9,000,000 common units in accordance with certain terms and conditions set forth within the agreements. Upon execution, the Company was issued 1,755,000 common units under the Kalo CUIA and any additional units will be determined based on the additional closings of the Series A Preferred Units which will be completed within 90 days of execution of the Kalo CUIA. Under the Kalo TDA, the parties jointly agree on TDPs for specific strains and enzymes in which the Company will perform agreed upon development services in return for consideration on a cost-plus basis for all services provided.

(d) 2014 Plan Increase

In March 2021, the board of directors approved an increase to the aggregate number of shares reserved for issuance under the 2014 Plan of 814,182 shares, raising the total aggregate number of shares reserved for issuance under the 2014 Plan from 2,664,186 to 3,478,368.

(e) Parcel O Lease Agreement

In April 2021, the Company entered into a lease consisting of approximately 152,000 square feet of office and laboratory space being developed in Boston, Massachusetts. The lease commencement date is estimated to be June 1, 2024, subject to certain extensions, and expires on the fifteenth anniversary of the lease commencement date. Annual base rent for the first lease year will be approximately $12.9 million, subject to annual rent increases over the term of the lease. The lease includes one option to extend the lease for ten years at then-market rates, subject to certain adjustments, and will be secured by a letter of credit of $9.1 million.

(f) Acquisition of Dutch DNA Biotech B.V.

In April 2021, the Company entered into a definitive Share Sale and Purchase Agreement (“Purchase Agreement”) with Have Fungi B.V. (“HF”) and a Technical Development Agreement (“TDA”) with Dutch DNA Biotech B.V. (“DDNA”), each a Dutch company located in the Netherlands. Under the Purchase Agreement, the Company will pay HF a purchase price in an amount equal to EUR 10 million, 33,291 shares of Ginkgo common stock, plus net debt and working capital adjustments, to acquire 100% ownership in the capital of DDNA. In addition, under the Purchase Agreement, the Company agrees to earn-out payments to HF and certain designees upon achievement of one or more technical and commercialization milestones based on the performance of DDNA, including pursuant to the TDA, in an aggregate amount not to exceed $20.0 million during the earn-out term. The Company expects to finalize the transaction by the beginning of the third quarter of 2021.

(g) Agreement and Plan of Merger

On May 11, 2021, the Company and Soaring Eagle Acquisition Corp. (“SRNG”) entered into an agreement and plan of merger (the “Merger Agreement”) under which Merger Sub, a newly formed subsidiary of SRNG, will be merged with and into Ginkgo with Ginkgo surviving the merger as a wholly owned subsidiary of SRNG (the

 

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“Business Combination”). As a result of the proposed merger, SRNG will be renamed “Ginkgo Bioworks Holdings, Inc.” (“New Ginkgo”).

Concurrently with the execution of the Merger Agreement, SRNG entered into subscription agreements with certain accredited investors, pursuant to which, among other things, they agreed to purchase immediately prior to the closing of the Business Combination, an aggregate of 77,500,000 shares of SRNG’s Class A common stock for a purchase price of $10.00 per share, for aggregate gross proceeds of $775 million (the “PIPE Financing”).

Subject to the terms of the Merger Agreement, immediately prior to the effective time of the Business Combination (the “Effective Time”), (i) Ginkgo will effect a recapitalization such that Ginkgo’s authorized capital stock shall consist solely of Ginkgo Class A common stock and Ginkgo Class B common stock and (ii) as of the Effective Time (a) each share of Ginkgo’s Class A common stock or Class B common stock issued and outstanding immediately prior to the Effective Time (including as a result of the automatic exercise of Ginkgo Warrants (defined below) by virtue of the occurrence of the Business Combination pursuant to the terms of such warrants) shall be converted into a share of Class A common stock or Class B common stock, as applicable, of New Ginkgo common stock, calculated, in each case, based on the equity value exchange ratio as set forth in the Merger Agreement, (b) each option exercisable for Class A common stock or Class B common stock of Ginkgo that is outstanding immediately prior to the Effective Time will be assumed and converted into a newly issued option exercisable for shares of Class A common stock or Class B common stock, as applicable, of New Ginkgo (subject to the same terms and conditions as the original Ginkgo option and with appropriate adjustments to the number of shares for which such option is exercisable and the exercise price thereof), (c) each award of restricted common stock of Ginkgo under Ginkgo’s stock incentive plans (a “Ginkgo Restricted Stock Award”) that is outstanding immediately prior to the Effective Time will be converted into the right to receive restricted common stock of New Ginkgo on the same terms and conditions as applicable to such Ginkgo Restricted Stock Award, (d) each award of restricted stock units of Ginkgo under Ginkgo’s stock incentive plans (a “Ginkgo Restricted Stock Unit Award”) that is outstanding immediately prior to the Effective Time will be converted into the right to receive restricted stock units based on common stock of New Ginkgo on the same terms and conditions as applicable to such Ginkgo Restricted Stock Unit Award and with appropriate adjustments to the number of shares to which each such restricted stock unit relates, and (e) each warrant to purchase shares of Ginkgo capital stock (a “Ginkgo Warrant”) that is outstanding immediately prior to the Effective Time and is not automatically exercised in full in accordance with its terms by virtue of the occurrence of the Business Combination will be assumed and converted into a warrant exercisable for Class A common stock of New Ginkgo (each, a “New Ginkgo assumed warrant”) on the same terms and conditions as applicable to such Ginkgo Warrant immediately prior to the effective time of the Business Combination, with appropriate adjustments to the number of shares for which such New Ginkgo assumed warrant is exercisable and the exercise price thereof.

Completion of the PIPE Financing and Business Combination is subject to approval of SRNG stockholders, Company stockholders and the satisfaction or waiver of certain other customary closing conditions. The approvals from SRNG stockholders and Company stockholders are expected in the third quarter of 2021.

 

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Condensed Consolidated Balance Sheets

(unaudited)

(in thousands, except share and per share data)

 

     As of
March 31,
     As of
December 31,
 
     2021      2020  

Assets

     

Current assets:

     

Cash and cash equivalents

   $ 308,128      $ 380,801  

Accounts receivable, net

     24,389        16,694  

Accounts receivable, net from related parties (Note 17)

     7,058        5,212  

Inventory, net

     3,417        2,736  

Prepaid expenses and other current assets

     19,205        21,099  
  

 

 

    

 

 

 

Total current assets

     362,197        426,542  

Property and equipment, net

     141,919        121,435  

Investments

     64,122        60,504  

Equity method investments

     47,595        42,620  

Intangible assets, net

     3,157        3,294  

Goodwill

     1,857        1,857  

Loans receivable, net of current portion

     11,635        13,298  

Other non-current assets

     11,017        5,603  
  

 

 

    

 

 

 

Total assets

   $ 643,499      $ 675,153  
  

 

 

    

 

 

 

Liabilities and Stockholders’ Equity

     

Current liabilities:

     

Accounts payable

   $ 14,229      $ 13,893  

Accrued expenses and other current liabilities

     51,533        30,505  

Deferred revenue

     33,249        28,823  
  

 

 

    

 

 

 

Total current liabilities

     99,011        73,221  

Non-current liabilities:

     

Deferred rent, net of current portion

     13,366        12,678  

Deferred revenue, net of current portion

     114,159        99,652  

Lease financing obligation

     16,439        16,518  

Other non-current liabilities

     4,955        3,032  
  

 

 

    

 

 

 

Total liabilities

     247,930        205,101  
  

 

 

    

 

 

 

Commitments and contingencies (Note 10)

     

Stockholders’ equity:

     

Series B convertible preferred stock, $0.01 par value; 4,143,251 shares authorized as of March 31, 2021 and December 31, 2020; 4,138,185 shares issued and outstanding as of March 31, 2021 and December 31, 2020; liquidation value as of March 31, 2021 and December 31, 2020 of $53,093

     41        41  

Series C convertible preferred stock, $0.01 par value; 4,658,503 shares authorized, issued and outstanding as of March 31, 2021 and December 31, 2020; liquidation value as of March 31, 2021 and December 31, 2020 of $98,900

     47        47  

Series D convertible preferred stock, $0.01 par value; 6,162,631 shares authorized as of March 31, 2021 and December 31, 2020; 6,146,911 shares issued and outstanding as of March 31, 2021 and December 31, 2020; liquidation value as of March 31, 2021 and December 31, 2020 of $293,269

     61        61  

 

The accompanying notes are an integral part of these condensed consolidated financial statements.

 

F-98


Table of Contents

Ginkgo Bioworks, Inc. and Subsidiaries

Condensed Consolidated Balance Sheets

(unaudited)

(in thousands, except share and per share data)

 

     As of
March 31,
    As of
December 31,
 
     2021     2020  

Series E convertible preferred stock, $0.01 par value; 4,172,102 shares authorized as of March 31, 2021 and December 31, 2020; 3,460,005 shares issued and outstanding as of March 31, 2021 and December 31, 2020; liquidation value as of March 31, 2021 and December 31, 2020 of $519,658

     35       35  

Common stock, $0.01 par value; 35,000,000 shares authorized as of March 31, 2021 and December 31, 2020; 7,915,902 and 7,859,702 shares issued as of March 31, 2021 and December 31, 2020, respectively; 7,908,566 and 7,851,164 shares outstanding as of March 31, 2021 and December 31, 2020, respectively

     79       79  

Additional paid in capital

     929,286       928,991  

Accumulated deficit

     (541,447     (467,878
  

 

 

   

 

 

 

Total Ginkgo Bioworks, Inc. stockholders’ equity

     388,102       461,376  

Non-controlling interest

     7,467       8,676  
  

 

 

   

 

 

 

Total stockholders’ equity

     395,569       470,052  
  

 

 

   

 

 

 

Total liabilities and stockholders’ equity

   $ 643,499     $ 675,153  
  

 

 

   

 

 

 

 

The accompanying notes are an integral part of these condensed consolidated financial statements.

 

F-99


Table of Contents

Ginkgo Bioworks, Inc. and Subsidiaries

Condensed Consolidated Statements of Operations and Comprehensive Loss

(unaudited)

(in thousands, except share and per share data)

 

     Three Months Ended
March 31,
 
     2021     2020  

Foundry revenue (1)

   $ 22,504     $ 21,134  

Biosecurity revenue:

    

Product

     5,775       —    

Service

     15,818       —    
  

 

 

   

 

 

 

Total revenue

     44,097       21,134  
  

 

 

   

 

 

 

Costs and operating expenses:

    

Cost of Biosecurity product revenue

     9,935       —    

Cost of Biosecurity service revenue

     13,765       —    

Research and development

     59,585       30,236  

General and administrative

     17,927       6,568  
  

 

 

   

 

 

 

Total operating expenses

     101,212       36,804  
  

 

 

   

 

 

 

Loss from operations

     (57,115     (15,670

Other expense, net:

    

Interest income

     111       1,819  

Interest expense

     (586     (606

Loss on equity method investments

     (19,620     (7,087

Gain (loss) on investments

     3,618       (2,191

Other (expense) income, net

     (1,345     136  
  

 

 

   

 

 

 

Total other expense, net

     (17,822     (7,929
  

 

 

   

 

 

 

Loss before income taxes

     (74,937     (23,599

Income tax (benefit) provision

     (159     1,869  
  

 

 

   

 

 

 

Net loss and comprehensive loss

     (74,778     (25,468

Net loss and comprehensive loss attributable to non-controlling interest

     (1,209     (496
  

 

 

   

 

 

 

Net loss and comprehensive loss attributable to Ginkgo Bioworks, Inc. stockholders

   $ (73,569   $ (24,972
  

 

 

   

 

 

 

Net loss per share attributable to Ginkgo Bioworks, Inc. common stockholders, basic and diluted

   $ (9.33   $ (3.20
  

 

 

   

 

 

 

Weighted average common shares outstanding, basic and diluted

     7,885,537       7,807,486  
  

 

 

   

 

 

 

 

(1)

See Note 17 for revenue from related parties

 

The accompanying notes are an integral part of these condensed consolidated financial statements.

 

F-100


Table of Contents

Ginkgo Bioworks, Inc. and Subsidiaries

Condensed Consolidated Statements of Stockholders’ Equity

(unaudited)

(in thousands, except share data)

 

    Series B Convertible
Preferred Stock
    Series C Convertible
Preferred Stock
    Series D Convertible
Preferred Stock
    Series E Convertible
Preferred Stock
 
    Shares     Amount     Shares     Amount     Shares     Amount     Shares     Amount  

Balance as of December 31, 2019

    4,138,185     $ 41       4,658,503     $ 47       6,146,911     $ 61       2,831,342     $ 28  

Vesting of restricted stock awards

    —         —         —         —         —         —         —         —    

Stock-based compensation expense

    —         —         —         —         —         —         —         —    

Net loss and comprehensive loss

    —         —         —         —         —         —         —         —    
 

 

 

   

 

 

   

 

 

   

 

 

   

 

 

   

 

 

   

 

 

   

 

 

 

Balance as of March 31, 2020

    4,138,185     $ 41       4,658,503     $ 47       6,146,911     $ 61       2,831,342     $ 28  
 

 

 

   

 

 

   

 

 

   

 

 

   

 

 

   

 

 

   

 

 

   

 

 

 

Balance as of December 31, 2020

    4,138,185     $ 41       4,658,503     $ 47       6,146,911     $ 61       3,460,005     $ 35  

Exercise of stock options

    —         —         —         —         —         —         —         —    

Vesting of restricted stock awards

    —         —         —         —         —         —         —         —    

Stock-based compensation expense

    —         —         —         —         —         —         —         —    

Issuance of warrants to purchase convertible preferred stock

    —         —         —         —         —         —         —         —    

Net loss and comprehensive loss

    —         —         —         —         —         —         —         —    
 

 

 

   

 

 

   

 

 

   

 

 

   

 

 

   

 

 

   

 

 

   

 

 

 

Balance as of March 31, 2021

    4,138,185     $ 41       4,658,503     $ 47       6,146,911     $ 61       3,460,005     $ 35  
 

 

 

   

 

 

   

 

 

   

 

 

   

 

 

   

 

 

   

 

 

   

 

 

 

 

    Common Stock     Additional
Paid-In

Capital
    Accumulated
Deficit
    Non-Controlling
Interest
    Total
Stockholders’

Equity
 
    Shares     Amount  

Balance as of December 31, 2019

    7,806,772     $ 79     $ 834,076     $ (341,269   $ 8,790     $ 501,853  

Vesting of restricted stock awards

    1,618       —         —         —         —         —    

Stock-based compensation expense

    —         —         123       —         —         123  

Net loss and comprehensive loss

    —         —         —         (24,972     (496     (25,468
 

 

 

   

 

 

   

 

 

   

 

 

   

 

 

   

 

 

 

Balance as of March 31, 2020

    7,808,390     $ 79     $ 834,199     $ (366,241   $ 8,294     $ 476,508  
 

 

 

   

 

 

   

 

 

   

 

 

   

 

 

   

 

 

 

Balance as of December 31, 2020

    7,851,164     $ 79     $ 928,991     $ (467,878   $ 8,676     $ 470,052  

Exercise of stock options

    56,200       —         27       —         —         27  

Vesting of restricted stock awards

    1,202       —         —         —         —         —    

Stock-based compensation expense

    —         —         118       —         —         118  

Issuance of warrants to purchase convertible preferred stock

    —         —         150       —         —         150  

Net loss and comprehensive loss

    —         —         —         (73,569     (1,209     (74,778
 

 

 

   

 

 

   

 

 

   

 

 

   

 

 

   

 

 

 

Balance as of March 31, 2021

    7,908,566     $ 79     $ 929,286     $ (541,447   $ 7,467     $ 395,569  
 

 

 

   

 

 

   

 

 

   

 

 

   

 

 

   

 

 

 

 

The accompanying notes are an integral part of these condensed consolidated financial statements.

 

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Table of Contents

Ginkgo Bioworks, Inc. and Subsidiaries

Condensed Consolidated Statements of Cash Flows

(unaudited)

(in thousands)

 

     Three Months Ended
March 31,
 
     2021     2020  

Cash flow from operating activities:

    

Net loss

   $ (74,778   $ (25,468

Adjustments to reconcile net loss to net cash used in operating activities:

    

Depreciation and amortization

     5,629       3,154  

Stock-based compensation

     118       123  

Loss attributable to equity method investments

     19,620       7,087  

(Gain) loss attributable to investments

     (3,618     2,191  

Loss on change in fair value of loans receivable

     1,825       —    

Changes in operating assets and liabilities:

    

Accounts receivable, net

     (7,695     704  

Accounts receivable, net from related parties (Note 17)

     (1,846     (1,212

Prepaid expenses and other current assets

     1,633       (2,087

Inventory, net

     (681     —    

Other non-current assets

     (678     2,361  

Accounts payable

     516       (981

Accrued expenses and other current liabilities

     16,807       (1,202

Deferred revenue, current and non-current

     (5,512     (10,539

Deferred rent, non-current

     688       (6

Other non-current liabilities

     (159     1,863  
  

 

 

   

 

 

 

Net cash used in operating activities

     (48,131     (24,012
  

 

 

   

 

 

 

Cash flow from investing activities:

    

Purchases of property and equipment

     (21,935     (3,279

Proceeds from loan receivable

     99       —    

Prepayment for acquisition of Dutch DNA Biotech B.V.

     (1,210     —    
  

 

 

   

 

 

 

Net cash used in investing activities

     (23,046     (3,279
  

 

 

   

 

 

 

Cash flow from financing activities:

    

Proceeds from exercise of stock options

     27       —    

Principal payment on capital lease obligations

     (231     (180

Principal payment on lease financing obligations

     (54     (25

Payment of issuance costs on Series E convertible preferred stock

     —         (3,380

Payment of deferred offering costs

     (175     —    
  

 

 

   

 

 

 

Net cash used in financing activities

     (433     (3,585
  

 

 

   

 

 

 

Net decrease in cash, cash equivalents and restricted cash

     (71,610     (30,876

Cash, cash equivalents and restricted cash, beginning of period

     385,877       498,510  
  

 

 

   

 

 

 

Cash, cash equivalents and restricted cash, end of period

   $ 314,267     $ 467,634  
  

 

 

   

 

 

 

Supplemental disclosure of non-cash investing and financing activities:

    

Purchases of equipment through capital leases

   $ 3,175     $ —    

Purchases of property and equipment included in accounts payable and accrued expenses

   $ 15,324     $ 3,499  

Deferred offering costs in accounts payable and accrued expenses

   $ 2,288     $ —    

Allonnia, LLC equity interest received for intellectual property

   $ 12,698     $ —    

Kalo Ingredients, LLC equity interest received for intellectual property

   $ 11,897     $ —    

 

The accompanying notes are an integral part of these condensed consolidated financial statements.

 

F-102


Table of Contents

Ginkgo Bioworks, Inc. and Subsidiaries

Condensed Consolidated Statements of Cash Flows

(unaudited)

(in thousands)

 

The following table provides a reconciliation of the cash, cash equivalents and restricted cash balances as of each of the periods shown above:

 

     As of March 31,  
     2021      2020  

Cash and cash equivalents

   $ 308,128      $ 464,257  

Restricted cash

     6,139        3,377  
  

 

 

    

 

 

 

Total cash, cash equivalents and restricted cash

   $ 314,267      $ 467,634  
  

 

 

    

 

 

 

 

The accompanying notes are an integral part of these condensed consolidated financial statements.

 

F-103


Table of Contents

Ginkgo Bioworks, Inc. and Subsidiaries

Notes to Condensed Consolidated Financial Statements

(unaudited)

 

1. Organization

Business

The mission of Ginkgo Bioworks, Inc. (“Ginkgo Bioworks”, “Ginkgo”, or the “Company”) is to make biology easier to engineer. The Company designs custom cells for customers across multiple markets. Since inception, the Company has devoted its efforts to improving its platform for programming cells to enable customers to leverage biology to create impactful products across a range of industries. The Company’s platform comprises (i) equipment, robotic automation, software, data pipelines and tools, and standard operating procedures for high throughput genetic engineering, fermentation, and analytics (referred to collectively as the “Foundry”), (ii) a library of proprietary genetic assets and associated performance data (referred to collectively as “Codebase”), and (iii) the Company’s team of expert users, developers and operators of the Foundry and Codebase.

Liquidity and Capital Resources

As of March 31, 2021, the Company had $308.1 million in cash and cash equivalents. The Company’s sources of liquidity have been predominantly from proceeds from equity offerings, convertible note offerings, fees received for research and development services under license and collaboration arrangements, including those received on an upfront basis and upon accomplishment of milestones, fees received from Biosecurity product sales and services provided and government grants. These sources of liquidity have enabled the Company to expand the physical footprint and capacity of the Foundry and grow its personnel to expand capabilities and enter new markets.

The Company has incurred significant operating losses from inception through March 31, 2021, resulting in negative cash flows from operating activities and an accumulated deficit of $541.4 million as of March 31, 2021. The Company expects to continue to incur net losses into the foreseeable future. Successful transition to profitable operations is dependent upon achieving technical and commercial milestones under existing customer agreements, continuing to increase Foundry output while reducing the unit cost of that output, and expanding the number of engineered organisms under development with customers. The Company plans to continue to fund its losses from operations through future debt and equity financings, liquidation of equity holdings, and new customer and collaborative arrangements. The Company believes that its current cash and cash equivalents will provide adequate liquidity through one year from the date that these condensed consolidated financial statements are issued.

The Company’s future liquidity needs may vary materially from those currently planned and will depend on many factors, including the achievement of technical and commercial milestones under existing customer arrangements, the receipt of cash and equity from new customers and in connection with collaborative arrangements, the investments required to further scale the Foundry and Codebase, and the expenses needed to attract and retain personnel.

Risks and Uncertainties

The Company is subject to a number of risks including rapid technological change, regulatory change, technical feasibility, commercial viability, public perception of genetically modified organisms, uncertain market acceptance of products derived from engineered organisms, alternative means of production, data and cybersecurity breaches, and dependence on key vendors and personnel.

 

F-104


Table of Contents

Ginkgo Bioworks, Inc. and Subsidiaries

Notes to Condensed Consolidated Financial Statements

(unaudited)

 

Impact of the COVID-19 Pandemic

In December 2019, an outbreak of a novel strain of coronavirus (“COVID-19”) originated in Wuhan, China, and has since spread globally. On March 11, 2020, the World Health Organization characterized COVID-19 as a pandemic and, on March 13, 2020, the United States declared a national emergency with respect to COVID-19. Since then, extraordinary actions have been taken by authorities to contain and manage the outbreak and spread of COVID-19 around the world.

Consistent with the actions taken by governmental authorities, the Company has taken steps to protect its workforce and support the community efforts. From approximately March 2020 to approximately June 2020, the Company operated at a reduced capacity. The Company also restricted non-essential travel and allowed most of its workforce in general and administration functions to perform their duties remotely. In June 2020, the Company resumed modified on-site operations for its lab workers following the Center for Disease Control and Prevention’s guidance with facial covering requirements, rearranging facilities to follow social distancing protocols, performing active daily health checks, and undertaking regular and thorough disinfection of surfaces and tools.

The COVID-19 pandemic caused some disruption in the Company’s operations and the Company experienced partial suspensions and delays in servicing certain customer contracts. However, the Company believes that the COVID-19 pandemic did not have a material adverse impact to its financial position or results of operations.

The Company continues to monitor and assess the effects of the COVID-19 pandemic on its business, financial condition, results of operations and cash flows.

2. Summary of Significant Accounting Policies

Basis of Presentation

The accompanying condensed consolidated financial statements have been prepared in conformity with accounting principles generally accepted in the United States of America (“U.S. GAAP”). Any reference in these notes to applicable guidance is meant to refer to the authoritative U.S. GAAP as found in the Accounting Standards Codification (“ASC”) and Accounting Standards Updates (“ASU”) of the Financial Accounting Standards Board (“FASB”).

Unaudited Interim Condensed Consolidated Financial Information

The accompanying Condensed Consolidated Balance Sheet as of March 31, 2021, the Condensed Consolidated Statements of Operations and Comprehensive Loss for the three months ended March 31, 2021 and 2020, Condensed Consolidated Statements of Cash Flows for the three months ended March 31, 2021 and 2020 and the Condensed Consolidated Statements of Stockholders’ Equity for the three months ended March 31, 2021 and 2020 are unaudited. The financial data and other information contained in the notes thereto as of and for the three months ended March 31, 2021 and 2020 are also unaudited. The Condensed Consolidated Balance Sheet as of December 31, 2020 was derived from the Company’s audited consolidated financial statements included elsewhere in this proxy statement/prospectus.

The unaudited interim condensed consolidated financial statements have been prepared on the same basis as the audited annual consolidated financial statements, and in the opinion of management, reflect all normal recurring adjustments necessary for the fair presentation of the Company’s financial position as of March 31, 2021, the

 

F-105


Table of Contents

Ginkgo Bioworks, Inc. and Subsidiaries

Notes to Condensed Consolidated Financial Statements

(unaudited)

 

results of its operations for the three months ended March 31, 2021 and 2020 and its cash flows for the three months ended March 31, 2021 and 2020. These unaudited condensed consolidated financial statements should be read in conjunction with the audited consolidated financial statements as of and for the years ended December 31, 2020 and 2019, and the notes thereto, included elsewhere in this proxy statement/prospectus.

The results for the three months ended March 31, 2021 are not necessarily indicative of results to be expected for the year ended December 31, 2021, or any other interim periods, or any future year or period.

The significant accounting policies used in preparation of these unaudited interim condensed consolidated financial statements are consistent with those described in the Company’s audited consolidated financial statements as of and for the years ended December 31, 2020 and 2019 included elsewhere in this proxy statement/prospectus and are updated below as necessary.

Use of Estimates

The preparation of financial statements in conformity with U.S. GAAP requires management to make estimates and assumptions that affect the reported amounts of assets and liabilities, the disclosure of contingent assets and liabilities at the date of the condensed consolidated financial statements, and the reported amounts of revenues and expenses during the reporting period. Significant estimates and assumptions used in preparation of these condensed consolidated financial statements include, among others, those related to the fair value of equity instruments and equity awards, revenue recognition, the fair value of loans receivable, the fair value of certain investments, including equity method investments, accrued expenses, and income taxes.

The Company bases its estimates on historical experience and other market-specific or relevant assumptions that it believes to be reasonable under the circumstances. Reported amounts and disclosures reflect the overall economic conditions that management believes are most likely to occur, and the anticipated measures management intends to take. Actual results could differ materially from those estimates. All revisions to accounting estimates are recognized in the period in which the estimates are revised.

Concentration of Credit Risk

Financial instruments that potentially subject the Company to a concentration of credit risk consist primarily of cash and cash equivalents, accounts receivable, and loans receivable. The Company’s cash and cash equivalents are maintained in bank deposit accounts and money market funds, which, at times, may exceed federally insured limits. The Company believes that it is not exposed to significant credit risk as its deposits are held in financial institutions in the United States that management believes to be of high credit quality. The Company’s loans receivable are comprised of both collateralized convertible notes, which limits the Company’s credit risk, as well as uncollateralized convertible notes. The Company’s accounts receivable primarily consist of amounts owed under its license and collaboration agreements and its Biosecurity product and service offering. The Company has not experienced any material write-offs related to its accounts receivable since inception.

Restricted Cash

Restricted cash primarily includes cash balances collateralizing letters of credit associated with leases for the Company’s facilities and is included in other non-current assets on the Condensed Consolidated Balance Sheets.

 

F-106


Table of Contents

Ginkgo Bioworks, Inc. and Subsidiaries

Notes to Condensed Consolidated Financial Statements

(unaudited)

 

Inventory, net

Inventory mainly consists of diagnostic testing kits purchased from suppliers, testing program supplies and the costs of assembling sample collection kits. Finished goods inventory for lateral flow assay (“LFA”) and polymerase chain reaction (“PCR”) tests are valued at the lower of cost or net realizable value using the first-in first-out method. Raw materials and finished goods inventory for pooled testing services are valued at the lower of cost or net realizable value using the average cost method. Inventory has been reduced by an allowance for lost and defective inventory based on an analysis of quantities on hand.

Equity Method Investments

The Company utilizes the equity method to account for its investments in common stock, or in-substance common stock, of the Company’s strategic partnerships when it possesses the ability to exercise significant influence over, but not control, the operating and financial policies of the investee. The Company uses judgment when determining the level of influence over the operating and financial policies of the investee considering key factors including, among others, the Company’s ownership interest, representation on the board of directors, participation in policy-making decisions and material contractual arrangements and obligations. Income and losses are allocated based upon relative ownership interest unless there is a substantive profit-sharing agreement in place.

For investments with a substantive profit-sharing agreement, the Company utilizes the Hypothetical Liquidation at Book Value (“HLBV”) method to allocate income and losses from the equity method investment. Under the HLBV method, the Company utilizes the capital account at the end of the period assuming the book value of the entity was liquidated or sold minus the same calculation at the beginning of the period. The difference is the share of earnings or losses attributable to the equity method investment.

Under the equity method, if there is a commitment for the Company to fund the losses of its equity method investees, the Company would continue to record its share of losses resulting in a negative equity method investment, which would be presented as a liability on the Condensed Consolidated Balance Sheets. Commitments may be explicit and may include formal guarantees, legal obligations, or arrangements by contract. Implicit commitments may arise from reputational expectations, intercompany relationships, statements by the Company of its intention to provide support, a history of providing financial support or other facts and circumstances. When the Company has no commitment to fund the losses of its equity method investees, the carrying value of its equity method investments will not be reduced below zero. The Company had no commitment to fund additional losses of its equity method investments during the three months ended March 31, 2021 and 2020.

The Company evaluates its equity method investments for impairment whenever events or circumstances indicate that the carrying value of the investment may not be recoverable. The Company considers the investee’s financial position, forecasts and economic outlook, and the estimated duration and extent of losses to determine whether a recovery is anticipated. An impairment that is other-than-temporary is recognized in the period identified. The Company has not recognized an impairment loss relative to its equity method investments for the three months ended March 31, 2021 and 2020.

The Company may elect the fair value option for its equity method investments on an investment-by-investment basis. For all equity method investments accounted for under the fair value option, the Company carries the equity method investment at fair value. The Company records all subsequent changes in the values of its equity method investments in the Condensed Consolidated Statements of Operations and Comprehensive Loss as a component of loss on equity method investments.

 

F-107


Table of Contents

Ginkgo Bioworks, Inc. and Subsidiaries

Notes to Condensed Consolidated Financial Statements

(unaudited)

 

Deferred Offering Costs

The Company capitalized certain legal, accounting and other third-party fees that are directly associated with the in-process merger with Soaring Eagle Acquisition Corp. (“SRNG”) as deferred offering costs until such merger is consummated. After consummation of the merger, such costs will be reclassified as a reduction to additional paid-in capital generated as a result of the merger. In the event the merger is abandoned, all capitalized deferred offering costs will be immediately expensed. Deferred offering costs as of March 31, 2021 were $2.5 million and are classified in other non-current assets in the Condensed Consolidated Balance Sheet. No deferred offering costs were capitalized as of December 31, 2020.

Revenue Recognition

Biosecurity Revenue

In 2020, the Company launched its commercial offering of COVID-19 testing products and services for businesses, academic institutions, and other organizations. In the first quarter of 2021, the Company launched its pooled testing initiative which focuses on providing end-to-end COVID-19 testing services to groups of individuals, with a focus of offering pooled testing services for K-12 schools. The Company sells COVID-19 test kits on a standalone basis or as part of an end-to-end testing service. The Company records product revenue from sales of LFA diagnostic test kits. The Company records service revenue from sales of its end-to-end COVID-19 testing services, which consist of multiple promised goods and services including sample collection kits, physician authorizations, onsite test administration, outsourced laboratory PCR analysis, and access to results reported through the Company’s proprietary web-based portal. The Company recognizes its product and service revenue using the five-step model under ASC 606, Revenue from Contracts with Customers (“ASC 606”).

Product revenue from the sale of LFA diagnostic test kits is recognized when the test kits are shipped, and risk of loss is transferred to the carrier. The Company’s diagnostic test kits are generally not subject to a customer right of return except for product recalls under the rules and regulations of the FDA. The Company has elected to include shipping and handling fees billed to customers as a component of Biosecurity revenue.

Service revenue from the Company’s end-to-end COVID-19 testing services is recognized upon completion of the tests and release of the test results on the web-based portal. The Company has identified one performance obligation in its testing services contracts that represents a series of distinct goods or services that are substantially the same and that have the same pattern of transfer to the customer, with each test as a distinct service within the series. As the price for the testing services is fixed under each customer contract, the Company has elected the practical expedient to recognize revenue at the amount to which it has the right to invoice for services performed. The Company’s testing services contracts are generally one year or less in length and contain fixed unit pricing. Under typical payment terms for testing services, amounts are billed in advance based on contractual billing terms or monthly in arrears for services performed.

Other than as noted herein, there were no other changes to the Company’s revenue recognition policy since the date of the audited consolidated financial statements as of and for the years ended December 31, 2020 and 2019 included elsewhere in this proxy statement/prospectus.

Stock-Based Compensation

For awards granted from January 2021 through March 31, 2021, the Company utilized the hybrid method to estimate the value of its common stock underlying its stock-based awards. The hybrid method is a probability-weighted expected return method (“PWERM”) where the equity value in at least one scenario is allocated using

 

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Notes to Condensed Consolidated Financial Statements

(unaudited)

 

an option pricing method (“OPM”). The Company considered two scenarios: (i) a scenario in which the conversion of the convertible preferred stock to common stock occurs through an initial public offering (“IPO”) or a merger with a special purpose acquisition company (“SPAC”), and (ii) a remain-private scenario. The Company estimated equity value using the guideline public company method and by considering the values indicated by preliminary letters of intent received from potential investors. In the IPO/SPAC transaction scenario, conversion of the convertible preferred stock to common stock was assumed. In the remain private scenario, equity value was allocated among the convertible preferred stock and common stock using the OPM. In addition to considering these two scenarios, the Company considered the prices paid for its common stock and Series B convertible preferred stock in secondary transactions and the Company included these prices in its weighted average conclusion of value.

Other than as noted herein, there were no other changes to the Company’s stock-based compensation policy since the date of the audited consolidated financial statements as of and for the years ended December 31, 2020 and 2019 included elsewhere in this proxy statement/prospectus.

Recent Accounting Pronouncements

Recently Adopted Accounting Pronouncements

In October 2018, the FASB issued ASU 2018-17, Consolidation (Topic 810): Targeted Improvements to Related Party Guidance for Variable Interest Entities (“ASU 2018-17”). The provisions of ASU 2018-17 modify the guidance under ASC 810 related to the evaluation of indirect interests held through related parties under common control when determining whether fees paid to decision makers and service providers are variable interests. Indirect interests held through related parties that are under common control are no longer considered to be the equivalent of direct interests in their entirety and instead should be considered on a proportional basis. This guidance more closely aligns with accounting of how indirect interests held through related parties under common control are considered for determining whether a reporting entity must consolidate a variable interest entity. The Company adopted ASU 2018-17 on January 1, 2021 and the adoption did not have a material impact on the Company’s condensed consolidated financial statements and related disclosures.

Recently Issued Accounting Pronouncements

From time to time, new accounting pronouncements are issued by the FASB and adopted by the Company as of the specified effective date. Unless otherwise discussed, the Company believes that the impact of recently issued standards that are not yet effective will not have a material impact on its financial position or results of operations upon adoption. Refer to the audited consolidated financial statements as of and for the years ended December 31, 2020 and 2019 included elsewhere in this proxy statement/prospectus for a summary of additional recently issued accounting pronouncements that have not yet been adopted.

In May 2021, the FASB issued ASU 2021-04, Earnings Per Share (Topic 260), Debt-Modifications and Extinguishments (Subtopic 470-50), Compensation-Stock Compensation (Topic 718), and Derivatives and Hedging-Contracts in Entity’s Own Equity (Subtopic 815-40): Issuer’s Accounting for Certain Modifications or Exchanges of Freestanding Equity-Classified Written Call Options (“ASU 2021-04”). ASU 2021-04 requires issuers to account for modifications or exchanges of freestanding equity-classified written call options (e.g., warrants) that remain equity classified after the modification or exchange based on the economic substance of the modification or exchange. This new standard will be effective for the Company on January 1, 2022, with early

 

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Notes to Condensed Consolidated Financial Statements

(unaudited)

 

adoption permitted. The Company is currently evaluating the impact that the implementation of this standard will have on its condensed consolidated financial statements and related disclosures.

3. Fair Value Measurements

No transfers between levels have occurred during the periods presented. The following tables present information about the Company’s financial assets measured at fair value on a recurring basis (in thousands):

 

     As of March 31, 2021  
     Total      Level 1      Level 2      Level 3  

Assets:

           

Money market funds, included in cash and cash equivalents

   $ 303,272      $ 303,272      $ —        $ —    

Synlogic, Inc. common stock, included in equity method investments

     22,700        22,700        —          —    

Synlogic, Inc. warrant, included in investments

     9,122        —          9,122        —    

Loans receivable, included in prepaid expenses and other current assets

     2,007        —          —          2,007  

Loans receivable, net of current portion

     11,635        —          —          11,635  
  

 

 

    

 

 

    

 

 

    

 

 

 

Total

   $ 348,736      $ 325,972      $ 9,122      $ 13,642  
  

 

 

    

 

 

    

 

 

    

 

 

 

 

     As of December 31, 2020  
     Total      Level 1      Level 2      Level 3  

Assets:

           

Money market funds, included in cash and cash equivalents

   $ 372,537      $ 372,537      $ —        $ —    

Synlogic, Inc. common stock, included in equity method investments

     13,696        13,696        —          —    

Synlogic, Inc. warrant, included in investments

     5,504        —          5,504        —    

Loans receivable, included in prepaid expenses and other current assets

     2,268        —          —          2,268  

Loans receivable, net of current portion

     13,298        —          —          13,298  
  

 

 

    

 

 

    

 

 

    

 

 

 

Total

   $ 407,303      $ 386,233      $ 5,504      $ 15,566  
  

 

 

    

 

 

    

 

 

    

 

 

 

The fair value of the warrant to purchase Synlogic common stock (Note 7) is calculated as the value of the underlying common stock, less the related unpaid exercise price and represents a Level 2 measurement within the fair value hierarchy.

As of March 31, 2021 and December 31, 2020, loans receivable primarily consisted of a revolving promissory note with Glycosyn, LLC (“Glycosyn”) which is secured by the assets of Glycosyn, including certain intellectual property such as patents and copyrights held by Glycosyn, (“Glycosyn Promissory Note”) and a series of convertible notes with Access Bio, Inc. (“Access Bio Convertible Notes”). The fair value of the Glycosyn Promissory Note and Access Bio Convertible Notes were determined based on significant inputs not observable in the market, which represent a Level 3 measurement within the fair value hierarchy. Significant changes in these unobservable inputs in isolation could have resulted in a significantly lower or higher fair value measurement. Refer to Note 4 for additional details on the Company’s loans receivable.

 

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Notes to Condensed Consolidated Financial Statements

(unaudited)

 

The Company used a probability-weighted discounted cash flow valuation approach to determine the fair value of the Glycosyn Promissory Note. Using this approach, the present value of the expected future cash flows were calculated under four settlement scenarios and then were weighted based on the estimated probability of each scenario. The four settlement scenarios considered in the valuation were (i) a qualified financing which resulted in a 20% conversion discount, (ii) repayment upon change in control, (iii) a dissolution scenario and (iv) repayment in accordance with the terms of the note. The significant assumptions used in valuing the Glycosyn Promissory Note as of March 31, 2021 and December 31, 2020 included the expected timing and probability of each scenario and the discount rate. As of March 31, 2021, a discount rate of 15% was applied and the probability and timing of each scenario ranged from 10% to 40% and spanned from less than 1.0 year to 2.25 years, respectively. As of December 31, 2020, a discount rate of 15% was applied and the probability and timing of each scenario ranged from 10% to 40% and spanned 1.0 to 2.5 years, respectively. The weighted average timing of the scenarios weighted based on the probability of each scenario as of March 31, 2021 and December 31, 2020 was less than 1.0 year and 1.2 years, respectively.

The Company used a Monte-Carlo simulation model to determine the fair value of the Access Bio Convertible Notes. The future stock price of Access Bio, Inc. (“Access Bio”) was simulated over the term of the note to assess the value of the settlement features which included (i) conversion into stock at a discount determined under a reset provision tied to the performance of Access Bio’s stock price and (ii) redemption at maturity. The significant assumptions used in determining the simulated future stock price included the expected timing of the conversion, which is assumed at maturity, and expected volatility. The significant assumptions used in determining the fair value of the Access Bio Convertible Notes under a redemption at maturity scenario was the discount rate and expected volatility. As of March 31, 2021 and December 31, 2020, the discount rate that was used to determine fair value of the Access Bio Convertible Notes under the maturity scenario was 31.8% and 32.8%, respectively. As of March 31, 2021 and December 31, 2020, the volatility rate used to determine the fair value of the Access Bio Convertible Notes was 93.9% and 88.5%, respectively.

The following table provides a reconciliation of all assets measured at fair value using Level 3 significant unobservable inputs (in thousands):

 

     Loans
Receivable
 

Balance as of December 31, 2019

   $ 4,830  

Change in fair value

     —    
  

 

 

 

Balance as of March 31, 2020

   $ 4,830  
  

 

 

 

Balance as of December 31, 2020

   $ 15,566  

Proceeds from loan receivable

     (99

Change in fair value

     (1,825
  

 

 

 

Balance as of March 31, 2021

   $ 13,642  
  

 

 

 

4. Loans Receivable

Glycosyn Promissory Note

In October 2018, the Company provided a revolving promissory note to Glycosyn which has been amended several times since inception. The Glycosyn Promissory Note is convertible at a discount, at the Company’s election, into equity securities of Glycosyn upon Glycosyn’s first issuance of equity securities, other than an underwritten public offering, from which Glycosyn receives gross proceeds of at least $10.0 million. In addition,

 

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Notes to Condensed Consolidated Financial Statements

(unaudited)

 

Glycosyn is obligated to immediately repay the outstanding balance of the loan, plus accrued interest, upon a change in control event. The Glycosyn Promissory Note accrues interest at a rate of 7.5% per annum and matures in June 2023, unless earlier converted by the Company into equity securities of Glycosyn. In January 2021, the existing terms of the Glycosyn Promissory Note were amended to add an additional $0.2 million to the principal balance and to extend the number of interest-only payments to include the quarterly payments due on or before December 31, 2020 and March 31, 2021. The amendment also added a provision to increase the interest rate from 7.5% to 12.5% (or the maximum allowable by law, whichever is less) in the event of default by Glycosyn.

As of March 31, 2021 and December 31, 2020, there was $5.5 million and $5.4 million outstanding under the Glycosyn Promissory Note, respectively, of which $5.4 million and $5.3 million represented the unpaid principal balance, respectively. The fair value of the Glycosyn Promissory Note was $4.7 million and $4.5 million as of March 31, 2021 and December 31, 2020, respectively, of which $1.7 million and $2.0 million was included in prepaid expenses and other current assets, respectively, with the remaining amounts included in loans receivable, net of current portion on the Condensed Consolidated Balance Sheets for the respective periods. The gain on the change in fair value of $0.2 million for the three months ended March 31, 2021 was recorded as a component of other expense, net on the Condensed Consolidated Statements of Operations and Comprehensive Loss. There was no gain or loss on the change in fair value of the Glycosyn Promissory Note for the three months ended March 31, 2020 as the fair value remained unchanged from December 31, 2019.

Access Bio Convertible Notes

In November 2020, the Company entered into a convertible note subscription agreement with Access Bio, a supplier of the Company’s diagnostic test kits. The Access Bio Convertible Notes are due in November 2022 in the aggregate principal amount of $10.0 million plus a 2% rate of return compounded annually. The Access Bio Convertible Notes are convertible into a number of shares of common stock of Access Bio, a company listed on the Korea Stock Exchange, of up to $10.0 million based on a fixed foreign currency exchange rate and a conversion price subject to certain adjustments, including reset adjustments each quarter based on the trading price of Access Bio’s stock. The adjusted conversion price cannot be reduced to less than 70% of the initial conversion price as a result of the reset adjustments and the reset adjustments cannot increase the effective conversion ratio. The Access Bio Convertible Notes are convertible at the Company’s election any time following the first anniversary of the issuance date of the notes, but prior to the 30th day before the maturity date. Additionally, subject to certain provisions, the Company has the option to cause Access Bio to repurchase, or Access Bio has the option to repurchase, a portion of the outstanding balance under the notes (or up to the entire balance in the case of the Company’s option) at a price to ensure a 2% rate of return compounded annually.

As of March 31, 2021 and December 31, 2020, the fair value of the Access Bio Convertible Notes was $8.7 million and $10.7 million, respectively, which was recorded in loans receivable, net of current portion on the Condensed Consolidated Balance Sheets. The loss on the change in fair value of the Access Bio Convertible Notes during the three months ended March 31, 2021 of $2.0 million was recorded as a component of other expense, net on the Condensed Consolidated Statements of Operations and Comprehensive Loss.

 

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Notes to Condensed Consolidated Financial Statements

(unaudited)

 

5. Inventory, net

Inventory, net consisted of the following (in thousands):

 

     As of
March 31,
     As of
December 31,
 
     2021      2020  

Finished goods

   $ 2,654      $ 2,756  

Raw materials

     783        —    

Less: Inventory reserve

     (20      (20
  

 

 

    

 

 

 

Inventory, net

   $ 3,417      $ 2,736  
  

 

 

    

 

 

 

6. Property and Equipment, net

Property and equipment, net consisted of the following (in thousands):

 

     As of
March 31,
     As of
December 31,
 
     2021      2020  

Facilities

   $ 12,762      $ 12,762  

Furniture and fixtures

     2,727        2,165  

Lab equipment

     89,652        51,072  

Computer equipment and software

     7,093        6,204  

Leasehold improvements

     42,353        40,435  

Construction in progress

     26,379        42,575  
  

 

 

    

 

 

 

Total property and equipment

     180,966        155,213  

Less: Accumulated depreciation

     (39,047      (33,778
  

 

 

    

 

 

 

Property and equipment, net

   $ 141,919      $ 121,435  
  

 

 

    

 

 

 

7. Investments and Equity Method Investments

The Company holds equity method investments in Motif Foodworks, Inc. (“Motif”), Allonnia, LLC (“Allonnia”) and Kalo Ingredients, LLC (“Kalo”). Additionally, the Company holds an equity method investment in Joyn Bio, LLC (“Joyn”) through its controlling financial interest in Cooksonia, LLC (“Cooksonia”), which is the consolidated holding entity for its investment in Joyn.

The Company also holds an equity method investment in Synlogic, Inc. (“Synlogic”), as well as a warrant to purchase common stock of Synlogic, which are accounted for under the fair value option. The Company elected to apply the fair value option to its equity method investment and the warrant to purchase shares of Synlogic common stock as the fair value of Synlogic common stock is objectively determinable and is based on quoted market prices in an active market for identical securities. The Company’s equity method investment in Synlogic is the only equity method investment where the underlying equity instruments are traded in an active market. As of March 31, 2021 and December 31, 2020, the Company held 6,340,771 shares of Synlogic common stock which comprises its equity method investment in that entity. As of the same respective periods, the warrant under which the Company may purchase 2,548,117 shares of Synlogic common stock remained unexercised.

The Company’s preferred stock investment in Genomatica, Inc. (“Genomatica”) is accounted for under the measurement alternative. As of March 31, 2021 and December 31, 2020, no adjustments have been recognized

 

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Notes to Condensed Consolidated Financial Statements

(unaudited)

 

related to the preferred stock investment as a result of the application of the measurement alternative as the Company did not identify observable price changes in orderly transactions for the identical or similar investment of the same issuer and the equity instrument was not otherwise deemed to be impaired. Investments and equity method investments consisted of the following (in thousands):

 

     As of
March 31,
     As of
December 31,
 
     2021      2020  

Investments:

     

Genomatica, Inc. preferred stock

   $ 55,000      $ 55,000  

Synlogic, Inc. warrant

     9,122        5,504  
  

 

 

    

 

 

 

Total

   $ 64,122      $ 60,504  
  

 

 

    

 

 

 

Equity method investments:

     

Joyn Bio, LLC

   $ 24,895      $ 28,924  

Synlogic, Inc.

     22,700        13,696  
  

 

 

    

 

 

 

Total

   $ 47,595      $ 42,620  
  

 

 

    

 

 

 

The carrying value of the Company’s equity method investments in Motif, Allonnia and Kalo as of March 31, 2021 and the Company’s equity method investments in Motif and Allonnia as of December 31, 2020 were zero and as such, were excluded from the table above.

Gains (losses) on investments and equity method investments consisted of the following (in thousands):

 

     Three Months Ended March 31,  
             2021                      2020          

Gain (loss) on investments:

     

Synlogic, Inc. warrant

   $ 3,618      $ (2,191
  

 

 

    

 

 

 

Total

   $ 3,618      $ (2,191
  

 

 

    

 

 

 

(Loss) gain on equity method investments:

     

Joyn Bio, LLC

   $ (4,029    $ (1,634

Synlogic, Inc.

     9,004        (5,453

Allonnia, LLC

     (12,698      —    

Kalo Ingredients, LLC

     (11,897      —    
  

 

 

    

 

 

 

Total

   $ (19,620    $ (7,087
  

 

 

    

 

 

 

The summarized financial information for the Company’s equity method investment in Synlogic, which was considered a significant equity method investee during the three months ended March 31, 2020, consisted of the following (in thousands):

 

     Three Months March 31,  
             2021                      2020          

Revenue

   $ —        $ 100  

Total operating expenses

   $ (15,031    $ (16,498

Loss from operations

   $ (15,031    $ (16,398

Net loss

   $ (14,971    $ (15,828

 

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Notes to Condensed Consolidated Financial Statements

(unaudited)

 

The summarized financial information for the Company’s remaining equity method investments for the three months ended March 31, 2021 and 2020 were excluded from the table above as the Company’s investments in these entities were not considered individually significant as compared to its results of operations during the respective periods.

Refer to Notes 8 and 15 for additional details on the Company’s investments and equity method investments.

8. Variable Interest Entities

Consolidated Variable Interest Entities

With respect to the Company’s investment in Cooksonia, which was formed by the Company and certain other investors for the purposes of holding the Company’s investment in Joyn, the Company concluded that it holds a variable interest in this entity through its 70% equity interest. Additionally, the Company concluded it is the primary beneficiary of Cooksonia as it controls the most significant activities of Cooksonia. These conclusions were reached considering that: (i) the Company controls 100% of the board of directors of Cooksonia and (ii) the Company holds a controlling financial interest in Cooksonia. Due to the fact that the Company is the primary beneficiary of Cooksonia, the Company has consolidated the financial statements of Cooksonia in accordance with ASC 810, Consolidation (“ASC 810”) into its condensed consolidated financial statements and has recognized a non-controlling interest associated with the minority equity interest held by other investors of Cooksonia, which together hold the remaining 30% equity interest in Cooksonia. The Company presents the non-controlling interest attributable to the other investors’ equity interest in Cooksonia as a component of stockholder’s equity.

The sole asset held by Cooksonia as of March 31, 2021 and December 31, 2020, which was included in the Company’s Condensed Consolidated Balance Sheets as of each period end, was its equity method investment in Joyn. The balance of Cooksonia’s equity method investment in Joyn as of March 31, 2021 and December 31, 2020 was $24.9 million and $28.9 million, respectively. No liabilities were held by Cooksonia as of March 31, 2021 and December 31, 2020. The net loss incurred by Cooksonia during the three months ended March 31, 2021 and 2020 of $4.0 million and $1.6 million, respectively, was comprised solely of the loss from its equity method investment in Joyn and was included in the Company’s Condensed Consolidated Statements of Operations and Comprehensive Loss for the respective periods. The net loss incurred by Cooksonia attributable to the non-controlling interest during the three months ended March 31, 2021 and 2020 was $1.2 million and $0.5 million, respectively.

Unconsolidated Variable Interest Entities

With respect to the Company’s investments in Motif, Allonnia, Genomatica and Kalo, the Company has concluded these entities represent variable interest entities (“VIE”). However, although the Company holds board representation and is involved in the ongoing development activities of the entities via its participation on joint steering committees, the Company has concluded that it is not the primary beneficiary of these entities. The Company reached this conclusion considering that: (i) it does not control the board of directors of either Motif, Allonnia, Genomatica or Kalo, and no voting or consent agreements exist between the Company and other members of each respective board of directors or other investors, (ii) the holders of preferred security interests in Motif, Allonnia, Genomatica and Kalo hold certain rights that require their consent prior to the taking of certain actions, which include certain significant operating and financing decisions, and (iii) the Company’s representation on the joint steering committee of each respective entity does not give it control over the development activities of either Motif, Allonnia, Genomatica or Kalo as all votes must pass by consensus and

 

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Notes to Condensed Consolidated Financial Statements

(unaudited)

 

there are no agreements in place that would require any of the entities to vote in alignment with the Company. As the Company’s involvement in Motif, Allonnia, Genomatica and Kalo does not give it the power to control the decisions with respect to their development or other activities, which are their most significant activities, the Company has concluded that it is not the primary beneficiary of Motif, Allonnia, Genomatica or Kalo.

Additionally, with respect to Cooksonia’s investment in Joyn, as Cooksonia does not control Joyn’s board of directors, it does not have the power to control the decisions related to the development activities of Joyn, which are its most significant activities. Accordingly, the Company has concluded that Cooksonia is not the primary beneficiary of Joyn.

As of March 31, 2021 and December 31, 2020, the maximum risk of loss related to the Company’s VIEs was limited to the carrying value of its investment in such entities.

Refer to Notes 7 and 15 for additional details on the Company’s investments and equity method investments.

9. Goodwill and Intangible Assets, net

There was no change in the carrying value of goodwill for the periods presented.

Intangible assets, net consisted of the following (in thousands):

 

     Gross
Carrying
Value
     Accumulated
Amortization
     Net  

Balances as of March 31, 2021

        

Acquired technology

   $ 5,490      $ (2,333    $ 3,157  

Balances as of December 31, 2020

        

Acquired technology

   $ 5,490      $ (2,196    $ 3,294  

Intangible assets had a weighted average remaining amortization period of 5.75 and 6.0 years as of March 31, 2021 and December 31, 2020, respectively. Amortization expense was $0.1 million for each of the three months ended March 31, 2021 and 2020. Future amortization expense will be $0.4 million for the nine months ended December 31, 2021 and $0.5 million per year thereafter over the useful remaining life of the intangible assets.

10. Commitments and Contingencies

The Company is party to a number of agreements with certain collaborators and suppliers that require the Company to meet minimum purchase obligations over the term of such agreements. During the three months ended March 31, 2021, there were no material changes to the Company’s obligations under these agreements. For a description of the arrangements and the related accounting conclusions, refer to Note 11 to the audited consolidated financial statements as of and for the years ended December 31, 2020 and 2019 included elsewhere in this proxy statement/prospectus.

Acquisition of Dutch DNA Biotech B.V.

In April 2021, the Company entered into a definitive Share Sale and Purchase Agreement (“Purchase Agreement”) with Have Fungi B.V. (“HF”) and a Technical Development Agreement (“TDA”) with Dutch DNA Biotech B.V. (“DDNA”), each a Dutch company located in the Netherlands. Under the Purchase Agreement, the

 

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Notes to Condensed Consolidated Financial Statements

(unaudited)

 

Company will pay HF a purchase price in an amount equal to EUR 10.0 million, 33,291 shares of Ginkgo common stock, plus net debt and working capital adjustments, to acquire 100% ownership in the capital of DDNA. In addition, under the Purchase Agreement, the Company agrees to earn-out payments to HF and certain designees upon achievement of one or more technical and commercialization milestones based on the performance of DDNA, including pursuant to the TDA, in an aggregate amount not to exceed $20.0 million during the earn-out term. During the three months ended March 31, 2021, the Company made a $1.2 million prepayment towards the cash purchase price, which is included in other non-current assets on the Condensed Consolidated Balance Sheet. The Company expects to finalize the transaction by the beginning of the third quarter of 2021.

Purchase Orders

The Company has agreements with third parties for certain services for which the Company is not contractually able to terminate for convenience to avoid future obligations to the respective vendors. Such agreements may provide for termination fees, penalties, or costs to wind-down the arrangement. Under such agreements, the Company is contractually obligated to make payments, primarily to reimburse the vendor for their expenditures that are not recoverable and incurred prior to any cancellation of the respective agreement. The actual amounts the Company could pay in the future to these vendors under the various agreements may differ from the amounts under the purchase orders due to these cancellation provisions.

Indemnification Agreements

The Company enters into standard indemnification agreements and has agreements with indemnification clauses in the ordinary course of business. Under such arrangements, the Company indemnifies, holds harmless and agrees to reimburse the indemnified party for losses suffered or incurred by the indemnified party, who are generally the Company’s business partners. The terms of these indemnification arrangements are generally perpetual and effective any time after contract execution. The maximum potential liability resulting from these indemnification arrangements may be unlimited. The Company has never incurred costs to defend lawsuits or settle claims related to these indemnification arrangements and the Company does not believe that the outcome of any claims under such arrangements will have a material effect on its financial position, results of operations or cash flows, and have not accrued any liabilities related to such obligations as of March 31, 2021 or December 31, 2020.

Legal Proceedings

The Company is not currently party to any material legal proceedings. As of each reporting date, the Company evaluates whether or not a potential loss amount or range of loss amounts is reasonably estimable and probable of being incurred and whether such amounts meet the requirements to be accrued or disclosed pursuant to ASC 450, Contingencies (“ASC 450”). The Company expenses costs related to such legal proceedings as incurred.

11. Convertible Preferred Stock

As of March 31, 2021 and December 31, 2020, the Fourth Amended and Restated Certificate of Incorporation, as amended, (“Amended Certificate of Incorporation”) authorized the Company to issue 19,136,487 shares of $0.01 par value convertible preferred stock, of which 4,143,251 shares have been designated as Series B convertible preferred stock (“Series B Preferred Stock”), 4,658,503 shares have been designated as Series C convertible preferred stock (“Series C Preferred Stock”), 6,162,631 shares have been designated as Series D convertible

 

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Notes to Condensed Consolidated Financial Statements

(unaudited)

 

preferred stock (“Series D Preferred Stock”), and 4,172,102 shares have been designated as Series E convertible preferred stock (“Series E Preferred Stock”, and collectively with the Series B, Series C, and Series D Preferred Stock, “Convertible Preferred Stock”). No dividends have been declared or paid by the Company since its inception.

As the Convertible Preferred Stock may only become redeemable upon a deemed liquidation event, the occurrence of which is solely within the Company’s control, the Company classifies the Convertible Preferred Stock in stockholders’ equity. The Convertible Preferred Stock was recorded at par and is not subsequently remeasured.

The Convertible Preferred Stock consisted of the following (in thousands, except share data):

 

     As of March 31, 2021  
     Preferred
Stock
Authorized
     Preferred
Stock
Issued and
Outstanding
     Carrying
Value
     Liquidation
Value
     Common
Stock
Issuable
Upon
Conversion
 

Series B

     4,143,251        4,138,185      $ 41      $ 53,093        4,138,185  

Series C

     4,658,503        4,658,503        47        98,900        4,658,503  

Series D

     6,162,631        6,146,911        61        293,269        6,146,911  

Series E

     4,172,102        3,460,005        35        519,658        3,460,005  
  

 

 

    

 

 

    

 

 

    

 

 

    

 

 

 

Total

     19,136,487        18,403,604      $ 184      $ 964,920        18,403,604  
  

 

 

    

 

 

    

 

 

    

 

 

    

 

 

 

 

     As of December 31, 2020  
     Preferred
Stock
Authorized
     Preferred
Stock
Issued and
Outstanding
     Carrying
Value
     Liquidation
Value
     Common
Stock
Issuable
Upon
Conversion
 

Series B

     4,143,251        4,138,185      $ 41      $ 53,093        4,138,185  

Series C

     4,658,503        4,658,503        47        98,900        4,658,503  

Series D

     6,162,631        6,146,911        61        293,269        6,146,911  

Series E

     4,172,102        3,460,005        35        519,658        3,460,005  
  

 

 

    

 

 

    

 

 

    

 

 

    

 

 

 

Total

     19,136,487        18,403,604      $ 184      $ 964,920        18,403,604  
  

 

 

    

 

 

    

 

 

    

 

 

    

 

 

 

 

12.

Common Stock

As of March 31, 2021 and December 31, 2020, the Amended Certificate of Incorporation authorized the Company to issue 35,000,000 shares of $0.01 par value common stock.

 

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Notes to Condensed Consolidated Financial Statements

(unaudited)

 

Common Stock Reserved for Future Issuances

The Company had the following shares of common stock reserved for future issuances:

 

     As of
March 31,
     As of
December 31,
 
     2021      2020  

Shares reserved for Series B Preferred Stock outstanding

     4,138,185        4,138,185  

Shares reserved for future issuances of Series B Preferred Stock attached to warrants to purchase Series B Preferred Stock

     5,066        5,066  

Shares reserved for Series C Preferred Stock outstanding

     4,658,503        4,658,503  

Shares reserved for Series D Preferred Stock outstanding

     6,146,911        6,146,911  

Shares reserved for future issuances of Series D Preferred Stock attached to warrants to purchase Series D Preferred Stock

     15,720        15,720  

Shares reserved for Series E Preferred Stock outstanding

     3,460,005        3,460,005  

Shares reserved for exercises of outstanding stock options under the 2008 Stock Incentive Plan

     623,396        679,596  

Shares reserved for vesting of restricted stock units under the 2014 Stock Incentive Plan

     2,625,080        2,545,458  

Shares reserved for issuances under the 2014 Stock Incentive Plan

     832,022        97,462  
  

 

 

    

 

 

 

Total common stock reserved for future issuances

     22,504,888        21,746,906  
  

 

 

    

 

 

 

 

13.

Stock-Based Compensation

2008 Stock Incentive Plan

As of March 31, 2021 and December 31, 2020, the maximum number of shares of common stock that were reserved for issuance under the 2008 Stock Incentive Plan (the “2008 Plan”) was 978,673 shares, of which no shares were available for future issuance. No additional awards may be granted under the 2008 Plan and shares of common stock underlying any awards that are forfeited, cancelled, repurchased, or otherwise terminated by the Company under the 2008 Plan will be added back to the shares available for issuance under the 2014 Stock Incentive Plan (the “2014 Plan”).

2014 Stock Incentive Plan

In March 2021, the board of directors approved an increase to the aggregate number of shares of common stock reserved for issuance under the 2014 Plan of 814,182 shares. As of March 31, 2021 and December 31, 2020, the maximum number of shares of common stock that were reserved for issuance under the 2014 Plan was 3,478,368 shares and 2,664,186 shares, respectively, of which 832,022 shares and 97,462 shares, respectively, were available for future issuance under the 2014 Plan. Under the 2014 Plan, the Company may grant incentive and

 

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Notes to Condensed Consolidated Financial Statements

(unaudited)

 

nonqualified stock options, restricted stock units (“RSUs”), restricted stock awards (“RSAs”) and other stock-based awards to employees, officers, directors, consultants, and advisors. The shares of common stock underlying any awards that are forfeited, cancelled, repurchased, or otherwise terminated by the Company under the 2014 Plan will be added back to the shares available for issuance under the 2014 Plan.

Stock Options

A summary of stock option activity under the 2008 Plan is presented below:

 

     Number
of Shares
     Weighted
Average
Exercise
Price
per Share
     Weighted
Average
Remaining
Contractual
Term
     Aggregate
Intrinsic
Value(1)
 
                   (in years)      (in thousands)  

Outstanding as of December 31, 2020

     679,596      $ 0.66        3.20      $ 131,370  

Exercised

     (56,200      0.48        
  

 

 

    

 

 

    

 

 

    

 

 

 

Outstanding as of March 31, 2021

     623,396      $ 0.68        3.01      $ 153,218  
  

 

 

    

 

 

    

 

 

    

 

 

 

Exercisable as of March 31, 2021

     623,396      $ 0.68        3.01      $ 153,218  
  

 

 

    

 

 

    

 

 

    

 

 

 
(1) The aggregate intrinsic value of stock options is calculated as the difference between the exercise price of the underlying stock options and the estimated fair value of the common stock for those stock options that had exercise prices lower than the estimated fair value of the common stock as of March 31, 2021 and December 31, 2020.

 

The aggregate intrinsic value of stock options exercised during the three months ended March 31, 2021 was $11.4 million. No stock options were exercised during the three months ended March 31, 2020. No stock options were granted during the three months ended March 31, 2021 and 2020.

Restricted Stock Units

A summary of the RSU activity under the 2014 Plan is presented below:

 

     Number of
Shares
     Weighted
Average
Grant Date
Fair Value
 

Nonvested as of December 31, 2020

     2,545,458      $ 85.63  

Granted

     97,727        246.46  

Forfeited

     (18,105      128.85  
  

 

 

    

 

 

 

Nonvested as of March 31, 2021

     2,625,080      $ 91.32  
  

 

 

    

 

 

 

RSUs issued under the 2014 Plan expire seven years from the date of grant. The weighted average remaining contractual term for the nonvested RSUs as of March 31, 2021 was 4.95 years. The weighted average grant date fair value of the RSUs granted during the three months ended March 31, 2020 was $111.85 per share.

 

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Notes to Condensed Consolidated Financial Statements

(unaudited)

 

Restricted Stock Awards

A summary of the RSA activity under the 2014 Plan is presented below:

 

     Number of
Shares
     Weighted
Average
Grant Date
Fair Value
 

Nonvested as of December 31, 2020

     8,538      $ 97.63  

Vested

     (1,202      97.63  
  

 

 

    

 

 

 

Nonvested as of March 31, 2021

     7,336      $ 97.63  
  

 

 

    

 

 

 

The aggregate fair value of the RSAs that vested during the three months ended March 31, 2021 and 2020 was $0.1 million and $0.2 million, respectively.

Stock-Based Compensation

Stock-based compensation expense was allocated as follows (in thousands):

 

     Three Months Ended
March 31,
 
         2021              2020      

Research and development

   $ 18      $ 24  

General and administrative

     100        99  
  

 

 

    

 

 

 

Total

   $ 118      $ 123  
  

 

 

    

 

 

 

During the three months ended March 31, 2021 and 2020, the Company recognized $0.1 million each of stock-based compensation expense related to the RSAs. The Company has not recognized any stock-based compensation expense related to the RSUs as of March 31, 2021 as satisfaction of the performance-based vesting condition was not deemed probable. All outstanding stock options were fully vested prior to January 1, 2020 and, accordingly, no stock-based compensation expense was recognized for these awards during the three months ended March 31, 2021 and 2020.

As of March 31, 2021, total unrecognized stock-based compensation expense related to the RSUs and RSAs was $239.7 million and $0.7 million, respectively. The total unrecognized stock-based compensation expense related to the RSAs will be recognized over a weighted average period of 1.65 years.

 

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Notes to Condensed Consolidated Financial Statements

(unaudited)

 

14.

Revenue Recognition

Disaggregation of Revenue

The following table sets forth the percentage of Foundry revenues by industry based on total Foundry revenue:

 

     Three Months Ended
March 31,
 
         2021             2020      

Food and nutrition

     27     47

Industrial and environmental

     25     22

Agriculture

     11     12

Consumer and technology

     15     14

Other

     22     5
  

 

 

   

 

 

 

Total

     100     100
  

 

 

   

 

 

 

The following table sets forth the percentage of revenue by geographic location based on total revenue:

 

     Three Months Ended
March 31,
 
         2021             2020      

North America

     96     92

Rest of world

     4     8
  

 

 

   

 

 

 

Total

     100     100
  

 

 

   

 

 

 

Contract Balances

The Company recognizes a contract asset when the Company transfers goods or services to a customer before the customer pays consideration or before payment is due, excluding any amounts presented as accounts receivable. The Company had no contract asset balances as of and for the three months ended March 31, 2021 and 2020.

Contract liabilities, or deferred revenue, primarily consist of payments received in advance of performance under the contract or when the Company has an unconditional right to consideration under the terms of the contract before it transfers goods or services to the customer. The Company’s collaborative arrangements with its investees and related parties typically include upfront payments consisting of cash or non-cash consideration for future research and development services and non-cash consideration in the form of equity securities for licenses that will be transferred in the future. The Company records the upfront cash payments and fair value of the equity securities as deferred revenue.

The Company also invoices customers based on contractual billing schedules, which results in the recording of deferred revenue to the extent payment is received prior to the Company’s performance of the related services. Contract liabilities are recognized as revenue as (or when) the Company performs under the contract.

Of the Company’s $128.5 million in deferred revenue at December 31, 2020, $11.0 million was recognized as revenue during the three months ended March 31, 2021. Of the Company’s $147.9 million in deferred revenue at December 31, 2019, $9.8 million was recognized as revenue during the three months ended March 31, 2020.

 

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Notes to Condensed Consolidated Financial Statements

(unaudited)

 

Performance Obligations

The aggregate amount of the transaction price that was allocated to performance obligations that have not yet been satisfied or are partially satisfied as of March 31, 2021 and December 31, 2020 was $23.5 million and $20.7 million, respectively. The Company has elected the practical expedient not to provide the remaining performance obligation disclosures related to contracts for which the Company recognizes revenue in the amount to which it has the right to invoice. As of March 31, 2021, of the performance obligations not yet satisfied or partially satisfied, nearly all is expected to be recognized as revenue during the years 2021 to 2025.

 

15.

Significant Collaboration Transactions

Kalo Ingredients, LLC

Summary of Arrangement

Kalo was formed in March 2021 to focus on the application of synthetic biology in the personal care products industry. In March 2021, the Company entered into (i) an Intellectual Property Contribution Agreement (“Kalo IP Agreement”) that granted Kalo a license to certain of the Company’s intellectual property, (ii) a Technical Development Agreement (“Kalo TDA”) that establishes the terms under which the Company will provide technical research and development services, and (iii) a Common Unit Issuance Agreement (“Kalo CUIA”) which compensates the Company for its intellectual property contribution. Contemporaneous with these transactions, Kalo entered into a Series A Preferred Unit Purchase Agreement under which it sold 1,755,000 Series A preferred units to certain of the Company’s investors, for aggregate proceeds of approximately $19.5 million. The Series A Preferred Unit Purchase Agreement provides for the sale and issuance of up to an additional 7,245,000 Series A preferred units. In June 2021, Kalo issued an additional 3,528,000 Series A preferred units for aggregate proceeds of approximately $39.2 million (Note 18). As a result, the Company is entitled to receive additional common units in accordance with the additional common unit right described in the following paragraph, the amount of which is subject to negotiation between the parties.

Under the Kalo IP Agreement, the Company licensed certain intellectual property to Kalo for use in the development or the production of Kalo’s products that the parties will subsequently agree to research and develop under technical development plans (“TDPs”). The license rights provide Kalo with the ability to commercialize the specified products from the corresponding TDP under the Kalo TDA. In return for the license to the intellectual property, Kalo has agreed to issue the Company up to 9,000,000 common units in accordance with certain terms and conditions set forth within the agreements. Upon execution of the Kalo CUIA, the Company was issued 1,755,000 common units. The Company is entitled to receive up to an additional 7,245,000 common units upon closing of the Series A preferred unit financing by Kalo.

Under the Kalo TDA, the parties jointly agree on TDPs, through equal representation on a joint steering committee, under which the Company will perform agreed-upon research and development services in return for consideration on a cost-plus basis for all services provided. As of March 31, 2021, no TDPs had been executed by the parties.

Accounting Analysis

The common unit investment in Kalo is considered an equity method investment as a result of the Company’s ability to exercise significant influence over Kalo’s financial and operating policies through its ownership of common units. The initial carrying value of the equity method investment in Kalo is the fair value of the common

 

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Notes to Condensed Consolidated Financial Statements

(unaudited)

 

units of $11.9 million received in exchange for the Kalo IP Agreement which, as discussed below, was accounted for as deferred revenue at inception. The fair value of Kalo’s common units was determined at inception of the agreements using the option pricing method. The option pricing method used a back-solve methodology to infer the total equity value based on the pricing of the Series A preferred unit financing, which was contemporaneous with the Kalo IP Agreement. Further, the Company determined the rights to up to an additional 7,245,000 common units did not meet the definition of a freestanding financial instrument and are not representative of a derivative. The right to the additional common units is considered variable consideration that is fully constrained at inception and until the contingencies related to the issuance of the additional shares are resolved.

The Series A preferred units issued by Kalo receive a liquidation preference prior to common units. As such, the Company concluded that this represents a substantive profit-sharing arrangement, and the Company is recognizing earnings and losses on the equity method investment using the HLBV method. The Company recorded a $11.9 million loss on its equity method investment in Kalo during the three months ended March 31, 2021. The loss allocated to the Company primarily relates to Kalo’s accounting for the non-cash consideration related to the Kalo IP Agreement as in-process research and development, which resulted in the full value of the Company’s intellectual property contribution being expensed in the three months ended March 31, 2021. As of March 31, 2021, the carrying value of the equity method investment in Kalo has been reduced to zero. There is no commitment for the Company to provide further financial support to Kalo, and therefore the carrying value of the equity method investment will not be reduced below zero.

The relationship with Kalo is a vendor-customer relationship and is within the scope of ASC 606, as the provision of services and corresponding license rights are considered a part of the Company’s ordinary activities. The common units issued to the Company represent non-cash consideration. While the Kalo TDA has been executed by the parties and provides the payments terms for future services, the Kalo TDA does not provide for any transfer of goods or services between the parties. However, the Company will provide licenses and services upon execution of the contemplated TDPs. Accordingly, the Company concluded that the Kalo TDA, in combination with the Kalo CUIA, met the definition of a contract under ASC 606. Each TDP executed under the Kalo TDA will be accounted for in accordance with ASC 606. As of March 31, 2021, the Company had not executed any TDPs with Kalo. Therefore, the non-cash consideration of $11.9 million is recorded as deferred revenue, net of current portion on the Condensed Consolidated Balance Sheet.

The Company’s performance obligations under the contract consist of ten material rights to future technical research and development services and commercial licenses under individual TDPs that the Company expects to execute under the Kalo TDA. The material rights represent an advance payment for the license rights, which will be granted upon the execution of future TDPs. As there is no additional payment for these license rights when future TDPs are executed, the Company has determined that there is a material right associated with each of the contemplated additional TDPs under the Kalo TDA. The Company has allocated approximately $1.2 million of the upfront non-cash consideration to each of the ten material rights based on the estimated standalone selling price of the performance obligations. Unexercised material rights are recorded as non-current deferred revenue until such time as the parties execute a TDP conveying a commercial license.

Upon the execution of a TDP underlying a material right, the Company is obligated to provide technical research and development services under the TDP and a license to applicable patents and other intellectual property designed and developed under the TDP. The technical research and development services and license provided under a TDP are highly interdependent and interrelated with one another. Without the Company’s knowledge, expertise, and platform, there would not be a licensable strain or other commercializable product to transfer to Kalo. Further, Kalo has rights to development intellectual property created as part of each TDP, irrespective of

 

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Notes to Condensed Consolidated Financial Statements

(unaudited)

 

the result of the development. Therefore, each executed TDP underlying a material right consists of one combined performance obligation for the technical research and development services and license to be provided by the Company.

For each TDP underlying a material right, the transaction price consists of variable consideration for the most likely amount of estimated consideration to be received under the cost-plus arrangement and non-cash consideration allocated to the material rights. As the services performed by the Company under a TDP create or enhance an asset that Kalo controls as the asset is created or enhanced, the Company satisfies the performance obligation and recognizes revenue over time. The Company uses an input method that compares total costs incurred relative to total estimated cost to complete to estimate progress under the contract. Any revisions to the estimated total budgeted costs to complete, and the resulting impact to revenue recognition, are reflected in the period of the change through a cumulative catch-up adjustment.

As of March 31, 2021, the Company had a deferred revenue balance of $11.9 million with Kalo, consisting of the non-cash consideration received. No revenue was recognized by the Company during the three months ended March 31, 2021.

Allonnia, LLC

Summary of Arrangement

Allonnia was formed in 2019 and focuses on the application of synthetic biology in the bioremediation space, leveraging Ginkgo’s proprietary platform to develop solutions to treat waste streams through degrading or metabolizing contaminants of concern and recover and upcycle valuable materials from waste. In December 2019, the Company entered into (i) an Intellectual Property Contribution Agreement (“Allonnia IP Agreement”) that granted Allonnia a license to certain of the Company’s intellectual property, (ii) a Technical Development Agreement (“Allonnia TDA”) that establishes the terms under which the Company is providing technical development services, and (iii) a Common Unit Issuance Agreement (“Allonnia CUIA”) which provides for the issuance of common units of Allonnia to the Company in exchange for the license rights granted under the Allonnia IP Agreement. Contemporaneous with these agreements, Allonnia entered into a Series A Preferred Unit Purchase Agreement under which Allonnia sold 2,970,000 Series A preferred units to certain of the Company’s investors, as well as a third-party investor. Allonnia also agreed to issue an additional 630,000 Series A preferred units to a strategic partner as compensation for the delivery of future services to Allonnia. The Series A Preferred Unit Purchase Agreement also provided for the sale and issuance of up to an additional 5,400,000 Series A preferred units subsequent to the initial closing. Through December 31, 2020, Allonnia issued an additional 1,844,911 Series A preferred units, 180,000 of which were issued in exchange for the rights to certain intellectual property which will vest based on the achievement of milestones associated with the development of the intellectual property received. During the three months ended March 31, 2021, Allonnia closed their Series A preferred unit financing and issued 22,500 Series A preferred units to an additional third-party investor.

Under the Allonnia IP Agreement, the Company licensed intellectual property to Allonnia for use in the development or the production of its products that the parties will subsequently agree to develop under TDPs. The license rights provide Allonnia with the ability to commercialize the specified products from the corresponding strain or enzyme, which can only be developed by the Company under the Allonnia TDA. The Company received 3,600,000 common units as consideration for the license upon execution of the agreement and an additional 1,867,411 common units during the three months ended March 31, 2021 in connection with the closing of the Series A preferred unit financing.

 

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Notes to Condensed Consolidated Financial Statements

(unaudited)

 

Under the Allonnia TDA, the parties jointly agree, through equal representation on a joint steering committee, on TDPs for specific strains and enzymes, in which the Company will perform agreed upon development services in return for consideration on a cost-plus basis for all services provided.

Accounting Analysis

The common unit investment in Allonnia is considered an equity method investment as a result of the Company’s ability to exercise significant influence over Allonnia’s financial and operating policies through its ownership of common units. The initial carrying value of the equity method investment in Allonnia, which was equal to the fair value of the common units received in exchange for the Allonnia IP Agreement of $24.5 million, was subsequently reduced to zero as a result of the application of the HLBV method and was recorded as a loss on equity method investments. During the three months ended March 31, 2021, Allonnia issued an additional 22,500 Series A preferred units and closed their Series A preferred unit financing. As a result, the Company received an additional 1,867,411 common units for total consideration of $12.7 million. The additional consideration received resulted in an increase in the Company’s equity method investment in Allonnia of $12.7 million, which the Company subsequently reduced to zero as a result of the application of the HLBV method. Accordingly, the Company recorded a loss on its equity method investment in Allonnia of $12.7 million during the three months ended March 31, 2021. As of March 31, 2021, the carrying value of the equity method investment in Allonnia remained at zero. There is no commitment for the Company to provide further financial support to Allonnia and therefore the carrying value of the equity method investment will not be reduced below zero. Therefore, no additional loss was recognized during the three months ended March 31, 2021.

The relationship with Allonnia is a vendor-customer relationship and is within the scope of ASC 606 whereby the Company will provide licenses and services upon execution of the TDPs as outlined under the terms of the Allonnia TDA. The Company’s performance obligations under the contract consist of a combined service and license performance obligation related to the initial TDP executed in February 2020 and nine material rights, related to the estimated additional TDPs the parties expect to execute under the Allonnia TDA. The material rights represent an advance payment for the license rights which will be granted upon the execution of each TDP. As there is no additional payment for these license rights upon execution of a TDP, the Company has determined that there is a material right associated with each of the contemplated future TDPs. The Company initially allocated $2.5 million of the upfront non-cash consideration to each of the ten performance obligations under the contract based on the estimated standalone selling price of the performance obligations. Unexercised material rights are recorded as non-current deferred revenue until such time as the parties execute a TDP.

Upon the execution of each TDP, the Company is obligated to provide development services under the TDP and a license to applicable patents and other intellectual property to the products developed under the plan. Each executed TDP consists of one combined performance obligation for the license and research and development services to be performed by the Company.

The transaction price for each TDP consists of variable consideration for the most likely amount of estimated consideration to be received under the cost-plus arrangement and the non-cash consideration allocated to the material rights. The Company recognizes revenue over time as it satisfies the respective performance obligations using an input method that compares total costs incurred relative to total estimated cost to complete to estimate progress under the contract. During the three months ended March 31, 2021, the additional non-cash consideration received of $12.7 million, which is representative of previously constrained variable consideration, was allocated to each of the ten performance obligations under the arrangement with Allonnia of $1.3 million each consistent with the initial relative selling price allocation. Additionally, a cumulative catch up in revenue was recognized for the TDPs in process.

 

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Notes to Condensed Consolidated Financial Statements

(unaudited)

 

As of March 31, 2021 and December 31, 2020, the Company had a deferred revenue balance of $38.0 million and $26.1 million, respectively, with Allonnia. During the three months ended March 31, 2021 and 2020, the Company recognized $2.3 million and $0.4 million from services provided to Allonnia, respectively.

Other Significant Collaboration Transactions

In addition to the activity discussed above related to Kalo and Allonnia, the Company provided research and development services under existing collaboration arrangements with Joyn, Motif, Synlogic and Genomatica. During the three months ended March 31, 2021 and 2020, the total revenue recognized from services provided to these entities was $10.4 million and $15.2 million, respectively. As of March 31, 2021 and December 31, 2020, the Company had an aggregate deferred revenue balance of $88.3 million and $94.0 million, respectively, with Joyn, Motif, Synlogic and Genomatica.

During the three months ended March 31, 2021, there were no material changes to the Company’s arrangements with its collaborators except as noted above. For a description of these arrangements and the related accounting conclusions, refer to Note 17 to the audited consolidated financial statements as of and for the years ended December 31, 2020 and 2019 included elsewhere in this proxy statement/prospectus. Refer to Notes 7 and 8 for additional details on the Company’s equity method investments and investments, as well as Note 17 for a summary of transactions with related parties.

 

16.

Net Loss per Share

The following potential common shares, presented based on amounts outstanding at each period end, were excluded from the calculation of diluted net loss per share attributable to Ginkgo Bioworks, Inc. common stockholders for the periods indicated because including them would have been anti-dilutive:

 

     Three Months Ended
March 31,
 
     2021      2020  

Series B Preferred Stock

     4,138,185        4,138,185  

Series C Preferred Stock

     4,658,503        4,658,503  

Series D Preferred Stock

     6,146,911        6,146,911  

Series E Preferred Stock

     3,460,005        2,831,342  

Warrants to purchase Series B Preferred Stock

     5,066        5,066  

Warrants to purchase Series D Preferred Stock

     15,720        15,720  

Outstanding stock options

     623,396        718,755  

Unvested RSUs

     2,625,080        1,769,881  

Unvested RSAs

     7,336        12,153  

 

17.

Related Parties

The Company’s significant transactions with its related parties are primarily comprised of revenue generating activities under license and collaboration agreements.

 

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Ginkgo Bioworks, Inc. and Subsidiaries

Notes to Condensed Consolidated Financial Statements

(unaudited)

 

Significant related party transactions included in the Condensed Consolidated Balance Sheets are summarized below (in thousands):

 

     Joyn      Motif      Genomatica      Allonnia      Synlogic      Kalo      Total  

Balances as of March 31, 2021

                    

Accounts receivable, net

   $ —        $ 3,391      $ 1,500      $ 2,167      $   —        $ —        $ 7,058  

Deferred revenue, current and non-current

   $ 8,281      $ 53,299      $ 26,680      $ 37,959      $ 66      $ 11,897      $ 138,182  

Balances as of December 31, 2020

                    

Accounts receivable, net

   $ —        $ 2,403      $ 1,500      $ 1,309      $ —        $ —        $ 5,212  

Deferred revenue, current and non-current

   $ 9,862      $ 53,952      $ 30,128      $ 26,064      $ 72      $ —        $ 120,078  

Significant related party transactions included in the Condensed Consolidated Statements Operations and Comprehensive Loss are summarized below (in thousands):

 

     Joyn      Motif      Genomatica      Allonnia      Synlogic      Kalo      Total  

For the Three Months Ended March 31, 2021

                    

Foundry revenue

   $ 1,598      $ 5,492      $ 3,298      $ 2,266      $ 6      $ —        $ 12,660  

For the Three Months Ended March 31, 2020

                    

Foundry revenue

   $ 2,416      $ 9,689      $ 3,032      $ 369      $   19      $ —        $ 15,525  

Significant related party transactions included in the changes in operating assets and liabilities in the Condensed Consolidated Statements of Cash Flows are summarized below (in thousands):

 

     Joyn     Motif     Genomatica     Allonnia     Synlogic     Kalo      Total  

For the Three Months Ended March 31, 2021

               

Accounts receivable, net

   $ —       $ (988   $ —       $ (858   $   —       $ —        $ (1,846

Deferred revenue, current and non-current

   $ (1,581   $ (653   $ (3,448   $ (803   $ (6   $ —        $ (6,491

For the Three Months Ended March 31, 2020

               

Accounts receivable, net

   $ 104     $ (956   $ —       $ (360   $ —       $ —        $ (1,212

Deferred revenue, current and non-current

   $ (2,416   $ (4,682   $ (3,032   $ (55   $ (19   $ —        $ (10,204

Refer to Notes 7 and 8 for additional details on the Company’s investments and equity method investments held in its related parties.

 

18.

Subsequent Events

The Company evaluated subsequent events and transactions that occurred after the balance sheet date up to June 28, 2021, the date that the financial statements were available to be issued. Based on this review, other than

 

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Ginkgo Bioworks, Inc. and Subsidiaries

Notes to Condensed Consolidated Financial Statements

(unaudited)

 

as described below, the Company did not identify any subsequent events that would have required adjustment or disclosure in the financial statements.

Kalo Series A Preferred Unit Financing

In June 2021, Kalo issued an additional 3,528,000 Series A preferred units for aggregate proceeds of approximately $39.2 million. As a result, the Company is entitled to receive additional common units in Kalo, the amount of which is subject to negotiation between the parties.

 

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Table of Contents

Annex A

 

 

 

 

AGREEMENT AND PLAN OF MERGER

by and among

SOARING EAGLE ACQUISITION CORP.,

SEAC MERGER SUB INC.,

and

GINKGO BIOWORKS, INC.

dated as of May 11, 2021

 

 

 


Table of Contents

TABLE OF CONTENTS

 

         Page  
ARTICLE I CERTAIN DEFINITIONS      A-4  

Section 1.1.

 

Definitions

     A-4  

Section 1.2.

 

Construction

     A-21  

Section 1.3.

 

Knowledge

     A-22  

Section 1.4.

 

Equitable Adjustments

     A-22  
ARTICLE II THE TRANSACTIONS      A-22  

Section 2.1.

 

Domestication

     A-22  

Section 2.2.

 

Pre-Closing Recapitalization

     A-23  

Section 2.3.

 

The Merger

     A-24  

Section 2.4.

 

Merger Effective Time

     A-24  

Section 2.5.

 

Effect of the Merger

     A-24  

Section 2.6.

 

Governing Documents

     A-24  

Section 2.7.

 

Directors and Officers

     A-24  

Section 2.8.

 

Reorganization Tax Matters

     A-24  
ARTICLE III CLOSING OF THE TRANSACTIONS      A-25  

Section 3.1.

 

Closing

     A-25  

Section 3.2.

 

Pre-Closing Deliverables

     A-25  

Section 3.3.

 

FIRPTA Certificate

     A-25  

Section 3.4.

 

Closing Payments

     A-26  

Section 3.5.

 

Further Assurances

     A-26  
ARTICLE IV MERGER CONSIDERATION; CONVERSION OF SECURITIES      A-26  

Section 4.1.

 

Merger Consideration.

     A-26  

Section 4.2.

 

Conversion of Company Common Shares in the Merger.

     A-27  

Section 4.3.

 

Exchange Procedures

     A-27  

Section 4.4.

 

Treatment of Company Preferred Warrants

     A-29  

Section 4.5.

 

Treatment of Company Equity Awards

     A-30  

Section 4.6.

 

Earn-out.

     A-31  

Section 4.7.

 

Withholding

     A-33  
ARTICLE V REPRESENTATIONS AND WARRANTIES OF THE COMPANY      A-33  

Section 5.1.

 

Company Organization

     A-33  

Section 5.2.

 

Subsidiaries

     A-33  

Section 5.3.

 

Due Authorization.

     A-34  

Section 5.4.

 

No Conflict

     A-34  

Section 5.5.

 

Governmental Authorities; Consents

     A-34  

Section 5.6.

 

Capitalization of the Company.

     A-35  

Section 5.7.

 

Capitalization of Subsidiaries.

     A-36  

Section 5.8.

 

Financial Statements

     A-37  

Section 5.9.

 

Undisclosed Liabilities

     A-37  

Section 5.10.

 

Absence of Changes

     A-37  

Section 5.11.

 

Litigation and Proceedings

     A-38  

Section 5.12.

 

Legal Compliance

     A-38  

Section 5.13.

 

Contracts; No Defaults.

     A-38  

Section 5.14.

 

Company Benefit Plans.

     A-40  

Section 5.15.

 

Labor Relations; Employees.

     A-41  

Section 5.16.

 

Taxes

     A-42  

 

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TABLE OF CONTENTS

(continued)

 

         Page  

Section 5.17.

 

Brokers’ Fees

     A-44  

Section 5.18.

 

Insurance

     A-44  

Section 5.19.

 

Licenses

     A-44  

Section 5.20.

 

Equipment and Other Tangible Property

     A-44  

Section 5.21.

 

Real Property.

     A-45  

Section 5.22.

 

Intellectual Property.

     A-45  

Section 5.23.

 

Privacy and Cybersecurity.

     A-47  

Section 5.24.

 

Environmental Matters

     A-47  

Section 5.25.

 

Anti-Corruption and Anti-Money Laundering Compliance.

     A-48  

Section 5.26.

 

Sanctions and International Trade Compliance.

     A-48  

Section 5.27.

 

Information Supplied

     A-48  

Section 5.28.

 

Customers.

     A-49  

Section 5.29.

 

Vendors.

     A-49  

Section 5.30.

 

Sufficiency of Assets

     A-49  

Section 5.31.

 

Related Party Transactions

     A-49  

Section 5.32.

 

Investment Company Act

     A-50  

Section 5.33.

 

No Additional Representation or Warranties

     A-50  
ARTICLE VI REPRESENTATIONS AND WARRANTIES OF ACQUIROR AND MERGER SUB      A-50  

Section 6.1.

 

Company Organization

     A-50  

Section 6.2.

 

Due Authorization.

     A-50  

Section 6.3.

 

No Conflict

     A-52  

Section 6.4.

 

Governmental Authorities; Consents

     A-52  

Section 6.5.

 

Litigation and Proceedings

     A-52  

Section 6.6.

 

SEC Filings

     A-53  

Section 6.7.

 

Internal Controls; Listing; Financial Statements.

     A-53  

Section 6.8.

 

Undisclosed Liabilities

     A-54  

Section 6.9.

 

Absence of Changes

     A-54  

Section 6.10.

 

Trust Account

     A-54  

Section 6.11.

 

Investment Company Act; JOBS Act

     A-55  

Section 6.12.

 

Capitalization of Acquiror.

     A-55  

Section 6.13.

 

PIPE Investment

     A-56  

Section 6.14.

 

Brokers’ Fees

     A-56  

Section 6.15.

 

Indebtedness; SPAC Expenses

     A-56  

Section 6.16.

 

Taxes

     A-57  

Section 6.17.

 

Business Activities

     A-58  

Section 6.18.

 

Nasdaq Stock Market Quotation

     A-59  

Section 6.19.

 

Registration Statement, Proxy Statement and Proxy Statement/Registration Statement

     A-59  

Section 6.20.

 

No Additional Representation or Warranties

     A-59  
ARTICLE VII COVENANTS OF THE COMPANY      A-60  

Section 7.1.

 

Conduct of Business

     A-60  

Section 7.2.

 

Inspection

     A-62  

Section 7.3.

 

Preparation and Delivery of Additional Company Financial Statements

     A-63  

Section 7.4.

 

Affiliate Agreements

     A-63  

Section 7.5.

 

Acquisition Proposals

     A-63  

 

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TABLE OF CONTENTS

(continued)

 

         Page  
ARTICLE VIII COVENANTS OF ACQUIROR      A-63  

Section 8.1.

 

Employee Matters

     A-63  

Section 8.2.

 

Trust Account Proceeds and Related Available Equity

     A-64  

Section 8.3.

 

Listing Matters

     A-64  

Section 8.4.

 

No Solicitation by Acquiror

     A-65  

Section 8.5.

 

Acquiror Conduct of Business

     A-65  

Section 8.6.

 

Post-Closing Directors and Officers of Acquiror

     A-67  

Section 8.7.

 

Indemnification and Insurance

     A-67  

Section 8.8.

 

Acquiror Public Filings

     A-68  

Section 8.9.

 

PIPE Subscriptions

     A-68  
ARTICLE IX JOINT COVENANTS      A-68  

Section 9.1.

 

HSR Act; Other Filings

     A-68  

Section 9.2.

 

Preparation of Proxy Statement/Registration Statement; Shareholders’ Meeting and Approvals

     A-69  

Section 9.3.

 

Support of Transaction

     A-72  

Section 9.4.

 

Tax Matters

     A-72  

Section 9.5.

 

Section 16 Matters

     A-72  

Section 9.6.

 

Cooperation; Consultation

     A-73  

Section 9.7.

 

Transaction Litigation

     A-73  
ARTICLE X CONDITIONS TO OBLIGATIONS      A-73  

Section 10.1.

 

Conditions to Obligations of Acquiror, Merger Sub, and the Company

     A-73  

Section 10.2.

 

Conditions to Obligations of Acquiror and Merger Sub

     A-74  

Section 10.3.

 

Conditions to Obligation of the Company

     A-75  

Section 10.4.

 

Frustration of Conditions

     A-75  
ARTICLE XI TERMINATION/EFFECTIVENESS      A-76  

Section 11.1.

 

Termination

     A-76  

Section 11.2.

 

Effect of Termination

     A-77  
ARTICLE XII MISCELLANEOUS      A-77  

Section 12.1.

 

Trust Account Waiver

     A-77  

Section 12.2.

 

Notices

     A-78  

Section 12.3.

 

Assignment

     A-78  

Section 12.4.

 

Rights of Third Parties

     A-79  

Section 12.5.

 

Expenses

     A-79  

Section 12.6.

 

Governing Law

     A-79  

Section 12.7.

 

Counterparts

     A-79  

Section 12.8.

 

Company and Acquiror Disclosure Letters

     A-79  

Section 12.9.

 

Entire Agreement

     A-79  

Section 12.10.

 

Amendments

     A-79  

Section 12.11.

 

Waivers

     A-80  

Section 12.12.

 

Confidentiality; Publicity.

     A-80  

Section 12.13.

 

Severability

     A-80  

Section 12.14.

 

Jurisdiction; Waiver of Jury Trial.

     A-80  

Section 12.15.

 

Enforcement

     A-81  

 

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TABLE OF CONTENTS

(continued)

 

         Page  

Section 12.16.

 

Non-Recourse

     A-81  

Section 12.17.

 

Non-Survival of Representations, Warranties and Covenants

     A-81  

Section 12.18.

 

Conflicts and Privilege

     A-81  

EXHIBITS

 

Exhibit A

  Form of Certificate of Incorporation of Acquiror upon Domestication

Exhibit B

  Form of Bylaws of Acquiror upon Domestication

Exhibit C

  Form of Company Stockholder Support Agreement

Exhibit D

  Sponsor Support Agreement

Exhibit E

  Form of Registration Rights Agreement

Exhibit F

  Form of Certificate of Merger

Exhibit G

  Form of Certificate of Incorporation of Surviving Company

Exhibit H

  Form of Bylaws of Surviving Company

 

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AGREEMENT AND PLAN OF MERGER

This Agreement and Plan of Merger, dated as of May 11, 2021 (this “Agreement”), is made and entered into by and among Soaring Eagle Acquisition Corp., a Cayman Islands exempted company limited by shares (which shall domesticate as a Delaware corporation in connection with the consummation of the transactions contemplated hereby) (together with its successor, “Acquiror”), SEAC Merger Sub Inc., a Delaware corporation and a direct, wholly owned subsidiary of Acquiror (“Merger Sub”), and Ginkgo Bioworks, Inc., a Delaware corporation (the “Company”). Acquiror, Merger Sub and the Company are sometimes collectively referred to herein as the “Parties”, and each of them is sometimes individually referred to herein as a “Party”. Certain terms used in this Agreement have the respective meanings ascribed to them in Section 1.1.

RECITALS

WHEREAS, Acquiror is a blank check company incorporated for the purpose of effecting a merger, share exchange, asset acquisition, share purchase, reorganization or similar business combination with one or more businesses;

WHEREAS, Merger Sub is a newly formed, direct, wholly owned subsidiary of Acquiror incorporated for the purpose of effecting the Merger;

WHEREAS, subject to the conditions set forth in this Agreement, prior to the Closing, Acquiror will change its jurisdiction of incorporation from the Cayman Islands to the State of Delaware by effecting the Domestication in accordance with the applicable provisions of the Delaware General Corporation Law (the “DGCL”) and the Cayman Islands Companies Act (the “Companies Act”);

WHEREAS, in connection with the Domestication, Acquiror will amend and restate its Governing Documents by (a) adopting and filing with the Delaware Secretary of State a certificate of incorporation substantially in the form attached to this Agreement as Exhibit A (the “Acquiror Delaware Charter”), which will, among other things, implement a dual-class stock structure wherein Acquiror’s common stock will consist of Acquiror Delaware Class A Shares, which will entitle the holders thereof to one vote per share on all voting matters, and Acquiror Delaware Class B Shares, which will carry economic rights (including dividend and liquidation rights) identical to those carried by the Acquiror Delaware Class A Shares but will entitle the holders thereof to ten votes per share on all voting matters (the “Dual-Class Stock Structure”), and (b) adopting bylaws substantially in the form attached to this Agreement as Exhibit B (the “Acquiror Delaware Bylaws”);

WHEREAS, at the Domestication Effective Time, by virtue of the Domestication, (a) each Acquiror Cayman Class B Share that is issued and outstanding immediately prior to the Domestication Effective Time will convert automatically, on a one-for-one basis, into an Acquiror Cayman Class A Share, (b) immediately following the conversion described in the preceding clause (a), each Acquiror Cayman Class A Share that is then issued and outstanding will convert automatically, on a one-for-one basis, into an Acquiror Delaware Class A Share, (c) each Acquiror Cayman Warrant that is issued and outstanding immediately prior to the Domestication Effective Time will convert automatically, on a one-for-one basis, into an Acquiror Delaware Warrant and (d) each Acquiror Cayman Unit that is issued and outstanding immediately prior to the Domestication Effective Time will convert automatically into one Acquiror Delaware Class A Share and one-fifth of one Acquiror Delaware Warrant;

WHEREAS, prior to the Closing, in order to facilitate the consummation of the transactions contemplated hereby (including the Merger and the implementation of the Dual-Class Stock Structure), the Company will be recapitalized such that, immediately prior to the Merger Effective Time, the Company’s authorized capital stock shall consist solely of Company Class A Shares and Company Class B Shares (the “Company Recapitalization”);

 

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Table of Contents

WHEREAS, after the Domestication Effective Time and prior to the Merger Effective Time, on the terms and subject to the conditions set forth in the Subscription Agreements, the PIPE Investors will purchase from Acquiror in a private placement certain Acquiror Delaware Class A Shares for an aggregate purchase price equal to the PIPE Investment Amount (the “PIPE Investment”);

WHEREAS, at the Merger Effective Time, on the terms and subject to the conditions set forth in this Agreement and in accordance with the applicable provisions of the DGCL, Merger Sub will be merged with and into the Company (the “Merger”), whereupon the separate corporate existence of Merger Sub will cease and the Company will continue as the surviving corporation in the Merger (the “Surviving Corporation”) and will be a wholly owned subsidiary of Acquiror;

WHEREAS, at the Merger Effective Time, by virtue of the Merger, (a) each Company Class A Share that is issued and outstanding immediately prior to the Merger Effective Time will be converted into the right to receive, on the terms and subject to the conditions set forth in this Agreement, the Standard Per Share Equity Value Consideration and, subject to the vesting and forfeiture conditions specified in Section 4.6, the Standard Per Share Earn-out Consideration and (b) each Company Class B Share that is issued and outstanding immediately prior to the Merger Effective Time will be converted into the right to receive, on the terms and subject to the conditions set forth in this Agreement, the Employee Per Share Equity Value Consideration and, subject to the vesting and forfeiture conditions specified in Section 4.6, the Employee Per Share Earn-out Consideration;

WHEREAS, each of the Parties intends that, for U.S. federal income tax purposes, the Merger will qualify as a “reorganization” within the meaning of Section 368(a) of the Code and the Treasury Regulations, to which each of Acquiror, Merger Sub and the Company are to be parties under Section 368(b) of the Code, this Agreement is intended to constitute a “plan of reorganization” within the meaning of Section 368 of the Code and the Treasury Regulations and the Merger and the PIPE Investment, taken together, shall constitute a transaction that qualifies under Section 351 of the Code;

WHEREAS, the board of directors of the Company (the “Company Board”) has (a) determined that it is in the best interests of the Company and the Company Stockholders, and declared it advisable, for the Company to enter into this Agreement and each Ancillary Agreement to which the Company is, or is contemplated to be, a party, (b) approved the Company’s execution and delivery of, and performance of its obligations under, this Agreement and each Ancillary Agreement to which the Company is, or is contemplated to be, a party and the transactions contemplated hereby and thereby (including the Company Recapitalization and the Merger), on the terms and subject to the conditions set forth herein and therein, and (c) adopted a resolution recommending the approval and (as applicable) adoption of this Agreement and each Ancillary Agreement to which the Company is, or is contemplated to be, a party and the transactions contemplated hereby and thereby (including the Company Recapitalization and the Merger), on the terms and subject to the conditions set forth herein and therein, by the Company Stockholders (the determinations, approvals and other actions described in each of the foregoing clauses (a), (b) and (c), the “Company Board Actions”);

WHEREAS, the board of directors of Acquiror (the “Acquiror Board”) has (a) determined that it is in the best interests of Acquiror and the Acquiror Shareholders, and declared it advisable, for Acquiror to enter into this Agreement and each Ancillary Agreement to which Acquiror is, or is contemplated to be, a party, (b) approved the transactions contemplated hereby as a Business Combination and approved Acquiror’s execution and delivery of, and performance of its obligations under, this Agreement and each Ancillary Agreement to which Acquiror is, or is contemplated to be, a party and the transactions contemplated hereby and thereby (including the Domestication and the Merger), on the terms and subject to the conditions set forth herein and therein, and (c) adopted a resolution recommending the approval and (as applicable) adoption of this Agreement and each Ancillary Agreement to which Acquiror is, or is contemplated to be, a party and the transactions contemplated hereby and thereby (including the Domestication, the PIPE Investment and the Merger), on the terms and subject to the conditions set forth herein and therein, by the Acquiror Shareholders (the determinations, approvals and other actions described in each of the foregoing clauses (a), (b) and (c), the “Acquiror Board Actions”);

 

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WHEREAS, the board of directors of Merger Sub has (a) determined that it is in the best interests of Merger Sub and its sole stockholder, and declared it advisable, for Merger Sub to enter into this Agreement and each Ancillary Agreement to which Merger Sub is, or is contemplated to be, a party, (b) approved Merger Sub’s execution and delivery of, and performance of its obligations under, this Agreement and each Ancillary Agreement to which Merger Sub is, or is contemplated to be, a party and the transactions contemplated hereby and thereby (including the Merger), on the terms and subject to the conditions set forth herein and therein, and (c) adopted a resolution recommending the approval and (to the extent applicable) adoption of this Agreement and each Ancillary Agreement to which Merger Sub is, or is contemplated to be, a party and the transactions contemplated hereby and thereby (including the Merger), on the terms and subject to the conditions set forth herein and therein, by Merger Sub’s sole stockholder;

WHEREAS, concurrently with the Parties’ execution and delivery of this Agreement, and as a condition and inducement to Acquiror’s willingness to enter into this Agreement, each of the Supporting Company Stockholders has entered into a support agreement substantially in the form attached to this Agreement as Exhibit C (each, a “Company Stockholder Support Agreement”) with the Company, pursuant to which, among other things, such Supporting Company Stockholder has agreed, on the terms and subject to the conditions set forth therein, to vote all of its Company Shares, promptly after the Registration Statement is declared effective under the Securities Act, in favor of the approval and (to the extent applicable) adoption of this Agreement, each applicable Ancillary Agreement, the transactions contemplated hereby and thereby (including the Merger) and each other matter required to be approved or adopted by the Company Stockholders in order to effect the Merger and the other transactions contemplated hereby;

WHEREAS, Acquiror, as the sole stockholder of Merger Sub, has approved and adopted this Agreement and each applicable Ancillary Agreement and has approved the consummation of the transactions contemplated hereby and thereby;

WHEREAS, concurrently with the Parties’ execution and delivery of this Agreement, and as a condition and inducement to the Company’s willingness to enter into this Agreement, the Sponsor, which is the record holder of the issued and outstanding Acquiror Cayman Class B Shares, and certain principals thereof have entered into the support agreement attached to this Agreement as Exhibit D (the “Sponsor Support Agreement”) with Acquiror and the Company, pursuant to which, among other things, the Sponsor and such principals have agreed, on the terms and subject to the conditions set forth therein, (a) to vote all of their Acquiror Shares in favor of the approval and (to the extent applicable) adoption of this Agreement, each applicable Ancillary Agreement, the transactions contemplated hereby and thereby (including the Domestication and the Merger) and each other matter required to be approved or adopted by the Acquiror Shareholders in order to effect the Merger and the other transactions contemplated hereby, (b) to irrevocably waive any anti-dilution right or other protection with respect to the Acquiror Cayman Class B Shares that would result in the Acquiror Cayman Class B Shares converting into other Acquiror Shares in connection with any of the transactions contemplated by this Agreement at a ratio greater than one-for-one, (c) to forfeit a specified portion of the aggregate number of Acquiror Shares into which the Acquiror Cayman Class B Shares otherwise would automatically convert in connection with the consummation of the transactions contemplated by this Agreement in the event that the Acquiror Share Redemption Amount exceeds a specified threshold and (d) to subject a portion of their Equity Securities of Acquiror to certain vesting and forfeiture conditions;

WHEREAS, in connection with obtaining the Acquiror Shareholder Approval, each eligible Acquiror Shareholder will be entitled to request that Acquiror redeem all or a portion of such eligible Acquiror Shareholder’s Acquiror Cayman Class A Shares for a pro rata portion of the amount on deposit in the Trust Account; and

 

A-3


Table of Contents

WHEREAS, at the Closing, Acquiror and certain stockholders of Acquiror (after giving effect to the Domestication and the Merger) will enter into a registration rights agreement substantially in the form attached to this Agreement as Exhibit E (the “Registration Rights Agreement”), which shall be effective as of the Closing.

NOW, THEREFORE, in consideration of the foregoing and the representations, warranties, covenants and agreements set forth in this Agreement, the Parties, intending to be legally bound, agree as follows:

ARTICLE I

CERTAIN DEFINITIONS

Section 1.1. Definitions. As used in this Agreement, the following terms shall have the following meanings:

2019 Audited Financial Statements” has the meaning specified in Section 5.8(a).

2020 Audited Financial Statements” has the meaning specified in Section 7.3.

2020 Unaudited Financial Statements” has the meaning specified in Section 5.8(a).

Acquiror” has the meaning specified in the Preamble hereto.

Acquiror Board” has the meaning specified in the Recitals hereto.

Acquiror Board Actions” has the meaning specified in the Recitals hereto.

Acquiror Cayman Class A Share” means a Class A ordinary share, par value $0.0001 per share, of Acquiror prior to the Domestication Effective Time.

Acquiror Cayman Class B Share” means a Class B ordinary share, par value $0.0001 per share, of Acquiror prior to the Domestication Effective Time.

Acquiror Cayman Ordinary Share” means any Acquiror Cayman Class A Share or the Acquiror Cayman Class B Share.

Acquiror Cayman Share” means any Acquiror Cayman Class A Share, Acquiror Cayman Class B Share or share of any other class or series of capital stock of Acquiror prior to the Domestication Effective Time.

Acquiror Cayman Unit” means a unit of Acquiror prior to the Domestication Effective Time, consisting of one Acquiror Cayman Class A Share and one-fifth of one Acquiror Cayman Warrant.

Acquiror Cayman Warrant” means a warrant to purchase one Acquiror Cayman Class A Share at an exercise price of $11.50 per share (subject to adjustment as provided in the Warrant Agreement).

Acquiror Closing Cash Amount” means an amount, calculated as of the Closing, equal to the sum of (a) the amount of cash available in the Trust Account after deducting the Acquiror Share Redemption Amount (but prior to payment of any Acquiror Transaction Expenses or Company Transaction Expenses), plus (b) the PIPE Investment Amount, to the extent actually received by Acquiror, the Company or any of their respective Subsidiaries substantially concurrently with the Closing and held by Acquiror as of the Closing plus (c) the portion of the Net Ancillary Investment Amount, if any, resulting from Ancillary Investments arranged solely by Acquiror or any of its Representatives acting on its behalf (and not arranged by the Company or any of its Representatives acting on its behalf).

 

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Acquiror Delaware Bylaws” has the meaning specified in the Recitals hereto.

Acquiror Delaware Charter” has the meaning specified in the Recitals hereto.

Acquiror Delaware Class A Share” means a share of Class A common stock, par value $0.0001 per share, of Acquiror at or after the Domestication Effective Time, which, as of immediately after the Domestication Effective Time and as of immediately after the Merger Effective Time, will entitle the holder thereof to one vote per share on all voting matters.

Acquiror Delaware Class B Share” means a share of Class B common stock, par value $0.0001 per share, of Acquiror at or after the Domestication Effective Time, which, as of immediately after the Domestication Effective Time and as of immediately after the Merger Effective Time, will entitle the holder thereof to ten votes per share on all voting matters.

Acquiror Delaware Common Share” means any Acquiror Delaware Class A Share, Acquiror Delaware Class B Share or share of any other class or series of common stock of Acquiror at or after the Domestication Effective Time.

Acquiror Delaware Share” means any Acquiror Delaware Common Share or share of any other class or series of capital stock of Acquiror at or after the Domestication Effective Time.

Acquiror Delaware Warrant” means a warrant to purchase one Acquiror Delaware Class A Share at an exercise price of $11.50 per share (subject to adjustment as provided in the Warrant Agreement).

Acquiror Disclosure Letter” has the meaning specified in the introduction to Article VI.

Acquiror Financial Statements” has the meaning specified in Section 6.7(d).

Acquiror Indemnified Parties” has the meaning specified in Section 8.7(a).

Acquiror Inception Date” means October 22, 2020.

Acquiror Insider” means (a) the Sponsor, (b) any Related Person of the Sponsor or (c) prior to the Merger Effective Time, (i) any Affiliate of Acquiror or (ii) any director or officer of Acquiror or any of its Affiliates.

Acquiror IPO Date” means February 26, 2021.

Acquiror Option” has the meaning specified in Section 4.5(a).

Acquiror Private Placement Warrant” means an Acquiror Cayman Warrant issued to the Sponsor substantially concurrently with Acquiror’s initial public offering or any Acquiror Delaware Warrant into which such Acquiror Cayman Warrant has been converted or for which such Acquiror Cayman Warrant has been exchanged.

Acquiror Public Warrant” means any Acquiror Warrant other than an Acquiror Private Placement Warrant.

Acquiror Restricted Stock Award” has the meaning specified in Section 4.5(b).

Acquiror Restricted Stock Unit Award” has the meaning specified in Section 4.5(b).

Acquiror Sale” means (a) any transaction or series of related transactions (whether by merger, consolidation, tender offer, exchange offer, stock transfer or otherwise) that results in any Third-Party Purchaser

 

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acquiring beneficial ownership of Equity Securities of Acquiror that represent more than 50% of (i) the issued and outstanding Acquiror Delaware Class A Shares or (ii) the combined voting power of the then-outstanding voting Equity Securities of Acquiror or (b) any sale, transfer or other disposition to a Third-Party Purchaser of all or more than 50% of the assets (by value), or assets generating at least 50% of the gross revenues or net income, of Acquiror and its Subsidiaries on a consolidated basis (other than any sale, transfer or other disposition of property or assets in the ordinary course of business). For clarity, the preceding clause (a) shall include any merger or consolidation of Acquiror with any Person if immediately after the consummation of such merger or consolidation, the Acquiror Delaware Class A Shares outstanding immediately prior to such merger or consolidation do not continue to represent, or are not converted into, voting securities representing in the aggregate more than 50% of the combined voting power of all of the outstanding voting securities (other than the successor security to Acquiror Delaware Class B Shares) of the Person resulting from such merger or consolidation or, if the surviving company is a subsidiary, the ultimate parent company thereof.

Acquiror Sale Price” means the price per Acquiror Delaware Class A Share paid or payable to the holders of outstanding Acquiror Common Shares (determined without giving effect to the vesting contemplated by Section 4.6(g)) in an Acquiror Sale, inclusive of any escrows, holdbacks or fixed deferred purchase price, but exclusive of any contingent deferred purchase price, earnouts or the like; provided that, if and to the extent such price is payable in whole or in part in the form of consideration other than cash, the price for such non-cash consideration shall be (a) with respect to any securities, (i) the average of the closing prices of the sales of such securities on all securities exchanges on which such securities are then listed, averaged over a period of 21 days consisting of the day as of which such value is being determined and the 20 consecutive Business Days preceding such day, or (ii) if the information contemplated by the preceding clause (i) is not practically available, then the fair value of such securities as of the date of valuation as determined in accordance with the succeeding clause (b), and (b) with respect to any other non-cash assets, the fair value thereof as of the date of valuation, as determined by an independent, nationally recognized investment banking firm mutually selected by Acquiror and the holders of a majority of the Acquiror Delaware Class B Shares, on the basis of an orderly sale to a willing, unaffiliated buyer in an arm’s-length transaction, taking into account all factors determinative of value as the investment banking firm determines relevant (and giving effect to any transfer Taxes payable in connection with such sale).

Acquiror SEC Filings” has the meaning specified in Section 6.6.

Acquiror Share” means any Acquiror Cayman Share or any Acquiror Delaware Share.

Acquiror Share Redemption” means the election, in connection with the Acquiror Shareholder Approval, of an eligible (as determined in accordance with Article 51.5 of Acquiror’s Governing Documents as in effect on the date hereof) Acquiror Shareholder to have all or a portion of the Acquiror Cayman Class A Shares or Acquiror Delaware Class A Shares, as the case may be, held by such Acquiror Shareholder redeemed by Acquiror, on the terms and subject to the limitations and conditions set forth in Acquiror’s Governing Documents, at a per-share price, payable in cash, equal to the quotient of (a) the aggregate amount on deposit in the Trust Account (including interest earned on funds held in the Trust Account and not previously released to Acquiror to pay taxes) calculated as of two Business Days prior to the Closing Date divided by (b) the aggregate number of Acquiror Cayman Class A Shares or Acquiror Delaware Class A Shares, as the case may be, then issued.

Acquiror Share Redemption Amount” means the aggregate amount paid or payable in connection with all Acquiror Share Redemptions.

Acquiror Shareholder” means any shareholder of Acquiror prior to the Merger Effective Time.

Acquiror Shareholder Approval” means the approval of (a) the Transaction Proposal identified in clause (A) of Section 9.2(c) by an affirmative vote of the holders of at least two-thirds of the outstanding Acquiror

 

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Cayman Class B Shares entitled to vote, who attend and vote thereupon (as determined in accordance with Acquiror’s Governing Documents) at a shareholders’ meeting duly called by the Board of Directors of Acquiror and held for such purpose, (b) those Transaction Proposals identified in clauses (B) and (C) of Section 9.2(c), in each case, by an affirmative vote of the holders of a majority of at least two-thirds of the outstanding Acquiror Cayman Ordinary Shares entitled to vote, who attend and vote thereupon (as determined in accordance with Acquiror’s Governing Documents) at a shareholders’ meeting duly called by the Board of Directors of Acquiror and held for such purpose and (c) those Transaction Proposals identified in clauses (D), (E), (F), (G), (H), (I), (J), and (K) of Section 9.2(c), in each case, by an affirmative vote of the holders of a majority of the outstanding Acquiror Cayman Ordinary Shares entitled to vote, who attend and vote thereupon (as determined in accordance with Acquiror’s Governing Documents), in each case, at an Acquiror Shareholders’ Meeting duly called by the Board of Directors of Acquiror and held for such purpose.

Acquiror Shareholders’ Meeting” has the meaning specified in Section 9.2(c).

Acquiror Trading Price” means, at any given time, the trading price per share of Acquiror Delaware Class A Common Shares as reported by Bloomberg or, if not available on Bloomberg, as reported by Morningstar.

Acquiror Transaction Expenses” means the following out-of-pocket fees and expenses paid or payable by Acquiror (whether or not billed or accrued for) as a result of or in connection with its initial public offering or the negotiation, documentation and consummation of the transactions contemplated hereby: (a) all fees, costs, expenses, brokerage fees, commissions, finders’ fees and disbursements of financial advisors, investment banks, data room administrators, attorneys, accountants and other advisors and service providers, (b) 50% of all the filing fees incurred in connection with making any filings under Section 9.1, (c) all fees and expenses incurred in connection with effecting the Domestication, preparing and filing the Registration Statement, the Proxy Statement or the Proxy Statement/Registration Statement under Section 9.2, obtaining approval of Nasdaq or NYSE, as applicable, under Section 8.3(b) and obtaining the Acquiror Shareholder Approval, (d) obligations under any Working Capital Loans and (e) any deferred underwriting commissions and other fees and expenses relating to Acquiror’s initial public offering.

Acquiror Warrant” means an Acquiror Cayman Warrant or an Acquiror Delaware Warrant (including any Acquiror Private Placement Warrant or Acquiror Public Warrant).

Acquiror Warrantholder Approval” means the approval of the Acquiror Warrant Proposal by an affirmative vote of the holders of (a) at least 50% of the outstanding Acquiror Public Warrants and (b) at least 50% of the outstanding Acquiror Private Placement Warrants.

Acquiror Warrant Proposal” has the meaning specified in Section 9.2(b).

Acquisition Proposal” means (a) any offer, inquiry, proposal or indication of interest (whether written or oral, and whether binding or non-binding), other than with respect to the transactions contemplated by this Agreement (including the Company Recapitalization and the Merger), and other than with respect to any acquisition or disposition of property or assets in the ordinary course of business, relating to (i) any acquisition, issuance or purchase, direct or indirect, of (A) 15% or more of the consolidated assets (by value), or assets generating 15% or more of the consolidated revenues or net income, of the Company and its Subsidiaries or (B) 15% or more of any class or series of Equity Securities of (x) the Company or (y) any Subsidiary of the Company holding assets constituting, individually or in the aggregate, 15% or more of the consolidated assets (by value), or assets generating 15% or more of the consolidated revenues or net income, of the Company and its Subsidiaries, (ii) any tender offer or exchange offer that, if consummated, would result in any Person or group beneficially owning (within the meaning of Rule 13d-3 promulgated under the Exchange Act) 15% or more of any class of Equity Securities or voting securities of (A) the Company or (B) any Subsidiary of the Company holding assets constituting, individually or in the aggregate, 15% or more of the consolidated assets (by value), or assets

 

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generating 15% or more of the consolidated revenues or net income, of the Company and its Subsidiaries or (iii) a merger, consolidation, share exchange, business combination, sale of substantially all the assets, reorganization, recapitalization, liquidation, dissolution or other similar transaction involving (A) the Company or (B) any Subsidiary of the Company holding assets constituting, individually or in the aggregate, 15% or more of the consolidated assets (by value), or assets generating 15% or more of the consolidated revenues or net income, of the Company and its Subsidiaries, and of which the Company or its applicable Subsidiary is not the surviving entity or (b) any initial public offering or direct listing of the Company on any stock exchange.

Action” means any claim, action, suit, audit, examination, assessment, arbitration, mediation or inquiry, or any proceeding or investigation, by or before any Governmental Authority.

Affiliate” means, with respect to any specified Person, any other Person that, directly or indirectly, controls, is controlled by, or is under common control with, such specified Person, whether through one or more intermediaries or otherwise. The term “control” (including the terms “controlling”, “controlled by” and “under common control with”) means the possession, directly or indirectly, of the power to direct or cause the direction of the management and policies of a Person, whether through the ownership of voting securities, by Contract or otherwise.

Affiliate Agreements” has the meaning specified in Section 5.13(a)(vii).

Aggregate Assumed Warrant Exercise Price” means the aggregate exercise price that would be paid to the Company in respect of all Assumed Warrants if all such Assumed Warrants were exercised in full on a cash basis immediately prior to the Merger Effective Time (without giving effect to any net exercise or similar concept).

Aggregate Company Option Exercise Price” means the aggregate exercise price that would be paid to the Company in respect of all in-the-money Company Options that are Included Company Equity Awards if all such Company Options were exercised in full on a cash basis immediately prior to the Merger Effective Time (without giving effect to any net exercise or similar concept).

Aggregate Equity Value” means an amount equal to the sum of (a) the Base Equity Value plus (b) the Aggregate Company Option Exercise Price plus (c) the Aggregate Assumed Warrant Exercise Price plus (d) the Excess Acquiror Transaction Expenses Amount.

Aggregate Equity Value Consideration” means a number of Acquiror Delaware Common Shares equal to the quotient of (a) the Aggregate Equity Value divided by (b) $10.00.

Aggregate Earn-out Consideration” means 180,000,000 restricted Acquiror Delaware Common Shares.

Agreement” has the meaning specified in the Preamble hereto.

Ancillary Agreements” means the Sponsor Support Agreement, the Company Stockholder Support Agreements, the Acquiror Delaware Charter, the Acquiror Delaware Bylaws, and the Registration Rights Agreement.

Ancillary Investment” has the meaning ascribed to such term in the Sponsor Support Agreement.

Anti-Bribery Laws” means the anti-bribery provisions of the Foreign Corrupt Practices Act of 1977 and all other applicable anti-corruption and bribery Laws (including the U.K. Bribery Act 2010, and any rules or regulations promulgated thereunder or other Laws of other countries implementing the OECD Convention on Combating Bribery of Foreign Officials).

 

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Anti-Money Laundering Laws” means all applicable Laws related to the prevention of money laundering, including the U.S. Money Laundering Control Act of 1986, the U.S. Currency and Foreign Transactions Reporting Act of 1970 (commonly referred to as the “U.S. Bank Secrecy Act”) and similar Laws in other applicable jurisdictions.

Antitrust Authorities” means the Antitrust Division of the U.S. Department of Justice, the U.S. Federal Trade Commission or the antitrust or competition Law authorities of any other jurisdiction (whether United States, foreign or multinational).

Antitrust Information or Document Request” means any request or demand for the production, delivery or disclosure of documents or other evidence, or any request or demand for the production of witnesses for interviews or depositions or other oral or written testimony, by any Antitrust Authority relating to the transactions contemplated hereby.

Applicable Earn-out Consideration” means (a) the Standard Per Share Earn-out Consideration, (b) the Employee Per Share Earn-out Consideration, (c) the Option Earn-out Shares and/or (d) the RSU Earn-out Shares, as applicable.

Applicable Earn-out Recipient” means any Person entitled to any Applicable Earn-out Consideration.

Base Equity Value” means $15,000,000,000.

Business Combination” has the meaning set forth in Article 1.1 of Acquiror’s Governing Documents as in effect on the date hereof.

Business Combination Deadline Date” means August 26, 2023, the deadline for consummating Acquiror’s initial Business Combination pursuant to Acquiror’s Governing Documents.

Business Combination Proposal” means any offer, inquiry, proposal or indication of interest (whether written or oral, and whether binding or non-binding), other than with respect to the transactions contemplated hereby, relating to a Business Combination.

Business Day” means any day other than a Saturday, a Sunday or another day on which commercial banks in New York, New York are authorized or required by Law to close.

Cayman Registrar” means the Register of Companies in the Cayman Islands.

Certificate of Domestication” has the meaning specified in Section 2.1(a).

Certificate of Merger” has the meaning specified in Section 2.4.

Closing” has the meaning specified in Section 3.1.

“Closing Company Financial Statements” has the meaning specified in Section 7.3.

Closing Date” has the meaning specified in Section 3.1.

Code” means the Internal Revenue Code of 1986.

Companies Act” has the meaning specified in the Recitals hereto.

Company” has the meaning specified in the Preamble hereto.

 

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Company Benefit Plan” has the meaning specified in Section 5.14(a).

Company Board” has the meaning specified in the Recitals hereto.

Company Board Actions” has the meaning specified in the Recitals hereto.

Company Class A Share” means a share of Class A common stock, par value $0.0001 per share, of the Company, which, as of immediately after the Company Recapitalization, will entitle the holder thereof to one vote per share on all voting matters.

Company Class B Share” means a share of Class B common stock, par value $0.0001 per share, of the Company, which, as of immediately after the Company Recapitalization, will entitle the holder thereof to ten votes per share on all voting matters.

Company Common Share” means any share of any class or series of common stock of the Company, including, after the Company Recapitalization, any Company Class A Share or Company Class B Share.

Company Disclosure Letter” has the meaning specified in the introduction to Article V.

Company Equity Award” means a Company Option, a Company Restricted Stock Award or a Company Restricted Stock Unit Award.

Company Stockholder Support Agreement” has the meaning specified in the Recitals hereto.

Company Incentive Plans” means the Company 2014 Stock Incentive Plan and the Company 2008 Stock Incentive Plan.

Company Indemnified Parties” has the meaning specified in Section 8.7(a).

Company IT Systems” means any and all IT Systems that are owned by, licensed or leased to or otherwise under the control of the Company.

Company Material Adverse Effect” means any event, state of facts, development, circumstance, occurrence or effect (any of the foregoing, an “Event”) that has had, or would reasonably be expected to have, individually or in the aggregate, a material adverse effect on the results of operations or financial condition of the Company and its Subsidiaries, taken as a whole; provided, however, that in no event will any of the following, alone or in combination, be deemed to constitute, or be taken into account in determining whether there has been or would be, a “Company Material Adverse Effect”: (a) any change or proposed change in applicable Laws or GAAP or any interpretation thereof, (b) any change in interest rates or economic, political, business, financial, commodity, currency or market conditions generally, (c) the taking or omission of any action required by or expressly and affirmatively permitted by this Agreement or any Ancillary Agreement or with the written consent of Acquiror, (d) any natural disaster (including hurricanes, storms, tornados, flooding, tsunamis, earthquakes, mudslides, wildfires, volcanic eruptions or similar occurrences), pandemic or epidemic or other public health crisis (including COVID-19), “force majeure” event or calamity (whether or not caused by any Person), state of emergency declared by any Governmental Authority, change in climate or weather conditions, or any action (including the issuance of any directive, pronouncement or guideline) by any Governmental Authority or self-regulatory organization in response to any of the foregoing (or change in any such action previously taken), (e) any act of terrorism, sabotage (including any cyberattack) not perpetrated by any employee of the Company or any of its Subsidiaries, war, outbreak or escalation of hostilities, commencement or escalation of military action, act of mass protest or state of civil unrest, or any action (including the issuance of any directive, pronouncement or guideline) by any Governmental Authority or self-regulatory organization in response to any of the foregoing (or change in any such action previously taken), (f) municipal, state, national or international political conditions,

 

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(g) any failure of the Company to meet any projection, forecast or budget (provided that this clause (g) shall not prevent a determination that any Event not otherwise excluded from this definition of Company Material Adverse Effect underlying such failure constitutes a Company Material Adverse Effect), (h) any Event generally affecting the industries or markets in which the Company or any of its Subsidiaries operates (including increases in the cost of products, supplies, materials or other goods or labor or other services), (i) the announcement or performance of this Agreement or any Ancillary Agreement or the consummation of any of the transactions contemplated hereby or thereby, including, as a result thereof, any termination of, reduction in or other adverse impact on relationships, contractual or otherwise, with any lessor, lessee, licensor, licensee, customer, distributor, vendor, supplier, partner, employee or other service provider or other business relation of the Company or any of its Subsidiaries, (j) any Liability or Action to the extent expressly described in the Company Disclosure Letter, (k) action taken by, or at the request of, Acquiror, Sponsor or any of their respective Affiliates; provided, further, that any Event referred to in any of the foregoing clauses (a), (b), (d), (e), (f) and (h) may be taken into account in determining whether a Company Material Adverse Effect has occurred to the extent that it has a disproportionate and adverse effect on the results of operations or financial condition of the Company and its Subsidiaries, taken as a whole, relative to companies in the industry in which the Company and its Subsidiaries conduct their respective operations, but only to the extent of the incremental disproportionate effect on the Company and its Subsidiaries, taken as a whole, relative to companies in the industry in which the Company and its Subsidiaries conduct their respective operations.

Company Option” means an option to purchase Company Common Shares granted under any Company Incentive Plan.

Company Owned Intellectual Property” means any and all Intellectual Property that is owned or purported to be owned by the Company or any of its Subsidiaries, including Company Registered Intellectual Property.

Company Preferred Share” means any Series B Preferred Share, Series C Preferred Share, Series D Preferred Share, Series E Preferred Share or share of any other class or series of preferred stock of the Company.

Company Preferred Warrant” means any Series B Preferred Warrant, Series D Preferred Warrant or any other warrant of any class or series issued by the Company and outstanding from time to time.

Company Recapitalization” has the meaning specified in the Recitals hereto.

Company Registered Intellectual Property” has the meaning specified in Section 5.22(a).

Company Restricted Stock Award” means an award of restricted Company Common Shares granted under any Company Incentive Plan, which includes any Company Common Shares issued pursuant to early-exercised Company Options.

Company Restricted Stock Unit Award” means an award of restricted stock units based on Company Common Shares (whether to be settled in cash or shares) granted under any Company Incentive Plan.

Company Share” means any Company Preferred Share, Company Common Share or other share of any class or series of capital stock of the Company.

Company Stockholder” means a holder of any Company Share.

Company Stockholder Approval” means the approval of this Agreement and the transactions contemplated hereby, including the Company Recapitalization and the Merger, by the affirmative vote or written consent of (a) the holders of a majority of the voting power of the outstanding Company Shares voting as a single class and on an as-converted basis, (b) the holders of a majority of the outstanding Company Preferred Shares, voting together as a single class on an as-converted basis, (c) the holders of at least 72% of the outstanding Series D Preferred Shares, voting as a separate class, and (e) the holders of a majority of the outstanding Series E Preferred Shares, voting as a separate class.

 

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Company Stockholder Support Agreement” has the meaning specified in the Recitals hereto.

Company Transaction Expenses” means the following out-of-pocket fees and expenses paid or payable by the Company or any of its Subsidiaries (whether or not billed or accrued for) as a result of or in connection with the negotiation, documentation and consummation of the transactions contemplated hereby: (a) all fees, costs, expenses, brokerage fees, commissions, finders’ fees and disbursements of financial advisors, investment banks, data room administrators, attorneys, accountants and other advisors and service providers, (b) change-in-control payments, transaction bonuses, retention payments, severance or similar compensatory payments payable by the Company or any of its Subsidiaries to any current or former employee (including any amounts due under any consulting agreement with any such former employee), independent contractor, officer, or director of the Company or any of its Subsidiaries as a result of the transactions contemplated hereby (and not tied to any subsequent event or condition, such as a termination of employment), including the employer portion of payroll Taxes arising therefrom, (c) Transfer Taxes, (d) 50% of all the filing fees incurred in connection with making any filings under Section 9.1 and (e) amounts owing or that may become owed, payable or otherwise due, directly or indirectly, by the Company or any of its Subsidiaries to any Affiliate of the Company or any of its Subsidiaries in connection with the consummation of the transactions contemplated hereby, including fees, costs and expenses related to the termination of any Affiliate Agreement.

Confidentiality Agreement” means that certain Confidentiality Agreement, dated as of March 3, 2021, between the Company and Acquiror.

Consent Solicitation” has the meaning specified in Section 9.2(b).

Contract” means any contract, agreement, instrument, lease, license, purchase order or other obligation, in each case, that is legally binding.

Copyleft License” means any license that requires, as a condition of use, modification or distribution of software subject to such license, that such software subject to such license, or other software incorporated into, derived from, or used or distributed with such software subject to such license (a) in the case of software, be made available or distributed in a form other than binary (e.g., source code form), (b) be licensed for the purpose of preparing derivative works, (c) be licensed under terms that allow the Company’s or any Subsidiary of the Company’s products or portions thereof or interfaces therefor to be reverse engineered, reverse assembled or disassembled (other than by operation of Law) or (d) be redistributable at no license fee. Copyleft Licenses include the GNU General Public License, the GNU Lesser General Public License, the Mozilla Public License, the Common Development and Distribution License, the Eclipse Public License and all Creative Commons “sharealike” licenses.

COVID-19” means the novel coronavirus, SARS-CoV-2, COVID-19 or any related strain or sequence, including any intensification, resurgence or any evolutions or mutations thereof, and any related or associated epidemics, pandemics, disease outbreaks or public health emergencies.

D&O Indemnified Parties” has the meaning specified in Section 8.7(a).

DGCL” has the meaning specified in the Recitals hereto.

Disclosure Letter” means, as applicable, the Company Disclosure Letter or the Acquiror Disclosure Letter.

Dissenting Share” has the meaning specified in Section 4.2(b).

dollar” or “$” means lawful money of the United States.

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Domestication Effective Time” has the meaning specified in Section 2.1(a).

Dual-Class Stock Structure” has the meaning specified in the Recitals hereto.

Eagle Group” has the meaning specified in Section 12.18(a).

Earn-out Exchange Ratio” means a number equal to the quotient of (a) the Aggregate Earn-out Consideration divided by (b) the aggregate number of Participating Company Common Shares.

Earn-out Share” means a First Target Earn-out Share, a Second Target Earn-out Share, a Third Target Earn-out Share or a Fourth Target Earn-out Share.

Earn-out Shares Discount Factor” means a percentage (not exceeding 100%) determined by the Company in good faith prior to the Closing.

EIP” has the meaning specified in Section 8.1(a).

Employee Per Share Earn-Out Consideration” has the meaning specified in Section 4.1(c)(ii).

Employee Per Share Equity Value Consideration” has the meaning specified in Section 4.1(c)(i).

Environmental Laws” means all applicable Laws relating to Hazardous Materials, pollution, or the protection or management of the environment or natural resources, or protection of human health (with respect to exposure to Hazardous Materials).

Equity Adjustment” has the meaning specified in Section 2.2.

Equity Security” means, with respect to any Person, any share of capital stock of, or other equity interest in, such Person or any security exercisable or exchangeable for, or convertible into, any share of capital stock of, or other equity interest (including any security exercisable or exchangeable for, or convertible into, any share of capital stock) in, such Person, including any warrant, option, convertible or exchangeable note or debenture, profits interest or phantom equity right, whether voting or non-voting. With respect to the Company, for clarity, “Equity Security” shall include any equity award issued under any Company Incentive Plan.

Equity Value Exchange Ratio” means a number equal to the quotient of (a) the Aggregate Equity Value Consideration divided by (b) the aggregate number of Participating Company Common Shares.

ERISA” has the meaning specified in Section 5.14(a).

ERISA Affiliate” means any Affiliate or business, whether or not incorporated, that, together with the Company or any of its Subsidiaries, would be deemed to be a “single employer” within the meaning of Section 414(b), (c), (m) or (o) of the Code.

ESPP” has the meaning specified in Section 8.1(a).

Excess Acquiror Transaction Expenses Amount” means the greater of (a) zero ($0) and (b) the difference of (i) the aggregate amount of Acquiror Transaction Expenses minus (ii) $108,000,000.

Exchange Act” means the Securities Exchange Act of 1934.

Exchange Agent” has the meaning specified in Section 4.3(a).

 

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Excluded Company Equity Award” means such portion of any Company Equity Award that is issued and outstanding and that is subject to any unsatisfied service- or time-based vesting condition immediately prior to the Merger Effective Time.

Excluded Share” has the meaning specified in Section 4.2(a)(i).

Export Approvals” has the meaning specified in Section 5.26(a).

Fractional Earn-out Share Cash-Out Amount” means, with respect to any specified fractional Earn-out Share, an amount in cash (rounded up to the nearest cent) equal to the product of (a) the fractional amount (rounded to the nearest thousandth when expressed in decimal form) of such specified fractional Earn-out Share multiplied by (b) $10.00.

GAAP” means generally accepted accounting principles in the United States as in effect from time to time.

Ginkgo Group” has the meaning specified in Section 12.18(b).

Governing Documents” means the legal document(s) by which any Person (other than an individual) establishes its legal existence or which govern its internal affairs. For example, the “Governing Documents” of a corporation are its certificate of incorporation and bylaws, the “Governing Documents” of a limited partnership are its limited partnership agreement and certificate of limited partnership, the “Governing Documents” of a limited liability company are its operating agreement and certificate of formation and the “Governing Documents” of an exempted company are its memorandum and articles of association.

Governmental Authority” means any federal, state, provincial, municipal, local or foreign government, governmental authority, regulatory or administrative agency, governmental commission, department, board, bureau, agency or instrumentality, court or tribunal.

Governmental Authorization” has the meaning specified in Section 5.5.

Governmental Order” means any order, judgment, injunction, decree, writ, stipulation, determination or award, in each case, entered by or with any Governmental Authority.

Hazardous Material” means any (a) pollutant, contaminant, chemical, (b) industrial, solid, liquid or gaseous toxic or hazardous substance, material or waste, (c) petroleum or any fraction or product thereof, (d) asbestos or asbestos-containing material, (e) polychlorinated biphenyl, (f) chlorofluorocarbons, and (g) other substance, material or waste, in each case, which are regulated under any Environmental Law or as to which liability may be imposed pursuant to Environmental Law.

HSR Act” means the Hart-Scott-Rodino Antitrust Improvements Act of 1976 and the rules and regulations promulgated thereunder.

Included Company Equity Award” means any Company Equity Award that is issued and outstanding immediately prior to the Merger Effective Time, other than Excluded Company Equity Awards, but including Company Equity Awards to the extent granted under the Founder Equity Grant Agreements (as defined in the Company Disclosure Letter).

Indebtedness” means with respect to any specified Person, without duplication, any obligations, contingent or otherwise, in respect of (a) the principal of and premium (if any) in respect of all indebtedness for borrowed money of such specified Person, including accrued interest and any per diem interest accruals, (b) the principal and interest components of capitalized lease obligations under GAAP, (c) amounts drawn (including any accrued and unpaid interest) on letters of credit, bank guarantees, bankers’ acceptances and other similar instruments of

 

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such specified Person (solely to the extent such amounts have actually been drawn), (d) the principal of and premium (if any) in respect of obligations evidenced by bonds, debentures, notes and similar instruments of such specified Person, (e) the termination value of interest rate protection agreements and currency obligation swaps, hedges or similar arrangements of such specified Person (without duplication of other indebtedness supported or guaranteed thereby), (f) the principal component of all obligations of such specified Person to pay the deferred and unpaid purchase price of property and equipment which have been delivered, including “earn outs” and “seller notes,” and (g) breakage costs, prepayment or early termination premiums, penalties, or other fees or expenses payable as a result of the consummation of the transactions contemplated hereby in respect of any of the items in the foregoing clauses (a) through (f), and (h) all Indebtedness of another Person referred to in the foregoing clauses (a) through (g) guaranteed directly or indirectly, jointly or severally, by such specified Person.

Insider Letter” means that certain letter agreement, dated February 23, 2021, between Acquiror, the Sponsor and each of the directors and officers of Acquiror as of the date hereof.

Intellectual Property” means any rights, title, and interest in or to the following, throughout the world, including all U.S. and foreign: (a) patents, published or unpublished patent applications (and any patents that will be issued as a result of those patent applications), provisional patent applications and similar filings, invention disclosures, and industrial designs, and all related continuations, continuations-in-part, divisionals, reissues, re-examinations, substitutions, extensions or counterparts and foreign equivalents thereof, (b) registered and unregistered trademarks, logos, service marks, trade dress and trade names, brand names, business names, slogans, pending applications therefor, and internet domain names, and other similar designations of source or indicia or origin, together with the goodwill of the Company or any of its Subsidiaries or their respective businesses symbolized by or associated with any of the foregoing, (c) registered and unregistered copyrights, and applications for registration of copyright, including such corresponding rights in Software and other works of authorship, (d) Software and (e) trade secrets, confidential information and other proprietary rights or information including know-how, unpatented inventions, processes, libraries of enzymes, models and methodologies, formulae, technology, technical, research, clinical and regulatory data, customer lists, business plans, database rights, in each case that derive independent economic value from not being generally known by the public and not being readily ascertainable by other Persons (the foregoing items in clause (e), collectively “Trade Secrets”).

Interim Period” has the meaning specified in Section 7.1.

International Trade Laws” means all applicable Laws relating to the import, export, re-export, deemed export, deemed re-export, or transfer of information, data, goods, and technology, including the Export Administration Regulations administered by the U.S. Department of Commerce, the International Traffic in Arms Regulations administered by the U.S. Department of State, customs and import Laws administered by U.S. Customs and Border Protection, any other export or import controls administered by an agency of the U.S. government, the anti-boycott regulations administered by the U.S. Department of Commerce and the U.S. Department of the Treasury, and other applicable Laws adopted by Governmental Authorities of other countries relating to the same subject matter as the U.S. Laws described above.

Investment Company Act” means the Investment Company Act of 1940.

IT Systems” means Software, information technology and computer systems, servers, networks, workstations, routers, hubs, switches, data communication lines, interfaces, platforms, databases, websites, computer hardware and equipment used to process, store, generate, analyze, maintain and operate data or information, including any of the foregoing accessed pursuant to outsourced or cloud computing arrangements.

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

Latham” has the meaning specified in Section 12.18(b).

 

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Law” means (a) any statute, law, ordinance, rule or regulation, in each case, of any Governmental Authority or (b) any Governmental Order.

Leased Real Property” means all real property leased, licensed, subleased or otherwise used or occupied by the Company or any of its Subsidiaries.

Letter of Transmittal” has the meaning specified in Section 4.3(b).

Liability” means any debt, liability, obligation, guaranty, loss, damage, claim, demand, action, cause of action, cost, deficiency, penalty or expense, in each case, whether based in contract, tort, equity or otherwise, and whether direct or indirect, absolute or contingent, accrued or unaccrued, matured or unmatured or otherwise.

License” means any approval, authorization, consent, license, registration, permit or certificate granted or issued by a Governmental Authority.

Lien” means any lien, mortgage, deed of trust, pledge, hypothecation, encumbrance, security interest, right of first offer, right of first refusal, option, adverse claim or other lien of any kind, whether consensual, statutory or otherwise.

Listing Exchange” means the Nasdaq Market; provided that, at the election of the Company, exercisable upon delivery of written notice to Acquiror no later than three Business Days prior to the initial filing of the Proxy Statement/Registration Statement with the SEC pursuant to Section 9.2, “Listing Exchange” shall instead mean the New York Stock Exchange.

Merger” has the meaning specified in the Recitals hereto.

Merger Effective Time” has the meaning specified in Section 2.4.

Merger Sub” has the meaning specified in the Preamble hereto.

Minimum Acquiror Closing Cash Amount” means $1,250,000,000.

Modification in Recommendation” has the meaning specified in Section 9.2(c).

Multiemployer Plan” has the meaning specified in Section 5.14(c).

Nasdaq” means The Nasdaq Stock Market LLC.

Nasdaq Market” means the Nasdaq Capital Market, the Nasdaq Global Market or the Nasdaq Global Select Market, as may be applicable.

Net Ancillary Investment Amount” has the meaning ascribed to such term in the Sponsor Support Agreement.

NYSE” means the New York Stock Exchange, Inc.

Offer Documents” has the meaning specified in Section 9.2(a)(i).

Open Source License” means any license meeting the Open Source Definition (as promulgated by the Open Source Initiative) or the Free Software Definition (as promulgated by the Free Software Foundation), or any substantially similar license, including any license approved by the Open Source Initiative or any Creative Commons License, and including Copyleft Licenses.

 

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Open Source Materials” means any software subject to an Open Source License.

Option Earn-out Exchange Ratio” means a number equal to the product of (a) the Earn-out Exchange Ratio multiplied by (b) the Earn-out Shares Discount Factor.

Option Earn-out Shares” has the meaning specified in Section 4.5(a).

Option Exercise Price Exchange Ratio” means a number equal to the sum of (a) the Equity Value Exchange Ratio plus (b) the Option Earn-out Exchange Ratio.

Outside Deadline” has the meaning specified in Section 11.1(b)(ii).

Participating Company Common Shares” means the Company Common Shares (without duplication) (a) that are issued and outstanding immediately prior to the Merger Effective Time after giving effect to the Company Recapitalization (including Company Restricted Stock Awards that are Included Company Equity Awards and Company Common Shares deemed issued and outstanding pursuant to Section 4.4(a)), other than Excluded Shares, or (b) that would be issued upon the cash settlement (as opposed to “net settlement”) of all Assumed Warrants and Company Options that are Included Company Equity Awards and all Company Restricted Stock Unit Awards that are Included Company Equity Awards, in each case, that are issued and outstanding immediately prior to the Merger Effective Time, if the Assumed Warrants and such Company Options and Company Restricted Stock Unit Awards were exercised or settled in full upon payment of the full cash exercise price immediately prior to the Merger Effective Time after giving effect to the Company Recapitalization. For the avoidance of doubt, Company Common Shares that are subject to, or would be issued upon the settlement of, Excluded Company Equity Awards shall not be considered to be Participating Company Common Shares.

Per Share Merger Consideration” means, as applicable, (a) the Standard Per Share Equity Value Consideration and, subject to the vesting and forfeiture conditions specified in Section 4.6, the Standard Per Share Earn-out Consideration or (b) the Employee Per Share Equity Value Consideration and, subject to the vesting and forfeiture conditions specified in Section 4.6, the Employee Per Share Earn-out Consideration.

Permitted Liens” means (a) mechanic’s, materialmen’s and similar Liens arising in the ordinary course of business with respect to any amounts (i) not yet due and payable or which are being contested in good faith through appropriate proceedings and (ii) for which adequate accruals or reserves have been established in accordance with GAAP, (b) Liens for Taxes (i) not yet due and payable or (ii) which are being contested in good faith through appropriate proceedings and for which adequate accruals or reserves have been established in accordance with GAAP, (c) with respect to any Leased Real Property, (i) non-monetary Liens, encumbrances or restrictions (including easements, encroachments, covenants, rights of way and other conditions) and (ii) zoning, building, entitlement and other land use and environmental regulations promulgated by any Governmental Authority that, in the case of each of the preceding clauses (i) and (ii), (A) are matters of record, (B) would be disclosed by a current, accurate survey or physical inspection of such real property, or (C) do not materially interfere with the present uses of such real property, (d) with respect to any Leased Real Property, (i) the interests and rights of the respective lessors with respect thereto, including any statutory landlord liens and any Lien thereon, (ii) any Lien permitted under a Real Property Lease and (iii) Liens encumbering the underlying fee title of the real property of which the Leased Real Property is a part, (e) non-exclusive license agreements of Intellectual Property entered into with customers in the ordinary course of business, (f) Liens arising under conditional sales contracts and equipment leases with third parties entered into in the ordinary course of business or purchase money Liens and Liens securing rental payments under operating or capital lease arrangements, in each case, entered into in the ordinary course of business, (g) other Liens arising in the ordinary course of business and not incurred in connection with the borrowing of money in connection with workers’ compensation, unemployment insurance or other types of social security and (h) other Liens that do not, individually or in the aggregate, materially and adversely affect the businesses of the Company and its Subsidiaries, taken as a whole.

 

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Person” means any individual, firm, corporation, partnership, limited liability company, incorporated or unincorporated association, joint venture, joint stock company, Governmental Authority or instrumentality or other entity of any kind.

PIPE Investment” has the meaning specified in the Recitals hereto.

PIPE Investment Amount” means the aggregate gross purchase price received by Acquiror prior to or substantially concurrently with the Closing in respect of all of the PIPE Shares.

PIPE Investor” means any investors participating in the PIPE Investment pursuant to the Subscription Agreements.

PIPE Share” means any Acquiror Delaware Class A Share purchased in the PIPE Investment.

Prospectus” has the meaning specified in Section 12.1.

Proxy Statement” has the meaning specified in Section 9.2(a)(i).

Proxy Statement/Registration Statement” has the meaning specified in Section 9.2(a)(i).

Real Property Leases” has the meaning specified in Section 5.21(a)(ii).

Registration Rights Agreement” has the meaning specified in the Recitals hereto.

Registration Statement” means the Registration Statement on Form S-4, or another appropriate form, including any pre-effective or post-effective amendments or supplements thereto, to be filed with the SEC by Acquiror under the Securities Act with respect to the Registration Statement Securities.

Registration Statement Securities” has the meaning specified in Section 9.2(a)(i).

Related Person” means, with respect to any specified Person, any former, current or future (a) Affiliate, equityholder, member, partner, director, manager, officer, employee, agent, representative, heir, successor or assign of such specified Person or (b) any Affiliate, equityholder, member, partner, director, manager, officer, employee, agent, representative, heir, successor or assign of any Person described in the preceding clause (a).

Remaining Earn-out Shares” means a number equal to the sum of (a) the difference of (i) the product of (A) the number of Company Common Shares subject to Company Options immediately prior to the Merger Effective Time multiplied by (B) the Earn-out Exchange Ratio, minus (ii) the number of Acquiror Delaware Class B Shares that are Earn-out Shares and that are subject to Acquiror Options immediately following the Merger Effective Time, plus (b) the sum of the respective fractional amounts (rounded to the nearest thousandth when expressed in decimal form) of all fractional Earn-out Shares resulting from any rounding of Earn-out Shares (including pursuant to Section 4.3(e)(iii)(B), Section 4.3(e)(iv)(B), Section 4.3(e)(v)(B) or Section 4.6(b)(1)) in connection with the conversion of Company Equity Awards into Acquiror Options, Acquiror Restricted Stock Awards or Acquiror Restricted Stock Unit Awards, as applicable plus (c) any Earn-out Shares that any Person waives its right to receive.

Representative” means, with respect to any specified Person, any director, manager, officer, employee, agent, attorney, advisor or other representative of such specified Person.

Requisite Company Stockholders” means the Company Stockholders holding the required voting power to obtain the Company Stockholder Approval.

RSU Earn-out Shares” has the meaning specified in Section 4.5(c).

 

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Sanctioned Country” means a country or territory which is itself the subject or target of any country-wide or territory-wide Sanctions Laws in effect at the relevant time (at the time of this Agreement, the Crimea region, Cuba, Iran, North Korea and Syria).

Sanctioned Person” means (a) any Person identified in any sanctions-related list of designated Persons maintained by (i) the U.S. Department of the Treasury’s Office of Foreign Assets Control, the U.S. Department of Commerce, Bureau of Industry and Security, or the U.S. Department of State, (ii) Her Majesty’s Treasury of the United Kingdom, (iii) any committee of the United Nations Security Council or (iv) the European Union, (b) any Person located, organized, or resident in, organized in, or a Governmental Authority or government instrumentality of, any Sanctioned Country or (c) any Person directly or indirectly owned or controlled by, or acting for the benefit or on behalf of, any Person described in the foregoing clause (a) or (b), either individually or in the aggregate.

Sanctions Laws” means those trade, economic and financial sanctions Laws administered, enacted or enforced from time to time by (a) the United States (including the Department of the Treasury’s Office of Foreign Assets Control), (b) the European Union and enforced by its member states, (c) the United Nations or (d) Her Majesty’s Treasury of the United Kingdom.

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

SEC” means the U.S. Securities and Exchange Commission.

Securities Act” means the Securities Act of 1933.

Series B Preferred Shares” has the meaning specified in Section 5.6(a).

Series B Preferred Warrant” means a warrant to acquire any Series B Preferred Share.

Series C Preferred Shares” has the meaning specified in Section 5.6(a).

Series D Preferred Shares” has the meaning specified in Section 5.6(a).

Series D Preferred Warrant” means a warrant to acquire any Series D Preferred Share.

Series E Preferred Shares” has the meaning specified in Section 5.6(a).

Software” means any and all (a) computer programs (including any and all software implementation of algorithms, models and methodologies, whether in source code, object code, human readable form or other form), (b) databases and compilation (including any and all data and collections of data), whether machine readable or otherwise, (c) descriptions, flow charts and other documentation used to design, plan, organize and develop any of the foregoing, screens, user interfaces, report formats, firmware, development tools, templates, menus, buttons and icons, and (d) all documentation including developer notes, instructions, comments, annotations, user manuals and other training documentation relating to any of the foregoing.

Sponsor” means Eagle Equity Partners III, LLC, a Delaware limited liability company.

Sponsor Support Agreement” has the meaning set forth in the Recitals hereto.

Standard Per Share Earn-Out Consideration” has the meaning specified in Section 4.1(b)(ii).

Standard Per Share Equity Value Consideration” has the meaning specified in Section 4.1(b)(i).

 

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Subscription Agreements” means the subscription agreements pursuant to which the PIPE Investment will be consummated.

Subsidiary” means, with respect to any specified Person, any other corporation or other business entity more than 50% of the voting power of the Equity Securities of which is owned, directly or indirectly, by such specified Person.

Supporting Company Stockholder” means those Persons set forth on Section 1.1(b) of the Company Disclosure Letter.

Surviving Corporation” has the meaning specified in the Recitals hereto.

U.S.” means United States.

Tax Return” means any return, declaration, report, statement, information statement or other document filed or required to be filed with any Governmental Authority with respect to Taxes, including any claims for refunds of Taxes, any information returns and any schedules, attachments, amendments or supplements of any of the foregoing.

Taxes” means any and all federal, state, local, foreign or other taxes imposed by any Governmental Authority, including all income, gross receipts, license, payroll, net worth, employment, excise, severance, stamp, occupation, premium, windfall profits, environmental, customs duties, escheat, capital stock, ad valorem, value added, inventory, franchise, profits, withholding, social security (or similar), unemployment, disability, real property, personal property, sales, use, transfer, registration, governmental charges, duties, levies and other similar charges imposed by a Governmental Authority in the nature of a tax, alternative or add-on minimum, or estimated taxes, and including any interest, penalty, or addition thereto.

third party” means, with respect to any specified Person, any Person other than (a) such specified Person or (b) any Related Person of such specified Person.

Third-Party Purchaser” means any Person (other than Acquiror or any wholly owned Subsidiary of Acquiror or Person of which Acquiror is a wholly owned Subsidiary) or “group” (within the meaning of Section 13(d)(3) of the Exchange Act) of such Persons.

Title IV Plan” has the meaning specified in Section 5.14(c).

Top Customers” has the meaning specified in Section 5.28(a).

Top Vendors” has the meaning specified in Section 5.29(a).

Trading Day” means any day on which Acquiror Class A Common Shares are actually traded on the principal securities exchange or securities market on which Acquiror Class A Common Shares are then traded.

Transaction Litigation” has the meaning specified in Section 9.7.

Transaction Proposals” has the meaning specified in Section 9.2(c).

Transfer Taxes” has the meaning specified in Section 9.4.

Treasury Regulations” means the regulations promulgated under the Code by the United States Department of the Treasury (whether in final, proposed or temporary form).

Trust Account” has the meaning specified in Section 12.1.

 

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Trust Agreement” has the meaning specified in Section 6.10.

Trustee” has the meaning specified in Section 6.10.

Warrant Agreement” means the Warrant Agreement, dated as of February 23, 2021, between Acquiror and Continental Stock Transfer & Trust Company.

Willful Breach” means, with respect to any agreement, a party’s knowing and intentional material breach of any of its representations or warranties as set forth in such agreement, or such party’s material breach of any of its covenants or other agreements set forth in such agreement, which material breach constitutes, or is a consequence of, a purposeful act or failure to act by such party with the actual knowledge that the taking of such act or failure to take such act would cause a material breach of such agreement.

Working Capital Loan” means any loan made to Acquiror by any Acquiror Insider for the purpose of financing costs incurred in connection with a Business Combination.

Written Consent” has the meaning specified in Section 9.2(d)(i).

Section 1.2. Construction.

(a) Unless the context of this Agreement otherwise requires, (i) words of any gender include each other gender, (ii) words using the singular or plural number also include the plural or singular number, respectively, (iii) the terms “hereof,” “herein,” “hereby,” “hereto” and derivative or similar words refer to this entire Agreement and not any particular Article, Section or provision hereof, (iv) the terms “Article,” “Section” or “Exhibit” refer to the specified Article, Section or Exhibit, as applicable, of this Agreement, (v) the word “include,” “includes” or “including” shall be deemed to be followed by the phrase “without limitation,” (vi) the words “or” and “any” shall be disjunctive but not exclusive and (vi) the word “extent” in the phrase “to the extent” shall mean the degree to which a subject or other thing extends, and such phrase shall not mean simply “if.”

(b) Unless the context of this Agreement otherwise requires, (i) references to any Law shall be deemed to refer to such Law as consolidated, replaced, revised, amended or supplemented from time to time, including through the promulgation of rules or regulations thereunder, (ii) references herein to any Contract (including this Agreement) shall be deemed to refer to such Contract as amended, restated, supplemented or otherwise modified from time to time, and (iii) references herein to any Person shall be deemed to include such Person’s successors and assigns.

(c) Whenever this Agreement refers to a number of days, such number shall refer to calendar days unless Business Days are specified.

(d) Unless otherwise specified, the reference date for purposes of calculating any period shall be excluded from such calculation, but any period “from” or “through” a specified date shall commence or end, as applicable, on such specified date.

(e) Any accounting terms used and not otherwise expressly defined herein shall have the respective meanings given to them under GAAP.

(f) Headings contained in this Agreement are for reference purposes only and shall not affect in any way the meaning or interpretation of any provision of this Agreement.

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(h) “Writing,” “written” and similar words refer to printing, typing and other means of reproducing words in a visible form (including e-mail or any.pdf attached thereto).

(i) Each Party acknowledges and agrees that it has been represented by legal counsel during, and has participated jointly with the other Parties in, the negotiation and execution of this Agreement and waives the application of any Law or rule of construction providing that ambiguities in a contract or other document or any provision thereof will be construed against the Party that drafted such contract or other document or provision thereof.

(j) When used herein, “ordinary course of business” means an action taken, or omitted to be taken, in the ordinary and usual course of the Company’s business or Acquiror’s business, as applicable.

Section 1.3. Knowledge(a) . As used herein, (a) the phrase “to the knowledge of the Company” (or any similar phrase) shall mean the actual knowledge of the individuals identified in Section 1.3(a) of the Company Disclosure Letter, solely in their respective capacities as directors, officers or employees of the Company, as applicable, and without any individual liability, as such individuals would have acquired upon reasonable inquiry of their respective direct reports, and (b) the phrase “to the knowledge of Acquiror” (or any similar phrase) shall mean the actual knowledge of the individuals identified in Section 1.3(b) of the Acquiror Disclosure Letter, solely in their respective capacities as directors, officers or employees of Acquiror, as applicable, and without any individual liability, as such individuals would have acquired upon reasonable inquiry of their respective direct reports.

Section 1.4. Equitable Adjustments. If, during the Interim Period, the outstanding Acquiror Shares shall have been changed into a different number of shares or a different class or series, by reason of any Equity Adjustment, or any similar event shall have occurred, or if there shall have been any breach by Acquiror of any of its representations, warranties or covenants contained herein relating to the Acquiror Shares, then any number, value (including dollar value) or amount contained herein which is based upon the number of Acquiror Shares will be appropriately adjusted to provide to the holders of Equity Securities of the Company the same economic effect as contemplated by this Agreement without giving effect to such event. For the avoidance of doubt, nothing in this Section 1.4 shall be construed to permit Acquiror to take or permit any action that is prohibited by any other provision of this Agreement, or omit any action that is required by any other provision of this Agreement, with respect to the Acquiror Shares or otherwise.

ARTICLE II

THE TRANSACTIONS

Section 2.1. Domestication.

(a) After all of the conditions set forth in Article X have been satisfied or, to the extent permitted by applicable Law, waived by the applicable Party or Parties entitled to the benefit thereof (other than the Domestication Condition and those conditions that by their nature or terms are to be satisfied at the Closing), but no later than one day prior to the Closing Date, Acquiror shall change its jurisdiction of incorporation from the Cayman Islands to the State of Delaware by (i) deregistering as a Cayman Islands exempted company pursuant to and in accordance with Sections 206 through 209 of the Companies Act and (ii) continuing and domesticating as a Delaware corporation pursuant to and in accordance with Section 388 of the DGCL (the “Domestication”). Acquiror will effect the Domestication by (A) filing all applicable notices, undertakings and other documents required to be filed, in form and substance reasonably satisfactory to the Company, paying all applicable fees required to paid, and causing the satisfaction of all other conditions to deregistration required to be satisfied, in each case, under Section 206 of the Companies Act and in accordance therewith and (B) filing a certificate of corporate domestication, in form and substance reasonably acceptable to the Company (the “Certificate of

 

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Domestication”), and the Acquiror Delaware Charter simultaneously with the Delaware Secretary of State in accordance with Section 388 of the DGCL. The Domestication shall become effective under the DGCL at the time the Certificate of Domestication and the Acquiror Delaware Charter are accepted for filing by the Delaware Secretary of State or at such later time as may be mutually agreed by the Company and Acquiror and specified in each of the Certificate of Domestication and the Acquiror Delaware Charter. The time at which the Domestication actually becomes effective under the DGCL is referred to herein as the “Domestication Effective Time”.

(b) At the Domestication Effective Time, the Governing Documents of Acquiror shall be amended and restated such that (i) the Acquiror Delaware Charter shall be the certificate of incorporation of Acquiror until thereafter amended, restated, supplemented or otherwise modified in accordance with the applicable provisions thereof and of the DGCL and (ii) the Acquiror Delaware Bylaws shall be the bylaws of Acquiror until thereafter amended, restated, supplemented or otherwise modified in accordance with the applicable provisions thereof and of the Acquiror Delaware Charter and the DGCL. At the Merger Effective Time, the Acquiror Delaware Charter shall be amended to change Acquiror’s name to “Ginkgo Bioworks Holdings, Inc.”

(c) At the Domestication Effective Time, by virtue of the Domestication and without any action on the part of any holder of Acquiror Cayman Shares, Acquiror Cayman Warrants or Acquiror Cayman Units, (i) each Acquiror Cayman Class B Share that is issued and outstanding immediately prior to the Domestication Effective Time will convert automatically, on a one-for-one basis, into an Acquiror Cayman Class A Share, (ii) immediately following the conversion described in clause (i), each Acquiror Cayman Class A Share that is then issued and outstanding will convert automatically, on a one-for-one basis, into an Acquiror Delaware Class A Share, (iii) each Acquiror Cayman Warrant that is issued and outstanding immediately prior to the Domestication Effective Time will convert automatically, on a one-for-one basis, into an Acquiror Delaware Warrant, pursuant to and in accordance with the Warrant Agreement, and (iv) each Acquiror Cayman Unit that is issued and outstanding immediately prior to the Domestication Effective Time will convert automatically into one Acquiror Delaware Class A Share and one-fifth of one Acquiror Delaware Warrant.

Section 2.2. Pre-Closing Recapitalization. Prior to the Closing, the Company shall (notwithstanding anything to the contrary herein, but subject to the receipt of the Company Stockholder Approval) take such actions as it reasonably deems necessary or appropriate to effect the Company Recapitalization (in each case, after reasonable advance written notice to Acquiror of the actions to be taken), including (a) authorizing new classes or series of Equity Securities or additional Equity Securities of any existing class or series, (b) issuing new Equity Securities, (c) effecting any dividend, distribution, combination, split, subdivision, conversion, exchange, transfer, sale, cancelation, repurchase, redemption, reclassification or other change to, or transaction in, any Equity Security (each action described in this clause (c), an “Equity Adjustment”) of the Company or class or series thereof, (d) entering into, terminating, amending, restating, supplementing or otherwise modifying any Contracts relating to Equity Securities of the Company and (e) amending, restating, supplementing or otherwise modifying the Governing Documents of the Company; provided that (i) the Company shall not take any action pursuant to this Section 2.2 that would have the effect of increasing the aggregate consideration to be paid to holders of Equity Securities of the Company in, or in connection with, the Merger pursuant to Article IV, (ii) without the prior written consent of Acquiror, the Company shall not declare, pay or make (or agree to pay or make) any dividend, distribution or other payment in a form other than Equity Securities of the Company or any of its Subsidiaries that will be included as Participating Company Common Shares, (iii) each Company Preferred Share outstanding immediately prior to the Company Recapitalization shall be converted into, exchanged for or otherwise replaced with a number of Company Class A Shares equal to the number of Company Common Shares into which such Company Preferred Share would have been convertible immediately prior to the Company Recapitalization, (iv) the aggregate number of Company Common Shares outstanding immediately prior to the Company Recapitalization shall be equal to the aggregate number of Company Class A Shares and Company Class B Shares, collectively, issued in respect of such Company Common Shares (or that such Company Common Shares were converted into, exchanged for or otherwise replaced with) in connection with the Company Recapitalization, (v) no other Equity Securities of the Company outstanding immediately prior to the

 

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Company Recapitalization shall be converted into, exchanged for or otherwise replaced with Company Class A Shares or Company Class B Shares, (vi) the holders of Company Shares immediately prior to the Company Recapitalization shall be the only holders of Company Shares immediately following the Company Recapitalization and (vii) the Company Recapitalization shall not alter, or have the effect of altering, the terms or conditions of the Per Share Merger Consideration.

Section 2.3. The Merger. On the terms and subject to the conditions set forth in this Agreement and in accordance with the applicable provisions of the DGCL, at the Merger Effective Time, Merger Sub and the Company shall consummate the Merger, pursuant to which Merger Sub shall be merged with and into the Company, whereupon the separate corporate existence of Merger Sub shall cease and the Company shall continue as the Surviving Corporation.

Section 2.4. Merger Effective Time. At the Closing and after the Domestication Effective Time, the Company and Merger Sub shall file with the Delaware Secretary of State a certificate of merger substantially in the form attached to this Agreement as Exhibit F (the “Certificate of Merger”) in accordance with the applicable provisions of the DGCL. The Merger shall become effective at the time the Certificate of Merger is accepted for filing by the Delaware Secretary of State or at such later time as may be mutually agreed by the Company and Acquiror and specified in the Certificate of Merger. The time at which the Merger actually becomes effective is referred to herein as the “Merger Effective Time”.

Section 2.5. Effect of the Merger. The effect of the Merger shall be as provided in this Agreement, the Certificate of Merger and the applicable provisions of the DGCL. Without limiting the generality of the foregoing, and subject thereto, at the Merger Effective Time, all of the respective assets, properties, rights, privileges, immunities, powers and franchises of the Company and Merger Sub shall vest in the Surviving Corporation, and all of the respective debts, Liabilities, duties and obligations of the Company and Merger Sub shall become the debts, Liabilities, duties and obligations of the Surviving Corporation.

Section 2.6. Governing Documents. At the Merger Effective Time, the certificate of incorporation and bylaws of the Company in effect immediately prior to the Merger Effective Time shall be amended and restated in their entirety to be in substantially the forms attached hereto as Exhibit G and Exhibit H, respectively, and, as so amended, shall be the certificate of incorporation and bylaws of the Surviving Corporation until thereafter supplemented or amended in accordance with the applicable provisions thereof and of the DGCL.

Section 2.7. Directors and Officers.

(a) At the Merger Effective Time, the directors and officers identified in Section 2.7 of the Company Disclosure Letter shall become the directors and officers of the Surviving Corporation and shall hold such offices in accordance with the Governing Documents of the Surviving Corporation until their respective successors are duly elected or appointed and qualified or their earlier death, resignation or removal.

(b) The parties shall take all actions necessary to ensure that, from and after the Merger Effective Time, the Persons identified as the post-Closing directors and officers of the Acquiror in accordance with the provisions of Section 8.6 shall be the directors and officers (and, in the case of such officers, holding such positions as set forth in Section 8.6(b) of the Company Disclosure Letter), respectively, of the Acquiror, each to hold office in accordance with the Governing Documents of the Surviving Corporation until their respective successors are duly elected or appointed and qualified or their earlier death, resignation or removal.

Section 2.8. Reorganization Tax Matters. Acquiror, Merger Sub, the Company and the Surviving Corporation intend that, for U.S. federal income tax purposes, (a) as a result of the Domestication, Acquiror shall be treated as a “domestic” corporation (within the meaning of Section 7701(a)(4) of the Code and corresponding provisions of state and local Law) prior to the Merger Effective Time, (b) the Merger qualifies as a “reorganization” within the meaning of Section 368(a) of the Code (and the Treasury Regulations promulgated thereunder) to which each of Acquiror, Merger Sub and the Company are parties under Section 368(b) of the

 

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Code (and the Treasury Regulations promulgated thereunder) and (c) the Merger and the PIPE Investment, taken together, shall constitute a transaction that qualifies under Section 351 of the Code (the foregoing clauses (a), (b) and (c) collectively, the “Intended Tax Treatment”). This Agreement is intended to constitute, and is adopted as, a “plan of reorganization” within the meaning of Treasury Regulations Section 1.368-2(g) and 1.368-3(a). Acquiror, Merger Sub, the Company and the Surviving Corporation shall file all Tax Returns consistent with, and take no position (whether in any audit or examination, on any Tax Return or otherwise) or any other action before or after the Closing, in either case, that is inconsistent with the Intended Tax Treatment, unless otherwise required to do so as a result of a “determination” that is final within the meaning of Section 1313(a) of the Code or a change in applicable Law. Acquiror, Merger Sub, the Company and the Surviving Corporation shall (and shall cause their respective Affiliates to) cooperate fully with each other and their respective counsel, as and to the extent reasonably requested by each other, in connection with filing any applicable Tax Return, with respect to any Tax proceeding or as otherwise necessary or desirable to document and support the Intended Tax Treatment, including providing factual support letters.

ARTICLE III

CLOSING OF THE TRANSACTIONS

Section 3.1. Closing. On the terms and subject to the conditions set forth in this Agreement, the closing of the Merger (the “Closing”) shall take place (a) remotely by the mutual exchange of electronic signatures by the means provided in Section 12.2, at 10:00 a.m., Eastern Time, on the date that is two Business Days after the first day on which all of the conditions set forth in Article X have been satisfied or, to the extent permitted by applicable Law, waived by the applicable Party or Parties entitled to the benefit thereof (other than the Domestication Condition and those conditions that by their nature or terms are to be satisfied at the Closing, but subject to the satisfaction or waiver thereof) or (b) at such other place or time as Acquiror and the Company may mutually agree in writing. The date on which the Closing actually occurs is referred to herein as the “Closing Date”. For the avoidance of doubt, the Domestication Effective Time shall occur prior to the Closing and prior to the Merger Effective Time.

Section 3.2. Pre-Closing Deliverables.

(a) Not less than two Business Days prior to the Closing Date, the Company shall prepare and deliver to Acquiror (i) a statement setting forth the Company’s good faith determination of Company Transaction Expenses as of the Closing Date (in reasonable detail and with reasonable supporting documentation to enable a review of such statement by Acquiror), including the respective amounts and wire transfer instructions for the payment thereof, together with corresponding invoices therefor and (ii) an allocation schedule setting forth the Company’s good faith determination of (A) the numbers of each type of Equity Securities of the Company held by each holder of Equity Securities of the Company immediately prior to the Company Recapitalization and immediately after the Company Recapitalization (but immediately before the Closing), (B) the aggregate number of Participating Company Common Shares, the Equity Value Exchange Ratio, the Earn-out Exchange Ratio and (C) the consideration due to each holder of Equity Securities of the Company pursuant to this Agreement, including any cash amounts payable in lieu of fractional shares, together with any other information that the Exchange Agent may reasonably request.

(b) Not less than three Business Days prior to the Closing Date, Acquiror shall prepare and deliver to the Company a statement setting forth Acquiror’s good faith determination of (i) the Acquiror Share Redemption Amount, (ii) the Acquiror Closing Cash Amount and (iii) Acquiror Transaction Expenses as of the Closing Date (in each case, in reasonable detail and with reasonable supporting documentation to enable a review of such statement by the Company), including the respective amounts and wire transfer instructions for the payment of all Acquiror Transaction Expenses, together with corresponding invoices therefor.

Section 3.3. FIRPTA Certificate(a) . At the Closing, the Company shall deliver to Acquiror a certificate prepared in accordance with the requirements of Treasury Regulations Section 1.1445-2(c)(3), together with a

 

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notice to the Internal Revenue Service prepared in accordance with the provisions of Treasury Regulations Section 1.897-2(h)(2), in each case, in form and substance reasonably satisfactory to Acquiror; provided that, notwithstanding anything to the contrary in this Agreement, the sole remedy available to Acquiror for any failure to provide the documentation described in this Section 3.3 shall be to make any Tax withholding (if any) required under applicable Law in connection with payments made pursuant to this Agreement, it being understood that in no event shall any such failure to deliver the documentation described in this Section 3.3 constitute a failure of a condition to the Closing pursuant to Article X or otherwise.

Section 3.4. Closing Payments.

(a) At the Closing, Acquiror will deliver or cause to be delivered to the Exchange Agent the Aggregate Equity Value Consideration and the Aggregate Earn-out Consideration for further distribution to the applicable holders of Equity Securities of the Company pursuant to Section 4.3.

(b) At the Closing, Acquiror shall pay or cause to be paid, by wire transfer of immediately available funds, (i) all accrued and unpaid Acquiror Transaction Expenses as set forth in the Acquiror Closing Statement and (ii) all accrued and unpaid Company Transaction Expenses as set forth in the Company Closing Statement; provided that any unpaid Company Transaction Expenses due to any current or former employee, independent contractor, officer or director of the Company or any of its Subsidiaries shall be paid to the Company for further payment to such employee, independent contractor, officer or director through the Company’s payroll.

Section 3.5. Further Assurances. If, at any time after the Closing, any further action is necessary or desirable to carry out the purposes of this Agreement and to vest the Surviving Corporation following the Merger Effective Time with full right and title to, and possession of, all assets, properties, rights, privileges, immunities, powers and franchises of the Company and Merger Sub, the Parties and their respective directors, managers and officers are fully authorized, in the name of the applicable Party or its successor or otherwise, to take, and shall take, all such lawful actions (including preparing, executing, delivering, filing, disseminating and publishing all such other agreements, instruments and other documents) as are reasonably necessary to achieve the foregoing purposes and are not inconsistent with this Agreement.

ARTICLE IV

MERGER CONSIDERATION; CONVERSION OF SECURITIES

Section 4.1. Merger Consideration.

(a) The aggregate consideration to be paid to holders of Equity Securities of the Company in, or in connection with, the Merger shall be the Aggregate Equity Value Consideration plus, subject to the vesting and forfeiture conditions specified in Section 4.6, the Aggregate Earn-out Consideration.

(b) The consideration to be paid in, or in connection with, the Merger in respect of each Company Class A Share that is issued and outstanding immediately prior to the Merger Effective Time (but after the Company Recapitalization) shall be (i) a number of Acquiror Delaware Class A Shares equal to the Equity Value Exchange Ratio (the “Standard Per Share Equity Value Consideration”) and (ii) subject to the vesting and forfeiture conditions specified in Section 4.6, a number of Acquiror Delaware Class A Shares equal to the Earn-out Exchange Ratio (the “Standard Per Share Earn-out Consideration”).

(c) The consideration to be paid in, or in connection with, the Merger in respect of each Company Class B Share that is issued and outstanding immediately prior to the Merger Effective Time (but after the Company Recapitalization) shall be (i) a number of Acquiror Delaware Class B Shares equal to the Equity Value Exchange Ratio (the “Employee Per Share Equity Value Consideration”) and (ii) subject to the vesting and forfeiture conditions specified in Section 4.6, a number of Acquiror Delaware Class B Shares equal to the Earn-out Exchange Ratio (the “Employee Per Share Earn-out Consideration”).

 

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Section 4.2. Conversion of Company Common Shares in the Merger.

(a) At the Merger Effective Time, after the Company Recapitalization, by virtue of the Merger and without any action on the part of Acquiror, Merger Sub, the Company or any holder of Equity Securities of any of the foregoing:

(i) each Company Share that is owned by Acquiror, Merger Sub or the Company (as treasury stock or otherwise) immediately prior to the Merger Effective Time (each, an “Excluded Share”) shall be canceled and shall cease to exist and no consideration shall be delivered in exchange therefor;

(ii) each Company Class A Share that is issued and outstanding immediately prior to the Merger Effective Time (other than Excluded Shares and Dissenting Shares) shall be canceled and converted into the right to receive the Standard Per Share Equity Value Consideration and subject to the vesting and forfeiture conditions specified in Section 4.6, the Standard Per Share Earn-out Consideration;

(iii) each Company Class B Share that is issued and outstanding immediately prior to the Merger Effective Time (other than Excluded Shares and Dissenting Shares) shall be canceled and converted into the right to receive the Employee Per Share Equity Value Consideration and subject to the vesting and forfeiture conditions specified in Section 4.6, the Employee Per Share Earn-out Consideration; and

(iv) each share of common stock of Merger Sub that is issued and outstanding immediately prior to the Merger Effective Time shall be converted into one validly issued, fully paid and non-assessable share of common stock, par value $0.01 per share, of the Surviving Corporation.

(b) Each Company Common Share that is issued and outstanding immediately prior to the Merger Effective Time and in respect of which a demand for appraisal has been properly exercised in accordance with Section 262 of the DGCL and, as of the Merger Effective Time, has not been effectively withdrawn or lost or forfeited (a “Dissenting Share”) shall not be converted into the right to receive the applicable Per Share Merger Consideration but shall instead be converted into the right to receive such consideration as may be determined to be due with respect to such Dissenting Share pursuant to Section 262 of the DGCL. Each holder of a Dissenting Share that becomes entitled to payment under the DGCL in respect of such Dissenting Share shall receive payment therefor in accordance with the DGCL (but only after the value therefor shall have been agreed upon or finally determined pursuant to the DGCL). If, after the Merger Effective Time, any Company Common Share shall lose its status as a Dissenting Share, then such Company Common Share shall immediately be converted into the right to receive the applicable Per Share Merger Consideration as if such Company Share never had been a Dissenting Share, and Acquiror (or following the Merger Effective Time, the Company) shall deliver, or cause to be delivered in accordance with the terms of this Agreement, to the holder thereof the applicable Per Share Merger Consideration as if such Company Share had never been a Dissenting Share.

Section 4.3. Exchange Procedures.

(a) No later than 15 Business Days prior to the Closing Date, Acquiror shall appoint (pursuant to an agreement in a form reasonably acceptable to the Company) Acquiror’s transfer agent or another agent reasonably acceptable to the Company (the “Exchange Agent”) to act as the agent for the purpose of paying the Aggregate Equity Value Consideration and the Aggregate Earn-out Consideration to the applicable holders of Equity Securities of the Company. At or before the Merger Effective Time, Acquiror shall deposit with the Exchange Agent the Aggregate Equity Value Consideration and the Aggregate Earn-out Consideration.

(b) Reasonably promptly after the Merger Effective Time, Acquiror shall send or shall cause the Exchange Agent to send, to each record holder of Company Common Shares as of immediately prior to the Merger Effective Time whose Company Common Shares were converted pursuant to Section 4.2(a) into the right to receive a portion of the Aggregate Equity Value Consideration and the Aggregate Earn-out Consideration, a letter of transmittal and instructions (which shall specify that the delivery shall be effected, and the risk of loss and title shall pass, only upon proper transfer of each Company Common Share to the Exchange Agent, and which otherwise shall be in customary form) for use in such exchange (each, a “Letter of Transmittal”).

 

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(c) Each holder of Company Common Shares that have been converted into the right to receive a portion of the Aggregate Equity Value Consideration and the Aggregate Earn-out Consideration, pursuant to Section 4.2(a) shall be entitled to receive such portion of the Aggregate Equity Value Consideration and the Aggregate Earn-out Consideration upon receipt by the Exchange Agent of a duly completed and validly executed Letter of Transmittal and such other documents as may reasonably be requested by the Exchange Agent. No interest shall be paid or accrued upon the transfer of any Company Common Share.

(d) Promptly following the date that is one year after the Closing Date, Acquiror shall instruct the Exchange Agent to deliver to Acquiror all documents in its possession relating to the transactions contemplated hereby, and the Exchange Agent’s duties shall terminate. Thereafter, any portion of the Aggregate Equity Value Consideration or the Aggregate Earn-out Consideration that remains unclaimed shall be returned to Acquiror, and any Person that was a holder of Company Common Shares as of immediately prior to the Merger Effective Time that has not exchanged such Company Common Shares for the applicable portion of the Aggregate Equity Value Consideration and the Aggregate Earn-out Consideration in accordance with this Section 4.3 prior to the date that is one year after the Merger Effective Time may transfer such Company Common Shares to Acquiror and (subject to applicable abandoned property, escheat and similar Laws) receive in consideration therefor, and Acquiror shall promptly deliver, such applicable portion of the Aggregate Equity Value Consideration and the Aggregate Earn-out Consideration without any interest thereupon. None of Acquiror, Merger Sub, the Company, the Surviving Corporation or the Exchange Agent shall be liable to any Person in respect of any of the Aggregate Equity Value Consideration or the Aggregate Earn-out Consideration delivered to a Governmental Authority pursuant to and in accordance with any applicable abandoned property, escheat or similar Laws. If any Company Common Shares shall not have been transferred immediately prior to the date on which any consideration payable pursuant to this Article IV would otherwise escheat to or become the property of any Governmental Authority, any such amounts shall, to the extent permitted by applicable Law, become the property of the Surviving Corporation, free and clear of all claims or interest of any Person previously entitled thereto.

(e) Notwithstanding anything in this Agreement to the contrary, no fractional Acquiror Delaware Common Shares shall be issued in exchange for Company Common Shares, and any fractional Acquiror Delaware Common Share that otherwise would be issued pursuant to the applicable provisions of this Article IV shall be rounded as follows:

(i) if either (A) the aggregate number of Acquiror Delaware Class A Shares that would be paid to the holder of any Company Class A Share in respect of all Company Class A Shares held by such holder pursuant to Section 4.1(b)(i) in the absence of this Section 4.3(e) is not a whole number or (B) the aggregate number of Acquiror Delaware Class A Shares that would be paid to the holder of any Company Class A Share in respect of all Company Class A Shares held by such holder pursuant to Section 4.1(b)(ii) in the absence of this Section 4.3(e) is not a whole number, then such aggregate number shall be (x) rounded down to the nearest whole number in the event that the fractional Acquiror Delaware Class A Share that otherwise would be so paid is less than five-tenths (0.5) of an Acquiror Delaware Class A Share and (y) rounded up to the nearest whole number in the event that the fractional Acquiror Delaware Class A Share that otherwise would be so paid is greater than or equal to five-tenths (0.5) of an Acquiror Delaware Class A Share;

(ii) if either (A) the aggregate number of Acquiror Delaware Class B Shares that would be paid to the holder of any Company Class B Share in respect of all Company Class B Shares held by such holder pursuant to Section 4.1(c)(i) in the absence of this Section 4.3(e) is not a whole number or (B) the aggregate number of Acquiror Delaware Class B Shares that would be paid to the holder of any Company Class B Share in respect of all Company Class B Shares held by such holder pursuant to Section 4.1(c)(ii) in the absence of this Section 4.3(e) is not a whole number, then such aggregate number shall be (x) rounded down to the nearest whole number in the event that the fractional Acquiror Delaware Class B Share that otherwise would be so paid is less than five-tenths (0.5) of an Acquiror Delaware Class B Share and (y) rounded up to the nearest whole number in the event that the fractional Acquiror Delaware Class B Share that otherwise would be so paid is greater than or equal to five-tenths (0.5) of an Acquiror Delaware Class B Share;

 

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(iii) if either (A) the number of Acquiror Delaware Common Shares that would be subject to any Acquiror Option pursuant to Section 4.5(a)(i)(A) in the absence of this Section 4.3(e) is not a whole number or (B) the number of Acquiror Delaware Common Shares that would be subject to any Acquiror Option pursuant to Section 4.5(a)(i)(B) in the absence of this Section 4.3(e) is not a whole number, then such number shall be rounded down to the nearest whole number;

(iv) if either (A) the aggregate number of Acquiror Delaware Class B Shares that the holder of any Company Restricted Stock Award would be entitled to receive in respect of all Company Restricted Stock Awards held by such holder pursuant to Section 4.1(c)(i) (by reference thereto in Section 4.5(b)) in the absence of this Section 4.3(e) is not a whole number or (B) the aggregate number of Acquiror Delaware Class B Shares that the holder of any Company Restricted Stock Award would be entitled to receive in respect of all Company Restricted Stock Awards held by such holder pursuant to Section 4.1(c)(ii) (by reference thereto in Section 4.5(b)) in the absence of this Section 4.3(e) is not a whole number, then such aggregate number shall be (x) rounded down to the nearest whole number in the event that the fractional Acquiror Delaware Class B Share that otherwise would be so received is less than five-tenths (0.5) of an Acquiror Delaware Class B Share and (y) rounded up to the nearest whole number in the event that the fractional Acquiror Delaware Class B Share that otherwise would be so received is greater than or equal to five-tenths (0.5) of an Acquiror Delaware Class B Share; and

(v) if either (A) the number of Acquiror Delaware Common Shares that would be subject to any Acquiror Restricted Stock Unit Award pursuant to Section 4.5(c)(i) in the absence of this Section 4.3(e) is not a whole number or (B) the number of Acquiror Delaware Common Shares that would be subject to any Acquiror Restricted Stock Unit Award pursuant to Section 4.5(c)(ii) in the absence of this Section 4.3(e) is not a whole number, then such number shall be (x) rounded down to the nearest whole number in the event that the fractional Acquiror Delaware Common Share that otherwise would be subject to such Acquiror Restricted Stock Unit Award is less than five-tenths (0.5) of an Acquiror Delaware Common Share and (y) rounded up to the nearest whole number in the event that the fractional Acquiror Delaware Common Share that otherwise would be subject to such Acquiror Restricted Stock Unit Award is greater than or equal to five-tenths (0.5) of an Acquiror Delaware Common Share.

Section 4.4. Treatment of Company Preferred Warrants.

(a) Each Company Preferred Warrant that is outstanding and unexercised immediately prior to the Merger Effective Time (after giving effect to the Company Recapitalization, pursuant to which each Company Preferred Warrant shall have become a warrant to purchase a number of Company Class A Shares determined in accordance with the terms of such Company Preferred Warrant) and that would automatically be exercised in full in accordance with its terms by virtue of the occurrence of the Merger, without any election or action by the Company or the holder thereof, shall automatically be exercised in full accordance with its terms immediately prior to the Merger Effective Time, without any action on the part of the Company or the holder thereof, and each Company Class A Share issued or issuable upon such exercise shall be treated as being issued and outstanding immediately prior to the Merger Effective Time and, pursuant to Section 4.2(a)(ii) (and without duplication) shall be canceled and converted into the right to receive the Standard Per Share Equity Value Consideration and subject to the vesting and forfeiture conditions specified in Section 4.6, the Standard Per Share Earn-out Consideration.

(b) Each Company Preferred Warrant that is outstanding and unexercised immediately prior to the Merger Effective Time (after giving effect to the Company Recapitalization, pursuant to which each Company Preferred Warrant shall have become a warrant to purchase a number of Company Class A Shares determined in accordance with the terms of such Company Preferred Warrant) and that is not automatically exercised in full pursuant to Section 4.4(a)) shall be converted into a warrant to purchase Acquiror Delaware Class A Shares on the same terms and conditions (including as to vesting and exercisability) as are in effect with respect to such Company Preferred Warrant immediately prior to the Merger Effective Time (after giving effect to the Company Recapitalization) (each, an “Assumed Warrant”), except that (i) such Assumed Warrant shall entitle the holder thereof to purchase such number of Acquiror Delaware Class A Shares as is equal to the sum of (A) the product

 

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of (x) the number of Company Class A Shares subject to such Company Preferred Warrant immediately prior to the Merger Effective Time (after giving effect to the Company Recapitalization) multiplied by (y) the Equity Value Exchange Ratio plus (B) subject to the vesting and forfeiture provisions specified in Section 4.6, the product of (x) the number of Company Class A Shares subject to such Company Preferred Warrant immediately prior to the Merger Effective Time (after giving effect to the Company Recapitalization) multiplied by (y) the Earn-out Exchange Ratio and (ii) such Assumed Warrant shall have an exercise price per share (which shall be rounded up to the nearest whole cent) equal to the quotient of (A) the exercise price per share of such Company Preferred Warrant immediately prior to the Merger Effective Time (after giving effect to the Company Recapitalization) divided by (B) the sum of (x) the Equity Value Exchange Ratio plus the Earn-out Exchange Ratio.

Section 4.5. Treatment of Company Equity Awards.

(a) As of the Merger Effective Time, each Company Option that is then outstanding shall be converted into the right to receive an option relating to Acquiror Delaware Common Shares on the same terms and conditions as are in effect with respect to such Company Option immediately prior to the Merger Effective Time (including with respect to vesting and termination-related provisions, except as set forth in the proviso hereto) (each, an “Acquiror Option”), except that (i) such Acquiror Option shall relate to such number of Acquiror Delaware Common Shares (rounded down to the nearest whole Acquiror Delaware Common Share) as is equal to the sum of (A) the product of (x) the number of Company Common Shares subject to such Company Option multiplied by (y) the Equity Value Exchange Ratio, plus (B) subject to the vesting and forfeiture conditions specified in Section 4.6, the product of (x) the number of Company Common Shares subject to such Company Option multiplied by (y) the Option Earn-out Exchange Ratio (the Acquiror Delaware Common Shares in this clause (B), the “Option Earn-out Shares”), and (ii) the exercise price per share of such Acquiror Option shall be equal to the quotient of (A) the exercise price per share of such Company Option in effect immediately prior to the Merger Effective Time divided by (B) the Option Exercise Price Exchange Ratio (the exercise price per share, as so determined, being rounded up to the nearest full cent); provided that (1) all Acquiror Delaware Common Shares resulting from this Section 4.5(a) shall be (x) in the form of Acquiror Delaware Class B Shares to the extent resulting from Company Class B Shares prior to the Merger Effective Time and (y) in the form of Acquiror Delaware Class A Shares to the extent resulting from Company Class A Shares prior to the Merger Effective Time and (2) all Option Earn-out Shares shall be subject to the provisions of Section 4.5(d).

(b) As of the Merger Effective Time, each Company Restricted Stock Award that is outstanding immediately prior to the Merger Effective Time shall be converted into the right to receive restricted Acquiror Delaware Common Shares (each, an “Acquiror Restricted Stock Award”) having the same terms and conditions as were applicable to such Company Restricted Stock Award immediately prior to the Merger Effective Time (including with respect to vesting and termination-related provisions), except that such Acquiror Restricted Stock Award shall relate to such number of Acquiror Delaware Common Shares as is determined in accordance with Section 4.1.

(c) As of the Merger Effective Time, each Company Restricted Stock Unit Award that is outstanding immediately prior to the Merger Effective Time shall be converted into the right to receive restricted stock units based on Acquiror Delaware Common Shares (each, an “Acquiror Restricted Stock Unit Award”) with the same terms and conditions as were applicable to such Company Restricted Stock Unit Award immediately prior to the Merger Effective Time (including with respect to vesting and termination-related provisions), except that such Acquiror Restricted Stock Unit Award shall relate to such number of Acquiror Delaware Common Shares as is equal to the sum of (i) the product of (A) the number of Company Common Shares subject to such Company Restricted Stock Unit Award immediately prior to the Merger Effective Time multiplied by (B) the Equity Value Exchange Ratio, plus (ii) subject to the vesting and forfeiture conditions specified in Section 4.6, the product of (A) the number of Company Common Shares subject to such Company Restricted Stock Unit Award immediately prior to the Merger Effective Time multiplied by (B) the Earn-out Exchange Ratio (the Acquiror Delaware Common Shares described in this clause (ii), the “RSU Earn-out Shares”); provided that (1) all Acquiror Delaware Common Shares resulting from this Section 4.5(c) shall be (x) in the form of Acquiror

 

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Delaware Class B Shares to the extent resulting from Company Class B Shares prior to the Merger Effective Time and (y) in the form of Acquiror Delaware Class A Shares to the extent resulting from Company Class A Shares prior to the Merger Effective Time and (2) all RSU Earn-out Shares resulting from the foregoing clause (ii) shall be subject to the provisions of Section 4.6 and shall be issued in the form of restricted stock instead of restricted stock units, subject to the terms of conditions of the Company Restricted Stock Unit Award that would apply to restricted stock instead of restricted stock units (as reasonably determined by the Company).

(d) The Company shall take all necessary actions to effect the treatment of the Company Equity Awards pursuant to Section 4.5(a), Section 4.5(b) and Section 4.5(c) in accordance with the Company Incentive Plans and the applicable award agreements and to ensure that no Acquiror Option may be exercised prior to the effective date of an applicable Form S-8 (or other applicable form, including Form S-1 or Form S-3) of Acquiror, unless such exercise satisfies an exemption from the registration requirements of the Securities Act. The Board of Directors of the Company shall amend the Company Incentive Plans and take all other necessary actions, effective as of immediately prior to the Closing, in order to provide that no new Company Equity Awards will be granted under the Company Incentive Plans.

Section 4.6. Earn-out.

(a) The Standard Per Share Earn-out Consideration, the Employee Per Share Earn-out Consideration, the Option Earn-out Shares and the RSU Earn-out Shares will each be composed as follows: (i) 25% of the Acquiror Delaware Common Shares constituting the Applicable Earn-out Consideration shall be subject to the vesting and forfeiture conditions specified in Section 4.6(c)(i) (the “First Target Earn-out Shares”), (ii) an additional 25% of the Acquiror Delaware Common Shares constituting the Applicable Earn-out Consideration shall be subject to the vesting and forfeiture conditions specified in Section 4.6(c)(ii) (the “Second Target Earn-out Shares”), (iii) an additional 25% of the Acquiror Delaware Common Shares constituting the Applicable Earn-out Consideration shall be subject to the vesting and forfeiture conditions specified in Section 4.6(c)(iii) (the “Third Target Earn-out Shares”) and (iv) the remaining 25% of the Acquiror Delaware Common Shares constituting the Applicable Earn-out Consideration shall be subject to the vesting and forfeiture conditions specified in Section 4.6(c)(iv) (the “Fourth Target Earn-out Shares”).

(b) If, after giving effect to Section 4.3(e), (i) the result of the product of (A) 25% multiplied by (B) the aggregate number of Earn-out Shares that would be paid to a Company Stockholder pursuant to Section 4.1(b)(ii) or Section 4.1(c)(ii) (including by reference thereto in Section 4.5(b)) in the absence of this Section 4.6(b) is not a whole number, (ii) the result of the product of (A) 25% multiplied by (B) the aggregate number of Earn-out Shares that would be subject to Acquiror Options held by any holder thereof pursuant to Section 4.5(a)(i)(B) in the absence of this Section 4.6(b) is not a whole number or (iii) the result of the product of (A) 25% multiplied by (B) the aggregate number of Earn-out Shares that would be subject to Acquiror Restricted Stock Unit Awards held by any holder thereof pursuant to Section 4.5(c)(ii) in the absence of this Section 4.6(b) is not a whole number, then (1) the number of Earn-out Shares resulting from the product of (x) four (4) multiplied by (y) the fractional amount (rounded to the nearest thousandth when expressed in decimal form) of the fractional Earn-out Share resulting from the foregoing clause (i), (ii) or (iii), as applicable, shall be rounded down to the nearest whole number, and each such whole Earn-out Share shall be a First Target Earn-out Share, and (2) Acquiror shall pay the Fractional Earn-out Share Cash-Out Amount to each such Company Stockholder or holder of Acquiror Options or Acquiror Restricted Stock Unit Awards to which any fractional Earn-out Share resulting from the product described in the foregoing clause (1) otherwise would have been paid.

(c) The Standard Earn-out Consideration, the Employee Per Share Earn-out Consideration, the Option Earn-out Shares and the RSU Earn-out Shares shall be subject to the following vesting conditions:

(i) If, at any time during the period commencing on the Closing Date and ending on the date that is five years after the Closing Date (the “Earn-out Period”), the Acquiror Trading Price at any point during the trading hours of a Trading Day is greater than or equal to $12.50 for any 20 Trading Days within any period of 30 consecutive Trading Days, the First Target Earn-out Shares shall immediately vest and no longer be subject to the forfeiture conditions provided in this Section 4.6.

 

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(ii) If, at any time during the Earn-out Period, the Acquiror Trading Price at any point during the trading hours of a Trading Day is greater than or equal to $15.00 for any 20 Trading Days within any period of 30 consecutive Trading Days, the Second Target Earn-out Shares shall immediately vest and no longer be subject to the forfeiture conditions provided in this Section 4.6.

(iii) If, at any time during the Earn-out Period, the Acquiror Trading Price at any point during the trading hours of a Trading Day is greater than or equal to $17.50 for any 20 Trading Days within any period of 30 consecutive Trading Days, the Third Target Earn-out Shares shall immediately vest and no longer be subject to the forfeiture conditions provided in this Section 4.6.

(iv) If, at any time during the Earn-out Period, the Acquiror Trading Price at any point during the trading hours of a Trading Day is greater than or equal to $20.00 for any 20 Trading Days within any period of 30 consecutive Trading Days, the Fourth Target Earn-out Shares shall immediately vest and no longer be subject to the forfeiture conditions provided in this Section 4.6.

(d) For the avoidance of doubt, if the vesting conditions applicable to more than one of Section 4.6(c)(i), Section 4.6(c)(ii), Section 4.6(c)(iii) or Section 4.6(c)(iv) have been satisfied at any time, then all of the Earn-out Shares subject to such satisfied vesting conditions shall immediately vest and no longer be subject to the forfeiture conditions provided in this Section 4.6.

(e) If, upon the expiration of the Earn-out Period, the vesting of any of the Earn-out Shares has not occurred, then the applicable Earn-out Shares that failed to vest pursuant to Section 4.6(c)(i), Section 4.6(c)(ii), Section 4.6(c)(iii) or Section 4.6(c)(iv), as applicable, and any dividends or distributions previously paid or made in respect thereof shall be automatically forfeited and transferred to Acquiror for no consideration, and no Person (other than the Acquiror) shall have any further right with respect thereto. Notwithstanding anything to the contrary herein, in no event will the Applicable Earn-out Recipients collectively receive Earn-out Shares in an aggregate amount higher than the Aggregate Earn-out Consideration (or the portion thereof) that has vested in accordance with Section 4.6(c) or Section 4.6(g).

(f) If, during the Earn-out Period, the Acquiror Delaware Class A Shares outstanding as of immediately following the Merger Effective Time shall have been changed into a different number of shares or a different class, by reason of any Equity Adjustment, or any similar event shall have occurred, then the applicable Acquiror Trading Price specified in each of Section 4.6(c)(i), Section 4.6(c)(ii), Section 4.6(c)(iii) and Section 4.6(c)(iv) shall be equitably adjusted to reflect such change.

(g) In the event that there is an Acquiror Sale during the Earn-out Period, then, to the extent that the holders of Acquiror Delaware Class A Shares receive an Acquiror Sale Price that is greater than or equal to the applicable Acquiror Trading Price specified in Section 4.6(c)(i), Section 4.6(c)(ii), Section 4.6(c)(iii) or Section 4.6(c)(iv) (subject to Section 4.6(f)), any Earn-out Shares that have not previously vested in accordance with Section 4.6(c)(i), Section 4.6(c)(ii), Section 4.6(c)(iii) or Section 4.6(c)(iv), as applicable, shall be deemed to have vested (to the extent that such Earn-out Shares would have vested pursuant to Section 4.6(c)(i), Section 4.6(c)(ii), Section 4.6(c)(iii) or Section 4.6(c)(iv), as applicable, if the Acquiror Trading Price had been the Acquiror Sale Price for any 20 Trading Days within any period of 30 consecutive Trading Days during the Earn-out Period) immediately prior to the closing of such Acquiror Sale, and the holders of any Earn-out Shares deemed vested pursuant to this Section 4.6(g) shall be eligible to participate in such Acquiror Sale with respect to such Earn-out Shares on the same terms, and subject to the same conditions, as apply to the holders of Acquiror Delaware Class A Shares or Acquiror Delaware Class B Shares, as applicable, generally.

(h) For so long as any Earn-out Share remains subject to the vesting and forfeiture conditions specified in Section 4.6(c), (i) the holder thereof shall be entitled to exercise the voting rights carried by such Earn-out Share and (ii) the holder thereof shall not be entitled to receive any dividends or other distributions in respect of such Earn-out Share, and any dividends or distributions paid or made in respect of such Earn-out Share shall be retained by Acquiror and invested as and to the extent determined by Acquiror and shall be paid or made to the holder of such Earn-out Share only when and to the extent that such Earn-out Share vests in accordance with Section 4.6(c), and, to the extent that such Earn-out Share fails to vest in accordance with Section 4.6(c) prior to

 

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the expiration of the Earn-out Period, any dividends or distributions paid or made in respect thereof shall be forfeited to Acquiror for no consideration, and no Person (other than Acquiror) shall have any further right with respect thereto.

Section 4.7. Withholding. Notwithstanding any other provision of this Agreement, none of Acquiror, the Company, the Surviving Corporation or the Exchange Agent shall be entitled to deduct or withhold from any consideration payable pursuant to this Agreement any Taxes, except for any Taxes that are required to be deducted and withheld from such amounts under the Code or any other applicable Law. Acquiror shall use commercially reasonable efforts to provide the Company with written notice of any amount that it intends to withhold in connection with any payment under this Agreement (other than any compensatory payments to be made pursuant to this Agreement) at least five days prior to making any such withholding (which notice shall set forth a description of the factual and legal basis for such withholding) and cooperate with the Company to reduce or eliminate any applicable withholding; provided that Acquiror shall not have any such obligations with respect to any withholding contemplated under Section 3.3. To the extent that any amount so deducted and withheld in accordance with this Section 4.7 are timely remitted to the appropriate Governmental Authority, such amounts shall be treated for all purposes of this Agreement as having been paid to the Person in respect of which such deduction and withholding was made. For the avoidance of doubt, in the case of any such payment payable to employees of the Company or its Subsidiaries in connection with the Merger treated as compensation, the Parties shall cooperate to pay such amounts through the Company’s or the relevant Subsidiary’s payroll to facilitate applicable withholding.

ARTICLE V

REPRESENTATIONS AND WARRANTIES OF THE COMPANY

Except as set forth in the disclosure letter delivered to Acquiror and Merger Sub by the Company on the date of this Agreement (the “Company Disclosure Letter”), the Company represents and warrants to Acquiror and Merger Sub as follows:

Section 5.1. Company Organization. The Company has been duly incorporated and is validly existing and in good standing under the Laws of the State of Delaware and has the requisite corporate power and authority to own, lease or otherwise hold and operate all of its properties and assets and to conduct its business as it is now being conducted. The Governing Documents of the Company, as amended to the date of this Agreement and as previously made available by or on behalf of the Company to Acquiror, are true, correct and complete. The Company is duly licensed or qualified and in good standing as a foreign or extra-provincial corporation (or other entity, if applicable) in each jurisdiction in which its ownership of property or the character of its activities is such as to require it to be so licensed or qualified or in good standing (if the concept of good standing is recognized by such jurisdiction), as applicable, except where the failure to be so licensed or qualified or in good standing would not be material to the Company and its Subsidiaries, taken as a whole.

Section 5.2. Subsidiaries. The legal entity name and jurisdiction of incorporation, formation or organization, as applicable, of each Subsidiary of the Company as of the date of this Agreement is set forth in Section 5.2 of the Company Disclosure Letter. Each Subsidiary of the Company has been duly incorporated, formed or organized, as the case may be, and is validly existing under the Laws of its jurisdiction of incorporation, formation or organization, as applicable, and has the requisite corporate or other business entity power and authority to own, lease or otherwise hold and operate all of its properties and assets and to conduct its business as it is now being conducted. True, correct and complete copies of the Governing Documents of each Subsidiary of the Company, as amended to the date of this Agreement, have been previously made available to Acquiror by or on behalf of the Company. Each Subsidiary of the Company is duly licensed or qualified and in good standing as a foreign or extra-provincial corporation (or other entity, if applicable) in each jurisdiction in which its ownership of property or the character of its activities is such as to require it to be so licensed or qualified or in good

 

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standing (if the concept of good standing is recognized by such jurisdiction), as applicable, except where the failure to be so licensed or qualified or in good standing would not be material to the Company and its Subsidiaries, taken as a whole.

Section 5.3. Due Authorization.

(a) The Company has all requisite corporate power and authority to execute and deliver this Agreement and each Ancillary Agreement to which it is, or is contemplated to be, a party and (subject to receipt of the Company Stockholder Approval and the Governmental Authorizations described in clauses (a) and (b) of Section 5.5) to perform all of its obligations hereunder and thereunder and to consummate the transactions contemplated hereby and thereby. The execution and delivery by the Company of this Agreement and each Ancillary Agreement to which the Company is, or is contemplated to be, a party have been duly and validly authorized and approved by the Company Board. This Agreement has been, and each of the Ancillary Agreements to which the Company is, or is contemplated to be, a party has been or will be, as applicable, duly and validly executed and delivered by the Company, and this Agreement constitutes, and each Ancillary Agreement to which the Company is, or is contemplated to be, a party constitutes or, upon execution prior to the Closing, as applicable, will constitute, a legal, valid and binding obligation of the Company (assuming, in each case, the due and valid execution and delivery by each of the other parties thereto), enforceable against the Company in accordance with its terms, subject to applicable bankruptcy, insolvency, fraudulent conveyance, reorganization, moratorium and similar Laws affecting creditors’ rights generally and subject, as to enforceability, to general principles of equity. Company Stockholder Support Agreements have been executed and delivered to Acquiror by the Requisite Company Stockholders.

(b) Prior to the Company’s execution and delivery of this Agreement, the Company Board has taken the Company Board Actions, and, as of the date hereof, none of the Company Board Actions has been rescinded, withdrawn or modified. No other corporate action is required on the part of the Company or any of its stockholders to enter into this Agreement or the Ancillary Agreements to which the Company is, or is contemplated to be, a party or to approve the Merger, the Company Recapitalization or other transactions contemplated hereby, except for the Company Stockholder Approval.

Section 5.4. No Conflict. Subject to the receipt of the Company Stockholder Approval and the Governmental Authorizations described in clauses (a) and (b) of Section 5.5 and except as set forth in Section 5.4 of the Company Disclosure Letter, the execution and delivery by the Company of this Agreement and each of the Ancillary Agreements to which the Company is, or is contemplated to be, a party and the consummation of the transactions contemplated hereby and thereby do not and will not (a) violate or conflict with any provision of, or result in any breach of or default under, the Governing Documents of the Company, (b) violate or conflict with any provision of, or result in any breach of or default under, any Law applicable to the Company or any of its Subsidiaries, (c) violate or conflict with any provision of, or result (with or without due notice or lapse of time or both) in any breach of or default under, or require any consent or waiver to be obtained under, or result in the loss of any right or benefit of the Company or any of its Subsidiaries under, or give rise to any right of termination, cancellation or acceleration under, or cause the termination or cancellation of, any Contract of the type described in Section 5.13(a) to which the Company or any of its Subsidiaries is a party or by which the Company or any of its Subsidiaries is bound or (d) result in the creation of any Lien (other than Permitted Liens) on any of the properties or assets of the Company or any of its Subsidiaries, except, in the case of clauses (b) through (d), to the extent that the occurrence of any of the foregoing would not be material to the business of the Company and its Subsidiaries, taken as a whole.

Section 5.5. Governmental Authorities; Consents. Assuming the truth and completeness of the representations and warranties of Acquiror and Merger Sub contained in this Agreement, no consent, waiver, approval or authorization of, or designation, declaration or filing with, or notification to, any Governmental Authority (each, a “Governmental Authorization”) is required on the part of the Company or any of its Subsidiaries with respect to the Company’s execution or delivery of this Agreement or the consummation by the Company of the transactions contemplated hereby, except (a) for (i) applicable requirements of the HSR Act,

 

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(ii) the filing of the Merger Certificate in accordance with the DGCL and the acceptance thereof by the Delaware Secretary of State, (iii) the filing of the amended and restated certificate of incorporation of the Company in connection with the Company Recapitalization in accordance with the DGCL and the acceptance thereof by the Delaware Secretary of State, (iv) compliance with any applicable requirements of the Securities Act, the Exchange Act and any other applicable securities Laws and (v) any Governmental Authorization the absence of which would not, individually or in the aggregate, reasonably be expected to have a material adverse effect on the ability of the Company to perform or comply with on a timely basis any material obligation of the Company under this Agreement or to consummate the transactions contemplated hereby and (b) as set forth in Section 5.5 of the Company Disclosure Letter.

Section 5.6. Capitalization of the Company.

(a) As of the date of this Agreement, the authorized capital stock of the Company consists of (i) 35,000,000 Company Common Shares and (ii) 19,136,487 Company Preferred Shares, (A) 4,143,251 of which are designated Series B Preferred Stock, par value $0.01 per share (the “Series B Preferred Shares”), (B) 4,658,503 of which are designated Series C Preferred Stock, par value $0.01 per share (the “Series C Preferred Shares”), (C) 6,162,631 of which are designated Series D Preferred Stock, par value $0.01 per share (the “Series D Preferred Shares”), and (D) 4,172,102 of which are designated Series E Preferred Stock, par value $0.01 per share (the “Series E Preferred Shares”), and there are no other authorized classes or series of capital stock of the Company.

(b) As of the date of this Agreement, there are issued and outstanding (i) 7,940,789 Company Common Shares and (ii) 18,403,604 Company Preferred Shares, consisting of (A) 4,138,185 Series B Preferred Shares, (B) 4,658,503 Series C Preferred Shares, (C) 6,146,911 Series D Preferred Shares and (D) 3,460,005 Series E Preferred Shares. All of the issued and outstanding Company Shares (1) have been duly authorized and validly issued and are fully paid and non-assessable, (2) have been offered, sold and issued in compliance with applicable Law, including federal and state securities Laws, and all requirements set forth in (x) the Governing Documents of the Company as then in effect and (y) any other applicable Contracts governing the issuance of such securities to which the Company is a party or otherwise bound, (3) have not been issued in violation of any purchase option, call option, right of first refusal, preemptive right, subscription right or any similar right under any provision of any applicable Law, the Governing Documents of the Company as then in effect or any Contract to which the Company is a party or otherwise bound and (4) subject to the Governing Documents of the Company and the Contracts set forth in Section 5.6(b) of the Company Disclosure Letter, are free and clear of any Liens.

(c) As of the date of this Agreement, there are issued and outstanding Company Preferred Warrants to purchase an aggregate of 20,786 Company Preferred Shares, (i) 5,066 of which are Series B Preferred Shares subject to Series B Preferred Warrants and (ii) 15,720 of which are Series D Preferred Shares subject to Series D Preferred Warrants. All of the issued and outstanding Company Preferred Warrants (A) have been duly authorized and validly issued and constitute valid and binding obligations of the Company, enforceable against the Company in accordance with their terms, subject to applicable bankruptcy, insolvency, fraudulent conveyance, reorganization, moratorium and similar Laws affecting creditors’ rights generally and subject, as to enforceability, to general principles of equity, (B) have been offered, sold and issued in compliance with applicable Law, including federal and state securities Laws, and all requirements set forth in (1) the Governing Documents of the Company and (2) any other applicable Contracts governing the issuance of such securities to which the Company is a party or otherwise bound, (C) have not been issued in violation of any purchase option, call option, right of first refusal, preemptive right, subscription right or any similar right under any provision of any applicable Law, the Governing Documents of the Company or any Contract to which the Company is a party or otherwise bound and (D) subject to the Governing Documents of the Company and the Contracts set forth in Section 5.6(c) of the Company Disclosure Letter, are free and clear of any Liens.

(d) As of the date of this Agreement, there are issued and outstanding (i) Company Options to purchase an aggregate of 598,509 Company Common Shares, (ii) Company Restricted Stock Awards with respect to 21,266 Company Common Shares and (iii) Company Restricted Stock Unit Awards with respect to 3,113,840

 

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Company Common Shares. The Company has provided to Acquiror, prior to the date of this Agreement, a true and complete list, as of the date of this Agreement, of, with respect to each Company Equity Award, the holder and type of such Company Equity Award, the number of Company Common Shares subject thereto and, if applicable, the vesting schedule and the exercise price per Company Common Share thereof. Each Company Equity Award was validly issued and properly approved by the Company Board (or an appropriate committee thereof). All Company Options, Company Restricted Stock Awards and Company Restricted Stock Unit Awards are evidenced by award agreements in substantially the forms previously made available to Acquiror, and no Company Option, Company Restricted Stock Award or Company Restricted Stock Unit Award is subject to terms that are materially different from those set forth in such forms. Each Company Option has been granted with an exercise price that is intended to be no less than the fair market value of the underlying Company Common Share on the date of grant, as determined in accordance with Section 409A of the Code or Section 422 of the Code, if applicable. Each Company Option is intended to either qualify as an “incentive stock option” under Section 422 of the Code or to be exempt under Section 409A of the Code.

(e) Except as otherwise set forth in this Section 5.6 or in Section 5.6(e) of the Company Disclosure Letter, as of the date hereof, the Company has no outstanding (i) Equity Securities of the Company, (ii) subscriptions, calls, options, warrants, rights (including preemptive rights), puts or other securities convertible into or exchangeable or exercisable for Equity Securities of the Company or any other Contracts to which the Company is a party or by which the Company is bound obligating the Company to issue or sell any Equity Securities of the Company, (iii) equity equivalents, stock appreciation rights, phantom stock ownership interests or similar rights in the Company, (iv) Contracts to which the Company is a party or by which the Company is bound obligating the Company to repurchase, redeem or otherwise acquire any Equity Securities of the Company or (v) bonds, debentures, notes or other indebtedness of the Company having the right to vote (or convertible into, or exchangeable for, Equity Securities of the Company having the right to vote) on any matter on which the Company’s stockholders may vote.

Section 5.7. Capitalization of Subsidiaries.

(a) The outstanding Equity Securities of each of the Company’s Subsidiaries (i) have been duly authorized and validly issued, (ii) are, to the extent applicable, fully paid and non-assessable, (iii) have been offered, sold and issued in compliance with applicable Law, including federal and state securities Laws, and all requirements set forth in the Governing Documents of the applicable Subsidiary and any other applicable Contracts governing the issuance of such securities to which the applicable Subsidiary is a party or otherwise bound, (iv) have not been issued in violation of any purchase option, call option, right of first refusal, preemptive right, subscription right or any similar right under any provision of any applicable Law, the Governing Documents of the applicable Subsidiary or any Contract to which the applicable Subsidiary is a party or otherwise bound and (v) subject to the Governing Documents of the applicable Subsidiary and the Contracts set forth in Section 5.7(a) of the Company Disclosure Letter, are free and clear of any Liens.

(b) The Company or another direct or indirect wholly owned Subsidiary of the Company owns of record and beneficially all the issued and outstanding Equity Securities each of the Company’s Subsidiaries free and clear of any Liens (other than Permitted Liens).

(c) Except as set forth in Section 5.7(c) of the Company Disclosure Letter, as of the date hereof, there are no outstanding (i) subscriptions, calls, options, warrants, rights (including preemptive rights), puts or other securities convertible into or exchangeable or exercisable for Equity Securities of any of the Company’s Subsidiaries or any other Contracts to which any of the Company or any of its Subsidiaries is a party or by which the Company or any of its Subsidiaries is bound obligating any of the Company’s Subsidiaries to issue or sell any Equity Securities of such Subsidiary, (ii) equity equivalents, stock appreciation rights, phantom stock ownership interests or similar rights in any of the Company’s Subsidiaries, (iii) Contracts to which the Company or any of its Subsidiaries is a party or by which the Company or any of its Subsidiaries is bound obligating any of the Company’s Subsidiaries to repurchase, redeem or otherwise acquire any Equity Securities of such Subsidiary or (iv) bonds, debentures, notes or other indebtedness of any of the Company’s Subsidiaries having the right to vote

 

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(or convertible into, or exchangeable for, Equity Securities of such Subsidiary having the right to vote) on any matter on which the holders of Equity Securities of such Subsidiary may vote.

Section 5.8. Financial Statements.

(a) The Company has previously provided to Acquiror true and complete copies of (i) the audited consolidated balance sheet and statements of operations and comprehensive loss, changes in stockholders’ equity and cash flows of the Company and its consolidated subsidiaries as of and for the year ended December 31, 2019, together with the auditor’s report thereon (the “2019 Audited Financial Statements”) and (ii) the unaudited consolidated balance sheet and statements of operations and comprehensive loss, changes in stockholders’ equity and cash flows of the Company and its consolidated subsidiaries as of and for the year ended December 31, 2020 (the “2020 Unaudited Financial Statements”). Except as set forth in Section 5.8(a) of the Company Disclosure Letter, the 2019 Audited Financial Statements and the 2020 Unaudited Financial Statements (i) fairly present in all material respects the consolidated financial position of the Company and its consolidated subsidiaries, as at the respective dates thereof, and their consolidated results of operations and comprehensive income (or loss), consolidated changes in stockholders’ equity and consolidated cash flows for the respective periods then ended, (ii) were prepared in accordance with GAAP applied on a consistent basis during the periods covered (except as may be indicated in the notes thereto) and (iii) were prepared from, and are in accordance in all material respects with, the books and records of the Company and its consolidated subsidiaries.

(b) The Closing Company Financial Statements, when delivered following the date of this Agreement in accordance with Section 7.3, (i) will fairly present in all material respects the consolidated financial position of the Company and its consolidated subsidiaries, as at the respective dates thereof, and their consolidated results of operations and comprehensive income (or loss), consolidated changes in stockholders’ equity and consolidated cash flows for the respective periods then ended (subject, in the case of any unaudited Closing Company Financial Statements, to normal year-end adjustments and the absence of footnotes), (ii) will have been prepared in accordance with GAAP applied on a consistent basis during the periods covered (except as may be indicated in the notes thereto and, in the case of any unaudited Closing Company Financial Statements, the absence of footnotes), (iii) will have been prepared from, and will be in accordance in all material respects with, the books and records of the Company and its consolidated subsidiaries and (iv) in the case of any Audited Closing Company Financial Statements, will comply in all material respects with the applicable accounting requirements of the Exchange Act and the Securities Act and the rules and regulations promulgated by the SEC, in each case, as in effect as of the respective dates thereof.

(c) Except as set forth in Section 5.8(b) of the Company Disclosure Letter, neither the Company nor, to the knowledge of the Company, any independent auditor of the Company has identified or been made aware of (i) any significant deficiency or material weakness in the system of internal accounting controls utilized by the Company, (ii) any fraud, whether or not material, that involves the Company’s management or other employees who have a significant role in the preparation of financial statements or the internal accounting controls utilized by the Company or (iii) any allegation in writing regarding any of the foregoing.

Section 5.9. Undisclosed Liabilities. As of the date of this Agreement, except as set forth in Section 5.9 of the Company Disclosure Letter, there is no other Liability of the Company or any of the Company’s Subsidiaries that would be required to be set forth or reserved for on a consolidated balance sheet prepared in accordance with GAAP consistently applied and in accordance with past practice, except for Liabilities (a) reflected or reserved for on the Financial Statements or disclosed in the notes thereto, (b) that have arisen since the date of the most recent balance sheet included in the Financial Statements in the ordinary course of business of the Company and its Subsidiaries, (c) that will be discharged or paid off prior to or at the Closing or (d) the failure to so be set forth or reserved for would not be material to the Company and its Subsidiaries, taken as a whole.

Section 5.10. Absence of Changes. From the date of the most recent balance sheet included in the Financial Statements through the date of this Agreement, there has not been any Company Material Adverse Effect.

 

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Section 5.11. Litigation and Proceedings. Except as set forth in Section 5.11 of the Company Disclosure Letter or as would not be material to the Company and its Subsidiaries, taken as a whole, as of the date of this Agreement, (a) there is no Action pending or, to the knowledge of the Company, threatened against the Company or any of its Subsidiaries or any of their respective properties or assets or, to the knowledge of the Company, any of their respective directors, managers, officers or employees (in their respective capacities as such), (b) to the knowledge of the Company, there is no investigation or other inquiry pending with any Governmental Authority, against the Company or any of its Subsidiaries or any of their respective properties or assets or any of their respective directors, managers, officers or employees (in their respective capacities as such) and (c) there is no Governmental Order imposed upon, or, to the knowledge of the Company, threatened against, the Company or any of its Subsidiaries, nor are any of the properties or assets of the Company or any of its Subsidiaries bound by or subject to any Governmental Order the violation of which would, individually or in the aggregate, reasonably be expected to be material to the Company.

Section 5.12. Legal Compliance. Except (a) with respect to compliance with Environmental Laws (as to which certain representations and warranties are made in Section 5.24) and compliance with Tax Laws (which are the subject of Section 6.15) and (b) as would not be material to the Company and its Subsidiaries, taken as a whole, the Company and its Subsidiaries are, and during the past two years have been, in compliance with all applicable Laws in all material respects. During the two years prior to the date hereof, neither the Company nor any of its Subsidiaries has received any written notice of any material violation of applicable Law by the Company or any of its Subsidiaries, and, to the knowledge of the Company, no Action alleging any material violation of any Law by the Company or any of its Subsidiaries is pending or threatened against the Company or any of its Subsidiaries as of the date hereof.

Section 5.13. Contracts; No Defaults.

(a) Section 5.13(a) of the Company Disclosure Letter contains a listing of all Contracts described in clauses (i) through (xv) below to which the Company or any of its Subsidiaries is a party as of the date of this Agreement, other than Company Benefit Plans. True, correct and complete copies of the Contracts listed in Section 5.13(a) of the Company Disclosure Letter have previously been made available to Acquiror or its agents or representatives.

(i) each Contract with any of the Top Customers involving aggregate payments to the Company or any of its Subsidiaries in excess of $500,000 per year;

(ii) each Contract with any of the Top Vendors involving aggregate payments by the Company or any of its Subsidiaries in excess of $500,000 per year;

(iii) each Contract (A) evidencing outstanding indebtedness of the Company or any of its Subsidiaries for borrowed money, or any guarantee by the Company or any of its Subsidiaries of such indebtedness of a third party, in an amount exceeding $500,000 or (B) that is a commitment to provide loans, credit or financing to the Company or any of its Subsidiaries in an amount exceeding $500,000;

(iv) each Contract entered into during the past three years providing for (A) the acquisition by the Company or any of its Subsidiaries of (1) any Equity Security of a Person other than the Company or any of its present Subsidiaries or (2) material assets of a Person other than the Company or any of its Subsidiaries involving payments in excess of $500,000 or (B) the disposition to any Person other than the Company or any of its Subsidiaries of (1) any Equity Security of the Company or any of its Subsidiaries (other than any Company Equity Award) or (2) material assets of the Company or any of its Subsidiaries involving payments in excess of $500,000, other than, in the case of each of clauses (A) and (B), Contracts (x) under which the applicable acquisition or disposition has been consummated and there are no material unperformed obligations, (y) entered into in the ordinary course of business or (z) between the Company and any of its Subsidiaries or between any two or more of the Company’s Subsidiaries;

(v) each Contract establishing or governing any material joint venture or partnership between the Company or any of its Subsidiaries, on the one hand, and any Person other than the Company or any of its Subsidiaries, on the other hand;

 

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(vi) each lease, rental or occupancy agreement, license, installment and conditional sale agreement or other Contract that provides for the ownership of, leasing of, title to, use of, or any leasehold or other interest in any real or personal property that involves aggregate payments in excess of $500,000 in any calendar year;

(vii) each Contract (other than Contracts relating to employment (including employment agreements, confidentiality and invention assignment agreements or grants of Company Equity Awards) and Governing Documents or other Contracts relating to Equity Securities in the Company or any of its Subsidiaries) between the Company or any of its Subsidiaries, on the one hand, and, on the other hand, any Affiliate of the Company or any of its Subsidiaries (other than the Company or any of its Subsidiaries), any director, manager or officer of the Company or any of its Subsidiaries, any members or stockholders of the Company or any of the Company’s Subsidiaries, any employee of the Company or any of the Company’s Subsidiaries or a member of the immediate family of the foregoing Persons, on the other hand (collectively, “Affiliate Agreements”);

(viii) each Contract with any current (A) employee of the Company with annual base compensation in excess of $250,000 that provides for severance in excess of 90 days or a notice of termination of more than 90 days or (B) employee of the Company or any of its Subsidiaries with a title of executive officer or any more senior title;

(ix) each Contract with any employee or consultant of the Company or any of its Subsidiaries that provides for cash-based change in control or similar payments or benefits contingent upon, accelerated by or triggered by the consummation of the transactions contemplated hereby;

(x) each Contract (A) prohibiting or limiting the right of the Company or any of its Subsidiaries to engage in or compete with any Person in any line of business in any material respect or (B) prohibiting or restricting the ability of the Company or any of its Subsidiaries to conduct their business with any Person in any geographic area in any material respect;

(xi) any collective bargaining (or similar) agreement or Contract between the Company or any of its Subsidiaries, on one hand, and any labor union or other body representing employees of the Company or any of the Company’s Subsidiaries, on the other hand;

(xii) each Contract (including license agreements, coexistence agreements, and agreements with covenants not to sue, but not including non-disclosure agreements, employee agreements, contractor services agreements, consulting services agreements, customer agreements entered into in the ordinary course of business, and incidental trademark licenses or ancillary licenses to Intellectual Property that are necessary to be granted to receive the benefit of services from third-party service providers) pursuant to which the Company or any of the Company’s Subsidiaries (A) grants to a third party the right to use material Intellectual Property of the Company and its Subsidiaries or (B) is granted by a third party the right to use Intellectual Property that is material to the business of the Company and its Subsidiaries (other than Open Source Licenses or Contracts granting nonexclusive rights to use commercially available off-the-shelf software or software as a service on standard terms and conditions);

(xiii) each Contract requiring capital expenditures by the Company or any of its Subsidiaries after the date of this Agreement in an amount in excess of $10,000,000 in any calendar year;

(xiv) each Contract granting any Person (other than the Company or any of its Subsidiaries) any (A) “most favored nation” rights, (B) price guarantee for a period of more than one year after the date of this Agreement and requires aggregate future payments to the Company and its Subsidiaries in excess of $500,000 in any calendar year, or (C) right of first refusal or first offer or similar preferential right to purchase or lease any asset of the Company or its Subsidiaries;

(xv) each Contract granting any Person (other than the Company or any of its Subsidiaries) a right of first refusal or first offer or similar preferential right to purchase or acquire Equity Securities of the Company or any of its Subsidiaries; and

 

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(xvi) Any outstanding written commitment to enter into any Contract of the type described in clauses (i) through (xv) of this Section 5.13(a).

(b) Except for any Contract that will terminate upon the expiration of the stated term thereof prior to the Closing Date, all of the Contracts listed pursuant to Section 5.13(a) in the Company Disclosure Letter are (i) in full force and effect and (ii) represent legal, valid and binding obligations of the Company or the Subsidiary of the Company party thereto and, to the knowledge of the Company, represent legal, valid and binding obligations of the counterparties thereto. Except, in each case, where the occurrence of a breach or default would not be material to the Company and its Subsidiaries, taken as a whole, (A) the Company and its Subsidiaries have performed in all respects all of the respective obligations required to be performed by them to date under each Contract listed pursuant to Section 5.13(a) in the Company Disclosure Letter, and neither the Company or any of its Subsidiaries, nor, to the knowledge of the Company, any other party to any such Contract is in breach of or default of its obligations under any such Contract, (B) during the past 12 months, neither the Company nor any of its Subsidiaries has received any written claim or written notice of termination or breach of or default under any such Contract, and (C) to the knowledge of the Company, no event has occurred which, individually or together with other events, would reasonably be expected to result in a breach of or a default under any such Contract by the Company or any of its Subsidiaries or any other party to any such Contract (in each case, with or without notice or lapse of time or both).

Section 5.14. Company Benefit Plans.

(a) Section 5.14(a) of the Company Disclosure Letter sets forth a complete and accurate list, as of the date hereof, of each material Company Benefit Plan. For purposes of this Agreement, a “Company Benefit Plan” means an “employee benefit plan” as defined in Section 3(3) of the Employee Retirement Income Security Act of 1974 (“ERISA”) or any other plan, policy, program or Contract (including any employment, bonus, incentive or deferred compensation, equity or equity-based compensation, severance, retention, supplemental retirement, change in control or similar plan, policy, program or agreement) providing compensation or other benefits to any current or former director, officer, individual consultant, worker or employee, which are maintained, sponsored or contributed (or required to be contributed) to by the Company or any of its Subsidiaries and to which the Company or any of its Subsidiaries is a party or has or may have any liability, and in each case whether or not (i) subject to the Laws of the United States, (ii) in writing or (iii) funded, but excluding in each case any statutory plan, program or arrangement that is required under applicable Law and maintained by any Governmental Authority. With respect to each material Company Benefit Plan, the Company has made available to Acquiror, to the extent applicable, true, complete and correct copies of (A) such Company Benefit Plan (or, if not written a written summary of its material terms) and all plan documents, trust agreements or other funding vehicles and all amendments thereto, (B) the most recent summary plan descriptions, including any summary of material modifications (C) the most recent annual reports (Form 5500 series) filed with the IRS with respect to such Company Benefit Plan, (D) the most recent actuarial report or other financial statement relating to such Company Benefit Plan and (E) the most recent determination or opinion letter, if any, issued by the IRS with respect to any Company Benefit Plan and any pending request for such a determination letter.

(b) Except as set forth in Section 5.14(b) of the Company Disclosure Letter, (i) each Company Benefit Plan has been operated and administered in compliance with its terms and all applicable Laws, including ERISA and the Code, except where the failure to comply would not be material to the Company and its Subsidiaries, taken as a whole, (ii) all material contributions required to be made with respect to any Company Benefit Plan on or before the date hereof have been made and all obligations in respect of each Company Benefit Plan as of the date hereof have been accrued and reflected in the Company’s financial statements to the extent required by GAAP, (iii) each Company Benefit Plan which is intended to be qualified within the meaning of Section 401(a) of the Code has received a favorable determination or opinion letter from the IRS as to its qualification or may rely upon an opinion letter for a prototype plan and, to the knowledge of the Company, no fact or event has occurred that would reasonably be expected to adversely affect the qualified status of any such Company Benefit Plan except where the failure to be so qualified would not be material to the Company and its Subsidiaries, taken as a whole.

 

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(c) No Company Benefit Plan is a multiemployer pension plan (as defined in Section 3(37) of ERISA) (a “Multiemployer Plan”) or other pension plan that is subject to Title IV of ERISA (“Title IV Plan”), and none of the Company, any of its Subsidiaries or any of their respective ERISA Affiliates has sponsored or contributed to, been required to contribute to, has or had any actual or contingent liability under, a Multiemployer Plan or Title IV Plan at any time within the past six years. None of the Company, any of its Subsidiaries or any of their respective ERISA Affiliates has incurred any withdrawal liability under Section 4201 of ERISA that has not been fully satisfied.

(d) With respect to each Company Benefit Plan, except as would not result in, or would not reasonably be expected to result in, material liability to the Company and its Subsidiaries, no actions, suits or claims (other than routine claims for benefits in the ordinary course) are pending or, to the knowledge of the Company, threatened, and, to the knowledge of the Company, no facts or circumstances exist that would reasonably be expected to give rise to any such actions, suits or claims.

(e) No Company Benefit Plan provides medical, surgical, life insurance, hospitalization, death or other health and welfare benefits (whether or not insured, but excluding cash severance) for employees or former employees of the Company or any Subsidiary for periods extending beyond their retirement or other termination of service, other than (i) coverage mandated by applicable Law, (ii) death benefits under any “pension plan,” or (iii) benefits the full cost of which is borne by the current or former employee (or his or her beneficiary).

(f) Except as set forth in Section 5.14(f) of the Company Disclosure Letter or as would not be expected to be material to the Company and its Subsidiaries, taken as a whole, the consummation of the transactions contemplated hereby will not, either alone or in combination with another event (such as termination following the consummation of the transactions contemplated hereby), (i) entitle any current or former employee, officer or other service provider of the Company or any Subsidiary of the Company to any severance pay or any other compensation payable by the Company or any Subsidiary of the Company, except as expressly provided in this Agreement, (ii) accelerate the time of payment, funding or vesting, or increase the amount of compensation due any such employee, officer or other individual service provider by the Company or a Subsidiary of the Company, (iii) directly or indirectly cause the Company to transfer or set aside any assets to fund any material benefits under any Company Benefit Plan, (iv) otherwise give rise to any material Liability under any Company Benefit Plan, or (v) limit or restrict the right to merge, materially amend, terminate or transfer the assets of any Company Benefit Plan at or following the Merger Effective Time. The consummation of the transactions contemplated hereby will not, either alone or in combination with another event, result in any “excess parachute payment” under Section 280G of the Code with respect to any current or former service provider of the Company or any of its Subsidiaries. No Company Benefit Plan provides for a Tax gross-up, make whole or similar payment with respect to the Taxes imposed under Sections 409A or 4999 of the Code or any other Tax.

Section 5.15. Labor Relations; Employees.

(a) Except as set forth in Section 5.15(a) of the Company Disclosure Letter, (i) neither the Company nor any of its Subsidiaries is a party to or bound by any collective bargaining agreement, or any similar agreement, (ii) no such agreement is being negotiated by the Company or any of its Subsidiaries and (iii) no labor union or any other employee representative body has requested or, to the knowledge of the Company, has sought to represent any of the employees of the Company or any of its Subsidiaries. There is no, and to the knowledge of the Company, there has not been, labor organization activity involving any employees of the Company or any of its Subsidiaries. In the past three years, there has been no actual or, to the knowledge of the Company, threatened strike, slowdown, work stoppage, lockout or other material labor dispute against or affecting the Company or any of its Subsidiaries.

(b) Each of the Company and its Subsidiaries are, and have been during the past three years, in compliance with all applicable Laws respecting labor and employment including all Laws respecting terms and conditions of employment, health and safety, wages and hours, working time, employee classification (with respect to both exempt vs. non-exempt status and employee vs. independent contractor and worker status), child labor, immigration, employment discrimination, disability rights or benefits, equal opportunity and equal pay,

 

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plant closures and layoffs, affirmative action, workers’ compensation, labor relations, employee leave issues and unemployment insurance, except where the failure to comply would not be material to the Company and its Subsidiaries, taken as a whole.

(c) During the past two years, the Company and its Subsidiaries have not received (i) notice of any unfair labor practice charge or material complaint pending or threatened before the National Labor Relations Board or any other Governmental Authority against them, and to the knowledge of the Company, none is threatened, (ii) notice of any complaints, grievances or arbitrations arising out of any collective bargaining agreement or any other complaints, grievances or arbitration procedures against them, and to the knowledge of the Company, none is threatened, (iii) notice of any material charge or complaint with respect to or relating to them pending before the Equal Employment Opportunity Commission or any other Governmental Authority responsible for the prevention of unlawful employment practices, and to the knowledge of the Company, none is threatened, or (iv) notice of the intent of any Governmental Authority responsible for the enforcement of labor, employment, wages and hours of work, child labor, immigration, or occupational safety and health Laws to conduct an investigation with respect to or relating to them or notice that such investigation is in progress, and to the knowledge of the Company, none is threatened.

(d) To the knowledge of the Company, no present or former employee, worker or independent contractor of the Company or any of its Subsidiaries is in violation in any material respect of (i) any restrictive covenant, nondisclosure obligation or fiduciary duty to the Company or any of its Subsidiaries or (ii) any restrictive covenant or nondisclosure obligation to a former employer or engager of any such individual relating to (A) the right of any such individual to work for or provide services to the Company or any of its Subsidiaries or (B) the knowledge or use of trade secrets or proprietary information.

(e) Neither the Company nor any of the Company’s Subsidiaries reasonably expects any material liabilities with respect to any sexual harassment, or other discrimination, retaliation or policy violation allegations, or has knowledge of any such allegations relating to officers, directors, employees, contractors, or agents of the Company and its Subsidiaries, that, if known to the public, would bring the Company and its Subsidiaries into material disrepute.

(f) All payments due from the Company on account of wages or other compensation, and employee health and welfare insurance and other benefits, have been paid or accrued in all material respects in accordance with GAAP as a liability on the books of the Company.

(g) During the past three years, the Company and its Subsidiaries have not engaged in layoffs, furloughs or employment terminations sufficient to trigger application of the Workers’ Adjustment and Retraining Notification Act or any similar state or local law relating to group terminations or effected any broad-based salary or other compensation or benefits reductions, in each case, whether temporary or permanent.

Section 5.16. Taxes.

(a) All material Tax Returns required to be filed by or with respect to the Company or any of its Subsidiaries have been timely filed (taking into account any applicable extensions), all such Tax Returns (taking into account all amendments thereto) are true, complete and accurate in all material respects and all material Taxes due and payable by the Company or any of its Subsidiaries (whether or not shown on any Tax Return) have been paid, other than Taxes being contested in good faith and for which adequate reserves have been established in accordance with GAAP.

(b) The Company and each of its Subsidiaries have withheld from amounts owing to any employee, creditor or other Person all material amounts of Taxes required by Law to be withheld, paid over to the proper Governmental Authority in a timely manner all such withheld amounts required to have been so paid over and complied in all material respects with all applicable withholding and related reporting requirements with respect to such Taxes.

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(d) No claim, assessment, deficiency or proposed adjustment for any material amount of Tax has been asserted or assessed by any Governmental Authority against the Company or any of its Subsidiaries that remains unresolved or unpaid, except for claims, assessments, deficiencies or proposed adjustments (i) being contested in good faith through appropriate proceedings and for which adequate reserves have been established in accordance with GAAP and (ii) as set forth in Section 5.16(d) of the Company Disclosure Letter or disclosed in the notes to the Company’s financial statements.

(e) There are no Tax audits, examinations or other Actions with respect to any material Taxes of the Company or any of its Subsidiaries presently in progress or pending, and there are no waivers, extensions or requests for any waivers or extensions of any statute of limitations currently in effect with respect to any Taxes of the Company or any of its Subsidiaries.

(f) Neither the Company nor any of its Subsidiaries has made a request for an advance tax ruling, request for technical advice, a request for a change of any method of accounting or any similar request that is in progress or pending with any Governmental Authority with respect to any Taxes that would reasonably be expected to have a material effect on the Company and its Subsidiaries.

(g) Neither the Company nor any of its Subsidiaries is a party to any Tax indemnification or Tax sharing or similar agreement (other than any such agreement solely between the Company and its existing Subsidiaries and customary commercial Contracts entered into in the ordinary course of business not primarily related to Taxes).

(h) Neither the Company nor any of its Subsidiaries has been a party to any transaction treated by the parties to such transaction as a distribution of stock qualifying for income tax-free treatment under Section 355 of the Code in the two years prior to the date of this Agreement.

(i) Neither the Company nor any of its Subsidiaries (i) is liable for Taxes of any other Person (other than the Company and its Subsidiaries) under Treasury Regulations Section 1.1502-6 or any similar provision of state, local or non-U.S. Tax Law or as a transferee or successor or by Contract (other than customary commercial Contracts entered into in the ordinary course of business not primarily related to Taxes) or (ii) has ever been a member of an affiliated, consolidated, combined or unitary group filing for U.S. federal, state or local income Tax purposes, other than a group the common parent of which was or is the Company or any of its Subsidiaries.

(j) No written and unresolved claim has been made by any Governmental Authority within the past two years in any jurisdiction in which the Company or any of its Subsidiaries does not file Tax Returns that it is or may be subject to material taxation in that jurisdiction.

(k) Neither the Company nor any of its Subsidiaries has a permanent establishment (within the meaning of an applicable income Tax treaty or convention) in any country other than the country under the Laws of which the Company or such Subsidiary, as applicable, is organized, or is subject to income Tax in a jurisdiction outside the country under the Laws of which the Company or such Subsidiary, as applicable, is organized.

(l) Neither the Company nor any of its Subsidiaries has participated in a “reportable transaction” within the meaning of Treasury Regulation 1.6011-4(b) (or any corresponding or similar provision of state, local or non-U.S. Law).

(m) Neither the Company nor any of its Subsidiaries will be required to include any material amount in taxable income, exclude any material item of deduction or loss from taxable income, or make any adjustment under Section 481 of the Code (or any similar provision of state, local or non-U.S. Law) for any taxable period (or portion thereof) beginning after the Closing Date as a result of any (i) installment sale, intercompany transaction described in Treasury Regulations under Section 1502 of the Code (or any similar provision of state, local or non-U.S. Law) or open transaction disposition made on or prior to the Closing, (ii) prepaid amount received or deferred revenue recognized at or prior to the Closing other than in the ordinary course of business, (iii) change in method of accounting for a taxable period (or portion thereof) ending on or prior to the Closing Date made or required to be made prior to the Closing, (iv) ”closing agreements” described in Section 7121 of the Code (or any similar provision of state, local or non-U.S. Law) executed on or prior to the Closing, or (v) by reason of Section 965(a) of the Code or an election pursuant to Section 965(h) of the Code (or any similar provision of state, local or non-U.S. Law).

 

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(n) The Company has not taken any action that could reasonably be expected to prevent the Merger from qualifying for the Intended Tax Treatment. To the knowledge of the Company and its Subsidiaries, there are no facts or circumstances, other than any facts and circumstances to the extent that such facts and circumstances exist or arise as a result of or related to any act or omission occurring after the date of this Agreement of any Acquiror Party or any of their respective Affiliates not contemplated by this Agreement and/or any Ancillary Agreement, that could reasonably be expected to prevent the merger from qualifying for the Intended Tax Treatment.

(o) Neither the Company nor any of its Subsidiaries own any “controlled foreign corporation” within the meaning of Section 957 of the Code or any “passive foreign investment company” within the meaning of Section 1297 of the Code.

Section 5.17. Brokers Fees. Except as set forth in Section 5.17 of the Company Disclosure Letter, no broker, finder, investment banker or other Person is entitled to any brokerage fee, finders’ fee or other commission in connection with the transactions contemplated hereby based upon arrangements made by the Company or any of its Subsidiaries or any of their Affiliates for which Acquiror, the Company or any of the Company’s Subsidiaries has any obligation.

Section 5.18. Insurance. As of the date of this Agreement, except as would not be material to the Company and its Subsidiaries, taken as a whole, (a) all of the material policies of property, fire and casualty, liability, workers’ compensation, directors and officers and other forms of insurance held by, or for the benefit of, the Company or any of its Subsidiaries with respect to policy periods that include the date of this Agreement are in full force and effect, and all premiums due therefor have been paid, and (b) neither the Company nor any of its Subsidiaries has received a written notice of cancellation of any of such policies or of any material changes that are required in the conduct of the business of the Company or any of its Subsidiaries as a condition to the continuation of coverage under, or renewal of, any of such policies.

Section 5.19. Licenses. The Company and its Subsidiaries have obtained, and maintain, all of the material Licenses reasonably required to permit the Company and its Subsidiaries to acquire, originate, own, operate, use and maintain their material assets in the manner in which they are now operated and maintained and to conduct the business of the Company and its Subsidiaries as currently conducted. Each material License held by the Company or any of the Company’s Subsidiaries is in full force and effect. Neither the Company nor any of its Subsidiaries (a) is in default or violation (and no event has occurred which, with notice or the lapse of time or both, would constitute a material default or violation) in any material respect of any term, condition or provision of any material License to which it is a party, (b) is or has been the subject of any pending or threatened Action by a Governmental Authority seeking the revocation, suspension, termination, modification, or impairment of any material License or (c) has received any notice that any Governmental Authority that has issued any material License intends to cancel, terminate, or not renew any such material License, except to the extent such material License may be amended, replaced, or reissued as a result of and as necessary to reflect the transactions contemplated hereby or as otherwise disclosed in Section 5.4 of the Company Disclosure Letter, provided that such amendment, replacement, or reissuance does not materially adversely affect the continuous conduct of the business of the Company and its Subsidiaries as currently conducted from and after Closing.

Section 5.20. Equipment and Other Tangible Property. The Company or one of its Subsidiaries owns and has good title to all material machinery, equipment and other tangible property reflected on the books of the Company and its Subsidiaries as owned by the Company or one of its Subsidiaries, free and clear of all Liens other than Permitted Liens. The Company or one of its Subsidiaries owns and has good title to, or has a valid leasehold interest in or right to use by license or otherwise, all material machinery, equipment and other tangible property used in the business of the Company as presently conducted, except as would not be material to the Company and its Subsidiaries, taken as a whole. All material personal property and leased personal property assets of the Company and its Subsidiaries are structurally sound and in good operating condition and repair (ordinary wear and tear expected) and are suitable for their present use.

 

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Section 5.21. Real Property.

(a) Section 5.21(a) of the Company Disclosure Letter sets forth a true, correct and complete list as of the date of this Agreement of all Leased Real Property, including the address thereof, and all Real Property Leases (as hereinafter defined) pertaining to such Leased Real Property. With respect to each parcel of Leased Real Property:

(i) The Company or one of its Subsidiaries holds a good and valid leasehold estate in such Leased Real Property, free and clear of all Liens, except for Permitted Liens.

(ii) The Company has delivered to Acquiror true, correct and complete copies of all material leases, lease guaranties, subleases, agreements for the leasing, use or occupancy of, or otherwise granting a right in and to the Leased Real Property by or to the Company and its Subsidiaries, including all amendments, terminations and modifications thereof (collectively, the “Real Property Leases”), and none of such Real Property Leases has been modified in any material respect, except to the extent that such modifications have been disclosed by the copies delivered to Acquiror.

(iii) All of the Real Property Leases (A) are in full force and effect and (B) represent legal, valid and binding obligations of the Company or the Subsidiary of the Company party thereto and, to the knowledge of the Company, represent legal, valid and binding obligations of the counterparties thereto. Except, in each case, where the occurrence of a failure to perform or a breach or default would not be material to the Company and its Subsidiaries, taken as a whole, with respect to each Real Property Lease, (x) the Company and its Subsidiaries have performed in all respects all of the respective obligations required to be performed by them to date thereunder, and neither the Company or any of its Subsidiaries, nor, to the knowledge of the Company, any other party to any such Real Property Lease is in breach or default of its obligations under any such Real Property Lease, (y) during the past 12 months, neither the Company nor any of its Subsidiaries has received any written claim or written notice of termination or material breach of or material default under any such Real Property Lease, and (z) to the knowledge of the Company, no event has occurred which, individually or together with other events, would reasonably be expected to result in a breach of or a default under any such Real Property Lease by the Company or any of its Subsidiaries or any other party to any such Real Property Lease (in each case, with or without notice or lapse of time or both).

(iv) As of the date of this Agreement, no party, other than the Company and its Subsidiaries, has any right to use or occupy the Leased Real Property or any portion thereof.

(v) Neither the Company nor any of its Subsidiaries has received written notice of any current condemnation proceeding or proposed similar Action or agreement for taking in lieu of condemnation with respect to any portion of the Leased Real Property.

(b) Neither the Company nor any of its Subsidiaries owns, or has ever owned, any real property.

Section 5.22. Intellectual Property.

(a) Section 5.22(a) of the Company Disclosure Letter sets forth an accurate and complete list of, as of the date hereof, each item of Intellectual Property that is registered and applied-for with a Governmental Authority and is owned by the Company or any of its Subsidiaries, whether applied for or registered in the United States or internationally as of the date of this Agreement (“Company Registered Intellectual Property”). To the knowledge of the Company, the Company or one of its Subsidiaries is the sole and exclusive beneficial and record owner of all of the items of Company Registered Intellectual Property, and, to the knowledge of the Company, all such Company Registered Intellectual Property (excluding any pending applications included in the Company Registered Intellectual Property) is valid and enforceable, subsisting, in full force and effect, and has not been cancelled, expired or abandoned, or otherwise terminated except in the ordinary course of business.

(b) Except as would not be expected to be material to the Company and its Subsidiaries, taken as a whole, the Company or one of its Subsidiaries owns, free and clear of all Liens (other than Permitted Liens), or has a valid right to use, all Intellectual Property reasonably necessary for the conduct of the business of the

 

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Company and its Subsidiaries as presently conducted and contemplated as of the date of this Agreement to be conducted following Closing; provided that the foregoing shall not be deemed a representation or warranty regarding non-infringement, validity or enforceability. All permitted use of Intellectual Property by the Company or its Subsidiaries, other than Company Owned Intellectual Property, is pursuant to valid and binding Contracts and no such Contracts will be violated or give rise to a right of termination, modification, acceleration or cancellation under any provision by (or will require the payment or grant of additional amounts or consideration as a result of) the execution, delivery, or performance of this Agreement, except as would not be expected to be material to the Company and its Subsidiaries, taken as a whole.

(c) The transactions contemplated by this Agreement do not and will not conflict with, result in the forfeiture of, impair or result in a breach of or default under, or payment of any additional amount with respect to the right to own or use any Company Owned Intellectual Property, Software and Company IT Systems, except as would not be material to the Company and its Subsidiaries, taken as a whole.

(d) As of the date of this Agreement, there is no action pending to which the Company or any of its Subsidiaries is a named party or, to the knowledge of the Company, that is threatened in writing, alleging the Company’s or its Subsidiaries’ infringement, misappropriation or other violation of any Intellectual Property of any third Person, and, to the knowledge of the Company, there is no reasonable basis for any such claims.

(e) Except as set forth in Section 5.22(e) of the Company Disclosure Letter, to the knowledge of the Company, as of the date of this Agreement and since January 1, 2018, (i) no Person is infringing upon, misappropriating or otherwise violating any material Intellectual Property owned by the Company or any of the Company’s Subsidiaries, and (ii) the Company and its Subsidiaries have not sent to any Person any written, or to the knowledge of the Company, verbal notice, charge, complaint, claim or other written assertion against such third Person claiming infringement or violation by or misappropriation of any Intellectual Property owned by the Company or any of its Subsidiaries.

(f) The Company and its Subsidiaries have taken commercially reasonable measures designed to protect the confidentiality of Trade Secrets in possession of the Company or any of its Subsidiaries, including requiring all Persons who receive access to such Trade Secrets to execute valid, written nondisclosure agreements requiring such individuals to protect the confidentiality of such Trade Secrets and refrain from using them for purposes other than intended. To the knowledge of the Company, there has not been any unauthorized disclosure of or unauthorized access to any Trade Secrets in the possession of the Company or any of its Subsidiaries to or by any Person in a manner that has resulted or may reasonably result in the misappropriation of, or loss of Trade Secret or other rights in and to, such Trade Secret, except as would not be material to the Company and its Subsidiaries taken as a whole.

(g) All current and former employees, directors, officers, consultants, contractors and/or individuals that have contributed to the creation of Intellectual Property on behalf of the Company or its Subsidiaries have executed an agreement presently assigning all such Intellectual Property to the Company or such Subsidiary except as would not be material to the Company and its Subsidiaries taken as a whole.

(h) The Company or one of its Subsidiaries, owns or has a valid right to access and use all IT Systems necessary for the conduct of their respective businesses as currently conducted and, to the knowledge of the Company, contemplated to be conducted following the Closing. The Company IT Systems operate in all material respects in accordance with their documentation and functional specifications and as necessary to conduct the business as currently conducted. The Company and its Subsidiaries have back-up and disaster recovery arrangements designed to enable the continued operation of their businesses in the event of a failure of their material IT Systems that are, in the reasonable determination of the Company and its Subsidiaries, consistent with commercially reasonable practice in all material respects. The Company has in its possession or has all necessary rights to the information technology and all technical and other information required to enable a reasonably skilled information technology professional to maintain and support any material part of the Company IT Systems that are owned by and in the Company’s or one of its Subsidiaries’ direct control.

 

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(i) With respect to the Software or IT Systems used or held for use in the business of the Company and its Subsidiaries, to the knowledge of the Company, no such Software or IT System contains any undisclosed or hidden device or feature designed to disrupt, disable, or otherwise impair the functioning of any Software or IT System or any “back door,” “time bomb”, “Trojan horse,” “worm,” “drop dead device,” or other malicious code or routines that permit unauthorized access or the unauthorized disablement or erasure of such or other software or information or data (or any parts thereof) of the Company or its Subsidiaries or customers of the Company and its Subsidiaries.

(j) The Company’s and its Subsidiaries’ use and distribution of Open Source Materials, is in material compliance with all Open Source Licenses applicable thereto, except for any non-compliance which would not be material to the Company and its Subsidiaries, taken as a whole. To the knowledge of the Company, neither the Company nor any of its Subsidiaries has used any Copyleft Licenses in a manner that requires any Company Software or Company Owned Intellectual Property to be disclosed or distributed in source code form or be licensed for the purpose of making derivative works.

Section 5.23. Privacy and Cybersecurity.

(a) The Company and its Subsidiaries are in compliance in all material respects with, and during the past three years have been in compliance in all material respects with, (i) all applicable Laws relating to the privacy or security of personal information, (ii) the Company’s and its Subsidiaries’ posted or publicly facing privacy policies and (iii) the Company’s and its Subsidiaries’ contractual obligations concerning data privacy, cybersecurity, data security and the security of the Company’s and each of its Subsidiaries’ information technology systems, in each case of the preceding clauses (i) through (iii), other than any non-compliance that, individually or in the aggregate, has not been, and would not reasonably be expected to be, material to the Company and its Subsidiaries, taken as a whole. There is no Action by any Person (including any Governmental Authority) pending to which the Company or any of its Subsidiaries is a named party or threatened in writing against the Company or any of its Subsidiaries alleging a violation of any Laws or Contracts with respect to privacy, personal information rights or information security related incidents.

(b) During the past three years, to the knowledge of the Company (i) there have been no material breaches of the security of the information or operational technology systems, software or applications of the Company and its Subsidiaries, and (ii) there have been no disruptions in any information or operational technology systems, software or applications that materially and adversely affected the Company’s and its Subsidiaries’ business or operations. The Company and its Subsidiaries have implemented and maintained commercially reasonable safeguards designed to protect the confidentiality, integrity and availability of the information and operational technology systems, software and applications of the Company and its Subsidiaries, including measures designed to protect confidential, sensitive or personally identifiable information in its possession or control against unauthorized access, use, modification, disclosure or other misuse, including through administrative, technical and physical safeguards. To the knowledge of the Company, neither the Company nor any of its Subsidiaries has (A) experienced any material data breaches or security incidents in which personally identifiable information was stolen or improperly accessed, disclosed or used including in connection with a breach of security, or (B) received or provided any written notice, or received any written complaint from any Governmental Authority with respect to any of the foregoing, nor has any such notice or complaint been threatened in writing against the Company or any of the Company’s Subsidiaries.

Section 5.24. Environmental Matters. Except, in each case, as would not be material to the Company and its Subsidiaries, taken as a whole:

(a) The Company and its Subsidiaries and their respective operations and properties are and, except for matters which have been fully resolved, have been in compliance with all Environmental Laws, including by maintaining in full force and effect all permits, licenses, registrations, identification numbers, and other authorizations required under Environmental Laws.

 

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(b) There has been no release of any Hazardous Materials by the Company or its Subsidiaries (i) at, in, on or under any Leased Real Property or in connection with the Company’s and its Subsidiaries’ operations off-site of the Leased Real Property or (ii) to the knowledge of the Company, at, in, on or under any formerly owned property or Leased Real Property during the time that the Company owned or leased such property or at any other location where Hazardous Materials generated by the Company or any of the Company’s Subsidiaries have been transported to, sent, placed or disposed of.

(c) Neither the Company nor any of its Subsidiaries is subject to any current Governmental Order relating to any non-compliance with Environmental Laws by the Company or its Subsidiaries or the investigation, sampling, monitoring, treatment, remediation, removal or cleanup of Hazardous Materials.

(d) As of the date hereof, no Action is pending or, to the knowledge of the Company, threatened with respect to the Company’s and its Subsidiaries’ compliance with or liability under Environmental Laws, and, to the knowledge of the Company, there are no facts or circumstances which would reasonably be expected to form the basis of such an Action.

Section 5.25. Anti-Corruption and Anti-Money Laundering Compliance.

(a) For the past five years, none of the Company, any of its Subsidiaries or their respective directors or officers while acting on behalf of the Company or any of its Subsidiaries or, to the knowledge of the Company, any employee or agent acting on behalf of the Company or any of its Subsidiaries has corruptly offered or given anything of value to: (i) any official or employee of a Governmental Authority, any political party or official thereof or any candidate for political office or (ii) any other Person, in any such case while knowing or being aware of a high probability that all or a portion of such money or thing of value will be offered, given or promised, directly or indirectly, to any official or employee of a Governmental Authority or candidate for political office, in each case in violation of applicable Anti-Bribery Laws in any material respect.

(b) To the knowledge of the Company, as of the date hereof, there are no current or pending internal investigations, third-party investigations (including by any Governmental Authority) or internal or external audits that address any material allegations or information concerning possible violations of Anti-Bribery Laws or Anti-Money Laundering Laws related to the Company or any of its Subsidiaries in any material respect. For the past five years, the Company and any of its Subsidiaries or, to the knowledge of the Company, any director, officer, or agent acting on behalf of the Company or any of its Subsidiaries have been in compliance with all relevant Anti-Money Laundering Laws in all material respects.

Section 5.26. Sanctions and International Trade Compliance.

(a) To the knowledge of the Company, the Company and its Subsidiaries (i) are, and have been for the past five years, in compliance in all material respects with all applicable International Trade Laws and Sanctions Laws, and (ii) have obtained all required licenses, consents, notices, waivers, approvals, orders, registrations, declarations, or other authorizations from, and have made any material filings with, any applicable Governmental Authority for the import, export, re-export, deemed export, deemed re-export, or transfer required under applicable International Trade Laws and Sanctions Laws (the “Export Approvals”). There are no pending or, to the knowledge of the Company, threatened, claims, complaints, charges, investigations, voluntary disclosures or Actions against the Company or any of the Company’s Subsidiaries related to any applicable International Trade Laws, Sanctions Laws, or any Export Approvals.

(b) None of the Company or any of its Subsidiaries or any of their respective directors or officers or, to the knowledge of the Company, any of the Company’s or any of its Subsidiaries’ respective employees, agents, representatives or other Persons acting on behalf of the Company or any of its Subsidiaries (i) is, or has during the past five years, been a Sanctioned Person or (ii) has transacted business, related to the Company or any of its Subsidiaries, directly or knowingly indirectly with any Sanctioned Person or in any Sanctioned Country in violation of applicable Sanctions Laws.

 

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Section 5.27. Information Supplied. None of the information supplied or to be supplied by in writing the Company or any of its Subsidiaries specifically for inclusion in the Proxy Statement/Registration Statement will, at the date on which the Proxy Statement/Registration Statement is first mailed to the Acquiror Shareholders or at the time of the Acquiror Shareholders’ Meeting, contain any untrue statement of a material fact or omit to state any material fact required to be stated therein or necessary in order to make the statements therein, in light of the circumstances under which they are made, not misleading.

Section 5.28. Customers.

(a) Section 5.28(a) of the Company Disclosure Letter sets forth, as of the date of this Agreement, the top 20 customers of the Company and its Subsidiaries collectively, based on the aggregate dollar value of the Company’s and its Subsidiaries’ transaction volume with such counterparty during the trailing twelve months for the period ending December 31, 2020 (the “Top Customers”).

(b) Except as set forth in Section 5.28(b) of the Company Disclosure Letter, none of the Top Customers has, as of the date of this Agreement, informed the Company or any of its Subsidiaries in writing that it will, or, to the knowledge of the Company, threatened to terminate, cancel, or materially limit or materially and adversely modify any of its existing business with the Company or any of its Subsidiaries (other than due to the expiration of an existing contractual arrangement), and, to the knowledge of the Company, none of the Top Customers is, as of the date of this Agreement, otherwise involved in or threatening any material Action against the Company or any of its Subsidiaries or any of their respective businesses.

Section 5.29. Vendors.

(a) Section 5.29(a) of the Company Disclosure Letter sets forth, as of the date of this Agreement, the top 20 vendors of the Company and its Subsidiaries collectively, based on the aggregate dollar value of the Company’s and its Subsidiaries’ transaction volume with such counterparty during the trailing twelve months for the period ending December 31, 2020 (the “Top Vendors”).

(b) Except as set forth in Section 5.29(b) of the Company Disclosure Letter, none of the Top Vendors has, as of the date of this Agreement, informed any of the Company or any of its Subsidiaries in writing that it will, or, to the knowledge of the Company, threatened to terminate, cancel, or materially limit or materially and adversely modify any of its existing business with the Company or any of its Subsidiaries (other than due to the expiration of an existing contractual arrangement), and, to the knowledge of the Company, none of the Top Vendors is, as of the date of this Agreement, otherwise involved in or threatening any material Action against the Company or any of its Subsidiaries or any of their respective businesses.

Section 5.30. Sufficiency of Assets. Except as would not be material to the Company and its Subsidiaries, taken as a whole, the tangible and intangible assets owned, licensed or leased by the Company and its Subsidiaries constitute all of the assets reasonably necessary for the continued conduct of the business of the Company and its Subsidiaries after the Closing in the ordinary course. Notwithstanding the foregoing, this Section 5.30 shall not be deemed a representation or warranty regarding non-infringement, validity or enforceability of Intellectual Property.

Section 5.31. Related Party Transactions. Except as set forth in Section 5.31 of the Company Disclosure Letter, there are no material transactions or Contracts between the Company or any of its Subsidiaries, on the one hand, and any Affiliate, present or former officer or director of the Company, beneficial owner (within the meaning of Section 13(d) of the Exchange Act) of Company Shares constituting, as of the date of this Agreement, more than 5% of the total number of Company Shares on a fully diluted basis, calculated as of the date of this Agreement, or, to the knowledge of the Company, any member of the “immediate family” (as defined in Rule 16a-1 promulgated under the Exchange Act) of any officer or director of the Company (each of the foregoing, a “Company Related Party”), on the other hand, except, in each case, for (a) Contracts and arrangements related or incidental to any Company Related Party’s employment or retention as a director or other service provider by the Company or any of its Subsidiaries (including compensation, benefits and

 

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advancement or reimbursement of expenses), (b) loans to employees or other service providers of the Company or any of its Subsidiaries in the ordinary course of business and arrangements related or incidental thereto, (c) Contracts relating to a Company Related Party’s status as a holder of Equity Securities of the Company and (d) Contracts that are permitted by or entered into in accordance with Section 7.1.

Section 5.32. Investment Company Act. The Company is not required to register as an “investment company” under (and within the meaning of) the Investment Company Act.

Section 5.33. No Additional Representation or Warranties.

(a) Except as provided in this Article V, neither the Company nor any Related Person of the Company has made, or is making, any representation or warranty whatsoever to Acquiror, Merger Sub, any Acquiror Insider or any Related Person of any of the foregoing and neither the Company nor any Related Person of the Company shall be liable in respect of the accuracy or completeness of any information provided to Acquiror, Merger Sub, any Acquiror Insider or any Related Person of any of the foregoing.

(b) The Company and its Representatives have made their own investigation of Acquiror and Merger Sub and, except as provided in Article VI, are not relying on any representation or warranty whatsoever as to the condition, merchantability, suitability or fitness for a particular purpose or trade as to any of the assets of Acquiror or Merger Sub, the prospects (financial or otherwise) or the viability or likelihood of success of the business of Acquiror or Merger Sub as conducted after the Closing, as contained in any materials provided by Acquiror, Merger Sub or any of their respective Related Persons or otherwise.

ARTICLE VI

REPRESENTATIONS AND WARRANTIES OF ACQUIROR AND MERGER SUB

Except as set forth (a) in the case of Acquiror, in any Acquiror SEC Filing filed or furnished prior to the date hereof (excluding (i) disclosures in any “risk factors” section that do not constitute statements of fact, disclosures in any “forward-looking statements” disclaimer and other disclosures that are generally cautionary, predictive or forward looking in nature and (ii) any exhibits or other documents appended to Acquiror SEC Filings) (it being acknowledged that nothing disclosed in any such Acquiror SEC Filing will be deemed to modify or qualify the representations and warranties set forth in Section 6.1, Section 6.2, Section 6.5, Section 6.10, Section 6.12, Section 6.16 or Section 6.18), or (b) in the case of Acquiror and Merger Sub, in the disclosure letter delivered by Acquiror and Merger Sub to the Company on the date of this Agreement (the “Acquiror Disclosure Letter”), Acquiror and Merger Sub represent and warrant to the Company as follows:

Section 6.1. Company Organization. Each of Acquiror and Merger Sub has been duly incorporated or organized and is validly existing as a corporation or exempted company in good standing under the Laws of its jurisdiction of incorporation or organization and has the requisite corporate or exempted company power and authority to own, lease or otherwise hold and operate all of its properties and assets and to conduct its business as it is now being conducted. The respective Governing Documents of Acquiror and Merger Sub, as amended to the date of this Agreement and as previously made available by Acquiror to the Company, are true, correct and complete. Each of Acquiror and Merger Sub is duly licensed or qualified and in good standing as a foreign or extra-provincial corporation (or other entity, if applicable) in each jurisdiction in which its ownership of property or the character of its activities is such as to require it to be so licensed or qualified or in good standing (if the concept of good standing is recognized by such jurisdiction), as applicable, except where the failure to be so licensed or qualified or in good standing would not, individually or in the aggregate, be material to Acquiror or Merger Sub. Merger Sub has no assets or operations other than those required to effect the transactions contemplated hereby. All of the Equity Securities of Merger Sub are held directly by Acquiror.

 

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Section 6.2. Due Authorization.

(a) Each of Acquiror and Merger Sub has all requisite corporate power and authority to execute and deliver this Agreement and each Ancillary Agreement to which it is, or is contemplated to be, a party and (subject to receipt of the Acquiror Shareholder Approval and the Governmental Authorizations described in clauses (a) and (b) of Section 6.7) to perform all of its obligations hereunder and thereunder and to consummate the transactions contemplated hereby and thereby. The execution and delivery by each of Acquiror and Merger Sub of this Agreement and each Ancillary Agreement to which Acquiror or Merger Sub is, or is contemplated to be, a party have been duly and validly authorized and approved by the Acquiror Board and the board of directors of Merger Sub and this Agreement will, within 24 hours of its execution and delivery by all of the Parties, be approved by Acquiror as the sole shareholder of Merger Sub. This Agreement has been, and each of the Ancillary Agreements to which Acquiror or Merger Sub is, or is contemplated to be, a party has been or will be, as applicable, duly and validly executed and delivered by Acquiror or Merger Sub, as applicable, and this Agreement constitutes and each Ancillary Agreement to which Acquiror or Merger Sub is, or is contemplated to be, a party constitutes or, upon execution prior to the Closing, as applicable, will constitute, a legal, valid and binding obligation of Acquiror or Merger Sub, as applicable (assuming, in each case, the due and valid execution and delivery by each of the other parties thereto), enforceable against Acquiror or Merger Sub, as applicable, in accordance with its terms, subject to applicable bankruptcy, insolvency, fraudulent conveyance, reorganization, moratorium and similar Laws affecting creditors’ rights generally and subject, as to enforceability, to general principles of equity.

(b) Prior to Acquiror’s execution and delivery of this Agreement, at a meeting duly called and held, the Acquiror Board has taken the Acquiror Board Actions, and, as of the date hereof, none of the Acquiror Board Actions has been rescinded, withdrawn or modified. No other corporate action with respect to the Acquiror is required on the part of Acquiror or any of its shareholders to enter into this Agreement or the Ancillary Agreements to which Acquiror is, or is contemplated to be, a party or to approve the Merger, the Domestication, the PIPE Investment or the other transactions contemplated hereby, except for the Acquiror Shareholder Approval.

(c) Assuming that a quorum (as determined pursuant to Acquiror’s Governing Documents) is present:

(i) the Transaction Proposal identified in clause (A) of Section 9.2(c) shall require approval by an affirmative vote of the holders of a majority of at least two-thirds of the Acquiror Cayman Class B Shares entitled to vote, who attend and vote thereupon (as determined in accordance with Acquiror’s Governing Documents) at a shareholders’ meeting duly called by the Board of Directors of Acquiror and held for such purpose;

(ii) each of those Transaction Proposals identified in clause (B) or (C) of Section 9.2(c) shall require approval by an affirmative vote of the holders of a majority of at least two-thirds of the Acquiror Cayman Ordinary Shares entitled to vote, who attend and vote thereupon (as determined in accordance with Acquiror’s Governing Documents) at a shareholders’ meeting duly called by the Acquiror Board and held for such purpose; and

(iii) each of those Transaction Proposals identified in clause (D), (E), (F), (G), (H), (I), (J), or (K) of Section 9.2(c), in each case, shall require approval by an affirmative vote of the holders of a majority of the Acquiror Cayman Ordinary Shares entitled to vote thereupon (as determined in accordance with Acquiror’s Governing Documents) at a shareholders’ meeting duly called by the Acquiror Board and held for such purpose.

(d) The votes described in Section 6.2(c) are the only votes of the holders of Equity Securities of Acquiror necessary in connection with the consummation of the Merger, the Domestication, the PIPE Investment and the other transactions contemplated by this Agreement.

(e) The Acquiror Warrant Proposal shall require approval by an affirmative vote of the holders of (i) at least 50% of the outstanding Acquiror Public Warrants and (ii) at least 50% of the outstanding Acquiror Private Placement Warrants. The votes described in this Section 6.2(e) are the only votes of the holders of Equity

 

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Securities of Acquiror necessary to qualify the Acquiror Warrants for classification as equity instruments (rather than liabilities) of Acquiror from and after the effectiveness of such amendments under GAAP and other applicable accounting standards.

Section 6.3. No Conflict. Subject to receipt of the Acquiror Shareholder Approval and the Governmental Authorizations described in clauses (a) and (b) of Section 6.5, the execution and delivery of this Agreement by Acquiror and Merger Sub and each of the Ancillary Agreements to which Acquiror and Merger Sub is, or is contemplated to be, a party and the consummation of the transactions contemplated hereby and thereby do not and will not (a) violate or conflict with any provision of, or result in any breach of or default under, the Governing Documents of Acquiror or Merger Sub, (b) violate or conflict with any provision of, or result in any breach of or default under, any Law applicable to Acquiror or Merger Sub, (c) violate or conflict with any provision of, or result (with or without due notice or lapse of time or both) in any breach of or default under, or require any consent or waiver to be obtained under, or result in the loss of any right or benefit of the Company or any of its Subsidiaries under, or give rise to any right of termination, cancellation or acceleration under, or cause the termination or cancellation of, any Contract to which Acquiror or Merger Sub is a party or by which Acquiror or Merger Sub is bound or (d) result in the creation of any Lien on any of the properties or assets of Acquiror or Merger Sub, except, in the case of clauses (b) through (d), to the extent that the occurrence of any of the foregoing would not, individually or in the aggregate, (i) be material to Acquiror or (ii) have, or reasonably be expected to have, a material and adverse effect on the ability of Acquiror or Merger Sub to enter into and perform its obligations under and consummate the transactions contemplated by this Agreement or any of the Ancillary Agreements.

Section 6.4. Governmental Authorities; Consents. Assuming the truth and completeness of the representations and warranties of the Company contained in this Agreement, no Governmental Authorization or consent, waiver, approval or authorization of, or designation, declaration or filing with, or notification to, any other Person is required on the part of Acquiror or Merger Sub with respect to Acquiror’s or Merger Sub’s execution or delivery of this Agreement or the consummation of the transactions contemplated hereby, except (a) for (i) applicable requirements of the HSR Act, (ii) the filing of the Merger Certificate in accordance with the DGCL and the acceptance thereof by the Delaware Secretary of State, (iii) the filing of the Certificate of Domestication and the Acquiror Delaware Charter in accordance with the DGCL and the acceptance thereof by the Delaware Secretary of State and any filings required to be made with the Cayman Registrar in connection with the Domestication, and (iv) compliance with any applicable requirements of the Securities Act, the Exchange Act and any other applicable securities Laws and (b) as set forth in Section 6.4 of the Acquiror Disclosure Letter.

Section 6.5. Litigation and Proceedings. Except as would not be material to Acquiror or Merger Sub, (a) there is no Action pending or, to the knowledge of Acquiror, threatened against Acquiror or Merger Sub or any of their respective properties or assets or, to the knowledge of Acquiror, any of their respective directors, managers, officers or employees (in each case, in their respective capacities as such), (b) there is no investigation or other inquiry pending or, to the knowledge of Acquiror, threatened by any Governmental Authority, against Acquiror or Merger Sub or any of their respective properties or assets or, to the knowledge of Acquiror, any of their respective directors, managers, officers or employees (in each case, in their respective capacities as such) and (c) there is no outstanding Governmental Order imposed upon, or to the knowledge of the Company, threatened against, Acquiror or Merger Sub, nor are any of the properties or assets of Acquiror or Merger Sub bound by or subject to any Governmental Order the violation of which would, individually or in the aggregate, reasonably be expected to be material to Acquiror. Each of Acquiror and Merger Sub is, and since the Acquiror Inception date, in the case of Acquiror, and since the date of Merger Sub’s incorporation, in the case of Merger Sub, has been, in compliance with all applicable Laws in all material respects. During the past two years, neither Acquiror nor Merger Sub has received any written notice of any material violation of applicable Law by Acquiror or Merger Sub, and, to the knowledge of Acquiror, no Action alleging any material violation of any Law by Acquiror or Merger Sub is currently pending or threatened against Acquiror or Merger Sub. To the knowledge of Acquiror, no investigation or review by any Governmental Authority of which Acquiror or Merger Sub is the target is pending or threatened as or the date hereof or has been conducted during the past two years, other than those the outcome of which did not or would not result in material liability to Acquiror or Merger Sub.

 

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Section 6.6. SEC Filings. Acquiror has timely filed or furnished all statements, prospectuses, registration statements, forms, reports and documents required to be filed by it with the SEC since the Acquiror Inception Date pursuant to the Exchange Act or the Securities Act or other applicable securities Laws other than the Registration Statement, Prospectus and the Proxy Statement (collectively, as they have been amended since the time of their filing through the date hereof, the “Acquiror SEC Filings”). Each of the Acquiror SEC Filings, as of the date of its filing, and as of the date of any amendment thereof, complied in all material respects with the applicable requirements of the Securities Act, the Exchange Act, the Sarbanes-Oxley Act and any other securities Laws applicable to the Acquiror SEC Filings. None of the Acquiror SEC Filings, as of the date of its filing (or if amended or superseded by a filing prior to the date of this Agreement or the Closing Date, then on the date of such filing), contained any untrue statement of a material fact or omitted to state a material fact required to be stated therein or necessary to make the statements made therein, in light of the circumstances under which they were made, not misleading. As of the date hereof, there are no outstanding or unresolved comments in comment letters received from the SEC with respect to the Acquiror SEC Filings. To the knowledge of Acquiror, none of the Acquiror SEC Filings filed on or prior to the date hereof is subject to ongoing SEC review or investigation as of the date hereof.

Section 6.7. Internal Controls; Listing; Financial Statements.

(a) Acquiror has established and, since the Acquiror IPO Date, has maintained disclosure controls and procedures (as defined in Rule 13a-15 under the Exchange Act). Such disclosure controls and procedures are designed to ensure that material information relating to Acquiror, including its consolidated subsidiaries, if any, is made known to Acquiror’s principal executive officer and its principal financial officer by others within those entities, particularly during the periods in which the periodic reports required under the Exchange Act are being prepared. Such disclosure controls and procedures are effective in timely alerting Acquiror’s principal executive officer and principal financial officer to material information required to be included in Acquiror’s periodic reports required under the Exchange Act. Acquiror has established and, since the Acquiror IPO Date, has maintained a system of internal controls over financial reporting (as defined in Rule 13a-15 under the Exchange Act) sufficient to provide reasonable assurance regarding the reliability of Acquiror’s financial reporting and the preparation of Acquiror Financial Statements for external purposes in accordance with GAAP.

(b) Each director and executive officer of Acquiror has filed with the SEC on a timely basis all statements required by Section 16(a) of the Exchange Act and the rules and regulations promulgated thereunder. Acquiror has not taken any action prohibited by Section 402 of the Sarbanes-Oxley Act.

(c) Since the Acquiror IPO Date, Acquiror has complied in all material respects with the applicable listing and corporate governance rules and regulations of Nasdaq. The Acquiror Cayman Class A Shares are registered pursuant to Section 12(b) of the Exchange Act and are listed for trading on the Nasdaq Market. There is no Action pending or, to the knowledge of Acquiror, threatened against Acquiror by Nasdaq or the SEC with respect to any intention by such entity to deregister the Acquiror Cayman Class A Shares or prohibit or terminate the listing of Acquiror Cayman Class A Shares on the Nasdaq Market.

(d) The Acquiror SEC Filings contain true and complete copies of the audited balance sheet as of December 31, 2020, and statement of operations, shareholders’ equity and cash flows of Acquiror for the period from the Acquiror Inception Date (inception) through December 31, 2020, together with the auditor’s reports thereon (the “Acquiror Financial Statements”). Except as disclosed in the Acquiror SEC Filings, the Acquiror Financial Statements (i) fairly present in all material respects the financial position of Acquiror, as at the respective dates thereof, and the results of operations and consolidated cash flows for the respective periods then ended, (ii) were prepared in conformity with GAAP applied on a consistent basis during the periods involved (except as may be indicated therein or in the notes thereto) and (iii) comply in all material respects with the applicable accounting requirements and with the rules and regulations of the SEC, the Exchange Act and the Securities Act in effect as of the respective dates thereof. The books and records of Acquiror are, and since the Acquiror Inception Date have been, maintained in all material respects in accordance with GAAP and any other applicable legal and accounting requirements.

 

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(e) There are no outstanding loans or other extensions of credit made by Acquiror to any executive officer (as defined in Rule 3b-7 under the Exchange Act) or director of Acquiror. Acquiror has not taken any action prohibited by Section 402 of the Sarbanes-Oxley Act.

(f) Neither Acquiror nor, to the knowledge of Acquiror, any independent auditor or Acquiror has identified or been made aware of (i) any significant deficiency or material weakness in the system of internal accounting controls utilized by Acquiror, (ii) any fraud, whether or not material, that involves Acquiror’s management or other employees who have a role in the preparation of financial statements or the internal accounting controls utilized by Acquiror or (iii) any claim or allegation regarding any of the foregoing.

Section 6.8. Undisclosed Liabilities. As of the date of this Agreement, except for any Acquiror Transaction Expenses payable by Acquiror or Merger Sub as a result of or in connection with the consummation of the transactions contemplated hereby as described herein, there is no other Liability of Acquiror or Merger Sub that would be required to be set forth or reserved for on a consolidated balance sheet prepared in accordance with GAAP consistently applied and in accordance with past practice, except for Liabilities (a) reflected or reserved for on the financial statements or disclosed in the notes thereto included in the Acquiror SEC Filings, (b) that have arisen since the date of the most recent balance sheet included in the Acquiror SEC Filings in the ordinary course of business of Acquiror and Merger Sub or (c) which would not be, or would not reasonably be expected to be, material to Acquiror.

Section 6.9. Absence of Changes. Since December 31, 2020, (a) there has not been any event or occurrence that has had, or would reasonably be expected to have, individually or in the aggregate, a material and adverse effect on the ability of Acquiror or Merger Sub to enter into and perform its obligations under this Agreement or any Ancillary Agreement to which Acquiror or Merger Sub is, or is contemplated to be, a party and (b) except as set forth in Section 6.9 of the Acquiror Disclosure Letter, Acquiror and Merger Sub have, in all material respects, conducted their business and operated their properties in the ordinary course of business consistent with past practice.

Section 6.10. Trust Account. As of the date of this Agreement, Acquiror has at least $1,725,000,000.00 in the Trust Account, such monies invested in U.S. government securities or money market funds meeting certain conditions under Rule 2a-7 promulgated under the Investment Company Act pursuant to the Investment Management Trust Agreement, dated as of February 23, 2021 (the “Trust Agreement”), between Acquiror and Continental Stock Transfer & Trust Company, as trustee (the “Trustee”). There are no separate Contracts, side letters or other arrangements or understandings (whether written or unwritten, express or implied) that would cause the description of the Trust Agreement in the Acquiror SEC Filings to be inaccurate or that would entitle any Person (other than eligible Acquiror Shareholders who have elected to effect an Acquiror Share Redemption and the underwriters of Acquiror’s initial public offering with respect to deferred underwriting commissions) to any portion of the proceeds in the Trust Account. Prior to the Closing, none of the funds held in the Trust Account may be released other than the withdrawal of interest to fund working capital requirements (subject to an aggregate limit of $3,000,000), to pay Taxes and make payments with respect to Acquiror Share Redemptions or redemption of Acquiror Cayman Class A Shares in connection with any amendment to Acquiror’s amended and restated memorandum and articles of association. There are no claims or proceedings pending or, to the knowledge of Acquiror, threatened with respect to the Trust Account. Acquiror has performed all material obligations required to be performed by it to date under, and is not in default under, in breach of, or delinquent in performance or any other respect (claimed or actual) in connection with, the Trust Agreement, and no event has occurred which, with due notice or lapse of time or both, would constitute such a default or breach thereunder. As of the Merger Effective Time, the obligations of Acquiror to dissolve or liquidate pursuant to Acquiror’s Governing Documents shall terminate, and, as of the Merger Effective Time, Acquiror shall have no obligation whatsoever pursuant to Acquiror’s Governing Documents to dissolve and liquidate the assets of Acquiror by reason of the consummation of the transactions contemplated hereby. Following the Merger Effective Time, no Acquiror Shareholder shall be entitled to receive any amount from the Trust Account except to the extent such Acquiror Shareholder has validly effected an Acquiror Share Redemption. As of the date hereof, assuming the

 

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accuracy of the representations and warranties of the Company contained herein and the compliance by the Company with its obligations hereunder, neither Acquiror or Merger Sub has any reason to believe that any of the conditions to the use of funds in the Trust Account will not be satisfied or funds available in the Trust Account will not be available to Acquiror and Merger Sub on the Closing Date.

Section 6.11. Investment Company Act; JOBS Act. Acquiror is not required to register as an “investment company” under (and within the meaning of) the Investment Company Act. Acquiror constitutes an “emerging growth company” as defined in Section 2(a) of the Securities Act, as modified by the Jumpstart Our Business Startups Act of 2012.

Section 6.12. Capitalization of Acquiror.

(a) As of the date of this Agreement, the authorized share capital of Acquiror consists of (i) 480,000,000 Acquiror Cayman Common Shares, divided into (A) 400,000,000 Acquiror Cayman Class A Shares, 172,500,000 of which are issued and outstanding as of the date of this Agreement, and (B) 80,000,000 Acquiror Cayman Class B Shares, 43,125,000 of which are issued and outstanding as of the date of this Agreement, and (ii) 1,000,000 preference shares of par value $0.0001 each, none of which are issued or outstanding as of the date of this Agreement. Subject to the Domestication, the PIPE Investment and the Acquiror Share Redemptions, the foregoing represent all of the issued or outstanding Acquiror Shares. All issued and outstanding Acquiror Cayman Ordinary Shares (1) have been duly authorized and validly issued and are fully paid and non-assessable, (2) have been offered, sold and issued in compliance with applicable Law, including federal and state securities Laws, and all requirements set forth in (x) Acquiror’s Governing Documents and (y) any other applicable Contracts governing the issuance of such securities and (3) have not been issued in violation of any purchase option, call option, right of first refusal, preemptive right, subscription right or any similar right under any provision of any applicable Law, Acquiror’s Governing Documents or any Contract to which Acquiror is a party or otherwise bound.

(b) Subject to the terms of conditions of the Warrant Agreement, as of immediately after the Closing, each Acquiror Delaware Warrant will be exercisable after giving effect to the Merger and Domestication for one Acquiror Delaware Class A Share at an exercise price of $11.50. As of the date of this Agreement, 53,750,000 Acquiror Cayman Warrants are issued and outstanding, 19,250,000 of which are Acquiror Private Placement Warrants. The Acquiror Delaware Warrants will not be exercisable until the date that is thirty days after the Closing. All outstanding Acquiror Cayman Warrants (i) have been duly authorized and validly issued and constitute valid and binding obligations of Acquiror, enforceable against Acquiror in accordance with their terms, subject to applicable bankruptcy, insolvency, fraudulent conveyance, reorganization, moratorium and similar Laws affecting creditors’ rights generally and subject, as to enforceability, to general principles of equity, (ii) have been offered, sold and issued in compliance with applicable Law, including federal and state securities Laws, and all requirements set forth in (A) Acquiror’s Governing Documents and (B) any other applicable Contracts governing the issuance of such securities to which Acquiror is a party or otherwise bound and (iii) are not subject to, nor have they been issued in violation of, any purchase option, call option, right of first refusal, preemptive right, subscription right or any similar right under any provision of any applicable Law, Acquiror’s Governing Documents or any Contract to which Acquiror is a party or otherwise bound. Except for the Subscription Agreements, Acquiror’s Governing Documents and this Agreement, there are no outstanding Contracts to which Acquiror is a party or otherwise bound to repurchase, redeem or otherwise acquire any Acquiror Securities.

(c) Except as otherwise set forth in this Section 6.12 or in Section 6.12(c) of the Acquiror Disclosure Letter, and other than in connection with the PIPE Investment or the rights of Acquiror’s shareholders to effect Acquiror Share Redemptions as provided in Acquiror’s Governing Documents, Acquiror has no outstanding (i) subscriptions, calls, options, warrants, rights (including preemptive rights), puts or other securities convertible into or exchangeable or exercisable for Equity Securities of Acquiror or any other Contracts to which Acquiror is a party or by which Acquiror is bound obligating Acquiror to issue or sell any Equity Securities of Acquiror, (ii) equity equivalents, stock appreciation rights, phantom stock ownership interests or similar rights in Acquiror

 

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or (iii) bonds, debentures, notes or other indebtedness of Acquiror having the right to vote (or convertible into, or exchangeable for, Equity Securities of Acquiror having the right to vote) on any matter on which Acquiror’s shareholders may vote and there are no Contracts to which Acquiror is a party or by which Acquiror is bound obligating Acquiror to repurchase, redeem or otherwise acquire any Equity Securities of Acquiror.

(d) The Aggregate Equity Value Consideration and the Aggregate Earn-out Consideration, when issued in accordance with the terms hereof, (i) will be duly authorized and validly issued, fully paid and non-assessable, (ii) will have been issued in compliance with applicable Law, including federal and state securities Laws, and all requirements set forth in (A) Acquiror’s Governing Documents and (B) any other applicable Contracts governing the issuance of such securities and (iii) other than as expressly contemplated by any Ancillary Agreement, will not be subject to, and will not have been issued in violation of, any Lien, purchase option, call option, right of first refusal, preemptive right, subscription right or any similar right under any provision of applicable Law, Acquiror’s Governing Documents, or any Contract to which Acquiror is a party or otherwise bound.

(e) Acquiror has no Subsidiaries other than Merger Sub and does not own, directly or indirectly, any Equity Securities or other interests or investments (whether equity or debt) in any Person, whether incorporated or unincorporated. Other than this Agreement and the applicable Ancillary Agreements, Acquiror is not party to any Contract that obligates Acquiror to invest money in, loan money to or make any capital contribution to any other Person.

Section 6.13. PIPE Investment. Prior to the execution of this Agreement, Acquiror has entered into Subscription Agreements with PIPE Investors, true and correct copies of which have been provided to the Company on or prior to the date of this Agreement, pursuant to which, and on the terms and subject to the conditions of which, such PIPE Investors have agreed, in connection with the transactions contemplated hereby, to purchase from Acquiror Delaware Class A Shares for a PIPE Investment Amount of $775,000,000. Each Subscription Agreement is a legal, valid and binding obligation of Acquiror and, to the knowledge of Acquiror, the applicable PIPE Investor party thereto, and neither the execution or delivery thereof by Acquiror nor the performance of Acquiror’s obligations under any such Subscription Agreement violates, or will at the Closing violate, any Laws. Each Subscription Agreement is in full force and effect and has not been withdrawn or terminated, or otherwise amended or modified, in any respect, and as of the date hereof, no withdrawal, termination, amendment or modification is contemplated by Acquiror or, to Acquiror’s knowledge, by any PIPE Investor. There are no other agreements, side letters, or arrangements between Acquiror and any PIPE Investor relating to any Subscription Agreement that could affect the obligation of such PIPE Investor to pay to Acquiror the applicable portion of the PIPE Investment Amount set forth in such Subscription Agreement as and when due pursuant to the terms thereof, and, as of the date hereof, Acquiror does not know of any fact or circumstance that would reasonably be expected to result in any of the conditions set forth in any Subscription Agreement not being satisfied as of the Closing (as defined in such Subscription Agreement) or the PIPE Investment Amount not being available in full to Acquiror on the Closing Date. No event has occurred that (with or without notice, lapse of time or both) would constitute a default or breach on the part of Acquiror under any material term or condition of any Subscription Agreement and, as of the date hereof, Acquiror has no reason to believe that it will be unable to perform or satisfy, or cause to be performed or satisfied, on a timely basis any obligation to be satisfied by it or any condition, in each case, contained in any Subscription Agreement. No fees, consideration or other discounts are, or will be, payable to any PIPE Investor in respect of its PIPE Investment, except as set forth in the Subscription Agreements.

Section 6.14. Brokers Fees. Except as set forth in Section 6.14 of the Acquiror Disclosure Letter, no broker, finder, investment banker or other Person is entitled to any brokerage fee, finders’ fee or other commission in connection with the transactions contemplated hereby based upon arrangements made by Acquiror or any of its Affiliates, except for any such fee or commission payable solely by an Affiliate of Acquiror (other than Merger Sub).

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date of this Agreement (including in respect of deferred underwriting commissions and costs and expenses incurred in respect with other prospective Business Combinations and of Acquiror’s initial public offering) do not exceed, in the aggregate, the amount set forth in Section 6.15 of the Acquiror Disclosure Letter.

Section 6.16. Taxes.

(a) All material Tax Returns required to be filed by or with respect to Acquiror or Merger Sub have been timely filed (taking into account any applicable extensions), all such Tax Returns (taking into account all amendments thereto) are true, complete and accurate in all material respects and all material Taxes due and payable by Acquiror or Merger Sub (whether or not shown on any Tax Return) have been paid, other than Taxes being contested in good faith and for which adequate reserves have been established in accordance with GAAP.

(b) Acquiror and Merger Sub have withheld from amounts owing to any employee, creditor or other Person all material amounts of Taxes required by Law to be withheld, paid over to the proper Governmental Authority in a timely manner all such withheld amounts required to have been so paid over and otherwise complied in all material respects with all applicable withholding and related reporting requirements with respect to such Taxes.

(c) There are no Liens for any Taxes (other than Permitted Liens) upon the property or assets of Acquiror or Merger Sub.

(d) No claim, assessment, deficiency or proposed adjustment for any material amount of Tax has been asserted or assessed by any Governmental Authority against Acquiror or Merger Sub that remains unresolved or unpaid, except for claims, assessments, deficiencies or proposed adjustments (i) being contested in good faith through appropriate proceedings and for which adequate reserves have been established in accordance with GAAP and (ii) as set forth in Section 6.16(d) of the Acquiror Disclosure Letter or disclosed in the notes to Acquiror’s financial statements.

(e) There are no Tax audits, examinations or other Actions with respect to any material Taxes of Acquiror or Merger Sub presently in progress or pending, and there are no waivers, extensions or requests for any waivers or extensions of any statute of limitations currently in effect with respect to any Taxes of Acquiror or Merger Sub.

(f) Neither Acquiror nor Merger Sub has made a request for an advance tax ruling, request for technical advice, a request for a change of any method of accounting or any similar request that is in progress or pending with any Governmental Authority with respect to any Taxes that would reasonably be expected to have a material effect on Acquiror or Merger Sub.

(g) No written and unresolved claim has been made by any Governmental Authority in any jurisdiction in which Acquiror or Merger Sub does not file Tax Returns that it is or may be subject to taxation in that jurisdiction.

(h) Neither Acquiror nor Merger Sub has a “permanent establishment” (within the meaning of an applicable income Tax treaty or convention) in any country other than the United States or the country under the Laws of which Acquiror or Merger Sub, as applicable, is organized), or is subject to income Tax in a jurisdiction outside the country under the Laws of which Acquiror or Merger Sub, as applicable, is organized.

(i) Neither Acquiror nor Merger Sub is a party to any Tax indemnification or Tax sharing or similar agreement (other than any such agreement solely between the Acquiror and Merger Sub and customary commercial Contracts entered into in the ordinary course of business not primarily related to Taxes.

(j) Neither Acquiror nor Merger Sub has been a party to any transaction treated by the parties to such transaction as a distribution of stock qualifying for income tax-free treatment under Section 355 of the Code.

(k) Neither Acquiror nor Merger Sub (i) is liable for Taxes of any other Person (other than Acquiror or Merger Sub) under Treasury Regulations Section 1.1502-6 or any similar provision of state, local or non-U.S. Tax Law or as a transferee or successor or by Contract (other than customary commercial Contracts (or Contracts

 

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entered into in the ordinary course of business) not primarily related to Taxes) or (ii) has ever been a member of an affiliated, consolidated, combined or unitary group filing for U.S. federal, state or local income Tax purposes, other than a group consisting solely of Acquiror and Merger Sub.

(l) Neither Acquiror nor Merger Sub has participated in a “reportable transaction” within the meaning of Treasury Regulation 1.6011-4(b) (or any corresponding or similar provision of state, local or non-U.S. Law).

(m) Neither Acquiror nor Merger Sub will be required to include any material amount in taxable income, exclude any material item of deduction or loss from taxable income, or make any adjustment under Section 481 of the Code (or any similar provision of state, local or non-U.S. Law) for any taxable period (or portion thereof) beginning after the Closing Date as a result of any (i) installment sale, intercompany transaction described in the Treasury Regulations under Section 1502 of the Code (or any similar provision of state, local or non-U.S. Law) or open transaction disposition made on or prior to the Closing, (ii) prepaid amount received or deferred revenue recognized on or prior to the Closing other than in the ordinary course of business, (iii) change in method of accounting for a taxable period (or portion thereof) ending on or prior to the Closing, (iv) “closing agreement” as described in Section 7121 of the Code (or any similar provision of state, local or non-U.S. Law) executed on or prior to the Closing or (v) by reason of Section 965(a) of the Code or an election pursuant to Section 965(h) of the Code (or any similar provision of state, local or non-U.S. Law).

(n) Acquiror and Merger Sub have not taken any action that would reasonably be expected to prevent the Merger from qualifying for the Intended Tax Treatment. To the knowledge of the Acquiror and Merger Sub, there are no facts or circumstances, other than any facts and circumstances to the extent that such facts and circumstances exist or arise as a result of or related to any act or omission occurring after the date of this Agreement of the Company or any of its Subsidiaries not contemplated by this Agreement and/or any Ancillary Agreement, that could reasonably be expected to prevent the merger from qualifying for the Intended Tax Treatment.

(o) Acquiror has never owned any Equity Securities of another Person (other than Merger Sub).

Section 6.17. Business Activities.

(a) Since its incorporation or organization, as applicable, neither Acquiror nor Merger Sub has conducted any business activities other than activities related to Acquiror’s initial public offering or directed toward the accomplishment of a Business Combination. Except as set forth in Acquiror’s Governing Documents or as otherwise contemplated by this Agreement or the Ancillary Agreements and the transactions contemplated hereby and thereby, there is no Contract or Governmental Order binding upon Acquiror or Merger Sub or to which Acquiror or Merger Sub is a party which has or would reasonably be expected to have the effect of prohibiting or impairing any business practice of Acquiror or Merger Sub or any acquisition of property by Acquiror or Merger Sub or the conduct of business by Acquiror or Merger Sub as currently conducted or as contemplated to be conducted as of the Closing, other than such effects, individually or in the aggregate, which have not been and would not reasonably be expected to be material to Acquiror or Merger Sub.

(b) Except for Merger Sub and the transactions contemplated by this Agreement and the Ancillary Agreements, Acquiror does not own or have a right to acquire, directly or indirectly, any interest or investment (whether equity or debt) in any Person. Except for this Agreement and the Ancillary Agreements and the transactions contemplated hereby and thereby, Acquiror has no material interests, rights, obligations or Liabilities with respect to, and is not party to, bound by or has its assets or property subject to, in each case whether directly or indirectly, any Contract or transaction which is, or would reasonably be interpreted as constituting, a Business Combination. Except for the transactions contemplated by this Agreement and the Ancillary Agreements, Merger Sub does not own or have a right to acquire, directly or indirectly, any interest or investment (whether equity or debt) in any Person.

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as expressly contemplated by this Agreement, the Ancillary Agreements and the other documents and transactions contemplated hereby and thereby, has no, assets, Liabilities or obligations of any kind or nature whatsoever other than those incident to its formation.

(d) As of the date hereof, and except for this Agreement and the Ancillary Agreements (including with respect to expenses and fees incurred in connection therewith), neither Acquiror nor Merger Sub is party to any Contract with any other Person that would require payments by Acquiror or any of its Subsidiaries after the date hereof in excess of $150,000 monthly or $250,000 in the aggregate with respect to any individual Contract, other than with respect to the Acquiror Transaction Expenses. As of the date hereof, there are no amounts outstanding under any Working Capital Loans.

Section 6.18. Nasdaq Stock Market Quotation. The Acquiror Cayman Class A Shares are registered pursuant to Section 12(b) of the Exchange Act and are listed for trading on the Nasdaq Market under the symbol “SRNG”. The Acquiror Cayman Warrants are registered pursuant to Section 12(b) of the Exchange Act and are listed for trading on the Nasdaq Market under the symbol “SRNGW”. As of the Closing, after the Domestication, the Acquiror Delaware Class A Shares and the Acquiror Delaware Warrants will be registered pursuant to Section 12(b) of the Exchange Act and will be listed for trading on the Nasdaq Market. Acquiror is in compliance with Nasdaq rules and there is no Action or proceeding pending or, to the knowledge of Acquiror, threatened against Acquiror by Nasdaq or the SEC seeking to deregister the Acquiror Cayman Class A Shares or the Acquiror Cayman Warrants or terminate the listing of the Acquiror Cayman Class A Shares or the Acquiror Cayman Warrants on the Nasdaq Market. None of Acquiror, Merger Sub or their respective Affiliates has taken any action in an attempt to terminate the registration of the Acquiror Cayman Class A Shares or Acquiror Cayman Warrants under the Exchange Act except as contemplated by this Agreement.

Section 6.19. Registration Statement, Proxy Statement and Proxy Statement/Registration Statement. On the effective date of the Registration Statement, the Registration Statement, and when first filed in accordance with Rule 424(b) and/or filed pursuant to Section 14A, the Proxy Statement and the Proxy Statement/Registration Statement (or any amendment or supplement thereto), shall comply in all material respects with the applicable requirements of the Securities Act and the Exchange Act. On the effective date of the Registration Statement, the Registration Statement will not contain any untrue statement of a material fact or omit to state any material fact required to be stated therein or necessary in order to make the statements therein not misleading. On the date of any filing pursuant to Rule 424(b) and/or Section 14A, the date the Proxy Statement/Registration Statement and the Proxy Statement, as applicable, is first mailed to the Acquiror Shareholders and certain of the Company’s stockholders, as applicable, and at the time of the Acquiror Shareholders’ Meeting, the Proxy Statement/Registration Statement and the Proxy Statement, as applicable (together with any amendments or supplements thereto) will not include any untrue statement of a material fact or omit to state a material fact necessary in order to make the statements therein, in the light of the circumstances under which they were made, not misleading. Notwithstanding anything to the contrary in this Agreement, Acquiror makes no representations or warranties as to the information contained in or omitted from the Registration Statement, Proxy Statement or the Proxy Statement/Registration Statement in reliance upon and in conformity with information furnished in writing to Acquiror by or on behalf of the Company specifically for inclusion in the Registration Statement, Proxy Statement or the Proxy Statement/Registration Statement.

Section 6.20. No Additional Representation or Warranties.

(a) Except as provided in this Article VI, neither Acquiror nor Merger Sub nor any Related Person of Acquiror or Merger Sub has made, or is making, any representation or warranty whatsoever to the Company or any of its Related Persons and none of Acquiror, Merger Sub or any of their respective Related Persons shall be liable in respect of the accuracy or completeness of any information provided to the Company or any of its Related Persons.

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any representation or warranty whatsoever as to the condition, merchantability, suitability or fitness for a particular purpose or trade as to any of the assets of the Company or any of its Subsidiaries, the prospects (financial or otherwise) or the viability or likelihood of success of the business of the Company or any of its Subsidiaries as conducted after the Closing, as contained in any materials provided by the Company or any of its Subsidiaries or any of their respective Related Persons or otherwise. Without limiting the generality of the foregoing, it is understood that any cost estimates, financial or other projections or other predictions that may be contained or referred to in the Company Disclosure Letter or elsewhere, as well as any information, documents or other materials (including any such materials contained in any “data room” (whether or not accessed by Acquiror, any Acquiror Insider or any of their respective Representatives) or reviewed by Acquiror, any Acquiror Insider or any of their respective Representatives pursuant to the Confidentiality Agreement) or management presentations that have been or may hereafter be provided to Acquiror, any Acquiror Insider or any of their respective Representatives are not and will not be deemed to be representations or warranties of the Company, and no representation or warranty is made as to the accuracy or completeness of any of the foregoing except as may be expressly set forth in Article V of this Agreement. Except as otherwise expressly set forth in this Agreement, Acquiror understands and agrees that the assets, properties and business of the Company and its Subsidiaries are furnished “as is”, “where is” and subject to and except as otherwise provided in the representations and warranties contained in Article V, with all faults and without any other representation or warranty of any nature whatsoever.

ARTICLE VII

COVENANTS OF THE COMPANY

Section 7.1. Conduct of Business. From the date of this Agreement through the earlier of the Closing or the valid termination of this Agreement pursuant to Article XI (the “Interim Period”), the Company shall, and shall cause its Subsidiaries to, except as explicitly required or permitted by this Agreement or any Ancillary Agreement to which the Company is a party (including as necessary to effect the Company Recapitalization in accordance with Section 2.2), as required by Law or as consented to by Acquiror in writing (which consent shall not be unreasonably withheld, conditioned or delayed), use commercially reasonable efforts to operate the business of the Company and its Subsidiaries in the ordinary course and use reasonable best efforts to preserve the present business and operations and goodwill of the Company. Without limiting the generality of the foregoing, the Company shall not, and the Company shall cause its Subsidiaries not to, except (w) as otherwise expressly required or permitted by this Agreement or any Ancillary Agreement (including as necessary to effect the Company Recapitalization in accordance with Section 2.2), (x) as required by Law, (y) as consented to by Acquiror in writing (which consent with respect to paragraphs (b), (c) (other than clause (i), (ii) and (iii) thereof), (d), (e), (g), (h), (i), (k), (m), (n), (o), (p) or (s) (to the extent relating to the foregoing paragraphs) of this Section 7.1 shall not be unreasonably withheld, conditioned or delayed) or (z) as set forth in Section 7.1 of the Company Disclosure Letter:

(a) amend, restate, supplement or otherwise modify any provision of the Governing Documents of the Company;

(b) incorporate, form or organize any new direct or indirect Subsidiary of the Company or engage in any new line of business that is materially different from the general nature of the businesses of the Company and its Subsidiaries as of the date hereof;

(c) (i) pay, make, declare or set aside any dividend or distribution in respect of any Equity Security of the Company, (ii) split, combine, reclassify or otherwise amend or modify any terms of any Equity Security of the Company or any of its Subsidiaries, other than any such transaction by a wholly owned Subsidiary of the Company that remains a wholly owned Subsidiary of the Company after consummation of such transaction, (iii) purchase, repurchase, redeem or otherwise acquire (or offer to purchase, repurchase, redeem or otherwise acquire) any issued and outstanding Equity Security of the Company or any of its Subsidiaries, other than, in the

 

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case of this clause (iii), (A) in connection with the forfeiture or cancellation of any such Equity Security for no consideration, (B) the surrender of Company Common Shares by holders of Company Options in order to pay the exercise price of any Company Option, (C) the withholding of Company Common Shares to satisfy tax obligations with respect to any Company Equity Awards or (D) transactions between the Company and any of its wholly owned Subsidiaries or between any two or more wholly owned Subsidiaries of the Company, (iv) grant, issue, transfer, sell or otherwise dispose of, or authorize to issue, sell, or otherwise dispose of, any Equity Securities in the Company (other than any grant of any equity awards under any Company Incentive Plan in the ordinary course of business consistent with past practice) or (v) issue, deliver, sell, authorize, pledge or otherwise encumber, or agree to any of the foregoing with respect to, any Equity Securities or enter into other agreements or commitments of any character obligating it to issue any Equity Securities;

(d) enter into, modify or amend in any material respect or terminate (other than by expiration in accordance with the terms of any Contract without an auto-renewal or similar term) any Contract of a type required to be listed in Section 5.13(a) of the Company Disclosure Letter or any Real Property Lease, in each case, other than in the ordinary course of business;

(e) (i) issue or sell any debt securities or warrants or other rights to acquire any debt securities of the Company or any of its Subsidiaries or guarantee any debt securities of another Person, (ii) incur or assume any Indebtedness for borrowed money or (iii) guarantee any indebtedness for borrowed money of a third party, except, in the case of each of the foregoing clauses (i) through (iii), in an aggregate amount not to exceed $500,000;

(f) sell, assign, transfer, convey, lease or otherwise dispose of any material tangible assets or properties of the Company or any of its Subsidiaries, except for (i) dispositions of obsolete or worthless equipment, (ii) transactions between the Company and any of its Subsidiaries or between any two or more of the Company’s Subsidiaries and (iii) transactions in the ordinary course of business;

(g) make or commit to make any capital expenditures other than in an amount not exceeding $100,000,000 in the aggregate;

(h) acquire by merger or consolidation with, or merge or consolidate with, or purchase substantially all or a material portion of the assets of, any corporation, partnership, association, joint venture or other business organization or division thereof;

(i) waive, release, settle, compromise or otherwise resolve any Action, except in the ordinary course of business or where such waivers, releases, settlements or compromises involve only the payment of monetary damages in an amount less than $10,000,000 (net of any amounts covered by insurance) in the aggregate;

(j) authorize, recommend, propose or announce an intention to adopt a plan of, or otherwise enter into or effect any, complete or partial liquidation, dissolution, restructuring, recapitalization or other reorganization of the Company or its Subsidiaries (other than the Merger);

(k) (i) make or change any material election in respect of Taxes, (ii) amend, modify or otherwise change any filed material Tax Return, (iii) adopt or request permission of any taxing authority to change any accounting method in respect of material Taxes, (iv) enter into any closing agreement in respect of material Taxes or enter into any Tax sharing or similar agreement (other than customary commercial Contracts entered into in the ordinary course of business not primarily related to Taxes), (v) settle any claim or assessment in respect of material Taxes, (vi) surrender or allow to expire any right to claim a refund of material Taxes or (vii) consent to any extension or waiver of the limitation period applicable to any claim or assessment in respect of material Taxes or in respect of any material Tax attribute that would reasonably be expected to give rise to any claim or assessment of Taxes;

(l) take any action, or knowingly fail to take any action, where such action or failure to act could reasonably be expected to prevent the Merger from qualifying as a “reorganization” within the meaning of Section 368(a) of the Code and the Treasury Regulations;

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(i) grant any severance, retention, change-of-control or termination or similar pay, except in connection with the promotion, hiring or termination of employment of any employee in the ordinary course of business, (ii) terminate, adopt, enter into or amend any material Company Benefit Plan, or (iii) increase the cash compensation or bonus opportunity of any employee, officer, director or other individual service provider;

(n) enter into, amend, extend or terminate any collective bargaining agreement or similar labor agreement or recognize or certify any labor union, labor organization, or group of employees of the Company or its Subsidiaries as the bargaining representative for any employees of the Company or its Subsidiaries;

(o) implement any employee layoffs, plant closings, or similar events that individually or in the aggregate would give rise to any material obligations or Liabilities on the part of the Company under the federal Work Adjustment and Retraining Notification Act or any similar state or local “mass layoff” or “plant closing” Law;

(p) enter into or materially amend any agreement with, or pay, distribute or advance any assets or property to, any of its officers, directors, employees, partners, stockholders or other Affiliates, other than payments or distributions (x) relating to obligations in respect of arms-length commercial transactions pursuant to the agreements set forth in Section 5.31 of the Company Disclosure Letter as existing on the date of this Agreement or (y) in the ordinary course of business consistent with past practice;

(q) except as required by GAAP (or any interpretation thereof) or applicable Law, make any change in accounting methods, principles or practices;

(r) (i) transfer, sell, assign, license, sublicense, covenant not to assert, encumber, subject to a Lien (other than a Permitted Lien), abandon, allow to lapse, or otherwise dispose of, any right, title or interest of the Company or its Subsidiaries in Company Owned Intellectual Property (other than non-exclusive licenses to Company Owned Intellectual Property granted in the ordinary course of business, exclusive licenses to customers with respect to Intellectual Property developed for or utilized by such customers pursuant to agreements entered in the ordinary course of business or Company Owned Intellectual Property abandoned in the ordinary course of business consistent with past practice in the Company’s reasonable business judgment); (ii) disclose any Trade Secrets to any third party that is not subject to a Contract to maintain confidentiality; or (iii) subject any source code for any Company Software to any Copyleft License; or

(s) enter into any agreement to take any action prohibited under this Section 7.1.

Section 7.2. Inspection. During the Interim Period, the Company shall, and shall cause its Subsidiaries to, use commercially reasonable efforts to afford to Acquiror and its Representatives reasonable access during normal business hours and with reasonable advance notice, and solely for purposes in furtherance of the consummation of the transactions contemplated hereby (including transition and integration planning) to all of the respective properties (other than for purposes of performing any testing, sampling or analysis of any properties, facilities or equipment of the Company or any of its Subsidiaries), books, Contracts, Tax Returns, records and appropriate officers and employees of the Company and its Subsidiaries, and shall furnish such Representatives with all historical or prospective financial and operating data and other information concerning the affairs of the Company and its Subsidiaries as such Representatives may reasonably request, to the extent then available, except, in each case, to the extent that the Company reasonably determines that providing such access would (a) unreasonably disrupt the normal operations of the Company or any of its Subsidiaries, (b) violate any contractual, fiduciary or legal duty or obligation to which the Company or any of its Subsidiaries is subject (provided that, to the extent possible, the Parties shall cooperate in good faith to permit disclosure of such information in a manner that complies with such duty or obligation), (c) result in the loss of the ability of the Company or any of its Subsidiaries to assert successfully or seek the application of attorney-client privilege or the work-product doctrine or (d) result in the disclosure of information reasonably pertinent to any Action in which the Company or any of its Subsidiaries, on the one hand, and Acquiror, Merger Sub, any Acquiror Insider or any of their respective Affiliates, on the other hand, are adverse parties. Additionally, in the event that any litigation related to this Agreement, any Ancillary Agreement or any of the transactions contemplated hereby or thereby is brought, or, to the knowledge of the Company, threatened in writing, against the Company or the

 

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Company Board (or any member thereof) prior to the Closing, the Company shall promptly notify Acquiror of such pending or threatened litigation and shall keep Acquiror reasonably informed with respect to the status thereof. All information obtained by Acquiror, Merger Sub or their respective representatives pursuant to this Section 7.2 shall be subject to the Confidentiality Agreement.

Section 7.3. Preparation and Delivery of Additional Company Financial Statements. As promptly as reasonably practicable, the Company shall deliver to Acquiror (a) the audited consolidated balance sheet and statements of operations and comprehensive loss, changes in stockholders’ equity and cash flows of the Company and its consolidated subsidiaries as of and for the year ended December 31, 2020, audited in accordance with the auditing standards of the Public Company Accounting Oversight Board (provided that such financial statements shall not be required to include a signed audit opinion, which signed audit opinion shall instead be delivered concurrently with the filing of the Registration Statement with the SEC) (the “2020 Audited Financial Statements”) and (b) any other audited or unaudited financial statements of the Company and its consolidated subsidiaries that are required by applicable Law to be included in the Registration Statement (the financial statements described in the foregoing clauses (a) and (b), collectively, the “Closing Company Financial Statements”).

Section 7.4. Affiliate Agreements. The Company shall terminate or settle all Affiliate Agreements identified in Section 7.4 of the Company Disclosure Letter at or prior to the Closing without further liability to Acquiror, the Company or any of the Company’s Subsidiaries, except as set forth in Section 7.4 of the Company Disclosure Letter.

Section 7.5. Acquisition Proposals. During the Interim Period, the Company shall not, and shall cause its Subsidiaries not to, and shall instruct and use reasonable best efforts to cause its and their respective Representatives not to, (a) initiate, solicit, enter into or continue discussions, negotiations or transactions with, or respond to any inquiries or proposals by, any Person with respect to, or provide any non-public information or data concerning the Company or any of the Company’s Subsidiaries to any Person relating to, an Acquisition Proposal (other than to inform such Person of the Company’s obligations pursuant to this Section 7.5) or afford to any Person access to the business, properties, assets, information or personnel of the Company or any of the Company’s Subsidiaries in connection with an Acquisition Proposal, (b) enter into any acquisition agreement, merger agreement or similar definitive agreement, or any letter of intent, memorandum of understanding or agreement in principle, or any other agreement relating to an Acquisition Proposal, (c) grant any waiver, amendment or release under any confidentiality agreement or the anti-takeover laws of any state for purposes of facilitating an Acquisition Proposal, (d) otherwise knowingly encourage or facilitate any such inquiries, proposals, discussions, or negotiations or any effort or attempt by any Person to make an Acquisition Proposal or (e) resolve or agree to do any of the foregoing. The Company shall promptly (and in any event within two (2) Business Days after receipt thereof) notify Acquiror in writing of the receipt of any inquiry, proposal, offer or request for information received after the date hereof that constitutes an Acquisition Proposal and keep Acquiror reasonably informed of any material developments with respect to any such inquiry, proposal, offer, request for information or Acquisition Proposal (including any material changes thereto).

ARTICLE VIII

COVENANTS OF ACQUIROR

Section 8.1. Employee Matters.

(a) Equity Plan. Prior to the Closing Date, Acquiror shall approve and adopt an equity incentive plan (the “EIP”), and an employee stock purchase plan (the “ESPP”) in the form provided by the Company to Acquiror prior to the Closing Date with terms consistent with this Section 8.1(a) and as otherwise determined by the Company. The EIP and the ESPP shall each provide for the ability to grant and recycle Acquiror Delaware

 

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Class A Shares and Acquiror Delaware Class B Shares (including any shares subject to forfeited Acquiror Options, Acquiror Restricted Stock Awards or Acquiror Restricted Stock Unit Awards), except that the Persons identified in Section 8.1(a) of the Company Disclosure Letter shall not be eligible to receive Acquiror Delaware Class B Shares under the EIP. The EIP shall initially reserve a number of Acquiror Delaware Class B Shares constituting no less than 10% of total number of Acquiror Delaware Common Shares outstanding on a fully diluted basis, as determined at the Closing, plus the Remaining Earn-out Shares. A committee composed of a subset of the Persons identified in Section 8.1(a) of the Company Disclosure Letter shall have the authority to grant equity awards under the EIP covering the Remaining Earn-out Shares and any Earn-out Shares that return the EIP as a result of the forfeiture or net settlement (including for taxes) of Acquiror Options, Acquiror Restricted Stock Awards and Acquiror Restricted Stock Unit Awards, except that such committee may not make any such grants to any of the Persons identified in Section 8.1(a) of the Company Disclosure Letter. The ESPP shall initially reserve a number of Acquiror Delaware Class B Shares constituting no less than 1% of the total number of Acquiror Delaware Common Shares outstanding on a fully diluted basis, as determined at the Closing. Each of the EIP and the ESPP shall include an “evergreen” provision pursuant to which the number of Acquiror Delaware Class B Shares reserved for issuance under such equity plan shall be increased automatically each year by 4% (in the case of the EIP) or 1% (in the case of the ESPP) of the aggregate number of Acquiror Delaware Common Shares then outstanding. Within five Business Days following the expiration of the 60-day period following the date on which Acquiror files current Form 10 information with the SEC reflecting its status as an entity that is not a shell company, Acquiror shall file an effective registration statement on Form S-8 (or other applicable form, including Form S-3) with respect to the Acquiror Delaware Common Shares issuable under the EIP and the ESPP.

(b) No Third-Party Beneficiaries. Notwithstanding anything herein to the contrary, each Party acknowledges and agrees that all provisions contained in this Section 8.1 are included for the sole benefit of Acquiror and the Company, and that nothing in this Agreement, whether express or implied, (i) shall be construed to establish, amend, or modify any employee benefit plan, program, agreement or arrangement, (ii) shall limit the right of Acquiror, the Company or any of their respective Affiliates to amend, terminate or otherwise modify any Company Benefit Plan or other employee benefit plan, agreement or other arrangement following the Closing or (iii) shall confer upon any Person who is not a Party (including any equityholder, any current or former director, manager, officer, employee or independent contractor of the Company, or any participant in any Company Benefit Plan or other employee benefit plan, agreement or other arrangement (or any dependent or beneficiary thereof)), any right to continued or resumed employment or recall, any right to compensation or benefits, or any third-party beneficiary or other right of any kind or nature whatsoever.

Section 8.2. Trust Account Proceeds and Related Available Equity. Upon satisfaction (or, to the extent permitted by applicable Law, waiver by the applicable Party or Parties entitled to the benefit thereof) of all of the conditions set forth in Article X (other than the Domestication Condition and those conditions that by their nature or terms are to be satisfied at the Closing), Acquiror shall provide notice (in accordance with the terms of the Trust Agreement) thereof to the Trustee and (a) pursuant to and in accordance with the Trust Agreement, (a) Acquiror (i) shall cause any notices, certificates, opinions or other documents required to be delivered to the Trustee pursuant to the Trust Agreement to be so delivered at the time and in the manner required under the Trust Agreement and (ii) shall use its reasonable best efforts to cause the Trustee to, and the Trustee shall thereupon be obligated to, at the Closing, (A) pay as and when due all amounts payable to Acquiror Shareholders pursuant to the Acquiror Share Redemptions, and (B) pay all remaining amounts then available in the Trust Account to Acquiror for immediate use, subject to this Agreement and the Trust Agreement, and (b) thereafter, the Trust Account shall terminate, except as otherwise provided therein.

Section 8.3. Listing Matters.

(a) During the Interim Period, Acquiror shall maintain its listing on the Nasdaq Market and, in the event that Acquiror receives any notice that Acquiror has failed to satisfy any Nasdaq listing requirement, shall provide prompt written notice of the same to the Company, including a copy of any written notice thereof received from Nasdaq.

 

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(b) Prior to the Closing, Acquiror shall use reasonable best efforts to cause the Acquiror Delaware Class A Shares to be issued in connection with the transactions contemplated hereby to be approved for listing on the Listing Exchange (subject to notice of issuance) prior to the Closing under a ticker symbol to be selected by the Company, including by submitting prior to the Closing an initial listing application (the “Listing Application”) with Nasdaq or NYSE, as applicable, with respect to such Acquiror Delaware Class A Shares. Each of the Company and Acquiror shall promptly furnish all information concerning itself and its Affiliates as may be reasonably requested by the other such Party and shall otherwise reasonably assist and cooperate with the other such Party in connection with the preparation and filing of the Listing Application. Acquiror will use reasonable best efforts to (i) cause the Listing Application, when filed, to comply in all material respects with all requirements applicable thereto, (ii) respond as promptly as reasonably practicable to and resolve all comments received from Nasdaq or its staff concerning the Listing Application and (iii) have the Listing Application approved by Nasdaq or NYSE, as applicable, as promptly as practicable after such filing. Acquiror shall not submit the Nasdaq Listing Application or any supplement or amendment thereto, or respond to comments received from Nasdaq or NYSE, as applicable, with respect thereto, without the Company’s prior consent (which shall not be unreasonably withheld, conditioned or delayed) and without providing the Company a reasonable opportunity to review and comment thereon. Acquiror shall promptly notify the Company upon the receipt of any comments from Nasdaq or NYSE, as applicable, or any request from Nasdaq or NYSE, as applicable, for amendments or supplements to the Listing Application and shall provide the Company with copies of all material correspondence between Acquiror or any of its Representatives, on the one hand, and Nasdaq or NYSE, as applicable, on the other hand, and all written comments with respect to the Listing Application received from Nasdaq or NYSE, as applicable, and advise the Company of any oral comments with respect to the Listing Application received from Nasdaq or NYSE, as applicable. Promptly after receiving notice thereof, Acquiror shall advise the Company of the time of the approval of the Listing Application and the approval for listing on the Listing Exchange (subject to official notice of issuance) of the Acquiror Delaware Class A Shares to be issued in connection with the transactions contemplated hereby.

Section 8.4. No Solicitation by Acquiror. During the Interim Period, Acquiror shall not, and shall cause its Subsidiaries not to, and shall instruct and use reasonable best efforts to cause its and their respective Representatives, not to, (a) make any proposal or offer that constitutes a Business Combination Proposal, (b) initiate, solicit, enter into or continue discussions, negotiations or transactions with, or encourage or respond to any inquiries or proposals by, any Person with respect to a Business Combination Proposal (other than to inform such Person of Acquiror’s obligations pursuant to this Section 8.4) or (iii) enter into any acquisition agreement, business combination agreement, merger agreement or similar definitive agreement, or any letter of intent, memorandum of understanding or agreement in principle, or any other agreement relating to a Business Combination Proposal, in each case, other than to or with the Company and its Representatives. From and after the date hereof, Acquiror shall, and shall instruct and cause its Representatives, its Affiliates and their respective Representatives to, immediately cease and terminate all discussions and negotiations with any Persons that may be ongoing with respect to a Business Combination Proposal (other than the Company and its Representatives).

Section 8.5. Acquiror Conduct of Business.

(a) During the Interim Period, Acquiror shall, and shall cause Merger Sub to, except as expressly required or permitted by this Agreement or any Ancillary Agreement to which Acquiror or Merger Sub is a party (including as contemplated by the PIPE Investment and as necessary to effect the Domestication), as required by Law or as consented to by the Company in writing (which consent shall not be unreasonably withheld, conditioned or delayed), use reasonable best efforts to operate its business in the ordinary course and consistent with past practice. Without limiting the generality of the foregoing, Acquiror shall not, and shall cause Merger Sub not to, except (w) as otherwise expressly required or permitted by this Agreement or any Ancillary Agreement (including as contemplated by the PIPE Investment and as necessary to effect the Domestication), (x) as required by Law, (y) as consented to by the Company in writing (which consent with respect to clauses (iii), (v), (vi), (vii) and (viii) (to the extent relating to the foregoing items) of this Section 8.5(a) shall not be

 

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unreasonably withheld, conditioned or delayed) or (z) as set forth in Section 8.5(a) of the Acquiror Disclosure Letter:

(i) amend, restate, supplement or otherwise modify or waive any provision of (or seek any approval from the Acquiror Shareholders to amend, restate, supplement or otherwise modify or waive any provision of) the Trust Agreement, the Acquiror Warrants, the Warrant Agreement or the Governing Documents of Acquiror or Merger Sub, except as contemplated by the Transaction Proposals or the Acquiror Warrant Proposal;

(ii) (A) pay, make, declare or set aside any dividend or distribution in respect of any Equity Security of Acquiror or Merger Sub, (B) split, combine, reclassify or otherwise amend or modify any terms of any Equity Security of Acquiror or Merger Sub or (C) purchase, repurchase, redeem or otherwise acquire (or offer to purchase, repurchase, redeem or otherwise acquire) any issued and outstanding Equity Security of Acquiror or Merger Sub, other than to provide eligible Acquiror Shareholders with the opportunity to effect Acquiror Share Redemptions as required by Acquiror’s Governing Documents;

(iii) make or change any material election in respect of Taxes, (A) amend, modify or otherwise change any filed material Tax Return, (B) adopt or request permission of any taxing authority to change any accounting method in respect of material Taxes, (C) enter into any closing agreement in respect of material Taxes or enter into any Tax sharing or similar agreement (other than customary commercial Contracts entered into in the ordinary course of business not primarily related to Taxes), (D) settle any claim or assessment in respect of Taxes, (E) surrender or allow to expire any right to claim a refund of material Taxes; or (F) consent to any extension or waiver of the limitation period applicable to any claim or assessment in respect of material Taxes or in respect of any material Tax attribute that would reasonably be expected to give rise to any claim or assessment of Taxes;

(iv) take any action, or knowingly fail to take any action, where such action or failure to act could reasonably be expected to prevent the Merger from qualifying as a “reorganization” within the meaning of Section 368(a) of the Code and the Treasury Regulations;

(v) enter into, renew, terminate, amend, restate, supplement or otherwise modify or waive any provision of any transaction or Contract (including the Insider Letter) with any Affiliate of Acquiror or Merger Sub, any Acquiror Insider or any Person in which the Sponsor has a direct or indirect legal, contractual or beneficial ownership interest of 5% or greater;

(vi) other than Acquiror Transaction Expenses, incur, assume or otherwise become liable for (whether directly or indirectly, absolutely or contingently or otherwise) any Indebtedness or Liability or guarantee any Indebtedness or Liability of another Person, or issue or sell any debt securities or warrants or other rights to acquire any debt securities of Acquiror or any of its Subsidiaries or guarantee any debt securities of another Person, other than Indebtedness for borrowed money incurred in the ordinary course of business consistent with past practice and not exceeding $100,000 in the aggregate;

(vii) (A) issue any Equity Securities of Acquiror, other than the issuance of the Aggregate Equity Value Consideration and the issuance of the Aggregate Earn-out Value Consideration, (B) grant any options, warrants or other equity-based awards with respect to Equity Securities of Acquiror not outstanding on the date hereof or (C) amend, modify or waive any of the material terms or rights set forth in any Acquiror Warrant, including any amendment, modification or reduction of the warrant price set forth therein; or

(viii) enter into any agreement to take any action prohibited under this Section 8.5.

(b) During the Interim Period, Acquiror shall, and shall cause its Subsidiaries (including Merger Sub) to comply with, and continue performing under, as applicable, Acquiror’s Governing Documents, the Trust Agreement and all other agreements or Contracts to which Acquiror or its Subsidiaries may be a party.

 

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Section 8.6. Post-Closing Directors and Officers of Acquiror. Subject to the terms of the Acquiror’s Governing Documents, Acquiror shall take all such action within its power as may be necessary or appropriate such that immediately following the Merger Effective Time:

(a) the Acquiror Board shall consist of eight directors, which initially shall be those individuals identified in Section 8.6(a) of the Company Disclosure Letter; and

(b) the initial officers of Acquiror shall be as set forth in Section 8.6(b) of the Company Disclosure Letter (as may be updated by the Company prior to Closing following written notice to Acquiror), who shall serve in such capacity in accordance with the terms of Acquiror’s Governing Documents following the Merger Effective Time.

Section 8.7. Indemnification and Insurance.

(a) From and after the Merger Effective Time, Acquiror agrees that it shall indemnify and hold harmless each present and former director and officer of the (i) Company and each of its Subsidiaries (in each case, solely to the extent acting in their capacity as such and to the extent such activities are related to the business of the Company being acquired under this Agreement) (the “Company Indemnified Parties”) and (ii) Acquiror and each of its Subsidiaries (the “Acquiror Indemnified Parties” together with the Company Indemnified Parties, the “D&O Indemnified Parties”) against any costs or expenses (including reasonable attorneys’ fees), judgments, fines, losses, claims, damages or liabilities incurred in connection with any Action, whether civil, criminal, administrative or investigative, arising out of or pertaining to matters existing or occurring at or prior to the Merger Effective Time, whether asserted or claimed prior to, at or after the Merger Effective Time, to the fullest extent that the Company, Acquiror or any of their respective Subsidiaries, as the case may be, would have been permitted under applicable Law and its Governing Documents in effect on the date of this Agreement to indemnify such D&O Indemnified Parties (including the advancing of expenses as incurred to the fullest extent permitted under applicable Law). Without limiting the foregoing, Acquiror shall, and shall cause its Subsidiaries to (A) maintain for a period of not less than six years following the Closing Date provisions in its Governing Documents concerning the indemnification, exoneration and exculpation (including provisions relating to expense advancement) of Acquiror’s and its Subsidiaries’ former and current officers, directors, employees, and agents that are no less favorable to those Persons than the provisions of the Governing Documents of the Company, Acquiror or their respective Subsidiaries, as applicable, in each case, as in effect on the date of this Agreement, and (B) not amend, repeal or otherwise modify such provisions in any respect that would adversely affect the rights of those Persons thereunder, in each case, except as required by Law. Acquiror shall assume, and be liable for, each of the covenants in this Section 8.7.

(b) For a period of six years following the Closing Date, Acquiror shall maintain in effect directors’ and officers’ liability insurance covering those Persons who are currently covered by Acquiror’s, the Company’s or any of their respective Subsidiaries’ directors’ and officers’ liability insurance policies (true, correct and complete copies of which have been heretofore made available to each of Acquiror and the Company) on terms substantially the same as (and, in any event, not less favorable in the aggregate than) the terms of such current insurance coverage, except that in no event shall Acquiror be required to pay an annual premium for such insurance in excess of three hundred percent (300%) of the aggregate annual premium payable by Acquiror or the Company, as applicable, for such insurance policy for the year ended December 31, 2021; provided, however, that if the premium for such insurance would exceed such amount or such coverage is not otherwise available, then Acquiror shall purchase and maintain the maximum coverage available for three hundred percent (300%) of the aggregate annual premium payable by Acquiror or the Company, as applicable, for such insurance policy for the year ended December 31, 2021; provided, further, that (i) Acquiror may cause coverage to be extended under the current directors’ and officers’ liability insurance by obtaining a six-year “tail” policy containing terms substantially the same as (and, in any event, not less favorable in the aggregate than) the terms of such current insurance coverage with respect to claims existing or occurring at or prior to the Merger Effective Time and (ii) if any claim is asserted or made within such six-year period, any insurance required to be maintained under this Section 8.7 shall be continued in respect of such claim until the final disposition thereof.

 

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(c) Notwithstanding anything contained in this Agreement to the contrary, this Section 8.7 shall survive the consummation of the Merger indefinitely and shall be binding, jointly and severally, on Acquiror and all successors and assigns of Acquiror. In the event that Acquiror or any of its successors or assigns consolidates with or merges into any other Person and shall not be the continuing or surviving corporation or entity of such consolidation or merger or transfers or conveys all or substantially all of its properties and assets to any Person, then, and in each such case, Acquiror shall ensure that proper provision shall be made so that the successors and assigns of Acquiror shall succeed to the obligations set forth in this Section 8.7.

(d) Prior to or at the Closing, Acquiror shall enter into customary indemnification agreements reasonably satisfactory to each of the Company and Acquiror with each Person who shall be a director or an officer of Acquiror immediately after the merger Effective Time, which indemnification agreements shall continue to be effective following the Closing.

(e) The rights of each D&O Indemnified Party hereunder shall be in addition to, and not in limitation of, any other rights such person may have under the Governing Documents of the Company, any other indemnification arrangement, any Law or otherwise. The provisions of this Section 8.7 expressly are intended to benefit, and are enforceable by, each of the D&O Indemnified Parties, each of whom is an intended third-party beneficiary of this Section 8.7.

Section 8.8. Acquiror Public Filings. From the date hereof through the Merger Effective Time, Acquiror will keep current and timely file all periodic reports required to be filed or furnished with the SEC and otherwise comply in all material respects with its reporting obligations under applicable Laws.

Section 8.9. PIPE Subscriptions. Unless otherwise approved in writing by the Company, Acquiror shall not permit any amendment or modification to be made to, any waiver (in whole or in part) of, or provide consent to modify (including consent to terminate), any provision or remedy under, or any replacements of, any of the Subscription Agreements. Subject to the immediately preceding sentence, Acquiror shall use its reasonable best efforts to take, or to cause to be taken, all actions required, necessary or that it otherwise deems to be proper or advisable to consummate the transactions contemplated by the Subscription Agreements on the terms described therein, including using its reasonable best efforts to enforce its rights under the Subscription Agreements to cause the PIPE Investors to pay to (or as directed by) Acquiror the applicable purchase price under each PIPE Investor’s applicable Subscription Agreement in accordance with its terms. For purposes of satisfying the condition set forth in Section 10.3(d), Acquiror may enter into additional Subscription Agreements with the Company’s prior written consent as long as the purchase price is at least $10.00 per PIPE share so subscribed for. The proceeds raised pursuant to such additional Subscription Agreement(s) shall be included in the determination of the Acquiror Closing Cash Amount.

ARTICLE IX

JOINT COVENANTS

Section 9.1. HSR Act; Other Filings.

(a) In connection with the transactions contemplated hereby, each of the Company and Acquiror shall (and, to the extent necessary, shall cause its Affiliates to) comply promptly but in no event later than ten Business Days after the date hereof with the notification and reporting requirements of the HSR Act. Each of the Company and Acquiror shall substantially comply with any Antitrust Information or Document Requests pursuant to the HSR Act.

(b) Each of the Company and Acquiror shall (and, to the extent necessary, shall cause its Affiliates to) request early termination of any waiting period under the HSR Act and exercise its reasonable best efforts to (i) obtain termination or expiration of the waiting period under the HSR Act and (ii) prevent the entry, in any Action brought by an Antitrust Authority or any other Person, of any Governmental Order which would prohibit, make unlawful or delay the consummation of the transactions contemplated hereby.

 

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(c) Each Party shall cooperate in good faith with Governmental Authorities and use reasonable best efforts to undertake promptly any and all action required to complete lawfully the transactions contemplated hereby as soon as practicable (but in any event prior to the Outside Deadline) and any and all action necessary or advisable to avoid, prevent, eliminate or remove the actual or threatened commencement of any proceeding in any forum by or on behalf of any Governmental Authority or the issuance of any Governmental Order that would delay, enjoin, prevent, restrain or otherwise prohibit the consummation of the Merger.

(d) To the extent not prohibited by Law, the Company shall promptly furnish to Acquiror, and Acquiror shall promptly furnish to the Company, copies of any notices or written communications received by such party or any of its Affiliates from any third party or any Governmental Authority with respect to the transactions contemplated hereby, and each such Party shall permit counsel to the other such Party an opportunity to review in advance, and each such Party shall consider in good faith the views of such counsel in connection with, any proposed written communications by such Party or any of its Affiliates to any Governmental Authority concerning the transactions contemplated hereby; provided that none of the Parties shall extend any waiting period or comparable period under the HSR Act or enter into any agreement with any Governmental Authority without the written consent of the other Parties. To the extent not prohibited by Law, the Company agrees to provide Acquiror and its counsel, and Acquiror agrees to provide the Company and its counsel, the opportunity, on reasonable advance notice, to participate in any substantive meetings or discussions, either in person or by telephone, between such Party or any of its Affiliates, agents or advisors, on the one hand, and any Governmental Authority, on the other hand, concerning or in connection with the transactions contemplated hereby.

(e) Each of the Company, on the one hand, and Acquiror, on the other, shall be responsible for and pay 50% of the filing fees payable to the Antitrust Authorities in connection with the transactions contemplated hereby.

Section 9.2. Preparation of Proxy Statement/Registration Statement; Shareholders Meeting and Approvals.

(a) Registration Statement and Prospectus.

(i) As promptly as practicable after the execution of this Agreement, (A) Acquiror and the Company shall jointly prepare and Acquiror shall file with the SEC, mutually acceptable materials which shall include the proxy statement to be filed with the SEC as part of the Registration Statement and sent to the Acquiror Shareholders relating to the Acquiror Shareholders’ Meeting (such proxy statement, together with any amendments or supplements thereto, the “Proxy Statement”), and (B) Acquiror shall prepare (with the Company’s reasonable cooperation (including causing its Subsidiaries and representatives to cooperate)) and file with the SEC the Registration Statement, in which the Proxy Statement will be included as a prospectus (the “Proxy Statement/Registration Statement”), in connection with the registration under the Securities Act of (x) the Acquiror Delaware Common Shares and Acquiror Delaware Warrants to be issued in exchange for the issued and outstanding Acquiror Cayman Common Shares, Acquiror Cayman Warrants and Acquiror Cayman Units in the Domestication, (y) the Acquiror Delaware Common Shares that constitute the Aggregate Equity Value Consideration and the Aggregate Earn-out Consideration and (z) the Acquiror Delaware Warrants to be issued in exchange for the issued and outstanding Company Preferred Warrants (the Equity Securities of Acquiror described in the foregoing clauses (x), (y) and (z), collectively, the “Registration Statement Securities”). Each of Acquiror and the Company shall use its reasonable best efforts to cause the Proxy Statement/Registration Statement to comply with the rules and regulations promulgated by the SEC, to have the Registration Statement declared effective under the Securities Act as promptly as practicable after such filing and to keep the Registration Statement effective as long as is necessary to consummate the transactions contemplated hereby. Notwithstanding anything to the contrary in this Agreement, neither Acquiror nor its tax advisors are obligated to provide any opinion that the Domestication qualifies as a reorganization within the meaning of Section 368(a) of the Code or that the transactions contemplated by this Agreement otherwise qualify for the Intended Tax Treatment (other than a customary opinion regarding the material accuracy of any disclosure regarding U.S. federal income tax considerations of such transactions included in the Proxy Statement/Registration Statement as may be

 

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required to satisfy applicable rules and regulations promulgated by the SEC). Acquiror also agrees to use its reasonable best efforts to obtain all necessary state securities law or “Blue Sky” Governmental Authorizations required to carry out the transactions contemplated hereby, and the Company shall furnish all information concerning the Company, its Subsidiaries and any of their respective holders of Equity Securities as may be reasonably requested in connection with any such action. Each of Acquiror and the Company agrees to furnish to the other such Party all information concerning itself and its Subsidiaries, officers, directors, managers and holders of Equity Securities and information regarding such other matters as may be reasonably necessary or advisable or as may be reasonably requested in connection with the Proxy Statement/Registration Statement, a Current Report on Form 8-K pursuant to the Exchange Act in connection with the transactions contemplated by this Agreement, or any other statement, filing, notice or application made by or on behalf of Acquiror, the Company or any of their respective Subsidiaries to any Governmental Authority or to Nasdaq or NYSE, as applicable, in connection with the Merger and the other transactions contemplated hereby (the “Offer Documents”). Acquiror shall cause the Proxy Statement/Registration Statement to be mailed to the Acquiror Shareholders promptly after the Registration Statement is declared effective under the Securities Act.

(ii) To the extent not prohibited by Law, Acquiror will advise the Company, reasonably promptly after Acquiror receives notice thereof, of the time when the Proxy Statement/Registration Statement has become effective or any supplement or amendment has been filed, of the issuance of any stop order or the suspension of the qualification of the Acquiror Delaware Common Shares for offering or sale in any jurisdiction, of the initiation or written threat of any proceeding for any such purpose, or of any request by the SEC for the amendment or supplement of the Proxy Statement/Registration Statement or for additional information. To the extent not prohibited by Law, the Company and its counsel shall be given a reasonable opportunity to review and comment on the Proxy Statement/Registration Statement and any Offer Document each time before any such document is filed with the SEC, and Acquiror shall give reasonable and good faith consideration to any comments made by the Company and its counsel. To the extent not prohibited by Law, Acquiror shall provide the Company and its counsel with (A) any comments or other communications, whether written or oral, that Acquiror or its counsel may receive from time to time from the SEC or its staff with respect to the Proxy Statement/Registration Statement or Offer Documents promptly after receipt of those comments or other communications and (B) a reasonable opportunity to participate in the response of Acquiror to those comments and to provide comments on that response (to which reasonable and good faith consideration shall be given), including by participating with the Company or its counsel in any discussions or meetings with the SEC.

(iii) Each of Acquiror and the Company shall ensure that none of the information supplied by or on its behalf for inclusion or incorporation by reference in (A) the Registration Statement will, at the time the Registration Statement is filed with the SEC, at each time at which it is amended and at the time it becomes effective under the Securities Act, contain any untrue statement of a material fact or omit to state any material fact required to be stated therein or necessary to make the statements therein, not misleading or (B) the Proxy Statement will, at the date it is first mailed to the Acquiror Shareholders and at the time of the Acquiror Shareholders’ Meeting, contain any untrue statement of a material fact or omit to state any material fact required to be stated therein or necessary in order to make the statements therein, in light of the circumstances under which they are made, not misleading.

(iv) If at any time prior to the Merger Effective Time any information relating to the Company, Acquiror or any of their respective Subsidiaries, Affiliates, directors or officers is discovered by the Company or Acquiror, which is required to be set forth in an amendment or supplement to the Proxy Statement or the Registration Statement, so that neither of such documents would include any misstatement of a material fact or omit to state any material fact necessary to make the statements therein, with respect to the Proxy Statement, in light of the circumstances under which they were made, not misleading, the Party which discovers such information shall promptly notify the other Parties and an appropriate amendment or supplement describing such information shall be promptly filed with the SEC and, to the extent required by Law, disseminated to the Acquiror Shareholders.

 

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(b) Acquiror Warrantholder Approval. As promptly as practicable following the execution and delivery of this Agreement, Acquiror shall prepare a consent solicitation in accordance with the Acquiror Warrants, the Warrant Agreement, Acquiror’s Governing Documents, applicable Law (including the Companies Act) and Nasdaq rules, in a form approved by the Company, to be delivered to the holders of Acquiror Warrants (the “Consent Solicitation”) for the purpose of soliciting approvals or consents from such holders to effect such amendments to the Warrant Agreement in order to qualify the Acquiror Warrants for classification as equity instruments (rather than liabilities) of Acquiror from and after the effectiveness of such amendments under GAAP and other applicable accounting standards (the “Acquiror Warrant Proposal”). Acquiror shall use commercially reasonable efforts to (i) cause the Consent Solicitation to be disseminated to the holders of Acquiror Warrants in compliance with the Acquiror Warrants, the Warrant Agreement, Acquiror’s Governing Documents, applicable Law (including the Companies Act) and Nasdaq rules as promptly as practicable following the execution and delivery of this Agreement and (ii) obtain the Acquiror Warrantholder Approval as promptly as practicable following the execution and delivery of this Agreement (and, in any event, prior to the Closing); provided that in no event shall Acquiror or Merger Sub be obligated to bear any expense or pay any amount (except for any filing or registration fee with the SEC and customary fees to a consent solicitation agent) or grant any concession in connection with obtaining the Acquiror Warrantholder Approval.

(c) Acquiror Shareholder Approval. Acquiror shall (i) as promptly as practicable after the Registration Statement is declared effective under the Securities Act, (x) cause the Proxy Statement to be disseminated to Acquiror Shareholders in compliance with applicable Law, (y) duly give notice of and convene and hold a meeting of the Acquiror Shareholders (the “Acquiror Shareholders Meeting”) in accordance with Acquiror’s Governing Documents and Nasdaq Listing Rule 5620(b) for a date no later than 30 Business Days following the date on which the Registration Statement is declared effective under the Securities Act and (z) solicit proxies from the holders of Acquiror Cayman Ordinary Shares to vote in favor of each of the Transaction Proposals and solicit proxies from the holders of Acquiror Warrants to vote in favor of the Acquiror Warrant Proposal, and (ii) provide the Acquiror Shareholders with the opportunity to elect to effect an Acquiror Share Redemption. Acquiror shall, through its Board of Directors, recommend to the Acquiror Shareholders: (A) the approval of the change of Acquiror’s jurisdiction of incorporation to the State of Delaware, (B) approval of the change of Acquiror’s name to “Ginkgo Bioworks Holdings, Inc.”, (C) the amendment and restatement of Acquiror’s Governing Documents, in the form attached as Exhibit A and Exhibit B, respectively (as may be subsequently amended by mutual written agreement of the Company and Acquiror at any time before the effectiveness of the Registration Statement), in connection with the Domestication, including any separate or unbundled proposals as are required to implement the foregoing, (D) the adoption and approval of this Agreement in accordance with applicable Law and Nasdaq rules, (E) the approval of the issuance of Acquiror Delaware Common Shares in connection with the Domestication and the Merger, (F) the approval of the issuance of more than one percent (1%) of Acquiror’s outstanding common stock to a “related party” pursuant to Nasdaq rules as contemplated by the Subscription Agreements with the applicable PIPE Investors, to the extent applicable, (G) the approval of the adoption by Acquiror of the EIP and the ESPP, (H) the election of directors effective as of the Closing as contemplated by Section 8.6, (I) the adoption and approval of any other proposals as the SEC (or staff member thereof) may indicate are necessary in its comments to the Registration Statement or correspondence related thereto, (J) the adoption and approval of any other proposals as reasonably agreed by Acquiror and the Company to be necessary or appropriate in connection with the transactions contemplated hereby and (K) the adjournment of the Acquiror Shareholders’ Meeting, if necessary, to permit further solicitation of proxies because there are not sufficient votes to approve and adopt any of the foregoing (such proposals described in the foregoing clauses (A) through (K), together, the “Transaction Proposals”), and include such recommendation in the Proxy Statement. The Acquiror Board shall not withdraw, amend, qualify or modify its recommendation to the Acquiror Shareholders that they vote in favor of the Transaction Proposals (together with any withdrawal, amendment, qualification or modification of any of the Acquiror Board Actions, a “Modification in Recommendation”). To the fullest extent permitted by applicable Law, (x) Acquiror’s obligations to establish a record date for, duly call, give notice of, convene and hold the Acquiror Shareholders’ Meeting shall not be affected by any Modification in Recommendation and (y) Acquiror agrees to establish a record date for, duly call, give notice of, convene and hold the Acquiror Shareholders’ Meeting and submit for approval the

 

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Transaction Proposals. Acquiror shall adjourn the Acquiror Shareholders’ Meeting (i) to solicit additional proxies for the purpose of obtaining the Acquiror Shareholder Approval if the Acquiror Shareholder Approval shall not have been obtained at the Acquiror Shareholders’ Meeting, (ii) if a quorum is absent, or (iii) to allow reasonable additional time for the filing or mailing of any supplemental or amended disclosure that Acquiror has determined in good faith after consultation with outside legal counsel is required under applicable Law and for such supplemental or amended disclosure to be disseminated and reviewed by Acquiror Shareholders prior to the Acquiror Shareholders’ Meeting; provided that the Acquiror Shareholders’ Meeting will not be adjourned to a date that is (x) more than 30 days after the date for which the Acquiror Shareholders’ Meeting was originally scheduled (excluding any adjournments required by applicable Law) or (y) later than three Business Days prior to the date on which the Outside Deadline occurs. Acquiror agrees that it shall provide the holders of Acquiror Cayman Class A Shares the opportunity to elect redemption of such Acquiror Cayman Class A Shares in connection with the Acquiror Shareholders’ Meeting, as required by Acquiror’s Governing Documents.

(d) Company Stockholder Approval.

(i) As promptly as reasonably practicable (and in any event within two (2) Business Days) after the Registration Statement becomes effective, the Company shall: (A) recommend approval and adoption of this Agreement and the Transactions consistent with the Company Board Actions and (B) solicit approval of this Agreement and the transactions contemplated hereby in the form of an irrevocable written consent (the “Written Consent”) of each of the Requisite Company Stockholders (pursuant to the Company Stockholder Support Agreements) and any other Company Stockholders as the Company may determine in its reasonable discretion, or, in the event that the Company is not able to obtain the Written Consent, the Company shall duly and promptly convene a meeting of the Company Stockholders for the purpose of voting upon the adoption of this Agreement and the transactions contemplated hereby.

(ii) If the Company Stockholder Approval is obtained, then as promptly as reasonably practicable following the receipt of the Written Consent, the Company will prepare and deliver to its stockholders who have not consented the notice required by Sections 228(e) (if applicable) and 262 of the DGCL; provided that, Acquiror shall be given a reasonable opportunity to review and comment on the contents of such notice before delivery to the applicable stockholders.

Section 9.3. Support of Transaction. Without limiting any covenant contained in Article VII, or Article VIII, Acquiror and the Company shall each, and each shall cause its Subsidiaries to, (a) use reasonable best efforts to obtain all material consents and approvals of third parties that any of Acquiror, or the Company or their respective Affiliates are required to obtain in order to consummate the Merger, and (b) take such other action as may be reasonably necessary or as another Party may reasonably request to satisfy the conditions of Article X or otherwise to comply with this Agreement and to consummate the transactions contemplated hereby as soon as practicable. Notwithstanding anything to the contrary contained herein, (i) no action taken by the Company under and in furtherance of this Section 9.3 will constitute a breach of Section 7.1, (ii) no action taken by Acquiror or Merger Sub under and in furtherance of this Section 9.3 will constitute a breach of Section 8.5 and (iii) in no event shall Acquiror, Merger Sub or the Company be obligated to bear any expense or pay any amount (except for any filing or registration fee with a Governmental Authority) or grant any concession in connection with obtaining any such consents or approvals.

Section 9.4. Tax Matters. All transfer, documentary, sales, use, real property, stamp, registration and other similar Taxes, fees and costs (including any associated penalties and interest) (“Transfer Taxes”) incurred in connection with this Agreement shall constitute Company Transaction Expenses.

Section 9.5. Section 16 Matters. Prior to the Domestication Effective Time, Acquiror shall take all such steps as may be required (to the extent permitted under applicable Law) to cause any acquisition or disposition of any Equity Security of Acquiror that occurs or is deemed to occur by reason of the transactions contemplated hereby by each individual who is or may become subject to the reporting requirements of Section 16(a) of the Exchange Act in connection with the transactions contemplated hereby to be exempt under Rule 16b-3

 

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promulgated under the Exchange Act, including by taking steps in accordance with the No-Action Letter, dated January 12, 1999, issued by the SEC regarding such matters.

Section 9.6. Cooperation; Consultation.

(a) Prior to the Closing, each of the Company and Acquiror shall, and each of them shall cause its Subsidiaries and its and their respective Representatives to, reasonably cooperate in a timely manner in connection with any financing arrangement the Parties mutually agree to seek in connection with the transactions contemplated by this Agreement (it being understood and agreed that the consummation of any such financing by the Company or Acquiror shall be subject to the Parties’ mutual agreement), including (if mutually agreed by the Parties) (a) by providing such information and assistance as the other Party may reasonably request, (b) granting such access to the other Party and its Representatives as may be reasonably necessary for their due diligence, and (c) participating in a reasonable number of meetings, presentations, road shows, drafting sessions, due diligence sessions with respect to such financing efforts (including direct contact between senior management and other representatives of the Company and its Subsidiaries at reasonable times and locations). All such cooperation, assistance and access shall be granted during normal business hours and shall be granted under conditions that shall not unreasonably interfere with the business and operations of the Company, Acquiror, or their respective auditors.

(b) From the date of the announcement of this Agreement or the transactions contemplated hereby (pursuant to any applicable public communication made in compliance with Section 12.12), until the Closing Date, Acquiror shall use its reasonable best efforts to, and shall instruct its financial advisors to, keep the Company and its financial advisors reasonably informed with respect to the PIPE Investment and the Acquiror Common Shares during such period, including by consulting and cooperating with, and considering in good faith any feedback from, the Company or its financial advisors with respect to such matters; provided that each of Acquiror and the Company acknowledges and agrees that none of their respective financial advisors shall be entitled to any fees with respect to the PIPE Investment unless as set forth in Section 6.14 of the Acquiror Disclosure Letter or otherwise mutually agreed by the Company and Acquiror in writing.

Section 9.7. Transaction Litigation. During the Interim Period, in the event that any litigation related to this Agreement, any Ancillary Agreement or any of the transactions contemplated hereby or thereby, including demands for appraisal of any Dissenting Shares (collectively, “Transaction Litigation”), is, in the case of Acquiror, brought or, to the knowledge of Acquiror, threatened in writing, against any of Acquiror, Merger Sub or the Acquiror Board (or any member thereof) or, in the case of the Company, brought or, to the Company’s knowledge, threatened in writing, against any of the Company, any of its Subsidiaries or the Company Board (or any member thereof), Acquiror and the Company shall, as applicable, promptly notify the other of such pending or threatened litigation and shall keep the other reasonably informed with respect to the status thereof. Acquiror and the Company shall each provide the other the opportunity to participate in (subject to a customary joint defense agreement), but not control, the defense of any such litigation, shall give due consideration to the other’s advice with respect to any such litigation and shall not settle or agree to settle any such litigation or consent to the same without the written consent of the other (which consent shall not be unreasonably withheld, conditioned or delayed).

ARTICLE X

CONDITIONS TO OBLIGATIONS

Section 10.1. Conditions to Obligations of Acquiror, Merger Sub, and the Company. The respective obligations of Acquiror, Merger Sub, and the Company to consummate, or cause to be consummated, the Merger are subject to the satisfaction (or, to the extent permitted by applicable Law, waiver by Acquiror, Merger Sub and the Company), as of the Closing, of the following conditions:

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(b) the Company Stockholder Approval shall have been duly obtained in accordance with the DGCL and the Company’s Governing Documents;

(c) the Registration Statement shall have been declared effective under the Securities Act, no stop order suspending the effectiveness of the Registration Statement shall have been issued by the SEC which remains in effect and no proceeding seeking such a stop order shall have been initiated by the SEC which remains pending;

(d) the applicable waiting period(s) (and any extension(s) thereof) under the HSR Act applicable to the transactions contemplated by this Agreement and the Ancillary Agreements shall have expired or been terminated;

(e) there shall not be in effect any Governmental Order or other Law from any Governmental Authority of competent jurisdiction that enjoins, prohibits or makes illegal the consummation of the Merger or any other transaction contemplated in Article II, Article III or Article IV;

(f) Acquiror shall have, and shall not have redeemed Acquiror Cayman Class A Shares in an amount that would cause Acquiror not to have, at least $5,000,001 of net tangible assets (as determined in accordance with Rule 3a51-1(g)(1) of the Exchange Act) after giving effect to any payments required to be made in connection with Acquiror Share Redemptions and the PIPE Investment Amount; and

(g) the Acquiror Delaware Class A Shares to be issued in connection with the transactions contemplated hereby shall have been approved for listing on the Listing Exchange (subject only to official notice of issuance thereof).

Section 10.2. Conditions to Obligations of Acquiror and Merger Sub. The respective obligations of Acquiror and Merger Sub to consummate, or cause to be consummated, the Merger are subject to the satisfaction (or, to the extent permitted by applicable Law, waiver by Acquiror and Merger Sub), as of the Closing, of the following additional conditions:

(a) each of the representations and warranties of the Company contained in (i) Section 5.6(a), Section 5.6(e) and the first sentences of clauses (b), (c) and (d) of Section 5.6 (Capitalization of the Company) shall be true and correct in all but de minimis respects as of the Closing as though then made, except to the extent that any such representation or warranty expressly speaks as of an earlier time, in which case such representation or warranty shall be true and correct (disregarding any limitation or exception as to materiality, material adverse effect or Company Material Adverse Effect or similar qualification set forth therein) in all but de minimis respects as of such earlier time, (ii) each of Section 5.1 (Company Organization), Section 5.3 (Due Authorization), clause (a) of Section 5.4 (No Conflict), Section 5.6 (Capitalization of the Company) (other than the representations and warranties contained in Section 5.6 that are identified in the preceding clause (i)), Section 5.7 (Capitalization of Subsidiaries) and Section 5.17 (Brokers Fees) shall be true and correct (disregarding any limitation or exception as to materiality, material adverse effect or Company Material Adverse Effect or similar qualification set forth therein) in all material respects as of the Closing as though then made, except to the extent that any such representation or warranty expressly speaks as of an earlier time, in which case such representation or warranty shall be true and correct (disregarding any limitation or exception as to materiality, material adverse effect or Company Material Adverse Effect or similar qualification set forth therein) in all material respects as of such earlier time, (iii) Section 5.10 (Absence of Changes) shall be true and correct in all respects as of the Closing Date as though then made and (iv) Article V (other than the representations and warranties addressed by the preceding clause (i), (ii) or (iii)) shall be true and correct (disregarding any limitation or exception as to materiality, material adverse effect or Company Material Adverse Effect or similar qualification set forth therein) as of the Closing as though then made, except, (A) where the failure of any such representation or warranty to be so true and correct does not constitute a Company Material Adverse Effect or (B) to the extent that any such representation or warranty expressly speaks as of an earlier time, in which case such representation or warranty shall be true and correct (disregarding any limitation or exception as to materiality, material adverse effect or Company Material Adverse Effect or similar qualification set forth therein) as of such earlier time, except where the failure of any such representation or warranty to be so true and correct does not constitute a Company Material Adverse Effect; provided that the failure of any representation or

 

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warranty of the Company contained in Article V (other than the representations and warranties addressed by the preceding clause (i), (ii) or (iii)) to be true and correct at and as of the Closing as a result of the taking or omission of any action required or expressly permitted to be taken or omitted, as applicable, under this Agreement or any Ancillary Agreement (including in connection with the Pre-Closing Recapitalization) in compliance with the provisions hereof or thereof (as they may be amended, supplemented or otherwise modified prior to the Closing in accordance with the terms hereof or thereof) shall not be taken into account in determining whether the condition set forth in this Section 10.2(a)(iv) has been satisfied;

(b) the Company shall have performed or complied with in all material respects all agreements and covenants required under this Agreement to be performed or complied with by it at or prior to the Closing;

(c) there shall not have occurred any Company Material Adverse Effect after the date of this Agreement the material adverse effects of which are continuing; and

(d) the Company shall have delivered to Acquiror a certificate signed by an officer of the Company, dated as of the Closing Date, certifying that, to the knowledge and belief of such officer, the conditions specified in Section 10.2(a), Section 10.2(b) and Section 10.2(c) have been satisfied.

Section 10.3. Conditions to Obligation of the Company. The obligation of the Company to consummate, or cause to be consummated, the Merger is subject to the satisfaction (or, to the extent permitted by applicable Law, waiver by the Company), as of the Closing, of the following additional conditions:

(a) each of the representations and warranties of Acquiror and Merger Sub contained in (i) Section 6.12 shall be true and correct in all but de minimis respects as of the Closing, (ii) Article VI (other than Section 6.12) shall be true and correct (disregarding any limitation or exception as to materiality, material adverse effect or similar qualification set forth therein) in all material respects as of the Closing as though then made, except to the extent that any such representation or warranty expressly speaks as of an earlier time, in which case such representation or warranty shall be true and correct (disregarding any limitation or exception as to materiality, material adverse effect or similar qualification set forth therein) in all material respects as of such earlier time;

(b) Acquiror and Merger Sub shall have performed or complied with in all material respects all agreements and covenants required under this Agreement to be performed or complied with by them at or prior to the Closing;

(c) Acquiror shall have delivered to the Company a certificate signed by an officer of Acquiror and an officer of Merger Sub, dated as of the Closing Date, certifying that, to the knowledge and belief of such officers, the conditions specified in Section 10.3(a) and Section 10.3(b) have been satisfied;

(d) the Acquiror Closing Cash Amount shall not be less than the Minimum Acquiror Closing Cash Amount;

(e) the Domestication shall have been completed as provided in Section 2.1(a), and a time-stamped copy of the Certificate of Domestication issued by the Delaware Secretary of State shall have been delivered to the Company (the condition set forth in this Section 10.3(e), the “Domestication Condition”);

(f) Acquiror shall have delivered to the Company evidence reasonably acceptable to the Company that the Acquiror Board will be constituted, immediately after the Closing, as provided in Section 8.6(a); and

(g) each of Acquiror and Sponsor shall have duly executed and delivered a counterpart of the Registration Rights Agreement to the other parties thereto.

Section 10.4. Frustration of Conditions. No Party may rely on the failure of any condition set forth in this Article X to be satisfied if such failure was caused by such Party’s failure to act or to take such actions (in each case, if such act or action is required by this Agreement) as may be necessary to cause the conditions of the other Party to be satisfied.

 

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ARTICLE XI

TERMINATION/EFFECTIVENESS

Section 11.1. Termination. This Agreement may be terminated and the transactions contemplated hereby abandoned at any time prior to the Closing:

(a) by mutual written consent of the Company and Acquiror;

(b) by either the Company or Acquiror:

(i) if any Governmental Authority of competent jurisdiction has enacted, issued, promulgated, enforced or entered any Governmental Order or other Law which has become final and non-appealable and remains in effect and has the effect of making the consummation of the Merger or any other transaction contemplated in Article II, Article III or Article IV illegal or otherwise permanently preventing or prohibiting the consummation of the Merger or such other transaction; provided that the right to terminate this Agreement pursuant to this Section 11.1(b)(i) shall not be available to a Party if such Party’s breach of any of its obligations under this Agreement is the primary cause of the existence or occurrence of any fact or circumstance but for the existence or occurrence of which the consummation of the Merger or such other transaction would not be illegal or otherwise permanently prevented or prohibited;

(ii) if the Closing has not occurred before 5:00 p.m., Eastern Time, on November 11, 2021 (such time on such date, the “Outside Deadline”); provided that (A) if any Action for specific performance or other equitable relief by the Company with respect to this Agreement or any Ancillary Agreement or any of the transaction contemplated hereby or thereby is pending in a court specified in Section 12.14(a) as of the Outside Deadline, then the Outside Deadline shall be automatically extended until 5:00 p.m., Eastern Time, on the date that is the earlier of (x) 30 days after the date on which a final, non-appealable Governmental Order has been entered with respect to such Action and (y) the Business Combination Deadline Date, and such extended time shall be the “Outside Deadline” for all purposes under this Agreement, and (B) the right to terminate this Agreement pursuant to this Section 11.1(b)(ii) shall not be available to a Party if such Party’s breach of any of its obligations under this Agreement is the primary cause of the failure of the Closing to have occurred before the Outside Deadline; or

(iii) if the Acquiror Shareholder Approval has not been obtained at the Acquiror Shareholders’ Meeting duly convened therefor (subject to any adjournment or postponement thereof in accordance with Section 9.2(c)).

(c) by the Company:

(i) if any of the representations or warranties of Acquiror or Merger Sub set forth in Article VI has failed to be true and correct, or if Acquiror or Merger Sub has failed to perform or comply with any covenant or agreement set forth in this Agreement, in each case, such that the condition specified in Section 10.3(a) or Section 10.3(b), as applicable, would not be satisfied at the Closing and (A) such failure, by its nature, could not be cured prior to the Outside Deadline through Acquiror’s exercise of its reasonable best efforts or (B) such failure has not been cured by the earlier of (x) the date that is 30 days after the date on which the Company has first notified Acquiror in writing of such failure (or such earlier time after Acquiror’s receipt of such notice as Acquiror has ceased to use reasonable best efforts to cure such failure) and (y) the Outside Deadline; provided that the right to terminate this Agreement pursuant to this Section 11.1(c)(i) shall not be available to the Company at any time at which Acquiror would have the right to terminate this Agreement pursuant to Section 11.1(d)(i); or

(ii) if there has been a Modification in Recommendation.

(d) by Acquiror:

(i) if any of the representations or warranties of the Company set forth in Article V has failed to be true and correct, or if the Company has failed to perform any covenant or agreement set forth in this

 

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Agreement, in each case, such that the condition specified in Section 10.2(a) or Section 10.2(b), as applicable, would not be satisfied at the Closing and such failure (A) has not been cured by the earlier of (x) the date that is 30 days after the date on which Acquiror has first notified the Company in writing of such failure and (y) the Outside Deadline or (B) by its nature cannot be cured prior to the Outside Deadline through the Company’s exercise of its reasonable best efforts; provided that the right to terminate this Agreement pursuant to this Section 11.1(d)(i) shall not be available to Acquiror at any time at which the Company would have the right to terminate this Agreement pursuant to Section 11.1(c)(i); or

(ii) if the Company Stockholder Approval has not been obtained within ten Business Days after the Registration Statement has been declared effective by the SEC.

The Party desiring to terminate this Agreement pursuant to this Section 11.1 (other than pursuant to Section 11.1(a)) shall deliver a written notice of such termination to the other Parties specifying the provision hereof pursuant to which such termination is made and the factual basis therefor.

Section 11.2. Effect of Termination. In the event of the termination of this Agreement pursuant to Section 11.1, this Agreement shall forthwith become void and have no further force or effect, without any liability on the part of any Person, other than liability of the Company, Acquiror or Merger Sub, as the case may be, for any Willful Breach of this Agreement occurring prior to such termination, except that the provisions of Section 1.2, this Section 11.2, Article XII and (to the extent related to the foregoing) Section 1.1 shall survive any termination of this Agreement and shall remain legal, valid, binding and enforceable obligations of the Parties in accordance with their respective terms.

ARTICLE XII

MISCELLANEOUS

Section 12.1. Trust Account Waiver. The Company acknowledges that Acquiror is a blank check company with the powers and privileges to effect a Business Combination. The Company further acknowledges that, as described in the prospectus dated February 25, 2021 (the “Prospectus”) available at www.sec.gov, substantially all of Acquiror’s assets consist of the cash proceeds of Acquiror’s initial public offering and private placements of its securities occurring substantially simultaneously with such initial public offering, and substantially all of those proceeds have been deposited in a trust account for the benefit of Acquiror, certain of its public stockholders and the underwriters of Acquiror’s initial public offering (the “Trust Account”). The Company acknowledges that it has been advised by Acquiror that cash in the Trust Account may be disbursed only in the circumstances and to the Persons described in the Prospectus and in accordance with the Trust Agreement. For and in consideration of Acquiror entering into this Agreement, and for other good and valuable consideration, the receipt and sufficiency of which are hereby acknowledged, the Company hereby irrevocably waives any right, title, interest or claim of any kind (whether based on contract, tort, equity or otherwise) that it has or may have in the future in or to any monies or other assets in the Trust Account and agrees not to seek recourse against the Trust Account or any funds distributed therefrom as a result of, or in connection with, this Agreement or any negotiations, Contracts or agreements or transactions with Acquiror. Notwithstanding the foregoing sentence, (a) nothing herein shall limit or prohibit the Company’s right to pursue any claim against Acquiror for (i) legal relief against monies or other assets held outside the Trust Account or (ii) specific performance to consummate the Closing (including any claim for Acquiror to specifically perform its obligations under this Agreement to cause the disbursement of the balance of the cash remaining in the Trust Account (after giving effect to the Acquiror Share Redemptions) at the Closing to the Company in accordance with the terms of this Agreement and the Trust Agreement), so long as such claim would not affect Acquiror’s ability to fulfill its obligation to effectuate the Acquiror Share Redemptions or otherwise violate the Trust Agreement and (b) nothing herein shall limit or prohibit any claim that the Company may have in the future against Acquiror’s assets or funds that are not held in the Trust Account (including any such funds that have been released from the Trust Account and any assets that have been purchased or acquired with any such funds).

 

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Section 12.2. Notices. All notices and other communications under this Agreement between the Parties shall be in writing and shall be deemed to have been duly given, delivered and received (i) when delivered in person, (ii) when delivered after posting in the U.S. mail, having been sent registered or certified mail, return receipt requested, postage prepaid, (iii) when delivered by FedEx or other nationally recognized overnight delivery service or (iv) when delivered by email (provided that, if receipt has not been confirmed (excluding any automated reply, such as an out-of-office notification) then a copy shall be dispatched in the manner described in the preceding clause (iii) no later than 24 hours after such delivery by email) (provided that any such notice or other communication delivered in the manner described in any of the preceding clauses (i), (ii) and (iii) shall also be delivered by email no later than 24 hours after being dispatched in the manner described in the preceding clause (i), (ii) or (iii), as applicable), addressed as follows:

(a) If to Acquiror or Merger Sub prior to the Closing, or to Acquiror after the Merger Effective Time, to:

Soaring Eagle Acquisition Corp.

2121 Avenue of the Stars, Suite 2300

Los Angeles, CA 90067

Attention:   Eli Baker

Email:         ebaker@eagleequityptnrs.com

with copies (which shall not constitute notice) to:

White & Case LLP

1221 Avenue of the Americas

New York, NY 10020

Attention:   Joel Rubenstein

                   James Hu

Email:         joel.rubinstein@whitecase.com

                    james.hu@whitecase.com

(b) If to the Company prior to the Closing, or to the Surviving Corporation after the Merger Effective Time, to:

Ginkgo Bioworks, Inc.

27 Drydock Avenue, 8th Floor

Boston, MA 02210

Attention:   Chief Executive Officer

                   General Counsel

Email:         legal@ginkgobioworks.com

with copies (which shall not constitute notice) to:

Latham & Watkins LLP

555 Eleventh Street, N.W.

Washington, DC 20004

Attention:   Paul F. Sheridan, Jr.

                   Kristen S. Grannis

Email:         paul.sheridan@lw.com

                    kristen.grannis@lw.com

or to such other address(es) or email address(es) as the Parties may from time to time designate in writing. Copies delivered solely to outside counsel shall not constitute notice.

Section 12.3. Assignment. No Party shall assign, delegate or otherwise transfer any of its rights or obligations under this Agreement (whether by operation of law or otherwise) without the prior written consent of the Company and Acquiror, and any such assignment, delegation or transfer attempted in violation of this

 

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Section 12.3 shall be void. Subject to the preceding sentence, this Agreement shall be binding upon and inure to the benefit of the Parties and their respective permitted successors and assigns.

Section 12.4. Rights of Third Parties. Nothing expressed or implied in this Agreement is intended or shall be construed to confer upon or give any Person, other than the Parties, any right or remedy under or by reason of this Agreement; provided, however, that the D&O Indemnified Parties are intended third-party beneficiaries of, and may enforce, Section 8.7, and the Related Persons of each Party are intended third-party beneficiaries of, and may enforce, Section 12.6.

Section 12.5. Expenses. Except as otherwise set forth in this Agreement, each Party shall be responsible for and shall pay all fees and expenses incurred by such Party in connection with this Agreement, any Ancillary Agreement or any of the transactions contemplated hereby or thereby, including all fees and disbursements of its legal counsel, financial advisers and accountants.

Section 12.6. Governing Law. This Agreement, and all claims or causes of action based upon, arising out of, or related to this Agreement or the transactions contemplated hereby (whether based on contract, tort, equity or otherwise), shall be governed by, and construed in accordance with, the Laws of the State of Delaware, without giving effect to principles or rules of conflict of Laws (whether of the State of Delaware or of any other jurisdiction) to the extent such principles or rules would require or permit the application of Laws of a jurisdiction other than the State of Delaware (except that the Companies Act shall also apply to the Domestication).

Section 12.7. Counterparts. This Agreement may be executed in any number of counterparts, each of which shall be deemed an original, but all of which together shall constitute one and the same instrument.

Section 12.8. Company and Acquiror Disclosure Letters. Each of the Company Disclosure Letter and the Acquiror Disclosure Letter is a part of this Agreement as if fully set forth herein. Any disclosure set forth in a section or subsection of a Disclosure Letter shall be deemed to be (as applicable) an exception to, or a disclosure for purposes of, the representations, warranties, covenants or agreements, as the case may be, contained in, or other provisions of, the correspondingly numbered (and, if applicable, lettered) Section or subsection of this Agreement and each other representation, warranty, covenant, agreement or other provision of this Agreement to which the relevance of such disclosure is reasonable apparent on the face of such disclosure. Certain information set forth in the Disclosure Letters is included solely for informational purposes and may not be required to be disclosed pursuant to this Agreement. The disclosure of any information shall not be deemed to constitute an acknowledgment that such information is required to be disclosed in connection with any representation, warranty, covenant, agreement contained in, or other provision of, this Agreement, nor shall such information be deemed to establish a standard of materiality.

Section 12.9. Entire Agreement. This Agreement (together with the Disclosure Letters), the Ancillary Agreements (as and when executed by the applicable parties thereto) and the Confidentiality Agreement constitute the entire agreement among the Parties relating to the subject matter hereof and supersede any other agreements, whether written or oral, that may have been made or entered into by or among any of the Parties or any of their respective Affiliates relating to the subject matter hereof. No representations, warranties, covenants, understandings, agreements, oral or otherwise, relating to the transactions contemplated hereby exist between the Parties except as expressly set forth in this Agreement and the Ancillary Agreements.

Section 12.10. Amendments. This Agreement may be amended or modified, in whole or in part, only by an agreement in writing which makes reference to this Agreement and has been duly authorized, executed and delivered by each of the Parties hereto; provided that, after the Closing, any such amendment or modification shall also require the written consent of the holders of a majority of the Acquiror Delaware Class B Shares. Any purported amendment or modification of this Agreement effected in a manner that does not comply with the preceding sentence shall be void and of no effect.

 

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Section 12.11. Waivers. Any Party may, at any time prior to the Closing, (a) extend the time for the performance of the obligations or acts of any other Party to be performed hereunder, (b) waive any inaccuracies in the representations and warranties of any other Party that are contained in this Agreement or (c) waive compliance by any other Party with any of the agreements or conditions contained in this Agreement, but, in the case of each of the foregoing clauses (a) through (c), such extension or waiver shall be valid only if set forth in an instrument in writing duly authorized, executed and delivered by the Party granting such extension or waiver.

Section 12.12. Confidentiality; Publicity.

(a) Acquiror acknowledges and agrees that the information being provided to it in connection with this Agreement and the consummation of the transactions contemplated hereby is subject to the Confidentiality Agreement, the provisions of which are incorporated herein by reference. The Confidentiality Agreement shall survive the execution and delivery of this Agreement and shall apply to all information furnished thereunder or hereunder and any other activities contemplated thereby. The Company acknowledges that, in connection with the PIPE Investment, Acquiror shall be entitled to disclose, pursuant to the Exchange Act, any information contained in any presentation to the PIPE Investors, which information may include Proprietary Information (as defined in the Confidentiality Agreement).

(b) Prior to the earlier of the Closing Date and the termination of this Agreement, none of Acquiror, any Acquiror Insider, the Company and any of their respective Affiliates or any Representative of any of the foregoing shall make any public announcement or issue any public communication regarding this Agreement or the transactions contemplated hereby, or any matter related to the foregoing, unless the Company (in the case of such a public announcement or public communication desired to be made by Acquiror, any Acquiror Insider or any of their respective Affiliates or any Representative of any of the foregoing) or Acquiror (in the case of such a public announcement or public communication desired to be made by the Company or any of its Affiliates or any Representative of any of the foregoing), as applicable (which consent shall not be unreasonably withheld, conditioned or delayed) has first been provided with an opportunity to review and comment on the contents of such proposed public announcement or public communication, except if such public announcement or public communication is required by any Governmental Order or other applicable Law or the rules of any national securities exchange, in which case Acquiror or the Company, as applicable, shall use commercially reasonable efforts to provide the other such Party with such an opportunity to review and comment; provided, however, that nothing in this Section 12.2 shall (i) modify the obligations of Acquiror set forth in Section 9.2, (ii) restrict the ability of any Party (or any of its Affiliates) from making announcements regarding the status and terms (including price terms) of this Agreement and the transactions contemplated hereby to their respective directors, officers, employees and investors or otherwise in the ordinary course of their respective businesses, in each case, so long as such recipients are obligated to keep such information confidential or (iii) restrict any Party (or any of its Affiliates) from communicating with third parties to the extent necessary for the purpose of seeking any third-party consent.

Section 12.13. Severability. Whenever possible, each provision of this Agreement shall be interpreted in such a manner as to be valid and enforceable under applicable Law, but, if any provision of this Agreement is held invalid or unenforceable by any court of competent jurisdiction, the other provisions of this Agreement shall remain in full force and effect. The Parties further agree that if any provision contained herein is, to any extent, held invalid or unenforceable in any respect under the Laws governing this Agreement, they shall take any actions necessary to render the remaining provisions of this Agreement valid and enforceable to the fullest extent permitted by Law and, to the extent necessary, shall amend or otherwise modify this Agreement to replace any provision contained herein that is held invalid or unenforceable with a valid and enforceable provision giving effect to the intent of the Parties.

Section 12.14. Jurisdiction; Waiver of Jury Trial.

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court does not have subject matter jurisdiction, the Superior Court of the State of Delaware), or, if it has or can acquire jurisdiction, in the United States District Court for the District of Delaware, and each of the Parties irrevocably (i) submits to the exclusive jurisdiction of each such court in any such proceeding or Action, (ii) waives any objection it may now or hereafter have to personal jurisdiction, venue or to convenience of forum, (iii) agrees that all claims in respect of the proceeding or Action shall be heard and determined only in any such court and (iv) agrees not to bring any proceeding or Action arising out of or relating to this Agreement or the transactions contemplated hereby in any other court. Nothing herein contained shall be deemed to affect the right of any Party to serve process in any manner permitted by Law or to commence Actions or otherwise proceed against any other party in any other jurisdiction, in each case, to enforce judgments obtained in any Action, suit or proceeding brought pursuant to this Section 12.14.

(b) EACH PARTY ACKNOWLEDGES AND AGREES THAT ANY CONTROVERSY WHICH MAY ARISE UNDER THIS AGREEMENT AND THE TRANSACTIONS CONTEMPLATED HEREBY IS LIKELY TO INVOLVE COMPLICATED AND DIFFICULT ISSUES, AND THEREFORE EACH PARTY HEREBY IRREVOCABLY, UNCONDITIONALLY AND VOLUNTARILY WAIVES ANY RIGHT SUCH PARTY MAY HAVE TO A TRIAL BY JURY IN RESPECT OF ANY ACTION, SUIT OR PROCEEDING DIRECTLY OR INDIRECTLY ARISING OUT OF OR RELATING TO THIS AGREEMENT OR ANY OF THE TRANSACTIONS CONTEMPLATED HEREBY.

Section 12.15. Enforcement. The Parties agree that irreparable damage could occur in the event that any of the provisions of this Agreement were not performed in accordance with their specific terms or were otherwise breached. It is accordingly agreed that the Parties shall be entitled to an injunction or injunctions to prevent breaches of this Agreement and to specific enforcement of the terms and provisions of this Agreement, in addition to any other remedy to which any party is entitled at law or in equity. In the event that any Action shall be brought in equity to enforce the provisions of this Agreement, no party shall allege, and each party hereby waives the defense, that there is an adequate remedy at law, and each party agrees to waive any requirement for the securing or posting of any bond in connection therewith.

Section 12.16. Non-Recourse. Subject in all respects to the following sentence, this Agreement may only be enforced against, and any claim or cause of action based upon, arising out of, or related to this Agreement or the transactions contemplated hereby may only be brought against, the entities that are expressly named as Parties and then only to the extent of the specific obligations set forth herein with respect to any Party. Except to the extent a Party (and then only to the extent of the specific obligations undertaken by such Party in this Agreement), no Related Person or former, current or future Representative of any Party shall have any Liability for any of the representations, warranties, covenants, agreements or other obligations or Liabilities of any of the Company, Acquiror or Merger Sub under this Agreement of or for any claim based on, arising out of, or related to this Agreement or the transactions contemplated hereby (whether based on contract, tort, equity or otherwise). Notwithstanding the foregoing, nothing in this Section 12.6 shall limit, amend or waive any rights or obligations of any party to any Ancillary Agreement.

Section 12.17. Non-Survival of Representations, Warranties and Covenants. None of the representations, warranties, covenants, obligations or other agreements in this Agreement or in any certificate, statement or instrument delivered pursuant to this Agreement, including any rights arising out of any breach of any such representation, warranty, covenant, obligation, agreement or other provision, shall survive the Closing, and each of them shall terminate and expire upon the occurrence of the Merger Effective Time (and there shall be no liability after the Closing in respect thereof), except for (a) those covenants and agreements contained herein that by their terms expressly apply in whole or in part after the Closing and then only with respect to any breaches occurring after the Closing and (b) this Article XII.

Section 12.18. Conflicts and Privilege.

(a) Each of the Parties, on its own behalf and on behalf of its Related Persons (including, after the Closing, the Surviving Corporation), hereby agree that, in the event that a dispute with respect to this Agreement

 

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or the transactions contemplated hereby arises after the Closing between or among (x) the Sponsor, the stockholders or holders of other Equity Securities of Acquiror or the Sponsor and/or or any of their respective directors, members, partners, officers, employees or Affiliates (other than the Surviving Corporation) (collectively, the “Eagle Group”), on the one hand, and (y) the Surviving Corporation and/or any member of the Ginkgo Group, on the other hand, any legal counsel, including White & Case LLP (“White & Case”), that represented Acquiror and/or the Sponsor prior to the Closing may represent the Sponsor and/or any other member of the Eagle Group in such dispute even though the interests of such Persons may be directly adverse to the Surviving Corporation, and even though such counsel may have represented Acquiror in a matter substantially related to such dispute, or may be handling ongoing matters for the Surviving Corporation and/or the Sponsor. Acquiror and the Company, on behalf of their respective successors and assigns (including, after the Closing, the Surviving Corporation), further agree that, as to all legally privileged communications prior to the Closing (made in connection with the negotiation, preparation, execution, delivery and performance under, or any dispute or Action arising out of or relating to, this Agreement, any Ancillary Agreements or the transactions contemplated hereby or thereby) between or among Acquiror, the Sponsor and/or any other member of the Eagle Group, on the one hand, and White & Case, on the other hand, the attorney-client privilege and the expectation of client confidence shall survive the Merger and belong to the Eagle Group after the Closing, and shall not pass to or be claimed or controlled by the Surviving Corporation. Notwithstanding the foregoing, any privileged communications or information shared by the Company prior to the Closing with Acquiror or the Sponsor under a common interest agreement shall remain the privileged communications or information of the Surviving Corporation.

(b) Acquiror and the Company, on behalf of their respective successors and assigns (including, after the Closing, the Surviving Corporation), hereby agree that, in the event a dispute with respect to this Agreement or the transactions contemplated hereby arises after the Closing between or among (x) the stockholders or holders of other Equity Securities of the Company and/or any of their respective directors, members, partners, officers, employees or Affiliates (other than the Surviving Corporation) (collectively, the “Ginkgo Group”), on the one hand, and (y) the Surviving Corporation and/or any member of the Eagle Group, on the other hand, any legal counsel, including Latham & Watkins LLP (“Latham”) that represented the Company prior to the Closing may represent any member of the Ginkgo Group in such dispute even though the interests of such Persons may be directly adverse to the Surviving Corporation, and even though such counsel may have represented Acquiror and/or the Company in a matter substantially related to such dispute, or may be handling ongoing matters for the Surviving Corporation, further agree that, as to all legally privileged communications prior to the Closing (made in connection with the negotiation, preparation, execution, delivery and performance under, or any dispute or Action arising out of or relating to, this Agreement, any Ancillary Agreements or the transactions contemplated hereby or thereby) between or among the Company and/or any member of the Ginkgo Group, on the one hand, and Latham, on the other hand, the attorney-client privilege and the expectation of client confidence shall survive the Merger and belong to the Ginkgo Group after the Closing, and shall not pass to or be claimed or controlled by the Surviving Corporation. Notwithstanding the foregoing, any privileged communications or information shared by Acquiror prior to the Closing with the Company under a common interest agreement shall remain the privileged communications or information of the Surviving Corporation.

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IN WITNESS WHEREOF, the Parties have caused this Agreement to be duly executed as of the date first written above.

 

SOARING EAGLE ACQUISITION CORP.
By:   /S/ HARRY E. SLOAN
  Name: Harry E. Sloan
  Title: Chief Executive Officer
SEAC MERGER SUB INC.
By:   /S/ ELI BAKER
  Name: Eli Baker
  Title: President
GINKGO BIOWORKS, INC.
By:   /S/ JASON KELLY
  Name: Jason Kelly
  Title:   Chief Executive Officer

[Signature Page of Agreement and Plan of Merger]


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EXHIBIT A

FORM OF CERTIFICATE OF INCORPORATION OF ACQUIROR UPON DOMESTICATION

[Attached.]

EXHIBIT A


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EXHIBIT B

FORM OF BYLAWS OF ACQUIROR UPON DOMESTICATION

[Attached.]

EXHIBIT B


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EXHIBIT C

FORM OF COMPANY STOCKHOLDER SUPPORT AGREEMENT

[Attached.]

EXHIBIT C


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EXHIBIT D

SPONSOR SUPPORT AGREEMENT

[Attached.]

EXHIBIT D


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EXHIBIT E

FORM OF REGISTRATION RIGHTS AGREEMENT

[Attached.]

EXHIBIT E


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EXHIBIT F

FORM OF CERTIFICATE OF MERGER

[Attached.]

EXHIBIT F


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EXHIBIT G

FORM OF CERTIFICATE OF INCORPORATION OF SURVIVING COMPANY

[Attached.]

EXHIBIT G


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EXHIBIT H

FORM OF BYLAWS OF SURVIVING COMPANY

[Attached.]

EXHIBIT H


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Annex B

Final Form

FORM OF

CERTIFICATE OF INCORPORATION

OF

SOARING EAGLE ACQUISITION CORP.

ARTICLE I

NAME

The name of the Corporation is Soaring Eagle Acquisition Corp. (hereinafter called the “Corporation”).

ARTICLE II

REGISTERED OFFICE AND AGENT

The address of the Corporation’s registered office in the State of Delaware is 1209 Orange Street, Wilmington, County of New Castle, DE 19801. The name of its registered agent at such address is The Corporation Trust Company.

ARTICLE III

PURPOSE

The purpose of the Corporation is to engage in any lawful act or activity for which corporations may now or hereafter be organized under the General Corporation Law of the State of Delaware (the “DGCL”) as it now exists or may hereafter be amended, restated, supplemented or otherwise modified.

The Corporation is being incorporated in connection with the domestication of Soaring Eagle Acquisition Corp., a Cayman Islands exempted company limited by shares (the “Cayman Company”), to a Delaware corporation, which domestication is being effected in connection with the transactions contemplated by that certain Agreement and Plan of Merger entered into by the Cayman Company, SEAC Merger Sub Inc. and Ginkgo Bioworks, Inc., a Delaware corporation (the “Company”), on May 11, 2021 (as it may be amended, restated, supplemented or otherwise modified from time to time, the “Merger Agreement”), and this Certificate of Incorporation is being filed simultaneously with a certificate of corporate domestication effecting such domestication (the “Certificate of Domestication”).

ARTICLE IV

DEFINITIONS

The following terms, where capitalized in this Certificate of Incorporation (as amended from time to time, and including the terms of any certificate of designation of any series of Preferred Stock, this “Certificate of Incorporation”), shall have the meanings ascribed to them in this Article IV:

Cause” means, with respect to any Founder, “cause” or any similar concept as it may be defined or used in any agreement relating to the employment of such Founder by the Corporation or any of its subsidiaries or any policy of the Corporation or any of its subsidiaries applicable to the employment of such Founder thereby.

 

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Distribution” means (a) any dividend or distribution of cash, property or shares of the Corporation’s capital stock or (b) any distribution following or in connection with any liquidation, dissolution or winding up of the Corporation (whether voluntary or involuntary).

Eligible Holder” means (a) any director or employee of the Corporation or any Subsidiary (or, in the case of any such director or employee who is subject to the community property laws of any jurisdiction, the spouse of such director or employee, solely to the extent of the interest of such spouse (if any) during the course of a marriage or civil union in any Class B Common Stock owned by such director or employee arising solely by reason of the application of such community property laws and not otherwise constituting a Transfer of all or any portion of such Class B Common Stock) or (b) any Person (other than an individual) through which (directly or indirectly, and by ownership, voting power, contract or otherwise) any director or employee (or group composed solely of directors or employees) of the Corporation or any Subsidiary has the exclusive right to exercise any voting right (directly or indirectly through one or more intermediaries) with respect to the shares of Class B Common Stock owned by such Person (it being understood that no Excluded Action shall itself be deemed to cause the loss of the exclusive right to exercise any voting right with respect to the shares of Class B Common Stock owned by such Person).

Exchange Act” means the Securities Exchange Act of 1934, as amended.

Extraordinary Transaction” means any transaction or series of related transactions that results in or is in connection with (a) the acquisition, directly or indirectly, by any Third Party of beneficial ownership of (i) a majority of the outstanding shares of Common Stock of the Corporation (or any successor thereto) or (ii) shares representing a majority of the voting power of all of the outstanding shares of capital stock of the Corporation (or any successor thereto), (b) a merger or consolidation of the Corporation with or into any other entity or any other transaction having an effect on stockholders substantially similar to that resulting from a merger or consolidation or (c) the sale, lease, exclusive license, assignment, exchange, conveyance or other transfer or disposition (other than the creation of any lien or other encumbrance in the ordinary course of business, including to secure indebtedness for borrowed money, so long as no foreclosure occurs in respect of such lien or encumbrance) of all or substantially all of the property and assets, or property or assets generating more than 50% of the revenues, of the Corporation and its subsidiaries, on a consolidated basis, to any Third Party (including any liquidation, dissolution or winding up of the affairs of the Company, or any other distribution made, in connection therewith).

Founder” means any of Jason Kelly (who, as of the date of this Certificate of Incorporation, is the chief executive officer of the Company), Reshma Shetty (who, as of the date of this Certificate of Incorporation, is the chief operating officer of the Company), Austin Che (who, as of the date of this Certificate of Incorporation, is the chief strategy officer of the Company), Bartholomew Canton (who, as of the date of this Certificate of Incorporation, is the chief technology officer of the Company) and Thomas Knight (who, as of the date of this Certificate of Incorporation, is a Ginkgo fellow of the Company).

Founder Holder” means (a) any Founder or (b) any Person (other than an individual) through which (directly or indirectly, and by ownership, voting power, contract or otherwise) any Founder exercises exclusive voting control with respect to the shares of capital stock of the Corporation owned by such Person.

Founder Cause Termination Action” means, with respect to any Founder, (a) any termination of the employment of such Founder by the Corporation or any of its subsidiaries for Cause, (b) any material and adverse reduction of the responsibilities, title or position of such Founder as an employee of the Corporation or any of its subsidiaries for Cause without the prior written consent of such Founder or (c) any determination that an event has occurred with respect to such Founder that constitutes Cause.

Founder Non-Cause Termination Action” means, with respect to any Founder, (a) any termination of the employment of such Founder by the Corporation or any of its subsidiaries other than for Cause or (b) any material and adverse reduction of the responsibilities, title or position of such Founder as an employee of the Corporation or any of its subsidiaries other than for Cause without the prior written consent of such Founder.

 

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Included Merger Consideration Share” means any share (a) described in clause (a) of the definition of Merger Consideration Share, (b) described in clause (b)(i) of the definition of Merger Consideration Share or (c) solely to the extent that such share is an Included Company Equity Award (as such term is defined in the Merger Agreement), described in clause (b)(ii) of the definition of Merger Consideration Share.

Merger Consideration Share” means any share of Class A Common Stock or Class B Common Stock (other than any Earn-out Share) originally issued (a) to any of the holders of common stock of the Company as consideration in the Merger (as such term is defined in the Merger Agreement) upon the exchange of Company Common Shares converted pursuant to Section 4.2(a)(ii) or Section 4.2(a)(iii), as applicable, of the Merger Agreement or (b) upon the settlement of (i) any Assumed Warrant (as such term is defined in the Merger Agreement) or (ii) any Acquiror Option, Acquiror Restricted Stock Award or Acquiror Restricted Stock Unit Award (in each case, as such term is defined in the Merger Agreement) into which a Company Option, Company Restricted Stock Award or Company Restricted Stock Unit Award (in each case, as such term is defined in the Merger Agreement), as applicable, has converted pursuant to Section 4.5 of the Merger Agreement.

Person” means any individual, corporation, limited liability company, unlimited liability company, partnership, joint venture, association, trust or other entity.

Right” means any option, warrant, restricted stock unit, conversion right or contractual right of any kind to acquire shares of the Corporation’s authorized but unissued capital stock.

Subsidiary” means any wholly owned subsidiary of the Corporation or, to the extent determined by the Board, any non-wholly owned subsidiary of the Corporation.

Third Party” means any Person (other than the Corporation or any wholly owned subsidiary of the Corporation or Person of which the Corporation is a wholly owned subsidiary) or “group” (within the meaning of Section 13(d)(3) of the Exchange Act) of such Persons.

Transfer” means, with respect to any share of capital stock of the Corporation, (a) any sale, assignment, exchange, conveyance, pledge, hypothecation or other transfer or disposition of such share or any legal or beneficial interest in such share, whether direct or indirect, whether or not for value, and whether voluntary or involuntary or by operation of law (including by merger, consolidation or otherwise), including, without limitation, any transfer of such share to a broker or other nominee (with or without a corresponding change in beneficial ownership) and any transfer of voting control of such share, or (b) entering into any agreement or binding arrangement (including any warrant, option, other derivative transaction or proxy) providing for any transaction contemplated by the preceding clause (a); provided, however, that none of the following shall be considered a “Transfer” (each an “Excluded Action”): (i) any grant of a proxy with respect to the voting of such share to officers or directors of the Corporation at the request of the Board in connection with actions to be taken at an annual or special meeting of stockholders; (ii) entering into a support, voting, tender or similar agreement, arrangement or understanding with respect to such share (with or without granting a proxy and/or other customary terms) in support of an Extraordinary Transaction that is approved by a majority of the directors of the Corporation then in office who qualify as “independent” in accordance with the requirements of the securities exchange on which equity securities of the Corporation are then listed for trading, or consummating the actions or transactions contemplated by such Extraordinary Transaction (including, without limitation, voting, tendering, selling, exchanging, or otherwise transferring or disposing of such share or any legal or beneficial interest therein in connection with such Extraordinary Transaction); (iii) any pledge of such share that creates a mere security interest in such share pursuant to a bona fide loan or indebtedness transaction for so long as the holder of such share immediately prior to such pledge continues to exercise exclusive voting control with respect to such share (provided, however, that the pledgee’s foreclosure on such share or other similar action shall not be excluded from the definition of “Transfer”); (iv) entering into a trading plan with respect to such share pursuant to Rule 10b5-1 under the Exchange Act that has been approved by a majority of the directors of the Corporation then in office who qualify as “independent” in accordance with the requirements of the securities exchange on

 

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which equity securities of the Corporation are then listed for trading (provided, however, that the sale or other disposition of such share pursuant to such plan shall not be excluded from the definition of “Transfer”); (v) any redemption, purchase or other acquisition by, or surrender, transfer or forfeiture to, the Corporation of such share; (vi) the fact that the spouse of any holder of such share possesses or obtains an interest in such share arising solely by reason of the application of the community property laws of any jurisdiction, so long as no other event or circumstance shall exist or have occurred that constitutes a Transfer of such share (provided that any transfer of such share by any holder of such share to such holder’s spouse, including a transfer in connection with a divorce proceeding, domestic relations order or similar legal requirement, shall constitute a Transfer of such share unless otherwise exempt from the definition of “Transfer”); or (vii) entering into any voting trust or other agreement or arrangement with respect to the voting of such share (with or without granting a proxy) solely with holders of Class B Common Stock in their capacities as such that (A) is disclosed either in a Schedule 13D filed with the Securities and Exchange Commission or in writing to the secretary of the Corporation, (B) either has a term not exceeding one year or is terminable by the holder of such share at any time and (C) does not involve any payment of cash, securities or other property or other consideration to the holders of the shares subject thereto, other than the mutual promise to vote shares in a designated manner.

ARTICLE V

CAPITAL STOCK

1. Authorized Shares.

(a) The total number of shares of all classes of capital stock which the Corporation shall have authority to issue is 16,000,000,000 shares, consisting of (i) 10,500,000,000 shares of Class A Common Stock, par value $0.0001 per share (“Class A Common Stock”), (ii) 4,500,000,000 shares of Class B Common Stock, par value $0.0001 per share (the “Class B Common Stock”), (iii) 800,000,000 shares of Class C Common Stock, par value $0.0001 per share (“Class C Common Stock”, and, together with the Class A Common Stock and the Class B Common Stock, the “Common Stock”), and (iv) 200,000,000 shares of Preferred Stock, par value $0.0001 per share (“Preferred Stock”). At the Domestication Effective Time (as such term is defined in the Merger Agreement), each Class A ordinary share, par value $0.0001 per share, of the Cayman Company and each Class B ordinary share, par value $0.0001 per share, of the Cayman Company issued and outstanding immediately prior to the Domestication Effective Time will, for all purposes thereafter and without any action on the part of the Cayman Company, the Corporation or any of their respective stockholders, be deemed to be one issued and outstanding, fully paid and nonassessable share of Class A Common Stock. Any stock certificate that immediately prior to the Domestication Effective Time represented any Class A ordinary share of the Cayman Company or Class B ordinary share of the Cayman Company will, from and after the Domestication Effective Time, automatically and without the necessity of presenting the same for exchange, represent the same number of shares of Class A Common Stock.

(b) Subject to the rights of the holders of Preferred Stock, (i) the number of authorized shares of Class A Common Stock, Class B Common Stock, Class C Common Stock or Preferred Stock may be increased by the affirmative vote of the holders of shares representing a majority of the voting power of all of the outstanding shares of capital stock of the Corporation entitled to vote thereon, irrespective of the provisions of Section 242(b)(2) of the DGCL (or any successor provision thereto), (ii) the number of authorized shares of Class A Common Stock, Class C Common Stock or Preferred Stock may be decreased (but not below the number of shares thereof then outstanding or, in the case of the Class A Common Stock, the number of shares of Class A Common Stock reserved pursuant to Section 2(g) of this Article V) by the affirmative vote of the holders of shares representing a majority of the voting power of all of the outstanding shares of capital stock of the Corporation entitled to vote thereon, irrespective of the provisions of Section 242(b)(2) of the DGCL (or any successor provision thereto), and (iii) the number of authorized shares of Class B Common Stock may be decreased (but not below the number of shares thereof then outstanding) by the affirmative vote of a majority of the voting power of all of the outstanding shares of Class B Common Stock.

 

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2. Common Stock. The powers, designations, preferences and relative, participating, optional or other special rights of the Class A Common Stock, the Class B Common Stock and the Class C Common Stock, and the qualifications, limitations and restrictions thereof, are as follows:

(a) Equal Status. Except as otherwise expressly provided in this Certificate of Incorporation or required by applicable law, shares of Class A Common Stock, shares of Class B Common Stock and shares of Class C Common Stock shall have the same rights, powers and preferences and rank equally, share ratably and be identical in all respects as to all matters. The rights, powers and preferences of the holders of Common Stock are subject to and qualified by the rights, powers and preferences of the holders of the Preferred Stock of any series as may be designated by the board of directors of the Corporation (the “Board”) upon any issuance of the Preferred Stock of any series.

(b) Voting.

(i) Except as otherwise expressly provided in this Certificate of Incorporation or required by applicable law, at all meetings of stockholders and on all matters submitted to a vote (or to be acted upon by written consent) of the stockholders of the Corporation, (A) each holder of Class A Common Stock shall have the right to one (1) vote per share of Class A Common Stock held of record by such holder, (B) each holder of Class B Common Stock shall have the right to ten (10) votes per share of Class B Common Stock held of record by such holder and (C) each holder of Class C Common Stock shall have the right to zero (0) votes per share of Class C Common stock held of record by such holder (except that, solely to the extent that any holder of Class C Common Stock is expressly entitled to vote on any matter pursuant to this Certificate of Incorporation or by applicable law, such holder of Class C Common Stock shall have the right to one (1) vote per share of Class C Common Stock held of record by such holder). Except as otherwise expressly provided in this Certificate of Incorporation or required by applicable law, the holders of Class A Common Stock and the holders of Class B Common Stock shall at all times vote together as a single class at all meetings of stockholders and on all matters (including the election and removal of directors) submitted to a vote (or to be acted upon by written consent) of the stockholders of the Corporation.

(ii) Except as otherwise provided in this Certificate of Incorporation or required by applicable law, the holders of the Class A Common Stock and the holders of the Class B Common Stock shall (A) have the exclusive right to vote on all matters (including the election and removal of directors) submitted to a vote (or to be acted upon by written consent) of the stockholders of the Corporation, (B) be entitled to notice of any stockholders’ meeting in accordance with the bylaws of the Corporation (as amended or restated from time to time, the “Bylaws”) and (C) be entitled to vote upon such matters and in such manner as may be provided by applicable law.

(iii) Notwithstanding any other provision of this Certificate of Incorporation to the contrary, except as otherwise required by applicable law, the holders of Common Stock, as such, shall not be entitled to vote on any amendment to this Certificate of Incorporation that relates solely to the terms of one or more outstanding series of Preferred Stock if the holders of such affected series are entitled to vote thereon, either separately or together as a class with the holders of one or more other such series, pursuant to this Certificate of Incorporation or applicable law.

(c) Dividends and Distributions. Subject to the rights of the holders of any Preferred Stock that may then be outstanding, the holders of Common Stock shall be entitled to receive, if, as and when declared by the Board, out of any assets of the Corporation legally available for distribution to stockholders of the Corporation, such Distributions as may be declared from time to time by the Board. Shares of Class A Common Stock, shares of Class B Common Stock and shares of Class C Common Stock shall be treated equally, identically and ratably, on a per share basis, with respect to any Distribution paid or made by the Corporation (including with respect to the form, amount and timing thereof), unless different treatment of the shares of each such class is approved by the affirmative vote of the holders of a majority of the outstanding shares of Class A Common Stock, by the

 

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affirmative vote of the holders of a majority of the outstanding shares of Class B Common Stock and by the affirmative vote of the holders of a majority of the outstanding shares of Class C Common Stock, each voting separately as a class; provided, however, that, in the event that a Distribution is paid in the form of Common Stock (or Rights to acquire such stock), holders of Class A Common Stock shall receive Class A Common Stock (or Rights to acquire such stock, as the case may be), holders of Class B Common Stock shall receive Class B Common Stock (or Rights to acquire such stock, as the case may be) and holders of Class C Common Stock shall receive Class C Common Stock (or Rights to acquire such stock, as the case may be).

(d) Subdivisions, Combinations or Reclassifications. If the Corporation in any manner subdivides or combines (by any stock split, stock dividend, recapitalization, reorganization, reclassification, merger, amendment of this Certificate of Incorporation, scheme, arrangement or otherwise) the outstanding shares of Class A Common Stock, the outstanding shares of Class B Common Stock or the outstanding shares of Class C Common Stock, the outstanding shares of each such class shall be subdivided or combined in the same proportion and manner, unless different treatment of the shares of each such class is approved by the affirmative vote of the holders of a majority of the outstanding shares of Class A Common Stock, by the affirmative vote of the holders of a majority of the outstanding shares of Class B Common Stock and by the holders of a majority of the outstanding Class C Shares, each voting separately as a class.

(e) Extraordinary Transactions.

(i) In the event that any Extraordinary Transaction is effected, shares of Class A Common Stock, shares of Class B Common Stock and shares of Class C Common Stock shall be treated equally, identically and ratably, on a per share basis, with respect to any consideration paid or otherwise distributed to, or rights received by, stockholders of the Corporation, or into which such shares are converted or for which such shares are exchanged, in connection with such Extraordinary Transaction (including with respect to the form, amount and timing thereof), unless different treatment of the shares of each such class is approved by the affirmative vote of the holders of a majority of the outstanding shares of Class A Common Stock, the holders of a majority of the outstanding shares of Class B Common Stock and the holders of a majority of the outstanding shares of Class C Common Stock, each voting separately as a class; provided, however, that, to the extent that such consideration is paid in the form of securities or other equity interests, (A) holders of Class B Common Stock may receive a class, series or other form of such securities or other equity interests each having voting power that is ten (10) times greater than the voting power of any security or other equity interest received by holders of Class A Common Stock and (B) holders of Class C Common Stock may receive a class, series or other form of such securities or other equity interests having no voting power.

(ii) The Corporation may not enter into any agreement pursuant to which a Third Party may, by tender or exchange offer, acquire shares of Class A Common Stock, shares of Class B Common Stock or shares of Class C Common Stock, unless, pursuant to such agreement, (A) shares of Class A Common Stock, shares of Class B Common Stock and shares of Class C Common Stock would be treated equally, identically and ratably, on a per share basis, with respect to any consideration paid or otherwise distributed to, or rights received by, stockholders of the Corporation, or into which such shares are converted, or for which such shares are exchanged in connection with the transactions contemplated by such agreement (including with respect to the form, amount and timing thereof) or (B) different treatment of shares of Class A Common Stock and shares of Class B Common Stock is approved by the affirmative vote of the holders of a majority of the outstanding shares of Class A Common Stock, the holders of a majority of the outstanding shares of Class B Common Stock and the holders of a majority of the outstanding shares of Class C Common Stock, each voting separately as a class; provided, however, that, to the extent that such consideration would be paid in the form of securities or other equity interests, (A) holders of Class B Common Stock may receive a class, series or other form of such securities or other equity interests each having voting power that is ten (10) times greater than the voting power of any security or other equity interest received by holders of Class A Common Stock and (B) holders of Class C Common Stock may receive a class, series or other form of such securities or other equity interests having no voting power.

 

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(f) Issuance and Conversion of Class B Common Stock.

(i) Issuance of Class B Common Stock. Except as may otherwise be approved, ratified or otherwise determined by a majority of the Class B Directors then in office, no share of Class B Common Stock shall be issued to any Person that is not an Eligible Holder as of the time of such issuance.

(ii) Voluntary Conversion of Class B Common Stock. Each outstanding share of Class B Common Stock shall be convertible into one (1) fully paid and nonassessable share of Class A Common Stock at the election of the holder thereof at any time upon delivery of written notice of such election to the transfer agent of the Corporation.

(iii) Automatic Conversion of Class B Common Stock. Subject to the Stock Policies (as hereinafter defined), each outstanding share of Class B Common Stock shall automatically convert into one (1) fully paid and nonassessable share of Class A Common Stock, without the need for any further action by the holder thereof or the Corporation, upon the holder of such share of Class B Common Stock ceasing to be an Eligible Holder for any reason (a “Mandatory Conversion Event”) (whether voluntarily or involuntarily or by operation of law, and including, without limitation, by virtue of (A) (x) the termination or removal of such holder (or any individual exercising any voting right (directly or indirectly through one or more intermediaries) with respect to such share through such holder (any such individual, a “Voting Individual”)) as a director or an employee of the Corporation or any Subsidiary (whether or not for cause), (y) the resignation by such holder (or any Voting Individual) as a director or an employee of the Corporation or any Subsidiary (whether or not for good reason) or (z) the death, incapacity or disability (as such term (or any similar term) may be defined or used in any agreement relating to the employment or engagement of such holder (or any Voting Individual) by the Corporation or any Subsidiary or in any policy of the Corporation or any Subsidiary applicable to the employment or engagement of such holder (or any Voting Individual) thereby) of such holder (or any Voting Individual), (B) any individual other than a director or an employee of the Corporation acquiring any right to exercise any voting right (directly or indirectly through one or more intermediaries) with respect to such share and (C) the Transfer of such share to a Person other than an Eligible Holder), unless the Board has resolved, by the affirmative vote of a majority of the directors of the Corporation then in office who qualify as “independent” in accordance with the requirements of the securities exchange on which equity securities of the Corporation are then listed for trading, that such action, transaction or event shall not result in the conversion of such share of Class B Common Stock.

(iv) Certificated Shares. The Corporation shall not be obligated to issue certificates evidencing the shares of Class A Common Stock issuable upon any conversion of shares of Class B Common Stock unless the certificates evidencing such shares of Class B Common Stock, if any such certificates have been issued, have been delivered to the Corporation or its transfer agent or the holder of such shares of Class B Common Stock has notified the Corporation or its transfer agent that such certificates have been lost, stolen or destroyed and has executed an agreement satisfactory to the Corporation to indemnify the Corporation from any loss incurred by it in connection with such certificates (or the absence thereof).

(v) Procedures. The Corporation may, from time to time, establish such restrictions, policies and procedures relating to the conversion of Class B Common Stock to Class A Common Stock and the general administration of the Corporation’s multi-class stock structure (the “Stock Policies”), including the issuance of stock certificates (or the establishment of book-entry positions) with respect thereto, as it may deem necessary or advisable. None of the Stock Policies shall be adopted, amended, altered or repealed unless such action has been recommended or approved pursuant to a resolution adopted by the affirmative vote of (A) a majority of the directors of the Corporation then in office and (B) if any Class B Director is then in office, then at least one Class B Director. The Corporation may request that holders of shares of Class B Common Stock furnish affidavits or other proof to the Corporation as it deems necessary to verify the ownership of Class B Common Stock and to confirm that a conversion to Class A Common Stock has not occurred. A determination by the secretary of the Corporation that a Mandatory Conversion Event has occurred shall be conclusive and binding; provided that, if the holder of any share with respect to which the secretary of the Corporation has determined

 

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that a Mandatory Conversion Event has occurred believes in good faith that such determination is in error, such holder may appeal such determination to the Board, and the Board shall determine in its sole discretion (x) whether to review the secretary’s determination and (y) if the Board elects to review the secretary’s determination, whether a Mandatory Conversion Event has occurred with respect to such share, in which case the Board’s determination shall be conclusive and binding.

(vi) Effectiveness of Conversion. In the event of a voluntary conversion of shares of Class B Common Stock to shares of Class A Common Stock pursuant to Section 2(f)(ii) of this Article V, such conversion shall be deemed to have occurred at the time that the Corporation’s transfer agent receives the required written notice of the holder’s election to effect such conversion. In the event of an automatic conversion of shares of Class B Common Stock to shares of Class A Common Stock pursuant to Section 2(f)(iii) of this Article V, such conversion shall be deemed to have occurred at the time specified in the Stock Policies with respect to the applicable relevant Mandatory Conversion Event. Upon any conversion of a share of Class B Common Stock to a share of Class A Common Stock pursuant to this Section 2(f) of this Article V, all rights of the holder of such share of Class B Common Stock shall cease and the Person(s) in whose name(s) the certificate(s) or book-entry position(s) representing the shares of Class A Common Stock are to be issued shall be treated for all purposes as having become the record holder(s) of such shares of Class A Common Stock.

(vii) Unless otherwise determined by the Corporation, each share of Class B Common Stock that is converted pursuant to this Section 2(f) of this Article V shall return to the status of authorized but unissued shares of Class B Common Stock, but shall be reserved and may only be reissued pursuant to the Corporation’s equity plans, subject to the terms thereof.

(g) Reservation of Stock. The Corporation shall at all times reserve and keep available out of its authorized but unissued shares of Class A Common Stock or out of shares of Class A Common Stock held in its treasury, solely for the purpose of effecting conversions of shares of Class B Common Stock, such number of shares of Class A Common Stock as shall from time to time be sufficient to effect the conversion of all outstanding shares of Class B Common Stock into shares of Class A Common Stock.

(h) Restrictions on Transfer of Certain Shares.

(i) From the Merger Effective Time (as such term is defined in the Merger Agreement) until the date that is 180 calendar days following the Closing Date (as such term is defined in the Merger Agreement), no stockholder of the Corporation (other than a stockholder described in Section 2(h)(ii) of this Article V) or transferee thereof may Transfer any Merger Consideration Share legally or beneficially owned by it, other than in accordance with Section 2(h)(iii) of this Article V.

(ii) From the Merger Effective Time until the date that is one year following the Closing Date, no stockholder of the Corporation who is a Founder Holder or, as of the Closing, is an employee of the Corporation or any Subsidiary, or transferee thereof, may Transfer any Merger Consideration Share legally or beneficially owned by such stockholder, other than in accordance with Section 2(h)(iii) of this Article V, except that the foregoing restriction shall not apply to an aggregate of 10% (rounded down to the nearest whole share) of the total number of Included Merger Consideration Shares that are (or are subject to equity awards of Acquiror that are) legally or beneficially owned or held, directly or indirectly, by such stockholder (other than any such stockholder that is a Founder Holder) immediately following the Merger Effective Time (such portion of such Included Merger Consideration Shares, such stockholder’s “Transferrable Included Merger Consideration Shares”).

(iii) Notwithstanding anything to the contrary in Section 2(h)(i) or Section 2(h)(ii) of this Article V, each stockholder of the Corporation shall be permitted to Transfer any Merger Consideration Share:

(A) if such stockholder holds any equity award issued pursuant to any equity plan of the Company or any of its subsidiaries that is assumed by the Corporation in connection with the Merger (as

 

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defined in the Merger Agreement) or issued pursuant to any equity plan of the Corporation, then, beginning on the earlier of (x) March 1, 2022 or (y) the date that is fifteen (15) calendar days before the date on which any tax relating to such equity award (other than any equity award or portion thereof that is a Transferrable Included Merger Consideration Share) will become due under applicable law (as reasonably determined by the Corporation), solely to the extent necessary to yield aggregate net proceeds to such stockholder in connection with such Transfer (assuming that all Merger Consideration Shares so Transferred would be sold for value at the prevailing trading price of shares of Class A Common Stock at the time of such Transfer) sufficient to cover the aggregate amount of ordinary income, employment or similar taxes payable in connection with such equity award (as reasonably determined by the Corporation);

(B) if such stockholder is an individual, then (x) by will or other testamentary document or device or (y) by operation of applicable law, including applicable laws of intestacy or descent or pursuant to a qualified domestic relations order, divorce settlement, divorce decree, separation agreement or related court order;

(C) as a bona fide gift or gifts, including to any charitable organization;

(D) for bona fide estate planning purposes;

(E) to any Person of which all of the outstanding equity interests are legally and beneficially owned by such stockholder or, if such stockholder is an individual, then to one or more members of the immediate family or former spouse of such stockholder;

(F) if such stockholder is a Person other than an individual, then to another Person (other than an individual) that is an Affiliate of such stockholder, or to any investment fund or other Person managing or managed by such stockholder or one or more of its Affiliates (including, for the avoidance of doubt, where such stockholder is a partnership, to its general partner);

(G) if such stockholder is a Person other than an individual, then (i) to any shareholder, partner or member of such stockholder in redemption of such shareholder’s partner’s or member’s interest in such stockholder or (ii) upon such stockholder’s bona fide liquidation or dissolution, to the shareholders, partners or members of such stockholder in accordance with its governing documents; or

(H) to a nominee or custodian of any Person to which a Transfer would be permissible under any of the preceding clauses (A) through (G);

provided that, (1) in the case of any Transfer pursuant to any of the foregoing clauses (B), (C), (D)and (H), such Transfer does not involve a disposition for value and (2) in the case of any Transfer pursuant to any of the foregoing clauses (C), (D), (E), (F), (G) and (H), (x) the Person effecting such Transfer provides written notice of such Transfer to the Corporation at least two Business Days prior to effecting such Transfer, (y) the shares so Transferred shall remain subject to the transfer restrictions set forth in this Section 2(h) of this Article V, (z) any public report or filing required to be made pursuant to applicable securities laws (including filings under Section 16(a) of the Exchange Act) will disclose the nature of such Transfer on a timely basis.

(iv) Each certificate or book entry representing Merger Consideration Shares or shares of Class B Common Stock shall bear a legend substantially in the following form (or in such other form as the Board may determine):

THE SECURITIES REPRESENTED BY THIS [CERTIFICATE] [BOOK ENTRY] ARE SUBJECT TO RESTRICTIONS ON TRANSFER SET FORTH IN THE CERTIFICATE OF INCORPORATION OF THE CORPORATION (AS IT MAY BE AMENDED AND/OR RESTATED), A COPY OF WHICH IS ON FILE WITH THE SECRETARY OF THE CORPORATION AND SHALL BE PROVIDED FREE OF CHARGE TO ANY STOCKHOLDER MAKING A REQUEST THEREFOR.

(i) Notwithstanding anything to the contrary in this Certificate of Incorporation, there shall be no Transfer of any share of Class B Common Stock involving a disposition for value unless the value paid in respect

 

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of such share of Class B Common Stock is equal to the prevailing price per share of Class A Common Stock at the time of such disposition for value. The Corporation may establish in the Stock Policies such other restrictions and such policies and procedures relating to Transfers of Class B Common Stock as the Corporation may deem necessary or advisable.

3. Preferred Stock. Shares of Preferred Stock may be issued from time to time in one or more series. The Board is hereby authorized, to the fullest extent permitted by applicable law, to provide, by resolution from time to time, for the issuance, out of the unissued shares of Preferred Stock, of one or more series of Preferred Stock, without stockholder approval, by filing a certificate of designation with respect thereto pursuant to the applicable provisions of the DGCL setting forth such resolution or resolutions and, with respect to each such series, establishing the number of shares to be included in such series and fixing the powers (which may include full, limited or no voting power), designations, preferences and relative, participating, optional or other special rights, if any, of the shares of each such series and any qualifications, limitations or restrictions thereof. The powers, designations, preferences and relative, participating, optional and other special rights of each series of Preferred Stock, if any, and any qualifications, limitations and restrictions thereof may differ from those of any and all other series of Preferred Stock at any time outstanding. Without limiting the generality of the foregoing, any resolution or certificate of designation providing for issuance of any series of Preferred Stock may provide that such series shall be superior or rank equally or be junior to any other series of Preferred Stock, to the extent permitted by applicable law. Subject to the terms of any such series of Preferred Stock, and except as otherwise required by applicable law, any shares of Preferred Stock that may be redeemed, purchased or acquired by the Corporation shall return to the status of authorized but unissued shares of Preferred Stock and may be reissued by the Corporation in one or more series as provided in this Section 3 of this Article V.

ARTICLE VI

STOCKHOLDER ACTION

1. Action without Meeting. Subject to the rights of the holders of any series of Preferred Stock, any action required or permitted to be taken by the stockholders of the Corporation must be effected at a duly called annual or special meeting of the stockholders, and may not be taken or effected by a written consent of stockholders in lieu thereof, unless (a) such action has been recommended or approved pursuant to a resolution adopted by the affirmative vote of all of the directors of the Corporation then in office or (b) the holders of Class B Common Stock collectively beneficially own shares representing a majority of the voting power of all of the outstanding shares of capital stock of the Corporation.

2. Special Meetings.

(a) Except as otherwise required by applicable law, and subject to the rights of the holders of any series of Preferred Stock, special meetings of the stockholders of the Corporation may be called for any purpose or purposes, at any time, only by (i) the Board, (ii) the chairman of the Board, (iii) the chief executive officer or president of the Corporation or (iv) at any time that the holders of Class B Common Stock collectively beneficially own shares representing a majority of the voting power of all of the outstanding shares of capital stock of the Corporation, the holders of shares representing a majority of the voting power of all of the outstanding shares of capital stock of the Corporation.

(b) Advance notice of stockholder nominations for the election of directors and of other business to be brought by stockholders of the Corporation before any meeting of stockholders shall be given in the manner provided in the Bylaws. Only those matters set forth in the notice of the special meeting may be considered or acted upon at a special meeting of stockholders.

 

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ARTICLE VII

DIRECTORS

1. General. The business and affairs of the Corporation shall be managed by or under the direction of the Board, except as otherwise provided in this Certificate of Incorporation or required by applicable law.

2. Number of Directors. Subject to the rights of the holders of any series of Preferred Stock with respect to the election of directors, between the Corporation and certain of its stockholders, the number of directors of the Corporation shall be fixed from time to time solely by resolution of the Board; provided that, if at any time the number of directors that the holders of Class B Common Stock are entitled to nominate and elect pursuant to Section 3 of this Article VII is less than one-quarter (1/4) of the total number of directors of the Corporation, then the total number of directors of the Corporation and the number of directors that the holders of Class B Common Stock are entitled to nominate and elect shall be automatically increased to the extent necessary so that the number of directors that the holders of Class B Common Stock are entitled to nominate and elect is one-quarter (1/4) of the total number of directors of the Corporation.

3. Election of Directors.

(a) The election of directors need not be by written ballot unless the Bylaws shall so provide.

(b) For so long (and only for so long) as the outstanding shares of Class B Common Stock continue to represent at least 2% of all of the outstanding shares of Common Stock, the holders of Class B Common Stock, voting separately as a class, shall be entitled to nominate and elect a number of directors equal to one-quarter (1/4) of the total number of directors of the Corporation (the “Class B Directors”). In the event that the total number of directors of the Corporation is not evenly divisible by four (4), the number of directors entitled to be nominated and elected by the holders of Class B Common Stock shall be the smallest whole number of directors that constitutes at least one-quarter (1/4) of the total number of directors of the Corporation. At any time that a Class B Director is serving as a director of the Corporation, at least one (1) Class B Director shall be required to be present at a meeting of the Board to constitute a quorum.

(c) Subject to the rights of the holders of any series of Preferred Stock with respect to the election of directors, the holders of Class A Common Stock and the holders of Class B Common Stock, voting together as a single class, shall be entitled to elect the directors of the Corporation other than the Class B Directors (the “Common Directors”).

(d) Subject to the rights of the holders of any series of Preferred Stock with respect to the election of directors, each director of the Corporation shall hold such office until the expiration of the term for which he or she is elected and until his or her successor has been duly elected and qualified or until his or her earlier death, resignation or removal.

4. Removal; Vacancies.

(a) Subject to the rights of the holders of any series of Preferred Stock with respect to the election (or removal) of directors, any Common Director may be removed from office, with or without cause, by the affirmative vote of the holders of shares representing a majority of the voting power of all of the outstanding shares of capital stock of the Corporation entitled to vote thereon, voting together as a single class. Any Class B Director may be removed from office (i) without cause, by the affirmative vote of the holders of shares representing a majority of the voting power of all of the outstanding shares of Class B Common Stock and (ii) with cause, by the affirmative vote of the holders of shares representing a majority of the voting power of all of the outstanding shares of capital stock of the Corporation entitled to vote thereon, voting together as a single class.

 

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(b) Subject to the rights of the holders of any series of Preferred Stock with respect to the election of directors, vacancies occurring with respect to any Common Director for any reason and newly created directorships resulting from an increase in the authorized number of Common Directors may be filled only by vote of a majority of the remaining members of the Board, although less than a quorum, or by a sole remaining director. Subject to the rights of the holders of any series of Preferred Stock with respect to the election of directors, vacancies occurring with respect to any Class B Director for any reason and newly created directorships resulting from an increase in the authorized number of Class B Directors may be filled only by vote of a majority of the remaining Class B Directors, although less than a quorum, or by a sole remaining Class B Director. A person elected to fill a vacancy or newly created directorship in accordance with the preceding sentences of this Section 4(b) of this Article VII shall hold office until the next annual meeting of stockholders and until his or her successor shall be duly elected and qualified, or until his or her earlier resignation, death or removal.

(c) In the event of a vacancy on the Board, the remaining directors of the Corporation, except as otherwise provided by law, and so long as a quorum is present, shall exercise the powers of the full Board until the vacancy is filled.

5. Committees of the Board. The Board shall establish and maintain an audit committee, a nominating and corporate governance committee and a compensation committee, and may establish such other committees as it shall determine from time to time. For so long as any Founder serving as a director of the Corporation holds shares of Class B Common Stock, such Founder shall not be permitted to serve as a member of the compensation committee of the Board. Subject to applicable requirements of the securities exchange on which equity securities of the Corporation are then listed for trading, at any time that any Class B Director is serving as a director of the Corporation, each committee of the Board (other than the compensation committee of the Board) shall include at least one (1) Class B Director unless a majority of the Class B Directors then in office approve the formation and composition of such committee.

6. Founder Termination Actions.

(a) No Founder Cause Termination Action shall be taken or approved or agreed to by or on behalf of the Corporation, and the Corporation shall not take any Founder Cause Termination Action in its capacity as stockholder of any of its subsidiaries (and shall use its best efforts to prevent any subsidiary board of directors or equivalent governing body or any committee thereof from taking any Founder Cause Termination Action), unless such Founder Cause Termination Action has been recommended or approved pursuant to a resolution adopted by the affirmative vote of at least three-quarters (3/4) of the directors of the Corporation then in office.

(b) No Founder Non-Cause Termination Action shall be taken or approved or agreed to by or on behalf of the Corporation, and the Corporation shall not take any Founder Non-Cause Termination Action in its capacity as stockholder of any of its subsidiaries (and shall use its best efforts to prevent any subsidiary board of directors or equivalent governing body or any committee thereof from taking any Founder Non-Cause Termination Action), unless such Founder Non-Cause Termination Action has been recommended or approved pursuant to a resolution adopted by the affirmative vote of (i) at least three-quarters (3/4) of the directors of the Corporation then in office and (ii) if any Founder is then serving as a director of the Corporation, at least one director of the Corporation who is a Founder; provided that, if only one Founder is then serving as a director of the Corporation and such Founder is the subject of the Founder Non-Cause Termination Action, the affirmative vote described in the foregoing clause (ii) shall not be required.

(c) Any Founder Cause Termination Action or Founder Non-Cause Termination Action considered by or voted upon by the Board shall concern one Founder only, and, in the event that more than one Founder is the subject of a Founder Cause Termination Action or a Founder Non-Cause Termination Action, a separate Founder Cause Termination Action or Founder Non-Cause Termination Action, as applicable, shall be considered and voted upon by the Board with respect to each such Founder.

 

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7. Stakeholders. In addition to any other considerations which the Board, any committee thereof or any individual director lawfully may take into account in determining whether to take or refrain from taking corporate action on any matter, including making or declining to make any recommendation to the stockholders of the Corporation, the Board, any committee thereof or any individual director may, in his, her, or its discretion, consider the long-term as well as the short-term interests of the Corporation, taking into account and considering, as deemed appropriate, the effects of such action on the Corporation’s (a) stockholders and (b) other stakeholders, including the Corporation’s workforce, customers, suppliers, academic researchers, governments and communities, in the case of this clause (b), as may be identified or revised by the Board from time to time. Nothing in this Section 7 of this Article VII, elsewhere in this Certificate of Incorporation or in any other governing document, policy or guideline adopted by the Corporation from time to time shall (a) create any duty owed by any director to any person or entity to consider, or afford any particular weight to, any of the foregoing matters or to limit his or her consideration thereof or (b) other than as vested in the Corporation’s stockholders to the extent provided under applicable law, be construed as creating any rights against any director of the Corporation or the Corporation. This Section 7 of this Article VII shall be deemed to grant discretionary authority only to the extent consistent with and permitted by law, and shall not be deemed to confer third-party beneficiary status on any person or entity.

ARTICLE VIII

LIMITATION OF LIABILITY

To the fullest extent permitted by the DGCL, as it presently exists or may hereafter be amended from to time, no director of the Corporation shall be personally liable to the Corporation or any of its stockholders for monetary damages for breach of fiduciary duty as a director. If the DGCL is amended after the effective date of this Certificate of Incorporation to authorize corporate action further eliminating or limiting the personal liability of directors of corporations, then the liability of each director of the Corporation shall be eliminated or limited to the fullest extent permitted by the DGCL, as so amended.

Neither any amendment, repeal or modification of this Article VIII by the stockholders of the Corporation or by virtue of an amendment to the DGCL nor the adoption of any provision of this Certificate of Incorporation inconsistent with this Article VIII shall adversely affect any limitation of personal liability or other right or protection of a director of the Corporation existing by virtue of this Article VIII at the time of such amendment, repeal, modification or adoption with respect to any act or omission occurring before such amendment, repeal, modification or adoption.

ARTICLE IX

CORPORATE OPPORTUNITIES

The Corporation renounces any interest or expectancy of the Corporation in, or in being offered an opportunity to participate in, any matter, transaction or interest that is presented to, or acquired, created or developed by, or which otherwise comes into the possession of, any director of the Corporation who is not an employee of the Corporation or any of its subsidiaries, unless such matter, transaction or interest is presented to, or acquired, created or developed by, or otherwise comes into the possession of, such director first in such director’s capacity as a director of the Corporation.

ARTICLE X

AMENDMENT OF CERTIFICATE OF INCORPORATION

1. The Corporation reserves the right to adopt, amend, alter or repeal any provision of this Certificate of Incorporation, in the manner now or hereafter prescribed by statute, except as provided in Section 2 of this Article X, and all rights, powers and preferences conferred upon any stockholder, director or other Person herein are granted subject to this reservation.

 

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2. Notwithstanding any other provision of this Certificate of Incorporation or provision of applicable law that might otherwise permit a lesser or no vote, but in addition to any vote or assent of any stockholder or the holders of any class or series of capital stock of the Corporation required by any provision of this Certificate of Incorporation or applicable law, the affirmative vote of the holders of shares representing at least two-thirds (2/3) of the voting power of all of the outstanding shares of capital stock of the Corporation shall be required to adopt, amend, alter or repeal (by amendment, merger, consolidation or otherwise) any provision of this Certificate of Incorporation that is inconsistent with Article VI, Article VII, Article VIII, Article IX, this Article X or Article XI. So long as any share of Class B Common Stock remains outstanding, in addition to any other vote required by applicable law or this Certificate of Incorporation, the Corporation shall not, without the prior affirmative vote of the holders of at least two-thirds (2/3) of the outstanding shares of Class B Common Stock, voting as a separate class, adopt, amend, alter or repeal (by amendment, merger, consolidation or otherwise) any provision of this Certificate of Incorporation (a) in a manner that adversely alters or changes or is inconsistent with any of the voting, conversion, dividend or liquidation provisions hereof applicable to the Class B Common Stock or other rights, powers or preferences of the Class B Common Stock; (b) to provide for any holder of Class A Common Stock to have more than one (1) vote per share or any right to a separate class vote of the holders of Class A Common Stock other than as provided by this Certificate of Incorporation as then in effect or required by the DGCL; (c) to reclassify any outstanding shares of Class A Common Stock into shares having rights as to dividends or liquidation that are senior to the Class B Common Stock or the right to have more than one (1) vote per share or any right to a separate class vote of the holders of such shares other than as provided by this Certificate of Incorporation as then in effect or required by the DGCL; (d) to authorize, or issue any shares of, any class or series of capital stock of the Corporation (other than Class B Common Stock) having the right to more than one (1) vote per share or any right to a separate class vote of the holders of such shares other than as provided by this Certificate of Incorporation as then in effect or required by the DGCL; or (e) in a manner that otherwise adversely impacts or affects the rights, powers or preferences of the Class B Common Stock in a manner that is disparate from the manner in which it affects the rights, powers or preferences of the Class A Common Stock. So long as any share of Class A Common Stock remains outstanding, in addition to any other vote required by applicable law or this Certificate of Incorporation, the Corporation shall not, without the prior affirmative vote of the holders of at least two-thirds (2/3) of the outstanding shares of Class A Common Stock, voting as a separate class, adopt, amend, alter or repeal (by amendment, merger, consolidation or otherwise), any provision of this Certificate of Incorporation (i) in a manner that adversely alters or changes or is inconsistent with any of the voting, conversion, dividend or liquidation provisions hereof applicable to the Class A Common Stock or other rights, powers or preferences of the Class A Common Stock; (ii) to provide for any holder of Class B Common Stock to have more than ten (10) votes per share or any right to a separate class vote of the holders of Class B Common Stock other than as provided by this Certificate of Incorporation as then in effect or required by the DGCL; (iii) to reclassify any outstanding shares of Class B Common Stock into shares having rights as to dividends or liquidation that are senior to the Class A Common Stock or the right to have more than ten (10) votes per share or any right to a separate class vote of the holders of such shares other than as provided by this Certificate of Incorporation as then in effect or required by the DGCL; or (iv) in a manner that otherwise adversely impacts or affects the rights, powers or preferences of the Class A Common Stock in a manner that is disparate from the manner in which it affects the rights, powers or preferences of the Class B Common Stock.

ARTICLE XI

AMENDMENT OF BYLAWS

1. Amendment by Directors. Except as otherwise provided in this Certificate of Incorporation or required by applicable law, and in furtherance (and not in limitation) of the powers conferred upon it by the DGCL, the Board shall have the power to adopt, amend, alter or repeal any provision of the Bylaws without the vote or assent of the stockholders.

2. Amendment by Stockholders. Except as otherwise provided therein, any provision of the Bylaws may be adopted, amended, altered or repealed at any annual meeting of stockholders, or any special meeting of

 

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stockholders called for such purpose, by the affirmative vote of the holders of at least two-thirds (2/3) of the voting power of all of the outstanding shares of capital stock of the Corporation; provided, however, that if the Board recommends that stockholders approve such amendment or repeal at such meeting of stockholders, such amendment or repeal shall only require the affirmative vote of a majority of the voting power of all of the outstanding shares of capital stock of the Corporation.

ARTICLE XII

MISCELLANEOUS

1. Opt Out of Section 203 of the DGCL. The Corporation shall not be governed by Section 203 of the DGCL.

2. Notice of Provisions. To the fullest extent permitted by applicable law, any Person acquiring, owning or holding any interest in shares of capital stock of the Corporation shall be deemed to have notice of and to have consented to the provisions of this Certificate of Incorporation (including those contained in Article IX).

3. Severability. If any provision of this Certificate of Incorporation shall be held to be invalid, illegal or unenforceable as applied to any circumstance for any reason whatsoever, then the validity, legality and enforceability of such provision in any other circumstance and of the remaining provisions of this Certificate of Incorporation (including, without limitation, each portion of any paragraph of this Certificate of Incorporation containing any such provision held to be invalid, illegal or unenforceable that is not itself held to be invalid, illegal or unenforceable) shall not in any way be affected or impaired thereby.

4. Incorporator; Initial Directors. The incorporator of the Corporation is [●], whose mailing address is [●]. The powers of the incorporator are to terminate upon the filing of this Certificate of Incorporation with the Secretary of State of the State of Delaware. The names and mailing address[es] of the individuals who are to serve as the initial directors of the Corporation until the first annual meeting of stockholders and until his or her successor has been duly elected and qualified or until his or her earlier death, resignation or removal, are as follows:

 

Name

  

Mailing
Address

 

[●]

     [●]  

[●]

  

[●]

  

[●]

  

[●]

  

[●]

  

[●]

  

[●]

  

[End of text.]

 

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THIS CERTIFICATE OF INCORPORATION is executed as of this [●] day of [●], 2021.

 

SOARING EAGLE ACQUISITION CORP.
By:    
Name:    [●]
Title:      [●]

 

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Annex C

Final Form

 

Bylaws of

Ginkgo Bioworks Holdings, Inc.

(a Delaware corporation)

 

 

 


Table of Contents

Table of Contents

 

         Page  

Article I—Corporate Offices

     C-1  

1.1

 

Registered Office

     C-1  

1.2

 

Other Offices

     C-1  

Article II—Meetings of Stockholders

     C-1  

2.1

 

Place of Meetings

     C-1  

2.2

 

Annual Meeting

     C-1  

2.3

 

Special Meeting

     C-1  

2.4

 

Notice of Business to Be Brought before a Meeting.

     C-1  

2.5

 

Notice of Nominations for Election to the Board of Directors.

     C-5  

2.6

 

Additional Requirements for Valid Nomination of Candidates to Serve as Director and, if Elected, to be Seated as Directors.

     C-7  

2.7

 

Notice of Stockholders’ Meetings

     C-8  

2.8

 

Quorum

     C-8  

2.9

 

Adjourned Meeting; Notice

     C-9  

2.10

 

Conduct of Business

     C-9  

2.11

 

Voting

     C-9  

2.12

 

Record Date for Stockholder Meetings and Other Purposes

     C-10  

2.13

 

Proxies

     C-10  

2.14

 

List of Stockholders Entitled to Vote

     C-11  

2.15

 

Inspectors of Election

     C-11  

2.16

 

Delivery to the Corporation.

     C-12  

2.17

 

Action without Meeting.

     C-12  

Article III—Directors

     C-12  

3.1

 

Powers

     C-12  

3.2

 

Number of Directors

     C-12  

3.3

 

Election, Qualification and Term of Office of Directors

     C-12  

3.4

 

Resignation; Removal; Vacancies

     C-12  

3.5

 

Place of Meetings; Meetings by Telephone

     C-13  

3.6

 

Regular Meetings

     C-13  

3.7

 

Special Meetings; Notice

     C-13  

3.8

 

Quorum

     C-14  

3.9

 

Board Action without a Meeting

     C-14  

3.10

 

Fees and Compensation of Directors

     C-14  

Article IV—Committees

     C-14  

4.1

 

Committees of Directors

     C-14  

4.2

 

Committee Minutes

     C-14  

4.3

 

Meetings and Actions of Committees

     C-15  

4.4

 

Subcommittees.

     C-15  

Article V—Officers

     C-15  

5.1

 

Officers

     C-15  

5.2

 

Appointment of Officers

     C-15  

5.3

 

Subordinate Officers

     C-16  

5.4

 

Removal and Resignation of Officers

     C-16  

5.5

 

Vacancies in Offices

     C-16  

5.6

 

Representation of Shares of Other Corporations

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5.7

 

Authority and Duties of Officers

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5.8

 

Compensation.

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Article VI—Records

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(continued)

 

         Page  

Article VII—General Matters

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7.1

 

Execution of Corporate Contracts and Instruments

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7.2

 

Stock Certificates

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7.3

 

Special Designation of Certificates.

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7.4

 

Lost Certificates

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7.5

 

Shares Without Certificates

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7.6

 

Construction; Definitions

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7.7

 

Dividends

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7.8

 

Fiscal Year

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7.9

 

Seal

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7.10

 

Transfer of Stock

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7.11

 

Stock Transfer Agreements

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7.12

 

Registered Stockholders

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7.13

 

Waiver of Notice

     C-19  

Article VIII—Notice

     C-19  

8.1

 

Delivery of Notice; Notice by Electronic Transmission

     C-19  

Article IX—Forum

     C-20  

9.1

 

Choice of Forum

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9.2

 

Consent to Jurisdiction

     C-21  

9.3

 

Remedies

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Article X—Indemnification

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10.1

 

Indemnification of Directors and Officers

     C-21  

10.2

 

Indemnification of Others

     C-21  

10.3

 

Prepayment of Expenses

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10.4

 

Determination; Claim

     C-22  

10.5

 

Non-Exclusivity of Rights

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10.6

 

Insurance

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10.7

 

Other Indemnification

     C-22  

10.8

 

Continuation of Indemnification

     C-22  

10.9

 

Amendment or Repeal; Interpretation

     C-22  

10.10

 

Other Indemnification and Advancement of Expenses.

     C-23  

Article XI—Amendments

     C-23  

Article XII—Definitions

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Bylaws of

Ginkgo Bioworks Holdings, Inc.

 

 

Article I—Corporate Offices

1.1 Registered Office.

The address of the registered office of Ginkgo Bioworks Holdings, Inc. (the “Corporation”) in the State of Delaware, and the name of its registered agent at such address, shall be as set forth in the Corporation’s certificate of incorporation, as the same may be amended and/or restated from time to time (the “Certificate of Incorporation”).

1.2 Other Offices.

The Corporation may have additional offices at any place or places, within or outside the State of Delaware, as the Corporation’s board of directors (the “Board”) may from time to time establish or as the business of the Corporation may require.

Article II—Meetings of Stockholders

2.1 Place of Meetings.

Meetings of stockholders shall be held at any place within or outside the State of Delaware, designated by the Board. The Board may, in its sole discretion, determine that a meeting of stockholders shall not be held at any place, but may instead be held solely by means of remote communication as authorized by Section 211(a)(2) of the General Corporation Law of the State of Delaware (the “DGCL”). In the absence of any such designation or determination, stockholders’ meetings shall be held at the Corporation’s principal executive office.

2.2 Annual Meeting.

The Board shall designate the date and time of the annual meeting. At the annual meeting, directors shall be elected and other proper business properly brought before the meeting in accordance with Section 2.4 of these bylaws may be transacted. The Board may postpone, reschedule or cancel any previously scheduled annual meeting of stockholders.

2.3 Special Meeting.

Special meetings of the stockholders may be called only by such persons and only in such manner as set forth in the Certificate of Incorporation.

No business may be transacted at any special meeting of stockholders other than the business specified in the notice of such meeting. The Board may postpone, reschedule or cancel any previously scheduled special meeting of stockholders.

2.4 Notice of Business to Be Brought before a Meeting.

(a) At an annual meeting of the stockholders, only such business shall be conducted as shall have been properly brought before the meeting. To be properly brought before an annual meeting, business must be (i) specified in a notice of meeting given by or at the direction of the Board of Directors, (ii) if not specified in a notice of meeting, otherwise brought before the meeting by the Board of Directors or the Chairperson of the Board or (iii) otherwise properly brought before the meeting by a stockholder present in person who (A) (1) was a record owner of shares of the Corporation both at the time of giving the notice provided for in this Section 2.4

 

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and at the time of the meeting, (2) is entitled to vote at the meeting, and (3) has complied with this Section 2.4 in all applicable respects or (B) properly made such proposal in accordance with Rule 14a-8 under the Securities Exchange Act of 1934, as amended, and the rules and regulations thereunder (as so amended and inclusive of such rules and regulations, the “Exchange Act”), which proposal has been included in the Corporation’s proxy statement for the annual meeting. Unless otherwise required by law, if the stockholder is not present in person to present the proposed business, such proposed business shall not be transacted, notwithstanding that proxies in respect of such vote may have been received by the Corporation. The foregoing clause (iii) shall be the exclusive means for a stockholder to propose business to be brought before an annual meeting of the stockholders. For purposes of this Section 2.4, “present in person” shall mean that the stockholder proposing that the business be brought before the annual meeting of the Corporation, or a qualified representative of such proposing stockholder, appear at such annual meeting. A “qualified representative” of such proposing stockholder shall be a duly authorized officer, manager or partner of such stockholder or any other person authorized by a writing executed by such stockholder or an electronic transmission delivered by such stockholder to act for such stockholder as proxy at the meeting of stockholders and such person must produce such writing or electronic transmission, or a reliable reproduction of the writing or electronic transmission, at the meeting of stockholders. Stockholders seeking to nominate persons for election to the Board of Directors must comply with Section 2.5 and Section 2.6 and this Section 2.4 shall not be applicable to nominations except as expressly provided in Section 2.5 and Section 2.6.

(b) Without qualification, for business to be properly brought before an annual meeting by a stockholder, the stockholder must (i) provide Timely Notice (as defined below) thereof in writing and in proper form to the Secretary of the Corporation and (ii) provide any updates or supplements to such notice at the times and in the forms required by this Section 2.4. To be timely, a stockholder’s notice must be delivered to, or mailed and received at, the principal executive offices of the Corporation not less than 90 days nor more than 120 days prior to the one-year anniversary of the preceding year’s annual meeting; provided, however, that if no annual meeting was held in the preceding year, to be timely, a stockholder’s notice must be so delivered, or mailed and received, not earlier than the close of business on the 120th day prior to such annual meeting and not later than the close of business on the later of the 90th day prior to such annual meeting or the 10th day following the day on which public disclosure of the date of such annual meeting was first made by the Corporation; provided, however, that if the date of the annual meeting is more than 30 days before or more than 60 days after such anniversary date, notice by the stockholder to be timely must be so delivered, or mailed and received, not later than the 90th day prior to such annual meeting or, if later, the 10th day following the day on which public disclosure of the date of such annual meeting was first made by the Corporation (such notice within such time periods, “Timely Notice”). In no event shall any adjournment or postponement of an annual meeting or the announcement thereof commence a new time period (or extend any time period) for the giving of Timely Notice as described above.

(c) To be in proper form for purposes of this Section 2.4, a stockholder’s notice to the Secretary shall set forth:

(i) As to each Proposing Person (as defined below), (1) the name and address of such Proposing Person (including, if applicable, the name and address that appear on the Corporation’s books and records); (2) the class or series and number of shares of the Corporation that are, directly or indirectly, owned of record or beneficially owned (within the meaning of Rule 13d-3 under the Exchange Act) by such Proposing Person, except that such Proposing Person shall in all events be deemed to beneficially own any shares of any class or series of the Corporation as to which such Proposing Person has a right to acquire beneficial ownership at any time in the future; and (3) a representation that the stockholder is a holder of record of stock of the Corporation entitled to vote at the meeting and intends to be present in person at the meeting to propose such business (the disclosures to be made pursuant to the foregoing clauses (1)-(3) are referred to as “Stockholder Information”);

(ii) As to each Proposing Person, (1) the full notional amount of any securities that, directly or indirectly, underlie any “derivative security” (as such term is defined in Rule 16a-1(c) under the

 

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Exchange Act) that constitutes a “call equivalent position” (as such term is defined in Rule 16a-1(b) under the Exchange Act) (“Synthetic Equity Position”) and that is, directly or indirectly, held or maintained by such Proposing Person with respect to any shares of any class or series of shares of the Corporation; provided that, for the purposes of the definition of “Synthetic Equity Position,” the term “derivative security” shall also include any security or instrument that would not otherwise constitute a “derivative security” as a result of any feature that would make any conversion, exercise or similar right or privilege of such security or instrument becoming determinable only at some future date or upon the happening of a future occurrence, in which case the determination of the amount of securities into which such security or instrument would be convertible or exercisable shall be made assuming that such security or instrument is immediately convertible or exercisable at the time of such determination; and, provided, further, that any Proposing Person satisfying the requirements of Rule 13d-1(b)(1) under the Exchange Act (other than a Proposing Person that so satisfies Rule 13d-1(b)(1) under the Exchange Act solely by reason of Rule 13d-1(b)(1)(ii)(E)) shall not be deemed to hold or maintain the notional amount of any securities that underlie a Synthetic Equity Position held by such Proposing Person as a hedge with respect to a bona fide derivatives trade or position of such Proposing Person arising in the ordinary course of such Proposing Person’s business as a derivatives dealer, (2) any rights to dividends on the shares of any class or series of shares of the Corporation owned beneficially by such Proposing Person that are separated or separable from the underlying shares of the Corporation, (3) any material pending or threatened legal proceeding in which such Proposing Person is a party or material participant involving the Corporation or any of its officers or directors, or any affiliate of the Corporation, (4) any other material relationship between such Proposing Person, on the one hand, and the Corporation or any affiliate of the Corporation, on the other hand, (5) any direct or indirect material interest in any contract or agreement of such Proposing Person with the Corporation or any affiliate of the Corporation (including, in any such case, any employment agreement, collective bargaining agreement or consulting agreement), (6) a representation that such Proposing Person intends or is part of a group which intends to deliver a proxy statement or form of proxy to holders of at least the percentage of the Corporation’s outstanding capital stock required to approve or adopt the proposal or otherwise solicit proxies from stockholders in support of such proposal and (7) any other information relating to such Proposing Person that would be required to be disclosed in a proxy statement or other filing required to be made in connection with solicitations of proxies or consents by such Proposing Person in support of the business proposed to be brought before the meeting pursuant to Section 14(a) of the Exchange Act (the disclosures to be made pursuant to the foregoing clauses (1) through (7) are referred to as “Disclosable Interests”); provided, however, that Disclosable Interests shall not include any such disclosures with respect to the ordinary course business activities of any broker, dealer, commercial bank, trust company or other nominee who is a Proposing Person solely as a result of being the stockholder directed to prepare and submit the notice required by these bylaws on behalf of a beneficial owner; and

(iii) As to each item of business that the stockholder proposes to bring before the annual meeting, (1) a brief description of the business desired to be brought before the annual meeting, the reasons for conducting such business at the annual meeting and any material interest in such business of each Proposing Person, (2) the text of the proposal or business (including the text of any resolutions proposed for consideration and in the event that such business includes a proposal to amend these bylaws, the language of the proposed amendment), and (3) a reasonably detailed description of all agreements, arrangements and understandings (x) between or among any of the Proposing Persons or (y) between or among any Proposing Person and any other record or beneficial holder(s) or persons(s) who have a right to acquire beneficial ownership at any time in the future of the shares of any class or series of the Corporation or any other person or entity (including their names) in connection with the proposal of such business by such stockholder, and (4) any other information relating to such item of business that would be required to be disclosed in a proxy statement or other filing required to be made in connection with solicitations of proxies in support of the business proposed to be brought before the meeting pursuant to Section 14(a) of the Exchange Act; provided, however, that the disclosures

 

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required by this paragraph (iii) shall not include any disclosures with respect to any broker, dealer, commercial bank, trust company or other nominee who is a Proposing Person solely as a result of being the stockholder directed to prepare and submit the notice required by these bylaws on behalf of a beneficial owner.

For purposes of this Section 2.4, the term “Proposing Person” shall mean (i) the stockholder providing the notice of business proposed to be brought before an annual meeting, (ii) the beneficial owner or beneficial owners, if different, on whose behalf the notice of the business proposed to be brought before the annual meeting is made, and (iii) any participant (as defined in paragraphs (a)(ii)-(vi) of Instruction 3 to Item 4 of Schedule 14A) with such stockholder in such solicitation.

(d) A Proposing Person shall update and supplement its notice to the Corporation of its intent to propose business at an annual meeting, if necessary, so that the information provided or required to be provided in such notice pursuant to this Section 2.4 shall be true and correct as of the record date for stockholders entitled to vote at the meeting and as of the date that is 10 business days prior to the meeting or any adjournment or postponement thereof, and such update and supplement shall be delivered to, or mailed and received by, the Secretary at the principal executive offices of the Corporation not later than five business days after the record date for stockholders entitled to vote at the meeting (in the case of the update and supplement required to be made as of such record date), and not later than eight business days prior to the date for the meeting or, if practicable, any adjournment or postponement thereof (and, if not practicable, on the first practicable date prior to the date to which the meeting has been adjourned or postponed) (in the case of the update and supplement required to be made as of 10 business days prior to the meeting or any adjournment or postponement thereof). For the avoidance of doubt, the obligation to update and supplement as set forth in this paragraph or any other Section of these bylaws shall not limit the Corporation’s rights with respect to any deficiencies in any notice provided by a stockholder, extend any applicable deadlines hereunder or enable or be deemed to permit a stockholder who has previously submitted notice hereunder to amend or update any proposal or to submit any new proposal, including by changing or adding matters, business or resolutions proposed to be brought before a meeting of the stockholders.

(e) Notwithstanding anything in these bylaws to the contrary and except as otherwise expressly provided in any applicable rule or regulation promulgated under the Exchange Act, no business shall be conducted at an annual meeting that is not properly brought before the meeting in accordance with this Section 2.4. The presiding officer of the meeting shall, if the facts warrant, determine that the business was not properly brought before the meeting in accordance with this Section 2.4, and if he or she should so determine, he or she shall so declare to the meeting and any such business not properly brought before the meeting shall not be transacted.

(f) This Section 2.4 is expressly intended to apply to any business proposed to be brought before an annual meeting of stockholders other than any proposal made in accordance with Rule 14a-8 under the Exchange Act and included in the Corporation’s proxy statement. The foregoing notice requirements of this Section 2.4 shall be deemed satisfied by a stockholder as to any proposal (other than a nomination) if the stockholder has notified the Corporation of his, her or its intention to present such proposal at an annual meeting in compliance with Rule 14a-8 under the Exchange Act and such stockholder’s proposal has been included in a proxy statement that has been prepared by the Corporation to solicit proxies for such annual meeting. In addition to the requirements of this Section 2.4 with respect to any business proposed to be brought before an annual meeting, each Proposing Person shall comply with all applicable requirements of the Exchange Act with respect to any such business. Nothing in this Section 2.4 shall be deemed to affect the rights of stockholders to request inclusion of proposals in the Corporation’s proxy statement pursuant to Rule 14a-8 under the Exchange Act.

(g) For purposes of these bylaws, “public disclosure” shall mean disclosure in a press release reported by a national news service, in a document publicly filed by the Corporation with the Securities and Exchange Commission pursuant to Sections 13, 14 or 15(d) of the Exchange Act or by such other means as is reasonably

 

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designed to inform the public or securityholders of the Corporation in general of such information including, without limitation, posting on the Corporation’s investor relations website.

2.5 Notice of Nominations for Election to the Board of Directors.

(a) Subject in all respects to the provisions of the Certificate of Incorporation, nominations of any person for election to the Board of Directors at an annual meeting or at a special meeting (but only if the election of directors is a matter specified in the notice of meeting given by or at the direction of the person calling such special meeting) may be made at such meeting only (x) by or at the direction of the Board of Directors, including by any committee or persons authorized to do so by the Board of Directors or these bylaws, or (y) by a stockholder present in person (A) who was a record owner of shares of the Corporation both at the time of giving the notice provided for in this Section 2.5 and at the time of the meeting, (B) is entitled to vote at the meeting, and (C) has complied with this Section 2.5 and Section 2.6 as to such notice and nomination. Unless otherwise required by law, if the stockholder is not present in person to present a nomination, such nomination shall be disregarded, notwithstanding that proxies in respect of such vote may have been received by the Corporation. For purposes of this Section 2.5, “present in person” shall mean that the stockholder proposing that the business be brought before the meeting of the Corporation, or a qualified representative of such stockholder, appear at such meeting. A “qualified representative” of such proposing stockholder shall be a duly authorized officer, manager or partner of such stockholder or any other person authorized by a writing executed by such stockholder or an electronic transmission delivered by such stockholder to act for such stockholder as proxy at the meeting of stockholders and such person must produce such writing or electronic transmission, or a reliable reproduction of the writing or electronic transmission, at the meeting of stockholders. The foregoing clause (y) shall be the exclusive means for a stockholder to make any nomination of a person or persons for election to the Board of Directors at an annual meeting or special meeting.

(b) Without qualification, for a stockholder to make any nomination of a person or persons for election to the Board of Directors at an annual meeting, the stockholder must (1) provide Timely Notice (as defined in Section 2.4) thereof in writing and in proper form to the Secretary of the Corporation, (2) provide the information, agreements and questionnaires with respect to such stockholder and its candidate for nomination as required to be set forth by this Section 2.5 and Section 2.6 and (3) provide any updates or supplements to such notice at the times and in the forms required by this Section 2.5 and Section 2.6.

(i) Without qualification, if the election of directors is a matter specified in the notice of meeting given by or at the direction of the person calling a special meeting in accordance with the Certificate of Incorporation or these bylaws, then for a stockholder to make any nomination of a person or persons for election to the Board of Directors at a special meeting, the stockholder must (i) provide timely notice thereof in writing and in proper form to the Secretary of the Corporation at the principal executive offices of the Corporation, (ii) provide the information with respect to such stockholder and its candidate for nomination as required by this Section 2.5 and Section 2.6 and (iii) provide any updates or supplements to such notice at the times and in the forms required by this Section 2.5. To be timely, a stockholder’s notice for nominations to be made at a special meeting must be delivered to, or mailed and received at, the principal executive offices of the Corporation not earlier than the 120th day prior to such special meeting and not later than the 90th day prior to such special meeting or, if later, the 10th day following the day on which public disclosure (as defined in Section 2.4) of the date of such special meeting was first made.

(ii) In no event shall any adjournment or postponement of an annual meeting or special meeting or the announcement thereof commence a new time period (or extend the time period) for the giving of a stockholder’s notice as described above.

(iii) In no event may a Nominating Person provide notice with respect to a greater number of director candidates than are subject to election by stockholders at the applicable meeting; provided, however that if the Nominating Person is giving the notice on behalf of a beneficial owner, the

 

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foregoing clause shall mean that the number of director candidates a Nominating Person may nominate for election at the applicable meeting on behalf of any beneficial owner shall not be greater than the number of director candidates that are subject to election by stockholders at the applicable meeting. If the Corporation shall, subsequent to such notice, increase the number of directors subject to election at the meeting, such notice as to any additional nominees shall be due on the later of (i) the conclusion of the time period for Timely Notice for an annual meeting or timely notice for a special meeting), (ii) the date set forth in Section 2.5(b)(i), or (iii) the tenth day following the date of public disclosure (as defined in Section 2.4) of such increase.

(c) To be in proper form for purposes of this Section 2.5, a stockholder’s notice to the Secretary shall set forth:

(i) As to each Nominating Person (as defined below), the Stockholder Information (as defined in Section 2.4(c)(i), except that for purposes of this Section 2.5 the term “Nominating Person” shall be substituted for the term “Proposing Person” in all places it appears in Section 2.4(c)(i));

(ii) As to each Nominating Person, any Disclosable Interests (as defined in Section 2.4(c)(ii), except that for purposes of this Section 2.5 the term “Nominating Person” shall be substituted for the term “Proposing Person” in all places it appears in Section 2.4(c)(ii) and the disclosure with respect to the business to be brought before the meeting in Section 2.4(c)(ii) shall be made with respect to the election of directors at the meeting); and

(iii) As to each candidate whom a Nominating Person proposes to nominate for election as a director, (A) all information with respect to such candidate for nomination that would be required to be set forth in a stockholder’s notice pursuant to this Section 2.5 and Section 2.6 if such candidate for nomination were a Nominating Person, (B) all information relating to such candidate for nomination that is required to be disclosed in a proxy statement or other filings required to be made in connection with solicitations of proxies for election of directors in a contested election pursuant to Section 14(a) under the Exchange Act (including such candidate’s written consent to being named in the proxy statement as a nominee and to serving as a director if elected), (C) a description of any direct or indirect material interest in any contract or agreement between or among any Nominating Person, on the one hand, and each candidate for nomination or his or her respective associates or any other participants in such solicitation, on the other hand, including, without limitation, all information that would be required to be disclosed pursuant to Item 404 under Regulation S-K if such Nominating Person were the “registrant” for purposes of such rule and the candidate for nomination were a director or executive officer of such registrant (the disclosures to be made pursuant to the foregoing clauses (A) through (C) are referred to as “Nominee Information”), and (D) a completed and signed questionnaire, representation and agreement as provided in Section 2.6(a).

For purposes of this Section 2.5, the term “Nominating Person” shall mean (i) the stockholder providing the notice of the nomination proposed to be made at the meeting, (ii) the beneficial owner or beneficial owners, if different, on whose behalf the notice of the nomination proposed to be made at the meeting is made, and (iii) any other participant in such solicitation.

(d) A stockholder providing notice of any nomination proposed to be made at a meeting shall further update and supplement such notice, if necessary, so that the information provided or required to be provided in such notice pursuant to this Section 2.5 shall be true and correct as of the record date for stockholders entitled to vote at the meeting and as of the date that is 10 business days prior to the meeting or any adjournment or postponement thereof, and such update and supplement shall be delivered to, or mailed and received by, the Secretary at the principal executive offices of the Corporation not later than five business days after the record date for stockholders entitled to vote at the meeting (in the case of the update and supplement required to be made as of such record date), and not later than eight business days prior to the date for the meeting or, if practicable, any adjournment or postponement thereof (and, if not practicable, on the first practicable date prior

 

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to the date to which the meeting has been adjourned or postponed) (in the case of the update and supplement required to be made as of 10 business days prior to the meeting or any adjournment or postponement thereof). For the avoidance of doubt, the obligation to update and supplement as set forth in this paragraph or any other Section of these bylaws shall not limit the Corporation’s rights with respect to any deficiencies in any notice provided by a stockholder, extend any applicable deadlines hereunder or enable or be deemed to permit a stockholder who has previously submitted notice hereunder to amend or update any nomination or to submit any new nomination.

(e) In addition to the requirements of this Section 2.5 with respect to any nomination proposed to be made at a meeting, each Nominating Person shall comply with all applicable requirements of the Exchange Act with respect to any such nominations.

2.6 Additional Requirements for Valid Nomination of Candidates to Serve as Director and, if Elected, to be Seated as Directors.

(a) To be eligible to be a candidate for election as a director of the Corporation at an annual or special meeting, a candidate must be nominated in the manner prescribed in Section 2.5 and the candidate for nomination, whether nominated by the Board of Directors or by a stockholder of record, must have previously delivered (in accordance with the time period prescribed for delivery in a notice to such candidate given by or on behalf of the Board of Directors), to the Secretary at the principal executive offices of the Corporation, (i) a completed written questionnaire (in a form provided by the Corporation) with respect to the background, qualifications, stock ownership and independence of such proposed nominee, and such additional information with respect to such proposed nominee as would be required to be provided by the Corporation pursuant to Schedule 14A if such proposed nominee were a participant in the solicitation of proxies by the Corporation in connection with such annual or special meeting and (ii) if requested by the Corporation, a written representation and agreement (in a form provided by the Corporation) that such candidate for nomination (A) is not and, if elected as a director during his or her term of office, will not become a party to (1) any agreement, arrangement or understanding with, and has not given and will not give any commitment or assurance to, any person or entity as to how such proposed nominee, if elected as a director of the Corporation, will act or vote on any issue or question (a “Voting Commitment”) that has not been disclosed to the Corporation or (2) any Voting Commitment that could limit or interfere with such proposed nominee’s ability to comply, if elected as a director of the Corporation, with such proposed nominee’s fiduciary duties under applicable law, (B) is not, and will not become a party to, any agreement, arrangement or understanding with any person or entity other than the Corporation with respect to any direct or indirect compensation or reimbursement for service as a director that has not been disclosed therein or to the Corporation, (C) if elected as a director of the Corporation, will comply with all applicable corporate governance, conflict of interest, confidentiality, stock ownership and trading and other policies and guidelines of the Corporation applicable to directors and in effect during such person’s term in office as a director, and (D) consents to being named as a nominee in the Corporation’s proxy statement pursuant to Rule 14a-4(d) under the Exchange Act and any associated proxy card of the Corporation and agrees to serve if elected as a director.

(b) The Board of Directors may also require any proposed candidate for nomination as a Director to furnish such other information as may reasonably be requested by the Board of Directors in writing prior to the meeting of stockholders at which such candidate’s nomination is to be acted upon in order for the Board of Directors to determine the eligibility of such candidate for nomination to be an independent director of the Corporation in accordance with the Corporation’s Corporate Governance Guidelines.

(c) A candidate for nomination as a director shall further update and supplement the materials delivered pursuant to this Section 2.6, if necessary, so that the information provided or required to be provided pursuant to this Section 2.6 shall be true and correct as of the record date for stockholders entitled to vote at the meeting and as of the date that is 10 business days prior to the meeting or any adjournment or postponement thereof, and such update and supplement shall be delivered to, or mailed and received by, the Secretary at the principal executive

 

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offices of the Corporation (or any other office specified by the Corporation in any public announcement) not later than five business days after the record date for stockholders entitled to vote at the meeting (in the case of the update and supplement required to be made as of such record date), and not later than 8 business days prior to the date for the meeting or, if practicable, any adjournment or postponement thereof (and, if not practicable, on the first practicable date prior to the date to which the meeting has been adjourned or postponed) (in the case of the update and supplement required to be made as of 10 business days prior to the meeting or any adjournment or postponement thereof). For the avoidance of doubt, the obligation to update and supplement as set forth in this paragraph or any other Section of these bylaws shall not limit the Corporation’s rights with respect to any deficiencies in any notice or information previously provided, extend any applicable deadlines hereunder or enable or be deemed to permit a stockholder who has previously submitted notice hereunder to amend or update any proposal or to submit any new proposal, including by changing or adding nominees, matters, business or resolutions proposed to be brought before a meeting of the stockholders.

(d) No candidate shall be eligible for nomination as a director of the Corporation unless such candidate for nomination and the Nominating Person seeking to place such candidate’s name in nomination has complied with Section 2.5 and this Section 2.6, as applicable. The presiding officer at the meeting shall, if the facts warrant, determine that a nomination was not properly made in accordance with Section 2.5 and this Section 2.6, and if he or she should so determine, he or she shall so declare such determination to the meeting, the defective nomination shall be disregarded and any ballots cast for the candidate in question (but in the case of any form of ballot listing other qualified nominees, only the ballots cast for the nominee in question) shall be void and of no force or effect.

(e) Notwithstanding anything in these bylaws to the contrary, no candidate for nomination shall be eligible to be seated as a director of the Corporation unless nominated and elected in accordance with Section 2.5 and this Section 2.6.

2.7 Notice of Stockholders Meetings.

Unless otherwise provided by law, the Certificate of Incorporation or these bylaws, the notice of any meeting of stockholders shall be sent or otherwise given in accordance with Section 8.1 of these bylaws not less than 10 days nor more than 60 days before the date of the meeting to each stockholder entitled to vote at such meeting as of the record date for determining the stockholders entitled to notice of the meeting. The notice shall specify the place, if any, date and hour of the meeting, the record date for determining the stockholders entitled to vote at the meeting (if such date is different from the record date for stockholders entitled to notice of the meeting), the means of remote communication, if any, by which stockholders and proxy holders may be deemed to be present in person and vote at such meeting, and, in the case of a special meeting, the purpose or purposes for which the meeting is called.

2.8 Quorum.

Unless otherwise provided by law, the Certificate of Incorporation or these bylaws, the holders of a majority in voting power of the stock issued and outstanding and entitled to vote thereat, present in person (including present by remote communication) or represented by proxy, shall constitute a quorum for the transaction of business at all meetings of the stockholders. Where a separate vote by class or series is required on a matter, the holders of a majority in voting power of such class or series issued and outstanding and entitled to vote, present in person (including present by remote communication) or represented by proxy, shall constitute a quorum for such matter. A quorum, once established at a meeting, shall not be broken by the withdrawal of enough votes to leave less than a quorum. If, however, a quorum is not present or represented at any meeting of the stockholders, then either (i) the person presiding over the meeting or (ii) a majority in voting power of the stockholders entitled to vote at the meeting, present in person (including by remote communication) or represented by proxy, shall have power to recess the meeting or adjourn the meeting from time to time in the manner provided in Section 2.9 of these bylaws until a quorum is present or represented.

 

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2.9 Adjourned Meeting; Notice.

When a meeting is adjourned to another time or place, unless these bylaws otherwise require, notice need not be given of the adjourned meeting if the time, place, if any, thereof, and the means of remote communications, if any, by which stockholders and proxy holders may be deemed to be present in person and vote at such adjourned meeting are announced at the meeting at which the adjournment is taken. At any adjourned meeting, the Corporation may transact any business which might have been transacted at the original meeting. If the adjournment is for more than thirty (30) days, a notice of the adjourned meeting shall be given to each stockholder of record entitled to vote at the meeting. If after the adjournment a new record date for determination of stockholders entitled to vote is fixed for the adjourned meeting, the Board shall fix as the record date for determining stockholders entitled to notice of such adjourned meeting the same or an earlier date as that fixed for determination of stockholders entitled to vote at the adjourned meeting, and shall give notice of the adjourned meeting to each stockholder of record entitled to vote at such meeting as of the record date so fixed for notice of such adjourned meeting.

2.10 Conduct of Business.

Meetings of stockholders shall be presided over by the chairperson of the Board, if any, or in his or her absence by the vice chairperson of the Board, if any, or in the absence of the foregoing persons by the Chief Executive Officer, or in the absence of the foregoing persons by the President, or in the absence of the foregoing persons by a vice president, or in the absence of the foregoing persons by a chairperson designated by the Board, or in the absence of such designation by a chairperson chosen at the meeting. The Secretary of the Corporation shall act as secretary of the meeting, but in his or her absence the chairperson of the meeting may appoint any person to act as secretary of the meeting. The date and time of the opening and the closing of the polls for each matter upon which the stockholders will vote at a meeting shall be announced at the meeting by the person presiding over the meeting. The Board may adopt by resolution such rules and regulations for the conduct of the meeting of stockholders as it shall deem appropriate. Except to the extent inconsistent with such rules and regulations as adopted by the Board, the person presiding over any meeting of stockholders shall have the right and authority to convene and (for any or no reason) to recess and/or adjourn the meeting, to prescribe such rules, regulations and procedures (which need not be in writing) and to do all such acts as, in the judgment of such presiding person, are appropriate for the proper conduct of the meeting. Such rules, regulations or procedures, whether adopted by the Board or prescribed by the person presiding over the meeting, may include, without limitation, the following: (i) the establishment of an agenda or order of business for the meeting; (ii) rules and procedures for maintaining order at the meeting and the safety of those present (including, without limitation, rules and procedures for removal of disruptive persons from the meeting); (iii) limitations on attendance at or participation in the meeting to stockholders entitled to vote at the meeting, their duly authorized and constituted proxies or such other persons as the person presiding over the meeting shall determine; (iv) restrictions on entry to the meeting after the time fixed for the commencement thereof; and (v) limitations on the time allotted to questions or comments by participants. The presiding person at any meeting of stockholders, in addition to making any other determinations that may be appropriate to the conduct of the meeting (including, without limitation, determinations with respect to the administration and/or interpretation of any of the rules, regulations or procedures of the meeting, whether adopted by the Board or prescribed by the person presiding over the meeting), shall, if the facts warrant, determine and declare to the meeting that a matter or business was not properly brought before the meeting and if such presiding person should so determine, such presiding person shall so declare to the meeting and any such matter or business not properly brought before the meeting shall not be transacted or considered. Unless and to the extent determined by the Board or the person presiding over the meeting, meetings of stockholders shall not be required to be held in accordance with the rules of parliamentary procedure.

2.11 Voting.

(a) Except as otherwise provided in the Certificate of Incorporation, these bylaws or the DGCL, each stockholder shall be entitled to one (1) vote for each share of capital stock held by such stockholder.

 

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(b) Except as otherwise provided by the Certificate of Incorporation, at all duly called or convened meetings of stockholders at which a quorum is present, for the election of directors, a plurality of the votes cast shall be sufficient to elect a director. Unless a different or minimum vote is provided for such matter by the Certificate of Incorporation, these bylaws, the rules or regulations of any stock exchange applicable to the Corporation, or applicable law or pursuant to any regulation applicable to the Corporation or its securities, in which case such different or minimum vote shall be the required vote for such matter, each matter (other than the election of directors) presented to the stockholders at a duly called or convened meeting at which a quorum is present shall be decided by a majority of the votes cast (excluding abstentions and broker non-votes) on such matter.

2.12 Record Date for Stockholder Meetings and Other Purposes.

(a) In order that the Corporation may determine the stockholders entitled to notice of any meeting of stockholders or any adjournment thereof, the Board may fix a record date, which record date shall not precede the date upon which the resolution fixing the record date is adopted by the Board, and which record date shall, unless otherwise required by law, not be more than 60 days nor less than 10 days before the date of such meeting. If the Board so fixes a date, such date shall also be the record date for determining the stockholders entitled to vote at such meeting unless the Board determines, at the time it fixes such record date, that a later date on or before the date of the meeting shall be the date for making such determination. If no record date is fixed by the Board, the record date for determining stockholders entitled to notice of or to vote at a meeting of stockholders shall be the close of business on the day immediately preceding the day on which notice is first given, or, if notice is waived, at the close of business on the day immediately preceding the day on which the meeting is held. A determination of stockholders of record entitled to notice of or to vote at a meeting of stockholders shall apply to any adjournment of the meeting; provided, however, that the Board may fix a new record date for determination of stockholders entitled to vote at the adjourned meeting; and in such case shall also fix as the record date for stockholders entitled to notice of such adjourned meeting the same or an earlier date as that fixed for determination of stockholders entitled to vote in accordance herewith at the adjourned meeting.

(b) In order that the Corporation may determine the stockholders entitled to receive payment of any dividend or other distribution or allotment or any rights or the stockholders entitled to exercise any rights in respect of any change, conversion or exchange of capital stock, or for the purpose of any other lawful action, the Board may fix a record date, which record date shall not precede the date upon which the resolution fixing the record date is adopted, and which record date shall be not more than 60 days prior to such action. If no record date is fixed, the record date for determining stockholders for any such purpose shall be at the close of business on the day on which the Board adopts the resolution relating thereto.

(c) Unless otherwise restricted by the Certificate of Incorporation, in order that the Corporation may determine the stockholders entitled to express consent to corporate action in writing without a meeting, the Board may fix a record date, which record date shall not precede the date upon which the resolution fixing the record date is adopted by the Board, and which record date shall not be more than 10 days after the date upon which the resolution fixing the record date is adopted by the Board. If no record date for determining stockholders entitled to express consent to corporate action in writing without a meeting is fixed by the Board, (i) when no prior action of the Board is required by law, the record date for such purpose shall be the first date on which a signed written consent setting forth the action taken or proposed to be taken is delivered to the Corporation in accordance with applicable law, and (ii) if prior action by the Board is required by law, the record date for such purpose shall be at the close of business on the day on which the Board adopts the resolution taking such prior action.

2.13 Proxies.

Each stockholder entitled to vote at a meeting of stockholders or to express consent to corporate action in writing without a meeting may authorize another person or persons to act for such stockholder by proxy authorized by an instrument in writing or by a transmission permitted by law filed in accordance with the

 

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procedure established for the meeting, but no such proxy shall be voted or acted upon after three years from its date, unless the proxy provides for a longer period. The revocability of a proxy that states on its face that it is irrevocable shall be governed by the provisions of Section 212 of the DGCL. A proxy may be in the form of an electronic transmission which sets forth or is submitted with information from which it can be determined that the transmission was authorized by the stockholder.

2.14 List of Stockholders Entitled to Vote.

The Corporation shall prepare, at least 10 days before every meeting of stockholders, a complete list of the stockholders entitled to vote at the meeting (provided, however, that if the record date for determining the stockholders entitled to vote is less than 10 days before the date of the meeting, the list shall reflect the stockholders entitled to vote as of the tenth day before the meeting date), arranged in alphabetical order, and showing the address of each stockholder and the number of shares registered in the name of each stockholder. The Corporation shall not be required to include electronic mail addresses or other electronic contact information on such list. Such list shall be open to the examination of any stockholder, for any purpose germane to the meeting for a period of at least 10 days prior to the meeting: (i) on a reasonably accessible electronic network, provided that the information required to gain access to such list is provided with the notice of the meeting, or (ii) during ordinary business hours, at the Corporation’s principal executive office. In the event that the Corporation determines to make the list available on an electronic network, the Corporation may take reasonable steps to ensure that such information is available only to stockholders of the Corporation. If the meeting is to be held at a place, then the list shall be produced and kept at the time and place of the meeting during the whole time thereof, and may be inspected by any stockholder who is present. If the meeting is to be held solely by means of remote communication, then the list shall also be open to the examination of any stockholder during the whole time of the meeting on a reasonably accessible electronic network, and the information required to access such list shall be provided with the notice of the meeting. Such list shall presumptively determine the identity of the stockholders entitled to vote at the meeting and the number of shares held by each of them. Except as otherwise provided by law, the stock ledger shall be the only evidence as to who are the stockholders entitled to examine the list of stockholders required by this Section 2.14 or to vote in person or by proxy at any meeting of stockholders.

2.15 Inspectors of Election.

Before any meeting of stockholders, the Corporation shall appoint an inspector or inspectors of election to act at the meeting or its adjournment and make a written report thereof. The Corporation may designate one or more persons as alternate inspectors to replace any inspector who fails to act. If any person appointed as inspector or any alternate fails to appear or fails or refuses to act, then the person presiding over the meeting shall appoint a person to fill that vacancy.

Such inspectors shall:

(i) determine the number of shares outstanding and the voting power of each, the number of shares represented at the meeting and the validity of any proxies and ballots;

(ii) count all votes or ballots;

(iii) count and tabulate all votes;

(iv) determine and retain for a reasonable period a record of the disposition of any challenges made to any determination by the inspector(s); and

(v) certify its or their determination of the number of shares represented at the meeting and its or their count of all votes and ballots.

 

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Each inspector, before entering upon the discharge of the duties of inspector, shall take and sign an oath faithfully to execute the duties of inspection with strict impartiality and according to the best of such inspector’s ability. Any report or certificate made by the inspectors of election is prima facie evidence of the facts stated therein. The inspectors of election may appoint such persons to assist them in performing their duties as they determine.

2.16 Delivery to the Corporation.

Whenever Sections 2.4, 2.5, and 2.6 require one or more persons (including a record or beneficial owner of stock) to deliver a document or information to the Corporation or any officer, employee or agent thereof (including any notice, request, questionnaire, revocation, representation or other document or agreement), such document or information shall be in writing exclusively (and not in an electronic transmission) and shall be delivered exclusively by hand (including, without limitation, overnight courier service) or by certified or registered mail, return receipt requested, and the Corporation shall not be required to accept delivery of any document not in such written form or so delivered. For the avoidance of doubt, the Corporation expressly opts out of Section 116 of the DGCL with respect to the delivery of information and documents to the Corporation required by Sections 2.4, 2.5, and 2.6.

2.17 Action without Meeting.

Any action required or permitted to be taken at any annual or special meeting of stockholders of the Corporation may be taken without a meeting, without prior notice and without a vote only to the extent permitted by and in the manner provided in the Certificate of Incorporation and in accordance with applicable law.

Article III—Directors

3.1 Powers.

Except as otherwise provided by the Certificate of Incorporation or the DGCL, the business and affairs of the Corporation shall be managed by or under the direction of the Board.

3.2 Number of Directors.

Subject to the Certificate of Incorporation, the number of directors of the Corporation shall be fixed from time to time solely by resolution of the Board. No reduction of the authorized number of directors shall have the effect of removing any director before that director’s term of office expires.

3.3 Election, Qualification and Term of Office of Directors.

Except as provided in Section 3.4 of these bylaws, and subject to the Certificate of Incorporation, each director, including a director elected to fill a vacancy or newly created directorship, shall hold office until the expiration of the term of the class, if any, for which elected and until such director’s successor is elected and qualified or until such director’s earlier death, resignation, disqualification or removal in accordance with the Certificate of Incorporation. Directors need not be stockholders. The Certificate of Incorporation or these bylaws may prescribe qualifications for directors.

3.4 Resignation; Removal; Vacancies.

Any director may resign at any time upon notice given in writing or by electronic transmission to the Corporation. The resignation shall take effect at the time specified therein or upon the happening of an event specified therein, and if no time or event is specified, at the time of its receipt. When one or more directors so

 

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resigns and the resignation is effective at a future date or upon the happening of an event to occur on a future date, a majority of the directors then in office, including those who have so resigned, shall have power to fill such vacancy or vacancies, the vote thereon to take effect when such resignation or resignations shall become effective, and each director so chosen shall hold office as provided in Section 3.3.

Any director may only be removed from office as provided by the Certificate of Incorporation.

Vacancies resulting from the death, resignation, disqualification or removal of any director, and newly created directorships resulting from any increase in the authorized number of directors, shall be filled as provided by the Certificate of Incorporation. Any director appointed in accordance with the preceding sentence shall hold office for the remainder of the term of the director and until such director’s successor shall have been elected and qualified.

3.5 Place of Meetings; Meetings by Telephone.

The Board may hold meetings, both regular and special, either within or outside the State of Delaware.

Unless otherwise restricted by the Certificate of Incorporation or these bylaws, members of the Board, or any committee designated by the Board, may participate in a meeting of the Board, or any committee, by means of conference telephone or other communications equipment by means of which all persons participating in the meeting can hear each other, and such participation in a meeting pursuant to this bylaw shall constitute presence in person at the meeting.

3.6 Regular Meetings.

Regular meetings of the Board may be held within or outside the State of Delaware and at such time and at such place as which has been designated by the Board and publicized among all directors, either orally or in writing, by telephone, including a voice-messaging system or other system designed to record and communicate messages, facsimile, telegraph or telex, or by electronic mail or other means of electronic transmission. No further notice shall be required for regular meetings of the Board.

3.7 Special Meetings; Notice.

Special meetings of the Board for any purpose or purposes may be called at any time by the chairperson of the Board, the Chief Executive Officer, the President, the Secretary or a majority of the total number of directors constituting the Board.

Notice of the time and place of special meetings shall be:

(i) delivered personally by hand, by courier or by telephone;

(ii) sent by United States first-class mail, postage prepaid;

(iii) sent by facsimile or electronic mail; or

(iv) sent by other means of electronic transmission,

directed to each director at that director’s address, telephone number, facsimile number or electronic mail address, or other address for electronic transmission, as the case may be, as shown on the Corporation’s records.

If the notice is (i) delivered personally by hand, by courier or by telephone, (ii) sent by facsimile or electronic mail, or (iii) sent by other means of electronic transmission, it shall be delivered or sent at least

 

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twenty-four (24) hours before the time of the holding of the meeting. If the notice is sent by U.S. mail, it shall be deposited in the U.S. mail at least four (4) days before the time of the holding of the meeting. The notice need not specify the place of the meeting (if the meeting is to be held at the Corporation’s principal executive office) nor the purpose of the meeting.

3.8 Quorum.

At all meetings of the Board, unless otherwise provided by the Certificate of Incorporation, a majority of the total number of directors shall constitute a quorum for the transaction of business. The vote of a majority of the directors present at any meeting at which a quorum is present shall be the act of the Board, except as may be otherwise specifically provided by statute, the Certificate of Incorporation or these bylaws. If a quorum is not present at any meeting of the Board, then a majority of the directors present thereat may adjourn the meeting from time to time, without further notice other than announcement at the meeting, until a quorum is present.

3.9 Board Action without a Meeting.

Unless otherwise restricted by the Certificate of Incorporation or these bylaws, any action required or permitted to be taken at any meeting of the Board, or of any committee thereof, may be taken without a meeting if all members of the Board or committee, as the case may be, consent thereto in writing or by electronic transmission. After an action is taken, the consent or consents relating thereto shall be filed with the minutes of the proceedings of the Board, or the committee thereof, in the same paper or electronic form as the minutes are maintained. Such action by written consent or consent by electronic transmission shall have the same force and effect as a unanimous vote of the Board.

3.10 Fees and Compensation of Directors.

Unless otherwise restricted by the Certificate of Incorporation or these bylaws, the Board shall have the authority to fix the compensation, including fees and reimbursement of expenses, of directors for services to the Corporation in any capacity.

Article IV—Committees

4.1 Committees of Directors.

The Board may designate one (1) or more committees, each committee to consist, of one (1) or more of the directors of the Corporation in accordance with the requirements of the Certificate of Incorporation. The Board may designate one (1) or more directors as alternate members of any committee, who may replace any absent or disqualified member at any meeting of the committee. In the absence or disqualification of a member of a committee, the member or members thereof present at any meeting and not disqualified from voting, whether or not such member or members constitute a quorum, may unanimously appoint another member of the Board to act at the meeting in the place of any such absent or disqualified member. Any such committee, to the extent permitted by law and provided in the resolution of the Board or in these bylaws, shall have and may exercise all the powers and authority of the Board in the management of the business and affairs of the Corporation, and may authorize the seal of the Corporation to be affixed to all papers that may require it; but no such committee shall have the power or authority to (i) approve or adopt, or recommend to the stockholders, any action or matter (other than the election and removal of directors) expressly required by the DGCL to be submitted to stockholders for approval, or (ii) adopt, amend or repeal any bylaw of the Corporation.

4.2 Committee Minutes.

Each committee shall keep regular minutes of its meetings and report the same to the Board when required.

 

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4.3 Meetings and Actions of Committees.

Meetings and actions of committees shall be governed by, and held and taken in accordance with, the provisions of:

(i) Section 3.5 (place of meetings; meetings by telephone);

(ii) Section 3.6 (regular meetings);

(iii) Section 3.7 (special meetings; notice);

(iv) Section 3.9 (board action without a meeting); and

(v) Section 7.13 (waiver of notice),

in each case, with such changes in the context of those bylaws as are necessary to substitute the committee and its members for the Board and its members. However:

(i) the time of regular meetings of committees may be determined either by resolution of the Board or by resolution of the committee;

(ii) special meetings of committees may also be called by resolution of the Board or the chairperson of the applicable committee; and

(iii) the Board may adopt rules for the governance of any committee to override the provisions that would otherwise apply to the committee pursuant to this Section 4.3, provided that such rules do not violate the provisions of the Certificate of Incorporation or applicable law.

4.4 Subcommittees.

Unless otherwise provided in the Certificate of Incorporation, these bylaws or the resolutions of the Board designating the committee, a committee may create one (1) or more subcommittees, each subcommittee to consist of one (1) or more members of the committee, and delegate to a subcommittee any or all of the powers and authority of the committee.

Article V—Officers

5.1 Officers.

The officers of the Corporation shall include a Chief Executive Officer, a President and a Secretary. The Corporation may also have, at the discretion of the Board, a Chairperson of the Board, a Vice Chairperson of the Board, a Chief Financial Officer, a Treasurer, one (1) or more Vice Presidents, one (1) or more Assistant Vice Presidents, one (1) or more Assistant Treasurers, one (1) or more Assistant Secretaries, and any such other officers as may be appointed in accordance with the provisions of these bylaws. Any number of offices may be held by the same person. No officer need be a stockholder or director of the Corporation.

5.2 Appointment of Officers.

The Board shall appoint the officers of the Corporation, except such officers as may be appointed in accordance with the provisions of Section 5.3.

 

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5.3 Subordinate Officers.

The Board may appoint, or empower the Chief Executive Officer or the President to appoint, such other officers and agents as the business of the Corporation may require. Each of such officers shall hold office for such period, have such authority, and perform such duties as are provided in these bylaws or as the Board may from time to time determine.

5.4 Removal and Resignation of Officers.

Subject to the rights, if any, of an officer under any contract of employment, and to the provisions of the Certificate of Incorporation, any officer may be removed, either with or without cause, by the Board or, except in the case of an officer chosen by the Board, by any officer upon whom such power of removal may be conferred by the Board.

Any officer may resign at any time by giving notice to the Corporation. Any resignation shall take effect at the date of the receipt of that notice or at any later time specified in that notice. Unless otherwise specified in the notice of resignation, the acceptance of the resignation shall not be necessary to make it effective. Any resignation is without prejudice to the rights, if any, of the Corporation under any contract to which the officer is a party.

5.5 Vacancies in Offices.

Any vacancy occurring in any office of the Corporation shall be filled as provided in Section 5.2 or Section 5.3, as applicable.

5.6 Representation of Shares of Other Corporations.

The Chairperson of the Board, the Chief Executive Officer, or the President of this Corporation, or any other person authorized by the Board, the Chief Executive Officer or the President, is authorized to vote, represent and exercise on behalf of this Corporation all rights incident to any and all shares or voting securities of any other corporation or other entity standing in the name of this Corporation. The authority granted herein may be exercised either by such person directly or by any other person authorized to do so by proxy or power of attorney duly executed by such person having the authority.

5.7 Authority and Duties of Officers.

All officers of the Corporation shall respectively have such authority and perform such duties in the management of the business of the Corporation as may be provided herein or designated from time to time by the Board and, to the extent not so provided, as generally pertain to their respective offices, subject to the control of the Board.

5.8 Compensation.

The compensation of the officers of the Corporation for their services as such shall be fixed from time to time by or at the direction of the Board. An officer of the Corporation shall not be prevented from receiving compensation by reason of the fact that he or she is also a director of the Corporation.

Article VI—Records

A stock ledger consisting of one or more records in which the names of all of the Corporation’s stockholders of record, the address and number of shares registered in the name of each such stockholder, and all issuances

 

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and transfers of stock of the corporation are recorded in accordance with Section 224 of the DGCL shall be administered by or on behalf of the Corporation. Any records administered by or on behalf of the Corporation in the regular course of its business, including its stock ledger, books of account, and minute books, may be kept on, or by means of, or be in the form of, any information storage device, or method, or one or more electronic networks or databases (including one or more distributed electronic networks or databases), provided that the records so kept can be converted into clearly legible paper form within a reasonable time and, with respect to the stock ledger, that the records so kept (i) can be used to prepare the list of stockholders specified in Sections 219 and 220 of the DGCL, (ii) record the information specified in Sections 156, 159, 217(a) and 218 of the DGCL, and (iii) record transfers of stock as governed by Article 8 of the Uniform Commercial Code as adopted in the State of Delaware.

Article VII—General Matters

7.1 Execution of Corporate Contracts and Instruments.

The Board, except as otherwise provided in these bylaws, may authorize any officer or officers, or agent or agents, to enter into any contract or execute any instrument in the name of and on behalf of the Corporation; such authority may be general or confined to specific instances. Except as otherwise required by the Certificate of Incorporation or these bylaws (including, without limitation, as otherwise required by Section 2.16), any document, including, without limitation, any consent, agreement, certificate or instrument, required by the DGCL, the Certificate of Incorporation or these bylaws to be executed by any officer, director, stockholder, employee or agent of the Corporation may be executed using a facsimile, by docusign or any other form of electronic signature to the fullest extent permitted by applicable law. All other contracts, agreements, certificates or instruments to be executed on behalf of the Corporation may be executed using a facsimile, docusign or any other form of electronic signature to the fullest extent permitted by applicable law.

7.2 Stock Certificates.

The shares of the Corporation shall be represented by certificates, provided that the Board by resolution may provide that some or all of the shares of any class or series of stock of the Corporation shall be uncertificated. Certificates for the shares of stock, if any, shall be in such form as is consistent with the Certificate of Incorporation and applicable law. Every holder of stock represented by a certificate shall be entitled to have a certificate signed by, or in the name of the Corporation by, any two officers authorized to sign stock certificates representing the number of shares registered in certificate form. The Chairperson or Vice Chairperson of the Board, Chief Executive Officer, the President, the Treasurer, or the Secretary of the Corporation shall be specifically authorized to sign stock certificates. Any or all of the signatures on the certificate may be a facsimile. In case any officer, transfer agent or registrar who has signed or whose facsimile signature has been placed upon a certificate has ceased to be such officer, transfer agent or registrar before such certificate is issued, it may be issued by the Corporation with the same effect as if he or she were such officer, transfer agent or registrar at the date of issue.

The Corporation may issue the whole or any part of its shares as partly paid and subject to call for the remainder of the consideration to be paid therefor. Upon the face or back of each stock certificate issued to represent any such partly paid shares, or upon the books and records of the Corporation in the case of uncertificated partly paid shares, the total amount of the consideration to be paid therefor and the amount paid thereon shall be stated. Upon the declaration of any dividend on fully paid shares, the Corporation shall declare a dividend upon partly paid shares of the same class, but only upon the basis of the percentage of the consideration actually paid thereon.

7.3 Special Designation of Certificates.

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of each class of stock or series thereof and the qualifications, limitations or restrictions of such preferences and/or rights shall be set forth in full or summarized on the face or on the back of the certificate that the Corporation shall issue to represent such class or series of stock (or, in the case of uncertificated shares, set forth in a notice provided pursuant to Section 151 of the DGCL); provided, however, that except as otherwise provided in Section 202 of the DGCL, in lieu of the foregoing requirements, there may be set forth on the face of back of the certificate that the Corporation shall issue to represent such class or series of stock (or, in the case of any uncertificated shares, included in the aforementioned notice) a statement that the Corporation will furnish without charge to each stockholder who so requests the powers, the designations, the preferences and the relative, participating, optional or other special rights of each class of stock or series thereof and the qualifications, limitations or restrictions of such preferences and/or rights.

7.4 Lost Certificates.

Except as provided in this Section 7.4, no new certificates for shares shall be issued to replace a previously issued certificate unless the latter is surrendered to the Corporation and cancelled at the same time. The Corporation may issue a new certificate of stock or uncertificated shares in the place of any certificate theretofore issued by it, alleged to have been lost, stolen or destroyed, and the Corporation may require the owner of the lost, stolen or destroyed certificate, or such owner’s legal representative, to give the Corporation a bond sufficient to indemnify it against any claim that may be made against it on account of the alleged loss, theft or destruction of any such certificate or the issuance of such new certificate or uncertificated shares.

7.5 Shares Without Certificates

The Corporation may adopt a system of issuance, recordation and transfer of its shares of stock by electronic or other means not involving the issuance of certificates, provided the use of such system by the Corporation is permitted in accordance with applicable law.

7.6 Construction; Definitions.

Unless the context requires otherwise, the general provisions, rules of construction and definitions in the DGCL shall govern the construction of these bylaws. Without limiting the generality of this provision, the singular number includes the plural and the plural number includes the singular.

7.7 Dividends.

The Board, subject to any restrictions contained in either (i) the DGCL or (ii) the Certificate of Incorporation, may declare and pay dividends upon the shares of its capital stock. Dividends may be paid in cash, in property or in shares of the Corporation’s capital stock.

The Board may set apart out of any of the funds of the Corporation available for dividends a reserve or reserves for any proper purpose and may abolish any such reserve. Such purposes shall include but not be limited to equalizing dividends, repairing or maintaining any property of the Corporation, and meeting contingencies.

7.8 Fiscal Year.

The fiscal year of the Corporation shall be fixed by resolution of the Board and may be changed by the Board.

7.9 Seal.

The Corporation may adopt a corporate seal, which shall be adopted and which may be altered by the Board. The Corporation may use the corporate seal by causing it or a facsimile thereof to be impressed or affixed or in any other manner reproduced.

 

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7.10 Transfer of Stock.

Shares of the Corporation shall be transferable in the manner prescribed by law, in these bylaws and in the Certificate of Incorporation. Shares of stock of the Corporation shall be transferred on the books of the Corporation only by the holder of record thereof or by such holder’s attorney duly authorized in writing, upon surrender to the Corporation of the certificate or certificates representing such shares endorsed by the appropriate person or persons (or by delivery of duly executed instructions with respect to uncertificated shares), with such evidence of the authenticity of such endorsement or execution, transfer, authorization and other matters as the Corporation may reasonably require, and accompanied by all necessary stock transfer stamps. No transfer of stock shall be valid as against the Corporation for any purpose until it shall have been entered in the stock records of the Corporation by an entry showing the names of the persons from and to whom it was transferred.

7.11 Stock Transfer Agreements.

The Corporation shall have power to enter into and perform any agreement with any number of stockholders of any one or more classes or series of stock of the Corporation to restrict the transfer of shares of stock of the Corporation of any one or more classes or series owned by such stockholders in any manner not prohibited by the DGCL.

7.12 Registered Stockholders.

The Corporation:

(i) shall be entitled to recognize the exclusive right of a person registered on its books as the owner of shares to receive dividends and to vote as such owner; and

(ii) shall not be bound to recognize any equitable or other claim to or interest in such share or shares on the part of another person, whether or not it shall have express or other notice thereof, except as otherwise required by the laws of the State of Delaware.

7.13 Waiver of Notice.

Whenever notice is required to be given under any provision of the DGCL, the Certificate of Incorporation or these bylaws, a written waiver, signed by the person entitled to notice, or a waiver by electronic transmission by the person entitled to notice, whether before or after the time of the event for which notice is to be given, shall be deemed equivalent to notice. Attendance of a person at a meeting shall constitute a waiver of notice of such meeting, except when the person attends a meeting for the express purpose of objecting at the beginning of the meeting, to the transaction of any business because the meeting is not lawfully called or convened. Neither the business to be transacted at, nor the purpose of, any regular or special meeting of the stockholders or the Board need be specified in any written waiver of notice or any waiver by electronic transmission unless so required by the Certificate of Incorporation or these bylaws.

Article VIII—Notice

8.1 Delivery of Notice; Notice by Electronic Transmission.

Without limiting the manner by which notice otherwise may be given effectively to stockholders, any notice to stockholders given by the Corporation under any provisions of the DGCL, the Certificate of Incorporation, or these bylaws may be given in writing directed to the stockholder’s mailing address (or by electronic transmission directed to the stockholder’s electronic mail address, as applicable) as it appears on the records of the Corporation and shall be given (1) if mailed, when the notice is deposited in the U.S. mail, postage prepaid, (2) if delivered by courier service, the earlier of when the notice is received or left at such stockholder’s address or

 

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(3) if given by electronic mail, when directed to such stockholder’s electronic mail address unless the stockholder has notified the Corporation in writing or by electronic transmission of an objection to receiving notice by electronic mail. A notice by electronic mail must include a prominent legend that the communication is an important notice regarding the Corporation.

Without limiting the manner by which notice otherwise may be given effectively to stockholders, any notice to stockholders given by the Corporation under any provision of the DGCL, the Certificate of Incorporation or these bylaws shall be effective if given by electronic mail in accordance with the first paragraph of this Section or by any other form of electronic transmission consented to by the stockholder to whom the notice is given. Any such consent shall be revocable by the stockholder by written notice or electronic transmission to the Corporation.

Any notice given pursuant to the preceding paragraph shall be deemed given:

 

  (i)

if by facsimile telecommunication, when directed to a number at which the stockholder has consented to receive notice;

 

  (ii)

if by a posting on an electronic network together with separate notice to the stockholder of such specific posting, upon the later of (A) such posting and (B) the giving of such separate notice; and

 

  (iii)

if by any other form of electronic transmission, when directed to the stockholder.

Notwithstanding the foregoing, a notice may not be given by an electronic transmission from and after the time that (1) the Corporation is unable to deliver by such electronic transmission two (2) consecutive notices given by the Corporation and (2) such inability becomes known to the Secretary or an Assistant Secretary of the Corporation or to the transfer agent, or other person responsible for the giving of notice, provided, however, the inadvertent failure to discover such inability shall not invalidate any meeting or other action.

An affidavit of the Secretary or an Assistant Secretary or of the transfer agent or other agent of the Corporation that the notice has been given shall, in the absence of fraud, be prima facie evidence of the facts stated therein.

Article IX—Forum

9.1 Choice of Forum.

(a) Unless the Corporation expressly consents in writing to the selection of an alternative forum, the Court of Chancery of the State of Delaware or, if the Court of Chancery lacks subject matter jurisdiction, another state or federal court located within the State of Delaware (collectively, the “Selected Courts”) shall, to the fullest extent permitted by law, be the sole and exclusive forum for resolution of (a) any derivative action or proceeding brought on behalf of the Corporation, (b) any action asserting a claim of breach of a fiduciary duty owed by any current or former director, officer, employee, agent or stockholder of the Corporation to the Corporation or any of the Corporation’s stockholders, or any claim for aiding and abetting such an alleged breach, (c) any action governed by the “internal affairs doctrine” or arising pursuant to any provision of these bylaws or the Certificate of Incorporation, or to interpret, apply, enforce or determine the validity of these bylaws or the Certificate of Incorporation, or (d) any action asserting a claim against the Corporation or any current or former director, officer, employee, agent or stockholder of the Corporation (i) arising pursuant to any provision of the DGCL or (ii) as to which the DGCL confers jurisdiction on the Court of Chancery; provided, however, that the foregoing shall not apply to any action, claim or proceeding (A) as to which a Selected Court determines that there is an indispensable party not subject to the jurisdiction of the Selected Courts (and the indispensable party does not consent to the personal jurisdiction of the Selected Courts within ten (10) days following such determination) or (B) the subject matter of which is within the scope contemplated by Section 9.1(b).

 

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(b) Unless the Corporation expressly consents in writing to the selection of an alternative forum, the federal district courts of the United States of America shall, to the fullest extent permitted by law, be the sole and exclusive forum for resolution of any action, claim or proceeding arising under the Securities Act of 1933, as amended.

(c) Notwithstanding the foregoing, the provisions of this Section 9.1 will not apply to suits brought to enforce any liability or duty created by the Exchange Act or any other claim for which the federal courts have exclusive jurisdiction.

9.2 Consent to Jurisdiction.

If any action, claim or proceeding the subject matter of which is within the scope contemplated by Section 9.1 is filed in the name of any stockholder of the Corporation in a court other than the applicable courts specified in Section 9.1, then such stockholder shall, to the fullest extent permitted by applicable law, be deemed to have consented to (a) the personal jurisdiction of the applicable courts specified in Section 9.1 in connection with any action brought in any such court to enforce this Article IX and (b) having service of process made upon such stockholder in any such action by service upon such stockholder’s counsel in such action as agent for such stockholder.

9.3 Remedies.

Failure to enforce the provisions of this Article IX would cause the Corporation irreparable harm and, accordingly, the Corporation shall be entitled to equitable relief, including injunctive relief and specific performance, to enforce such provisions.

Article X—Indemnification

10.1 Indemnification of Directors and Officers.

The Corporation shall indemnify and hold harmless, to the fullest extent permitted by the DGCL as it presently exists or may hereafter be amended, any director or officer of the Corporation who was or is made or is threatened to be made a party or is otherwise involved in any action, suit or proceeding, whether civil, criminal, administrative or investigative (a “Proceeding”) by reason of the fact that he or she, or a person for whom he or she is the legal representative, is or was a director or officer of the Corporation or, while serving as a director or officer of the Corporation, is or was serving at the request of the Corporation as a director, officer, employee or agent of another corporation or of a partnership, joint venture, trust, enterprise or non-profit entity, including service with respect to employee benefit plans (any such person a “covered person”), against all liability and loss suffered and expenses (including attorneys’ fees, judgments, fines ERISA excise taxes or penalties and amounts paid in settlement) reasonably incurred by such person in connection with any such Proceeding. Notwithstanding the preceding sentence, except as otherwise provided in Section 10.4, the Corporation shall be required to indemnify a person in connection with a Proceeding initiated by such person only if the initiation of such Proceeding (or part thereof) by such person was authorized in advance in the specific case by the Board.

10.2 Indemnification of Others.

The Corporation shall have the power to indemnify and hold harmless, to the fullest extent permitted by applicable law as it presently exists or may hereafter be amended, any employee or agent of the Corporation who was or is made or is threatened to be made a party or is otherwise involved in any Proceeding by reason of the fact that he or she, or a person for whom he or she is the legal representative, is or was an employee or agent of the Corporation or is or was serving at the request of the Corporation as a director, officer, employee or agent of another corporation or of a partnership, joint venture, trust, enterprise or non-profit entity, including service with respect to employee benefit plans, against all liability and loss suffered and expenses reasonably incurred by such person in connection with any such Proceeding.

 

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10.3 Prepayment of Expenses.

The Corporation shall to the fullest extent not prohibited by applicable law pay the expenses (including attorneys’ fees) incurred by any covered person, and may pay the expenses incurred by any employee or agent of the Corporation, in defending any Proceeding in advance of its final disposition; provided, however, that such payment of expenses in advance of the final disposition of the Proceeding shall be made only upon receipt of an undertaking by the person to repay all amounts advanced if it should be ultimately determined that the person is not entitled to be indemnified under this Article X or otherwise.

10.4 Determination; Claim.

If a claim for indemnification (following the final disposition of such Proceeding) under this Article X is not paid in full within sixty (60) days, or a claim for advancement of expenses under this Article X is not paid in full within thirty (30) days, after a written claim therefor has been received by the Corporation, the claimant may thereafter (but not before) file suit to recover the unpaid amount of such claim and, if successful in whole or in part, shall be entitled to be paid the expense of prosecuting such claim to the fullest extent permitted by law. In any such action the Corporation shall have the burden of proving that the claimant was not entitled to the requested indemnification or advancement of expenses under applicable law.

10.5 Non-Exclusivity of Rights.

The rights conferred on any person by this Article X shall not be exclusive of any other rights which such person may have or hereafter acquire under any statute, provision of the Certificate of Incorporation, these bylaws, agreement, vote of stockholders or disinterested directors or otherwise.

10.6 Insurance.

The Corporation may purchase and maintain insurance on behalf of any person who is or was a director, officer, employee or agent of the Corporation, or is or was serving at the request of the Corporation as a director, officer, employee or agent of another corporation, partnership, joint venture, trust enterprise or non-profit entity, including service with respect to employee benefit plans, against any liability, loss or expense incurred by him or her in any such capacity, or arising out of his or her status as such, whether or not the Corporation would have the power to indemnify him or her against such liability, loss or expense under the provisions of the DGCL.

10.7 Other Indemnification.

The Corporation’s obligation, if any, to indemnify or advance expenses to any person who was or is serving at its request as a director, officer, employee or agent of another corporation, partnership, joint venture, trust, enterprise or non-profit entity shall be reduced by any amount such person may collect as indemnification or advancement of expenses from such other corporation, partnership, joint venture, trust, enterprise or non-profit entity.

10.8 Continuation of Indemnification.

The rights to indemnification and to advancement of expenses provided by, or granted pursuant to, this Article X shall continue notwithstanding that the person has ceased to be a director or officer of the Corporation and shall inure to the benefit of the estate, heirs, executors, administrators, legatees and distributees of such person.

10.9 Amendment or Repeal; Interpretation.

The provisions of this Article X shall constitute a contract between the Corporation, on the one hand, and, on the other hand, each individual who serves or has served as a director or officer of the Corporation (whether before or after the adoption of these bylaws), in consideration of such person’s performance of such services, and pursuant to this Article X the Corporation intends to be legally bound to each such current or former director or

 

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officer of the Corporation. With respect to current and former directors and officers of the Corporation, the rights conferred under this Article X are present contractual rights and such rights are fully vested, and shall be deemed to have vested fully, immediately upon adoption of theses bylaws. With respect to any directors or officers of the Corporation who commence service following adoption of these bylaws, the rights conferred under this provision shall be present contractual rights and such rights shall fully vest, and be deemed to have vested fully, immediately upon such director or officer commencing service as a director or officer of the Corporation. Any repeal or modification of the foregoing provisions of this Article X shall not adversely affect any right or protection (i) hereunder of any person in respect of any act or omission occurring prior to the time of such repeal or modification or (ii) under any agreement providing for indemnification or advancement of expenses to an officer or director of the Corporation in effect prior to the time of such repeal or modification.

Any reference to an officer of the Corporation in this Article X shall be deemed to refer exclusively to the Chief Executive Officer, President, and Secretary, or other officer of the Corporation appointed by (x) the Board pursuant to Article V of these bylaws or (y) an officer to whom the Board has delegated the power to appoint officers pursuant to Article V of these bylaws, and any reference to an officer of any other corporation, partnership, joint venture, trust, employee benefit plan or other enterprise shall be deemed to refer exclusively to an officer appointed by the board of directors (or equivalent governing body) of such other entity pursuant to the certificate of incorporation and bylaws (or equivalent organizational documents) of such other entity. The fact that any person who is or was an employee of the Corporation or an employee of any other corporation, partnership, joint venture, trust, employee benefit plan or other enterprise has been given or has used the title of “Vice President” or any other title that could be construed to suggest or imply that such person is or may be an officer of the Corporation or of such other corporation, partnership, joint venture, trust, employee benefit plan or other enterprise shall not in and of itself result in such person being constituted as, or being deemed to be, an officer of the Corporation or of such other corporation, partnership, joint venture, trust, employee benefit plan or other enterprise for purposes of this Article X .

10.10 Other Indemnification and Advancement of Expenses. 

This Article X shall not limit the right of the Corporation, to the fullest extent and in the manner permitted by law, to indemnify and to advance expenses to other persons serving the Corporation when and as authorized by appropriate corporate action.

Article XI—Amendments

The Board is expressly empowered to adopt, amend or repeal these bylaws. The stockholders also shall have power to adopt, amend or repeal these bylaws at any annual meeting of stockholders, or any special meeting of stockholders called for such purpose; provided, however, that such action by stockholders shall require, in addition to any other vote required by the Certificate of Incorporation or applicable law, the affirmative vote of the holders of at least two-thirds (2/3) of the voting power of all of the outstanding shares of capital stock of the Corporation; provided further, however, that if the Board recommends that stockholders approve such amendment or repeal at such meeting of stockholders, such amendment or repeal shall only require the affirmative vote of a majority of the voting power of all of the outstanding shares of capital stock of the Corporation.

Article XII—Definitions

As used in these bylaws, unless the context otherwise requires, the following terms shall have the following meanings:

An “electronic transmission” means any form of communication, not directly involving the physical transmission of paper, including the use of, or participation in, one or more electronic networks or databases

 

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(including one or more distributed electronic networks or databases), that creates a record that may be retained, retrieved and reviewed by a recipient thereof, and that may be directly reproduced in paper form by such a recipient through an automated process.

An “electronic mail” means an electronic transmission directed to a unique electronic mail address (which electronic mail shall be deemed to include any files attached thereto and any information hyperlinked to a website if such electronic mail includes the contact information of an officer or agent of the Corporation who is available to assist with accessing such files and information).

An “electronic mail address” means a destination, commonly expressed as a string of characters, consisting of a unique user name or mailbox (commonly referred to as the “local part” of the address) and a reference to an internet domain (commonly referred to as the “domain part” of the address), whether or not displayed, to which electronic mail can be sent or delivered.

The term “person” means any individual, general partnership, limited partnership, limited liability company, corporation, trust, business trust, joint stock company, joint venture, unincorporated association, cooperative or association or any other legal entity or organization of whatever nature, and shall include any successor (by merger or otherwise) of such entity.

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Annex D

SUBSCRIPTION AGREEMENT

This SUBSCRIPTION AGREEMENT (this “Subscription Agreement”) is entered into on May 11, 2021, by and between Soaring Eagle Acquisition Corp., a Cayman Islands exempted company (the “Company”), and the undersigned subscriber (“Subscriber”).

RECITALS

WHEREAS, concurrently with the execution of this Subscription Agreement, the Company is entering into an Agreement and Plan of Merger with Ginkgo Bioworks, Inc., a Delaware corporation (the “Target”) and SEAC Merger Sub Inc., a Delaware corporation and wholly owned subsidiary of the Company (“Merger Sub”), pursuant to which (and subject to the terms and conditions set forth therein) the Company will be domesticated as a Delaware corporation in accordance with Section 388 of the General Corporation Law of the State of Delaware and Part XII of the Cayman Islands Companies Act (As Revised) (the “Domestication”), and, promptly thereafter, Merger Sub will merge with and into the Target, with the Target surviving the merger as a wholly owned subsidiary of the Company (such agreement, as amended, supplemented, restated or otherwise modified from time to time, the “Merger Agreement” and the transactions contemplated by the Merger Agreement, the “Transaction”);

WHEREAS, in connection with the Transaction, Subscriber desires to subscribe for and purchase from the Company, following the Domestication and prior to the consummation of the Transaction, that number of shares of the Company’s Class A common stock, par value $0.0001 per share (the “Class A Common Shares”), set forth on the signature page hereto (the “Subscribed Shares”) for a purchase price of $10.00 per share (the “Per Share Price”), and the Company desires to issue and sell to Subscriber the Subscribed Shares in consideration of the payment, by or on behalf of Subscriber to the Company, of the aggregate Per Share Price for all Subscribed Shares (the “Purchase Price”);

WHEREAS, concurrently with the execution of this Subscription Agreement, the Company is entering into subscription agreements (the “Other Subscription Agreements”) with certain other investors (the “Other Subscribers”) acquiring Class A Common Shares at the same Per Share Price; and

WHEREAS, pursuant to this Subscription Agreement and the Other Subscription Agreements, Subscriber and the Other Subscribers collectively have agreed to purchase on the closing date of the Transaction (the “Closing Date”) an aggregate of up to 77,500,000 Class A Common Shares, each at the Per Share Price.

NOW, THEREFORE, in consideration of the foregoing and the mutual representations, warranties and covenants, and subject to the conditions, herein contained, and intending to be legally bound hereby, the parties hereto hereby agree as follows:

AGREEMENT

1. Subscription. On the terms and subject to the conditions hereof, at the Closing (as defined below), Subscriber hereby irrevocably subscribes for and agrees to purchase from the Company, and the Company hereby agrees to issue and sell to Subscriber, upon the payment of the Purchase Price by or on behalf of Subscriber to the Company, the Subscribed Shares (such subscription and issuance, the “Subscription”). Subscriber and the Company acknowledge that, as a result of the Domestication, the Subscribed Shares will be shares of common stock in a Delaware corporation and will not be ordinary shares of a Cayman Islands exempted company.

 

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2. Closing.

(a) The consummation of the Subscription (the “Closing”) shall occur on the Closing Date, following the Domestication and prior to or substantially concurrent with (and subject to) the consummation of the Transaction.

(b) At least five (5) Business Days before the anticipated Closing Date, the Company shall deliver or cause to be delivered written notice to Subscriber (the “Closing Notice”) specifying (i) the anticipated Closing Date and (ii) the wire instructions for delivery of the Purchase Price to the Company. No later than two (2) Business Days prior to the anticipated Closing Date as set forth in the Closing Notice, Subscriber shall deliver to the Company (A) the Purchase Price in cash via wire transfer to the account of the Company specified in the Closing Notice and (B) such information as is reasonably requested in the Closing Notice in order for the Company to issue the Subscribed Shares to Subscriber at the Closing. The Company shall deliver to Subscriber (1) at the Closing, the Subscribed Shares in book entry form, free and clear of any liens or other restrictions (other than those arising under this Subscription Agreement or applicable securities laws), in the name of Subscriber (or its nominee in accordance with its delivery instructions) or to a custodian designated by Subscriber, as applicable, and (2) promptly after the Closing, written notice from the Company or its transfer agent evidencing the issuance to Subscriber of the Subscribed Shares on and as of the Closing Date. In the event that the consummation of the Transaction does not occur within one (1) Business Day after the anticipated Closing Date specified in the Closing Notice, the Company shall promptly (but in no event later than two (2) Business Days after the anticipated Closing Date specified in the Closing Notice) return the funds so delivered by Subscriber to the Company by wire transfer of United States dollars in immediately available funds to the account specified by Subscriber, and, to the extent that any Subscribed Shares have been delivered to Subscriber, such Subscribed Shares shall be deemed repurchased and any related book entries shall be cancelled. For the avoidance of doubt, unless this Subscription Agreement has been validly terminated pursuant to Section 7, the return of any funds delivered by Subscriber to the Company shall not terminate this Subscription Agreement or relieve Subscriber of any of its obligations hereunder (including its obligation to purchase the Subscribed Shares at the Closing following the Company’s delivery to Subscriber of a new Closing Notice). For the purposes of this Subscription Agreement, “Business Day” means any day other than a Saturday, Sunday or a day on which the Federal Reserve Bank of New York is closed.

(c) The Closing shall be subject to the satisfaction or written waiver by each of the Company and Subscriber of the conditions that, on the Closing Date:

 

  (i)

no suspension of the qualification of the Class A Common Shares for offering or sale or trading by the applicable stock exchange on which the Class A Common Shares are to be listed (the “Exchange”) or the United States Securities and Exchange Commission (the “Commission”) shall be in effect;

 

  (ii)

all conditions precedent to the closing of the Transaction set forth in the Merger Agreement, including the approval by the Company’s shareholders, shall have been satisfied (as determined by the parties to the Merger Agreement) (other than those of such conditions precedent that, by their nature, are to be satisfied at the closing of the Transaction, including to the extent that any such condition precedent is, or is dependent upon, the consummation of the transactions contemplated hereby) or waived, and the closing of the Transaction shall be scheduled to occur substantially concurrently with the Closing; and

 

  (iii)

no governmental authority of competent jurisdiction shall have enacted, issued, promulgated, enforced or entered any judgment, order, law, rule or regulation (whether temporary, preliminary or permanent) which is then in effect and has the effect of making consummation of the transactions contemplated hereby illegal or otherwise restraining or prohibiting consummation of the transactions contemplated hereby, and, to the knowledge of the Company, no such governmental authority shall have instituted a proceeding seeking to impose any such restraint or prohibition which remains pending.

 

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(d) The obligation of the Company to consummate the Closing shall be subject to the satisfaction or written waiver by the Company of the additional conditions that, on the Closing Date:

 

  (i)

all representations and warranties of Subscriber contained in this Subscription Agreement shall be true and correct in all material respects (other than representations and warranties that are qualified as to materiality or Subscriber Material Adverse Effect (as defined below), which representations and warranties shall be true and correct in all respects) at and as of the Closing; and

 

  (ii)

Subscriber shall have performed, satisfied and complied in all material respects with all covenants, agreements and conditions required by this Subscription Agreement to be performed, satisfied or complied with by it at or prior to the Closing.

(e) The obligation of Subscriber to consummate the Closing shall be subject to the satisfaction or written waiver by Subscriber of the additional conditions that, on the Closing Date:

 

  (i)

all representations and warranties of the Company contained in this Subscription Agreement shall be true and correct (without giving effect to any limitation as to “materiality” or “Company Material Adverse Effect” (as defined below) or any similar limitation contained herein) at and as of the Closing (except to the extent that any such representation or warranty expressly speaks as of an earlier time, in which case such representation or warranty shall be true and correct as of such earlier date), except where the failure of such representations and warranties of the Company to be so true and correct has not had and would not reasonably be expected to have a Company Material Adverse Effect;

 

  (ii)

the Company shall have performed, satisfied and complied in all material respects with all covenants, agreements and conditions required by this Subscription Agreement to be performed, satisfied or complied with by it at or prior to the Closing;

 

  (iii)

except to the extent consented to in writing by Subscriber, the Merger Agreement shall not have been amended in writing by the Company in a manner that would reasonably be expected to materially and adversely affect the economic benefits that Subscriber would reasonably expect to receive under this Subscription Agreement; and

 

  (iv)

the Subscribed Shares shall be approved for listing on the Exchange.

(f) Prior to or at the Closing, Subscriber shall deliver to the Company a duly completed and executed Internal Revenue Service Form W-9 or appropriate Form W-8.

3. Company Representations and Warranties. The Company represents and warrants to Subscriber that:

(a) The Company (i) is duly organized, validly existing and in good standing under the laws of its jurisdiction of incorporation, (ii) has the requisite power (corporate or otherwise) and authority to own, lease and operate its properties, to carry on its business as it is now being conducted and to enter into and perform its obligations under this Subscription Agreement, and (iii) is duly licensed or qualified to conduct its business and, if applicable, is in good standing under the laws of each jurisdiction (other than its jurisdiction of incorporation) in which the conduct of its business or the ownership of its properties or assets requires such license or qualification, except, with respect to the foregoing clause (iii), where the failure to be in good standing would not reasonably be expected to have a Company Material Adverse Effect. For purposes of this Subscription Agreement, a “Company Material Adverse Effect” means an event, change, development, occurrence, condition or effect with respect to the Company and its subsidiaries, taken together as a whole (on a consolidated basis), that, individually or in the aggregate, would reasonably be expected to have a material adverse effect on the business, financial condition, shareholders’ equity or results of operations of the Company and its subsidiaries, taken together as a whole (on a consolidated basis).

(b) The Subscribed Shares will have been duly authorized prior to the Closing and, when issued and delivered to Subscriber against full payment therefor in accordance with the terms of this Subscription Agreement, will be validly issued, fully paid and non-assessable, free and clear of any liens or other restrictions

 

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(other than those arising under this Subscription Agreement or applicable securities laws), and will not have been issued in violation of, or subject to, any preemptive or similar rights created under the Company’s organizational documents or the laws of its jurisdiction of incorporation.

(c) This Subscription Agreement has been duly authorized, validly executed and delivered by the Company, and, assuming the due authorization, execution and delivery of the same by Subscriber, this Subscription Agreement shall constitute the valid and legally binding obligation of the Company, enforceable against the Company in accordance with its terms, except as such enforceability may be limited by bankruptcy, insolvency, reorganization, moratorium and similar laws affecting creditors’ rights generally and by the availability of equitable remedies.

(d) The execution and delivery of this Subscription Agreement, the issuance and sale of the Subscribed Shares and the compliance by the Company with all of the provisions of this Subscription Agreement and the consummation of the transactions contemplated hereby will not conflict with or result in a breach or violation of any of the terms or provisions of, or constitute a default under, or result in the creation or imposition of any lien, charge or encumbrance upon any of the property or assets of the Company pursuant to the terms of (i) any indenture, mortgage, deed of trust, loan agreement, lease, license or other agreement or instrument to which the Company is a party or by which the Company is bound or to which any of the property or assets of the Company is subject; (ii) the organizational documents of the Company; or (iii) any statute or any judgment, order, rule or regulation of any court or governmental agency or body, domestic or foreign, having jurisdiction over the Company or any of its properties that, in the case of clauses (i) and (iii), would reasonably be expected to have a Company Material Adverse Effect or have a material adverse effect on the Company’s ability to consummate the transactions contemplated hereby, including the issuance and sale of the Subscribed Shares.

(e) Assuming the accuracy of the representations and warranties of Subscriber, the Company is not required to obtain any consent, waiver, authorization or order of, give any notice to, or make any filing or registration with, any court or other federal, state, local or other governmental authority, self-regulatory organization (including the Exchange) or other person in connection with the execution, delivery and performance of this Subscription Agreement (including the issuance of the Subscribed Shares), other than (i) those required by applicable securities laws, (ii) the filing of the Registration Statement (as defined below) pursuant to Section 5, (iii) the filing of a Notice of Exempt Offering of Securities on Form D with the Commission under Regulation D under the Securities Act of 1933, as amended (the “Securities Act”), if applicable, (iv) those required by the Exchange, including with respect to obtaining shareholder approval, (v) those required to consummate the Transaction as provided under the Merger Agreement, including those required in connection with the Domestication, (vi) those required under the Hart-Scott-Rodino Antitrust Improvements Act of 1976, if applicable, and (vii) those the failure of which to obtain would not be reasonably likely to have a Company Material Adverse Effect or have a material adverse effect on the Company’s ability to consummate the transactions contemplated hereby, including the issuance and sale of the Subscribed Shares.

(f) As of their respective dates, all reports required to be filed by the Company with the Commission (the “SEC Reports”) complied in all material respects with the requirements of the Securities Act and the Securities Exchange Act of 1934, as amended (the “Exchange Act”), and the rules and regulations of the Commission promulgated thereunder as in effect at the time of filing, and none of the SEC Reports, when filed, contained any untrue statement of a material fact or omitted to state a material fact required to be stated therein or necessary in order to make the statements therein, in the light of the circumstances under which they were made, not misleading. The financial statements of the Company included in the SEC Reports comply in all material respects with applicable accounting requirements and the rules and regulations of the Commission with respect thereto as in effect at the time of filing and fairly present in all material respects the financial position of the Company as of and for the dates thereof and the results of operations and cash flows for the periods then ended, subject, in the case of unaudited statements, to normal, year-end audit adjustments. There are no material outstanding or unresolved comments in comment letters from the staff of the Division of Corporation Finance of the Commission with respect to any of the SEC Reports filed by the Company with the Commission. Notwithstanding anything in this Subscription Agreement to the contrary, no representation or warranty is made as to the accounting treatment of the Company’s issued and outstanding warrants, or as to any deficiencies in

 

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disclosure (including with respect to internal control over financial reporting or disclosure controls and procedures) arising from the treatment of such warrants as equity rather than liabilities in the Company’s currently issued financial statements. Furthermore, Subscriber acknowledges and agrees that (i) the Staff of the SEC issued the Staff Statement on Accounting and Reporting Considerations for Warrants Issued by Special Purpose Acquisition Companies on April 12, 2021 (the “Statement”), (ii) the Company continues to review the Statement and its implications, including on the financial statements and other information included in its SEC Reports and (iii) any restatement, revision or other modification of the SEC Reports or any statements or information included therein in connection with such a review of the Statement or any subsequent related agreements or other guidance from the Staff of the SEC related thereto shall be deemed not to be material for purposes of this Subscription Agreement.

(g) As of the date hereof, the authorized share capital of the Company consists of (i) 1,000,000 preference shares, with a par value of $0.0001 per share (“Preference Shares”), and (ii) 480,000,000 ordinary shares, with a par value of $0.0001 per share, consisting of 400,000,000 Class A ordinary shares (“Class A Ordinary Shares”) and 80,000,000 Class B ordinary shares (“Class B Ordinary Shares” and, together with the Class A Ordinary Shares, the “Ordinary Shares”). As of the date hereof: (A) 172,500,000 Class A Ordinary Shares, 43,125,000 Class B Ordinary Shares and no Preference Shares are issued and outstanding; (B) 53,750,000 warrants, each exercisable to purchase one Class A Ordinary Share at $11.50 per share (“Ordinary Warrants”), are issued and outstanding, including 19,250,000 private placement warrants; and (C) no Class A Ordinary Shares are subject to issuance upon exercise of outstanding options.

Following the Domestication, and immediately prior to the Closing (assuming that no elections to redeem any Class A Ordinary Shares in connection with the consummation of the Transaction have been validly made), the authorized share capital of the Company will consist of (i) 200,000,000 shares of preferred stock, with a par value of $0.0001 per share (“Preferred Shares”), and (ii) 15,800,000,000 shares of common stock, with a par value of $0.0001 per share, consisting of 10,500,000,000 Class A Common Shares, 4,500,000,000 shares of Class B common stock (“Class B Common Shares”), 800,000,000 shares of Class C common stock (“Class C Common Shares” and, together with the Class A Common Shares and Class B Common Shares, the “Common Shares”). Following the Domestication, and immediately prior to the Closing (assuming that no elections to redeem any Class A Ordinary Shares in connection with the consummation of the Transaction have been validly made): (A) 215,625,000 Class A Common Shares, no Class B Common Shares, no Class C Common Shares and no Preferred Shares will be issued and outstanding; (B) 53,750,000 warrants, each exercisable to purchase one Class A Common Share at $11.50 per share (“Common Warrants”), will be issued and outstanding, including 19,250,000 private placement warrants; and (C) no Class A Common Shares will be subject to issuance upon exercise of outstanding options.

No Ordinary Warrants or Common Warrants are or will be exercisable at or prior to the Closing. All issued and outstanding Ordinary Shares have been duly authorized and validly issued, are fully paid and non-assessable and are not subject to preemptive rights, and, following the Domestication, all issued and outstanding Common Shares will have been duly authorized and validly issued, will be fully paid and non-assessable and will not be subject to preemptive rights. All outstanding Ordinary Warrants have been duly authorized and validly issued, and, following the Domestication, all outstanding Common Warrants will have been duly authorized and validly issued. As of the date hereof, except as set forth above in this Section 3(g) and pursuant to (i) this Subscription Agreement and the Other Subscription Agreements, (ii) the forward purchase agreements entered into on February 23, 2021 by the Company and funds managed by Franklin Advisors, Inc. and by the Company and accounts managed by Wellington Management Company LLP, respectively, (collectively, the “Forward Purchase Agreements”) or (iii) the Merger Agreement, there are no outstanding options, warrants or other rights to subscribe for, purchase or acquire from the Company any Ordinary Shares, Common Shares or other equity interests in the Company (collectively, “Equity Interests”) or securities convertible into or exchangeable or exercisable for Equity Interests. As of the date hereof, the Company has no subsidiaries other than Merger Sub and does not own, directly or indirectly, interests or investments (whether equity or debt) in any person (other than Merger Sub), whether incorporated or unincorporated. There are no shareholder agreements, voting trusts or

 

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other agreements or understandings to which the Company is a party or by which it is bound relating to the voting of any Equity Interests, other than (A) the letter agreements entered into by the Company in connection with the Company’s initial public offering on February 23, 2021 pursuant to which Eagle Equity Partners III, LLC and the Company’s executive officers and independent directors agreed to vote in favor of any proposed Business Combination (as defined therein), which includes the Transaction, and (B) as contemplated by the Merger Agreement. Other than Class B Ordinary Shares, which have the anti- dilution rights described in the Company’s amended and restated memorandum and articles of association that will be waived in connection with the Transaction, there are no securities or instruments issued by or to which the Company is a party containing anti-dilution or similar provisions that will be triggered by the issuance of (i) the Subscribed Shares, (ii) the shares to be issued pursuant to any Other Subscription Agreement or (iii) any other share capital of the Company to be issued pursuant to the Transaction.

(h) Except for such matters as have not had and would not be reasonably likely to have a Company Material Adverse Effect or have a material adverse effect on the Company’s ability to consummate the transactions contemplated hereby, including the issuance and sale of the Subscribed Shares, as of the date hereof, there is no (i) suit, action, proceeding or arbitration before a governmental authority or arbitrator pending, or, to the knowledge of the Company, threatened in writing against the Company or (ii) judgment, decree, injunction, ruling or order of any governmental authority or arbitrator outstanding against the Company.

(i) The issued and outstanding Class A Ordinary Shares are registered pursuant to Section 12(b) of the Exchange Act, and are listed for trading on the Exchange under the symbol “SRNG.” There is no suit, action, proceeding or investigation pending or, to the knowledge of the Company, threatened against the Company by the Exchange or the Commission seeking to deregister the Class A Ordinary Shares or prohibit or terminate the listing of the Class A Ordinary Shares or, when registered and issued in connection with the Domestication, the Class A Common Shares on the Exchange. The Company has taken no action that is designed to terminate the registration of the Class A Ordinary Shares under the Exchange Act, other than in connection with the Domestication and subsequent registration under the Exchange Act of the Class A Common Shares.

(j) Assuming the accuracy of Subscriber’s representations and warranties set forth in Section 4, no registration under the Securities Act is required for the offer and sale of the Subscribed Shares by the Company to Subscriber.

(k) Neither the Company nor any person acting on its behalf has engaged or will engage in any form of general solicitation or general advertising (within the meaning of Regulation D) in connection with any offer or sale of the Subscribed Shares.

(l) The Company is not, and immediately after receipt of payment for the Subscribed Shares will not be, required to be registered as an “investment company” within the meaning of the Investment Company Act of 1940, as amended.

(m) The Company is in compliance with all applicable laws, except where such non-compliance would not reasonably be expected to have a Company Material Adverse Effect. The Company has not received any written communication from a governmental authority that alleges that the Company is not in compliance with or is in default or violation of any applicable law, except where such noncompliance, default or violation would not reasonably be expected to have a Company Material Adverse Effect.

(n) The Company is not under any obligation to pay any broker’s fee or commission in connection with the sale of the Subscribed Shares other than to the Placement Agents (as defined herein).

(o) Other than the Other Subscription Agreements, the Forward Purchase Agreements, the Merger Agreement and any other agreement expressly contemplated by the Merger Agreement, the Company has not entered into any side letter or similar agreement with any Other Subscriber in connection with such Other Subscriber’s contemplated investment in the Company; provided that one or more Other Subscription Agreements may include (i) any rights or benefits granted to an Other Subscriber in connection with such Other Subscriber’s compliance with any law, regulation or policy specifically applicable to such Other Subscriber or in connection with the taxable status of such Other Subscriber, or (ii) any rights or benefits which are personal to an

 

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Other Subscriber based solely on its place of organization or headquarters, its organizational form, or other particular restrictions applicable to such Other Subscriber. Subject to the foregoing proviso, the Other Subscription Agreements (x) as of the date hereof, reflect the same Per Share Price and other material terms with respect to the purchase of Class A Common Shares that are no more favorable to such Other Subscriber thereunder than the terms of this Subscription Agreement and (y) shall not be amended after the date hereof to provide for terms with respect to the purchase of the Class A Common Shares that are more favorable to such Other Subscriber thereunder than the terms of this Subscription Agreement, unless such amended terms are also offered to the Subscriber.

(p) Neither the Company nor any of its subsidiaries, nor to the knowledge of the Company, any of their respective directors, officers, agents, employees or controlled affiliates is a (i) a person or entity named on the List of Specially Designated Nationals and Blocked Persons administered by the U.S. Treasury Department’s Office of Foreign Assets Control (“OFAC”) or in any Executive Order issued by the President of the United States and administered by OFAC (“OFAC List”), or a person or entity prohibited by any OFAC sanctions program, (ii) any person operating, organized or resident in a country or territory which is itself the subject or target of any Sanctions (at the time of this Subscription Agreement, Crimea, Cuba, Iran, North Korea, and Syria) or (iii) a non-U.S. shell bank or providing banking services indirectly to a non-U.S. shell bank. The Company has not heretofore engaged in any transaction to lend, contribute or otherwise make available its funds or the funds of any joint venture partner or other person or entity towards any sales or operations in Crimea, Cuba, Iran, North Korea, Syria or any other country sanctioned by OFAC or for the purpose of financing the activities of any person or entity currently subject to any U.S. sanctions administered by OFAC.

4. Subscriber Representations and Warranties. Subscriber represents and warrants to the Company that:

(a) Subscriber (i) is duly organized, validly existing and in good standing under the laws of its jurisdiction of incorporation or organization, and (ii) has the requisite power and authority to enter into and perform its obligations under this Subscription Agreement.

(b) This Subscription Agreement has been duly executed and delivered by Subscriber, and assuming the due authorization, execution and delivery of the same by the Company, this Subscription Agreement shall constitute the valid and legally binding obligation of Subscriber, enforceable against Subscriber in accordance with its terms, except as such enforceability may be limited by bankruptcy, insolvency, reorganization, moratorium and similar laws affecting creditors’ rights generally and by the availability of equitable remedies.

(c) The execution and delivery of this Subscription Agreement, the purchase of the Subscribed Shares and the compliance by Subscriber with all of the provisions of this Subscription Agreement and the consummation of the transactions contemplated hereby will not conflict with or result in a breach or violation of any of the terms or provisions of, or constitute a default under, or result in the creation or imposition of any lien, charge or encumbrance upon any of the property or assets of Subscriber pursuant to the terms of (i) any indenture, mortgage, deed of trust, loan agreement, lease, license or other agreement or instrument to which Subscriber is a party or by which Subscriber is bound or to which any of the property or assets of Subscriber is subject; (ii) the organizational documents of Subscriber; or (iii) any statute or any judgment, order, rule or regulation of any court or governmental agency or body, domestic or foreign, having jurisdiction over Subscriber or any of its properties that, in the case of clauses (i) and (iii), would reasonably be expected to have a Subscriber Material Adverse Effect. For purposes of this Subscription Agreement, a “Subscriber Material Adverse Effect” means an event, change, development, occurrence, condition or effect with respect to Subscriber that would reasonably be expected to have a material adverse effect on Subscriber’s ability to timely consummate the transactions contemplated hereby, including the purchase of the Subscribed Shares.

(d) Subscriber (i) is a “qualified institutional buyer” (as defined in Rule 144A under the Securities Act) or an institutional “accredited investor” (within the meaning of Rule 501(a)(1), (2), (3), or (7) under the Securities Act), in each case, satisfying the applicable requirements set forth on Annex A, (ii) is acquiring the Subscribed Shares only for its own account and not for the account of others, or if Subscriber is subscribing for the Subscribed Shares as a fiduciary or agent for one or more investor accounts, each owner of such account is a qualified institutional buyer and Subscriber has full investment discretion with respect to each such account, and

 

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the full power and authority to make the acknowledgements, representations and agreements herein on behalf of each owner of each such account, and (iii) is not acquiring the Subscribed Shares with a view to, or for offer or sale in connection with, any distribution thereof in violation of the Securities Act (and has provided the Company with the requested information on Annex A following the signature page hereto). Subscriber is not an entity formed for the specific purpose of acquiring the Subscribed Shares. Subscriber acknowledges that the offering meets the exemptions from filing under FINRA Rule 5123(b)(1)(C) or (J).

(e) Subscriber and its investment adviser, if applicable, understands that the Subscribed Shares are being offered in a transaction not involving any public offering within the meaning of the Securities Act and that the Subscribed Shares have not been registered under the Securities Act. Subscriber understands that the Subscribed Shares may not be resold, transferred, pledged or otherwise disposed of by Subscriber absent an effective registration statement under the Securities Act, except (i) to the Company or a subsidiary thereof, or (ii) pursuant to an applicable exemption from the registration requirements of the Securities Act, and, in each of cases (i) and (ii), in accordance with any applicable securities laws of the states and other jurisdictions of the United States.

(f) Subscriber and its investment adviser, if applicable, understands and agrees that Subscriber is purchasing the Subscribed Shares directly from the Company. Subscriber further acknowledges that there have not been, and Subscriber hereby agrees that it is not relying on, any representations, warranties, covenants or agreements made to Subscriber by the Company, any other party to the Transaction, any Placement Agent (as defined herein), or any other person or entity, expressly or by implication, other than those representations, warranties, covenants and agreements of the Company set forth in this Subscription Agreement. Subscriber acknowledges that certain information provided by the Company was based on projections, and such projections were prepared based on assumptions and estimates that are inherently uncertain and are subject to a wide variety of significant business, economic and competitive risks and uncertainties that could cause actual results to differ materially from those contained in the projections.

(g) In making its decision to purchase the Subscribed Shares, Subscriber, and its investment adviser, if applicable, has relied solely upon independent investigation made by Subscriber. Subscriber acknowledges and agrees that Subscriber has received such information as Subscriber deems necessary in order to make an investment decision with respect to the Subscribed Shares, including with respect to the Company and the Transaction (including the Target and its subsidiaries (collectively, the “Acquired Companies”)). Subscriber represents and agrees that Subscriber and Subscriber’s professional advisor(s), if any, have had the full opportunity to ask such questions, receive such answers and obtain such information as Subscriber and its professional advisor(s), if any, have deemed necessary to make an investment decision with respect to the Subscribed Shares. Subscriber acknowledges and agrees that none of Goldman Sachs & Co. LLC, Morgan Stanley & Co. LLC and Allen & Company LLC, acting as placement agents to the Company (each, a “Placement Agent” and, collectively, the “Placement Agents”), or any affiliate of any Placement Agent has provided Subscriber with any information or advice with respect to the Subscribed Shares and that no such information or advice necessary or desired. None of the Placement Agents or any of their respective affiliates has made or makes any representation as to the Company or the Acquired Companies or the quality or value of the Subscribed Shares. The Placement Agents and any of their respective affiliates may have acquired non-public information with respect to the Company or the Acquired Companies, which Subscriber agrees need not be provided to it. Subscriber further acknowledges that the Placement Agents and their respective directors, officers, employees, representatives and controlling persons have made no independent investigation with respect to the Company or the Subscribed Shares or the accuracy, completeness or adequacy of any information supplied to Subscriber by the Company. In connection with the issuance of the Subscribed Shares to Subscriber, Subscriber acknowledges that none of the Placement Agents or any of their respective affiliates has acted as a financial advisor or fiduciary to Subscriber.

(h) Subscriber, and its investment adviser, if applicable, became aware of this offering of the Subscribed Shares solely by means of direct contact between Subscriber and the Company, or their respective representatives or affiliates, or by means of contact from a Placement Agent, and the Subscribed Shares were offered to Subscriber solely by direct contact between Subscriber and the Company, or their respective

 

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representatives or affiliates, or by means of contact from a Placement Agent. Subscriber did not become aware of this offering of the Subscribed Shares, nor were the Subscribed Shares offered to Subscriber, by any other means. Subscriber acknowledges that the Company represents and warrants that the Subscribed Shares (i) were not offered by any form of general solicitation or general advertising and (ii) are not being offered in a manner involving a public offering under, or in a distribution in violation of, the Securities Act, or any state securities laws.

(i) Subscriber, and its investment adviser, if applicable, acknowledges that it is aware that there are substantial risks incident to the purchase and ownership of the Subscribed Shares. Subscriber has such knowledge and experience in financial and business matters as to be capable of evaluating the merits and risks of an investment in the Subscribed Shares, and Subscriber has had an opportunity to seek, and has sought, such accounting, legal, business and tax advice as Subscriber has considered necessary to make an informed investment decision. Subscriber is an institutional account as defined in FINRA Rule 4512(c). Subscriber understands and acknowledges that the purchase and sale of the Subscribed Shares hereunder meets (i) the exemptions from filing under FINRA Rule 5123(b)(1)(A) and (ii) the institutional customer exemption under FINRA Rule 2111(b).

(j) Subscriber, and its investment adviser, if applicable, has adequately analyzed and fully considered the risks of an investment in the Subscribed Shares and determined that the Subscribed Shares are a suitable investment for Subscriber and that Subscriber is able at this time and in the foreseeable future to bear the economic risk of a total loss of Subscriber’s investment in the Company. Subscriber acknowledges specifically that a possibility of total loss exists.

(k) Subscriber understands and agrees that no federal or state agency has passed upon or endorsed the merits of the offering of the Subscribed Shares or made any findings or determination as to the fairness of this investment.

(l) Subscriber is not (i) a person or entity named on the List of Specially Designated Nationals and Blocked Persons administered by the U.S. Treasury Department’s Office of Foreign Assets Control (“OFAC”) or in any Executive Order issued by the President of the United States and administered by OFAC (“OFAC List”), or a person or entity prohibited by any OFAC sanctions program, (ii) a Designated National as defined in the Cuban Assets Control Regulations, 31 C.F.R. Part 515, or (iii) a non-U.S. shell bank or providing banking services indirectly to a non-U.S. shell bank. Subscriber agrees to provide law enforcement agencies, if requested thereby, such records as required by applicable law, provided that Subscriber is permitted to do so under applicable law. Subscriber represents that if it is a financial institution subject to the Bank Secrecy Act (31 U.S.C. Section 5311 et seq.), as amended by the USA PATRIOT Act of 2001 and its implementing regulations (collectively, the “BSA/PATRIOT Act”), that Subscriber maintains policies and procedures reasonably designed to comply with applicable obligations under the BSA/PATRIOT Act. Subscriber also represents that, to the extent required, it maintains policies and procedures reasonably designed for the screening of its investors against the OFAC sanctions programs, including the OFAC List. Subscriber further represents and warrants that, to the extent required, it maintains policies and procedures reasonably designed to ensure that the funds held by Subscriber and used to purchase the Subscribed Shares were legally derived.

(m) Subscriber does not have, as of the date hereof, and during the 30-day period immediately prior to the date hereof, Subscriber has not entered into, any “put equivalent position” as such term is defined in Rule 16a-1 under the Exchange Act or end of day short sale positions with respect to the securities of the Company. Notwithstanding the foregoing, in the case of a Subscriber that is a multi-managed investment vehicle whereby separate portfolio managers manage separate portions of such Subscriber’s assets and the portfolio managers have no direct knowledge of the investment decisions made by the portfolio managers managing other portions of such Subscriber’s assets, the representation set forth above shall only apply with respect to the portion of assets managed by the portfolio manager that made the investment decision to purchase the Subscribed Shares covered by this Subscription Agreement. For the avoidance of doubt, this Section 4(m) shall not apply to ordinary course, non-speculative hedging transactions.

 

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(n) If Subscriber is an employee benefit plan that is subject to Title I of ERISA, a plan, an individual retirement account or other arrangement that is subject to section 4975 of the Code or an employee benefit plan that is a governmental plan (as defined in section 3(32) of ERISA), a church plan (as defined in section 3(33) of ERISA), a non-U.S. plan (as described in section 4(b)(4) of ERISA) or other plan that is not subject to the foregoing but may be subject to provisions under any other federal, state, local, non-U.S. or other laws or regulations that are similar to such provisions of ERISA or the Internal Revenue Code of 1986, as amended, or an entity whose underlying assets are considered to include “plan assets” of any such plan, account or arrangement (each, a “Plan”) subject to the fiduciary or prohibited transaction provisions of ERISA or section 4975 of the Code, Subscriber represents and warrants that neither the Company nor any of its affiliates has acted as the Plan’s fiduciary, or has been relied on for advice, with respect to its decision to acquire and hold the Subscribed Shares, and neither the Company nor any of its affiliates shall at any time be relied upon as the Plan’s fiduciary with respect to any decision to acquire, continue to hold or transfer the Subscribed Shares.

(o) Subscriber will have sufficient funds to pay the Purchase Price pursuant to and in accordance with Section 2(b).

(p) Subscriber acknowledges that it has not relied upon any statement, representation or warranty made by any person, firm or corporation (including the Company, any of its affiliates or any of its or their respective control persons, officers, directors, employees, agents or representatives, or the Placement Agents), other than the representations and warranties of the Company expressly set forth in this Subscription Agreement, or any Other Subscriber in making its investment or decision to invest in the Company. Subscriber agrees that none of (i) any Other Subscriber pursuant to this Subscription Agreement or any other agreement related to the private placement of Class A Common Shares (including the controlling persons, officers, directors, partners, agents or employees of any such Subscriber) or (ii) the Placement Agents or any of their respective affiliates or any of its or their respective affiliates’ control persons, officers, directors or employees shall be liable to any Other Subscriber pursuant to this Subscription Agreement or any other agreement related to the private placement of Class A Common Shares for any action heretofore or hereafter taken or omitted to be taken by any of them in connection with the purchase of the Subscribed Shares hereunder.

(q) Subscriber acknowledges that Morgan Stanley & Co. LLC and Allen & Company LLC are each acting as financial advisor to the Target in connection with the Transaction. Subscriber further acknowledges that Goldman Sachs & Co. LLC is acting as financial advisor to the Company in connection with the Transaction.

(r) Subscriber agrees that, notwithstanding anything herein to the contrary, the Placement Agents and the Target may rely upon the representations and warranties made by Subscriber to the Company in this Subscription Agreement.

5. Registration of Subscribed Shares.

(a) The Company agrees that, on or prior to the Closing Date (the “Filing Deadline”), the Company shall use its commercially reasonable efforts to file with the Commission (at the Company’s sole cost and expense) a registration statement registering the resale of the Subscribed Shares (the “Registration Statement”), and the Company shall use its commercially reasonable efforts to have the Registration Statement declared effective upon the Closing or as soon as practicable thereafter, but in any event no later than the earlier of (1) sixty (60) calendar days following the Filing Deadline (or one hundred and twenty (120) calendar days after the Filing Deadline if the Registration Statement is reviewed by, and comments thereto are provided by, the Commission) and (2) the tenth (10th) Business Day after the date the Company is notified by the Commission that the Registration Statement will not be “reviewed” or will not be subject to further review. The Company will provide a draft of the Registration Statement to the Subscriber for review at least two (2) Business Days in advance of filing the Registration Statement. Notwithstanding the foregoing, if the Commission prevents the Company from including any or all of the shares proposed to be registered under the Registration Statement due to limitations on the use of Rule 415 under the Securities Act for the resale of the Subscribed Shares by the applicable shareholders or otherwise, the Registration Statement shall register for resale such number of Subscribed Shares which is equal to the maximum number of Subscribed Shares as is permitted to be registered by the Commission. In such event, the number of Subscribed Shares to be registered for each selling shareholder

 

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named in the Registration Statement shall be reduced pro rata among all such selling shareholders and, during the Effectiveness Period (as defined below), as promptly as practicable after being permitted to register additional Subscribed Shares under Rule 415 under the Securities Act, the Company shall amend the Registration Statement or file a new Registration Statement to register such additional Subscribed Shares and cause such amendment or Registration Statement to become effective as promptly as practicable. The Company agrees that, except for such times as the Company is permitted hereunder to suspend the use of the prospectus forming part of the Registration Statement, the Company will use commercially reasonable efforts to cause the Registration Statement to remain effective with respect to Subscriber until the earliest of (i) two (2) years from the effective date of the Registration Statement, (ii) the date on which all of the Subscribed Shares shall have been sold and (iii) the first date on which Subscriber can sell all of its Subscribed Shares (or shares received in exchange therefor) under Rule 144 under the Securities Act without limitation as to the manner of sale or the amount of such securities that may be sold and without the requirement for the Company to be in compliance with the current public information required under Rule 144(c)(1) (or Rule 144(i)(2), if applicable). The period commencing on the date on which the Registration Statement is actually filed and ending on the earliest of the dates referenced in the immediately preceding sentence is referred to herein as the “Effectiveness Period”. During the Effectiveness Period, the Company will use commercially reasonable efforts to file all reports, and provide all customary and reasonable cooperation, necessary to enable Subscriber to resell the Subscribed Shares pursuant to the Registration Statement, qualify the Subscribed Shares for listing on the applicable stock exchange on which the Class A Common Shares are then listed, and update or amend the Registration Statement as necessary to include the Subscribed Shares. The Company’s obligations to include the Subscribed Shares in the Registration Statement are contingent upon Subscriber furnishing in writing to the Company such information regarding Subscriber, the securities of the Company held by Subscriber and the intended method of disposition of the Subscribed Shares as shall be reasonably requested by the Company to effect the registration of the Subscribed Shares, and Subscriber shall execute such documents in connection with such registration as the Company may reasonably request that are customary for a selling shareholder in similar situations, including providing that the Company shall be entitled to postpone and suspend the effectiveness or use of the Registration Statement during any customary blackout or similar period or as permitted hereunder; provided, that the Subscriber shall not in connection with the foregoing be required to execute any lock-up or similar agreement or otherwise be subject to any contractual restrictions on the ability to transfer the Subscribed Shares. In the case of the registration effected by the Company pursuant to this Subscription Agreement, the Company shall, upon reasonable request, inform Subscriber as to the status of such registration. If the Commission requests that Subscriber be identified as a statutory underwriter in the Registration Statement, Subscriber will have an opportunity to withdraw from the Registration Statement. Subscriber shall not be entitled to use the Registration Statement for an underwritten offering of Subscribed Shares. Notwithstanding anything to the contrary contained herein, the Company may delay or postpone filing of the Registration Statement, and from time to time require Subscriber not to sell under the Registration Statement or suspend the use or effectiveness of the Registration Statement, (i) if it determines that in order for the Registration Statement not to contain a material misstatement or omission, an amendment thereto would be needed, (ii) if the Company’s CEO, CFO or General Counsel believes, upon the advice of legal counsel, that such filing or use could materially affect a bona fide business or financing transaction of the Company or would require premature disclosure of information that could materially adversely affect the Company or (iii) at any time that the Company is required to file a post-effective amendment to the Registration Statement and the Commission has not declared such amendment effective (each such circumstance, a “Suspension Event”); provided that (x) the Company shall not so delay filing or so suspend the use of the Registration Statement for a period of more than sixty (60) consecutive days or more than three (3) times, in each case, during any three hundred sixty (360)-day period and (y) during the Effectiveness Period, the Company shall use commercially reasonable efforts to make the Registration Statement available for the sale by Subscriber of the Subscribed Shares as soon as practicable thereafter.

(b) At its expense, during the Effectiveness Period, the Company shall advise Subscriber within two (2) Business Days: (A) of the issuance by the Commission of any stop order suspending the effectiveness of the Registration Statement or the Company’s receipt of notice of the initiation of any proceedings for such purpose; (B) of the receipt by the Company of any notification with respect to the suspension of the qualification of the

 

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Subscribed Shares included therein for sale in any jurisdiction or the initiation or threatening of any proceeding for such purpose; and (C) subject to the provisions in this Subscription Agreement, of the occurrence of a Suspension Event. Notwithstanding anything to the contrary set forth herein, the Company shall not, when so advising Subscriber of such events, provide Subscriber with any material, nonpublic information regarding the Company other than to the extent required to provide notice to Subscriber of the occurrence of such events.

(c) At its expense, during the Effectiveness Period, the Company shall use its commercially reasonable efforts to obtain the withdrawal of any order suspending the effectiveness of the Registration Statement as soon as reasonably practicable, and upon the occurrence of any event contemplated by clause (A) or (B) above (other than a permitted Suspension Event), the Company shall use its commercially reasonable efforts to, as soon as reasonably practicable, prepare a post-effective amendment to the Registration Statement or a supplement to the related prospectus, or file any other required document so that, as thereafter delivered to purchasers of the Subscribed Shares included therein, such prospectus will not include any untrue statement of a material fact or omit to state any material fact necessary to make the statements therein, in the light of the circumstances under which they were made, not misleading.

(d) Upon receipt of written notice from the Company of the happening of any Suspension Event during the Effectiveness Period or if as a result of a Suspension Event the Registration Statement or related prospectus contains any untrue statement of a material fact or omits to state any material fact required to be stated therein or necessary to make the statements therein, in light of the circumstances under which they were made (in the case of the prospectus), not misleading, Subscriber agrees that (1) it will immediately discontinue offers and sales of the Subscribed Shares under the Registration Statement (excluding, for the avoidance of doubt, sales conducted pursuant to Rule 144 or another exemption from registration) until the Company prepares a supplemental or amended prospectus (which the Company agrees to prepare promptly) that corrects the misstatement(s) or omission(s) referred to above and receives notice that any post-effective amendment has become effective or unless otherwise notified by the Company that it may resume such offers and sales, and (2) it will maintain the confidentiality of any information included in such written notice delivered by the Company unless otherwise required by law, subpoena or regulatory request or requirement. If so directed by the Company, Subscriber will deliver to the Company or, in Subscriber’s sole discretion, destroy all copies of the prospectus covering the Subscribed Shares in Subscriber’s possession; provided, however, that this obligation to deliver or destroy all copies of the prospectus covering the Subscribed Shares shall not apply (x) to the extent Subscriber is required to retain a copy of such prospectus (A) in order to comply with applicable legal, regulatory, self-regulatory or professional requirements or (B) in accordance with a bona fide pre-existing document retention policy or (y) to copies stored electronically on archival servers as a result of automatic data back-up.

(e) For purposes of this Section 5, “Subscribed Shares” shall mean, as of any date of determination, the Subscribed Shares (as defined in the recitals to this Subscription Agreement) and any other equity security issued or issuable with respect to the Subscribed Shares by way of share split, dividend, distribution, recapitalization, merger, exchange, replacement or similar event, and “Subscriber” shall include any affiliate of the undersigned Subscriber to which the rights under this Section 5 shall have been duly assigned.

(f) The Company shall indemnify and hold harmless Subscriber (to the extent a seller under the Registration Statement), its officers, directors, employees, members, managers, partners and agents, and each person who controls Subscriber (within the meaning of Section 15 of the Securities Act or Section 20 of the Exchange Act) and the officers, directors, employees, members, managers, partners and agents of such controlling persons to the fullest extent permitted by applicable law, from and against any and all losses, claims, damages, liabilities, costs (including reasonable attorneys’ fees) and expenses (collectively, “Losses”), as incurred, that arise out of or are based upon any untrue or alleged untrue statement of a material fact contained in the Registration Statement (or incorporated by reference therein), any prospectus included in the Registration Statement or any form of prospectus or in any amendment or supplement thereto or in any preliminary prospectus, or arising out of or relating to any omission or alleged omission to state a material fact required to be stated therein or necessary to make the statements therein (in the case of any prospectus or form of prospectus or supplement thereto, in light of the circumstances under which they were made) not misleading, except (i) to the extent that such untrue statements or alleged untrue statements, omissions or alleged omissions are based upon

 

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information regarding Subscriber furnished in writing to the Company by Subscriber expressly for use therein or Subscriber has omitted a material fact from such information or (ii) Subscriber otherwise violated any federal or state securities law or any rule or regulation thereunder.

(g) Subscriber shall, severally and not jointly with any Other Subscriber, indemnify and hold harmless the Company, its directors, officers, agents and employees, and each person who controls the Company (within the meaning of Section 15 of the Securities Act and Section 20 of the Exchange Act), to the fullest extent permitted by applicable law, from and against all Losses, as incurred, arising out of or based upon any untrue or alleged untrue statement of a material fact contained in the Registration Statement, any prospectus included in the Registration Statement, or any form of prospectus, or in any amendment or supplement thereto or in any preliminary prospectus, or arising out of or relating to any omission or alleged omission of a material fact required to be stated therein or necessary to make the statements therein (in the case of any prospectus, or any form of prospectus or supplement thereto, in light of the circumstances under which they were made) not misleading to the extent, but only to the extent, that such untrue statements or omissions are based upon information regarding Subscriber furnished in writing to the Company by Subscriber expressly for use therein. In no event shall the liability of Subscriber be greater in amount than the dollar amount of the net proceeds received by Subscriber upon the sale of the Subscribed Shares giving rise to such indemnification obligation. Subscriber shall notify the Company promptly of the institution, threat or assertion of any proceeding arising from or in connection with the transactions contemplated by this Section 5 of which Subscriber is aware.

(h) If the indemnification provided under this Section 5 from the indemnifying party is unavailable or insufficient to hold harmless an indemnified party in respect of any losses, claims, damages, liabilities and expenses referred to herein, then the indemnifying party, in lieu of indemnifying the indemnified party, shall contribute to the amount paid or payable by the indemnified party as a result of such losses, claims, damages, liabilities and expenses in such proportion as is appropriate to reflect the relative fault of the indemnifying party and the indemnified party, as well as any other relevant equitable considerations. The relative fault of the indemnifying party and indemnified party shall be determined by reference to, among other things, whether any action in question, including any untrue or alleged untrue statement of a material fact or omission or alleged omission to state a material fact, was made by, or relates to information supplied by, such indemnifying party or indemnified party, and the indemnifying party’s and indemnified party’s relative intent, knowledge, access to information and opportunity to correct or prevent such action. The amount paid or payable by a party as a result of the losses or other liabilities referred to above shall be deemed to include, subject to the limitations set forth in this Section 5, any legal or other fees, charges or expenses reasonably incurred by such party in connection with any investigation or proceeding. No person guilty of fraudulent misrepresentation (within the meaning of Section 11(f) of the Securities Act) shall be entitled to contribution pursuant to this Section 5 from any person who was not guilty of such fraudulent misrepresentation. Each indemnifying party’s obligation to make a contribution pursuant to this Section 5(f) shall be individual, not joint and several, and in no event shall the liability of any Subscriber hereunder be greater in amount than the dollar amount of the net proceeds received by such Subscriber upon the sale of the Subscribed Shares giving rise to such indemnification obligation.

6. Other Covenants.

(a) With a view to making available to Subscriber the benefits of Rule 144 promulgated under the Securities Act or any other similar rule or regulation of the Commission that may at any time permit Subscriber to sell Subscribed Shares to the public without registration, the Company agrees, until Subscriber no longer holds Subscribed Shares, to use commercially reasonable efforts to:

 

  i.

make and keep public information available, as those terms are understood and defined in Rule 144;

 

  ii.

file with the Commission in a timely manner all reports and other documents required to be filed by the Company under Section 13 or Section 15(d) of the Exchange Act, for so long as the Company remains subject to such requirements and the filing of such reports and other documents is required to enable Subscriber to sell Subscribed Shares under Rule 144; and

 

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  iii.

furnish to Subscriber, upon request in connection with an anticipated sale of Subscribed Shares by Subscriber under Rule 144, (x) a written statement by the Company, if true, that it has complied with the reporting requirements of Rule 144(c), the Securities Act and the Exchange Act during the 12-month period preceding the date of such anticipated sale and (y) such other information as may be reasonably requested to permit Subscriber to sell such securities pursuant to Rule 144 without registration.

(b) In connection with any sale or other disposition of the Subscribed Shares by the Subscriber pursuant to Rule 144 and upon compliance by the Subscriber with the requirements of this Section 6(b), if requested by the Subscriber, the Company shall cause the transfer agent for the Subscribed Shares (the “Transfer Agent”) to remove any restrictive legends related to the book entry account holding such Subscribed Shares and make a new, unlegended entry for such book entry shares sold or disposed of without restrictive legends within five (5) trading days of any such request therefor from the Subscriber; provided that the Company and the Transfer Agent have timely received from the Subscriber customary representations and other documentation reasonably acceptable to the Company and the Transfer Agent in connection therewith. Subject to receipt from the Subscriber by the Company and the Transfer Agent of customary representations and other documentation reasonably acceptable to the Company and the Transfer Agent in connection therewith, the Subscriber may request that the Company remove any legend from the book entry position evidencing its Subscribed Shares and the Company will, if required by the Transfer Agent, use its commercially reasonable efforts cause an opinion of the Company’s counsel be provided, in a form reasonably acceptable to the Transfer Agent, to the effect that the removal of such restrictive legends in such circumstances may be effected under the Securities Act, following the earliest of such time as such Subscribed Shares (i) are subject to or have been or are about to be sold pursuant to an effective registration statement or (ii) have been or are about to be sold pursuant to Rule 144. If restrictive legends are no longer required for such Subscribed Shares pursuant to the foregoing, the Company shall, in accordance with the provisions of this section and within five (5) trading days of any request therefor from the Subscriber accompanied by such customary and reasonably acceptable representations and other documentation referred to above establishing that restrictive legends are no longer required, deliver to the Transfer Agent irrevocable instructions that the Transfer Agent shall make a new, unlegended entry for such book entry shares. The Company shall be responsible for the fees of its Transfer Agent, its legal counsel and all DTC fees associated with such issuance.

7. Termination. This Subscription Agreement shall terminate and be void and of no further force and effect, and all rights and obligations of the parties hereunder shall terminate without any further liability on the part of any party in respect thereof, upon the earliest to occur of (a) such date and time as the Merger Agreement is terminated in accordance with its terms, (b) the mutual written agreement of the Company and Subscriber to terminate this Subscription Agreement and (c) the date that is 60 days after the Outside Deadline (as defined in the Merger Agreement as in effect on the date hereof, without giving effect to any amendment, modification or waiver of any provision thereof that would have the effect of extending the Outside Deadline to a later time); provided that nothing herein will relieve any party hereto from liability for any willful breach hereof prior to the time of termination, and each party hereto will be entitled to any remedies at law or in equity to recover losses, liabilities or damages arising from such breach. The Company shall notify Subscriber of the termination of the Merger Agreement promptly after the termination thereof, and any monies paid by the Subscriber to the Company in connection herewith shall be promptly returned to the Subscriber within one (1) Business Day of such termination.

8. Trust Account Waiver. Subscriber hereby acknowledges that the Company has established a trust account (the “Trust Account”) containing the proceeds of its initial public offering (the “IPO”) and from certain private placements occurring simultaneously with the IPO (including interest accrued from time to time thereon) for the benefit of the Company’s public shareholders and certain other parties (including the underwriters of the IPO). For and in consideration of the Company entering into this Subscription Agreement, and for other good and valuable consideration, the receipt and sufficiency of which are hereby acknowledged, Subscriber hereby (i) agrees that it does not now and shall not at any time hereafter have any right, title, interest or claim of any kind in or to any assets held in the Trust Account, and shall not make any claim against the Trust Account, that

 

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arises as a result of, in connection with or relating in any way to this Subscription Agreement, regardless of whether such claim arises based on contract, tort, equity or any other theory of legal liability (any and all such claims are collectively referred to hereafter as the “Released Claims”), (ii) irrevocably waives any Released Claims that it may have against the Trust Account now or in the future as a result of, or arising out of, this Subscription Agreement, and (iii) will not seek recourse against the Trust Account for any Released Claims; provided however, that nothing in this Section 8 shall be deemed to limit any Subscriber’s right to distributions from the Trust Account in accordance with the Company’s amended and restated memorandum and articles of association in respect of any redemptions by Subscriber of its public Ordinary Shares of the Company acquired by any means other than pursuant to this Subscription Agreement.

9. Miscellaneous.

(a) The provisions of this Subscription Agreement shall be interpreted in accordance with the following definitions, which shall apply equally to the singular and plural forms of the terms defined. The words “include,” “includes” and “including” shall be deemed to be followed by the phrase “without limitation.” The verb form of the word “will” shall be construed to have the same meaning and effect as the word “shall.” The words “or” and “any” shall not be construed to be disjunctive but not exclusive. The word “extent” in the phrase “to the extent” shall mean the degree to which a subject or other thing extends, and such phrase shall not mean simply “if.” Unless the context requires otherwise, (i) references to any statute, rule or regulation shall be deemed to refer to such statute, rule or regulation as amended or supplemented from time to time, including through the promulgation of rules or regulations thereunder; (ii) the words “herein,” “hereto,” “hereby,” “hereof” and “hereunder” and words of similar import shall be construed to refer to this Subscription Agreement in its entirety and not to any particular provision hereof; and (iii) references to “Sections” shall be construed to refer to sections of this Subscription Agreement. “Writing”, “written” and comparable terms shall be deemed to refer to printing, typing or any other means (including e-mail and other electronic or digital media) of reproducing words in a visible form. Unless otherwise specified, the reference date for purposes of calculating any period shall be excluded from such calculation, but any period “from” or “through” a specified date shall commence or end, as applicable, on such specified date. Each party hereto acknowledges and agrees that it has been represented by legal counsel during, and has participated jointly with the other party hereto in, the negotiation and execution of this Subscription Agreement and waives the application of any law or rule of construction providing that ambiguities in a contract or other document or any provision thereof will be construed against the party that drafted such contract or other document or provision thereof.

(b) All notices, requests, demands, claims, and other communications hereunder shall be in writing. Any notice, request, demand, claim, or other communication hereunder shall be deemed duly given, delivered and received (i) when delivered personally to the recipient, (ii) when sent by electronic mail, with no mail undeliverable or other rejection notice, on the date of transmission to such recipient; provided, that such notice, request, demand, claim or other communication is also sent to the recipient pursuant to clause (i), (iii) or (iv) of this Section 9(b), (iii) one (1) Business Day after being sent to the recipient by reputable overnight courier service (charges prepaid), or (iv) four (4) Business Days after being mailed to the recipient by certified or registered mail, return receipt requested and postage prepaid, and, in each case, addressed to the intended recipient at its address specified on the signature page hereof or to such electronic mail address or address as subsequently modified by written notice given in accordance with this Section 9(b).

(c) Subscriber acknowledges that the Company, the Target and the Placement Agents will rely on the acknowledgments, understandings, agreements, representations and warranties contained in this Subscription Agreement. Prior to the Closing, Subscriber agrees to promptly notify the Company and the Placement Agents if it becomes aware that any of the acknowledgments, understandings, agreements, representations and warranties of Subscriber set forth herein are no longer accurate in all material respects. The Company acknowledges that Subscriber and others will rely on the acknowledgments, understandings, agreements, representations and warranties contained in this Subscription Agreement. Prior to the Closing, the Company agrees to promptly notify Subscriber if it becomes aware of any failure of any of its representations or warranties set forth herein to be true and correct, or any failure to perform or comply with any of its covenants set forth herein, in each case, such that the condition specified in Section 2(e)(i) or Section 2(e)(ii) would not be satisfied on the Closing Date.

 

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(d) Each of the Company, the Target, the Placement Agents and Subscriber is irrevocably authorized to produce this Subscription Agreement or a copy hereof to any interested party in any administrative or legal proceeding or official inquiry with respect to the matters covered hereby.

(e) Each party hereto shall pay all of its own expenses in connection with this Subscription Agreement and the transactions contemplated hereby.

(f) Neither this Subscription Agreement nor any rights that may accrue to Subscriber hereunder (other than the Subscribed Shares acquired hereunder, if any) may be transferred or assigned. Neither this Subscription Agreement nor any rights that may accrue to the Company hereunder may be transferred or assigned (provided, that, for the avoidance of doubt, the Company may transfer the Subscription Agreement and its rights hereunder in connection with the consummation of the Transaction, including in connection with the consummation of the Domestication). Notwithstanding the foregoing, Subscriber may assign its rights and obligations under this Subscription Agreement to one or more funds or accounts managed by the investment manager or investment advisor that manages Subscriber (or an affiliate that controls, is controlled by or is under common control with such investment manager or investment advisor) or, with the Company’s prior written consent, to another person, provided, in each case, that any assignee agrees in writing to be bound by the terms hereof as if it were an original party hereto and that no such assignment shall relieve Subscriber of its obligations hereunder if any such assignee fails to perform such obligations.

(g) All the agreements, representations and warranties made by each party hereto in this Subscription Agreement shall survive the Closing.

(h) The Company may request from Subscriber such additional information as the Company may deem reasonably necessary to evaluate the eligibility of Subscriber to acquire the Subscribed Shares, and Subscriber shall provide such information as may be reasonably requested, to the extent reasonably available; provided that the Company agrees to keep any such information provided by Subscriber confidential, except (A) as required by the federal securities laws, rules or regulations, (B) as requested by the staff of the Commission and (C) to the extent such disclosure is required by other laws, rules or regulations, any order of a governmental authority or under the rules or regulations of the Exchange. Subscriber acknowledges that the Company will file a form of this Subscription Agreement with the Commission as an exhibit to a current or periodic report of the Company or a registration statement of the Company.

(i) This Subscription Agreement may not be amended, modified, waived or terminated (other than as provided by and in accordance with Section 7) except by an instrument in writing, signed by the party against whom enforcement of such amendment, modification, waiver, or termination is sought. Notwithstanding the foregoing, (i) no amendment, modification, or waiver of any provision of this Subscription Agreement, and (ii) no consent to termination of this Subscription Agreement (including pursuant to Section 7(b)), shall be effective unless and until consented to in writing by the Target.

(j) This Subscription Agreement constitutes the entire agreement, and supersedes all other prior agreements, understandings, representations and warranties, both written and oral, between the parties hereto, with respect to the subject matter hereof.

(k) Except as otherwise provided herein, this Subscription Agreement shall be binding upon, and inure to the benefit of the parties hereto and their heirs, executors, administrators, successors, legal representatives, and permitted assigns, and the agreements, representations, warranties, covenants and acknowledgments contained herein shall be deemed to be made by, and be binding upon, such heirs, executors, administrators, successors, legal representatives and permitted assigns.

(l) If any provision of this Subscription Agreement shall be invalid, illegal or unenforceable, the validity, legality or enforceability of the remaining provisions of this Subscription Agreement shall not in any way be affected or impaired thereby and shall continue in full force and effect.

(m) This Subscription Agreement may be executed and delivered in one or more counterparts (including by facsimile or any other form of electronic delivery (including .pdf or any electronic signature

 

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complying with the U.S. federal ESIGN Act of 2000, e.g., www.docusign.com or other transmission method)) and by different parties in separate counterparts, with the same effect as if all parties hereto had signed the same document. All counterparts so executed and delivered shall be construed together and shall constitute one and the same agreement.

(n) This Subscription Agreement is intended for the benefit of the parties hereto and their respective successors and permitted assigns and is not for the benefit of, nor may any provision hereof be enforced by, any other person; provided, however, that (i) the Target is a third party beneficiary of this Subscription Agreement with respect to the rights of the Company hereunder and shall have the right to enforce, among other things, Subscriber’s obligation to fund the Purchase Price, (ii) the Placement Agents shall be intended third party beneficiaries of the representations and warranties of the Company in Section 3 hereof and of Subscriber in Section 4 hereof and of the provisions of Section 9 hereof applicable to it.

(o) The parties hereto agree that irreparable damage would occur in the event that any of the provisions of this Subscription Agreement were not performed in accordance with their specific terms or were otherwise breached. It is accordingly agreed that the parties hereto shall be entitled to equitable relief, including in the form of an injunction or injunctions to prevent breaches of this Subscription Agreement and to enforce specifically the terms and provisions of this Subscription Agreement, this being in addition to any other remedy to which such party is entitled at law, in equity, in contract, in tort or otherwise.

(p) This Subscription Agreement shall be governed by, and construed in accordance with, the laws of the state of Delaware, without regard to the principles of conflicts of laws that would otherwise require the application of the law of any other jurisdiction.

(q) EACH PARTY HERETO AND ANY PERSON IDENTIFIED AS A THIRD PARTY BENEFICIARY HEREUNDER HEREBY WAIVES ITS RIGHT TO A TRIAL BY JURY OF ANY CLAIM OR CAUSE OF ACTION BASED UPON OR ARISING OUT OR RELATED TO THIS SUBSCRIPTION AGREEMENT OR THE TRANSACTIONS CONTEMPLATED HEREBY IN ANY ACTION, PROCEEDING OR OTHER LITIGATION OF ANY TYPE BROUGHT BY ANY PARTY HERETO AGAINST ANY OTHER PARTY HERETO OR ANY AFFILIATE OF SUCH OTHER PARTY, WHETHER WITH RESPECT TO CONTRACT CLAIMS, TORT CLAIMS OR OTHERWISE. THE PARTIES HERETO AGREE THAT ANY SUCH CLAIM OR CAUSE OF ACTION SHALL BE TRIED BY A COURT TRIAL WITHOUT A JURY. WITHOUT LIMITING THE FOREGOING, EACH OF THE PARTIES HERETO FURTHER AGREES THAT ITS RIGHT TO A TRIAL BY JURY IS WAIVED BY OPERATION OF THIS SECTION AS TO ANY ACTION, COUNTERCLAIM OR OTHER PROCEEDING WHICH SEEKS, IN WHOLE OR IN PART, TO CHALLENGE THE VALIDITY OR ENFORCEABILITY OF THIS SUBSCRIPTION AGREEMENT OR ANY PROVISION HEREOF. THIS WAIVER SHALL APPLY TO ANY SUBSEQUENT AMENDMENTS, RENEWALS, SUPPLEMENTS OR MODIFICATIONS TO THIS SUBSCRIPTION AGREEMENT.

(r) The parties hereto agree that all disputes, legal actions, suits and proceedings arising out of or relating to this Subscription Agreement must be brought exclusively in the Court of Chancery of the State of Delaware and any state appellate court therefrom within the State of Delaware (or, if the Court of Chancery of the state of Delaware declines to accept jurisdiction over a particular matter, any federal court within the State of Delaware or, in the event each federal court within the State of Delaware declines to accept jurisdiction over a particular matter, any state court within the state of Delaware) (collectively the “Designated Courts”). Each party hereto hereby consents and submits to the exclusive jurisdiction of the Designated Courts. No legal action, suit or proceeding with respect to this Subscription Agreement may be brought in any other forum. Each party hereto hereby irrevocably waives all claims of immunity from jurisdiction and any objection which such party may now or hereafter have to the laying of venue of any suit, action or proceeding in any Designated Court, including any right to object on the basis that any dispute, action, suit or proceeding brought in the Designated Courts has been brought in an improper or inconvenient forum or venue. Each of the parties hereto also agrees that delivery of any process, summons, notice or document to a party hereof in compliance with Section 9(b) of this Subscription Agreement shall be effective service of process for any action, suit or proceeding in a Designated Court with respect to any matters to which the parties hereto have submitted to jurisdiction as set forth above.

 

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(s) The Company shall, by 9:00 a.m., New York City time, on the first (1st) Business Day immediately following the date of this Subscription Agreement, issue one or more press releases or file with the Commission a Current Report on Form 8-K (collectively, the “Disclosure Document”) disclosing, to the extent not previously publicly disclosed, all material terms of the transactions contemplated hereby (and by the Other Subscription Agreements), the Transaction and any other material, nonpublic information that the Company has provided to Subscriber at any time prior to the filing of the Disclosure Document. Upon the issuance of the Disclosure Document, to the Company’s knowledge, Subscriber shall not be in possession of any material, non-public information received from the Company or any of its officers, directors or employees or the Placement Agents. Notwithstanding the foregoing, the Company shall not publicly disclose the name of Subscriber or any affiliate or investment adviser of Subscriber, or include the name of Subscriber or any affiliate or investment adviser of Subscriber (i) in any press release or marketing materials without the prior written consent (including by e-mail) of Subscriber or (ii) in any filing with the Commission or any regulatory agency or trading market, without the prior written consent (including by e-mail) of Subscriber, except as required by the applicable securities laws, rules or regulations and to the extent such disclosure is required by other laws, rules or regulations, at the request of the staff of the Commission or regulatory agency or under the rules or regulations of the Exchange, in which case the Company shall provide Subscriber with prior written notice (including by e-mail) of such permitted disclosure, and shall reasonably consult with Subscriber regarding such disclosure.

(t) The obligations of Subscriber under this Subscription Agreement are several and not joint with the obligations of any Other Subscriber or any other investor under the Other Subscription Agreements, and Subscriber shall not be responsible in any way for the performance of the obligations of any Other Subscriber under this Subscription Agreement or any Other Subscriber or other investor under the Other Subscription Agreements. The decision of Subscriber to purchase Subscribed Shares pursuant to this Subscription Agreement has been made by Subscriber independently of any Other Subscriber or any other investor and independently of any information, materials, statements or opinions as to the business, affairs, operations, assets, properties, liabilities, results of operations, condition (financial or otherwise) or prospects of the Company or any of its subsidiaries which may have been made or given by any Other Subscriber or investor or by any agent or employee of any Other Subscriber or investor, and neither Subscriber nor any of its agents or employees shall have any liability to any Other Subscriber or investor (or any other person) relating to or arising from any such information, materials, statements or opinions. Nothing contained herein or in any Other Subscription Agreement, and no action taken by Subscriber, any Other Subscriber or other investor pursuant hereto or thereto, shall be deemed to constitute Subscriber and any Other Subscriber or other investor as a partnership, an association, a joint venture or any other kind of entity, or create a presumption that Subscriber and any Other Subscriber or other investor are in any way acting in concert or as a group with respect to such obligations or the transactions contemplated by this Subscription Agreement and the Other Subscription Agreements. Subscriber acknowledges that no Other Subscriber has acted as agent for Subscriber in connection with making its investment hereunder and no Other Subscriber will be acting as agent of Subscriber in connection with monitoring its investment in the Subscribed Shares or enforcing its rights under this Subscription Agreement. Subscriber shall be entitled to independently protect and enforce its rights, including the rights arising out of this Subscription Agreement, and it shall not be necessary for any Other Subscriber or investor to be joined as an additional party in any proceeding for such purpose.

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IN WITNESS WHEREOF, each of the Company and Subscriber has executed, or caused to be executed by its duly authorized representative, this Subscription Agreement as of the date first set forth above.

 

Soaring Eagle Acquisition Corp.
By:  

         

  Name:
 

Title:

Address for Notices:

[SUBSCRIBER]
By:  

         

  Name:
 

Title:

Address for Notices:

 

Name in which Subscribed Shares are to be registered:

         

 

Number of Subscribed Shares subscribed for:

  
  

 

 

 

Price Per Subscribed Share:

   $ 10.00  

Aggregate Purchase Price:

   $                            

You must pay the Purchase Price by wire transfer of United States dollars in immediately available funds to the account of the Company specified by the Company in the Closing Notice.

[Signature Page to PIPE Subscription Agreement]


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ANNEX A

ELIGIBILITY REPRESENTATIONS OF SUBSCRIBER

This Annex A should be completed and signed by Subscriber

and constitutes a part of the Subscription Agreement.

 

A.

QUALIFIED INSTITUTIONAL BUYER STATUS (Please check the box, if applicable)

 

 

Subscriber is a “qualified institutional buyer” (as defined in Rule 144A under the Securities Act).

** OR **

 

B.

INSTITUTIONAL ACCREDITED INVESTOR STATUS (Please check the box)

 

 

Subscriber is an institutional “accredited investor” (within the meaning of Rule 501(a)(1), (2), (3), or (7) under the Securities Act) and has marked and initialed the appropriate box below indicating the provision under which it qualifies as an institutional “accredited investor.”

** AND **

 

C.

AFFILIATE STATUS

(Please check the applicable box)

SUBSCRIBER:

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Table of Contents

Annex E

 

GINKGO BIOWORKS HOLDINGS, INC.

2021 INCENTIVE AWARD PLAN

ARTICLE I.

PURPOSE

The Plan’s purpose is to enhance the Company’s ability to attract, retain and motivate persons who make (or are expected to make) important contributions to the Company by providing these individuals with equity ownership opportunities. Capitalized terms used in the Plan are defined in Article XI.

ARTICLE II.

ELIGIBILITY

Service Providers are eligible to be granted Awards under the Plan, subject to the limitations described herein.

ARTICLE III.

ADMINISTRATION AND DELEGATION

3.1 Administration. The Plan is administered by the Administrator. The Administrator has authority to determine which Service Providers receive Awards, grant Awards and set Award terms and conditions, subject to the conditions and limitations in the Plan. The Administrator also has the authority to take all actions and make all determinations under the Plan, to interpret the Plan and Award Agreements, to impose a mandatory holding period pursuant to which some or all Participants may not dispose of or transfer Shares issued under the Plan for a period of time determined by the Administrator in its discretion, and to adopt, amend and repeal Plan administrative rules, guidelines and practices as it deems advisable. The Administrator may correct defects and ambiguities, supply omissions and reconcile inconsistencies in the Plan or any Award as it deems necessary or appropriate to administer the Plan and any Awards. The Administrator’s determinations under the Plan are in its sole discretion and will be final and binding on all persons having or claiming any interest in the Plan or any Award.

3.2 Appointment of Committees. To the extent Applicable Laws permit, the Board may delegate any or all of its powers under the Plan to one or more Committees or officers of the Company or any of its Subsidiaries. The Board may abolish any Committee or re-vest in itself any previously delegated authority at any time.

ARTICLE IV.

STOCK AVAILABLE FOR AWARDS

4.1 Number of Shares. Subject to adjustment under Article VIII and the terms of this Article IV, Awards may be made under the Plan covering up to the Overall Share Limit. As of the Plan’s effective date, the Company will cease granting awards under any Prior Plan; however, Prior Plan Awards will remain subject to the terms of the applicable Prior Plan. Shares issued under the Plan (i) may consist of authorized but unissued Shares, Shares purchased on the open market or treasury Shares and (ii) may be issued as Class A Common Stock or Class B Common Stock, as determined by the Administrator in its sole discretion.

4.2 Share Recycling. If all or any part of an Award or Prior Plan Award expires, lapses or is terminated, exchanged for cash, surrendered, repurchased, canceled without having been fully exercised or forfeited, in any

 

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case, in a manner that results in the Company acquiring Shares covered by the Award or Prior Plan Award at a price not greater than the price (as adjusted to reflect any Equity Restructuring) paid by the Participant for such Shares or not issuing any Shares covered by the Award or Prior Plan Award, the unused Shares covered by the Award or Prior Plan Award will, as applicable, become or again be available for Award grants under the Plan. Further, Shares delivered (either by actual delivery or attestation) to the Company by a Participant to satisfy the applicable exercise or purchase price of an Award or Prior Plan Award and/or to satisfy any applicable tax withholding obligation (including Shares retained by the Company from the Award or Prior Plan Award being exercised or purchased and/or creating the tax obligation) will, as applicable, become or again be available for Award grants under the Plan. The payment of Dividend Equivalents in cash in conjunction with any outstanding Awards or Prior Plan Awards shall not count against the Overall Share Limit.

4.3 Incentive Stock Option Limitations. Notwithstanding anything to the contrary herein, no more than 200,000,000 Shares may be issued pursuant to the exercise of Incentive Stock Options (any or all of which may be granted with respect to Class A Common Stock and/or Class B Common Stock).

4.4 Substitute Awards. In connection with an entity’s merger or consolidation with the Company or the Company’s acquisition of an entity’s property or stock, the Administrator may grant Awards in substitution for any options or other stock or stock-based awards granted before such merger or consolidation by such entity or its affiliate. Substitute Awards may be granted on such terms as the Administrator deems appropriate, notwithstanding limitations on Awards in the Plan. Substitute Awards will not count against the Overall Share Limit (nor shall Shares subject to a Substitute Award be added to the Shares available for Awards under the Plan as provided above), except that Shares acquired by exercise of substitute Incentive Stock Options will count against the maximum number of Shares that may be issued pursuant to the exercise of Incentive Stock Options under the Plan. Additionally, in the event that a company acquired by the Company or any Subsidiary or with which the Company or any Subsidiary combines has shares available under a pre-existing plan approved by stockholders, the shares available for grant pursuant to the terms of such pre-existing plan (as adjusted, to the extent appropriate, using the exchange ratio or other adjustment or valuation ratio or formula used in such acquisition or combination to determine the consideration payable to the holders of common stock of the entities party to such acquisition or combination) may be used for Awards under the Plan and shall not reduce the Shares authorized for grant under the Plan (and Shares subject to such Awards shall not be added to the Shares available for Awards under the Plan as provided above); provided that Awards using such available shares shall not be made after the date awards or grants could have been made under the terms of the pre-existing plan, absent the acquisition or combination, and shall only be made to individuals who were not Employees or Directors prior to such acquisition or combination.

4.5 Non-Employee Director Compensation. Notwithstanding any provision to the contrary in the Plan, the Administrator may establish compensation for Non-Employee Directors from time to time, subject to the limitations in the Plan. The Administrator will from time to time determine the terms, conditions and amounts of all such Non-Employee Director compensation in its discretion and pursuant to the exercise of its business judgment, taking into account such factors, circumstances and considerations as it shall deem relevant from time to time, provided that the sum of any cash compensation, or other compensation, and the value (determined as of the grant date in accordance with Financial Accounting Standards Board Accounting Standards Codification Topic 718, or any successor thereto) of Awards granted to a Non-Employee Director as compensation for services as a Non-Employee Director during any fiscal year of the Company may not exceed $1,000,000, increased to $1,250,000 in the fiscal year in which the Plan’s effective date occurs or in the fiscal year of a Non-Employee Director’s initial service as a Non-Employee Director (in either case, the “NED Limit”). For the avoidance of doubt, the value of any cash or equity-based compensation granted prior to the Plan’s effective date shall not count against the NED Limit. The Administrator may make exceptions to a NED Limit for individual Non-Employee Directors in extraordinary circumstances, as the Administrator may determine in its discretion, provided that the Non-Employee Director receiving such additional compensation may not participate in the decision to award such compensation or in other contemporaneous compensation decisions involving Non-Employee Directors.

 

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ARTICLE V.

STOCK OPTIONS AND STOCK APPRECIATION RIGHTS

5.1 General. The Administrator may grant Options or Stock Appreciation Rights to Service Providers subject to the limitations in the Plan, including any limitations in the Plan that apply to Incentive Stock Options. The Administrator will determine the number of Shares covered by each Option and Stock Appreciation Right, the exercise price of each Option and Stock Appreciation Right and the conditions and limitations applicable to the exercise of each Option and Stock Appreciation Right. A Stock Appreciation Right will entitle the Participant (or other person entitled to exercise the Stock Appreciation Right) to receive from the Company upon exercise of the exercisable portion of the Stock Appreciation Right an amount determined by multiplying the excess, if any, of the Fair Market Value of one Share on the date of exercise over the exercise price per Share of the Stock Appreciation Right by the number of Shares with respect to which the Stock Appreciation Right is exercised, subject to any limitations of the Plan or that the Administrator may impose and payable in cash, Shares valued at Fair Market Value or a combination of the two as the Administrator may determine or provide in the Award Agreement.

5.2 Exercise Price. The Administrator will establish each Option’s and Stock Appreciation Right’s exercise price and specify the exercise price in the Award Agreement. Unless otherwise determined by the Administrator, the exercise price will not be less than 100% of the Fair Market Value on the grant date of the Option or Stock Appreciation Right.

5.3 Duration. Each Option or Stock Appreciation Right will be exercisable at such times and as specified in the Award Agreement, provided that, unless otherwise determined by the Administrator, the term of an Option or Stock Appreciation Right will not exceed ten years. Notwithstanding the foregoing, if the Participant, prior to the end of the term of an Option or Stock Appreciation Right (i) violates the non-competition, non-solicitation, confidentiality or other similar restrictive covenant provisions of any employment contract, confidentiality and nondisclosure agreement or other agreement between the Participant and the Company or any of its Subsidiaries or (ii) commits a material violation or breach of a Company policy that relates to discrimination, harassment, retaliation or that is otherwise customarily punishable by termination of employment, the right of the Participant and the Participant’s transferees to exercise any Option or Stock Appreciation Right issued to the Participant shall terminate immediately upon such violation or breach, unless the Company otherwise determines.

5.4 Exercise. Options and Stock Appreciation Rights may be exercised by delivering to the Company a written notice of exercise, in a form the Administrator approves (which may be electronic), signed by the person authorized to exercise the Option or Stock Appreciation Right, together with, as applicable, payment in full (i) as specified in Section 5.5 for the number of Shares for which the Award is exercised and (ii) as specified in Section 9.5 for any applicable taxes. Unless the Administrator otherwise determines, an Option or Stock Appreciation Right may not be exercised for a fraction of a Share.

5.5 Payment Upon Exercise. Subject to Section 10.8, any Company insider trading policy (including blackout periods) and Applicable Laws, the exercise price of an Option must be paid by:

(a) cash, wire transfer of immediately available funds or by check payable to the order of the Company, provided that the Company may limit the use of one of the foregoing payment forms if one or more of the payment forms below is permitted;

(b) if there is a public market for Shares at the time of exercise, unless the Company otherwise determines, (A) delivery (including telephonically to the extent permitted by the Company) of an irrevocable and unconditional undertaking by a broker acceptable to the Company to deliver promptly to the Company sufficient funds to pay the exercise price, or (B) the Participant’s delivery to the Company of a copy of irrevocable and unconditional instructions to a broker acceptable to the Company to deliver promptly to the Company cash or a check sufficient to pay the exercise price; provided that such amount is paid to the Company at such time as may be required by the Administrator;

 

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(c) to the extent permitted by the Administrator, delivery (either by actual delivery or attestation) of Shares owned by the Participant valued at their fair market value;

(d) to the extent permitted by the Administrator, surrendering Shares then issuable upon the Option’s exercise valued at their fair market value on the exercise date;

(e) to the extent permitted by the Administrator, delivery of a promissory note or any other property that the Administrator determines is good and valuable consideration; or

(f) to the extent permitted by the Company, any combination of the above payment forms approved by the Administrator.

ARTICLE VI.

RESTRICTED STOCK; RESTRICTED STOCK UNITS

6.1 General. The Administrator may grant Restricted Stock, or the right to purchase Restricted Stock, to any Service Provider, subject to the Company’s right to repurchase all or part of such shares at their issue price or other stated or formula price from the Participant (or to require forfeiture of such shares) if conditions the Administrator specifies in the Award Agreement are not satisfied before the end of the applicable restriction period or periods that the Administrator establishes for such Award. In addition, the Administrator may grant Restricted Stock Units to Service Providers, which may be subject to vesting and forfeiture conditions during the applicable restriction period or periods, as set forth in an Award Agreement. The Administrator will determine and set forth in the Award Agreement the terms and conditions for each Restricted Stock and Restricted Stock Unit Award, subject to the conditions and limitations contained in the Plan.

6.2 Restricted Stock.

(g) Dividends. Participants holding shares of Restricted Stock will be entitled to all ordinary cash dividends paid with respect to such Shares, unless the Administrator provides otherwise in the Award Agreement. In addition, unless the Administrator provides otherwise, if any dividends or distributions are paid in Shares, or consist of a dividend or distribution to holders of Common Stock of property other than an ordinary cash dividend, the Shares or other property will be subject to the same restrictions on transferability and forfeitability as the shares of Restricted Stock with respect to which they were paid.

(h) Stock Certificates. The Company may require that the Participant deposit in escrow with the Company (or its designee) any stock certificates issued in respect of shares of Restricted Stock, together with a stock power endorsed in blank.

6.3 Restricted Stock Units.

(i) Settlement. The Administrator may provide that settlement of Restricted Stock Units will occur upon or as soon as reasonably practicable after the Restricted Stock Units vest or will instead be deferred, on a mandatory basis or at the Participant’s election, in a manner intended to comply with Section 409A.

(j) Stockholder Rights. A Participant will have no rights of a stockholder with respect to Shares subject to any Restricted Stock Unit unless and until the Shares are delivered in settlement of the Restricted Stock Unit.

(k) Dividend Equivalents. If the Administrator provides, a grant of Restricted Stock Units may provide a Participant with the right to receive Dividend Equivalents. Dividend Equivalents may be paid currently or credited to an account for the Participant, settled in cash or Shares and subject to the same restrictions on

 

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transferability and forfeitability as the Restricted Stock Units with respect to which the Dividend Equivalents are granted and subject to other terms and conditions as set forth in the Award Agreement.

ARTICLE VII.

OTHER STOCK OR CASH BASED AWARDS

Other Stock or Cash Based Awards may be granted to Participants, including Awards entitling Participants to receive Shares to be delivered in the future and including annual or other periodic or long- term cash bonus awards (whether based on specified Performance Criteria or otherwise), in each case subject to any conditions and limitations in the Plan. Such Other Stock or Cash Based Awards will also be available as a payment form in the settlement of other Awards, as standalone payments and as payment in lieu of compensation to which a Participant is otherwise entitled. Other Stock or Cash Based Awards may be paid in Shares, cash or other property, as the Administrator determines. Subject to the provisions of the Plan, the Administrator will determine the terms and conditions of each Other Stock or Cash Based Award, including any purchase price, performance goal (which may be based on the Performance Criteria), transfer restrictions, and vesting conditions, which will be set forth in the applicable Award Agreement.

ARTICLE VIII.

ADJUSTMENTS FOR CHANGES IN COMMON STOCK

AND CERTAIN OTHER EVENTS

8.1 Equity Restructuring. In connection with any Equity Restructuring, notwithstanding anything to the contrary in this Article VIII, the Administrator will equitably adjust each outstanding Award as it deems appropriate to reflect the Equity Restructuring, which may include adjusting the number and type of securities subject to each outstanding Award and/or the Award’s exercise price or grant price (if applicable), granting new Awards to Participants, and making a cash payment to Participants. The adjustments provided under this Section 8.1 will be nondiscretionary and final and binding on the affected Participant and the Company; provided that the Administrator will determine whether an adjustment is equitable.

8.2 Corporate Transactions. In the event of any dividend or other distribution (whether in the form of cash, Common Stock, other securities, or other property), reorganization, merger, consolidation, combination, amalgamation, repurchase, recapitalization, liquidation, dissolution, or sale, transfer, exchange or other disposition of all or substantially all of the assets of the Company, or sale or exchange of Common Stock or other securities of the Company, Change in Control, issuance of warrants or other rights to purchase Common Stock or other securities of the Company, other similar corporate transaction or event, other unusual or nonrecurring transaction or event affecting the Company or its financial statements or any change in any Applicable Laws or accounting principles, the Administrator, on such terms and conditions as it deems appropriate, either by the terms of the Award or by action taken prior to the occurrence of such transaction or event (except that action to give effect to a change in Applicable Law or accounting principles may be made within a reasonable period of time after such change) and either automatically or upon the Participant’s request, is hereby authorized to take any one or more of the following actions whenever the Administrator determines that such action is appropriate in order to (x) prevent dilution or enlargement of the benefits or potential benefits intended by the Company to be made available under the Plan or with respect to any Award granted or issued under the Plan, (y) to facilitate such transaction or event or (z) give effect to such changes in Applicable Laws or accounting principles:

(m) To provide for the cancellation of any such Award in exchange for either an amount of cash (except with respect to Non-Employee Directors) or other property with a value equal to the amount that could have been obtained upon the exercise or settlement of the vested portion of such Award or realization of the Participant’s rights under the vested portion of such Award, as applicable; provided that, if the amount that could have been obtained upon the exercise or settlement of the vested portion of such Award or realization of the Participant’s rights, in any case, is equal to or less than zero, then the Award may be terminated without payment;

 

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(n) To provide that such Award shall vest and, to the extent applicable, be exercisable as to all shares covered thereby, notwithstanding anything to the contrary in the Plan or the provisions of such Award;

(o) To provide that such Award be assumed by the successor or survivor corporation, or a parent or subsidiary thereof, or shall be substituted for by awards covering the stock of the successor or survivor corporation, or a parent or subsidiary thereof, with appropriate adjustments as to the number and kind of shares and/or applicable exercise or purchase price, in all cases, as determined by the Administrator;

(p) To make adjustments in the number and type of shares of Common Stock (or other securities or property) subject to outstanding Awards and/or with respect to which Awards may be granted under the Plan (including, but not limited to, adjustments of the limitations in Article IV hereof on the maximum number and kind of shares which may be issued) and/or in the terms and conditions of (including the grant or exercise price), and the criteria included in, outstanding Awards;

(q) To replace such Award with other rights or property selected by the Administrator; and/or

(r) To provide that the Award will terminate and cannot vest, be exercised or become payable after the applicable event.

8.3 Change in Control. Notwithstanding Section 8.2 above, if a Change in Control occurs and Awards are not continued, converted, assumed, or replaced with a comparable award (as determined by the Administrator) by (i) the Company or (ii) a successor entity or its parent or subsidiary (an “Assumption”), and provided that the Participant has not had a Termination of Service, then immediately prior to the Change in Control such Awards (other than any Award that is regularly scheduled to vest based on the attainment of performance-based vesting conditions) will become fully vested, exercisable and/or payable, as applicable, and all forfeiture, repurchase and other restrictions on such Awards will lapse, in which case, such Awards will be canceled upon the consummation of the Change in Control in exchange for the right to receive the Change in Control consideration payable to other holders of Common Stock, which may be on such terms and conditions as apply generally to holders of Common Stock under the Change in Control documents (including, without limitation, any escrow, earn-out or other deferred consideration provisions) or such other terms and conditions as the Administrator may provide, and determined by reference to the number of Shares subject to such Awards and net of any applicable exercise price; provided that to the extent that any Awards constitute “nonqualified deferred compensation” that may not be paid upon the Change in Control under Section 409A without the imposition of taxes thereon under Section 409A, the timing of such payments shall be governed by the applicable Award Agreement (subject to any deferred consideration provisions applicable under the Change in Control documents); and provided, further, that if the amount to which a Participant would be entitled upon the settlement or exercise of such Award at the time of the Change in Control is equal to or less than zero, then such Award may be terminated without payment. An Award will be considered replaced with a comparable award if the Award is exchanged for an amount of cash or other property with a value equal to the amount that could have been obtained upon the settlement of such Award in such Change in Control (as determined by the Administrator), even if such cash or other property payable with respect to the unvested portion of such Award remains subject to similar vesting provisions following such Change in Control. Notwithstanding the foregoing, the Administrator will have full and final authority to determine whether an Assumption of an Award has occurred in connection with a Change in Control.

8.4 Administrative Stand Still. In the event of any pending stock dividend, stock split, combination or exchange of shares, merger, consolidation or other distribution (other than normal cash dividends) of Company assets to stockholders, or any other extraordinary transaction or change affecting the Shares or the share price of Common Stock, including any Equity Restructuring or any securities offering or other similar transaction, for administrative convenience, the Administrator may refuse to permit the exercise of any Award for up to sixty days before or after such transaction.

 

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8.5 General. Except as expressly provided in the Plan or the Administrator’s action under the Plan, no Participant will have any rights due to any subdivision or consolidation of Shares of any class, dividend payment, increase or decrease in the number of Shares of any class or dissolution, liquidation, merger, or consolidation of the Company or other corporation. Except as expressly provided with respect to an Equity Restructuring under Section 8.1 above or the Administrator’s action under the Plan, no issuance by the Company of Shares of any class, or securities convertible into Shares of any class, will affect, and no adjustment will be made regarding, the number of Shares subject to an Award or the Award’s grant or exercise price. The existence of the Plan, any Award Agreements and the Awards granted hereunder will not affect or restrict in any way the Company’s right or power to make or authorize (i) any adjustment, recapitalization, reorganization or other change in the Company’s capital structure or its business, (ii) any merger, consolidation dissolution or liquidation of the Company or sale of Company assets or (iii) any sale or issuance of securities, including securities with rights superior to those of the Shares or securities convertible into or exchangeable for Shares. The Administrator may treat Participants and Awards (or portions thereof) differently under this Article VIII.

ARTICLE IX.

GENERAL PROVISIONS APPLICABLE TO AWARDS

9.1 Transferability. Except as the Administrator may determine or provide in an Award Agreement or otherwise for Awards other than Incentive Stock Options, Awards may not be sold, assigned, transferred, pledged or otherwise encumbered, either voluntarily or by operation of law, except by will or the laws of descent and distribution, or, subject to the Administrator’s consent, pursuant to a domestic relations order, and, during the life of the Participant, will be exercisable only by the Participant. References to a Participant, to the extent relevant in the context, will include references to a Participant’s authorized transferee that the Administrator specifically approves.

9.2 Documentation. Each Award will be evidenced in an Award Agreement, which may be written or electronic, as the Administrator determines. Each Award may contain terms and conditions in addition to those set forth in the Plan.

9.3 Discretion. Except as the Plan otherwise provides, each Award may be made alone or in addition or in relation to any other Award. The terms of each Award to a Participant need not be identical, and the Administrator need not treat Participants or Awards (or portions thereof) uniformly. Notwithstanding anything in the Plan to the contrary, the Administrator may, without the approval of the stockholders of the Company, grant one or more Awards to any Employee, Director or Consultant (including any Employee, Director or Consultant

who is a substantial security holder (i.e., those controlling 5% or more of the Company’s shares or voting power)) that represent, directly or indirectly, one percent or more of the Common Stock or one percent or more of the voting power of the Company.

9.4 Termination of Status. The Administrator will determine how the disability, death, retirement, authorized leave of absence or any other change or purported change in a Participant’s Service Provider status affects an Award and the extent to which, and the period during which, the Participant, the Participant’s legal representative, conservator, guardian or Designated Beneficiary may exercise rights under the Award, if applicable.

9.5 Withholding. Each Participant must pay the Company, or make provision satisfactory to the Administrator for payment of, any taxes required by law to be withheld in connection with such Participant’s Awards by the date of the event creating the tax liability. The Company may deduct an amount sufficient to satisfy such tax obligations based on the applicable statutory withholding rates (or such other rate as may be determined by the Company after considering any accounting consequences or costs) from any payment of any kind otherwise due to a Participant. Subject to Section 10.8 and any Company insider trading policy (including blackout periods), Participants may satisfy such tax obligations (i) in cash, by wire transfer of immediately

 

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available funds, by check made payable to the order of the Company, provided that the Company may limit the use of the foregoing payment forms if one or more of the payment forms below is permitted, (ii) to the extent permitted by the Administrator, in whole or in part by delivery of Shares, including Shares retained from the Award creating the tax obligation, valued at their fair market value, (iii) if there is a public market for Shares at the time the tax obligations are satisfied, unless the Company otherwise determines, (A) delivery (including telephonically to the extent permitted by the Company) of an irrevocable and unconditional undertaking by a broker acceptable to the Company to deliver promptly to the Company sufficient funds to satisfy the tax obligations, or (B) delivery by the Participant to the Company of a copy of irrevocable and unconditional instructions to a broker acceptable to the Company to deliver promptly to the Company cash or a check sufficient to satisfy the tax withholding; provided that such amount is paid to the Company at such time as may be required by the Administrator, or (iv) to the extent permitted by the Company, any combination of the foregoing payment forms approved by the Administrator. If any tax withholding obligation will be satisfied under clause (ii) of the immediately preceding sentence by the Company’s retention of Shares from the Award creating the tax obligation and there is a public market for Shares at the time the tax obligation is satisfied, the Company may elect to instruct any brokerage firm determined acceptable to the Company for such purpose to sell on the applicable Participant’s behalf some or all of the Shares retained and to remit the proceeds of the sale to the Company or its designee, and each Participant’s acceptance of an Award under the Plan will constitute the Participant’s authorization to the Company and instruction and authorization to such brokerage firm to complete the transactions described in this sentence.

9.6 Amendment of Award; Repricing. The Administrator may amend, modify or terminate any outstanding Award, including by substituting another Award of the same or a different type, changing the exercise or settlement date, and converting an Incentive Stock Option to a Non-Qualified Stock Option. The Participant’s consent to such action will be required unless (i) the action, taking into account any related action, does not materially and adversely affect the Participant’s rights under the Award, or (ii) the change is permitted under Article VIII or pursuant to Section 10.6. Notwithstanding the foregoing or anything in the Plan to the contrary, the Administrator may, without the approval of the stockholders of the Company, reduce the exercise price or base price per share of outstanding Options or Stock Appreciation Rights or cancel outstanding Options or Stock Appreciation Rights that have an exercise price or base price in excess of Fair Market Value in exchange for cash, other Awards or Options or Stock Appreciation Rights with an exercise price or base price per share that is less than the exercise price or base price per share of the original Options or Stock Appreciation Rights.

9.7 Conditions on Delivery of Stock. The Company will not be obligated to deliver any Shares under the Plan or remove restrictions from Shares previously delivered under the Plan until (i) all Award conditions have been met or removed to the Company’s satisfaction, (ii) as determined by the Company, all other legal matters regarding the issuance and delivery of such Shares have been satisfied, including any applicable securities laws and stock exchange or stock market rules and regulations, and (iii) the Participant has executed and delivered to the Company such representations or agreements as the Administrator deems necessary or appropriate to satisfy any Applicable Laws. The Company’s inability to obtain authority from any regulatory body having jurisdiction, which the Administrator determines is necessary to the lawful issuance and sale of any securities, will relieve the Company of any liability for failing to issue or sell such Shares as to which such requisite authority has not been obtained.

9.8 Acceleration . The Administrator may at any time provide that any Award will become immediately vested and fully or partially exercisable, free of some or all restrictions or conditions, or otherwise fully or partially realizable.

9.9 Additional Terms of Incentive Stock Options . The Administrator may grant Incentive Stock Options only to employees of the Company, any of its present or future parent or subsidiary corporations, as defined in Sections 424(e) or (f) of the Code, respectively, and any other entities the employees of which are eligible to receive Incentive Stock Options under the Code. If an Incentive Stock Option is granted to a Greater Than 10% Stockholder, the exercise price will not be less than 110% of the Fair Market Value on the Option’s grant date,

 

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and the term of the Option will not exceed five years. All Incentive Stock Options will be subject to and construed consistently with Section 422 of the Code. By accepting an Incentive Stock Option, the Participant agrees to give prompt notice to the Company of dispositions or other transfers (other than in connection with a Change in Control) of Shares acquired under the Option made within (i) two years from the grant date of the Option or (ii) one year after the transfer of such Shares to the Participant, specifying the date of the disposition or other transfer and the amount the Participant realized, in cash, other property, assumption of indebtedness or other consideration, in such disposition or other transfer. Neither the Company nor the Administrator will be liable to a Participant, or any other party, if an Incentive Stock Option fails or ceases to qualify as an “incentive stock option” under Section 422 of the Code. Any Incentive Stock Option or portion thereof that fails to qualify as an “incentive stock option” under Section 422 of the Code for any reason, including becoming exercisable with respect to Shares having a fair market value exceeding the $100,000 limitation under Treasury Regulation Section 1.422-4, will be a Non-Qualified Stock Option.

ARTICLE X.

MISCELLANEOUS

10.1 No Right to Employment or Other Status. No person will have any claim or right to be granted an Award, and the grant of an Award will not be construed as giving a Participant the right to continued employment or any other relationship with the Company. The Company expressly reserves the right at any time to dismiss or otherwise terminate its relationship with a Participant free from any liability or claim under the Plan or any Award, except as expressly provided in an Award Agreement.

10.2 No Rights as Stockholder; Certificates. Subject to the Award Agreement, no Participant or Designated Beneficiary will have any rights as a stockholder with respect to any Shares to be distributed under an Award until becoming the record holder of such Shares. Notwithstanding any other provision of the Plan, unless the Administrator otherwise determines or Applicable Laws require, the Company will not be required to deliver to any Participant certificates evidencing Shares issued in connection with any Award and instead such Shares may be recorded in the books of the Company (or, as applicable, its transfer agent or stock plan administrator). The Company may place legends on stock certificates issued under the Plan that the Administrator deems necessary or appropriate to comply with Applicable Laws.

10.3 Effective Date and Term of Plan. The Plan will become effective upon the consummation of the Initial Business Combination. However, the effectiveness of the Plan shall be subject to approval of the Plan by the Company’s stockholders. If the Plan is not approved by the Company’s stockholders, the Plan will not become effective and no Awards will be granted under the Plan. The Plan shall remain in effect until terminated by the Administrator under Section 10.4; provided, that, any provision of the Plan that constitutes a “formula” under the New York Stock Exchange Listed Company Manual (or such successor manual of the New York Stock Exchange) shall only remain in effect until the tenth anniversary of the date the Company’s stockholders last approved the Plan, and Incentive Stock Options may not be granted under the Plan after the tenth anniversary of the earlier of (i) the date the Board adopted the Plan or (ii) the date the Company’s stockholders approved the Plan.

10.4 Amendment of Plan. The Administrator may amend, suspend or terminate the Plan at any time; provided that no amendment, other than an increase to the Overall Share Limit, may materially and adversely affect any Award outstanding at the time of such amendment without the affected Participant’s consent. No Awards may be granted under the Plan during any suspension period or after Plan termination. Awards outstanding at the time of any Plan suspension or termination will continue to be governed by the Plan and the Award Agreement, as in effect before such suspension or termination. The Board will obtain stockholder approval of any Plan amendment to the extent necessary to comply with Applicable Laws.

 

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10.5 Provisions for Foreign Participants. The Administrator may modify Awards granted to Participants who are foreign nationals or employed outside the United States or establish subplans or procedures under the Plan to address differences in laws, rules, regulations or customs of such foreign jurisdictions with respect to tax, securities, currency, employee benefit or other matters.

10.6 Section 409A.

(s) General. The Company intends that all Awards be structured to comply with, or be exempt from, Section 409A, such that no adverse tax consequences, interest, or penalties under Section 409A apply. Notwithstanding anything in the Plan or any Award Agreement to the contrary, the Administrator may, without a Participant’s consent, amend this Plan or Awards, adopt policies and procedures, or take any other actions (including amendments, policies, procedures and retroactive actions) as are necessary or appropriate to preserve the intended tax treatment of Awards, including any such actions intended to (A) exempt this Plan or any Award from Section 409A, or (B) comply with Section 409A, including regulations, guidance, compliance programs and other interpretative authority that may be issued after an Award’s grant date. The Company makes no representations or warranties as to an Award’s tax treatment under Section 409A or otherwise. The Company will have no obligation under this Section 10.6 or otherwise to avoid the taxes, penalties or interest under Section 409A with respect to any Award and will have no liability to any Participant or any other person if any Award, compensation or other benefits under the Plan are determined to constitute noncompliant “nonqualified deferred compensation” subject to taxes, penalties or interest under Section 409A.

(t) Separation from Service. If an Award constitutes “nonqualified deferred compensation” under Section 409A, any payment or settlement of such Award upon a termination of a Participant’s Service Provider relationship will, to the extent necessary to avoid taxes under Section 409A, be made only upon the Participant’s “separation from service” (within the meaning of Section 409A), whether such “separation from service” occurs upon or after the termination of the Participant’s Service Provider relationship. For purposes of this Plan or any Award Agreement relating to any such payments or benefits, references to a “termination,” “termination of employment” or like terms means a “separation from service.”

(u) Payments to Specified Employees. Notwithstanding any contrary provision in the Plan or any Award Agreement, any payment(s) of “nonqualified deferred compensation” required to be made under an Award to a “specified employee” (as defined under Section 409A and as the Administrator determines) due to his or her “separation from service” will, to the extent necessary to avoid taxes under Section 409A(a)(2)(B)(i) of the Code, be delayed for the six-month period immediately following such “separation from service” (or, if earlier, until the specified employee’s death) and will instead be paid (as set forth in the Award Agreement) on the day immediately following such six-month period or as soon as administratively practicable thereafter (without interest). Any payments of “nonqualified deferred compensation” under such Award payable more than six months following the Participant’s “separation from service” will be paid at the time or times the payments are otherwise scheduled to be made.

10.7 Limitations on Liability. Notwithstanding any other provisions of the Plan, no individual acting as a director, officer, other employee or agent of the Company or any Subsidiary will be liable to any Participant, former Participant, spouse, beneficiary, or any other person for any claim, loss, liability, or expense incurred in connection with the Plan or any Award, and such individual will not be personally liable with respect to the Plan because of any contract or other instrument executed in his or her capacity as an Administrator, director, officer, other employee or agent of the Company or any Subsidiary. The Company will indemnify and hold harmless each director, officer, other employee and agent of the Company or any Subsidiary that has been or will be granted or delegated any duty or power relating to the Plan’s administration or interpretation, against any cost or expense (including attorneys’ fees) or liability (including any sum paid in settlement of a claim with the Administrator’s approval) arising from any act or omission concerning this Plan unless arising from such person’s own fraud or bad faith.

 

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10.8 Lock-Up Period. The Company may, at the request of any underwriter representative or the Company, in connection with registering the offering of any Company securities under the Securities Act, prohibit Participants from, directly or indirectly, selling or otherwise transferring any Shares or other Company securities during a period of up to one hundred eighty days following the effective date of a Company registration statement filed under the Securities Act, or such shorter or longer period as determined by the underwriter or the Company (including as set forth in the Charter), and subject to such exceptions as may be determined by the underwriter or the Company (including as set forth in the Charter).

10.9 Conversion of Stock. The Awards granted and Shares issuable and issued pursuant to this Plan are subject to the provisions of the Charter regarding the conversion of shares of Class B Common Stock to Class A Common Stock. In addition, prior to or in connection with issuing any Shares subject to Awards under the Plan, the Administrator may convert Awards previously granted covering shares of Class B Common Stock to Class A Common Stock or convert Awards previously granted covering shares of Class A Common Stock to Class B Common Stock.

10.10 Data Privacy. As a condition for receiving any Award, each Participant explicitly and unambiguously consents to the collection, use and transfer, in electronic or other form, of personal data as described in this section by and among the Company and its Subsidiaries and affiliates exclusively for implementing, administering and managing the Participant’s participation in the Plan. The Company and its Subsidiaries and affiliates may hold certain personal information about a Participant, including the Participant’s name, address and telephone number; birthdate; social security, insurance number or other identification number; salary; nationality; job title(s); any Shares held in the Company or its Subsidiaries and affiliates; and Award details, to implement, manage and administer the Plan and Awards (the “Data”). The Company and its Subsidiaries and affiliates may transfer the Data amongst themselves as necessary to implement, administer and manage a Participant’s participation in the Plan, and the Company and its Subsidiaries and affiliates may transfer the Data to third parties assisting the Company with Plan implementation, administration and management. These recipients may be located in the Participant’s country, or elsewhere, and the Participant’s country may have different data privacy laws and protections than the recipients’ country. By accepting an Award, each Participant authorizes such recipients to receive, possess, use, retain and transfer the Data, in electronic or other form, to implement, administer and manage the Participant’s participation in the Plan, including any required Data transfer to a broker or other third party with whom the Company or the Participant may elect to deposit any Shares. The Data related to a Participant will be held only as long as necessary to implement, administer, and manage the Participant’s participation in the Plan. A Participant may, at any time, view the Data that the Company holds regarding such Participant, request additional information about the storage and processing of the Data regarding such Participant, recommend any necessary corrections to the Data regarding the Participant or refuse or withdraw the consents in this Section 10.10 in writing, without cost, by contacting the local human resources representative. The Company may cancel Participant’s ability to participate in the Plan and, in the Administrator’s discretion, the Participant may forfeit any outstanding Awards if the Participant refuses or withdraws the consents in this Section 10.10. For more information on the consequences of refusing or withdrawing consent, Participants may contact their local human resources representative.

10.11 Severability. If any portion of the Plan or any action taken under it is held illegal or invalid for any reason, the illegality or invalidity will not affect the remaining parts of the Plan, and the Plan will be construed and enforced as if the illegal or invalid provisions had been excluded, and the illegal or invalid action will be null and void.

10.12 Governing Documents. If any contradiction occurs between the Plan and any Award Agreement or other written agreement between a Participant and the Company (or any Subsidiary) that the Administrator has approved, the Plan will govern, unless it is expressly specified in such Award Agreement or other written document that a specific provision of the Plan will not apply.

 

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10.13 Governing Law. The Plan and all Awards will be governed by and interpreted in accordance with the laws of the State of Delaware, disregarding any state’s choice-of-law principles requiring the application of a jurisdiction’s laws other than the State of Delaware.

10.14 Claw-back Provisions. All Awards (including any proceeds, gains or other economic benefit the Participant actually or constructively receives upon receipt or exercise of any Award or the receipt or resale of any Shares underlying the Award) will be subject to any Company claw-back policy adopted to comply with Applicable Laws (including the Dodd-Frank Wall Street Reform and Consumer Protection Act and any rules or regulations promulgated thereunder).

10.15 Titles and Headings. The titles and headings in the Plan are for convenience of reference only and, if any conflict, the Plan’s text, rather than such titles or headings, will control.

10.16 Conformity to Securities Laws. Participant acknowledges that the Plan is intended to conform to the extent necessary with Applicable Laws. Notwithstanding anything herein to the contrary, the Plan and all Awards will be administered only in conformance with Applicable Laws. To the extent Applicable Laws permit, the Plan and all Award Agreements will be deemed amended as necessary to conform to Applicable Laws.

10.17 Relationship to Other Benefits. No payment under the Plan will be taken into account in determining any benefits under any pension, retirement, savings, profit sharing, group insurance, welfare or other benefit plan of the Company or any Subsidiary except as expressly provided in writing in such other plan or an agreement thereunder.

10.18 Broker-Assisted Sales. In the event of a broker-assisted sale of Shares in connection with the payment of amounts owed by a Participant under or with respect to the Plan or Awards, including amounts to be paid under the final sentence of Section 9.5: (a) any Shares to be sold through the broker-assisted sale will be sold on the day the payment first becomes due, or as soon thereafter as practicable; (b) such Shares may be sold as part of a block trade with other Participants in the Plan in which all participants receive an average price; (c) the applicable Participant will be responsible for all broker’s fees and other costs of sale, and by accepting an Award, each Participant agrees to indemnify and hold the Company harmless from any losses, costs, damages, or expenses relating to any such sale; (d) to the extent the Company or its designee receives proceeds of such sale that exceed the amount owed, the Company will pay such excess in cash to the applicable Participant as soon as reasonably practicable; (e) the Company and its designees are under no obligation to arrange for such sale at any particular price; and (f) in the event the proceeds of such sale are insufficient to satisfy the Participant’s applicable obligation, the Participant may be required to pay immediately upon demand to the Company or its designee an amount in cash sufficient to satisfy any remaining portion of the Participant’s obligation.

ARTICLE XI.

DEFINITIONS

As used in the Plan, the following words and phrases will have the following meanings:

11.1 “Administrator” means the Board or a Committee to the extent that the Board’s powers or authority under the Plan have been delegated to such Committee.

11.2 “Applicable Laws” means the requirements relating to the administration of equity incentive plans under U.S. federal and state securities, tax and other applicable laws, rules and regulations, the applicable rules of any stock exchange or quotation system on which the Common Stock is listed or quoted and the applicable laws and rules of any foreign country or other jurisdiction where Awards are granted.

11.3 “Award” means, individually or collectively, a grant under the Plan of Options, Stock Appreciation Rights, Restricted Stock, Restricted Stock Units or Other Stock or Cash Based Awards.

 

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11.4 “Award Agreement” means a written agreement evidencing an Award, which may be electronic, that contains such terms and conditions as the Administrator determines, consistent with and subject to the terms and conditions of the Plan.

11.5 “Board” means the Board of Directors of the Company.

11.6 “Change in Control” means and includes each of the following:

(a) A transaction or series of transactions (other than an offering of Common Stock to the general public through a registration statement filed with the Securities and Exchange Commission or a transaction or series of transactions that meets the requirements of clauses (i) and (ii) of subsection (c) below) whereby any “person” or related “group” of “persons” (as such terms are used in Sections 13(d) and 14(d)(2) of the Exchange Act) (other than the Company, any of its Subsidiaries, an employee benefit plan maintained by the Company or any of its Subsidiaries or a “person” that, prior to such transaction, directly or indirectly controls, is controlled by, or is under common control with, the Company) directly or indirectly acquires beneficial ownership (within the meaning of Rule 13d-3 under the Exchange Act) of securities of the Company possessing more than 50% of the total combined voting power of the Company’s securities outstanding immediately after such acquisition; or

(b) The consummation by the Company (whether directly involving the Company or indirectly involving the Company through one or more intermediaries) of (x) a merger, consolidation, reorganization, or business combination or (y) a sale or other disposition of all or substantially all of the Company’s assets in any single transaction or series of related transactions or (z) the acquisition of assets or stock of another entity, in each case other than a transaction:

(i) which results in the Company’s voting securities outstanding immediately before the transaction continuing to represent (either by remaining outstanding or by being converted into voting securities of the Company or the person that, as a result of the transaction, controls, directly or indirectly, the Company or owns, directly or indirectly, all or substantially all of the Company’s assets or otherwise succeeds to the business of the Company (the Company or such person, the “Successor Entity”)) directly or indirectly, at least a majority of the combined voting power of the Successor Entity’s outstanding voting securities immediately after the transaction, and

(ii) after which no person or group beneficially owns voting securities representing 50% or more of the combined voting power of the Successor Entity; provided, however, that no person or group shall be treated for purposes of this clause (ii) as beneficially owning 50% or more of the combined voting power of the Successor Entity solely as a result of the voting power held in the Company prior to the consummation of the transaction.

Notwithstanding the foregoing, in no event shall the Initial Business Combination or the transactions occurring in connection therewith constitute a Change in Control and, if a Change in Control constitutes a payment event with respect to any Award (or portion of any Award) that provides for the deferral of compensation that is subject to Section 409A, to the extent required to avoid the imposition of additional taxes under Section 409A, the transaction or event described in subsection (a) or (b) with respect to such Award (or portion thereof) shall only constitute a Change in Control for purposes of the payment timing of such Award if such transaction also constitutes a “change in control event,” as defined in Treasury Regulation Section 1.409A-3(i)(5).

The Administrator shall have full and final authority, which shall be exercised in its discretion, to determine conclusively whether a Change in Control has occurred pursuant to the above definition, the date of the occurrence of such Change in Control and any incidental matters relating thereto; provided that any exercise of authority in conjunction with a determination of whether a Change in Control is a “change in control event” as defined in Treasury Regulation Section 1.409A-3(i)(5) shall be consistent with such regulation.

 

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11.7 “Charter” means the Certificate of Incorporation of Soaring Eagle Acquisition Corp, as amended from time to time.

11.8 “Class A Common Stock” means the Class A common stock of the Company, par value of $0.0001 per share, which entitle the holder thereof to one vote per share on all Company voting matters.

11.9 “Class B Common Stock” means the Class B common stock of the Company, par value of $0.0001 per share, which entitle the holder thereof to ten votes per share on all Company voting matters.

11.10 “Code” means the Internal Revenue Code of 1986, as amended, and the regulations issued thereunder.

11.11 “Committee” means one or more committees or subcommittees of the Board, which may include one or more Company directors or executive officers, to the extent Applicable Laws permit. To the extent required to comply with the provisions of Rule 16b-3, it is intended that each member of the Committee will be, at the time the Committee takes any action with respect to an Award that is subject to Rule 16b-3, a “non-employee director” within the meaning of Rule 16b-3; however, a Committee member’s failure to qualify as a “non-employee director” within the meaning of Rule 16b-3 will not invalidate any Award granted by the Committee that is otherwise validly granted under the Plan.

11.12 “Common Stock” means either the Class A Common Stock or Class B Common Stock of the Company.

11.13 “Company” means Ginkgo Bioworks Holdings, Inc., a Delaware corporation, or any successor.

11.14 “Consultant” means any person, including any adviser, engaged by the Company or its parent or Subsidiary to render services to such entity if the consultant or adviser: (i) renders bona fide services to the Company; (ii) renders services not in connection with the offer or sale of securities in a capital-raising transaction and does not directly or indirectly promote or maintain a market for the Company’s securities; and (iii) is a natural person.

11.15 “Designated Beneficiary” means the beneficiary or beneficiaries the Participant designates, in a manner the Administrator determines, to receive amounts due or exercise the Participant’s rights if the Participant dies or becomes incapacitated. Without a Participant’s effective designation, “Designated Beneficiary” will mean the Participant’s estate.

11.16 “Director” means a Board member.

11.17 “Disability” means a permanent and total disability under Section 22(e)(3) of the Code, as amended.

11.18 “Dividend Equivalents” means a right granted to a Participant under the Plan to receive the equivalent value (in cash or Shares) of dividends paid on Shares.

11.19 “Earn-out Share” has the meaning set forth in the Merger Agreement.

11.20 “Employee” means any employee of the Company or its Subsidiaries.

11.21 “Equity Restructuring” means a nonreciprocal transaction between the Company and its stockholders, such as a stock dividend, stock split, spin-off or recapitalization through a large, nonrecurring cash dividend, that affects the number or kind of Shares (or other Company securities) or the share price of Common Stock (or other Company securities) and causes a change in the per share value of the Common Stock underlying outstanding Awards.

 

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11.22 “Exchange Act” means the Securities Exchange Act of 1934, as amended.

11.23 “Fair Market Value” means, as of any date, the value of Common Stock determined as follows: (i) if the Common Stock is listed on any established stock exchange, its Fair Market Value will be the closing sales price for such Common Stock as quoted on such exchange for the last market trading day prior to such date, as reported in The Wall Street Journal or another source the Administrator deems reliable; (ii) if the Common Stock is not traded on a stock exchange but is quoted on a national market or other quotation system, the closing sales price on such date, or if no sales occurred on such date, then on the last date preceding such date during which a sale occurred, as reported in The Wall Street Journal or another source the Administrator deems reliable; or (iii) in any case, the Administrator may determine the Fair Market Value in its discretion.

11.24 “Greater Than 10% Stockholder” means an individual then owning (within the meaning of Section 424(d) of the Code) more than 10% of the total combined voting power of all classes of stock of the Company or its parent or subsidiary corporation, as defined in Section 424(e) and (f) of the Code, respectively.

11.25 “Incentive Stock Option” means an Option intended to qualify as an “incentive stock option” as defined in Section 422 of the Code.

11.26 “Initial Business Combination” means the transactions contemplated by the Merger Agreement.

11.27 “Merger Agreement” means the Agreement and Plan of Merger, dated as of May 11, 2021, by and among Soaring Eagle Acquisition Corp., SEAC Merger Sub Inc., and Ginkgo Bioworks, Inc.

11.28 “Non-Employee Director” means a Director who is not an Employee.

11.29 “Non-Qualified Stock Option” means an Option not intended or not qualifying as an Incentive Stock Option.

11.30 “Option” means an option to purchase Shares.

11.31 “Other Stock or Cash Based Awards” means cash awards, awards of Shares, and other awards valued wholly or partially by referring to, or are otherwise based on, Shares or other property.

11.32 “Overall Share Limit” means the sum of (i) 200,000,000 Shares; (ii) any shares of Common Stock which remain available for future grants under any Prior Plan as of immediately prior to approval of the Plan by the Company’s stockholders; (iii) any shares of Common Stock which are subject to Prior Plan Awards which become available for issuance under the Plan pursuant to Article IV; (iv) any Remaining Earn-out Shares; and (v) an annual increase on the first day of each calendar year beginning January 1, 2022 and ending on and including January 1, 2031, equal to the lesser of (A) 4% of the aggregate number of shares of common stock of the Company outstanding on the final day of the immediately preceding calendar year and (B) such smaller number of Shares as is determined by the Board.

11.33 “Participant” means a Service Provider who has been granted an Award.

11.34 “Performance Criteria” mean the criteria (and adjustments) that the Administrator may select for an Award to establish performance goals for a performance period, which may include the following: net earnings or losses (either before or after one or more of interest, taxes, depreciation, amortization, and non-cash equity-based compensation expense); gross or net sales or revenue or sales or revenue growth; net income (either before or after taxes) or adjusted net income; profits (including but not limited to gross profits, net profits, profit growth, net operation profit or economic profit), profit return ratios or operating margin; budget or operating earnings (either before or after taxes or before or after allocation of corporate overhead and bonus); cash flow (including operating cash flow and free cash flow or cash flow return on capital); return on assets; return on capital or

 

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invested capital; cost of capital; return on stockholders’ equity; total stockholder return; return on sales; costs, reductions in costs and cost control measures; expenses; working capital; earnings or loss per share; adjusted earnings or loss per share; price per share or dividends per share (or appreciation in or maintenance of such price or dividends); regulatory achievements or compliance; implementation, completion or attainment of objectives relating to research, development, regulatory, commercial, or strategic milestones or developments; market share; economic value or economic value added models; division, group or corporate financial goals; customer satisfaction/growth; customer service; employee satisfaction; recruitment and maintenance of personnel; human resources management; supervision of litigation and other legal matters; strategic partnerships and transactions; financial ratios (including those measuring liquidity, activity, profitability or leverage); debt levels or reductions; sales-related goals; financing and other capital raising transactions; cash on hand; acquisition activity; investment sourcing activity; and marketing initiatives, any of which may be measured in absolute terms or as compared to any incremental increase or decrease. Such performance goals also may be based solely by reference to the Company’s performance or the performance of a Subsidiary, division, business segment or business unit of the Company or a Subsidiary, or based upon performance relative to performance of other companies or upon comparisons of any of the indicators of performance relative to performance of other companies. The Committee may provide for exclusion of the impact of an event or occurrence which the Committee determines should appropriately be excluded, including (a) restructurings, discontinued operations, extraordinary items, and other unusual, infrequently occurring or non-recurring charges or events, (b) asset write-downs, (c) litigation or claim judgments or settlements, (d) acquisitions or divestitures, (e) reorganization or change in the corporate structure or capital structure of the Company, (f) an event either not directly related to the operations of the Company, Subsidiary, division, business segment or business unit or not within the reasonable control of management, (g) foreign exchange gains and losses, (h) a change in the fiscal year of the Company, (i) the refinancing or repurchase of bank loans or debt securities, (j) unbudgeted capital expenditures, (k) the issuance or repurchase of equity securities and other changes in the number of outstanding shares, (l) conversion of some or all of convertible securities to Common Stock, (m) any business interruption event (n) the cumulative effects of tax or accounting changes in accordance with U.S. generally accepted accounting principles, or (o) the effect of changes in other laws or regulatory rules affecting reported results.

11.35 “Plan” means this 2021 Incentive Award Plan.

11.36 “Prior Plan” means the Ginkgo Bioworks, Inc. 2008 Stock Incentive Plan and/or the Ginkgo Bioworks, Inc. 2014 Stock Incentive Plan.

11.37 “Prior Plan Award” means an award outstanding under any Prior Plan as of immediately prior to approval of the Plan by the Company’s stockholders.

11.38 “Remaining Earn-out Shares” has the meaning set forth in the Merger Agreement, which Remaining Earn-out Shares shall be subject to the vesting and forfeiture conditions set forth in the Merger Agreement.

11.39 “Restricted Stock” means Shares awarded to a Participant under Article VI subject to certain vesting conditions and other restrictions.

11.40 “Restricted Stock Unit” means an unfunded, unsecured right to receive, on the applicable settlement date, one Share or an amount in cash or other consideration determined by the Administrator to be of equal value as of such settlement date, subject to certain vesting conditions and other restrictions.

11.41 “Rule 16b-3” means Rule 16b-3 promulgated under the Exchange Act.

11.42 “Section 409A” means Section 409A of the Code and all regulations, guidance, compliance programs and other interpretative authority thereunder.

11.43 “Securities Act” means the Securities Act of 1933, as amended.

 

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11.44 “Service Provider” means an Employee, Consultant or Director.

11.45 “Shares” means shares of Common Stock.

11.46 “Stock Appreciation Right” means a stock appreciation right granted under Article V.

11.47 “Subsidiary” means any entity (other than the Company), whether domestic or foreign, in an unbroken chain of entities beginning with the Company if each of the entities other than the last entity in the unbroken chain beneficially owns, at the time of the determination, securities or interests representing at least 50% of the total combined voting power of all classes of securities or interests in one of the other entities in such chain.

11.48 “Substitute Awards” shall mean Awards granted or Shares issued by the Company in assumption of, or in substitution or exchange for, awards previously granted, or the right or obligation to make future awards, in each case by a company acquired by the Company or any Subsidiary or with which the Company or any Subsidiary combines.

11.49 “Termination of Service” means the date the Participant ceases to be a Service Provider.

* * * * *

 

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Annex F

 

GINKGO BIOWORKS HOLDINGS, INC.

2021 EMPLOYEE STOCK PURCHASE PLAN

ARTICLE I.

PURPOSE

The purpose of this Plan is to assist Eligible Employees of the Company and its Designated Subsidiaries in acquiring a stock ownership interest in the Company.

The Plan consists of two components: (i) the Section 423 Component and (ii) the Non-Section 423 Component. The Section 423 Component is intended to qualify as an “employee stock purchase plan” under Section 423 of the Code and shall be administered, interpreted and construed in a manner consistent with the requirements of Section 423 of the Code. The Non-Section 423 Component authorizes the grant of rights which need not qualify as rights granted pursuant to an “employee stock purchase plan” under Section 423 of the Code. Rights granted under the Non-Section 423 Component shall be granted pursuant to separate Offerings containing such sub-plans, appendices, rules or procedures as may be adopted by the Administrator and designed to achieve tax, securities laws or other objectives for Eligible Employees and Designated Subsidiaries but shall not be intended to qualify as an “employee stock purchase plan” under Section 423 of the Code. Except as otherwise determined by the Administrator or provided herein, the Non-Section 423 Component will operate and be administered in the same manner as the Section 423 Component. Offerings intended to be made under the Non-Section 423 Component will be designated as such by the Administrator at or prior to the time of such Offering. Notwithstanding the foregoing, to the extent a limitation or requirement set forth in the Plan is specifically mandated under Section 423 of the Code, such limitation or requirement need not apply to the Non-Section 423 Component and the Administrator may eliminate application of such limitation or requirement to the Non-Section 423 Component in its discretion, subject to stockholder approval only to the extent required by Applicable Law.

For purposes of this Plan, the Administrator may designate separate Offerings under the Plan in which Eligible Employees will participate. The terms of these Offerings need not be identical, even if the dates of the applicable Offering Period(s) in each such Offering are identical, provided that the terms of participation are the same within each separate Offering under the Section 423 Component (as determined under Section 423 of the Code). Solely by way of example and without limiting the foregoing, the Company could, but shall not be required to, provide for simultaneous Offerings under the Section 423 Component and the Non-Section 423 Component of the Plan.

ARTICLE II.

DEFINITIONS AND CONSTRUCTION

Wherever the following terms are used in the Plan they shall have the meanings specified below, unless the context clearly indicates otherwise.

2.1 “Administrator” means the entity that conducts the general administration of the Plan as provided in Article XI.

2.2 Agent” means the brokerage firm, bank or other financial institution, entity or person(s), if any, engaged, retained, appointed or authorized to act as the agent of the Company or an Employee with regard to the Plan.

2.3 Applicable Law” means the requirements relating to the administration of equity incentive plans under U.S. federal and state securities, tax and other applicable laws, rules and regulations, the applicable rules of any

 

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stock exchange or quotation system on which Shares are listed or quoted and the applicable laws and rules of any foreign country or other jurisdiction where rights under this Plan are granted.

2.4 “Board” means the Board of Directors of the Company.

2.5 “Class A Common Stock” means the Class A common stock of the Company, par value of $0.0001 per share, which entitle the holder thereof to one vote per share on all Company voting matters.

2.6 “Class B Common Stock” means the Class B common stock of the Company, par value of $0.0001 per share, which entitle the holder thereof to ten votes per share on all Company voting matters.

2.7 “Code” means the U.S. Internal Revenue Code of 1986, as amended, and the regulations issued thereunder.

2.8 “Common Stock” means either the Class A Common Stock or Class B Common Stock of the Company.

2.9 “Company” means Ginkgo Bioworks Holdings, Inc., a Delaware corporation, or any successor.

2.10 “Compensation” of an Eligible Employee means, unless otherwise determined by the Administrator, the gross base compensation or wages received by such Eligible Employee as compensation for services to the Company or any Designated Subsidiary, excluding overtime payments, sales commissions, incentive compensation, bonuses, expense reimbursements, income received in connection with any stock options, stock appreciation rights, restricted stock, restricted stock units or other compensatory equity awards, fringe benefits and other special payments.

2.11 “Designated Subsidiary” means any Subsidiary designated by the Administrator in accordance with Section 11.2(b), such designation to specify whether such participation is in the Section 423 Component or Non-Section 423 Component. A Designated Subsidiary may participate in either or both the Section 423 Component or Non-Section 423 Component, unless otherwise prohibited by Applicable Law; provided that a Subsidiary that, for U.S. tax purposes, is disregarded from the Company or any Subsidiary that participates in the Section 423 Component shall automatically constitute a Designated Subsidiary that participates in the Section 423 Component.

2.12 “Eligible Employee” means:

(a) With respect to the Section 423 Component, an Employee who does not, immediately after any rights under this Plan are granted, own (directly or through attribution) stock possessing 5% or more of the total combined voting power or value of all classes of shares and other securities of the Company, a Parent or a Subsidiary (as determined under Section 423(b)(3) of the Code). For purposes of the foregoing, the rules of Section 424(d) of the Code with regard to the attribution of stock ownership shall apply in determining the stock ownership of an individual, and stock that an Employee may purchase under outstanding options shall be treated as stock owned by the Employee.

(b) Notwithstanding the foregoing, the Administrator may provide in an Offering Document that an Employee shall not be eligible to participate in an Offering Period under the Section 423 Component if: (i) such Employee is a highly compensated employee within the meaning of Section 423(b)(4)(D) of the Code; (ii) such Employee has not met a service requirement designated by the Administrator pursuant to Section 423(b)(4)(A) of the Code (which service requirement may not exceed two years); (iii) such Employee’s customary employment is for twenty hours per week or less; (iv) such Employee’s customary employment is for less than five months in any calendar year; and/or (v) such Employee is a citizen or resident of a foreign jurisdiction and the grant of a right to purchase Shares under the Plan to such Employee would be prohibited under the laws of such foreign jurisdiction or the grant of a right to purchase Shares under the Plan to such Employee in compliance with the

 

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laws of such foreign jurisdiction would cause the Plan to violate the requirements of Section 423 of the Code, as determined by the Administrator in its sole discretion; provided, further, that any exclusion in clauses (i), (ii), (iii), (iv) or (v) shall be applied in an identical manner under each Offering Period to all Employees in the Section 423 Component, in accordance with Treasury Regulation Section 1.423-2(e).

(c) With respect to the Non-Section 423 Component, an Employee; provided that the Administrator may limit eligibility within the Company or a Designated Subsidiary so as to only designate some Employees of the Company or a Designated Subsidiary as Eligible Employees.

2.13 “Employee” means any individual who renders services to the Company or any Designated Subsidiary in the status of an employee, and, with respect to the Section 423 Component, a person who is an employee within the meaning of Section 3401(c) of the Code. For purposes of an individual’s participation in, or other rights under the Plan, all determinations by the Company shall be final, binding and conclusive, notwithstanding that any court of law or governmental agency subsequently makes a contrary determination. For purposes of the Plan, the employment relationship shall be treated as continuing intact while the individual is on sick leave or other leave of absence approved by the Company or Designated Subsidiary and, with respect to the Section 423 Component, meeting the requirements of Treasury Regulation Section 1.421-1(h)(2). With respect to participation in the Section 423 Component, where the period of leave exceeds three (3) months and the individual’s right to reemployment is not guaranteed either by statute or by contract, the employment relationship shall be deemed to have terminated on the first day immediately following such three (3)-month period.

2.14 “Enrollment Date” means the first Trading Day of each Offering Period.

2.15 “Fair Market Value” means, as of any date, the value of Shares determined as follows: (i) if the Shares are listed on any established stock exchange, its Fair Market Value will be the closing sales price for such Shares as quoted on such exchange for the last market Trading Day prior to such date, as reported in The Wall Street Journal or another source the Administrator deems reliable; (ii) if the Shares are not traded on a stock exchange but are quoted on a national market or other quotation system, the closing sales price on such date, or if no sales occurred on such date, then on the last date preceding such date during which a sale occurred, as reported in The Wall Street Journal or another source the Administrator deems reliable; or (iii) in any case, the Administrator may determine the Fair Market Value in its discretion.

2.16 “Initial Business Combination” means the transactions contemplated by that certain Agreement and Plan of Merger, dated as of May 11, 2021, by and among Soaring Eagle Acquisition Corp., SEAC Merger Sub Inc., and Ginkgo Bioworks, Inc.

2.17 “Non-Section 423 Component” means those Offerings under the Plan, together with the sub-plans, appendices, rules or procedures, if any, adopted by the Administrator as a part of this Plan, in each case, pursuant to which rights to purchase Shares during an Offering Period may be granted to Eligible Employees that need not satisfy the requirements for rights to purchase Shares granted pursuant to an “employee stock purchase plan” that are set forth under Section 423 of the Code.

2.18 “Offering” means an offer under the Plan of a right to purchase Shares that may be exercised during an Offering Period as further described in Article IV hereof. Unless otherwise specified by the Administrator, each Offering to the Eligible Employees of the Company or a Designated Subsidiary shall be deemed a separate Offering, even if the dates and other terms of the applicable Offering Periods of each such Offering are identical, and the provisions of the Plan will separately apply to each Offering. To the extent permitted by Treas. Reg. § 1.423-2(a)(1), the terms of each separate Offering under the Section 423 Component need not be identical, provided that the terms of the Section 423 Component and an Offering thereunder together satisfy Treas. Reg. § 1.423-2(a)(2) and (a)(3).

2.19 “Offering Document” has the meaning given to such term in Section 4.1.

 

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2.20 “Offering Period” has the meaning given to such term in Section 4.1.

2.21 “Parent” means any corporation, other than the Company, in an unbroken chain of corporations ending with the Company if, at the time of the determination, each of the corporations other than the Company owns stock possessing 50% or more of the total combined voting power of all classes of stock in one of the other corporations in such chain.

2.22 “Participant” means any Eligible Employee who has executed a subscription agreement and been granted rights to purchase Shares pursuant to the Plan.

2.23 “Payday” means the regular and recurring established day for payment of Compensation to an Employee of the Company or any Designated Subsidiary.

2.24 Plan” means this 2021 Employee Stock Purchase Plan, including both the Section 423 Component and Non-Section 423 Component and any other sub-plans or appendices hereto, as amended from time to time.

2.25 “Purchase Date” means the last Trading Day of each Offering Period, or such other date as determined by the Administrator and set forth in the Offering Document.

2.26 “Purchase Price” means the purchase price designated by the Administrator in the applicable Offering Document (which purchase price, for purposes of the Section 423 Component, shall not be less than 85% of the Fair Market Value of a Share on the Enrollment Date or on the Purchase Date, whichever is lower); provided, however, that, in the event no purchase price is designated by the Administrator in the applicable Offering Document, the purchase price for the Offering Periods covered by such Offering Document shall be 85% of the Fair Market Value of a Share on the Enrollment Date or on the Purchase Date, whichever is lower; provided, further, that the Purchase Price may be adjusted by the Administrator pursuant to Article VIII and shall not be less than the par value of a Share.

2.27 “Section 423 Component” means those Offerings under the Plan, together with the sub-plans, appendices, rules or procedures, if any, adopted by the Administrator as a part of this Plan, in each case, pursuant to which rights to purchase Shares during an Offering Period may be granted to Eligible Employees that are intended to satisfy the requirements for rights to purchase Shares granted pursuant to an “employee stock purchase plan” that are set forth under Section 423 of the Code.

2.28 “Securities Act” means the U.S. Securities Act of 1933, as amended.

2.29 “Share” means a share of Common Stock.

2.30 “Subsidiary” means any corporation, other than the Company, in an unbroken chain of corporations beginning with the Company if, at the time of the determination, each of the corporations other than the last corporation in an unbroken chain owns stock possessing 50% or more of the total combined voting power of all classes of stock in one of the other corporations in such chain; provided, however, that a limited liability company or partnership may be treated as a Subsidiary to the extent either (a) such entity is treated as a disregarded entity under Treasury Regulation Section 301.7701-3(a) by reason of the Company or any other Subsidiary that is a corporation being the sole owner of such entity, or (b) such entity elects to be classified as a corporation under Treasury Regulation Section 301.7701-3(a) and such entity would otherwise qualify as a Subsidiary. In addition, with respect to the Non-Section 423 Component, Subsidiary shall include any corporate or non-corporate entity in which the Company has a direct or indirect equity interest or significant business relationship.

2.31 “Trading Day” means a day on which national stock exchanges in the United States are open for trading.

2.32 “Treas. Reg.” means U.S. Department of the Treasury regulations.

 

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ARTICLE III.

SHARES SUBJECT TO THE PLAN

3.1 Number of Shares. Subject to Article VIII, the aggregate number of Shares that may be issued pursuant to rights granted under the Plan shall be 20,000,000 Shares. In addition to the foregoing, subject to Article VIII, on the first day of each calendar year beginning on January 1, 2022 and ending on and including January 1, 2031, the number of Shares available for issuance under the Plan shall be increased by that number of Shares equal to the lesser of (a) 1% of the aggregate number of shares of common stock of the Company outstanding on the final day of the immediately preceding calendar year and (b) such smaller number of Shares as determined by the Board. If any right granted under the Plan shall for any reason terminate without having been exercised, the Shares not purchased under such right shall again become available for issuance under the Plan. Notwithstanding anything in this Section 3.1 to the contrary, the number of Shares that may be issued or transferred pursuant to the rights granted under the Section 423 Component of the Plan shall not exceed an aggregate of 100,000,000 Shares, subject to Article VIII.

3.2 Shares Distributed. Any Shares distributed pursuant to the Plan (i) may consist, in whole or in part, of authorized and unissued Shares, treasury shares or Shares purchased on the open market and (ii) may be issued as Class A Common Stock or Class B Common Stock, as determined by the Administrator in its sole discretion.

ARTICLE IV.

OFFERING PERIODS; OFFERING DOCUMENTS; PURCHASE DATES

4.1 Offering Periods. The Administrator may from time to time grant or provide for the grant of rights to purchase Shares under the Plan to Eligible Employees during one or more periods (each, an “Offering Period”) selected by the Administrator. The terms and conditions applicable to each Offering Period shall be set forth in an “Offering Document” adopted by the Administrator, which Offering Document shall be in such form and shall contain such terms and conditions as the Administrator shall deem appropriate and shall be incorporated by reference into and made part of the Plan and shall be attached hereto as part of the Plan. The provisions of separate Offerings or Offering Periods under the Plan need not be identical.

4.2 Offering Documents. Each Offering Document with respect to an Offering Period shall specify (through incorporation of the provisions of this Plan by reference or otherwise):

(a) the length of the Offering Period, which period shall not exceed twenty-seven months;

(b) the maximum number of Shares that may be purchased by any Eligible Employee during such Offering Period, which, in the absence of a contrary designation by the Administrator, shall be 25,000 Shares; and

(c) such other provisions as the Administrator determines are appropriate, subject to the Plan.

ARTICLE V.

ELIGIBILITY AND PARTICIPATION

5.1 Eligibility. Any Eligible Employee who shall be employed by the Company or a Designated Subsidiary on a given Enrollment Date for an Offering Period shall be eligible to participate in the Plan during such Offering Period, subject to the requirements of this Article V and, for the Section 423 Component, the limitations imposed by Section 423(b) of the Code.

 

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5.2 Enrollment in Plan.

(a) Except as otherwise set forth in an Offering Document or determined by the Administrator, an Eligible Employee may become a Participant in the Plan for an Offering Period by delivering a subscription agreement to the Company by such time prior to the Enrollment Date for such Offering Period (or such other date specified in the Offering Document) designated by the Administrator and in such form as the Company provides.

(b) Each subscription agreement shall designate a whole percentage of such Eligible Employee’s Compensation to be withheld by the Company or the Designated Subsidiary employing such Eligible Employee on each Payday during the Offering Period as payroll deductions under the Plan. The percentage of Compensation designated by an Eligible Employee may not be less than 1% and may not be more than the maximum percentage specified by the Administrator in the applicable Offering Document (which percentage shall be 25% in the absence of any such designation) as payroll deductions. The payroll deductions made for each Participant shall be credited to an account for such Participant under the Plan and shall be deposited with the general funds of the Company.

(c) A Participant may increase or decrease the percentage of Compensation designated in his or her subscription agreement, subject to the limits of this Section 5.2, or may suspend his or her payroll deductions, at any time during an Offering Period; provided, however, that the Administrator may limit the number of changes a Participant may make to his or her payroll deduction elections during each Offering Period in the applicable Offering Document (and in the absence of any specific designation by the Administrator, a Participant shall be allowed one change to his or her payroll deduction elections during each Offering Period). Any such change or suspension of payroll deductions shall be effective with the first full payroll period that is at least five business days after the Company’s receipt of the new subscription agreement (or such shorter or longer period as may be specified by the Administrator in the applicable Offering Document). In the event a Participant suspends his or her payroll deductions, such Participant’s cumulative payroll deductions prior to the suspension shall remain in his or her account and shall be applied to the purchase of Shares on the next occurring Purchase Date and shall not be paid to such Participant unless he or she withdraws from participation in the Plan pursuant to Article VII.

(d) Except as otherwise set forth in an Offering Document or determined by the Administrator, a Participant may participate in the Plan only by means of payroll deduction and may not make contributions by lump sum payment for any Offering Period.

5.3 Payroll Deductions. Except as otherwise provided in the applicable Offering Document, payroll deductions for a Participant shall commence on the first Payday following the Enrollment Date and shall end on the last Payday in the Offering Period to which the Participant’s authorization is applicable, unless sooner terminated by the Participant as provided in Article VII or suspended by the Participant or the Administrator as provided in Section 5.2 and Section 5.6, respectively. Notwithstanding any other provisions of the Plan to the contrary, in non-U.S. jurisdictions where participation in the Plan through payroll deductions is prohibited, the Administrator may provide that an Eligible Employee may elect to participate through contributions to the Participant’s account under the Plan in a form acceptable to the Administrator in lieu of or in addition to payroll deductions; provided, however, that, for any Offering under the Section 423 Component, the Administrator shall take into consideration any limitations under Section 423 of the Code when applying an alternative method of contribution.

5.4 Effect of Enrollment. A Participant’s completion of a subscription agreement will enroll such Participant in the Plan for each subsequent Offering Period on the terms contained therein until the Participant either submits a new subscription agreement, withdraws from participation under the Plan as provided in Article VII or otherwise becomes ineligible to participate in the Plan.

5.5 Limitation on Purchase of Shares. An Eligible Employee may be granted rights under the Section 423 Component only if such rights, together with any other rights granted to such Eligible Employee under

 

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“employee stock purchase plans” of the Company, any Parent or any Subsidiary, as specified by Section 423(b)(8) of the Code, do not permit such employee’s rights to purchase stock of the Company or any Parent or Subsidiary to accrue at a rate that exceeds $25,000 of the fair market value of such stock (determined as of the first day of the Offering Period during which such rights are granted) for each calendar year in which such rights are outstanding at any time. This limitation shall be applied in accordance with Section 423(b)(8) of the Code.

5.6 Suspension of Payroll Deductions. Notwithstanding the foregoing, to the extent necessary to comply with Section 423(b)(8) of the Code and Section 5.5 (with respect to the Section 423 Component) or the other limitations set forth in this Plan, a Participant’s payroll deductions may be suspended by the Administrator at any time during an Offering Period. The balance of the amount credited to the account of each Participant that has not been applied to the purchase of Shares by reason of Section 423(b)(8) of the Code, Section 5.5 or the other limitations set forth in this Plan shall be paid to such Participant in one lump sum in cash as soon as reasonably practicable after the Purchase Date.

5.7 Foreign Employees. In order to facilitate participation in the Plan, the Administrator may provide for such special terms applicable to Participants who are citizens or residents of a foreign jurisdiction, or who are employed by a Designated Subsidiary outside of the United States, as the Administrator may consider necessary or appropriate to accommodate differences in local law, tax policy or custom. Except as permitted by Section 423 of the Code, with respect to the Section 423 Component, such special terms may not be more favorable than the terms of rights granted under the Section 423 Component to Eligible Employees who are residents of the United States. Such special terms may be set forth in an addendum to the Plan in the form of an appendix or sub-plan (which appendix or sub-plan may be designed to govern Offerings under the Section 423 Component or the Non-Section 423 Component, as determined by the Administrator). To the extent that the terms and conditions set forth in an appendix or sub-plan conflict with any provisions of the Plan, the provisions of the appendix or sub-plan shall govern. The adoption of any such appendix or sub-plan shall be pursuant to Section 11.2(g). Without limiting the foregoing, the Administrator is specifically authorized to adopt rules and procedures, with respect to Participants who are foreign nationals or employed in non-U.S. jurisdictions, regarding the exclusion of particular Subsidiaries from participation in the Plan, eligibility to participate, the definition of Compensation, handling of payroll deductions or other contributions by Participants, payment of interest, conversion of local currency, data privacy security, payroll tax, withholding procedures, establishment of bank or trust accounts to hold payroll deductions or contributions.

5.8 Leave of Absence. During leaves of absence approved by the Company and, with respect to the Section 423 Component, meeting the requirements of Treasury Regulation Section 1.421-1(h)(2) under the Code, a Participant may continue participation in the Plan by making cash payments to the Company on his or her normal Payday equal to the Participant’s authorized payroll deduction.

ARTICLE VI.

GRANT AND EXERCISE OF RIGHTS

6.1 Grant of Rights. On the Enrollment Date of each Offering Period, each Eligible Employee participating in such Offering Period shall be granted a right to purchase the maximum number of Shares specified under Section 4.2, subject to the limits in Section 5.5, and shall have the right to buy, on each Purchase Date during such Offering Period (at the applicable Purchase Price), such number of whole Shares as is determined by dividing (a) such Participant’s payroll deductions accumulated prior to such Purchase Date and retained in the Participant’s account as of the Purchase Date, by (b) the applicable Purchase Price (rounded down to the nearest Share). The right shall expire on the earliest of: (x) the last day of the Offering Period, and (y) the date on which the Participant withdraws in accordance with the Plan.

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purchase of whole Shares, up to the maximum number of Shares permitted pursuant to the terms of the Plan and the applicable Offering Document, at the Purchase Price. No fractional Shares shall be issued upon the exercise of rights granted under the Plan, unless the Offering Document specifically provides otherwise. Any cash in lieu of fractional Shares remaining after the purchase of whole Shares upon exercise of a purchase right will be credited to a Participant’s account and carried forward and applied toward the purchase of whole Shares for the next following Offering Period. Shares issued pursuant to the Plan may be evidenced in such manner as the Administrator may determine and may be issued in certificated form or issued pursuant to book-entry procedures.

6.3 Pro Rata Allocation of Shares. If the Administrator determines that, on a given Purchase Date, the number of Shares with respect to which rights are to be exercised may exceed (a) the number of Shares that were available for issuance under the Plan on the Enrollment Date of the applicable Offering Period, or (b) the number of Shares available for issuance under the Plan on such Purchase Date, the Administrator may in its sole discretion provide that the Company shall make a pro rata allocation of the Shares available for purchase on such Enrollment Date or Purchase Date, as applicable, in as uniform a manner as shall be practicable and as it shall determine in its sole discretion to be equitable among all Participants for whom rights to purchase Shares are to be exercised pursuant to this Article VI on such Purchase Date, and shall either (i) continue all Offering Periods then in effect, or (ii) terminate any or all Offering Periods then in effect pursuant to Article IX. The Company may make pro rata allocation of the Shares available on the Enrollment Date of any applicable Offering Period pursuant to the preceding sentence, notwithstanding any authorization of additional Shares for issuance under the Plan by the Company’s stockholders subsequent to such Enrollment Date. The balance of the amount credited to the account of each Participant that has not been applied to the purchase of Shares shall be paid to such Participant in one lump sum in cash as soon as reasonably practicable after the Purchase Date or such earlier date as determined by the Administrator.

6.4 Withholding. At the time a Participant’s rights under the Plan are exercised, in whole or in part, or at the time some or all of the Shares issued under the Plan is disposed of, the Participant must make adequate provision for the Company’s federal, state, or other tax withholding obligations, if any, that arise upon the exercise of the right or the disposition of the Shares. At any time, the Company may, but shall not be obligated to, withhold from the Participant’s compensation or Shares received pursuant to the Plan the amount necessary for the Company to meet applicable withholding obligations, including any withholding required to make available to the Company any tax deductions or benefits attributable to sale or early disposition of Shares by the Participant.

6.5 Conditions to Issuance of Shares. The Company shall not be required to issue or deliver any certificate or certificates for, or make any book entries evidencing, Shares purchased upon the exercise of rights under the Plan prior to fulfillment of all of the following conditions: (a) the admission of such Shares to listing on all stock exchanges, if any, on which the Shares are then listed; (b) the completion of any registration or other qualification of such Shares under any state or federal law or under the rulings or regulations of the Securities and Exchange Commission or any other governmental regulatory body, that the Administrator shall, in its absolute discretion, deem necessary or advisable; (c) the obtaining of any approval or other clearance from any state or federal governmental agency that the Administrator shall, in its absolute discretion, determine to be necessary or advisable; (d) the payment to the Company of all amounts that it is required to withhold under federal, state or local law upon exercise of the rights, if any; and (e) the lapse of such reasonable period of time following the exercise of the rights as the Administrator may from time to time establish for reasons of administrative convenience.

ARTICLE VII.

WITHDRAWAL; CESSATION OF ELIGIBILITY

7.1 Withdrawal. A Participant may withdraw all but not less than all of the payroll deductions credited to his or her account and not yet used to exercise his or her rights under the Plan at any time by giving written notice to the Company in a form acceptable to the Company no later than one week prior to the end of the Offering Period

 

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(or such shorter or longer period as may be specified by the Administrator in the applicable Offering Document). All of the Participant’s payroll deductions credited to his or her account during an Offering Period shall be paid to such Participant as soon as reasonably practicable after receipt of notice of withdrawal and such Participant’s rights for the Offering Period shall be automatically terminated, and no further payroll deductions for the purchase of Shares shall be made for such Offering Period. If a Participant withdraws from an Offering Period, payroll deductions shall not resume at the beginning of the next Offering Period unless the Participant timely delivers to the Company a new subscription agreement.

7.2 Future Participation. A Participant’s withdrawal from an Offering Period shall not have any effect upon his or her eligibility to participate in any similar plan that may hereafter be adopted by the Company or a Designated Subsidiary or in subsequent Offering Periods that commence after the termination of the Offering Period from which the Participant withdraws.

7.3 Cessation of Eligibility. Upon a Participant’s ceasing to be an Eligible Employee for any reason, he or she shall be deemed to have elected to withdraw from the Plan pursuant to this Article VII and the payroll deductions credited to such Participant’s account during the Offering Period shall be paid to such Participant or, in the case of his or her death, to the person or persons entitled thereto under Section 12.4, as soon as reasonably practicable, and such Participant’s rights for the Offering Period shall be automatically terminated. If a Participant transfers employment from the Company or any Designated Subsidiary participating in the Section 423 Component to any Designated Subsidiary participating in the Non-Section 423 Component, such transfer shall not be treated as a termination of employment, but the Participant shall immediately cease to participate in the Section 423 Component; however, any contributions made for the Offering Period in which such transfer occurs shall be transferred to the Non-Section 423 Component, and such Participant shall immediately join the then-current Offering under the Non-Section 423 Component upon the same terms and conditions in effect for the Participant’s participation in the Section 423 Component, except for such modifications otherwise applicable for Participants in such Offering. A Participant who transfers employment from any Designated Subsidiary participating in the Non-Section 423 Component to the Company or any Designated Subsidiary participating in the Section 423 Component shall not be treated as terminating the Participant’s employment and shall remain a Participant in the Non-Section 423 Component until the earlier of (i) the end of the current Offering Period under the Non-Section 423 Component or (ii) the Enrollment Date of the first Offering Period in which the Participant is eligible to participate following such transfer. Notwithstanding the foregoing, the Administrator may establish different rules to govern transfers of employment between entities participating in the Section 423 Component and the Non-Section 423 Component, and general transfers between participation in the Section 423 Component and the Non-Section 423 Company, consistent with the requirements of Section 423 of the Code, to the extent applicable.

ARTICLE VIII.

ADJUSTMENTS UPON CHANGES IN SHARES

8.1 Changes in Capitalization. Subject to Section 8.3, in the event that the Administrator determines that any dividend or other distribution (whether in the form of cash, Shares, other securities, or other property), change in control, reorganization, merger, amalgamation, consolidation, combination, repurchase, redemption, recapitalization, liquidation, dissolution, or sale, transfer, exchange or other disposition of all or substantially all of the assets of the Company, or sale or exchange of Shares or other securities of the Company, issuance of warrants or other rights to purchase Shares or other securities of the Company, or other similar corporate transaction or event, as determined by the Administrator, affects the Shares such that an adjustment is determined by the Administrator to be appropriate in order to prevent dilution or enlargement of the benefits or potential benefits intended by the Company to be made available under the Plan or with respect to any outstanding purchase rights under the Plan, the Administrator shall make equitable adjustments, if any, to reflect such change with respect to (a) the aggregate number and type of Shares (or other securities or property) that may be issued under the Plan (including, but not limited to, adjustments of the limitations in Section 3.1 and the limitations

 

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established in each Offering Document pursuant to Section 4.2 on the maximum number of Shares that may be purchased); (b) the class(es) and number of Shares and price per Share subject to outstanding rights; and (c) the Purchase Price with respect to any outstanding rights.

8.2 Other Adjustments. Subject to Section 8.3, in the event of any transaction or event described in Section 8.1 or any unusual or nonrecurring transactions or events affecting the Company, any affiliate of the Company, or the financial statements of the Company or any affiliate, or of changes in Applicable Law or accounting principles, the Administrator, in its discretion, and on such terms and conditions as it deems appropriate, is hereby authorized to take any one or more of the following actions whenever the Administrator determines that such action is appropriate in order to prevent the dilution or enlargement of the benefits or potential benefits intended to be made available under the Plan or with respect to any right under the Plan, to facilitate such transactions or events or to give effect to such changes in laws, regulations or principles:

(a) To provide for either (i) termination of any outstanding right in exchange for an amount of cash, if any, equal to the amount that would have been obtained upon the exercise of such right had such right been currently exercisable or (ii) the replacement of such outstanding right with other rights or property selected by the Administrator in its sole discretion;

(b) To provide that the outstanding rights under the Plan shall be assumed by the successor or survivor corporation, or a parent or subsidiary thereof, or shall be substituted for by similar rights covering the stock of the successor or survivor corporation, or a parent or subsidiary thereof, with appropriate adjustments as to the number and kind of shares and prices;

(c) To make adjustments in the number and type of Shares (or other securities or property) subject to outstanding rights under the Plan and/or in the terms and conditions of outstanding rights and rights that may be granted in the future;

(d) To provide that Participants’ accumulated payroll deductions may be used to purchase Shares prior to the next occurring Purchase Date on such date as the Administrator determines in its sole discretion and the Participants’ rights under the ongoing Offering Period(s) shall be terminated; and

(e) To provide that all outstanding rights shall terminate without being exercised.

8.3 No Adjustment Under Certain Circumstances. Unless determined otherwise by the Administrator, no adjustment or action described in this Article VIII or in any other provision of the Plan shall be authorized to the extent that such adjustment or action would cause the Section 423 Component of the Plan to fail to satisfy the requirements of Section 423 of the Code.

8.4 No Other Rights. Except as expressly provided in the Plan, no Participant shall have any rights by reason of any subdivision or consolidation of shares of stock of any class, the payment of any dividend, any increase or decrease in the number of shares of stock of any class or any dissolution, liquidation, merger, or consolidation of the Company or any other corporation. Except as expressly provided in the Plan or pursuant to action of the Administrator under the Plan, no issuance by the Company of shares of stock of any class, or securities convertible into shares of stock of any class, shall affect, and no adjustment by reason thereof shall be made with respect to, the number of Shares subject to outstanding rights under the Plan or the Purchase Price with respect to any outstanding rights.

ARTICLE IX.

AMENDMENT, MODIFICATION AND TERMINATION

9.1 Amendment, Modification and Termination. The Administrator may amend, suspend or terminate the Plan at any time and from time to time; provided, however, that approval of the Company’s stockholders shall be

 

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required to amend the Plan to the extent required by Applicable Law, including to: (a) increase the aggregate number, or change the type, of shares that may be sold pursuant to rights under the Plan under Section 3.1 (other than an adjustment as provided by Article VIII) or (b) change the corporations or classes of corporations whose employees may be granted rights under the Plan.

9.2 Certain Changes to Plan. Without stockholder consent and without regard to whether any Participant rights may be considered to have been adversely affected (and, with respect to the Section 423 Component of the Plan, after taking into account Section 423 of the Code), the Administrator shall be entitled to change or terminate the Offering Periods, limit the frequency and/or number of changes in the amount withheld from Compensation during an Offering Period, establish the exchange ratio applicable to amounts withheld in a currency other than U.S. dollars, permit payroll withholding in excess of the amount designated by a Participant in order to adjust for delays or mistakes in the Company’s processing of withholding elections, establish reasonable waiting and adjustment periods and/or accounting and crediting procedures to ensure that amounts applied toward the purchase of Shares for each Participant properly correspond with amounts withheld from the Participant’s Compensation, and establish such other limitations or procedures as the Administrator determines in its sole discretion to be advisable that are consistent with the Plan.

9.3 Actions In the Event of Unfavorable Financial Accounting Consequences. In the event the Administrator determines that the ongoing operation of the Plan may result in unfavorable financial accounting consequences, the Administrator may, in its discretion and, to the extent necessary or desirable, modify or amend the Plan to reduce or eliminate such accounting consequence including, but not limited to:

(a) altering the Purchase Price for any Offering Period including an Offering Period underway at the time of the change in Purchase Price;

(b) shortening any Offering Period so that the Offering Period ends on a new Purchase Date, including an Offering Period underway at the time of the Administrator action; and

(c) allocating Shares.

Such modifications or amendments shall not require stockholder approval or the consent of any Participant.

9.4 Payments Upon Termination of Plan. Upon termination of the Plan, the balance in each Participant’s Plan account shall be refunded as soon as practicable after such termination, without any interest thereon, or the Offering Period may be shortened so that the purchase of Shares occurs prior to the termination of the Plan.

ARTICLE X.

TERM OF PLAN

The Plan shall become effective upon the consummation of the Initial Business Combination. The effectiveness of the Plan shall be subject to approval of the Plan by the Company’s stockholders within twelve months following the date the Plan is first approved by the Board. No right may be granted under the Plan prior to such stockholder approval. The Plan shall remain in effect until terminated under Section 9.1. No rights may be granted under the Plan during any period of suspension of the Plan or after termination of the Plan.

ARTICLE XI.

ADMINISTRATION

11.1 Administrator. Unless otherwise determined by the Board, the Administrator of the Plan shall be the Compensation Committee of the Board (or another committee or a subcommittee of the Board to which the

 

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Board delegates administration of the Plan). The Board may at any time vest in the Board any authority or duties for administration of the Plan. The Administrator may delegate administrative tasks under the Plan to the services of an Agent or Employees to assist in the administration of the Plan, including establishing and maintaining an individual securities account under the Plan for each Participant.

11.2 Authority of Administrator. The Administrator shall have the power, subject to, and within the limitations of, the express provisions of the Plan:

(a) To determine when and how rights to purchase Shares shall be granted and the provisions of each offering of such rights (which need not be identical).

(b) To designate from time to time which Subsidiaries of the Company shall be Designated Subsidiaries, which designation may be made without the approval of the stockholders of the Company.

(c) To impose a mandatory holding period pursuant to which Employees may not dispose of or transfer Shares purchased under the Plan for a period of time determined by the Administrator in its discretion.

(d) To construe and interpret the Plan and rights granted under it, and to establish, amend and revoke rules and regulations for its administration. The Administrator, in the exercise of this power, may correct any defect, omission or inconsistency in the Plan, in a manner and to the extent it shall deem necessary or expedient to make the Plan fully effective.

(e) To amend, suspend or terminate the Plan as provided in Article IX.

(f) Generally, to exercise such powers and to perform such acts as the Administrator deems necessary or expedient to promote the best interests of the Company and its Subsidiaries and to carry out the intent that the Plan be treated as an “employee stock purchase plan” within the meaning of Section 423 of the Code for the Section 423 Component.

(g) The Administrator may adopt sub-plans applicable to particular Designated Subsidiaries or locations, which sub-plans may be designed to be outside the scope of Section 423 of the Code. The rules of such sub-plans may take precedence over other provisions of this Plan, with the exception of Section 3.1 hereof, but unless otherwise superseded by the terms of such sub-plan, the provisions of this Plan shall govern the operation of such sub-plan.

11.3 Decisions Binding. The Administrator’s interpretation of the Plan, any rights granted pursuant to the Plan, any subscription agreement and all decisions and determinations by the Administrator with respect to the Plan are final, binding, and conclusive on all parties.

ARTICLE XII.

MISCELLANEOUS

12.1 Restriction upon Assignment. A right granted under the Plan shall not be transferable other than by will or the applicable laws of descent and distribution, and is exercisable during the Participant’s lifetime only by the Participant. Except as provided in Section 12.4 hereof, a right under the Plan may not be exercised to any extent except by the Participant. The Company shall not recognize and shall be under no duty to recognize any assignment or alienation of the Participant’s interest in the Plan, the Participant’s rights under the Plan or any rights thereunder.

12.2 Rights as a Stockholder. With respect to Shares subject to a right granted under the Plan, a Participant shall not be deemed to be a stockholder of the Company, and the Participant shall not have any of the rights or

 

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privileges of a stockholder, until such Shares have been issued to the Participant or his or her nominee following exercise of the Participant’s rights under the Plan. No adjustments shall be made for dividends (ordinary or extraordinary, whether in cash securities, or other property) or distribution or other rights for which the record date occurs prior to the date of such issuance, except as otherwise expressly provided herein or as determined by the Administrator.

12.3 Interest. No interest shall accrue on the payroll deductions or contributions of a Participant under the Plan.

12.4 Designation of Beneficiary.

(a) A Participant may, in the manner determined by the Administrator, file a written designation of a beneficiary who is to receive any Shares and/or cash, if any, from the Participant’s account under the Plan in the event of such Participant’s death subsequent to a Purchase Date on which the Participant’s rights are exercised but prior to delivery to such Participant of such Shares and cash. In addition, a Participant may file a written designation of a beneficiary who is to receive any cash from the Participant’s account under the Plan in the event of such Participant’s death prior to exercise of the Participant’s rights under the Plan. If the Participant is married and resides in a community property state, a designation of a person other than the Participant’s spouse as his or her beneficiary shall not be effective without the prior written consent of the Participant’s spouse.

(b) Such designation of beneficiary may be changed by the Participant at any time by written notice to the Company. In the event of the death of a Participant and in the absence of a beneficiary validly designated under the Plan who is living at the time of such Participant’s death, the Company shall deliver such Shares and/or cash to the executor or administrator of the estate of the Participant, or if no such executor or administrator has been appointed (to the knowledge of the Company), the Company, in its discretion, may deliver such Shares and/or cash to the spouse or to any one or more dependents or relatives of the Participant, or if no spouse, dependent or relative is known to the Company, then to such other person as the Company may designate.

12.5 Notices. All notices or other communications by a Participant to the Company under or in connection with the Plan shall be deemed to have been duly given when received in the form specified by the Company at the location, or by the person, designated by the Company for the receipt thereof.

12.6 Equal Rights and Privileges. Subject to Section 5.7, all Eligible Employees will have equal rights and privileges under the Section 423 Component so that the Section 423 Component of this Plan qualifies as an “employee stock purchase plan” within the meaning of Section 423 of the Code. Subject to Section 5.7, any provision of the Section 423 Component that is inconsistent with Section 423 of the Code will, without further act or amendment by the Company, the Board or the Administrator, be reformed to comply with the equal rights and privileges requirement of Section 423 of the Code. Eligible Employees participating in the Non-Section 423 Component need not have the same rights and privileges as other Eligible Employees participating in the Non-Section 423 Component or as Eligible Employees participating in the Section 423 Component.

12.7 Use of Funds. All payroll deductions received or held by the Company under the Plan may be used by the Company for any corporate purpose, and the Company shall not be obligated to segregate such payroll deductions.

12.8 Reports. Statements of account shall be given to Participants at least annually, which statements shall set forth the amounts of payroll deductions, the Purchase Price, the number of Shares purchased and the remaining cash balance, if any.

12.9 No Employment Rights. Nothing in the Plan shall be construed to give any person (including any Eligible Employee or Participant) the right to remain in the employ of the Company or any Parent or Subsidiary or affect the right of the Company or any Parent or Subsidiary to terminate the employment of any person (including any Eligible Employee or Participant) at any time, with or without cause.

 

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12.10 Notice of Disposition of Shares. Each Participant shall give prompt notice to the Company of any disposition or other transfer of any Shares purchased upon exercise of a right under the Section 423 Component of the Plan if such disposition or transfer is made: (a) within two years from the Enrollment Date of the Offering Period in which the Shares were purchased or (b) within one year after the Purchase Date on which such Shares were purchased. Such notice shall specify the date of such disposition or other transfer and the amount realized, in cash, other property, assumption of indebtedness or other consideration, by the Participant in such disposition or other transfer.

12.11 Governing Law. The Plan and any agreements hereunder shall be administered, interpreted and enforced in accordance with the laws of the State of Delaware, disregarding any state’s choice of law principles requiring the application of a jurisdiction’s laws other than the State of Delaware.

12.12 Conversion of Shares. Shares purchased under the Plan are subject to the Company’s certificate of incorporation regarding the conversion of shares of Class B Common Stock to Class A Common Stock. In addition, prior to or in connection with issuing any Shares under the Plan, the Administrator may convert shares of Class B Common Stock to Class A Common Stock or convert shares of Class A Common Stock to Class B Common Stock.

12.13 Electronic Forms. To the extent permitted by Applicable Law and in the discretion of the Administrator, an Eligible Employee may submit any form or notice as set forth herein by means of an electronic form approved by the Administrator. Before the commencement of an Offering Period, the Administrator shall prescribe the time limits within which any such electronic form shall be submitted to the Administrator with respect to such Offering Period in order to be a valid election.

*  *  *  *  *

 

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Annex G

THE COMPANIES ACT (AS REVISED)

OF THE CAYMAN ISLANDS

COMPANY LIMITED BY SHARES

AMENDED AND RESTATED

MEMORANDUM AND ARTICLES OF ASSOCIATION

OF

SOARING EAGLE ACQUISITION CORP.

(ADOPTED BY SPECIAL RESOLUTION DATED 23 FEBRUARY 2021 AND EFFECTIVE ON 23 FEBRUARY 2021)

 

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THE COMPANIES ACT (AS REVISED)

OF THE CAYMAN ISLANDS

COMPANY LIMITED BY SHARES

AMENDED AND RESTATED

MEMORANDUM OF ASSOCIATION

OF

SOARING EAGLE ACQUISITION CORP.

(ADOPTED BY SPECIAL RESOLUTION DATED 23 FEBRUARY 2021 AND EFFECTIVE ON 23 FEBRUARY 2021)

 

1

The name of the Company is Soaring Eagle Acquisition Corp.

 

1

The Registered Office of the Company shall be at the offices of Maples Corporate Services Limited, PO Box 309, Ugland House, Grand Cayman, KY1-1104, Cayman Islands, or at such other place within the Cayman Islands as the Directors may decide.

 

2

The objects for which the Company is established are unrestricted and the Company shall have full power and authority to carry out any object not prohibited by the laws of the Cayman Islands.

 

3

The liability of each Member is limited to the amount unpaid on such Member’s shares.

 

4

The share capital of the Company is US$48,100 divided into 400,000,000 Class A ordinary shares of a par value of US$0.0001 each, 80,000,000 Class B ordinary shares of a par value of US$0.0001 each and 1,000,000 preference shares of a par value of US$0.0001 each.

 

5

The Company has power to register by way of continuation as a body corporate limited by shares under the laws of any jurisdiction outside the Cayman Islands and to be deregistered in the Cayman Islands.

 

6

Capitalised terms that are not defined in this Amended and Restated Memorandum of Association bear the respective meanings given to them in the Amended and Restated Articles of Association of the Company.

 

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THE COMPANIES ACT (AS REVISED)

OF THE CAYMAN ISLANDS

COMPANY LIMITED BY SHARES

AMENDED AND RESTATED

ARTICLES OF ASSOCIATION

OF

SOARING EAGLE ACQUISITION CORP.

(ADOPTED BY SPECIAL RESOLUTION DATED 23 FEBRUARY 2021 2021 AND EFFECTIVE ON 23 FEBRUARY 2021)

 

1

Interpretation

 

1.1

In the Articles Table A in the First Schedule to the Statute does not apply and, unless there is something in the subject or context inconsistent therewith:

 

“Affiliate”    in respect of a person, means any other person that, directly or indirectly, through one or more intermediaries, controls, is controlled by, or is under common control with, such person, and (a) in the case of a natural person, shall include, without limitation, such person’s spouse, parents, children, siblings, mother-in-law and father-in-law and brothers and sisters-in-law, whether by blood, marriage or adoption or anyone residing in such person’s home, a trust for the benefit of any of the foregoing, a company, partnership or any natural person or entity wholly or jointly owned by any of the foregoing and (b) in the case of an entity, shall include a partnership, a corporation or any natural person or entity which directly, or indirectly through one or more intermediaries, controls, is controlled by, or is under common control with, such entity.
“Applicable Law”    means, with respect to any person, all provisions of laws, statutes, ordinances, rules, regulations, permits, certificates, judgments, decisions, decrees or orders of any governmental authority applicable to such person.
“Articles”    means these amended and restated articles of association of the Company.
“Audit Committee”    means the audit committee of the board of directors of the Company established pursuant to the Articles, or any successor committee.
“Auditor”    means the person for the time being performing the duties of auditor of the Company (if any).
“Business Combination”    means a merger, amalgamation, share exchange, asset acquisition, share purchase, reorganisation or similar business combination involving the Company, with one or more businesses or entities (the “target business”).

 

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“business day”    means any day other than a Saturday, a Sunday or a legal holiday or a day on which banking institutions or trust companies are authorised or obligated by law to close in New York City.
“Cause”    means a conviction for a criminal offence involving dishonesty or engaging in conduct which brings a Director or the Company into disrepute or which results in a material financial detriment to the Company.
“Clearing House”    means a clearing house recognised by the laws of the jurisdiction in which the Shares (or depositary receipts therefor) are listed or quoted on a stock exchange or interdealer quotation system in such jurisdiction.
“Class A Share”    means a Class A ordinary share of a par value of US$0.0001 in the share capital of the Company.
“Class B Share”    means a Class B ordinary share of a par value of US$0.0001 in the share capital of the Company.
“Company”    means the above named company.
“Company’s Website”    means the website of the Company and/or its web-address or domain name.
“Compensation Committee”    means the compensation committee of the board of directors of the Company established pursuant to the Articles, or any successor committee.
“Designated Stock Exchange”    means any United States national securities exchange on which the securities of the Company are listed for trading, including the New York Stock Exchange or The Nasdaq Capital Market.
“Directors”    means the directors for the time being of the Company.
“Dividend”    means any dividend (whether interim or final) resolved to be paid on Shares pursuant to the Articles.
“Electronic Communication”    means a communication sent by electronic means, including electronic posting to the Company’s Website, transmission to any number, address or internet website (including the website of the Securities and Exchange Commission) or other electronic delivery methods as otherwise decided and approved by the Directors.
“Electronic Record”    has the same meaning as in the Electronic Transactions Act.
“Electronic Transactions Act”    means the Electronic Transactions Act (2003 Revision) of the Cayman Islands.
“Equity-linked Securities”    means any debt or equity securities that are convertible, exercisable or exchangeable for Class A Shares issued in a financing transaction in connection with a Business Combination, including but not limited to a private placement of equity or debt.
“Exchange Act”    means the United States Securities Exchange Act of 1934, as amended, or any similar U.S. federal statute and the rules and regulations of the Securities and Exchange Commission thereunder, all as the same shall be in effect at the time.
“Founders”    means all Members immediately prior to the consummation of the IPO.

 

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“Independent Director”    has the same meaning as in the rules and regulations of the Designated Stock Exchange or in Rule 10A-3 under the Exchange Act, as the case may be.
“IPO”    means the Company’s initial public offering of securities.
“Member”    has the same meaning as in the Statute.
“Memorandum”    means the amended and restated memorandum of association of the Company.
“Minimum Member”    means a Member meeting the minimum requirements set forth for eligible members to submit proposals under Rule 14a-8 of the Exchange Act or any applicable rules thereunder as may be amended or promulgated thereunder from time to time.
“Nominating and Corporate Governance Committee”    means the nominating and corporate governance committee of the board of directors of the Company established pursuant to the Articles, or any successor committee.
“Officer”    means a person appointed to hold an office in the Company.
“Ordinary Resolution”    means a resolution passed by a simple majority of the Members as, being entitled to do so, vote in person or, where proxies are allowed, by proxy at a general meeting, and includes a unanimous written resolution. In computing the majority when a poll is demanded regard shall be had to the number of votes to which each Member is entitled by the Articles.
“Over-Allotment Option”    means the option of the Underwriters to purchase up to an additional 15 per cent of the firm units (as described in the Articles) issued in the IPO at a price equal to US$10 per unit, less underwriting discounts and commissions.
“Preference Share”    means a preference share of a par value of US$0.0001 in the share capital of the Company.
“Public Share”    means a Class A Share issued as part of the units (as described in the Articles) issued in the IPO.
“Private Placement Warrants”    means the warrants issued by the Company in a private placement simultaneously with the closing date of the IPO.
“Redemption Notice”    means a notice in a form approved by the Directors by which a holder of Public Shares is entitled to require the Company to redeem its Public Shares.
“Register of Members”    means the register of Members maintained in accordance with the Statute and includes (except where otherwise stated) any branch or duplicate register of Members.
“Registered Office”    means the registered office for the time being of the Company.
“Representative”    means a representative of the Underwriters.
“Seal”    means the common seal of the Company and includes every duplicate seal.
“Securities and Exchange Commission”    means the United States Securities and Exchange Commission.

 

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“Share”    means a Class A Share, a Class B Share, or a Preference Share and includes a fraction of a share in the Company.
“Special Resolution”    subject to Article 31.4, has the same meaning as in the Statute, and includes a unanimous written resolution.
“Sponsor”    means Eagle Equity Partners III, LLC, a Delaware limited liability company, and its successors or assigns.
“Statute”    means the Companies Act (As Revised) of the Cayman Islands.
“Tax Filing Authorised Person”    means such person as any Director shall designate from time to time, acting severally.
“Treasury Share”    means a Share held in the name of the Company as a treasury share in accordance with the Statute.
“Trust Account”    means the trust account established by the Company upon the consummation of its IPO and into which a certain amount of the net proceeds of the IPO, together with a certain amount of the proceeds of the sale of the Private Placement Warrants, will be deposited.
“Underwriter”    means an underwriter of the IPO from time to time and any successor underwriter.

 

1.2

In the Articles

 

  (a)

words importing the singular number include the plural number and vice versa;

 

  (b)

words importing the masculine gender include the feminine gender;

 

  (c)

words importing persons include corporations as well as any other legal or natural person;

 

  (d)

“written” and “in writing” include all modes of representing or reproducing words in visible form, including in the form of an Electronic Record;

 

  (e)

“shall” shall be construed as imperative and “may” shall be construed as permissive;

 

  (f)

references to provisions of any law or regulation shall be construed as references to those provisions as amended, modified, re-enacted or replaced;

 

  (g)

any phrase introduced by the terms “including”, “include”, “in particular” or any similar expression shall be construed as illustrative and shall not limit the sense of the words preceding those terms;

 

  (h)

the term “and/or” is used herein to mean both “and” as well as “or.” The use of “and/or” in certain contexts in no respects qualifies or modifies the use of the terms “and” or “or” in others. The term “or” shall not be interpreted to be exclusive and the term “and” shall not be interpreted to require the conjunctive (in each case, unless the context otherwise requires);

 

  (i)

headings are inserted for reference only and shall be ignored in construing the Articles;

 

  (j)

any requirements as to delivery under the Articles include delivery in the form of an Electronic Record;

 

  (k)

any requirements as to execution or signature under the Articles including the execution of the Articles themselves can be satisfied in the form of an electronic signature as defined in the Electronic Transactions Act;

 

  (l)

sections 8 and 19(3) of the Electronic Transactions Act shall not apply;

 

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  (m)

the term “clear days” in relation to the period of a notice means that period excluding the day when the notice is received or deemed to be received and the day for which it is given or on which it is to take effect; and

 

  (n)

the term “holder” in relation to a Share means a person whose name is entered in the Register of Members as the holder of such Share.

 

2

Commencement of Business

 

2.1

The business of the Company may be commenced as soon after incorporation of the Company as the Directors shall see fit.

 

2.2

The Directors may pay, out of the capital or any other monies of the Company, all expenses incurred in or about the formation and establishment of the Company, including the expenses of registration.

 

3

Issue of Shares and other Securities

 

3.1

Subject to the provisions, if any, in the Memorandum (and to any direction that may be given by the Company in general meeting) and, where applicable, the rules and regulations of the Designated Stock Exchange, the Securities and Exchange Commission and/or any other competent regulatory authority or otherwise under Applicable Law, and without prejudice to any rights attached to any existing Shares, the Directors may allot, issue, grant options over or otherwise dispose of Shares (including fractions of a Share) with or without preferred, deferred or other rights or restrictions, whether in regard to Dividends or other distributions, voting, return of capital or otherwise and to such persons, at such times and on such other terms as they think proper, and may also (subject to the Statute and the Articles) vary such rights, save that the Directors shall not allot, issue, grant options over or otherwise dispose of Shares (including fractions of a Share) to the extent that it may affect the ability of the Company to carry out a Class B Share Conversion set out in the Articles.

 

3.2

The Company may issue rights, options, warrants or convertible securities or securities of similar nature conferring the right upon the holders thereof to subscribe for, purchase or receive any class of Shares or other securities in the Company on such terms as the Directors may from time to time determine.

 

3.3

The Company may issue units of securities in the Company, which may be comprised of whole or fractional Shares, rights, options, warrants or convertible securities or securities of similar nature conferring the right upon the holders thereof to subscribe for, purchase or receive any class of Shares or other securities in the Company, upon such terms as the Directors may from time to time determine.

 

3.4

The Company shall not issue Shares to bearer.

 

4

Register of Members

 

4.1

The Company shall maintain or cause to be maintained the Register of Members in accordance with the Statute.

 

4.2

The Directors may determine that the Company shall maintain one or more branch registers of Members in accordance with the Statute. The Directors may also determine which register of Members shall constitute the principal register and which shall constitute the branch register or registers, and to vary such determination from time to time.

 

5

Closing Register of Members or Fixing Record Date

 

5.1

For the purpose of determining Members entitled to notice of, or to vote at any meeting of Members or any adjournment thereof, or Members entitled to receive payment of any Dividend or other distribution, or in

 

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  order to make a determination of Members for any other purpose, the Directors may, after notice has been given by advertisement in an appointed newspaper or any other newspaper or by any other means in accordance with the rules and regulations of the Designated Stock Exchange, the Securities and Exchange Commission and/or any other competent regulatory authority or otherwise under Applicable Law, provide that the Register of Members shall be closed for transfers for a stated period which shall not in any case exceed forty days.

 

5.2

In lieu of, or apart from, closing the Register of Members, the Directors may fix in advance or arrears a date as the record date for any such determination of Members entitled to notice of, or to vote at any meeting of the Members or any adjournment thereof, or for the purpose of determining the Members entitled to receive payment of any Dividend or other distribution, or in order to make a determination of Members for any other purpose.

 

5.3

If the Register of Members is not so closed and no record date is fixed for the determination of Members entitled to notice of, or to vote at, a meeting of Members or Members entitled to receive payment of a Dividend or other distribution, the date on which notice of the meeting is sent or the date on which the resolution of the Directors resolving to pay such Dividend or other distribution is passed, as the case may be, shall be the record date for such determination of Members. When a determination of Members entitled to vote at any meeting of Members has been made as provided in this Article, such determination shall apply to any adjournment thereof.

 

6

Certificates for Shares

 

6.1

A Member shall only be entitled to a share certificate if the Directors resolve that share certificates shall be issued. Share certificates representing Shares, if any, shall be in such form as the Directors may determine. Share certificates shall be signed by one or more Directors or other person authorised by the Directors. The Directors may authorise certificates to be issued with the authorised signature(s) affixed by mechanical process. All certificates for Shares shall be consecutively numbered or otherwise identified and shall specify the Shares to which they relate. All certificates surrendered to the Company for transfer shall be cancelled and, subject to the Articles, no new certificate shall be issued until the former certificate representing a like number of relevant Shares shall have been surrendered and cancelled.

 

6.2

The Company shall not be bound to issue more than one certificate for Shares held jointly by more than one person and delivery of a certificate to one joint holder shall be a sufficient delivery to all of them.

 

6.3

If a share certificate is defaced, worn out, lost or destroyed, it may be renewed on such terms (if any) as to evidence and indemnity and on the payment of such expenses reasonably incurred by the Company in investigating evidence, as the Directors may prescribe, and (in the case of defacement or wearing out) upon delivery of the old certificate.

 

6.4

Every share certificate sent in accordance with the Articles will be sent at the risk of the Member or other person entitled to the certificate. The Company will not be responsible for any share certificate lost or delayed in the course of delivery.

 

6.5

Share certificates shall be issued within the relevant time limit as prescribed by the Statute, if applicable, or as the rules and regulations of the Designated Stock Exchange, the Securities and Exchange Commission and/or any other competent regulatory authority or otherwise under Applicable Law may from time to time determine, whichever is shorter, after the allotment or, except in the case of a Share transfer which the Company is for the time being entitled to refuse to register and does not register, after lodgement of a Share transfer with the Company.

 

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7

Transfer of Shares

 

7.1

Subject to the terms of the Articles, any Member may transfer all or any of his Shares by an instrument of transfer provided that such transfer complies with the rules and regulations of the Designated Stock Exchange, the Securities and Exchange Commission and/or any other competent regulatory authority or otherwise under Applicable Law. If the Shares in question were issued in conjunction with rights, options or warrants issued pursuant to the Articles on terms that one cannot be transferred without the other, the Directors shall refuse to register the transfer of any such Share without evidence satisfactory to them of the like transfer of such option or warrant.

 

7.2

The instrument of transfer of any Share shall be in writing in the usual or common form or in a form prescribed by the rules and regulations of the Designated Stock Exchange, the Securities and Exchange Commission and/or any other competent regulatory authority or otherwise under Applicable Law or in any other form approved by the Directors and shall be executed by or on behalf of the transferor (and if the Directors so require, signed by or on behalf of the transferee) and may be under hand or, if the transferor or transferee is a Clearing House or its nominee(s), by hand or by machine imprinted signature or by such other manner of execution as the Directors may approve from time to time. The transferor shall be deemed to remain the holder of a Share until the name of the transferee is entered in the Register of Members.

 

8

Redemption, Repurchase and Surrender of Shares

 

8.1

Subject to the provisions of the Statute, and, where applicable, the rules and regulations of the Designated Stock Exchange, the Securities and Exchange Commission and/or any other competent regulatory authority or otherwise under Applicable Law, the Company may issue Shares that are to be redeemed or are liable to be redeemed at the option of the Member or the Company. The redemption of such Shares, except Public Shares, shall be effected in such manner and upon such other terms as the Company may, by Special Resolution, determine before the issue of such Shares. With respect to redeeming or repurchasing the Shares:

 

  (a)

Members who hold Public Shares are entitled to request the redemption of such Shares in the circumstances described in the Business Combination Article hereof;

 

  (b)

Class B Shares held by the Sponsor shall be surrendered by the Sponsor for no consideration to the extent that the Over-Allotment Option is not exercised in full so that the Founders will own 20 per cent of the Company’s issued Shares after the IPO (exclusive of any securities purchased in a private placement simultaneously with the IPO); and

 

  (c)

Public Shares shall be repurchased by way of tender offer in the circumstances set out in the Business Combination Article hereof.

 

8.2

Subject to the provisions of the Statute, and, where applicable, the rules and regulations of the Designated Stock Exchange, the Securities and Exchange Commission and/or any other competent regulatory authority or otherwise under Applicable Law, the Company may purchase its own Shares (including any redeemable Shares) in such manner and on such other terms as the Directors may agree with the relevant Member. For the avoidance of doubt, redemptions, repurchases and surrenders of Shares in the circumstances described in the Article above shall not require further approval of the Members.

 

8.3

The Company may make a payment in respect of the redemption or purchase of its own Shares in any manner permitted by the Statute, including out of capital.

 

8.4

The Directors may accept the surrender for no consideration of any fully paid Share.

 

9

Treasury Shares

 

9.1

The Directors may, prior to the purchase, redemption or surrender of any Share, determine that such Share shall be held as a Treasury Share.

 

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9.2

The Directors may determine to cancel a Treasury Share or transfer a Treasury Share on such terms as they think proper (including, without limitation, for nil consideration).

 

10

Variation of Rights of Shares

 

10.1

Subject to Article 3.1, if at any time the share capital of the Company is divided into different classes of Shares, all or any of the rights attached to any class (unless otherwise provided by the terms of issue of the Shares of that class) may, whether or not the Company is being wound up, be varied without the consent of the holders of the issued Shares of that class where such variation is considered by the Directors not to have a material adverse effect upon such rights; otherwise, any such variation shall be made only with the consent in writing of the holders of not less than two thirds of the issued Shares of that class (other than with respect to a waiver of the provisions of the Class B Share Conversion Article hereof, which as stated therein shall only require the consent in writing of the holders of a majority of the issued Shares of that class), or with the approval of a resolution passed by a majority of not less than two thirds of the votes cast at a separate meeting of the holders of the Shares of that class. For the avoidance of doubt, the Directors reserve the right, notwithstanding that any such variation may not have a material adverse effect, to obtain consent from the holders of Shares of the relevant class. To any such meeting all the provisions of the Articles relating to general meetings shall apply mutatis mutandis, except that the necessary quorum shall be one person holding or representing by proxy at least one third of the issued Shares of the class and that any holder of Shares of the class present in person or by proxy may demand a poll.

 

10.2

For the purposes of a separate class meeting, the Directors may treat two or more or all the classes of Shares as forming one class of Shares if the Directors consider that such class of Shares would be affected in the same way by the proposals under consideration, but in any other case shall treat them as separate classes of Shares.

 

10.3

The rights conferred upon the holders of the Shares of any class issued with preferred or other rights shall not, unless otherwise expressly provided by the terms of issue of the Shares of that class, be deemed to be varied by the creation or issue of further Shares ranking pari passu therewith or Shares issued with preferred or other rights.

 

11

Commission on Sale of Shares

The Company may, in so far as the Statute permits, pay a commission to any person in consideration of his subscribing or agreeing to subscribe (whether absolutely or conditionally) or procuring or agreeing to procure subscriptions (whether absolutely or conditionally) for any Shares. Such commissions may be satisfied by the payment of cash and/or the issue of fully or partly paid-up Shares. The Company may also on any issue of Shares pay such brokerage as may be lawful.

 

12

Non Recognition of Trusts

The Company shall not be bound by or compelled to recognise in any way (even when notified) any equitable, contingent, future or partial interest in any Share, or (except only as is otherwise provided by the Articles or the Statute) any other rights in respect of any Share other than an absolute right to the entirety thereof in the holder.

 

13

Lien on Shares

 

13.1

The Company shall have a first and paramount lien on all Shares (whether fully paid-up or not) registered in the name of a Member (whether solely or jointly with others) for all debts, liabilities or engagements to or with the Company (whether presently payable or not) by such Member or his estate, either alone or jointly with any other person, whether a Member or not, but the Directors may at any time declare any Share to be wholly or in part exempt from the provisions of this Article. The registration of a transfer of any such Share shall operate as a waiver of the Company’s lien thereon. The Company’s lien on a Share shall also extend to any amount payable in respect of that Share.

 

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13.2

The Company may sell, in such manner as the Directors think fit, any Shares on which the Company has a lien, if a sum in respect of which the lien exists is presently payable, and is not paid within fourteen clear days after notice has been received or deemed to have been received by the holder of the Shares, or to the person entitled to it in consequence of the death or bankruptcy of the holder, demanding payment and stating that if the notice is not complied with the Shares may be sold.

 

13.3

To give effect to any such sale the Directors may authorise any person to execute an instrument of transfer of the Shares sold to, or in accordance with the directions of, the purchaser. The purchaser or his nominee shall be registered as the holder of the Shares comprised in any such transfer, and he shall not be bound to see to the application of the purchase money, nor shall his title to the Shares be affected by any irregularity or invalidity in the sale or the exercise of the Company’s power of sale under the Articles.

 

13.4

The net proceeds of such sale after payment of costs, shall be applied in payment of such part of the amount in respect of which the lien exists as is presently payable and any balance shall (subject to a like lien for sums not presently payable as existed upon the Shares before the sale) be paid to the person entitled to the Shares at the date of the sale.

 

14

Call on Shares

 

14.1

Subject to the terms of the allotment and issue of any Shares, the Directors may make calls upon the Members in respect of any monies unpaid on their Shares (whether in respect of par value or premium), and each Member shall (subject to receiving at least fourteen clear days’ notice specifying the time or times of payment) pay to the Company at the time or times so specified the amount called on the Shares. A call may be revoked or postponed, in whole or in part, as the Directors may determine. A call may be required to be paid by instalments. A person upon whom a call is made shall remain liable for calls made upon him notwithstanding the subsequent transfer of the Shares in respect of which the call was made.

 

14.2

A call shall be deemed to have been made at the time when the resolution of the Directors authorising such call was passed.

 

14.3

The joint holders of a Share shall be jointly and severally liable to pay all calls in respect thereof.

 

14.4

If a call remains unpaid after it has become due and payable, the person from whom it is due shall pay interest on the amount unpaid from the day it became due and payable until it is paid at such rate as the Directors may determine (and in addition all expenses that have been incurred by the Company by reason of such non-payment), but the Directors may waive payment of the interest or expenses wholly or in part.

 

14.5

An amount payable in respect of a Share on issue or allotment or at any fixed date, whether on account of the par value of the Share or premium or otherwise, shall be deemed to be a call and if it is not paid all the provisions of the Articles shall apply as if that amount had become due and payable by virtue of a call.

 

14.6

The Directors may issue Shares with different terms as to the amount and times of payment of calls, or the interest to be paid.

 

14.7

The Directors may, if they think fit, receive an amount from any Member willing to advance all or any part of the monies uncalled and unpaid upon any Shares held by him, and may (until the amount would otherwise become payable) pay interest at such rate as may be agreed upon between the Directors and the Member paying such amount in advance.

 

14.8

No such amount paid in advance of calls shall entitle the Member paying such amount to any portion of a Dividend or other distribution payable in respect of any period prior to the date upon which such amount would, but for such payment, become payable.

 

15

Forfeiture of Shares

 

15.1

If a call or instalment of a call remains unpaid after it has become due and payable the Directors may give to the person from whom it is due not less than fourteen clear days’ notice requiring payment of the

 

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  amount unpaid together with any interest which may have accrued and any expenses incurred by the Company by reason of such non-payment. The notice shall specify where payment is to be made and shall state that if the notice is not complied with the Shares in respect of which the call was made will be liable to be forfeited.

 

15.2

If the notice is not complied with, any Share in respect of which it was given may, before the payment required by the notice has been made, be forfeited by a resolution of the Directors. Such forfeiture shall include all Dividends, other distributions or other monies payable in respect of the forfeited Share and not paid before the forfeiture.

 

15.3

A forfeited Share may be sold, re-allotted or otherwise disposed of on such terms and in such manner as the Directors think fit and at any time before a sale, re-allotment or disposition the forfeiture may be cancelled on such terms as the Directors think fit. Where for the purposes of its disposal a forfeited Share is to be transferred to any person the Directors may authorise some person to execute an instrument of transfer of the Share in favour of that person.

 

15.4

A person any of whose Shares have been forfeited shall cease to be a Member in respect of them and shall surrender to the Company for cancellation the certificate for the Shares forfeited and shall remain liable to pay to the Company all monies which at the date of forfeiture were payable by him to the Company in respect of those Shares together with interest at such rate as the Directors may determine, but his liability shall cease if and when the Company shall have received payment in full of all monies due and payable by him in respect of those Shares.

 

15.5

A certificate in writing under the hand of one Director or Officer that a Share has been forfeited on a specified date shall be conclusive evidence of the facts stated in it as against all persons claiming to be entitled to the Share. The certificate shall (subject to the execution of an instrument of transfer) constitute a good title to the Share and the person to whom the Share is sold or otherwise disposed of shall not be bound to see to the application of the purchase money, if any, nor shall his title to the Share be affected by any irregularity or invalidity in the proceedings in reference to the forfeiture, sale or disposal of the Share.

 

15.6

The provisions of the Articles as to forfeiture shall apply in the case of non payment of any sum which, by the terms of issue of a Share, becomes payable at a fixed time, whether on account of the par value of the Share or by way of premium as if it had been payable by virtue of a call duly made and notified.

 

16

Transmission of Shares

 

16.1

If a Member dies, the survivor or survivors (where he was a joint holder), or his legal personal representatives (where he was a sole holder), shall be the only persons recognised by the Company as having any title to his Shares. The estate of a deceased Member is not thereby released from any liability in respect of any Share, for which he was a joint or sole holder.

 

16.2

Any person becoming entitled to a Share in consequence of the death or bankruptcy or liquidation or dissolution of a Member (or in any other way than by transfer) may, upon such evidence being produced as may be required by the Directors, elect, by a notice in writing sent by him to the Company, either to become the holder of such Share or to have some person nominated by him registered as the holder of such Share. If he elects to have another person registered as the holder of such Share he shall sign an instrument of transfer of that Share to that person. The Directors shall, in either case, have the same right to decline or suspend registration as they would have had in the case of a transfer of the Share by the relevant Member before his death or bankruptcy or liquidation or dissolution, as the case may be.

 

16.3

A person becoming entitled to a Share by reason of the death or bankruptcy or liquidation or dissolution of a Member (or in any other case than by transfer) shall be entitled to the same Dividends, other distributions and other advantages to which he would be entitled if he were the holder of such Share. However, he shall not, before becoming a Member in respect of a Share, be entitled in respect of it to exercise any right conferred by membership in relation to general meetings of the Company and the Directors may at any

 

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  time give notice requiring any such person to elect either to be registered himself or to have some person nominated by him be registered as the holder of the Share (but the Directors shall, in either case, have the same right to decline or suspend registration as they would have had in the case of a transfer of the Share by the relevant Member before his death or bankruptcy or liquidation or dissolution or any other case than by transfer, as the case may be). If the notice is not complied with within ninety days of being received or deemed to be received (as determined pursuant to the Articles), the Directors may thereafter withhold payment of all Dividends, other distributions, bonuses or other monies payable in respect of the Share until the requirements of the notice have been complied with.

 

17

Class B Share Conversion

 

17.1

The rights attaching to all Shares shall rank pari passu in all respects, and the Class A Shares and Class B Shares shall vote together as a single class on all matters (except as otherwise expressly provided in the Articles) with the exception that the holder of a Class B Share shall have the Conversion Rights referred to in this Article.

 

17.2

Class B Shares shall automatically convert into Class A Shares on a one-for-one basis (the “Initial Conversion Ratio”) concurrently with or immediately following the consummation of a Business Combination.

 

17.3

Notwithstanding the Initial Conversion Ratio, in the case that additional Class A Shares or any other Equity-linked Securities, are issued or deemed issued in connection with a Business Combination, all Class B Shares in issue shall automatically convert into Class A Shares at the time of the closing of a Business Combination, the ratio for which the Class B Shares shall convert into Class A Shares will be adjusted so that the number of Class A Shares issuable upon conversion of all Class B Shares will equal, in the aggregate, 25 per cent of the sum of: (a) the total number of all Class A Shares in issue immediately prior to such conversion; plus (b) all Class A Shares and Equity-linked Securities issued or deemed issued in connection with a Business Combination, excluding any Shares or Equity-linked Securities issued, or to be issued, to any seller in a Business Combination, any private placement-equivalent warrants issued to the Sponsor or an affiliate of the Sponsor or to the Company’s officers and directors upon the conversion of working capital loans made to the Company; minus (c) the number of Public Shares redeemed in connection with a Business Combination, provided that such conversion of Class B Shares into Class A Shares shall never be less than the Initial Conversion Ratio.

 

17.4

Notwithstanding anything to the contrary contained herein, the foregoing adjustment to the Initial Conversion Ratio may be waived as to any particular issuance or deemed issuance of additional Class A Shares or Equity-linked Securities by the written consent or agreement of holders of a majority of the Class B Shares then in issue consenting or agreeing separately as a separate class in the manner provided in the Variation of Rights of Shares Article hereof.

 

17.5

The foregoing conversion ratio shall also be adjusted to account for any subdivision (by share split, subdivision, exchange, capitalisation, rights issue, reclassification, recapitalisation or otherwise) or combination (by reverse share split, share consolidation, exchange, reclassification, recapitalisation or otherwise) or similar reclassification or recapitalisation of the Class A Shares in issue into a greater or lesser number of shares occurring after the original filing of the Articles without a proportionate and corresponding subdivision, combination or similar reclassification or recapitalisation of the Class B Shares in issue.

 

17.6

Each Class B Share shall convert into its pro rata number of Class A Shares pursuant to this Article. The pro rata share for each holder of Class B Shares will be determined as follows: each Class B Share shall convert into such number of Class A Shares as is equal to the product of 1 multiplied by a fraction, the numerator of which shall be the total number of Class A Shares into which all of the Class B Shares in issue shall be converted pursuant to this Article and the denominator of which shall be the total number of Class B Shares in issue at the time of conversion.

 

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17.7

References in this Article to “converted”, “conversion” or “exchange” shall mean the compulsory redemption without notice of Class B Shares of any Member and, on behalf of such Members, automatic application of such redemption proceeds in paying for such new Class A Shares into which the Class B Shares have been converted or exchanged at a price per Class B Share necessary to give effect to a conversion or exchange calculated on the basis that the Class A Shares to be issued as part of the conversion or exchange will be issued at par. The Class A Shares to be issued on an exchange or conversion shall be registered in the name of such Member or in such name as the Member may direct.

 

18

Amendments of Memorandum and Articles of Association and Alteration of Capital

18.1 The Company may by Ordinary Resolution:

 

  (a)

increase its share capital by such sum as the Ordinary Resolution shall prescribe and with such rights, priorities and privileges annexed thereto, as the Company in general meeting may determine;

 

  (b)

subject to Article 18.4, consolidate and divide all or any of its share capital into Shares of larger amount than its existing Shares;

 

  (c)

convert all or any of its paid-up Shares into stock, and reconvert that stock into paid-up Shares of any denomination;

 

  (d)

by subdivision of its existing Shares or any of them divide the whole or any part of its share capital into Shares of smaller amount than is fixed by the Memorandum or into Shares without par value; and

 

  (e)

cancel any Shares that at the date of the passing of the Ordinary Resolution have not been taken or agreed to be taken by any person and diminish the amount of its share capital by the amount of the Shares so cancelled.

 

18.2

All new Shares created in accordance with the provisions of the preceding Article shall be subject to the same provisions of the Articles with reference to the payment of calls, liens, transfer, transmission, forfeiture and otherwise as the Shares in the original share capital.

 

18.3

Subject to the provisions of the Statute, the provisions of the Articles as regards the matters to be dealt with by Ordinary Resolution and Article 31.4, the Company may by Special Resolution:

 

  (a)

change its name;

 

  (b)

alter or add to the Articles (subject to Article 31.4);

 

  (c)

alter or add to the Memorandum with respect to any objects, powers or other matters specified therein; and

 

  (d)

reduce its share capital or any capital redemption reserve fund.

 

18.4

Prior to the closing of a Business Combination this Article 18.4 may only be amended by a Special Resolution passed by at least 90 per cent of such Members as, being entitled to do so, vote in person or, where proxies are allowed, by proxy at a general meeting of which notice specifying the intention to propose the resolution as a special resolution has been given, or by way of unanimous written resolution.

 

19

Offices and Places of Business

Subject to the provisions of the Statute, the Company may by resolution of the Directors change the location of its Registered Office. The Company may, in addition to its Registered Office, maintain such other offices or places of business as the Directors determine.

 

20

General Meetings

 

20.1

All general meetings other than annual general meetings shall be called extraordinary general meetings.

 

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20.2

The Company may, but shall not (unless required by the Statute) be obliged to, in each year hold a general meeting as its annual general meeting, and shall specify the meeting as such in the notices calling it. Any annual general meeting shall be held at such time and place as the Directors shall appoint. At these meetings the report of the Directors (if any) shall be presented.

 

20.3

The Directors, the chief executive officer or the chairman of the board of Directors may call general meetings and, for the avoidance of doubt, Members shall not have the ability to call general meetings.

 

21

Notice of General Meetings

 

21.1

At least five clear days’ notice shall be given of any general meeting. Every notice shall specify the place, the day and the hour of the meeting and the general nature of the business to be conducted at the general meeting and shall be given in the manner hereinafter mentioned or in such other manner if any as may be prescribed by the Company, provided that a general meeting of the Company shall, whether or not the notice specified in this Article has been given and whether or not the provisions of the Articles regarding general meetings have been complied with, be deemed to have been duly convened if it is so agreed:

 

  (a)

in the case of an annual general meeting, by all of the Members entitled to attend and vote thereat; and

 

  (b)

in the case of an extraordinary general meeting, by a majority in number of the Members having a right to attend and vote at the meeting, together holding not less than ninety-five per cent in par value of the Shares giving that right.

 

  21.2

The accidental omission to give notice of a general meeting to, or the non receipt of notice of a general meeting by, any person entitled to receive such notice shall not invalidate the proceedings of that general meeting.

 

22

Advance Notice for Business

 

22.1

At each annual general meeting, the Members shall appoint the Directors then subject to appointment in accordance with the procedures set forth in the Articles and subject to Applicable Law and the rules of the Designated Stock Exchange or quotation system on which Shares may be then listed or quoted. At any such annual general meeting any other business properly brought before the annual general meeting may be transacted.

 

22.2

To be properly brought before an annual general meeting, business (other than nominations of Directors, which must be made in compliance with, and shall be exclusively governed by, Article 29) must be:

 

  (a)

specified in the notice of the annual general meeting (or any supplement thereto) given to Members by or at the direction of the Directors in accordance with the Articles;

 

  (b)

otherwise properly brought before the annual general meeting by or at the direction of the Directors; or

 

  (c)

otherwise properly brought before the annual general meeting by a Member who:

 

  (i)

is a Minimum Member at the time of giving of the notice provided for in this Article and at the time of the annual general meeting;

 

  (ii)

is entitled to vote at such annual general meeting; and

 

  (iii)

complies with the notice procedures set forth in this Article.

 

22.3

For any such business to be properly brought before any annual general meeting pursuant to Article 22.2(c), the Member must have given timely notice thereof in writing, either by personal delivery or express or registered mail (postage prepaid), to the Company not earlier than the close of business on the

 

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  120th day and not later than the close of business on the 90th day prior to the one-year anniversary of the date of the annual general meeting for the immediately preceding year. However, in the event that the date of the annual general meeting is more than 30 days before or after such anniversary date, in order to be timely, a Member’s notice must be received by the Company not later than the later of: (x) the close of business 90 days prior to the date of such annual general meeting; and (y) if the first public announcement of the date of such advanced or delayed annual general meeting is less than 100 days prior to such date, 10 days following the date of the first public announcement of the annual general meeting date. In no event shall the public announcement of an adjournment or postponement of an annual general meeting, or such adjournment or postponement, commence a new time period or otherwise extend any time period for the giving of a Member’s notice as described herein.

22.4 Any such notice of other business shall set forth as to each matter the Member proposes to bring before the annual general meeting:

 

  (a)

a brief description of the business desired to be brought before the annual general meeting, the reasons for conducting such business at the annual general meeting and the text of any proposal regarding such business (including the text of any resolutions proposed for consideration and, if such business includes a proposal to amend the Articles, the text of the proposed amendment), which shall not exceed 1,000 words;

 

  (b)

as to the Member giving notice and any beneficial owner on whose behalf the proposal is made:

 

  (i)

the name and address of such Member (as it appears in the Register of Members) and such beneficial owner on whose behalf the proposal is made;

 

  (ii)

the class and number of Shares which are, directly or indirectly, owned beneficially or of record by any such Member and by such beneficial owner, respectively, or their respective Affiliates (naming such Affiliates), as at the date of such notice;

 

  (iii)

a description of any agreement, arrangement or understanding (including, without limitation, any swap or other derivative or short positions, profit interests, options, hedging transactions, and securities lending or borrowing arrangement) to which such Member or any such beneficial owner or their respective Affiliates is, directly or indirectly, a party as at the date of such notice: (x) with respect to any Shares; or (y) the effect or intent of which is to mitigate loss to, manage the potential risk or benefit of share price changes (increases or decreases) for, or increase or decrease the voting power of such Member or beneficial owner or any of their Affiliates with respect to Shares or which may have payments based in whole or in part, directly or indirectly, on the value (or change in value) of any Shares (any agreement, arrangement or understanding of a type described in this Article 22.4(b)(iii), a “Covered Arrangement”); and

 

  (iv)

a representation that the Member is a holder of record of Shares entitled to vote at such annual general meeting and intends to appear in person or by proxy at the annual general meeting to propose such business;

 

  (c)

a description of any direct or indirect material interest by security holdings or otherwise of the Member and of any beneficial owner on whose behalf the proposal is made, or their respective Affiliates, in such business (whether by holdings of securities, or by virtue of being a creditor or contractual counterparty of the Company or of a third party, or otherwise) and all agreements, arrangements and understandings between such Member or any such beneficial owner or their respective Affiliates and any other person or persons (naming such person or persons) in connection with the proposal of such business by such Member;

 

  (d)

a representation whether the Member or the beneficial owner intends or is part of a Group which intends:

 

  (i)

to deliver a proxy statement and/or form of proxy to holders of at least the percentage of the Ordinary Shares (or other Shares) required to approve or adopt the proposal; and/or

 

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  (ii)

otherwise to solicit proxies from Members in support of such proposal;

 

  (e)

an undertaking by the Member and any beneficial owner on whose behalf the proposal is made to:

 

  (i)

notify the Company in writing of the information set forth in Articles 22.4(b)(ii), (b)(iii) and (c) above as at the record date for the annual general meeting promptly (and, in any event, within five (5) business days) following the later of the record date or the date notice of the record date is first disclosed by public announcement; and

 

  (ii)

update such information thereafter within two (2) business days of any change in such information and, in any event, as at close of business on the day preceding the meeting date; and

 

  (f)

any other information relating to such Member, any such beneficial owner and their respective Affiliates that would be required to be disclosed in a proxy statement or other filings required to be made in connection with solicitations of proxies for, as applicable, such proposal pursuant to section 14 of the Exchange Act, to the same extent as if the Shares were registered under the Exchange Act.

 

22.5

Notwithstanding anything to the contrary, the notice requirements set forth herein with respect to the proposal of any business pursuant to this Article, other than nominations for Directors which must be made in compliance with, and shall be exclusively governed by Article 29, shall be deemed satisfied by a Member if such Member has submitted a proposal to the Company in compliance with Rule 14a-8 of the Exchange Act and such Member’s proposal has been included in a proxy statement that has been prepared by the Company to solicit proxies for the annual general meeting; provided, that such Member shall have provided the information required by Article 22.4; provided, further, that the information required by Article 22.4(b) may be satisfied by providing the information to the Company required pursuant to Rule 14a-8(b) of the Exchange Act.

 

22.6

Notwithstanding anything in the Articles to the contrary:

 

  (a)

no other business brought by a Member (other than the nominations of Directors, which must be made in compliance with, and shall be exclusively governed by Article 29) shall be conducted at any annual general meeting except in accordance with the procedures set forth in this Article; and

 

  (b)

unless otherwise required by Applicable Law and the rules of any applicable stock exchange or quotation system on which Shares may be then listed or quoted, if a Member intending to bring business before an annual general meeting in accordance with this Article does not: (x) timely provide the notifications contemplated by Article 22.4(e) above; or (y) timely appear in person or by proxy at the annual general meeting to present the proposed business, such business shall not be transacted, notwithstanding that proxies in respect of such business may have been received by the Company or any other person or entity.

 

22.7

Except as otherwise provided by Applicable Law or the Articles, the chairman or co-chairman of any annual general meeting shall have the power and duty to determine whether any business proposed to be brought before an annual general meeting was proposed in accordance with the foregoing procedures (including whether the Member solicited or did not so solicit, as the case may be, proxies in support of such Member’s proposal in compliance with such Member’s representation as required by Article 22.4(d)) and if any business is not proposed in compliance with this Article, to declare that such defective proposal shall be disregarded. The requirements of this Article shall apply to any business to be brought before an annual general meeting by a Member other than nominations of Directors (which must be made in compliance with, and shall be exclusively governed by Article 29) and other than matters properly brought under Rule 14a-8 of the Exchange Act. For purposes of the Articles, “public announcement” shall mean:

 

  (a)

prior to the IPO, notice of the annual general meeting given to Members by or at the direction of the Directors in accordance with the procedures set forth in the Articles; and

 

  (b)

on and after the IPO, disclosure in a press release of the Company reported by the Dow Jones News Service, Associated Press or comparable news service or in a document publicly filed or furnished

 

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  by the Company with or to the United States Securities Exchange Commission pursuant to section 13, 14 or 15(b) of the Exchange Act.

 

22.8

Nothing in this Article shall be deemed to affect any rights of:

 

  (a)

Members to request inclusion of proposals in the Company’s proxy statement pursuant to applicable rules and regulations under the Exchange Act; or

 

  (b)

the holders of any class of Preferred Shares, or any other class of Shares authorised to be issued by the Company, to make proposals pursuant to any applicable provisions thereof.

 

22.9

Notwithstanding the foregoing provisions of this Article, a Member shall also comply with all applicable requirements of the Exchange Act and the rules and regulations thereunder with respect to the matters set forth in this Article, if applicable.

 

23

Proceedings at General Meetings

 

23.1

No business shall be transacted at any general meeting unless a quorum is present. The holders of a majority of the Shares being individuals present in person or by proxy or if a corporation or other non-natural person by its duly authorised representative or proxy shall be a quorum.

 

23.2

A person may participate at a general meeting by conference telephone or other communications equipment by means of which all the persons participating in the meeting can communicate with each other. Participation by a person in a general meeting in this manner is treated as presence in person at that meeting.

 

23.3

A resolution (including a Special Resolution) in writing (in one or more counterparts) signed by or on behalf of all of the Members for the time being entitled to receive notice of and to attend and vote at general meetings (or, being corporations or other non-natural persons, signed by their duly authorised representatives) shall be as valid and effective as if the resolution had been passed at a general meeting of the Company duly convened and held.

 

23.4

If a quorum is not present within half an hour from the time appointed for the meeting to commence or if during such a meeting a quorum ceases to be present, the meeting, if convened upon a Members’ requisition, shall be dissolved and in any other case it shall stand adjourned to the same day in the next week at the same time and/or place or to such other day, time and/or place as the Directors may determine, and if at the adjourned meeting a quorum is not present within half an hour from the time appointed for the meeting to commence, the Members present shall be a quorum.

 

23.5

The Directors may, at any time prior to the time appointed for the meeting to commence, appoint any person to act as chairman of a general meeting of the Company or, if the Directors do not make any such appointment, the chairman, if any, of the board of Directors shall preside as chairman at such general meeting. If there is no such chairman, or if he shall not be present within fifteen minutes after the time appointed for the meeting to commence, or is unwilling to act, the Directors present shall elect one of their number to be chairman of the meeting.

 

23.6

If no Director is willing to act as chairman or if no Director is present within fifteen minutes after the time appointed for the meeting to commence, the Members present shall choose one of their number to be chairman of the meeting.

 

23.7

The chairman may, with the consent of a meeting at which a quorum is present (and shall if so directed by the meeting) adjourn the meeting from time to time and from place to place, but no business shall be transacted at any adjourned meeting other than the business left unfinished at the meeting from which the adjournment took place.

 

23.8

When a general meeting is adjourned for thirty days or more, notice of the adjourned meeting shall be given as in the case of an original meeting. Otherwise it shall not be necessary to give any such notice of an adjourned meeting.

 

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23.9

If, prior to a Business Combination, a notice is issued in respect of a general meeting and the Directors, in their absolute discretion, consider that it is impractical or undesirable for any reason to hold that general meeting at the place, the day and the hour specified in the notice calling such general meeting, the Directors may postpone the general meeting to another place, day and/or hour provided that notice of the place, the day and the hour of the rearranged general meeting is promptly given to all Members. No business shall be transacted at any postponed meeting other than the business specified in the notice of the original meeting.

 

23.10

When a general meeting is postponed for thirty days or more, notice of the postponed meeting shall be given as in the case of an original meeting. Otherwise it shall not be necessary to give any such notice of a postponed meeting. All proxy forms submitted for the original general meeting shall remain valid for the postponed meeting. The Directors may postpone a general meeting which has already been postponed.

 

23.11

A resolution put to the vote of the meeting shall be decided on a poll.

 

23.12

A poll shall be taken as the chairman directs, and the result of the poll shall be deemed to be the resolution of the general meeting at which the poll was demanded.

 

23.13

A poll demanded on the election of a chairman or on a question of adjournment shall be taken forthwith. A poll demanded on any other question shall be taken at such date, time and place as the chairman of the general meeting directs, and any business other than that upon which a poll has been demanded or is contingent thereon may proceed pending the taking of the poll.

 

23.14

In the case of an equality of votes the chairman shall be entitled to a second or casting vote.

 

24

Votes of Members

 

24.1

Subject to any rights or restrictions attached to any Shares, including as set out at Articles 18.4, 31.1 and 49, every Member present in any such manner shall have one vote for every Share of which he is the holder.

 

24.2

In the case of joint holders the vote of the senior holder who tenders a vote, whether in person or by proxy (or, in the case of a corporation or other non-natural person, by its duly authorised representative or proxy), shall be accepted to the exclusion of the votes of the other joint holders, and seniority shall be determined by the order in which the names of the holders stand in the Register of Members.

 

24.3

A Member of unsound mind, or in respect of whom an order has been made by any court, having jurisdiction in lunacy, may vote by his committee, receiver, curator bonis, or other person on such Member’s behalf appointed by that court, and any such committee, receiver, curator bonis or other person may vote by proxy.

 

24.4

No person shall be entitled to vote at any general meeting unless he is registered as a Member on the record date for such meeting nor unless all calls or other monies then payable by him in respect of Shares have been paid.

 

24.5

No objection shall be raised as to the qualification of any voter except at the general meeting or adjourned general meeting at which the vote objected to is given or tendered and every vote not disallowed at the meeting shall be valid. Any objection made in due time in accordance with this Article shall be referred to the chairman whose decision shall be final and conclusive.

 

24.6

Votes may be cast either personally or by proxy (or in the case of a corporation or other non-natural person by its duly authorised representative or proxy). A Member may appoint more than one proxy or the same proxy under one or more instruments to attend and vote at a meeting. Where a Member appoints more than one proxy the instrument of proxy shall specify the number of Shares in respect of which each proxy is entitled to exercise the related votes.

 

24.7

A Member holding more than one Share need not cast the votes in respect of his Shares in the same way on any resolution and therefore may vote a Share or some or all such Shares either for or against a resolution

 

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  and/or abstain from voting a Share or some or all of the Shares and, subject to the terms of the instrument appointing him, a proxy appointed under one or more instruments may vote a Share or some or all of the Shares in respect of which he is appointed either for or against a resolution and/or abstain from voting a Share or some or all of the Shares in respect of which he is appointed.

 

25

Proxies

 

25.1

The instrument appointing a proxy shall be in writing and shall be executed under the hand of the appointor or of his attorney duly authorised in writing, or, if the appointor is a corporation or other non natural person, under the hand of its duly authorised representative. A proxy need not be a Member.

 

25.2

The Directors may, in the notice convening any meeting or adjourned meeting, or in an instrument of proxy sent out by the Company, specify the manner by which the instrument appointing a proxy shall be deposited and the place and the time (being not later than the time appointed for the commencement of the meeting or adjourned meeting to which the proxy relates) at which the instrument appointing a proxy shall be deposited. In the absence of any such direction from the Directors in the notice convening any meeting or adjourned meeting or in an instrument of proxy sent out by the Company, the instrument appointing a proxy shall be deposited physically at the Registered Office not less than 48 hours before the time appointed for the meeting or adjourned meeting to commence at which the person named in the instrument proposes to vote.

 

25.3

The chairman may in any event at his discretion declare that an instrument of proxy shall be deemed to have been duly deposited. An instrument of proxy that is not deposited in the manner permitted, or which has not been declared to have been duly deposited by the chairman, shall be invalid.

 

25.4

The instrument appointing a proxy may be in any usual or common form (or such other form as the Directors may approve) and may be expressed to be for a particular meeting or any adjournment thereof or generally until revoked. An instrument appointing a proxy shall be deemed to include the power to demand or join or concur in demanding a poll.

 

25.5

Votes given in accordance with the terms of an instrument of proxy shall be valid notwithstanding the previous death or insanity of the principal or revocation of the proxy or of the authority under which the proxy was executed, or the transfer of the Share in respect of which the proxy is given unless notice in writing of such death, insanity, revocation or transfer was received by the Company at the Registered Office before the commencement of the general meeting, or adjourned meeting at which it is sought to use the proxy.

 

26

Corporate Members

 

26.1

Any corporation or other non-natural person which is a Member may in accordance with its constitutional documents, or in the absence of such provision by resolution of its directors or other governing body, authorise such person as it thinks fit to act as its representative at any meeting of the Company or of any class of Members, and the person so authorised shall be entitled to exercise the same powers on behalf of the corporation which he represents as the corporation could exercise if it were an individual Member.

 

26.2

If a Clearing House (or its nominee(s)), being a corporation, is a Member, it may authorise such persons as it sees fit to act as its representative at any meeting of the Company or at any meeting of any class of Members provided that the authorisation shall specify the number and class of Shares in respect of which each such representative is so authorised. Each person so authorised under the provisions of this Article shall be deemed to have been duly authorised without further evidence of the facts and be entitled to exercise the same rights and powers on behalf of the Clearing House (or its nominee(s)) as if such person was the registered holder of such Shares held by the Clearing House (or its nominee(s)).

 

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27

Shares that May Not be Voted

Shares in the Company that are beneficially owned by the Company shall not be voted, directly or indirectly, at any meeting and shall not be counted in determining the total number of outstanding Shares at any given time.

 

28

Directors

 

28.1

There shall be a board of Directors consisting of not less than one person provided however that, subject to Article 31.1, the Company may by Ordinary Resolution increase or reduce the limits in the number of Directors.

 

28.2

The Directors shall be divided into three (3) classes designated as Class I, Class II and Class III, respectively. Directors shall be assigned to each class in accordance with a resolution or resolutions adopted by the board of Directors. At the first annual general meeting of the Company, the term of office of the Class I Directors shall expire and Class I Directors shall be elected for a full term of three (3) years. At the second annual general meeting of the Company, the term of office of the Class II Directors shall expire and Class II Directors shall be elected for a full term of three (3) years. At the third annual general meeting of the Company, the term of office of the Class III Directors shall expire and Class III Directors shall be elected for a full term of three (3) years. At each succeeding annual general meeting of the Company, Directors shall be elected for a full term of three (3) years to succeed the Directors of the class whose terms expire at such annual general meeting. Notwithstanding the foregoing provisions of this Article, each Director shall hold office until the expiration of his term, until his successor shall have been duly elected and qualified or until his earlier death, resignation or removal. No decrease in the number of Directors constituting the board of Directors shall shorten the term of any incumbent Director.

 

29

Nomination of Directors

29.1 Subject to Article 31.1, nominations of persons for election as Directors may be made at an annual general meeting only by:

 

  (a)

the Directors; or

 

  (b)

by any Member who:

 

  (i)

is a Minimum Member at the time of giving of the notice provided for in this Article and at the time of the annual general meeting;

 

  (ii)

is entitled to vote for the appointments at such annual general meeting; and

 

  (iii)

complies with the notice procedures set forth in this Article (notwithstanding anything to the contrary set forth in the Articles, this Article 29.1(b) shall be the exclusive means for a Member to make nominations of persons for election of Directors at an annual general meeting).

 

29.2

Any Member entitled to vote for the elections may nominate a person or persons for election as Directors only if written notice of such Member’s intent to make such nomination is given in accordance with the procedures set forth in this Article, either by personal delivery or express or registered mail (postage prepaid), to the Company not earlier than the close of business on the 120th day and not later than the close of business on the 90th day prior to the one-year anniversary of the date of the annual general meeting for the immediately preceding year. However, in the event that the date of the annual general meeting is more than 30 days before or after such anniversary date, in order to be timely, a Member’s notice must be received by the Company not later than the later of: (x) the close of business 90 days prior to the date of such annual general meeting; and (y) if the first public announcement of the date of such advanced or delayed annual general meeting is less than 100 days prior to such date, 10 days following the date of the first public announcement of the annual general meeting date. In no event shall the public announcement of

 

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  an adjournment or postponement of an annual general meeting, or such adjournment or postponement, commence a new time period or otherwise extend any time period for the giving of a Member’s notice as described herein. Members may nominate a person or persons (as the case may be) for election to the Directors only as provided in this Article and only for such class(es) as are specified in the notice of annual general meeting as being up for election at such annual general meeting.

 

29.3

Each such notice of a Member’s intent to make a nomination of a Director shall set forth:

 

  (a)

as to the Member giving notice and any beneficial owner on whose behalf the nomination is made:

 

  (i)

the name and address of such Member (as it appears in the Register of Members) and any such beneficial owner on whose behalf the nomination is made;

 

  (ii)

the class and number of Shares which are, directly or indirectly, owned beneficially and of record by such Member and any such beneficial owner, respectively, or their respective Affiliates (naming such Affiliates), as at the date of such notice;

 

  (iii)

a description of any Covered Arrangement to which such Member or beneficial owner, or their respective Affiliates, directly or indirectly, is a party as at the date of such notice;

 

  (iv)

any other information relating to such Member and any such beneficial owner that would be required to be disclosed in a proxy statement in connection with a solicitation of proxies for the election of Directors in a contested election pursuant to section 14 of the Exchange Act; and

 

  (v)

a representation that the Member is a holder of record of Shares entitled to vote at such annual general meeting and intends to appear in person or by proxy at the meeting to nominate the person or persons specified in such Member’s notice;

 

  (b)

a description of all arrangements or understandings between the Member or any beneficial owner, or their respective Affiliates, and each nominee or any other person or persons (naming such person or persons) pursuant to which the nomination or nominations are to be made by the Member;

 

  (c)

a representation whether the Member or the beneficial owner is or intends to be part of a Group which intends:

 

  (i)

to deliver a proxy statement and/or form of proxy to holders of at least the percentage of the Ordinary Shares (or other Shares) required to elect the Director or Directors nominated; and/or

 

  (ii)

otherwise to solicit proxies from Members in support of such nomination or nominations;

 

  (d)

as to each person whom the Member proposes to nominate for election or re-election as a Director:

 

  (i)

all information relating to such person as would have been required to be included in a proxy statement filed in connection with a solicitation of proxies for the election of Directors in a contested election pursuant to section 14 of the Exchange Act;

 

  (ii)

a description of any Covered Arrangement to which such nominee or any of his Affiliates is a party as at the date of such notice

 

  (iii)

the written consent of each nominee to being named in the proxy statement as a nominee and to serving as a Director if so elected; and

 

  (iv)

whether, if elected, the nominee intends to tender any advance resignation notice(s) requested by the Directors in connection with subsequent elections, such advance resignation to be contingent upon the nominee’s failure to receive a majority vote and acceptance of such resignation by the Directors; and

 

  (e)

an undertaking by the Member of record and each beneficial owner, if any, to (i) notify the Company in writing of the information set forth in Articles 29.3(a)(ii), (a)(iii), (b) and (d) above as at the

 

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  record date for the annual general meeting promptly (and, in any event, within five (5) business days) following the later of the record date or the date notice of the record date is first disclosed by public announcement and (ii) update such information thereafter within two (2) business days of any change in such information and, in any event, as at close of business on the day preceding the meeting date.

 

29.4

No person shall be eligible for election as a Director unless nominated in accordance with the procedures set forth in the Articles. Except as otherwise provided by Applicable Law or the Articles, the chairman or co-chairman of any annual general meeting to elect Directors or the Directors may, if the facts warrant, determine that a nomination was not made in compliance with the foregoing procedure or if the Member solicits proxies in support of such Member’s nominee(s) without such Member having made the representation required by Article 29.3(c); and if the chairman, co-chairman or the Directors should so determine, it shall be so declared to the annual general meeting, and the defective nomination shall be disregarded. Notwithstanding anything in the Articles to the contrary, unless otherwise required by Applicable Law or the rules of the Designated Stock Exchange or quotation system on which Shares may be then listed or quoted, if a Member intending to make a nomination at an annual general meeting in accordance with this Article does not:

 

  (a)

timely provide the notifications contemplated by of Article 29.3(e); or

 

  (b)

timely appear in person or by proxy at the annual general meeting to present the nomination, such nomination shall be disregarded, notwithstanding that proxies in respect of such nomination may have been received by the Company or any other person or entity.

 

29.5

Notwithstanding the foregoing provisions of this Article, any Member intending to make a nomination at an annual general meeting in accordance with this Article, and each related beneficial owner, if any, shall also comply with all requirements of the Exchange Act and the rules and regulations thereunder applicable to the same extent as if the Shares were registered under the Exchange Act with respect to the matters set forth in the Articles; provided, however, that any references in the Articles to the Exchange Act are not intended to and shall not limit the requirements applicable to nominations made or intended to be made in accordance with Article 29.1(b).

 

29.6

Nothing in this Article shall be deemed to affect any rights of the holders of any class of Preferred Shares, or any other class of Shares authorised to be issued by the Company, to appoint Directors pursuant to the terms thereof.

 

29.7

To be eligible to be a nominee for election or re-election as a Director pursuant to Article 29.1(b), a person must deliver (not later than the deadline prescribed for delivery of notice) to the Company a written questionnaire prepared by the Company with respect to the background and qualification of such person and the background of any other person or entity on whose behalf the nomination is being made (which questionnaire shall be provided by the Company upon written request) and a written representation and agreement (in the form provided by the Company upon written request) that such person:

 

  (a)

is not and will not become a party to:

 

  (i)

any agreement, arrangement or understanding with, and has not given any commitment or assurance to, any person or entity as to how such person, if elected as a Director, will act or vote on any issue or question (a “Voting Commitment”) that has not been disclosed to the Company; or

 

  (ii)

any Voting Commitment that could limit or interfere with such person’s ability to comply, if elected as a Director, with such person’s duties under Applicable Law;

 

  (b)

is not and will not become a party to any agreement, arrangement or understanding with any person or entity other than the Company with respect to any direct or indirect compensation, reimbursement or indemnification in connection with service or action as a Director that has not been disclosed therein;

 

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  (c)

in such person’s individual capacity and on behalf of any person or entity on whose behalf the nomination is being made, would be in compliance, if elected as a Director, and will comply with, Applicable Law and corporate governance, conflict of interest, confidentiality and share ownership and trading policies and guidelines of the Company that are applicable to Directors generally; and

 

  (d)

if elected as a Director, will act in the best interests of the Company and not in the interest of any individual constituency. The nominating and governance committee shall review all such information submitted by the Member with respect to the proposed nominee and determine whether such nominee is eligible to act as a Director. The Company and the nominating and governance committee of the Directors may require any proposed nominee to furnish such other information as may reasonably be required by the Company to determine the eligibility of such proposed nominee to serve as an independent Director or that could be material to a reasonable Member’s understanding of the independence, or lack thereof, of such nominee.

 

29.8

At the request of the Directors, any person nominated for election as a Director shall furnish to the Company the information that is required to be set forth in a Members’ notice of nomination pursuant to this Article.

 

29.9

Any Member proposing to nominate a person or persons for election as Director shall be responsible for, and bear the costs associated with, soliciting votes from any other voting Member and distributing materials to such Members prior to the annual general meeting in accordance with the Articles and applicable rules of the United States Securities Exchange Commission. A Member shall include any person or persons such Member intends to nominate for election as Director in its own proxy statement and proxy card.

 

30

Powers of Directors

 

30.1

Subject to the provisions of the Statute, the Memorandum and the Articles and to any directions given by Special Resolution, the business of the Company shall be managed by the Directors who may exercise all the powers of the Company. No alteration of the Memorandum or Articles and no such direction shall invalidate any prior act of the Directors which would have been valid if that alteration had not been made or that direction had not been given. A duly convened meeting of Directors at which a quorum is present may exercise all powers exercisable by the Directors.

 

30.2

All cheques, promissory notes, drafts, bills of exchange and other negotiable or transferable instruments and all receipts for monies paid to the Company shall be signed, drawn, accepted, endorsed or otherwise executed as the case may be in such manner as the Directors shall determine by resolution.

 

30.3

The Directors on behalf of the Company may pay a gratuity or pension or allowance on retirement to any Director who has held any other salaried office or place of profit with the Company or to his widow or dependants and may make contributions to any fund and pay premiums for the purchase or provision of any such gratuity, pension or allowance.

 

30.4

The Directors may exercise all the powers of the Company to borrow money and to mortgage or charge its undertaking, property and assets (present and future) and uncalled capital or any part thereof and to issue debentures, debenture stock, mortgages, bonds and other such securities whether outright or as security for any debt, liability or obligation of the Company or of any third party.

 

31

Appointment and Removal of Directors

 

31.1

Prior to the closing of a Business Combination, the Company may by Ordinary Resolution of the holders of the Class B Shares increase and decrease the number of Directors and appoint any person to be a Director or may by Ordinary Resolution of the holders of the Class B Shares remove any Director. For the avoidance of doubt, prior to the closing of a Business Combination holders of Class A Shares shall have no right to vote on the appointment or removal of any Director, even if such Director will be appointed in connection with the closing of a Business Combination.

 

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31.2

The Directors may appoint any person to be a Director, either to fill a vacancy or as an additional Director provided that the appointment does not cause the number of Directors to exceed any number fixed by or in accordance with the Articles as the maximum number of Directors.

 

31.3

After the closing of a Business Combination, the Company may by Ordinary Resolution appoint any person to be a Director or may by Ordinary Resolution remove any Director.

 

31.4

Prior to the closing of a Business Combination, Article 31.1 may only be amended by a Special Resolution passed by at least 90 per cent of such Members as, being entitled to do so, vote in person or, where proxies are allowed, by proxy at a general meeting of which notice specifying the intention to propose the resolution as a special resolution has been given, or by way of unanimous written resolution.

 

32

Vacation of Office of Director

The office of a Director shall be vacated if:

 

  (a)

the Director gives notice in writing to the Company that he resigns the office of Director; or

 

  (b)

the Director absents himself (for the avoidance of doubt, without being represented by proxy) from three consecutive meetings of the board of Directors without special leave of absence from the Directors, and the Directors pass a resolution that he has by reason of such absence vacated office; or

 

  (c)

the Director dies, becomes bankrupt or makes any arrangement or composition with his creditors generally; or

 

  (d)

the Director is found to be or becomes of unsound mind; or

 

  (e)

all of the other Directors (being not less than two in number) determine that he should be removed as a Director for Cause (and not otherwise), either by a resolution passed by all of the other Directors at a meeting of the Directors duly convened and held in accordance with the Articles or by a resolution in writing signed by all of the other Directors.

 

33

Proceedings of Directors

 

33.1

The quorum for the transaction of the business of the Directors may be fixed by the Directors, and unless so fixed shall be a majority of the Directors then in office.

 

33.2

Subject to the provisions of the Articles, the Directors may regulate their proceedings as they think fit. Questions arising at any meeting shall be decided by a majority of votes. In the case of an equality of votes, the chairman shall have a second or casting vote.

 

33.3

A person may participate in a meeting of the Directors or any committee of Directors by conference telephone or other communications equipment by means of which all the persons participating in the meeting can communicate with each other at the same time. Participation by a person in a meeting in this manner is treated as presence in person at that meeting. Unless otherwise determined by the Directors, the meeting shall be deemed to be held at the place where the chairman is located at the start of the meeting.

 

33.4

A resolution in writing (in one or more counterparts) signed by all the Directors or all the members of a committee of the Directors or, in the case of a resolution in writing relating to the removal of any Director or the vacation of office by any Director, all of the Directors other than the Director who is the subject of such resolution shall be as valid and effectual as if it had been passed at a meeting of the Directors, or committee of Directors as the case may be, duly convened and held.

 

33.5

A Director may, or other Officer on the direction of a Director shall, call a meeting of the Directors by at least two days’ notice in writing to every Director which notice shall set forth the general nature of the business to be considered unless notice is waived by all the Directors either at, before or after the meeting is held. To any such notice of a meeting of the Directors all the provisions of the Articles relating to the giving of notices by the Company to the Members shall apply mutatis mutandis.

 

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33.6

The continuing Directors (or a sole continuing Director, as the case may be) may act notwithstanding any vacancy in their body, but if and so long as their number is reduced below the number fixed by or pursuant to the Articles as the necessary quorum of Directors the continuing Directors or Director may act for the purpose of increasing the number of Directors to be equal to such fixed number, or of summoning a general meeting of the Company, but for no other purpose.

 

33.7

The Directors may elect a chairman of their board and determine the period for which he is to hold office; but if no such chairman is elected, or if at any meeting the chairman is not present within five minutes after the time appointed for the meeting to commence, the Directors present may choose one of their number to be chairman of the meeting.

 

33.8

All acts done by any meeting of the Directors or of a committee of the Directors shall, notwithstanding that it is afterwards discovered that there was some defect in the appointment of any Director, and/or that they or any of them were disqualified, and/or had vacated their office and/or were not entitled to vote, be as valid as if every such person had been duly appointed and/or not disqualified to be a Director and/or had not vacated their office and/or had been entitled to vote, as the case may be.

 

33.9

A Director may be represented at any meetings of the board of Directors by a proxy appointed in writing by him. The proxy shall count towards the quorum and the vote of the proxy shall for all purposes be deemed to be that of the appointing Director.

 

34

Presumption of Assent

A Director who is present at a meeting of the board of Directors at which action on any Company matter is taken shall be presumed to have assented to the action taken unless his dissent shall be entered in the minutes of the meeting or unless he shall file his written dissent from such action with the person acting as the chairman or secretary of the meeting before the adjournment thereof or shall forward such dissent by registered post to such person immediately after the adjournment of the meeting. Such right to dissent shall not apply to a Director who voted in favour of such action.

 

35

Directors’ Interests

 

35.1

A Director may hold any other office or place of profit under the Company (other than the office of Auditor) in conjunction with his office of Director for such period and on such terms as to remuneration and otherwise as the Directors may determine.

 

35.2

A Director may act by himself or by, through or on behalf of his firm in a professional capacity for the Company and he or his firm shall be entitled to remuneration for professional services as if he were not a Director.

 

35.3

A Director may be or become a director or other officer of or otherwise interested in any company promoted by the Company or in which the Company may be interested as a shareholder, a contracting party or otherwise, and no such Director shall be accountable to the Company for any remuneration or other benefits received by him as a director or officer of, or from his interest in, such other company.

 

35.4

No person shall be disqualified from the office of Director or prevented by such office from contracting with the Company, either as vendor, purchaser or otherwise, nor shall any such contract or any contract or transaction entered into by or on behalf of the Company in which any Director shall be in any way interested be or be liable to be avoided, nor shall any Director so contracting or being so interested be liable to account to the Company for any profit realised by or arising in connection with any such contract or transaction by reason of such Director holding office or of the fiduciary relationship thereby established. A Director shall be at liberty to vote in respect of any contract or transaction in which he is interested provided that the nature of the interest of any Director in any such contract or transaction shall be disclosed by him at or prior to its consideration and any vote thereon.

 

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35.5

A general notice that a Director is a shareholder, director, officer or employee of any specified firm or company and is to be regarded as interested in any transaction with such firm or company shall be sufficient disclosure for the purposes of voting on a resolution in respect of a contract or transaction in which he has an interest, and after such general notice it shall not be necessary to give special notice relating to any particular transaction.

 

36

Minutes

The Directors shall cause minutes to be made in books kept for the purpose of recording all appointments of Officers made by the Directors, all proceedings at meetings of the Company or the holders of any class of Shares and of the Directors, and of committees of the Directors, including the names of the Directors present at each meeting.

 

37

Delegation of Directors’ Powers

 

37.1

The Directors may delegate any of their powers, authorities and discretions, including the power to sub-delegate, to any committee consisting of one or more Directors (including, without limitation, the Audit Committee, the Compensation Committee and the Nominating and Corporate Governance Committee). Any such delegation may be made subject to any conditions the Directors may impose and either collaterally with or to the exclusion of their own powers and any such delegation may be revoked or altered by the Directors. Subject to any such conditions, the proceedings of a committee of Directors shall be governed by the Articles regulating the proceedings of Directors, so far as they are capable of applying.

 

37.2

The Directors may establish any committees, local boards or agencies or appoint any person to be a manager or agent for managing the affairs of the Company and may appoint any person to be a member of such committees, local boards or agencies. Any such appointment may be made subject to any conditions the Directors may impose, and either collaterally with or to the exclusion of their own powers and any such appointment may be revoked or altered by the Directors. Subject to any such conditions, the proceedings of any such committee, local board or agency shall be governed by the Articles regulating the proceedings of Directors, so far as they are capable of applying.

 

37.3

The Directors may adopt formal written charters for committees. Each of these committees shall be empowered to do all things necessary to exercise the rights of such committee set forth in the Articles and shall have such powers as the Directors may delegate pursuant to the Articles and as required by the rules and regulations of the Designated Stock Exchange, the Securities and Exchange Commission and/or any other competent regulatory authority or otherwise under Applicable Law. Each of the Audit Committee, the Compensation Committee and the Nominating and Corporate Governance Committee, if established, shall consist of such number of Directors as the Directors shall from time to time determine (or such minimum number as may be required from time to time by the rules and regulations of the Designated Stock Exchange, the Securities and Exchange Commission and/or any other competent regulatory authority or otherwise under Applicable Law).

 

37.4

The Directors may by power of attorney or otherwise appoint any person to be the agent of the Company on such conditions as the Directors may determine, provided that the delegation is not to the exclusion of their own powers and may be revoked by the Directors at any time.

 

37.5

The Directors may by power of attorney or otherwise appoint any company, firm, person or body of persons, whether nominated directly or indirectly by the Directors, to be the attorney or authorised signatory of the Company for such purpose and with such powers, authorities and discretions (not exceeding those vested in or exercisable by the Directors under the Articles) and for such period and subject to such conditions as they may think fit, and any such powers of attorney or other appointment may contain such provisions for the protection and convenience of persons dealing with any such attorneys or authorised signatories as the Directors may think fit and may also authorise any such attorney or authorised signatory to delegate all or any of the powers, authorities and discretions vested in him.

 

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37.6

The Directors may appoint such Officers as they consider necessary on such terms, at such remuneration and to perform such duties, and subject to such provisions as to disqualification and removal as the Directors may think fit. Unless otherwise specified in the terms of his appointment an Officer may be removed by resolution of the Directors or Members. An Officer may vacate his office at any time if he gives notice in writing to the Company that he resigns his office.

 

38

No Minimum Shareholding

The Company in general meeting may fix a minimum shareholding required to be held by a Director, but unless and until such a shareholding qualification is fixed a Director is not required to hold Shares.

 

39

Remuneration of Directors

 

39.1

The remuneration to be paid to the Directors, if any, shall be such remuneration as the Directors shall determine, provided that no cash remuneration shall be paid to any Director by the Company prior to the consummation of a Business Combination. The Directors shall also, whether prior to or after the consummation of a Business Combination, be entitled to be paid all travelling, hotel and other expenses properly incurred by them in connection with their attendance at meetings of Directors or committees of Directors, or general meetings of the Company, or separate meetings of the holders of any class of Shares or debentures of the Company, or otherwise in connection with the business of the Company or the discharge of their duties as a Director, or to receive a fixed allowance in respect thereof as may be determined by the Directors, or a combination partly of one such method and partly the other.

 

39.2

The Directors may by resolution approve additional remuneration to any Director for any services which in the opinion of the Directors go beyond his ordinary routine work as a Director. Any fees paid to a Director who is also counsel, attorney or solicitor to the Company, or otherwise serves it in a professional capacity shall be in addition to his remuneration as a Director.

 

40

Seal

 

40.1

The Company may, if the Directors so determine, have a Seal. The Seal shall only be used by the authority of the Directors or of a committee of the Directors authorised by the Directors. Every instrument to which the Seal has been affixed shall be signed by at least one person who shall be either a Director or some Officer or other person appointed by the Directors for the purpose.

 

40.2

The Company may have for use in any place or places outside the Cayman Islands a duplicate Seal or Seals each of which shall be a facsimile of the common Seal of the Company and, if the Directors so determine, with the addition on its face of the name of every place where it is to be used.

 

40.3

A Director or Officer, representative or attorney of the Company may without further authority of the Directors affix the Seal over his signature alone to any document of the Company required to be authenticated by him under seal or to be filed with the Registrar of Companies in the Cayman Islands or elsewhere wheresoever.

 

41

Dividends, Distributions and Reserve

 

41.1

Subject to the Statute and this Article and except as otherwise provided by the rights attached to any Shares, the Directors may resolve to pay Dividends and other distributions on Shares in issue and authorise payment of the Dividends or other distributions out of the funds of the Company lawfully available therefor. A Dividend shall be deemed to be an interim Dividend unless the terms of the resolution pursuant to which the Directors resolve to pay such Dividend specifically state that such Dividend shall be a final Dividend. No Dividend or other distribution shall be paid except out of the realised or unrealised profits of the Company, out of the share premium account or as otherwise permitted by law.

 

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41.2

Except as otherwise provided by the rights attached to any Shares, all Dividends and other distributions shall be paid according to the par value of the Shares that a Member holds. If any Share is issued on terms providing that it shall rank for Dividend as from a particular date, that Share shall rank for Dividend accordingly.

 

41.3

The Directors may deduct from any Dividend or other distribution payable to any Member all sums of money (if any) then payable by him to the Company on account of calls or otherwise.

 

41.4

The Directors may resolve that any Dividend or other distribution be paid wholly or partly by the distribution of specific assets and in particular (but without limitation) by the distribution of shares, debentures, or securities of any other company or in any one or more of such ways and where any difficulty arises in regard to such distribution, the Directors may settle the same as they think expedient and in particular may issue fractional Shares and may fix the value for distribution of such specific assets or any part thereof and may determine that cash payments shall be made to any Members upon the basis of the value so fixed in order to adjust the rights of all Members and may vest any such specific assets in trustees in such manner as may seem expedient to the Directors.

 

41.5

Except as otherwise provided by the rights attached to any Shares, Dividends and other distributions may be paid in any currency. The Directors may determine the basis of conversion for any currency conversions that may be required and how any costs involved are to be met.

 

41.6

The Directors may, before resolving to pay any Dividend or other distribution, set aside such sums as they think proper as a reserve or reserves which shall, at the discretion of the Directors, be applicable for any purpose of the Company and pending such application may, at the discretion of the Directors, be employed in the business of the Company.

 

41.7

Any Dividend, other distribution, interest or other monies payable in cash in respect of Shares may be paid by wire transfer to the holder or by cheque or warrant sent through the post directed to the registered address of the holder or, in the case of joint holders, to the registered address of the holder who is first named on the Register of Members or to such person and to such address as such holder or joint holders may in writing direct. Every such cheque or warrant shall be made payable to the order of the person to whom it is sent. Any one of two or more joint holders may give effectual receipts for any Dividends, other distributions, bonuses, or other monies payable in respect of the Share held by them as joint holders.

 

41.8

No Dividend or other distribution shall bear interest against the Company.

 

41.9

Any Dividend or other distribution which cannot be paid to a Member and/or which remains unclaimed after six months from the date on which such Dividend or other distribution becomes payable may, in the discretion of the Directors, be paid into a separate account in the Company’s name, provided that the Company shall not be constituted as a trustee in respect of that account and the Dividend or other distribution shall remain as a debt due to the Member. Any Dividend or other distribution which remains unclaimed after a period of six years from the date on which such Dividend or other distribution becomes payable shall be forfeited and shall revert to the Company.

 

42

Capitalisation

The Directors may at any time capitalise any sum standing to the credit of any of the Company’s reserve accounts or funds (including the share premium account and capital redemption reserve fund) or any sum standing to the credit of the profit and loss account or otherwise available for distribution; appropriate such sum to Members in the proportions in which such sum would have been divisible amongst such Members had the same been a distribution of profits by way of Dividend or other distribution; and apply such sum on their behalf in paying up in full unissued Shares for allotment and distribution credited as fully paid-up to and amongst them in the proportion aforesaid. In such event the Directors shall do all acts and things required to give effect to such capitalisation, with full power given to the Directors to make such provisions as they think fit in the case of Shares becoming distributable in fractions (including provisions

 

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whereby the benefit of fractional entitlements accrue to the Company rather than to the Members concerned). The Directors may authorise any person to enter on behalf of all of the Members interested into an agreement with the Company providing for such capitalisation and matters incidental or relating thereto and any agreement made under such authority shall be effective and binding on all such Members and the Company.

 

43

Books of Account

 

43.1

The Directors shall cause proper books of account (including, where applicable, material underlying documentation including contracts and invoices) to be kept with respect to all sums of money received and expended by the Company and the matters in respect of which the receipt or expenditure takes place, all sales and purchases of goods by the Company and the assets and liabilities of the Company. Such books of account must be retained for a minimum period of five years from the date on which they are prepared. Proper books shall not be deemed to be kept if there are not kept such books of account as are necessary to give a true and fair view of the state of the Company’s affairs and to explain its transactions.

 

43.2

The Directors shall determine whether and to what extent and at what times and places and under what conditions or regulations the accounts and books of the Company or any of them shall be open to the inspection of Members not being Directors and no Member (not being a Director) shall have any right of inspecting any account or book or document of the Company except as conferred by Statute or authorised by the Directors or by the Company in general meeting.

 

43.3

The Directors may cause to be prepared and to be laid before the Company in general meeting profit and loss accounts, balance sheets, group accounts (if any) and such other reports and accounts as may be required by law.

 

44

Audit

 

44.1

The Directors may appoint an Auditor of the Company who shall hold office on such terms as the Directors determine.

 

44.2

Without prejudice to the freedom of the Directors to establish any other committee, if the Shares (or depositary receipts therefor) are listed or quoted on the Designated Stock Exchange, and if required by the rules and regulations of the Designated Stock Exchange, the Securities and Exchange Commission and/or any other competent regulatory authority or otherwise under Applicable Law, the Directors shall establish and maintain an Audit Committee as a committee of the Directors and shall adopt a formal written Audit Committee charter and review and assess the adequacy of the formal written charter on an annual basis. The composition and responsibilities of the Audit Committee shall comply with the rules and regulations of the Designated Stock Exchange, the Securities and Exchange Commission and/or any other competent regulatory authority or otherwise under Applicable Law.

 

44.3

If the Shares (or depositary receipts therefor) are listed or quoted on the Designated Stock Exchange, the Company shall conduct an appropriate review of all related party transactions on an ongoing basis and shall utilise the Audit Committee for the review and approval of potential conflicts of interest.

 

44.4

The remuneration of the Auditor shall be fixed by the Audit Committee (if one exists).

 

44.5

If the office of Auditor becomes vacant by resignation or death of the Auditor, or by his becoming incapable of acting by reason of illness or other disability at a time when his services are required, the Directors shall fill the vacancy and determine the remuneration of such Auditor.

 

44.6

Every Auditor of the Company shall have a right of access at all times to the books and accounts and vouchers of the Company and shall be entitled to require from the Directors and Officers such information and explanation as may be necessary for the performance of the duties of the Auditor.

 

44.7

Auditors shall, if so required by the Directors, make a report on the accounts of the Company during their tenure of office at the next annual general meeting following their appointment in the case of a company

 

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  which is registered with the Registrar of Companies as an ordinary company, and at the next extraordinary general meeting following their appointment in the case of a company which is registered with the Registrar of Companies as an exempted company, and at any other time during their term of office, upon request of the Directors or any general meeting of the Members.

 

45

Notices

 

45.1

Notices shall be in writing and may be given by the Company to any Member either personally or by sending it by courier, post, cable, telex, fax or e-mail to him or to his address as shown in the Register of Members (or where the notice is given by e-mail by sending it to the e-mail address provided by such Member). Notice may also be served by Electronic Communication in accordance with the rules and regulations of the Designated Stock Exchange, the Securities and Exchange Commission and/or any other competent regulatory authority or by placing it on the Company’s Website.

 

45.2

Where a notice is sent by:

 

  (a)

courier; service of the notice shall be deemed to be effected by delivery of the notice to a courier company, and shall be deemed to have been received on the third day (not including Saturdays or Sundays or public holidays) following the day on which the notice was delivered to the courier;

 

  (b)

post; service of the notice shall be deemed to be effected by properly addressing, pre paying and posting a letter containing the notice, and shall be deemed to have been received on the fifth day (not including Saturdays or Sundays or public holidays in the Cayman Islands) following the day on which the notice was posted;

 

  (c)

cable, telex or fax; service of the notice shall be deemed to be effected by properly addressing and sending such notice and shall be deemed to have been received on the same day that it was transmitted;

 

  (d)

e-mail or other Electronic Communication; service of the notice shall be deemed to be effected by transmitting the e-mail to the e-mail address provided by the intended recipient and shall be deemed to have been received on the same day that it was sent, and it shall not be necessary for the receipt of the e-mail to be acknowledged by the recipient; and

 

  (e)

placing it on the Company’s Website; service of the notice shall be deemed to have been effected one hour after the notice or document was placed on the Company’s Website.

 

45.3

A notice may be given by the Company to the person or persons which the Company has been advised are entitled to a Share or Shares in consequence of the death or bankruptcy of a Member in the same manner as other notices which are required to be given under the Articles and shall be addressed to them by name, or by the title of representatives of the deceased, or trustee of the bankrupt, or by any like description at the address supplied for that purpose by the persons claiming to be so entitled, or at the option of the Company by giving the notice in any manner in which the same might have been given if the death or bankruptcy had not occurred.

 

45.4

Notice of every general meeting shall be given in any manner authorised by the Articles to every holder of Shares carrying an entitlement to receive such notice on the record date for such meeting except that in the case of joint holders the notice shall be sufficient if given to the joint holder first named in the Register of Members and every person upon whom the ownership of a Share devolves by reason of his being a legal personal representative or a trustee in bankruptcy of a Member where the Member but for his death or bankruptcy would be entitled to receive notice of the meeting, and no other person shall be entitled to receive notices of general meetings.

 

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46

Winding Up

 

46.1

If the Company shall be wound up, the liquidator shall apply the assets of the Company in satisfaction of creditors’ claims in such manner and order as such liquidator thinks fit. Subject to the rights attaching to any Shares, in a winding up:

 

  (a)

if the assets available for distribution amongst the Members shall be insufficient to repay the whole of the Company’s issued share capital, such assets shall be distributed so that, as nearly as may be, the losses shall be borne by the Members in proportion to the par value of the Shares held by them; or

 

  (b)

if the assets available for distribution amongst the Members shall be more than sufficient to repay the whole of the Company’s issued share capital at the commencement of the winding up, the surplus shall be distributed amongst the Members in proportion to the par value of the Shares held by them at the commencement of the winding up subject to a deduction from those Shares in respect of which there are monies due, of all monies payable to the Company for unpaid calls or otherwise.

 

46.2

If the Company shall be wound up the liquidator may, subject to the rights attaching to any Shares and with the approval of a Special Resolution of the Company and any other approval required by the Statute, divide amongst the Members in kind the whole or any part of the assets of the Company (whether such assets shall consist of property of the same kind or not) and may for that purpose value any assets and determine how the division shall be carried out as between the Members or different classes of Members. The liquidator may, with the like approval, vest the whole or any part of such assets in trustees upon such trusts for the benefit of the Members as the liquidator, with the like approval, shall think fit, but so that no Member shall be compelled to accept any asset upon which there is a liability.

 

47

Indemnity and Insurance

 

47.1

Every Director and Officer (which for the avoidance of doubt, shall not include auditors of the Company), together with every former Director and former Officer (each an “Indemnified Person”) shall be indemnified out of the assets of the Company against any liability, action, proceeding, claim, demand, costs, damages or expenses, including legal expenses, whatsoever which they or any of them may incur as a result of any act or failure to act in carrying out their functions other than such liability (if any) that they may incur by reason of their own actual fraud, wilful neglect or wilful default. No Indemnified Person shall be liable to the Company for any loss or damage incurred by the Company as a result (whether direct or indirect) of the carrying out of their functions unless that liability arises through the actual fraud, wilful neglect or wilful default of such Indemnified Person. No person shall be found to have committed actual fraud, wilful neglect or wilful default under this Article unless or until a court of competent jurisdiction shall have made a finding to that effect.

 

47.2

The Company shall advance to each Indemnified Person reasonable attorneys’ fees and other costs and expenses incurred in connection with the defence of any action, suit, proceeding or investigation involving such Indemnified Person for which indemnity will or could be sought. In connection with any advance of any expenses hereunder, the Indemnified Person shall execute an undertaking to repay the advanced amount to the Company if it shall be determined by final judgment or other final adjudication that such Indemnified Person was not entitled to indemnification pursuant to this Article. If it shall be determined by a final judgment or other final adjudication that such Indemnified Person was not entitled to indemnification with respect to such judgment, costs or expenses, then such party shall not be indemnified with respect to such judgment, costs or expenses and any advancement shall be returned to the Company (without interest) by the Indemnified Person.

 

47.3

The Directors, on behalf of the Company, may purchase and maintain insurance for the benefit of any Director or Officer against any liability which, by virtue of any rule of law, would otherwise attach to such person in respect of any negligence, default, breach of duty or breach of trust of which such person may be guilty in relation to the Company.

 

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48

Financial Year

Unless the Directors otherwise prescribe, the financial year of the Company shall end on 31st December in each year and, following the year of incorporation, shall begin on 1st January in each year.

 

49

Transfer by Way of Continuation

 

49.1

If the Company is exempted as defined in the Statute, it shall, subject to the provisions of the Statute and with the approval of a Special Resolution, have the power to register by way of continuation as a body corporate under the laws of any jurisdiction outside the Cayman Islands and to be deregistered in the Cayman Islands.

 

49.2

Prior to the closing of a Business Combination:

 

  (a)

only the Class B Shares shall carry the right to vote on any resolution of the shareholders to approve any transfer by way of continuation pursuant to this Article; and

 

  (b)

this Article 49.2 may only be amended by a Special Resolution passed by at least 90 per cent of such Members as, being entitled to do so, vote in person or, where proxies are allowed, by proxy at a general meeting of which notice specifying the intention to propose the resolution as a special resolution has been given, or by way of unanimous written resolution.

50 Mergers and Consolidations

The Company shall have the power to merge or consolidate with one or more other constituent companies (as defined in the Statute) upon such terms as the Directors may determine and (to the extent required by the Statute) with the approval of a Special Resolution.

51 Business Combination

 

51.1

Notwithstanding any other provision of the Articles, this Article shall apply during the period commencing upon the adoption of the Articles and terminating upon the first to occur of the consummation of a Business Combination and the full distribution of the Trust Account pursuant to this Article. In the event of a conflict between this Article and any other Articles, the provisions of this Article shall prevail.

 

51.2

Prior to the consummation of a Business Combination, the Company shall either:

 

  (a)

submit such Business Combination to its Members for approval; or

 

  (b)

provide Members with the opportunity to have their Shares repurchased by means of a tender offer for a per-Share repurchase price payable in cash, equal to the aggregate amount then on deposit in the Trust Account, calculated as of two business days prior to the consummation of such Business Combination, including interest earned on the Trust Account ((net of taxes paid or payable, if any), divided by the number of then issued Public Shares, provided that the Company shall not repurchase Public Shares in an amount that would cause the Company’s net tangible assets to be less than US$5,000,001.

 

51.3

If the Company initiates any tender offer in accordance with Rule 13e-4 and Regulation 14E of the Exchange Act in connection with a Business Combination, it shall file tender offer documents with the Securities and Exchange Commission prior to completing such Business Combination which contain substantially the same financial and other information about such Business Combination and the redemption rights as is required under Regulation 14A of the Exchange Act. If, alternatively, the Company holds general meeting to approve a Business Combination, the Company will conduct any redemptions in conjunction with a proxy solicitation pursuant to Regulation 14A of the Exchange Act, and not pursuant to the tender offer rules, and file proxy materials with the Securities and Exchange Commission.

 

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51.4

At a general meeting called for the purposes of approving a Business Combination pursuant to this Article, in the event that such Business Combination is approved by Ordinary Resolution, the Company shall be authorised to consummate such Business Combination.

 

51.5

Any Member holding Public Shares who is not the Sponsor, a Founder, Officer or Director may, in connection with any vote on a Business Combination, elect to have their Public Shares redeemed for cash (the “IPO Redemption”), provided that no such Member acting together with any Affiliate of his or any other person with whom he is acting in concert or as a partnership, limited partnership, syndicate, or other group for the purposes of acquiring, holding, or disposing of Shares may exercise this redemption right with respect to more than 15 per cent of the Public Shares in the aggregate without the prior consent of the Company. If so demanded, the Company shall pay any such redeeming Member, regardless of whether he is voting for or against such proposed Business Combination, a per-Share redemption price payable in cash, equal to the aggregate amount then on deposit in the Trust Account calculated as of two business days prior to the consummation of the Business Combination, including interest earned on the Trust Account and not previously released to the Company to pay its taxes, divided by the number of then issued Public Shares (such redemption price being referred to herein as the “Redemption Price”). The Company shall not redeem Public Shares in an amount that would cause the Company’s net tangible assets to be less than US$5,000,001 (the “Redemption Limitation”).

 

51.6

A Member may not withdraw a Redemption Notice once submitted to the Company unless the Directors determine (in their sole discretion) to permit the withdrawal of such redemption request (which they may do in whole or in part).

 

51.7

In the event that the Company does not consummate a Business Combination by 24 months from the consummation of the IPO, or 30 months from the consummation of the IPO if the Company has executed a definitive agreement for its initial Business Combination within 24 months from the consummation of the IPO, or such later time as the Members may approve in accordance with the Articles, the Company shall:

 

  (a)

cease all operations except for the purpose of winding up;

 

  (b)

as promptly as reasonably possible but not more than ten business days thereafter, redeem the Public Shares, at a per-Share price, payable in cash, equal to 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 the Company (less taxes payable and up to US$100,000 of interest to pay dissolution expenses), divided by the number of then Public Shares in issue, which redemption will completely extinguish public Members’ rights as Members (including the right to receive further liquidation distributions, if any); and

 

  (c)

as promptly as reasonably possible following such redemption, subject to the approval of the Company’s remaining Members and the Directors, liquidate and dissolve,

subject in each case to its obligations under Cayman Islands law to provide for claims of creditors and other requirements of Applicable Law.

 

51.8

In the event that any amendment is made to this Article:

(a) to modify the substance or timing of the Company’s obligation to allow redemption in connection with our initial business combination or to redeem 100 per cent of the Public Shares if the Company has not consummated a Business Combination within 24 months from the consummation of the IPO, or 30 months from the consummation of the IPO if the Company has executed a definitive agreement for its initial Business Combination within 24 months from the consummation of the IPO, or such later time as the Members may approve in accordance with the Articles; or

(b) with respect to any other material provisions relating to Member’s rights or pre-initial Business Combination activity,

each holder of Public Shares who is not the Sponsor, a Founder, Officer or Director shall be provided with the opportunity to redeem their Public Shares upon the approval of any such amendment at a per-Share

 

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price, payable in cash, equal to 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 the Company to pay its taxes, divided by the number of then outstanding Public Shares. The Company’s ability to provide such redemption in this Article is subject to the Redemption Limitation.

 

51.9

A holder of Public Shares shall be entitled to receive distributions from the Trust Account only in the event of an IPO Redemption, a repurchase of Shares by means of a tender offer pursuant to this Article, or a distribution of the Trust Account pursuant to this Article. In no other circumstance shall a holder of Public Shares have any right or interest of any kind in the Trust Account.

 

51.10

After the issue of Public Shares, and prior to the consummation of a Business Combination, the Directors shall not issue additional Shares or any other securities that would entitle the holders thereof to (i) receive funds from the Trust Account or (ii) vote as a class with Public Shares on a Business Combination.

 

51.11

A Director may vote in respect of a Business Combination in which such Director has a conflict of interest with respect to the evaluation of such Business Combination. Such Director must disclose such interest or conflict to the other Directors.

 

51.12

The Company shall not enter into an initial Business Combination solely with another blank cheque company or a similar company with nominal operations.

 

51.13

The Company may enter into a Business Combination with a target business that is an Affiliate of the Sponsor, an Officer or a Director. In the event the Company seeks to complete a Business Combination with a target business that is an Affiliate of the Sponsor, an Officer or a Director, the Company, or a committee of Independent Directors, shall obtain an opinion from an independent investment banking firm which is a member of the United States Financial Industry Regulatory Authority or another independent entity that commonly renders valuation opinions stating that the consideration to be paid by the Company in such a Business Combination is fair to the Company from a financial point of view.

 

52

Certain Tax Filings

Each Tax Filing Authorised Person and any such other person, acting alone, as any Director shall designate from time to time, are authorised to file tax forms SS-4, W-8 BEN, W-8 IMY, W-9, 8832 and 2553 and such other similar tax forms as are customary to file with any US state or federal governmental authorities or foreign governmental authorities in connection with the formation, activities and/or elections of the Company and such other tax forms as may be approved from time to time by any Director or Officer. The Company further ratifies and approves any such filing made by any Tax Filing Authorised Person or such other person prior to the date of the Articles.

 

53

Business Opportunities

 

53.1

To the fullest extent permitted by Applicable Law, no individual serving as a Director or an Officer (“Management”) shall have any duty, except and to the extent expressly assumed by contract, to refrain from engaging directly or indirectly in the same or similar business activities or lines of business as the Company. To the fullest extent permitted by Applicable Law, the Company renounces any interest or expectancy of the Company in, or in being offered an opportunity to participate in, any potential transaction or matter which may be a corporate opportunity for Management, on the one hand, and the Company, on the other. Except to the extent expressly assumed by contract, to the fullest extent permitted by Applicable Law, Management shall have no duty to communicate or offer any such corporate opportunity to the Company and shall not be liable to the Company or its Members for breach of any fiduciary duty as a Member, Director and/or Officer solely by reason of the fact that such party pursues or acquires such corporate opportunity for itself, himself or herself, directs such corporate opportunity to another person, or does not communicate information regarding such corporate opportunity to the Company.

 

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53.2

To the extent a court might hold that the conduct of any activity related to a corporate opportunity that is renounced in this Article to be a breach of duty to the Company or its Members, the Company hereby waives, to the fullest extent permitted by Applicable Law, any and all claims and causes of action that the Company may have for such activities. To the fullest extent permitted by Applicable Law, the provisions of this Article apply equally to activities conducted in the future and that have been conducted in the past.

 

53.3

Notwithstanding anything to the contrary in this Article, such renouncement shall not apply to any business opportunity that is expressly offered to such person solely in his or her capacity as a Director or Officer of the Company and it is an opportunity the Company is able to complete on a reasonable basis.

 

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PART II

INFORMATION NOT REQUIRED IN PROSPECTUS

 

Item 20.

Indemnification of Directors and Officers.

Cayman Islands law does not limit the extent to which a company’s memorandum and articles of association may provide for indemnification of officers and directors, except to the extent any such provision may be held by the Cayman Islands courts to be contrary to public policy, such as to provide indemnification against willful default, willful neglect, civil fraud or the consequences of committing a crime. SRNG’s amended and restated memorandum and articles of association provides for indemnification of our officers and directors to the maximum extent permitted by law, including for any liability incurred in their capacities as such, except through their own actual fraud, willful default or willful neglect. SRNG has purchased a policy of directors’ and officers’ liability insurance that insures its officers and directors against the cost of defense, settlement or payment of a judgment in some circumstances and insures SRNG against its obligations to indemnify its officers and directors.

SRNG’s officers and directors have agreed to waive any right, title, interest or claim of any kind in or to any monies in the trust account, and have agreed to waive any right, title, interest or claim of any kind they may have in the future as a result of, or arising out of, any services provided to SRNG and will not seek recourse against the trust account for any reason whatsoever. Accordingly, any indemnification provided will only be able to be satisfied by SRNG if (i) SRNG have sufficient funds outside of the trust account or (ii) SRNG consummates an initial business combination.

Insofar as indemnification for liabilities arising under the Securities Act may be permitted to directors, officers or persons controlling SRNG pursuant to the foregoing provisions, SRNG have been informed that in the opinion of the SEC such indemnification is against public policy as expressed in the Securities Act and is therefore unenforceable.

 

Item 21.

Exhibits and Financial Statement Schedules.

The following exhibits are filed as part of this registration statement:

 

Exhibit

  

Description

  2.1†    Merger Agreement, dated as of May 11, 2021, by and among Soaring Eagle Acquisition Corp., SEAC Merger Sub Inc. and Ginkgo Bioworks, Inc. (attached to the proxy statement/prospectus which forms part of this registration statement as Annex A).
  2.1**    Plan of Domestication.
  3.1    Memorandum and Articles of Association of Soaring Eagle Acquisition Corp. (incorporated by reference to Exhibit 3.1 of SRNG’s Form S-1/A (File No. 333-251661), filed with the SEC on February 22, 2021).
  3.2    Amended and Restated Memorandum and Articles of Association of Soaring Eagle Acquisition Corp. (incorporated by reference to Exhibit  3.2 of SRNG’s Form S-1/A (File No. 333-251661), filed with the SEC on February 22, 2021).
  3.3    Second Amended and Restated Memorandum and Articles of Association of Soaring Eagle Acquisition Corp. (incorporated by reference to Exhibit 3.1 of SRNG’s Current Report on Form 8-K (File No. 001-40097), filed with the SEC on February 26, 2021).
  3.4    Form of New Ginkgo Charter (attached to the proxy statement/prospectus which forms part of this registration statement as Annex B).
  3.5    Form of New Ginkgo Bylaws (attached to the proxy statement/prospectus which forms part of this registration statement as Annex C).

 

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Exhibit

  

Description

  3.6**    Form of Certificate of Domestication of the Registrant, to be filed with the Secretary of State of Delaware.
  4.1    Specimen Unit Certificate (incorporated by reference to Exhibit 4.1 of SRNG’s Form S-1/A (File No.  333-251661), filed with the SEC on February 22, 2021).
  4.2    Specimen Ordinary Share Certificate (incorporated by reference to Exhibit 4.2 of SRNG’s Form  S-1/A (File No. 333-251661), filed with the SEC on February 22, 2021).
  4.3    Specimen Warrant Certificate (incorporated by reference to Exhibit 4.3 of SRNG’s Form  S-1/A (File No. 333-251661), filed with the SEC on February 22, 2021).
  4.4    Warrant Agreement, dated as of February 23, 2021, by and among Soaring Eagle Acquisition Corp. and Continental Stock Transfer & Trust Company, as warrant agent (incorporated by reference to Exhibit 4.1 of SRNG’s Current Report on Form 8-K (File No. 001-40097), filed with the SEC on February 26, 2021).
  4.5**    Specimen Class A Common Stock Certificate.
  5.1    Opinion of White & Case LLP as to the validity of the securities being registered.
  8.1    Opinion of White & Case LLP regarding certain federal income tax matters.
10.1+    Form of Ginkgo Bioworks Holdings, Inc. 2021 Incentive Plan (attached to the proxy statement/prospectus which forms part of this registration statement as Annex E).
10.2+    Form of Ginkgo Bioworks Holdings, Inc. 2021 Employee Stock Purchase Plan (attached to the proxy statement/prospectus which forms part of this registration statement as Annex F).
10.3    Form of Subscription Agreement (attached to the proxy statement/prospectus which forms part of this registration statement as Annex D).
10.4    Registration Rights Agreement, dated as of February 23, 2021, by and among Soaring Eagle Acquisition Corp., Eagle Equity Partners  III, LLC and the Holders signatory thereto (incorporated by reference to Exhibit 10.3 of SRNG’s Current Report on Form 8-K (File No. 001-40097), filed with the SEC on February 26, 2021).
10.5    Company Stockholder Support Agreement, dated as of May 11, 2021, by and among Soaring Eagle Acquisition Corp., SEAC Merger Sub Inc. and certain Supporting Stockholders of Ginkgo Bioworks, Inc. (incorporated by reference to Exhibit 10.3 of SRNG’s Current Report on Form 8-K (File No. 001-40097), filed with the SEC on May 11, 2021).
10.6    Sponsor Support Agreement, dated as of May 11, 2021, by and among Eagle Equity Partners III, LLC, Ginkgo Bioworks, Inc., Soaring Eagle Acquisition Corp. and certain of its shareholders (incorporated by reference to Exhibit 10.4 of SRNG’s Current Report on Form 8-K (File No. 001-40097), filed with the SEC on May 11, 2021).
10.7    Form of Amended and Restated Registration Rights Agreement (incorporated by reference to Exhibit  10.2 of SRNG’s Current Report on Form 8-K (File No. 001-40097), filed with the SEC on May 11, 2021).
10.8    Ginkgo Bioworks, Inc. 2008 Stock Incentive Plan, as amended as of June 18, 2014.
10.9    Ginkgo Bioworks, Inc. 2014 Stock Incentive Plan.
10.10    Amendment to the Ginkgo Bioworks, Inc. 2014 Stock Incentive Plan, effective May 1, 2019.
10.11    Amendment to the Ginkgo Bioworks, Inc. 2014 Stock Incentive Plan, effective September 9, 2019.
10.12    Amendment to the Ginkgo Bioworks, Inc. 2014 Stock Incentive Plan, effective November 14, 2019.

 

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Exhibit

  

Description

10.13    Amendment to the Ginkgo Bioworks, Inc. 2014 Stock Incentive Plan, effective April 8, 2020.
10.14    Amendment to the Ginkgo Bioworks, Inc. 2014 Stock Incentive Plan, effective March 15, 2021.
10.15    Form of Incentive Stock Option Agreement, granted under the Ginkgo Bioworks, Inc. 2008 Stock Incentive Plan.
10.16    Form of Restricted Stock Unit Agreement, granted under the Ginkgo Bioworks, Inc. 2014 Stock Incentive Plan.
10.17    Form of Restricted Stock Agreement, granted under the Ginkgo Bioworks, Inc. 2014 Stock Incentive Plan.
10.18†‡    Lease Agreement, dated December 22, 2011, between Zoom Group LLC and Ginkgo Bioworks, Inc.
10.19†    First Amendment to Lease Agreement, dated April 1, 2012.
10.20†    Second Amendment to Lease, dated August 1, 2014.
10.21    Third Amendment to Lease, dated August 15, 2014.
10.22†    Fourth Amendment to Lease, dated May 1, 2016.
10.23†    Fifth Amendment to Lease, dated May 31, 2016.
10.24    Sixth Amendment to Lease, dated August 5, 2016.
10.25†    Seventh Amendment to Lease, dated July 31, 2017.
10.26†    Eighth Amendment to Lease, dated March 23, 2018.
10.27†    Ninth Amendment to Lease, dated September 6, 2018.
10.28†    Tenth Amendment to Lease, dated July 29, 2020.
10.29†    Eleventh Amendment to Lease, dated August 14, 2020.
10.30†    Twelfth Amendment to Lease, dated January 13, 2021.
10.31†‡    Lease Agreement, dated March 18, 2016, by and between Jamestown 21-23-25 Drydock, L.P. and Ginkgo Bioworks, Inc.
10.32†    First Amendment to Lease Agreement, dated August 13, 2018.
10.33†‡    Sublease, dated December 10, 2019, by and between Stanley Convergent Security Solutions, Inc., and Ginkgo Bioworks, Inc.
10.34†    Storage Space License Agreement, dated July 1, 2020, by and between Jamestown 21-23-25 Drydock, L.P. and Ginkgo Bioworks, Inc.
10.35†    License Agreement, dated September 11, 2020, by and between Jamestown 21-23-25 Drydock, L.P. and Ginkgo Bioworks, Inc.
10.36‡   

Supply Agreement by and between Ginkgo Bioworks, Inc. and Twist Bioscience Corporation, dated March  2, 2018.

10.37‡    Collaboration Agreement, dated as of September 13, 2019, by and between Ginkgo Bioworks, Inc. and Berkeley Lights, Inc.
10.38    Offer Letter, dated October 7, 2020, between Ginkgo Bioworks, Inc. and Mark Dmytruk.
23.1    Consent of WithumSmith+Brown, PC.
23.2    Consent of Independent Registered Public Accounting Firm.
23.3    Consent of White & Case LLP (included in Exhibits 5.1 and 8.1 hereto).
24.1*    Power of Attorney (included on the signature page to the proxy statement/prospectus which forms part of this registration statement).

 

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Exhibit

  

Description

99.1**    Form of Preliminary Proxy Card.
99.2*    Consent of Jason Kelly to be named as a director nominee.
99.3*    Consent of Reshma Shetty to be named as a director nominee.
99.4    Consent of Marijn Dekkers to be named as a director nominee.
99.5    Consent of Christian Henry to be named as a director nominee.
99.6    Consent of Shyam Sankar to be named as a director nominee.
99.7    Consent of Harry E. Sloan to be named as a director nominee.
99.8    Consent of Arie Belldegrun to be named as a director nominee.

 

The annexes, schedules, and certain exhibits to this Exhibit have been omitted pursuant to Item 601(b)(2) of Regulation S-K. The Registrant hereby agrees to furnish supplementally a copy of any omitted annex, schedule or exhibit to the SEC upon request.

Certain confidential information contained in this Exhibit has been omitted because it is (i) not material and (ii) of the type that the registrant treats as private or confidential.

+

Indicates a management contract of compensatory plan.

*

Previously filed.

**

To be filed by amendment.

 

Item 22.

Undertakings.

The undersigned registrant hereby undertakes:

(1) To file, during any period in which offers or sales are being made, a post-effective amendment to this registration statement:

(i) To include any prospectus required by Section 10(a)(3) of the Securities Act of 1933;

(ii) To reflect in the proxy statement/prospectus any facts or events arising after the effective date of the registration statement (or the most recent post-effective amendment thereof) which, individually or in the aggregate, represent a fundamental change in the information set forth in the registration statement. Notwithstanding the foregoing, any increase or decrease in volume of securities offered (if the total dollar value of securities offered would not exceed that which was registered) and any deviation from the low or high end of the estimated maximum offering range may be reflected in the form of proxy statement/prospectus filed with the Commission pursuant to Rule 424(b) if, in the aggregate, the changes in volume and price represent no more than 20 percent change in the maximum aggregate offering price set forth in the “Calculation of Registration Fee” table in the effective registration statement;

(iii) To include any material information with respect to the plan of distribution not previously disclosed in the registration statement or any material change to such information in the registration statement.

(2) That, for the purpose of determining any liability under the Securities Act of 1933, each such post-effective amendment shall be deemed to be a new registration statement relating to the securities offered therein, and the offering of such securities at that time shall be deemed to be the initial bona fide offering thereof.

(3) To remove from registration by means of a post-effective amendment any of the securities being registered which remain unsold at the termination of the offering.

(4) That, for the purpose of determining liability under the Securities Act of 1933 to any purchaser, each prospectus filed pursuant to Rule 424(b) as part of a registration statement relating to an offering, other than registration statements relying on Rule 430B or other than prospectuses filed in reliance on Rule 430A, shall be deemed to be part of and included in the registration statement as of the date it is first used after effectiveness. Provided, however, that no statement made in a registration statement or prospectus that is part of the registration statement or made in a document incorporated or deemed incorporated by reference into the registration statement

 

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or prospectus that is part of the registration statement will, as to a purchaser with a time of contract of sale prior to such first use, supersede or modify any statement that was made in the registration statement or prospectus that was part of the registration statement or made in any such document immediately prior to such date of first use.

(5) That, for the purpose of determining liability of the registrant under the Securities Act of 1933 to any purchaser in the initial distribution of the securities, the undersigned registrant undertakes that in a primary offering of securities of the undersigned registrant pursuant to this registration statement, regardless of the underwriting method used to sell the securities to the purchaser, if the securities are offered or sold to such purchaser by means of any of the following communications, the undersigned registrant will be a seller to the purchaser and will be considered to offer or sell such securities to such purchaser:

(i) Any preliminary prospectus or prospectus of the undersigned registrant relating to the offering required to be filed pursuant to Rule 424;

(ii) Any free writing prospectus relating to the offering prepared by or on behalf of the undersigned registrant or used or referred to by the undersigned registrant;

(iii) The portion of any other free writing prospectus relating to the offering containing material information about the undersigned registrant or its securities provided by or on behalf of the undersigned registrant; and

(iv) Any other communication that is an offer in the offering made by the undersigned registrant to the purchaser.

(6) That, for purposes of determining any liability under the Securities Act of 1933, each filing of the registrant’s annual report pursuant to Section 13(a) or 15(d) of the Securities Exchange Act of 1934 (and, where applicable, each filing of an employee benefit plan’s annual report pursuant to Section 15(d) of the Securities Exchange Act of 1934) that is incorporated by reference in this registration statement shall be deemed to be a new registration statement relating to the securities offered therein, and the offering of such securities at that time shall be deemed to be the initial bona fide offering thereof.

(7) That prior to any public reoffering of the securities registered hereunder through use of a prospectus which is a part of this registration statement, by any person or party who is deemed to be an underwriter within the meaning of Rule 145(c), the issuer undertakes that such reoffering prospectus will contain the information called for by the applicable registration form with respect to reofferings by persons who may be deemed underwriters, in addition to the information called for by the other items of the applicable form.

(8) That every prospectus: (i) that is filed pursuant to the immediately preceding paragraph, or (ii) that purports to meet the requirements of Section 10(a)(3) of the Act and is used in connection with an offering of securities subject to Rule 415, will be filed as a part of an amendment to the registration statement and will not be used until such amendment is effective, and that, for purposes of determining any liability under the Securities Act of 1933, each such post-effective amendment shall be deemed to be a new registration statement relating to the securities offered therein, and the offering of such securities at that time shall be deemed to be the initial bona fide offering thereof.

Insofar as indemnification for liabilities arising under the Securities Act of 1933 may be permitted to directors, officers and controlling persons of the registrant pursuant to the foregoing provisions, or otherwise, the registrant has been advised that in the opinion of the SEC such indemnification is against public policy as expressed in the Securities Act and is, therefore, unenforceable. In the event that a claim for indemnification against such liabilities (other than the payment by the registrant of expenses incurred or paid by a director, officer or controlling person of the registrant in the successful defense of any action, suit or proceeding) is asserted by such director, officer or controlling person in connection with the securities being registered, the registrant will, unless in the opinion of its counsel the matter has been settled by controlling precedent, submit to a court of appropriate jurisdiction the question whether such indemnification by it is against public policy as expressed in the Act and will be governed by the final adjudication of such issue.

 

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The undersigned registrant hereby undertakes to respond to requests for information that is incorporated by reference into the proxy statement/prospectus pursuant to Item 4, 10(b), 11, or 13 of this form, within one business day of receipt of such request, and to send the incorporated documents by first class mail or other equally prompt means. This includes information contained in documents filed subsequent to the effective date of the registration statement through the date of responding to the request.

The undersigned registrant hereby undertakes to supply by means of a post-effective amendment all information concerning a transaction, and the company being acquired involved therein, that was not the subject of and included in the registration statement when it became effective.

 

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SIGNATURES

Pursuant to the requirements of the Securities Act of 1933, the registrant has duly caused this registration statement to be signed on its behalf by the undersigned, thereunto duly authorized, in the City of New York, State of New York, on the 28th day of June, 2021.

 

SOARING EAGLE ACQUISITION CORP.
By:  

/s/ Harry E. Sloan

Name:   Harry E. Sloan
Title:   Chief Executive Officer and Chairman

POWER OF ATTORNEY

Pursuant to the requirements of the Securities Act of 1933, as amended, this Registration Statement has been signed below by the following persons in the capacities and on the dates indicated.

 

Name

  

Title

 

Date

/s/ Harry E. Sloan

Harry E. Sloan

   Chief Executive Officer and Chairman
(Principal Executive Officer)
  June 28, 2021

/s/ Eli Baker

Eli Baker

   President, Chief Financial Officer and Secretary (Principal Financial and Accounting Officer)   June 28, 2021

*

Scott M. Delman

   Director   June 28, 2021

*

Joshua Kazam

   Director   June 28, 2021

*

Isaac Lee

   Director   June 28, 2021

*

Timothy Leiweke

   Director   June 28, 2021

*

Dennis A. Miller

   Director   June 28, 2021

*

Laurence E. Paul

   Director   June 28, 2021

 

* By:   /s/ Harry E. Sloan
  Harry E. Sloan, Attorney-in-Fact

 

II-7

Exhibit 5.1

 

LOGO

 

June 28, 2021                           

Soaring Eagle Acquisition Corp.

955 Fifth Avenue

New York, NY 10075

 

Re: Registration Statement on Form S-4 (File No. 333-256121)

      LOGO

Ladies and Gentlemen:

We have acted as New York counsel to Soaring Eagle Acquisition Corp., a Cayman Islands exempted company (“SRNG” or the “Company”), in connection with the preparation and filing of SRNG’s Registration Statement on Form S-4 (the “Registration Statement,” which term does not include any other document or agreement whether or not specifically referred to or incorporated by reference therein or attached as an exhibit or schedule thereto) pursuant to the terms of the agreement and plan of merger, dated May 11, 2021, by and among SRNG, SEAC Merger Sub Inc., a Delaware corporation and a direct, wholly owned subsidiary of SRNG, and Ginkgo Bioworks, Inc. (“Ginkgo”), a Delaware corporation (the “Merger Agreement”), including the Registration Statement forming a part thereof, and the amendment to the Merger Agreement, dated May 14, 2021 (the “Merger Agreement Amendment), relating to, among other things: (1) the domestication of SRNG as a Delaware corporation, in connection with which SRNG will change its name to “Ginkgo Bioworks Holdings, Inc.” (the “Domestication”); (2) the purchase by SRNG of all of the outstanding equity interests of Ginkgo in the form of New Ginkgo common stock, plus earn-out shares of New Ginkgo common stock; (3) the issuance of shares of New Ginkgo Class A common stock and New Ginkgo Class B common stock to Ginkgo shareholders; and (4) the other transactions contemplated therein (the Domestication, together with the foregoing transactions, the “Business Combination”). Upon the closing of the Business Combination (the “Closing”), SEAC Merger Sub Inc. will merge with, and into, Ginkgo, with Ginkgo surviving the merger as a wholly owned subsidiary of SRNG.

Prior to and as a condition of the Business Combination, no later than one day prior to the Closing, the Domestication will take place and SRNG will change its jurisdiction of incorporation by effecting a deregistration under the Cayman Islands Companies Act (2020 Revision) and a domestication under Section 388 of the Delaware General Corporation Law (“DGCL”), pursuant to which SRNG’s jurisdiction of incorporation will be changed from the Cayman Islands to the State of Delaware. In connection therewith, the Company will file the Certificate of Domestication (as defined below) simultaneously with the Certificate of Incorporation (as defined below), in each case, in respect of the Company with the Secretary of State of the State of Delaware (the “Delaware Secretary of State”). In this opinion, we refer to the Company following effectiveness of the Domestication as “New Ginkgo.”

Upon the Certificate of Domestication and the Certificate of Incorporation becoming effective under Section 103 of the DGCL (the “Effective Time”), among other things, pursuant to the Plan of Domestication (as defined below): (1) each of the then-issued and outstanding Class B ordinary shares, par value $0.0001 per share, of SRNG (the “SRNG Class B ordinary shares”) will convert automatically, on a one-for-one basis, into SRNG Class A ordinary shares (as defined below); (2) immediately following the conversion described in clause (1), each of the then-issued and outstanding Class A ordinary shares, par value $0.0001 per share, of SRNG (the “SRNG Class A ordinary shares”) will convert automatically, on a one-for-one basis, into shares of Class A common stock, par value $0.0001 per share, of New Ginkgo (the “New Ginkgo Class A common stock”); (3) each of the then-issued and outstanding warrants


LOGO

 

of SRNG (the “SRNG warrants”) will convert automatically, on a one-for-one basis, into warrants of New Ginkgo (the “New Ginkgo warrants”) pursuant to the Warrant Agreement, dated February 23, 2021 (the “Warrant Agreement”), between SRNG and Continental Stock Transfer & Trust Company (“Continental”), as warrant agent; and (4) each of the then-issued and outstanding units of SRNG (the “SRNG units”) will be automatically separated into its component parts and will entitle the holder thereof to one share of New Ginkgo Class A common stock and one-fifth of one New Ginkgo warrant. No fractional New Ginkgo warrants will be issued upon separation of the SRNG units.

This opinion is being furnished in accordance with the requirements of Item 601(b)(5) of Regulation S–K of the General Rules and Regulations under the Securities Act of 1933 (the “Securities Act”).

In connection with our opinions expressed below, we have examined originals or copies certified or otherwise identified to our satisfaction of the following documents and such other documents, corporate records, certificates and other statements of government officials and corporate officers of the Company as we deemed necessary for the purposes of the opinion set forth in this opinion letter:

 

  (a)

the Registration Statement;

 

  (b)

the Merger Agreement, filed as Exhibit 2.1 to the Registration Statement;

 

  (c)

the Merger Agreement Amendment, filed by the Company as Exhibit 2.1 to the Form 10-Q on May 14, 2021;

 

  (d)

the form of certificate of incorporation of the Company to become effective upon consummation of the Business Combination, filed as Exhibit 3.4 to the Registration Statement (the “Certificate of Incorporation”);

 

  (e)

the form of bylaws of the Company to become effective upon consummation of the Business Combination, filed as Exhibit 3.5 to the Registration Statement (the “Bylaws”);

 

  (f)

the form of certificate of domestication, to be filed by amendment as Exhibit 3.6 to the Amendment No. 1 to the Registration Statement on Form S-4 (the “Certificate of Domestication”);

 

  (g)

the plan of domestication, to be filed by amendment as Exhibit 2.1 to the Amendment No. 1 to the Registration Statement on Form S-4 (the “Plan of Domestication”);

 

  (h)

the form of warrant certificate, filed as Exhibit 4.3 to the Registration Statement;

 

  (i)

an executed copy of the Warrant Agreement, dated February 23, 2021, between the Company and Continental, as warrant agent; and

 

  (j)

resolutions of the Board of Directors of the Company, dated May 7, 2021, relating to, among other things, the Registration Statement, the Business Combination and the Domestication.

We have relied, to the extent we deem such reliance proper, upon such certificates or comparable documents of officers and representatives of the Company and of public officials and upon statements and information furnished by officers and representatives of the Company with respect to the accuracy of material factual matters contained therein which were not independently established by us. In rendering the opinions expressed below, we have assumed, without independent investigation or verification of any

 

2


LOGO

 

kind, the genuineness of all signatures on documents we have reviewed, the legal capacity and competency of all natural persons signing all such documents, the authenticity and completeness of all documents submitted to us as originals, the conformity to authentic, complete original documents of all documents submitted to us as copies, the truthfulness, completeness and correctness of all factual representations and statements contained in all documents we have reviewed, the accuracy and completeness of all public records examined by us, and the accuracy of all statements in certificates of officers of the Company that we reviewed. We have also assumed that the shareholders of the Company have approved or will have approved, among other things, the Merger Agreement, the Merger Agreement Amendment and the Business Combination and that all conditions precedent to the closing of the Business Combination have been satisfied or will have been satisfied or otherwise waived.

In addition to the foregoing, for the purpose of rendering the opinions expressed below, we have assumed that:

 

  1.

Prior to effecting the Domestication: (i) the Registration Statement, as finally amended (including all necessary post-effective amendments), will have become effective under the Securities Act; (ii) the shareholders of the Company will have approved, among other things, the Merger Agreement, the Merger Agreement Amendment and the Domestication, including the Certificate of Incorporation and Bylaws; and (iii) all other necessary action will have been taken under the applicable laws of the Cayman Islands to authorize, approve and permit the Domestication, and any and all consents, approvals and authorizations from applicable Cayman Islands and other governmental and regulatory authorities required to authorize and permit the Domestication will have been obtained;

 

  2.

The Certificate of Domestication, in the form to be filed as Exhibit 3.6 to the Amendment No. 1 to the Registration Statement on Form S-4, without alteration or amendment (other than identifying the appropriate date), will be duly authorized and executed and thereafter be duly filed with the Delaware Secretary of State in accordance with Sections 103 and 388 of the DGCL, that no other certificate or document, other than the Certificate of Incorporation, has been, or prior to the filing of the Certificate of Domestication will be, filed by or in respect of the Company with the Delaware Secretary of State and that the Company will pay any fees and other charges required to be paid in connection with the filing of the Certificate of Domestication;

 

  3.

The Certificate of Incorporation, in the form filed as Exhibit 3.4 to the Registration Statement, without alteration or amendment (other than identifying the appropriate date), will be duly authorized and executed and thereafter be duly filed with the Delaware Secretary of State and have become effective in accordance with Sections 103 and 388 of the DGCL, that no other certificate or document, other than the Certificate of Domestication, has been, or prior to the filing of the Certificate of Incorporation will be, filed by or in respect of the Company with the Delaware Secretary of State and that the Company will pay any fees and other charges required to be paid in connection with the filing of the Certificate of Incorporation;

 

  4.

The Bylaws, in the form attached as Exhibit 3.5 to the Registration Statement, without alteration or amendment (other than identifying the appropriate date), will become effective upon the Effective Time; and

 

  5.

Prior to the issuance of the New Ginkgo Class A common stock: (i) the Registration Statement, as finally amended (including all necessary post-effective amendments), will have become effective under the Securities Act; (ii) the shareholders of the Company will have approved, among other things, the Merger Agreement, the Merger Agreement Amendment and the Domestication, including the Certificate of Incorporation and Bylaws; and (iii) the Domestication and the other transactions contemplated by the Merger Agreement to be consummated concurrent with or prior to the Business Combination will have been consummated.

 

3


LOGO

 

Based upon the foregoing assumptions, and subject to the qualifications set forth in this opinion letter, having considered such questions of law as we have deemed necessary as a basis for the opinions expressed below, we are of the opinion that:

 

  1.

Upon the Effective Time, pursuant to the Plan of Domestication, each issued and outstanding SRNG Class B ordinary share will convert automatically into one share of New Ginkgo Class A common stock that will have been duly authorized by all requisite corporate action on the part of New Ginkgo under the DGCL and that will be validly issued, fully paid and nonassessable.

 

  2.

Upon the Effective Time, pursuant to the Plan of Domestication, each issued and outstanding SRNG Class A ordinary share will convert automatically into one share of New Ginkgo Class A common stock that will have been duly authorized by all requisite corporate action on the part of New Ginkgo under the DGCL and that will be validly issued, fully paid and nonassessable.

 

  3.

Upon the Effective Time, pursuant to the Plan of Domestication, each issued and outstanding SRNG warrant will become one New Ginkgo warrant that will have been duly authorized by all requisite corporate action on the part of New Ginkgo under the DGCL and that will be validly issued, fully paid and nonassessable.

 

  4.

Upon the Effective Time, pursuant to the Plan of Domestication, each issued and outstanding SRNG unit will be separated into its component parts and will entitle the holder thereof to one share of New Ginkgo Class A common stock and one-fifth of one New Ginkgo warrant, which will have been duly authorized by all requisite corporate action on the part of New Ginkgo under the DGCL and that will be validly issued, fully paid and nonassessable.

The opinions stated herein are subject to the following qualifications:

 

  (a)

we do not express any opinion with respect to any law, rule or regulation that is applicable to any party to the Plan of Domestication, the Merger Agreement or any Warrant certificate or Warrant Agreement or the transactions contemplated thereby solely because such law, rule or regulation is part of a regulatory regime applicable to any such party or any of its affiliates as a result of the specific assets or business operations of such party or such affiliates;

 

  (b)

we do not express any opinion with respect to the enforceability of any provision contained in any Warrant certificate or Warrant Agreement relating to any indemnification, contribution, non-reliance, exculpation, release, limitation or exclusion of remedies, waiver or other provisions having similar effect that may be contrary to public policy or violative of federal or state securities laws, rules or regulations, or to the extent any such provision purports to, or has the effect of waiving or altering any statute of limitations; and

 

  (c)

we have assumed that Continental has the power, corporate or other, to enter into and perform all obligations under the Warrant Agreement and have also assumed due authorization by all requisite action, corporate or other, and the execution and delivery by Continental of the Warrant Agreement and that the Warrant Agreement constitutes the valid and binding obligation of Continental, enforceable against Continental in accordance with its terms.

 

4


LOGO

 

SRNG is a Cayman Islands exempted company that will be redomesticated as a Delaware corporation pursuant to the Domestication, and we have not considered, and we express no opinion as to, any law other than the DGCL.

This opinion letter is for your benefit in connection with the Registration Statement and may be relied upon by you and by persons entitled to rely upon it pursuant to the applicable provisions of the Securities Act. This opinion letter is provided solely in connection with the distribution of the common stock and warrants pursuant to the Registration Statement and is not to be relied upon for any other purpose.

The opinions expressed above is as of the date hereof only, and we express no opinion as to, and assume no responsibility for, the effect of any fact or circumstance occurring, or of which we learn, subsequent to the date of this opinion letter, including, without limitation, legislative and other changes in the law or changes in circumstances affecting any party. We assume no responsibility to update this opinion letter for, or to advise you of, any such facts or circumstances of which we become aware, regardless of whether or not they affect the opinions expressed in this opinion letter.

We hereby consent to the filing of this opinion letter as Exhibit 5.1 to the Registration Statement and to the reference to our firm as counsel for the Company that has passed on the validity of the New Ginkgo Class A common stock appearing under the caption “Legal Matters” in the prospectus forming part of the Registration Statement or any prospectus filed pursuant to Rule 424(b) with respect thereto. In giving this consent, we do not thereby admit that we are within the category of persons whose consent is required under Section 7 of the Securities Act or the rules and regulations of the Securities and Exchange Commission thereunder.

 

Very truly yours,
/s/ White & Case LLP

JR : JR : VM : TZ : EM

 

5

Exhibit 8.1

[Letterhead of White & Case LLP]

June 28, 2021

Soaring Eagle Acquisition Corp.

955 Fifth Avenue

New York, New York 10075

Ladies and Gentlemen:

We have acted as United States counsel to Soaring Eagle Acquisition Corp., a Cayman Islands exempted company (the “Company”), in connection with the transactions contemplated by the agreement and plan of merger, dated May 11, 2021 (the “Merger Agreement”), by and among the Company, SEAC Merger Sub, Inc. and Ginkgo Bioworks, Inc., pursuant to which the Company will be domesticated as a Delaware corporation, and SEAC Merger Sub, Inc. will merge with and into Ginkgo Bioworks, Inc. with Ginkgo Bioworks, Inc. surviving the merger as a wholly owned subsidiary of the Company (the “Business Combination”). Reference is made to the Registration Statement on Form S-4 of the Company, including the proxy statement/prospectus forming a part thereof (as amended or supplemented through the date hereof, the “Registration Statement”), relating to the Business Combination. Capitalized terms used but not defined herein have the meaning given to such terms in the Registration Statement.

In rendering this opinion, we have examined originals or copies, certified or otherwise identified to our satisfaction, of such agreements and other documents as we have deemed necessary or appropriate and we have made such investigations of law as we have deemed appropriate as a basis for the opinion expressed below. In our examination, we have assumed, without independent verification, (i) the authenticity and accuracy of all documents reviewed by us (including the conformity to original documents of all documents submitted to us as email, fax or photostatic copies and the authenticity of such original documents), (ii) that the signatures on all documents examined by us are genuine and have been duly authorized, and such documents reflect all material terms of the agreement between the parties to such documents, (iii) that the parties to such documents have complied and will comply with the terms thereof, and that such documents are enforceable in accordance with their respective terms, (iv) that such documents have been duly authorized by, have been duly executed and delivered by, and constitute (to the extent containing contractual or other obligations) legal, valid, binding and enforceable obligations of, all parties to such documents, (v) all of the parties to such documents are duly organized, validly existing, and have power and authority (corporate, partnership, or other) to execute, deliver, and perform the obligations in such documents and (vi) that the transactions provided for by each agreement were and will be carried out in accordance with their terms. In rendering our opinion we have made no independent investigation of the facts referred to herein and have relied for the purpose of rendering this opinion exclusively on those facts that have been provided to us by you and your agents, which we assume have been, and will continue to be, true.

The opinion set forth below is based upon the Internal Revenue Code of 1986, as amended, the U.S. Treasury Regulations promulgated thereunder, administrative rulings, judicial decisions, and other applicable authorities, all as available and in effect on the date hereof. The statutory provisions, regulations, and interpretations upon which our opinion is based are subject to change, and any such change could apply retroactively. There can be no assurance that positions contrary to those stated in our opinion will not be asserted by the Internal Revenue Service (“IRS”) and (as customary in transactions of this type) no rulings will be obtained from the IRS regarding the U.S. federal income tax consequences of the Business Combination or otherwise in connection with the transactions effected pursuant to the Merger Agreement (and any other documents or agreements executed in connection with the transactions contemplated thereunder). The opinions expressed above are as of the date hereof only, and we express no opinion as to, and assume no responsibility for, the effect of any fact or circumstance occurring, or of which we learn, subsequent to the date of this opinion letter, including, without limitation, legislative and other changes in the law or changes in circumstances affecting any party. We assume no responsibility to update this opinion letter for, or to advise you of, any such facts or circumstances of which we become aware, regardless of whether or not they affect the opinions expressed in this opinion letter.

Based upon and subject to the foregoing, and subject to the qualifications, assumptions and limitations contained therein, the statements in the Registration Statement set forth under the caption “U.S. Federal Income Tax


Considerations,” to the extent that they constitute descriptions or summaries of U.S. federal income tax law or legal conclusions with respect thereto, are accurate in all material respects.

We hereby consent to the filing of this opinion with the Securities and Exchange Commission as an exhibit to the Registration Statement, and to the references therein to us. In giving such consent, we do not thereby admit that we are in the category of persons whose consent is required under Section 7 of the Securities Act of 1933, as amended.

Very truly yours,

/s/ White & Case LLP

Exhibit 10.8

GINKGO BIOWORKS, INC.

2008 STOCK INCENTIVE PLAN

AS AMENDED AS OF JUNE 18, 2014

 

1.

Purpose.

The purpose of this plan (the “Plan”) is to secure for Ginkgo BioWorks, Inc., a Delaware corporation (the “Company”), and its shareholders the benefits arising from capital stock ownership by employees, officers and directors of, and consultants or advisors to, the Company and its parent and subsidiary corporations who are expected to contribute to the Company’s future growth and success. Under the Plan recipients may be awarded both (i) Options (as defined in Section 2.1) to purchase the Company’s common stock, $.01 par value (“Common Stock”) and (ii) shares of the Company’s Common Stock (“Restricted Stock Awards”). Except where the context otherwise requires, the term “Company” shall include any parent and all present and future subsidiaries of the Company as defined in Sections 424(e) and 424(f) of the Internal Revenue Code of 1986, as amended or replaced from time to time (the “Code”). Those provisions of the Plan which make express reference to Section 422 of the Code shall apply only to Incentive Stock Options (as that term is defined below).

 

2.

Types of Awards and Administration.

 

  2.1

Options. Options granted pursuant to the Plan (“Options”) shall be authorized by action of the Board of Directors of the Company (the “Board” or “Board of Directors”) and may be either incentive stock options (“Incentive Stock Options”) meeting the requirements of Section 422 of the Code or non-statutory Options which are not intended to meet the requirements of Section 422 of the Code. The vesting of Options may be conditioned upon the completion of a specified period of employment with the Company and/or such other conditions or events as the Board may determine. The Board may also provide that Options are immediately exercisable subject to certain repurchase rights in the Company dependent upon the continued employment of the optionee and/or such other conditions or events as the Board may determine.

 

  2.1.1

Incentive Stock Options. All Options when granted are intended to be non-statutory Options, unless the applicable Option Agreement (as defined in Section 5.1) explicitly states that the Option is intended to be an Incentive Stock Option. Incentive Stock Options may only be granted to employees of the Company and shall be subject to and construed consistently with the requirements of Section 422 of the Code. For so long as the Code shall so provide, Options granted to any employee under the Plan (and any other incentive stock option plans of the Company) which are intended to constitute Incentive Stock Options shall not constitute Incentive Stock Options to the extent that such Options, in the aggregate, become exercisable for the first time in any one


  calendar year for shares of Common Stock with an aggregate fair market value (determined as of the respective date or dates of grant) of more than $100,000. If an Option is intended to be an Incentive Stock Option, and if for any reason such Option (or any portion thereof) shall not qualify as an Incentive Stock Option, then, to the extent of such nonqualification, such Option (or portion thereof) shall be regarded as a non-statutory Option appropriately granted under the Plan provided that such Option (or portion thereof) otherwise meets the Plan’s requirements relating to non-statutory Options. The Company shall have no liability to any optionee, or to any other party, if an Option (or portion thereof) which is intended to be an Incentive Stock Option shall not qualify as an Incentive Stock Option.

 

  2.2

Restricted Stock Awards. The Board in its discretion may grant Restricted Stock Awards, entitling the recipient to acquire, for a purchase price determined by the Board, shares of Common Stock subject to such restrictions and conditions as the Board may determine at the time of grant (“Restricted Stock”), including continued employment and/or achievement of pre-established performance goals and objectives.

 

  2.3

Administration. The Plan shall be administered by the Board, whose construction and interpretation of the terms and provisions of the Plan shall be final and conclusive. The Board may in its sole discretion issue Restricted Stock and grant Options and issue shares upon exercise of such Options as provided in the Plan. The Board shall have authority, subject to the express provisions of the Plan, to construe Restricted Stock Agreements, Option Agreements and the Plan, to prescribe, amend and rescind rules and regulations relating to the Plan, to determine the terms and provisions of Restricted Stock Agreements and Option Agreements, and to make all other determinations in the judgment of the Board necessary or desirable for the administration of the Plan. The Board may correct any defect or supply any omission or reconcile any inconsistency in the Plan or in any Restricted Stock Agreement or Option Agreement in the manner and to the extent it shall deem expedient to carry the Plan into effect and it shall be the sole and final judge of such expediency. No director or person acting pursuant to authority delegated by the Board shall be liable for any action or determination under the Plan made in good faith. The Board may, to the full extent permitted by or consistent with applicable laws or regulations, delegate any or all of its powers under the Plan to a committee (the “Committee”) appointed by the Board, and if the Committee is so appointed all references to the Board in the Plan shall mean and relate to such Committee, other than references to the Board in this sentence and in Sections 19 (as to amendment of the Plan) and 22. No director or person acting pursuant to the authority delegated by the Board shall be liable for any action or determination relating to or under the Plan made in good faith.

 

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3.

Eligibility.

Options may be granted, and Restricted Stock may be issued, to persons who are, at the time of such grant or issuance, employees, officers or directors of, or consultants or advisors to, the Company; provided, that the class of persons to whom Incentive Stock Options may be granted shall be limited to employees of the Company.

 

  3.1

10% Shareholder. For so long as the Code shall so provide, if any employee to whom an Incentive Stock Option is to be granted is, at the time of the grant of such Option, the owner of stock possessing more than 10% of the total combined voting power of all classes of stock of the Company (after taking into account the attribution of stock ownership rules of Section 424(d) of the Code) (“10% Shareholder”), any Incentive Stock Option granted to such individual must: (i) have an exercise price per share of not less than 110% of the fair market value of one share of Common Stock at the time of grant; and (ii) expire by its terms not more than five years from the date of grant.

 

4.

Stock Subject to Plan.

Subject to adjustment as provided in Section 14.2 below, as of June 18, 2014, the maximum number of shares of Common Stock which may be issued under the Plan is One Million Seven Hundred and Thirty-Eight Thousand (1,738,000) shares, and the maximum number of Incentive Stock Options which may be granted under the Plan is One Million Seven Hundred and Thirty-Eight Thousand (1,738,000) Incentive Stock Options. If an Option shall expire or terminate for any reason without having been exercised in full, the unpurchased shares subject to such Option shall again be available for subsequent Option grants or Restricted Stock Awards under the Plan. If shares of Restricted Stock shall be forfeited to, or otherwise repurchased by, the Company pursuant to a Restricted Stock Agreement, such purchased shares shall again be available for subsequent Option grants or Restricted Stock Awards under the Plan. If shares issued upon exercise of an Option are tendered to the Company in payment of the exercise price of an Option, such tendered shares shall again be available for subsequent Option grants or Restricted Stock Awards under the Plan.

 

5.

Forms of Restricted Stock Agreements and Option Agreements.

 

  5.1

Option Agreement. As a condition to the grant of an Option, each recipient of an Option shall execute an option agreement (“Option Agreement”) in such form not inconsistent with the Plan as may be approved by the Board of Directors. Such Option Agreements may differ among recipients.

 

  5.2

Restricted Stock Agreement. As a condition to the issuance of Restricted Stock, each recipient thereof shall execute a restricted stock agreement (“Restricted Stock Agreement”) in such form not inconsistent with the Plan as may be approved by the Board of Directors. Such Restricted Stock Agreements may differ among recipients.

 

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  5.3

“Lock-Up” Agreement. Unless the Board specifies otherwise, each Restricted Stock Agreement and Option Agreement shall provide that upon the request of the Company or the managing underwriter(s), the holder of any Option or the purchaser of any Restricted Stock shall, in connection with any registration of securities of the Company under the Securities Act of 1933, as amended from time to time (the “Act”), agree in writing that for a period of time (not to exceed 180 days) from the effective date of the registration statement under the Act for such offering, the holder or purchaser will not sell, make any short sale of, loan, grant any option for the purchase of, or otherwise dispose of any shares of the Common Stock, no par value, of the Company owned or controlled by him or her.

 

6.

Purchase Price.

 

  6.1

General. The purchase price per share of Restricted Stock and the per share exercise price of an Option shall be determined by the Board at the time of issuance in the case of Restricted Stock and at the time of grant in the case of Options.

 

  6.2

Payment of Purchase Price. Option Agreements may provide for the payment of the exercise price by (i) delivery of a personal, certified or bank check or postal money order payable to the order of the Company in an amount equal to the exercise price of such Option, (ii) with the consent of the Board, delivery to the Company of shares of Common Stock of the Company already owned by the optionee for a period of six months and having a fair market value equal in amount to the exercise price of the Options being exercised, (iii) with the consent of the Board, a personal recourse note issued by the optionee to the Company in a principal amount equal to such aggregate exercise price and with such other terms, including interest rate and maturity, as the Company may determine in its discretion; provided, however, that the interest rate borne by such note shall not be less than the lowest applicable federal rate, as defined in Section 1274(d) of the Code, (iv) in the event there is a public market for the Common Stock at such time, subject to rules as may be established by the Board, through delivery of irrevocable instructions to a broker to sell such shares and deliver promptly to the Company an amount equal to the aggregate exercise price, (v) any other means which the Board of Directors determines are consistent with the purpose of the Plan and with applicable laws and regulations or (vi) any combination of such methods of payment. The fair market value of any shares of Common Stock or other non-cash consideration which may be delivered upon exercise of an Option shall be determined by the Board. Restricted Stock Agreements may provide for the payment of any purchase price in any manner approved by the Board at the time of authorizing the issuance thereof.

 

7.

Option Period.

Each Option shall be exercisable at such times and subject to such terms and conditions as the Board may specify in the applicable Option Agreement.

 

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8.

Exercise of Options.

 

  8.1

General. Each Option shall be exercisable either in full or in installments at such time or times and during such period as shall be set forth in the agreement evidencing such Option, subject to the provisions of the Plan. To the extent not exercised, installments shall accumulate and be exercisable, in whole or in part, at any time after becoming exercisable, but not later than the date the Option expires.

 

  8.2

Notice of Exercise. An Option may be exercised by the optionee by delivering to the Company on any business day a written notice specifying the number of shares of Common Stock the optionee then desires to purchase and specifying the address to which the certificates for such shares are to be mailed (the “Notice”), accompanied by payment for such shares. In addition, the Company may require any individual to whom an Option is granted, as a condition of exercising such Option, to give written assurances in a substance and form satisfactory to the Company to the effect that such individual is acquiring the Common Stock subject to the Option for his or her own account for investment and not with a view to the resale or distribution thereof, and to such other effects as the Company deems necessary or advisable in order to comply with any securities law(s). In addition, the Company may require any individual to whom an Option is granted, as a condition of exercising such Option, to become a party to a stockholders’ agreement or similar agreement, as may be amended from time to time, between the Company and its stockholders.

 

  8.3

Delivery. As promptly as practicable after receipt of such written notification and payment, the Company shall deliver or cause to be delivered to the optionee certificates for the number of shares with respect to which such Option has been so exercised, issued in the optionee’s name; provided, however, that such delivery shall be deemed effected for all purposes when the Company or a stock transfer agent shall have deposited such certificates in the United States mail, addressed to the optionee, at the address specified in the Notice.

 

9.

Nontransferability of Options.

Except as the Board may otherwise permit or provide in an applicable Option Agreement, no Option shall be assignable or transferable by the person to whom it is granted, either voluntarily or by operation of law, except by will or the laws of descent and distribution. During the life of an optionee, an Option shall be exercisable only by the optionee.

 

10.

Termination of Employment; Disability; Death. Except as may be otherwise expressly provided in the terms and conditions of the Option Agreement, Options shall terminate on the earliest to occur of:

 

  (i)

the date of expiration thereof;

 

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  (ii)

immediately upon the effective date of termination of the optionee’s employment with, or provision of services to, the Company by the Company for Cause (as hereinafter defined);

 

  (iii)

90 days after the date of voluntary termination of the optionee’s employment with, or provision of services to, the Company by the optionee (other than for death or permanent disability as defined below); or

 

  (iv)

90 days after the date of termination of the optionee’s employment with, or provision of services to, the Company by the Company without Cause (other than for death or permanent disability as defined below).

Until the date on which the Option so expires, the optionee may exercise that portion of his or her Option which is exercisable at the time of termination of the employment or service relationship.

An employment or service relationship between the Company and the optionee shall be deemed to exist during any period during which the optionee is employed by or providing services to the Company, either on a full-time or a part-time basis. Whether an authorized leave of absence or an absence due to military or government service shall constitute termination of the employment relationship between the Company and the optionee shall be determined by the Board at the time thereof.

For purposes of this Section 10, the term “Cause” shall mean (a) a good faith finding by the Board that the optionee willfully failed to perform his or her assigned duties for the Company, (b) any material breach by the optionee of any agreement to which the optionee and the Company are both parties, (c) any act (other than retirement) or omission to act by the optionee which may have a material and adverse effect on the Company’s business or on the optionee’s ability to perform services for the Company, including, without limitation, the commission of any crime (other than minor traffic violations), or (d) any material misconduct or material neglect of duties by the optionee in connection with the business or affairs of the Company.

In the event of the permanent and total disability or death of an optionee while in an employment or other relationship with the Company and before the date of expiration of such option, such option shall terminate on the earlier of such date of expiration or one year following the date of such disability or death. After disability or death, the optionee (or in the case of death, his or her executor, administrator or any person or persons to whom this option may be transferred by will or by laws of descent and distribution) shall have the right, at any time prior to such termination, to exercise the option to the extent the optionee was entitled to exercise such option as of the date of his or her disability or death. An optionee is permanently and totally disabled if he or she is unable to engage in any substantial gainful activity by reason of any medically determinable physical or mental impairment which can be expected to last for a continuous period of not less than 12 months; permanent and total disability shall be determined in accordance with Section 22(e)(3) of the Code and the regulations issued thereunder.

 

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11.

Rights as a Shareholder. The holder of an Option shall have no rights as a shareholder with respect to any shares covered by the Option (including, without limitation, any rights to receive dividends or non-cash distributions with respect to such shares) until the date of issue of a stock certificate to him or her for such shares. No adjustment shall be made for dividends or other rights for which the record date occurs prior to the date such stock certificate is issued.

 

12.

Additional Provisions. The Board of Directors may, in its sole discretion, include additional provisions in Restricted Stock Agreements and Option Agreements, including, without limitation, restrictions on transfer, rights of the Company to repurchase shares of Restricted Stock or shares of Common Stock acquired upon exercise of Options, commitments to pay cash bonuses, to make, arrange for or guaranty loans or to transfer other property to optionees upon exercise of Options, or such other provisions as shall be determined by the Board of Directors; provided that such additional provisions shall not be inconsistent with any other term or condition of the Plan and such additional provisions shall not be such as to cause any Incentive Stock Option to fail to qualify as an Incentive Stock Option within the meaning of Section 422 of the Code.

 

13.

Acceleration, Extension, Etc. The Board of Directors may, in its sole discretion, (i) accelerate the date or dates on which all or any particular Option or Options may be exercised or (ii) extend the period or periods of time during which all, or any particular, Option or Options may be exercised.

 

14.

Adjustment Upon Changes in Capitalization

 

  14.1

No Effect of Options upon Certain Corporate Transactions. The existence of outstanding Options shall not affect in any way the right or power of the Company to make or authorize any or all adjustments, recapitalizations, reorganizations or other changes in the Company’s capital structure or its business, or any merger or consolidation, or any issue of Common Stock, or any issue of bonds, debentures, preferred or prior preference stock ahead of or affecting the Common Stock or the rights thereof, or the dissolution or liquidation of the Company, or any sale or transfer of all or any part of its assets or business, or any other corporate act or proceeding, whether of a similar character or otherwise.

 

  14.2

Adjustment Provisions. If, through or as a result of any merger, consolidation, sale of all or substantially all of the assets of the Company, reorganization, recapitalization, reclassification, stock dividend, stock split, reverse stock split or other similar transaction, (i) the outstanding shares of Common Stock are increased, decreased or exchanged for a different number or kind of shares or other securities of the Company, or (ii) additional shares or new or different shares or other securities of the Company or other non-cash assets are distributed with respect to such shares of Common Stock or other securities, an appropriate and proportionate adjustment shall be made in (x) the maximum number and kind of shares reserved for issuance under the Plan, (y) the number and kind of shares or other securities subject to any then outstanding Options, and (z) the price for

 

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  each share subject to any then outstanding Options, without changing the aggregate purchase price as to which such Options remain exercisable. Notwithstanding the foregoing, no adjustment shall be made pursuant to this Section 14 if such adjustment would cause the Plan to fail to comply with Section 422 of the Code.

 

  14.3

No Adjustment in Certain Cases. Except as expressly provided for herein, the issue by the Company of shares of stock of any class, or securities convertible into shares of stock of any class, for cash or property or for labor or services, either upon direct sale or upon the exercise of rights or warrants to subscribe therefor, or upon conversion of shares or obligations of the Company convertible into such shares or other securities, shall not affect, and no adjustment by reason thereof shall be made with respect to, the number or price of shares of Common Stock then subject to outstanding options.

 

  14.4

Board Authority to Make Adjustments. Any adjustments under this Section 14 will be made by the Board of Directors, whose determination as to what adjustments, if any, will be made and the extent thereof will be final, binding and conclusive. No fractional shares will be issued under the Plan on account of any such adjustments.

 

15.

Effect of Certain Transactions

 

  15.1

General. In the event of a consolidation or merger or sale of all or substantially all of the assets of the Company in which outstanding shares of capital stock are exchanged for securities, cash or other property of any other corporation or business entity, the Board, or the board of directors of any corporation assuming the obligations of the Company, may, in its discretion, take any one or more of the following actions, as to some or all outstanding Options (and need not take the same action as to each such Option): (i) provide that such Options shall be assumed, or equivalent Options shall be substituted, by the acquiring or succeeding corporation (or an affiliate thereof), provided that any such Options substituted for Incentive Stock Options shall meet the requirements of Section 424(a) of the Code, (ii) upon written notice to the optionees, provide that all unexercised Options will terminate immediately following the consummation of such transaction unless exercised by the optionee to the extent otherwise then exercisable within a specified period following the date of such notice, provided that the vesting of any such Options so terminated shall have been accelerated as of immediately prior to the consummation of such transaction so that such Options may be exercised in full concurrently with the consummation of such transaction, (iii) in the event of a merger under the terms of which holders of the Common Stock of the Company will receive upon consummation thereof a cash payment for each share surrendered in the merger (the “Merger Price”), make or provide for a cash payment to the optionees equal to the difference between (A) the Merger Price times the number of shares of Common Stock subject to such outstanding Options (to the extent then exercisable at prices not in excess of the Merger Price) and (B) the aggregate exercise price of all such outstanding

 

-8-


  Options, in exchange for the termination of such Options, and (iv) provide that all or any outstanding Options shall become exercisable in part or in full immediately prior to such event.

 

  15.2

Substitute Options. The Company may grant Options in substitution for options held by employees of another corporation who become employees of the Company, as the result of a merger or consolidation of the employing corporation with the Company or as a result of the acquisition by the Company, of property or stock of the employing corporation. The Company may direct that substitute Options be granted on such terms and conditions as the Board considers appropriate in the circumstances.

 

  15.3

Restricted Stock. In the event of a business combination or other transaction of the type detailed in Section 15.1, any securities, cash or other property received in exchange for shares of Restricted Stock shall continue to be governed by the provisions of any Restricted Stock Agreement pursuant to which they were issued, including any provision regarding vesting, and such securities, cash, or other property may be held in escrow on such terms as the Board of Directors may direct, to insure compliance with the terms of any such Restricted Stock Agreement.

 

16.

No Special Rights to an Employment or Other Business Relationship. Nothing contained in the Plan or in any Option or Restricted Stock Agreement shall confer upon any optionee or holder of Restricted Stock any right with respect to the continuation of his or her employment by the Company or any other business relationship with the Company or interfere in any way with the right of the Company at any time to terminate such employment or other business relationship or to increase or decrease the compensation of such person.

 

17.

Other Employee Benefits. The amount of any compensation deemed to be received by an employee as a result of the issuance of shares of Restricted Stock or the grant or exercise of an Option or the sale of shares received upon such award or exercise will not constitute compensation with respect to which any other employee benefits of such employee are determined, including, without limitation, benefits under any bonus, pension, profit-sharing, life insurance or salary continuation plan, except as otherwise specifically determined by the Board of Directors.

 

18.

Special Provisions Relating to Section 409A of the Code and Regulations Promulgated Thereunder.

 

  18.1

Intention to Price Options at Not Lower than Fair Market Value. It is the intention of the Company to issue all Options under the Plan with exercise prices at least equal to the fair market value of the Common Stock as of the date of grant. However, this Section 18 is included herein to ensure compliance with Section 409A of the Code in the event that any Option is issued with an exercise price lower than the fair market value of the Common Stock as of the date of grant.

 

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  18.2

Earliest Distribution Date. Notwithstanding anything contained in the Plan or any Option Agreement issued pursuant to the Plan, to the extent that any Option or Common Stock issuable upon exercise of an Option constitutes “deferred compensation” within the meaning of Section 409A of the Code (“Section 409A”), such Option or Stock may not be distributed to the recipient earlier than:

 

  (a)

the date of the recipient’s “separation from service” as determined in accordance with Section 409A (except as otherwise provided in Section 18.3(a),

 

  (b)

the date the recipient becomes disabled (within the meaning of Section 18.4),

 

  (c)

the date of the recipient’s death,

 

  (d)

to the extent provided under Section 409A and regulations promulgated thereunder, a change in the ownership or effective control of the Company, or in the ownership of a substantial portion of the assets of the Company, or

 

  (e)

the occurrence of an unforeseeable emergency.

 

  18.3

Special rules.

 

  (a)

Specified employees. In the case of any specified employee, the requirement of Section 18.2(a) is met only if distributions may not be made before the date which is 6 months after the date of separation from service (or, if earlier, the date of death of the recipient). For purposes of the preceding sentence, a specified employee is a key employee (as defined in section 416(i) of the Code without regard to paragraph (5) thereof) of a Company any stock in which is publicly traded on an established securities market or otherwise.

 

  (b)

Unforeseeable emergency. For purposes of Section 18.2(e):

 

  (i)

In general. The term “unforeseeable emergency” means a severe financial hardship to the recipient resulting from an illness or accident of the recipient, the recipient’s spouse, or a dependent (as defined in section 152(a) of the Code) of the recipient, loss of the recipient’s property due to casualty, or other similar extraordinary and unforeseeable circumstances arising as a result of events beyond the control of the recipient.

 

  (ii)

Limitation on distributions. The requirement of Section 18.2(e) is met only if, as determined under regulations promulgated pursuant to the Code, the amounts distributed with respect to an emergency do not exceed the amounts

 

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  necessary to satisfy such emergency, including amounts necessary to pay taxes reasonably anticipated as a result of the distribution, after taking into account the extent to which such hardship is or may be relieved through reimbursement or compensation by insurance or otherwise or by liquidation of the participant’s assets (to the extent the liquidation of such assets would not itself cause severe financial hardship).

 

  18.4

Disabled. For purposes of Section 18.2(b), a recipient shall be considered disabled if the recipient:

 

  (a)

is unable to engage in any substantial gainful activity by reason of any medically determinable physical or mental impairment which can be expected to result in death or can be expected to last for a continuous period of not less than 12 months, or

 

  (b)

is, by reason of any medically determinable physical or mental impairment which can be expected to result in death or can be expected to last for a continuous period of not less than 12 months, receiving income replacement benefits for a period of not less than 3 months under an accident and health plan covering employees of the Company.

 

  18.5

No Acceleration. No acceleration of the time or schedule of any payment governed by this Section 18 shall occur except as provided in regulations promulgated pursuant to Section 409A.

 

  18.6

Compliance with Section 409A. This Section 18 is intended to comply with Section 409A and the regulations promulgated thereunder, and to the extent it conflicts with Section 409A and such regulations at any time, it shall be construed in accordance with Section 409A and such regulations as they may be in effect at such time.

 

19.

Amendments.

 

  19.1

The Board may at any time, and from time to time, modify, amend or suspend the Plan in any respect.

 

  19.2

The termination or any modification or amendment of the Plan shall not, without the consent of an optionee or the holder of Restricted Stock, adversely affect his or her rights under an Option or Restricted Stock Award previously granted to him or her. With the consent of the recipient of Restricted Stock or optionee affected, the Board may amend outstanding Restricted Stock Agreements or Option Agreements in a manner not inconsistent with the Plan. The Board shall have the right to amend or modify the terms and provisions of the Plan and of any outstanding Incentive Stock Options to the extent necessary to qualify any or all such Options for such favorable federal income tax treatment (including deferral of taxation upon exercise) as may be afforded incentive stock options under Section 422 of the Code.

 

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20.

Withholding. The Company shall have the right to deduct from payments of any kind otherwise due to the optionee or recipient of Restricted Stock, any federal, state or local taxes of any kind required by law to be withheld with respect to issuance of any shares of Restricted Stock or shares issued upon exercise of Options. Subject to the prior approval of the Company, which may be withheld by the Company in its sole discretion, the obligor may elect to satisfy such minimum withholding obligations, in whole or in part, (i) by causing the Company to withhold shares of Common Stock otherwise issuable or (ii) by delivering to the Company shares of Common Stock of the Company already owned by the obligor for a period of at least six months. The shares so withheld shall have a fair market value equal to such withholding obligation. The fair market value of the shares used to satisfy such withholding obligation shall be determined by the Company as of the date that the amount of tax to be withheld is to be determined. A person who has made an election pursuant to this Section 20 may only satisfy his or her withholding obligation with shares of Common Stock which are not subject to any repurchase, forfeiture, unfulfilled vesting or other similar requirements.

 

21.

Effective Date and Duration of the Plan.

 

  21.1

Effective Date. The Plan shall become effective when adopted by the Board of Directors. If shareholder approval is not obtained within twelve months after the date of the Board’s adoption of the Plan, no Options previously granted under the Plan shall be deemed to be Incentive Stock Options and no Incentive Stock Options shall be granted thereafter. Amendments to the Plan not requiring shareholder approval shall become effective when adopted by the Board. Amendments requiring shareholder approval shall become effective when adopted by the Board, but if shareholder approval is not obtained within twelve months of the Board’s adoption of such amendment, unless otherwise permitted under the Code, any Incentive Stock Options granted pursuant to such amendment shall be deemed to be non-statutory Options provided that such Options are authorized by the Plan. Subject to this limitation, Options may be granted under the Plan at any time after the effective date and before the date fixed for termination of the Plan.

 

  21.2

Termination. Unless sooner terminated by action of the Board of Directors, the Plan shall terminate upon the close of business on the day next preceding the tenth anniversary of the date of its adoption by the Board of Directors.

 

22.

Requirements of Law. The Company shall not be required to sell or issue any shares under any Option or Restricted Stock Agreement if the issuance of such shares shall constitute a violation by the optionee, the Restricted Stock Award recipient, or by the Company of any provisions of any law or regulation of any governmental authority. In addition, in connection with the Act, the Company shall not be required to issue any shares upon exercise of any Option unless the Company has received evidence satisfactory to it to the effect that the holder of such Option will not transfer such shares except pursuant to a registration statement in effect under the Act or unless an opinion of

 

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  counsel satisfactory to the Company has been received by the Company to the effect that such registration is not required in connection with any such transfer. Any determination in this connection by the Board shall be final, binding and conclusive. In the event the shares issuable on exercise of an Option are not registered under the Act or under the securities laws of each relevant state or other jurisdiction, the Company may imprint on the certificate(s) appropriate legends that counsel for the Company considers necessary or advisable to comply with the Act or any such state or other securities law. The Company may register, but in no event shall be obligated to register, any securities covered by the Plan pursuant to the Act; and in the event any shares are so registered the Company may remove any legend on certificates representing such shares. The Company shall not be obligated to take any affirmative action in order to cause the exercise of an Option or the issuance of shares pursuant thereto to comply with any law or regulation of any governmental authority.

 

23.

Governing Law. This Plan and each Option or Restricted Stock Agreement shall be governed by the laws of the State of Delaware, without regard to its principles of conflicts of law.

 

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Exhibit 10.9

GINKGO BIOWORKS, INC.

2014 STOCK INCENTIVE PLAN

1. Purpose

The purpose of this 2014 Stock Incentive Plan (the “Plan”) of Ginkgo BioWorks, Inc., a Delaware corporation (the “Company”), is to advance the interests of the Company’s stockholders by enhancing the Company’s ability to attract, retain and motivate persons who are expected to make important contributions to the Company and by providing such persons with equity ownership opportunities and performance-based incentives that are intended to better align the interests of such persons with those of the Company’s stockholders. Except where the context otherwise requires, the term “Company” shall include any of the Company’s present or future parent or subsidiary corporations as defined in Sections 424(e) or (f) of the Internal Revenue Code of 1986, as amended, and any regulations thereunder (the “Code”) and any other business venture (including, without limitation, joint venture or limited liability company) in which the Company has a controlling interest, as determined by the Board of Directors of the Company (the “Board”); provided, however, that such other business ventures shall be limited to entities that, where required by Section 409A of the Code, are eligible issuers of service recipient stock (as defined in Treas. Reg. Section 1.409A-1(b)(5)(iii)(E), or applicable successor regulation).

2. Eligibility

All of the Company’s employees, officers and directors, as well as consultants and advisors to the Company (as such terms are defined and interpreted for purposes of Rule 701 under the Securities Act of 1933, as amended (the “Securities Act”) (or any successor rule)) are eligible to be granted Awards under the Plan. Each person who is granted an Award under the Plan is deemed a “Participant.” “Award” means Options (as defined in Section 5), SARs (as defined in Section 6), Restricted Stock (as defined in Section 7), Restricted Stock Units (as defined in Section 7) and Other Stock-Based Awards (as defined in Section 8).

3. Administration and Delegation

(a) Administration by Board of Directors. The Plan will be administered by the Board. The Board shall have authority to grant Awards and to adopt, amend and repeal such administrative rules, guidelines and practices relating to the Plan as it shall deem advisable. The Board may construe and interpret the terms of the Plan and any Award agreements entered into under the Plan. The Board may correct any defect, supply any omission or reconcile any inconsistency in the Plan or any Award in the manner and to the extent it shall deem expedient to carry the Plan into effect and it shall be the sole and final judge of such expediency. All decisions by the Board shall be made in the Board’s sole discretion and shall be final and binding on all persons having or claiming any interest in the Plan or in any Award.

(b) Appointment of Committees. To the extent permitted by applicable law, the Board may delegate any or all of its powers under the Plan to one or more committees or subcommittees of the Board (a “Committee”). All references in the Plan to the “Board” shall mean the Board or a Committee of the Board or the officers referred to in Section 3(c) to the extent that the Board’s powers or authority under the Plan have been delegated to such Committee or officers.


(c) Delegation to Officers. To the extent permitted by applicable law, the Board may delegate to one or more officers of the Company the power to grant Options and other Awards that constitute rights under Delaware law (subject to any limitations under the Plan) to employees or officers of the Company and to exercise such other powers under the Plan as the Board may determine, provided that the Board shall fix the terms of such Awards to be granted by such officers (including the exercise price of such Awards, which may include a formula by which the exercise price will be determined) and the maximum number of shares subject to such Awards that the officers may grant; provided further, however, that no officer shall be authorized to grant such Awards to any “executive officer” of the Company (as defined by Rule 3b-7 under the Securities Exchange Act of 1934, as amended (the “Exchange Act”)) or to any “officer” of the Company (as defined by Rule 16a-1 under the Exchange Act). The Board may not delegate authority under this Section 3(c) to grant Restricted Stock, unless Delaware law then permits such delegation.

4. Stock Available for Awards

(a) Number of Shares. Subject to adjustment under Section 9, Awards may be made under the Plan (any or all of which Awards may be in the form of Incentive Stock Options (as defined in Section 5(b)) for up to such number of shares of common stock, $0.01 par value per share, of the Company (the “Common Stock”), as is equal to the sum of:

(1) the number of shares reserved for issuance under the Company’s 2008 Stock Incentive Plan (the “Existing Plan”) that remain available for grant under the Existing Plan on the date this Plan is approved by the Board of Directors of the Company; and

(2) the number of shares of Common Stock subject to awards granted under the Existing Plan which awards expire, terminate or are otherwise surrendered, canceled, forfeited or repurchased by the Company pursuant to a contractual repurchase right (subject, however, in the case of Incentive Stock Options to any limitations of the Code).

If any Award expires or is terminated, surrendered or canceled without having been fully exercised, is forfeited in whole or in part (including as the result of shares of Common Stock subject to such Award being repurchased by the Company at the original issuance price pursuant to a contractual repurchase right), or results in any Common Stock not being issued, the unused Common Stock covered by such Award shall again be available for the grant of Awards under the Plan. Further, shares of Common Stock tendered to the Company by a Participant to exercise an Award shall be added to the number of shares of Common Stock available for the grant of Awards under the Plan. However, in the case of Incentive Stock Options, the two immediately preceding sentences shall be subject to any limitations under the Code. Shares issued under the Plan may consist in whole or in part of authorized but unissued shares or treasury shares.

(b) Substitute Awards. In connection with a merger or consolidation of an entity with the Company or the acquisition by the Company of property or stock of an entity, the Board may grant Awards in substitution for any options or other stock or stock-based awards granted by

 

2


such entity or an affiliate thereof. Substitute Awards may be granted on such terms as the Board deems appropriate in the circumstances, notwithstanding any limitations on Awards contained in the Plan. Substitute Awards shall not count against the overall share limit set forth in Section 4(a), except as may be required by reason of Section 422 and related provisions of the Code.

5. Stock Options

(a) General. The Board may grant options to purchase Common Stock (each, an “Option”) and determine the number of shares of Common Stock to be covered by each Option, the exercise price of each Option and the conditions and limitations applicable to the exercise of each Option, including conditions relating to applicable federal or state securities laws, as it considers necessary or advisable.

(b) Incentive Stock Options. An Option that the Board intends to be an “incentive stock option” as defined in Section 422 of the Code (an “Incentive Stock Option”) shall only be granted to employees of the Company, any of the Company’s present or future parent or subsidiary corporations as defined in Sections 424(e) or (f) of the Code, and any other entities the employees of which are eligible to receive Incentive Stock Options under the Code, and shall be subject to and shall be construed consistently with the requirements of Section 422 of the Code. An Option that is not intended to be an Incentive Stock Option shall be designated a “Nonstatutory Stock Option.” The Company shall have no liability to a Participant, or any other party, if an Option (or any part thereof) that is intended to be an Incentive Stock Option is not an Incentive Stock Option or if the Company converts an Incentive Stock Option to a Nonstatutory Stock Option.

(c) Exercise Price. The Board shall establish the exercise price of each Option and specify the exercise price in the applicable Option agreement. The exercise price shall be not less than 100%, or not less than 110% in the case of an Option intended to be an Incentive Stock Option granted to a Ten Percent Owner (as defined below), of the fair market value per share of Common Stock, as determined by (or in a manner approved by) the Board (“Fair Market Value”), on the date the Option is granted. A “Ten Percent Owner” means a person who owns, or is deemed within the meaning of Section 422(b)(6) of the Code to own, stock possessing more than 10% of the total combined voting power of all classes of stock of the Company (or any parent or subsidiary corporations of the Company, as defined in Sections 424(e) and (f), respectively, of the Code). Whether a person is a Ten Percent Owner shall be determined with respect to an Option based on the facts existing immediately prior to the grant date of the Option.

(d) Duration of Options. Each Option shall be exercisable at such times and subject to such terms and conditions as the Board may specify in the applicable option agreement; provided, however, that no Option will be granted with a term in excess of 10 years.

(e) Exercise of Options. Options may be exercised by delivery to the Company of a notice of exercise in a form of notice (which may be electronic) approved by the Company, together with payment in full (in a manner specified in Section 5(f)) of the exercise price for the number of shares for which the Option is exercised. Shares of Common Stock subject to the Option will be delivered by the Company as soon as practicable following exercise.

 

3


(f) Payment Upon Exercise. Common Stock purchased upon the exercise of an Option granted under the Plan shall be paid for as follows:

(1) in cash or by check, payable to the order of the Company;

(2) when the Common Stock is registered under the Exchange Act, except as may otherwise be provided in the applicable Option agreement or approved by the Board, in its sole discretion, by (i) delivery of an irrevocable and unconditional undertaking by a creditworthy broker to deliver promptly to the Company sufficient funds to pay the exercise price and any required tax withholding or (ii) delivery by the Participant to the Company of a copy of irrevocable and unconditional instructions to a creditworthy broker to deliver promptly to the Company cash or a check sufficient to pay the exercise price and any required tax withholding;

(3) when the Common Stock is registered under the Exchange Act and to the extent provided for in the applicable Option agreement or approved by the Board, in its sole discretion, by delivery (either by actual delivery or attestation) of shares of Common Stock owned by the Participant valued at their Fair Market Value, provided (i) such method of payment is then permitted under applicable law, (ii) such Common Stock, if acquired directly from the Company, was owned by the Participant for such minimum period of time, if any, as may be established by the Board in its discretion and (iii) such Common Stock is not subject to any repurchase, forfeiture, unfulfilled vesting or other similar requirements;

(4) to the extent provided for in the applicable Nonstatutory Stock Option agreement or approved by the Board in its sole discretion, by delivery of a notice of “net exercise” to the Company, as a result of which the Participant would pay the exercise price for the portion of the Option being exercised by cancelling a portion of the Option for such number of shares as is equal to the exercise price divided by the excess of the Fair Market Value on the date of exercise over the Option exercise price per share.

(5) to the extent permitted by applicable law and provided for in the applicable Option agreement or approved by the Board, in its sole discretion, by (i) delivery of a promissory note of the Participant to the Company on terms determined by the Board, or (ii) payment of such other lawful consideration as the Board may determine; or

(6) by any combination of the above permitted forms of payment.

6. Stock Appreciation Rights

(a) General. The Board may grant Awards consisting of stock appreciation rights (“SARs”) entitling the holder, upon exercise, to receive an amount of Common Stock or cash or a combination thereof (such form to be determined by the Board) determined by reference to appreciation, from and after the date of grant, in the Fair Market Value of a share of Common Stock over the measurement price established pursuant to Section 6(b). The date as of which such appreciation is determined shall be the exercise date.

(b) Measurement Price. The Board shall establish the measurement price of each SAR and specify it in the applicable SAR agreement. The measurement price shall not be less than 100%, of the Fair Market Value on the date the SAR is granted.

 

4


(c) Duration of SARs. Each SAR shall be exercisable at such times and subject to such terms and conditions as the Board may specify in the applicable SAR agreement; provided, however, that no SAR will be granted with a term in excess of 10 years.

(d) Exercise of SARs. SARs may be exercised by delivery to the Company of a notice of exercise in a form (which may be electronic) approved by the Company, together with any other documents required by the Board.

7. Restricted Stock; Restricted Stock Units

(a) General. The Board may grant Awards entitling recipients to acquire shares of Common Stock (“Restricted Stock”), subject to the right of the Company to repurchase all or part of such shares at their issue price or other stated or formula price (or to require forfeiture of such shares if issued at no cost) from the recipient in the event that conditions specified by the Board in the applicable Award are not satisfied prior to the end of the applicable restriction period or periods established by the Board for such Award. The Board may also grant Awards entitling the recipient to receive shares of Common Stock or cash to be delivered at the time such Award vests (“Restricted Stock Units”) (Restricted Stock and Restricted Stock Units are each referred to herein as a “Restricted Stock Award”).

(b) Terms and Conditions for All Restricted Stock Awards. The Board shall determine the terms and conditions of a Restricted Stock Award, including the conditions for vesting and repurchase (or forfeiture) and the issue price, if any.

(c) Additional Provisions Relating to Restricted Stock.

(1) Dividends. Unless otherwise provided in the applicable Award agreement, any dividends (whether paid in cash, stock or property) declared and paid by the Company with respect to shares of Restricted Stock (“Accrued Dividends”) shall be paid to the Participant only if and when such shares become free from the restrictions on transferability and forfeitability that apply to such shares. Each payment of Accrued Dividends will be made no later than the end of the calendar year in which the dividends are paid to stockholders of that class of stock or, if later, the 15th day of the third month following the lapsing of the restrictions on transferability and the forfeitability provisions applicable to the underlying shares of Restricted Stock.

(2) Stock Certificates. The Company may require that any stock certificates issued in respect of shares of Restricted Stock, as well as dividends or distributions paid on such Restricted Stock, shall be deposited in escrow by the Participant, together with a stock power endorsed in blank, with the Company (or its designee). At the expiration of the applicable restriction periods, the Company (or such designee) shall deliver the certificates no longer subject to such restrictions to the Participant or if the Participant has died, to his or her Designated Beneficiary. “Designated Beneficiary” means (i) the beneficiary designated, in a manner determined by the Board, by a Participant to receive amounts due or exercise rights of the Participant in the event of the Participant’s death or (ii) in the absence of an effective designation by a Participant, “Designated Beneficiary” the Participant’s estate.

 

5


(d) Additional Provisions Relating to Restricted Stock Units.

(1) Settlement. Upon the vesting of and/or lapsing of any other restrictions (i.e., settlement) with respect to each Restricted Stock Unit, the Participant shall be entitled to receive from the Company one share of Common Stock or (if so provided in the applicable Award agreement) an amount of cash equal to the Fair Market Value of one share of Common Stock. The Board may, in its discretion, provide that settlement of Restricted Stock Units shall be deferred, on a mandatory basis or at the election of the Participant in a manner that complies with Section 409A of the Code.

(2) Voting Rights. A Participant shall have no voting rights with respect to any Restricted Stock Units.

(3) Dividend Equivalents. The Award agreement for Restricted Stock Units may provide Participants with the right to receive an amount equal to any dividends or other distributions declared and paid on an equal number of outstanding shares of Common Stock (“Dividend Equivalents”). Dividend Equivalents may be paid currently or credited to an account for the Participants, may be settled in cash and/or shares of Common Stock and may be subject to the same restrictions on transfer and forfeitability as the Restricted Stock Units with respect to which paid, in each case to the extent provided in the applicable Award agreement.

8. Other Stock-Based Awards

(a) General. Other Awards of shares of Common Stock, and other Awards that are valued in whole or in part by reference to, or are otherwise based on, shares of Common Stock or other property, may be granted hereunder to Participants (“Other Stock-Based-Awards”). Such Other Stock-Based Awards shall also be available as a form of payment in the settlement of other Awards granted under the Plan or as payment in lieu of compensation to which a Participant is otherwise entitled. Other Stock-Based Awards may be paid in shares of Common Stock or cash, as the Board shall determine.

(b) Terms and Conditions. Subject to the provisions of the Plan, the Board shall determine the terms and conditions of each Other Stock-Based Award, including any purchase price applicable thereto.

9. Adjustments for Changes in Common Stock and Certain Other Events

(a) Changes in Capitalization. In the event of any stock split, reverse stock split, stock dividend, recapitalization, combination of shares, reclassification of shares, spin-off or other similar change in capitalization or event, or any dividend or distribution to holders of Common Stock other than an ordinary cash dividend, (i) the number and class of securities available under the Plan, (ii) the number and class of securities and exercise price per share of each outstanding Option, (iii) the share and per-share provisions and the measurement price of each outstanding SAR, (iv) the number of shares subject to and the repurchase price per share subject to each outstanding Restricted Stock Award and (v) the share and per-share-related provisions and the purchase price, if any, of each outstanding Other Stock-Based Award, shall be equitably adjusted by the Company (or substituted Awards may be made, if applicable) in the manner determined by the Board. Without limiting the generality of the foregoing, in the event the Company effects a split of the Common Stock by means of a stock dividend and the exercise

 

6


price of and the number of shares subject to an outstanding Option are adjusted as of the date of the distribution of the dividend (rather than as of the record date for such dividend), then an optionee who exercises an Option between the record date and the distribution date for such stock dividend shall be entitled to receive, on the distribution date, the stock dividend with respect to the shares of Common Stock acquired upon such Option exercise, notwithstanding the fact that such shares were not outstanding as of the close of business on the record date for such stock dividend.

(b) Reorganization Events.

(1) Definition. A “Reorganization Event” shall mean: (a) any merger or consolidation of the Company with or into another entity as a result of which all of the Common Stock of the Company is converted into or exchanged for the right to receive cash, securities or other property or is cancelled, (b) any transfer or disposition of all of the Common Stock of the Company for cash, securities or other property pursuant to a share exchange or other transaction or (c) any liquidation or dissolution of the Company.

(2) Consequences of a Reorganization Event on Awards Other than Restricted Stock.

(i) In connection with a Reorganization Event, the Board may take any one or more of the following actions as to all or any (or any portion of) outstanding Awards other than Restricted Stock on such terms as the Board determines (except to the extent specifically provided otherwise in an applicable Award agreement or another agreement between the Company and the Participant): (i) provide that such Awards shall be assumed, or substantially equivalent Awards shall be substituted, by the acquiring or succeeding corporation (or an affiliate thereof), (ii) upon written notice to a Participant, provide that all of the Participant’s unexercised Awards will terminate immediately prior to the consummation of such Reorganization Event unless exercised by the Participant (to the extent then exercisable) within a specified period following the date of such notice, (iii) provide that outstanding Awards shall become exercisable, realizable, or deliverable, or restrictions applicable to an Award shall lapse, in whole or in part prior to or upon such Reorganization Event, (iv) in the event of a Reorganization Event under the terms of which holders of Common Stock will receive upon consummation thereof a cash payment for each share surrendered in the Reorganization Event (the “Acquisition Price”), make or provide for a cash payment to Participants with respect to each Award held by a Participant equal to (A) the number of shares of Common Stock subject to the vested portion of the Award (after giving effect to any acceleration of vesting that occurs upon or immediately prior to such Reorganization Event) multiplied by (B) the excess, if any, of (I) the Acquisition Price over (II) the exercise, measurement or purchase price of such Award and any applicable tax withholdings, in exchange for the termination of such Award, (v) provide that, in connection with a liquidation or dissolution of the Company, Awards shall convert into the right to receive liquidation proceeds (if applicable, net of the exercise, measurement or purchase price thereof and any applicable tax withholdings) and (vi) any combination of the foregoing. In taking any of the actions permitted under this Section 9(b)(2), the Board shall not be obligated by the Plan to treat all Awards, all Awards held by a Participant, or all Awards of the same type, identically.

 

7


(ii) Notwithstanding the terms of Section 9(b)(2)(A), in the case of outstanding Restricted Stock Units that are subject to Section 409A of the Code: (i) if the applicable Restricted Stock Unit agreement provides that the Restricted Stock Units shall be settled upon a “change in control event” within the meaning of Treasury Regulation Section 1.409A-3(i)(5)(i), and the Reorganization Event constitutes such a “change in control event”, then no assumption or substitution shall be permitted pursuant to Section 9(b)(2)(A)(i) and the Restricted Stock Units shall instead be settled in accordance with the terms of the applicable Restricted Stock Unit agreement; and (ii) the Board may only undertake the actions set forth in clauses (iii), (iv) or (v) of Section 9(b)(2)(A) if the Reorganization Event constitutes a “change in control event” as defined under Treasury Regulation Section 1.409A-3(i)(5)(i) and such action is permitted or required by Section 409A of the Code; if the Reorganization Event is not a “change in control event” as so defined or such action is not permitted or required by Section 409A of the Code, and the acquiring or succeeding corporation does not assume or substitute the Restricted Stock Units pursuant to clause (i) of Section 9(b)(2)(A), then the unvested Restricted Stock Units shall terminate immediately prior to the consummation of the Reorganization Event without any payment in exchange therefor.

(iii) For purposes of Section 9(b)(2)(A)(i), an Award (other than Restricted Stock) shall be considered assumed if, following consummation of the Reorganization Event, such Award confers the right to purchase or receive pursuant to the terms of such Award, for each share of Common Stock subject to the Award immediately prior to the consummation of the Reorganization Event, the consideration (whether cash, securities or other property) received as a result of the Reorganization Event by holders of Common Stock for each share of Common Stock held immediately prior to the consummation of the Reorganization Event (and if holders were offered a choice of consideration, the type of consideration chosen by the holders of a majority of the outstanding shares of Common Stock); provided, however, that if the consideration received as a result of the Reorganization Event is not solely common stock of the acquiring or succeeding corporation (or an affiliate thereof), the Company may, with the consent of the acquiring or succeeding corporation, provide for the consideration to be received upon the exercise or settlement of the Award to consist solely of such number of shares of common stock of the acquiring or succeeding corporation (or an affiliate thereof) that the Board determined to be equivalent in value (as of the date of such determination or another date specified by the Board) to the per share consideration received by holders of outstanding shares of Common Stock as a result of the Reorganization Event.

(3) Consequences of a Reorganization Event on Restricted Stock. Upon the occurrence of a Reorganization Event other than a liquidation or dissolution of the Company, the repurchase and other rights of the Company with respect to outstanding Restricted Stock shall inure to the benefit of the Company’s successor and shall, unless the Board determines otherwise, apply to the cash, securities or other property which the Common Stock was converted into or exchanged for pursuant to such Reorganization Event in the same manner and to the same extent as they applied to such Restricted Stock; provided, however, that the Board may provide for termination or deemed satisfaction of such repurchase or other rights under the instrument evidencing any Restricted Stock or any other agreement between a Participant and the Company, either initially or by amendment. Upon the occurrence of a Reorganization Event involving the liquidation or dissolution of the Company, except to the extent specifically provided to the contrary in the instrument evidencing any Restricted Stock or any other agreement between a Participant and the Company, all restrictions and conditions on all Restricted Stock then outstanding shall automatically be deemed terminated or satisfied.

 

8


10. General Provisions Applicable to Awards

(a) Transferability of Awards. Awards (or any interest in an Award, including, prior to exercise, any interest in shares of Common Stock issuable upon exercise of an Option or SAR) shall not be sold, assigned, transferred (including by establishing any short position, put equivalent position (as defined in Rule 16a-1 issued under the Exchange Act) or call equivalent position (as defined in Rule 16a-1 issued under the Exchange Act)), pledged, hypothecated or otherwise encumbered by the person to whom they are granted, either voluntarily or by operation of law, and, during the life of the Participant, shall be exercisable only by the Participant; except that Awards may be transferred to family members (as defined in Rule 701(c)(3) under the Securities Act) through gifts or (other than Incentive Stock Options) domestic relations orders or to an executor or guardian upon the death or disability of the Participant. The Company shall not be required to recognize any such permitted transfer until such time as such permitted transferee shall deliver to the Company a written instrument, as a condition to such transfer, in form and substance satisfactory to the Company confirming that such transferee shall be bound by all of the terms and conditions of the Award. References to a Participant, to the extent relevant in the context, shall include references to authorized transferees. For the avoidance of doubt, nothing contained in this Section 10(a) shall be deemed to restrict a transfer to the Company.

(b) Documentation. Each Award shall be evidenced in such form (written, electronic or otherwise) as the Board shall determine. Each Award may contain terms and conditions in addition to those set forth in the Plan.

(c) Board Discretion. Except as otherwise provided by the Plan, each Award may be made alone or in addition or in relation to any other Award. The terms of each Award need not be identical, and the Board need not treat Participants uniformly.

(d) Termination of Status. The Board shall determine the effect on an Award of the disability, death, termination or other cessation of employment, authorized leave of absence or other change in the employment or other status of a Participant and the extent to which, and the period during which, the Participant, or the Participant’s legal representative, conservator, guardian or Designated Beneficiary, may exercise rights under the Award.

(e) Withholding. The Participant must satisfy all applicable federal, state, and local or other income and employment tax withholding obligations before the Company will deliver stock certificates or otherwise recognize ownership of Common Stock under an Award. The Company may decide to satisfy the withholding obligations through additional withholding on salary or wages. If the Company elects not to or cannot withhold from other compensation, the Participant must pay the Company the full amount, if any, required for withholding or have a broker tender to the Company cash equal to the withholding obligations. Payment of withholding obligations is due before the Company will issue any shares on exercise, vesting or release from forfeiture of an Award or at the same time as payment of the exercise or purchase price unless the Company determines otherwise. If provided for in an Award or approved by the Board in its sole discretion, a Participant may satisfy such tax obligations in whole or in part by

 

9


delivery (either by actual delivery or attestation) of shares of Common Stock, including shares retained from the Award creating the tax obligation, valued at their Fair Market Value; provided, however, except as otherwise provided by the Board, that the total tax withholding where stock is being used to satisfy such tax obligations cannot exceed the Company’s minimum statutory withholding obligations (based on minimum statutory withholding rates for federal and state tax purposes, including payroll taxes, that are applicable to such supplemental taxable income). Shares used to satisfy tax withholding requirements cannot be subject to any repurchase, forfeiture, unfulfilled vesting or other similar requirements.

(f) Amendment of Award.

(1) The Board may amend, modify or terminate any outstanding Award, including but not limited to, substituting therefor another Award of the same or a different type, changing the date of exercise or realization, and converting an Incentive Stock Option to a Nonstatutory Stock Option. The Participant’s consent to such action shall be required unless (i) the Board determines that the action, taking into account any related action, does not materially and adversely affect the Participant’s rights under the Plan or (ii) the change is permitted under Section 9.

(2) The Board may, without stockholder approval, amend any outstanding Award granted under the Plan to provide an exercise price per share that is lower than the then-current exercise price per share of such outstanding Award. The Board may also, without stockholder approval, cancel any outstanding award (whether or not granted under the Plan) and grant in substitution therefor new Awards under the Plan covering the same or a different number of shares of Common Stock and having an exercise price per share lower than the then-current exercise price per share of the cancelled award.

(g) Conditions on Delivery of Stock. The Company will not be obligated to deliver any shares of Common Stock pursuant to the Plan or to remove restrictions from shares previously issued or delivered under the Plan until (i) all conditions of the Award have been met or removed to the satisfaction of the Company, (ii) in the opinion of the Company’s counsel, all other legal matters in connection with the issuance and delivery of such shares have been satisfied, including any applicable securities laws and regulations and any applicable stock exchange or stock market rules and regulations, and (iii) the Participant has executed and delivered to the Company such representations or agreements as the Company may consider appropriate to satisfy the requirements of any applicable laws, rules or regulations.

(h) Acceleration. The Board may at any time provide that any Award shall become immediately exercisable in whole or in part, free of some or all restrictions or conditions, or otherwise realizable in whole or in part, as the case may be.

11. Miscellaneous

(a) No Right To Employment or Other Status. No person shall have any claim or right to be granted an Award by virtue of the adoption of the Plan, and the grant of an Award shall not be construed as giving a Participant the right to continued employment or any other relationship with the Company. The Company expressly reserves the right at any time to dismiss or otherwise terminate its relationship with a Participant free from any liability or claim under the Plan, except as expressly provided in the applicable Award.

 

10


(b) No Rights As Stockholder. Subject to the provisions of the applicable Award, no Participant or Designated Beneficiary shall have any rights as a stockholder with respect to any shares of Common Stock to be distributed with respect to an Award until becoming the record holder of such shares.

(c) Effective Date and Term of Plan. The Plan shall become effective on the date on which it is adopted by the Board. No Awards shall be granted under the Plan after the expiration of 10 years from the earlier of (i) the date on which the Plan was adopted by the Board or (ii) the date the Plan was approved by the Company’s stockholders, but Awards previously granted may extend beyond that date.

(d) Amendment of Plan. The Board may amend, suspend or terminate the Plan or any portion thereof at any time; provided that if at any time the approval of the Company’s stockholders is required as to any modification or amendment under Section 422 of the Code or any successor provision with respect to Incentive Stock Options, the Board may not effect such modification or amendment without such approval. Unless otherwise specified in the amendment, any amendment to the Plan adopted in accordance with this Section 11(d) shall apply to, and be binding on the holders of, all Awards outstanding under the Plan at the time the amendment is adopted, provided the Board determines that such amendment, taking into account any related action, does not materially and adversely affect the rights of Participants under the Plan.

(e) Authorization of Sub-Plans (including Grants to non-U.S. Employees). The Board may from time to time establish one or more sub-plans under the Plan for purposes of satisfying applicable securities, tax or other laws of various jurisdictions. The Board shall establish such sub-plans by adopting supplements to the Plan containing (i) such limitations on the Board’s discretion under the Plan as the Board deems necessary or desirable or (ii) such additional terms and conditions not otherwise inconsistent with the Plan as the Board shall deem necessary or desirable. All supplements adopted by the Board shall be deemed to be part of the Plan, but each supplement shall apply only to Participants within the affected jurisdiction and the Company shall not be required to provide copies of any supplement to Participants in any jurisdiction which is not the subject of such supplement.

(f) Compliance with Section 409A of the Code. Except as provided in individual Award agreements initially or by amendment, if and to the extent (i) any portion of any payment, compensation or other benefit provided to a Participant pursuant to the Plan in connection with his or her employment termination constitutes “nonqualified deferred compensation” within the meaning of Section 409A of the Code and (ii) the Participant is a specified employee as defined in Section 409A(a)(2)(B)(i) of the Code, in each case as determined by the Company in accordance with its procedures, by which determinations the Participant (through accepting the Award) agrees that he or she is bound, such portion of the payment, compensation or other benefit shall not be paid before the day that is six months plus one day after the date of “separation from service” (as determined under Section 409A of the Code) (the “New Payment Date”), except as Section 409A of the Code may then permit. The aggregate of any payments

 

11


that otherwise would have been paid to the Participant during the period between the date of separation from service and the New Payment Date shall be paid to the Participant in a lump sum on such New Payment Date, and any remaining payments will be paid on their original schedule.

The Company makes no representations or warranty and shall have no liability to the Participant or any other person if any provisions of or payments, compensation or other benefits under the Plan are determined to constitute nonqualified deferred compensation subject to Section 409A of the Code but do not to satisfy the conditions of that section.

(g) Limitations on Liability. Notwithstanding any other provisions of the Plan, no individual acting as a director, officer, other employee, or agent of the Company will be liable to any Participant, former Participant, spouse, beneficiary, or any other person for any claim, loss, liability, or expense incurred in connection with the Plan, nor will such individual be personally liable with respect to the Plan because of any contract or other instrument he or she executes in his or her capacity as a director, officer, other employee, or agent of the Company. The Company will indemnify and hold harmless each director, officer, other employee, or agent of the Company to whom any duty or power relating to the administration or interpretation of the Plan has been or will be delegated, against any cost or expense (including attorneys’ fees) or liability (including any sum paid in settlement of a claim with the Board’s approval) arising out of any act or omission to act concerning the Plan unless arising out of such person’s own fraud or bad faith.

(h) Governing Law. The provisions of the Plan and all Awards made hereunder shall be governed by and interpreted in accordance with the laws of the State of Delaware, excluding choice-of-law principles of the law of such state that would require the application of the laws of a jurisdiction other than the State of Delaware.

*            *             *

 

12

Exhibit 10.10

AMENDMENT TO THE

GINKGO BIOWORKS, INC.

2014 STOCK INCENTIVE PLAN

Effective May 1, 2019

This Amendment to the Ginkgo Bioworks, Inc. 2014 Stock Incentive Plan, as amended (the “Plan”) is effective as of the date first set forth above, such amendment having been approved by the Board of Directors of Ginkgo Bioworks, Inc., a Delaware corporation (the “Company”), on April 8, 2019 and approved by the holders of a majority of the Company’s outstanding shares of voting capital stock on April 15, 2019, in each case in accordance with Section 11(d) of the Plan. Capitalized but undefined terms shall have the meanings provided in the Plan.

As of result of the foregoing approvals, the Plan is hereby amended as follows:

1.     Section 4(a) of the Plan is hereby amended and restated in its entirety to read as follows:

“(a) Number of Shares. Subject to adjustment under Section 9, Awards may be made under the Plan (any or all of which Awards may be in the form of Incentive Stock Options (as defined in Section 5(b)) for up to such number of shares of common stock, $0.01 par value per share, of the Company (the “Common Stock”), as is equal to the sum of:

(1) 504,504; and

(2) the number of shares of Common Stock subject to awards granted under the Existing Plan which awards expire, terminate or are otherwise surrendered, canceled, forfeited or repurchased by the Company pursuant to a contractual repurchase right (subject, however, in the case of Incentive Stock Options to any limitations of the Code); and.

If any Award expires or is terminated, surrendered or canceled without having been fully exercised, is forfeited in whole or in part (including as the result of shares of Common Stock subject to such Award being repurchased by the Company at the original issuance price pursuant to a contractual repurchase right), or results in any Common Stock not being issued, the unused Common Stock covered by such Award shall again be available for the grant of Awards under the Plan. Further, shares of Common Stock tendered to the Company by a Participant to exercise an Award shall be added to the number of shares of Common Stock available for the grant of Awards under the Plan. However, in the case of Incentive Stock Options, the two immediately preceding sentences shall be subject to any limitations under the Code. Shares issued under the Plan may consist in whole or in part of authorized but unissued shares or treasury shares.”

The undersigned, being the duly elected and acting Secretary of the Company, hereby certifies that the foregoing amendment was duly approved and adopted by the Board of Directors and the Stockholders of the Company effective as of the date first referenced above.

 

By:  

/s/  Bartholomew Canton

        Bartholomew Canton, Secretary

Exhibit 10.11

Plan Amendment

AMENDMENT TO THE

GINKGO BIOWORKS, INC.

2014 STOCK INCENTIVE PLAN

Effective September 9, 2019

This Amendment to the Ginkgo Bioworks, Inc. 2014 Stock Incentive Plan, as amended (the “Plan”) is effective as of the date first set forth above, such amendment having been approved by the Board of Directors of Ginkgo Bioworks, Inc., a Delaware corporation (the “Company”), on September 9, 2019 and approved by the holders of a majority of the Company’s outstanding shares of voting capital stock on September 9, 2019, in each case in accordance with Section 11(d) of the Plan. Capitalized but undefined terms shall have the meanings provided in the Plan.

As of result of the foregoing approvals, the Plan is hereby amended as follows:

1.     Section 4(a) of the Plan is hereby amended and restated in its entirety to read as follows:

“(a) Number of Shares. Subject to adjustment under Section 9, Awards may be made under the Plan (any or all of which Awards may be in the form of Incentive Stock Options (as defined in Section 5(b)) for up to such number of shares of common stock, $0.01 par value per share, of the Company (the “Common Stock”), as is equal to the sum of:

(1) 1,752,404; and

(2) the number of shares of Common Stock subject to awards granted under the Existing Plan which awards expire, terminate or are otherwise surrendered, canceled, forfeited or repurchased by the Company pursuant to a contractual repurchase right (subject, however, in the case of Incentive Stock Options to any limitations of the Code); and.

If any Award expires or is terminated, surrendered or canceled without having been fully exercised, is forfeited in whole or in part (including as the result of shares of Common Stock subject to such Award being repurchased by the Company at the original issuance price pursuant to a contractual repurchase right), or results in any Common Stock not being issued, the unused Common Stock covered by such Award shall again be available for the grant of Awards under the Plan. Further, shares of Common Stock tendered to the Company by a Participant to exercise an Award shall be added to the number of shares of Common Stock available for the grant of Awards under the Plan. However, in the case of Incentive Stock Options, the two immediately preceding sentences shall be subject to any limitations under the Code. Shares issued under the Plan may consist in whole or in part of authorized but unissued shares or treasury shares.”


The undersigned, being the duly elected and acting Secretary of the Company, hereby certifies that the foregoing amendment was duly approved and adopted by the Board of Directors and the Stockholders of the Company effective as of the date first referenced above.

 

By:  

/s/  Bartholomew Canton

        Bartholomew Canton, Secretary

Exhibit 10.12

Plan Amendment

AMENDMENT TO THE

GINKGO BIOWORKS, INC.

2014 STOCK INCENTIVE PLAN

Effective November 14, 2019

This Amendment to the Ginkgo Bioworks, Inc. 2014 Stock Incentive Plan, as amended (the “Plan”) is effective as of the date first set forth above, such amendment having been approved by the Board of Directors of Ginkgo Bioworks, Inc., a Delaware corporation (the “Company”), on November 14, 2019 in accordance with Section 11(d) of the Plan. Capitalized but undefined terms shall have the meanings provided in the Plan.

As of result of the foregoing approvals, the Plan is hereby amended as follows:

 

  1.

 Section 10(e) of the Plan is hereby amended and restated in its entirety to read as follows:

(e)    Withholding. The Participant must satisfy all applicable federal, state, and local or other income and employment tax withholding obligations before the Company will deliver stock certificates or otherwise recognize ownership of Common Stock under an Award. The Company may decide to satisfy the withholding obligations through additional withholding on salary or wages. If the Company elects not to or cannot withhold from other compensation, the Participant must pay the Company the full amount, if any, required for withholding or have a broker tender to the Company cash equal to the withholding obligations. Payment of withholding obligations is due before the Company will issue any shares on exercise, vesting or release from forfeiture of an Award or at the same time as payment of the exercise or purchase price unless the Company determines otherwise. If provided for in an Award or approved by the Board in its sole discretion, a Participant may satisfy such tax obligations in whole or in part by delivery (either by actual delivery or attestation) of shares of Common Stock, including shares retained from the Award creating the tax obligation, valued at their Fair Market Value; provided, however, that the total tax withholding where stock is being used to satisfy such tax obligations cannot exceed the Company’s maximum statutory withholding obligations for the applicable jurisdiction (or such other rate as may be determined by the Company after considering any accounting consequences or costs). Shares used to satisfy tax withholding requirements cannot be subject to any repurchase, forfeiture, unfulfilled vesting or other similar requirements.

The undersigned, being the duly elected and acting Secretary of the Company, hereby certifies that the foregoing amendment was duly approved and adopted by the Board of Directors of the Company effective as of the date first referenced above.

 

By:  

/s/  Bartholomew Canton

        Bartholomew Canton, Secretary

Exhibit 10.13

Plan Amendment

AMENDMENT TO THE

GINKGO BIOWORKS, INC.

2014 STOCK INCENTIVE PLAN

Effective April 8, 2020

This Amendment to the Ginkgo Bioworks, Inc. 2014 Stock Incentive Plan, as amended (the “Plan”) is effective as of the date first set forth above, such amendment having been approved by the Board of Directors of Ginkgo Bioworks, Inc., a Delaware corporation (the “Company”), on April 8, 2020 and approved by the holders of a majority of the Company’s outstanding shares of voting capital stock on April 27, 2020, in each case in accordance with Section 11(d) of the Plan. Capitalized but undefined terms shall have the meanings provided in the Plan.

As of result of the foregoing approvals, the Plan is hereby amended as follows:

1.     Section 4(a) of the Plan is hereby amended and restated in its entirety to read as follows:

“(a) Number of Shares. Subject to adjustment under Section 9, Awards may be made under the Plan (any or all of which Awards may be in the form of Incentive Stock Options (as defined in Section 5(b)) for up to such number of shares of common stock, $0.01 par value per share, of the Company (the “Common Stock”), as is equal to the sum of:

(1) 2,664,186; and

(2) the number of shares of Common Stock subject to awards granted under the Company’s 2008 Stock Incentive Plan which awards expire, terminate or are otherwise surrendered, canceled, forfeited or repurchased by the Company pursuant to a contractual repurchase right (subject, however, in the case of Incentive Stock Options to any limitations of the Code); and.

If any Award expires or is terminated, surrendered or canceled without having been fully exercised, is forfeited in whole or in part (including as the result of shares of Common Stock subject to such Award being repurchased by the Company at the original issuance price pursuant to a contractual repurchase right), or results in any Common Stock not being issued, the unused Common Stock covered by such Award shall again be available for the grant of Awards under the Plan. Further, shares of Common Stock tendered to the Company by a Participant to exercise an Award shall be added to the number of shares of Common Stock available for the grant of Awards under the Plan. However, in the case of Incentive Stock Options, the two immediately preceding sentences shall be subject to any limitations under the Code. Shares issued under the Plan may consist in whole or in part of authorized but unissued shares or treasury shares.”


The undersigned, being the duly elected and acting Secretary of the Company, hereby certifies that the foregoing amendment was duly approved and adopted by the Board of Directors and the Stockholders of the Company effective as of the date first referenced above.

 

By:  

/s/  Bartholomew Canton

        Bartholomew Canton, Secretary

Exhibit 10.14

AMENDMENT TO THE

GINKGO BIOWORKS, INC.

2014 STOCK INCENTIVE PLAN

Effective March 15, 2021

This Amendment to the Ginkgo Bioworks, Inc. 2014 Stock Incentive Plan, as amended (the “Plan”) is effective as of the date first set forth above, such amendment having been approved by the Board of Directors of Ginkgo Bioworks, Inc., a Delaware corporation (the “Company”), on March 15, 2021 and approved by the holders of a majority of the Company’s outstanding shares of voting capital stock on March 15, 2021, in each case in accordance with Section 11(d) of the Plan. Capitalized but undefined terms shall have the meanings provided in the Plan.

As of result of the foregoing approvals, the Plan is hereby amended as follows:

1. Section 4(a) of the Plan is hereby amended and restated in its entirety to read as follows:

“(a) Number of Shares. Subject to adjustment under Section 9, Awards may be made under the Plan (any or all of which Awards may be in the form of Incentive Stock Options (as defined in Section 5(b)) for up to such number of shares of common stock, $0.01 par value per share, of the Company (the “Common Stock”), as is equal to the sum of:

(1) 3,478,368; and

(2) the number of shares of Common Stock subject to awards granted under the Company’s 2008 Stock Incentive Plan which awards expire, terminate or are otherwise surrendered, canceled, forfeited or repurchased by the Company pursuant to a contractual repurchase right (subject, however, in the case of Incentive Stock Options to any limitations of the Code); and.

If any Award expires or is terminated, surrendered or canceled without having been fully exercised, is forfeited in whole or in part (including as the result of shares of Common Stock subject to such Award being repurchased by the Company at the original issuance price pursuant to a contractual repurchase right), or results in any Common Stock not being issued, the unused Common Stock covered by such Award shall again be available for the grant of Awards under the Plan. Further, shares of Common Stock tendered to the Company by a Participant to exercise an Award shall be added to the number of shares of Common Stock available for the grant of Awards under the Plan. However, in the case of Incentive Stock Options, the two immediately preceding sentences shall be subject to any limitations under the Code. Shares issued under the Plan may consist in whole or in part of authorized but unissued shares or treasury shares.”

The undersigned, being the duly elected and acting Secretary of the Company, hereby certifies that the foregoing amendment was duly approved and adopted by the Board of Directors and the Stockholders of the Company effective as of the date first referenced above.


By:  

/s/ Bartholomew Canton

  Bartholomew Canton, Secretary

Exhibit 10.15

GINKGO BIOWORKS, INC.

INCENTIVE STOCK OPTION AGREEMENT

This Option is granted by Ginkgo BioWorks, Inc., a Delaware corporation (the “Company”), pursuant to the provisions of the Company’s 2008 Stock Incentive Plan, as amended from time to time (the “Plan”), which is incorporated herein by reference and made a part hereof. The holder of this Option (the “Holder”) hereby accepts this Option subject to all the terms and provisions of the Plan and agrees that (a) in the event of any conflict between the terms hereof and those of the Plan, the latter shall prevail, and (b) all decisions under and interpretations of the Plan by the Board or the Committee shall be final, binding and conclusive upon the Holder and his or her heirs and legal representatives.

 

1.

Option Grant.

 

Name of Holder:                
Date of Grant:                
Shares:    This option may be exercisable for a maximum of              shares of Common Stock of the Company, $.01 par value (the “Common Stock”).
Exercise Price:    $             per share.

 

2.

Payment method. The Exercise Price may be paid for by the Holder by:

 

  (i)

a personal, certified or bank check or postal money order payable to the order of the Company for an amount equal to the exercise price of the shares being purchased; or

 

  (ii)

any of the other methods set forth in the Plan, with the consent of the Company.

 

3.

Expiration Date of Option. This Option shall expire on the tenth anniversary of the Date of Grant unless sooner terminated.

 

4.

Vesting Schedule. Subject to the provisions set forth herein and in the Plan, this Option shall become exercisable for 2.0833% of the original number of Shares granted hereby on             , 20    , and shall become exercisable for an additional 2.0833% of the original number of Shares granted hereby as of the last day of each successive calendar month thereafter until the fourth anniversary of the Vesting Start Date (defined below), at which time the Option shall be exercisable in full. The vesting of this Option shall cease upon the date of termination of employment. The Vesting Start Date shall be             , 20    .

 

5.

Termination of Employment. This Option shall terminate on the earliest to occur of:

 

  (i)

the date of expiration hereof;


  (ii)

immediately upon the effective date of the termination of the Holder’s employment with the Company by the Company for Cause (as defined in the Plan);

 

  (iii)

90 days after the date of voluntary termination of the Holder’s employment with the Company by the Holder (other than for death or permanent disability as defined in the Plan); or

 

  (iv)

90 days after the date of termination of the Holder’s employment with the Company by the Company without Cause (other than for death or permanent disability as defined in the Plan).

 

6.

Exercising the Option. To exercise this Option, the Holder shall deliver to the Company a Notice (as defined in the Plan), the payment for the Shares to be purchased, and any other documents requested by the Company in accordance with Section 8.2 of the Plan. This Option may not be exercised for a fraction of a Share.

 

7.

Company’s Right of First Refusal. Prior to the effective date of a registration statement covering shares of the Company’s Common Stock, $.01 par value (the “Common Stock”), any shares of stock issued pursuant to exercise of this Option shall be subject to the Company’s right of first refusal as set forth in Appendix A.

 

8.

Lock-Up Agreement. The Holder agrees for a period of up to 180 days from the effective date of any registration of securities of the Company under the Securities Act of 1933, as amended (the “Securities Act”), upon request of the Company or underwriters managing any underwritten offering of the Company’s securities, not to sell, make any short sale of, loan, grant any option for the purchase of, or otherwise dispose of any shares issued pursuant to the exercise of this Option, without the prior written consent of the Company and such underwriters.

 

9.

Incentive Stock Option; Disqualifying Disposition. Although this Option is intended to qualify as an incentive stock option under the Internal Revenue Code of 1986 (the “Code”), the Company makes no representation as to the tax treatment upon exercise of this Option or sale or other disposition of the shares covered by this Option, and the Holder is advised to consult a personal tax advisor. Upon a Disqualifying Disposition of shares received upon exercise of this Option, the Holder will forfeit the favorable income tax treatment otherwise available with respect to the exercise of this Option. A “Disqualifying Disposition” shall have the meaning specified in Section 421(b) of the Code. As of the Date of Grant of this Option a Disqualifying Disposition is any disposition (including any sale) of such shares before the later of (a) the second anniversary of the date of grant of this Option and (b) the first anniversary of the date on which the Holder acquired such shares by exercising this Option, provided that such holding period requirements terminate upon the death of the Holder. The Holder shall notify the Company in writing immediately after making a Disqualifying Disposition of any shares of Common Stock received pursuant to the exercise of this Option, and shall provide the Company with any information that the Company shall request concerning any such Disqualifying Disposition.

 

2


10.

Tax Withholding. The Company’s obligation to deliver Shares shall be subject to the Holder’s satisfaction or any federal, state and local income and employment tax withholding requirements.

 

11.

Notices. Any notice to be given to the Company hereunder shall be deemed sufficient if addressed to the Company and delivered to the offices of the Company, at 27 Drydock Ave Floor 8 Boston MA 02210, attention: President, or such other address as the Company may hereafter designate. Any notice to be given to the Holder hereunder shall be deemed sufficient if addressed to and delivered in person to the Holder at his or her address furnished to the Company or when deposited in the mail, postage prepaid, addressed to the Holder at such address.

Remainder of Page Intentionally Left Blank

 

3


IN WITNESS WHEREOF, this Option has been executed as of the Date of Grant.

 

GINKGO BIOWORKS, INC.
By:                                                                   

Name:       

Title:         


HOLDER’S ACCEPTANCE AND ACKNOWLEDGEMENT

The undersigned hereby accepts the foregoing Option and agrees to the terms and conditions thereof. The undersigned hereby acknowledges receipt of a copy of the Company’s 2008 Stock Incentive Plan as amended as of             , 20    .

 

        /s/             

Name of Holder:                 

Record Address:

            

            

 
 


APPENDIX A

Right of First Refusal

1.    General. Prior to the effective date of a registration statement under the Securities Act, covering any shares of the Company’s Common Stock and until such time as the Company shall have effected a public offering of its Common Stock registered under the Securities Act, in the event that, at any time when the Holder (which term for purposes of this section shall mean the Holder and his or her executors, administrators and any other person to whom this Option may be transferred by will or the laws of descent and distribution) is permitted to do so, the Holder desires to sell, assign or otherwise transfer any of the shares issued upon the exercise of this Option, the Holder shall first offer such shares to the Company by giving written notice of the Holder’s desire so to sell, assign or transfer such shares.

2.    Notice of Intended Transfer. The notice shall state the number of shares offered, the name of the person or persons to whom it is proposed to sell, assign or transfer such shares and the price at which such shares are intended to be sold, assigned or transferred. Such notice shall constitute an offer to the Company for the Company to purchase the number of shares set forth in the notice at a price per share equal to the price stated therein.

3.    Company to Accept or Decline Within 30 Days. The Company may accept the offer as to all, but not less than all, such shares by notifying the Holder in writing within 30 days after receipt of such notice of its acceptance of the offer. If the offer is accepted, the Company shall have 60 days within which to purchase the offered shares at a price per share as aforesaid. If within the applicable time periods the Holder does not receive notice of the Company’s intention to purchase the offered shares, or if payment in full of the purchase price is not made by the Company, the offer shall be deemed to have been rejected and the Holder may transfer title to such shares within 90 days from the date of the Holder’s written notice to the Company of the Holder’s intention to sell, but such transfer shall be made only to the proposed transferee and at the proposed price as stated in such notice and after compliance with any other provisions of this Option applicable to the transfer of such shares.

4.    Permitted Transfers. The following transactions shall be exempt from the provisions of this Appendix A:

 

  (a)

any transfer of Shares to or for the benefit of any spouse, child or grandchild of the Holder, or to a trust for their benefit;

 

  (b)

any transfer pursuant to an effective registration statement filed by the Company under the Act; and

 

  (c)

the sale of all or substantially all of the shares of capital stock of the Company (including pursuant to a merger or consolidation).


5.    Transferred Shares to Remain Subject to Right of First Refusal. Shares that are so transferred to such transferee shall remain subject to the rights of the Company set forth in this Appendix A. As a condition to such transfer, such transferee shall execute and deliver all such documents as the Company may require to evidence the binding agreement of such transferee so to remain subject to the rights of the Company.

6.    Remedies of Company. No sale, assignment, pledge or transfer of any of the shares covered by this Option shall be effective or given effect on the books of the Company unless all of the applicable provisions of this Appendix A have been duly complied with, and the Company may inscribe on the face of any certificate representing any of such shares a legend referring to the provisions of this Appendix A. If any transfer of shares is made or attempted in violation of the foregoing restrictions, or if shares are not offered to the Company as required hereby, the Company shall have the right to purchase such shares from the owner thereof or his transferee at any time before or after the transfer, as herein provided. In addition to any other legal or equitable remedies which it may have, the Company may enforce its rights by actions for specific performance (to the extent permitted by law) and may refuse to recognize any transferee as one of its stockholders for any purpose, including, without limitation, for purposes of dividend and voting rights, until all applicable provisions hereof have been complied with.

7.    Shares Subject to Right of First Refusal. For purposes of the Right of First Refusal pursuant to this Appendix A, the term “shares” shall mean any and all new, substituted or additional securities or other property issued to the Holder, by reason of his or her ownership of Common Stock pursuant to the exercise of this Option, in connection with any stock dividend, liquidating dividend, stock split or other change in the character or amount of any of the outstanding securities of the Company, or any consolidation, merger or sale of all or substantially all of the assets of the Company.

8.    Legends on Stock Certificates. Any certificate representing shares of stock subject to the provisions of this Appendix A may have endorsed thereon one or more legends, substantially as follows:

 

  (i)

“Any disposition of any interest in the securities represented by this certificate is subject to restrictions, and the securities represented by this certificate are subject to certain options, contained in a certain agreement between the record holder hereof and the Company, a copy of which will be mailed to any holder of this certificate without charge upon receipt by the Company of a written request therefor.”

 

  (ii)

“The shares of stock represented by this certificate have not been registered under the Securities Act of 1933 or under the securities laws of any state and may not be pledged, hypothecated, sold or otherwise transferred except upon such registration or upon receipt by the Company of an opinion of counsel satisfactory to the Company, in form and substance satisfactory to the Company, that such registration is not required.”

9.    Right of First Refusal to Lapse Upon Registration. The restrictions imposed by this Appendix A shall terminate in all respects upon the effective date of a registration statement under the Securities Act covering any of the Company’s Common Stock.

 

A-2

Exhibit 10.16

Ginkgo BioWorks, Inc.

Restricted Stock Unit Agreement

Granted Under 2014 Stock Incentive Plan

1. Grant of Restricted Stock Units.

(a) This agreement (the “Agreement”) evidences the grant by Ginkgo BioWorks, Inc., a Delaware corporation (the “Company”), on                 , 20     (the “Grant Date”) to                     , an [employee/consultant/director] of the Company (the “Participant”), of an award of                      restricted stock units (“Restricted Stock Units” or “RSUs”) on the terms provided herein and in the Company’s 2014 Stock Incentive Plan (the “Plan”). Each vested Restricted Stock Unit represents the right to receive one share (“Share”) of common stock, $0.01 par value per share, of the Company (“Common Stock”). Unless earlier terminated, the RSUs shall expire and be forfeited at 5:00 p.m., Eastern time, on                 , 20     (the “Expiration Date”).1

(b) Except as otherwise indicated by the context, the term “Participant”, as used in this Agreement, shall be deemed to include any person who acquires the right to the RSUs validly under their terms.

2. Vesting Schedule.

Subject to Section 4 and Section 5 of this Agreement, the RSUs will become non-forfeitable (“vest”) upon the satisfaction of both an event condition (the “Event Condition”) and a service condition (the “Service Condition”) on or before the Expiration Date. The Event Condition will be satisfied on the first to occur of (i) a Change in Control (as defined below) or (ii) the earlier of (x) the date six months after the closing of the sale of shares of Common Stock in an underwritten public offering pursuant to an effective registration statement under the Securities Act of 1933, as amended (the “Securities Act”) (a “Public Offering”) or (y) March 15 of the calendar year following the effective date of a Public Offering (the “March 15th Date”). The Service Condition will be satisfied as to 25% of the original number of RSUs on the first anniversary of the Vesting Commencement Date (as defined below) and (A) prior to the effective date of a Public Offering, as to an additional 1/48th of the original number of RSUs on the corresponding day of each month following the first anniversary of the Vesting Commencement Date (and if there is no corresponding day, the last day of the month) until the fourth anniversary of the Vesting Commencement Date and (B) on and after the effective date of a Public Offering, as to an additional 1/16th of the original number of RSUs on the last day of each calendar quarter following the first anniversary of the Vesting Commencement Date until the fourth anniversary of the Vesting Commencement Date; provided, however, that with respect to the calendar quarter in which the effective date of the Public Offering occurs, the number of RSUs that vest pursuant to clause (B) shall be reduced by the number of RSUs that previously vested during any month occurring in such calendar quarter pursuant to clause (A). For purposes of this Agreement, “Vesting Commencement Date” shall mean                 , 20    .2

 

1 

Note: Insert the date that is seven years from the date of grant.

2 

The Vesting Commencement Date for new grantees is typically the date services begin. The Vesting Commencement Date for existing participants (e.g., who are receiving a subsequent grant of RSUs) is typically the date the RSU is granted.


For purposes of this Agreement, “Change in Control” means (i) a merger or consolidation of the Company with or into any other corporation or other entity or person, (ii) a sale, lease, exchange or other transfer in one transaction or a series of related transactions of all or substantially all of the Company’s assets, or (iii) any other transaction, including the sale by the Company of new shares of its capital stock or a transfer of existing shares of capital stock of the Company, the result of which is that a third party that is not an affiliate of the Company or its stockholders (or a group of third parties not affiliated with the Company or its stockholders) immediately prior to such transaction acquires or holds capital stock of the Company representing a majority of the Company’s outstanding voting power immediately following such transaction; provided that the following events shall not constitute a “Change in Control”: (A) a transaction (other than a sale of all or substantially all of the Company’s assets) in which the holders of the voting securities of the Company immediately prior to the merger or consolidation hold, directly or indirectly, at least a majority of the voting securities in the successor corporation or its parent immediately after the merger or consolidation; (B) a sale, lease, exchange or other transaction in one transaction or a series of related transactions of all or substantially all of the Company’s assets to an affiliate of the Company; (C) an initial public offering of any of the Company’s securities; (D) a reincorporation of the Company solely to change its jurisdiction; or (E) a transaction undertaken for the primary purpose of creating a holding company that will be owned in substantially the same proportion by the persons who held the Company’s securities immediately before such transaction.

3. Issuance of Common Stock Upon Vesting.

(a) As soon as administratively practicable following the vesting of any Restricted Stock Units pursuant to Section 2 of this Agreement, but in no event later than (i) 30 days after the applicable vesting date, or (ii) the March 15th Date if the RSUs vest as a result of an Event Condition that is a Public Offering, the Company shall deliver to Participant (or Participant’s permitted transferee, if applicable) a number of Shares (either by delivering one or more certificates for such shares or by entering such shares in book entry form, as determined by the Company in its sole discretion) equal to the number of RSUs subject to this award that vest on the applicable vesting date, unless such RSUs terminate prior to the given vesting date pursuant to Section 5 of this Agreement; provided, however, that if the RSUs vest as a result of an Event Condition that is a Change in Control, the Company may delay settlement of the RSUs in the same manner in which payment of the consideration payable to the stockholders of the Company may be delayed in connection with the Change in Control and in all events in compliance with Section 409A of the Code.

(b) As set forth in Section 10(e) of the Plan, the Company shall have the authority and the right to deduct or withhold, or to require Participant to remit to the Company, an amount sufficient to satisfy all applicable federal, state and local taxes required by law to be withheld with respect to any taxable event arising in connection with the Restricted Stock Units, including instructing a broker on Participant’s behalf to sell shares of Common Stock otherwise issuable to Participant upon vesting of the RSUs and submit the proceeds of such sale to the Company. The Company shall not be obligated to deliver any new certificate representing Shares to Participant or Participant’s legal representative or enter such share of Common Stock in book entry form unless and until Participant or Participant’s legal representative shall have paid or otherwise satisfied in full the amount of all federal, state and local taxes applicable to the taxable income of Participant resulting from the vesting of the Restricted Stock Units or the issuance of Shares.

(c) Notwithstanding anything in this Agreement to the contrary, the Company may accelerate the vesting of any or all of the RSUs and may settle any or all of the RSUs in cash instead of Shares. If an RSU is paid in cash, the amount of cash paid with respect to the RSU will equal the Fair Market Value of a Share on the day immediately preceding the payment date.

 

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4. Continuous Relationship with the Company Required.

Except as otherwise provided in this Agreement, the RSUs shall not vest unless the Participant, on the applicable vesting date, is, and has been at all times since the Grant Date, an employee, officer or director of, or consultant or advisor to, the Company or any other entity the employees, officers, directors, consultants, or advisors of which are eligible to receive grants under the Plan (an “Eligible Participant”).

5. Termination of Relationship with the Company.

(a) Except as provided in subsection (b) below, if the Participant ceases to be an Eligible Participant for any reason, all Restricted Stock Units which have not vested prior to or in connection with such cessation will thereupon automatically be forfeited, terminated and cancelled as of the applicable cessation date without payment of any consideration by the Company, and Participant, or Participant’s beneficiary or personal representative, as the case may be, shall have no further rights hereunder. No portion of the RSUs which has not become vested as of the date on which Participant ceases to be an Eligible Participant shall thereafter become vested.

(b) Notwithstanding subsection (a) above, if the Participant ceases to be an Eligible Participant for any reason prior to the occurrence of the Event Condition after the Grant Date, then all RSUs for which the service condition as set forth in Section 2 of this Agreement has been satisfied shall vest upon the subsequent occurrence of the Event Condition if the Event Condition occurs prior to the Expiration Date.

6. Unsecured Obligation to RSUs.

Unless and until the RSUs have vested in the manner set forth in Section 2 of this Agreement, Participant will have no right to receive Common Stock, or other payment, in respect of such RSUs. Prior to actual payment of any vested RSUs, such RSUs will represent an unsecured obligation of the Company, payable (if at all) only from the general assets of the Company.

7. Agreement in Connection with Initial Public Offering.

The Participant agrees, in connection with the initial Public Offering, (i) not to (a) offer, pledge, announce the intention to sell, sell, contract to sell, sell any option or contract to purchase, purchase any option or contract to sell, grant any option, right or warrant to purchase, or otherwise transfer or dispose of, directly or indirectly, any shares of Common Stock or any other securities of the Company or (b) enter into any swap or other agreement that transfers, in whole or in part, any of the economic consequences of ownership of shares of Common Stock or other securities of the Company, whether any transaction described in clause (a) or (b) is to be settled by delivery of securities, in cash or otherwise, during the period beginning on the date of the filing of such registration statement with the Securities and Exchange Commission and ending 180 days after the date of the final prospectus relating to the offering (plus up to an additional 34 days to the extent requested by the managing underwriters for such offering in order to address FINRA Rule 2711(f)(4) or NYSE Rule 472(f)(4) or any similar successor provision), and (ii) to execute any agreement reflecting clause (i) above as may be requested by the Company or the managing underwriters at the time of such offering. The Company may impose stop-transfer instructions with respect to the shares of Common Stock or other securities subject to the foregoing restriction until the end of the “lock-up” period.

 

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8. Withholding.

No Shares will be issued pursuant to the settlement of the RSUs unless and until the Participant pays to the Company, or makes provision satisfactory to the Company for payment of, any federal, state or local withholding taxes required by law to be withheld in respect of the RSUs.

9. Transfer Restrictions.

(a) The RSUs may not be sold, assigned, transferred, pledged or otherwise encumbered by the Participant, either voluntarily or by operation of law, except by will or the laws of descent and distribution, and, during the lifetime of the Participant, this award shall be exercisable only by the Participant.

(b) The Participant agrees that he or she will not transfer any Shares issued pursuant to the settlement of the RSUs unless the transferee, as a condition to such transfer, delivers to the Company a written instrument confirming that such transferee shall be bound by all of the terms and conditions of Section 7 until the completion of the lock-up period in connection with the Company’s initial Public Offering.

10. Provisions of the Plan.

This award is subject to the provisions of the Plan (including the provisions relating to amendments to the Plan), a copy of which is furnished to the Participant with this award. In the event of a conflict between the provisions of the Plan and this Agreement, the provisions of the Plan shall control.

- Signature Pages Follow -

 

- 4 -


IN WITNESS WHEREOF, the Company has caused this award to be executed under its corporate seal by its duly authorized officer. This award shall take effect as a sealed instrument.

 

GINKGO BIOWORKS, INC.
By:  

 

  Name:  

 

  Title:  

 

 

- 5 -


PARTICIPANT’S ACCEPTANCE

The undersigned hereby accepts the foregoing award and agrees to the terms and conditions thereof. The undersigned hereby acknowledges receipt of a copy of the Company’s 2014 Stock Incentive Plan.

 

PARTICIPANT:

 

Address:  

 

 

 

 

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Exhibit 10.17

GINKGO BIOWORKS, INC.

Restricted Stock Agreement

Granted Under 2014 Stock Incentive Plan

AGREEMENT made this      day of             , 20    , between Ginkgo BioWorks, Inc., a Delaware corporation (the “Company”), and                      (the “Participant”).

For valuable consideration, receipt of which is acknowledged, the parties hereto agree as follows:

1. Purchase of Shares.

The Company shall issue and sell to the Participant, and the Participant shall purchase from the Company, subject to the terms and conditions set forth in this Agreement and in the Company’s 2014 Stock Incentive Plan (the “Plan”),                  shares (the “Shares”) of common stock, $0.01 par value, of the Company (“Common Stock”), at a purchase price of $         per share. The aggregate purchase price for the Shares shall be paid by the Participant by check payable to the order of the Company or such other method as may be acceptable to the Company. Upon receipt by the Company of payment for the Shares, the Company shall issue to the Participant one or more certificates in the name of the Participant for that number of Shares purchased by the Participant. The Participant agrees that the Shares shall be subject to the purchase options set forth in Sections 2 and 5 of this Agreement and the restrictions on transfer set forth in Section 4 of this Agreement.

2. Purchase Option.

(a) In the event that the Participant ceases to be employed by the Company for any reason or no reason, with or without cause, prior to the fourth anniversary of the Vesting Commencement Date (as defined below), the Company shall have the right and option (the “Purchase Option”) to purchase from the Participant, for a sum of $         per share1 (the “Option Price”), some or all of the Unvested Shares (as defined below).

“Unvested Shares” means the total number of Shares multiplied by the Applicable Percentage at the time the Purchase Option becomes exercisable by the Company. The “Applicable Percentage” shall be (i) 100% during the period ending on the first anniversary of the Vesting Commencement Date, (ii) 75% on the first anniversary of the Vesting Commencement Date, (iii) 75% less 2.0833% for each month of employment completed by the Participant with the Company from and after the first anniversary of the Vesting Commencement Date, and (iv) zero on or after the fourth anniversary of the Vesting Commencement Date. For purposes of this Agreement, “Vesting Commencement Date” shall mean                 , 20    2.

 

1 

This should be the same as the purchase price

2 

The Vesting Commencement Date for new employees is typically the date of hire. The Vesting Commencement Date for existing employees (e.g., who are receiving a subsequent grant of restricted stock) is typically the date the restricted stock is granted.


(b) If the Participant is employed by a parent or subsidiary of the Company, any references in this Agreement to employment with the Company or termination of employment by or with the Company shall instead be deemed to refer to such parent or subsidiary. For purposes of this Agreement, employment with the Company shall include employment with a parent or subsidiary of the Company and service to the Company as an advisor, consultant or member of the Board of Directors of the Company.

3. Exercise of Purchase Option and Closing.

(a) The Company may exercise the Purchase Option by delivering or mailing to the Participant (or his or her estate), within 90 days after the termination of the employment of the Participant with the Company, a written notice of exercise of the Purchase Option. Such notice shall specify the number of Shares to be purchased. If and to the extent the Purchase Option is not so exercised by the giving of such a notice within such 90-day period, the Purchase Option shall automatically expire and terminate effective upon the expiration of such 90-day period.

(b) Within 10 days after delivery to the Participant of the Company’s notice of the exercise of the Purchase Option pursuant to subsection (a) above, the Participant (or his or her estate) shall, pursuant to the provisions of the Joint Escrow Instructions referred to in Section 7 below, tender to the Company at its principal offices the certificate or certificates representing the Shares which the Company has elected to purchase in accordance with the terms of this Agreement, duly endorsed in blank or with duly endorsed stock powers attached thereto, all in form suitable for the transfer of such Shares to the Company. Promptly following its receipt of such certificate or certificates, the Company shall pay to the Participant the aggregate Option Price for such Shares (provided that any delay in making such payment shall not invalidate the Company’s exercise of the Purchase Option with respect to such Shares).

(c) After the time at which any Shares are required to be delivered to the Company for transfer to the Company pursuant to subsection (b) above, the Company shall not pay any dividend to the Participant on account of such Shares or permit the Participant to exercise any of the privileges or rights of a stockholder with respect to such Shares, but shall, in so far as permitted by law, treat the Company as the owner of such Shares.

(d) The Option Price may be payable, at the option of the Company, in cancellation of all or a portion of any outstanding indebtedness of the Participant to the Company or in cash (by check) or both.

(e) The Company shall not purchase any fraction of a Share upon exercise of the Purchase Option, and any fraction of a Share resulting from a computation made pursuant to Section 2 of this Agreement shall be rounded to the nearest whole Share (with any one-half Share being rounded upward).

(f) The Company may assign its Purchase Option to one or more persons or entities.

 

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4. Restrictions on Transfer.

(a) The Participant shall not sell, assign, transfer, pledge, hypothecate or otherwise dispose of, by operation of law or otherwise (collectively “transfer”) any Shares, or any interest therein, that are subject to the Purchase Option, except that the Participant may transfer such Shares (i) to or for the benefit of any spouse, children, parents, uncles, aunts, siblings, grandchildren and any other relatives approved by the Board of Directors (collectively, “Approved Relatives”) or to a trust established solely for the benefit of the Participant and/or Approved Relatives, provided that such Shares shall remain subject to this Agreement (including without limitation the restrictions on transfer set forth in this Section 4, the Purchase Option and the right of first refusal set forth in Section 5) and such permitted transferee shall, as a condition to such transfer, deliver to the Company a written instrument confirming that such transferee shall be bound by all of the terms and conditions of this Agreement or (ii) as part of the sale of all or substantially all of the shares of capital stock of the Company (including pursuant to a merger or consolidation), provided that, in accordance with the Plan, the securities or other property received by the Participant in connection with such transaction shall remain subject to this Agreement.

(b) The Participant shall not transfer any Shares, or any interest therein, that are no longer subject to the Purchase Option, except in accordance with Section 5 below.

5. Right of First Refusal.

(a) If the Participant proposes to transfer any Shares that are no longer subject to the Purchase Option (either because they are no longer Unvested Shares or because the Purchase Option expired unexercised), then the Participant shall first give written notice of the proposed transfer (the “Transfer Notice”) to the Company. The Transfer Notice shall name the proposed transferee and state the number of such Shares the Participant proposes to transfer (the “Offered Shares”), the price per share and all other material terms and conditions of the transfer.

(b) For 30 days following its receipt of such Transfer Notice, the Company shall have the option to purchase all or part of the Offered Shares at the price and upon the terms set forth in the Transfer Notice. In the event the Company elects to purchase all or part of the Offered Shares, it shall give written notice of such election to the Participant within such 30-day period. Within 10 days after his or her receipt of such notice, the Participant shall tender to the Company at its principal offices the certificate or certificates representing the Offered Shares to be purchased by the Company, duly endorsed in blank by the Participant or with duly endorsed stock powers attached thereto, all in a form suitable for transfer of the Offered Shares to the Company. Promptly following receipt of such certificate or certificates, the Company shall deliver or mail to the Participant a check in payment of the purchase price for such Offered Shares; provided that if the terms of payment set forth in the Transfer Notice were other than cash against delivery, the Company may pay for the Offered Shares on the same terms and conditions as were set forth in the Transfer Notice; and provided further that any delay in making such payment shall not invalidate the Company’s exercise of its option to purchase the Offered Shares.

 

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(c) If the Company does not elect to acquire all of the Offered Shares, the Participant may, within the 30-day period following the expiration of the option granted to the Company under subsection (b) above, transfer the Offered Shares which the Company has not elected to acquire to the proposed transferee, provided that such transfer shall not be on terms and conditions more favorable to the transferee than those contained in the Transfer Notice. Notwithstanding any of the above, all Offered Shares transferred pursuant to this Section 5 shall remain subject to this Agreement (including without limitation the restrictions on transfer set forth in Section 4 and the right of first refusal set forth in this Section 5) and such transferee shall, as a condition to such transfer, deliver to the Company a written instrument confirming that such transferee shall be bound by all of the terms and conditions of this Agreement.

(d) After the time at which the Offered Shares are required to be delivered to the Company for transfer to the Company pursuant to subsection (b) above, the Company shall not pay any dividend to the Participant on account of such Offered Shares or permit the Participant to exercise any of the privileges or rights of a stockholder with respect to such Offered Shares, but shall, insofar as permitted by law, treat the Company as the owner of such Offered Shares.

(e) The following transactions shall be exempt from the provisions of this Section 5:

(1) a transfer of Shares to or for the benefit of any Approved Relatives, or to a trust established solely for the benefit of the Participant and/or Approved Relatives;

(2) any transfer pursuant to an effective registration statement filed by the Company under the Securities Act of 1933, as amended (the “Securities Act”); and

(3) the sale of all or substantially all of the outstanding shares of capital stock of the Company (including pursuant to a merger or consolidation);

provided, however, that in the case of a transfer pursuant to clause (1) above, such Shares shall remain subject to this Agreement (including without limitation the restrictions on transfer set forth in Section 4 and the right of first refusal set forth in this Section 5) and such transferee shall, as a condition to such transfer, deliver to the Company a written instrument confirming that such transferee shall be bound by all of the terms and conditions of this Agreement.

(f) The Company may assign its rights to purchase Offered Shares in any particular transaction under this Section 5 to one or more persons or entities.

(g) The provisions of this Section 5 shall terminate upon the earlier of the following events:

(1) the closing of the sale of shares of Common Stock in an underwritten public offering pursuant to an effective registration statement filed by the Company under the Securities Act; or

 

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(2) the sale of all or substantially all of the outstanding shares of capital stock, assets or business of the Company, by merger, consolidation, sale of assets or otherwise (other than a merger or consolidation in which all or substantially all of the individuals and entities who were beneficial owners of the Company’s voting securities immediately prior to such transaction beneficially own, directly or indirectly, more than 75% (determined on an as-converted basis) of the outstanding securities entitled to vote generally in the election of directors of the resulting, surviving or acquiring corporation in such transaction).

(h) The Company shall not be required (1) to transfer on its books any of the Shares which shall have been sold or transferred in violation of any of the provisions set forth in this Agreement, or (2) to treat as owner of such Shares or to pay dividends to any transferee to whom any such Shares shall have been so sold or transferred.

6. Agreement in Connection with Initial Public Offering.

The Participant agrees, in connection with the initial underwritten public offering of the Common Stock pursuant to a registration statement under the Securities Act, (i) not to (a) offer, pledge, announce the intention to sell, sell, contract to sell, sell any option or contract to purchase, purchase any option or contract to sell, grant any option, right or warrant to purchase, or otherwise transfer or dispose of, directly or indirectly, any shares of Common Stock or any securities convertible into or exercisable or exchangeable for shares of Common Stock or (b) enter into any swap or other agreement that transfers, in whole or in part, any of the economic consequences of ownership of shares of Common Stock, whether any transaction described in clause (a) or (b) is to be settled by delivery of shares of Common Stock or other securities, in cash or otherwise, during the period beginning on the date of the filing of such registration statement with the Securities and Exchange Commission and ending 180 days from the date of the final prospectus relating to the offering (plus up to an additional 34 days to the extent requested by the managing underwriters for such offering in order to address FINRA rules or any similar successor provision), and (ii) to execute any agreement reflecting clause (i) above as may be requested by the Company or the managing underwriters at the time of such offering. The Company may impose stop-transfer instructions with respect to the shares of Common Stock or other securities subject to the foregoing restriction until the end of the “lock-up” period.

7. Escrow.

The Participant shall, upon the execution of this Agreement, execute Joint Escrow Instructions in the form attached to this Agreement as Exhibit A. The Joint Escrow Instructions shall be delivered to the Secretary of the Company, as escrow agent thereunder. The Participant shall deliver to such escrow agent a stock assignment duly endorsed in blank, in the form attached to this Agreement as Exhibit B, and hereby instructs the Company to deliver to such escrow agent, on behalf of the Participant, the certificate(s) evidencing the Shares issued hereunder. Such materials shall be held by such escrow agent pursuant to the terms of such Joint Escrow Instructions.

 

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8. Restrictive Legends.

All certificates representing Shares shall have affixed thereto legends in substantially the following form, in addition to any other legends that may be required under federal or state securities laws:

“The shares of stock represented by this certificate are subject to restrictions on transfer and an option to purchase set forth in a certain Restricted Stock Agreement between the corporation and the registered owner of these shares (or his or her predecessor in interest), and such Agreement is available for inspection without charge at the office of the Secretary of the corporation.”

“The shares represented by this certificate have not been registered under the Securities Act of 1933, as amended, and may not be sold, transferred or otherwise disposed of in the absence of an effective registration statement under such Act or an opinion of counsel satisfactory to the corporation to the effect that such registration is not required.”

9. Provisions of the Plan.

(a) This Agreement is subject to the provisions of the Plan, a copy of which is furnished to the Participant with this Agreement.

(b) As provided in the Plan, upon the occurrence of a Reorganization Event (as defined in the Plan), the repurchase and other rights of the Company hereunder shall inure to the benefit of the Company’s successor and shall apply to the cash, securities or other property which the Shares were converted into or exchanged for pursuant to such Reorganization Event in the same manner and to the same extent as they applied to the Shares under this Agreement. If, in connection with a Reorganization Event, a portion of the cash, securities and/or other property received upon the conversion or exchange of the Shares is to be placed into escrow to secure indemnification or similar obligations, the mix between the vested and unvested portion of such cash, securities and/or other property that is placed into escrow shall be the same as the mix between the vested and unvested portion of such cash, securities and/or other property that is not subject to escrow.

10. Investment Representations.

The Participant represents, warrants and covenants as follows:

(a) The Participant is purchasing the Shares for his or her own account for investment only, and not with a view to, or for sale in connection with, any distribution of the Shares in violation of the Securities Act, or any rule or regulation under the Securities Act.

 

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(b) The Participant has had such opportunity as she has deemed adequate to obtain from representatives of the Company such information as is necessary to permit her to evaluate the merits and risks of his or her investment in the Company.

(c) The Participant has sufficient experience in business, financial and investment matters to be able to evaluate the risks involved in the purchase of the Shares and to make an informed investment decision with respect to such purchase.

(d) The Participant can afford a complete loss of the value of the Shares and is able to bear the economic risk of holding such Shares for an indefinite period.

(e) The Participant understands that (i) the Shares have not been registered under the Securities Act and are “restricted securities” within the meaning of Rule 144 under the Securities Act; (ii) the Shares cannot be sold, transferred or otherwise disposed of unless they are subsequently registered under the Securities Act or an exemption from registration is then available; (iii) in any event, the exemption from registration under Rule 144 will not be available for at least one year and even then will not be available unless a public market then exists for the Common Stock, adequate information concerning the Company is then available to the public, and other terms and conditions of Rule 144 are complied with; and (iv) there is now no registration statement on file with the Securities and Exchange Commission with respect to any stock of the Company and the Company has no obligation or current intention to register the Shares under the Securities Act.

11. Withholding Taxes; Section 83(b) Election.

(a) The Participant acknowledges and agrees that the Company has the right to deduct from payments of any kind otherwise due to the Participant any federal, state or local taxes of any kind required by law to be withheld with respect to the purchase of the Shares by the Participant or the lapse of the Purchase Option.

(b) The Participant has reviewed with the Participant’s own tax advisors the federal, state, local and foreign tax consequences of this investment and the transactions contemplated by this Agreement. The Participant is relying solely on such advisors and not on any statements or representations of the Company or any of its agents. The Participant understands that the Participant (and not the Company) shall be responsible for the Participant’s own tax liability that may arise as a result of this investment or the transactions contemplated by this Agreement. The Participant understands that it may be beneficial in many circumstances to elect to be taxed at the time the Shares are purchased rather than when and as the Company’s Purchase Option expires by filing an election under Section 83(b) of the Internal Revenue Code of 1986 with the I.R.S. within 30 days from the date of purchase.

THE PARTICIPANT ACKNOWLEDGES THAT IT IS SOLELY THE PARTICIPANT’S RESPONSIBILITY AND NOT THE COMPANY’S TO FILE TIMELY THE ELECTION UNDER SECTION 83(b), EVEN IF THE PARTICIPANT REQUESTS THE COMPANY OR ITS REPRESENTATIVES TO MAKE THIS FILING ON THE PARTICIPANT’S BEHALF.

 

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12. Miscellaneous.

(a) No Rights to Employment. The Participant acknowledges and agrees that the vesting of the Shares pursuant to Section 2 hereof is earned only by continuing service as an employee at the will of the Company (not through the act of being hired or purchasing shares hereunder). The Participant further acknowledges and agrees that the transactions contemplated hereunder and the vesting schedule set forth herein do not constitute an express or implied promise of continued engagement as an employee or consultant for the vesting period, for any period, or at all.

(b) Severability. The invalidity or unenforceability of any provision of this Agreement shall not affect the validity or enforceability of any other provision of this Agreement, and each other provision of this Agreement shall be severable and enforceable to the extent permitted by law.

(c) Waiver. Any provision for the benefit of the Company contained in this Agreement may be waived, either generally or in any particular instance, by the Board of Directors of the Company.

(d) Binding Effect. This Agreement shall be binding upon and inure to the benefit of the Company and the Participant and their respective heirs, executors, administrators, legal representatives, successors and assigns, subject to the restrictions on transfer set forth in Sections 4 and 5 of this Agreement.

(e) Notice. All notices required or permitted hereunder shall be in writing and deemed effectively given upon personal delivery or five days after deposit in the United States Post Office, by registered or certified mail, postage prepaid, addressed to the other party hereto at the address shown beneath his, her or its respective signature to this Agreement, or at such other address or addresses as either party shall designate to the other in accordance with this Section 12(e).

(f) Pronouns. Whenever the context may require, any pronouns used in this Agreement shall include the corresponding masculine, feminine or neuter forms, and the singular form of nouns and pronouns shall include the plural, and vice versa.

(g) Entire Agreement. This Agreement and the Plan constitute the entire agreement between the parties, and supersedes all prior agreements and understandings, relating to the subject matter of this Agreement.

(h) Amendment. This Agreement may be amended or modified only by a written instrument executed by both the Company and the Participant.

(i) Governing Law. This Agreement shall be construed, interpreted and enforced in accordance with the internal laws of the State of Delaware without regard to any applicable conflicts of laws.

 

- 8 -


(j) Participant’s Acknowledgments. The Participant acknowledges that she: (i) has read this Agreement; (ii) has been represented in the preparation, negotiation, and execution of this Agreement by legal counsel of the Participant’s own choice or has voluntarily declined to seek such counsel; (iii) understands the terms and consequences of this Agreement; (iv) is fully aware of the legal and binding effect of this Agreement; and (v) understands that the law firm of Latham & Watkins LLP, is acting as counsel to the Company in connection with the transactions contemplated by the Agreement, and is not acting as counsel for the Participant.

IN WITNESS WHEREOF, the parties hereto have executed this Agreement as of the day and year first above written.

 

GINKGO BIOWORKS, INC.
By:  

 

  Name:  

 

  Title:  

 

Address:

PARTICIPANT

 

  Name:  

 

Address:  

 

 

 

 

- 9 -


Exhibit A

Joint Escrow Instructions

[                ], 20[    ]

Ginkgo BioWorks, Inc.

27 Drydock Avenue, Floor 8

Boston, MA 02210

Attn: Secretary

Dear Sir/Madam:

As Escrow Agent for Ginkgo BioWorks, Inc., a Delaware corporation (the “Company”) , and its successors in interest under the Restricted Stock Agreement (the “Agreement”) of even date herewith, to which a copy of these Joint Escrow Instructions is attached, and the undersigned person (“Holder”), you are hereby authorized and directed to hold the documents delivered to you pursuant to the terms of the Agreement in accordance with the following instructions:

1. Appointment. Holder irrevocably authorizes the Company to deposit with you any certificates evidencing Shares (as defined in the Agreement) to be held by you hereunder and any additions and substitutions to said Shares. For purposes of these Joint Escrow Instructions, “Shares” shall be deemed to include any additional or substitute property. Holder does hereby irrevocably constitute and appoint you as her attorney-in-fact and agent for the term of this escrow to execute with respect to such Shares all documents necessary or appropriate to make such Shares negotiable and to complete any transaction herein contemplated. Subject to the provisions of this Section 1 and the terms of the Agreement, Holder shall exercise all rights and privileges of a stockholder of the Company while the Shares are held by you.

2. Closing of Purchase.

(a) Upon any purchase by the Company of the Shares pursuant to the Agreement, the Company shall give to Holder and you a written notice specifying the number of Shares to be purchased, the purchase price for the Shares, as determined pursuant to the Agreement, and the time for a closing hereunder (the “Closing”) at the principal office of the Company. Holder and the Company hereby irrevocably authorize and direct you to close the transaction contemplated by such notice in accordance with the terms of said notice.

(b) At the Closing, you are directed (i) to date the stock assignment form or forms necessary for the transfer of the Shares, (ii) to fill in on such form or forms the number of Shares being transferred, and (iii) to deliver the same, together with the certificate or certificates evidencing the Shares to be transferred, to the Company against the simultaneous delivery to you of the purchase price for the Shares being purchased pursuant to the Agreement.

 

-10-


3. Withdrawal. The Holder shall have the right to withdraw from this escrow any Shares as to which the Purchase Option (as defined in the Agreement) has terminated or expired.

4. Duties of Escrow Agent.

(a) Your duties hereunder may be altered, amended, modified or revoked only by a writing signed by all of the parties hereto.

(b) You shall be obligated only for the performance of such duties as are specifically set forth herein and may rely and shall be protected in relying or refraining from acting on any instrument reasonably believed by you to be genuine and to have been signed or presented by the proper party or parties. You shall not be personally liable for any act you may do or omit to do hereunder as Escrow Agent or as attorney-in-fact of Holder while acting in good faith and in the exercise of your own good judgment, and any act done or omitted by you pursuant to the advice of your own attorneys shall be conclusive evidence of such good faith.

(c) You are hereby expressly authorized to disregard any and all warnings given by any of the parties hereto or by any other person or entity, excepting only orders or process of courts of law, and are hereby expressly authorized to comply with and obey orders, judgments or decrees of any court. If you are uncertain of any actions to be taken or instructions to be followed, you may refuse to act in the absence of an order, judgment or decrees of a court. In case you obey or comply with any such order, judgment or decree of any court, you shall not be liable to any of the parties hereto or to any other person or entity, by reason of such compliance, notwithstanding any such order, judgment or decree being subsequently reversed, modified, annulled, set aside, vacated or found to have been entered without jurisdiction.

(d) You shall not be liable in any respect on account of the identity, authority or rights of the parties executing or delivering or purporting to execute or deliver the Agreement or any documents or papers deposited or called for hereunder.

(e) You shall be entitled to employ such legal counsel and other experts as you may deem necessary properly to advise you in connection with your obligations hereunder and may rely upon the advice of such counsel.

(f) Your rights and responsibilities as Escrow Agent hereunder shall terminate if (i) you cease to be Secretary of the Company or (ii) you resign by written notice to each party. In the event of a termination under clause (i), your successor as Secretary shall become Escrow Agent hereunder; in the event of a termination under clause (ii), the Company shall appoint a successor Escrow Agent hereunder.

(g) If you reasonably require other or further instruments in connection with these Joint Escrow Instructions or obligations in respect hereto, the necessary parties hereto shall join in furnishing such instruments.

 

-11-


(h) It is understood and agreed that if you believe a dispute has arisen with respect to the delivery and/or ownership or right of possession of the securities held by you hereunder, you are authorized and directed to retain in your possession without liability to anyone all or any part of said securities until such dispute shall have been settled either by mutual written agreement of the parties concerned or by a final order, decree or judgment of a court of competent jurisdiction after the time for appeal has expired and no appeal has been perfected, but you shall be under no duty whatsoever to institute or defend any such proceedings.

(i) These Joint Escrow Instructions set forth your sole duties with respect to any and all matters pertinent hereto and no implied duties or obligations shall be read into these Joint Escrow Instructions against you.

(j) The Company shall indemnify you and hold you harmless against any and all damages, losses, liabilities, costs, and expenses, including attorneys’ fees and disbursements, (including without limitation the fees of counsel retained pursuant to Section 4(e) above, for anything done or omitted to be done by you as Escrow Agent in connection with this Agreement or the performance of your duties hereunder, except such as shall result from your gross negligence or willful misconduct.

5. Notice. Any notice required or permitted hereunder shall be given in writing and shall be deemed effectively given upon personal delivery or upon deposit in the United States Post Office, by registered or certified mail with postage and fees prepaid, addressed to each of the other parties thereunto entitled at the following addresses, or at such other addresses as a party may designate by ten days’ advance written notice to each of the other parties hereto.

 

COMPANY:

  

Notices to the Company shall be sent to the address set forth in the salutation hereto, Attn: President

HOLDER:

  

Notices to Holder shall be sent to the address set forth below Holder’s signature below.

ESCROW AGENT:

  

Notices to the Escrow Agent shall be sent to the address set forth in the salutation hereto.

6. Miscellaneous.

(a) By signing these Joint Escrow Instructions, you become a party hereto only for the purpose of said Joint Escrow Instructions, and you do not become a party to the Agreement.

(b) This instrument shall be binding upon and inure to the benefit of the parties hereto and their respective successors and permitted assigns.

 

-12-


Very truly yours,

GINKGO BIOWORKS, INC.

By:    
Name:  
Title:  
HOLDER:
 
(Signature)
Name:  
Address:  

 

Date Signed:    

 

ESCROW AGENT:
 
Secretary

 

-13-


Exhibit B

(STOCK ASSIGNMENT SEPARATE FROM CERTIFICATE)

FOR VALUE RECEIVED, I hereby sell, assign and transfer unto                      (            ) shares of Common Stock, $0.01 par value per share, of Ginkgo BioWorks, Inc. (the “Corporation”) standing in my name on the books of the Corporation represented by Certificate(s) Number                      herewith, and do hereby irrevocably constitute and appoint Latham & Watkins LLP attorney to transfer the said stock on the books of the Corporation with full power of substitution in the premises.

 

Dated:  

                    

 
Name:  

 

-14-

Exhibit 10.18

LEASE AGREEMENT BETWEEN

ZOOM GROUP LLC, AS LANDLORD,

AND

GINKGO BIOWORKS, INC., AS TENANT

DATED DECEMBER 22, 2011

 

i

 

Certain confidential information contained in this Exhibit has been omitted because it is (i) not material and (ii) of the type that the registrant treats as private or confidential.


BASIC LEASE INFORMATION

 

Lease Date:    December 22, 2011
Tenant:    Ginkgo Bioworks, Inc., a Delaware corporation
Landlord:    ZOOM GROUP LLC, a Massachusetts limited liability company
Premises:    Approximately 11,565 rentable square feet (the “Premises Rentable Area”) on southeast corner of the eighth floor of the building currently known as Section A of Building 114 (the “Building”), and whose street address is 27 Drydock Avenue, Boston, Massachusetts. The Premises are outlined on the plan attached to this Lease as Exhibit A. The land on which the Building is located (the “Land”) is described on Exhibit B. The term “Building” includes the Land and the driveways, parking facilities, and similar improvements on the Land.
   Included as appurtenant to the Premises shall be: (i) the right to install equipment on the rooftop in an area to be agreed upon by Landlord and Tenant consistent with the needs of Tenant but respecting the needs of other tenants in the Building and limitations that may be imposed by the EDIC and the City of Boston; (ii) the right to the exclusive use of one Control Area on the eighth floor in compliance with Massachusetts building code; (iii) the right of access to use of showers on the second; and (iv) the right to use all other common areas of the Building.
First Right of Refusal Premises:    Approximately 6,785 rentable square feet, or any portion thereof (the “Premises Rentable Area”) on the eighth floor of the Building adjacent to the Premises, all as shown on the plan attached to this Lease.
   Landlord and Tenant stipulate that the number of rentable square feet in the Premises and the First Right of Refusal Premises set forth above shall be binding upon them.
Term:    Sixty-one (61) months, commencing on the date upon which the Premises are delivered to the Tenant in the condition required by Section 3 of this Lease (the “Commencement Date”) and ending at 5:00 p.m. on last day of the sixty first (61st ) full month after the Commencement Date, subject to adjustment and earlier termination as provided in the Lease. The estimated date for delivery of the Premises as required by this Lease is February 1, 2012.

 

ii


Basic Rent:    The initial Basic Rent shall be $23,515.50 per month in the first year of the Lease (which first lease year shall end on February 28, 2013, if the Premises are delivered during February, 2012); $24,479.25 in the second year; $25,443.00 in the third year; $26,406.75 in the fourth year and $27,370.50 in the fifth and final year of the Lease.
   As used herein, the term “Lease Month” shall mean each calendar month during the Term (and if the Commencement Date does not occur on the first day of a calendar month, the period from the Commencement Date to the first day of the next calendar month shall be included in the first Lease Month for purposes of determining the duration of the Term and the monthly Basic Rent rate applicable for such partial month). Notwithstanding the foregoing, Landlord agrees to waive payment of the first three months of Basic Rent and as set forth in Section 4, Basic Rent shall commence on the first day of fourth full month of the Lease. For illustrative purposes, assuming the Premises are available on February 1, February is without charge for any rent to allow Tenant to begin tenant improvements, then March and April are the two months free rent, and the first payment is due on May 1, 2012.
Security Deposit:    $50,000.00
Building Rentable Area:    Agreed to be 280,562 square feet.
Rent:    Basic Rent, Tenant’s Proportionate Share of Taxes, Additional Rent, and all other sums that Tenant may owe to Landlord or otherwise be required to pay under the Lease. In the event that Tenant exercises the Expansion Option for the First Right of Refusal Premises, the Rent shall be adjusted appropriately to reflect the additional rentable square feet.
Additional Rent:    Landlord’s good faith estimate of Additional Rent, as hereinafter defined in Section 4(b), for the fiscal year at the commencement of this lease shall be equal to $5,428.62 per month equal to $5.35 per Building Rentable Area. Additional Rent shall commence and be payable as of the Commencement Date. Notwithstanding the foregoing, Landlord agrees to waive payment of the first three months of Additional Rent.
Tenant’s Proportionate Share:    4.34% which is the percentage obtained by dividing the Premises Rentable Area by 95% of the Building Rentable Area.

 

iii


Permitted Use:    Biology and chemistry lab, storage and handling of materials and office use associated with such uses. Landlord covenants that the Permitted Use is a use permitted under the EDIC Lease.
Initial Liability Insurance Amount:    $3,000,000.00
Tenant’s Address:    Ginkgo Bioworks, Inc.
   7 Tide Street Unit 2B
   Boston MA 02210
Landlord’s Address:    For all Notices:
   Zoom Group LLC
   c/o North Star Management
   27 Drydock Ave.
   Boston MA. 02110

 

iv


The foregoing Basic Lease Information is incorporated into and made a part of the Lease identified above. If any conflict exists between any Basic Lease Information and the Lease, then the Lease shall control.

 

LANDLORD:
Zoom Group LLC,
a Massachusetts limited liability company
        By:  

/s/ Jeff Wallace

    Jeff Wallace, its Manager
TENANT:

Ginkgo Bioworks, Inc.

a Delaware corporation

By:  

/s/ Barry Canton

  Name:  

Barry Canton

  Title:  

Founder

 

v


TABLE OF CONTENTS

 

             Page  
1.     Definitions and Basic Provisions      8  
2.     Lease Grant      8  
3.     Term      8  
4.     Rent      9  
  (a)   Payment      9  
  (b)   Operating Costs; Taxes, Electricity      10  
  (c)   Billing for Electricity      12  
5.     Delinquent Payment; Handling Charges      12  
6.     Security Deposit      13  
7.     Landlord’s Obligations      13  
  (a)   Services      13  
  (b)   Excess Utility Use      13  
  (c)   Restoration of Services; Abatement      14  
8.     Improvements; Alterations; Repairs; Maintenance.      14  
  (a)   Improvements; Alterations      14  
  (b)   Repairs; Maintenance      14  
  (c)   Performance of Work      15  
  (d)   Mechanic’s Liens      15  
9.     Use      15  
10.     Assignment and Subletting      16  
  (a)   Transfers      16  
  (b)   Consent Standards      16  
  (c)   Request for Consent      16  
  (d)   Conditions to Consent      16  
  (e)   Cancelation      17  
  (f)   Additional Compensation      17  
  (g)   Permitted Transfers      17  
11.     Insurance; Waivers; Subrogation; Indemnity      18  
  (a)   Insurance      18  
  (b)   Waiver of Negligence; No Subrogation      18  
  (c)   Indemnity      19  
12.     Subordination; Attornment; Notice to Landlord’s Mortgagee      19  
  (a)   Subordination      19  
  (b)   Attornment      19  
  (c)   Notice to Landlord’s Mortgagee      20  
  (d)   Landlord’s Mortgagee’s Protection Provisions      20  
13.     Rules and Regulations      20  
14.     Condemnation      21  
  (a)   Total Taking      21  
  (b)   Partial Taking – Tenant’s Rights      21  
  (c)   Partial Taking – Landlord’s Rights      21  
  (d)   Award      21  
15.     Fire or Other Casualty      21  
  (a)   Repair Estimate      21  
  (b)   Landlord’s and Tenant’s Rights      21  
  (c)   Landlord’s Rights      22  
  (d)   Repair Obligation      22  
16.     Personal Property Taxes      22  
17.     Events of Default      22  
18.     Remedies      23  
19.     Payment by Tenant; Non-Waiver      24  
  (a)   Payment by Tenant      24  

 

vi


    (b)   No Waiver    24  

20.

    Landlord’s Lien      25  

21.

    Surrender of Premises      25  

22.

    Holding Over      25  

23.

    Certain Rights Reserved by Landlord      26  

24.

    Substitution Space      26  

25.

    Miscellaneous      26  
    (a)   Landlord Transfer    26  
    (b)   Landlord’s Liability    26  
    (c)   Force Majeure    26  
    (d)   Brokerage    27  
    (e)   Estoppel Certificates    27  
    (f)   Notices    27  
    (g)   Separability    27  
    (h)   Amendments; and Binding Effect    27  
    (i)   Quiet Enjoyment    27  
    (j)   No Merger    27  
    (k)   No Offer    28  
    (l)   Entire Agreement    28  
    (m)   Waiver of Jury Trial    28  
    (n)   Governing Law    28  
    (o)   Joint and Several Liability    28  
    (p)   Financial Reports    28  
    (q)   Landlord’s Fees    28  
    (r)   Telecommunications    29  
    (s)   Confidentiality    29  
    (t)   Hazardous Materials    29  
    (u)   List of Exhibits    30  
    (v)   Time of Essence    30  
    (w)   EDIC Lease    30  
    (x)   Consent of EDIC    30  
26.     Other Provisions      31  

 

vii


LEASE

THIS LEASE AGREEMENT (this “Lease”) is entered into as of December     , 2011, by ZOOM GROUP LLC, a Massachusetts limited liability company (“Landlord”), and GINKGO BIOWORKS, INC., a Delaware corporation (“Tenant”).

1.     Definitions and Basic Provisions. The definitions and basic provisions set forth in the Basic Lease Information (the “Basic Lease Information”) executed by Landlord and Tenant contemporaneously herewith are incorporated herein by reference for all purposes. Additionally, the following terms shall have the following meanings when used in this Lease: “Building’s Structure” means the Building’s exterior walls, roof, elevator shafts, footings, foundations, structural portions of loadbearing walls, structural floors and subfloors, and structural columns and beams; “Building’s Systems” means the Building’s HVAC, lifesafety, plumbing, electrical, and mechanical systems; “Laws” means all federal, state, and local laws, rules and regulations, all court orders, governmental directives, and governmental orders, and all restrictive covenants affecting the Property, and “Law” shall mean any of the foregoing; “Affiliate” means any person or entity which, directly or indirectly, through one or more intermediaries, controls, is controlled by, or is under common control with the party in question; “Tenant Party” means any of the following persons: Tenant; any assignees claiming by, through, or under Tenant; any subtenants claiming by, through, or under Tenant; and any of their respective agents, contractors, employees, and invitees; and “including” means including, without limitation.

2.     Lease Grant. Subject to the terms of this Lease, Landlord leases to Tenant, and Tenant leases from Landlord, the Premises.

Landlord represents that, upon delivery of the Premises to Tenant, the Premises shall comply in all material respects with all applicable laws, regulations, ordinances, codes and bylaws, including without limitation, the American with Disabilities Act and all laws, rules or regulations regarding any hazardous waste, substance or materials or other environmental laws. Landlord has required the current tenant of the Premises to provide an environmental report indicating that the Premises are free of Hazardous Materials, as hereinafter defined. Landlord shall provide a copy of such report, or a comparable report, to Tenant upon receipt of the same. Notwithstanding any provision to the contrary contained herein, the Commencement Date shall not be deemed to have occurred until Landlord has delivered the report, and Tenant has approved the report which approval shall not be unreasonably withheld or delayed. In the event that the report reveals the presence of any Hazardous Materials, Landlord shall have the option to remove such Materials, in which event the report shall be deemed acceptable upon notice from Landlord to Tenant of such election to remove the Materials.

3.     Term. The Commencement Date shall be deemed to be the date upon which Landlord delivers possession of the Premises as provided in Exhibit D (the “Delivery Date”).    If the Premises are not delivered to Tenant by February 1, 2012 as so required, then (a) Landlord shall not be in default hereunder or be liable for damages therefor, and (b) Tenant shall accept possession of the Premises when Landlord tenders possession thereof to Tenant in the condition herein required for

 

8


delivery. By occupying the Premises, Tenant shall be deemed to have accepted the Premises in their condition as of the date of such occupancy. Tenant shall execute and deliver to Landlord, within ten (10) days after Landlord has requested the same, an amendment substantially in the form of Exhibit E hereto confirming the Commencement Date and the expiration date of the Term that Tenant has accepted the Premises, and that Landlord has performed all of its obligations with respect to the Premises. Notwithstanding the foregoing, in the event that the Delivery Date has not occurred by May 1, 2012 (the “Outside Delivery Date”), then Tenant shall have the option, exercisable within ten (10) days after the Outside Delivery Date, to terminate this Lease, whereupon all amounts paid by Tenant to Landlord shall be promptly refunded and all obligations of the parties hereto shall be null and void and this Agreement shall be without recourse to either party.

In addition, notwithstanding anything contained in this Lease to the contrary, in the event that Tenant, despite using diligent efforts, is unable by May 15, 2011 (the “Permit Deadline”) to obtain all necessary permits from the (i) Massachusetts Water Resource Authority, (ii) City of Boston Fire Department and (iii) Boston Public Health Commission (collectively, the “Permits”) required for the operation of Tenant’s business at the Premises, then Tenant shall have the option, exercisable within ten (10) days after the Permit Deadline, to terminate this Lease, whereupon all amounts paid by Tenant to Landlord shall be promptly refunded and all obligations of the parties hereto shall be null and void and this Agreement shall be without recourse to either party. Tenant’s termination option with respect to the Permits shall only be available if Tenant submits an application (including all required supporting materials) for such Permits as soon as practicable after the execution of this Lease and diligently takes all reasonable and customary steps required for the issuance of such Permits.

At any time after the execution of this Lease by Landlord and Tenant, Tenant shall have the right to deliver any equipment used in connection with Tenant’s business operations to the Building and stored in a location designated by Landlord, without payment of any Rent or storage charges, subject to Tenant’s compliance with complying with all requirements of Paragraph 11 of this Lease.

4.     Rent.

(a)     Payment. Tenant shall timely pay to Landlord Basic Rent and all additional sums to be paid by Tenant to Landlord under this Lease, without notice, deduction or set off except as otherwise set forth in this Lease, at Landlord’s address provided for in this Lease or as otherwise specified by Landlord and shall be accompanied by all applicable state and local sales or use taxes. Basic Rent, adjusted as herein provided, shall be payable monthly in advance. The first monthly installment of Basic Rent shall be payable contemporaneously with the execution of this Lease; thereafter, Basic Rent shall be payable on the first day of each month beginning on the first day of the fifth full calendar month of the Term (the Basic Rent for the fourth full calendar month having been paid contemporaneously with the execution of this Lease as set forth above). The monthly Basic Rent for any partial month at the beginning of the Term shall equal the product of 1/365 of the annual Basic Rent in effect during the partial month and the number of days in the partial month from and after the Commencement Date, and shall be due on the Commencement Date.

 

9


(b)     Operating Costs; Taxes, Electricity.

(1)     Tenant shall pay Tenant’s Proportionate Share of the Operating Costs (defined below) (“Additional Rent”). Landlord shall make a good faith estimate of the Additional Rent to be due by Tenant for any calendar year or part thereof during the Term, and Tenant shall pay to Landlord, commencing on the first day of the fourth full calendar month of the Term and on the first day of each calendar month thereafter, an amount equal to the estimated Additional Rent for such calendar year or part thereof divided by the number of months therein. From time to time, Landlord may estimate and re-estimate the Additional Rent to be due by Tenant and deliver a copy of the estimate or re-estimate to Tenant. Thereafter, the monthly installments of Additional Rent payable by Tenant shall be appropriately adjusted in accordance with the estimations so that, by the end of the calendar year in question, Tenant shall have paid all of the Additional Rent as estimated by Landlord. Any amounts paid based on such an estimate shall be subject to adjustment as herein provided when actual Operating Costs are available for each calendar year.

(2)     The term “Operating Costs” shall mean all expenses and disbursements (subject to the limitations set forth below) that Landlord incurs in connection with the ownership, operation, and maintenance of the Building, determined in accordance with sound accounting principles consistently applied, including, but not limited to, the following costs: (A) wages and salaries and a management fee (not to exceed standard commercially acceptable rates) of all employees engaged in the operation, maintenance, and security of the Building, including taxes, insurance and benefits relating thereto; (B) all supplies and materials used in the operation, maintenance, repair, replacement, and security of the Building; (C) costs for improvements made to the Building which, although capital in nature, are expected to reduce the normal operating costs (including all utility costs) of the Building, as well as capital improvements made in order to comply with (i) any law hereafter promulgated by any governmental authority, or (ii) the EDIC Master Lease, as amortized over the useful economic life of such improvements as determined by Landlord in its reasonable discretion; (D) annual increases, if any, in the fixed rent payable by Landlord under the EDIC Master Lease (subject to the provisions in the next paragraph), (E) cost of all utilities, except the cost of utilities reimbursable to Landlord by the Building’s tenants other than pursuant to a provision similar to this Section 4.(b); (F) insurance expenses; and (G) repairs, replacements, and general maintenance of the Building; and (G) service or maintenance contracts with independent contractors for the operation, maintenance, repair, replacement, or security of the Building (including, without limitation, alarm service, window cleaning, and elevator maintenance).

Notwithstanding anything contained in this Lease to the contrary, the Additional Rent that Tenant shall be liable for hereunder with respect to any increased in the fixed rent payable by Landlord under the EDIC Master Lease shall not exceed:

For 2012 - $       0.00

For 2013 - $   659.59

For 2014 - $1,882.73

For 2015 - $2,866.67

For 2016 - $3,880.12

 

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Operating Costs shall not include costs for (i) capital improvements made to the Building, other than capital improvements described in Section 4(b)(2)(C) and except for items which are generally considered maintenance and repair items, such as painting of common areas, replacement of carpet in elevator lobbies, painting and sealing and general maintenance of the Building exterior windows and envelope as well as the parking lot, sidewalk and related elements, and the like; (ii) repair, replacements and general maintenance paid by proceeds of insurance or by Tenant or other third parties; (iii) interest, amortization or other payments on loans to Landlord; (iv) depreciation; (v) leasing commissions; (vi) legal expenses for services, other than those that benefit the Building tenants generally (e.g., tax disputes); (vii) renovating or otherwise improving space for occupants of the Building or vacant space in the Building; (viii) Taxes (defined below); (ix) federal income taxes imposed on or measured by the income of Landlord from the operation of the Building; (x) leasing commissions, fees and costs, advertising and promotional expenses and other costs incurred in procuring tenants or in selling the Building or the Park; (xi) any overhead or profit increments to any subsidiary or affiliate of Landlord for services on or to the Building, to the extent that the costs of such services exceed commercially reasonable costs for such services; (xii) cost of any HVAC, janitorial or other services provided to tenants on an extra cost basis after regular business hours; (xiii) cost of any work or services performed for any facility other than the Building; (xiv) contingency or replacement reserves; (xv) cost of acquiring, securing cleaning or maintaining sculptures, paintings and other works of art, other than any existing on the date of this Lease, and any which is of a customary type and cost for similarly situated buildings as the Building; (xvi) charitable or political contributions; and (xvii) all other items for which another party compensates or pays so that Landlord shall not recover any item of cost more than once.

(3)     Tenant shall also pay Tenant’s Proportionate Share of the Taxes (defined below) for each year and partial year falling within the Term in the same manner as provided above for Additional Rent with regard to Operating Costs. “Taxes” shall mean taxes, assessments, and governmental charges whether federal, state, county or municipal, and whether they be by taxing districts or authorities presently taxing or by others, subsequently created or otherwise, and any other taxes and assessments attributable to the Building (or its operation), but Taxes shall not include payments in lieu of taxes pursuant to the EDIC Master Lease (so-called “tax rent” under the Master Lease), nor shall Taxes include amounts that would be payable under the Master Lease as tax rent if the payment in lieu of taxes provisions are discontinued and those amounts are thereafter payable as Taxes as otherwise defined herein, excluding, however, penalties and interest thereon and franchise, estate, inheritance, succession, capital levy, transfer, excess profits, or federal and state income taxes (if the present method of taxation changes so that in lieu of the whole or any part of any Taxes, there is levied on Landlord a capital tax directly on the rents received therefrom or a franchise tax, assessment, or charge based, in whole or in part, upon such rents for the Building, then all such taxes, assessments, or charges, or the part thereof so based, shall be deemed to be included within the term “Taxes” for purposes hereof). Taxes shall include the reasonable costs of consultants retained in an effort to lower taxes and all costs incurred in disputing any taxes or in seeking to lower the tax valuation of the Building. For property tax purposes, Tenant waives all rights to protest or appeal the appraised value of the Premises, as well as the Building, and all rights to receive notices of reappraisement.

(4)     By April 1 of each calendar year, or as soon thereafter as practicable, Landlord shall furnish to Tenant a statement of Operating Costs for the previous year, and of the

 

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Taxes for the previous year (the “Operating Costs and Tax Statement”). If the Operating Costs and Tax Statement reveals that Tenant paid more for Operating Costs the actual amount for the year for which such statement was prepared, or more than its actual share of Taxes for such year, then Landlord shall promptly credit or reimburse Tenant for such excess; likewise, if Tenant paid less than Tenant’s actual Proportionate Share of Additional Rent or share of Taxes due, then Tenant shall promptly pay Landlord such deficiency.

(5)     Tenant shall have sixty (60) days in which to dispute the statement of Landlord’s Operating Costs and Tax Statement, in which case Tenant shall give Landlord written notice (“Review Notice”) that Tenant intends to review Landlord’s records of the Landlord’s Operating Costs for that calendar year. Within a reasonable time after receipt of the Review Notice, Landlord shall make all pertinent records available for inspection that are reasonably necessary for Tenant to conduct its review. Within sixty (60) days after the records are made available to Tenant, Tenant shall have the right to give Landlord written notice (an “Objection Notice”) stating in reasonable detail any objection to Landlord’s statement of Landlord’s Operating Costs for that year. If Tenant provides Landlord with a timely Objection Notice, Landlord and Tenant shall work together in good faith to resolve any issues raised in Tenant’s Objection Notice. If Landlord and Tenant determine that Landlord’s Operating Costs for the calendar year are less than reported, Landlord shall provide Tenant with a credit against the next installment of rent in the amount of the overpayment by Tenant. The records obtained by Tenant shall be treated as confidential. If there is an overcharge of Landlord’s Operating Costs by Landlord of more than five percent (5.00%), Landlord shall pay the reasonable costs incurred by Tenant in reviewing Landlord’s records, provided however that if the audit determines that there has not been any overcharging, then Tenant shall pay to Landlord all reasonable expenses incurred by Landlord in connection with such audit. This provision shall survive the expiration or early termination of the Lease.

(c)     Billing for Electricity. The Premises currently has a separate meter for electricity in the Premises. Tenant shall pay (as hereinafter described) for the use of all electrical service to the Premises. Tenant shall be billed directly by such utility company and Tenant agrees to pay each bill promptly in accordance with its terms, and upon default in making any such payment, Landlord may pay such charges and collect the same from Tenant. In the event for any reason Tenant cannot be billed directly, Landlord shall forward each bill received with respect to the Building to Tenant of which Tenant shall pay its proportionate share (as reasonably determined by Landlord based upon either square footage or level of use) promptly and in accordance with its terms.

5.     Delinquent Payment; Handling Charges. If payment required of Tenant hereunder is delinquent for a period of five (5) days, Landlord may charge Tenant a fee equal to 5% of the delinquent payment to reimburse Landlord for its cost and inconvenience incurred as a consequence of Tenant’s delinquency. In addition, all past due payments required of Tenant hereunder shall bear interest from five (5) days after the date due until paid at the lesser of eighteen percent per annum or the maximum lawful rate of interest. In no event, however, shall the charges permitted under this Section 5 or elsewhere in this Lease, to the extent they are considered to be interest under applicable Law, exceed the maximum lawful rate of interest.

 

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6.     Security Deposit. $50,000.00

7.     Landlord’s Obligations

(a)     Services. Landlord shall furnish to Tenant: (1) hot and cold water to the Premises; (2) heating, ventilation and air conditioning (“HVAC”) as appropriate, at such temperatures and in such amounts as are standard for comparable buildings and the Permitted Use in the vicinity of the Building; (3) passenger and freight elevators for ingress and egress to the floor on which the Premises are located, in common with other tenants, provided that Landlord may reasonably limit the number of operating elevators during non-business hours and holidays; and (4) 400 amp 3 phase electrical current at 408 volts (which is the electrical current which currently serves the Premises) for equipment that does not require more than 408 volts and whose electrical energy consumption does not exceed what is typical and customary for laboratory use. Landlord shall maintain the Building’s Structure, the Building’s Systems (including any supplemental HVAC systems serving the Premises), and the common areas of the Building in reasonably good order and condition, except for damage caused by a Tenant Party. If Tenant desires any of the services specified in Section 7.(a)(2) at any time other than between 8:00 a.m. and 6:00 p.m. on weekdays (excluding holidays), then such services shall be supplied to Tenant upon the request of Tenant delivered to Landlord on the business day preceding such extra usage, and Tenant shall pay to Landlord the actual cost of such services within thirty (30) days after Landlord has delivered to Tenant an invoice therefor. The costs incurred by Landlord in providing after-hour HVAC service to Tenant shall include actual costs for electricity, water and sewer.

(b)     Excess Utility Use. Landlord shall not be required to furnish electrical current for equipment that requires more than 408 volts or other equipment whose electrical energy consumption exceeds what is typical and customary for laboratory use. If Tenant’s requirements for or consumption of electricity exceed the electricity to be provided by Landlord as described in Section 7.(a), Landlord shall, at Tenant’s expense, make reasonable efforts to supply such service through the then-existing feeders and risers serving the Building and the Premises, and Tenant shall pay to Landlord the cost of such service within thirty (30) days after Landlord has delivered to Tenant an invoice therefor. Landlord may determine the amount of such additional consumption and potential consumption by any verifiable method, including installation of a separate meter in the Premises installed, maintained, and read by Landlord, at Tenant’s expense. Tenant shall not install any electrical equipment requiring special wiring or exceeding Building capacity unless approved in advance by Landlord, which consent shall not be unreasonably withheld, conditioned or delayed, provided that Tenant shall agree to be responsible for any and all costs associated with the installation of such equipment, and the removal thereof at the end of the term of this Lease if so requested by Landlord. The use of electricity in the Premises shall not exceed the capacity of existing feeders and risers to or wiring in the Premises. Any risers or wiring required to meet Tenant’s excess electrical requirements shall, upon Tenant’s written request, be installed by Landlord, at Tenant’s cost, if, in Landlord’s judgment, the same are necessary and shall not cause permanent damage to the Building or the Premises, cause or create a dangerous or hazardous condition, entail excessive or unreasonable alterations, repairs, or expenses, or interfere with or disturb other tenants of the Building. If Tenant uses machines or equipment in the Premises which materially adversely affect the temperature otherwise maintained by the HVAC system or otherwise

 

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overload any utility beyond customary machinery or equipment required for laboratory use by Tenant, Landlord may install supplemental HVAC units or other supplemental equipment in the Premises, and the cost thereof, including the cost of installation, operation, use, and maintenance, shall be paid by Tenant to Landlord within thirty (30) days after Landlord has delivered to Tenant an invoice therefor.

(c)     Restoration of Services; Abatement. Landlord shall use reasonable efforts to restore any service required of it that becomes unavailable; however, such unavailability shall not render Landlord liable for any damages caused thereby, be a constructive eviction of Tenant, constitute a breach of any implied warranty, or, except as provided in the next sentence, entitle Tenant to any abatement of Tenant’s obligations hereunder. If, however, Tenant is prevented from using the Premises for more than seven (7) consecutive business days because of the unavailability of any such service and such unavailability was not caused by a Tenant Party, then Tenant shall, as its exclusive remedy be entitled to a reasonable abatement of Rent for each consecutive day (after such 7-day period) that Tenant is so prevented from using the Premises.

8.     Improvements; Alterations; Repairs; Maintenance.

(a)     Improvements; Alterations. Improvements to the Premises shall be installed at Tenant’s expense only in accordance with plans and specifications which have been previously submitted to and approved in writing by Landlord, which approval shall be governed by standards in the following sentence. No alterations or physical additions in or to the Premises may be made without Landlord’s prior written consent, which shall not be unreasonably withheld or delayed; however, Landlord may withhold its consent to any alteration or addition that would adversely affect (in the reasonable discretion of Landlord) (1) the Building’s Structure or the Building’s Systems (including the Building’s restrooms or mechanical rooms), (2) the exterior appearance of the Building, or (3) the appearance of the Building’s common areas or elevator lobby areas. Tenant shall not paint or install lighting or decorations, signs, window or door lettering, or advertising media of any type on or about the Premises without the prior written consent of Landlord, which shall not be unreasonably withheld or delayed; however, Landlord may withhold its consent to any such painting or installation which would affect the appearance of the exterior of the Building or of any common areas of the Building. All alterations, additions, and improvements shall be constructed, maintained, and used by Tenant, at its risk and expense, in accordance with all Laws; Landlord’s consent to or approval of any alterations, additions or improvements (or the plans therefor) shall not constitute a representation or warranty by Landlord, nor Landlord’s acceptance, that the same comply with sound architectural and/or engineering practices or with all applicable Laws, and Tenant shall be solely responsible for ensuring all such compliance.

(b)     Repairs; Maintenance. Tenant shall maintain the Premises in a clean, safe, and operable condition, and shall not permit nor allow to remain any waste or damage to any portion of the Premises. Tenant shall repair or replace, subject to Landlord’s direction and supervision, any damage to the Building caused by a Tenant Party. If Tenant fails to make such repairs or replacements within fifteen (15) days after the occurrence of such damage (or such longer period as may be necessary provided that Tenant commences the repair within fifteen (15) days and diligently prosecutes the same to completion), then Landlord may make the same at Tenant’s cost. If any such damage occurs outside of the Premises, then Landlord may elect to repair such damage at Tenant’s

 

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expense, rather than having Tenant repair such damage. The cost of all repair or replacement work performed by Landlord under this Section 8 shall be paid by Tenant to Landlord within ten (10) days after Landlord has invoiced Tenant therefor. Tenant shall provide Landlord within thirty (30) days following the Commencement Date (and then annually on the anniversary of the Commencement Date), with copies of any service contracts for Tenant owned HVAC equipment.

(c)     Performance of Work. All work described in this Section 8 shall be performed only by Landlord or by contractors and subcontractors approved in writing by Landlord, which consent shall not be unreasonably withheld, conditioned or delayed. Tenant shall cause all contractors and subcontractors to procure and maintain insurance coverage naming Landlord as an additional insured against such risks, in such amounts, and with such companies as Landlord may reasonably require. All such work shall be performed in accordance with all Laws and in a good and workmanlike manner so as not to damage the Building (including the Premises, the Building’s Structure and the Building’s Systems). Except of Tenant’s Work described on Exhibit B, All such work which may affect the Building’s Structure or the Building’s Systems must be approved by the Building’s engineer of record, at Tenant’s expense and, at Landlord’s election, must be performed by Landlord’s usual contractor for such work. Tenant shall provide sworn statements, including the names, addresses and copies of contracts for all contractors, and upon completion of any work shall promptly furnish Landlord with sworn owner’s and contractor’s statements and full and final waivers of lien covering all labor and materials included in the work in question.

Tenant shall provide sworn statements, including the names, addresses and copies of contracts for all contractors, and upon completion of any work shall promptly furnish Landlord with sworn owner’s and contractor’s statements and full and final waivers of lien covering all labors and materials included in the work in question.

(d)     Mechanic’s Liens. Tenant shall not permit any mechanic’s liens to be filed against the Premises or the Building for any work performed, materials furnished, or obligation incurred by or at the request of Tenant. If such a lien is filed, then Tenant shall, within ten (10) days after Landlord has delivered notice of the filing thereof to Tenant, either pay the amount of the lien or diligently contest such lien and deliver to Landlord a bond or other security reasonably satisfactory to Landlord. If Tenant fails to timely take either such action, then Landlord may pay the lien claim, and any amounts so paid, including expenses and interest, shall be paid by Tenant to Landlord within ten (10) days after Landlord has invoiced Tenant therefor.

9.     Use. Tenant shall occupy and not use the Premises for any use other than the Permitted Use, and shall comply with all Laws relating to the use, condition, access to, and occupancy of the Premises. Notwithstanding the foregoing, Tenant shall not be required to make any changes to the Building’s Structure or the Building’s Systems unless required as a result of Tenant’s particular use of the Premises or any alterations performed by or on behalf of Tenant (other than the Tenant’s Work) Tenant may use the Premises on a 24/7 basis. The Premises shall not be used for any use which is disreputable, creates extraordinary fire hazards, or results in an increased rate of insurance on the Building or its contents, or for the storage of any Hazardous Materials, other than those Hazardous Materials used and stored by Tenant in connection with the operation of Tenant for the Permitted Use strictly in conformance with all applicable laws, rules and regulations. If, because of a Tenant Party’s acts, the rate of insurance on the Building or its contents increases (excluding

 

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however, any increase in insurance due solely to Tenant’s business operations as a laboratory), then such acts shall be an Event of Default, Tenant shall pay to Landlord the amount of such increase on demand, and acceptance of such payment shall not waive any of Landlord’s other rights. Tenant shall conduct its business and control each other Tenant Party so as not to create any nuisance or unreasonably interfere with other tenants or Landlord in its management of the Building.

10.     Assignment and Subletting

(a)     Transfers. Except as provided in this Section 10, Tenant shall not, without the prior written consent of Landlord, (1) assign, transfer, or encumber this Lease or any estate or interest herein, whether directly or by operation of law, (2) permit any other entity to become Tenant hereunder by merger, consolidation, or other reorganization, (3) if Tenant is an entity other than a corporation whose stock is publicly traded, permit the transfer of an ownership interest in Tenant so as to result in a change in the current control of Tenant, (4) sublet any portion of the Premises, (5) grant any license, concession, or other right of occupancy of any portion of the Premises, or (6) permit the use of the Premises by any parties other than Tenant (any of the events listed in Section 10.(a)(1) through 10.(a)(6) being a “Transfer”).

(b)     Consent Standards. Subject to the provisions of Section 10.(e) hereof, Landlord shall not unreasonably withhold, condition or delay its consent to any assignment or subletting of the Premises, provided that the proposed transferee is creditworthy, will use the Premises for the Permitted Use or any other use permitted by applicable zoning regulations, and will not use the Premises in any manner that would conflict with any exclusive use agreement or other similar agreement entered into by Landlord with any other tenant of the Building, is not a governmental entity, or subdivision or agency thereof, and is not another occupant of the Building or person or entity with whom Landlord is negotiating to lease space in the Building; otherwise, Landlord may withhold its consent in its sole discretion.

(c)     Request for Consent. If Tenant requests Landlord’s consent to a transfer, then Tenant shall provide Landlord with a written description of all material terms and conditions of the proposed Transfer, copies of the proposed documentation, and the following information about the proposed transferee: name and address; reasonably satisfactory information about its business and business history; its proposed use of the Premises; banking, financial, and other credit information reasonably requested by Landlord. Concurrently with Tenant’s notice of any request for consent to a Transfer, Tenant shall pay to Landlord a fee of $750.00 to defray Landlord’s expenses in reviewing such request, and Tenant shall also reimburse Landlord within ten (10) days of request for its reasonable attorneys’ fees incurred in connection with considering any request for consent to a Transfer.

(d)     Conditions to Consent. If Landlord consents to a proposed Transfer, then the proposed transferee shall deliver to Landlord a written agreement whereby it expressly assumes Tenant’s obligations hereunder; however, any transferee of less than all of the space in the Premises shall be liable only for obligations under this Lease that are properly allocable to the space subject to the Transfer for the period of the Transfer, and provided further that the rental obligations of any subtenant shall be governed by the applicable sublease. No Transfer shall release Tenant from its

 

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obligations under this Lease, but rather Tenant and its transferee shall be jointly and severally liable therefor. Landlord’s consent to any Transfer shall not waive Landlord’s rights as to any subsequent Transfers. If an Event of Default occurs while the Premises or any part thereof are subject to a Transfer, then Landlord, in addition to its other remedies, may collect directly from such transferee all rents becoming due to Tenant and apply such rents against Rent. Tenant authorizes its transferees to make payments of rent directly to Landlord upon receipt of notice from Landlord to do so. Tenant shall pay for the cost of any demising walls or other improvements necessitated by a proposed subletting or assignment.

(e)     Cancellation. Landlord may in its sole discretion, within ten (10) business days after submission of Tenant’s written request for Landlord’s consent to an assignment or a subletting of greater than fifty percent (50%) of the Premises, cancel this Lease as to the portion of the Premises proposed to be sublet or assigned as of the date the proposed Transfer is to be effective. If Landlord cancels this Lease as to any portion of the Premises, then Tenant shall have the option to withdraw the request for Landlord’s consent within ten (10) business days of Landlord’s notice of cancellation. If Tenant does not withdraw the request, this Lease shall cease for such portion of the Premises and Tenant shall pay to Landlord all Rent accrued through the cancellation date relating to the portion of the Premises covered by the proposed Transfer. Thereafter, Landlord may lease such portion of the Premises to the prospective transferee (or to any other person) without liability to Tenant.

(f)     Additional Compensation. Tenant shall pay to Landlord, within ten (10) days of receipt thereof, fifty percent (50%) of the excess of (1) all compensation received by Tenant for a Transfer less the costs reasonably incurred by Tenant with unaffiliated third parties in connection with such Transfer (i.e., brokerage commissions, tenant finish work, fees and costs paid to Landlord, and the like) over (2) the Rent allocable to the portion of the Premises covered thereby.

(g)     Permitted Transfers. Notwithstanding Section 10. (a), Tenant may Transfer all or part of its interest in this Lease or all or part of the Premises (a “Permitted Transfer”) to the following types of entities (a “Permitted Transferee”) without the written consent of Landlord:

(1)     an Affiliate of Tenant so long as Tenant remains liable on this Lease;

(2)     any corporation, limited partnership, limited liability partnership, limited liability company or other business entity in which or with which Tenant, or its corporate successors or assigns, is merged or consolidated, in accordance with applicable statutory provisions governing merger and consolidation of business entities, so long as (A) Tenant’s obligations hereunder are assumed by the entity surviving such merger or created by such consolidation; and (B) the Tangible Net Worth (as defined below) of the surviving or created entity is not less than the greater of (i) the Tangible Net Worth of Tenant as of the date hereof, or (ii) the Tangible Net Worth of Tenant at the time of any such Permitted Transfer; or

(3)     any corporation, limited partnership, limited liability partnership, limited liability company or other business entity acquiring all or substantially all of Tenant’s assets if such entity’s Tangible Net Worth after such acquisition is not less than the greater of (i) the Tangible Net Worth of Tenant as of the date hereof, or (ii) the Tangible Net Worth of Tenant at the time of any such Permitted Transfer.

 

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In addition, notwithstanding the provisions of Section 10(a), should the investment of additional equity capital in Tenant result in a change in control of the ownership interest of Tenant, such change shall not be deemed a Transfer so long as the current principals of the controlling interest in Tenant continue to retain an equity interest in Tenant.

Tenant shall promptly notify Landlord of any such Permitted Transfer. Tenant shall remain liable for the performance of all of the obligations of Tenant hereunder, or if Tenant no longer exists because of a merger, consolidation, or acquisition, the surviving or acquiring entity shall expressly assume in writing the obligations of Tenant hereunder. Additionally, the Permitted Transferee shall comply with all of the terms and conditions of this Lease, including the Permitted Use, and the use of the Premises by the Permitted Transferee may not violate any other agreements affecting the Premises, the Building, Landlord or other tenants of the Building. At least thirty (30) days after the effective date of any Permitted Transfer, Tenant agrees to furnish Landlord with copies of the instrument effecting any of the foregoing Transfers and documentation establishing Tenant’s satisfaction of the requirements set forth above applicable to any such Transfer. The occurrence of a Permitted Transfer shall not waive Landlord’s rights as to any subsequent Transfers. “Tangible Net Worth” means the excess of total assets over total liabilities, in each case as determined in accordance with generally accepted accounting principles consistently applied (“GAAP”), excluding, however, from the determination of total assets all assets which would be classified as intangible assets under GAAP Any subsequent Transfer by a Permitted Transferee shall be subject to Landlord’s prior written consent in accordance with the provisions of this Section 10.

11.     Insurance; Waivers; Subrogation; Indemnity

(a)     Insurance. Tenant shall maintain throughout the Term the following insurance policies: (1) commercial general liability insurance in amounts of $3,000,000 per occurrence or such other amounts as Landlord may from time to time reasonably require, naming Landlord, Landlord’s agents and any mortgage lender as additional insureds, (2) insurance covering the full value of Tenant’s property and improvements, and other property (including property of others) in the Premises, (3) worker’s compensation insurance, containing a waiver of subrogation endorsement acceptable to Landlord, and (4) business interruption insurance as exists as of the date of this Lease. Tenant’s insurance shall provide primary coverage to Landlord when any policy issued to Landlord provides duplicate or similar coverage, and in such circumstance Landlord’s policy will be excess over Tenant’s policy. Tenant shall furnish to Landlord certificates of such insurance and such other evidence satisfactory to Landlord of the maintenance of all insurance coverages required hereunder, and Tenant shall obtain a written obligation on the part of each insurance company to notify Landlord at least thirty (30) days before cancellation or a material change of any such insurance policies. All such insurance policies shall be in form, and issued by companies, reasonably satisfactory to Landlord.

(b)     Waiver of Negligence; No Subrogation. To the extent permitted by law, Landlord and Tenant each waives any claim it might have against the other for any injury to or death

 

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of any person or persons or damage to or theft, destruction, loss, or loss of use of any property (a “Loss”), to the extent the same is insured against under any insurance policy that covers the Building, the Premises, Landlord’s or Tenant’s fixtures, personal property, leasehold improvements, or business, or, is required to be insured against under the terms hereof, regardless of whether the negligence of the other party caused such Loss. Each party shall cause its insurance carrier to endorse all applicable policies waiving the carrier’s rights of recovery under subrogation or otherwise against the other party.

(c)     Indemnity. Subject to Section 11.(b), Tenant shall defend, indemnify, and hold harmless Landlord and its representatives and agents from and against all claims, demands, liabilities, causes of action, suits, judgments, damages, and expenses (including attorneys’ fees) arising from (1) any Loss arising from any occurrence on the Premises (other than any Loss arising out of a breach of Tenant’s obligations under Section 25.(t), which shall be subject to the indemnity in such section) or (2) Tenant’s failure to perform its obligations under this Lease, and in either case except to the extent caused by the negligence or fault of Landlord or its agents. This indemnity provision shall survive termination or expiration of this Lease. If any proceeding is filed for which indemnity is required hereunder, Tenant agrees, upon request therefor, to defend the indemnified party in such proceeding at its sole cost utilizing counsel reasonably satisfactory to the indemnified party.

(d)     Landlord’s Insurance. Landlord shall procure and maintain (i) general liability for bodily injury and property damage arising from Landlord’s ownership, management, use and/or operation of the Building with coverage limits equal to those Tenant is required to maintain in accordance with Section 11.1(a) above; and (ii) insurance covering all perils insurable under a “Causes of Loss - Special Form” policy, including, but not limited to, fire and such other risks as are from time to time included in standard extended coverage endorsements, with an “Agreed Amount” endorsement, or such greater coverage as may be required by Landlord’s mortgage but in any event not less than full replacement value of the Building.

12.     Subordination; Attornment; Notice to Landlord’s Mortgagee

(a)     Subordination. This Lease shall be subordinate to any deed of trust, mortgage, or other security instrument, or any ground lease, master lease, or primary lease, that now or hereafter covers all or any part of the Premises (the mortgagee under any such mortgage or the lessor under any such lease is referred to herein as a “Landlord’s Mortgagee”) without the necessity of the execution of a separate subordination agreement. Tenant shall execute such agreements confirming such subordination as Landlord or Landlord’s Mortgagee may reasonably request. Any Landlord’s Mortgagee may elect, at any time, unilaterally, to make this Lease superior to its mortgage, ground lease, or other interest in the Premises by so notifying Tenant in writing.

(b)     Attornment. Tenant shall attorn to any party succeeding to Landlord’s interest in the Premises, whether by purchase, foreclosure, deed in lieu of foreclosure, power of sale, termination of lease, or otherwise, upon such party’s request, and shall execute such agreements confirming such attornment as such party may reasonably request.

 

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(c)     Notice to Landlord’s Mortgagee. Tenant shall not seek to enforce any remedy it may have for any default on the part of Landlord without first giving written notice by certified mail, return receipt requested, specifying the default in reasonable detail, to any Landlord’s Mortgagee whose address has been given to Tenant, and affording such Landlord’s Mortgagee a reasonable opportunity to perform Landlord’s obligations hereunder.

(d)     Landlord’s Mortgagee’s Protection Provisions. If Landlord’s Mortgagee shall succeed to the interest of Landlord under this Lease, Landlord’s Mortgagee shall not be: (1) liable for any act or omission of any prior lessor (including Landlord); (2) bound by any rent or additional rent or advance rent which Tenant might have paid for more than the current month to any prior lessor (including Landlord), and all such rent shall remain due and owing, notwithstanding such advance payment; (3) bound by any security or advance rental deposit made by Tenant which is not delivered or paid over to Landlord’s Mortgagee and with respect to which Tenant shall look solely to Landlord for refund or reimbursement; (4) bound by any termination, material amendment or modification of this Lease made without Landlord’s Mortgagee’s consent and written approval, except for those terminations, amendments and modifications permitted to be made by Landlord without Landlord’s Mortgagee’s consent pursuant to the terms of the loan documents between Landlord and Landlord’s Mortgagee; (5) subject to the defenses which Tenant might have against any prior lessor (including Landlord); and (6) subject to the offsets which Tenant might have against any prior lessor (including Landlord) except for those offset rights which (A) are expressly provided in this Lease (B) relate to periods of time following the acquisition of the Building by Landlord’s Mortgagee, and (C) Tenant has provided written notice to Landlord’s Mortgagee and provided Landlord’s Mortgagee a reasonable opportunity to cure the event giving rise to such offset event. Landlord’s Mortgagee shall have no liability or responsibility under or pursuant to the terms of this Lease or otherwise after it ceases to own an interest in the Building. Nothing in this Lease shall be construed to require Landlord’s Mortgagee to see to the application of the proceeds of any loan, and Tenant’s agreements set forth herein shall not be impaired on account of any modification of the documents evidencing and securing any loan.

(e)     Subordination, Non-Disturbance and Attornment Agreement. The Landlord agrees to use commercially reasonable efforts to have the holder of any mortgage or deed of trust which may become prior to this Lease and any such primary lessor, as the case may be, enter into its usual nondisturbance agreement with Tenant, or, in lieu thereof, provide the Tenant with an agreement by the terms of which such holder or primary lessor agrees to recognize the rights of the Tenant under this Lease in the event of foreclosure of such mortgage or deed of trust or termination of such primary lease, respectively, so long as the Tenant is not in default hereunder; provided that the Tenant has paid any reasonable legal fees and other charges which may be required by such holder or such primary lessor, as the case may be, in order so to obtain such agreement (and the Landlord shall not be required to pay any such charges).

13.     Rules and Regulations. Tenant shall comply with the rules and regulations of the Building which are attached hereto as Exhibit C. Landlord may, from time to time, change such rules and regulations for the safety, care, or cleanliness of the Building and related facilities, provided that such changes are applicable to all tenants of the Building and will not unreasonably interfere with Tenant’s use of or access to the Premises. Tenant shall be responsible for the compliance with such rules and regulations by each Tenant Party.

 

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14.     Condemnation.

(a)     Total Taking. If the entire Building or Premises are taken by right of eminent domain or conveyed in lieu thereof (a “Taking”), this Lease shall terminate as of the date of the Taking.

(b)     Partial Taking – Tenant’s Rights. If any part of the Building becomes subject to a Taking and such Taking will materially adversely affect Tenant’s business in the Premises in a manner reasonably comparable to that conducted immediately before such Taking for a period of more than one hundred eighty (180) days, then Tenant may terminate this Lease as of the date of such Taking by giving written notice to Landlord within thirty (30) days after the Taking, and Rent shall be apportioned as of the date of such Taking. If Tenant does not terminate this Lease, then Rent shall be abated on a reasonable basis as to that portion of the Premises rendered untenantable by the Taking.

(c)     Partial Taking – Landlord’s Rights. If any material portion, but less than all, of the Building becomes subject to a Taking, or if Landlord is required to pay any of the proceeds received for a Taking to a Landlord’s Mortgagee, then Landlord may terminate this Lease by delivering written notice thereof to Tenant within thirty (30) days after such Taking, and Rent shall be apportioned as of the date of such Taking, provided that Landlord terminates the leases of all other similarly affected tenants. If Landlord does not so terminate this Lease, then this Lease will continue, but if any portion of the Premises has been taken, Rent shall abate as provided in the last sentence of Section 14.(b).

(d)     Award. If any Taking occurs, then Landlord shall receive the entire award or other compensation for the land on which the Building is situated, the Building, and other improvements taken, and Tenant may separately pursue a claim (to the extent it will not reduce Landlord’s award) against the condemnor for the value of Tenant’s personal property which Tenant is entitled to remove under this Lease, moving costs, loss of business, and other claims it may have.

15.     Fire or Other Casualty

(a)     Repair Estimate. If the Premises or the Building are damaged by fire or other casualty (a “Casualty”), Landlord shall, within sixty (60) days after such Casualty, deliver to Tenant a good faith estimate (the “Damage Notice”) of the time needed to repair the damage caused by such Casualty.

(b)     Landlord’s and Tenant’s Rights. If a material portion of the Premises or the Building is damaged by Casualty such that Tenant is prevented from conducting its business in the Premises in a manner reasonably comparable to that conducted immediately before such Casualty and Landlord estimates that the damage caused thereby cannot be repaired within one hundred eighty (180) days after the Casualty, then Tenant may terminate this Lease by delivering written notice to Landlord of its election to terminate within thirty (30) days after the Damage Notice has been delivered to Tenant. If Tenant does not so timely terminate this Lease, then

 

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(subject to Section 15.(c)) Landlord shall repair the Building or the Premises, as the case may be, as provided below, and Rent for the portion of the Premises rendered untenantable by the damage shall be abated on a reasonable basis from the date of damage until the completion of the repair.

(c)     Landlord’s Rights. If a Casualty damages a material portion of the Building, and Landlord makes a good faith determination that restoring the Premises would be uneconomical, or if Landlord is required to pay any insurance proceeds arising out of the Casualty to a Landlord’s Mortgagee, then Landlord may terminate this Lease by giving written notice of its election to terminate within thirty (30) days after the Damage Notice has been delivered to Tenant, and Basic Rent and Additional Rent shall be abated as of the date of the Casualty.

(d)     Repair Obligation. If neither party elects to terminate this Lease following a Casualty, then Landlord shall, within a reasonable time after such Casualty, begin to repair the Building and the Premises and shall proceed with reasonable diligence to restore the Building and Premises to substantially the same condition as they existed immediately before such Casualty; however, Landlord shall not be required to repair or replace any of the furniture, equipment, fixtures, and other improvements which may have been placed by, or at the request of, Tenant or other occupants in the Building or the Premises, and Landlord’s obligation to repair or restore the Building or Premises shall be limited to the extent of the insurance proceeds actually received by Landlord for the Casualty in question.

16.     Personal Property Taxes. Tenant shall be liable for all taxes levied or assessed against personal property, furniture, or fixtures placed by Tenant in the Premises. If any taxes for which Tenant is liable are levied or assessed against Landlord or Landlord’s property and Landlord elects to pay the same, or if the assessed value of Landlord’s property is increased by inclusion of such personal property, furniture or fixtures and Landlord elects to pay the taxes based on such increase, then Tenant shall pay to Landlord, upon demand, the part of such taxes for which Tenant is primarily liable hereunder; however, Landlord shall not pay such amount if Tenant notifies Landlord that it will contest the validity or amount of such taxes before Landlord makes such payment, and thereafter diligently proceeds with such contest in accordance with law and if the non-payment thereof does not pose a threat of loss or seizure of the Building or interest of Landlord therein or impose any fee or penalty against Landlord.

17.     Events of Default. Each of the following occurrences shall be an “Event of Default”:

(a)     Tenant’s failure to pay Rent within five (5) days after Landlord has delivered written notice to Tenant that the same is due; however, an Event of Default shall occur hereunder without any obligation of Landlord to give any notice if Landlord has given Tenant written notice under this Section 17.(a) on more than two occasions during the twelve (12) month interval preceding such failure by Tenant;

(b)     Tenant abandons the Premises;

 

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(c)     Tenant fails to comply with the Permitted Use set forth herein and the continuance of such failure for a period of five (5) days after Landlord has delivered to Tenant written notice thereof;

(d)     Tenant fails to provide any estoppel certificate within the time period required under Section 25.(e) and such failure shall continue for five (5) days after written notice thereof from Landlord to Tenant;

(e)     Tenant’s failure to perform, comply with, or observe any other agreement or obligation of Tenant under this Lease and the continuance of such failure for a period of more than thirty (30) days after Landlord has delivered to Tenant written notice thereof or such longer period as may reasonably be required, not to exceed ninety (90) days, provided that Tenant has commenced diligently to correct the default or defaults so specified and thereafter diligently pursued such correction to completion; and

(f)     The filing of a petition by or against Tenant (the term “Tenant” shall include, for the purpose of this Section 17.(f), any guarantor of Tenant’s obligations hereunder) (1) in any bankruptcy or other insolvency proceeding; (2) seeking any relief under any state or federal debtor relief law; (3) for the appointment of a liquidator or receiver for all or substantially all of Tenant’s property or for Tenant’s interest in this Lease; or (4) for the reorganization or modification of Tenant’s capital structure; however, if such a petition is filed against Tenant, then such filing shall not be an Event of Default unless Tenant fails to have the proceedings initiated by such petition dismissed within ninety (90) days after the filing thereof.

18.     Remedies. Upon an Event of Default, Landlord may, in addition to all other rights and remedies afforded Landlord hereunder, take any of the following actions:

(a)     Terminate this Lease by giving Tenant written notice thereof, in which event Tenant shall pay to Landlord the sum of (1) all Rent accrued hereunder through the date of termination, (2) all amounts due under Section 19.(a), and (3) an amount equal to (A) the total Rent that Tenant would have been required to pay for the remainder of the Term plus Landlord’s estimate of aggregate expenses of reletting to the Premises, minus (B) the then present fair rental rate value of the Premises for such period, which amount shall be discounted to present value at a discount rate equal to the then Prime Rate as published in the Wall Street Journal on the date closest to the date of written termination;

(b)     Terminate Tenant’s right to possess the Premises without terminating this Lease by giving written notice thereof to Tenant, in which event Tenant shall pay to Landlord (1) all Rent and other amounts accrued hereunder to the date of termination of possession, (2) all amounts due from time to time under Section 19.(a), and (3) all Rent and other net sums required hereunder to be paid by Tenant during the remainder of the Term, diminished by any net sums thereafter received by Landlord through reletting the Premises during such period, after deducting all out-of-pocket costs incurred by Landlord in reletting the Premises. The refusal or failure of Landlord to relet the Premises or any part or parts thereof shall not release or affect Tenant’s liability for damages, provided however, that after the termination of this Lease as a result of an Event of Default, Landlord shall use reasonable efforts to relet the Premises on such terms as

 

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Landlord in its sole but reasonable discretion may determine (including a term different from the Term, rental concessions, and alterations to, and improvement of, the Premises), but in using such reasonable efforts, Landlord shall not be required to (i) give priority to the reletting of the Premises over the leasing of other portions of the Building, (ii) enter into a lease with any proposed tenant that does not, in Landlord’s reasonable opinion, have sufficient financial resources or experience to operate the Premises in a first-class manner, or (iii) lease the Premises for a rental less than the current rental then prevailing for similar space in the Building. Landlord shall not be liable for, nor shall Tenant’s obligations hereunder be diminished because of, Landlord’s failure to relet the Premises or to collect rent due for such reletting. Tenant shall not be entitled to the excess of any consideration obtained by reletting over the Rent due hereunder. Reentry by Landlord in the Premises shall not affect Tenant’s obligations hereunder for the unexpired Term; rather, Landlord may, from time to time, bring an action against Tenant to collect amounts due by Tenant, without the necessity of Landlord’s waiting until the expiration of the Term. Unless Landlord delivers written notice to Tenant expressly stating that it has elected to terminate this Lease, all actions taken by Landlord to dispossess or exclude Tenant from the Premises shall be deemed to be taken under this Section 18.(b). If Landlord elects to proceed under this Section 18.(b), it may at any time elect to terminate this Lease under Section 18.(a).

Any and all remedies set forth in this Lease: (i) shall be in addition to any and all other remedies Landlord may have at law or in equity; (ii) shall be cumulative; and (iii) may be pursued successively or concurrently as Landlord may elect. The exercise of any remedy by Landlord shall not be deemed an election of remedies or preclude Landlord from exercising any other remedies in the future. Notwithstanding the foregoing, Landlord shall only recover its damages allowed hereunder once. Notwithstanding anything contained herein to contrary, except as set forth in Section 22 of this Lease, Tenant shall not be liable for Landlord’s consequential, indirect or special damages resulting from Tenant’s default hereunder.

19.     Payment by Tenant; Non-Waiver

(a)     Payment by Tenant. Upon any Event of Default, Tenant shall pay to Landlord all costs incurred by Landlord (including court costs and reasonable attorneys’ fees and expenses) in (1) obtaining possession of the Premises, (2) removing and storing Tenant’s or any other occupant’s property, (3) repairing, restoring, or otherwise putting the Premises into condition acceptable to a new tenant, (4) if Tenant is dispossessed of the Premises and this Lease is not terminated, reletting all or any part of the Premises (including brokerage commissions, cost of tenant finish work, and other costs incidental to such reletting), (5) performing Tenant’s obligations which Tenant failed to perform, and (6) enforcing, or advising Landlord of, its rights, remedies, and recourses arising out of the Event of Default. To the full extent permitted by law, Landlord and Tenant agree the federal and state courts of the state in which the Premises are located shall have exclusive jurisdiction over any matter relating to or arising from this Lease and the parties’ rights and obligations under this Lease.

(b)     No Waiver. Landlord’s acceptance of Rent following an Event of Default shall not waive Landlord’s rights regarding such Event of Default. No waiver by Landlord of any violation or breach of any of the terms contained herein shall waive Landlord’s rights regarding any future violation of such term. Landlord’s acceptance of any partial payment of Rent shall not

 

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waive Landlord’s rights with regard to the remaining portion of the Rent that is due, regardless of any endorsement or other statement on any instrument delivered in payment of Rent or any writing delivered in connection therewith; accordingly, Landlord’s acceptance of a partial payment of Rent shall not constitute an accord and satisfaction of the full amount of the Rent that is due.

20.     Intentionally Omitted.

21.     Surrender of Premises. No act by Landlord shall be deemed an acceptance of a surrender of the Premises, and no agreement to accept a surrender of the Premises shall be valid unless it is in writing and signed by Landlord. At the expiration or termination of this Lease, Tenant shall deliver to Landlord the Premises with all improvements located therein in good repair and condition, strictly in compliance with applicable law with respect to all Hazardous Materials placed on the Premises during the Term, broom-clean, reasonable wear and tear (and condemnation and Casualty damage, as to which Sections 14 and 15 shall control) excepted, and shall deliver to Landlord all keys to the Premises. Provided that Tenant has performed all of its obligations hereunder, Tenant may remove all unattached trade fixtures, furniture, and personal property placed in the Premises or elsewhere in the Building by Tenant (but Tenant may not remove any such item which was paid for, in whole or in part, by Landlord or any wiring or cabling unless Landlord requires such removal). Additionally, at Landlord’s option, Tenant shall remove such alterations, additions, improvements, trade fixtures, personal property, equipment, wiring, cabling, and furniture as Landlord may have requested be removed at the time it approved of such alterations, additions or improvements. Notwithstanding anything contained to the contrary herein, Tenant shall have no obligations to remove any of the alterations that comprise Tenant’s Work as set forth on Exhibit B. Tenant shall repair all damage caused by such removal. All items not so removed shall, at Landlord’s option, be deemed to have been abandoned by Tenant and may be appropriated, sold, stored, destroyed, or otherwise disposed of by Landlord without notice to Tenant and without any obligation to account for such items; any such disposition shall not be considered a strict foreclosure or other exercise of Landlord’s rights in respect of the security interest granted under Section 20. The provisions of this Section 21 shall survive the end of the Term.

22.     Holding Over. If Tenant fails to vacate the Premises at the end of the Term, then Tenant shall be a tenant at sufferance and, in addition to all other damages and remedies to which Landlord may be entitled for such holding over, Tenant shall pay, in addition to the other Rent, a daily Basic Rent equal to 150% of the daily Basic Rent payable during the last month of the Term. The provisions of this Section 22 shall not be deemed to limit or constitute a waiver of any other rights or remedies of Landlord provided herein or at law. If Tenant fails to surrender the Premises upon the termination or expiration of this Lease, in addition to any other liabilities to Landlord accruing therefrom, Tenant shall protect, defend, indemnify and hold Landlord harmless from all loss, costs (including reasonable attorneys’ fees) and liability resulting from such failure, including, without limiting the generality of the foregoing, any claims made by any succeeding tenant founded upon such failure to surrender, and any lost profits to Landlord resulting therefrom.

 

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23.     Certain Rights Reserved by Landlord. Provided that the exercise of such rights does not unreasonably interfere with Tenant’s occupancy of or access to the Premises, Landlord shall have the following rights:

(a)     To decorate and to make inspections, repairs, alterations, additions, changes, or improvements, whether structural or otherwise, in and about the Building, or any part thereof; to enter upon the Premises (after giving Tenant reasonable notice thereof, which may be oral notice, except in cases of real or apparent emergency, in which case no notice shall be required) and, during the continuance of any such work, to temporarily close doors, entryways, public space, and corridors in the Building; to interrupt or temporarily suspend Building services and facilities; upon 60 days prior notice, to change the name of the Building; and to change the arrangement and location of entrances or passageways, doors, and doorways, corridors, elevators, stairs, restrooms, or other public parts of the Building;

(b)     To take such reasonable measures as Landlord deems advisable for the security of the Building and its occupants; evacuating the Building for cause, suspected cause, or for drill purposes; temporarily denying access to the Building; and closing the Building after normal business hours and on Sundays and holidays, subject, however, to Tenant’s right to enter when the Building is closed after normal business hours under such reasonable regulations as Landlord may prescribe from time to time; and

(c)     To enter the Premises at reasonable hours upon reasonable prior notice, to show the Premises to prospective purchasers, lenders, or, during the last 12 months of the Term, tenants provided that a representative of Tenant is afforded the opportunity to be present at all such times.

24.     Intentionally Omitted.

25.     Miscellaneous.

(a)     Landlord Transfer. Landlord may transfer any portion of the Building and any of its rights under this Lease. If Landlord assigns its rights under this Lease, then Landlord shall thereby be released from any further obligations hereunder arising after the date of transfer, provided that the assignee assumes Landlord’s obligations hereunder in writing.

(b)     Landlord’s Liability. The liability of Landlord to Tenant for any default by Landlord under the terms of this Lease shall be limited to Tenant’s actual direct, but not consequential, damages therefor and shall be recoverable only from the interest of Landlord in the Building (including the rents, profits and proceeds), and Landlord shall not be personally liable for any deficiency. This Section shall not limit any remedies which Tenant may have for Landlord’s defaults which do not involve the personal liability of Landlord.

(c)     Force Majeure. Other than for Tenant’s obligations under this Lease that can be performed by the payment of money (e.g., payment of Rent and maintenance of insurance), whenever a period of time is herein prescribed for action to be taken by either party hereto, such party shall not be liable or responsible for, and there shall be excluded from the computation of any such period of time, any delays due to strikes, riots, acts of God, shortages of labor or materials, war, governmental laws, regulations, or restrictions, or any other causes of any kind whatsoever which are beyond the control of such party.

 

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(d)     Brokerage. Neither Landlord nor Tenant has dealt with any broker or agent in connection with the negotiation or execution of this Lease, other than North Star Management and Columbia Group, whose commission shall be paid by Landlord. Tenant and Landlord shall each indemnify the other against all costs, expenses, attorneys’ fees, and other liability for commissions or other compensation claimed by any other broker or agent claiming the same by, through, or under the indemnifying party.

(e)     Estoppel Certificates. From time to time, Tenant shall furnish to any party designated by Landlord, within ten (10) business days after Landlord has made a request therefor, a certificate signed by Tenant confirming and containing such factual certifications and representations as to this Lease as Landlord may reasonably request. Unless otherwise required by Landlord’s Mortgagee or a prospective purchaser or mortgagee of the Building, the initial form of estoppel certificate to be signed by Tenant is attached hereto as Exhibit F.

(f)     Notices. All notices and other communications given pursuant to this Lease shall be in writing and shall be (1) mailed by first class, United States Mail, postage prepaid, certified, with return receipt requested, and addressed to the parties hereto at the address specified in the Basic Lease Information, (2) sent by a nationally recognized overnight courier service. All notices shall be effective upon delivery to the address of the addressee. The parties hereto may change their addresses by giving notice thereof to the other in conformity with this provision.

(g)     Separability. If any clause or provision of this Lease is illegal, invalid, or unenforceable under present or future laws, then the remainder of this Lease shall not be affected thereby and in lieu of such clause or provision, there shall be added as a part of this Lease a clause or provision as similar in terms to such illegal, invalid, or unenforceable clause or provision as may be possible and be legal, valid, and enforceable.

(h)     Amendments; and Binding Effect. This Lease may not be amended except by instrument in writing signed by Landlord and Tenant. No provision of this Lease shall be deemed to have been waived by Landlord unless such waiver is in writing signed by Landlord, and no custom or practice which may evolve between the parties in the administration of the terms hereof shall waive or diminish the right of Landlord to insist upon the performance by Tenant in strict accordance with the terms hereof. The terms and conditions contained in this Lease shall inure to the benefit of and be binding upon the parties hereto, and upon their respective successors in interest and legal representatives, except as otherwise herein expressly provided. This Lease is for the sole benefit of Landlord and Tenant, and no third party shall be deemed a third party beneficiary hereof.

(i)     Quiet Enjoyment. Provided Tenant is not in default hereunder beyond applicable notice and cure periods, Tenant shall peaceably and quietly hold and enjoy the Premises for the Term, without hindrance from Landlord or any party claiming by, through, or under Landlord, but not otherwise, subject to the terms and conditions of this Lease.

(j)     No Merger. There shall be no merger of the leasehold estate hereby created with the fee estate in the Premises or any part thereof if the same person acquires or holds, directly or indirectly, this Lease or any interest in this Lease and the fee estate in the leasehold Premises or any interest in such fee estate.

 

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(k)     No Offer. The submission of this Lease to Tenant shall not be construed as an offer, and Tenant shall not have any rights under this Lease unless Landlord executes a copy of this Lease and delivers it to Tenant.

(l)     Entire Agreement. This Lease constitutes the entire agreement between Landlord and Tenant regarding the subject matter hereof and supersedes all oral statements and prior writings relating thereto. Except for those set forth in this Lease, no representations, warranties, or agreements have been made by Landlord or Tenant to the other with respect to this Lease or the obligations of Landlord or Tenant in connection therewith. The normal rule of construction that any ambiguities be resolved against the drafting party shall not apply to the interpretation of this Lease or any exhibits or amendments hereto.

(m)     Waiver of Jury Trial. To the maximum extent permitted by law, Landlord and Tenant each waive right to trial by jury in any litigation arising out of or with respect to this Lease.

(n)     Governing Law. This Lease shall be governed by and construed in accordance with the laws of the State in which the Premises are located.

(o)     Joint and Several Liability. If Tenant is comprised of more than one party, each such party shall be jointly and severally liable for Tenant’s obligations under this Lease.

(p)     Financial Reports. Within fifteen (15) days after Landlord’s request, Tenant will furnish Tenant’s most recent audited financial statements (including any notes to them) to Landlord, or, if no such audited statements have been prepared, such other financial statements (and notes to them) as may have been prepared by an independent certified public accountant or, failing those, Tenant’s internally prepared financial statements. If Tenant is a publicly traded corporation, Tenant may satisfy its obligations hereunder by providing to Landlord Tenant’s most recent annual and quarterly reports. Tenant will discuss its financial statements with Landlord. Landlord will not disclose any aspect of Tenant’s financial statements that Tenant designates to Landlord as confidential except (1) to Landlord’s Mortgagee or prospective purchasers of the Building, (2) in litigation between Landlord and Tenant, and (3) if required by court order. Tenant shall not be required to deliver the financial statements required under this Section 25.(p) more than once in any 12-month period unless requested by Landlord’s Mortgagee or a prospective buyer or lender of the Building or an Event of Default occurs.

(q)     Landlord’s Fees. Whenever Tenant requests Landlord to take any action not required of it hereunder or give any consent required or permitted under this Lease, Tenant will reimburse Landlord for Landlord’s reasonable out-of-pocket costs payable to third parties and incurred by Landlord in reviewing the proposed action or consent, including without limitation reasonable attorneys’, engineers’ or architects’ fees, within thirty (30) days after Landlord’s delivery to Tenant of a statement of such costs. Tenant will be obligated to make such reimbursement without regard to whether Landlord consents to any such proposed action. The provisions of this paragraph shall not apply with respect to any consent required of Landlord in connection with the Tenant’s Work set forth in Exhibit B.

 

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(r)     Telecommunications. Tenant and its telecommunications companies, including but not limited to local exchange telecommunications companies and alternative access vendor services companies shall have no right of access to and within the Building, for the installation and operation of telecommunications systems including but not limited to voice, video, data, and any other telecommunications services provided over wire, fiber optic, microwave, wireless, and any other transmission systems, for part or all of Tenant’s telecommunications within the Premises, the Building and from the Building to any other location without Landlord’s prior written consent, provided however that Landlord shall consent to Tenant’s initial wiring of such systems subject to Landlord’s reasonable rules and regulations.

(s)     Confidentiality. Tenant acknowledges that the terms and conditions of this Lease are to remain confidential for Landlord’s benefit, and may not be disclosed by Tenant to anyone, by any manner or means, directly or indirectly, without Landlord’s prior written consent, except for Tenant’s attorney’s or accountants. The consent by Landlord to any disclosures shall not be deemed to be a waiver on the part of Landlord of any prohibition against any future disclosure..

(t)     Hazardous Materials. The term “Hazardous Materials” means any substance, material, or waste which is now or hereafter classified or considered to be hazardous, toxic, or dangerous under any Law relating to pollution or the protection or regulation of human health, natural resources or the environment, or poses or threatens to pose a hazard to the health or safety of persons on the Premises or in the Building. Tenant shall not use, generate, store, or dispose of, or permit the use, generation, storage or disposal of Hazardous Materials on or about the Premises or the Building except in a manner and quantity necessary for the ordinary performance of Tenant’s business, and then in compliance with all Laws. If Tenant breaches its obligations under this Section 25.(t), Landlord may immediately take any and all action reasonably appropriate to remedy the same, including taking all appropriate action to clean up or remediate any contamination resulting from Tenant’s use, generation, storage or disposal of Hazardous Materials. Tenant shall defend, indemnify, and hold harmless Landlord and its representatives and agents from and against any and all claims, demands, liabilities, causes of action, suits, judgments, damages and expenses (including reasonable attorneys’ fees and cost of clean up and remediation) arising from Tenant’s failure to comply with the provisions of this Section 25.(t). This indemnity provision shall survive termination or expiration of the Lease.

(u)     Authority. Tenant (if a corporation, limited liability company, limited partnership or other business entity) hereby represents and warrants to Landlord that Tenant is a duly formed and existing entity qualified to do business in the state in which the Premises are located, that Tenant has full right and authority to execute and deliver this Lease, and that each person signing on behalf of Tenant is authorized to do so. Landlord hereby represents and warrants to Tenant that Landlord is a duly formed and existing entity qualified to do business in the state in which the Premises are located, that Landlord has full right and authority to execute and deliver this Lease, and that each person signing on behalf of Landlord is authorized to do so.

 

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(v)     List of Exhibits. All exhibits and attachments attached hereto are incorporated herein by this reference.

 

Exhibit A

   -     

Floor Plan of Premises

Exhibit B

   -     

Legal Description of Building

Exhibit C

   -     

Building Rules and Regulations

Exhibit D

   -     

Tenant’s Work

Exhibit E

   -     

Amendment No. 1

Exhibit F

   -     

Form of Tenant Estoppel Certificate

Exhibit G

   -     

Deleted

Exhibit H

   -     

Parking

Exhibit I

   -     

Excerpts from Master Lease

Exhibit J

   -     

Renewal Option

Exhibit K

   -     

Expansion Right

(w)     Time of Essence. Time is of the essence of this Lease and each and all of its provisions.

(x)     EDIC Lease. Landlord’s interest in the Building derives from a lease (hereinafter referred to as the Master Lease) from EDIC to Landlord’s predecessor in interest, Drydock Associates. This Lease shall be in all respects subject to the Master Lease, and if the Master Lease shall terminate during the Term hereof for any reason whatsoever, then this Lease shall thereupon terminate with the same force and effect as if the Term of this Lease had expired. If and to the extent that the provisions of the Master Lease are modified by agreement of Landlord and EDIC, Landlord shall notify Tenant of such modification, which shall be deemed part of the Master Lease for purposes hereof, provided that no such modification shall materially increase Tenant’s obligations. Tenant expressly covenants and agrees not to do or permit to be done any act or thing in violation of the Master Lease nor to require Landlord to do or perform any act or thing not authorized or permitted by the terms thereof. Whenever the obligations of Landlord to Tenant would depend upon the obligations of EDIC to Landlord, the maximum obligation of Landlord shall be to use reasonably diligent efforts to obtain appropriate action on the part of EDIC. Without limiting the generality of the foregoing, the parties shall comply with their respective obligations as set forth in those sections of the Master Lease attached hereto as Exhibit I and made a part hereof, which Landlord represents are the only provisions of the Master Lease that are material to the obligations of Tenant. Notwithstanding Section 17.04 of the Master Lease, Tenant shall not be entitled directly or indirectly to any share of Net Cash Flow, Net Proceeds of Sale or Net Proceeds of Financing or Refinancing, nor shall Tenant have any interest in the Occupant Trust, all as further defined and set forth in said Section. In no event shall the provisions of said Section or any other provisions of this Lease or of the Master Lease be deemed or construed as creating a partnership or joint venture between Landlord and Tenant.

(y)     Consent of EDIC. Whenever Tenant makes any request which requires, either directly or as a condition of Landlord’s consent, the consent of EDIC, Tenant shall pay all costs, including without limitation reasonable attorneys’ fees, incurred by EDIC in connection therewith.

 

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26.     Other Provisions. LANDLORD AND TENANT EXPRESSLY DISCLAIM ANY IMPLIED WARRANTY THAT THE PREMISES ARE SUITABLE FOR TENANT’S INTENDED COMMERCIAL PURPOSE, AND TENANT’S OBLIGATION TO PAY RENT HEREUNDER IS NOT DEPENDENT UPON THE CONDITION OF THE PREMISES OR THE PERFORMANCE BY LANDLORD OF ITS OBLIGATIONS HEREUNDER, AND, EXCEPT AS OTHERWISE EXPRESSLY PROVIDED HEREIN OR AS OTHERWISE PROVIDED BY LAW, TENANT SHALL CONTINUE TO PAY THE RENT, WITHOUT ABATEMENT, SETOFF OR DEDUCTION, NOTWITHSTANDING ANY BREACH BY LANDLORD OF ITS DUTIES OR OBLIGATIONS HEREUNDER, WHETHER EXPRESS OR IMPLIED.

[Remainder of Page Intentionally Left Blank]

 

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IN WITNESS WHEREOF, and in consideration of the mutual entry into this Lease and for other good and valuable consideration, and intending to be legally bound, each party hereto has caused this Lease Agreement to be duly executed as a Massachusetts instrument under seal as of the day and year first above written.

 

TENANT:
Ginkgo Bioworks, Inc.
a Delaware corporation
By:  

/s/ Barry Canton

  Name:   Barry Canton
  Title:   Founder

 

LANDLORD:
ZOOM GROUP LLC
a Massachusetts limited partnership
By:  

/s/ Jeff Wallace

  Jeff Wallace, its Manager

 

EDIC:      
For the purposes of approving this Lease:      
ECONOMIC DEVELOPMENT AND INDUSTRIAL CORPORATION OF BOSTON      

Address:

One City Hall Square, 9th Floor

        Boston, MA 02201-1007
        By:  

/s/ Peter Mead

      Fax. number:
        Name:   Peter Mead      
        Title:   Director      

 

A-1

Exhibit 10.19

FIRST AMENDMENT TO LEASE AGREEMENT

THIS FIRST AMENDMENT TO LEASE AGREEMENT (this “Amendment”) is made and entered into as of this 1st day of April 2012, by and between ZOOM GROUP, LLC, a Massachusetts limited liability company (“Landlord”), and GINKGO BIOWORKS, INC., a Delaware corporation (“Tenant”).

W I T N E S S E T H:

WHEREAS, Landlord and Tenant are parties to that certain Lease Agreement entered into as of December 22nd, 2011, by and between Landlord and Tenant (the “Original Lease”). The Original Lease together with this Amendment are hereinafter referred to collectively as the “Lease.” Pursuant to the Original Lease, Tenant leased certain Premises in the building located at 27 Drydock Avenue, Boston, Massachusetts (the “Building”), which Premises consist of a portion of the eighth floor of the Building and contain approximately 11,565 rentable square feet (the “Premises”);

WHEREAS, the Original Lease provides Tenant an Expansion Option for a certain First Right of Refusal Premises (as such term in defined in the Lease); and

WHEREAS, Landlord and Tenant desire to amend the Expansion Option set forth in Exhibit K of the Original Lease in order to provide Tenant with an ongoing right of refusal with respect to the First Right of Refusal Premises.

NOW, THEREFORE, in consideration of Ten Dollars ($10.00), the covenants and agreements herein contained, and other good and valuable consideration, the receipt and sufficiency of which is hereby acknowledged, Landlord and Tenant do hereby agree as follows:

1.    Amendment. The Original Lease is hereby amended such that Exhibit K of the Original Lease, entitled “Expansion Right”, is hereby deleted in its entirety and replaced with the Exhibit K attached to this Amendment.

2.    Execution. This Amendment may be executed in two (2) or more counterparts, each of which shall be an original but such counterparts together shall constitute one and the same instrument notwithstanding that both Landlord and Tenant are not signatories to the same counterpart. Delivery of an executed counterpart of this Amendment by facsimile shall be equally as effective as delivery of any original executed counterpart. Any party delivering an executed counterpart of this Amendment by facsimile also shall deliver an original executed counterpart of this Amendment, but the failure to deliver an original executed counterpart shall not affect the validity, enforceability and binding effect of this Amendment. Signature and acknowledgement pages may be detached from the counterparts and attached to a single copy of this Amendment to physically form one (1) document.

3.    Severability. The illegality, invalidity or unenforceability of any provision of this Amendment under the laws of any jurisdiction shall not affect its legality, validity or enforceability under the laws of any other jurisdiction, nor the legality, validity or enforceability of any other provision.

4.    Miscellaneous. All terms used herein, unless otherwise defined herein, shall have the same meaning as such terms used in the Original Lease. Except as herein modified or amended, the provisions, conditions and terms of the Original Lease shall remain unchanged and in full force and


effect. The conditions, covenants and agreements herein contained shall be binding upon the parties hereto and their respective successors and assigns. The individuals executing this Amendment hereby represent and warrant that they are empowered and duly authorized to so execute this Amendment on behalf of the parties they represent. This Amendment shall be governed and construed in accordance with the laws of the Commonwealth of Massachusetts applicable to agreements made and to be performed within such state without regard to principles of conflicts of law.

-Balance of page intentionally blank, signature page and exhibits on following pages-

 

-2-


Landlord and Tenant have executed this Amendment as of the day and year first above written.

 

GINGKO BIOWORKS, INC., a Delaware corporation
By:  

/s/ Barry Canton

Name:   Barry Canton
Its:   Founder
ZOOM GROUP, LLC, a Massachusetts limited liability company
By:  

/s/ Jeff Wallace

Name:   Jeff Wallace
Its:   Manager

Exhibit 10.20

SECOND AMENDMENT TO LEASE

Second Amendment to Lease (“Second Amendment”) dated this 1st day of August 2014, by and between Zoom Group LLC, a Massachusetts limited liability company, as Landlord, and Ginkgo Bioworks, Inc., a Delaware corporation, as Tenant.

Whereas, Landlord and Tenant did enter into, execute and deliver that certain Lease Agreement dated as of December 22, 2011, as affected by Commencement Date Agreement dated January 31, 2012 and amended by a First Amendment to Lease dated April     , 2012, (as so amended, the “Lease”) with respect to a certain leasehold premises more particularly described in said Lease; and

Whereas, Landlord and Tenant have agreed to expand the premises that are subject to the Lease by including the space that was defined as the First Right of Refusal Premises in the Lease, extend the Term of the Lease, modify the Rent payable under the Lease and provide Tenant with certain rights with respect to other portions of the Building and wish to amend the Lease to reflect the agreements of the parties.

Now therefore, for good and valuable consideration, the receipt and sufficiency of which are hereby acknowledged, Landlord and Tenant do hereby agree as follows:

1. Capitalized terms used herein shall have the meaning ascribed to them in the Lease except as explicitly defined otherwise herein.

2. Effective on the Expansion Premises Commencement Date, the first paragraph of the description of the Premises in the Basic Lease Information is deleted in its entirety and the following paragraph is substituted therefore:

“Approximately 18,350 rentable square feet (the “Premises Rentable Area”) consisting of 11,565 rentable square feet in southeast corner of the eighth floor (the “Original Premises”) and 6,785 rentable square feet on the eighth floor (the “Expansion Premises”) both of which are located within the building currently known as Section A of Building 114 (the Building), and whose street address is 27 Drydock Avenue, Boston, Massachusetts. The Original Premises are outlined on the plan attached hereto as Exhibit A and are labeled “A” and the Expansion Premises are outlined on the plan attached hereto as Exhibit A and are labeled “B”. The combined Premises is also shown on the attached Exhibit A1 labeled “Premises”. The land on which the Building is located (the Land) is described on Exhibit B. The term “Building” includes the Land and the driveways, parking facilities, and similar improvements on the Land.”

Landlord and Tenant acknowledge and agree that Tenant’s appurtenant rights with respect to the rooftop as set forth in the second paragraph of the Premises description remain in full force and effect.

3. Landlord and Tenant acknowledge that the Expansion Premises are the premises described in the Lease as the First Right of Refusal Premises and that, upon delivery of the Expansion Premises to Tenant in accordance with this Second Amendment, the First Right of Refusal shall be null and void with respect to the Expansion Premises. Landlord hereby grants to Tenant a right of first refusal in, and the Lease shall be deemed amended so as to provide that the First Right of Refusal Premises shall now be defined as “Any and all remaining premises located on the 8th floor of the Building, excluding the Building Management Office which space is labeled as “Building Mgmt Ofc” as shown on the attached Exhibit A-1”. The terms of the Lease with respect to a Right of First Refusal shall apply to all such remaining premises (excluding the Building Management Office) on the 8th floor. This Right of First

 

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Refusal shall be superior to any rights of all existing or future tenants, except the following tenants which possess prior outstanding rights with respect to portions or all of the remaining premises:

 

  Space A.   Labeled as “Immunetics” with rights to extend its lease through July 2023.
  Space B.   Labeled as “Building Mgmt Ofc” is excluded from Tenant’s First Right of Refusal or Renewal Option.

4. Landlord and Tenant agree that the Original Premises have been delivered to Tenant and Tenant has accepted those premises and that but for this Second Amendment, the lease would terminate on February 28, 2017. The Term is hereby extended to February 29, 2024, subject to earlier termination as provided in the Lease, and subject to Tenant’s extension right as provided in the Lease.

5. The definition of Basic Rent in the Basic Lease Information is amended by adding the following:

Until the Expansion Rent Commencement Date, as hereinafter defined, Basic Rent shall remain as set forth in the Lease. From and after the Expansion Rent Commencement Date the Basic Rent shall be as follows:

 

Months

commencing

on

          Monthly Basic Rent  

Expansion Rent Commencement Date

   $ 45,208  

March

     2015         $ 46,672  

March

     2016         $ 48,152  

March

     2017         $ 52,378  

March

     2018         $ 53,950  

March

     2019         $ 55,568  

March

     2020         $ 57,235  

March

     2021         $ 58,952  

March

     2022         $ 60,721  

March

     2023         $ 62,543  

6. The following definitions are added to the Basic Lease Information:

 

  “Expansion Premises  
         Commencement Date:   The date upon which Landlord delivers the Expansion Premises in “as-is, broom-clean” condition, free and clear of personal property and free of all tenants and parties in possession and with all hazardous waste, substances and materials used by any prior tenants properly removed from the Premises. Landlord represents that to the best of its knowledge, upon delivery of the Premises to Tenant, the Premises shall comply in all material respects with all applicable laws, regulations, ordinances, codes and bylaws, including without limitation, the American with Disabilities Act and all laws, rules or regulations regarding any hazardous waste,

 

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    substance or materials or other environmental laws. The estimated Expansion Premises Commencement Date is August 7, 2014, provided however that the failure of Landlord to deliver the Expansion Premises on such date shall not constitute a default by Landlord.”
  “Expansion Rent  
         Commencement Date:   The date that is one hundred eighty (180) days following the Expansion Premises Commencement Date. Tenant shall not be excused from the payment of Basic Rent or Additional Rent by reason of any failure of Tenant to have completed the work that it shall do the Expansion Premises as contemplated herein. Notwithstanding the foregoing, the Expansion Rent Commencement Date shall be extended one day for each day of delay in Tenant’s completion of the Expansion Improvements (as defined hereafter) (i) caused by the Landlord or (ii) as a result of Force Majeure.”

7. The definition of Tenant’s Proportionate Share in the Basic Lease Information is deleted and the following is substituted:

 

          “Tenant’s  
         Proportionate Share:   4.34% which is the percentage prior to the Expansion Premises Commencement Date and 6.89% following the Expansion Rent Commencement Date. Tenant’s Proportionate Share is obtained by dividing the Original Premises and the Expansion Premises, as applicable, Rentable Area by 95% of the Building Rentable Area.

8. The definition of Additional Rent in the Basic Lease Information is amended by adding, “Landlord and Tenant acknowledge and agree that the estimates set forth herein are only Landlord’s best estimate as of the date of the original execution of the Lease. Notwithstanding that Tenant shall not be required to pay Basic Rent and Additional Rent prior to the Expansion Rent Commencement Date, Tenant shall pay Tenant’s utility costs from and after the Expansion Premises Commencement Date.

9. The definition of Security Deposit in the Basic Lease Information is amended by adding, “As of the Expansion Premises Commencement Date, the existing security deposit shall be increased to $110,000.”

10. Tenant shall be responsible for any and all Improvements or Alterations to the Expansion Premises that Tenant may require to make the Expansion Premises suitable for Tenant’s occupation and use of the Expansion Premises for the uses permitted pursuant to the Lease (the “Expansion Improvements”). Landlord shall cooperate with Tenant to obtain any permits required for any of the Expansion Improvements, and shall provide access to Tenant for all plumbing and other utility connections in locations other than the Expansion Premises within the Building that are necessary for the Expansion Improvements. All such Expansion Improvements shall be completed in accordance with the provisions of Section 8(a) of the Lease, except to the extent that the following provisions supersede Section 8(a).

(a) Landlord shall provide an allowance of $581,650.00 (the “Tenant Allowance”) that Tenant may use towards funding the Expansion Improvements, including all hard and soft construction costs, including architect’s and engineering fees. Fifty percent (50%) of the Tenant Allowance shall be paid to Tenant upon completion of all rough inspections by the City of Boston

 

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Inspectional Services Department and the remaining fifty percent (50%) shall be paid to Tenant upon delivery to Landlord of (i) a final Certificate of Occupancy issued by Boston Inspectional Services for the Expansion Premises and (ii) lien waivers from all contractors or other satisfactory evidence that all contractors have been paid or will be paid in full for all work that has been done to the Expansion Premises. Notwithstanding the foregoing, if Tenant’s contract with its general contractor requires a deposit for the rooftop equipment condenser, and that condenser is delivered in place (but not fully installed) to a rooftop platform on the Building built by Tenant to receive the equipment, then Landlord shall accelerate the portion of rough inspection first payment by paying to Tenant 50% of Tenant’s equipment. Any amount disbursed under the foregoing circumstances shall be deducted from the first rough inspection payment. All payments to Tenant by Landlord shall be made within ten (10) business days of billing by Tenant.

(b) All plans for the Expansion Improvements must be approved by Landlord, which approval shall not be unreasonably withheld or delayed. Tenant shall be responsible for all space planning for the Expansion Improvements. Landlord hereby approves of the preliminary plans attached hereto as Exhibit A4. The approximate rooftop area designated for Tenant’s rooftop equipment is shown in attached Exhibit A3.

(c) Construction of the Expansion Improvements shall be completed fully in compliance with the Building’s Construction Guidelines. Tenant shall have the right to hire the Richmond Group as its general contractor and/or project manager for the Expansion Improvements.

(d) Landlord shall execute a form of landlord waiver required by Tenant’s lender in connection with its financing of the Expansion Improvements, in a form to be reasonably acceptable to Landlord.

11. The Lease is further amended to provide that Tenant shall have the right (the “Fifth Floor Expansion Right”) to lease a portion of the Fifth Floor consisting of 6,314 rentable square feet as shown on Exhibit A2 attached hereto (the “Fifth Floor Expansion Premises”), by delivering written notice to Landlord no later than February 1, 2018. If Tenant delivers such notice, Basic Rent for the Fifth Floor Expansion Premises shall be the “Prevailing Rental Rate” as defined in and determined in accordance with Exhibit J to the Lease, provided that, notwithstanding any provisions in Exhibit J to the contrary, Landlord shall provide a build out period, and improvement allowance consistent with what is then being offered to other tenants in the Building. In such an event, the Premises, Monthly Basic Rent, Tenant’s Proportionate Share and all appropriate provisions of the Lease shall be amended to reflect the addition of the Fifth Floor Expansion Premises to the Premises. In the event that Tenant properly exercises the Fifth Floor Expansion Premises, Landlord shall deliver said premises in their then condition with all base building systems in good working order, broom clean and free of debris or personal property, within ten (10) days following the date that the current tenant of such premises vacates the space. The parties acknowledge that the date upon which the current tenant is scheduled to vacate is December 1, 2018, provided however that Landlord shall not be in default of this Lease if the current tenant shall fail to vacate the space in a timely manner.

12. Tenant’s Renewal Option as outlined in the Lease as Exhibit J remains in full force and effect. The provisions regarding the expiration of the Term are agreed to refer to the expiration of the Term as extended hereby.

13. Section 7 (a) of the Lease is amended by striking the second sentence and inserting the following, “Landlord shall maintain the Building’s Structure, the Building’s Systems, and the common areas of the Building in reasonably good order and condition, except for damage caused by a Tenant Party, but shall not be responsible for the maintenance and repair of air conditioning

 

4


delivery systems that are located within, or exclusively service the Premises.” Notwithstanding the foregoing, Landlord shall maintain the air conditioning delivery systems in Tenant’s Original Premises (but not the Expansion Premises) until the original expiration date of the Term (February 28, 2017). Landlord shall deliver the air conditioning delivery systems for both the Original Premises and the Expansion Premises in “good working order” as of the Expansion Premises Commencement Date.

14. Exhibit H of the Lease is amended by deleting “six (6)” as the number of spaces and substituting “nine (9)”. Landlord agrees to transition the assignment of all Tenant’s parking spaces from the area leased from the EDIC to the Building Land area controlled by Landlord no later than February 28, 2017. Tenant acknowledges that the current market rate for a parking space is $202.86 per month.

15. Broker. Landlord and Tenant warrant and represent to the other that neither has dealt with any broker in connection with the consummation of this Second Amendment except North Star Management for Landlord and Columbia Group Realty Advisors for Tenant, to whom Landlord shall pay a market rate fee pursuant to a separate agreement. Tenant and Landlord shall each indemnify the other against all costs, expenses, attorney’s fees, and other liability for any other commissions or compensation claimed in connection with Second Amendment by and broker or agent claiming by, through or under the indemnifying party for amounts other than those specified in Second Amendment.

16. Landlord and Tenant each hereby warrant and represent to the other that (i) the terms and conditions of the Lease have not been changed except as explicitly set forth herein; (ii) the Lease has not been cancelled or terminated; and (iii) to the knowledge of each, neither party is in default under the Lease and no condition exists which but for the passage or time or the giving notice or both, would constitute an Event of Default under the provisions of the Lease.

17. Landlord and Tenant each hereby warrant and represent to the other that (i) each is duly authorized to enter into and consummate the transactions contemplated by this Second Amendment; and (ii) the person executing this Second Amendment for each is duly authorized to enter into this Second Amendment on its behalf.

18. This Second Amendment may not be amended or modified except in writing signed by the Parties hereto. In case any provision(s) hereof shall be determined invalid or unenforceable under applicable law, such provision(s) shall insofar as possible, be construed or applied in such a manner as will permit enforcement; otherwise, this Second Amendment shall be construed as those such provision(s) had never been made a part hereof. This Second Amendment shall be governed by and construed in accordance with the laws of the Commonwealth of Massachusetts. Time is of the essence of each and every provision of this Second Amendment. This Second Amendment shall bind and inure to the parties’ respective successors. This Second Amendment, together with the Lease and the First Amendment to Lease, represents the entire agreement between the parties with respect to the subject matter hereof, and supersedes all other prior written agreements, representations, and covenants, oral or written. This Agreement may be executed in multiple counterparts, which when taken together, shall constitute a complete original document. Notwithstanding the foregoing, Landlord and Tenant have agreed to execute a separate side letter in the form attached hereto as Exhibit C.

[Signatures follow on the next page.]

 

5


Executed as a sealed instrument this 1st day of August 2014.

 

LANDLORD:
Zoom Group LLC
By:  

/s/ Jeff Wallace

  Jeff Wallace, its Manager

TENANT:

Ginkgo Bioworks, Inc.

By:  

/s/ Barry Canton

  Barry Canton, Founder

 

6

Exhibit 10.21

THIRD AMENDMENT TO LEASE

This Commencement Date Agreement (this “Agreement”) is executed as of August 15, 2014 between ZOOM GROUP LLC, a Massachusetts limited liability company (“Landlord”), and GINKGO BIOWORKS, INC,. a Delaware corporation (“Tenant”), for the purpose of amending the Lease Agreement between Landlord and Tenant dated December 22, 2011 (the “Lease”). Capitalized terms used herein but not defined shall be given the meanings assigned to them in the Lease.

AGREEMENTS

For valuable consideration, whose receipt and sufficiency are acknowledged, Landlord and Tenant agree as follows:

1. Condition of Premises. Tenant has accepted possession of the Premises pursuant to the Lease. Any improvements required by the terms of the Lease to be made by Landlord have been completed to the full and complete satisfaction of Tenant in all respects, and Landlord has fulfilled all of its duties under the Lease with respect to such initial tenant improvements. Furthermore, Tenant acknowledges that the Premises are suitable for the Permitted Use.

2. Commencement Date. The Delivery Date of the Second Amendment is August 15, 2014. If the Commencement Date set forth in the Lease is different than the date set forth in the preceding sentence, then the Commencement Date as contained in the Lease is amended to be the Commencement Date set forth in the preceding sentence.

3. Expiration Date. The Term is scheduled to expire on February 28, 2024 exclusive of any extension options. If the scheduled expiration date of the initial Term as set forth in the Lease is different than the date set forth in the preceding sentence, then the scheduled expiration date as set forth in the Lease is hereby amended to the expiration date set forth in the preceding sentence.

4. Contact Numbers. Tenant’s telephone number in the Premises is                     Tenant’s telecopy number in the Premises is                     .

5. Ratification. Tenant hereby ratifies and confirms its obligations under the Lease, and represents and warrants to Landlord that it has no defenses thereto. Additionally, Tenant further confirms and ratifies that, as of the date hereof, the Lease is and remains in good standing and in full force and effect, and Tenant has no claims, counterclaims, set-offs or defenses against Landlord arising out of the Lease or in any way relating thereto or arising out of any other transaction between Landlord and Tenant.

6. Binding Effect; Governing Law. Except as modified hereby, the Lease shall remain in full effect and this Agreement shall be binding upon Landlord and Tenant and their respective successors and assigns. If any inconsistency exists or arises between the terms of this Agreement and the terms of the Lease, the terms of this Agreement shall prevail. This Agreement shall be governed by the laws of the State in which the Premises is located.

 

E-1


7. Counterparts. This Agreement may be executed in multiple counterparts, each of which shall constitute an original, but all of which shall constitute one document.

Executed as of the date first written above.

 

LANDLORD:
Zoom Group LLC,
a Massachusetts limited liability company
By:  

/s/ Jeff Wallace

  Jeff Wallace, its Manager
TENANT:
Ginkgo Bioworks, Inc.
a Delaware corporation
By:  

/s/ Thomas F. Knight Jr.

Name:   Thomas F. Knight Jr.
Title:   Founder

Semester

 

E-2

Exhibit 10.22

FOURTH AMENDMENT TO LEASE

Agreement as of the 1st day of May, 2016, by and between Zoom Group LLC, a Massachusetts limited liability company, as Landlord, and Ginkgo Bioworks, Inc., a Delaware corporation, as Tenant.

Whereas, Landlord and Tenant did enter into, execute and deliver that certain Lease Agreement dated as of December 22, 2011, as affected by Commencement Date Agreement dated January 31, 2012 and amended by First Amendment to Lease dated April      2012 with respect to a certain leasehold premises more particularly described in said Lease; and

Whereas, by the Second Amendment to Lease dated August 1, 2014 (the “Second Amendment”) Landlord and Tenant agreed to (i) expand the premises that are subject to the Lease by including the space that was defined as the First Right of Refusal Premises in the Lease, (ii) extend the Term of the Lease, (iii) modify the Rent payable under the Lease and (iv) provide Tenant with a First Right of Refusal with respect to certain other portions of the Building defined therein as the First Right of Refusal Space (the “new First Right of Refusal Space”); and

Whereas, by the Third Amendment to Lease dated as of August 15, 2014 (the “Third Amendment” and together with the Lease as so amended, the “Lease”) Landlord and Tenant confirmed that (i) Tenant had accepted possession of the original First Right of Refusal Premises; (ii) the Delivery Date with respect to the original First Right of Refusal Space was August 15, 2014; and (iii) the Expiration Date of the Term is February 29, 2024; and

Whereas, a portion of the new First Right of Refusal Space (the “Second Expansion Premises”) has become available; Landlord has provided Tenant with the requisite Option Acceleration Notice; and Tenant has elected to exercise its Expansion Option to lease the space that has become available; and

Whereas, Landlord and Tenant have agreed to modify the Lease by adding the Second Expansion Premises to the Premises, modifying the Rent payable under the Lease and to reflecting certain other agreements of the parties.

Now therefore, for good and valuable consideration, the receipt and sufficiency of which are hereby acknowledged, Landlord and Tenant do hereby agree as follows:

1. Capitalized terms used herein shall have the meaning ascribed to them in the Lease except as explicitly defined otherwise herein.

2. The first two sentences of the first paragraph of the description of the Premises in the Basic Lease Information are deleted and the following sentences are substituted therefore:

“Approximately 20,330 rentable square feet (the “Premises Rentable Area”) consisting of 11,565 rentable square feet in southeast corner of the eighth floor (the “Original Premises”), 6,785 rentable square feet on the eighth floor (the “Expansion Premises”), and 1,980 rentable square feet on the eighth floor (the “Second Expansion Premises”), all of which are located within the building currently known as Section A of Building 114 (the “Building”), and whose street address is 27 Drydock Avenue, Boston, Massachusetts. The Original Premises, the Expansion Premises, and the Second Expansion Premises are outlined on the plan attached hereto as Exhibit A and are labeled “Premises.” The Second Expansion Premises are also shown on the attached Exhibit A1 labeled “Second Expansion Premises.”

 

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3. Landlord shall deliver the Second Expansion Premises in their current “as-is” condition on May 1, 2016 (the “Second Expansion Delivery Date”) and Tenant shall pay Rent with respect to such space commencing on the Second Expansion Delivery Date.

4. The Second Expansion Premises Term shall not be coterminous with the Lease Term. The Second Expansion Term shall commence on May 1, 2016 and shall terminate on February 29, 2020 unless otherwise terminated or extended in accordance with the Lease.

5. The definition of Basic Rent in the Basic Lease Information is amended by adding the following:

Until the Second Expansion Delivery Date, Basic Rent shall remain as set forth in the Lease. From and after the Second Expansion Delivery Date, the Basic Rent for the Second Expansion Premises shall be as follows:

 

Commencing on

          Monthly Basic Rent  

May 1,

     2016         $ 8,250.00  

May 1,

     2017         $ 8,497.50  

May 1,

     2018         $ 8,752.42  

May 1,

     2019         $ 9,015.00  

6. The definition of Tenant’s Proportionate Share in the Basic Lease Information is deleted and the following is substituted:

 

          “Tenant’s  
       Proportionate Share:   6.89% prior to the Second Expansion Delivery Date and 7.49% after the Second Expansion Delivery Date. Tenant’s Proportionate Share is obtained by dividing the Original Premises Rentable Area by 95% of the Building Rentable Area.

7. The definition of Security Deposit in the Basic Lease Information is amended by adding, “As of the Second Expansion Delivery Date, the existing security deposit shall be increased to $159,500.”

8 Tenant shall be responsible for any and all Improvements or Alterations to the Second Expansion Premises that Tenant may require to make the Second Expansion Premises suitable for Tenant’s occupation and use for the uses permitted pursuant to the Lease (the “Second Expansion Improvements”). All such Expansion Improvements shall be completed in accordance with the provisions of Section 8.3(a) of the Lease, except to the extent that the following provisions supersede Section 8.3(a).

(a) Landlord shall provide an allowance of $59,400.00 (the “Second Tenant Allowance”) that Tenant may use towards funding the Expansion Improvements. Fifty percent (50%) of the Second Tenant Allowance shall be paid upon completion of all rough inspections by the City of Boston Inspectional Services Department and the remaining fifty percent (50%) shall be paid upon delivery to Landlord of (i) a final Certificate of Occupancy issued by Boston Inspectional Services for the entire Second Expansion Premises and (ii) lien waivers from all contractors or other satisfactory evidence that all contractors have been paid or will be paid in full for all work that has been done to the Premises.

 

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(b) All plans for the Second Expansion Improvements must be approved by Landlord, which approval shall not be unreasonably withheld, conditioned or delayed. Tenant shall be responsible for all space planning for the Second Expansion Improvements.    

(c) Construction of the Second Expansion Improvements shall be completed fully in compliance with the Building’s Construction Guidelines. Tenant shall have the right to hire the Richmond Group as its project manager for the Second Expansion Improvements. Landlord grants permission to Tenant to engage Landlord’s agent, North Star Management, for the Second Expansion Improvements, but such engagement shall not be as the agent of Landlord, and Landlord shall have no supervisory or other control over, and shall not be liable for, the services of North Star Management. If Tenant engages North Star Management, North Star Management agrees to bill its services at cost plus ten percent (10%) basis (which fee is inclusive of construction management personnel, insurances and related soft costs but not inclusive of tradesmen or subcontractors).

9. Exhibit H of the Lease is amended by deleting “nine (9)” as the number of spaces and substituting “ten (10)”.

10. Tenant shall have the right to extend the Second Expansion Premises Term one time subject to and in accordance with the terms and conditions of Exhibit J – Renewal Option of the Lease, except that all references therein to “Term” shall be deemed to refer to the Second Expansion Premises Term” . The written notice of exercise shall be due from Tenant to Landlord not earlier than November 29, 2018 and not later than May 31, 2019. The Basic Rent payable each month of for the Renewal Term of the Second Expansion Premises shall be “Prevailing Rental Rate” as defined in Exhibit J. If exercised, the Renewal Term for the Second Expansion Premises Term shall be March 1 1, 2020 through February 28, 2025.

11. Landlord and Tenant warrant and represent to the other that neither has dealt with any broker in connection with the consummation of this Fourth Amendment. Tenant and Landlord shall each indemnify the other against all costs, expenses, attorney’s fees, and other liability for any other commissions or compensation claimed in connection with First Amendment by and broker or agent claiming by, through or under the indemnifying party for amounts other than those specified in Fourth Amendment.

12. Landlord and Tenant each hereby warrant and represent to the other that (i) the terms and conditions of the Lease have not been changed except as explicitly set forth herein; (ii) the Lease has not been cancelled or terminated; and (iii) to the knowledge of each, neither party is in default under the Lease and no condition exists which but for the passage or time or the giving of notice, or both, would constitute an Event of Default under the provisions of the Lease.

13. Landlord and Tenant each hereby warrant and represent to the other that (i) each is duly authorized to enter into and consummate the transactions contemplated by this Fourth Amendment; and (ii) the person executing this Fourth Amendment for each is duly authorized to enter into this Fourth Amendment on its behalf.

 

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14. This Fourth Amendment may not be amended or modified except in writing signed by the parties hereto. In case any provision(s) hereof shall be determined invalid or unenforceable under applicable law, such provision(s) shall insofar as possible, be construed or applied in such a manner as will permit enforcement; otherwise, this Fourth Amendment shall be construed as those such provision(s) had never been made a part hereof. This Fourth Amendment shall be governed by and construed in accordance with the laws of the Commonwealth of Massachusetts. Time is of the essence of each and every provision of this Fourth Amendment. This Fourth Amendment shall bind and inure to the parties’ respective successors. This Fourth Amendment, together with the Lease and the First Amendment to Lease, Second Amendment to Lease and Third Amendment to Lease, represents the entire agreement between the parties with respect to the subject matter hereof, and supersedes all other prior written agreements, representations, and covenants, oral or written. This Agreement may be executed in multiple counterparts, which when taken together, shall constitute a complete original document.

[Signatures follow on the next page.]

 

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Executed as a sealed instrument this 1st. day of May, 2016.

 

LANDLORD:

Zoom Group LLC

By:  

/s/ Jeff Wallace

  Jeff Wallace, its Manager

TENANT:

Ginkgo Bioworks, Inc.

By:  

/s/ Barry Canton

  Barry Canton, Founder

 

5

Exhibit 10.23

FIFTH AMENDMENT TO LEASE

Agreement as of the 31st day of May, 2016, by and between Zoom Group LLC, a Massachusetts limited liability company, as Landlord, and Ginkgo Bioworks, Inc., a Delaware corporation, as Tenant.

Whereas, Landlord and Tenant did enter into, execute and deliver that certain Lease Agreement dated as of December 22, 20 11, amended by a First Amendment to Lease dated April 2012, a Second Amendment to Lease dated August 1, 2014, a Third Amendment to Lease dated August 15, 2014, and a Fourth Amendment dated May J, 2016 (as amended, the “Lease”) with respect to a certain leasehold premises more particularly described in said Lease; and

Whereas, Landlord and Tenant did enter into, execute and deliver a certain License Agreement dated October 2015 for temporary use of certain space (the “License Agreement”); and

Whereas, Landlord and Tenant have agreed to expand the premises that are subject to the Lease by including the space that was defined as the First Right of Refusal Premises in the Lease, extend the Term of the Lease, modify the Rent payable under the Lease and provide Tenant with certain rights with respect to other portions of the Building and wish to amend the Lease to reflect the agreements of the parties.

Now therefore, for good and valuable consideration, the receipt and sufficiency of which are hereby acknowledged, Landlord and Tenant do hereby agree as follows:

1. Capitalized terms used herein shall have the meaning ascribed to them in the Lease except as explicitly defined otherwise herein.

2. Premises. The first paragraph of the description of the Premises in the Basic Lease Information is deleted in its entirety and the following paragraph is substituted therefore:

“Approximately 37,150 rentable square feet (the “Premises Rentable Area”) consisting of:

 

  (a)

11,565 rentable square feet in southeast comer of the eighth floor (the “Original Premises”);

 

  (b)

6,785 rentable square feet on the eighth floor (the “Expansion Premises”);

 

  (c)

1,980 rentable square feet on the eighth floor (the “Second Expansion Premises”); and

 

  (d)

16,820 rentable square feet shown on Exhibits 4A-1 and 4A-2 attached herewith (the “Future Expansion Premises”) and consisting of:

 

  (i)

7,955 rentable square feet on the eighth floor currently under the License Agreement (the “Third Expansion Premises”) to be delivered by Landlord and become a part of the Premises on the Third Expansion Premises Commencement Date;

 

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(ii) 450 rentable square feet of storage space on the first floor (the “Fourth Expansion Premises”) to be delivered by Landlord and become a part of the Premises on the Fourth Expansion Premises Commencement Date; and

(iii) 8,415 rentable square feet on the eighth floor and occupied currently by Air Graphics, Bentley and North Star (the “Fifth Expansion Premises) to be delivered by Landlord and become a part of the Premises on the Fifth Expansion Premises Commencement Date.

Landlord and Tenant acknowledge and agree that Tenant’s appurtenant rights with respect to the rooftop as set forth in the second paragraph of the Premises description remain in full force and effect. Furthermore, Landlord hereby grants Tenant the right to use so much of the area shown on Exhibit RR as is reasonably necessary to place Tenant’s rooftop equipment, which equipment shall (a) exclusively serve the Second and Future Expansion Premises and (b) be placed upon the rooftop area in a reasonably efficient manner, subject to Landlord’s approval, not to be unreasonably withheld, delayed or conditioned.

3 Right of First Refusal. Landlord and Tenant acknowledge that the Fifth Expansion Premises are a portion of the premises described in the Lease as the First Right of Refusal Premises. Tenant’s Right of First Refusal respecting such portion of such premises shall terminate and be null and void upon the execution and delivery of this Fifth Amendment to Lease. Prior to the delivery of the Future Expansion Premises, Landlord will not enter into any new lease that encumbers the Future Expansion Premises beyond the Commencement Date for the Future Expansion Premises nor will Landlord enter into any amendment to lease with the tenants that occupy any portion of the Fifth Expansion Premises that extends the tenant’s right to remain in their premises beyond the Commencement Date for the Future Expansion Premises.

4. Third Expansion Premises Commencement Date. The following shall be added to the definitions of the Lease: “Third Expansion Premises Commencement Date: June 1, 2016”.

5. Expansion Rights. Tenant’s right to expand onto the Fifth Floor Expansion Area or any other area in the Building is reaffirmed to have been rescinded and superseded by the Lease as amended by this Fifth Amendment to Lease.

6. License Agreement. The License Agreement shall be null and void as of the Third Expansion Premises Commencement Date having been superseded by the provisions of this Fifth Amendment to Lease. ·

7. Renewal Option. Tenant’s Renewal Option as outlined in the Lease as Exhibit J remains in full force and affect and is hereby expanded to include the Second Expansion Premises and so much of the Future Expansion Premises as Tenant shall actually occupy. Tenant’s Renewal Option for the Second Expansion Premises as set forth in the Fourth Amendment is hereby terminated and rendered null and void and superseded by the provisions of this Fifth Amendment to Lease.

 

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8. Delivery. A. Landlord and Tenant agree that the Original Premises, Expansion Premises, Second Expansion Premises and Third Expansion Premises have been satisfactorily delivered to Tenant, provided that the Third Expansion Premises shall have an electrical capacity equal to twenty-two (22) watts per rentable square foot as of the Fifth Expansion Premises Commencement Date. Landlord also agrees that it will not reduce the current electrical capacity of the Third Expansion Premises.

B. The Fourth Expansion Premises shall be delivered demised, code compliant and in broom clean condition for use for storage purposes with a new 4 feet wide by 8 feet high lockable metal door, adequate lighting, newly painted walls and ceilings and a sealed concrete floor, and an electrical capacity of 13 watts per rentable square foot. The date on which the Fourth Expansion Premises is delivered to Tenant in accordance with the foregoing shall be the “Fourth Expansion Area Commencement Date”, which date shall not be later than ninety (90) days after the date of this Fifth Amendment, provided however that the failure of Landlord to deliver the Fourth Expansion Premises on or before such date shall not constitute a default by Landlord under the Lease, and Tenant shall have no claim or offset against Landlord so long as the Fourth Expansion Area Commencement Date occurs no later than six ( 6) months after the date of this Fifth Amendment. If the Fourth Expansion Area Commencement Date does not occur within six (6) months after the date of this Fifth Amendment, then Tenant shall have the option, exercisable by written notice to Landlord prior to the delivery of the Fourth Expansion Area to Tenant, to terminate the Lease with respect to the Fourth Expansion Area and receive a payment from Landlord or credit against Rent next coming due equal to $20,000.

C. The Fifth Expansion Premises shall be delivered by Landlord in broom clean condition with all existing systems in good working order but otherwise in “as-is” condition on February 1, 2020 (the “Fifth Expansion Premises Commencement Date”). As of such date, the overall electrical capacity of the Second Expansion Premises and the Future Expansion Premises shall be equal to twenty-two (22) watts per rentable square foot.

D. Tenant hereby acknowledges that Landlord’s ability to deliver the Fifth Expansion Premises to Tenant is subject to the existing rights of Air Graphics and Bentley Prince. Provided that Landlord makes commercially reasonable efforts, Landlord will not be in default of the Lease if it is not able to deliver the Fifth Expansion Premises as of such date and Tenant shall have no claim or offsets against Landlord; provided, however, in the event that Landlord is unable to deliver the Fifth Expansion Premises in its entirety by April 1, 2020, then Tenant shall have the option (“Tenant’s Termination Option”), exercisable by written notice to Landlord, to terminate the Lease as to the Second and Fifth Expansion Premises, unless sooner terminated or extended in accordance with the provisions of the Lease. In the event that Tenant exercises Tenant’s Termination Option, the First Party Wall Door (as defined below) shall remain in place and Tenant shall have the appurtenant right to access and use such First Party Wall Door for access to and egress from the Premises and to move goods, supplies and equipment through the First Party Wall Door into and out of the Premises for the remaining term of the Lease. In addition, in the event that Tenant exercises Tenant’s Termination Option, Tenant shall pay a termination fee to Landlord equal to the unamortized portion of the sum of (i) the amount of the Initial Tenant Allowance already paid by Landlord to Tenant, if any, in excess of the sum of the Existing Allowance and the Additional Allowance (i.e., the portion representing the Extension Allowance) as those terms are defined in Section 14 below, and (ii) the broker’s fee paid to the Columbia Group in connection with this transaction in the amount of $16,434. Such sum shall be amortized on a straight line basis over the period from May 1, 2016 (the commencement date of the Second Expansion Premises Term) to January 31, 2027 (the expiration date of the Term).

 

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Tenant acknowledges and agrees that Landlord’s landlord/tenant relationship with Air Graphics, Bentley Prince and all other tenants in the Building is a significant concern to Landlord and Landlord’s business and operation of the Building. Any attempt by Tenant to negotiate terms of a modification, sublease or termination of the lease of any other tenant in the Building shall be deemed to be an interference with the contractual relationship of Landlord and such other tenant. Tenant shall not attempt to negotiate the terms of any other lease in the Building with the other tenant. In the event of a breach of the provisions of this paragraph Landlord shall be entitled to all damages that Landlord would be entitled to in the event of a breach and shall in addition be entitled to damages that Landlord may suffer as a result of such breach.

9. Term. The Term of the Lease, including the Term of the Second Expansion Premises, is hereby extended to January 31, 2027, subject to earlier termination as provided in the Lease, as amended hereby.

10. Rent. The definition of Basic Rent in the Basic Lease Information is amended by adding the following:

(a) Basic Rent for the Original Premises and the Expansion Premises shall remain as set forth in the Lease, until the end of the original Term (that is, February 29, 2024), at which time Basic Rent shall be payable in accordance with Exhibit RS attached hereto.

(b) Basic Rent for the Second Expansion Premises shall remain as set forth in the Lease until the end of the Second Expansion Term, as defined in the Fourth Amendment to Lease (that is, February 29, 2020), at which time Basic Rent shall be payable in accordance with Exhibit RS attached hereto.

(c) Basic Rent for the Third, Fourth and Fifth Expansion Premises shall be payable in accordance with Exhibit RS attached hereto.

Notwithstanding anything to the contrary above or in Exhibit RS, Basic Rent, but not Additional Rent, for (i) the Fourth Expansion Premises shall be waived for the first five (5) months after the Fourth Expansion Premises Commencement Date, and (ii) the Fifth Expansion Premises shall be waived for the first five (5) months after the Fifth Expansion Premises Commencement Date.

11. Tenant’s Proportionate Share. The definition of Tenant’s Proportionate Share in the Basic Lease Information is deleted and the following is substituted:

“Tenant’s Proportionate Share: (a) 7.63% prior to the Third Expansion Premises Commencement Date, (b) 10.62% following the Third Expansion Premises Commencement Date, (c) 10.79% following the Fourth Expansion Premises Commencement Date, (d) and 13.95% following the Fifth Expansion Premises Commencement Date.”

12. Additional Rent. The definition of Additional Rent in Section 4(b) of the Lease and Tenant’s obligation to pay the same is reaffirmed. For the period from October 1, 2015 and ending September 30, 2016, the amount of Taxes billed to Landlord by the EDIC is $217,245.96.

 

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Landlord’s good faith estimate, without warranty or representation, is that the Taxes will increase by five percent (5%) for the period from October 1, 2016 to September 30, 2017. Landlord is not able to make any estimate, warranty or representation with respect to Taxes after September 30, 2017.

13. Security Deposit. The definition of Security Deposit in the Basic Lease Information is amended by adding, “The existing security deposit shall be increased from $159,500.00 in cash to $386,500.00 in cash with the increase ($227,000.00) due and payable upon the execution of this Fifth Amendment to Lease. If the Fifth Expansion Premises is delivered by Landlord and Tenant does not exercise its Termination Option, the Security Deposit shall further increase by $160,000.00 to a total of $546,500.00. In the event that Tenant does exercise its Termination Option, the Security Deposit will be reduced from $386,500.00 by $49,500.00 to $337,000.00. To effect such reduction, no later than fifteen (15) days after Tenant’s exercise of Tenant’s Termination Option, Landlord shall return to tenant an amount equal to the difference between the Security Deposit then being held by Landlord and $337,000.00.

14. Tenant Improvements. Tenant shall be responsible for any and all Improvements or Alterations to the Future Expansion Premises suitable for Tenant’s occupation and use of the Future Expansion Premises, for the uses permitted pursuant to the Lease (the “Future Expansion Improvements”). All such Future Expansion Improvements shall be approved and completed in accordance with the provisions of Section 8 of the Lease, except to the extent that the following provisions supersede Section 8.

(a) Landlord has provided for a Tenant Allowance for the Second Expansion Premises (the “Second Expansion Improvements”) in the Fourth Amendment (the “Existing Allowance”), which Existing Allowance has not been drawn by Tenant and remains available to Tenant, subject to the terms and conditions of the Fourth Amendment.

(b) Landlord shall provide an additional allowance equal to the sum of (i) $504,300.00 (the “Additional Allowance”) and (ii) in consideration of the extension of Term of the Second Expansion Premises, an amount equal to $0.50 per Rentable Square Foot located in the Second Expansion Premises (the “Extension Allowance” and, together with the Existing Allowance and the Additional Allowance, the “Initial Tenant Allowance”). Tenant may use the Initial Tenant Allowance towards funding the Second Expansion Improvements and the Future Expansion Improvements within the Third Expansion Premises and the Fourth Expansion Premises, and no other portion of the Premises.

(c) Upon the Fifth Expansion Premises Commencement Date, Landlord shall provide an additional allowance equal to $0,50 per Rentable Square Foot of the Fifth Expansion Premises (the “Second Tenant Allowance” and with the Initial Tenant Allowance, the “Tenant Allowance”) for each month then remaining of the Term that Tenant may use towards funding the Future Expansion Improvements within the Fifth Expansion Premises, and no other portion of the Premises. In the event that Tenant exercises Tenant’s Termination Option, Tenant shall not be entitled to the Second Tenant Allowance and no additional allowance shall be provided by Landlord.

Fifty percent (50%) of the respective Tenant Allowance shall be paid upon completion of all rough inspections by the City of Boston Inspectional Services Department within the

 

5


particular Expansion Premises, and the remaining fifty percent (50%) shall be paid upon delivery to Landlord of (i) a final Certificate of Occupancy issued by Boston Inspectional Services for the respective Expansion Premises and (ii) lien waivers from all contractors or other satisfactory evidence that all contractors have been paid or will be paid in full for all work that has been done to the Premises. All payments to Tenant by Landlord shall be made within ten (10) business days of billing by Tenant.

() All plans for the Future Expansion Improvements or any other improvements to the Premises must be approved by Landlord, as required by Section 8(a), which approval shall not be unreasonably withheld or delayed. Tenant shall be responsible for all space planning for the Expansion Improvements.

(e) Construction of the Future Expansion Improvements and any other improvements to the Premises shall be completed fully in compliance with the provisions of Section 8 of the Lease, and in particular, Sections 8(c) and 8(d).

(f) If Tenant shall phase the construction of any of its Second Expansion Improvements and Future Expansion Improvements, then the Tenant Allowance shall be paid by Landlord in accordance with the foregoing as to each such phase until the entire Tenant Allowance is exhausted. In illustration of the foregoing, if Tenant makes improvements to the Second Expansion Premises prior to undertaking improvements to the Fourth Expansion Premises, Tenant may utilize the Tenant Allowance with respect to such improvements to the Second Expansion Premises provided that the foregoing requirements of clauses (a) through (e) are satisfied with respect to such improvements.

15. Landlord’s Obligations. Section 7(a)(2) of the Lease is hereby amended by deleting the phrase “ventilation and air conditioning”. Until March 1, 2019, Landlord shall maintain the air conditioning systems in Tenant’s Original Premises (but not the Expansion Premises) but shall deliver the existing air conditioning in in any Expansion Premises in good working order to Tenant.

16. Parking – Exhibit H of the Lease is deleted in its entirely and replaced with the Exhibit H2 attached herewith.

17. Party Wall Agreement – Landlord shall cooperate in good faith with Tenant, the master lease tenant of 25 Drydock Avenue (the “25 Drydock Landlord”) and the EDIC to support Tenant in its efforts to secure a party wall agreement that permits an entryway between the Building and the building at 25 Drydock A venue (the “Party Wall Agreement”), a copy of which is attached hereto as Exhibit PWA. The intent of the Party Wall Agreement shall be to provide up to two (2) doorways (the “Party Wall Doors”) between the Building and the adjacent building at 25 Drydock A venue for Tenant’s exclusive use to provide passage between its respective leased premises in each building in accordance with. the Party Wall Agreement. Tenant shall submit plans to Landlord in accordance with the Lease, the approval of which plans Landlord shall not unreasonably withhold, condition or delay. Landlord here by approves the location of such doors in the locations shown on Exhibit DL. Subject to and conditional upon Landlord’s ability to recapture the space required by the double door of the plan which is currently leased space of Air Graphics, upon such terms and conditions as Landlord, in its sole and absolute discretion, shall approve, Tenant shall be permitted to install the First Party Wall Door as shown said Exhibit DL upon execution of this Fifth Amendment to Lease. Notwithstanding the foregoing, Landlord hereby approves the terms and conditions to recapture such space from Air Graphics attached

 

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hereto as Exhibit AGR. Tenant understands and agrees that there will be no discussion or agreement between Tenant and Air Graphics regarding this matter. Tenant shall be permitted to install the Second Party Wall Door upon the Fifth Expansion Premises Commencement Date. Any work on either of the Party Wall Doors shall require prior approval of Landlord in accordance with the provisions of Section 8 of the Lease, and any such construction after approval shall similarly comply with the provisions of Section 8. Tenant shall reimburse Landlord for all increased costs of security, fire safety and insurance reasonably incurred by Landlord as a result of the installation of the Party Wall Doors, if any, as Additional Rent. Tenant shall at all times maintain the Party Wall Doors in good working condition. Tenant shall take all necessary precautions, procedures and systems to (a) prevent any persons not authorized to be in the Premises from using the premises in 25 Drydock to access the Premises through the Party Wall Doors, and (b) ensure that access by visitors or employees and delivery of freight that is primarily or routinely destined to 25 Drydock use the common areas of that building for access instead of 27 Drydock for access. All work shall be at Tenant’s sole expense. Tenant shall maintain the passageways and associated improvements in good working order at all times throughout the Lease. Tenant shall allow Landlord, at Landlord’s cost, to install security camera(s) to monitor and record the passage between buildings. No Rent will be due to Landlord for its consent for this use nor. for its on-going continuance. Tenant will reimburse Landlord for all reasonable out-of-pocket costs associated with the Party Wall Agreement, including initial costs for preparation of the Agreement, approval of plans, oversight of the work by Landlord of its. agents (the “Initial Party Wall Costs”), as well as any reasonable costs that may occur from time to time related to the Tenant’s unique use of the party wall. The amount of the Initial Party Wall Costs to be reimbursed by Tenant shall not exceed $30,000. At the end of the Lease, or if Tenant’s lease shall terminate in the adjacent building, Tenant shall restore the party wall to its original condition pursuant to the terms of the Party Wall Agreement and upon such restoration the Party Wall Agreement shall be terminated. Tenant’s Allowance shall not be expended for the party wall improvements. The Party Wall Agreement will require the written consent of the EDIC. Landlord’s consent is contingent upon the consent of the EDIC. A breach by Tenant in the terms of the Party Wall Agreement shall be considered a material breach and cause of default under this Lease.

18. Single Floor Occupancy After the delivery of the Fifth Expansion Premises, Tenant may reconfigure the eighth floor to a code compliant single floor use while at all times functionally retaining existing improvements, whether common or of another tenant, that may pass through the Premises.

19. Broker.: Landlord and Tenant warrant and represent to the other that neither has dealt with any broker in connection with the consummation of this Fifth Amendment except NAI Hunneman for Landlord and Columbia Group Realty Advisors for Tenant. Landlord shall pay both brokers’ fees as agreed under separate contract with the Landlord. Tenant and Landlord shall each indemnify the other against all costs, expenses, attorney’s fees, and other liability for any other commissions or compensation claimed in connection with First Amendment by and broker or agent claiming by, through or under the indemnifying party for amounts other than those specified in First Amendment.

 

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20. Miscellaneous. Landlord and Tenant each hereby warrant and represent to the other that (i) the terms and conditions of the Lease have not been changed except as explicitly set forth herein; (ii) the Lease has not been cancelled or terminated; and (iii) to the knowledge of each, neither party is in default under the Lease and no condition exists which but for the passage of time or the giving notice or both, would constitute an Event of Default under the provisions of the Lease.

21. Notice of Lease. At the time of execution of this Fourth Amendment, Landlord and Tenant shall execute a Notice of Lease suitable for recording in the form attached hereto as Exhibit NOL.

Landlord and Tenant each hereby warrant and represent to the other that (i) each is duly authorized to enter into and consummate the transactions contemplated by this Fifth Amendment; and (ii) the person executing this Fifth Amendment for each is duly authorized to enter into this Fifth Amendment on its behalf.

Landlord and Tenant each hereby warrant and represent to the other that all forms of Rent and other obligations between parties are current and, to the knowledge of each, each has no claim on the other for any obligations of the Lease.

This Fifth Amendment may not be amended or modified except in writing signed by the parties hereto. In case any provision(s) hereof shall be determined invalid or unenforceable under applicable law, such provision(s) shall insofar as possible, be construed or applied in such a manner as will permit enforcement; otherwise, this Fifth Amendment shall be construed as those such provision(s) had never been made a part hereof. This Fifth: Amendment shall be governed by and construed in accordance with the laws of the Commonwealth of Massachusetts. Time is of the essence of each and every provision of this Fifth Amendment. This Fifth Amendment shall bind and inure to the parties’ respective successors. This Fifth Amendment, together with the Lease and the First Amendment to Lease, the Second Amendment to Lease, the Third Amendment to Lease and the Fourth Amendment to Lease, represents the entire agreement between the parties with respect to the subject matter hereof, and supersedes all other prior written agreements, representations, and covenants, oral or written. This Fifth Amendment may be executed in multiple counterparts, which when taken together, shall constitute a complete original document. Facsimile or electronic counterpart signatures to this Fifth Amendment shall be acceptable and binding.

 

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Executed as a sealed instrument as of 31st day of May, 2016.

 

LANDLORD:
Zoom Group LLC
By:  

/s/ Jeff Wallace

  Jeff Wallace, its Manager
TENANT:
Ginkgo Bioworks, Inc.
By:  

/s/ Barry Canton

  Barry Canton, its Founder

 

9

Exhibit 10.24

SIXTH AMENDMENT TO LEASE

This Commencement Date Agreement (this “Agreement”) is executed as of August 05, 2016 between ZOOM GROUP LLC, a Massachusetts limited liability company (“Landlord”), and GINKGO BIOWORKS, INC., a Delaware corporation (“Tenant”), for the purpose of amending the Lease Agreement between Landlord and Tenant dated December 22, 2011, as previously amended (the “Lease”). Capitalized terms used herein but not defined shall be given the meanings assigned to them in the Lease.

AGREEMENTS

For valuable consideration, whose receipt and sufficiency are acknowledged, Landlord and Tenant agree as follows:

1. Condition of Premises. Tenant has accepted possession of the Fourth Expansion Premises pursuant to the Lease. Any improvements required by the terms of the Lease to be made by Landlord in connection with the Fourth Expansion Premises have been completed to the full and complete satisfaction of Tenant in all respects, and Landlord has fulfilled all of its duties under the Lease with respect to such initial tenant improvements, subject to hidden defects or other matters not discoverable by inspection of the Fourth Expansion Premises as of the date hereof. Furthermore, Tenant acknowledges that the Fourth Expansion Premises are suitable for the Permitted Use. Landlord agrees that Tenant may use the Fourth Expansion Premises as a “Control Area” as defined in and in compliance with the Massachusetts building code.

2. Commencement Date. The Delivery Date of the Fourth Expansion Premises as storage space on the first floor is August 05, 2016. If the Commencement Date set forth in the Lease is different than the date set forth in the preceding sentence, then the Commencement Date as contained in the Lease is amended to be the Commencement Date set forth in the preceding sentence.

3. Expiration Date. The Term is scheduled to expire on January 31, 2027 exclusive of any extension options.

4. Contact Numbers. Tenant’s telephone number in the Premises is                     .

5. Ratification. Landlord and Tenant hereby ratify and confirm their obligations under the Lease, and represent and warrant to each other that they have no defenses thereto as of the date hereof. Additionally, Landlord and Tenant further confirm and ratify that, as of the date hereof the Lease is and remains in good standing and in full force and effect, and that each has no claims, counterclaims, set-offs or defenses against the other arising out of the Lease or in any way relating thereto or arising out of any other transaction between Landlord and Tenant.

6. Binding Effect; Governing Law. Except as modified hereby, the Lease shall remain in full effect and this Agreement shall be binding upon Landlord and Tenant and their respective successors and assigns. If any inconsistency exists or arises between the terms of this Agreement and the terms of the Lease, the terms of this Agreement shall prevail. This Agreement shall be governed by the laws of the State in which the Premises is located.

 

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7. Counterparts. This Agreement may be executed in multiple counterparts, each of which shall constitute an original, but all of which shall constitute one document

Executed as of the date first written above.

 

LANDLORD:
Zoom Group LLC,
a Massachusetts limited liability company
By:  

/s/ Jeff Wallace

  Jeff Wallace, its Manager
TENANT:
Ginkgo Bioworks, Inc.
A Delaware corporation
By:  

/s/ Barry Canton

  Barry Canton, its Secretary

Exhibit 10.25

SEVENTH AMENDMENT TO LEASE

This Seventh Amendment to Lease (“Seventh Amendment”) is executed as of the 31st day of July, 2017, by and between RREF II DRYDOCK, LLC, as landlord (“Landlord”), and GINKGO BIOWORKS, INC., as tenant (“Tenant”).

B A C K G R O U N D:

A.     Reference is made to a certain Lease Agreement dated December 22, 2011 between, Landlord’s predecessor-in-interest, Zoom Group LLC (“Zoom”), and Tenant, as amended by, among other documents, that certain: (i) Commencement Date Agreement dated January 31, 2012; (ii) First Amendment to Lease Agreement dated April    , 2012; (ii) Second Amendment to Lease Agreement (and Side Letter) dated as of August 1, 2014; (iii) Third Amendment to Lease Agreement dated August 15, 2014; (iv) Fourth Amendment to Lease dated May 1, 2016; (v) Party Wall Access Agreement dated May 31, 2016 between Zoom, Tenant and Jamestown 21-23-25 Drydock, L.P.; (vi) Fifth Amendment to Lease dated May 31, 2016 (“Fifth Amendment”); (vii) Sixth Amendment to Lease dated August 5, 2016; (viii) Collateral Assignment of Lease dated December 15, 2014; (ix) Landlord’s Agreement, Waiver and Consent dated December 15, 2014; and (x) Landlord’s Waiver and Consent Agreement dated October 5, 2015 (collectively, the “Lease”) pursuant to which Tenant is currently leasing from Landlord and occupying approximately 28,735 rentable square feet consisting of 28,285 rentable square feet of space on the eighth (8th) floor of the Building and approximately 450 rentable square feet of storage space on the first (1st) floor of the Building (the “Premises”) in the Building. In addition, pursuant to the Fifth Amendment Tenant has the right to approximately 8,415 rentable square feet of expansion space on the eighth (8th) floor of the Building. Capitalized terms not otherwise defined herein shall have the meaning ascribed to them in the Lease.

B.     Landlord and Tenant are the current holders, respectively, of the lessor’s and lessee’s interests in the Lease.

C.     Landlord and Tenant have reached an agreement with respect to certain changes in the Lease, including the make-up of various expansion space, and Landlord and Tenant desire to amend the Lease in certain respects as provided herein.

A G R E E M E N T S:

NOW, THEREFORE, in consideration of the agreements set forth herein and other good and valuable consideration, the receipt and sufficiency of which are hereby acknowledged, Landlord and Tenant hereby agree, and amend the Lease, as follows:

1.     Fifth Expansion Premises. From and after the date of this Seventh Amendment, the Fifth Expansion Premises, and all references thereto in the Lease, shall mean the approximately 2,871 rentable square feet of space on the eighth (8th) floor of the Building consisting of (a) approximately 1,450 rentable square feet of space on the eighth (8th) floor of the Building known as Suite 8W04 ( “Suite 8W04”); and (b) approximately 1,421 rentable square feet of space on the eighth (8th) floor of the Building known as Suite 8W05 (“Suite 8W05”), both as outlined on the plans attached hereto and incorporated herein as Exhibit A.

2.    Commencement Dates; Anticipated Delivery Dates; Rent Commencement Dates. (a) Suite 8W05. From and after the Suite 8W05 Commencement Date (as defined below), Suite 8W05 shall be deemed added to and incorporated into the Premises demised under the Lease and thereafter the Premises shall consist of approximately 30,156 rentable square feet and all references to the Premises in

 

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the Lease shall be deemed to include Suite 8W05 (assuming Suite 8W05 is delivered to Tenant first). The anticipated delivery date of the Suite 8W05 is August 1, 2017, subject to delays caused by factors beyond the reasonable control of Landlord. Subject to Section 10 below, Landlord shall not be liable to Tenant, and Landlord shall not be in default, for any failure to deliver Suite 8W05 on any specified date; provided in no event shall Tenant be required to pay Basic Rent on Suite 8W05 until the Suite 8W05 Rent Commencement Date (as defined below), but Tenant shall be required to pay Additional Rent applicable to Suite 8W05 as required under the Lease from and after the Suite 8W05 Commencement Date. The actual “Suite 8W05Commencement Date” shall be the date of the delivery of Suite 8W05 to Tenant in accordance with the terms and conditions hereof. As used herein, the “Suite 8W05 Rent Commencement Date” shall be the date that is five (5) months following the Suite 8W05Commencement Date. Landlord and Tenant agree to execute a supplemental agreement confirming the actual Suite 8W05Commencement Date, the Suite 8W05 Rent Commencement Date and Tenant’s Proportionate Share once same are determined.

(b)    Suite 8W04. From and after the Suite 8W04 Commencement Date (as defined below), Suite 8W05 shall be deemed added to and incorporated into the Premises demised under the Lease and thereafter the Premises shall consist of approximately 31,606 rentable square feet and all references to the Premises in the Lease shall be deemed to include Suite 8W04 (assuming Suite 8W05 is delivered to Tenant first). The anticipated delivery date of the Suite 8W04 is August 1, 2017, subject to delays caused by factors beyond the reasonable control of Landlord (including the holding over of the existing tenant). Subject to Section 10 below, Landlord shall not be liable to Tenant, and Landlord shall not be in default, for any failure to deliver Suite 8W04 on any specified date; provided in no event shall Tenant be required to pay Basic Rent on Suite 8W04 until the Suite 8W04 Rent Commencement Date (as defined below), but Tenant shall be required to pay Additional Rent applicable to Suite 8W04 as required under the Lease from and after the Suite 8W04 Commencement Date (as defined below). The actual “Suite 8W04Commencement Date” shall be the date of the delivery of Suite 8W04 to Tenant in accordance with the terms and conditions hereof. As used herein, the “Suite 8W04 Rent Commencement Date” shall be the date that is five (5) months following the Suite 8W04Commencement Date. Landlord and Tenant agree to execute a supplemental agreement confirming the actual Suite 8W04Commencement Date, the Suite 8W04 Rent Commencement Date and Tenant’s Proportionate Share once same are determined.

3.    Sixth Expansion Premises. (a) From and after the Sixth Expansion Premises Commencement Date (as defined below), approximately 5,544 rentable square feet of space on the eighth (8th) floor of the Building known as Suite 8W02 (the “Sixth Expansion Premises”) as outlined on the plan attached hereto and incorporated herein as Exhibit B shall be deemed added to and incorporated into the Premises demised under the Lease and thereafter the Premises shall consist of approximately 37,150 rentable square feet and all references to the Premises in the Lease shall be deemed to include the Sixth Expansion Space. The anticipated delivery date of the Sixth Expansion Premises is February 1, 2020, subject to (x) the right of the existing tenant to extend the term of its lease thereon, (y) delays caused by factors beyond the reasonable control of Landlord, or (z) the prior delivery due to the vacancy, early termination and/or yield-up of the tenant occupying the Sixth Expansion Premises prior. Subject to Section 10 below, Landlord shall not be liable to Tenant, and Landlord shall not be in default, for any failure to deliver the Sixth Expansion Premises on any specified date; provided in no event shall Tenant be required to pay Basic Rent on the Sixth Expansion Premises until the Sixth Expansion Premises Rent Commencement Date (as defined below), but Tenant shall be required to pay Additional Rent applicable to the Sixth Expansion Premises as required under the Lease from and after the Sixth Expansion Premises Commencement Date (as defined below). The actual “Sixth Expansion Premises Commencement Date” shall be the date of the delivery of the Sixth Expansion Premises to Tenant in accordance with the terms and conditions hereof. As used herein, the “Sixth Expansion Premises Rent Commencement Date” shall be the date that is five (5) months following the Sixth Expansion Premises Commencement Date.

 

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Landlord and Tenant agree to execute a supplemental agreement confirming the actual Sixth Expansion Premises Commencement Date, the Sixth Expansion Premises Rent Commencement Date and Tenant’s Proportionate Share once same are determined.

4.    Delivery. Notwithstanding anything to the contrary contained in the Lease, Landlord shall deliver the applicable portion of the Fifth Expansion Premises and the Sixth Expansion Premises to Tenant vacant and in broom-clean condition with all existing Building systems serving same in good working order but otherwise in “as is” condition, and otherwise without representation or warranty, express or implied, in fact or in law, by Landlord and without recourse to Landlord as to the nature, condition or usability thereof; and Tenant agrees that Landlord has no work to perform in or on the applicable corresponding Commencement Date therefor to prepare the applicable portion of the Fifth Expansion Premises and the Sixth Expansion Premises for Tenant’s use and occupancy, and that any and all work to be done in or on the Fifth Expansion Premises and the Sixth Expansion Premises will be performed by Tenant at Tenant’s sole cost and expense in accordance with the terms of this Seventh Amendment (subject to Section 8 below). As of the Sixth Expansion Premises Commencement Date, the overall electrical capacity of the Second Expansion Premises, the Third Expansion Premises, the Fourth Expansion Premises, the Fifth Expansion Premises and the Sixth Expansion Premises shall be equal to twenty-two (22) watts per rentable square foot.

5.    Co-Terminus. The term for the Fifth Expansion Premises and the Sixth Expansion Premises shall be co-terminus with Lease Term and shall expire on January 31, 2027, unless the Lease is otherwise terminated as provided therein.

6.    Basic Rent.

a.    Suite 8W05. As of the Suite 8W05 Rent Commencement Date, Tenant shall pay Basic Rent for Suite 8W05, to Landlord, in the amounts set forth below, in the manner and at the times set forth in Article 4(a) of the Lease, in advance, without demand, deduction or set off:

 

  i.

From and after the Suite 8W05 Rent Commencement Date through May 31, 2018 (or portion thereof, if applicable): $71,050.00 per annum, paid in monthly installments of $5,920.83 ($50.00 per rentable square foot);

 

  ii.

June 1, 2018 to May 31, 2019: $72,471.00 per annum, paid in monthly installments of $6,039.25 ($51.00 per rentable square foot);

 

  iii.

June 1, 2019 to May 31, 2020: $73,892.00 per, paid in monthly installments of $6,157.67 ($52.00 per rentable square foot);

 

  iv.

June 1, 2020 to May 31, 2021: $75,313.00 per annum, paid in monthly installments of $6,276.08 ($53.00 per rentable square foot);

 

  v.

June 1, 2021 to May 31, 2022: $76,734.00 per annum, paid in monthly installments of $6,394.50 ($54.00 per rentable square foot);

 

  vi.

June 1, 2022 to May 31, 2023: $78,155.00 per annum, paid in monthly installments of $6,512.92 ($55.00 per rentable square foot);

 

  vii.

June 1, 2023 to May 31, 2024: $79,576.00 per annum, paid in monthly installments of $6,631.33 ($56.00 per rentable square foot);

 

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  viii.

June 1, 2024 to May 31, 2025: $80,997.00 per annum, paid in monthly installments of $6,749.75 ($57.00 per rentable square foot);

 

  ix.

June 1, 2025 to May 31, 2026: $82,418.00 per annum, paid in monthly installments of $6,868.17 ($58.00 per rentable square foot); and

 

  x.

June 1, 2026 to January 31, 2027: $83,839.00 per annum, paid in monthly installments of $6,986.58 ($59.00 per rentable square foot).

b.    Suite 8W04. As of the Suite 8W04 Rent Commencement Date, Tenant shall pay Basic Rent for Suite 8W04, to Landlord, in the amounts set forth below, in the manner and at the times set forth in Article 4(a) of the Lease, in advance, without demand, deduction or set off:

 

  i.

From and after the Suite 8W04 Rent Commencement Date through May 31, 2018 (or portion thereof, if applicable): $72,500.00 per annum, paid in monthly installments of $6,041.67 ($50.00 per rentable square foot);

 

  ii.

June 1, 2018 to May 31, 2019: $73,950.00 per annum, paid in monthly installments of $6,162.50 ($51.00 per rentable square foot);

 

  iii.

June 1, 2019 to May 31, 2020: $75,400.00 per annum, paid in monthly installments of $6,283.33 ($52.00 per rentable square foot);

 

  iv.

June 1, 2020 to May 31, 2021: $76,850.00 per annum, paid in monthly installments of $6,404.17 ($53.00 per rentable square foot);

 

  v.

June 1, 2021 to May 31, 2022: $78,300.00 per annum, paid in monthly installments of $6,525.00 ($54.00 per rentable square foot);

 

  vi.

June1, 2022 to May 31, 2023: $79,750.00 per annum, paid in monthly installments of $6,645.83 ($55.00 per rentable square foot);

 

  vii.

June 1, 2023 to May 31, 2024: $81,200.00 per annum, paid in monthly installments of $6,766.66 ($56.00 per rentable square foot);

 

  viii.

June 1, 2024 to May 31, 2025: $82,650.00 per annum, paid in monthly installments of $6,887.50 ($57.00 per rentable square foot);

 

  ix.

June 1, 2025 to May 31, 2026: $84,100.00 per annum, paid in monthly installments of $7,008.33 ($58.00 per rentable square foot); and

 

  x.

June 1, 2026 to January 31, 2027: $85,550.00 per annum, paid in monthly installments of $7,129.17 ($59.00 per rentable square foot).

 

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c.    Sixth Expansion Premises. As of the Sixth Expansion Premises Rent Commencement Date, Tenant shall pay Basic Rent for the Sixth Expansion Premises, to Landlord, in the amounts set forth below, in the manner and at the times set forth in Article 4(a) of the Lease, in advance, without demand, deduction or set off:

 

  i.

From and after the Sixth Expansion Premises Rent Commencement Date through May 31, 2018 (or portion thereof, if applicable): $277,200.00 per annum, paid in monthly installments of $23,100.00 ($50.00 per rentable square foot);

 

  ii.

June 1, 2018 to May 31, 2019 (or portion thereof, if applicable): $282,744.00 per annum, paid in monthly installments of $23,562.00 ($51.00 per rentable square foot);

 

  iii.

June 1, 2019 to May 31, 2020 (or portion thereof, if applicable): $288,288.00 per annum, paid in monthly installments of $24,024.00 ($52.00 per rentable square foot);

 

  iv.

June 1, 2020 to May 31, 2021 (or portion thereof, if applicable): $293,832.00 per annum, paid in monthly installments of $24,486.00 ($53.00 per rentable square foot);

 

  v.

June 1, 2021 to May 31, 2022 (or portion thereof, if applicable): $299,376.00 per annum, paid in monthly installments of $24,948.00 ($54.00 per rentable square foot);

 

  vi.

June 1, 2022 to May 31, 2023 (or portion thereof, if applicable): $304,920.00 per annum, paid in monthly installments of $25,410.00 ($55.00 per rentable square foot);

 

  vii.

June 1, 2023 to May 31, 2024 (or portion thereof, if applicable): $310,464.00 per annum, paid in monthly installments of $25,872.00 ($56.00 per rentable square foot);

 

  viii.

June 1, 2024 to May 31, 2025 (or portion thereof, if applicable): $316,008.00 per annum, paid in monthly installments of $26,334.00 ($57.00 per rentable square foot);

 

  ix.

June 1, 2025 to May 31, 2026 (or portion thereof, if applicable): $321,552.00 per annum, paid in monthly installments of $26,796.00 ($58.00 per rentable square foot); and

 

  x.

June 1, 2026 to January 31, 2027 (or portion thereof, if applicable): $327,096.00 per annum, paid in monthly installments of $27,258.00 ($59.00 per rentable square foot).

For clarity, the actual Basic Rent for the applicable Expansion Premises (or portion thereof - e.g., Suite 8W04, 8W05 and/or the Sixth Expansion Premises) shall be the applicable Basic Rent amount corresponding to the appropriate period(s) set forth above so that, by way of example, if the Sixth Expansion Premises Commencement Date occurs during the period between June 1, 2018 to May 31, 2019, the applicable Basic Rent would be as set forth in Subsection b(ii) above.

d.    Tenant shall continue to pay Basic Rent and Additional Rent on the existing Premises as and when required under the Lease.

7.    Additional Rent: Tenant’s Proportionate Share. Tenant shall continue to pay all Additional Rent, including without limitation all Operating Costs, Taxes, Additional Rent and other charges due under the Lease, as set forth in the Lease. From and after the Suite 8W05 Commencement Date, the Premises shall consist of approximately 30,156 rentable square feet of space and Tenant’s Proportionate Share shall be Eleven and 09/100 percent (11.09%). From and after the Suite 8W04 Commencement Date, the Premises shall consist of approximately 31,606 rentable square feet of space and Tenant’s Proportionate Share shall be Eleven and 63/100 percent (11.63%). From and after the Sixth Premises Commencement Date, the Premises shall consist of approximately 37,150 rentable square feet

 

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of space and Tenant’s Proportionate Share shall be Thirteen and 67/100 percent (13.67%). The foregoing assumes that the order of delivery of the Fifth Expansion Premises shall be Suite 8W05 delivered first, Suite 8W04 following thereafter (or contemporaneously), and the Sixth Expansion Premises following thereafter. In the event that the actual delivery order is different from that contemplated herein, the parties agree that Landlord and Tenant shall execute and deliver a mutually agreeable certification or amendment reflecting the actual delivery dates and corresponding rentable square footages, Tenant’s Proportionate Shares, and such other information relating to the re-ordering of the delivery.

8.    Tenant Improvements. Tenant, at its sole cost and expense, but subject to the Seventh Amendment Allowance (as defined below), shall cause the substantial completion of all necessary or desirable construction and installations of all of Tenant’s improvements to the Fifth Expansion Premises and the Sixth Expansion Premises in accordance with the provisions of the Lease, including but not limited to Section 14 of the Fifth Amendment, Article 8 of the Lease, the Master Lease, including without limitation Articles 9 and 24 thereof, and the terms of this Amendment (“Tenant’s Improvements”). In connection with any Tenant’s Improvements, Tenant agrees that it will not, either directly or indirectly, use any contractors and/or materials if their use will create any difficulty, whether in the nature of a labor dispute or otherwise, with other contractors and/or labor engaged by Tenant or Landlord or others in the construction, maintenance and/or operation of the Building or any part thereof.

9.    Payment of Costs for Tenant’s Improvements; Seventh Amendment Allowance. Subject to the Seventh Amendment Allowance set forth below, Tenant shall pay all of the costs and expenses of Tenant’s Improvements (including, without limitation, the costs of construction, the cost of permits and permit expediting, and all architectural and engineering services obtained by Tenant in connection therewith). Landlord shall make the following allowances available to Tenant:

 

  a.

Upon the Suite 8W04 Commencement Date, Landlord shall provide an allowance equal to $0.50 per rentable square foot of Suite 8W04 (the “Suite 8W04 Allowance”) for each month then remaining of the Term that Tenant may use towards funding the Tenant’s Improvements within the Fifth Expansion Premises and/or the Sixth Expansion Premises, subject to the terms and conditions hereof. In the event that Tenant exercises Tenant’s Termination Option, Tenant shall not be entitled to any unpaid portion of the Suite 8W04 Allowance and no additional Seventh Amendment Allowance shall be provided by Landlord.

 

  b.

Upon the Suite 8W05 Commencement Date, Landlord shall provide an allowance equal to $0.50 per rentable square foot of Suite 8W04 (the “Suite 8W05 Allowance”) for each month then remaining of the Term that Tenant may use towards funding the Tenant’s Improvements within the Fifth Expansion Premises and/or the Sixth Expansion Premises, subject to the terms and conditions hereof. In the event that Tenant exercises Tenant’s Termination Option, Tenant shall not be entitled to any unpaid portion of the Suite 8W05 Allowance and no additional Seventh Amendment Allowance shall be provided by Landlord.

 

  c.

Upon the Sixth Expansion Premises Commencement Date, Landlord shall provide an allowance equal to $0.50 per rentable square foot of Suite 8W02 (the “Suite 8W02 Allowance” and collectively with the Suite 8W05 Allowance and the Suite 8W04 Allowance, the “Seventh Amendment Allowance”) for each month then remaining of the Term that Tenant may use towards funding the Tenant’s Improvements within the Fifth Expansion Premises and/or the Sixth Expansion Premises, subject to the terms and conditions hereof. In the event that Tenant exercises Tenant’s Termination Option, Tenant shall not be entitled to any unpaid portion of the Seventh Amendment Allowance and no additional Seventh Amendment Allowance shall be provided by Landlord.

 

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The applicable components of the Seventh Amendment Allowance may only be used for Tenant’s Improvements within the Fifth Expansion Premises and/or the Sixth Expansion Premises, subject to the terms and conditions hereof, and may not be used for other areas or portions of the Premises without the prior written consent of Landlord, which consent may be granted or withheld in Landlord’s sole discretion. Provided Tenant shall not then be in default of the Lease beyond applicable notice and/or cure periods, or there shall not then be occurring any circumstance or state of facts which, with notice or the passage of time or both, would result in a breach or default hereunder that is not cured within the applicable cure period, the payment of the applicable portion of the Seventh Amendment Allowance shall be made to reimburse Tenant for amounts spent on Tenant’s Improvements within thirty (30) days following Tenant’s requisition therefor generally in accordance with Section 14(c) of the Fifth Amendment such that no more than fifty percent (50%) of that portion of the Seventh Amendment Allowance corresponding to the cost of the Tenant’s Improvements within the applicable portion of the Fifth Expansion Premises and/or Sixth Expansion Premises will be paid upon satisfactory completion of all rough inspections by the City of Boston inspectional Services Department for the work within the particular portion of the Fifth Expansion Premises and/or the Sixth Expansion Premises, and the remaining fifty percent (50%) of that portion of the Seventh Amendment Allowance corresponding to the cost of the Tenant’s Improvements within the applicable portion of the Fifth Expansion Premises and/or the Sixth Expansion Premises will be paid within thirty (30) days following delivery to Landlord of (i) a final Certificate of Occupancy issued by the City of Boston Inspectional Services Department for the work within the particular portion of the Fifth Expansion Premises and/or the Sixth Expansion Premises; and (ii) satisfactory lien waivers from all contractors and other satisfactory evidence that all contractors have been paid or will be paid in full for the work within the particular portion of the Fifth Expansion Premises and/or the Sixth Expansion Premises Boston. Landlord shall have no obligation to advance any funds or pay any amounts on account of Tenant’s Improvements in excess of each Seventh Amendment Allowance. Tenant acknowledges and agrees that the Seventh Amendment Allowance as provided above is in lieu of any other allowance with respect thereto and, except as provided herein, Tenant is not owed any additional allowances or similar improvement credits or inducements with respect to the Fifth Expansion Premises and/or the Sixth Expansion Premises and Section 14(c) of the Fifth Amendment is hereby deleted in its entirety. Tenant shall continue to have the right to use the tenant improvement allowances relating to the 2nd Expansion Premises (in the amount of $59,400) and for the 3rd Expansion Premises and 4th Expansion Premises (in the amount of $504,300) as and to the extent provided in the Lease as amended hereby.

10.     Termination Right. From and after the date of this Seventh Amendment, Section 4D of the Fifth Amendment is hereby deleted and replaced with the following:

 

  D.

Tenant hereby acknowledges that Landlord’s ability to deliver the Sixth Expansion Premises to Tenant is subject to the existing rights of Air Graphics. Provided that Landlord makes commercially reasonable efforts, Landlord will not be in default of the Lease, and shall have no liability, if it is not able to deliver the Sixth Expansion Premises as of any applicable date and Tenant shall have no claim or offsets against Landlord; provided, however, in the event that Landlord is unable to deliver the Sixth Expansion Premises in its entirety by April 1, 2020, then Tenant shall have the option (“Tenant’s Termination Option”), exercisable by not less than thirty (30) days written notice to Landlord, to terminate the Lease as to the Second Expansion Premises, the Fifth Expansion Premises and the Sixth Expansion Premises, unless sooner terminated or extended in accordance with the provisions of the Lease; provided, however, that in the event Landlord delivers to Tenant the Sixth Expansion Premises within such thirty (30) day period, Tenant’s Termination Option shall be void and of no further force

 

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  or effect. In the event that Tenant exercises Tenant’s Termination Option, the First Party Wall Door (as defined in the Fifth Amendment) shall remain in place and Tenant shall have the appurtenant right to access and use such First Party Wall Door for reasonable access to and egress from the Premises and to move goods, supplies and equipment through the First Party Wall Door into and out of the Premises for the remaining term of the Lease, subject to the reasonable requirements of Landlord. If Tenant exercises Tenant’s Termination Option, Tenant shall surrender the Second Expansion Premises, the Fifth Expansion Premises and the Sixth Expansion Premises in accordance with the terms and conditions of the Lease including Section 21 thereof. In addition, in the event that Tenant exercises Tenant’s Termination Option, Tenant shall pay a termination fee to Landlord equal to the unamortized portion of the sum of (i) the amount of (w) any Tenant allowances paid to Tenant or applied for work to the Second Expansion Premises to the extent it will have been paid by Landlord to Tenant, plus (x) the broker’s fee paid to the Columbia Group in connection with the Fifth Amendment in the amount of $16,434.00 (together, (w) and (x) are referred to as the “Second Expansion Premises Termination Fee”) and (ii) the amount of (y) the portion of the Seventh Amendment Allowance already paid by Landlord to Tenant, if any, and (z) the broker’s fee paid to the Brokers set forth in Section 20 in connection with the Seventh Amendment in the amount of $84,503 (i.e., $37,933 with respect to the Fifth Expansion Premises, and $46,570 with respect to the Sixth Expansion Premises) (together, (y) and (z) are referred to as the “Fifth and Sixth Expansion Premises Termination Fee”). The Second Expansion Premises Termination Fee shall be pro-rated and amortized on a straight line basis over the period from May 1, 2016 (the commencement date of the Second Expansion Premises Term) to January 31, 2027 (the expiration date of the Term). The Fifth and Sixth Expansion Premises Termination Fee shall be pro-rated and amortized on a straight line basis over the period from the earlier of the Suite 8W04 Commencement Date or the Suite 8W05 Commencement Date to January 31, 2027 (the expiration date of the Term).

Tenant acknowledges and agrees that Landlord’s landlord/tenant relationship with Air Graphics and all other tenants in the Building is a significant concern to Landlord and Landlord’s business and operation of the Building. Any attempt by Tenant to negotiate terms of a modification, sublease or termination of the lease of any other tenant in the Building shall be deemed to be an interference with the contractual relationship of Landlord and such other tenant. Tenant shall not attempt to negotiate the terms of any other lease in the Building with the other tenant. In the event of a breach of the provisions of this paragraph Landlord shall be entitled to all damages that Landlord would be entitled to in the event of a breach and shall in addition be entitled to damages that Landlord may suffer as a result of such breach.

11.    Single Floor Occupancy. From and after the date of this Seventh Amendment, the phrase “Fifth Expansion Premises” in Section 18 of the Fifth Amendment shall be deleted and replaced with the phrase “Sixth Expansion Premises” provided any work in connection with Section 18 thereof shall be performed in accordance with the terms and conditions of the Lease, as amended hereby including Section 8 hereof. Moreover, from and after the delivery of the Sixth Expansion Premises in the event Tenant operates the Premises as a single floor occupancy with its premises in the abutting and adjacent building, Tenant shall maintain and comply, at Tenant’s sole cost and expense, with all reasonable and necessary security, fire and life safety requirements, protocols, reasonable Landlord requirements, and Laws and Restrictions relating to or arising from such single floor occupancy operations.

 

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12.    Surrender. From and after the date of this Seventh Amendment, Section 20 of the Lease shall be amended to insert the following at the end thereof:

Upon any such surrender or yield-up, Tenant shall restore the First Party Wall Door to comply with then current Laws and Restrictions. In addition to the foregoing, upon any such surrender or yield-up, including the exercise of any Termination Option, Tenant shall decommission all existing laboratory space and appurtenances serving the Premises in full compliance with the Lease and all applicable laws, codes, rules, regulations, and protocols, including the Laboratory Decommissioning Standard ANSI/AIHA Z9.11 latest edition, as follows:

(a)    Tenant, at Tenant’s expense, shall clean and otherwise decommission all interior surfaces (including floors, walls, ceilings, and counters), piping, supply lines, waste lines, acid neutralization systems, and plumbing in and/or exclusively serving the Premises (or applicable portion thereof) floor space, and all exhaust or other ductwork in and/or exclusively serving the Premises (or applicable portion thereof), in each case which has carried or released or been exposed to any Hazardous Material, and shall otherwise clean the Premises (or applicable portion thereof) (to the point of ceiling penetration) so as to permit the report hereinafter called for in subsection (b) to be issued;

(b)    Tenant, at Tenant’s expense, shall obtain for Landlord a report addressed to Landlord and Landlord’s designees (and, at Tenant’s election, Tenant) by a reputable licensed environmental engineer or certified industrial hygienist that, in either case, is designated by Tenant and acceptable to Landlord in Landlord’s reasonable discretion, which report shall be based on the environmental engineer’s or industrial hygienist’s inspection of the Premises (or applicable portion thereof) and shall show: that the Hazardous Materials, to the extent, if any, existing prior to such decommissioning, have been removed as necessary so that the interior surfaces of the Premises (or applicable portion thereof) (including but not limited to floors, walls, ceilings, and counters), piping, supply lines, waste lines and plumbing, and all such exhaust or other ductwork in and/or exclusively serving the Premises (or applicable portion thereof), may be reused by a subsequent tenant or disposed of in compliance of all laws, statutes, ordinances, rules and regulations of any local, state or federal governmental authority having jurisdiction concerning environmental, health and safety matters (collectively, “Environmental Laws”), without taking any special precautions for Hazardous Materials, without incurring special costs or undertaking special procedures for demolition, disposal, investigation, assessment, cleaning or removal of Hazardous Materials and without incurring regulatory compliance requirements or giving notice in connection with Hazardous Materials; and that the Premises (or applicable portion thereof) may be reoccupied for office, research or laboratory use, demolished or renovated without taking any special precautions for Hazardous Materials, without incurring special costs or undertaking special procedures for disposal, investigation, assessment, cleaning or removal of Hazardous Materials and without incurring regulatory requirements or giving notice in connection with Environmental Substances. Further, for purposes of this subsection: “special costs” or “special procedures” shall mean costs or procedures, as the case may be, that would not be incurred but for the nature of the Hazardous Materials as Hazardous Materials instead of non-hazardous materials. The report shall include reasonable detail concerning the clean-up location, the tests run and the analytic results. In addition, to the extent Tenant (or any party taking by or through Tenant) used, stored, generated or disposed of any radioactive or radiological substances on or about the Premises (or applicable portion thereof), such decommissioning shall also be conducted in accordance with the regulations of the U.S. Nuclear Regulatory Commission and/or the Massachusetts Department of Public Health for the control of radiation, and cause the Premises (or applicable portion thereof) to be released for unrestricted use by the Radiation Control Program of the Massachusetts Department of Public Health for the control of radiation, and deliver to Landlord the report of a certified industrial hygienist stating that he or she has examined the Premises (or applicable portion thereat) (including visual inspection, Geiger counter evaluation and airborne and surface monitoring) and found no evidence that such portion contains Hazardous Materials or is otherwise in violation of any Environmental Law.

 

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(c)    If Tenant fails to perform its obligations under subsections (a)-(c), without limiting any other right or remedy, Landlord may, on not less than fifteen (15) days’ prior written notice to Tenant perform such obligations at Tenant’s expense, and Tenant shall promptly reimburse Landlord upon demand for all costs and expenses reasonably incurred. Tenant’s obligations under subsections (a)-(c) shall survive the surrender of the Premises (or applicable portion thereof).

13.     Extension/Renewal Right. Tenant’s Renewal Option as outlined in the Lease as Exhibit J remains in full force and effect and is hereby expanded to include the Fifth Expansion Space and the Sixth Expansion Space, as and to the extent same is included within the Premises as provided herein.

14.    Right of First Refusal, First Offer or Expansion Rights. Tenant acknowledges and agrees that any remaining unexercised rights with respect to any Right of First Refusal, Right of First Offer or other Expansion Rights are hereby void and of no further force or effect.

15.    Prior Delivery. Tenant acknowledges and agrees that all portions of the Premises delivered prior to the date of this Amendment have been satisfactorily delivered and Landlord has no further work to perform or allowances to pay in accordance with such delivery, other than an outstanding allowance of $59,400 with respect to the Second Expansion Premises and $504,300 with respect to the Third and Fourth Expansion Premises.

16.    Prior References. References to the phrase “Fifth Expansion Premises” in the following Sections of the Fifth Amendment are hereby deleted: 10(c), l0(c)(ii), 11(d) and 13.

17.    Security Deposit. Upon the occurrence of the Suite 8W05 Commencement Date, the Security Deposit shall be increased to Four Hundred Thirteen Thousand Five Hundred Eighteen and 42/100 Dollars ($413, 518.42), consisting of the $386,500.00 already paid to Landlord by Tenant under the Lease, and Twenty-Seven Thousand Eighteen and 42/100 Dollars ($27,018.42) to be paid to Landlord by Tenant within three (3) business days thereof. Upon the occurrence of the Suite 8W04 Commencement Date, the Security Deposit shall be increased to Four Hundred Forty-One Thousand Eighty-Eight and 24/100 Dollars ($441,088.24), consisting of the $413, 518.42 already paid to Landlord by Tenant under the Lease, and Twenty-Seven Thousand Five Hundred Sixty-Nine and 82/100 Dollars ($27,569.82) to be paid to Landlord by Tenant within three (3) business days thereof. Upon the occurrence of the Sixth Expansion Premises Commencement Date, the Security Deposit shall be increased to Five Hundred Forty-Six Thousand Five Hundred and 24/100 Dollars ($546,500.00), consisting of the $441,088.24 already paid to Landlord by Tenant under the Lease, and One Hundred Five Thousand Four Hundred Eleven and 76/100 ($105,411.76) to be paid to Landlord by Tenant within three (3) business days thereof. At Landlord’s option, any increase of the Security Deposit hereunder shall be paid to Landlord in the form of a clean, irrevocable letter of credit in the foregoing applicable amount reasonably satisfactory in form and content to Landlord and issued by an FDIC insured bank reasonably satisfactory to Landlord in favor of Landlord which shall be held pursuant to the terms and conditions of the Lease.

18.    Tenant Handbook. Tenant acknowledges receipt of the 27 Drydock Tenant Handbook.

19.    Successors; Conflicts. This Seventh Amendment shall be binding upon the parties and their respective successors and assigns. To the extent the terms and conditions of the Lease expressly conflict with or are expressly inconsistent with this Seventh Amendment, the terms and conditions of this Seventh Amendment shall control.

 

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20.    Brokers. Landlord and Tenant each represents and warrants to the other that it has not directly or indirectly dealt, with respect to this Seventh Amendment, with any broker or had its attention called to the applicable Expansion Premises or other space to let in the Building, etc. by anyone other than Columbia Group Realty Advisors and JLL. Landlord and Tenant each agrees to defend, exonerate and save harmless and indemnify the other and anyone claiming by, through or under the other against any claims for a commission arising out of the execution and delivery of this Seventh Amendment or out of negotiations between Landlord and Tenant with respect to the leasing of other space in the Building. Landlord is responsible for paying all fees to Columbia Group Realty Advisors and JLL pursuant to separate agreement(s) therewith.

21.    Miscellaneous. Except as expressly modified herein, the Lease shall remain unmodified and in full force and effect, including, without limitation, the provisions of the Fifth Amendment. The provisions of this Seventh Amendment shall be binding upon and shall inure to the benefit of Landlord and Tenant and their respective legal representatives, successors and assigns.

[Signature Page to Follow]

 

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IN WITNESS WHEREOF the parties hereto have executed this Seventh Amendment to Lease in multiple copies, each to be considered an original hereof, as a sealed instrument on the date first written above

 

LANDLORD:    
RREF II DRYDOCK, LLC, a     GINKGO BIOWORKS, INC., a Delaware
Delaware limited liability company     corporation
By:  

/s/ Patrick Sweeney

                         By:  

/s/ Barry Canton

Name:   Patrick Sweeney     Name:   Barry Canton
Title:   Its Authorized Signatory     Title:   Co-Founder
      Hereunto Duly Authorized

 

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Exhibit 10.26

EIGHTH AMENDMENT TO LEASE

This Eighth Amendment to Lease (“Eighth Amendment”) is executed as of the 23rd day of March, 2018, by and between RREF II DRYDOCK, LLC, as landlord (“Landlord”), and GINKGO BIOWORKS, INC., as tenant (“Tenant”).

B A C K G R O U N D:

A. Reference is made to a certain Lease Agreement dated December 22, 2011 between, Landlord’s predecessor-in-interest, Zoom Group LLC (“Zoom”), and Tenant, as amended by, among other documents, that certain: (i) Commencement Date Agreement dated January 31, 2012; (ii) First Amendment to Lease Agreement dated April     , 2012; (ii) Second Amendment to Lease Agreement (and Side Letter) dated as of August 1, 2014; (iii) Third Amendment to Lease Agreement dated August 15, 2014; (iv) Fourth Amendment to Lease dated May 1, 2016; (v) Party Wall Access Agreement dated May 31, 2016 between Zoom, Tenant and Jamestown 21-23-25 Drydock, L.P.; (vi) Fifth Amendment to Lease dated May 31, 2016 (“Fifth Amendment”); and (vii) Sixth Amendment to Lease dated August 5, 2016; (viii) Seventh Amendment to Lease dated July 31, 2017 (“Seventh Amendment”) (collectively, the “Lease”) pursuant to which Tenant is currently leasing from Landlord and occupying approximately 31,606 rentable square feet consisting of 31,156 rentable square feet of space in the Building and approximately 450 rentable square feet of storage space on the first (1st) floor of the Building (the “Premises”). In addition, pursuant to the Seventh Amendment Tenant will lease the Sixth Expansion Premises (consisting of approximately 5,644 rentable square feet of space on the eighth (8th) floor of the Building) on the Sixth Expansion Premises Commencement Date. Capitalized terms not otherwise defined herein shall have the meaning ascribed to them in the Lease.

B. Landlord and Tenant are the current holders, respectively, of the lessor’s and lessee’s interests in the Lease.

C. Landlord and Tenant desire to amend the Lease in certain respects as provided herein.

A G R E E M E N T S:

NOW, THEREFORE, in consideration of the agreements set forth herein and other good and valuable consideration, the receipt and sufficiency of which are hereby acknowledged, Landlord and Tenant hereby agree, and amend the Lease, as follows:

1. Expansion Premises. The Seventh Expansion Premises, the Eighth Expansion Premises, the Ninth Expansion Premises, the Tenth Expansion Premises, the Eleventh Expansion Premises, the Twelfth Expansion Premises and the Thirteenth Expansion Premises (each as defined below) are referred to collectively as the “Expansion Premises” or singly as an “Expansion Premises”.

a. Seventh Expansion Premises. From and after the Seventh Expansion Premises Commencement Date (as defined below), approximately 6,408 rentable square feet of space on the first (1st) floor of the Building (the “Seventh Expansion Premises”), as outlined on the plan attached hereto and incorporated herein as Exhibit A-1, shall be deemed added to and incorporated into the Premises demised under the Lease.

b. Eighth Expansion Premises. From and after the Eighth Expansion Premises Commencement Date (as defined below), approximately 18,350 rentable square feet on the western half of the second (2nd) floor of the Building (the “Eighth Expansion Premises”), as outlined on the plan attached hereto and incorporated herein as Exhibit A-2, shall be deemed added to and incorporated into the Premises demised under the Lease.

 

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c. Ninth Expansion Premises. From and after the Ninth Expansion Premises Commencement Date (as defined below), approximately 18,350 rentable square feet (subject to adjustment as set forth in Section 6b below) on the western half of the third (3rd) floor of the Building (the “Ninth Expansion Premises”), as outlined on the plan attached hereto and incorporated herein as Exhibit A-3. shall be deemed added to and incorporated into the Premises demised under the Lease.

d. Tenth Expansion Premises. From and after the Tenth Expansion Premises Commencement Date (as defined below), approximately 5,448 rentable square feet of space on the first (1st) floor of the Building (the “Tenth Expansion Premises”), as outlined on the plan attached hereto and incorporated herein as Exhibit A-4, shall be deemed added to and incorporated into the Premises demised under the Lease.

e. Eleventh Expansion Premises. From and after the Eleventh Expansion Premises Commencement Date (as defined below), approximately 4,622 rentable square feet of space on the eastern half of the second (2nd) floor of the Building (the “Eleventh Expansion Premises”), as outlined on the plan attached hereto and incorporated herein as Exhibit A-5. shall be deemed added to and incorporated into the Premises demised under the Lease.

f. Twelfth Expansion Premises. From and after the Twelfth Expansion Premises Commencement Date (as defined below), approximately 8,921 rentable square feet of space on the eastern half of the second (2nd) floor of the Building (the “Twelfth Expansion Premises”), as outlined on the plan attached hereto and incorporated herein as Exhibit A-6, shall be deemed added to and incorporated into the Premises demised under the Lease.

g. Thirteenth Expansion Premises. From and after the Thirteenth Expansion Premises Commencement Date (as defined below), approximately 4,807 rentable square feet of space on the eastern half of the second (2nd) floor of the Building (the “Thirteenth Expansion Premises”), as outlined on the plan attached hereto and incorporated herein as Exhibit A-7, shall be deemed added to and incorporated into the Premises demised under the Lease.

h. Consolidation Exhibit. Upon the later of the Eleventh Expansion Premises Commencement Date, Twelfth Expansion Premises Commencement Date or Thirteenth Expansion Premises Commencement Date, Exhibits A-5, A-6 and A-7 shall be consolidated for layout purposes into the space shown on Exhibit A-8 attached hereto.

2. Commencement Dates; Anticipated Delivery Dates; Rent Commencement Dates.

a. Seventh Expansion Premises Commencement Date. The anticipated delivery date of the Seventh Expansion Premises is April I, 2018 (the “Anticipated Seventh Expansion Premises Commencement Date”), subject to delays caused by factors beyond the reasonable control of Landlord (which shall not include any financial difficulties of Landlord). Landlord shall not be liable to Tenant, and Landlord shall not be in default, for any failure to deliver the Seventh Expansion Premises on any specified date; provided in no event shall Tenant be required to pay Basic Rent or Additional Rent (other than as specifically set forth below) on the Seventh Expansion Premises until five (5) months following the actual Seventh Expansion Premises Commencement Date (as defined below) (that five (5) month period being the “Seventh Expansion Premises Free Rent Period”), but Tenant shall be required to pay all electricity charges applicable to the Seventh Expansion Premises as required under Sections 4(c) and 7(b) of the Lease from and after the Seventh Expansion Premises Commencement Date. Notwithstanding the

 

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foregoing, (i) in the event that delivery date of the Seventh Expansion Premises is later than March 15, 2018, Landlord shall provide no less than approximately 3,000 square feet of storage space (“Temp Storage Space”) elsewhere in the Building until the Seventh Expansion Premises is delivered to Tenant, and (ii) in the event that delivery date of the Seventh Expansion Premises is later than ninety (90) days following the Anticipated Seventh Expansion Premises Commencement Date for any reason other than a delay caused by Tenant or by an event of Force Majeure, the Seventh Expansion Premises Free Rent Period shall be increased by one (1) additional day for each day beyond such ninetieth (90th) day that the Seventh Expansion Premises are delivered to Tenant. The actual “Seventh Expansion Premises Commencement Date” shall be the date of the delivery of the Seventh Expansion Premises to Tenant in accordance with the terms and conditions hereof. As used herein, the “Seventh Expansion Premises Rent Commencement Date” shall be the day following the expiration of the Seventh Expansion Premises Free Rent Period. If applicable, the Temp Storage Space shall be delivered in as-is condition to be used, at no additional charge, for storage of Tenant’s personal property (but excluding any chemicals or hazardous materials) and shall be subject to the insurance and indemnity provisions of the Lease.

b. Eighth Expansion Premises Commencement Date. The anticipated delivery date of the Eighth Expansion Premises is on or about October 1, 2018 (the “Anticipated Eighth Expansion Premises Commencement Date”), subject to delays caused by factors beyond the reasonable control of Landlord (which shall not include any financial difficulties of Landlord) or the holdover or early yield-up, termination, expiration or relocation of the current tenant or occupant thereof. Landlord shall not be liable to Tenant, and Landlord shall not be in default, for any failure to deliver the Eighth Expansion Premises on any specified date; provided in no event shall Tenant be required to pay Basic Rent or Additional Rent (other than as specifically set forth below) on the Eighth Expansion Premises until five (5) months following the actual Eighth Expansion Premises Commencement Date (as defined below) (that five (5) month period being the “Eighth Expansion Premises Free Rent Period”), but Tenant shall be required to pay all electricity charges applicable to the Eighth Expansion Premises as required under as required under Sections 4(c) and 7(b) of the Lease from and after the Eighth Expansion Premises Commencement Date. Notwithstanding the foregoing, (i) in no event shall Tenant be required to accept delivery of the Eighth Expansion Premises before October 1, 2018, and (ii) in the event that delivery date of the Eighth Expansion Premises is later than ninety (90) days following the Anticipated Eighth Expansion Premises Commencement Date for any reason other than a delay caused by Tenant or by an event of Force Majeure, the Eighth Expansion Premises Free Rent Period shall be increased by one (1) additional day for each day beyond such ninetieth (90th) day that the Eighth Expansion Premises are delivered to Tenant. The actual “Eighth Expansion Premises Commencement Date” shall be the date of the delivery of the Eighth Expansion Premises to Tenant in accordance with the terms and conditions hereof. As used herein, the “Eighth Expansion Premises Rent Commencement Date” shall be the later of the day following the expiration of the Eighth Expansion Premises Free Rent Period, or March 1. 2019.

c. Ninth Expansion Premises Commencement Date. The anticipated delivery date of the Ninth Expansion Premises is no later than October 1, 2018 (the “Anticipated Ninth Expansion Premises Commencement Date”), subject to delays caused by factors beyond the reasonable control of Landlord (which shall not include any financial difficulties of Landlord) or the holdover or early yield-up, termination, expiration or relocation of the current tenant or occupant thereof. Landlord shall not be liable to Tenant, and Landlord shall not be in default, for any failure to deliver the Ninth Expansion Premises on any specified date; provided in no event shall Tenant be required to pay Basic Rent or Additional Rent (other than as specifically set forth below) on the Ninth Expansion Premises until five (5) months following the actual Ninth Expansion Premises Commencement Date (as defined below) (that five (5) month period being the “Ninth Expansion Premises Free Rent Period”), but Tenant shall be required to pay all electricity charges applicable to the Ninth Expansion Premises as required under as required under Sections 4(c) and 7(b) of the Lease from and after the Ninth Expansion Premises Commencement Date. Notwithstanding the foregoing, (i) in no event shall Tenant be required to accept

 

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delivery of the Ninth Expansion Premises before October 1, 2018, and (ii) in the event that delivery date of the Ninth Expansion Premises is later than thirty (30) days following the Anticipated Ninth Expansion Premises Commencement Date for any reason other than a delay caused by Tenant or by an event of Force Majeure, the Ninth Expansion Premises Free Rent Period shall be increased by one (1) additional day for each day beyond such thirtieth (30th) day that the Ninth Expansion Premises are delivered to Tenant. The actual “Ninth Expansion Premises Commencement Date” shall be the date of the delivery of the Ninth Expansion Premises to Tenant in accordance with the terms and conditions hereof. As used herein, the “Ninth Expansion Premises Rent Commencement Date” shall be the later of the day following the expiration of the Ninth Expansion Premises Free Rent Period, or March 1, 2019.

d. Tenth Expansion Premises Commencement Date. The delivery date of the Tenth Expansion Premises shall be one (1) business day following the date upon which the existing tenant yields up and surrenders same, which date is anticipated to be no later than December 1, 2020 (the “Anticipated Tenth Expansion Premises Commencement Date”), subject to delays caused by factors beyond the reasonable control of Landlord (which shall not include any financial difficulties of Landlord) or the holdover or early yield-up of the current tenant or occupant thereof. Landlord shall not be liable to Tenant, and Landlord shall not be in default, for any failure to deliver the Tenth Expansion Premises on any specified date; provided Landlord shall use commercially reasonable efforts to enforce the terms of the lease with the existing tenant in the event such tenant fails to promptly yields up and surrenders the Tenth Expansion Premises on December 1, 2020, and provided in no event shall Tenant be required to pay Basic Rent or Additional Rent (other than as specifically set forth below) on the Tenth Expansion Premises until five (5) months following the actual Tenth Expansion Premises Commencement Date (as defined below) (that five (5) month period being the “Tenth Expansion Premises Free Rent Period”), but Tenant shall be required to pay all electricity charges applicable to the Tenth Expansion Premises as required under Sections 4(c) and 7(b) of the Lease from and after the Tenth Expansion Premises Commencement Date. Notwithstanding the foregoing, (i) in the event that the delivery date of the Tenth Expansion Premises is anticipated to be more than thirty (30) days prior to the Anticipated Tenth Expansion Premises Commencement Date Landlord shall provide not less than six (6) months prior notice to Tenant of such early anticipated delivery date, and (ii) in the event that delivery date of the Tenth Expansion Premises is later than ninety (90) days following the Anticipated Tenth Expansion Premises Commencement Date for any reason other than a delay caused by Tenant or by an event of Force Majeure, the Tenth Expansion Premises Free Rent Period shall be increased by one (1) additional day for each day beyond such ninetieth (90th) day that the Tenth Expansion Premises are delivered to Tenant. The actual “Tenth Expansion Premises Commencement Date” shall be the date of the delivery of the Tenth Expansion Premises to Tenant in accordance with the terms and conditions hereof. As used herein, the “Tenth Expansion Premises Rent Commencement Date” shall be the day following the expiration of the Tenth Expansion Premises Free Rent Period.

e. Eleventh Expansion Premises Commencement Date. The anticipated delivery date of the Eleventh Expansion Premises is October 1, 2020 (the “Anticipated Eleventh Expansion Premises Commencement Date”), subject to delays caused by factors beyond the reasonable control of Landlord (which shall not include any financial difficulties of Landlord) or the holdover or early yield-up, termination, expiration or relocation of the current tenant or occupant thereof. Landlord shall not accelerate the Eleventh Expansion Premises Commencement Date (as defined below) by voluntarily seeking, agreeing or accepting from the current tenant or occupant thereof an early termination of the Lease for the Eleventh Expansion Premises; provided the foregoing shall not be applicable to an acceleration due to the default, bankruptcy or other forced or non-mutual termination or expiration event and in the case of an early yield up prior to the Anticipated Eleventh Expansion Premises Commencement Date Tenant shall only be responsible for the Basic Rent and Additional Rent charges equal to what the current tenant or occupant (“Prior 11th Occupant”) was required to pay (e.g., rent and additional rent) under its lease therefor (“Prior 11th Occupant Rent”) commencing on the Eleventh Expansion Premises

 

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Rent Commencement Date (as defined below) through the date that is the earlier of (i) the expiration of the term of such current tenant’s or occupant’s lease, or (ii) the Anticipated Eleventh Expansion Premises Commencement Date (e.g., Tenant hereunder shall only be charged what the prior tenant or occupant was being charged under its lease for the Eleventh Expansion Premises, subject to the Eleventh Expansion Premises Free Rent Period (as defined below)), after which time Basic Rent and Additional Rent shall commence as provided herein. Landlord shall not be liable to Tenant, and Landlord shall not be in default, for any failure to deliver the Eleventh Expansion Premises on any specified date; provided in no event shall Tenant be required to pay Basic Rent or Additional Rent (other than as specifically set forth herein) on the Eleventh Expansion Premises until five (5) months following the later of (I) the actual Eleventh Expansion Premises Commencement Date (as defined below), and (II) the original expiration date of the Prior 11th Occupant’s lease had same not been terminated early (that five (5) month period being the “Eleventh Expansion Premises Free Rent Period”), but Tenant shall be required to pay all electricity charges applicable to the Eleventh Expansion Premises as required under as required under Sections 4(c) and 7(b) of the Lease from and after the Eleventh Expansion Premises Commencement Date. Notwithstanding the foregoing, (i) in the event that the delivery date of the Eleventh Expansion Premises is anticipated to be more than thirty (30) days prior to the Anticipated Eleventh Expansion Premises Commencement Date Landlord shall provide not less than six (6) months prior notice to Tenant of such early anticipated delivery date, and in the event that delivery date of the Eleventh Expansion Premises is later than ninety (90) days following the Anticipated Eleventh Expansion Premises Commencement Date for any reason other than a delay caused by Tenant or by an event of Force Majeure, the Eleventh Expansion Premises Free Rent Period shall be increased by one (1) additional day for each day beyond such ninetieth (90th) day that the Eleventh Expansion Premises are delivered to Tenant. The actual “Eleventh Expansion Premises Commencement Date” shall be the date of the delivery of the Eleventh Expansion Premises to Tenant in accordance with the terms and conditions hereof. As used herein, the “Eleventh Expansion Premises Rent Commencement Date” shall be the day following the expiration of the Eleventh Expansion Premises Free Rent Period.

f. Twelfth Expansion Premises Commencement Date. The anticipated delivery date of the Twelfth Expansion Premises is February 1, 2022 (the “Anticipated Twelfth Expansion Premises Commencement Date”), subject to delays caused by factors beyond the reasonable control of Landlord (which shall not include any financial difficulties of Landlord) or the extension of the lease term by, holdover or early yield-up, termination, expiration or relocation of, the current tenant or occupant thereof. Landlord shall not accelerate the Twelfth Expansion Premises Commencement Date (as defined below) by voluntarily seeking, agreeing or accepting from the current tenant or occupant thereof an early termination of the Lease for the Twelfth Expansion Premises; provided the foregoing shall not be applicable to an acceleration due to the default, bankruptcy or other forced or non-mutual termination or expiration event and in the case of an early yield up prior to the Anticipated Twelfth Expansion Premises Commencement Date Tenant shall only be responsible for the Basic Rent and Additional Rent charges equal to what the current tenant or occupant (“Prior 12th Occupant”) was required to pay (e.g., rent and additional rent) under its lease therefor (“Prior 12th Occupant Rent”) commencing on the Twelfth Expansion Premises Rent Commencement Date (as defined below) through the date that is the earlier of (i) the expiration of the term of such current tenant’s or occupant’s lease, or (ii) the Anticipated Twelfth Expansion Premises Commencement Date (e.g., Tenant hereunder shall only be charged what the prior tenant or occupant was being charged under its lease for the Twelfth Expansion Premises, subject to the Twelfth Expansion Premises Free Rent Period (as defined below)), after which time Basic Rent and Additional Rent shall commence as provided herein. Landlord shall not be liable to Tenant, and Landlord shall not be in default, for any failure to deliver the Twelfth Expansion Premises on any specified date; provided Landlord shall use commercially reasonable efforts to enforce the terms of the lease with the existing tenant in the event such tenant fails to promptly yield up and surrender the Twelfth Expansion Premises on February 1, 2022 (other than as a result of the timely and compliant extension of the lease term thereby), and provided further in no event shall Tenant be required to pay Basic Rent or Additional

 

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Rent (other than as specifically set forth herein) on the Twelfth Expansion Premises until five (5) months following the later of (I) the actual Twelfth Expansion Premises Commencement Date (as defined below), and (II) the original expiration date of the Prior 12th Occupant’s lease had same not been terminated early (that five (5) month period being the “Twelfth Expansion Premises Free Rent Period”), but Tenant shall be required to pay all electricity charges applicable to the Twelfth Expansion Premises as required under as required under Sections 4(c) and 7(b) of the Lease from and after the Twelfth Expansion Premises Commencement Date. Notwithstanding the foregoing, in the event that delivery date of the Twelfth Expansion Premises is later than ninety (90) days following the Anticipated Twelfth Expansion Premises Commencement Date for any reason other than a delay caused by Tenant or by an event of Force Majeure, the Twelfth Expansion Premises Free Rent Period shall be increased by one (1) additional day for each day beyond such ninetieth (90th) day that the Twelfth Expansion Premises are delivered to Tenant. The actual “Twelfth Expansion Premises Commencement Date” shall be the date of the delivery of the Twelfth Expansion Premises to Tenant in accordance with the terms and conditions hereof. As used herein, the “Twelfth Expansion Premises Rent Commencement Date” shall be the day following the expiration of the Twelfth Expansion Premises Free Rent Period. Notwithstanding anything to the contrary contained herein, in the event that the Twelfth Expansion Premises is not delivered to Tenant because the current tenant occupying the Twelfth Expansion Premises exercises its right to extend its lease thereon, Landlord shall notify Tenant in writing of such extension exercise (“Twelfth Expansion Premises Withdrawal Notice”) whereupon (i) Tenant’s rights to the Twelfth Expansion Premises hereunder, and all references herein thereto, shall be void and of no further force or effect, mutaris mutandi, (except as and to the extent included within Section 11 below) and, (ii) provided the Thirteenth Expansion Premises Commencement Date (defined below) has not occurred, Tenant shall have the right by written notice to Landlord within twenty (20) days following Tenant’s receipt of the Twelfth Expansion Premises Withdrawal Notice to terminate its obligation to take the Thirteenth Expansion Premises. Upon Tenant’s timely giving of such notice, (W) Tenant’s rights to the Thirteenth Expansion Premises hereunder, and all references herein thereto, shall be void and of no further force or effect, mutaris mutandi , (except as and to the extent included within Section II below), (X) Tenant shall be required to reimburse Landlord for any Eighth Amendment Allowance paid in connection with the Twelfth Expansion Premises and/or the Thirteenth Expansion Premises, (Y) Tenant shall be required to reimburse Landlord for any brokerage commissions paid by Landlord to Columbia Group Realty Advisors in connection with the Twelfth Expansion Premises and/or the Thirteenth Expansion Premises (failing which Landlord may deduct same from any Eighth Amendment Allowance), and (Z) and there shall be a proportionate reduction in shaft space, exterior dueling and other appurtenances provided hereunder (as more specifically provided in Section l9g below). If Tenant fails to timely give such notice hereunder, then Tenant’s rights and obligations as to the Thirteenth Expansion Premises hereunder shall continue in full force and effect.

g. Thirteenth Expansion Premises Commencement Date. The anticipated delivery date of the Thirteenth Expansion Premises is October 1, 2022 (the “Anticipated Thirteenth Expansion Premises Commencement Date”), subject to delays caused by factors beyond the reasonable control of Landlord (which shall not include any financial difficulties of Landlord) or the holdover or early yield-up, termination, expiration or relocation of the current tenant or occupant thereof. Landlord shall not accelerate the Thirteenth Expansion Premises Commencement Date (as defined below) by voluntarily seeking, agreeing or accepting from the current tenant or occupant thereof an early termination or of the Lease for the Thirteenth Expansion Premises; provided the foregoing shall not be applicable to an early acceleration due to the default, bankruptcy or other forced or non-mutual termination or expiration event and in the case of an early yield up prior to the Anticipated Thirteenth Expansion Premises Commencement Date Tenant shall only be responsible for the Basic Rent and Additional Rent charges equal to what the current tenant or occupant (“Prior 13th Occupant”) was required to pay (e.g., rent and additional rent) under its lease therefor (“Prior 13th Occupant Rent”) commencing on the Thirteenth Expansion Premises Rent Commencement Date (as defined below) through the date that is the earlier of

 

6


(i) the expiration of the term of such current tenant’s or occupant’s lease, or (ii) the Anticipated Thirteenth Expansion Premises Commencement Date (e.g., Tenant hereunder shall only be charged what the prior tenant or occupant was being charged under its lease for the Thirteenth Expansion Premises, subject to the Thirteenth Expansion Premises Free Rent Period (as defined below)). after which time Basic Rent and Additional Rent shall commence as provided herein. Landlord shall not be liable to Tenant, and Landlord shall not be in default, for any failure to deliver the Thirteenth Expansion Premises on any specified date; provided Landlord shall use commercially reasonable efforts to enforce the terms of the lease with the existing tenant in the event such tenant fails to promptly yields up and surrenders the Thirteenth Expansion Premises on October 1, 2022, and provided further in no event shall Tenant be required to pay Basic Rent or Additional Rent (other than as specifically set forth herein) on the Thirteenth Expansion Premises until five (5) months following the later of (I) the actual Thirteenth Expansion Premises Commencement Date (as defined below), or (II) the original expiration date of the Prior 13th Occupant’s lease had same not been terminated early (that five (5) month period being the “Thirteenth Expansion Premises Free Rent Period”), but Tenant shall be required to pay all electricity charges applicable to the Thirteenth Expansion Premises as required under as required under Sections 4(c) and 7(b) of the Lease from and after the Thirteenth Expansion Premises Commencement Date. Notwithstanding the foregoing, in the event that delivery date of the Thirteenth Expansion Premises is later than ninety (90) days following the Anticipated Thirteenth Expansion Premises Commencement Date for any reason other than a delay caused by Tenant or by an event of Force Majeure, the Thirteenth Expansion Premises Free Rent Period shall be increased by one (1) additional day for each day beyond such ninetieth (90th) day that the Thirteenth Expansion Premises are delivered to Tenant. The actual “Thirteenth Expansion Premises Commencement Date” shall be the date of the delivery of the Thirteenth Expansion Premises to Tenant in accordance with the terms and conditions hereof. As used herein, the “Thirteenth Expansion Premises Rent Commencement Date” shall be the day following the expiration of the Thirteenth Expansion Premises Free Rent Period.

3. Delivery. Notwithstanding anything to the contrary contained in the Lease, Landlord shall deliver each Expansion Premises vacant and in broom-clean condition and with the applicable work, if any, set forth on Exhibit B attached hereto and as expressly provided in Section 16b below (“Landlord’s Delivery Work”) substantially completed at Landlord’s sole cost and expense, but otherwise in “as is” condition, and without representation or warranty, express or implied, in fact or in law, by Landlord and without recourse to Landlord as to the nature, condition or usability thereof. Tenant agrees that except for Landlord’s Delivery Work applicable to each Expansion Premises, if any, Landlord has no work to perform in or on the applicable Expansion Premises Commencement Date therefor to prepare the applicable Expansion Premises for Tenant’s use and occupancy, and that any and all work to be done in or on the applicable Expansion Premises will be performed by Tenant at Tenant’s sole cost and expense in accordance with the terms of this Eighth Amendment (subject to Section 9 below). As of each Expansion Premises Commencement Date, the overall electrical capacity of the Expansion Premises then being delivered to Tenant hereunder shall be as provided in Section 16(b) below.

4. Co-Terminus. The term for each of the Expansion Premises demised hereunder shall be co-terminus with Lease Term and shall expire on January 31, 2027 (the “Expiration Date”), unless the Lease is otherwise terminated or extended as provided therein or herein.

5. Basic Rent. Tenant shall pay Basic Rent for the applicable Expansion Premises, to Landlord, in the amounts set forth below, in the manner and at the times set forth in Article 4(a) of the Lease, in advance, without demand, deduction or set off except as may be otherwise specifically and expressly provided in the Lease:

a. Seventh Expansion Premises. Commencing on the Seventh Expansion Premises Rent Commencement Date:

 

  i.

From and after the Seventh Expansion Rent Commencement Date through the last day of the first Eighth Expansion Premises Lease Year (as defined below): $390,888.00 per annum, paid in monthly installments of $32,574.00 ($61.00 per rentable square foot);

 

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  ii.

Eighth Expansion Premises Lease Year 2: $402,614.64 per annum, paid in monthly installments of $33,551.22 ($62.83 per rentable square foot);

 

  iii.

Eighth Expansion Premises Lease Year 3: $414,693.08 per annum, paid in monthly installments of $34,557.76 ($64.71 per rentable square foot);

 

  iv.

Eighth Expansion Premises Lease Year 4: $427,133.87 per annum, paid in monthly installments of $35,594.49 ($66.65 per rentable square foot);

 

  v.

Eighth Expansion Premises Lease Year 5: $439,947.89 per annum, paid in monthly installments of $36,662.32 ($68.66 per rentable square foot);

 

  vi.

Eighth Expansion Premises Lease Year 6: $453,146.33 per annum, paid in monthly installments of $37,762.19 ($70.72 per rentable square foot);

 

  vii.

Eighth Expansion Premises Lease Year 7: $466,740.71 per annum, paid in monthly installments of $38,895.06 ($72.84 per rentable square foot);

 

  viii.

Eighth Expansion Premises Lease Year 8: $480,742.94 per annum, paid in monthly installments of $40,061.91 ($75.02 per rentable square foot); and

b. Eighth Expansion Premises. Commencing on the Eighth Expansion Premises Rent Commencement Date:

 

  i.

Eighth Expansion Premises Lease Year I (or portion thereof, if applicable): $1,119,350.00 per annum, paid in monthly installments of $93,279.17 ($61.00 per rentable square foot);

 

  ii.

Eighth Expansion Premises Lease Year 2: $1,152,930.50 per annum, paid in monthly installments of $96,077.54 ($62.83 per rentable square foot);

 

  iii.

Eighth Expansion Premises Lease Year 3: $1,187,428.50 per annum, paid in monthly installments of $98,952.38 ($64.71 per rentable square foot);

 

  iv.

Eighth Expansion Premises Lease Year 4: $1,223,027.50 per annum, paid in monthly installments of $101,918.96 ($66.65 per rentable square foot);

 

  v.

Eighth Expansion Premises Lease Year 5: $1,259,911.00 per annum, paid in monthly installments of $104,992.58 ($68.66 per rentable square foot);

 

  vi.

Eighth Expansion Premises Lease Year 6: $1,297,712.00.00 per annum, paid in monthly installments of $108,142.67 ($70.72 per rentable square foot);

 

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  vii.

Eighth Expansion Premises Lease Year 7: $1,336,614.00 per annum, paid in monthly installments of $111,384.50 ($72.84 per rentable square foot);

 

  viii.

Eighth Expansion Premises Lease Year 8: $1,376,617.00 per annum, paid in monthly installments of $114,718.08 ($75.02 per rentable square foot); and

(As used herein, the term “Eighth Expansion Premises Lease Year” shall mean each successive 12-month period included in whole or in part in the Term of this Lease with the first (1st) Eighth Expansion Premises Lease Year beginning on the Eighth Expansion Premises Rent Commencement Date and ending at midnight on the day before the first (1st) anniversary of the Eighth Expansion Premises Rent Commencement Date (provided that if the Eighth Expansion Premises Rent Commencement Date is not the first (1st) day of a calendar month, the first Eighth Expansion Premises Lease Year shall end at midnight on the last day of the calendar month which includes the first (1st) anniversary of the Eighth Expansion Premises Rent Commencement Date). If the first (1st) Eighth Expansion Premises Lease Year of the Term shall be greater than one (1) full calendar year, the annual Basic Rent for such Eighth Expansion Premises Lease Year shall be increased proportionately to the greater length of such Eighth Expansion Premises Lease Year. Similarly, if the last Eighth Expansion Premises Lease Year of the Term shall be less than one (1) full calendar year, the annual Basic Rent for such Eighth Expansion Premises Lease Year shall be decreased proportionately to the lesser length of such Eighth Expansion Premises Lease Year.)

c. Ninth Expansion Premises. Commencing on the Ninth Expansion Premises Rent Commencement Date:

 

  i.

Ninth Expansion Premises Lease Year 1 (or portion thereof, if applicable): $1,119,350.00 per annum, paid in monthly installments of $93,279.17 ($61.00 per rentable square foot);

 

  ii.

Ninth Expansion Premises Lease Year 2: $1,152,930.50 per annum, paid in monthly installments of $96,077.54 ($62.83 per rentable square foot);

 

  iii.

Ninth Expansion Premises Lease Year 3: $1,187,428.50 per annum, paid in monthly installments of $98,952.38 ($64.71 per rentable square foot);

 

  iv.

Ninth Expansion Premises Lease Year 4: $1,223,027.50 per annum, paid in monthly installments of $101,918.96 ($66.65 per rentable square foot);

 

  v.

Ninth Expansion Premises Lease Year 5: $1,259,911.00 per annum, paid in monthly installments of $104,992.58 ($68.66 per rentable square foot);

 

  vi.

Ninth Expansion Premises Lease Year 6: $1.297,712.00.00 per annum, paid in monthly installments of $108,142.67 ($70.72 per rentable square foot);

 

  vii.

Ninth Expansion Premises Lease Year 7: $1,336,614.00 per annum, paid in monthly installments of $111,384.50 ($72.84 per rentable square foot);

 

  viii.

Ninth Expansion Premises Lease Year 8: $1,376,617.00 per annum, paid in monthly installments of $114,718.08 ($75.02 per rentable square foot); and

 

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(As used herein, the term “Ninth Expansion Premises Lease Year” shall mean each successive 12-month period included in whole or in part in the Term of this Lease with the first (1st) Ninth Expansion Premises Lease Year beginning on the Ninth Expansion Premises Rent Commencement Date and ending at midnight on the day before the first (1st) anniversary of the Ninth Expansion Premises Rent Commencement Date (provided that if the Ninth Expansion Premises Rent Commencement Date is not the first (1st) day of a calendar month, the first Ninth Amendment Lease Year shall end at midnight on the last day of the calendar month which includes the first (1st) anniversary of the Ninth Expansion Premises Rent Commencement Date). If the first (1st) Ninth Expansion Premises Lease Year of the Term shall be greater than one (1) full calendar year, the annual Basic Rent for such Ninth Expansion Premises Lease Year shall be increased proportionately to the greater length of such Ninth Expansion Premises Lease Year. Similarly, if the last Ninth Expansion Premises Lease Year of the Term shall be less than one (1) full calendar year, the annual Basic Rent for such Ninth Expansion Premises Lease Year shall be decreased proportionately to the lesser length of such Ninth Expansion Premises Lease Year.)

d. Tenth, Eleventh, Twelfth and Thirteenth Expansion Premises. Commencing on each of the Tenth, Eleventh, Twelfth and Thirteenth Expansion Premises Rent Commencement Dates, Tenant shall pay Basic Rent on the corresponding Tenth, Eleventh, Twelfth or Thirteenth Expansion Premises, as the case may be, based on the then current rent per rentable square foot then being charged on the Eighth Expansion Premises during the corresponding Eighth Expansion Premises Lease Year and shall increase thereafter based on increases in the rent per rentable square foot being charged on the Eighth Expansion Premises for each subsequent Eighth Expansion Premises Lease Year. So, by way of example, if the Tenth Expansion Premises Rent Commencement Date occurs during Eighth Expansion Premises Lease Year 3 the rent per rentable square foot shall be $64.71 and the Basic Rent for the Tenth Expansion Premises for the remainder of the Eighth Expansion Premises Lease Year would be $352,540.08 per annum (or portion thereof), paid in monthly installments of $29,378.34, and Basic Rent for the Ninth Expansion Premises for Eighth Expansion Premises Lease Year 4 would be $363,109.20 per annum, paid in monthly installments of $30,259.10 based on $66.65 per rentable square foot and such increases would continue for subsequent Eighth Expansion Premises Lease Year.

e. Additional Rent; PILOT Agreement Expiration. Tenant shall continue to pay Basic Rent and Additional Rent on the existing Premises, and the Sixth Expansion Premises, as and when required under the Lease. Tenant acknowledges and agrees that in the event that any current payment in lieu of taxes agreement expires during the Lease Term (as same may be extended), then Tenant shall be responsible for Tenant’s Proportionate Share of Taxes as provided in the Lease. Any such Taxes shall be the Taxes actually assessed and billed pursuant to the applicable taxing authority.

6. Additional Rent: Tenant’s Proportionate Share: Re-measurement.

a. From and after the Seventh Expansion Premises Commencement Date, Tenant’s Proportionate Share shall be increased by two and 33/100 percent (2.33%). From and after the Eighth Expansion Premises Commencement Date, Tenant’s Proportionate Share shall be increased by six and 671100 percent (6.67%). From and after the Ninth Expansion Premises Commencement Date, Tenant’s Proportionate Share shall be increased by six and 67/100 percent (6.67%) (subject to adjustment as set forth in Section 6b below). From and after the Tenth Expansion Premises Commencement Date, Tenant’s Proportionate Share shall be increased by one and 98/100 percent (1.98%). From and after the Eleventh Expansion Premises Commencement Date, Tenant’s Proportionate Share shall be increased by one and 68/ 100 percent (1.68%). From and after the Twelfth Expansion Premises Commencement Date, Tenant’s Proportionate Share shall be increased by three and 24/100 percent (3.24%). From and after the Thirteenth Expansion Premises Commencement Date, Tenant’s Proportionate Share shall be increased by one and 75/100 percent (1.75%).

 

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b. Landlord and Tenant acknowledge and agree that as currently demised, the Ninth Expansion Premises consists of approximately 18,350 rentable square feet, containing 17,873 rentable square feet of space as shown on the first page of Exhibit A-3 together with an adjacent corridor of approximately 477 rentable square feet of space as shown on the second page of Exhibit A-3 (“Corridor”). Tenant shall have the right to seek the removal of the Corridor in connection with its Tenant’s Improvements (as defined below) to the Ninth Expansion Premises. If no variance or other discretionary governmental permit or approval is required for the removal of the Corridor, Landlord shall demolish and remove same, at Landlord’s cost, promptly following Tenant’s notice to Landlord which notice shall include reasonably satisfactory evidence that no such permit or approval is required therefor. If a variance and/or other discretionary governmental permits or approvals are required for the removal of the Corridor, Tenant shall be entitled to demolish and remove same, at Tenant’s cost, as part of Tenant’s Improvements (as defined in and subject to Section 8 below) promptly following Tenant’s notice to Landlord which notice shall include reasonably satisfactory evidence that all such permits and/or approvals therefor have been obtained. In the event the Corridor is not demolished and removed as provided herein, (i) the Ninth Expansion Premises shall consist only of 17,873 rentable square feet of space and the Corridor shall be excluded therefrom and shall remain common area, and (ii) the Basic Rent, Tenant’s Proportionate Share, Eighth Amendment Allowances and any other charges, expenses or benefits based thereon shall be adjusted to reflect the applicable measurement. Except as set forth in this Subsection (b), for the purposes of this Eighth Amendment, it is agreed that the Rentable Area of each area of the Premises is as set forth in this Eighth Amendment and the Building Rentable Area is 289,613 and neither party shall have the right to remeasure either the Premises or Building for the purposes of changing the Basic Rent, Additional Rent, Tenant’s Proportionate Share or other amounts under the Lease based on the Building Rentable Area or the Premises Rentable Area unless due to actual physical changes to the Rentable Area of the Building or Premises in which event Landlord reserves the right to so remeasure in material accordance with the methods of measuring rentable square feet as described in the American National Institute Publication ANSI Z65.1-1996 promulgated by the Building Owners and Managers Association for the purpose thereof.

7. Confirmation Agreement. Landlord and Tenant agree to execute one or more supplemental agreements confirming the actual applicable Commencement Date, applicable Rent Commencement Date and applicable Basic Rent schedule and total Tenant’s Proportionate Share based thereon, after same are determined.

8. Tenant Improvements. Tenant shall cause the substantial completion of all necessary or desirable construction and installations of all of Tenant’s improvements to each of the Expansion Premises in accordance with the provisions of the Lease, including but not limited to Section 14 of the Fifth Amendment, Article 8 of the Lease, the Master Lease, including without limitation Articles 9 and 24 thereof, and the terms of this Amendment (“Tenant’s Improvements”). In connection with any Tenant’s Improvements, Tenant agrees that it will not, either directly or indirectly, use any contractors and/or materials if their use will create any difficulty, whether in the nature of a labor dispute or otherwise, with other contractors and/or labor engaged by Tenant or Landlord or others in the construction, maintenance and/or operation of the Building or any part thereof. Landlord agrees that the following language included in any Certificate of Insurance delivered to Landlord in connection with the Lease is currently satisfactory and will be deemed approved by Landlord with respect to the naming of additional insureds if it names the parties in interest designated by Landlord (“Parties in Interest”) and reads substantially as follows: “[Parties in Interest]” are included as Additional Insured on a primary non-contributory basis.” Landlord and Tenant shall reasonably cooperate in connection with scheduling and performing Tenant’s Improvements in any and all of the Expansion Premises to provide flexibility as to timing therefor so Tenant may perform same as expeditiously as practical so long as same does not unreasonably interfere with other tenants or the operation of the Building.

 

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9. Payment of Costs for Tenant’s Improvements; Eighth Amendment Allowance(s). Subject to the Eighth Amendment Allowance(s) set forth below, Tenant shall pay all of the costs and expenses of Tenant’s Improvements (including, without limitation, the costs of construction, the cost of permits and permit expediting, and all architectural and engineering services obtained by Tenant in connection therewith). Landlord shall make the following allowances available to Tenant (collectively, the “Eighth Amendment Allowance(s)”):

a. Seventh Expansion Premises Allowance. Upon the Seventh Expansion Premises Commencement Date, Landlord shall provide an allowance of up to $150.00 per rentable square foot of the Seventh Expansion Premises (S961,200.00) (the “Seventh Expansion Premises Allowance”) that Tenant may use towards funding the Tenant’s Improvements within the Seventh Expansion Premises and/or as otherwise expressly set forth herein, subject to the terms and conditions hereof.

b. Eighth Expansion Premises Allowance. Upon the Eighth Expansion Premises Commencement Date, Landlord shall provide an allowance of up to $150.00 per rentable square foot of the Eighth Expansion Premises ($2,752,500.00) (the “Eighth Expansion Premises Allowance”) that Tenant may use towards funding the Tenant’s Improvements within the Eighth Expansion Premises and/or as otherwise expressly set forth herein, subject to the terms and conditions hereof.

c. Ninth Expansion Premises Allowance. Upon the Ninth Expansion Premises Commencement Date, Landlord shall provide an allowance of up to $150.00 per rentable square foot of the Ninth Expansion Premises ($2,752,500.00) (the “Ninth Expansion Premises Allowance”) (as same may be subject to adjustment as set forth in Section 6b above) that Tenant may use towards funding the Tenant’s Improvements within the Ninth Expansion Premises and/or as otherwise expressly set forth herein, subject to the terms and conditions hereof.

d. Tenth Expansion Premises Allowance. Upon the Tenth Expansion Premises Commencement Date, Landlord shall provide an allowance of up to $88.92 per rentable square foot of the Tenth Expansion Premises ($484,436.16) (the “Tenth Expansion Premises Allowance”) that Tenant may use towards funding the Tenant’s Improvements within the Tenth Expansion Premises and/or as otherwise expressly set forth herein, subject to the terms and conditions hereof.

e. Eleventh, Twelfth and Thirteenth Expansion Premises Allowances. Upon each of the Eleventh, Twelfth and Thirteenth Expansion Premises Commencement Dates, Landlord shall provide an allowance corresponding to the Expansion Premises delivered (e.g., for the Eleventh Expansion Premises upon the Eleventh Expansion Premises Commencement Date, for the Twelfth Expansion Premises upon the Twelfth Expansion Premises Commencement Date, etc.) each in an amount up to the sum prorated by subtracting $1.58 from the base allowance amount of $150.00 per rentable square foot of the applicable Expansion Premises for each month (or portion thereof) the applicable Expansion Premises Rent Commencement Date is later than March 1, 2019, so long as Tenant has commenced payment of Basic Rent in the amount set forth in Section 5d above (i.e., the applicable Expansion Premises Commencement Date corresponds to the applicable Anticipated Expansion Premises Commencement Date or if the applicable Expansion Premises Commencement Date is prior to the actual corresponding Anticipated Expansion Premises Commencement Date and Tenant is paying Prior 11th Occupant Rent, Prior 12th Occupant Rent or Prior 13th Occupant Rent, Tenant shall have the option, upon written notice to Landlord, to commence payment of Basic Rent in the amounts set forth in Section 5d (above) along with applicable Additional Rent due hereunder to obtain the calculation of the Eleventh, Twelfth and Thirteenth Expansion Premises Allowance(s) hereunder). So, by way of example, if the Eleventh Expansion Premises Rent Commencement Date occurs on March 1, 2021, then the Eleventh Expansion Premises Allowance would be an amount up to $112.08 per rentable square foot of the Eleventh

 

12


Expansion Premises ($518,033.76)(i.e., $150.00 – 37.92 ($I .58 x 24 months) =$1 12.08 x 4,622). In the event that Tenant exercises its option to extend in accordance with Section 10 below, the foregoing proration shall be recalculated to take into account the additional thirty-six (36) additional months contained in the extension term (e.g., instead of $1.58 per month over ninety-five (95) months, the entire proration shall be recalculated at $1.15 per month over one hundred thirty-one (131) months and the allowance(s) adjusted accordingly), provided, however, in no event shall the allowance paid hereunder for any Expansion Premises exceed $150.00 per rentable square foot of the applicable Expansion Premises.

f. Supplemental Improvement Allowance. Upon the Seventh Expansion Premises Commencement Date, Landlord shall provide an allowance of up to $450,000.00 (as the same may be reduced as provided below), the “Supplemental Improvement Allowance”) that Tenant may use towards funding the Tenant’s Improvements within any of the Expansion Premises and/or as otherwise expressly set forth herein, subject to the terms and conditions hereof. The Supplemental Improvement Allowance shall be reduced proportionately, to a minimum of $250,000.00, if Landlord notifies Tenant no later than June 1, 2018 that it will provide to Tenant shaft space for the Seventh Expansion Premises and Tenth Expansion Premises, the Eighth Expansion Premises and the Ninth Expansion Premises as shown on the AHA Shaft Plan Drawings attached hereto as Exhibit E-1, in which event such shaft space shall be made available as soon as practical after the Seventh Expansion Premises Commencement Date, but no later than June 1, 2018. So by way of example, if Landlord provides one-half of the shaft space shown on Exhibit E-1, then the Supplemental Improvement Allowance will be reduced to$350,000.00 and if Landlord provides three-quarters of the shaft space shown on Exhibit E-1, then the Supplemental Improvement Allowance will be reduced to $300,000.00.

g. Demo Allowance. Landlord shall provide an allowance of up to $7.50 per rentable square foot for each of the Eighth Expansion Premises (i.e., up to $137,625.00), the Eleventh Expansion Premises (i.e., up to $34,665.00), the Twelfth Expansion Premises (i.e., up to $66,907.50) and the Thirteenth Expansion Premises (i.e., up to $36,052.50) (collectively and individually the “Demolition Allowance”) that Tenant may use only toward the demolition of the applicable Expansion Premises, notwithstanding anything to the contrary contained herein or in the Lease, but otherwise subject to the terms and conditions hereof.

h. Extension Allowance. In the event Tenant timely exercises its three (3) – year extension right set forth in Section 10 below (i.e., from February 1, 2027 – January 31, 2030), Landlord shall provide an allowance of up to $15.00 per rentable square foot of space leased by Tenant on the eighth (8th) floor Premises portion of the Building and on the Fourth Expansion Premises, as defined in the Fifth Amendment (collectively, the “Extension Allowance”) (e.g., if Tenant is occupying 36,700 rentable square feet of space on the eighth (8th) floor and 450 rentable square feet in the Fourth Expansion Premises, the Extension Allowance would be up to $557,250.00) that Tenant may use towards funding the Tenant’s Improvements within any of the Premises on the eighth (8th) floor of the Building or any of the Premises making up the Fourth Expansion Premises; provided, however, the Extension Allowance shall be paid only for work performed on the eighth (8th) floor Premises or Fourth Expansion Premises portion of the Building from and after the commencement of the foregoing three (3) – year extension period.

Except as otherwise expressly provided above (e.g., the Demolition Allowance and the Extension Allowance), the applicable components of the Eighth Amendment Allowance(s) may only be used for hard or soft costs actually incurred by Tenant in connection with Tenant’s Improvements within any portion of the Expansion Premises demised hereunder and any portion of the Expansion Premises demised under the Seventh Amendment to Lease (and may be applied disproportionately thereto in Tenant’s sole discretion; provided in no event shall the application of any Eighth Amendment Allowance to any particular Expansion Premises exceed 150% of the original Eighth Amendment Allowance allocated to that Expansion Premises above or, if applicable, to any particular Expansion Premises

 

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allocated to that Expansion Premises under the Seventh Amendment), subject to the terms and conditions hereof, but may not be used for other areas or portions of the Premises (or Sixth Expansion Premises) without the prior written consent of Landlord, which consent may be granted or withheld in Landlord’s sole discretion. Notwithstanding the foregoing, any or all portions of the Eighth Amendment Allowance(s) may be used for hard or soft costs actually incurred by Tenant in connection with Tenant’s Roof-Top Area, including Roof-Top Equipment, Exterior Dueling, interior dueling, and conduits, equipment and other infrastructure and materials required to exhaust or vent from, or connect electrical service and other utilities to, any of the Premises. No portion of the Eighth Amendment Allowance may be used for Tenant’s furniture, fixtures, equipment, cabling and/or other personal property. Provided Tenant shall not then be in default of the Lease beyond applicable notice and/or cure periods, or there shall not then be occurring any circumstance or state of facts which, with notice or the passage of time or both, would result in a breach or default hereunder that is not cured within the applicable cure period, the payment of the applicable portion of the Eighth Amendment Allowance shall be made to reimburse Tenant for amounts spent on Tenant’s Improvements within thirty (30) days following Tenant’s requisition therefor generally in accordance with Section 14(c) of the Fifth Amendment such that no more than fifty percent (50%) of that portion of the Eighth Amendment Allowance corresponding to the cost of the Tenant’s Improvements within the applicable portion of the Expansion Premises will be paid upon satisfactory completion of all rough inspections by the City of Boston Inspectional Services Department for the work within the particular portion of the Expansion Premises, and the remaining fifty percent (50%) of that portion of the Eighth Amendment Allowance corresponding to the cost of the Tenant’s Improvements within the applicable portion of the Expansion Premises will be paid within thirty (30) days following delivery to Landlord of (i) a final Certificate of Occupancy issued by the City of Boston Inspectional Services Department for the work within the particular portion of the Expansion Premises; and (ii) satisfactory lien waivers from all contractors and other satisfactory evidence that all contractors have been paid or will be paid in full for the work within the particular portion of the Expansion Premises. Landlord shall have no obligation to advance any funds or pay any amounts on account of Tenant’s Improvements in excess of the Eighth Amendment Allowance (excluding any allowances outstanding as of the date hereof under the Lease as previously amended) and in the event Tenant fails to request any portion of any applicable Eighth Amendment Allowance, pursuant to the terms and conditions hereof, within forty-two (42) months of the corresponding Expansion Premises Commencement Date, or in the case of the Extension Allowance within thirty-six (36) months of the commencement of the extended Term, as shown on the attached Exhibit G, such unrequested portion(s) of the applicable Eighth Amendment Allowance(s) shall be forfeit and no longer available for request hereunder. For clarification, Tenant may only request reimbursement from the Supplemental Improvement Allowance for costs incurred in connection with a particular Expansion Premises within forty-two (42) months of the corresponding Expansion Premises Commencement Date.

10. Extension Right. On the conditions, which conditions Landlord may waive, at its election, by written notice to Tenant at any time, that Tenant is not in default of its covenants and obligations under the Lease beyond and applicable notice and cure period, both as of the time of option exercise described herein and as of the commencement of the hereinafter described additional term, Tenant shall have the option to extend the Term of the Lease for one (1) period of three (3) years commencing on February 1, 2027 through and including January 31, 2030. Tenant may exercise such option to extend by giving Landlord written notice on or before November 30, 2018. Upon the timely giving of such notice, the Term of the Lease shall be deemed extended upon all of the terms and conditions of the Lease, except that Landlord shall have no obligation to construct or renovate the Premises, or provide any additional allowance or credit therefor, and that Basic Rent for the entire Premises during such additional term shall be calculated based on the Basic Rent rate per rentable square foot of Premises as shown on Exhibit H attached hereto. If Tenant fails to timely exercise its rights hereunder, then within ten (10) days of Landlord’s written request therefor, Tenant shall execute and deliver to Landlord a certification, in recordable form, confirming the Tenant’s failure to exercise (or

 

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waiver of) such right, and Tenant’s failure to so execute and deliver such certification shall (without limiting Landlord’s remedies on account thereof) entitle Landlord to execute and deliver to any third party, and record, an affidavit confirming the failure or waiver, which affidavit shall be binding on Tenant and may be conclusively relied on by third parties. Tenant’s Renewal Option as outlined in the Lease as Exhibit J remains in full force and effect and is hereby expanded to include the applicable Expansion Premises, as and to the extent same is included within the Premises as provided herein. For the avoidance of doubt, in the event that Tenant exercises its option to extend the Term of the Lease in accordance with this Section 10, Tenant’s Renewal Option as outlined in the Lease as Exhibit J shall apply at the end of the Term as extended hereby; provided, however, that such Exhibit J is hereby amended as follows:

a. The phrase “Tenant is occupying the entire Premises” in the first line of the first textual paragraph of Exhibit J is hereby deleted and replaced with the following phrase: “Tenant itself, or a Permitted Transferee, is occupying at least fifty percent (50%) all of the Premises then demised to Tenant”;

b. The sentence “In no event shall the Basic Rent payable for each month of the extended Term be less than the Basic Rent for the last twelve (12) months of the initial Term of the Lease.” is hereby deleted in its entirety;

c. The time limit for Tenant to respond to Landlord’s determination of the Prevailing Rental Rate shall be extended from “ten (10) days” to “fifteen (15) days”;

d. For avoidance of doubt, the language “pursuant to Section 10.G” in Subsection (2) of the last textual paragraph of Exhibit J shall be deemed to mean Section 10.G as amended by this Eighth Amendment (e.g., to include the expanded definition of Permitted Transferee); and

e. Subsection (4) of the last textual paragraph of Exhibit J is hereby deleted and the word “or” is hereby moved to between Subsection (2) and (3).

11. Expansion Right. If at any time during the Term of the Lease, any portion of (a) the Building that is adjacent to (i.e., either horizontally or vertically) to any portion of the Premises (as it then exists and has been delivered to Tenant or which is scheduled to be delivered to Tenant in the future in accordance herewith) or (b) the fifth (5th) floor of the Building, or (c) the 9,080 rentable square feet of space located on the sixth (6th) floor of the Building currently soon to be vacated by the current tenants thereof (the “Sixth Floor Space”), becomes “available for occupancy” (as defined below) and which Landlord intends to lease to a third party (the “Available Space”), Landlord shall give written notice to Tenant thereof, describing the Available Space and the terms upon which Landlord proposes to lease such space, including the Basic Rent and other material business terms (as defined in Exhibit J mutatis mutandi) (“Available Space Notice”), subject and subordinate to all of the prior rights of other tenants (and initial prospective tenants of the Sixth Floor Space as provided below) of the Building as provided below. Notwithstanding the definition of “available for occupancy” below, the Sixth Floor Space cannot be deemed “available for occupancy” until after Landlord’s lease up of the Sixth Floor Space, to one or more prospective tenants, after the current tenants vacate. Tenant shall have fifteen (15) days after receipt of the Available Space Notice in which to elect to lease the Available Space subject to the Notice, on the terms hereinafter set forth, by written notice to Landlord. Notwithstanding the foregoing, if there are then at least forty-eight (48) months remaining in the Term, as the same may be extended, the lease of the Available Space shall be co-terminus with the Term of the Premises, with the benefit of the same option to extend set forth in Section 10 above; provided that the Net Effective Rent (as defined below) is equivalent (or made equivalent) to the Net Effective Rent of the terms set forth in the Available Space Notice. If Tenant fails to make such election within such fifteen (15) day period, Tenant shall be conclusively presumed to have rejected such offer, in which event Landlord shall be free, at any time

 

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thereafter, to let the applicable Available Space as Landlord deems fit, provided however that after the date that is six (6) months following Tenant’s rejection or deemed rejection, as the case may be, of Landlord’s offer, if the applicable Available Space is still “available for occupancy”, Landlord must again first offer the space to Tenant in accordance with this Section 11. Tenant acknowledges and agrees that its rights hereunder are and shall be subject and subordinate to any extension rights, expansion rights, options to lease or any rights of first negotiation, first offer or first refusal to lease granted to other tenants or occupants of the Building prior to the date of execution and delivery of this Eighth Amendment (including any rights contained in Landlord’s first lease up of the Sixth Floor Space to one or more prospective tenants), or to the terms of any leases, including extension and expansion rights, existing prior to the execution and delivery of this Eighth Amendment, and to Landlord’s right to extend the lease term with (x) Dana-Farber Cancer Institute, Inc., or its successors or assigns, and/or (y) InviCRO, LLC, or its successors or assigns even if such extension right is not expressly granted in either such lease (excluding in all events the Expansion Premises). This first opportunity to let shall not apply to any time in which (a) Tenant is in default of the Lease beyond applicable notice and cure periods, or (b) that Tenant itself, or a Permitted Transferee, is not occupying fifty percent (50%) of the Premises then demised to Tenant (except for periods of casualty, restoration or remodeling). If Tenant elects to lease the Available Space, it shall be on the same terms set forth in the Lease, except that (i) the Basic Rent payable by Tenant for the Available Space shall be the Prevailing Rental Rate (as defined in Exhibit J mutatis mutandi), (ii) Tenant’s Proportionate Share shall increase in accordance with the rentable square feet of the Available Space, and (iii) it is understood and agreed that the Available Space shall be leased by Tenant in the condition set forth in the Available Space Notice or as otherwise determined by the parties to reflect the Net Effective Rent in the event of Tenant’s exercise hereunder. TENANT SPECIFICALLY ACKNOWLEDGES AND AGREES THAT THE FIRST OPPORTUNITY TO LET PROVIDED HEREIN IS NOT INTENDED AS, NOR SHALL THE SAME BE INTERPRETED OR CONSTRUED TO BE, A RIGHT OF FIRST REFUSAL. Tenant acknowledges that its expansion rights under this Section 11 is in lieu of any other expansion rights contained in the Lease or any amendment prior hereto and that Tenant has no other expansion rights with respect to the Building. Notwithstanding the fact that, upon Tenant’s exercise of the option hereunder, such exercise shall be self-executing, as aforesaid, but to confirm the inclusion of the subject Available Space as set forth above, Landlord shall prepare, and Tenant and Landlord shall promptly execute and deliver, a reasonably satisfactory amendment to the Lease reflecting the foregoing terms and incorporation of any Available Space. For the purposes hereof, space shall be deemed “available for occupancy” when any lease or occupancy agreement for any Available Space has expired (including extension periods) or is due to expire within not less than six (6) months (provided Landlord shall not send an Available Space Notice more than eighteen ( 18) months prior to the anticipated delivery date of the Available Space), or Landlord has elected not to renew the lease of the present tenant, and any prior options, rights or rights to lease with respect to such Available Space have expired or been waived, or with respect to Available Space that is being re-offered as provided herein, such space is not subject to then current negotiations which may include, without limitation, an exchange of letters of intent, offers, or the like, and Landlord has decided to and is free to lease such space to third parties without restriction. If Tenant fails to timely exercise any of its rights hereunder, the right(s) granted hereunder as to the applicable Available Space shall be deemed waived for all purposes, and Landlord may lease the applicable Available Space to any party and upon any terms free of any rights of Tenant provided however that the Net Effective Rent is not less than ninety-five percent (95%) of the Net Effective Rent offered to Tenant in the Available Space Notice, and provided further that after the six (6) month anniversary of Tenant’s rejection or deemed rejection, as the case may be, of Landlord’s offer, if the applicable Available Space is still “available for occupancy”, Landlord must again first offer the space to Tenant in accordance with this Section 11. Tenant, following such waiver and within seven (7) business days of Landlord’s request therefor, shall execute and deliver to Landlord a certification, in recordable form, confirming the waiver of such right, and Tenant’s failure to so execute and deliver such certification within such 7-business day period shall (without limiting Landlord’s remedies on account thereof) entitle Landlord to execute and deliver to any third party, and record, an

 

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affidavit confirming the waiver, which affidavit shall be binding on Tenant and may be conclusively relied on by third parties as to such waiver or failure. As used herein, “Net Effective Rent” shall mean the “bottom line” or “net effective” cost per rentable square foot for the applicable Available Space under the original Available Space notice (or applicable space being compared), determined by considering all of the economic terms of the proposals, respectively, including, among other relevant factors, the fixed rent, the tax and expense payments and escalations, the additional rent, any free rent periods, and any other concessions and allowances all as prorated over the applicable terms of the proposed terms contained in the offer(s).

12. Intentionally Omitted.

13. Assignment and Subletting. Notwithstanding anything to the contrary contained in Section 10 of the Lease entitled “Assignment and Subletting”:

a. with respect to a request for Landlord’s consent to a subletting of all or any portion of the Eighth Expansion Premises, it shall not be reasonable for Landlord to withhold consent to any requested sublease made within two (2) years of the Eighth Expansion Premises Commencement Date solely on the basis that (i) there is other suitable space in the Building or (ii) that such proposed subtenant is a current occupant of the Building;

b. with respect to a request for Landlord’s consent to a subletting of all or any portion of the Eleventh Expansion Premises, the Twelfth Expansion Premises or the Thirteenth Expansion Premises it shall not be reasonable for Landlord to withhold consent to any requested sublease therefor made prior to the later of the Eleventh Expansion Premises Commencement Date, Twelfth Expansion Premises Commencement Date or Thirteenth Expansion Premises Commencement Date solely on the basis that (i) there is other suitable space in the Building or (ii) that such proposed subtenant is a current occupant of the Building; and

c. the term “Affiliate” in Subsection (g)(1) of Section 10 of the Lease shall include any entity which controls or is controlled by Tenant or is under common control with Tenant or to an entity that owns or controls 50% or more of the voting stock, beneficial interests, partnership interests, membership interests or other ownership interests in Tenant or such lesser amount constituting a controlling interest in any such entity so long as in any such instance such entity’s Tangible Net Worth (when combined with Tenant (so long as Tenant remains liable hereunder) is not less than the Tangible Net Worth of Tenant as of the date of the Eighth Amendment to Lease:

d. Subsection (g)(3) of Section 10 of the Lease shall include the term”, joint venture partner” after the term “limited liability company”.

e. The following Subsection (h) is added to Section 10 of the Lease:

f. “(h) Notwithstanding the foregoing or any other provision of this Lease, Tenant may permit any corporation, limited partnership, limited liability partnership, joint venture partner, limited liability company or other business entity with which Tenant has a formal business relationship in the ordinary course of Tenant’s business to occupy a portion of the Premises constituting not more than twenty-five percent (25%) of the Premises in the aggregate without the approval of, but upon reasonable prior notice to, Landlord. Any such business entity occupying the Premises in accordance herewith shall be deemed to be a Permitted Transferee for purposes of the Lease and any such use or occupancy shall be subject to all of the terms and conditions of this Lease.”

 

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14. Chemical Storage. Notwithstanding anything in the Lease to the contrary, Tenant shall have the right to use its proportionate share of chemical storage capacity for each floor of the Building on which a portion of the Premises is located. Tenant’s proportionate share of chemical storage capacity shall be based on Tenant’s applicable portion of Premises per share of the Building floor in relation to the chemical storage capacity on such floor and Tenant acknowledges and agrees that Tenant’s chemical storage areas shall be located within the applicable portions of the Premises.

15. Control Areas. From and after the Eighth Expansion Premises Commencement Date, Tenant shall be entitled to one (1) Control Area on the first (1st) floor of the Building, two (2) Control Areas on the second (2nd) floor of the Building increasing to three (3) Control Areas from and after the later of the Eleventh Expansion Premises Commencement Date, Twelfth Expansion Premises Commencement Date or Thirteenth Expansion Premises Commencement Date, and one (1) Control Area on the third (3rd) floor of the Building. Each Control Area shall be established, maintained and used by Tenant in accordance with, and shall be subject to, all of the terms and conditions of the Lease and in compliance with all applicable Jaws, rules, regulations, codes and requirements. For purposes hereof, “Control Area” shall mean Control Area as defined in and in compliance with the Massachusetts Building Code.

16. Emergency Generator Capacity: New Electrical Service Work.

a. From and after the Eighth Expansion Premises Rent Commencement Date, Tenant shall have the right to access to no less than five (5) watts of emergency generator stand-by capacity per square foot of the Premises (from time to time) from the emergency generator serving the Building provided Landlord shall have the right to reasonably limit and allocate Tenant’s utilization of and access to the emergency generator capacity in equitable proportion to percentage that the total rentable area of the Premises dedicated to laboratory use (not to exceed 50% of the Premises) bears to the total rentable area of the Building, from time to time, along with using and reserving certain generator capacity for present and future Building operations. Tenant shall be responsible, at Tenant’s sole cost and expense and in accordance with the terms and conditions of the Lease, for all work associated with all connections, including, but not limited to, circuit breaker, automatic transfer switch (ATS), disconnect, normal service feed, tenant panels, generator control (start) circuit, transformers, conduits, wiring, etc., to the generator power connection located at the Base Building Panel located within one of the Building electrical rooms with the location to be determined by Landlord.

b. No later than the Seventh Expansion Premises Commencement Date, Landlord shall deliver (or have delivered) as part of Landlord’s Delivery Work, using the current electrical service of the Building (“Existing Electrical Service”), no less than 24.85 watts per square foot of the Seventh Expansion Premises. On or about October 1, 2018, Landlord shall deliver (or have delivered) to the Building’s first floor Electrical Room (as approximately shown on Exhibit F) as part of Landlord’s Delivery Work new electrical service to provide 2,500 amp, three-phase, 480 volt service (“New Electrical Service”) providing no less than 24.85 watts per square foot across the entire Expansion Premises demised hereunder. For each day from and after December 1, 2018 that the New Electrical Service is not delivered, Basic Rent for the Seventh Expansion Premises shall be reduced by fifty percent (50%) applicable to the Seventh Expansion Premises until the New Electrical Service is delivered to Tenant. Tenant shall be responsible, at Tenant’s sole cost and expense, subject to any applicable earned but unused allowances including any applicable Eighth Amendment Expansion Allowances, and in accordance with the terms and conditions of the Lease, for all work associated with connecting and bringing the New Electrical Service to each Expansion Premises including, but not limited to, riser and panel work and all associated wiring, cabling and appurtenances in connection therewith. Tenant shall be responsible, at Tenant’s sole cost and expense, subject to any applicable earned but unused allowances including any applicable Eighth Amendment Expansion Allowances, and in accordance with the terms and conditions of the Lease, for delivering and

 

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distributing same within each Expansion Premises including, but not limited to, riser and panel work and all associated wiring, cabling and appurtenances in connection therewith and all work relating to the disconnection of the Existing Electrical Service to each Expansion Premises within five (5) months following the applicable Expansion Premises Commencement Date, provided, however, the connection of the Seventh Expansion Premises to the New Electrical Service and disconnection of the Existing Electrical Service thereto shall be completed within five (5) months following the Eighth Expansion Premises Commencement Date. Tenant has submitted and Landlord has approved Tenant’s plans entitled “Proposed Ginkgo Section Setup in New 4000A Switchboard” dated “2-15-2018” for incorporating the following switchboard disconnects as part of Landlord’s Delivery Work: one 1600 AMP, one 1000 AMP, one 800 AMP and two 400 AMP disconnects. Any and all actual, reasonable costs incurred in the design, purchase and installation of said disconnects shall be at Tenant’s sole expense and shall be deducted from the any then earned, accrued and available Eighth Amendment Allowance applicable thereto following, presentation of an invoice to Tenant itemizing such costs.

17. Parking. Tenant is currently entitled to a license to use certain parking spaces in accordance with Exhibit H to the Lease. From and after the applicable Expansion Premises Rent Commencement Date, Tenant shall be entitled to a license to use additional parking spaces based on the ratio of 1 parking space per 3,800 rentable square feet of space in the applicable Expansion Premises, subject to the terms of said Exhibit H. The parking space provided hereunder shall be located in the exterior lots “S” and/or “P” controlled by Landlord or as otherwise reasonably designated by Landlord from time to time.

18. Exterior Signage. On the conditions, which conditions Landlord may waive, at its election, by written notice to Tenant at any time, that Tenant is not in default of its covenants and obligations under the Lease beyond and applicable notice and cure period, and that Tenant has not assigned the Lease or subleased more than twenty-five percent (25%) of the Premises then demised to Tenant, other than to one or more Permitted Transferees (or in the case of Storefront Signage only, Tenant or one or more Permitted Transferees is occupying Premises located on the first floor), Tenant shall have the right, at its sole cost and expense, to maintain three (3) signs adjacent to the three bays adjacent to the Premises so occupied (and upon such occupancy) on the first floor of the Building on the so-called storefront of the Building each in the areas as generally shown on Exhibit C attached hereto (not to scale) (“Storefront Signage”) and the right to maintain, at Tenant’s option, either (a) two (2) so-called blade signs on the exterior portion of the Premises on the first floor of the Building, in two (2) areas as generally shown on Exhibit C attached hereto (not to scale) or (b) one (1) banner sign comparable in size to the current Autodesk sign at 23 Drydock Avenue as generally shown on Exhibit C attached hereto (not to scale), for the purpose of identifying Tenant (together with Storefront Signage, “Building Signage”), which Building Signage (including actual location, size, design, logo, color(s) and degree of illumination, if any) shall be subject to the prior written approval of Landlord (such approval not to be unreasonably withheld, conditioned or delayed so long as same is not otherwise inconsistent with the character and quality of the Building as a first class building, except as to actual location and size which shall be at Landlord’s sole but good faith discretion), and installed and maintained in compliance with all applicable laws, restrictions, codes and regulations. In the event Tenant has assigned the Lease or subleased more than twenty-five percent (25%), but not more than fifty percent (50%) of the Premises then demised to Tenant, other than to one or more Permitted Transferees, the number of blade signs allocated to Tenant shall be reduced from two (2) to one (1) blade sign. If necessary, Tenant shall be responsible for obtaining and maintaining all necessary permits and approvals for such signage (and shall promptly deliver copies of such permits and licenses to Landlord upon request), along with all actual out of pocket costs and expenses incurred by Landlord in connection therewith (including any taxes or assessments thereon and the cost of providing and maintaining electrical service thereto) and Landlord shall reasonably cooperate (at no cost to Landlord) with Tenant in connection with obtaining such permits and approvals. Tenant shall pay such amounts within thirty (30) days of Landlord’s invoice therefor. At the

 

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expiration or earlier termination of the Lease, or in the event the Tenant has assigned the Lease or subleased more than twenty-five percent (25%) or fifty percent (50%), as the case may be, of the Premises then demised to the Tenant (except for periods of casualty, restoration or remodeling), Landlord shall have the right, at Tenant’s sole cost and expense, to remove Tenant’s Building Signage (or simply “de-identify” same) and repair and restore the Building to the same or better condition existing prior to such installation, or at Landlord’s election, Landlord shall require Tenant to so repair or restore. All signs, decorations, advertising media, etc., including the Building Signage, shall be kept in first class condition and in good operating order and repair by Tenant at all times. If Tenant fails to maintain, repair or replace any of its signs, decorations, advertising media, etc. as specified above, and such failure continues for a period of thirty (30) days following receipt of notice from Landlord (which may be the so-called “default” notice required under the Lease), Landlord shall have the right to perform such maintenance, repair and replacement at Tenant’s sole expense.

19. Roof Rights; Exterior and other Shaft Rights. a. Tenant shall have the non-exclusive right, at no additional charge, to install, operate and maintain, all in good order and repair, Roof-top equipment and related mechanical or electrical equipment, conduits, cables, transmitters, receivers, computer and voice processing equipment, and similar roof-top equipment (collectively, “Roof-top Equipment”) on a portion or portions of the roof of the Building (“Roof”) as approximately shown as “Proposed Ginkgo Area” and “Assumed Ginkgo Re-Use” either on Exhibit D-1 (in the event Tenant is provided with the interior shaft space pursuant to Subsection g below) or Exhibit D-2 (in the event Tenant is not provided with the interior shaft space pursuant to Subsection g below), as applicable, attached hereto (as the case may be, the “Tenant’s Roof-top Area”) or as otherwise provided herein in compliance with all of the terms and conditions of this Lease, but not limited to Section 14 of the Fifth Amendment, Article 8 of the Lease, the Master Lease, including without limitation Articles 9 and 24 thereof, and the terms of this Amendment, and all of the specifications relating thereto as reasonably promulgated by and amended by Landlord from time to time and provided by notice to Tenant (the “Specifications”). Landlord shall deliver Tenant’s Roof-top Area to Tenant reasonably free and clear of any equipment not servicing the Premises. Tenant acknowledges and agrees that Tenant’s Roof-top Area granted hereunder is in lieu of and not in addition to any other roof rights granted under the Lease (including the Fifth Amendment) and that on or before December 31, 2018 Tenant shall yield-up and surrender the spaces shown on Exhibit D-1 and Exhibit D-2 as “Ginkgo Give-Back”; provided, however, that such yield-up and surrender shall be delayed by one (1) day for each day from and after October 1, 2018 that the New Electrical Service is not delivered to Tenant, subject to Landlord’s right to relocate any of Tenant’s equipment located in such area at an earlier time upon not less than sixty (60) days prior written notice to Tenant, which relocation shall be at Landlord’s sole cost and expense, without interruption of any service to Tenant, and accomplished in a manner reasonably acceptable to Tenant. In addition, Tenant acknowledges and agrees that the right granted to Tenant hereunder to use the Roof is a non-exclusive right (it being understood and agreed, however, that the right granted to Tenant hereunder to use Tenant’s Roof-top Area is an exclusive right, excluding rights to pass over same and other de minimis uses which do not materially interfere with Tenant’s use thereof, such as. by way of example, conduit passing over or through same). Tenant acknowledges that Landlord has the right to use and reserve Roof-top(s) and other Building utility space for future Building operations and other uses and operations. Tenant shall only use Roof-top Equipment for Tenant’s use in the Premises. No person or entity other than Tenant (or a Permitted Transferee or other permitted occupant, subtenant, successor or assign) shall have the right to use the Roof-top Equipment. Pursuant to the terms and conditions hereof, Tenant shall have the right to use the Roof provided the same shall be delivered in “as-is”, “where-is” condition without any representation or warranty, express or implied, and without any obligation for Landlord to perform any work in connection with Tenant’s use thereof or provide services for the same, except as otherwise expressly set forth herein.

 

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b. Upon reasonable prior notice (except in the event of an emergency in which case notice shall be given as soon as reasonably practicable), Landlord shall have the right, to be exercised in good faith, to require Tenant to relocate the Roof-top Equipment from time to time, (subject to Subsection d below as to that Roof-top Equipment properly installed in order to avoid relocation) at Tenant’s sole cost and expense (if due to Landlord’s good faith repairs and maintenance, but otherwise at Landlord’s cost and expense) to an alternative location on the Roof or in the Building selected by Landlord in its reasonable discretion provided that the same provides substantially the same level of utility, function and benefit to Tenant; provided, however, Landlord shall not require Tenant to so relocate its Roof-top Equipment at Tenant’s cost for purposes benefiting another Building tenant or occupant. Except as may be expressly provided herein, Landlord makes no representation or warranty to Tenant that the mechanical space or Roof or other Building utility space will be satisfactory to Tenant, provided Landlord shall use commercially reasonable efforts to assist Tenant to locate a satisfactory location in the mechanical space and on the Roof. Prior to installing or replacing any Roof-top Equipment, Tenant shall submit to Landlord plans and specifications for the installation thereof prepared by a licensed engineer reasonably satisfactory to Landlord (the “Roof Plans”) which Roof Plans shall be subject to the prior reasonable approval of Landlord (including, but not limited to, location, size, design, and method of attachment to the Building of the Roof-top Equipment shown thereon), which approval shall be granted or denied within fourteen (14) business days of Tenant’s submission of such complete plans and specifications, along with all requested information relating thereto reasonably requested by Landlord in a written notice to Tenant given within seven (7) business days of Tenant’s submission of such plans and specifications. The Roof Plans shall be consistent with the Specifications, any applicable rules and regulations, and otherwise reasonably satisfactory to Landlord, and shall show the location of the installations of the Roof-top Equipment, any structural requirements and installations, and all related equipment and components on the Roof or Building utility space, the location and type of all piping, conduit, wiring, cabling, the manner in which same will be placed in or on and fastened to the mechanical space, Roof or Building utility space and any other information requested by Landlord, in Landlord’s reasonable discretion. Landlord shall have the right to require that any Roof-top Equipment not be visible in a material manner from any location on the ground in the immediate vicinity of the Building and/or that all such Roof-top Equipment be screened and sound attenuated in a manner satisfactory to Landlord, in each case in Landlord’s reasonable discretion and as may be required by applicable legal requirements and that all Roof-top Equipment be installed in such a way so as to allow maintenance and repairs to the Roof (or other Building utility space) from time to time, all in Landlord’s reasonable discretion. Landlord shall have the right to employ a third party engineer or other consultant to review the Roof Plans and the reasonable, actual out-of-pocket cost of such engineer or consultant shall be paid by Tenant to Landlord within thirty (30) days after Landlord’s bill to Tenant therefor in reasonable detail. After Landlord has approved the Roof Plans and prior to installing any Roof-top Equipment and any related equipment, wiring, conduit, piping, or cabling, Tenant shall obtain and provide to Landlord: (i) all required governmental and quasi-governmental permits, licenses, special zoning variances and authorizations, as required by applicable laws, rules, ordinances, regulations and restrictions, all of which Tenant shall obtain at its own cost and expense (but with Landlord’s reasonable cooperation); and (ii) a policy or certificate of insurance evidencing such insurance coverage as may be reasonably required by Landlord. Any alteration or modification of the Roof-top Equipment or any associated piping, conduit, wiring, cabling, equipment after the Roof Plans have been approved shall require Landlord’s prior written approval, which shall not be unreasonably withheld, conditioned or delayed.

c. Installation and maintenance of the Roof-top Equipment or any associated structural work, piping, conduit, wiring, cabling, equipment shall be performed solely by contractors approved by Landlord, in its reasonable discretion. Landlord may require Tenant to use a roofing contractor selected by Landlord to perform any work that could damage, penetrate or alter the Roof and an electrician selected by Landlord to install any associated piping, conduit, wiring, cabling, equipment on the Roof or in the Building. Tenant shall bear all costs and expenses incurred in connection with the installation,

 

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operation, maintenance, repair and/or removal of the Roof-top Equipment installed by or on behalf of Tenant and Tenant agrees that Landlord shall not be responsible for, and, to the maximum extent this agreement may be made effective according to law (including the limitations set forth in M.G.L. c. 186, §15), but subject to Tenant’s insurance requirements under the Lease and Section 11(b) thereof, Tenant shall release, defend, indemnify and save Landlord harmless against and from any liability, loss, cost, expense, injury, damage, claim or suit resulting directly or indirectly from the aforesaid installations, use of the Roof and the use, operation and/or removal of any of the Roof-top Equipment and, if applicable, any Additional Roof-top Equipment, and this indemnity and release shall survive the termination of this Lease and Tenant acknowledges and agrees that the foregoing limitations and/or restrictions shall not give rise to any right to terminate this Lease or any claim of breach of Landlord under this Lease or any claim for damages against Landlord or Landlord’s Agents at law or equity, including injunctive relief.

d. Tenant acknowledges that Landlord may decide, in its reasonable discretion, from time to time, to repair or replace the Roof (hereinafter “Roof Repairs”). Tenant is encouraged to design, install and maintain the Roof-top Equipment in a manner that allows for Landlord to conduct Roof Repairs without any removal thereof being required (e.g., using adequately framed, reinforced, sealed and elevated dunnage and/or roof framing) and Landlord shall reasonably cooperate with Tenant to accomplish this. If Tenant fails to design, install and maintain the Roof-top Equipment in a manner that allows for Landlord to conduct Roof Repairs without any removal thereof being required and Landlord elects to make Roof Repairs that will in Landlord’s good faith determination require Tenant to temporarily relocate its Roof-top Equipment on the Roof, Tenant shall, upon Landlord’s request and reasonable notice and at Tenant’s sole cost and expense, temporarily relocate the Roof-top Equipment so that the Roof Repairs may be completed; Landlord and Tenant shall use good faith efforts to cooperate in connection with such temporary relocation in order to minimize or mitigate the effect thereof on Tenant’s business operations. The cost of removing and reinstalling same shall be paid by Tenant unless required notwithstanding the fact that same was designed, installed and maintained in a manner that allows for Landlord to conduct Roof Repairs without removal. Landlord acknowledges and agrees that Landlord has no right to require any existing Roof-top Equipment installed on dunnage on that portion of East side of the Roof (i.e., 27E) as of the date hereof to be relocated. To the maximum extent this agreement may be made effective according to law (including the limitations set forth in M.G.L. c. 186, §15), but subject to Tenant’s insurance requirements under the Lease and Section 11(b) thereof, Landlord shall not be liable to Tenant for any losses, liability, injury, damages, claim, suit, lost profits or other costs or expenses of any kind whatsoever incurred by Tenant, or any invitee, licensee or agent of Tenant as the result of the Roof Repairs.

e. At the time of Landlord’s review and approval therefor, Landlord shall advise Tenant of what, if any, Roof-top Equipment and associated conduit, wiring, cabling, and equipment relating thereto that Tenant shall be required to remove, otherwise all such Roof-top Equipment and associated conduit, wiring, cabling and equipment shall be left in place upon the expiration or termination of the Lease, subject to the terms hereof. Landlord’s determination as to such removal at the time of its review and approval shall be based on Landlord’s good faith judgment as to, without limitation, whether such Roof- top Equipment is of a type, nature, quality and/or quantity that would have use and applicability to other laboratory tenants of the Building (and/or the Building in general) and/or same would require unusual expense to remove and/or re-adapt the Premises or Building upon its ultimate removal. With respect to that Roof-top Equipment that Tenant is to leave in place, such Roof-top Equipment shall be (i) in, and have been maintained in, good working order and condition and not otherwise obsolete or beyond its reasonably life expectancy, and (ii) of a nature, level of performance and efficiency, and demand for the then current uses and occupants of the Building, in which event Tenant shall transfer all right, title and interest in and to same to Landlord (or nominee), free and clear of all liens and encumbrances, along with all manuals, operating material and logs relating thereto upon expiration of the Term or other termination of the Lease. In addition, Landlord shall have the right, upon written notice to Tenant prior to removal, to

 

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require Tenant to leave in place upon expiration or other termination of the Term any Roof-top Equipment that Landlord had previously requested Tenant to remove. In the event that such Roof-top Equipment does not, in Landlord’s good faith determination, satisfy the foregoing conditions, Landlord may require Tenant to remove such Roof-top Equipment and associated conduit, wiring, cabling, equipment, and repair and restore any damage resulting from such removal upon the expiration or termination of the Lease. In addition, with respect to any Roof-top Equipment that Tenant is to remove, Tenant shall have the right, subject to Landlord’s prior written approval, not to be unreasonably withheld, to arrange for another tenant or occupant of the Building to agree to use such equipment and assume Tenant’s obligations to remove hereunder in writing reasonably satisfactory to Landlord, and to repair any damages caused thereby, at Tenant’s sole cost and expense. If Tenant is required hereunder to, but does not, remove same on or before the date this Lease terminates or expires, Tenant hereby authorizes Landlord to remove and dispose of same and associated conduit, wiring, cabling, equipment, and Tenant shall promptly reimburse Landlord for the reasonable costs and expenses it incurs in removing and disposing of same and repairing any damages caused thereby. To the extent not removed by Tenant, Tenant agrees that Landlord may dispose of the Roof-top Equipment, any Additional Roof-top Equipment and any associated conduit, wiring, cabling, and equipment in any manner selected by Landlord.

f. Tenant’s right to operate and maintain the Roof-top Equipment hereunder shall automatically expire and terminate on the date that the Term of the Lease expires or is otherwise terminated. This right to operate and maintain any Roof-top Equipment shall be suspended, at Landlord’s option, if any of the following continue for more than five (5) business days after written notice from Landlord to Tenant (or such longer period as is reasonable under the circumstances and proportionate to the interference or damage or interference being caused and so long as Tenant is diligently pursuing a cure): (a) the Roof-top Equipment is causing physical damage to the Building or the Roof, or (b) the Roof-top Equipment is causing Landlord to be in violation any local, state or federal law, regulation or ordinance; provided, Tenant shall have the right to remedy any of the foregoing circumstances to ensure the cessation of damage, or violation, as the case may be, to Landlord’s reasonable satisfaction and with Landlord’s reasonable cooperation (at no additional cost or liability thereto) and thereupon Tenant may resume such use. Notwithstanding the foregoing, Landlord may suspend such right prior to the expiration of the five (5) business day period (as extended) but after notice (which may be oral) to Tenant under any of the following circumstances: (x) if necessary to prevent civil or criminal liability of in connection therewith; (y) if necessary to prevent an imminent and material interference of the conduct of business in the Building; or (z) if necessary to prevent injury to persons or imminent and material damage to the Building, Roof, other Building utility space or other property therein (which shall include but not be limited to damage to or leaking of the roof membrane).

g. Tenant shall have the exclusive right to use those portions, if any, of shaft space obtained for Tenant by Landlord in the shaft areas shown on Exhibit E-1 hereto annexed. In addition, (i) if Landlord is able to obtain all such shaft space indicated on Exhibit E-1, Tenant shall have the non-exclusive right to install up to two (2) additional exterior ducts and related equipment, based on Tenant’s Improvements provided herein, on the rear exterior of the Building with one (I) exterior duct located as approximately shown on Exhibit E-2 hereto attached and one (1) exterior duct located at a mutually agreeable location on the rear exterior of the Building; or (ii) if Landlord is unable to obtain such shaft space indicated on Exhibit E-1, Tenant shall have the non-exclusive right to install up to four (4) exterior ducts and related equipment, based on Tenant’s Improvements provided herein, on the rear exterior of the Building with three (3) exterior ducts located as approximately shown on Exhibit E-3 hereto attached and one (1) exterior duct located at a mutually agreeable location on the rear exterior of the Building within the area shown on Exhibit E-3 (with such exterior ducting, either as set forth in Subsection (i) or (ii) hereinabove being the “Exterior Ducting”). In the event Tenant elects to terminate the obligation to take the Twelfth Expansion Premises or the Thirteenth Expansion Premises as set forth in Section 2f above, then Tenant’s right to the interior dueling shown on Exhibit E-1 shall be reduced proportionately (based

 

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on the reduction in square footage) so long as Tenant has not already constructed and commenced use of same and the Exterior Ducting provided hereunder shall be reduced to one (1) Exterior Duct in the location as approximately shown on Exhibit E-2 as to subsection (i) above, or to three (3) Exterior Ducts with two (2) Exterior Ducts in two (2) of the locations as approximately shown on Exhibit E-3 and one (1) Exterior Ducting at a mutually agreeable location on the rear of the Building. The Exterior Ducting, if any, shall be subject to the prior written approval (including, without limitation, actual location, size, method of attachment, etc.) of Landlord (such approval not to be unreasonably withheld, conditioned or delayed so long as same is not otherwise inconsistent with the character and quality of the Building as of the date of such work), except as to actual location which shall be as set forth herein. Tenant’s right to install, maintain and operate such Exterior Ducting is non-exclusive (provided that the use of the Exterior Ducting installed by Tenant to serve the Premises shall be exclusive to Tenant) and shall be exercised in accordance with all of the terms and conditions of the Lease as amended hereby and, for the purposes of installation, operation, maintenance thereof shall be treated as Roof-top Equipment and subject to the provisions hereunder, mutatis mutandi. In addition, upon the installation of the New Electric Service, Tenant shall have the right to build an elevated platform (the “Platform”) above the approximately 5’ × 29’ concrete pad (the “Pad”) currently serving the tenant of the Tenth Expansion Premises, which size shall be subject to the requirements of the utility company for the New Electric Service and to the approval of Landlord as required herein and in the Lease (and to approval under the Master Lease) as to Tenant’s Improvements. The Platform will accommodate Tenant’s additional equipment and related conduits, cables and the like (and be subject to Landlord’s approval thereof as required herein and in the Lease (and to approval under the Master Lease) as to Tenant’s Improvements), provided that the same does not materially interfere with Landlord’s installation of the New Electrical Service or the then use of the Pad or any of the equipment located on the Pad. The Platform shall be no larger than the Pad and shall be subject to approval of the electrical utility company. In the alternative, so long as Tenant has not constructed the Platform and to the extent all of the Pad is not required to accommodate the installation or operation of the New Electrical Service, then upon the delivery of the Tenth Expansion Premises Commencement Date, Tenant shall have the right to use the Pad, or that portion thereof not required by the utility company, to accommodate Tenant’s additional equipment and related conduits, cables and the like to serve lower floors located in the Premises subject to Landlord’s approval thereof as required herein and in the Lease (and approval under the Master Lease) as to Tenant’s Improvements). If not required by Landlord as aforesaid, the Pad (or applicable portion thereof) shall be made available to Tenant in its then as-is, where-is condition without any representation or warranty, expressed or implied, as to its condition, suitability or otherwise and without any obligation to perform any work relating thereto. In the event that Tenant uses the Pad and does not build the Platform, Landlord shall retain the right to build a Platform for its own purposes so long as the same does not materially interfere with Tenant’s use of the Pad or any of the equipment located on the Pad.

h. Any approval required under this Section 19 shall not be unreasonably withheld or conditioned but shall be subject to the installation, operation, maintenance, use, removal and other terms and conditions of the Lease, but not limited to Section 14 of the Fifth Amendment, Article 8 of the Lease, the Master Lease, including without limitation Articles 9 and 24 thereof. If Landlord fails to respond to Tenant for any request for approval within the time frames set forth in the Lease after Landlord’s initial receipt of such request therefor (along with such necessary information relating thereto), Tenant may send Landlord a second request for approval. If Landlord fails to respond to such second request for approval within seven (7) days after its receipt of same, then Landlord shall be deemed to have approved such request; provided that there appears in bold type on the exterior of the envelope containing Tenant’s second request, as well as on the top of the written request itself, the statement (in a reasonably large size font and in bold) that Landlord’s failure to respond to the request within seven (7) days after receipt thereof shall be deemed approval of the within request.

 

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20. Security Deposit. Upon the execution and delivery of this Eighth Amendment, the Security Deposit shall be increased to One Million Ninety-eight Thousand Four Hundred Eighty-five and 00/100 Dollars ($1,098,485.00) in the form of a clean, irrevocable letter of credit in the foregoing applicable amount reasonably satisfactory in form and content to Landlord and issued by an FDIC insured bank reasonably satisfactory to Landlord in favor of Landlord which shall be held pursuant to the terms and conditions of the Lease. Upon the delivery of such letter of credit, Landlord shall release to Tenant the cash Security Deposit in the amount of Four Hundred Forty-one Thousand and Eighty-eight and 00/100 Dollars ($441,088.00) already paid to Landlord by Tenant under the Lease. Upon the occurrence of the following Expansion Premises Commencement Dates, the Security Deposit shall be increased as follows:

 

Expansion Premises Commencement Date

   Security Deposit Increase  

Sixth Expansion Premises Commencement Date (per Seventh Amendment):

   $ 105,411.76  

Tenth Expansion Premises Commencement Date:

   $ 88,135.02  

Eleventh Expansion Premises Commencement Date:

   $ 74,772.41  

Twelfth Expansion Premises Commencement Date:

   $ 148,646.16  

Thirteenth Expansion Premises Commencement Date:

   $ 82.512.16  
  

 

 

 

TOTAL SECURITY DEPOSIT UPON FULL DELIVERY OF THE FOREGOING:

   $ 1,597,962.74  

Each increase shall be effected within thirty (30) days following the applicable Expansion Premises Commencement Date in the form of a clean, irrevocable letter of credit in the foregoing additional amount or aggregate amount (in which case Landlord shall promptly return the prior letter of credit upon receipt of replacement letter of credit) reasonably satisfactory in form and content to Landlord and issued by an FDIC insured bank reasonably satisfactory to Landlord in favor of Landlord which shall be held pursuant to the terms and conditions of the Lease. Notwithstanding any other provision in the Lease to the contrary, the amounts to be paid or delivered herein shall, upon such payment or delivery constitute the full amount of the Security Deposit required under the Lease and no further amounts shall be required with respect to the Security Deposit.

21. Successors; Conflicts. This Eighth Amendment shall be binding upon the parties and their respective successors and assigns. To the extent the terms and conditions of the Lease expressly conflict with or are expressly inconsistent with this Eighth Amendment, the terms and conditions of this Eighth Amendment shall control.

22. Brokers. Landlord and Tenant each represents and warrants to the other that it has not directly or indirectly dealt, with respect to this Eighth Amendment, with any broker or had its attention called to the applicable Expansion Premises or other space to let in the Building, etc. by anyone other than Columbia Group Realty Advisors and JLL. Landlord and Tenant each agrees to defend, exonerate and save harmless and indemnify the other and anyone claiming by, through or under the other against any

 

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claims for a commission arising out of the execution and delivery of this Eighth Amendment or out of negotiations between Landlord and Tenant with respect to the leasing of other space in the Building. Landlord is responsible for paying all fees to Columbia Group Realty Advisors and JLL pursuant to separate agreement(s) therewith.

23. Miscellaneous. Except as expressly modified herein, the Lease shall remain unmodified and in full force and effect. The provisions of this Eighth Amendment shall be binding upon and shall inure to the benefit of Landlord and Tenant and their respective legal representatives, successors and assigns. Any signature delivered by a party by facsimile or electronic transmission shall be deemed to be an original signature to this Agreement.

[Signature Page to Follow]

 

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IN WITNESS WHEREOF the parties hereto have executed this Eighth Amendment to Lease in multiple copies, each to be considered an original hereof, as a sealed instrument on the date first written above

 

LANDLORD:     TENANT:
RREF II DRYDOCK, LLC, a Delaware limited liability company     GINKGO BIOWORKS, INC., a Delaware corporation
By:  

/s/ Patrick Sweeney

    By:  

/s/ Barry Canton

Name:   Patrick Sweeney     Name:   Barry Canton
Title:   Its Authorized Signatory     Title:   Founder & Secretary Hereunto Duly Authorized

 

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Exhibit 10.27

NINTH AMENDMENT TO LEASE

This Ninth Amendment to Lease (“Ninth Amendment”) is executed as of the 6th day of September, 2018, by and between RREF II DRYDOCK, LLC, as landlord (“Landlord”), and GINKGO BIOWORKS, INC., as tenant (“Tenant”).

B A C K G R O U N D:

A. Reference is made to a certain Lease Agreement dated December 22, 2011 between, Landlord’s predecessor-in-interest, Zoom Group LLC (“Zoom”), and Tenant, as amended by, among other documents, that certain: (i) Commencement Date Agreement dated January 31, 2012; (ii) First Amendment to Lease Agreement dated April     , 2012; (ii) Second Amendment to Lease Agreement (and Side Letter) dated as of August 1, 2014; (iii) Third Amendment to Lease Agreement dated August 15, 2014; (iv) Fourth Amendment to Lease dated May 1, 2016; (v) Party Wall Access Agreement dated May 31, 2016 between Zoom, Tenant and Jamestown 21-23-25 Drydock, L.P.; (vi) Fifth Amendment to Lease dated May 31 , 2016 (“Fifth Amendment”); (vii) Sixth Amendment to Lease dated August 5, 2016; (viii) Seventh Amendment to Lease dated July 31 , 2017 (“Seventh Amendment”); and (ix) Eighth Amendment to Lease dated as of March 23, 2018 (“Eighth Amendment”) (collectively, the “Lease”) pursuant to which Tenant is leasing (and has additional rights to lease) from Landlord space within the Building, all as more specifically set forth in the Lease (the “Premises”). Capitalized terms not otherwise defined herein shall have the meaning ascribed to them in the Lease.

B. Landlord and Tenant are the current holders, respectively, of the lessor’s and lessee’s interests in the Lease.

C. Landlord and Tenant desire to amend the Lease in certain respects as provided herein.

A G R E E M E N T S:

NOW, THEREFORE, in consideration of the agreements set forth herein and other good and valuable consideration, the receipt and sufficiency of which are hereby acknowledged, Landlord and Tenant hereby agree, and amend the Lease, as follows:

1. Fourteenth Expansion Premises. From and after the Fourteenth Expansion Premises Commencement Date (as defined below), approximately 18,674 rentable square feet consisting of (a) 18,434 rentable square feet on the eastern half of the seventh (7th) floor of the Building (the “7th Floor Expansion Premises”), and (b) approximately 240 rentable square feet on the western portion of the first (1st) floor of the Building (the “Electrical Room Expansion Premises” and collectively with the 7th Floor Expansion Premises, the “Fourteenth Expansion Premises”), as outlined on the plan attached hereto and incorporated herein as Exhibit A-1, shall be deemed added to and incorporated into the Premises demised under the Lease.

2. Fourteenth Expansion Premises Commencement Date; Fourteenth Expansion Premises Rent Commencement Date. The anticipated delivery date of the Fourteenth Expansion Premises is October 1, 2018 (the “Anticipated Fourteenth Expansion Premises Commencement Date”), subject to delays caused by factors beyond the reasonable control of Landlord (which shall not include any financial difficulties of Landlord) or the holdover of the current tenant or occupant thereof. Landlord shall not be liable to Tenant, and Landlord shall not be in default, for any failure to deliver the Fourteenth Expansion Premises on any specified date; provided in no event shall Tenant be required to pay Basic Rent or Additional Rent (other than as specifically set forth below) on the Fourteenth Expansion Premises until five (5) months following the actual Fourteenth Expansion Premises Commencement Date (as defined

 

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below) (that five (5) month period being the “Fourteenth Expansion Premises Free Rent Period”), but Tenant shall be required to pay all electricity charges applicable to the Fourteenth Expansion Premises as required under Sections 4(c) and 7(b) of the Lease from and after the Fourteenth Expansion Premises Commencement Date. The actual “Fourteenth Expansion Premises Commencement Date” shall be the date of the delivery of the Fourteenth Expansion Premises to Tenant in accordance with the terms and conditions hereof. As used herein, the “Fourteenth Expansion Premises Rent Commencement Date” shall be the day following the expiration of the Fourteenth Expansion Premises Free Rent Period. Notwithstanding the foregoing, Tenant acknowledges that the Fourteenth Expansion Premises delivery hereunder is subject to the existing tenant agreeing to a voluntary termination or recapture of its space and its surrender of the Fourteenth Expansion Premises (“Existing Tenant Termination”). In no event shall Tenant be required to accept delivery of the Fourteenth Expansion Premises before the Anticipated Fourteenth Expansion Premises Commencement Date. In the event the Existing Tenant Termination does not take place on or before March 31, 2019, Landlord and Tenant shall each have the right to terminate this Amendment by not less than fifteen (15) days prior written notice to the other whereupon such termination this Amendment shall be of no further force or effect, unless the Existing Tenant Termination occurs within such fifteen (15) day period in which event the termination right hereunder shall be void and of no further force or effect. Notwithstanding anything to the contrary set forth herein, Tenant shall also have the right to terminate this Amendment by not less than thirty (30) days prior written notice to Landlord if Landlord fails to deliver the Fourteenth Expansion Premises to Tenant by March 31, 2019, whereupon such termination this Amendment shall be void and of no further force or effect; unless the delivery of the Fourteenth Expansion Premises is delivered as required herein within such thirty (30) day period in which event the termination right hereunder shall be void and of no further force or effect.

3. Delivery. Notwithstanding anything to the contrary contained in the Lease, Landlord shall deliver the Fourteenth Expansion Premises vacant and in broom-clean condition and with the applicable work, if any, set forth on Exhibit B attached hereto and as expressly provided in Section 12 below (“Landlord’s Delivery Work”) substantially completed at Landlord’s sole cost and expense in a good and workmanlike manner, but otherwise in “as is” condition, and without representation or warranty, express or implied, in fact or in law, by Landlord and without recourse to Landlord as to the nature, condition or usability thereof, except that Landlord shall cause any defect in the work to be repaired within one (1) year of the Fourteenth Expansion Premises Commencement Date. Tenant agrees that except for Landlord’s Delivery Work applicable to the Fourteenth Expansion Premises, if any, Landlord has no work to perform in or on the Fourteenth Expansion Premises Commencement Date therefor to prepare the Fourteenth Expansion Premises for Tenant’s use and occupancy, and that any and all work to be done in or on the Fourteenth Expansion Premises will be performed by Tenant at Tenant’s sole cost and expense in accordance with the terms of this Ninth Amendment (subject to Section 6 below). As of the Fourteenth Expansion Premises Commencement Date, the overall electrical capacity of the Fourteenth Expansion Premises then being delivered to Tenant hereunder shall be as provided in Section 12 below.

4. Expiration Date. The term for the Fourteenth Expansion Premises demised hereunder shall expire on January 31, 2030, unless the Lease is otherwise terminated or extended as provided therein.

5. Tenant Improvements. Tenant shall cause the substantial completion of all necessary or desirable construction and installations of all of Tenant’s improvements to the Fourteenth Expansion Premises in accordance with the provisions of the Lease, including but not limited to Section 14 of the Fifth Amendment, Article 8 of the Lease, the Master Lease, including without limitation Articles 9 and 24 thereof, and the terms of this Amendment (“Tenant’s Improvements”). In connection with any Tenant’s Improvements, Tenant agrees that it will not, either directly or indirectly, use any contractors and/or materials if their use will create any difficulty, whether in the nature of a labor dispute or otherwise, with

 

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other contractors and/or labor engaged by Tenant or Landlord or others in the construction, maintenance and/or operation of the Building or any part thereof. Landlord agrees that the following language included in any Certificate of Insurance delivered to Landlord in connection with the Lease is currently satisfactory and will be deemed approved by Landlord with respect to the naming of additional insureds if it names the parties in interest designated by Landlord (“Parties in Interest”) and reads substantially as follows: “[Parties in Interest] are included as Additional Insured on a primary non-contributory basis.” Landlord and Tenant shall reasonably cooperate in connection with scheduling and performing Tenant’s Improvements in the Fourteenth Expansion Premises to provide flexibility as to timing therefor so Tenant may perform same as expeditiously as practical so long as same does not unreasonably interfere with other tenants or the operation of the Building.

6. Payment of Costs for Tenant’s Improvements; Fourteenth Expansion Premises Allowance. Subject to the Fourteenth Expansion Premises Allowance set forth below, Tenant shall pay all of the costs and expenses of Tenant’s Improvements (including, without limitation, the costs of construction, the cost of permits and permit expediting, and all architectural and engineering services obtained by Tenant in connection therewith). Upon the Fourteenth Expansion Premises_Commencement Date, Landlord shall provide an allowance of up to $96.00 per rentable square foot of the Fourteenth Expansion Premises ($1, 792, 704.00) (the “Fourteenth Expansion Premises Allowance”). The Fourteenth Expansion Premises Allowance may only be used for hard or soft costs actually incurred by Tenant in connection with Tenant’s Improvements within the Fourteenth Expansion Premises demised hereunder; provided, however, that Tenant may use (a) up to fifty percent (50%) of the Fourteenth Expansion Premises Allowance to improvements made in connection with the western half of the eighth (8th) floor of the Premises, and (b) any or all portions of the Fourteenth Expansion Premises Allowance may be used for hard or soft costs actually incurred by Tenant in connection with Tenant’s Roof-Top Area, including Roof-Top Equipment, Exterior Ducting, interior ducting, and conduits, equipment and other infrastructure and materials required to exhaust or vent from, or connect electrical service and other utilities to, any of the Premises. No portion of the Fourteenth Expansion Premises Allowance may be used for Tenant’s furniture, fixtures, equipment, cabling and/or other personal property. Provided Tenant shall not then be in default of the Lease beyond applicable notice and/or cure periods, or there shall not then be occurring any circumstance or state of facts which, with notice or the passage of time or both, would result in a breach or default hereunder that is not cured within the applicable cure period, the payment of the applicable portion of the Fourteenth Expansion Premises Allowance shall be made to reimburse Tenant for amounts spent on Tenant’s Improvements within thirty (30) days following Tenant’s requisition therefor generally in accordance with Section 14(c) of the Fifth Amendment such that no more than fifty percent (50%) of that portion of the Fourteenth Expansion Premises Allowance corresponding to the cost of the Tenant’s Improvements within the Fourteenth Expansion Premises (or such other work as otherwise expressly provided above) will be paid upon satisfactory completion of all rough inspections by the City of Boston lnspectional Services Department for the work within the Fourteenth Expansion Premises (or such other work as otherwise expressly provided above), and the remaining fifty percent (50%) of that portion of the Fourteenth Expansion Premises Allowance corresponding to the cost of the Tenant’s Improvements within the Fourteenth Expansion Premises (or such other work as otherwise expressly provided above) will be paid within thirty (30) days following delivery to Landlord of (i) a final Certificate of Occupancy issued by the City of Boston Inspectional Services Department for the work within the Fourteenth Expansion Premises (or such other work as otherwise expressly provided above); and (ii) satisfactory lien waivers from all contractors and other satisfactory evidence that all contractors have been paid or will be paid in full for the work within the Fourteenth Expansion Premises (o or such other work as otherwise expressly provided above). Landlord shall have no obligation to advance any funds or pay any amounts on account of Tenant’s Improvements in excess of the Fourteenth Expansion Premises Allowance (excluding any allowances outstanding as of the date hereof under the Lease as previously amended) and in the event Tenant fails to request any portion of the Fourteenth Expansion Premises Allowance, pursuant to the terms and conditions hereof, within forty-two ( 42) months of the Fourteenth Expansion Premises Commencement Date, such unrequested portion of the Fourteenth Expansion Premises Allowance shall be forfeit and no longer available for request hereunder.

 

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7. Eighth Amendment Extension Allowance. In the event that Tenant exercises its option to extend the Term for three (3) years in accordance with Section 9(h) of the Eighth Amendment, the Extension Allowance provided therein shall be available on and after February 1, 2027 for any and all improvements made to those portions of the Premises as provided therein on or after March 1, 2024 until the end of the Term.

8. Confirmation Agreement. Landlord and Tenant agree to execute, upon the request of either party, a supplemental agreement confirming the Fourteenth Expansion Premises Commencement Date and Fourteenth Expansion Premises Rent Commencement Date after same are determined.

9. Basic Rent for the Fourteenth Expansion Premises. As of the Fourteenth Expansion Premises Rent Commencement Date, Tenant shall pay Basic Rent for the Fourteenth Expansion Premises, to Landlord, in the amounts set forth below, in the manner and at the times set forth in Article 4(a) of the Lease, in advance, without demand, deduction or set off:

 

  a.

Fourteenth Expansion Premises Lease Year 1 (or portion thereof, if applicable): $1,139,114.00 per annum, paid in monthly installments of $94,926.17 ($61.00 per rentable square foot);

 

  b.

Fourteenth Expansion Premises Lease Year 2: $1,173,287.42 per annum, paid in monthly installments of $97,773.95 ($62.83 per rentable square foot);

 

  c.

Fourteenth Expansion Premises Lease Year 3: $1,208,394.54 per annum, paid in monthly installments of $100,699.55 ($64.71 per rentable square foot);

 

  d.

Fourteenth Expansion Premises Lease Year 4: $1,244,622.10 per annum, paid in monthly installments of $103,718.51 ($66.65 per rentable square foot);

 

  e.

Fourteenth Expansion Premises Lease Year 5: $1,282,156.84 per annum, paid in monthly installments of $106,846.40 ($68.66 per rentable square foot);

 

  f.

Fourteenth Expansion Premises Lease Year 6: $1,320,625.28 per annum, paid in monthly installments of $110,052.11 ($70.72 per rentable square foot);

 

  g.

Fourteenth Expansion Premises Lease Year 7: $1,360,214.16 per annum, paid in monthly installments of $113,351.18 ($72.84 per rentable square foot);

 

  h.

Fourteenth Expansion Premises Lease Year 8: $1,400,923.48 per annum, paid in monthly installments of $116,743.62 ($75.02 per rentable square foot);

 

  i.

Fourteenth Expansion Premises Lease Year 9: $1,442,939.98 per annum, paid in monthly installments of $120,245.00 ($77.27 per rentable square foot);

 

  j.

Fourteenth Expansion Premises Lease Year 10: $1,486,263.66 per annum, paid in monthly installments of $123,855.3l ($79.59 per rentable square foot); and

 

  k.

Fourteenth Expansion Premises Lease Year 11: $1,530,894.52 per annum, paid in monthly installments of $127,574.54 ($81.98 per rentable square foot).

 

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(As used herein, the term “Fourteenth Expansion Premises Lease Year” shall mean each successive 12-month period included in whole or in part in the Term of this Lease with the first (1st) Fourteenth Expansion Premises Lease Year beginning on the Fourteenth Expansion Premises Rent Commencement Date and ending at midnight on the day before the first (1st) anniversary of the Fourteenth Expansion Premises Rent Commencement Date (provided that if the Fourteenth Expansion Premises Rent Commencement Date is not the first (1st) day of a calendar month, the first (1st) Fourteenth Expansion Premises Lease Year shall end at midnight on the last day of the calendar month which includes the first (1st) anniversary of the Fourteenth Expansion Premises Rent Commencement Date). If the first (1st) Fourteenth Expansion Premises Lease Year of the Term shall be greater than one (1) full calendar year, the annual Basic Rent for such Fourteenth Expansion Premises Lease Year shall be increased proportionately to the greater length of such Fourteenth Expansion Premises Lease Year. Similarly, if the last Fourteenth Expansion Premises Lease Year of the Term shall be less than one (1) full calendar year, the annual Basic Rent for such Fourteenth Expansion Premises Lease Year shall be decreased proportionately to the lesser length of such Fourteenth Expansion Premises Lease Year.)

10. Premises; Tenant’s Proportionate Share; Additional Rent.

a. Tenant’s Proportionate Share. Notwithstanding anything to the contrary contained in the Lease, from and after the Fourteenth Expansion Premises Commencement Date, the size of the Premises shall increase by approximately 18,674 rentable square feet, Tenant’s Proportionate Share shall increase by 6.79%, and all references to the Premises in the Lease shall be deemed to include the Fourteenth Expansion Premises.

b. Additional Rent; PILOT Agreement Expiration. Tenant shall continue to pay Basic Rent and Additional Rent on the existing Premises, and the Fourteenth Expansion Premises, as and when required under the Lease. Tenant acknowledges and agrees that in the event that any current payment in lieu of taxes agreement expires during the Lease Term (as same may be extended), then Tenant shall be responsible for Tenant’s Proportionate Share of Taxes as provided in the Lease. Any such Taxes shall be the Taxes actually assessed and billed pursuant to the applicable taxing authority.

11. Security Deposit. Notwithstanding anything to the contrary contained in the Lease, upon the Fourteenth Expansion Premises Commencement Date, the existing Security Deposit shall be increased by Two Hundred Eighty-four Thousand Seven Hundred Seventy-eight and 51/100 ($284,778.51) to be paid to Landlord by Tenant within three (3) business days thereof, in the form of a clean, irrevocable letter of credit in the foregoing additional amount (and Landlord shall promptly return the prior letter of credit upon receipt of replacement letter of credit) reasonably satisfactory in form and content to Landlord and issued by an FDIC insured bank reasonably satisfactory to Landlord in favor of Landlord which shall be held pursuant to the terms and conditions of the Lease.

12. Roof Rights; Exterior and other Shaft Rights.

a. Tenant shall continue to have the rights set forth in Section 19 of the Eighth Amendment as to the Roof, Roof-top Equipment and Tenant’s Roof-top Area (as those terms are defined therein); provided, however, that as of the Fourteenth Expansion Premises Commencement Date Exhibit D-2 of the Eighth Amendment shall be replaced with Exhibit D-2 attached hereto and incorporated herein and thereafter all references to Exhibit D-2 in the Lease shall be to Exhibit D-2 attached hereto. In addition, Exhibit D-1 of the Eighth Amendment shall be of no further force or effect.

 

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b. The first three (3) sentences of Section 19(g) of the Eighth Amendment are hereby deleted in their entirety and replaced with the following (with all references being to sections in the Eighth Amendment, excepting references to Exhibit E-3, which shall mean Exhibit E-3 attached to this Ninth Amendment and incorporated herein) :

Tenant shall have the non-exclusive right to install up to four (4) exterior ducts and related equipment, based on Tenant’s Improvements provided herein, on the rear exterior of the Building with three (3) exterior ducts located as approximately shown on Exhibit E-3 hereto attached and one (1) exterior duct located at a mutually agreeable location on the rear exterior of the Building within the area shown on Exhibit E-3 (with such exterior ducting being the “Exterior Ducting”). In the event Tenant elects to terminate the obligation to take the Twelfth Expansion Premises or the Thirteenth Expansion Premises as set forth in Section 2f above, then the Exterior Ducting provided hereunder shall be reduced to three (3) Exterior Ducts with two (2) Exterior Ducts in two (2) of the locations as approximately shown on Exhibit E-3 and one (1) Exterior Ducting at a mutually agreeable location on the rear of the Building.

c. In addition, in connection with the delivery of the Fourteenth Expansion Premises, Tenant shall have the non-exclusive right to install one (1) additional exterior duct and related equipment, based on Tenant’s Improvements provided herein and in the Lease, on the rear exterior of the eastern portion Building as approximately shown on Exhibit E-3. Tenant’s rights to such additional exterior duct and related equipment shall be subject to the Exterior Ducting review and approval provisions of Section 19(g) of the Eighth Amendment.

13. New Electrical Service Work. From and after the date hereof, Section 16b of the Eighth Amendment is hereby deleted and replaced with the following:

b. On or about October 1, 2018, Landlord shall deliver (or have delivered) to the Building a new 4,000 Amp electrical service (the “New Electrical Service”) to serve the existing Premises and all Expansion Premises included in and through the Eighth Amendment and the Fourteenth Expansion Premises. For each day from and after December 1, 2018 that the New Electrical Service is not delivered, Basic Rent for the Seventh Expansion Premises shall be reduced by fifty percent (50%) applicable to the Seventh Expansion Premises until the New Electrical Service is delivered. Tenant shall be solely responsible for connecting the Fourteenth Expansion Premises and those portions of the Premises on the eighth (8th) floor to the New Electrical Service and disconnecting the Fourteenth Expansion Premises and those portions of the Premises on the Eighth Floor from the existing Bus Duct/Building electrical service, at Tenant’s sole cost and expense, subject to applicable allowances under the Lease as amended hereby and this Subsection b, all in accordance with the terms and conditions of the Lease. Tenant shall be responsible for completing the foregoing work, and all related ancillary work relating thereto, no later than the later of (A) five (5) months following Landlord’s completion of the installation of the New Electrical Service and (B) March 1, 2019 and (C) with respect to the Eighth Expansion Premises, the Eighth Expansion Premises Commencement Date for the entire Eighth Expansion Premises. In connection with the New Electrical Service: (i) Landlord shall be entitled to charge Tenant, as additional rent, for Tenant proportional percentage increase in Tenant’s use of the Building’s main electrical room based on a so-called triple net basis; (ii) Landlord shall remain responsible for any lease agreements or rental fees between Landlord any utility company(ies) associated with the New Electrical Service, subject to the inclusion thereof in Operating Costs as and to the extent provided in the Lease; (iii) subject to Landlord completing Landlord’s Delivery Work associated with the applicable Expansion Premises, and the rights existing tenants and occupants therein, Landlord shall provide Tenant with reasonable access to the applicable Expansion Premises (2nd floor West and 3rd floor West) to install Tenant electrical rooms therein prior to October I, 2018; and (iv) Landlord shall remain responsible for delivering the New Electrical Service pursuant to the Eighth Amendment as modified herein. Landlord shall reimburse Tenant for fifty percent (50%) of the third party reasonable costs incurred by Tenant solely in connecting the New Electrical Service to the Fourteenth Expansion Premises

 

6


and those portions of the Premises on the eighth (8th) floor and disconnecting the electrical service thereto, up to a maximum reimbursement amount of Ninety Thousand and 00/100 Dollars ($90,000.00) (“Landlord’s New Service Contribution”). Landlord’s New Service Contribution shall not include any costs or expenses relating to providing or disconnecting electrical service to the Roof. So long as Tenant is not in default of the Lease beyond applicable notice and/or cure periods, or there shall not then be occurring any circumstance or state of facts which, with notice or the passage of time or both, would result in a breach or default hereunder that is not cured within the applicable cure period, Landlord shall pay the Landlord’s New Service Contribution in one (I) lump sum payment following completion of the foregoing connection and disconnection work in a good and workmanlike manner and Landlord’s receipt of (x) paid third-party invoices (with satisfactory evidence of payment and other supporting material) for such work performed in accordance with all of the terms and conditions of the Lease, (y) lien waivers reasonably satisfactory to Landlord from the project manager or any others performing the work or supplying the labor or material, and (z) any other commercially reasonable requirements of Landlord relating thereto. Tenant has submitted and Landlord has approved Tenant’s plans entitled “Electrical Riser Diagram & Schedules” dated “4-03-2018” for incorporating the following switchboard disconnecting means as part of Landlord’s Delivery Work: two 1200 AMP, one 1000 AMP, three 600 AMP and seven 400 AMP circuit breakers. Any and all actual, reasonable costs incurred in the design, purchase and installation of said disconnects shall be at Tenant’s sole expense and shall be deducted from the any then earned, accrued and available Eighth Amendment Allowance applicable thereto following presentation of an invoice to Tenant itemizing such costs.

14. Ninth Amendment Riser. Landlord shall provide Tenant with access to space measuring approximately one foot by nine feet (1’x 9’) and running from the second (2nd) floor through the seventh (7th) floor of the Building, between columns E and F, as more particularly shown on Exhibit F, attached hereto and incorporated herein, and including a horizontal area through the top of the space currently occupied by Au Bon Pain, (the “ABP Conduit”, and collectively, the “Ninth Amendment Riser Space”), for Tenant’s exclusive use for the purpose of running electrical conduits and plumbing, and other uses reasonably approved by Landlord in writing (collectively, “Tenant’s Riser Uses”). All equipment within the Ninth Amendment Riser Space (or the Alternate Ninth Amendment Riser Space (as defined below) if applicable) shall be installed by Tenant, at Tenant’s sole cost and expense, in accordance with (x) all applicable laws, rules, regulations, and ordinances and (y) plans and a construction schedule approved by Landlord in writing (which approval shall not be unreasonably withheld), which plans shall include, without limitation, the specific path of the ABP Conduit. All insulated ductwork installed within the Ninth Amendment Riser Space shall be blanket wrapped, but Tenant shall not be required to insulate or wrap pipes unless (i) required by code or (ii) reasonably required by Landlord during Landlord’s approval of Tenant’s plans. Any portion of the Ninth Amendment Riser Space passing through a space leased or occupied by a third party shall be completely enclosed by Tenant, at Tenant’s sole cost and expense, to Base Building Standards, as reasonably defined by Landlord during the plan approval process. Landlord shall coordinate with other tenants of the Building to provide Tenant with reasonable access to the Ninth Amendment Riser Space to allow Tenant to perform its work (which coordination may include, without limitation, providing tenant with written approvals, if any, required by the leases of such tenants, not less than one (I) week’s advance notice, a written scope of work that has been approved by Landlord pursuant hereto, identification of, and certificates of insurance from, contractors performing work within such tenant’s space, and other reasonable requirements relating thereto), which Tenant agrees may be scheduled to minimize unreasonable interference with such other tenants or the operation of the Building and which may require Tenant to perform its work after regular business hours, at Tenant’s sole cost and expense. Landlord shall not be liable to Tenant, and Landlord shall not be in default, for any failure to provide access to the Ninth Amendment Riser Space on any specified date; provided, however, that in the event Landlord is unable to provide Tenant with the Ninth Amendment Riser Space on or before October 7, 2018 (subject to extension due to any delays caused by Tenant), (i) Tenant shall have the non-exclusive right to install, maintain and operate one (I) exterior duct located within the area shown as the “6th

 

7


Exterior Shaft Area” on Exhibit E-3 hereto attached (the “Alternate Ninth Amendment Riser Space”) for Tenant’s exclusive use for Tenant’s Riser Uses to service the Premises from the first (1st) floor through the eighth (8th) floor of the Building, and (ii) for as long as (a) Tenant is unable to access the Ninth Amendment Riser Space or the Alternate Ninth Amendment Riser Space for purposes of installing the approved equipment and (b) as a result thereof, Tenant is prevented from using the Ninth Expansion Premises and Tenth Expansion Premises, Tenant shall not be required to pay Basic Rent or Additional Rent with respect to the Fourteenth Expansion Premises for the period of time Tenant is unable to access either the Ninth Amendment Riser Space or the Alternate Ninth Amendment Riser Space provided such Basic Rent and Additional Rent abatement period shall in no event exceed one (I) full calendar month. The design and installation of the Alternate Ninth Amendment Riser Space, if any, shall be subject to the prior written approval (including, without limitation, actual location, size, method of attachment, etc.) of Landlord (such approval not to be unreasonably withheld, conditioned or delayed so long as same is not otherwise inconsistent with the character and quality of the Building as of the date of such work). In connection with all of Tenant’s work under this Ninth Amendment, Tenant agrees that it will not, either directly or indirectly, use any contractors and/or materials if their use will create any difficulty, whether in the nature of a labor dispute or otherwise, with other contractors and/or labor engaged by Tenant or Landlord or others in the construction, maintenance and/or operation of the Building or any part thereof. Tenant shall be responsible for completing the foregoing work, and all related ancillary work relating thereto, no later than the later of (a) five (5) months following the later of (I) Landlord’s completion of the installation of the New Electrical Service and (II) the date that Landlord provides access to the Ninth Amendment Riser Space or Alternate Ninth Amendment Riser Space for purposes of installing the approved equipment and (b) March 1, 2019 and (c) with respect to the Eighth Expansion Premises, the Eighth Expansion Premises Commencement Date for the entire Eighth Expansion Premises. In the event Landlord provides Tenant with the Ninth Amendment Riser Space on or before October 7, 2018 (as such date is extended due to any delays caused by Tenant), any rights of Tenant to the Alternate Ninth Amendment Riser Space shall be void and of no further force or effect.

15. Assignment and Subletting. Notwithstanding any other provision in the Lease to the contrary, with respect to a request for Landlord’s consent to a subletting of all or any portion of the Premises, it shall not be reasonable for Landlord to withhold consent to any requested sublease solely on the basis that (i) there is other suitable space in the Building or (ii) that such proposed subtenant is a current occupant of the Building.

16. Parking. Tenant is currently entitled to a license to use certain parking spaces in accordance with Exhibit H to the Lease. From and after the Fourteenth Expansion Premises Rent Commencement Date, Tenant shall be entitled to a license to use additional parking spaces based on the ratio of I parking space per 3,800 rentable square feet of space in the applicable Expansion Premises, subject to the terms of said Exhibit H. The parking space provided hereunder shall be located in the exterior lots “S” and/or “P” controlled by Landlord, provided that if Landlord is unable to provide any such parking space in the exterior lots “S” and/or “P”, then as otherwise reasonably designated by Landlord from time to time.

17. Control Areas. From and after the Fourteenth Expansion Premises Commencement Date, Tenant shall be entitled to use Tenant’s proportionate share of the Control Area (s) (i.e., chemical storage area available) (located on and allocable to the seventh (7th) floor of the Building based on the rentable area of the Fourteenth Expansion Premises to the entire rentable area of the seventh (7th) floor of the Building. Such Control Area shall be established, maintained and used by Tenant in accordance with, and shall be subject to, all of the terms and conditions of the Lease and in compliance with all applicable laws, rules, regulations, codes and requirements. For purposes hereof, “Control Area” shall mean Control Area as defined in and in compliance with the Massachusetts Building Code.

 

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18. License Agreement. Landlord’s License Termination Notice to Tenant dated July 11, 2018 (the “Termination Notice”) is hereby revoked and Landlord and Tenant hereby agree that the Temporary License for Use and Occupancy Agreement dated as of November 16, 2017 between Landlord, as licensor, and Tenant, as licensee, as amended by that certain Amendment to License dated as of March 27, 2018 (the “License Agreement”), remains in full force and effect, unaffected by the Termination Notice, but modified and hereby amended by deleting clause (ii) of Section 1 of the License Agreement and as follows:

Licensee hereby acknowledges and agrees that Licensor, will be replacing certain windows on the second (2nd) floor of the Building (the “Window Work”), which Window Work will require, among other things, that certain mechanical systems serving the Licensed Premises (including, without limitation the HVAC conduit, certain ductwork, and certain electrical components) will be removed and/or relocated. Licensee hereby acknowledges and agrees that the Window Work and such removal and/or relocation can be commenced and completed, and that Licensee shall be responsible, at its sole cost and expense, for any and all work required for Licensee’s continued use of the License Premises, which work shall be subject to Licensor’s prior written approval; provided that Licensor shall undertake the Window Work with reasonable diligence and reasonably coordinate same with Tenant per discussions between the parties (but such coordination shall not require after hours work or unreasonable delays).

19. Eighth Expansion Premises. The Anticipated Eighth Expansion Premises Commencement Date is hereby amended to mean December 1, 2018 and shall remain subject to delays caused by factors beyond the reasonable control of Landlord or the holdover or early yield-up, termination, expiration or relocation of the current tenant or occupant thereof. Tenant hereby agrees that Landlord may deliver, at Landlord’s option, and Tenant shall accept, the Eighth Expansion Premises in two (2) stages of approximately 15,007 rentable square feet and approximately 3,343 rentable square feet. If delivered in such stages, each stage shall have its own (a) Eighth Expansion Premises Commencement Date, (b) Eighth Expansions Premises Free Rent Period, and (c) Eighth Expansion Premises Rent Commencement Date (all subject to the terms of Section 2(b) of the Eighth Amendment). Notwithstanding whether the Eighth Expansion Premises is delivered at one time or in stages, the definition of the Eighth Expansion Premises Lease Year (as set forth in Section 5(b) of the Eighth Amendment) shall apply to the entire Eighth Expansion Premises and is hereby amended so that the first (1st) Eighth Expansion Premises Lease Year ends at 11:59 pm on February 29, 2020, but that all subsequent Eighth Expansion Premises Lease Years are twelve (12) month periods beginning on March 1 of each such Eighth Expansion Premises Lease Year.

20. Successors: Conflicts. This Ninth Amendment shall be binding upon the parties and their respective successors and assigns. To the extent the terms and conditions of the Lease expressly conflict with or are expressly inconsistent with this Ninth Amendment, the terms and conditions of this Ninth Amendment shall control.

21. Brokers. Landlord and Tenant each represents and warrants to the other that it has not directly or indirectly dealt, with respect to this Ninth Amendment, with any broker or had its attention called to the Fourteenth Expansion Premises or other space to let in the Building, etc. by anyone other than Columbia Group Realty Advisors and JLL. Landlord and Tenant each agrees to defend, exonerate and save harmless and indemnify the other and anyone claiming by, through or under the other against any claims for a commission arising out of the execution and delivery of this Ninth Amendment or out of negotiations between Landlord and Tenant with respect to the leasing of other space in the Building. Landlord is responsible for paying all fees to Columbia Group Realty Advisors and JLL pursuant to separate agreement(s) therewith.

 

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22. Miscellaneous. Except as expressly modified herein, the Lease shall remain unmodified and in full force and effect. The provisions of this Ninth Amendment shall be binding upon and shall inure to the benefit of Landlord and Tenant and their respective legal representatives, successors and assigns. Any signature delivered by a party by facsimile or electronic transmission shall be deemed to be an original signature to this Ninth Amendment.

IN WITNESS WHEREOF the parties hereto have executed this Ninth Amendment to Lease in multiple copies, each to be considered an original hereof, as a sealed instrument on the date first written above

 

LANDLORD:     TENANT:
RREF II DRYDOCK, LLC, a     GINKGO BIOWORKS, INC. , a Delaware corporation
Delaware limited liability company    
By:  

/s/ Partrick Sweeney

    By:  

/s/ Barry Canton

Name:   Partrick Sweeney     Name:   Barry Canton
Title:   Its Autorized Signatory     Title:   Founder
      Hereunto Duly Authorized

 

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Exhibit 10.28

Execution Version 7.27.20

27 Drydock Avenue

Boston, Massachusetts

(the “Building”)

TENTH AMENDMENT (“TENTH AMENDMENT”)

Execution Date: July 29, 2020

 

  LANDLORD:    BCP-CG 27 Property LLC, a Delaware limited liability company
  TENANT:    Ginkgo Bioworks, Inc., a Delaware corporation
  EXISTING PREMISES:    A total of 122,731 rentable square feet of the Building, as more specifically set forth in the Lease.
LEASE DATA   DATE OF LEASE:    December 22, 2011
  EXPIRATION DATE:    January 31, 2030, unless the Lease is otherwise terminated or extended as provided in the Lease.
  PREVIOUS LEASE AMENDMENTS:    First Amendment to Lease Agreement dated April    , 2012
     Second Amendment to Lease dated August 1, 2014
     Third Amendment to Lease dated August 15, 2014
     Fourth Amendment to Lease dated May 1, 2016
     Fifth Amendment to Lease dated May 31, 2016
     Sixth Amendment to Lease dated August 5, 2016
     Seventh Amendment to Lease dated July 31, 2017
     Eighth Amendment to Lease dated March 23, 2018
     Ninth Amendment to Lease dated September 6, 2018
  FIFTEENTH EXPANSION PREMISES:    Approximately 7,473 rentable square feet consisting of a portion of the sixth (6th) floor of the Building, substantially as shown on Exhibit 10A, Tenth Amendment, a copy of which is attached hereto and incorporated by reference herein


WHEREAS, Tenant desires to lease additional premises from Landlord, to wit, the Fifteenth Expansion Premises, upon the terms and conditions hereinafter set forth; and

WHEREAS, Landlord is willing to lease the Fifteenth Expansion Premises to Tenant and Tenant is willing to lease the Fifteenth Expansion Premises from Landlord upon the terms and conditions hereinafter set forth; NOW, THEREFORE, for good and valuable consideration, the parties hereby agree that the above-referenced lease (the “Lease”) is hereby amended as follows:

1.     DEMISE OF THE FIFTEENTH EXPANSION PREMISES

Landlord hereby leases to Tenant, and Tenant hereby hires and takes from Landlord, the Fifteenth Expansion Premises for a Term commencing as of the Fifteenth Expansion Premises Commencement Date (as hereinafter defined) and, co-terminus with the Lease, expiring on the Expiration Date of the Lease. Said leasing of the Fifteenth Expansion Premises shall be upon all of the same terms and conditions of the Lease, except as follows or as otherwise specifically set forth herein:

A.     The “Fifteenth Expansion Premises Commencement Date” shall be the later of (1) the date that Landlord makes the Fifteenth Expansion Premises available to Tenant and (2) the earlier of the date Tenant first occupies the Fifteenth Expansion Premises for the Permitted Use or August 1, 2020. From and after the Fifteenth Expansion Premises Commencement Date, the term “Premises” as used in the Lease shall mean the Existing Premises and the Fifteenth Expansion Premises, collectively. The parties acknowledge and agree that the Fifteenth Expansion Premises may be considered “available to Tenant” and the Fifteenth Expansion Premises Commencement Date to have occurred, notwithstanding the incompletion of Landlord’s Electrical Work, as defined in Section 4 below.

B.     The “Fifteenth Expansion Premises Rent Commencement Date” shall be January 1, 2021.

C.     Basic Rent payable with respect to the Fifteenth Expansion Premises shall be as follows:

 

Time Period

   Annual Basic
Rent
     Monthly Basic
Rent
     Per Rentable
Square Foot
 

Fifteenth Expansion Premises Lease Year 1

   $ 575,421.00      $ 47,951.75      $ 77.00  

Fifteenth Expansion Premises Lease Year 2

   $ 592,683.63      $ 49,390.30      $ 79.31  

Fifteenth Expansion Premises Lease Year 3

   $ 610,469.37      $ 50,872.45      $ 81.69  

Fifteenth Expansion Premises Lease Year 4

   $ 628,778.22      $ 52,398.19      $ 84.14  

Fifteenth Expansion Premises Lease Year 5

   $ 647,610.18      $ 53,967.52      $ 86.66  

Fifteenth Expansion Premises Lease Year 6

   $ 667,039.98      $ 55,586.67      $ 89.26  

Fifteenth Expansion Premises Lease Year 7

   $ 687,067.62      $ 57,255.64      $ 91.94  

Fifteenth Expansion Premises Lease Year 8

   $ 707,693.10      $ 58,974.43      $ 94.70  

Fifteenth Expansion Premises Lease Year 9

   $ 728,916.42      $ 60,743.04      $ 97.54  

Fifteenth Expansion Premises Lease Year 10

   $ 750,812.31    $ 62,567.69      $ 100.47  

 

*

Annualized for any period of less than 12 calendar months.


For purposes hereof, “Fifteenth Expansion Premises Lease Year” shall mean each successive 12-month period included in whole or in part in the Term of this Lease with respect to the Fifteenth Expansion Premises with the first (1st) Fifteenth Expansion Premises Lease Year beginning on the Fifteenth Expansion Premises Rent Commencement Date and ending at midnight on the day before the first (1st) anniversary of the Fifteenth Expansion Premises Rent Commencement Date, and each succeeding Fifteenth Expansion Premises Lease Year shall begin on the day following the last day of the prior Fifteenth Expansion Premises Lease Year. Notwithstanding anything to the contrary herein contained, the last Fifteenth Expansion Premises Lease Year shall expire on the Expiration Date.

Tenant shall have no obligation to pay Basic Rent for the Fifteenth Expansion Premises for the period commencing as of the Fifteenth Expansion Premises Commencement Date and expiring as of the day before the Fifteenth Expansion Premises Rent Commencement Date (the “Rent Abatement Period”). During the Rent Abatement Period, only Basic Rent for the Fifteenth Expansion Premises shall be abated, and all additional rent and other costs and charges, including all utilities, specified in the Lease shall remain as due and payable pursuant to the provisions of the Lease.

D.     From and after the Fifteenth Expansion Premises Commencement Date, Tenant’s Proportionate Share shall be increased by 2.58%. For the purposes of this Tenth Amendment, it is agreed that the Building Rentable Area is 289,613 square feet.

E.     From and after the Fifteenth Expansion Premises Commencement Date, any reference herein or in the Lease to the Premises shall be deemed to mean, collectively, the Existing Premises and the Fifteenth Expansion Premises.

2.     CONDITION OF FIFTEENTH EXPANSION PREMISES

Notwithstanding anything to the contrary herein contained, the Fifteenth Expansion Premises shall be delivered broom clean and free of tenants or other occupants and accepted by Tenant “as-is”, in its then (i.e., as of the Fifteenth Expansion Premises Commencement Date) state of construction, finish and decoration, without any obligation on the part of Landlord to prepare or construct the Fifteenth Expansion Premises for Tenant’s occupancy or to provide any construction allowance (other than the Fifteenth Expansion Premises Allowance (as hereinafter defined)) and without any representation or warranty by Landlord to Tenant as to the condition of the Fifteenth Expansion Premises. As of the Fifteenth Expansion Premises Commencement Date, the Building Systems serving the Fifteenth Expansion Premises shall be in good working order, condition and repair, subject to Landlord’s Electrical Work, as defined below.


3.     TENANT 15th IMPROVEMENTS AND FIFTEENTH EXPANSION PREMISES ALLOWANCE

Tenant shall cause the substantial completion of all necessary or desirable construction and installations of all of Tenant’s improvements to the Fifteenth Expansion Premises in accordance with the provisions of the Lease, including but not limited to Section 8 of the Eighth Amendment, Section 14 of the Fifth Amendment, Article 8 of the Lease, Articles 9, and 24 of the Master Lease, and the terms of this Tenth Amendment (“Tenant’s 15th Improvements”). In connection with any Tenant’s 15th Improvements, Tenant agrees that it will not, either directly or indirectly, use any contractors and/or materials if their use will create any difficulty, whether in the nature of a labor dispute or otherwise, with other contractors and/or labor engaged by Tenant or Landlord or others in the construction, maintenance and/or operation of the Building or any part thereof. Tenant’s contractors shall be subject to Landlord’s approval, which approval shall not be unreasonably withheld, conditioned or delayed.

Subject to the Fifteenth Expansion Premises Allowance set forth below, Tenant shall pay all of the costs and expenses of Tenant’s 15th Improvements (including, without limitation, the costs of construction, the cost of permits and permit expediting, and all architectural and engineering services obtained by Tenant in connection therewith). Upon the Fifteenth Expansion Premises Commencement Date, Landlord shall provide an allowance of up to $10.00 per rentable square foot of the Fifteenth Expansion Premises ($74,730.00) (the “Fifteenth Expansion Premises Allowance”) that Tenant may use towards the design and construction of one or more of the following: (i) Tenant’s 15th Improvements within the portion of the Premises constituting the Fifteenth Expansion Premises, (ii) improvements to the portion of the Premises located on the third (3rd) floor of the Building, or (iii) improvements to the portion of the Premises located on the eighth (8th) floor of the Building (collectively, the “Allowance Improvements”; each such portion of the Premises for which the Fifteenth Expansion Premises Allowance may be utilized is referred to herein as “Improvement Premises”), all of which shall be performed in the manner as required herein and subject to the terms and conditions hereof. The Fifteenth Expansion Premises Allowance may only be used for hard or soft costs actually incurred by Tenant in connection with the Allowance Improvements. No portion of the Fifteenth Expansion Premises Allowance may be used for Tenant’s furniture, fixtures, equipment, cabling and/or other personal property. Provided Tenant shall not then be in default of the Lease beyond applicable notice and/or cure periods, or there shall not then be occurring any circumstance or state of facts which, with notice or the passage of time or both, would result in a breach or default hereunder that is not cured within the applicable cure period, the payment of the applicable portion of the Fifteenth Expansion Premises Allowance shall be made to reimburse Tenant for amounts spent on the Allowance Improvements within thirty (30) days following Tenant’s requisition therefor generally in accordance with Section 14(c) of the Fifth Amendment such that no more than fifty percent (50%) of that portion of the Fifteenth Expansion Premises Allowance corresponding to the cost of the Allowance Improvements within the applicable Improvements Premises will be paid upon satisfactory completion of all rough inspections by the City of Boston lnspectional Services Department for the work within the applicable Improvements Premises, and the remaining fifty percent (50%) of that portion of the Fifteenth Expansion Premises Allowance corresponding to the cost of the Allowance Improvements within the applicable Improvements Premises will be paid within thirty (30) days following delivery to Landlord of (i) a final Certificate of Occupancy issued by the City of Boston Inspectional


Services Department for the work within the applicable Improvements Premises; and (ii) satisfactory lien waivers from all contractors and other satisfactory evidence that all contractors have been paid or will be paid in full for the work within the applicable Improvements Premises. Landlord shall have no obligation to advance any funds or pay any amounts on account of Tenant’s 15th Improvements in excess of the Fifteenth Expansion Premises Allowance and in the event Tenant fails to request any portion of the Fifteenth Expansion Premises Allowance, pursuant to the terms and conditions hereof, within twelve months of the Fifteenth Expansion Premises Commencement Date, such unrequested portion of the Fifteenth Expansion Premises Allowance shall be forfeit and no longer available for request hereunder.

Except for the Fifteenth Expansion Premises Allowance, Tenant shall bear all other costs of Tenant’s Improvements. Landlord shall have no liability or responsibility for any claim, injury or damage alleged to have been caused by the particular materials, whether building standard or non-building standard, selected by Tenant in connection with Tenant’s Improvements.

4.     ELECTRICAL CURRENT

Tenant shall be permitted to connect to the base Building riser serving the Fifteenth Expansion Premises in order to access electricity for the Fifteenth Expansion Premises. Tenant shall be responsible for the maintenance of all equipment necessary to do so, including without limitation, panels and separate submeters. Upon the Fifteenth Expansion Premises Commencement Date, Landlord shall allow Tenant access in an amount at least equal to twelve (12) watts per rentable square foot of the Fifteenth Expansion Premises. Upon completion of Landlord’s Electrical Work (as defined below), Landlord shall allow Tenant access in an amount at least equal to a total of twenty-four (24) watts per rentable square foot of the Fifteenth Expansion Premises. Landlord and Tenant acknowledge and agree that as of the date hereof, all such connections and equipment exist at the Fifteenth Expansion Premises, provided however, after the Fifteenth Expansion Premises Commencement Date, Tenant shall provide Landlord with access to and through the Premises to allow Landlord to perform certain work, including the installation of additional equipment, as necessary to provide Tenant with access to the twenty-four (24) watts per rentable square foot provided above (“Landlord’s Electrical Work”). Landlord shall use reasonable efforts to complete Landlord’s Electrical Work within thirty (30) days of commencement. Tenant shall pay all electricity charges applicable to the Fifteenth Expansion Premises as required under Section 4(c) and 7(b) of the Lease from and after the Fifteenth Expansion Premises Commencement Date.

Notwithstanding the foregoing, if the Landlord’s Electrical Work has not been completed on or before September 15, 2020, as such date may be extended as provided below (the “First Outside Date”), Tenant shall be entitled to a credit against Tenant’s obligation to pay Base Rent for the Fifteenth Expansion Premises following the Fifteenth Expansion Premises Rent Commencement Date equal to one (1) day for every two (2) days between the First Outside Date and the Second Outside Date (defined below). Furthermore, if the Landlord’s Electrical Work has not been completed on or before October 1, 2020, as such date may be extended as provided below (the “Second Outside Date”), Tenant shall be entitled to a credit against Tenant’s obligation to pay Base Rent for the Fifteenth Expansion Premises following the Fifteenth Expansion Premises Rent Commencement Date equal to one (1) day for each day between the Second Outside Date and the date of completion of Landlord’s Electrical Work.


Notwithstanding the foregoing, the First Outside Date and the Second Outside Date shall be extended by the length of any delays in the completion of Landlord’s Electrical Work arising from causes beyond Landlord’s reasonable control, including, without limitation, Force Majeure delays (as defined herein). For purposes of this provision, “Force Majeure” shall mean any prevention, delay or stoppage due to governmental regulation, strikes, lockouts, acts of God, acts of war, terrorist acts, civil commotions, unusual scarcity of or inability to obtain labor or materials, labor difficulties, casualty or other causes reasonably beyond Landlord’s control or attributable to Tenant’s action or inaction. The provisions set forth in this Section shall be Tenant’s sole remedy for any delay in the completion of the Landlord’s Electrical Work.

5.     ACCESS TO MECHANICAL ROOM

Tenant acknowledges that the demised mechanical room shown on Exhibit 10A (shown as “MECH 611”) contains HVAC systems/Air Handlers (“AHU”) that service space in the Building currently leased to InvicroCRO, LLC, and its permitted successors and assigns (“Invicro”), as more particularly shown and located on Exhibit 10A as “INVICRO AHU.” Tenant shall grant access through its Premises on reasonable terms and procedures that it shall from time to time establish, for the purpose of maintenance of AHU equipment, to the following: (i) Invicro, (ii) Landlord, and (iii) any subsequent tenant whose space is served by such AHU, provided, however, in the case of any subsequent tenant, such tenant shall be accompanied by an authorized agent of Landlord.

6.     SECURITY DEPOSIT

Landlord and Tenant acknowledge and agree that Landlord is currently holding an irrevocable letter of credit (the “Existing Letter of Credit”) in the amount of One Million Five Hundred Seventy-One Thousand One Hundred Eighty-Seven and 43/100 Dollars ($1,571,187.43), in accordance with the terms of the Lease. Notwithstanding anything to the contrary contained in the Lease, from and after the Execution Date hereof, the term “Security Deposit” shall mean the existing Security Deposit (as adjusted from time to time pursuant to the terms of the Lease) plus One Hundred Forty-Three Thousand Eight Hundred Fifty-Five and 25/100 ($143,855.25) (the “Fifteenth Expansion Additional Deposit”). No later than the Fifteenth Expansion Premises Commencement Date, the existing Security Deposit shall be increased by the Fifteenth Expansion Additional Deposit by delivery to Landlord of an amendment to the Existing Letter of Credit, in form and substance reasonably acceptable to Landlord, increasing the face amount thereof by the Fifteenth Expansion Additional Deposit. Landlord shall continue to hold the Security Deposit pursuant to the terms and conditions of the Lease.


7.     EMERGENCY GENERATOR CAPACITY

From and after the Fifteenth Expansion Premises Rent Commencement Date, the term “Premises” in Section 16 (a) of the Eighth Amendment shall include the Fifteenth Expansion Premises.

8.     EARLY ACCESS

Notwithstanding any provision herein to the contrary, Tenant shall be entitled to have access to the Fifteenth Expansion Premises as of the date hereof, without the payment of rent, for the purpose of installing furniture, fixtures, and equipment. All such installations shall be performed by, or under the direction or control of, Tenant and otherwise in compliance with the terms of this Lease. Any such entry shall be deemed a license from Landlord to Tenant, and any entry thereunder shall be at the sole risk of Tenant. The insurance and indemnity obligations of Tenant under the Lease shall apply during any such early access.

9.     SURRENDER

At the expiration of earlier termination of the Term with respect to the Fifteenth Expansion Premises, Tenant shall surrender and yield up the Fifteenth Expansion Premises in accordance with the terms and conditions of the Lease, including without limitation, the requirements and conditions set forth in the Seventh Amendment, Section 12 insofar as applicable to the Fifteenth Expansion Premises.

10.     BROKERAGE

Landlord shall pay any commissions or fees that are payable to CBRE and Columbia Group Realty Advisors (collectively, the “Brokers”) with respect to this Tenth Amendment, in accordance with the provisions of a separate commission contract between Landlord and the Brokers. Each of Landlord and Tenant represents and warrants to the other that it has had no dealings with any real estate broker, finder, or other person other than the Brokers with respect to this Tenth Amendment. Each of Tenant and Landlord hereby indemnifies and hold harmless the other against and from any claim for any brokerage commission or other fees and all costs, expenses and liabilities in connection therewith, including, without limitation, attorneys’ fees and expenses, arising out of any breach of the foregoing representation and warranty made by it. This representation and warranty shall survive the expiration or earlier termination of the Term hereof.

11.     CONFLICT

In the event that any of the provisions of the Lease are inconsistent with this Tenth Amendment or the state of facts contemplated hereby, the provisions of this Tenth Amendment shall control.


12.     RATIFICATION

Except as herein and hereby modified and amended, the Lease shall remain in full force and effect and all of the other terms, provisions, covenants, and conditions thereof are ratified and confirmed.

13.     MODIFICATIONS

This Tenth Amendment may not be modified orally but only by a writing signed by the parties hereto and dated subsequent to the date hereof.

14.     GOVERNING LAW

This Tenth Amendment shall be governed by, and construed, interpreted, and enforced in accordance with the laws of the Commonwealth of Massachusetts, without reference to its principles of conflicts of law.

15.     COUNTERPARTS. This Tenth Amendment may be executed in multiple counterparts, each of which shall constitute one agreement, even though all parties do not sign the same counterpart. In the event that any signature is delivered by facsimile transmission or by e-mail delivery of a “.pdf” format data file, such signature shall create a valid and binding obligation of the party executing (or on whose behalf such signature is executed) with the same force and effect as if such facsimile or “.pdf” signature page were an original thereof.

16.     ENTIRE AGREEMENT; NO AMENDMENT. This Tenth Amendment constitutes the entire agreement and understanding between the parties with respect to the subject of this Tenth Amendment and shall supersede all prior written and oral agreements concerning this subject matter. This Tenth Amendment may not be amended, modified or otherwise changed in any respect whatsoever except by a writing duly executed by authorized representatives of Landlord and Tenant. Each party acknowledges that it has read this Tenth Amendment, fully understands all of this Tenth Amendment’s terms and conditions, and executes this Tenth Amendment freely, voluntarily and with full knowledge of its significance. Each party to this Tenth Amendment has had the opportunity to receive the advice of counsel prior to the execution hereof.

17.     BINDING EFFECT

This Tenth Amendment shall be binding upon and inure to the benefit of the parties and their respective successors and assigns.


EXECUTED UNDER SEAL as of the date first above written.

 

LANDLORD:

BCP-CG 27 Property LLC,

a Delaware limited liability company

By:  

/s/ Matthew Stegall

Name:   Matthew Stegall
Title:   Managing Director

 

TENANT:
Ginkgo Bioworks, Inc.,
a Delaware corporation
By:  

/s/ Bartholomew Canton

Name:   Bartholomew Canton
Title:   CTO

Exhibit 10.29

27 Drydock Avenue

Boston, Massachusetts

(the “Building”)

ELEVENTH AMENDMENT (“ELEVENTH AMENDMENT”)

Execution Date: August 14, 2020

 

  LANDLORD:    BCP-CG 27 Property LLC, a Delaware limited liability company
  TENANT:    Ginkgo Bioworks, Inc., a Delaware corporation
  EXISTING PREMISES:    A total of 130,204 rentable square feet of the Building, as more specifically set forth in the Lease.
LEASE DATA   DATE OF LEASE:    December 22, 2011
  EXPIRATION DATE:    January 31, 2030, unless the Lease is otherwise terminated or extended as provided in the Lease.
  PREVIOUS LEASE AMENDMENTS:    First Amendment to Lease Agreement dated April     , 2012
     Second Amendment to Lease dated August 1, 2014
     Third Amendment to Lease dated August 15, 2014
     Fourth Amendment to Lease dated May 1, 2016
     Fifth Amendment to Lease dated May 31, 2016
     Sixth Amendment to Lease dated August 5, 2016
     Seventh Amendment to Lease dated July 31, 2017
     Eighth Amendment to Lease dated March 23, 2018
     Ninth Amendment to Lease dated September 6, 2018
     Tenth Amendment to Lease dated July 29, 2020

 

1


WHEREAS, Tenant and Landlord desire to amend certain provisions of the Lease, all upon the terms and conditions hereinafter set forth.

NOW, THEREFORE, for good and valuable consideration, the parties hereby agree that the above-referenced lease (the “Lease”) is hereby amended as follows:

1. LOADING DOCKS AND FREIGHT ELEVATORS

A. Commencing as of October 1, 2020, Tenant shall have (i) the exclusive right (“Tenant’s Exclusive Loading Rights”) to use the two (2) loading dock areas shown on Exhibit A, Eleventh Amendment attached hereto (“Tenant’s Exclusive Loading Docks”) and (ii) the exclusive right (“Tenant’s Exclusive Freight Rights”) to use the one (1) mechanical freight elevator shown on Exhibit A, Eleventh Amendment attached hereto (“Tenant’s Exclusive Freight Elevator”). Tenant’s use of Tenant’s Exclusive Loading Docks and Tenant’s Exclusive Freight Elevator shall be subject to Landlord’s reasonable rules and regulations governing such use (as such rules and regulations may be amended by Landlord from time to time upon reasonable advance notice given by Landlord to Tenant).

B. In consideration for the rights granted in Section 1(A) above, Tenant shall pay to Landlord an amount equal to Three Hundred Thousand Dollars ($300,000.00) per year ($25,000.00 per month) commencing as of October 1, 2020 and continuing thereafter for the remaining Term of the Lease (the “Loading/Freight Usage Charge”). Tenant shall remit to Landlord monthly installments of the Loading/Freight Usage Charge in the same manner and at the same time as Tenant’s monthly payments of Basic Rent. In the event that the Premises is at any point hereafter expanded to include an additional 36,000 rentable square feet (such that the Premises includes more than 166,204 rentable square feet in the aggregate), then Tenant shall no longer be obligated to pay the Loading/Freight Usage Charge as of the date when Tenant has commenced paying Basic Rent for all such additional 36,000 rentable square feet

C. Tenant shall be permitted, at Tenant’s sole cost and expense, to erect identification signage containing Tenant’s name and logo and also indicating that Tenant’s Exclusive Freight Elevator and Tenant’s Exclusive Loading Docks are exclusive to Tenant in locations approved by Landlord (i) within the area comprising Tenant’s Exclusive Loading Docks (“Tenant’s Loading Signage”); (ii) adjacent to the doors of Tenant’s Exclusive Freight Elevator on the first (1st) floor of the Building and (iii) inside of Tenant’s Exclusive Freight Elevator (collectively, “Tenant’s Signage”). The location, design, size, materials, proportions, method of installation and color(s) of Tenant’s Signage shall be subject to the prior approval of Landlord (which approval shall not be unreasonably withheld, conditioned or delayed), provided that (a) Tenant’s Signage adjacent to the doors of Tenant’s Exclusive Freight Elevator shall be reasonably visible from a distance of twenty (20) feet and (b) Tenant’s Loading Signage shall be in the form of painting on the ground (not to exceed four (4) feet by eight (8) feet in size) indicating Tenant’s Exclusive Loading Docks are exclusive to Tenant. Such Tenant’s Signage may also include signs located on stanchions proximate to the Tenant’s Exclusive Freight Elevator indicating that Tenant’s Exclusive Freight Elevator is exclusive to Tenant. Landlord shall also program the Tenant’s Exclusive Freight Elevator so that it does not stop on any floor in the Building not occupied by Tenant, and take such other reasonable measures as may be necessary to ensure that the use of Tenant’s Exclusive Freight Elevator and Tenant’s Exclusive

 

2


Loading Docks are exclusive to Tenant. Upon the expiration or earlier termination of the Term of the Lease (or, if earlier, the termination of Tenant’s Exclusive Freight Rights and Tenant’s Exclusive Loading Docks), Tenant shall, at Tenant’s cost and expense, remove Tenant’s Signage and restore all damage to the Building caused by the installation and/or removal of Tenant’s Signage. The installation, replacement, removal and restoration after removal of Tenant’s Signage shall be performed at Tenant’s sole cost and expense in accordance with the provisions of this Lease applicable to alterations.

D. Landlord shall maintain, repair and replace Tenant’s Exclusive Loading Docks and Tenant’s Exclusive Freight Elevator in good repair, order and condition. Tenant shall reimburse Landlord for one hundred percent (100%) of any and all Operating Costs (as defined in Section 4(b)(2) of the Lease) incurred by Landlord in connection with such maintenance, repair or replacement work within thirty (30) days after receipt of an invoice therefor from Landlord. Notwithstanding the foregoing, if any such maintenance, repairs or replacements are necessitated by any damage caused by the negligence or willful misconduct of Tenant or its agents, employees, contractors or invitees, or usage by any of the foregoing parties that is materially in excess of or inconsistent with the manner in which Tenant’s Exclusive Loading Docks and/or Tenant’s Exclusive Freight Elevator are designed to be used, then Tenant shall be responsible for paying for one hundred percent (100%) of such costs notwithstanding any Operating Costs exclusion to the contrary set forth in the Lease.

E. In addition to Tenant’s Exclusive Loading Rights and Tenant’s Exclusive Freight Rights, Tenant shall have the non-exclusive right to use, in common with others entitled to such use, the Building’s common freight elevator (“Common Freight Elevator”) and loading dock (“Common Loading Dock”) provided that such use shall be (i) limited during Normal Business Hours (as hereinafter defined) to package deliveries from recognized delivery service providers such as Federal Express, UPS or the United States Postal Service and for no other use or purpose (including, without limitation, construction deliveries) (the “Normal Business Hour Usage Restrictions”), and (ii) subject to Landlord’s reasonable rules and regulations governing such use applicable to all tenants and occupants of the Building (as such rules and regulations may be amended by Landlord from time to time upon notice given by Landlord to Tenant). As used in this Eleventh Amendment, “Normal Business Hours” shall mean 8:00 a.m. through 6:00 p.m. on Mondays through Fridays.

F. Tenant’s Exclusive Freight Rights shall be suspended during any period (a “Common Freight Interruption Period”) when the Common Freight Elevator is not in operation or is otherwise unavailable for the common use of other Building tenants and occupants (including, without limitation, for maintenance, repairs, replacement, inspection and/or restoration), provided that Landlord shall use reasonable diligence to minimize the periods when the Common Freight Elevator is not in operation or is otherwise unavailable for the common use of other Building tenants and occupants, and the Loading/Freight Usage Charge shall be abated during any such Common Freight Interruption Period until such Common Freight Interruption Period ends and Tenant has full exclusive use of Tenant’s Exclusive Freight Elevator. During any such Common Freight Interruption Period, Tenant may continue to use Tenant’s Exclusive Freight Elevator in accordance with the provisions hereof, provided that such usage shall be on a non-exclusive basis in common with others entitled to such use. For the avoidance of doubt, the parties acknowledge that the intent of such Common Freight Interruption

 

3


Period is to ensure that all Building tenants and occupants have access to a working freight elevator at all times. In addition, Landlord reserves the right to suspend Tenant’s Exclusive Freight Rights altogether during any period (a “Exclusive Freight Interruption Period”) when Landlord, in its reasonable discretion, determines that Tenant’s Exclusive Freight Elevator must be shut down (including, without limitation, for maintenance, repairs, replacement, inspection and/or restoration), provided that Landlord shall use reasonable diligence to minimize the periods when Tenant’s Exclusive Freight Elevator must be shut down and the Loading/Freight Usage Charge shall be abated during any such Exclusive Freight Interruption Period until such Exclusive Freight Interruption Period ends and Tenant has full exclusive use of Tenant’s Exclusive Freight Elevator. During any such Exclusive Freight Interruption Period, Tenant may continue to use the Common Freight Elevator in accordance with Section 1(E) above, provided that the Normal Business Hour Usage Restrictions shall not apply during such Exclusive Freight Interruption Period.

G. Landlord and Tenant acknowledge that they are currently negotiating an additional amendment to the Lease (the “12th Amendment”), pursuant to which Tenant would be obligated to (i) lease 18,350 rentable square feet located on the westerly side of the fourth (4th) floor of the Building under certain circumstances and (ii) lease 1,899 rentable square feet located on the first (1st) floor of the Building in exchange for Tenant surrendering a portion of the Tenth Expansion Premises containing no less than 1,000 rentable square feet and no more than 1,200 rentable square feet, all as to be more particularly set forth in the 12th Amendment which the parties agree to negotiate in good faith with reasonable diligence. Notwithstanding anything to the contrary contained herein, in the event that the parties do not fully execute the 12th Amendment on terms acceptable to both parties in their respective sole discretion on or before March 31, 2022, then the provisions of this Section 1 (including, without limitation, Tenant’s Exclusive Loading Rights and Tenant’s Exclusive Freight Rights) shall, at Landlord’s option, be void and without any further force or effect.

2. BROKERAGE

Each of Landlord and Tenant represents and warrants to the other that it has had no dealings with any real estate broker, finder, or other person other than CBRE and Columbia Group Realty Advisors (collectively, the “Brokers”) with respect to this Eleventh Amendment. Each of Tenant and Landlord hereby indemnifies and hold harmless the other against and from any claim for any brokerage commission or other fees and all costs, expenses and liabilities in connection therewith, including, without limitation, attorneys’ fees and expenses, arising out of any breach of the foregoing representation and warranty made by it. This representation and warranty shall survive the expiration or earlier termination of the Term hereof.

3. CONFLICT

In the event that any of the provisions of the Lease are inconsistent with this Eleventh Amendment or the state of facts contemplated hereby, the provisions of this Eleventh Amendment shall control.

 

4


4. RATIFICATION

Except as herein and hereby modified and amended, the Lease shall remain in full force and effect and all of the other terms, provisions, covenants, and conditions thereof are ratified and confirmed.

5. MODIFICATIONS

This Eleventh Amendment may not be modified orally but only by a writing signed by the parties hereto and dated subsequent to the date hereof.

6. GOVERNING LAW

This Eleventh Amendment shall be governed by, and construed, interpreted, and enforced in accordance with the laws of the Commonwealth of Massachusetts, without reference to its principles of conflicts of law.

7. COUNTERPARTS. This Eleventh Amendment may be executed in multiple counterparts, each of which shall constitute one agreement, even though all parties do not sign the same counterpart. In the event that any signature is delivered by facsimile transmission or by e-mail delivery of a “.pdf” format data file, such signature shall create a valid and binding obligation of the party executing (or on whose behalf such signature is executed) with the same force and effect as if such facsimile or “.pdf” signature page were an original thereof.

8. ENTIRE AGREEMENT; NO AMENDMENT. This Eleventh Amendment constitutes the entire agreement and understanding between the parties with respect to the subject of this Eleventh Amendment and shall supersede all prior written and oral agreements concerning this subject matter. This Eleventh Amendment may not be amended, modified or otherwise changed in any respect whatsoever except by a writing duly executed by authorized representatives of Landlord and Tenant. Each party acknowledges that it has read this Eleventh Amendment, fully understands all of this Eleventh Amendment’s terms and conditions, and executes this Eleventh Amendment freely, voluntarily and with full knowledge of its significance. Each party to this Eleventh Amendment has had the opportunity to receive the advice of counsel prior to the execution hereof.

9. BINDING EFFECT

This Eleventh Amendment shall be binding upon and inure to the benefit of the parties and their respective successors and assigns.

 

5


EXECUTED UNDER SEAL as of the date first above written.

 

LANDLORD:
BCP-CG 27 Property LLC,
a Delaware limited liability company
By:  

/s/ Matthew Stegall

Name:   Matthew Stegall
Title:   Managing Director
TENANT:
Ginkgo Bioworks, Inc.,
a Delaware corporation
By:  

/s/ Barry Canton

Name:   Barry Canton
Title:   Co-Founder, CTO

 

6

Exhibit 10.30

27 Drydock Avenue

Boston, Massachusetts

(the “Building”)

TWELFTH AMENDMENT (“TWELFTH AMENDMENT”)

Execution Date: January 13, 2021

 

  LANDLORD:    BCP-CG 27 Property LLC, a Delaware limited liability company
  TENANT:    Ginkgo Bioworks, Inc., a Delaware corporation
  EXISTING PREMISES:    A total of 130,204 rentable square feet of the Building, as more specifically set forth in the Lease.
LEASE DATA   DATE OF LEASE:    December 22, 2011
  EXPIRATION DATE:    January 31, 2030, unless the Lease is otherwise terminated or extended as provided in the Lease.
  PREVIOUS LEASE AMENDMENTS:    First Amendment to Lease Agreement dated April     , 2012
     Second Amendment to Lease dated August 1, 2014
     Third Amendment to Lease dated August 15, 2014
     Fourth Amendment to Lease dated May 1, 2016
     Fifth Amendment to Lease dated May 31, 2016
     Sixth Amendment to Lease dated August 5, 2016
     Seventh Amendment to Lease dated July 31, 2017
     Eighth Amendment to Lease dated March 23, 2018
     Ninth Amendment to Lease dated September 6, 2018
     Tenth Amendment to Lease dated July 29, 2020
     Eleventh Amendment to Lease dated August 14, 2020


  SIXTEENTH EXPANSION PREMISES:    Approximately 1,399 rentable square feet consisting of a portion of the first (1st) floor of the Building, substantially as shown on Exhibit A, Twelfth Amendment attached hereto.
  LANDLORD’S SECURITY OFFICE:    A portion of the first (1st) floor of the Building containing approximately 143 rentable square feet and located adjacent to the Sixteenth Expansion Premises, substantially as shown on Exhibit A, Twelfth Amendment attached hereto.
  GIVE-BACK PREMISES:    Approximately 1,311 rentable square feet consisting of a portion of the second (2nd) floor of the Building, substantially as shown on Exhibit B, Twelfth Amendment attached hereto.
  MUST-TAKE PREMISES:    Approximately 18,350 rentable square feet located on the westerly side of the fourth (4th) floor of the Building, substantially as shown on Exhibit C, Twelfth Amendment attached hereto.

WHEREAS, Tenant and Landlord desire to (i) expand the Premises to include the Sixteenth Expansion Premises, (ii) terminate the Lease with respect to the Give-Back Premises, (iii) provide for Tenant’s potential leasing of the Must-Take Premises; and (iv) amend certain other provisions of the Lease, all upon the terms and conditions hereinafter set forth.

NOW, THEREFORE, for good and valuable consideration, the parties hereby agree that the above-referenced lease (the “Lease”) is hereby amended as follows:

1.     TERMINATION WITH RESPECT TO GIVE-BACK PREMISES

The Term of the Lease in respect of the Give-Back Premises shall terminate effective as of the date (the “Give-Back Premises Termination Date”) when Tenant delivers the Give-Back Premises to Landlord with Tenant’s Management Office Work (as defined in Section 2 below) complete. On the Give-Back Premises Termination Date, Tenant shall vacate the Give-Back Premises and deliver the Give-Back Premises to Landlord with Tenant’s Management Office Work completed. From the Give-Back Premises Termination Date until the Sixteenth Expansion Premises Commencement Date (as defined in Section 3 below), (i) any reference herein or in the Lease to the Premises shall be deemed to mean the Existing Premises (less the Give-Back Premises), and (ii) Tenant’s Proportionate Share shall be decreased by 0.453% (i.e., rentable square footage of the Give-Back Premises 1,311 divided by the Building Rentable Area 289,613).

2.     TENANT’S MANAGEMENT/SECURITY OFFICE WORK

The parties acknowledge that Landlord intends to utilize (i) the Give-Back Premises as the Building’s new management office as the result of Landlord having agreed, at Tenant’s request, to lease the space currently being used as the management office (i.e., the Sixteenth Expansion Premises) to Tenant and (ii) Landlord’s Security Office as the Building’s new

 

2


security office. Accordingly, Tenant shall perform all of the work necessary to prepare (a) the Give-Back Premises for Landlord’s occupancy thereof (“Tenant’s Management Office Work”) and (b) Landlord’s Security Office for Landlord’s occupancy thereof (“Tenant’s Security Office Work”) (collectively, “Tenant’s Management/Security Office Work”). Tenant shall perform Tenant’s Management/Security Office Work (x) in accordance with (i) those certain plans and specifications for Tenant’s Management Office Work titled “JLL + Ginkgo 27E2”, prepared by Troika and dated November 2, 2020 and (ii) plans and specifications for Tenant’s Security Office Work approved by Landlord (which approval shall not be reasonably withheld, conditioned or delayed) (collectively, the “Construction Plans”) (y) using Building standard materials and finishes (except as set forth otherwise on the approved Construction Plans) and (z) otherwise in accordance with the provisions of the Lease and the Master Lease applicable to alterations (including, without limitation, Article 8 of the Lease and Articles 9 and 24 of the Master Lease). Tenant shall perform Tenant’s Management/Security Work at its sole cost and expense. Tenant warrants that Tenant’s Management/Security Office Work will be performed in a good and workmanlike manner and shall assign all warranties related to Tenant’s Management/Security Office Work to Landlord (including the warranty granted by the general contractor performing the same). Landlord shall be responsible for installing its furniture, fixtures and equipment in the Give-Back Premises and Landlord’s Security Office (provided, however, that Tenant shall be responsible for installing all cabling). Tenant shall use commercially reasonable efforts to complete (i) Tenant’s Management Office Work on or before two (2) months after the full execution of this Twelfth Amendment and (ii) Tenant’s Security Office Work on or before the date that is two (2) months after the Sixteenth Expansion Premises Commencement Date (each, a “Completion Deadline”). If Tenant fails to complete either portion Tenant’s Management/Security Work on or before the applicable Completion Deadline, as the same is extended for Force Majeure (which may include shutdowns or other delays resulting from the COVID-19 pandemic or government orders issued in connection therewith) or as a result of delays caused by Landlord or its employees, agents or contractors (provided Landlord shall not be charged with any such delays unless Tenant gives Landlord prompt notice of the same). Landlord may complete such portion of Tenant’s Management/Security Work at Tenant’s cost. If Landlord exercises such self-help right, then Tenant shall reimburse Landlord for any costs incurred in connection with performing Tenant’s Management/Security Work within thirty (30) days after Landlord’s billing therefor. Landlord shall relocate the Building’s management office to the Give-Back Premises no later than seven (7) days after completion of Tenant’s Management Office Work and the Building’s security office to Landlord’s Security Office no later than seven (7) days after completion of Tenant’s Security Office Work, provided that, unless Landlord exercises its self-help right, Tenant provides Landlord with no less than fifteen (15) days prior notice of the estimated completion date of the applicable space.

3.     DEMISE OF THE SIXTEENTH EXPANSION PREMISES

Landlord hereby leases to Tenant, and Tenant hereby hires and takes from Landlord, the Sixteenth Expansion Premises for a Term commencing as of the Sixteenth Expansion Premises Commencement Date (as hereinafter defined) and, co-terminus with the Lease, expiring on the

 

3


Expiration Date of the Lease. Said leasing of the Sixteenth Expansion Premises shall be upon all of the same terms and conditions of the Lease, except as follows or as otherwise specifically set forth herein:

A.     The “Sixteenth Expansion Premises Commencement Date” shall be the date Landlord delivers the Sixteenth Expansion Premises to Tenant free and clear of all tenants and occupants. Landlord shall use commercially reasonable efforts to cause the Sixteenth Expansion Premises Commencement Date to occur as quickly as is practicable after the Give-Base Premises Termination Date.

B.     The “Sixteenth Expansion Premises Rent Commencement Date” shall be the Sixteenth Expansion Premises Commencement Date.

C.     Basic Rent payable with respect to the Sixteenth Expansion Premises shall be as follows:

 

Time Period

   Annual Basic
Rent
     Monthly Basic
Rent
     Per Rentable
Square Foot
 

Sixteenth Expansion Premises Rent Commencement Date – 7/31/21

   $ 87,899.17      $ 7,324.93      $ 62.83  

8/1/21 – 7/31/22

   $ 90,536.15      $ 7,544.68      $ 64.71  

8/1/22 – 7/31/23

   $ 93,252.23      $ 7,771.02      $ 66.66  

8/1/23 – 7/31/24

   $ 96,049.80      $ 8,004.15      $ 68.66  

8/1/24 – 7/31/25

   $ 98,931.29      $ 8,244.27      $ 70.72  

8/1/25 – 7/31/26

   $ 101,899.23      $ 8,491.60      $ 72.84  

8/1/26 – 7/31/27

   $ 104,956.21      $ 8,746.35      $ 75.02  

8/1/27 – 7/31/28

   $ 108,104.89      $ 9,008.74      $ 77.27  

8/1/28 – 7/31/29

   $ 111,348.04      $ 9,279.00      $ 79.59  

8/1/29 – 1/31/30

   $ 114,688.48      $ 9,557.37      $ 81.98  

D.     Tenant’s Proportionate Share with respect to the Sixteenth Expansion Premises shall be 0.48%, which is the ratio that the rentable square footage of the Sixteenth Expansion Premises (1,399) bears to the Building Rentable Area (289,613).

E.     From and after the Sixteenth Expansion Premises Commencement Date, any reference herein or in the Lease to the Premises shall be deemed to mean, collectively, the Existing Premises (less the Give-Back Premises) and the Sixteenth Expansion Premises.

F.     Notwithstanding anything to the contrary herein contained, the Sixteenth Expansion Premises shall be delivered broom clean and free of tenants or other occupants and accepted by Tenant “as-is”, in its then (i.e., as of the Sixteenth Expansion Premises Commencement Date) state of construction, finish and decoration, without any obligation on the part of Landlord to prepare or construct the Sixteenth Expansion Premises for Tenant’s occupancy or to provide any construction allowance and without any representation or warranty by Landlord to Tenant as to the condition of the Sixteenth Expansion Premises, but all base Building systems serving the Sixteenth Expansion Premises shall be in good working order upon the Sixteenth Expansion Premises Commencement Date. For the avoidance of doubt, the parties acknowledge that the Sixteenth Expansion Premises shall be delivered to Tenant undemised from Landlord’s Security Office and Tenant shall be responsible, as part of Tenant’s Security Office Work, for legally separately demising the Sixteenth Expansion Premises from Landlord’s Security Office.

 

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G.     Once the Give-Back Premises Termination Date and the Sixteenth Expansion Premises Commencement Date have been determined, Landlord and Tenant shall execute an agreement, in a reasonable form provided by Landlord, in which shall be stated the Give-Back Premises Termination Date and the Sixteenth Expansion Premises Commencement Date.

4.     MUST-TAKE PREMISES

A.     The parties acknowledge that the Must-Take Premises are presently leased to another tenant (the “DFCI”) pursuant to a lease (the “DFCI Lease”) that is scheduled to expire on March 31, 2026. Therefore, the Must-Take Premises may not become available for lease for Tenant during the Term of this Lease. However, DFCI has a right to terminate the DFCI Lease with respect to the Must-Take Premises prior to such scheduled expiration date, as more particularly set forth in the DFCI Lease. If DFCI exercises such termination option or if the Must-Take Premises otherwise become available to lease to Tenant, Tenant desires to lease the Must-Take Premises from Landlord and Landlord desires to lease the Must-Take Premises to Tenant, on the terms and conditions hereinafter set forth and subject to the Prior Rights (as hereinafter defined).

B.     If DFCI exercises its termination option or if the Must-Take Premises otherwise become available to lease to Tenant, Landlord shall have the option, on or before April 30, 2022, to give Tenant written notice (“Landlord’s Must-Take Notice”) advising Tenant that Landlord has elected to lease the Must-Take Premises to Tenant. In the event Landlord delivers Landlord’s Must-Take Notice to Tenant, Tenant shall lease the Must-Take Premises from Landlord upon all the same the same terms and conditions of the Lease applicable to the Existing Premises, except as follows:

(1)     Must-Take Premises Commencement Date. The “Must-Take Premises Commencement Date” shall be the date when Landlord delivers the Must-Take Premises to Tenant in broom-clean condition. The Must-Take Premises Commencement Date shall in no event be earlier than twelve (12) months after the date when Landlord gives Landlord’s Must-Take Notice. Landlord shall use reasonable efforts to cause the Must-Take Premises Commencement Date to occur on or before the earlier to occur of (i) March 31, 2023 or (ii) fifteen (15) months after the date when Landlord gives Landlord’s Must-Take Notice. Notwithstanding the foregoing, in the event that the Must-Take Premises Commencement Date is later than July 1, 2023 (as such date shall be extended for any delay caused by (a) Tenant or any of its agents, employees or contractors or (b) an event of Force Majeure) (as so extended, the “Outside Date”), then Tenant shall be entitled to a rent abatement against Tenant’s obligation to pay Basic Rent with respect to the Must-Take Premises only following the Must-Take Premises Commencement Date equal to one (1) day for each day between the Outside Date and the Must-Take Premises Commencement Date.

(2)     Must-Take Premises Rent Commencement Date. The “Must-Take Premises Rent Commencement Date” shall be the earlier of (i) the date five (5) months after the Must-Take Premises Commencement Date or (ii) the date Tenant first occupies the Must-Take Premises for the Permitted Use.

 

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(3)     Basic Rent. Tenant shall pay Basic Rent with respect to the Must-Take Premises at the same per rentable square foot rental rate then in effect for the Fifteenth Expansion Premises (as defined in the Tenth Amendment). For the avoidance of doubt, such rental rates are as follows:

 

Time Period

   Per Rentable
Square Foot
 

1/1/21 – 12/31/21

   $ 77.00  

1/1/22 – 12/31/22

   $ 79.31  

1/1/23 – 12/31/23

   $ 81.69  

1/1/24 – 12/31/24

   $ 84.14  

1/1/25 – 12/31/25

   $ 86.66  

1/1/26 – 12/31/26

   $ 89.26  

1/1/27 – 12/31/27

   $ 91.94  

1/1/28 – 12/31/28

   $ 94.70  

1/1/29 – 12/31/29

   $ 97.54  

1/1/30 – 1/31/30

   $ 100.47  

(4)     Condition of Must-Take Premises. Tenant shall take the Must-Take Premises “as-is” in its then (i.e., as of the date of delivery) state of construction, finish, and decoration and without any obligation on the part of Landlord to prepare or construct the Must-Take Premises (other than Landlord’s Must-Take Premises Work) or to provide any tenant improvement allowance (other than the Must-Take Premises Allowance), Tenant hereby agreeing that it shall be responsible for all other work required to prepare the Must-Take Premises for its occupancy thereof (“Tenant’s Must-Take Work”). Landlord shall cause all base Building systems serving the Must-Take Premises Work to be in good working order upon the Must-Take Premises Commencement Date.

(5)     Landlord’s Must-Take Premises Work. Attached hereto as Exhibit D, Twelfth Amendment is a matrix (the “Landlord/Tenant Matrix”) showing certain base building infrastructure with respect to the Must-Take Premises that will be Landlord’s responsibility to provide (collectively, “Landlord’s Must-Take Premises Work”) and certain other items which will be Tenant’s responsibility to complete as part of Tenant’s Must-Take Premises Work. The parties acknowledge that Landlord’s Must-Take Premises Work will be performed following the Must-Take Premises Commencement Date concurrently with Tenant’s Must-Take Premises Work. Accordingly, Landlord and Tenant agree to cooperate with each other to minimize interference with the construction of the other party. In the event of any inconsistency between the Landlord/Tenant Matrix and the Lease with respect to the condition of the Must-Take Premises and/or the ongoing Building infrastructure, systems or services to be provided to the Must-Take Premises, the Landlord/Tenant Matrix shall control. Without limiting the foregoing, Section 16 of the Eighth Amendment (Emergency Generator Capacity; New Electrical Service Work) shall have no applicability with respect to the Must-Take Premises.

 

6


(6)     Must-Take Premises Allowance. Upon the Must-Take Premises Commencement Date, Landlord shall contribute up to Two Million Two Hundred Fifty Seven Thousand Fifty and 00/100 Dollars ($2,257,050.00) (i.e., $123.00 per rentable square foot of the Must-Take Premises) (the “Must-Take Premises Allowance”) towards the design and construction of Tenant’s Must-Take Premises Work. Said Must-Take Premises Allowance shall be disbursed subject to the same terms and conditions as are applicable to the disbursement of the Fifteenth Expansion Premises Allowance under Section 3 of the Tenth Amendment, except as follows: (a) any references therein to the “Fifteenth Expansion Premises Allowance” shall be deemed to mean the Must-Take Premises Allowance; (b) the Must-Take Premises Allowance may only be used towards the design and construction of Tenant’s Must-Take Premises Work; (c) any reference therein to “Improvements Premises” shall be deemed to mean the Must-Take Premises; and (d) any reference therein to “Fifteenth Expansion Premises Commencement Date” shall be deemed to mean the Must-Take Premises Commencement Date.

C.     Notwithstanding the fact that Tenant’s leasing of the Must-Take Premises shall be self-executing as aforesaid, the parties agree promptly to execute a lease amendment reflecting the addition of the Must-Take Premises.

D.     Notwithstanding anything herein to the contrary, Landlord’s obligation to lease the Must-Take Premises to Tenant and Tenant’s right to lease the Must-Take Premises from Landlord is subject and subordinate to the rights (whether such rights are designated as a right of first offer, right of first refusal, expansion option or otherwise) of any tenant of the Building existing on the date hereof (including Emulate’s right of first offer) (collectively, “Prior Rights”). Landlord represents and warrants to Tenant that Emulate’s right of first offer is the only Prior Right.

5.     BROKERAGE

Each of Landlord and Tenant represents and warrants to the other that it has had no dealings with any real estate broker, finder, or other person other than CBRE and Columbia Group Realty Advisors (collectively, the “Brokers”) with respect to this Twelfth Amendment. Each of Tenant and Landlord hereby indemnifies and hold harmless the other against and from any claim for any brokerage commission or other fees and all costs, expenses and liabilities in connection therewith, including, without limitation, attorneys’ fees and expenses, arising out of any breach of the foregoing representation and warranty made by it. This representation and warranty shall survive the expiration or earlier termination of the Term hereof.

6.     CONFLICT

In the event that any of the provisions of the Lease are inconsistent with this Twelfth Amendment or the state of facts contemplated hereby, the provisions of this Twelfth Amendment shall control.

7.     RATIFICATION

Except as herein and hereby modified and amended, the Lease shall remain in full force and effect and all of the other terms, provisions, covenants, and conditions thereof are ratified and confirmed.

 

7


8.     MODIFICATIONS

This Twelfth Amendment may not be modified orally but only by a writing signed by the parties hereto and dated subsequent to the date hereof.    

9.     GOVERNING LAW

This Twelfth Amendment shall be governed by, and construed, interpreted, and enforced in accordance with the laws of the Commonwealth of Massachusetts, without reference to its principles of conflicts of law.    

10.     COUNTERPARTS. This Twelfth Amendment may be executed in multiple counterparts, each of which shall constitute one agreement, even though all parties do not sign the same counterpart. In the event that any signature is delivered by facsimile transmission or by e-mail delivery of a “.pdf” format data file, such signature shall create a valid and binding obligation of the party executing (or on whose behalf such signature is executed) with the same force and effect as if such facsimile or “.pdf” signature page were an original thereof.

11.     ENTIRE AGREEMENT; NO AMENDMENT. This Twelfth Amendment constitutes the entire agreement and understanding between the parties with respect to the subject of this Twelfth Amendment and shall supersede all prior written and oral agreements concerning this subject matter. This Twelfth Amendment may not be amended, modified or otherwise changed in any respect whatsoever except by a writing duly executed by authorized representatives of Landlord and Tenant. Each party acknowledges that it has read this Twelfth Amendment, fully understands all of this Twelfth Amendment’s terms and conditions, and executes this Twelfth Amendment freely, voluntarily and with full knowledge of its significance. Each party to this Twelfth Amendment has had the opportunity to receive the advice of counsel prior to the execution hereof.

12.     BINDING EFFECT

This Twelfth Amendment shall be binding upon and inure to the benefit of the parties and their respective successors and assigns.

[Signatures on Following Page]

 

8


EXECUTED UNDER SEAL as of the date first above written.

 

LANDLORD:
BCP-CG 27 Property LLC,
a Delaware limited liability company
By:  

/s/ Matthew Stegall

Name:   Matthew Stegall
Title:   Managing Director
TENANT:
Ginkgo Bioworks, Inc.,
a Delaware corporation
By:  

/s/ Barry Canton

Name:   Barry Canton
Title:   CTO

[Signature Page to Twelfth Amendment]

 

Exhibit 10.31

LEASE

JAMESTOWN 21-23-25 DRYDOCK, L.P.

a Delaware Limited Partnership

Landlord

and

GINKGO BIOWORKS, INC.,

a Delaware corporation

Tenant

for

The Innovation and Design Building

Premises located on the Eighth Floor of the Bronstein Building

23 and 25 Drydock Avenue

Boston, Massachusetts

March 18, 2016

 

Certain confidential information contained in this Exhibit has been omitted because it is (i) not material and (ii) of the type that the registrant treats as private or confidential.


TABLE OF CONTENTS

 

Article I. BASIC LEASE INFORMATION

     3  

Article II

       5  

Section 2.1

 

Leased Premises and Term

     5  

Section 2.2

 

Condition; Delivery

     6  

Section 2.3

 

Use

     10  

Section 2.4

 

Base Rent

     11  

Section 2.5

 

PILOT Payments

     11  

Section 2.6

 

Tenant’s Proportionate Share of Operating Costs

     11  

Section 2.7

 

Separately Metered Utilities and Utility Usage

     13  

Section 2.8

 

Additional Rent; Payments

     13  

Article III

       13  

Section 3.1

 

Utilities

     13  

Section 3.2

 

Services to be Furnished by Landlord to Tenant

     13  

Section 3.3

 

Landlord’s Failure to Provide Utilities or Services

     14  

Section 3.4

 

Peaceful Enjoyment

     14  

Article IV

       15  

Section 4.1

 

Operation

     15  

Section 4.2

 

Alterations, Improvements and Additions

     15  

Section 4.3

 

Maintenance and Repairs

     16  

Section 4.4

 

Trade Fixtures

     16  

Section 4.5

 

Laws and Regulations; Building Rules

     16  

Section 4.6

 

Landlord’s Access

     17  

Section 4.7

 

Assignment and Subletting by Tenant

     17  

Section 4.8

 

Light, Air and View

     19  

Section 4.9

 

Taxes

     19  

Section 4.10

 

Liens

     19  

Section 4.11

 

Subordination to Mortgages and Leases

     20  

Section 4.12

 

Certificates

     20  

Section 4.13

 

Limitation on Weight

     21  

Section 4.14

 

Access to Books and Records

     21  

Section 4.15

 

Restorative Work; Renovations

     21  

Section 4.16

 

Boston Marine Industrial Park

     22  

Article V

       22  

Section 5.1

 

Condemnation

     22  

Section 5.2

 

Casualty Damage

     22  

Section 5.3

 

Insurance

     23  

Section 5.4

 

Surrender of Leased Premises

     24  

Section 5.5

 

Damages from Certain Causes

     25  

Section 5.6

 

Hold Harmless

     25  

Article VI

       25  

Section 6.1

 

Default by Tenant

     25  

Section 6.2

 

Landlord’s Remedies

     26  

Section 6.3

 

Landlord’s Right to Perform Certain Obligations

     28  

Section 6.4

 

Cumulative Remedies

     28  

Section 6.5

 

Security Deposit

     28  

 

i


Article VII

     31  

Section 7.1

 

Attorneys’ Fees and Other Expenses

     31  

Section 7.2

 

Alteration

     31  

Section 7.3

 

Non-Waiver

     31  

Section 7.4

 

Notices

     32  

Section 7.5

 

Interest

     33  

Section 7.6

 

Merger of Estates

     33  

Section 7.7

 

Other Tenants of Building

     33  

Section 7.8

 

Consent by Landlord

     33  

Section 7.9

 

Legal Interpretation

     33  

Section 7.10

 

Entire Agreement

     34  

Section 7.11

 

Assignment by Landlord

     34  

Section 7.12

 

Authority

     34  

Section 7.13

 

Liability

     34  

Section 7.14

 

Time of the Essence

     34  

Section 7.15

 

Instruments and Evidence Required to Be Submitted to Landlord

     34  

Section 7.16

 

Counterparts

     34  

Section 7.17

 

Gender

     35  

Section 7.18

 

Force Majeure

     35  

Section 7.19

 

Recordation

     35  

Section 7.20

 

Prime Lease

     35  

Section 7.21

 

Commissions

     35  

Section 7.22

 

Surrender of Premises and Holding Over

     35  

Section 7.23

 

Intentionally Omitted

     36  

Section 7.24

 

When Lease Becomes Binding

     36  

Section 7.25

 

No Construction Against Drafting Party

     36  

Section 7.26

 

OFAC List

     36  

Section 7.27

 

Confidentiality

     36  

Article VIII

       37  

Section 8.1

 

Renewal Term

     37  

Section 8.2

 

Renewal Term Rent

     37  

Section 8.3

 

Arbitration

     38  

Section 8.4

 

Connection to 27 Drydock Avenue

     39  

Article IX

       40  

Section 9.1

 

Definitions

     40  

Section 9.2

 

Parking

     45  

Section 9.3

 

Exhibits, Supplements and Riders

     45  

 

ii


THE INNOVATION AND DESIGN BUILDING

Lease Agreement

THIS LEASE AGREEMENT (the “Lease”) is made and entered into as of March 18, 2016 (the “Effective Date”), by and between JAMESTOWN 21-23-25 DRYDOCK, L.P., a Delaware limited partnership (“Landlord”), whose address is c/o Jamestown, Ponce City Market, 675 Ponce de Leon Avenue, NE, 7th Floor, Atlanta, Georgia 30308 and GINKGO BIOWORKS, INC., a Delaware corporation (“Tenant”), whose address is 27 Drydock Avenue, Floor 8, Boston, Massachusetts 02210. The terms set forth herein shall have the respective meanings set forth for the same in Articles I and IX of this Lease.

Subject to all of the terms and conditions of this Lease, and in consideration of the covenants and obligations contained in this Lease, Landlord and Tenant agree as follows:

ARTICLE I.

BASIC LEASE INFORMATION

Phase I Premises or Suite 25-810E shall mean approximately 16,361 rentable square feet, known as “Bay” 25-810E located on the eighth (8th) floor of 25 Drydock Avenue, Boston, Massachusetts, and as shown on the floor plan attached to this Lease as Exhibit A-1

Phase II Premises or Suite 25-810W shall mean approximately 18,053 rentable square feet, known as “Bay” 25-810W located on the eighth (8th) floor of 25 Drydock Avenue, Boston, Massachusetts, and as shown on the floor plan attached to this Lease as Exhibit A-2.

Phase III Premises or Suite 23-810E shall mean approximately 16,988 rentable square feet, known as “Bay” 23-810E located on the eighth (8th) floor of 23 Drydock Avenue, Boston, Massachusetts, as shown on the floor plan attached to this Lease as Exhibit A-3.

Phase IV Premises or Suite 23-810W shall mean approximately 18,037 rentable square feet, known as “Bay” 23-810W located on the eighth (8th) floor of 23 Drydock Avenue, Boston, Massachusetts, as shown on the floor plan attached to this Lease as Exhibit A-4.

Leased Premises or Premises shall mean the Phase I, Phase II, Phase III and/or Phase IV Premises.

Phase I Scheduled Commencement Date shall mean April 4, 2016 which is applicable to the Phase I Premises.

Phase II Scheduled Commencement Date shall mean October 1, 2016 which is applicable to the Phase II Premises.

Phase III Scheduled Commencement Date shall mean October 1, 2016 which is applicable to the Phase III Premises.

Phase IV Scheduled Commencement Date shall mean April 1, 2021 which is applicable to the Phase IV Premises.

 

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Phase I Commencement Date shall be the date that Landlord tenders possession of the Phase I Premises to Tenant with Landlord’s Work (as hereinafter defined) in Delivery Condition.

Phase II Commencement Date shall be the date that Landlord tenders possession of the Phase I Premises to Tenant with Landlord’s Work in Delivery Condition.

Phase III Commencement Date shall be the date that Landlord tenders possession of the Phase III Premises to Tenant with Landlord’s Work in Delivery Condition.

Phase IV Commencement Date shall be the date that Landlord tenders possession of the Phase IV Premises to Tenant with Landlord’s Work in Delivery Condition.

Expiration Date shall mean that date which is the last day of the one hundred and thirtieth (130th) month following the Phase I Commencement Date, or the last day of any renewal term, if the Lease Term is extended in accordance with the provisions of Section 8.1 hereof.

Lease Term shall mean a term beginning on the Phase I Commencement Date and ending on the Expiration Date.

Base Rent shall mean the rent payments as set forth on Exhibit D attached hereto and made a part hereof.

Permitted Use shall mean use for General Industrial (as defined in the Prime Lease, as hereinafter defined) uses and for no other use or purpose. In no event will the Leased Premises be used for any purpose not permitted under the Prime Lease.

Tenant’s Proportionate Share shall mean 2.09% with respect to the Phase I Premises, which Tenant’s Proportionate Share shall be increased by the following percentages upon the applicable Commencement Dates: (i) 2.31% on the Phase II Commencement Date; (ii) 2.17% on the Phase III Commencement Date; and (iv) 2.30% on the Phase IV Commencement Date, the parties acknowledging that the Building consists of 782,539 rentable square feet. The parties hereto further stipulate and agree that Tenant’s Proportionate Share of Operating Costs shall be deemed a separately enumerated amount for purposes of the Prime Lease, particularly, but without limitation, for purposes of Exhibit D of the Prime Lease.

Security Deposit shall mean $2,100,000.00 in the form of a letter of credit, subject to increase and decrease in accordance with the provisions of Section 6.5 hereof.

Broker shall collectively mean Jones Lang LaSalle (representing Landlord) and Columbia Group Realty Advisors, Inc. (representing Tenant), the commission for said Broker being paid by Landlord in accordance with separate agreements.

Landlord’s Construction Loan shall mean (i) $981,660.00 (calculated at a rate of $60.00 per rentable square foot) with respect to the Phase I Premises; (ii) $1,056,100.50 (calculated at a rate of $58.50 per rentable square foot) with respect to the Phase II Premises; and (iii) $874,882.00 (calculated at a rate of $51.50 per rentable square foot) with respect to the Phase III Premises.

 

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Landlord’s Additional Construction Loan shall mean (i) $327,220.00 (calculated at a rate of $20.00 per rentable square foot) with respect to the Phase I Premises; (ii) $352,033.50 (calculated at a rate of $19.50 per rentable square foot) with respect to the Phase II Premises; (iii) $475,664.00 (calculated at a rate of $28.00 per rentable square foot) with respect to the Phase III Premises; and (iv) $180,370.00 (calculated at a rate of $10.00 per rentable square foot) with respect to the Phase IV Premises.

Landlord’s Plans Contribution shall mean $1,636.10 (calculated at a rate of $.10 per rentable square foot) for the Phase I Premises only.

ARTICLE II.

Section 2.1     Leased Premises and Term.

A.    Upon the Effective Date, the terms and provisions of this Lease shall be fully binding on Landlord and Tenant. Landlord does hereby lease, demise and let to Tenant and Tenant does hereby lease and take from Landlord the applicable portion of the Leased Premises for a term beginning on the applicable Commencement Date and continuing in full force and effect for the Lease Term, unless this Lease is terminated earlier pursuant to the provisions hereof. In addition, Landlord grants to Tenant the right to use, on a non-exclusive basis and in common with other tenants, the Common Areas. Landlord specifically excepts and reserves to itself the use of the roof, the exterior portions of the Leased Premises, and such areas within the Leased Premises reasonably required for installation, maintenance, replacement and repair of utility lines and other installations required to service other tenants of the Building from time to time during the Lease Term. No rights are conferred on Tenant, and Landlord specifically excepts and reserves to itself, unless otherwise specifically provided, all rights to the land and improvements below the floor level of the Leased Premises and to the air rights above the Leased Premises and to the land and improvements located on and within the Common Areas.

B.    Tenant shall have the right to construct the installations for the Leased Premises in the area of the roof of the Building, all as shown on the plan attached here to as Exhibit F-l (“Rooftop Installations”). In connection with the Rooftop Installations, Landlord shall provide Tenant with 50 tons of cooling from the Building’s main condenser unit for each Bay included in the Premises.

C.    The Leased Premises are demised hereby subject to all easements, restrictions, agreements of record, mortgages and deeds of trust, zoning and building laws, and the terms and provisions of the Prime Lease, including, but not limited to, the provisions of the Prime Lease relating to employment and non-discrimination, which provisions are set forth on Exhibit C to this Lease. If and to the extent that such provisions shall be changed or modified as a result of any change imposed upon Landlord by the landlord under the Prime Lease (“Prime Lessor”), Tenant shall be given notice of such change and Tenant agrees to comply with any such changed provision. Once the applicable Commencement Date is determined, Landlord and Tenant shall endeavor to execute an agreement, substantially in the form attached hereto as Exhibit E. stating the applicable Commencement Date and the Expiration Date; provided, however, the failure to do so will not affect the determination of such dates.

 

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Section 2.2     Condition: Delivery: Landlord’s Construction Loan: Landlord’s Additional Construction Loan: Landlord’s Plans Contribution. For purposes of this Section 2.2, the following terms shall have the meanings set forth below:

A.    Condition. Tenant has inspected Suite 25-810, Suite 25-810W, Suite 23-810E and Suite 23-810W and agrees that except for Landlord’s Work, Landlord’s Construction Loan, Landlord’s Additional Construction Loan, and Landlord’s Plan Contribution, each as applicable, Landlord has no obligation to perform any work, supply any materials, incur any expense or make any alterations or improvements to prepare the Leased Premises for Tenant’s occupancy. Any work to be performed by Tenant in connection with Tenant’s initial occupancy of any of the Leased Premises shall be hereinafter referred to as “Initial Installations.” All Initial Installations shall be considered to be “Alterations” and shall be performed in accordance with Section 4.2 hereof. Notwithstanding the foregoing, Landlord hereby (a) approves in concept, subject to final review, those portions of the Initial Installations for the Phase I Premises as are shown in the plans listed on Exhibit A-6 and (b) approves in concept, subject to final review, the plans shown on Exhibit A-7.

B.    Substantial Completion and Delivery.

(i)    Landlord will exercise reasonable and diligent efforts to cause the applicable Commencement Date to occur by the applicable Scheduled Commencement Date, as the same may be extended by Unavoidable Delays. Except as set forth herein, Landlord shall have no liability for, and there shall be no postponement of the applicable Commencement Date, or any credit afforded to Tenant for (x) any delay in the applicable Commencement Date arising out of or resulting from any Unavoidable Delay, or (y) any delay by Landlord in the performance of Landlord’s Work arising out of or resulting from any Unavoidable Delay. Tenant’s commencement of any Initial Installations in a Bay shall be conclusive evidence Tenant has approved all of Landlord’s Work in such Bay, that Tenant has accepted possession of such Bay and that at the time such possession was taken, such Bay and the Building were in a good and satisfactory condition as required by this Lease.

(ii)    In the event of the failure of Landlord to deliver (a) the Phase I Premises on or before April 22, 2016; (b) the Phase II Premises on or before December 31, 2016; (c) the Phase III Premises on or before December 31, 2016; and (d) the Phase IV Premises on or before June 30, 2021 (each, an “Outside Delivery Date”), as the same may be extended by Unavoidable Delays, (and provided that the failure of an existing tenant to vacate a bay shall not be considered an Unavoidable Delay) then for and with respect to each day between the applicable Outside Delivery Date and the date on which Landlord delivers the applicable portion of the Leased Premises to Tenant, as its sole and exclusive remedy on account thereof, Tenant shall receive a credit against the Base Rent next becoming payable under this Lease in an amount equal to one (1) times the per diem Base Rent payable for the applicable Leased Premises for each day following the Outside Delivery Date until the Landlord has delivered the applicable portion of the Leased Premises in Delivery Condition.

 

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(iii)    Furthermore, if the Phase I Commencement Date is delayed beyond that date which is six (6) months after the Outside Delivery Date for the Phase I Premises, then by thirty (30) days’ prior written notice to Landlord, Tenant may terminate this Lease. In addition, if the Phase II Commencement Date is delayed beyond that date which is twelve (12) months after the Outside Delivery Date for the Phase II Premises then, by thirty (30) days’ prior written notice to Landlord, Tenant may terminate this Lease with respect to the Phase II Premises and the Phase IV Premises in which event (x) the Phase III Rent Abatement Period (as defined in Exhibit D) shall be seventeen (17) months; and (y) Landlord shall reimburse Tenant for its out of pocket costs incurred in connection with (i) the required addition of an automatic transfer switch for the Phase III Premises,. (ii) adding a second service rated breaker to serve the Phase III Premises; (iii) addition of a lab exhaust fan or the ductwork across the roof serving the Phase III Premises; (iv) installing ductwork on the roof from the Phase I Premises to the Phase III Premises; and (v) raising the RTU dunnage approximately 2 feet to allow ductwork to come out under the dunnage.

On or about the date when Landlord’s Work is substantially completed for the applicable Phase, Landlord’s and Tenant’s construction representatives shall jointly prepare a punch-list setting forth any items of Landlord’s Work which are incomplete and deliver the same to Tenant and Landlord. Landlord shall use good faith efforts to complete such punch-list items within thirty (30) days of the date of such walk through, each party acting to promptly and reasonably to resolve any disputes.

C.    Construction Representatives. Each party authorizes the other to rely upon all approvals granted and other actions taken by the respective construction representative designated from time to time by such party, or any person hereafter expressly designated in writing in substitution or addition thereof by notice to the party relying thereon. Tenant hereby designates Barry Canton as its construction representative and Landlord hereby designates Dana Griffin as its construction representative.

D.    Landlord’s Construction Loan and Landlord’s Additional Construction Loan.

(i)     Landlord and Tenant hereby agree that at Tenant’s election Landlord shall provide the Landlord’s Construction Loan to Tenant for use towards the Initial Installations located in the applicable portion of the Leased Premises for which such Landlord’s Construction Loan has been promised. Tenant shall pay to Landlord, as additional rent, Construction Rent, as hereinafter defined, on account of the Landlord’s Construction Loan. Construction Rent shall be deemed to be a repayment of a loan plus interest and shall be payable by Tenant to Landlord commencing as of the expiration of the applicable Rent Abatement Period (if any) and continuing on the first day of each month thereafter throughout the initial Term of the Lease. “Construction Rent” shall be based upon the amount of applicable portion of the Landlord’s Construction Loan and the accrual of interest relating to the same from the date of advance through the date of the applicable payment of Construction Rent, as more particularly set forth in Exhibit D attached hereto. Tenant’s monthly payments of Construction

 

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Rent shall be equal to the amount of equal monthly payments of principal and interest which would be necessary to repay a loan in the amount of Landlord’s Construction Loan, together with interest at the rate of eight percent (8%) per annum, on a level direct reduction basis over the initial Lease Term commencing on the applicable Commencement Date for the portion of the Leased Premises for which Landlord’s Construction Loan was funded.

(ii)    Tenant shall have the right, at Tenant’s election (which election Tenant may exercise by giving Landlord written notice on or before the applicable Commencement Date), to require Landlord to provide Landlord’s Additional Construction Loan for Initial Installations to be made in the applicable portion of the Leased Premises. The Landlord’s Additional Construction Loan shall be deemed to be a loan from the Landlord to the Tenant and shall commence accruing interest as of the date that the Landlord’s Additional Construction Loan or portion thereof is advanced by Landlord to Tenant. Tenant may, at any time after such election, notify Landlord that it is not seeking said Landlord’s Additional Construction Loan as to all or any remaining Initial Installations and only such amounts as shall have been advanced by Landlord prior to said notice shall be amortized and repaid in accordance with the provisions below.

(iii)    If Tenant elects that Landlord provide Landlord’s Additional Construction Loan to Tenant, as set forth in Paragraph (ii) above, then Tenant shall pay to Landlord Construction Rent on account of such Landlord’s Additional Construction Loan equal to the amount of equal monthly payments of principal and interest which would be necessary to repay a loan in the amount of Landlord’s Additional Construction Loan, together with interest at the rate of ten percent (10%) per annum, on a level direct reduction basis over the initial Lease Term commencing on the expiration of the Rent Abatement Period. Upon request of Tenant from time to time, Landlord shall provide Tenant with an amortization schedule setting forth the amounts of accrued interest and principal due from Landlord to Tenant on account of the Construction Rent for the Landlord’s Additional Construction Loan.

(iv)    For all purposes of the Lease, Construction Rent shall be treated as additional rent and shall be stated as additional rent on any invoice therefor delivered by Landlord to Tenant. Monthly payments of Construction Rent (x) shall be payable at the same time and in the same manner as Base Rent is payable under the Lease; and (y) may not be prepaid except as set forth below. Construction Rent shall not be abated or reduced for any reason whatsoever (including, without limitation, termination of the Lease other than if such termination is as a result of casualty, condemnation or a default by Landlord). If there is any default (beyond the expiration of any applicable grace periods) of any of Tenant’s obligations under the Lease (including, without limitation, its obligation to pay Construction Rent) or if the term of the Lease (other than if such termination is as a result of casualty, condemnation or a default by Landlord is terminated for any reason whatsoever prior to the termination of the term of the Lease, then Tenant shall pay to Landlord, immediately upon demand, the

 

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unamortized balance of Landlord’s Construction Loan together with all sums of interest that would have accrued on such Construction Rent during the Term. Tenant’s obligation to pay the unamortized balance of Landlord’s Construction Loan together with such interest shall be in addition to all other rights and remedies which Landlord has based upon any default of Tenant under the Lease, and Tenant shall not be entitled to any credit or reduction in such payment based upon amounts collected by Landlord from reletting the Premises after the default of Tenant.

E.    Evidence of Funds and Additional Letter(s) of Credit.

Prior to commencing the Initial Alterations in the Phase I Leased Premises, Tenant will (x) provide evidence from a credit worthy bank that Tenant has sufficient cash available in order to pay the entire amount of the Initial Alterations for the Phase I Leased Premises; and (y) provide a Letter of Credit (as defined in Section 6.5 hereof) in the amount of $500,000.00 as security for the completion of the Initial Installations in the Phase I Leased Premises by Tenant. In addition, prior to commencing the Initial Alterations in the Phase II Leased Premises, Tenant will (x) provide evidence from a credit worthy bank that Tenant has sufficient cash available in order to pay the entire amount of the Initial Alterations for the Phase II Leased Premises; and (y) provide a Letter of Credit (as defined in Section 6.5 hereof) in the amount of $250,000.00 as security for the completion of the Initial Installations in the Phase II Leased Premises by Tenant. Lastly, prior to commencing the Initial Alterations in the Phase III Leased Premises, Tenant will (x) provide evidence from a credit worthy bank that Tenant has sufficient cash available in order to pay the entire amount of the Initial Alterations for the Phase III Leased Premises; and (y) provide a Letter of Credit (as defined in Section 6.5 hereof) in the amount of $250,000.00 as security for the completion of the Initial Installations in the Phase III Leased Premises by Tenant. The provisions of Section 6.5 of this Lease shall be applicable to the Letters of Credit provided hereunder provided, however, that notwithstanding the provisions of Section 6.5(a)(i), Landlord shall only be entitled to draw down on such Letters(s) of Credit in the event of a default by Tenant pursuant to Section 4.2 hereof for purposes of reimbursing Landlord for all out-of-pocket costs reasonably incurred by Landlord as a result of such event of default. The Letter(s) of Credit set forth above shall be returned by Landlord to Tenant upon the final requisition of the Landlord’s Construction Loan or Landlord’s Additional Construction Loan, as applicable.

F.    Requisitions. Promptly after Landlord approves Tenant’s plans for the Initial Installations for a particular Phase of the Leased Premises, Tenant shall deliver to Landlord a project budget which will include a Guaranteed Maximum Price contract (“GMP”) for the general contractor performing the Initial Installations. Tenant hereby agrees that Landlord shall not be required to reimburse Tenant for any amount of the Landlord’s Construction Loan or Landlord’s Additional Construction Loan for an applicable Phase until such time that Tenant has expended all amounts required to complete the applicable Initial Installations other than the Landlord’s Construction Loan and Landlord’s Additional Construction Loan. At such time that Tenant has expended all such amounts, Tenant shall, on a monthly basis, deliver to Landlord an updated schedule of work, any changes to such budget and GMP and evidence of payment by Tenant of all amounts set forth in such budget other than the Landlord’s Construction Loan and Additional Construction Loan.

 

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Provided that as of the date on which Landlord is requested to make payment of the Landlord’s Construction Loan and Landlord’s Additional Construction Loan, if applicable, this Lease is in full force and effect, and (ii) no Event of Default then exists, Landlord shall make progress payments on account of the same to Tenant on a monthly or, if requested by Tenant, a less frequent basis. Each of Landlord’s progress payments shall be limited to the amount equal to the costs and expenses billed by Tenant during the immediately preceding month or such longer period covered by such requisition (as certified by an authorized representative of Tenant) by Tenant’s consultants, contractors, subcontractors and material suppliers, or other parties entitled to payment for costs described above (excluding any amounts which have been subject to previous disbursements pursuant to the foregoing). Such progress payments shall be made within thirty (30) days next following the delivery to Landlord of the completed requisition. Each requisition shall be executed by an authorized representative of Tenant, and shall be accompanied by (i) copies of conditional waivers of lien from all contractors, subcontractors, material suppliers, and paid design professionals performing work, providing materials or performing services for each such contractor, subcontractor, supplier and professional covering all work, materials and services which were the subject of previous progress payments by Landlord and Tenant, (ii) a certification from Tenant’s architect that the work for which the requisition is being made has been performed substantially in accordance with Plans approved by Landlord, and (iii) such other documents and information as Landlord may reasonably request consistent with the requirements of landlords of similar properties. Landlord shall make the final advance of the upon submission by Tenant to Landlord of Tenant’s requisition therefor accompanied by all documentation required under the foregoing provisions, together with (A) proof of the satisfactory completion of all required inspections and issuance of any required approvals, permits and sign-offs for the Initial Installations by Governmental Authorities having jurisdiction thereover, (B) final “as-built” plans and specifications for the Initial Installations, and (C) issuance of final lien waivers by all contractors, subcontractors, material suppliers, and design professionals covering all of the Initial Installations. Nothing in this Section 2.3 shall be deemed to make any third party, including any contractor, subcontractor, materialman, laborer, architect, engineer, attorney or other person or entity, a third party beneficiary. With respect to the Landlord’s Construction Loan, (a) Tenant shall begin requisitioning the Landlord’s Construction Loan no later than eighteen (18) months after the date on which Tenant commences paying Base Rent for an applicable Phase in accordance with Exhibit D, and (b) upon the occurrence of the date which is twenty-four (24) months after the date on which Tenant commences paying Base Rent for an applicable Phase in accordance with Exhibit D, any amount of the Landlord’s Construction Loan applicable to such Phase which has not been previously requisitioned by Tenant shall be retained by Landlord and Tenant shall have no further right or claim thereto.

G.    Landlord’s Plans Contribution. Landlord shall contribute Landlord’s Plans Contribution towards the cost of plans prepared for the performance of Initial Installations. Landlord shall, within thirty (30) days of receipt of paid invoices from Tenant, pay the Landlord’s Plans Contribution to Tenant.

Section 2.3     Use. The Leased Premises shall be used and occupied by Tenant solely for the Permitted Use and for no other purpose. Tenant shall not use the Leased Premises or allow the Leased Premises to be used in a manner constituting a Prohibited Use. If Tenant uses the Leased Premises for a purpose constituting a Prohibited Use, violating any Requirement, or

 

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causing the Building and/or the Project to be in violation of any Requirement, then Tenant shall promptly discontinue such use upon notice of such violation. Tenant, at its expense shall procure and at all times maintain and comply with the terms of all licenses and permits required for the lawful conduct of the Permitted Use in the Leased Premises.

Section 2.4     Base Rent. Commencing on the applicable Commencement Date, Tenant agrees to pay the Base Rent to Landlord for each month during the Lease Term as provided in Exhibit D attached hereto. Base Rent shall be due and payable in advance on the first day of the month without notice or demand, and without any set-off, counterclaim, abatement or deduction whatsoever. If the applicable Commencement Date is a day other than the first day of a calendar month or in the event this Lease terminates on such other than the last day of a calendar month, then Base Rent for each month or months shall be prorated and the installment or installments so prorated shall be paid in advance. In the event that Tenant fails to make any payment of Base Rent or any other amount payable to Landlord hereunder within ten (10) days after the date such payment becomes due and payable, a late charge in an amount equal to the greater of: (i) two percent (2%) of such payment; or (ii) $150.00, shall also become due and payable to Landlord by Tenant, such late charge being for Landlord’s administrative and other costs and is in addition to and cumulative with any other rights and remedies which Landlord may have hereunder with regard to the failure of Tenant to make any payment of Base Rent or any other sum due hereunder.

Section 2.5     PILOT Payments. The Building is currently exempt from real estate taxes and Landlord pays to Prime Lessor an amount in lieu of such real estate taxes pursuant to a Payment in Lieu of Tax Agreement (“PILOT Agreement”). Commencing as of the expiration of the Phase I Rent Abatement Period, Tenant shall pay to Landlord an amount equal to twenty (20%) of the Base Rent due hereunder on the first day of each calendar month for such calendar month on account of PILOT payments required to be made by Landlord to the Prime Lessor under the Prime Lease (such payments hereinafter referred to as “PILOT Payments”). If during the Term the PILOT Agreement is terminated and the Building and/or Project subsequently becomes subject to general real estate taxes in the City of Boston, then in lieu of such PILOT Payments, Tenant shall to Landlord Tenant’s Proportionate Share of the amount of real estate taxes then imposed on the Building and/or Project on account of the Leased Premises. In addition, if during the Term any other tax, assessment, impositions or the like is imposed on the Building and/or Project, then Tenant shall pay to Landlord Tenant’s Proportionate Share of all such other taxes, assessments, impositions or the like.

Section 2.6     Tenant’s Proportionate Share of Operating Costs. In addition to the payment of Base Rent and PILOT Payments, Tenant shall pay to Landlord Tenant’s Proportionate Share of Operating Costs in accordance with the following provisions:

A.    For each calendar year, Landlord shall furnish to Tenant a statement setting forth Landlord’s reasonable estimate of Tenant’s Proportionate Share of Operating Costs, if any (the “Expense Estimate”). Tenant shall pay to Landlord the amount of such Expense Estimate in monthly installments of 1/12th each on a monthly basis contemporaneously with the payment of Base Rent.

 

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B.    If at any time Landlord shall have reasonable grounds to believe that the amount of actual Operating Costs incurred and to be incurred will vary from the Expense Estimate, then Landlord reserves the right to revise such estimates accordingly by written notice to Tenant. Thirty (30) days after notice of any such revision, the monthly payments due and payable to Landlord by Tenant under this Section shall be increased to an amount which will amortize such revised estimate over the remainder of the calendar year in which any such revision is made by Landlord.

C.    Within one hundred and eighty (180) days after the end of any calendar year Landlord shall provide Tenant with a statement in reasonable detail showing actual Operating Costs for such calendar year (a “Statement”). If the Statement shows that Tenant’s payments for Tenant’s Proportionate Share of Operating Costs exceed the actual amount of Tenant’s Proportionate Share of Operating Costs for such calendar year, then Landlord shall credit the amount of such excess against subsequent payments of rent due hereunder or, in the event that the Lease has expired or terminated prior to delivery of the Statement, promptly (but in any event within thirty (30) days of the completion of the Statement for that year) refund the amount of such excess after first deducting any amounts due from Tenant hereunder. If the Statement shows that Tenant’s payments for Tenant’s Proportionate Share of Operating Costs are less than the actual amount of Tenant’s Proportionate Share of Operating Costs, then Tenant shall pay the amount of such deficiency within thirty (30) days after delivery of the Statement to Tenant.

D.    If the Commencement Date is a day other than the first day of a calendar month or if this Lease terminates on a day other than the last day of a calendar month, then the amounts due and owing by Tenant to Landlord under this Section shall be prorated accordingly.

E.    Landlord’s failure to render any Statement on a timely basis with respect to any calendar year shall not prejudice Landlord’s right to thereafter render a Statement with respect to such calendar year or any subsequent calendar year, nor shall the rendering of a Statement prejudice Landlord’s right to thereafter render a corrected Statement for that calendar year.

F.    Each Statement sent to Tenant shall constitute an account stated between Landlord and Tenant and shall be conclusively binding upon Tenant and Landlord unless Tenant (i) pays to Landlord when due the amount set forth in such Statement, without prejudice to Tenant’s right to dispute such Statement and (ii) within 120 days after such Statement is sent, sends a written notice to Landlord notifying Landlord of its desire to review or audit the Operating Costs and Taxes for the subject calendar year. The documents, books and records shall be made available to Tenant at an office of Landlord or its property manager located in The Commonwealth of Massachusetts, at mutually acceptable times and on mutually acceptable days. Tenant agrees that Tenant will not employ, in connection with any dispute under this lease, any person or entity who is to be compensated in whole or in part on a contingency fee basis. If Tenant identifies any objections to the Statement within 60 days after the date that Landlord makes the documents, books and records available to Tenant that are necessary to complete such review and the parties are unable to resolve any dispute as to the correctness of such Statement within thirty (30) days following such notice of objection, either party may refer the issues raised to a nationally recognized, independent public accounting firm selected by Tenant, and

 

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reasonably approved by Landlord, and the decision of such accountants shall be conclusively binding upon Landlord and Tenant. In connection therewith, Tenant and such accountants shall execute and deliver to Landlord a confidentiality agreement, in form and substance reasonably satisfactory to Landlord, whereby such parties agree not to disclose to any third party any of the information obtained in connection with such review (subject to customary exclusions for disclosures pursuant to Requirements and the like). The parties shall split the cost of the independent auditor and Tenant shall pay its fees and expenses relating to its audit, unless such accountants determine that Landlord overstated Operating Costs or Taxes by more than four (4%) for such calendar year, in which case Landlord shall pay such fees and expenses and Tenant shall have the right to review the two prior year Statements to confirm that the same overcharges were not made therein. Neither Tenant nor Landlord shall have the right to dispute by judicial proceeding or otherwise the accuracy of any determination by the independent auditor.

Section 2.7     Separately Metered Utilities and Utility Usage. Tenant shall pay upon demand or receipt of an invoice all amounts due and owing with respect to utilities furnished to the Leased Premises which may, from time to time, be separately measured or reasonably estimated by a licensed engineer selected by Landlord, and charged to Tenant by Landlord, or by any public utility as may furnish such utilities to the Leased Premises.

Section 2.8     Additional Rent; Payments. All sums of money due and payable by Tenant to Landlord under the terms of this Lease in addition to the Base Rent shall constitute additional rent (“Additional Rent”) hereunder for the purposes of the collection thereof. Landlord shall have the same remedies for default in the payment of Additional Rent as are available to Landlord in the case of a default in the payment of Base Rent Base. Rent and/or Additional Rent are sometimes referred to as “rent.” All rent shall be paid by check drawn on good and immediately available funds at Landlord’s address as provided herein (or at such other address as may be designated by Landlord from time to time). Tenant agrees to pay all rent under this Lease at the times and in the manner herein provided, without set-off, counterclaim, abatement or deduction whatsoever.

ARTICLE III.

Section 3.1     Utilities. Landlord shall use reasonable efforts to furnish or cause public utilities to furnish electricity to each Bay within the Leased Premises with 19 watts per square foot of electric capacity and water to the Building to the extent and in such manner as is reasonably deemed by Landlord to be adequate for Tenant’s use and occupancy of the Leased Premises.

Section 3.2     Services to be Furnished by Landlord to Tenant. Landlord shall furnish or cause to be furnished to Tenant during the Lease Term the following services consistent with first class services being provided in comparable buildings:

A.    Heating, ventilation and air conditioning to the Leased Premises during Normal Business Hours. Heating, ventilation and air conditioning supplied to the Leased Premises after Normal Business Hours shall be subject to the reasonable overtime hourly rates then charged by the Landlord at the Building;

 

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B.    Non-exclusive passenger elevator service and non-exclusive freight elevator service;

C.    Non-exclusive use of loading facilities for the Building, as the same may be relocated by Landlord from time to time in its sole discretion;

D.    Maintenance and repair in good condition and in compliance with Requirements of the mechanical systems, structural and exterior elements of the Building, including but not limited to the foundations, curtainwall, exterior glass, beams, and shafts (including elevator shafts), roof system (including the membrane), structural floor slabs and columns of the Building, bearing and exterior walls and other public areas of the Building; the roadways, walkways, parking areas and other Common Areas of the Project, clean with all snow and ice removed therefrom;

E.    Standard building signage identifying Tenant in the building lobby and floor directories on any multi-tenant floor; and

F.    Janitorial service for the Common Areas of the Building.

Except as specified above, such services shall be provided during Normal Business Hours, at such locations, in such manner and to the extent reasonably deemed by Landlord to be adequate for the use and occupancy of the Building, with due regard for the prudent control of energy.

Section 3.3     Landlord’s Failure to Provide Utilities or Services. Failure by Landlord to any extent to furnish or cause to be furnished the utilities or services described in Sections 3.1 and 3.2, or any cessation or interruption thereof, resulting from causes beyond Landlord’s reasonable control, including without limitation mechanical breakdown, overhaul, maintenance, or repair of equipment, strikes, riots, acts of God, shortages of labor or material, or governmental laws, regulations or restrictions or any other similar causes shall not render Landlord liable in any respect for damages to either person or property, be construed as an eviction of Tenant, result in an abatement of rent or relieve Tenant from its obligation to perform or observe any covenant or agreement contained in this Lease provided, however, that Landlord shall use all reasonable efforts to restore any such cessation or interruption of such utilities or service, and notwithstanding any other provision of this Lease to the contrary, if as a result of any such cessation, interruption, or suspension, for a period of seven (7) consecutive Business Days Tenant is unable to conduct its permitted business activities in the Leased Premises, then in any such event Rent shall equitably abate thereafter so long as such inability continues.

Section 3.4     Peaceful Enjoyment. Subject to the other terms of this Lease, Landlord covenants that Tenant shall and may peacefully have, hold and enjoy the Leased Premises for the Lease Term free of any claims by any party claiming by, through or under Landlord, provided that Tenant pays the rent to be paid by Tenant under this Lease and performs all of Tenant’s covenants and agreements herein contained.

 

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ARTICLE IV.

Section 4.1     Operation. Tenant shall operate the Leased Premises only for the Permitted Use, consistent with the terms of this Lease.

Section 4.2     Alterations, Improvements and Additions.

A.    Any and all furnishing, equipping or improving of or other alteration, improvement or addition to the Leased Premises shall be:

(i)    made and kept at the Leased Premises at Tenant’s sole cost, risk, and expense;

(ii)    performed in a prompt, good and workmanlike manner with labor and materials of such quality as Landlord may reasonably require in full compliance with all Requirements;

(iii)    constructed in accordance with plans and specifications approved in writing by Landlord prior to the commencement of any such work (which approval shall not unreasonably be withheld, conditioned or delayed in the case of non-structural work);

(iv)    subject to causes beyond the reasonable control of Tenant, prosecuted diligently and continuously to completion so as to minimize interference with the normal business operations of other tenants in the Building, the performance of Landlord’s obligations under this Lease or any mortgage or underlying lease covering or affecting all or any part of the Building or the land upon which the Building is situated and any work being done by contractors engaged by Landlord with respect to or in connection with the Building; and

(v)    performed by contractors approved in writing by Landlord (which approval shall not unreasonably be withheld, conditioned or delayed) and if requested by Landlord all such contractors and work shall be bonded in a manner satisfactory to Landlord.

B.    Any and all alterations, improvements and additions to the Leased Premises shall constitute a part of the Leased Premises. All alterations, improvements and additions constructed by Landlord, shall be, and remain, the property of Landlord. Absent an election by Landlord to require removal of any improvements or additions at the time of their approval by Landlord, all alterations, improvements and additions constructed by Tenant shall remain the property of Landlord at the end of the term of this Lease. Tenant shall be entitled to the exclusive right to depreciate and amortize any alterations or improvements that it constructs at its sole cost and take investment tax credits with respect thereto. Tenant shall have no (and hereby waives all) other rights to payment or compensation for such alteration, improvement or addition to the Leased Premises.

 

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C.    No sign may be installed or maintained by Tenant at the Leased Premises except with the prior written consent of Landlord and in accordance with rules and regulations therefor adopted from time to time by Landlord.

D.    No approval which may be given by Landlord to Tenant pursuant to this Lease, if any, shall (i) constitute an approval (or even be deemed to have confirmed Landlord’s review) with respect to compliance with any codes, building laws or other governmental requirements or (ii) relieve Tenant of any of its obligations as set forth in this Lease.

E.    Tenant shall not employ, or permit the employment of, any contractor, mechanic or laborer, or permit any materials to be delivered to or used in the Building and/or the Project, if, in Landlord’s sole reasonable judgment, such employment, delivery or use will interfere or cause any conflict with other contractors, mechanics or laborers engaged in the construction, maintenance or operation of the Building and/or the Project by Landlord, Tenant or others. If such interference or conflict occurs, upon Landlord’s request, Tenant shall cause all contractors, mechanics or laborers causing such interference or conflict to leave the Project immediately.

Section 4.3     Maintenance and Repairs. Subject to reasonable wear and use, having in mind good maintenance practices, damage by fire or other insured casualty for which proceeds sufficient for restoration are paid to Landlord only excepted, Tenant shall maintain the Leased Premises and all Trade Fixtures and other improvements situated therein in first class, clean and safe condition.

Section 4.4     Trade Fixtures. Landlord and Tenant agree that all Trade Fixtures in the Leased Premises shall be and remain the property of Tenant and, so long as Tenant is not in default hereunder, may be removed by Tenant prior to or upon the expiration of the Lease Term and in any event shall be removed at the request of the Landlord upon the expiration of the Lease Term. Tenant shall at its sole cost and expense repair any damage caused by such removal and restore the Leased Premises to such condition as existed prior to the installation of such Trade Fixtures. Any such repair and restoration shall be performed in accordance with the conditions set forth in Sections 4.2(a) hereof. Any Trade Fixtures which are not removed from the Leased Premises shall at Landlord’s election become the property of Landlord or Landlord may remove and dispose of the same, at Tenant’s cost, without necessity of further notice to Tenant. Tenant shall have no (and hereby waives all) rights to payment or compensation for any such item(s). Tenant shall have no right to remove property other than Trade Fixtures and Tenant’s personal property from the Leased Premises without Landlord’s prior written approval, which Landlord may withhold in Landlord’s sole discretion. In no event shall lighting fixtures or light bulbs, whether recessed, cans, track lights or otherwise, be considered Trade Fixtures and Tenant shall not have the right to remove any such lighting from the Leased Premises.

Section 4.5     Laws and Regulations: Building Rules. Tenant shall comply with all laws, ordinances, rules and regulations of any governmental authority relating to the Leased Premises, including the furnishing, equipping and improving thereof and Tenant’s use therein. Tenant shall, and shall cause its employees, agents, customers and invitees to, comply with the Building Rules.

 

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Section 4.6     Landlord’s Access. Landlord and its representatives and contractors shall have the right to enter upon the Leased Premises at any reasonable time for any reasonable purpose (including, without limitation, the performance of repairs, alterations, modifications, improvements or additions thereto) and at any time for any emergency. Landlord shall make reasonable efforts to enter only during Normal Business Hours and upon reasonable advance written notice when possible and reasonable advance oral notice when such written notice is not possible. Landlord agrees that to the extent possible it will not unreasonably interfere with the conduct of Tenant’s business in the exercise of its rights hereunder.

Section 4.7     Assignment and Subletting by Tenant.

A.    Notwithstanding any other provisions of this Lease, Tenant covenants and agrees that it will not assign this Lease or sublet (which term, without limitation, shall include the granting of concessions, licenses, and the like) the whole or any part of the Leased Premises without in each instance having first (i) received the express written consent of the Landlord, which consent shall not be unreasonably withheld, delayed or conditioned, and (ii) in the case of assignment, if such consent is given by Landlord, caused the assignee or transferee to execute and deliver to Landlord an instrument reasonably acceptable to Landlord whereby such assignee or transferee assumes all obligations of Tenant under this Lease. In connection with any request by Tenant for such consent to assignment or sublet, Tenant shall provide Landlord with all relevant information requested by Landlord concerning the proposed assignee’s or tenant’s financial responsibility, creditworthiness and business experience to enable Landlord to make an informed decision. Tenant shall reimburse Landlord promptly for all reasonable out-of-pocket expenses incurred by Landlord and all reasonable attorneys’ fees in connection with the review of Tenant’s request for approval of any assignment or sublease.

B.    Upon receipt from Tenant of a request to assign the Lease or to sublet one or more Bays for the balance of the Lease Term and such information, Landlord shall have the right, but not the obligation, to be exercised in writing within ten (10) calendar days after its receipt from Tenant of such request and information, (i) if the request is to assign the Lease, to terminate this Lease, or (ii) if the request is to sublet all or a portion of the Leased Premises, to release Tenant from its obligations under this Lease with respect to the portion of the Leased Premises subject to the proposed sublet for the term of the proposed sublease, in either case as of the date set forth in Landlord’s notice of exercise of such option, which date shall not be less than thirty (30) days nor more than ninety (90) days following the giving of such notice. If Landlord exercises its right of recapture within such 10 day period, Tenant shall have the right, within five (5) days thereafter, to rescind its request to assign or sublet, in which case such Landlord recapture election shall be null and void. In the event of an assignment or a sublet of the Leased Premises where Landlord exercised either of these options, Tenant shall surrender possession of the entire Leased Premises (in the event of an assignment or sublease of all of the Leased Premises) or the portion of the Leased Premises sublet (in the event of a sublet of a portion of the Leased Premises) on the date set forth in Landlord’s notice of its option exercise, in accordance with the provisions of this Lease relating to surrender of the Leased Premises at the expiration of the term. If Landlord shall exercise its option with respect to a sublet of less than the entire Leased Premises, Base Rent payments and Tenant’s Proportionate Share shall be readjusted proportionately according to the ratio that the number of square feet and the portion of the space surrendered compares to the floor area of Tenant’s Leased Premises for the duration of the sublet.

 

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C.    Tenant shall not offer to make, or enter into negotiations with respect to an assignment, sublease or transfer: (i) to any entity owned by, or under the common control of, whether directly or indirectly, a tenant in the Building or any adjacent building in the 19-27 Drydock building complex owned by Landlord or any affiliates thereof provided, however, that in the event that Landlord or an affiliate thereof purchases 27 Drydock Avenue after the date hereof, such restriction shall only be applicable to any tenant then occupying more than one (1) bay within 27 Drydock Avenue and any tenants that first take occupancy of 27 Drydock Avenue after the date that Landlord acquires 27 Drydock Avenue; or (ii) to any party with whom Landlord has been negotiating within the prior three (3) months with respect to other space in the Building or any adjacent building in the 19-27 Drydock building complex owned by Landlord or any affiliates thereof; and (iii) Tenant shall not publicly advertise to assign or sublet this Lease for an aggregate consideration of less than 100% of the fixed rent at which Landlord is then offering to lease other comparable space in the Building for comparable use (Landlord acknowledging that listing such space with a broker or other real estate marketing service and providing for the quoting of rates upon inquiry is permitted pursuant to this clause and nothing herein shall prevent Tenant from assigning or subletting all or a portion of the Leased Premises for a lower fixed rent so long as it abides by the foregoing restriction as to advertising. In no event shall the Leased Premises be used by any assignee, sublessee, concessionaire, licensee or any other person except for the Permitted Use. In any case where Landlord shall consent to such assignment or subletting, the tenant named herein shall remain fully liable for the obligations of Tenant hereunder, including, without limitation, the obligation to pay the rent and other amounts provided under this Lease. For the purposes of this Lease, the entering into of any management agreement or any agreement in the nature thereof transferring control of and any substantial percentage of the profits and losses from the business operations of Tenant in the Leased Premises to a person or entity other than Tenant, or otherwise having substantially the same effect, shall be treated for all purposes as an assignment of this Lease and shall be governed by the provisions of this Section.

D.    If Tenant is a legal entity, the transfer (by one or more transfers), directly or indirectly, by operation of law or otherwise, of a majority of the stock or other beneficial ownership interest in Tenant or of all or substantially all of the assets of Tenant (collectively “Ownership Interests”) shall be deemed a voluntary assignment of this Lease; provided, however, that the provisions of this Section 4.7 shall not apply to the transfer of Ownership Interests in Tenant (i) if and so long as Tenant is publicly traded on a nationally recognized stock exchange, or (ii) between and among the principals or members of Tenant, incident to the admittance of principals or members into, or the exiting of principals or members from, the entity comprising Tenant in the ordinary course of the operations of Tenant. Notwithstanding the foregoing, Tenant shall have the right, without obtaining the prior written consent of Landlord, (x) to assign this Lease or sublet the Leased Premises or any part thereof to any Related Entity (as hereinafter defined) of Tenant, and (y) to assign the Lease to a purchaser or other transferee in connection with any sale by Tenant of all or substantially of its assets in any transaction or series of transactions, or to any other successor entity which may result by way of merger, consolidation, sale, acquisition, financing, refinancing, transfer, leveraged buy-out or otherwise. As used herein, the term “Related Entity” shall mean any entity controlled by, under common control with, or in control of Tenant.

 

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E.    In the event Tenant assigns this Lease (which term shall include the entering into of any management or similar control transferring agreement, and also shall include the sale or transfer of stock, as aforesaid), or sublets the whole or any part of the Leased Premises, in either case in violation of the terms and provisions of this Section 4.7, in addition to and without limiting any of Landlord’s rights and remedies on account of the resulting default hereunder by Tenant, Landlord shall have the right to terminate this Lease by giving Tenant notice of Landlord’s desire so to do, in which event this Lease shall terminate on the date specified by Landlord in such notice all as if such date were the date specified herein for the expiration hereof. In the event of any assignment or subletting (other than an assignment or sublet that does not require Landlord’s consent hereunder), Tenant shall pay Landlord fifty percent (50%) of all rent and other consideration which Tenant receives as a result thereof that is in excess of the rent payable to Landlord for the portion of the Leased Premises and Term covered by the assignment or sublease. Tenant shall pay Landlord for Landlord’s share of the excess within thirty (30) days after Tenant’s receipt of the excess, after first deducting from the excess all reasonable and customary expenses directly incurred by Tenant attributable to the assignment or sublease.

Notwithstanding any other provisions of this Lease, neither Tenant nor any direct or indirect assignee or subtenant of Tenant may enter into any lease, sublease, license, concession or other agreement for use, occupancy or utilization of space in the Leased Premises which would require the payment of rent based on the net profits of any person or of any consideration that would not fall within the definition of “rents from real property”, as that term is defined in Section 856(d) of the Internal Revenue Code of 1986, as amended.

Section 4.8     Light, Air and View. Neither the diminution nor the shutting off of any light, air or view nor any other effect on the Leased Premises by any structure or condition now or hereafter existing on property adjacent to the Building shall affect this Lease, abate rent or otherwise impose any liability on Landlord.

Section 4.9     Taxes. Tenant shall pay all ad valorem and similar taxes or assessments levied upon or applicable to any of Tenant’s Trade Fixtures or any other equipment, fixtures, furniture and other property situated in the Leased Premises and all license and other fees or charges imposed on the business conducted by Tenant on the Leased Premises. Upon request by Landlord, Tenant will furnish Landlord annually with official tax receipts and other official receipts showing payment of such taxes, assessments, fees and charges. If Landlord shall be required to pay a higher ad valorem tax as a result of Tenant’s leasehold improvements, then Tenant shall pay to Landlord, upon demand, the amount of such increase in ad valorem taxes.

Section 4.10     Liens. Tenant shall not place or permit to be placed any lien, affidavit, charge or other encumbrance or order upon the Building or the Leased Premises or any part thereof or any interest therein. In the event that any such lien, affidavit, charge, encumbrance or order upon the Building or the Leased Premises or any part thereof or any interest therein attaches, regardless of the validity or enforceability thereof, Tenant shall, within fifteen (15) days, cause the same to be discharged of record by payment, bonding or otherwise.

 

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Section 4.11     Subordination to Mortgages and Leases. This Lease shall be subject and subordinated at all times to (a) all underlying leases now existing or which may hereinafter be executed affecting the Building, including but not limited to the Prime Lease, (b) the lien or liens of all mortgages and deeds of trust in any amount or amounts whatsoever now or hereafter placed on the Building or Landlord’s interest or estate therein or on or against such underlying leases and (c) all renewals, modifications, consolidations, replacements and extensions thereof. The subordinations set forth herein shall be self-operative and effective without the necessity of execution of any further instruments by any party; provided, however, Tenant shall execute and deliver upon demand any instruments, releases or other documents requested by any lessor or mortgagee for the purpose of confirming the provisions hereof or further subjecting and subordinating this Lease to such underlying leases, mortgages or deeds of trust. Landlord shall use reasonable and diligent efforts to obtain a non-disturbance agreement in commercially reasonable form for Tenant’s benefit from the landlord of any such existing underlying lease and the holder of any such existing lien and, notwithstanding the foregoing, the subordinations set forth herein as to any future leases or liens shall be subject to obtaining a non-disturbance agreement in commercially reasonable form for Tenant’s benefit from the landlord of any such future underlying lease and the holder of any such future lien. In the event of the enforcement by the holder of or trustee or the beneficiary under any such mortgage or deed of trust of the remedies provided for by law or by such mortgage or deed of trust, upon request of any person or party succeeding to the interest of Landlord as a result of such enforcement, Tenant will automatically attorn to and become the tenant of such successor in interest without change in the terms or provisions of this Lease; provided, however, that such successor in interest shall not be bound by (i) any payment of rent or Additional Rent for more than one month in advance except prepayments actually delivered to such successor in the nature of security for the performance by Tenant of its obligations under this Lease, (ii) any payment of the security deposit or any other deposit unless such security deposit or other deposit has actually been delivered to such successor or (iii) any amendment or modification of this Lease made without the written consent of such holder or such trustee or such beneficiary or such successor in interest, and Tenant shall execute and deliver an instrument or instruments confirming the attornment and other agreements provided for herein, provided that such successor shall recognize this Lease as remaining in full force and effect and Tenant’s rights to possession remain undisturbed so long as Tenant is not in default hereunder beyond any applicable grace periods. Further, notwithstanding anything contained in this Lease to the contrary, in the event of any default by Landlord in the performance of its covenants or obligations hereunder which would give Tenant the right to terminate this Lease, Tenant shall not exercise such right unless and until (i) Tenant gives written notice of such default (which notice shall specify the exact nature of said default and the steps necessary to cure same) to the holder of any mortgage or deed of trust encumbering the Building who has theretofore notified Tenant in writing of its interest and the address to which notices are to be sent, and (ii) such holder fails to commence to cure, or cause to be commenced to be cured, such default within thirty (30) days from the giving of such notice by Tenant. Landlord agrees to transfer the security deposit or any other deposit to the successor in interest to Landlord’s interest in the Lease.

Section 4.12     Certificates. At any time and from time to time during the Lease Term, upon fifteen (15) days after written request by the other (the “Requesting Party”), Tenant or Landlord, as applicable, will execute, acknowledge and deliver to the Requesting Party and any other persons specified by the Requesting Party a certificate certifying (i) that this Lease is in full

 

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force and effect, (ii) the date and nature of each modification to this Lease, (iii), the date to which rental and other sums payable under this Lease have been paid, (iv) that such party is not aware of any default under this Lease which has not been cured, except such defaults as may be specified in said certificate, and (v) such other matters as may be reasonably requested by the Requesting Party. Any such certificate may be relied upon by the Requesting Party and by any other person to whom it is delivered for such purpose..

Section 4.13     Limitation on Weight. Tenant shall not permit upon the floor of the Leased Premises any weight exceeding three hundred (300) pounds per square foot of floor area covered.

Section 4.14     Access to Books and Records. Tenant will permit the Landlord and its duly authorized agents to examine, and shall make available for audit, copy and inspection, at any reasonable time, but not more often than annually unless compelled to do so by proper legal authority, by Landlord and its duly authorized agents, Tenant’s books, contracts and records relating solely to its employment practices with respect to compliance with Exhibit C attached hereto. Tenant agrees that if, as a result of any audit, copy or inspection of such books, contracts, records or other papers, Landlord becomes aware of any default by Tenant hereunder, Tenant shall pay all costs and expenses incurred by Landlord in connection with such audit, copy or inspection. Landlord shall not disclose such information to third parties except as may be required by the Prime Lease with respect to employment practices, or by law or legal process or order of any governmental authority or agency, or except to Landlord’s lenders and prospective purchasers. Upon request by Landlord, Tenant will furnish to Landlord a copy of Tenant’s and each guarantor’s most recent year-end financial statement, including a profit and loss statement from operations, balance sheet, income statement and sales reports which request shall be made no more often than once in any calendar year unless Tenant is in default hereunder. All such financial information provided by Tenant shall be treated by Landlord as confidential and shall not be disclosed by Landlord to any third party, other than to lenders, investors and legal and financial advisors on the same condition of confidentiality.

Section 4.15     Restorative Work: Renovations. Landlord reserves the right to make all changes, alterations, additions, improvements, repairs or replacements to the Project, the Building and the Common Areas, including changing the arrangement or location of entrances or passageways, doors and doorways, corridors, elevators, stairs, toilets or other Common Areas (collectively, “Restorative Work”), as Landlord deems necessary or desirable, provided that (a) the level of any Landlord Service shall not decrease in any material respect from the level required of or provided by Landlord under this Lease as a result thereof (other than temporary changes in the level of such services during the performance of any such Restorative Work), and (b) Tenant is not deprived of access to the Leased Premises and such access is reasonably equivalent to the access currently provided thereof (other than temporary changes in the level of access during the performance of any such Restorative Work) and (c) Tenant is not deprived of reasonable use of the Premises for the conduct of its business. There shall be no rent abatement or allowance to Tenant for a diminution of rental value, no actual or constructive eviction of Tenant, in whole or in part, no relief from any of Tenant’s other obligations under this Lease, and no liability on the part of Landlord by reason of inconvenience, annoyance or injury to business arising from Landlord, Tenant or others performing, or failing to perform, any Restorative Work.

 

 

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Section 4.16     Boston Marine Industrial Park. Tenant hereby acknowledges that: (1) the Leased Premises are located in a working industrial port within the South Boston Designated Port Area and the Boston Marine Industrial Park and adjacent to the Massport Black Falcon Cruise Terminal, all of which are served by designated truck routes, potential rail routes, waterborne trade routes, and flight paths into Logan International Airport, and all of which are essential priorities in serving the public interest and the working port area; (2) such Leased Premises are in close proximity to active general industrial, marine industrial, and cruiseport operations that may occur on an episodic, 24-hour per day, 365-days per year basis and are of vital importance to the economy of the area and the region; and (3) such routes, infrastructure, and working industrial port activities may from time-to-time lawfully generate noise, dust, odor, truck traffic, and other conditions not ordinarily found in traditional office and retail districts.

ARTICLE V.

Section 5.1     Condemnation. If the Leased Premises shall be taken or condemned (or conveyed in lieu of any such taking or condemnation) for any public purpose or complete access thereto shall be so taken to such an extent as to render the Leased Premises untenantable, this Lease, at the option of either Landlord or Tenant by written notice to the other, shall terminate effective as of the date upon which possession of the Leased Premises is taken by such authority, and all rent accrued to the time of such termination shall be paid by Tenant to Landlord. In the event of any such taking or condemnation (or conveyance in lieu thereof) of twenty-five percent (25%) or more of the square footage of the Building, Landlord may elect to terminate this Lease effective as of the date upon which possession to such portion of the Building is taken, by written notice to Tenant given no later than the earlier of sixty (60) days after receiving notice of the taking and the date upon which possession to such portion of the Building is taken, and all rent accrued to the time of such termination shall be paid by Tenant to Landlord. In the event of any such taking or condemnation (or conveyance in lieu thereof) of any material portion of the Premises or access thereto shall be so taken to such an extent as to render the Leased Premises unusable for the purposes of Tenant’s reasonable business operations, Tenant may elect to terminate this Lease effective as of the date upon which possession to such portion of the Premises is taken by written notice to Landlord given no later than the earlier of sixty (60) days after receiving notice of the taking and the date upon which possession to such portion of the Building is taken, and all rent accrued to the time of such termination shall be paid by Tenant to Landlord. All proceeds of any taking, condemnation or conveyance in lieu thereof of the Leased Premises, the Building or any part thereof shall belong to and be paid to Landlord; provided, however, Tenant shall be entitled to claim, prove and receive in a condemnation proceeding such awards as may be allowed for damages to or the taking of fixtures, equipment and other personal property installed by it which it is herein permitted to remove from the Leased Premises at the end of the Lease Term and moving expenses, but only such awards as shall be separately awarded in addition to (and not out of or in diminishment of) the award made to Landlord.

Section 5.2     Casualty Damage. If the Leased Premises shall be destroyed or damaged by fire or any other casualty, Tenant shall give notice thereof to Landlord immediately upon becoming aware of the same. If the Leased Premises shall be damaged by fire or other insured casualty, so as to render the Leased Premises untenantable in whole or in part and to such an extent that Landlord determines that such damage can be repaired with the application of reasonable diligence within one hundred eighty (180) days, Tenant shall be entitled to a fair

 

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diminution of the rent hereunder until such time as the Leased Premises are made tenantable. If the Leased Premises or any other portion of the Building shall be destroyed or damaged by fire or any other casualty to such an extent that Landlord determines that such damage cannot be repaired with the application of reasonable diligence within one hundred eighty (180) days, and if the Leased Premises are rendered untenantable in whole or in part by reason of such casualty, then, at the option of Landlord, (i) Tenant shall be entitled to a fair diminution of the rent hereunder until such time as the Leased Premises are made tenantable, or (ii) either party may terminate this Lease by written notice to the other given no later than sixty (60) days after the casualty whereupon all rent accrued up to the time of such termination shall be paid by Tenant to Landlord. If the Leased Premises shall be destroyed or damaged by fire or any other casualty during the last two years of the Term such that the Leased Premises are not usable for the reasonable business operations of Tenant, then, at the option of Tenant, Tenant may terminate this Lease by written notice to Landlord given no later than sixty (60) days after the casualty. In addition to the foregoing, if for any cause the Leased Premises or Building shall be so damaged that Landlord shall in its sole judgment decide not to rebuild, then by notice in writing to Tenant by written notice to Tenant given no later than sixty (60) days after the casualty, this Lease shall forthwith terminate and all rent owed up to the time of such termination as set forth in such notice shall be paid by Tenant to Landlord. In no event shall Landlord have any obligation to repair or restore any of Tenant’s goods, Trade Fixtures, furniture or other property placed in or incorporated in the Leased Premises which is destroyed or damaged by fire or any other casualty.

Section 5.3    Insurance.

A.    Landlord shall not be obligated to insure any of Tenant’s goods, Trade Fixtures, furniture or any other property placed in or incorporated in the Leased Premises.

B.    Tenant shall, at its sole cost and expense, procure, and maintain and comply with during the Lease Term (a) Commercial General Liability Insurance applicable to the Leased Premises and its appurtenances to provide contractual liability, personal injury liability, and property damage coverages, with limits of not less than One Million Dollars ($1,000,000) per occurrence and Two Million Dollars ($2,000,000) general aggregate; (b) Property Insurance written on an All Risk or Special Perils form, with coverage for broad form water damage including earthquake, sprinkler leakage, at 100% replacement cost value covering all of Tenant’s business and Trade Fixtures, equipment, movable partitions, furniture, merchandise and other personal property within the Leased Premises and any Leasehold Improvements performed by or for the benefit of Tenant; whether paid by Tenant or Landlord; (c) Business Interruption Insurance for a period of twelve (12) months; (d) Workers’ Compensation Insurance in amounts required by Law; (e) Employers Liability Coverage of at least $1,000,000.00 per occurrence; (f) Automobile Liability Insurance with a minimum combined single limit of liability of at least One Million Dollars ($1,000,000) including coverage for owned, non-owned and hired vehicles; and (g) Umbrella Insurance excess of all liability insurance listed above, except for workers compensation, with limits of not less than Four Million Dollars ($4,000,000) annual aggregate. Any company writing Tenant’s Insurance shall be issued by a company that is licensed to do business in the state of Massachusetts and have an A.M. Best rating of not less than A-VIII. Landlord hereby approves Chubb as Tenant’s insurer. All Commercial General Liability Insurance policies shall name as additional insureds Landlord (or its successors and assignees), the Landlord’s managing agent, any mortgagee and the Prime Lessor for the Building (or any

 

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successor) of which Tenant is provided written notice, and their respective members, principals, beneficiaries, partners, officers, directors, employees, and agents of which Tenant is provided written notice, and other designees of Landlord and its successors as the interest of such designees shall appear and shall be primary and non-contributory with respect to any policies carried by Landlord or any additional insureds.

C.    If and to the extent available from Tenant’s insurer, all policies of insurance required to be maintained by Tenant shall provide that the Landlord shall be given at least thirty (30) days’ prior written notice of any cancellation or non-renewal of any such policy. A duly executed certificate of insurance with respect to each such policy will be deposited with Landlord by Tenant on or before the Commencement Date, and a duly executed certificate of insurance with respect to each subsequent policy shall be deposited with the Landlord at least fifteen (15) days prior to the expiration of the preceding such policy.

D.    Tenant shall not do or permit anything to be done in or about the Leased Premises nor bring nor keep nor permit anything to be brought to or kept therein, which will in any way increase the existing rate of or affect any fire or other insurance which Landlord carries upon any part of the Building or any of its contents, or cause the cancellation or invalidation of any such insurance. If the annual premium to be paid by Landlord with respect to any insurance obtained by Landlord covering any part of the Building or any of its contents shall exceed the standard rates because Tenant’s operations, contents of the Leased Premises or improvements with respect to the Leased Premises result in extra hazardous exposure, Tenant shall pay the excess amount of the premium upon demand by Landlord.

E.    All insurance carried by either Landlord or Tenant covering losses arising out of destruction or damage to the Leased Premises or its contents or to other portions of the Building, or to Tenant’s occupancy and operation of the Leased Premises shall provide for a waiver of rights of subrogation against Prime Lessor, Landlord and Tenant on the part of the insurance carrier, to the extent that the same is permitted under the laws and regulations governing the writing of insurance within the Commonwealth of Massachusetts. Anything in this Lease to the contrary notwithstanding and so long as the following does not invalidate any policy of insurance, Landlord and Tenant each hereby waive to the extent of insurance carried by either party any and all rights of recovery, claims, actions, or causes of action against the other, its agent, officers or employees, or any loss or damage that may occur to the Leased Premises or the Building, or any improvements thereto, which is insured against or should have been insured against under the terms of any insurance policy required to be maintained pursuant to this Section. The waivers set forth in the immediately preceding sentence shall be in addition to, and not in substitution for, any other waivers, indemnities or exclusions of liability set forth in this Lease, including without limitation Sections 5.5 and 5.6 of this Lease.

Section 5.4    Surrender of Leased Premises. Upon termination of this Lease or Tenant’s right to possession of the Leased Premises, Tenant shall peaceably and quietly surrender the Leased Premises to Landlord, broom-clean and in a good state of repair and condition, excepting only ordinary wear and tear (subject to good maintenance practices), or damage due to fire or other insured casualty. Upon termination of this Lease, Tenant will also surrender to Landlord all keys to the Leased Premises and inform Landlord of all combinations on locks, safes and vaults, if any, at the Leased Premises.

 

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Section 5.5     Damages from Certain Causes. To the fullest extent permitted by law, Prime Lessor and Prime Lessor’s agents and employees and Landlord and Landlord’s agents and employees shall not be liable or responsible to Tenant or any person claiming through Tenant for any loss or damage or injury to any property or person in, upon or about the Leased Premises or any other portion of the Building arising at any time from any cause other than to the extent by reason of the negligence or willful misconduct of Landlord or of Landlord’s employees or agents acting within the scope of their employment or authority.

Section 5.6     Hold Harmless. Neither Prime Lessor nor Landlord shall be liable to Tenant, or to Tenant’s agents, employees, contractors, customers or invitees or to any other person whomsoever for any injury or damage to person or property caused by or arising out of any act, omission or neglect of Tenant, its agents, contractors, subtenants, employees, customers, licensees, concessionaires or invitees or any other person entering the Building under express or implied invitation of Tenant, and Tenant agrees to indemnify and hold Landlord and Prime Lessor harmless from all liability and claims for any such damage and from all claims, costs, damages or liabilities arising out of any of the foregoing, including without limitation reasonable attorneys’ fees and all other out-of-pocket expenses incurred in connection therewith. In any case in which Tenant has agreed to indemnify Prime Lessor or Landlord or any other person, such indemnity shall be deemed to include an obligation on the part of Tenant to appear on behalf of the indemnified party in any and all proceedings involving a claim or cause of action covered by such indemnity and to defend the indemnified party against such claim or cause of action, all at Tenant’s cost; provided, however, at the option of any party indemnified hereunder, such party shall have the right to appear on its own behalf, employ its own legal counsel and defend any claim or cause of action indemnified in this Section, all the reasonable costs thereof to be at Tenant’s expense.

ARTICLE VI.

Section 6.1     Default by Tenant. The occurrence of any one or more of the following shall constitute a default by Tenant under this Lease:

A.    Failure of Tenant to timely pay rent or any other amounts payable under this Lease as and when first due and payable, provided that no default shall be deemed to have occurred unless Tenant fails to pay any such amount within ten (10) days after written notice from Landlord that such amount is due but provided further that Landlord shall not be required to provide more than two (2) such notices in any calendar year;

B.    Failure of Tenant to perform, observe or comply with any negative covenant or agreement set forth in this Lease or which prohibit or restrict Tenant from taking or omitting to take any action without the consent of the Landlord unless Tenant has cured the same to Landlord’s reasonable satisfaction within thirty (30) calendar days after the Landlord has given Tenant written notice thereof;

C.    Failure of Tenant to perform, observe, or comply with any of the terms, affirmative covenants, conditions or provisions contained in this Lease including, without limitation, the Rules and Regulations attached hereto as Exhibit B. as the same may be reasonably modified from time to time by written notice to Tenant (other than covenants to pay

 

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rent, negative covenants or agreements set forth in this Lease and/or all other covenants and agreements set forth in this Lease which prohibit or restrict Tenant from taking or omitting to take any action without the consent of the Landlord or which require Tenant to take action upon request of the Landlord) if such failure or default is not cured to Landlord’s reasonable satisfaction within thirty (30) calendar days after the Landlord has given Tenant written notice thereof or such longer period (not to exceed one hundred twenty (120) days in the aggregate) as may reasonably be required, provided that Tenant shall commence to cure such default within said thirty (30) day period and thereafter diligently prosecute the same to conclusion;

D.    The interest of Tenant under this Lease shall be levied on under execution or other legal process;

E.    Any petition in bankruptcy or other insolvency proceedings shall be filed by or against Tenant or any guarantor of this Lease, or any petition shall be filed or other action taken to declare Tenant or any such guarantor a bankrupt or to delay, reduce or modify Tenant’s or any such guarantor’s debts or obligations or to reorganize or modify Tenant’s or any such guarantor’s capital structure of indebtedness or to appoint a trustee, receiver or liquidator of Tenant or such guarantor or of any property of Tenant or such guarantor, or any proceeding or other action shall be commenced or taken by any governmental authority for the dissolution or liquidation of Tenant or any such guarantor, unless in each case the same is dismissed within ninety (90) days;

F.    (i) Tenant shall become insolvent or otherwise fail to pay its monetary obligations in due course as they mature, or (ii) Tenant shall make an assignment for the benefit of creditors, or (iii) a receiver or trustee shall be appointed for Tenant or any of its properties and not discharged within thirty (30) days; and

G.    Tenant shall do or permit to be done anything whereby a lien, security interest or other encumbrance (whether consensual or created by operation of law or otherwise) is created or filed against all or any part of the Leased Premises, the Building or any property situated therein or Tenant’s interest in this Lease which is not discharged within fifteen (15) days.

Section 6.2     Landlord’s Remedies. Upon the occurrence of any default by Tenant under this Lease, beyond any applicable grace period, Landlord may, at its sole option, do any one or more of the following:

A.    Landlord may terminate this Lease and/or Tenant’s right to possession of the Leased Premises, whereupon Tenant’s right of possession shall thereupon cease and terminate and Landlord shall be entitled to the possession of the Leased Premises, any process of law, any notice to quit, or of intention to re-enter being hereby exercised by entry, or in lieu thereof, by written notice to Tenant terminating this Lease and Tenant’s right to possession. Tenant hereby expressly waives any and all rights of redemption granted by or under any present or future laws in the event of Tenant being evicted or dispossessed for any cause or in the event Landlord terminates this Lease or Tenant’s right of possession as provided in this Section 6.2. In the event of such re-entry by process of law or otherwise, Tenant nevertheless shall remain liable for any and all damage, deficiency or loss and Landlord shall have the power and right, which is hereby acceded to by Tenant, to re-let the Leased Premises, and whether or not there has been such re-

 

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letting, Landlord shall have the right each month to sue for and recover all sums previously due and not previously paid as well as all sums thereafter due and payable including, without limitation, any loss of rents (or monthly deficit) with the right reserved to Landlord to bring any action(s) or proceeding(s) for the recovery of any deficit(s) remaining unpaid without being obligated to await the expiration of the Lease Term for a final determination of Tenant’s account. Additionally, Landlord may elect at any time, upon notice to Tenant, to accelerate the payment of Base Rent, Additional Rent and all other sums due or to become due under the Lease, as reasonably estimated by Landlord, in which case Tenant shall forthwith pay such sums to Landlord after receiving a credit for (i) such sums as may previously have been paid under this Section 6.2 net of such expenses as may be deducted under clause (b) of this Section 6.2; and (ii) the reasonable value of Tenant’s leasehold estate for the balance of the term fixed herein. The commencement or maintenance of any one or more actions shall not bar Landlord from bringing other or subsequent actions for future accruals pursuant to provisions of this Section 6.2. It is further understood that no waiver of any breach of any covenant, condition or agreements herein contained shall operate as a waiver of the covenant, condition or agreement itself or of any subsequent breach thereof. No provision of this Lease shall be deemed to have been waived by Landlord unless such waiver shall be in writing signed by Landlord. No payment by Tenant or receipt by Landlord of a lesser amount than the monthly installment of rent herein stipulated or otherwise payable under this Lease shall be deemed to be other than on account of the earliest stipulated rent nor shall any endorsement or statement on any check or any letter accompanying any check or payment as rent be deemed an accord and satisfaction. Landlord may accept such check or payment without prejudice to Landlord’s right to pursue or continue to pursue any of Landlord’s rights or remedies provided for in this Lease. The proceeds of any such re-letting shall first be applied to the expenses thereof, including all costs in refitting and redecorating the Leased Premises, leasing commissions and other costs and expenses incurred therein. The remaining proceeds resulting therefrom, if any, shall then be applied to Tenant’s liability under this Lease. Landlord shall use reasonable efforts to re-let the Leased Premises following Tenant’s default. Landlord’s re-letting of the Leased Premises following a default by Tenant under this Lease may be on such terms, provisions and conditions as Landlord shall deem appropriate and may be for such term (or terms) as Landlord may select whether longer or shorter than the remaining Lease Term. Tenant shall, following default under this Lease, reimburse Landlord for interest upon all sums due to Landlord (from the date such sums shall have been due to the date of payment thereof) at the maximum lawful rate then allowed by law.

In lieu of any other damages or indemnity and in lieu of the recovery by Landlord of all sums payable under all the foregoing provisions of this Section 6.2, and provided that there is more than one (1) year remaining in the Lease Term, Landlord may elect to collect from Tenant, by notice to Tenant, at any time after this Lease is terminated under any of the provisions contained in this ARTICLE VI or otherwise terminated by breach of any obligation of Tenant and before such full recovery, and Tenant shall thereupon pay, as liquidated damages, an amount equal to the sum of the Base Rent payable for the twelve (12) months ended next prior to the such termination plus the amount of Base Rent accrued and unpaid at the time of such election plus any and all expenses which Landlord may have incurred for and with respect to the collection of any of such rent.

B.    Notwithstanding anything hereinabove contained in this Article VI, no default by Tenant which would be violative of the Prime Lease or the Economic Development Plan pursuant to which the Boston Marine Industrial Park is operated and has been developed will be permitted, particular reference being made to Section 2.2 hereof and the Permitted Use.

 

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Section 6.3     Landlord’s Right to Perform Certain Obligations. Should Tenant fail to perform any of its obligations hereunder, which failure continues after expiration of any applicable grace period and notice, or should Landlord reasonably determine that immediate action is needed to prevent damage to either the Leased Premises or the Building, Landlord may (but shall not be obligated to) enter upon the Leased Premises and perform all or any part of such obligations and/or take such action as it deems necessary to prevent or limit such damage, as applicable with such notice to Tenant as is practicable under the circumstances. Upon demand, Tenant shall reimburse Landlord for the cost to Landlord of performing such obligations if Landlord reasonably took such action to prevent or limit damage to the Leased Premises or Building and the need for action arose from a matter caused by Tenant. No action taken by Landlord under this Section shall relieve Tenant from any of its obligations under this Lease or from any consequences or liabilities arising from the failure to perform such obligations. The expiration of applicable grace periods as aforesaid shall not be required if payment or other action is in the reasonable opinion of Landlord, necessary to protect Landlord’s property and interest.

Section 6.4     Cumulative Remedies. The rights and remedies of Landlord under this Article shall be non-exclusive and shall be in addition to and cumulative of all other remedies available to Landlord under this Lease or at law or in equity.

Section 6.5     Security Deposit. Concurrent with the execution of this Lease, Tenant shall deliver to Landlord a Letter of Credit (as hereinafter defined) in the amount specified in the Basic Lease Information, as security for the faithful performance and observance by Tenant of the terms, covenants and conditions of this Lease. The Letter of Credit shall be in the form of a clean, irrevocable, non-documentary and unconditional letter of credit (the “Letter of Credit”) issued by and drawable upon Citibank, or another commercial bank which is reasonably satisfactory to Landlord (the “Issuing Bank”), which has outstanding unsecured, uninsured and unguaranteed indebtedness, or shall have issued a letter of credit or other credit facility that constitutes the primary security for any outstanding indebtedness (which is otherwise uninsured and unguaranteed), that is then rated, without regard to qualification of such rating by symbols such as “+” or “-” or numerical notation, “Aa” or better by Moody’s Investors Service and “AA” or better by Standard & Poor’s Rating Service, and has combined capital, surplus and undivided profits of not less than $2,000,000,000. The Letter of Credit shall (a) name Landlord as beneficiary, (b) have a term of not less than one year, (c) permit multiple drawings, (d) be fully transferable by Landlord without the payment of any fees or charges by Landlord, and (e) otherwise be in form and content reasonably satisfactory to Landlord. The Letter of Credit, if in the form attached as Exhibit G shall be satisfactory. If upon any transfer of the Letter of Credit, any fees or charges shall be so imposed, then such fees or charges shall be payable solely by Tenant and the Letter of Credit shall so specify. The Letter of Credit shall provide that it shall be deemed automatically renewed, without amendment, for consecutive periods of one year each thereafter during the Term (and in no event shall the Letter of Credit expire prior to the 60th day following the Expiration Date) unless the Issuing Bank sends duplicate notices (the “Non-Renewal Notice”) to Landlord by certified mail, return receipt requested, not less than 60 days next preceding the then expiration date of the Letter of Credit stating that the Issuing Bank has

 

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elected not to renew the Letter of Credit. The Issuing Bank shall agree with all drawers, endorsers and bona fide holders that drafts drawn under and in compliance with the terms of the Letter of Credit will be duly honored upon presentation to the Issuing Bank at an office location in Boston, Massachusetts. Except as otherwise expressly stated herein, this Letter of Credit is governed by and subject to the “International Standby Practices of ISP 98 (1998 Revision), International Chamber of Commerce Publication No. 590.”

A.    Application of Security. If (i) a default by Tenant occurs and is continuing in the payment or performance of any of the terms, covenants or conditions of this Lease, including the payment of Rent, or (ii) Landlord receives a Non-Renewal Notice and Tenant does not provide a substitute Letter of Credit which meets the requirements of this Section 6.5, or (iii) Tenant files a voluntary petition under any Federal or state bankruptcy or insolvency code, law or proceeding, then Landlord shall have the right by sight draft to draw, at its election, all or a portion of the proceeds of the Letter of Credit and thereafter hold, use, apply, or retain the whole or any part of such proceeds, as the case may be, (x) to the extent required for the payment of any Base Rent or any other sum as to which Tenant is in default beyond any applicable cure period including (1) any sum which Landlord may expend or may be required to expend by reason of Tenant’s default beyond any applicable cure periods, and/or (2) any damages to which Landlord is entitled pursuant to this Lease, whether such damages accrue before or after summary proceedings or other reentry by Landlord, and/or (y) as a cash security deposit, unless and until, in the case of clause (c) above, Tenant delivers to Landlord a substitute Letter of Credit which meets the requirements of this Section 6.5. If Landlord applies or retains any part of the proceeds of the Letter of Credit, or cash security, Tenant, and within ten business (10) days, shall amend the Letter of Credit to increase the amount thereof by the amount so applied or retained or provide Landlord with an additional Letter of Credit in the amount so applied or retained so that Landlord shall have the full amount thereof on hand at all times during the Term. The Letter of Credit or cash security, as the case may be, or balance thereof shall be returned to Tenant after the Expiration Date and after delivery of possession of the Leased Premises to Landlord in the manner required by this Lease and the curing of any outstanding Events of Default under this Lease.

B.    Transfer. The Letter of Credit shall also provide that Landlord, its successors and assigns, may, at any time and without notice to Tenant and without first obtaining Tenant’s consent thereto, transfer (one or more times) all of its interest in and to the Letter of Credit to the holder of any mortgage upon the Building or the successor landlord in connection with a transfer of the Building, from or as a part of the assignment by Landlord of its rights and interests in and to this Lease. In the event of a transfer of Landlord’s interest in the Building, Landlord shall transfer the Letter of Credit, in whole or in part, to the transferee and thereupon Landlord shall without any further agreement between the parties, be released by Tenant from all liability therefor. The provisions of this Section 6.5(b) shall apply to every transfer or assignment of the whole of said Letter of Credit to a new landlord. In connection with any such transfer of the Letter of Credit by Landlord, Tenant shall, at Tenant’s sole cost and expense, execute and submit to the Bank such applications, documents and instruments as may be necessary to effectuate such transfer, and Tenant shall be responsible for paying the Bank’s transfer and processing fees in connection therewith.

 

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C.    Maintenance of Letter of Credit by Tenant. Tenant further covenants and warrants that it will neither assign nor encumber the Letter of Credit or any part thereof and that neither Landlord nor its successors or assigns will be bound by any such assignment, encumbrance, attempted assignment or attempted encumbrance. Without limiting the generality of the foregoing, if the Letter of Credit expires earlier than the date which is thirty (30) days after the Expiration Date, or if Tenant otherwise fails to maintain the Letter of Credit in the amount and in accordance with the terms set forth in this Section 6.5, Landlord shall have the right to present the Letter of Credit to the Issuing Bank in accordance with the terms of this Section 6.5, and the proceeds of the Letter of Credit may be applied by Landlord against any Rent payable by Tenant under this Lease that is not paid when due and/or to pay for all losses and damages that Landlord has suffered as a result of any breach or default by Tenant under this Lease.

D.    Landlord’s Right to Draw Upon Letter of Credit. Tenant hereby acknowledges and agrees that Landlord is entering into this Lease in material reliance upon the ability of Landlord to draw upon the Letter of Credit upon the occurrence of any breach or default on the part of Tenant under this Lease which continues beyond applicable notice and cure periods. If Tenant shall breach any provision of this Lease or otherwise be in default hereunder beyond any applicable grace or cure periods, Landlord may, but without obligation to do so, and without notice to Tenant, draw upon the Letter of Credit, in part or in whole, to cure any breach or default of Tenant and/or to compensate Landlord for any and all damages of any kind or nature sustained resulting from such Tenant’s breach or default. The use, application or retention of the Letter of Credit, or any portion thereof, by Landlord shall not prevent Landlord from exercising any other right or remedy provided by this Lease or by any applicable law, it being intended that Landlord shall not first be required to proceed against the Letter of Credit, and shall not operate as a limitation on any recovery to which Landlord may otherwise be entitled. Tenant agrees not to interfere in any way with payment to Landlord of the proceeds of the Letter of Credit, either prior to or following a “draw” by Landlord of any portion of the Letter of Credit, regardless of whether any dispute exists between Tenant and Landlord as to Landlord’s right to draw upon the Letter of Credit. No condition or term of this Lease shall be deemed to render the Letter of Credit conditional to justify the issuer of the Letter of Credit in failing to honor a drawing upon such Letter of Credit in a timely manner. Tenant agrees and acknowledges that (a) the Letter of Credit constitutes a separate and independent contract between Landlord and the Bank, (b) Tenant is not a third party beneficiary of such contract, (c) Tenant has no property interest whatsoever in the Letter of Credit or the proceeds thereof, and (d) in the event Tenant becomes a debtor under any chapter of the Bankruptcy Code, neither Tenant, any trustee, nor Tenant’s bankruptcy estate shall have any right to restrict or limit Landlord’s claim and/or rights to the Letter of Credit and/or the proceeds thereof by application of Section 502(b)(6) of the U. S. Bankruptcy Code or otherwise.

E.    Reduction in Letter of Credit. For purposes hereof, the “Letter of Credit Reduction Conditions” shall mean the following: (i) no default by Tenant shall have occurred and be continuing, and (ii) Tenant shall have provided evidence reasonably satisfactory to Landlord that Tenant has secured and received funding of no less than $45,000,000.00 which funds can be properly added to Tenant’s balance sheet. Provided that the Letter of Credit Reduction Conditions have been met, the Letter of Credit may be reduced to $1,400,000.00. The reduction in the Letter of Credit shall be accomplished as follows: Tenant shall request such reduction in a written notice to Landlord, and if Landlord determines that the Letter of Credit

 

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Reduction Conditions have been met, such determination to be made reasonably and in good faith and without undue delay, Landlord shall so notify Tenant, whereupon Tenant shall provide Landlord with a substitute Letter of Credit in the reduced amount, or an amendment to the Letter of Credit reducing it to the reduced amount.

F.    Increase in Letter of Credit. On or prior to the Phase IV Commencement Date, Tenant shall (i) in the event that Tenant has previously reduced the Letter of Credit pursuant to subsection (e) above, increase the Letter of Credit to $1,537,403.00; or (ii) in the event that Tenant has not previously reduced the Letter of Credit pursuant to subsection (e) above, increase the Letter of Credit by the amount of $137,403.00. Tenant shall provide Landlord with a substitute Letter of Credit in the increased amount, or an amendment to the Letter of Credit increasing it to the increased amount.

ARTICLE VII.

Section 7.1     Attorneys’ Fees and Other Expenses. Unless prohibited by applicable law, Tenant agrees to pay to Landlord the amount of all reasonable legal fees and expenses incurred by Landlord arising out of or resulting from any act or omission by Tenant with respect to this Lease or the Leased Premises including without limitation, any breach by Tenant of its obligations hereunder.

Further, if Tenant shall request Landlord’s consent to or joinder in any instrument pertaining to this Lease, Tenant agrees promptly to reimburse Landlord for the reasonable legal fees and expenses and such fees as are required to be paid by any mortgagee or other lender incurred by Landlord in processing such request, whether or not Landlord complies therewith; and if Tenant shall fail promptly so to reimburse Landlord, same shall be deemed to be a default in Tenant’s monetary obligations under this Lease.

Whenever Tenant shall request approval by Landlord or Landlord’s architect of plans, drawings, specifications, installation of signs including subsequent changes thereof, or the like, the Tenant specifically agrees promptly to pay to Landlord’s architect (or reimburse Landlord for the payment Landlord makes to said architect for) all reasonable charges involved in the review (and re-review, if necessary) and approval or disapproval thereof whether or not approval shall ultimately be given.

Section 7.2     Alteration. This Lease may not be altered, changed or amended, except by an instrument in writing signed by both parties hereto.

Section 7.3    Non-Waiver. No course of dealing between Landlord and Tenant or any other person, nor any delay on the part of Landlord or Tenant in exercising any rights under this Lease, nor any failure to enforce any provisions of this Lease, nor the acceptance of rental by Landlord shall operate as a waiver of any rights of such party, except to the extent, if any, expressly waived in writing by such party. The waiver by Landlord or Tenant of any agreement, condition or provision herein contained shall not be deemed a waiver of any subsequent breach of the same or any other agreement, condition or provision herein contained.

 

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Section 7.4     Notices. Except as otherwise expressly provided in this Lease, all consents, notices, demands, requests, approvals or other communications given under this Lease shall be in writing and shall be deemed sufficiently given or rendered if delivered by hand (provided a signed receipt is obtained) or if sent by registered or certified mail (return receipt requested) or by a nationally recognized overnight delivery service making receipted deliveries, addressed to Landlord and Tenant as set forth below, and to any mortgagee or Prime Lessor who shall require copies of notices and whose address is provided to Tenant, or to such other address(es) as Landlord, Tenant or any mortgagee or Prime Lessor may designate as its new address(es) for such purpose by notice given to the other in accordance with the provisions of this Section 7.4. Any such approval, consent, notice, demand, request or other communication shall be deemed to have been given on the date of receipted delivery, refusal to accept delivery or when delivery is first attempted but cannot be made due to a change of address for which no notice is given or three (3) Business Days after it shall have been mailed as provided in this Section 7.4, whichever is earlier.

 

If to Landlord:

  

c/o Jamestown

675 Ponce de Leon Avenue, 7th Floor

Atlanta, GA 30308

Attn: Managing Director of Asset

Management

Phone:

 

– and –

 

c/o Jamestown

Chelsea Market

75 Ninth Avenue, 5th Floor

New York, NY 10011

Attn: Innovation and Design Building

Asset Manager

Phone:

 

– and –

 

c/o Jamestown

The Innovation and Design Building

21 Drydock Avenue, 3rd Floor

Boston, MA 02210

Attn: General Manager

Phone:

With a copy to:

  

Goulston & Storrs PC

400 Atlantic Avenue

Boston, Massachusetts 02110-3333

Attention: Amy Moody McGrath, Esq.

Phone:

 

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If to Tenant:

  

Ginkgo Bioworks, Inc.

27 Drydock Avenue, Floor 8
Boston, Massachusetts 02210
Attn: Barry Canton
Phone:

With a copy to:

  

Mel Shuman Law

189 Eliot Street
Chestnut Hill, MA 02467
Attn: Mel Shuman. Esq.
Phone:

Section 7.5     Interest. Except as otherwise set forth herein, all amounts of money payable by Tenant to Landlord under this Lease shall bear interest from the date due until paid at a rate equal to the lower of (a) eight percent (8%) per annum, or (b) the maximum rate permitted by law, if any.

Section 7.6     Merger of Estates. The voluntary or other surrender of this Lease by Tenant or a mutual cancellation thereof, shall not constitute a merger and shall, at the option of Landlord, either terminate all or any existing subleases or subtenancies, or operate as an assignment to Landlord of Tenant’s interest in any or all such subleases or subtenancies.

Section 7.7     Other Tenants of Building. Neither this Lease nor Tenant’s continued occupancy of the Leased Premises is conditioned upon the opening of any store or business in the Building, nor upon the continued operation of any store or business.

Section 7.8     Consent by Landlord. In all circumstances under this Lease where the prior consent or permission of Landlord is required before Tenant is authorized to take any particular type of action, such consent must be in writing and unless this Lease expressly provides that such consent or permission is not to be unreasonably withheld, conditioned or delayed, the matter of whether to grant such consent of permission shall be within the sole and exclusive judgment and discretion of Landlord, and it shall not constitute any nature of breach by Landlord under this Lease or any defense to the performance of any covenant, duty or obligation of Tenant under this Lease that Landlord delayed or withheld the granting of such consent of permission.

Section 7.9     Legal Interpretation. This Lease and the rights and obligations of the parties hereto shall be interpreted, construed and enforced in accordance with the laws of the Commonwealth of Massachusetts and the United States. All obligations of the parties hereto are independent and shall be performable in, and all legal actions to enforce or construe this Lease shall be instituted in the courts of, Suffolk County, Massachusetts. The determination that one or more provisions of this Lease is invalid, void, illegal or unenforceable shall not affect or invalidate the remainder. All obligations of either party requiring any performance after the expiration of the Lease Term shall survive the expiration of the Lease Term and shall be fully enforceable in accordance with those provisions pertaining thereto. Section titles appearing in this Lease are for convenient reference only and shall not be used to interpret or limit the meaning of any provision of this Lease.

 

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Section 7.10     Entire Agreement. Tenant agrees that this Lease supersedes and cancels any and all previous letters of intent, statements, negotiations, arrangements, brochures, agreements and understandings, if any, between Landlord and Tenant or displayed by Landlord to Tenant with respect to the subject matter of this Lease, the Leased Premises or the Building, and that there are no representations, agreements, or warranties (express or implied, oral or written) between Landlord and Tenant with respect to the subject matter of this Lease, the Leased Premises or the Building other than contained in this Lease.

Section 7.11     Assignment by Landlord. Landlord shall have the right at any time to transfer and assign in whole or in part, by operation of law or otherwise, its rights, benefits, privileges, duties and obligations hereunder or in the Building. Tenant agrees to look only to the Landlord hereunder for performance of such of the Landlord’s obligations hereunder as arise during its period of ownership of the tenant’s interest in the Prime Lease.

Section 7.12     Authority. Each of Landlord and Tenant represents and warrants to the other that it has the full right, power and authority to enter into this Lease and to perform its obligations hereunder, and that upon execution of this Lease by such party, this Lease shall constitute a valid and legally binding obligation of such party. If Tenant signs as a corporation or other corporate entity, each of the persons executing this Lease on behalf of Tenant does hereby covenant and warrant that Tenant is a duly and validly existing corporate entity, as applicable, that the execution of this Lease by such persons on behalf of Tenant has been duly authorized by all necessary corporate or other action and that Tenant is qualified to do business in the Commonwealth of Massachusetts.

Section 7.13     Liability. Any provisions of this Lease to the contrary notwithstanding, Tenant and Landlord hereby agrees that no personal, partnership or corporate liability of any kind or character whatsoever now attaches or at any time hereafter under any condition shall attach to the other or its partners or venturers for payment of any amounts payable under this Lease or for the performance of any obligation under this Lease. The exclusive legal remedies of Tenant for the failure of Landlord to perform any of its obligations under this Lease shall be to proceed against the interest of Landlord in the Project

Section 7.14     Time of the Essence. In all instances where a party is required under this Lease to pay any sum or do any act at a particular time or within a particular period, it is understood that time is of the essence.

Section 7.15     Instruments and Evidence Required to Be Submitted to Landlord. Each written instrument and all evidence of the existence or non-existence of any circumstances or conditions which is required by this Lease to be furnished to Landlord shall in all respects be in form and substance reasonably satisfactory to Landlord.

Section 7.16     Counterparts. This Lease may be executed in any number of counterparts, each of which when so executed and delivered shall be an original, but such counterparts shall together constitute one and the same instrument.

 

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Section 7.17     Gender. The pronouns of any gender shall include the other gender and either the singular or the plural shall include the other.

Section 7.18     Force Majeure. Whenever a period of time is herein described for the taking of any action by Landlord or Tenant except for the payment of money, Landlord or Tenant, as the case may be, shall not be liable or responsible for, and there shall be excluded from the computation of such period of time, any delays due to strikes, riots, acts of God, shortages of labor or materials, war, governmental laws, regulations or restrictions or any act, omission, delay or neglect of the other party hereto or any of such other party employees or agents, or any other cause whatsoever beyond the control of such party.

Section 7.19     Recordation. Tenant agrees not to record this Lease, or any instrument to which this Lease may now or hereafter be attached but both parties agree to execute a Notice of Lease in recordable form for recording or filing at the Registry of Deeds in the form reasonably agreed to by the parties.

Section 7.20     Prime Lease. Tenant recognizes and acknowledges the existence of the Prime Lease and that this Lease is a sublease of a portion of Landlord’s leasehold estate created by the Prime Lease. The termination of the Prime Lease for any reason whatsoever, other than the default of Landlord, shall never constitute a default by Landlord hereunder nor shall such termination entitle Tenant to terminate this Lease or the payment of any rent or other sums due by Tenant hereunder. Tenant further agrees that this Lease is subject to all of the terms and provisions of the Prime Lease and hereby agrees to be bound by provisions thereof, including but not limited to the provisions relating to employment and non-discrimination and other provisions of which Landlord has made Tenant aware in writing. By execution hereof, Tenant hereby acknowledges that it has received a copy of all provisions of the Prime Lease relating to employment and non-discrimination all as set forth on Exhibit C attached hereto. Provided, however, that the execution of this Lease by Landlord shall never be construed to be an approval hereof by the Prime Lessor, it being understood that the Prime Lessor cannot be bound by any act or omission of Landlord. If Prime Lessor shall request a modification of this Lease, Tenant shall not unreasonably withhold or delay its consent to a modification which does not materially adversely affect Tenant’s rights and privileges hereunder or impose material burdens on Tenant. Landlord shall reasonably cooperate with Tenant in connection with any approval of Prime Lessor required for the construction of any Alterations by Tenant pursuant to this Lease.

Section 7.21     Commissions. Tenant and Landlord each warrants and represents to the other that it has dealt with no broker except as described in Article I hereof, the commission for said Broker being paid by Landlord in accordance with separate agreement(s). Tenant and Landlord each hereby agrees to defend, indemnify, and hold the other harmless, from and against any claim by third parties for brokerage, commissions, finders or other fees relative to this Lease or the leasing of space in the Building, and any court costs, attorneys’ fees or other costs or expenses arising therefrom, alleged to be due by any broker other than as described in Article I hereof.

Section 7.22     Surrender of Premises and Holding Over. If Tenant shall remain in possession of the Leased Premises without extension after the expiration of the Term, Tenant shall hold as a tenant at sufferance, at a charge for use and occupancy, and not as rent, of the

 

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Leased Premises (x) with respect to any holdover period up to sixty (60) days after the Expiration Date, equal to one hundred percent (100%) of the highest monthly installment of Base Rent applicable during the Term plus all Additional Rent during such period of time, provided that Tenant has given notice to Landlord no later than six (6) months before the Expiration Date Term that Tenant will hold over for up to sixty (60) days after the Expiration Date; and (y) with respect to any other holdover period, equal to one hundred and fifty percent (150%) of the highest monthly installment of Base Rent applicable during the Term plus all Additional Rent during such period of time. In all other respects Landlord and Tenant shall be subject to the terms, provisions and conditions of this Lease provided Tenant shall be liable for all damages incurred by Landlord as a result of Tenant holding over. No surrender to Landlord of this Lease or of the Leased Premises or any part thereof or of any interest therein by Tenant shall be valid or effective unless required by the provisions of this Lease or unless agreed to and accepted in writing by Landlord. No act on the part of any representative or agent of Landlord, and no act on the part of Landlord other than such a written agreement acceptance by Landlord, shall constitute or be deemed an acceptance of any such surrender.

Section 7.23     Intentionally Omitted.

Section 7.24     When Lease Becomes Binding. The submission of this document for examination and negotiation does not constitute an offer to lease, or a reservation of, or option for, the Leased Premises, and this document shall become effective and binding only upon the execution and delivery hereof by both Landlord and Tenant.

Section 7.25     No Construction Against Drafting Party. Landlord and Tenant acknowledge that each of them and their counsel have had an opportunity to review this Lease and that this Lease will not be construed against either party merely because its counsel has prepared it.

Section 7.26     OFAC List. Tenant represents and warrants that it is not listed, nor is it owned or controlled by, or acting for or on behalf of any person or entity, on the list of Specially Designated Nationals and Blocked Persons maintained by the Office of Foreign Assets Control of the United States Department of the Treasury, or any other list of persons or entities with whom Landlord is restricted from doing business with (“OFAC List”). Notwithstanding anything to the contrary herein contained, Tenant shall not permit the Leased Premises or any portion thereof to be used, occupied or operated by or for the benefit of any person or entity that is on the OFAC List. Tenant shall provide documentary and other evidence of Tenant’s identity and ownership as may be reasonably requested by Landlord at any time to enable Landlord to verify Tenant’s identity or to comply with any Legal Requirement.

Section 7.27     Confidentiality. Tenant and Landlord acknowledge that the terms and conditions of this Lease are to remain confidential for both parties’ benefit and may not be disclosed by either party to anyone, by any manner or means, directly or indirectly, without the other party’s prior written consent, except (i) in litigation between Landlord and Tenant, (ii) if required by court order, or (iii) as required by applicable law or regulation, or (iv) as disclosed in the Notice of Lease to be executed by the parties and recorded or filed at the Registry of Deeds. Notwithstanding the immediately preceding sentence, each party shall have the right to disclose such information to its attorneys, accountants, and consultants, provided such disclosing party instructs such persons to keep such information confidential.

 

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ARTICLE VIII.

Section 8.1     Renewal Term. Tenant shall have the right to renew the Term for all of the Premises for one renewal term of five (5) years (the “Renewal Term”) commencing on the day after the expiration of the initial Term (the “Renewal Term Commencement Date”) and ending on the day preceding the fifth (5th) anniversary of the Renewal Term Commencement Date, unless the Renewal Term shall sooner terminate pursuant to any of the terms of this Lease or otherwise. The Renewal Term shall commence only if (a) Tenant notifies Landlord (the “Exercise Notice”) of Tenant’s exercise of such renewal right not later than fifteen (15) months prior to the Expiration Date, (b) at the time of the exercise of such right and immediately prior to the Renewal Term Commencement Date, no default shall have occurred and be continuing hereunder, and (c) Tenant leases no less than four (4) Bays at the time of such Exercise Notice and occupies for its own use 75% of the Leased Premises at the time the Exercise Notice is given. Time is of the essence with respect to the giving of the Exercise Notice. The Renewal Term shall be upon all of the agreements, terms, covenants and conditions of this Lease, except that (w) the Base Rent shall be the Fair Market Value (as defined below), and (x) Tenant shall have no further right to renew the Term. Any termination, cancellation or surrender of the entire interest of Tenant under this Lease at any time during the Term shall terminate the foregoing right of renewal of Tenant hereunder.

Section 8.2     Renewal Term Rent. The annual Base Rent payable during the Renewal Term shall be equal to 100% of the annual Fair Market Value (as hereinafter defined) of the Premises as of commencement of the Renewal Term (the “Calculation Date”). “Fair Market Value” shall mean the fair market annual rental value of the Leased Premises as of the Calculation Date for a term equal to the Renewal Term, based on comparable space in the Project, or on comparable space in comparable buildings located in the Seaport District of Boston, Massachusetts, including all of Landlord’s services provided for in this Lease, and with the Leased Premises considered as vacant, and in “as is” condition existing on the Renewal Term Commencement Date. The calculation of Fair Market Value shall also be adjusted to take into account all relevant factors including, without limitation, the Permitted Use, free rent, tenant improvement allowances and fees then being paid for comparable space in the Project, or on comparable space in comparable buildings located in the Seaport District of Boston, Massachusetts. Landlord shall advise Tenant (the “Rent Notice”) of Landlord’s determination of Fair Market Value twelve (12) months prior to the Renewal Term Commencement Date. If Tenant disputes Landlord’s determination of Fair Market Value, then Tenant shall either withdraw its exercise of its right to renew the Term of the Lease by notice to Landlord, in which event Tenant’s right to renew shall be irrevocably be extinguished, or give notice (a “Dispute Notice”) to Landlord of such dispute within thirty (30) days after delivery of the Rent Notice, and such dispute shall be resolved by arbitration as provided below. Time is of the essence of the giving of said Rent Notice and Dispute Notice. Failure on the part of Tenant to timely submit a Dispute Notice shall constitute a waiver of the right of Tenant to dispute the Fair Rental Value determined by Landlord, and in such event the Base Rent for the Renewal Term shall be as set forth in the Rent Notice. If the Base Rent payable during the Renewal Term is not determined prior to the Renewal Term Commencement Date, then Tenant shall pay Base Rent in

 

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an amount equal to the Fair Market Value for the Leased Premises as determined by Landlord (the “Interim Rent”). Upon final determination of the Base Rent for the Renewal Term, Tenant shall commence paying such Base Rent as so determined, and within ten (10) days after such determination Tenant shall pay any deficiency in prior payments of Base Rent or, if the Base Rent as so determined shall be less than the Interim Rent, Tenant shall be entitled to a credit against the next succeeding installments of Base Rent in an amount equal to the difference between each installment of Interim Rent and the Base Rent as so determined which should have been paid for such installment until the total amount of the over payment has been recouped.

Section 8.3     Arbitration. If Tenant timely disputes Landlord’s determination of Fair Market Value pursuant to provisions above, then such dispute shall be determined by arbitration in accordance with the then prevailing expedited procedures of the American Arbitration Association or its successor for arbitration of commercial disputes, except that the expedited procedures shall be modified as follows:

(i)    In its Dispute Notice Tenant shall specify the name and address of the person to act as the arbitrator on Tenant’s behalf. The arbitrator shall be a commercial real estate broker or an appraiser with the M.A.I. designation from the American Institute of Real Estate Advisors, with at least 10 years full-time commercial real estate appraisal or brokerage experience who is familiar with the Fair Market Value of first-class commercial flex and R&D space in the Seaport District in Boston, Massachusetts. Failure on the part of Tenant to make the timely and proper demand for such arbitration shall constitute a waiver of the right thereto and the Base Rent shall be as set forth in the Rent Notice. Within ten (10) Business Days after receipt of the Dispute Notice, Landlord shall give notice to Tenant specifying the name and address of the person designated by Landlord to act as arbitrator on its behalf, which arbitrator shall be similarly qualified. If Landlord fails to notify Tenant of the appointment of its arbitrator within such ten (10) Business Day period, and such failure continues for three (3) Business Days after Tenant delivers a second notice to Landlord, then the arbitrator appointed by Tenant shall be the arbitrator to determine the Fair Market Value for the Leased Premises.

(ii)    If two arbitrators are chosen, the arbitrators so chosen shall meet within ten (10) Business Days after the second arbitrator is appointed and shall seek to reach agreement on Fair Market Value. If within twenty (20) Business Days after the second arbitrator is appointed the two arbitrators are unable to reach agreement on Fair Market Value then the two arbitrators shall appoint a third arbitrator, who shall be a competent and impartial person with qualifications similar to those required of the first two arbitrators. If they are unable to agree upon such appointment within five (5) Business Days after expiration of such twenty (20) Business Day period, the third arbitrator shall be selected by the parties themselves. If the parties do not agree on the third arbitrator within five (5) Business Days after expiration of the foregoing five (5) Business Day period, then either party, on behalf of both, may request appointment of such a qualified person by the Boston Office of the American Arbitration Association. The third arbitrator shall decide the dispute, if it has not been previously resolved, by

 

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following the procedures set forth below. Each party shall pay the fees and expenses of its respective arbitrator and both shall share the fees and expenses of the third arbitrator. Attorneys’ fees and expenses of counsel and of witnesses for the respective parties shall be paid by the respective party engaging such counsel or calling such witnesses.

(iii)    Fair Market Value shall be fixed by the third arbitrator in accordance with the following procedures. Concurrently with the appointment of the third arbitrator, each of the arbitrators selected by the parties shall state, in writing, his or her determination of the Fair Market Value supported by the reasons therefor. The third arbitrator shall have the right to consult experts and competent authorities for factual information or evidence pertaining to a determination of Fair Market Value, but any such determination shall be made in the presence of both parties with full right on their part to cross-examine. The third arbitrator shall conduct such hearings and investigations as he or she deem appropriate and shall, within thirty (30) days after being appointed, select which of the two proposed determinations most closely approximates his or her determination of Fair Market Value. The third arbitrator shall have no right to propose a middle ground or any modification of either of the two proposed determinations. The determination he or she chooses as that most closely approximating his or her determination of the Fair Market Value shall constitute the decision of the third arbitrator and shall be final and binding upon the parties. The third arbitrator shall render the decision in writing with counterpart copies to each party. The third arbitrator shall have no power to add to or modify the provisions of this Lease. Promptly following receipt of the third arbitrator’s decision, the parties shall enter into an amendment to this Lease evidencing the extension of the Term for the Renewal Term and confirming the Base Rent for the Renewal Term, but the failure of the parties to do so shall not affect the effectiveness of the third arbitrator’s determination.

(iv)    In the event of a failure, refusal or inability of any arbitrator to act, his or her successor shall be appointed by him or her, but in the case of the third arbitrator, his or her successor shall be appointed in the same manner as that set forth herein with respect to the appointment of the original third arbitrator.

Section 8.4     Connection to 27 Drydock Avenue. Landlord hereby recognizes that Tenant desires to connect its existing leased space located in the building adjacent to the Project known as 27 Drydock Avenue (the “27 Drydock Building”) to the Leased Premises in two (2) locations as shown on Exhibit A-5 hereto and agrees to such connections, subject to the third party approvals required for the same as set forth below and approval by Landlord of construction drawings for such connection. Landlord and Tenant hereby recognize and agree that such connections from the Leased Premises to the 27 Drydock Building will require the consent of the Prime Lessor (as the ground lessor for the ground lease governing the 27 Drydock Building), as well as Zoom Group, the tenant under such ground lease and Tenant’s landlord for such existing leased space. Tenant, at its sole cost and expense shall be responsible for all plans, consents and all necessary permits and approvals from the City of Boston or any other applicable Governmental Authorities with respect to the same and that receipt of any of the same shall not

 

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be a contingency to the effectiveness of this Lease. In the event that such connections are approved, Tenant shall be responsible for all costs of (i) construction, maintenance and repair of the same; and (ii) the restoration of the connection(s) at the expiration or earlier termination of the lease, which restoration shall be subject to the requirements and approval of the Landlord.

ARTICLE IX.

Section 9.1     Definitions. As used in this Lease, the following terms shall have the respective meanings indicated:

Building shall mean that certain building known as the Bronstein Building located at 21, 23 and 25 Drydock Avenue in Boston (Seaport), Massachusetts, as the same may now or hereafter exist or as it may from time to time hereafter be expanded or modified.

Building Rules shall mean the reasonable rules and regulations adopted and altered by Landlord from time to time for the safety, care and cleanliness of the Leased Premises and the Building and for the preservation of good order therein, all of which will be sent by Landlord to Tenant in writing and shall thereafter be carried out and observed by Tenant. The initial Building Rules are attached hereto as Exhibit B and no such rules and regulations shall be enforced against Tenant in a discriminatory fashion as between Tenant and other tenants of like size and nature.

Business Days shall mean all days, excluding Saturdays, Sundays and Observed Holidays.

Common Areas shall mean the lobby and sidewalk areas and other similar areas of general access and the areas on multi-tenant floors in the Project devoted to corridors, elevator lobbies, restrooms and other similar facilities serving the Leased Premises, as the same may be changed, altered or relocated from time to time in Landlord’s sole discretion.

Commencement Date shall mean the date shown in Article I hereof.

Delivery Condition shall be deemed to occur upon the date that Landlord delivers possession of the Leased Premises to Tenant, vacant, broom-clean and with Landlord’s Work substantially completed and in compliance with all Requirements.

Governmental Authorities shall mean the United States of America, the City of Boston, the Commonwealth of Massachusetts, or any political subdivision, agency, department, commission, board, bureau or instrumentality of any of the foregoing, now existing or hereafter created, having jurisdiction over the Real Property.

Hazardous Materials shall mean any substances, materials or wastes currently or in the future deemed or defined in any Requirement as “hazardous substances,” “toxic substances,” “contaminants,” “pollutants” or words of similar import.

“Landlord’s Work” shall mean, with respect to the Phase I Premises, Phase II Premises and Phase III Premises, the base building work to be performed by Landlord as listed on Exhibit F, attached hereto, which will include base building HVAC infrastructure services to the Leased

 

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Premises. Landlord shall deliver the Phase IV Premises in the as-is condition of the Phase IV Premises at the expiration of the term of the lease of the prior tenant located in the Phase IV Premises, the existing condition of which is described in Exhibit F-2 attached hereto. All of Landlord’s Work will be performed in a good and workmanlike manner using only materials of a good and high quality.

Lease Year shall mean, for the first “Lease Year,” the period of time commencing on the Commencement Date and ending on the last day of the calendar month preceding the month in which the first anniversary of the Commencement Date occurs. Each succeeding “Lease Year” shall commence on the day following the end of the preceding Lease Year and shall extend for twelve (12) consecutive months; provided, however, that the last Lease Year shall expire on the Expiration Date.

Normal Business Hours shall mean 8:00 a.m. to 6:00 p.m. from Monday through Friday and from 8:00 a.m. until 1:00 p.m. on Saturday, excepting Observed Holidays.

Observed Holidays shall mean New Years Day, Memorial Day, Independence Day, Labor Day, Thanksgiving Day and Christmas Day plus days observed by the Commonwealth of Massachusetts, the City of Boston, and the labor unions servicing the Project as holidays.

Operating Costs shall mean all operating costs of the Project and shall consist of all reasonable expenditures by Landlord to operate and maintain all of the Project in operation at the beginning of the Lease Term and such additional facilities in subsequent years as may be determined by Landlord to be necessary or beneficial to the operation of the Project. The term “Operating Costs” as used herein shall mean all expenses, costs and disbursements (but, except as otherwise herein provided, not replacement of capital investment items except as provided in (g) below nor specific costs specifically billed to and paid by specific tenants) of every kind and nature which Landlord shall pay or become obligated to pay because of or in connection with the ownership, maintenance, repair, promotion, insuring or operation of the Project, including, but not limited to, the following:

A.    Wages and salaries of all employees engaged in operation and maintenance or security (to the extent provided) of all or any part of the Project, including taxes, insurance and benefits relating to such employees.

B.    All supplies and materials used in the operation and maintenance of any part of the Project.

C.    Costs of all utilities for the Project, including the cost of water and power, heating, lighting, air conditioning and ventilating for all or any part of the Project.

D.    Costs of all maintenance, janitorial, security (to the extent provided) and service agreements for the Project, and the equipment therein, including alarm service, window cleaning, snow removal and elevator maintenance.

E.    Costs of all insurance relating to the Project, including cost of casualty and liability insurance and Landlord’s personal property used in connection therewith.

 

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F.    Costs of repairs and general maintenance of any part of the Project (excluding repairs and general maintenance paid by proceeds of insurance or by Tenant or other third parties, and alterations attributable solely to tenants of the Building other than Tenant) including, without limitation, landscaping of any part of the Project.

G.    The costs and expenses of any capital improvements if such capital improvement either (i) is intended in the good faith reasonable judgment of Landlord to reduce Operating Costs (as for example, a labor saving or energy saving improvement) provided, the amount included in Operating Costs in any calendar year shall not exceed an amount equal to the savings reasonably anticipated to result from the installation and operation of such improvement, and/or (ii) is made to comply with a Requirement. All of such costs shall be amortized over the reasonable life of such improvements, and a pro rata portion thereof included within Operating Costs for each year the same is so amortized, together with interest at the rate of six percent (6%) per annum on all unamortized balances. The reasonable life and amortization schedule of the foregoing shall be determined in accordance with generally accepted accounting principles (GAAP), and in no event shall such reasonable life extend beyond the reasonable life of the Building or other part of the Project to which such costs are related.

H.    Landlord’s central accounting and overhead costs allocable to the Project.

I.    All fees, costs and charges paid to any person or entity who provides services, including management services to any part of the Project

In determining the amount of Operating Costs for any calendar year, if less than 95% of the rentable areas of the Project are occupied by tenants at any time during any such year, Operating Costs that vary based on occupancy such as cleaning costs shall be determined for such year to be an amount equal to the like expenses which would normally be expected to be incurred had such occupancy been 95% throughout such year. Debt service and leasing commissions payable by Landlord shall be excluded from any computation of Operating Costs. In addition, the following shall be excluded from any computation of Operating Costs:

(1)    The cost of correcting defects, except that conditions (not occasioned by construction defects) resulting from ordinary wear and tear shall not be deemed defects for this purpose;

(2)    Salaries of officers and executives of the Landlord not connected with the operation of the Property;

(3)    The initial cost of tools and equipment used in the operation of the Property;

(4)    Depreciation;

(5)    Expenses relating to tenants’ alterations, including, without limitation, the construction of initial leasehold improvement for tenant spaces;

(6)    Interest, fees or principal on indebtedness and any ground lease rents;

 

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(7)    Expenses for which the Landlord, by the terms of this Lease or any other lease, makes a separate charge;

(8)    Real estate taxes;

(9)    Intentionally Omitted.

(10)    The cost of any services or systems for the that portion of the Building occupied by the Landlord or affiliates of the Landlord (exclusive of space occupied by the Landlord or affiliates of the Landlord in connection with the operation of the Building) and which are not provided generally to other tenants in the Building,

(11)    Leasing fees or commissions, advertising and promotional expenses, and legal fees incurred in connection with leasing space in the Building;

(12)    Costs incurred in performing work or furnishing services for any tenant (including Tenant), whether at such tenant’s or Landlord’s expense, to the extent that such work or service is in excess of any work or service that Landlord is obligated to furnish to Tenant at Landlord’s expense (e.g., if Landlord agrees to provide extra cleaning to another tenant, the cost thereof would be excluded since Landlord is not obligated to furnish extra cleaning to Tenant);

(13)    The cost of repairs or replacements incurred by reason of fire or other casualty or condemnation;

(14)    Intentionally Omitted;

(15)    Expenses for painting and redecorating for any tenant;

(16)    Legal expenses in enforcing the terms of any Lease;

(17)    Penalties and interest for late payment of real estate taxes, water and sewer charges, or any other obligation of Landlord;

(18)    Water rents and sewer charges to any tenant on a direct meter basis which are paid by the tenant;

(19)    The cost of any item or service to the extent to which Landlord is entitled to be reimbursed or compensated by insurance, any tenant, or any third party, or would have been entitled to reimbursement or compensation if Landlord maintained the insurance which it is required to maintain hereunder;

(20)    Expenses due to Landlord’s default under any lease or other agreement relating to the Building, the Lot, or the Premises; and

(21)    All other items that, under generally accepted accounting principles, are properly classified as capital expenditures, except as expressly otherwise provided in this Lease.

 

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Prime Lease shall mean that certain long term lease agreement dated January 30, 2007 by and between The Economic Development and Industrial Corporation of Boston, a corporation organized under the laws of the Commonwealth of Massachusetts, as Prime Lessor and CV Drydock Avenue LLC, as Prime Lessee, as amended by First Amendment dated January 21, 2015, covering the Building and certain real property on which the Building is situated, as the same may be further amended from time to time.

Prohibited Use shall mean any use or occupancy of the Leased Premises that in Landlord’s reasonable judgment would: (a) cause damage to the Project or any equipment, facilities or other systems therein; (b) impair the appearance of the Project; (c) interfere with the efficient and economical maintenance, operation and repair of the Leased Premises or the Project or the equipment, facilities or systems thereof; (d) adversely affect any service provided to, and/or the use and occupancy by, any Project tenant or occupants; (e) not comply with applicable Requirements; (f) materially and adversely affect the first-class image of the Project or (g) result in protests or civil disorder or commotions at, or other disruptions of the normal business activities in, the Project.

Project shall mean the Building, the land upon which the Building is situated and all other improvements now or hereafter situated on such land.

Requirements shall mean all present and future laws, rules, orders, ordinances, regulations, statutes, requirements, codes and executive orders, extraordinary and ordinary of (i) all Governmental Authorities, including the ADA and any law of like import, and all rules, regulations and government orders with respect thereto, and any of the foregoing relating to Hazardous Materials, environmental matters, public health and safety matters, and landmarks protection, (ii) any applicable fire rating bureau or other body exercising similar functions, affecting the Project or the maintenance, use or occupation thereof, or any street, avenue or sidewalk comprising a part of or in front thereof or any vault in or under the same, (iii) all requirements of all insurance bodies affecting the Project, and (iv) utility service providers.

Tax Year shall mean the twelve month period from July 1 through June 30 (or such other period as hereinafter may be duly adopted by the City of Boston as the fiscal year for real estate tax purposes).

Trade Fixtures shall mean any and all signs placed by Tenant within the Leased Premises pursuant to provisions hereof and any and all items of property used by Tenant in the Leased Premises including, but not limited to, furniture and equipment; provided, however, that the term “Trade Fixtures” shall not include any permanent leasehold improvements including, but not limited to, any floor, wall or ceiling coverings, any interior walls or partitions, any lighting fixtures, track lights or any property a part of or associated with any electrical, plumbing or mechanical system, notwithstanding that the same may have been installed within the Leased Premises.

Unavoidable Delays shall mean Landlord’s inability to fulfill or delay in fulfilling any of its obligations under this Lease expressly or impliedly to be performed by Landlord or Landlord’s inability to make or delay in making any repairs, additions, alterations, improvements or decorations or Landlord’s inability to supply or delay in supplying any equipment or fixtures,

 

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if Landlord’s inability or delay is due to or arises by reason of strikes, labor troubles or by accident, or by any cause whatsoever beyond Landlord’s reasonable control, including governmental preemption in connection with a national emergency, Requirements or shortages, or unavailability of labor, fuel, steam, water, electricity or materials, or delays caused by Tenant or other tenants, mechanical breakdown, acts of God, enemy action, civil commotion, fire or other casualty.

Section 9.2     Parking. Tenant shall have the exclusive non-reserved right to use two (2) surface parking spaces located on the Drydock Avenue side of the Project utilizing “G” decals (collectively, the “Parking Spaces”). Tenant shall pay, as Additional Rent, a monthly parking charge for such Parking Spaces at the then-current parking charge per space, per month, which rate may be increased from time to time. The Parking Spaces shall be used only for parking duly registered and operating private passenger motor vehicles owned and operated by Tenant or its employees and for visitor parking. Neither the Landlord nor any operator shall be liable for any loss, injury or damage to persons using the Parking Spaces or automobiles or other property therein, and, to the fullest extent permitted by law, the use of the Parking Spaces shall be at the sole risk of Tenant and its employees.

Section 9.3     Exhibits. Supplements and Riders. The Exhibits, Supplements and Riders attached to this Lease are hereby incorporated herein and hereby made a part of this Lease.

 

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IN WITNESS WHEREOF, Landlord and Tenant have executed this Lease as of the day and year first above written.

 

“LANDLORD”
JAMESTOWN 21-23-25 Drydock, L.P.,
a Delaware limited partnership
By:   JT 21-23-25 Drydock Corp.,
  a Delaware corporation,
  its general partner
By  

/s/ Shegun Holder

  Name:   Shegun Holder
  Title:  

 

“TENANT”
GINKGO BIOWORKS, INC.,
a Delaware corporation
By:  

/s/ Barry Canton

  Name:   Barry Canton
  Title:   Founder & Secretary
  Hereunto duly authorized

 

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Exhibit 10.32

FIRST AMENDMENT TO LEASE AGREEMENT

This FIRST AMENDMENT TO LEASE AGREEMENT (this “Amendment”) is made as of the 13th day of August, 2018 (the “First Amendment Effective Date”), by and between JAMESTOWN 21-23-25 DRYDOCK, L.P., a Delaware limited partnership, with a business address c/o Jamestown, Ponce City Market, 675 Ponce de Leon Avenue, NE, 7th Floor, Atlanta, Georgia 30308 (“Landlord”), and GINKGO BIOWORKS, INC., a Delaware corporation, whose address is 27 Drydock Avenue, Floor 8, Boston, Massachusetts 02210 (“Tenant”).

WHEREAS, Tenant and Landlord. entered into that certain Lease dated March 18, 2016 (the “Original Lease”), which Original Lease relates to the Leased Premises described therein on the eighth (8th) floor of The Bronstein Building (the “Building”) located at 21, 23 and 25 Drydock A venue, Boston, Massachusetts, comprising the Phase I Premises, the Phase II Premises, the Phase III Premises and the Phase IV Premises (which Phase IV Premises are not yet delivered to the Tenant per the provisions of the Original Lease) (collectively, the “Original Premises”);

WHEREAS, Tenant desires to lease additional premises in the Building consisting of (i) approximately 17,384 rentable square feet, known as 21-820E located on the eighth (8th) floor of 21 Drydock Avenue, Boston, Massachusetts, as shown on the floor plan attached to this Amendment as Exhibit A-1 (the “Expansion Premises”) and (ii) approximately 244 square feet located on the sixth (6th) floor of 23 Drydock Avenue, Boston, Massachusetts, as shown on the floor plan attached hereto as Exhibit A-2 (the “PH Premises);

WHEREAS, Landlord agrees to lease the Expansion Premises and the PH Premises to Tenant, subject to and upon the terms and conditions hereinafter set forth; and

WHEREAS, the Original Lease, as amended by this Amendment, is hereinafter referred to as the “Lease”, and all references contained in the Original Lease to “this Lease” or words of similar import shall mean and refer to the Original Lease, as amended by this Amendment.

NOW, THEREFORE, in consideration of the foregoing and for other good and valuable consideration, the receipt and sufficiency of which are hereby acknowledged, Landlord and Tenant agree that the Lease is hereby amended as follows:

1. Extension of Expiration Date. The definition of Expiration Date in the Original Lease is hereby deleted in its entirety and replaced with the following: “Expiration Date shall mean January 31, 2030, or the last day of any renewal term, if the Lease Term is extended in accordance with the provisions of Section 8.1 hereof.”

2. Expansion Premises. Landlord hereby demises and leases to Tenant, and Tenant hereby leases from Landlord, the Expansion Premises for a Lease Term commencing as of the Expansion Premises Commencement Date (as hereinafter defined) and expiring on the Expiration Date, unless sooner terminated in accordance with the terms of the Lease.

(a) Delivery of Expansion Premises. Landlord shall deliver the Expansion Premises to Tenant on the date (the “Expansion Premises Commencement Date”) that is the later of (i) July 1, 2022 and (ii) the date upon which Landlord substantially completes the work

 

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described in Exhibit B attached hereto in the Expansion Premises (collectively, “Landlord’s Expansion Premises Work”), provided, however, in the event that delivery date of the Expansion Premises is later than October 1, 2022 for any reason other than an Unavoidable Delay (as defined in the Lease), the Expansion Premises Rent Commencement Date shall be delayed by one (1) day for each day beyond October 1, 2022 that the Expansion Premises are delivered to Tenant.

(b) Rent for Expansion Premises. The Base Rent payable for the Expansion Premises shall commence on that date that is five (5) months following the Expansion Premises Commencement Date (the “Expansion Premises Rent Commencement Date”) and shall be equal to 100% of the Expansion Fair Market Value (as hereinafter defined) of the Expansion Premises, but in no event less than $65.00 per rentable square foot as an initial net rate, which rent · once established shall be subject to annual increases of three percent (3%) on each annual anniversary date of the Expansion Premises Rent Commencement Date during the Lease Term. Until the Expansion Premises Rent Commencement Date, Base Rent, PILOT Payments and Tenant’s Proportionate Share of Operating Costs for the Expansion Premises shall be abated. Tenant shall pay all forms of Additional Rent (other than PILOT Payments and Tenant’s Proportionate Share of Operating Costs) with respect to the Expansion Premises commencing on the Expansion Premises Commencement Date and all Additional Rent (including but not limited to PILOT Payments and Tenant’s Proportionate Share of Operating Costs) with respect to the Expansion Premises commencing on the Expansion Premises Rent Commencement Date.

 

  i.

On or before October 1, 2021 (i.e., nine (9) months prior to the earliest Expansion Premises Delivery Date), Landlord shall deliver to Tenant a Rent Notice (as defined in the Original Lease) stating Landlord’s determination of the Expansion Fair Market Value. If Landlord’s determination of Expansion Fair Market Value exceeds $65.00 per rentable square foot, then Tenant shall have the right to dispute the same by delivering a Dispute Notice (as defined in the Original Lease) to Landlord within thirty (30) days after delivery of the Rent Notice, and such dispute shall be resolved by arbitration as provided in Section 8.3 of the Lease. Time is of the essence of the giving of said Rent Notice and Dispute Notice. Failure on the part of Tenant to timely submit a Dispute Notice shall constitute a waiver of the right of Tenant to dispute the Expansion Fair Market Value determined by Landlord, and in such event the Base Rent for the Expansion Premises shall be as set forth in the Rent Notice. Upon final determination of the Base Rent for the Expansion Premises, Landlord and Tenant shall promptly execute a lease amendment replacing Exhibit D attached hereto with an exhibit that reflects rent due for the entire Leased Premises including the Expansion Premises. If the Base Rent for the Expansion Premises is not determined prior to the Expansion Premises Commencement Date, then Tenant shall pay Base Rent in an amount equal to $65.00 per rentable square foot (the “Interim Rent”). Upon final determination of the Base Rent for the Expansion Premises, Tenant shall commence paying such Base Rent as so determined, and within ten (10) days after such determination Tenant shall pay any deficiency in prior payments of Base Rent or, if the Base Rent as so determined shall be less than the Interim Rent, Tenant shall be entitled

 

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  to a credit against the next succeeding installments of Base Rent in an amount equal to the difference between each installment of Interim Rent and the Base Rent as so determined which should have been paid for such installment until the total amount of the over payment has been recouped.

 

  ii.

“Expansion Fair Market Value” shall mean the “Fair Market Value” (as defined in and determined in accordance with Section 8.2 of the Lease) of the Expansion Premises as of the date of the Rent Notice for a term equal to the remaining Lease Term provided, however, that for the avoidance of doubt the Permitted Use shall be laboratory use.

(c) Expansion Premises Allowance. Landlord agrees to contribute a tenant improvement allowance (the “Expansion Premises Allowance”) as follows: (x) in the event that the Expansion Fair Market Value is $65.00 per rentable square foot, an amount of up to $60.00 per rentable square foot of the Expansion Premises; and (y) in the event that the Expansion Fair Market Value is in excess of $65.00 per rentable square foot, an amount as set forth in the Rent Notice, as the same may be disputed and determined as set forth above. The Expansion Premises Allowance shall be for the design and construction of the Initial Installations for the Expansion Premises in accordance with Section 4.2 of the Lease. Landlord shall make progress payments from the Expansion Premises Allowance in accordance with the requirements and procedures of Section 2.2.F of the Lease. Any amount of the Expansion Premises Allowance which has not been previously requisitioned by Tenant on or before the twenty-nine (29) months from the Expansion Premises Commencement Date shall be retained by Landlord and Tenant shall have no further right or claim thereto

3. PH Premises. Landlord hereby demises and leases to Tenant, and Tenant hereby leases from Landlord, the PH Premises for a Lease Term commencing as of the PH Premises Commencement Date (as hereinafter defined) and expiring on the Expiration Date, unless sooner terminated in accordance with the terms of the Lease. Landlord shall allow reasonable pathways from the PH Premises to (a) the Original Premises and the Expansion Premises to permit Tenant to run mechanical, electrical and plumbing equipment between such Premises and the PH Premises as reasonably necessary to operate a pH/acid neutralization room, and (b) the exterior of the Building as reasonably necessary to vent the PH Premises; provided, however, that (i) Tenant hereby acknowledges and agrees that Landlord shall not be required to allow such pathways in areas that either are not permitted under current leases in the Project or would adversely impact any existing tenants in the Project, but (ii) Landlord shall ensure that such reasonable pathways are available.

(a) The PH Premises currently houses another tenant’s HVAC equipment (the “Existing Tenant’s Equipment”), and is expected to become available on May 15, 2019, provided, however, in the event that delivery date of the PH Premises is later than August 15, 2019 for any reason other than an Unavoidable Delay (as defined in the Lease), the PH Premises Rent Commencement Date shall be delayed by one (1) day for each day beyond August 15, 2019 that the PH Premises are delivered to Tenant. If Tenant wishes to commence use of the PH Premises prior to May 15, 2019 and to therefore cause Landlord to relocate the Existing Tenant’s Equipment prior to the natural expiration of the use agreement for the same, then, no later than one hundred and twenty ( 120) days prior to the desired date of use, Tenant shall (i) deliver notice to Landlord

 

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stating such desired date, together with a deposit equal to one hundred thousand dollars ($1 00,000) towards the costs that may be incurred by Landlord in relocating the Existing Tenant’s Equipment (such notice and payment, collectively, the “PH Premises Early Delivery Notice”), and Landlord shall thereafter use commercially reasonable efforts to cause the existing tenant to agree to relocate the Existing Tenant’s Equipment from the PH Premises. Notwithstanding the foregoing, in the event that Landlord, using commercially reasonable efforts, is unable to cause a relocation of the Existing Tenant’s Equipment, then Landlord shall promptly refund to Tenant the one hundred thousand dollars ($1 00,000.00) payment made by Tenant to Landlord. In the event that Landlord is successful in relocating the Existing Tenant’s Equipment, Tenant shall be responsible for all costs and expenses associated with the same. If such costs and expenses exceed the deposit provided to Landlord pursuant to the foregoing, Tenant shall pay such excess costs within thirty (30) days of request from Landlord and all such amounts shall be considered rent due under the Lease. In the event that such costs and expenses are less than the deposit provided to Landlord, Landlord shall refund the different to Tenant within thirty (30) days of the PH Premises Commencement Date (as hereinafter defined).

(b) If Tenant does not deliver the PH Premises Early Delivery Notice, Landlord shall use commercially reasonable efforts to deliver the PH Premises to Tenant on May 15, 2019. As used herein, the “PH Premises Commencement Date” shall be the date of actual delivery of the PH Premises to Tenant. Landlord shall deliver the PH Premises in the then as-is condition of the PH Premises, but with the Existing Tenant’s Equipment and all other personal property removed. Tenant shall, at Tenant’s sole cost and expense, be responsible for all plans, consents and all necessary permits and approvals from the City of Boston or any other applicable Governmental Authorities with respect to, and will perform all other work to prepare the PH Premises for, Tenant’s intended use, subject to the provisions of Section 4.2 of the Lease.

(c) Notwithstanding the foregoing, Landlord reserves the right in Landlord’s sole discretion (the “PH Premises Relocation Right”) to relocate the PH Premises to an alternate location within the Building at any time prior to the PH Premises Commencement Date, provided that such alternate location is (i) fully demised; (ii) located on a floor below the Existing Premises; and (iii) can be delivered to Tenant in the condition required by subsection (a) above on or before July 1, 2020. In the event Landlord exercises the PH Premises Relocation Right, Landlord shall make reasonable efforts to provide an alternate location near the Building plumbing chase or elevator/utility risers in 23 Drydock.

(d) Base Rent for the PH Premises at each point during the Lease Term shall be at the same rate per rentable square foot as the rest of the Leased Premises at such time. The Base Rent payable for the PH Premises shall commence on that date that is two (2) months following the applicable PH Premises Commencement Date. Until the PH Premises Rent Commencement Date, Base Rent, PILOT Payments and Tenant’s Proportionate Share of Operating Costs for the PH Premises shall be abated. Tenant shall pay all forms of Additional Rent (other than PILOT Payments and Tenant’s Proportionate Share of Operating Costs) with respect to the PH Premises commencing on the PH Premises Commencement Date and all Additional Rent (including but not limited to PILOT Payments and Tenant’s Proportionate Share of Operating Costs) with respect to the PH Premises commencing on the PH Premises Rent Commencement Date.

 

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(e) Tenant hereby agrees and acknowledges that the allowed use of the PH Premises shall be for Tenant’s PH/acid neutralization systems (“Tenant’s PH Systems”). Tenant shall use, and cause other parties under its control or for which it is responsible to use, the PH Systems in accordance with the Lease and in accordance with all applicable Requirements, and any permits and approvals from Governmental Authorities, and shall not permit any Hazardous Materials to be used or kept in or on the PH Premises without Landlord’s prior written consent (which consent shall not be unreasonably withheld, conditioned or delayed), other than sulfuric acid and sodium hydroxide as customarily used in a pH/acid neutralization room. As a condition to Landlord’s consent to introduce any Hazardous Material into any part of the Leased Premises, the Building or the Project, Tenant shall deliver to Landlord for Landlord’s review and approval the following information with respect thereto: (a) a description of handling, storage, use and disposal procedures; (b) all plans or disclosures and/or emergency response plans which Tenant has prepared, including without limitation a spill response plan, and all plans which Tenant is required to supply to any governmental agency or authority pursuant to any Requirements; (c) copies of all required permits relating thereto; and (d) other information reasonably requested by Landlord. The provisions of this paragraph (e) are in addition to all other restrictions on Hazardous Materials contained in the Lease.

4. Building Remeasurement; Remeasurement of Original Premises. The parties hereby confirm and agree that since the date of the Original Lease, the Building has been remeasured and comprises 809,296 rentable square feet, which square footage has been used to calculate Tenant’s Proportionate Share for the Expansion Premises and the PH Premises (as set forth below). Notwithstanding anything in the Original Lease to the contrary, from and after February 1, 2027 (the “Remeasurement Effective Date”), the parties hereby confirm and agree that the square footage of the Phase I Premises shall be deemed to comprise 17,369 rentable square feet, the Phase II Premises shall be deemed to comprise 17,751 rentable square feet, the Phase III Premises shall be deemed to comprise 17,877 rentable square feet and the Phase IV Premises shall be deemed to comprise 17,803 rentable square feet. Effective as of the Remeasurement Effective Date, Tenant’s Proportional Share for the Phase I Premises, Phase II Premises, Phase III Premises and Phase IV Premises shall be recalculated to reflect the increase in square footage of the same.

5. The definition of “Tenant’s Proportionate Share” in Article I of the Original Lease is hereby deleted in its entirety and replaced with the following:

“Tenant’s Proportionate Share shall mean as the date hereof, 6.57% (i.e. for the Phase I, Phase II and Phase III Premises) and shall be increased to 8.87% on the Phase IV Commencement Date based on the Building consisting of 782,539 rentable square feet per the Original Lease. Based on the remeasurement of the Building to 809,296 rentable square feet, Tenant’s Proportionate Share for the Expansion Premises and PH Premises is as follows: (i) for the PH Premises, the Tenant’s Proportionate Share is 0.03%; and (ii) for the Expansion Premises, the Tenant’s Proportionate Share is 2.15%.

6. Base Rent and Landlord’s Construction Loan. No later than thirty (30) days from the date hereof, Tenant shall make a one-time lump sum payment to Landlord of $325,971.58 (the “Reconciliation Payment”) as a reconciliation of all Construction Rent owing to Landlord through the end of July, 2018. Upon payment by Tenant to Landlord of the Reconciliation Payment,

 

5


the parties agree that no further payments shall be due and owing with respect to the Lease through and including July 31 of 2018, including, without limitation, Base Rent, Construction Rent and all Additional Rent. Exhibit D to the Lease is hereby deleted in its entirety and replaced by Exhibit D attached hereto. Notwithstanding any other provision of the Lease to the contrary, it is acknowledged and agreed that (a) commencing August 1, 2018, the principal balance with respect to Landlord’s Construction Loan for the Phase I Premises is shall be deemed to be $901,150.21 repayable at an interest rate of 7.35874% per annum, (b) commencing August 1, 2018, the principal balance with respect to Landlord’s Construction Loan for the Phase II Premises is deemed to be $1,056,100.50 payable at an interest rate of 5.58418% per annum, and (c) commencing September 1, 2018, the principal balance with respect to Landlord’s Construction Loan for the Phase III Premises is deemed to be $874,882 payable at an interest rate of 6.13562% per annum. Landlord and Tenant hereby agree that notwithstanding anything to the contrary set forth in Section 2.2(D) of the Lease or the Side Letter between Landlord and Tenant dated March 21, 2016, Tenant shall be required to pay Landlord’s Construction Loan as set forth on the schedule with respect to the same included within Exhibit D attached hereto.

7. Original Premises Allowance. Provided no monetary or material non-monetary default exists as of May 1, 2021 (following notice and the expiration of any applicable grace or cure periods), Landlord agrees to contribute an amount up to $1,062,000.00 (i.e. $15.00 per rentable square foot of the Original Premises) toward the cost incurred by Tenant for improvements to the Original Premises (the “Original Premises Allowance”), which improvements shall be made in accordance with the provisions of Section 4.2 of the Lease. If the Original Premises Allowance Condition (as hereinafter defined) is met, Tenant shall be entitled to draw down on the Original Premises Allowance with respect to any portion of the Original Premises in accordance with the requirements and procedures of the second paragraph of Section 2.2.F of the Lease (other than the last sentence of said Section 2.2.F) commencing as of May 1, 2021 provided however, that as of that date which is thirty-six (36) months after the Original Premises Allowance Condition, any amount of the applicable Original Premises Allowance which has not been previously requisitioned by Tenant pursuant to the foregoing shall be retained by Landlord and Tenant shall have no further right or claim thereto. If the Original Premises Allowance Condition has not been met as of May 1, 2021, then Tenant shall still be entitled to the Original Premises Allowance but Tenant shall not be permitted to draw down on such Original Premises Allowance until the earlier of the date when the Original Premises Allowance Condition has been met or February 1, 2027 (provided, however, that such Original Premises Allowance may be used to reimburse Tenant for any leasehold improvements made to the Original Premises from and after May 1, 2021). In such event, Landlord shall make disbursements upon receipt of the documentation required under Section 2.2.F of the Lease, provided that any amount of the Original Premises Allowance which has not been requisitioned by Tenant on or before February 1, 2028 shall be retained by Landlord and Tenant shall have no further right or claim thereto. As used herein, the “Original Premises Allowance Condition” shall be met if Tenant provides Landlord with reasonable evidence that any of the following conditions occurs: (i) Tenant has a market valuation of $900,000,000.00 or (ii) Tenant has a net worth, determined in accordance with generally accepted accounting principles, of $325,000,000.00. Landlord agrees that in the event Tenant receives the required approvals from the Prime Landlord and all Governmental Authorities, Tenant may create up to two connections between the portion of the Premises located in 21 Drydock Avenue and the portion of the Premises located in 23 Drydock Avenue, subject to and in accordance with Section 4.2 of the Lease. Landlord agrees to cooperate with and assist Tenant as

 

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reasonably requested by Tenant, at no out-of-pocket cost to Landlord, to obtain all approvals required to create such connections at Tenant’s expense, including executing applications and authorizations that may be required in connection therewith.

8. Statements. Section 2.6(E) of the Lease is hereby deleted in its entirety.

9. Electricity. Section 3.1 of the Original Lease is hereby deleted in its entirety and replaced with the following:

“Section 3.1 Utilities. Landlord shall furnish or cause public utilities to furnish electricity to each Bay within the Leased Premises with (a) no less than 19 watts per rentable square foot of electric capacity and (b) water to the Building to the extent and in such manner as is adequate to reasonably serve Tenant’s use and occupancy of the Leased Premises. Landlord retains the right to adjust electric capacity to the Expansion Premises provided by Landlord (as opposed to any additional electric capacity to the Expansion Premises provided by or on behalf of Tenant) based on actual usage, provided such reduction does not compromise or interfere with Tenant’s current or future use of the Premises, and that Landlord continues to furnish or cause public utilities to furnish electricity to each Bay within the Leased Premises with no less than 19 watts per rentable square foot of electric capacity. Landlord and Tenant acknowledge that 19 watts per rentable square foot of electric capacity may be insufficient for Tenant’s intended use, and agree to work cooperatively to identify if and when electrical service to the Premises requires upgrading. Landlord shall cooperate with Tenant to facilitate Tenant’s upgrades to electricity infrastructure, which upgrades shall be at Tenant’s sole cost and expense.

10. Expansion Rooftop Space. Effective on the Expansion Space Delivery Date, the Tenant shall have the right to construct additional installations for the Leased Premises in the area of the roof of the Building as shown on the plan attached here to as Exhibit A-3 (“Expansion Rooftop Installations”), all such construction to be in accordance with the provisions of the Lease.

11. Security Deposit. As of the Phase IV Commencement Date, the Security Deposit shall be increased to $1,537,403.00 from $1,400,000. The Security Deposit shall remain at $1,537,403.00 on and after the Expansion Premises Commencement Date. Section 6.5.E of the Original Lease is hereby deleted in its entirety.

12. Right of First Offer. The following is hereby inserted as a new Section 9.4 of the Lease immediately following Section 9.3 of the Lease.

“Section 9.4 Right of First Offer.

(a) Tenant shall have the following one (1) time right (“Right of First Offer”) to lease each RFO Premises (as hereinafter defined) when such RFO Premises become available for lease to Tenant (as hereinafter defined), subject to the following conditions, which conditions Landlord may waive, at its election, by written notice to Tenant at any time: (i) Tenant is not in Default of its covenants and obligations under the Lease beyond any applicable notice and cure periods, and (ii) at the time of such RFO Notice (as hereinafter defined) Tenant leases no less than four (4) Bays and occupies for

 

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its own use no less than three (3) Bays of the Leased Premises. For purposes hereof, if any portion of the Premises is occupied by any affiliate of Tenant, including, without limitation, joint ventures of which Tenant or any affiliate of Tenant is a part, it shall be deemed to be occupied by Tenant “for its own use.” Notwithstanding the foregoing, Tenant shall have no right to exercise its Right of First Offer if less than twenty-four (24) months remain in the Term of the Lease, unless (i) Tenant has not yet exercised Tenant’s Renewal Term, (ii) Tenant’s Renewal Term has not lapsed unexercised, and (iii) simultaneously with giving Tenant’s RFO Exercise Notice, Tenant timely and properly exercises its Renewal Term as set forth in Sections 8.1 and 8.2 of the Lease.

(b) Definition of RFO Premises. Each of the following (i) through (v) shall be an “Individual RFO Premises”, and collectively the “RFO Premises”: (i) Suite 23-710W (“RFO Premises A”) containing approximately 13,000 rentable square feet as shown on Exhibit E-1, First Amendment attached hereto which is expected to become available in January, 2024, unless the tenant leasing such space exercises its option to renew in which event it is expected to become available in January, 2029; (ii) Suite 23-720W (“RFO Premises B”) containing approximately 5,000 rentable square feet as shown on Exhibit E-2, First Amendment, which is expected to become available in August, 2024; (iii) Suite 21-740E (“RFO Premises C”) containing approximately 3,325 rentable square feet as shown on Exhibit E-3, First Amendment, which is expected to become available in February, 2024; (iv) Suite 21-710E (“RFO Premises D”) containing approximately 8,170 rentable square feet as shown on Exhibit E-4, First Amendment, which is expected to become available in July 2027; and (v) any portion of that space currently occupied by Elkus Manfredi, consisting of approximately 52,000 rentable square feet in three (3) bays on the seventh (7th) floor of 23 Drydock East or the seventh floor of 25 Drydock, East or West, which may become available (“RFO Premises E”) as shown on Exhibit E-5, First Amendment. For the purposes of this Section 9.4, an RFO Premises shall be deemed to be “available for lease to Tenant” when the same becomes available in accordance with the schedule attached hereto as Exhibit C.

(c) Exercise of Rights to Lease RFO Premises. Landlord shall give Tenant written notice (“RFO Notice”) setting forth (i) the location and square footage of space in each Individual RFO Premises that will become available, (ii) the date that such RFO Premises will become available for lease to Tenant as aforesaid, and (iii) the Base Rent and Additional Rent determined by Landlord pursuant to subsection (d)(ii) below. Tenant shall have the right, exercisable upon written notice given to Landlord within twenty (20) days after the receipt of an RFO Notice (“RFO Exercise Notice”), to lease any such RFO Premises (provided, however, that Tenant may not accept less than the entirety of the Individual RFO Premises which were the subject of the RFO Notice, provided, however, that if more than one Individual RFO Premises was the subject of the RFO Notice, Tenant may elect to accept one or more Individual RFO Premises without accepting all Individual RFO Premises). In addition, Tenant shall have the right to send Landlord a Dispute Notice with respect to Landlord’s determination of the Base Rent and Additional Rent. If Tenant timely and properly gives Landlord Tenant’s RFO Exercise Notice, then Landlord shall lease to Tenant and Tenant shall hire and take from Landlord, such RFO Premises, upon all of the same terms and conditions of the Lease except as hereinafter set forth. If Tenant does not timely and properly provide Tenant’s RFO Exercise Notice,

 

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time being of the essence, then Tenant shall have no further right to lease all or any portion of the RFO Premises which were the subject of the RFO Notice. If Tenant submits a Dispute Notice as aforesaid, the Base Rent and Additional Rent shall be determined as set forth in Section 8.3 of the Lease.

(d) Lease Provisions Applying to RFO Premise . The leasing to Tenant of such RFO Premises shall be upon all of the same terms and conditions of the Lease, except as follows:

(i) RFO Premises Commencement Date

The “RFO Premises Commencement Date” for each RFO Premises shall be the later of: (x) the RFO Premises Commencement Date as set forth in Landlord’s Notice, or (y) the date that Landlord delivers such RFO Premises to Tenant in the condition set forth in subparagraph (iii) below.

(ii) Base Rent

Base Rent with respect to the RFO Premises shall mean the “Fair Market Value” (as defined in and determined in accordance with Section 8.2 and, if applicable, 8.3 of the Lease) of the Expansion Premises as of the RFO Premises Commencement Date provided, however, that for the avoidance of doubt the Permitted Use shall be laboratory use.

(iii) Condition of RFO Premises

Tenant shall take such RFO Premises “as-is” in its then (i.e. as of the date of delivery) state of construction, finish, and decoration, without any obligation on the part of Landlord to construct or prepare any RFO Premises for Tenant’s occupancy.

(iv) Execution of Lease Amendments

Notwithstanding the fact that Tenant’s exercise of the above-described option to lease RFO Premises shall be self-executing, as aforesaid, the parties hereby agree promptly to execute a lease amendment reflecting the addition of an RFO Premises within thirty (30) days after Tenant’s delivery of the RFO Notice. The execution of such lease amendment shall not be deemed to waive any of the conditions to Tenant’s exercise of the herein option to lease the RFO Premises, unless otherwise specifically provided in such lease amendment.

(v) Subject to Existing Rights

Notwithstanding anything herein to the contrary, Tenant’s Right of First Offer is subject and subordinate to the expansion rights (whether such rights are designated as a right of first offer, right of first refusal, expansion option or otherwise) of any tenant of the Building existing on the date hereof provided as set forth in Exhibit C, however, that Tenant’s Right of First Offer to RFO Premises E is also subject to Landlord’s decision, in Landlord’s sole discretion, to extend the term of lease of the existing tenant, regardless of whether such tenant has a renewal right.”

 

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13. Parking. Section 9.2 is hereby deleted in its entirety and replaced with the following:

“Section 9.2 Parking. During each period of the Lease as set forth below, Tenant shall have the exclusive non-reserved right to use the corresponding number of surface parking spaces located on the Drydock A venue side of the Project utilizing “G” decals (collectively, the “Parking Spaces”).

 

Period

  

Total Number of

 Parking Spaces

First Amendment Effective Date through Expansion Premises Delivery Date    4
Expansion Premises Delivery Date through remainder of Term    5

Tenant shall pay, as Additional Rent, a monthly parking charge for such Parking Spaces at the then-current parking charge per space, per month, which rate may be increased from time to time. The Parking Spaces shall be used only for parking duly registered and operating private passenger motor vehicles owned and operated by Tenant or its employees and for visitor parking. Neither the Landlord nor any operator shall be liable for any loss, injury or damage to persons using the Parking Spaces or automobiles or other property therein, and, to the fullest extent permitted by law, the use of the Parking Spaces shall be at the sole risk of Tenant and its employees. The location of the Parking Spaces shall be determined by Landlord subject to availability.”

14. Signage. In addition to the Building-standard signage provided for in Section 3.2.E of the Lease, as of the date hereof Tenant shall have the right to install, at Tenant’s sole cost and expense, one exterior sign affixed to an outside container designated by Landlord on the promenade at the 25 Drydock portion of the Building. Tenant’s signage shall be subject to all Legal Requirements and Landlord’s prior approval and shall conform to the Building’s signage criteria. In addition, Landlord reserves the right to relocate any such signage to an outside container designated by Landlord at the 23 Drydock portion of the Building in Landlord’s sole discretion.

15. Marine Industrial Use. In the event that during the Lease Term Tenant enters into business activity or research related to the marine industrial sector, Tenant agrees to inform Landlord and to use good-faith efforts to perform its business and/or research related to the same in the Building (rather than any other buildings leased by Tenant in the Maritime Industrial Park in which the Building is located), provided that such efforts do not materially increase the cost to Tenant relating to such work when compared to any such other buildings and provided further that the foregoing shall not constrain Tenant from also conducting business activity or research related to the marine industrial sector in other buildings leased by Tenant in the Maritime Industrial Park

 

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in which the Building is located. In addition, Tenant agrees to cooperate with Landlord at no cost to Tenant in connection with Landlord’s efforts to have any such marine industrial uses recognized by the Prime Lessor.

16. Miscellaneous. Tenant hereby represents and warrants to Landlord as follows: (i) the execution and delivery of this Amendment by Tenant has been duly authorized by all requisite corporate action; (ii) neither the Lease nor the interest of Tenant therein has been assigned, sublet, encumbered or otherwise transferred; (iii) to the best knowledge of Tenant, there are no defenses or counterclaims to the enforcement of the Lease or the liabilities and obligations of Tenant thereunder; (iv) except as set forth in the Lease, Tenant is not entitled to any offset, abatement or reduction of rent under the Lease; (v) neither Landlord (to the best knowledge of Tenant) nor Tenant is in breach or default of any its respective obligations under the Lease; and (vi) Landlord has made no representations or warranties to Tenant in connection with the execution and delivery of this Amendment, except as expressly and specifically set forth in this Amendment. Except as expressly and specifically set forth herein, the Lease is hereby ratified and confirmed, and all of the terms, covenants, agreements and provisions of the Lease shall remain unaltered and unmodified and in full force and effect throughout the balance of the term of the Lease, as extended hereby. If any of the provisions of the Lease are inconsistent with this Amendment, the provisions of this Amendment shall control. Submission of this Amendment by Landlord is not an offer to enter into this Amendment but rather is a solicitation for such an offer by Tenant. Landlord shall not be bound by this Amendment until Landlord has executed and delivered the same to Tenant. This Amendment may be executed in any number of counterparts, each of which when so executed and delivered shall be an original, but such counterparts shall together constitute one and the same instrument. Any signature delivered by a party by facsimile or electronic transmission shall be deemed to be an original signature to this Agreement and binding on such party.

17. Brokers. Tenant warrants and represents that it has dealt with no broker other than Columbia Group and JLL (collectively, the “Broker”) in connection with the consummation of this Amendment, the commission for which Broker shall be paid by Landlord in accordance with separate agreements. In the event of any other brokerage claims against Landlord predicated upon prior dealings with Tenant, Tenant agrees to defend the same and indemnify Landlord against any such claim.

18. Capitalized Terms. Capitalized terms that are not otherwise defined herein shall have the meaning set forth in the Lease.

19. Governing Law. This Amendment shall be governed by the laws of the Commonwealth of Massachusetts without regard to its conflict of law provisions.

20. Counterparts. This Amendment may be executed in several counterparts each of which when executed and delivered is an original, but all of which together shall constitute one instrument.

[Signatures on next page]

 

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IN WITNESS WHEREOF, the parties hereto have executed this instrument in any number of counterpart copies, each of which shall be an original for all purposes, as of the day and year first above written.

 

“LANDLORD”
JAMESTOWN 21-23-25 Drydock, L.P.,
a Delaware limited partnership
By:   JT 21-23-25 Drydock Corp.,
  a Delaware corporation,
  its general partner
By:  

/s/ Dana Griffin

  Name:   Dana Griffin
  Title:   Authorized Signatory
“TENANT”
GINKGO BIOWORKS, INC.,
a Delaware corporation
By:  

/s/ Barry Canton

  Name:   Barry Canton
  Title:   Founder, Secretary
  Hereunto duly authorized

 

[Signature Page]

Exhibit 10.33

SUBLEASE

 

1.

PARTIES. This Sublease, dated December 10, 2019 (the “Sublease”) is made between Stanley Convergent Security Solutions, Inc. (“Sublessor”), and Ginkgo Bioworks, Inc. (“Sublessee”).

 

2.

MASTER LEASE. Sublessor is the lessee under a written lease dated March 2017 wherein Jamestown 21-23-25 Drydock, L.P. (“Lessor”) leased to Sublessor the real property located in the Commonwealth of Massachusetts described as 23 Drydock Avenue, Boston, MA consisting of approximately 5,151 rentable square feet (“RSF”) on a portion of the seventh (7’th) floor (“Master Premises”). Said lease is herein referred to as the “Master Lease” and is attached hereto as Exhibit “A”.

 

3.

PREMISES. Sublessor hereby subleases to Sublessee on the terms and conditions set forth in this Sublease the following portion of the Master Premises (“Premises”): 100%, including the right to use one (1) reserved surface parking space in accordance with Section 8.1 of the Master Lease.

 

4.

WARRANTY BY SUBLESSOR. Sublessor warrants and represents to Sublessee that the Master Lease has not been amended or modified except as expressly set forth herein, that Sublessor is not now, and as of the commencement of the Term hereof will not be, in default or breach of any of the provisions of the Master Lease, and that Sublessor has no knowledge of any claim by Lessor that Sublessor is in default or breach of any of the provisions of the Master Lease and no knowledge of any material default or material breach of any of the provisions of the Master Lease by Lessor.

 

5.

TERM. The Term of this Sublease shall commence on February 1, 2020 (provided that such date may accelerated to an earlier date, but not before January 1, 2020, upon not less than fifteen (15) days prior notice from Sublessor to Sublessee), or when Lessor consents to this Sublease, whichever shall last occur (“Commencement Date”), and end on June 30, 2024 (“Termination Date”), unless otherwise sooner terminated in accordance with the provisions of this Sublease. In the event the Term commences on a date other than February 1, 2020, Sublessor and Sublessee shall execute a memorandum setting forth the actual date of commencement of the Term. Possession of the Premises (“Possession”) shall be delivered to Sublessee on the Commencement Date. If for any reason, other than the act or omission of Sublessee, Sublessor does not deliver Possession to Sublessee on the Commencement Date, Sublessor shall not be subject to any liability for such failure, the Termination Date shall not be extended by the delay, and the validity of this Sublease shall not be impaired, but rent shall abate until delivery of Possession, provided that if Sublessor fails to deliver Possession by March 1, 2020, Sublessee may terminate the Sublease by notice given to Sublessor prior to delivery of Possession. Provided that Sublessor has vacated the Premises, Sublessor shall permit Sublessee to access the Premises prior to the commencement of the Term for reconfiguration of the Premises and installation of FF&E, such early access shall not advance the Commencement Date or the Termination Date and shall be subject to the provisions of this Sublease, other than the payment of rent, provided that Sublessee shall be responsible for any charges related to such early access such as utility costs loading dock and freight elevator charges and the like.

 

6.

DELIVERY OF PREMISES; PREMISES SUBLET “AS IS”. Sublessor shall deliver the Premises to Sublessee in their present “as is” condition, reasonable wear and tear excepted and with all of Sublessor’s personal items, furniture, fixtures and equipment removed, Without limiting any of Sublessor’s covenants, representations and warranties contained in this Sublease, Sublessee acknowledges that (i) Sublessee has inspected the Premises and is fully familiar and satisfied with the condition thereof, (ii) Sublessee shall take the Premises “as is” on the Commencement Date, (iii) Sublessor has made no representation or warranty concerning the condition of the Premises other than those set forth in this Sublease, and (iv) Sublessor shall not be required to make any improvements in order to prepare the Premises for Sublessee’s occupancy.

 

Certain confidential information contained in this Exhibit has been omitted because it is (i) not material and (ii) of the type that the registrant treats as private or confidential.


7.

RENT.

7.1 Minimum Rent. Sublessee shall pay to Sublessor as minimum rent, without deduction, setoff, notice, or demand, at STANLEY CONVERGENT SECUIRTY SOLUTIONS, INC., 1000 STANLEY DRIVE, NEW BRITAIN, CT 06053, ATTN: REAL ESTATE DEPARTMENT or at such other place as Sublessor shall designate from time to time by notice to Sublessee, the sum of See Rent Schedule Below per month, in advance on the first day of each month of the Term. If the Term begins or ends on a day other than the first or last day of a month, the rent for the partial months shall be prorated on a per diem basis. Additional provisions:

 

Dates:

   Base Rent PSF:      Monthly Base Rent:  

Commencement Date – June 30, 2020

   $ 50.00      $ 21,462.50  

July 1. 2020 – June 30 2021

   $ 51.00      $ 21,891.75  

July l, 2021 – June 30 2022

   $ 52.00      $ 22,321.00  

July l, 2022 – June 30 2023

   $ 54.00      $ 23,179.50  

July 1, 2023 – June 30, 2024

   $ 56.00      $ 24,038.00  

Additionally, Sublessee shall be responsible for the monthly $450.00 parking fee set forth in the Master Lease in Section 8.1 as rent and shall pay Sublessor such amount monthly as part of its rent.

7.2 Operating Costs. If the Master Lease requires Sublessor to pay to Lessor all or a portion of the expenses of operating the building and/or project of which the Premises are a part, including, but not limited to, taxes, utilities and PILOT Payments as defined in the Master Lease (“Operating Costs”), then Sublessee shall pay to Sublessor as additional rent one hundred percent (I00%) of the amounts payable by Sublessor for Operating Costs above a 2020 calendar year base and separately metered electric service with respect to the Premises, incurred during the Term. Such additional rent shall be payable as and when Operating Costs are payable by Sublessor to Lessor. If the Master Lease provides for the payment by Sublessor of Operating Costs on the basis of an estimate thereof, then as and when adjustments between estimated and actual Operating Costs are made under the Master Lease, the obligations of Sublessor and Sublessee hereunder shall be adjusted in a like manner; and if any such adjustment shall occur after the expiration or earlier termination of the Term, then the obligations of Sublessor and Sublessee under this Subsection 7.2 shall survive such expiration or termination. Sublessor shall, upon request by Sublessee, furnish Sublessee with copies of all statements submitted by Lessor of actual or estimated Operating Costs during the Term.

 

8.

SECURITY DEPOSIT. Sublessee shall deposit with Sublessor upon execution of this Sublease the sum of $44,642.00 as security for Sublessee’s faithful performance of Sublessee’s obligations hereunder (“Security Deposit”). Sublessee may deliver the Security deposit in the form of a letter of credit in accordance with the terms set forth herein. If Sublessee fails to pay rent or other charges when due under this sublease, or fails to perform any of its other obligations hereunder, after the expiration of any applicable notice and cure periods set forth herein, Sublessor may use or apply all or any portion of the Security Deposit for the payment of any rent or other amount then due hereunder and unpaid, for the payment of any other sum for which Sublessor may become obligated by reason of Sublessee’s default or breach, or for any loss or damage sustained by Sublessor as a result of Sublessee’s default or breach. If Sublessor so uses any portion of the Security Deposit, Sublessee shall, within ten (10) days after written demand by Sublessor, restore the Security Deposit to the full amount originally deposited, and Sublessee’s failure to do so shall constitute a default under this Sublease. Sublessor shall not be required to keep the Security Deposit separate from its general accounts, and shall have no obligation

 

2


  or liability for payment of interest on the Security Deposit. In the event Sublessor assigns its interest in this Sublease, Sublessor shall deliver to its assignee so much of the Security Deposit as is then held by Sublessor. Within thirty (30) days after the Term has expired, and provided Sublessee is not then in default of any of its obligations hereunder, the Security Deposit, or so much thereof as had not theretofore been applied by Sublessor, shall be returned to Sublessee or to the last assignee, if any, of Sublessee’s Interest hereunder.

Sublessee may deliver the Security deposit in the form of a letter of credit (the “Letter of Credit”). The Letter of Credit shall be in the form of a clean, irrevocable, non-documentary and unconditional letter of credit issued by and drawable upon a commercial bank which is reasonably satisfactory to Landlord (the “Sublessor”). The Letter of Credit shall (a) name Sublessor as beneficiary, (b) have a term of not less than one year, (c) permit multiple drawings, (d) be fully transferable by Sublessor without the payment of any fees or charges by Sublessor, and (e) otherwise be in form and content reasonably satisfactory to Sublessor. If upon any transfer of the Letter of Credit, any fees or charges shall be so imposed, then such fees or charges shall be payable solely by Sublessee. The Letter of Credit shall provide that it shall be deemed automatically renewed, without amendment, for consecutive periods of one year each thereafter during the Term (and in no event shall the Letter of Credit expire prior to the 30th day following the Expiration Date) unless the Issuing Bank sends duplicate notices (the “Non-Renewal Notice”) to Sublessor by certified mail, return receipt requested, not less than 30 days next preceding the then expiration date of the Letter of Credit stating that the Issuing Bank has elected not to renew the Letter of Credit.

 

9.

USE OF PREMISES. The Premises shall be used and occupied only for uses permitted under the Master Lease and for no other use or purpose (the “Permitted Use”). Sublessee shall, at its sole cost and expense, comply with all applicable laws and with the terms of the Master Lease with respect to the Premises and its use of the Premises.

 

10.

ASSIGNMENT AND SUBLETTING. Sublessee shall not assign this Sublease or further sublet all or any part of the Premises without the prior written consent of Sublessor, which consent shall not be unreasonably withheld, conditioned or delayed (and the consent of Lessor if such is required under the terms of the Master Lease). At the time of each request for Sublessor’s consent to a proposed assignment or sublease, Sublessee shall deliver to Sublessor all information reasonably requested by Sublessor concerning the proposed transfer and proposed transferee. Sublessee shall also reimburse Sublessor for all reasonable third party legal fees incurred by Sublessor in connection with reviewing any request for consent hereunder in an amount not to exceed $1,500 in each instance, together with any costs charged to Sublessor by the Lessor under the Master Lease (which shall not be subject to such $1,500 cap). Within thirty (30) days after Sublessor’s receipt of the information required by this Section 9, Sublessor shall deliver notice to Sublessee granting its consent to such proposed assignment or subletting, or its refusal to consent thereto. In no event shall any sublet or assignment release Sublessee of any liability hereunder.

 

11.

OTHER PROVISIONS OF SUBLEASE. All applicable terms and conditions of the Master Lease are incorporated into and made a part of this Sublease as if Sublessor were the lessor thereunder, Sublessee the lessee thereunder, and the Premises the Master Premises, except for the following: Sections 2.3 and 2.4. In addition, Section 2.6 of the Master Lease shall be deemed to refer to Minimum rent as set forth in Section 7.1 above and Sections 2.7 and 2.8 of the Master Lease shall be deemed to be modified by the provisions of Section 7.2 above. In the event of any inconsistency between the provisions hereof and the provisions of the Master Lease, the provisions hereof shall govern. Notwithstanding the foregoing, it is the intent of the parties that Sublessee be responsible for all Minimum rent set forth in the Master Lease and all line items of Operating Costs set forth in the Master Lease, adjusted to a 2020 base year. Without limiting the generality of the foregoing, the holdover provisions set forth in Section 7.2 of the Master Lease shall apply to the obligations of Sublessee pursuant to this Sublease. To the extent Sublessee defaults under any of its obligations pursuant to this Sublease, the remedies set forth in Article 6 of the Master Lease, shall be applicable to any such default. Sublessee assumes and agrees

 

3


  to perform the lessee’s obligations under the Master Lease during the Term to the extent that such obligations are applicable to the Premises, except that the obligation to pay rent to Lessor under the Master Lease, including Base Rent, PJLOT Payments and Tenant’s Proportionate Share of Operating Costs, shall be considered performed by Sublessee to the extent and in the amount rent is paid to Sublessor in accordance with Section 7 of this Sublease. This Sublease is and shall at all times during the Term remain, subject and subordinate to the Master Lease (and to all matters to which the Master Lease is subject and subordinate), and Sublessee covenants that it shall conduct itself and its operations in and about the Premises so as not to cause Sublessor to be in default under the Master Lease and shall not commit, permit or cause to be permitted in the Premises any act or omission which shall violate any term or condition of the Master Lease. Sublessor shall exercise due diligence in attempting to cause Lessor to perform its obligations under the Master Lease for the benefit of Sublessee. If the Master Lease terminates, this Sublease shall terminate and the parties shall be relieved of any further liability or obligation under this Sublease, provided however, that if the Master Lease terminates as a result of a default or breach by Sublessor or Sublessee under this Sublease and/or the Master Lease, then the defaulting party shall be liable to the nondefaulting party for the direct and actual damage suffered as a result of such termination (specifically excluding consequential damages). Notwithstanding the foregoing, if the Master Lease gives Sublessor any right to terminate the Master Lease in the event of the partial or total damage, destruction. or condemnation of the Master Premises or the building or project of which the Master Premises are a part, the exercise of such right by Sublessor shall not constitute a default or breach hereunder.

 

12.

DEFAULT. Sublessee shall be in default under this Sublease if any of the following occur: (i) Sublessee shall fail to pay when due any installment of Minimum Rent or regular monthly payments of Operating Expenses and such failure shall continue for five (5) days after notice thereof is given to Sublessee, except that if Sublessor shall have given two (2) such notices in any calendar year, Sublessee shall not be entitled to any further notice of its delinquency, (ii) Sublessee shall fail to perform any other monetary obligation hereunder and fail to cure such failure within three (3) business days after such amount was due; (ii) Sublessee shall fail to perform any non-monetary obligation hereunder and fail to cure such failure within thirty (30) days of receiving Sublessor’s written notice specifying such failure (provided, however, if such failure cannot be cured within such 30-day period, Sublessee shall not be in default if Sublessee commences the cure thereof within such 30-day period and diligently prosecutes such cure within sixty (60) days from the original notice); or (iii) Sublessee shall cause an event of default under the Master Lease to exist (unless due to (A) Sublessor’s act or omission or (B) Sublessee’s failure to receive written notice of the default in question). In the event of any default by Sublessee, Sublessor shall have all available remedies, and, in addition, Sublessee shall indemnify and hold Sublessor harmless from all loss, cost and liability arising from any such event.

 

13.

LATE CHARGE; DEFAULT INTEREST RATE. In addition to any other remedies available to Sublessor, in the event that Sublessee fails to timely pay within five (5) days after due any installment of Minimum Rent or regular monthly Operating Expenses, Sublessee shall be liable to Sublessor for a late charge in the amount of 5% of any such late payment. Further, all amounts due from Sublessee to Sublessor shall bear interest at the annual rate equal to the rate published from time to time in The Wall Street Journal as the prime rate plus 5%.

 

14.

ENFORCEMENT COSTS; EXCULPATION. Should either party institute any action or proceeding to enforce any provision of this Sublease or for damages by reason of an alleged breach of any provision hereof, the prevailing party shall be entitled to recover from the party not prevailing all costs and expenses (including reasonable attorneys’ fees) incurred by such prevailing party in connection with such action or proceeding. A party entitled to recover costs and expenses under this Section shall also be entitled to recover all costs and expenses (including reasonable attorneys’ fees) incurred in the enforcement of any judgment or settlement obtained in such action or proceeding (and in any such judgment provision shall be made for the recovery of such post-judgment costs and expenses).

 

4


15.

ACCESS. Sublessor shall have access to the Premises upon reasonable advance notice at reasonable times for the following purposes: (i) to perform Sublessor’s obligations under this Sublease, (ii) to cure an Event of Default by Sublessor under the Master Lease, or (iii) as may be reasonably required to monitor Sublessee’s compliance under the terms of this Sublease and the Master Lease.

 

16.

FINANCIAL STATEMENTS. From time to time upon reasonable request by Sublessor, not more often than annually, except to the extent requested more frequently by Lessor, Sublessee shall provide Sublessor with financial statements in a form which is reasonably acceptable to Sublessor unless Sublessee’s financial information is generally publicly available.

 

17.

ALTERATIONS. Sublessee shall at no time make any alterations or improvements to the Premises unless Sublessee complies with the requirements of the Master Lease, including obtaining from Lessor any consent which, under the terms of the Master Lease, is required of Lessor as a condition precedent to the making of such alterations or improvements. Further, Sublessee shall obtain the prior written consent of Sublessor to any such alterations or improvements for which i) the Lessor’s consent is required pursuant to the Master Lease, which Sublessor consent shall not be unreasonably withheld, conditioned or delayed, or ii) are not consistent with the Permitted Use, which Sublessor consent may be withheld in Sublessor’s sole discretion. lf any such improvements are consented to as aforesaid, the same shall be performed by Sublessee at its sole cost and expense in accordance with the terms and provisions of the Master Lease. If Lessor shall require Sublessor to remove, after the expiration of the term of the Master Lease, any leasehold improvements made to the Premises in accordance with the provisions of the Master Lease, Sublessor shall so notify Sublessee and Sublessee, prior to the expiration of the Sublease Term of this Sublease, shall remove the same and restore the Premises in accordance with the Master Lease.

 

18.

AGENCY DISCLOSURE. Sublessor and Sublessee each warrant that they have dealt with no other real estate broker in connection with this transaction except: Cushman & Wakefield and Jones Lang LaSalle, who together represents Sublessor and Columbia Group Realty Advisors who represents Sublessee.

 

19.

COMMISSION. Upon execution of this Sublease, and consent thereto by Lessor (if such consent is required under the terms of the Master Lease), Sublessor shall pay brokers a real estate brokerage commission in accordance with Sublessor’s contract with Broker for the subleasing of the Premises.

 

20.

TIME PERIODS. The time limits provided in the Master Lease for the tenant thereunder to give notices, make demands, perform any act, condition or covenant, or exercise any right, remedy or option, where Sublessee cannot give, make, perform or exercise the same directly (i.e., where Sublessee must go through Sublessor), are changed for the purposes of this Sublease by shortening the same by two (2) days in each instance, unless such time limit is ten (10) days or less, in which event it shall be shortened by one (1) day (but in no event less than one (1) business day), so that such notices may be given, such demands made, any such act, condition or covenant performed, or any such right, remedy or option hereunder exercised within the time limit relating thereto contained in the Master Lease. Time shall be of the essence with respect to the obligations of Sublessee hereunder.

 

21.

NOTICES. All notices and demands which may or are to be required or permitted to be given by either party on the other shall be in writing. All notices and demands by the Sublessor to Sublessee shall be sent by reputable overnight courier, addressed to the Sublessee at the Premises, and to the address hereinbelow, or to such other place as Sublessee may from time to time designate in a notice to the Sublessor. All notices and demands by the Sublessee to Sublessor shall be sent by reputable overnight courier, addressed to the Sublessor at the address set forth herein, and to such other person or place as the Sublessor may from time to time designate in a notice to the Sublessee.

 

5


To Sublessor:

Stanley Convergent Security Solutions, Inc.

1000 Stanley Drive.

New Britain, CT 06053

Attn: Real Estate Department

With a copy to:

To Sublessee:

Ginkgo Bioworks, Inc.

27 Drydock Ave

8th Floor

Boston MA 02210

Attention: Barry Canton

With copies to:

Jason Ng, JD

Legal, Contracts Manager

27 Drydock Ave

Boston MA 02210

And:

Melvin R. Shuman, Esq.

Mel Shuman Law

189 Eliot Street

Chestnut Hill, MA 02467

And a copy to:

legal@ginkgobioworks.com

 

22.

ENTIRE AGREEMENT; AMENDMENTS. This Sublease sets forth the entire agreement between the parties to this Sublease with respect to the subject matter of this Sublease, and supersede all prior agreements between the parties, whether written or oral, with respect to the subject matter of this Sublease. Any agreement hereafter made shall be ineffective to change, modify, waive or discharge any provision of this Sublease in whole or in part unless such agreement is in writing and signed by the party against whom enforcement of the change, modification, waiver or discharge is sought.

 

23.

FURTHER ASSURANCES. Each party shall each execute and deliver such additional instruments or other documents as the other party may reasonably request to accomplish the purposes and intent of this Sublease; provided, however, that nothing in this Section shall be deemed to enlarge the obligations of the parties hereunder or to require any party to incur any material expense or liability not otherwise required of it hereunder.

 

24.

GOVERNING LAW. This Sublease shall be governed by, and construed and interpreted in accordance with, the laws of the state or commonwealth where the Premises are located, without regard to conflict of laws principles.

 

6


25.

COUNTERPARTS. This Sublease may be executed in one or more counterparts, each of which shall be an original and all of which taken together shall constitute but one and the same instrument.

 

26.

CONSENT BY LESSOR. THIS SUBLEASE SHALL BE OF NO FORCE OR EFFECT UNLESS CONSENTED TO BY LESSOR AFTER EXECUTION HEREOF, WHICH CONSENT SUBLESSOR SHALL SEEK PROMPTLY AND WITH DILIGENCE TO OBTAIN. IF LESSOR FAILS TO CONSENT TO THIS SUBLEASE BY JANUARY 15, 2020, THE SUBLEASE SHALL, AT THE OPTION OF SUBLESSEE OR, PROVIDED SUBLESSOR HAS PROMPTLY AND DILIGENTLY SOUGHT TO OBTAIN SUCH CONSENT, SUBLESSOR EXERCISED BY NOTICE TO THE OTHER PARTY BE NULL AND VOID AND OF NO FURTHER FORCE AND EFFECT.

 

7


The parties have executed this Sublease as of the Effective Date.

 

  Sublessor:   STANLEY CONVERGENT SECURITY SOLUTIONS, INC.
    By:  

/s/ Greg Smulski

    Name:   Greg Smulski
    Title:   VP Real Estate

 

  Sublessee:   GINKGO BIOWORKS, INC.
    By:  

/s/ Bartholomew Canton

    Name:   Bartholomew Canton
    Title:   CTO

 

8


Addendum to Sublease

By and between Stanley Convergent Security Solutions, Inc. AND Ginkgo Bioworks, Inc.

 

1.

Surrender. Sublessee shall keep the Premises, and every part thereof, in good order and repair and otherwise in accordance with all terms and conditions of the Master Lease, and Subtenant shall surrender the Premises at the expiration or earlier termination of the Term of this Sublease in accordance with all terms and conditions outlined in Sections 4 and 7.22 of the Master Lease and otherwise in the same condition as when received, excepting only ordinary wear and tear (this exception will not apply to any condition resulting from misuse or improper care or maintenance of the Subleased Space by Sublessee or its agents, employees, contractors or invitees), damage or loss by casualty or condemnation and repairs for’ which Sublessee is not responsible under the terms of this Sublease. If Sublessee fails to remove any alterations or improvements required to be removed in accordance with Section 17 of the Sublease or the Master Lease and restore the Premises, then Sublessor shall have the right to do so, and charge Sublessee the actual costs therefor. Notwithstanding anything to the contrary contained herein, Sublessee agrees to cooperate with Sublessor in the event Sublessor is obligated under the Master Lease to remove any Alterations or Cabling at the end of the Term or earlier termination thereof.

 

/s/ Greg Smulski

                         

/s/ Bartholomew Canton

Sublessor:                                                                    Sublessee: Bartholomew Canton, Ginkgo Bloworks

 

9

Exhibit 10.34

STORAGE SPACE LICENSE AGREEMENT

THIS STORAGE SPACE LICENSE AGREEMENT (this “Agreement”) is made this 1st day of July, 2020, by and between JAMESTOWN 21-23-25 DRYDOCK, L.P., a Delaware limited partnership (“Licensor”) and GINKGO BIOWORKS, INC., a Delaware Corporation (“Licensee”).

WHEREAS, Licensor desires to grant to Licensee a license (“License”) to use the storage facility at the Licensor’s property located at the building commonly known as the Bronstein Building in Boston, Massachusetts, (the “Building”); and

WHEREAS, Licensor and Licensee are parties to that certain Lease dated March 18th, 2016, by and between Licensor, as Landlord, and Licensee, as Tenant for premises located in the Building (as amended, the “Lease”).

NOW, THEREFORE, in consideration of the mutual agreements and conditions set forth herein, and for other good and valuable considerations, the receipt and sufficiency of which are hereby acknowledged, Licensor and Licensee agree as follows:

It is understood and agreed that this Agreement is, and is intended to be, a License, granting the Licensee permission to engage in certain acts upon the Licensor’s premises, subject to the terms, conditions and limitations set forth herein. Licensor does not grant Licensee any permanent interest in Licensor’s premises, land, building or other realty whatsoever, nor shall any other relationship between the parties, including, but not limited to that of landlord and tenant be implied or created by virtue of this Agreement. The License granted by this Agreement may not be sold, assigned, transferred, mortgaged, pledged or transferred by Licensee.

In consideration of the agreements set forth herein the parties agree:

1. Storage Area: Licensee’s rights, duties and obligations under this Agreement shall be limited to the specific area containing approximately 17,340 square feet of floor area, as identified on Exhibit A, attached hereto and made a part hereof (“Storage Area”), commonly known as Suite 25-610E. Licensee shall have no right to use any other area of Licensor’s premises, other than the non-exclusive use of common areas open to the general public and those rights granted in the Lease.

2. Duration: Licensee’s rights under this Agreement shall commence on July 1st, 2020 (the “Commencement Date”) and shall continue on a Month to Month basis. Notwithstanding the foregoing, the Term shall renew on a month to month basis until terminated by Licensee with sixty (60) days’ notice or terminated by Licensor in accordance with Section 6 below.

3. Use: The Storage Area shall be occupied and used by the Licensee solely for the purpose of storage related to Licensee’s business under the Lease, and for no other purpose whatsoever. Licensee shall not store any items which are hazardous or combustible in any manner in the storage space. Storage items include office furniture and chairs, lab packaging material and miscellaneous office items. Licensee shall not create or drill any penetrations into the floor or walls.

 

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4. Fees: Licensee shall pay Licensor a fee in the amount of $20,000.00 Dollars per month (the “Monthly Fee”). Licensee shall pay Licensor the Monthly Fee, without notice, demand or setoff, at the property office or such other location as Licensor may specify at the same time and in the same manner as Base Rent under the Lease. In the event that Licensee fails to make any payment of Monthly Fee or any other amount payable to Landlord hereunder within ten (10) business days after the date such payment becomes due and payable, a late charge in an amount equal to the greater of: (i) two percent (2%) of such payment; or (ii) $150.00, shall also become due and payable to Licensor by Licensee, such late charge being for Licensor’s administrative and other costs and is in addition to and cumulative with any other rights and remedies which Licensor may have hereunder with regard to the failure of Licensee to make any payment of Monthly Fee or any other sum due hereunder..

5. Condition of Storage Area: Licensee has accepted the Storage Area as is, and Licensor has no obligation to prepare the Storage Area for occupancy. Neither Licensor nor Licensor’s agents have made any representations as to the condition of the Storage Area, or any other matter related to the Storage Area (except as herein expressly set forth). The taking of possession of the Storage Area shall be conclusive evidence that the Storage Area was in good and satisfactory condition at such time, except as to latent defects. Licensor reserves the right to show the storage area to prospective tenants at a mutually agreed to time during normal business hours upon twenty-four (24) hour notice to Licensee.

6. Relocation: Licensor reserves the right to move, relocate, adjust or substitute the Storage Area, in Licensor’s sole discretion, with no less than two (2) business days prior notice to Tenant, so long as the new area is substantially the same size as the original area. Licensor shall use reasonable efforts to do so in such a way as to minimize any material interference with Licensee’s business operations.

7. Termination: Licensor may terminate this Agreement at any time upon a minimum of Sixty (60) days’ notice to Licensee.

8. Insurance: Licensee shall, at its full cost and expense, procure and continue in force, during the term of this Agreement, all insurance required by Tenant under the Lease, such insurance to include the Storage Area.

9. Indemnity: All indemnifications included in the Lease shall also apply to the Storage Area leased by Licensee.

10. Liability of Licensor: Licensor shall not be responsible or liable for, and Licensee hereby expressly waives, all claims against Licensor for injury to persons or damage to Licensee’s property in the Storage Area, except in the case of the negligence or willful misconduct of Licensor, or Licensor’s members, principals, beneficiaries, partners, officers, directors, employee or agents each a “Licensor Party”).

11. Damages and Repairs: This License shall be terminated automatically if any portion of the Storage Area is damaged by fire or other peril which renders the Storage Area unusable for its intended purpose, regardless of the cause. Licensee shall have no recourse against Licensor as a result of damage due to fire or any other peril not caused directly or indirectly by the negligence or willful misconduct of a Licensor Party. Licensee must take good care of all parts of the Storage Area, including installations made by Licensor, and make all repairs, maintenance, and replacements during the Term. Licensee must not alter any part of the Storage Area without prior written consent from Licensor. Licensee is liable for any damage caused by Licensee in the Storage Area.

 

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12. Provisions: Licensor is or may be a party to certain documents, as amended from time to time, with a mortgagee or beneficiary of Licensor, department stores, mall tenants, and others. This License is subject and subordinate to all applicable provisions in those documents, as amended from time to time.

13. Terms of Agreement: This License and the Lease contain all the covenants, promises, agreements, conditions, and understandings between Licensor and Licensee. There are no other, either oral or written, between them other than those set forth in this License and the Lease.

14. Obligation upon Expiration or Termination: Upon the Expiration Date or earlier termination of this Agreement, Licensee shall immediately remove all of Licensee’s property, including, but not limited to inventory and trade fixtures from Licensor’s premises and otherwise return the Storage Area to the same condition as it existed at the Commencement Date hereof, other than alterations consented to by Licensor in accordance with Section 11 above. If Licensee shall fail to do so, Licensor shall be entitled to additional fees equivalent to one Monthly Fee. Licensee shall also reimburse Licensor for any court costs and reasonable attorney fees incurred as the result of Licensee’s failure to vacate the Storage Area upon the Expiration Date as set forth in Paragraph 2 hereof.

15. Notices: All notices hereunder shall be given in the same manner as notices under the Lease.

16. Non-Waiver Provision: The failure of Licensor to insist upon performance of any of the terms, conditions, and covenants hereof shall not be deemed to be a waiver of any rights or remedies that Licensor may have and shall not be deemed a waiver of any subsequent breach or default in the terms, conditions, and covenants herein contained.

17. Binding Agreement: This Agreement may not be modified in any manner other than by a written agreement signed by Licensee and Licensor, or any successor, designee, or assignee of Licensor. The terms, conditions and covenants set forth herein shall inure to the benefit of and be binding upon Licensee and Licensor, or any successor, designee or assignee of Licensor.

18. Counterparts: This Agreement may be executed in several counterparts, each of which may be deemed an original, but all of which together shall constitute one and the same Agreement. Any facsimile or electronically transmitted signature hereto shall be deemed for all purposes an original.

[Signatures on Following Page]

 

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IN WITNESS WHEREOF, the parties have executed this Agreement on the day and year first above written, each acknowledging receipt of an executed copy hereof.

 

LICENSOR:

JAMESTOWN Commercial Management Company, L.P.,

a Delaware limited partnership

By: JAMESTOWN COMMERCIAL MANAGEMENT COMPANY, L.P. as agent
           By:  

/s/ Corinne Mariano

  Name:   Corinne Mariano
    Authorized Signatory

 

LICENSEE:
GINKGO BIOWORKS, INC.,
a Delaware Corporation
By:  

/s/ Barry Canton

Name:   Barry Canton
Title:   CTO

 

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Exhibit 10.35

LICENSE AGREEMENT

 

A   LICENSOR – NAME, NOTICE AND RENT PAYMENT ADDRESS

 

Licensor:         JAMESTOWN 21-23-25 DRYDOCK, L.P.

Address:          c/o Jamestown

Ponce City Market, 7Th Floor

675 Ponce de Leon Avenue, NE

Atlanta, Georgia 30308

Attn: General Counsel; Asset Manager: Bronstein

 
B   LICENSEE – NAME AND NOTICE ADDRESS

 

Licensee:        GINKGO BIOWORKS, INC.

Address:          27 Drydock Avenue, Floor 8

Boston, Massachusetts 02210

C   TERMS

 

Effective Date:   September 11, 2020
Premises:   Suite 23-110W containing 1,694 square feet as shown on Exhibit A, located in the building commonly known as the Bronstein Building (the “Building”).
Percentage Rent:   Four percent (4%) of Gross Sales (as defined below)
Utilities:   No charge for use of electricity, water and HVAC. Licensor has right to impose a surcharge as set forth in Section 3(C).
Term:  

Commencement Date: September 14, 2020

 

From and after the Commencement Date, Licensee shall have the right to occupy the Premises on a month-to-month basis. Licensor and Licensee shall each have the right to terminate this Agreement upon a minimum of sixty (60) days prior written notice to the other party.

Permitted Use:   Subject to all applicable law, and further provided Licensee obtains all requisite permits, Licensee shall have the right to operate a COVID-19 testing site from the Premises and uses accessory thereto. Any and all testing and related services shall be performed by licensed medical professions when required in accordance with all applicable law.

 

Executed as of the Effective Date:
For and on behalf of the Licensor:   For and on behalf of the Licensee:
JAMESTOWN 21-23-25 DRYDOCK, L.P.,   GINKGO BIOWORKS, INC.,
a Delaware limited partnership   a Delaware corporation

 

By:   JT 21-23-25 Drydock Crop.,   By:  

/s/ Barry Canton

  a Delaware corporation   Name:   Barry Canton
  its general partner   Title:   Co-Founder, CTO
       
  By:  

/s/ Dana Griffin

   
    Name:  Dana Griffin    
    Authorized Signatory    


1.     Agreement. We (“Licensor”) hereby license to you (“Licensee”) the Premises described on Exhibit A, at the Building for the Term set forth on page one of this License Agreement (“Agreement”). No provision of this Agreement will be deemed to have been waived by us unless the waiver is in writing signed by us. This Agreement may not be modified or discharged, except in writing.

2.     Use. (A) You must use the Premises only for the use stated on page one. During the Term, you will have the right to enter the Premises at any time. Any personal property left outside the Premises will be discarded, at your expense. We will not be liable for any damage to or loss of objects left in these areas. You must keep the Premises clean, at your expense, in a manner reasonably satisfactory to us. Licensee may not use the Premises in violation of any existing exclusive use agreement between Licensor and any other tenant or licensee of the Building. Licensee shall have no right to sell or serve alcoholic beverages on the Premises.

(B)     At all times, your use of electrical current may not exceed the capacity of existing installations. You may not alter any wiring installations or other electrical facilities without our prior written consent. We are not responsible for any changes in the quantity and/or quality of electrical service.

(C)     You shall keep the Premises, the Building and your interest therein free and clear of any lien or encumbrance of any kind including, without limitation, mechanics’ liens.

3.     Payment. (A) Commencing on the Commencement Date, you agree to pay all additional rents and charges, as set forth on page one, as set forth herein. You agree to pay all other additional rents and charges within 10 business days from delivery of written demand, in each case at the address on page one, or any other address we designate, without any setoff, defense or deduction.

(B)     If you fail to pay any Percentage Rent or additional rent (collectively “Rent”) on the due date thereof, and such failure continues for more than ten (10) days after written notice, then in addition to our other rights under this Agreement, you shall be in default and this Agreement shall be terminated at our election while such default continues. However, if we give you such 10-day notice more than one time in any 12-month period, then we will have no obligation to give written notice of any subsequent default and we will thereafter have the right to terminate this Agreement if you fail to pay any rent or additional rent on the due date. If we elect to terminate this Agreement, we shall terminate the Agreement by giving you a cancellation notice. Such cancellation notice will state the date on which the Term will end, which may be no less than ten (10) days after the date of the notice. On the cancellation date set forth in such notice, this Agreement and the Term hereof shall cease, come to an end and expire as fully and completely and with the same force and effect as if the cancellation date fixed in said cancellation notice was the date originally fixed herein as the expiration date.

(C)     If the value of the water, electrical service or HVAC furnished to Licensee exceeds a reasonable amount (as determined in Licensor’s sole but reasonable discretion), Licensor may impose a surcharge to reflect the value of such utilities provided, which will be paid as additional rent. We will provide reasonable documentation of the basis for the increase.

(D)     You agree to pay Percentage Rent in the amount set forth in Section C above, no later than the twenty-fifth (25th) day of each month of the Term. The Percentage Rent shall be based on the Gross Sales from the prior month of the Term.

4.     Condition of Premises. You have inspected the Premises and accept them as is, and we have no obligation to prepare the Premises for occupancy. You are responsible for any and all installations to prepare the Premises for opening, subject to our approval of such installations, which approval shall not be unreasonably withheld, conditioned or delayed. Neither we nor our agents have made any representations as to the condition of the Building or the Premises, or any other matter related to the Premises (except as herein expressly set forth). All systems will be delivered in good working order. The taking of possession of the Premises shall be conclusive evidence that the Premises and the Building were in good and satisfactory condition at such time, except as to latent defects. Any signage shall be installed by Licensee, subject to Licensor’s prior written approval, which approval shall not be unreasonably withheld, conditioned or delayed.

5.     Compliance with Law and Rules. In the conduct of your business and in your use of the Premises and common areas, you must comply with all insurance requirements and the building Rules and Regulations attached hereto as Exhibit B. You must not do anything that may increase the insurance premiums we pay. We reserve the right to prescribe the weight and position of all safes and

mechanical equipment. You will give prompt notice to us of any notice you receive of the violation of any law or requirement of any public authority with respect to the Premises, the Building or the use or occupation thereof. We have no obligation to enforce the Rules and Regulations or covenants in any other occupancy agreement for the Building, and we will not be liable for violation of same by any other occupant of the Building. You agree to follow any reasonable requested protocols established by Licensor in order to mitigate the spread of COVID-19 as a result of your use of the Premises. You shall comply with all laws applicable to Licensee’s activities including, without limitation, the following:

(A)     Licensee shall be responsible for obtaining at its expense any licenses or permits necessary in connection with Licensee’s activities on the Premises, including without limitation, obtaining (and providing a copy of the same to Licensor) any required business licenses and any required permits; and

(B)     Licensee shall be responsible for collecting and remitting all required sales taxes applicable to the sale of Licensee’s products, if applicable.

6.     Insurance. Licensor and Licensee arc parties to that certain Lease dated March 18, 2016, by and between Licensor, as Landlord, and Licensee, as Tenant for premises located in the Building (as amended, the “Lease”). Licensee shall, at its full cost and expense, procure and continue in force, during the term of this Agreement, all insurance required by Tenant under the Lease, such insurance to include the Premises licensed hereunder.

 


7.     Damages and Repairs. You must take good care of all parts of the Premises, including installations made by us, and make all repairs, maintenance and replacements during the Term. You must not alter any part without our prior written consent. You are liable for any damage caused by you or those on the Premises with your permission.

8.     Licensor’s Rights and Obligations. (A) We have the right at any time to make changes to the exterior of the Building and interior of the Building outside of the Premises. We reserve the right to impose controls on access to the Building by your visitors as we deem reasonably necessary for the Building’s security without incurring liability.

(B)     We will perform structural repairs to the Premises (meaning to columns, beams, exterior walls (excluding windows) or floor slabs) and building systems unless caused by your acts, and we will perform any repairs necessary so the roof remains leak free during the Term, but we are not obligated to perform any capital improvements to the roof.

(C)     We have no obligation to carry insurance on, and will not be responsible for damage to, the Premises or any of your property.

(D)     We have the right to enter the Premises at reasonable hours and with reasonable advance notice to show to prospective tenants, licensees, investors, purchasers and mortgagees of the Building. We have the right to perform construction work, improvements and repairs in and around the Building at all times as we deem necessary in our sole and absolute discretion, but in so doing we will use commercially reasonable efforts not to unreasonably interfere with your operations in the Premises.

9.     Exculpation. We and our principals, agents, contractors and employees are not liable for any damage or claim with respect to any injury to persons or any damage to, or loss or destruction of any property of any third party, including without limitation, your employees or your guests, unless due to negligence or willful misconduct on our part. You agree to maintain insurance to cover such risks. You agree to indemnify, defend and save us harmless against and from all liability, including reasonable attorney’s fees, to third parties arising out of use or occupancy of the Premises or common areas, unless due to negligence or willful misconduct on our part. If any action or proceeding is brought against us by reason of such claim, upon written notice from us, you may, at your expense, resist or defend such action or proceeding by counsel approved by us in writing, which approval shall not be unreasonably withheld, conditioned or delayed. In case of fire or other casualty, you will look to your insurance for recovery for any loss or damage to your fixtures, personal property and inventory; you waive all rights of recovery from us and we are not obligated to repair any damage to the Premises. Notwithstanding anything to the contrary herein, neither Licensor nor Licensee shall be liable under this Agreement for consequential, special or punitive damages.

10.     Reporting. You agree to deliver to us on a monthly basis, within fifteen (15) days following the end of the previous month, a report of your Gross Sales from your business operations at the Premises, in form and substance reasonably prescribed by, and reasonably acceptable to us. We will use commercially reasonable efforts to keep such reports confidential, except as required by law.

Furthermore, we have the right to disclose such reports to our investors, lenders, accountants and others with a reasonable “need to know”, subject to the same confidentiality requirements Within sixty (60) days after receiving any gross monthly sales figures, Licensor shall have right to conduct an audit of any such sales figures. Licensor or its agents, in performing such audit, shall have the right to inspect the records of Gross Sales relating to the Premises at reasonable times during ordinary business hours upon notice. lf any audit by Licensor shows an error in Licensee’s original monthly sales figure prejudicial to Licensor’s receipt of Percentage Rent reported by Licensee’s statement for the period of the audit, Licensee shall promptly pay to Licensor the amount of the deficiency with interest thereon.

As used in this Agreement, “Gross Sales” means the total sales from or relating to the Premises when received, no matter how they are paid, including, without limitation, all proceeds from testing taking place at the Premises (whether or not the results of such tests are processed on-or off-site) with the exception of any payment related to an individual who is tested under the Ginkgo organization as a Ginkgo employee or contractor or a family member of any Ginkgo employee or contractor.

11.     Default. (A) (i) If you default in fulfilling any of your obligations under this Agreement (other than the obligation to pay any Rent (which is covered by Section 3 above)); (ii) if you vacate the Premises and/or fail to continuously and uninterruptedly operate the business in the Premises; (iii) if you take advantage of any law for relief from creditors; (iv) if a petition for relief in bankruptcy or reorganization or arrangement is filed against you; (v) if you dissolve or lack legal capacity to meet your obligations under this Agreement; or (vi) if any execution or attachment shall be issued against you or any of your property whereupon the Premises shall be taken or occupied by someone other than you, then we shall serve a written 30 days’ notice specifying the nature of said default. Upon the expiration of said 30 days, if such default is not cured, then this Agreement shall terminate at our election. This Agreement will terminate immediately upon your bankruptcy, at our election. We may enter the Premises at any reasonable time to cure any default by you after notice and the expiration of the applicable cure period, if any. Bills for expenses incurred by us in connection with any such actions shall be paid by you within 10 business days of demand.

(B)     In the event of the termination of this Agreement, you shall immediately remove any personal property from the Premises, immediately pay us an amount equal to all Rent and other sums payable pursuant to this Agreement with respect to the term from the Effective Date through the expiration date, and restore the Premises to the condition described above. We shall have the right to re-enter the Premises in accordance with this Agreement and applicable law.

 


12.     Termination. Upon the expiration or earlier termination of the Term, you must surrender the Premises, broom clean, in the order and condition received (ordinary wear and damages excepted), with any holes in masonry patched and painted, and emptied of your property and shall pay for our reasonable costs to remove any of your personal property (including furniture). All property permitted or required to be removed at the end of the Term remaining in the Premises after your removal will be deemed abandoned and may, at our election, either be retained or may be removed from the Premises, at your expense.

13.     Holdover. If possession of the Premises is not surrendered to us on or prior to the date of termination of this Agreement, we may exercise any rights or remedies we may have hereunder or at law, including collecting any damages suffered by us and arising from your failure to so surrender the Premises.

14.     Liability of Licensor. In the event of any default by us, you shall look only to our estate and interest in the Premises and Building for the satisfaction of any judgment, and no other property or assets shall be subject to levy, execution or other enforcement procedure for the satisfaction of the same. Neither our members, directors, officers, agents and employees nor your members, directors, officers, agents and employees shall be liable for the performance of any obligations under this Agreement.

15. Brokers. Each party represents and warrants to the other that it has not dealt with any broker in connection with this Agreement. Each party shall indemnify, defend and hold harmless the other from and against any and all claims for commission, fee or other compensation by any person or entity who shall claim to have dealt with such party in connection with this Agreement and for any and all costs incurred by such party in connection with such claims, including reasonable attorneys’ fees and disbursements.

16.     Owner-Occupant Relationship. (A) You agree that this agreement should be deemed a “license,” and that upon termination of this Agreement, or after the end of the Term, we may remove you from the Premises without need for resort to any judicial process. The laws of the state where the Building is located govern this Agreement. You (and we) agree to hereby waive trial by jury in any action, proceeding or counterclaim brought by either of the parties, except where the law would invalidate such waiver. You will not interpose any counterclaim in any summary proceeding brought by us relating to this Agreement other than compulsory counterclaims.

(B)     We have no other agreement with you, other than the Lease. Any work in the Premises which may be permitted by us shall be done at your sole cost and expense and in accordance with this Agreement and any additional requirements we deem necessary or desirable.

(C)     All our rights and remedies herein created or otherwise existing at law or equity are cumulative, and the exercise of one or more such rights or remedies shall not be deemed to exclude or waive the right to the exercise of any other rights or remedies. All such rights and remedies may be exercised and enforced concurrently and whenever and as often as deemed desirable.

17.     Assignment; Successors. You shall not, either directly or indirectly, assign, hypothecate, encumber or transfer this Agreement, any interest therein or any interest in the Licensee. You shall not, either directly or indirectly, license or sublicense the use of the Premises in whole or in part. The covenants contained in this Agreement shall bind and inure to the benefit of you and your respective heirs, distributees, executors, administrators, and successors.

18.     Notices. Notice under this agreement shall be delivered by hand or sent by recognized overnight courier service to the parties at the addresses set forth on page one of this Agreement. Notices shall be deemed effective, if delivered by hand, upon delivery and, if sent by courier service, one business day after such notices are deposited with the courier service.

19.     Subordination. This Agreement is subject and subordinate to all ground or underlying leases and to all mortgages which may now or hereafter affect any of the Building and to all renewals, modifications, consolidations, replacements and extensions of any such underlying leases and mortgages.

20.     Eminent Domain; Casualty. In the event that some or all of the Premises arc taken for any public or quasi public use or purpose by any lawful power or authority by the exercise of the right of condemnation or eminent domain, this Agreement shall terminate on the date of such taking. You shall have no claim for the value of any unexpired term and assign to us your entire interest in any such award. In the event of a fire or other casualty, we shall be responsible for restoring the structural components of the Building and base building systems, and you shall be responsible for restoring the Premises, fixtures and personal property. Notwithstanding the foregoing, we will have the right to terminate this Agreement if there is substantial damage to the Building, whether or not the Premises are damaged, and we elect not to restore the same. In that event, you must surrender the Premises on the date specified by us and you will have no further rights hereunder.

21.     Intentionally Deleted.

22.     Jurisdiction and Service of Process. (A) You hereby irrevocably:

(1)     submit to the jurisdiction of the state courts and federal courts in the state which the Building is located for the purposes of each and every suit, action or other proceeding arising out of or based upon this Agreement or the subject matter hereof brought by us; and

(2)     waive, and agree not to assert, by way of motion, as a defense, or otherwise, in any such suit, action or proceeding brought in any such court, any claim that you are not subject personally to the jurisdiction of the above-named courts, that your property is exempt or immune from attachment or execution, that the suit, action or proceeding is brought in an inconvenient forum, that the venue of the suit, action or proceeding is improper or that this Agreement or the subject matter hereof may not be enforced in or by such court, and further agrees to waive, to the fullest extent permitted under applicable law, the benefit of any defense that would hinder, fetter or delay the levy, execution or collection of any amount to which we or our successors or assigns arc entitled pursuant to the final judgment of any court having jurisdiction.

 

 

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(B)     You represent and warrant to us that you are duly organized, validly existing and in good standing under the laws of the state where the Building is located, with full power and authority to enter into and perform this Agreement; you have received all approvals necessary for the execution and delivery of this Agreement and performance of your obligations hereunder and this Agreement constitutes the legal, valid and binding obligation of you, enforceable against you in accordance with its terms. Neither the execution and delivery of this Agreement nor the performance by you of your obligations hereunder will violate, be in conflict with, result in a breach of, or constitute (with due notice or lapse of time, or both) a default under any applicable law or under any agreement or order binding upon you, or require any consents which have not been obtained.

23.     Intentionally Deleted.

24.     Publicity. You agree not to make or provide any public statement, press release or other public disclosure related to this Agreement and/or the opening of Licensee’s business at the Building (including, without limitation, by means of statements, press releases or disclosures displayed or accessible electronically, on the internet and/or on social media, such as, by way of example only, Facebook, Twitter and lnstagram) without the prior written consent of Licensor, which consent shall not be unreasonably withheld, conditioned or delayed. These restrictions on disclosure shall survive the termination or expiration of this Agreement.

All announcements, advertisements, emails, social media, and other correspondence by Licensee related to Licensee’s business at the Premises will mention the name of Licensor’s property as the host location and, when appropriate, will include the Licensor’s logo. Any such social media posts by Licensee will tag and/or geotag Licensor’s corresponding social media accounts (including, but not limited to, Facebook and lnstagram) and will utilize the handles and hashtags provided by Licensor.

25.     Counterparts. This Agreement may be executed in counterparts all of which shall be considered on and the same agreement and shall become effective when one or more counterparts have been signed by each of the parties, it being understood that all parties need not sign the same counterpart. This Agreement may be executed by facsimile or e-mail, and any signature so given shall be deemed an original.

26.     OFAC. Licensor and Licensee each represent and warrant to the other (for themselves, only) that each is currently in compliance with, and shall at all times during the term of this Agreement (including any extension thereof) remain in compliance with, the regulations of the Office of Foreign Asset Control (“OFAC”) of the Department of the Treasury (including those named on OFAC’s Specially Designated and Blocked Persons List) and any statute, executive order (including the September 24, 2001, Executive Order Blocking Property and Prohibiting Transactions with Persons Who Commit, Threaten to Commit, or Support Terrorism), or other governmental action relating thereto. Licensee shall provide documentary and other evidence of Licensee’s identity and ownership as may be reasonably requested by Licensor at any time to enable Licensor to verify identity or to comply with any legal requirement.

27.     Miscellaneous. Except as otherwise required by law, you agree not to disclose the terms of this Agreement to anyone other than your attorneys, accountants, officers, directors, investors and lenders. Time shall be of the essence with respect to all of the terms and conditions of this Agreement. In the event that we engage an attorney to enforce your obligations under this Agreement, you will be responsible for paying the amount of any reasonable attorneys’ fees and costs we incur. No estate passes to Licensee under this Agreement, and Licensee shall have a license only. This Agreement sets forth all the covenants, promises, agreements, conditions and understandings between us concerning the Premises.

28.     Prime Lease. Licensee recognizes and acknowledges the existence of the Prime Lease (as hereinafter defined) and that this Lease is a sublease of a portion of Licensor’s leasehold estate created by the Prime Lease. The termination of the Prime Lease for any reason whatsoever shall never constitute a default by Licensor hereunder nor shall such termination entitle Licensee to terminate this Lease or the payment of any Rent or other sums due by Licensee hereunder. Licensee further agrees that this Lease is subject to all of the terms and provisions of the Prime Lease and hereby agrees to be bound by provisions thereof, including but not limited to the provisions relating to employment and non-discrimination. By execution hereof, Licensee hereby acknowledges that it has received a copy of all provisions of the Prime Lease relating to employment and non-discrimination all as set forth in the Prime Lease. Prime Lease shall mean that certain long term lease agreement dated January 30, 2007 by and between The Economic Development and Industrial Corporation of Boston, a corporation organized under the laws of the Commonwealth of Massachusetts, as Prime Lessor and CV Drydock Avenue LLC, as Prime Lessee, as amended by First Amendment dated January 21, 2015, covering the Building and certain real property on which the Building is situated, as the same may be further amended from time to time.

 

 

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Exhibit 10.36

SUPPLY AGREEMENT

This Supply Agreement (this “Agreement”) is entered into as of March 2, 2018, but is effective as of March 1, 2018 (the “Effective Date”), by and between Twist Bioscience Corporation, a Delaware corporation with offices at 455 Mission Bay Blvd South, San Francisco, CA 94158 (“Twist”), and Ginkgo Bioworks, Inc., a Delaware corporation with offices at 27 Drydock Avenue, 8th Floor, Boston, Massachusetts 02210 (“Customer”).

1. RELATIONSHIP

1.1 General.

(a) Transactions Generally. During the Supply Term (as defined below), Customer may issue a blanket purchase order under which, from time to time, subject to the terms of this Agreement, Customer may issue individual orders (each a “Transaction”) for (i) synthesis of certain designated DNA products (“Clonal Products” & “Non-clonal Sequences” as defined below) based on Sequence Submissions as defined below (“Deliverables,” and each synthesized sequence individually, a “Deliverable”), or (ii) any Additional Services (as defined in Section 1.1(d) below). Twist will use all commercially reasonable efforts to confirm acceptance of any Transactions within [***] of receipt of such Transaction, subject to the terms of this Agreement. The Deliverables consist of:

 

  (i)

Clonal Products” which consist of the following:

 

  (a)

300-1,000bp Clonal Genes” which are defined as clonally perfect genes greater than 300 base pairs but less than or equal to 1.0 kilobase pairs (“kbp”) in length;

 

  (b)

Short Clonal Genes” which are defined as clonally perfect genes greater than 1.0 kbp but less than or equal to 1.8 kbp in length;

 

  (c)

Clonal Genes” which are defined as clonally perfect genes greater than 1.8 kbp but less than or equal to 3.2 kbp in length; and

 

  (d)

Long Clonal Genes” which are defined as clonally perfect genes greater than 3.2 kbp but less than or equal to 5 kbp in length.

 

  (ii)

Non-clonal Sequences” which consist of the following:

 

  (a)

Non-clonal Sequences (1.8kB)” which are defined as linear DNA greater than 300 base pairs but less than or equal to 1.8 kbp in length with a maximum error rate of [***] including adapter sequences.

 

  (b)

Non-clonal Sequences (3.2kB)” which are defined as linear DNA greater than 1.8 kbp base pairs but less than or equal to 3.2 kbp in length with a maximum error rate of [***] including adapter sequences.

(b) Deliverables. If Customer desires that Twist create any Deliverables, Customer shall provide Twist with genetic sequences to be synthesized (each a “Sequence Submission”) and a corresponding Transaction consistent with this Agreement. If any such Sequence Submission requests Deliverables that do not meet the Sequence Guidelines (as defined below in Section 1.5), upon receipt of any such Sequence Submission, Twist will use commercially reasonable efforts to analyze and score such Sequence Submission pursuant to the Sequence Guidelines. Upon completion of such analysis, and in no event later than [***] after receipt of any such Sequence Submission, Twist will notify Customer of the results in writing, and Customer shall have the opportunity to, at Customer’s discretion, revise such Sequence Submission and re-submit the Sequence Submission to Twist, to confirm its desire to include such Sequence Submission in the Transaction if it has a score of [***], or to remove/cancel such Sequence Submission from the Transaction. The foregoing process may be repeated as many times as desired by Customer. Twist shall be obligated to accept any Transactions with respect to Sequence Submissions that meet the Sequence Guidelines, and with respect to any other Sequence Submissions that have a score of [***] as determined in accordance with the process stated above, subject to Section 1.5; provided that the Deliverables ordered in such

 

Certain confidential information contained in this Exhibit has been omitted because it is (i) not material and (ii) of the type that the registrant treats as private or confidential.


Transaction do not exceed the applicable maximum length restrictions described in the following sentence. Customer agrees that Deliverables will not exceed the maximum length described in the definition of each Deliverable in Section 1.1 (a) above), provided that Twist may in its discretion offer to increase the permitted number of base pairs in Deliverables by written notice to Customer (in which case the definitions above shall be automatically modified to reflect such increase for such particular Transaction). Twist shall notify Customer of the acceptance (or partial acceptance) of each Transaction within [***] of receipt of such Transaction with respect to Sequence Submissions meeting the Sequence Guidelines and within [***] of receipt by Twist of Customer’s confirmation to proceed with such Sequence Submission in light of the relevant score determination of [***] as set forth above with respect to Sequence Submissions not meeting the Sequence Guidelines and not canceled by Customer as provided above. Twist will initiate synthesis when new Transactions totaling at least [***] have been placed (“Minimum Size Order”). High Priority Clonal Sequences are exempt from the Minimum Size Order as described below. Customer may submit individual Transactions for any number of Deliverables. For clarity, the distinction between Minimum Size Order and Transaction gives Customer the ability to group related Deliverables for tracking purposes and to ensure minimum yields (as defined below under Reasonable Efforts) for the Transaction and gives Twist the ability to aggregate efficient batches for manufacturing. Notwithstanding Section 8.6, the ordering and scoring process described above may be conducted by the parties via email or other electronic means as agreed by the parties. Twist will use commercially reasonable efforts to create the Deliverables under accepted Transactions and to produce and deliver to Customer such Deliverables, subject to Sections 1.5 and 1.8, and to ensure that the Deliverables conform to the relevant Transaction, all in accordance with the terms and conditions of this Agreement, the Transaction, and the Sequence Submission. In the event that, despite its commercially reasonable efforts, Twist determines that its efforts to synthesize any Sequence Submission have failed, Twist will promptly communicate such determination to Customer.

(c) High Priority Sequences. The parties agree that Twist will use a first pass protocol to synthesize Deliverables for Transactions it has accepted. If Twist delivers at [***] of the Non-clonal Sequences in a given Transaction or [***] of Clonal Products in a given Transaction, it may, at its discretion and following written notice to Customer, abandon attempts to construct the remaining Deliverables in the Transaction, provided that any ordered and undelivered Deliverables will still count towards the Quarterly Minimums (defined below). Customer may order Clonal Products as high-priority sequences (“High Priority Clonal Sequences”), and such High Priority Clonal Sequences will be put on highest priority on each production step and include [***] which should yield a final pass rate up to [***]. Customer shall clearly designate in writing any High Priority Clonal Sequences in the Transaction and the special pricing for such High Priority Clonal Sequences specified in Section 2 below shall apply. No more than [***] of orders in any single month may be designated as High Priority Clonal Sequences. High priority Clonal Sequences will count towards the Minimums (defined below).

(d) Additional Services. Customer may request that Twist perform additional services, which may include using a vector provided by Customer (a “Customer Vector”) to provide the Deliverables (“Additional Services”), in each case subject to the terms of this Agreement and (except for using a Customer Vector to provide Deliverables) subject to Twist’s prior written agreement to perform such Additional Services (not to be unreasonably withheld so long as such Additional Services are substantially related to Twist’s other activities hereunder and Twist has the ability, expertise and capacity to perform them), provided that if the fees for such Additional Services are not provided Customer and Twist shall agree on the fees in writing for such Additional Services prior to Twist performing any such Additional Services and Twist will then use commercially reasonable efforts to perform such Additional Services. The parties agree to a [***] for each new customer vector that must be validated by Twist.

(e) Modification of Transactions. Except as expressly provided herein, Customer may not cancel any Transactions once accepted by Twist. In connection with ordering and delivering services and products hereunder, Twist and Customer may employ their standard forms, but no additional terms contained in any Transaction or other form shall bind either party or be construed to modify or amend the terms of this Agreement and, in the event of any conflict with the terms hereof, this Agreement shall control.

1.2 Cooperation; Customer Materials. Customer hereby grants to Twist a non-exclusive, non-transferrable license during the Term to use and develop the sequences and other information provided in the Sequence Submission and the Customer Vectors (collectively, the “Customer Materials”) for the sole purpose of providing the services ordered by Customer hereunder (including without limitation to synthesize Deliverables and perform Additional Services). Customer acknowledges that Customer’s timely cooperation and provision of complete and accurate information (“Cooperation”) is essential to the performance of the services hereunder. If Customer fails to provide Cooperation to Twist, Twist will not be liable for any deficiency or delay in performing any services to the extent arising from a failure to provide Cooperation.


1.3 Minimum Volume Commitment.

(a) Customer agrees to place Transactions for Deliverables meeting the Sequence Guidelines or otherwise meeting the criteria for acceptance (including the kbp limits) as provided in Section 1.1(b) (“Acceptable Transactions”) for at least the quarterly minimum volume commitments as provided in Exhibit A, attached hereto and incorporated herein, (the “Quarterly Minimums”). Customer agrees to place Transactions for approximately One Billion, Three Hundred Million (1,300,000,000) base pairs of DNA or at least [***] prior to the end of the Supply Term (collectively, the “Total Minimum” and with the Quarterly Minimums, the “Minimums”), where the Total Minimum is subject to all adjustments (as defined and further described in this Section 1.3). Customer will provide to Twist a non-binding, rolling three (3) month forecast of anticipated Product demand by the 15th of each month. The distribution of products that makes up a Quarterly Minimum for a future quarter may be increased or decreased by no more than [***] at Customer’s sole discretion, so long as Customer provides prior written notice to Twist of such adjustment at least one quarter in advance; adjustments of up to [***] may be made at Customer’s sole discretion so long as Customer provides prior written notice to Twist at least two quarters in advance. The Parties acknowledge that quarterly product demand may vary; provided however that prices provided herewith reflect a maximum of [***] of Deliverables ordered being comprised of Long Clonal Genes.

(b) The Minimums will be modified under the following scenarios:

 

  (i)

for any quarter that the Long Clonal Genes product is not available, the Minimum Volume Commitment is reduced by the volume listed in the table below for that product in that quarter;

 

  (ii)

for any quarter in which an Application Program Interface feature (defined in Section 1.10) is not available for a product, the Minimum Volume Commitment is reduced by [***] of the volume listed in the table below for that product in that quarter;

 

  (iii)

for any Deliverables where average Standard TAT (as defined in Section 1.7) measured over two consecutive quarters is more than [***] than Standard TAT, Customer’s commitment for that product for the following two quarters shall be reduced by [***]; and

 

  (iv)

in the event average yield for a Clonal Product measured over two consecutive quarters is greater than [***], Customer’s commitment for that Clonal Product for the following two quarters shall be reduced by the corresponding number of genes.

For the avoidance of doubt, any and all Transactions placed by Customer in accordance with this Agreement on or after the beginning of the Supply Term and before the expiration of the Supply Term and meeting the Sequence Guidelines, regardless of when such order is delivered or not delivered as further provided herein, will be applied against the Minimums.

(c) If, within the [***] after the end of each of the [***] quarters (i.e., 3 month period) of the Supply Term, Customer determines that the actual yield for Clonal Products exceeds [***] aggregated across the preceding quarter, then Customer shall provide Twist written notice of such occurrence (a “High Yield Event”). In the event of a High Yield Event Twist will, upon request by Customer, adjust down the Quarterly Minimums over the aggregate of the next immediate succeeding quarter to reflect such overage from the previous quarter’s High Yield Event “(High Yield Adjustment”), provided that in no case will the Quarterly Minimums be reduced below [***] of the original Quarterly Minimum for such month.

(d) In the event that Customer fails to place sufficient acceptable Transactions in accordance with the Agreement for the Minimums measured every 6 months from the start of the agreement, Customer agrees to pay Twist an amount equal to [***] per Deliverable times the difference between the scheduled volume in Exhibit A (including any modifications as described above) and the amount actually ordered during such 6-month period (a “Shortfall Payment”) within [***] of Twist’s invoice therefor.

1.4 Sequence Guidelines. Twist will provide Customer with its current sequence guidelines (the “Sequence Guidelines”). In the event that Twist, in its sole discretion, issues an updated set of Sequence Guidelines, this Agreement will be amended to include such updated Sequence Guidelines. For clarity, such Sequence Guidelines shall at all times be consistent with those offered generally to Twist’s other customers for similar services. However, if such Sequence Guidelines are reasonably determined by Customer to be more restrictive than the then-current


Sequence Guidelines under this Agreement, then Customer may reduce the Quarterly Minimums proportionally to the degree that that Sequence Guidelines become more restrictive. Any updates shall apply to Transactions placed more than ten (10) days after Customer’s receipt of the updated Sequence Guidelines. Sequence Guidelines may be in the form of an algorithm or as a descriptive list of guidelines. The initial Sequence Guidelines are as follows:

(a) To be in conformance with the Sequence Guidelines, the Sequence Submission must contain: [***]

(b) [***]

Twist will score each received Sequence Submission for complexity on a scale of 1 (simple) – 5 (very complex) using its algorithms.

Sequence Guidelines for Non-clonal Sequences are the same as for Clonal Products. Non-clonal Sequences include a short standardized adapter sequence on each end. Twist has their own preferred adapter sequence however if Customer requires their own adapter sequence they must provide Twist the opportunity to verify the Customer adapter sequence in Twist processes.

In addition, Customer will provide Twist with prior written notice of any Transaction that Customer believes, to the best of its knowledge, meets the definition of “Toxic Sequences” as described in Exhibit B, where such Exhibit B may be updated from time to time by Customer at its discretion or by the Parties mutual agreement.

The Sequence Guidelines and all related algorithms are Confidential Information of Twist.

1.5 Termination of a Transaction. Twist may terminate a Transaction, in Twist’s sole discretion and upon prior written notice to Customer, if Twist determines that such cancellation is reasonably necessary for biosecurity, biosafety, patent infringement, including without limitation any export restrictions. No terms other than as provided herein will be binding on either party.

1.6 [***]

1.7 Delivery; Inspection.

(a) Twist will ship the Deliverables to Customer at the address provided in the Transaction Ex Works (Incoterms 2010). All Deliverables will be shipped as follows:

Quarters 1-4: [***]

Quarters 5-8: [***]

Quarters 9-12: [***]

Quarters 3-16: [***]

The first number in each cell indicates the normal number of business days for delivery after purchase order acceptance. The second number in each cell indicates the outside number of business days after purchase order acceptance (“Maximum TAT”). After the Maximum TAT, Customer may choose to cancel the order at no cost but, for clarity, the ordered sequences not delivered by the Maximum TAT will still count towards the Minimums.

To smooth demand on capacity, Customer may submit a large Transaction of Deliverables that Customer wishes to be exempt from turnaround time requirements provided herein (a “Low Priority Transaction”). Twist will acknowledge receipt of Low Priority status within [***]. Customer may also change the priority status of existing Transactions depending upon Customer’s requirements. Proposed changes in the status of existing Transactions shall be discussed by the parties at the next scheduled weekly meeting between Twist and Customer and mutually agreed to by the parties in writing. Any existing Transaction for which its priority status is changed from a lower priority to a higher priority will have the turnaround time of the new priority effective [***] from the date the change in priority was agreed to by the parties.


The provisions of this Section 1.7(a) shall be Customer’s sole and exclusive remedy for Twist’s failure to timely deliver the Deliverables. All deliveries will be via overnight courier. [***]

(b) All Deliverables will be delivered in 96- or 384-well plates along with an associated plate map. Clonal Products can be delivered in Twist’s in-house maintenance vector, or in a Customer Vector, at Customer’s discretion and as noted in the relevant Transaction. The minimum acceptable yield for Clonal Products is [***] but Customer may accept lower yields in its sole discretion. The minimum acceptable yield for Non-clonal Sequences is [***] of size-verified DNA but Customer may accept lower yields in its sole discretion.

(c) Twist will ship the Deliverables in a single shipment upon completion of the relevant Transaction or, at Customer’s written request, whenever at least [***] Deliverables are ready to ship.

(d) If Customer reasonably determines that any Deliverables do not materially comply with the relevant Sequence Submission, Customer shall have [***] from receipt of such Deliverables (the “Test Period”) to provide Twist with written notice specifying how the Deliverables fail to conform and, if requested by Twist, return the non-conforming Deliverables to Twist. Following the notice of non-conformity, unless Twist reasonably determines that the Deliverables do in fact conform, Twist shall, as directed by Customer, [***]. If Customer fails to provide written notice of non-conformity during the Test Period, the relevant Deliverables will be deemed accepted. The foregoing shall be Customer’s sole and exclusive remedy for any Deliverables that fail to conform.

1.8 Restrictions on Deliverables.

(a) Twist’s standard cloning plasmids serve only as carriers for the de novo synthesized DNA only and shall not be used for any other purpose, including without limitation for expression. Twist makes no representation or warranty that the combination of these plasmids with specific de novo synthesized DNA will not infringe any third party patents or rights. Twist does not accept responsibility for the correctness of the vector backbone sequence, the presence or absence of restriction sites, antibiotic markers, promoters or other sequence elements in the vector backbone that were not created by Twist.

(b) Deliverables are intended for research use only and not for use in human and/or animal diagnostic procedures, and Customer agrees to follow any reasonable applicable use restrictions that are provided to Customer by Twist in writing. Should Customer use such Deliverables for any purpose other than internal research, Customer is solely responsible for qualifying such Deliverable for such use and obtaining any intellectual property rights that might be required, and Twist shall have no liability for such use.

1.9 Export Control. Deliverables may be subject to United States, European Union and local export-control laws and regulations. Customer may not, directly or indirectly, sell, export, re-export, transfer, divert, or otherwise dispose of any such Deliverables or related information (including products derived from or based on the Deliverables or information) to any destination, entity, or person prohibited by United States, European Union or local laws or regulations. Upon written request from Twist, Customer shall promptly provide Twist with information that Customer processes or to which it has access as needed for completion of exportation or importation governmental processes, including licensing, with respect to Twist’s performance under this Agreement.

1.10 Application Program Interface (“API”). Twist will provide to Customer a fully automated interface for placing Transactions dependent on Customer signing a separate API agreement for use. The API will enable Customer to validate, score, quote, and place Transactions for all product categories programmatically. Furthermore, the API will enable Customer to query the status of placed Transactions and receive information about success or failure of the Deliverables within the Transaction at multiple points in the synthesis process. The API is expected to be fully operational by the commencement of the Agreement. Within [***] of the commencement of the Agreement, the API will support customer vector setup.

1.11 [***]

1.12 Project Management. At Customer’s option, Twist will assign a dedicated project manager to handle Customer orders, Customer Vector onboarding and order fulfillment.

2. FEES AND TAXES

2.1 In consideration of Twist’s performance of the services pursuant to this Agreement, Customer will pay to Twist the fees provided below (the “Fees”).


For Deliverables: [***]

Unclonable Genes

Upon agreement between Customer and Twist, Twist will supply “in-process” Non-clonal Sequences for Deliverables that are deemed “unclonable” at a price of [***]. Non-clonal Sequences will meet normal specifications for that product category.

2.2 Twist will invoice Customer upon shipment of the Deliverables. All undisputed invoiced amounts shall be due [***] from the date of invoice. If Customer disputes any amount for which Twist seeks payment, Customer shall provide Twist with prompt written notice of the amount disputed and the basis therefor, and the parties will work together in good faith to resolve the matter. Overdue payments will be subject to interest at the rate of [***] The Fees are nonrefundable except as expressly set forth herein. Customer will, in addition to the other amounts payable under this Agreement, pay any and all applicable customs, duties, sales, use, value added or other taxes, federal, state or otherwise, however designated, which are levied or imposed by reason of the transactions contemplated by this Agreement (excluding taxes based on Twist’s net income).

3. CONFIDENTIALITY

3.1 Duty. Each party will retain in confidence the non-public information and know-how disclosed or otherwise made available by the other party pursuant to this Agreement which should reasonably be understood to be confidential by a reasonable recipient (the “Confidential Information”). For clarity, the Twist Materials (as defined in Section 4.2 below) shall be Twist’s Confidential Information and the Customer Materials shall be Customer’s Confidential Information. Notwithstanding anything to the contrary herein, Customer agrees that Twist may, during and after the Term, use any generally applicable data or information developed by Twist or acquired from a third party while performing the services herein on an aggregated, non-Customer identifiable basis, provided that the foregoing shall not entitle Twist to use or disclose the Customer Materials or Customer Confidential Information except to provide the services herein and produce the relevant Deliverables. The receiving party hereby agrees to: (a) preserve and protect the confidentiality of the disclosing party’s Confidential Information; (b) refrain from using the disclosing party’s Confidential Information except as contemplated herein; and (c) not disclose such Confidential Information to any third party except to employees, agents and subcontractors as is reasonably required in connection with the performance of this Agreement or the exercise of rights hereunder (and only subject to binding use and disclosure restrictions at least as protective as those set forth herein). The receiving party agrees to immediately notify the disclosing party of any unauthorized disclosure or use of any of the disclosing party’s Confidential Information and to assist the disclosing party in remedying such unauthorized use or disclosure by taking such steps as are reasonably requested. Upon the disclosing party’s request or within thirty (30) days after termination of this Agreement, the receiving party will return to the disclosing party or, on the disclosing party’s request, destroy all of the disclosing party’s Confidential Information and materials containing any Confidential Information of the disclosing party in the receiving party’s possession.

3.2 Exceptions. Notwithstanding the foregoing, the receiving party may disclose Confidential Information of the other party which is: (a) already publicly known without breach of this Agreement; (b) discovered or created by the receiving party without use of, or reference to, Confidential Information provided by the disclosing party, as shown in the receiving party’s written records; or (c) otherwise known to the receiving party through no wrongful conduct of receiving party. If the receiving party is required by a governmental authority or by order of a court of competent jurisdiction to disclose any Confidential Information of the disclosing party, such disclosure shall not be a violation of this Agreement provided that the receiving party shall give the disclosing party prompt written notice of such requirement or order and provide reasonable assistance to the disclosing party to enable the disclosing party to seek a protective order or otherwise prevent or restrict such disclosure. Moreover, the receiving party may disclose any Confidential Information hereunder to any court of competent jurisdiction as reasonably required to resolve any dispute between the parties hereto.

3.3 Remedies. Each party agrees and acknowledges that any breach or threatened breach of this Section 3 may cause irreparable injury to the disclosing party and that, in addition to any other remedies that may be available, in law, in equity or otherwise, the disclosing party will be entitled to seek injunctive relief against the threatened breach of this Agreement or the continuation of any such breach by the receiving party, without the necessity of proving actual damages or posting any bond, in addition to any other rights or remedies provided by law.


4. PROPRIETARY RIGHTS

4.1 Customer Materials. The parties acknowledge that Customer will retain ownership of the Customer Materials.

4.2 Twist Materials. The parties acknowledge that Twist will retain ownership of any and all gene synthesis technology, inventions, works of authorship, documents, diagrams, data, drawings, information, concepts, designs, algorithms, software, ideas, know-how, processes, protocols and other technology materials owned or developed by Twist in connection with its performance of any services pursuant to this Agreement (other than the Deliverables, Customer Vectors and any other items listed above to the extent that they cannot exist and be used without use or disclosure of Customer Confidential Information) including any updates, derivatives, modifications, or improvements thereof or thereto (collectively, “Twist Materials”). The Twist Materials shall include any Twist vectors.

4.3 Deliverables. Subject to the terms and conditions of this Agreement, Customer shall own all right and title to the Deliverables, provided, however that such rights in the Deliverables shall not include any rights in or to the Twist Materials, provided that Twist will grant and does hereby grant to Customer and its Affiliates (as defined in Section 8.7 below) a perpetual, non-exclusive, fully paid-up worldwide, sublicensable license to use Twist Materials incorporated into the Deliverables, in each case solely as incorporated into the Deliverables and subject to the terms and conditions of this Agreement.

4.4 Reservation of Rights. Except as otherwise expressly provided herein, nothing in this Agreement will be deemed to grant, directly or by implication, estoppel, or otherwise, any right or license with respect to a party’s intellectual property or materials, and each party retains all right, title, and interest in such property and materials, including without limitation (a) patents, patent applications, patent disclosures and inventions (whether patentable or not), (b) trademarks, service marks, and registrations and applications for the registration thereof, together with all goodwill associated therewith, (c) copyrights and copyrightable works (including computer programs), and registrations and applications for the registration thereof, and (d) trade secrets, know-how and other confidential and proprietary information.

5. WARRANTIES; DISCLAIMER AND LIMITATION OF LIABILITY

5.1 Customer Warranties. Customer represents and warrants that (a) Customer has the right to provide and license the Customer Materials as provided in this Agreement, including without limitation the right to allow Twist to create the Deliverables as provided herein, (b) Twist’s use of the Customer Materials as provided herein will not violate any contract, or applicable law or regulation, and (c) to Customer’s knowledge, the Customer Materials do not infringe on or violate any third-party intellectual property rights.

5.2 Disclaimer and Limitation of Liability. EXCEPT AS EXPRESSLY PROVIDED IN THIS AGREEMENT, TWIST MAKES NO OTHER REPRESENTATIONS OR WARRANTIES, EXPRESS, IMPLIED, STATUTORY, OR OTHERWISE, WITH RESPECT TO ANY SERVICES PROVIDED UNDER THIS AGREEMENT, DELIVERABLES, THE API, ADDITIONAL SERVICES, OR ANY OTHER MATERIAL PROVIDED HEREUNDER. TWIST SPECIFICALLY DISCLAIMS ALL OTHER WARRANTIES, EXPRESS AND IMPLIED, INCLUDING WITHOUT LIMITATION THE IMPLIED WARRANTIES OF MERCHANTABILITY, FITNESS FOR A PARTICULAR PURPOSE AND NONINFRINGEMENT, THOSE WARRANTIES ARISING FROM A COURSE OF DEALING OR USAGE OR TRADE, OR ANY WARRANTIES REGARDING NON-TWIST ITEMS, AND ALL SUCH WARRANTIES ARE HEREBY EXCLUDED TO THE FULLEST EXTENT PERMITTED BY LAW. EXCEPT AS EXPRESSLY PROVIDED HEREIN, ANY SERVICES PROVIDED UNDER THIS AGREEMENT, DELIVERABLES, THE API, AND ADDITIONAL SERVICES ARE PROVIDED ON AN “AS IS” AND “AS AVAILABLE” BASIS. IN NO EVENT WILL TWIST’S LIABILITY ARISING UNDER THIS AGREEMENT EXCEED THE FEES PAID BY CUSTOMER TO TWIST HEREUNDER IN THE TWELVE (12) MONTHS PRECEDING THE CLAIM UNDER WHICH SUCH LIABILITY AROSE. IN NO EVENT WILL EITHER PARTY BE LIABLE UNDER THIS AGREEMENT FOR ANY CONSEQUENTIAL, INCIDENTAL, SPECIAL, INDIRECT, PUNITIVE OR EXEMPLARY DAMAGES, INCLUDING WITHOUT LIMITATION LOST PROFITS, REVENUE, GOODWILL, OR COSTS OF PROCUREMENT OF SUBSTITUTE GOODS OR SERVICES, OR FOR ANY CLAIM OR DEMAND BY ANY THIRD PARTY, HOWEVER CAUSED AND (TO THE FULLEST EXTENT PERMITTED BY LAW) UNDER ANY THEORY OF LIABILITY (INCLUDING NEGLIGENCE) EVEN IF SUCH PARTY HAS BEEN ADVISED OF THE POSSIBILITY OF SUCH DAMAGES. THE PARTIES AGREE THAT THE AMOUNTS PAYABLE HEREUNDER ARE BASED IN PART ON THESE LIMITATIONS, AND THESE LIMITATIONS WILL APPLY NOTWITHSTANDING ANY FAILURE OF ESSENTIAL PURPOSE OF ANY LIMITED REMEDY.


6. INDEMNIFICATION

6.1 Twist will defend or settle, at its own expense, any third-party action against Customer or its officers, directors, employees, agents, successors, or assigns to the extent based on a claim that any Twist Materials infringe or otherwise violate such third-party’s U.S. trade secret or U.S. copyright, and will pay such damages or costs as are finally awarded against Customer attributable to such claim. Should any Twist Materials become, or in Twist’s opinion be likely to become, the subject of such an infringement claim, Twist may, at its option, (a) procure the right to use the Twist Materials; (b) replace or modify, in whole or in part, the Twist Materials to make it non-infringing; or (c) terminate the Agreement and refund the Fees paid for any affected Deliverables supplied to Customer. Twist assumes no liability under this Section 6.1 for: (i) the Deliverables, (ii) any compliance with the Sequence Submission; or (iii) any Customer Materials or Twist’s use of such Customer Materials as provided in this Agreement; and Customer will indemnify, defend, and hold harmless Twist and its officers, directors, employees, agents, successors, and assigns against any damages, losses, and expenses (including reasonable attorneys’ fees) arising from any third-party action against Twist or its officers, directors, employees, agents, successors, or assigns to the extent based on a claim that services provided under this Agreement, Deliverables, or Additional Services infringe or otherwise violate such third-party’s intellectual property or other proprietary rights due to any of (i) through (iii) (inclusive).

6.2 The indemnification obligations set forth in Section 6.1 are contingent upon the indemnified party: (a) promptly notifying the indemnifying party of the claim for which indemnification is sought; (b) giving the indemnifying party sole control of the defense and settlement of the action, provided that any settlement that imposes any material obligation on the indemnified party will require the indemnified party’s prior written consent, not to be unreasonably withheld or delayed; and (c) giving the indemnifying party all reasonable cooperation and assistance in its defense or settlement of the action at the written request and expense of the indemnifying party. THIS SECTION 6 SETS FORTH TWIST’S ENTIRE LIABILITY AND OBLIGATION, AND CUSTOMER’S SOLE REMEDY, FOR ANY CLAIM OF INFRINGEMENT OR VIOLATION OF ANY INTELLECTUAL PROPERTY RIGHTS HEREUNDER.

7. TERM AND TERMINATION

7.1 Term. Unless earlier terminated as provided in this Section 7, this Agreement will be effective as of the Effective Date and will continue thereafter until the end of the Supply Term (the “Term”). The “Supply Term” shall start on March 1, 2018 and shall end forty eight (48) months after the Effective Date.

7.2 Termination by Mutual Agreement. At any time during the Term, the Agreement may be terminated upon the mutual written consent of the Parties.

7.3 Termination for Specified Change in Control. Twist shall provide Customer [***] prior written notice (a “Specified Change in Control Notice”) of any Specified Change in Control (as defined below). Customer may terminate this Agreement in its sole and absolute discretion upon written notice given to Twist not later than [***] after the receipt of such Specified Change in Control Notice. For purposes of this Agreement, “Specified Change in Control” means the consummation of a merger or sale of Twist or of substantially all of the assets of Twist to which this Agreement applies, in each case, with or to a Specified Party or an Affiliate thereof; provided, that a Specified Change in Control shall not include any bona fide investment transaction, in which Twist issues shares of its capital stock to the investor(s) participating in such bona fide investment transaction, and (ii) “Specified Party” means [***]

7.4 Termination for Material Breach. Either party may terminate this Agreement for the material breach of the other party upon sixty (60) days’ prior written notice to such other party describing such breach in reasonable detail and upon providing an opportunity to cure for the breaching party before the end of such 60-day period (and in the case of such a cure, this Agreement shall remain in full force and effect). Expiration or termination of this Agreement shall not relieve the parties of any obligation accruing prior to such expiration or termination. The rights and obligations of Twist and Customer in Sections 1.3 (pro-rated through the termination date), 1.6(b) (which will survive for the originally agreed upon Term plus six (6) months after the Term), 1.9, and 2 through 8 (inclusive) will survive any termination of this Agreement.


7.5 Termination for Shortfall. Notwithstanding the foregoing, should Customer fail to place more than [***] of the Quarterly Minimum set forth in Exhibit A for two consecutive quarters, Twist shall have the right to terminate this Agreement.

7.6 Effects of Termination. Transactions not delivered before the effective date of expiration or termination of this Agreement shall survive expiration or termination of this Agreement until completed, unless this Agreement is terminated for breach by a Party or insolvency of a Party. Twist shall be entitled to receive and retain all Fees due for Transactions surviving the effective date of termination.

7.7 Survival. Sections 1.3, 1.6, 1.8, 1.9, 2, 3, 4, 5, 6, 7.6, 7.7 and 8 shall survive any termination or expiration of this Agreement. Termination or expiration of this Agreement shall not affect Customer’s liability for any obligations or liabilities that have accrued prior to such expiration or termination (including without limitation any Fees owed by Customer) or any breach of this Agreement committed before such expiration or termination.

8. MISCELLANEOUS

8.1 Entire Agreement; Modification; Waiver; Counterparts. This Agreement, as of the Effective Date, together with any accepted Transactions (to the extent provided herein), represents the entire agreement between the parties, and supersedes all prior agreements and understandings, written or oral, with respect to the matters covered herein, and is not intended to confer on any third-party any rights or remedies hereunder. No modification of, or amendment to, nor any waiver of any rights under, this Agreement will be effective unless in a mutually signed writing. The waiver of one breach or default or any delay in exercising any rights will not constitute a waiver of any later breach or default. This Agreement may be executed in counterparts (including by PDF or other electronic form), each of which will be deemed an original and all of which together will constitute one instrument.

8.2 Delays. If either party is prevented from performing or is unable to perform any of its obligations under this Agreement (other than any payment obligation) due to any Act of God, major forces, fire, casualty, flood, earthquake, war, strike, lockout, epidemic, destruction of production facilities, riot, insurrection, material unavailability, or any other cause beyond the reasonable control of the party invoking this Section, and if such party will have used its commercially reasonable efforts to mitigate its effects, such party will give prompt written notice to the other party, and the time for the performance will be extended for the period of delay or inability to perform due to such occurrences.

8.3 Governing Law; Arbitration; Fees. This Agreement will in all respects be governed by the laws of the State of Delaware without reference to its principles of conflicts of laws. Any dispute or claim arising out of or in connection with this Agreement will be finally settled by binding arbitration in Wilmington, Delaware under the Rules of Arbitration of the American Arbitration Association, by at least one arbitrator appointed in accordance with said rules. The arbitrator shall apply Delaware law, without reference to rules of conflicts or law or rules of statutory arbitration, to the resolution of any dispute. Judgment on the award rendered by the arbitrator may be entered in any court having jurisdiction thereof. Notwithstanding the foregoing, the parties may apply to any court of competent jurisdiction for preliminary or interim equitable relief, or to compel arbitration in accordance with this paragraph, without breach of this arbitration provision. If any action at law or in equity (including arbitration) is necessary to enforce or interpret the terms of this Agreement, the prevailing party will be entitled to reasonable attorney’s fees, costs and necessary disbursements in addition to any other relief to which such party may be entitled.

8.4 Relationship of the Parties. Nothing in this Agreement is to be construed as creating an agency, partnership, or joint venture relationship between the parties hereto. Neither party will have any right or authority to assume or create any obligations or to make any representations or warranties on behalf of any other party, whether express or implied, or to bind the other party in any respect whatsoever. Each party may identify the other as a customer or supplier, as applicable.

8.5 Publicity. The Parties have issued a joint press release to announce the forthcoming execution of this Agreement, and, following the issuance of such press release, Twist and Customer may each disclose to Third Parties the information contained in such press release without the need for further approval by the other. Neither Party shall issue any other public announcement, press release, or other public disclosure regarding this Agreement or its subject matter without the other Party’s prior written consent (which shall not be unreasonably withheld, delayed, or conditioned). Following issuance of the press release, in the event a Party desires to issue any public announcement, press release, or other public disclosure, such Party shall submit the proposed disclosure in writing to the other Party at least fourteen (14) Business Days prior to the anticipated date of disclosure; provided that if the


other Party has not provided its consent (or indicated that it does not consent) to such proposed disclosure within such fourteen (14) day period, such consent shall be deemed to have been given and the disclosing Party may make the proposed disclosure. With respect to such press releases, the terms of this Agreement and all activities under this Agreement will be kept confidential except as specifically agreed to by the parties or as otherwise required by law.

8.6 Notices. Any notice, demand or request required or permitted to be given under this Agreement must, unless otherwise specified in this Agreement, be in writing and will be deemed sufficient when delivered personally or by overnight courier providing evidence of receipt, addressed to the party to be notified at such party’s address as set forth on the first page of this Agreement, as subsequently modified by written notice. Notice shall be deemed effective upon receipt.

8.7 Right to Notice of Proposed Acquisitions; Discussions of Consequential Changes. Twist agrees to provide prompt written notice to Customer (an “Offer Notice”) upon Twist’s receipt of a bona fide notice, proposal, or offer, in each case in writing, from a Specified Party in connection with a proposed merger or sale of Twist or of substantially all of the assets of Twist to which this Agreement applies (in each case a “Proposed Acquisition”) on condition that Twist’s board of directors determines to proceed with negotiations in respect of such Proposed Acquisition. For the avoidance of doubt, (i) any Offer Notice provided pursuant to this Section 8.7 shall only be required to include an indication that the circumstances contemplated by the first sentence of Section 8.7 have occurred and need not include any terms of such Proposed Acquisition nor the identity of the third party offeror with respect to such Proposed Acquisition and (ii) the first sentence of Section 8.7 shall not apply to any consolidation or merger of Twist with or into any other entity in which the holders of Twist’s outstanding voting securities immediately before such consolidation or merger, immediately after such consolidation or merger, retain voting securities representing a majority of the voting power of the surviving entity or voting securities representing a majority of the voting power of an entity that wholly owns, directly or indirectly, the surviving entity.

8.8 Terminal Order. Upon receipt of a Notice of Consummated Change in Control within the last twelve (12) months of the Term, in addition to any other rights Customer may have hereunder, Customer shall be entitled to place a single Transaction in respect to a number of Deliverables not to exceed [***] (the “Terminal Order”) on or prior to the last day of the Term. Subject to the last sentence of this Section 8.8, Customer’s notice to Twist of its election to place a Terminal Order shall constitute a binding obligation by Customer to purchase the quantities of Deliverables referenced therein and by Twist to supply such quantities of Deliverables. Twist shall update Customer periodically (but no less frequently than quarterly) regarding its status and progress on the Terminal Order build. Customer, by written notice to Twist, may request to modify the specific Deliverables or quantities set forth in the Terminal Order solely to the extent that (i) Twist has not commenced the manufacture or production of such Deliverables prior to the date Twist actually receives such notice from Customer and (ii) the number of Deliverables in the Terminal Order, as modified by such notice, does not exceed 100,000 Deliverables.

8.9 Assignment. Neither party may assign the Agreement, in whole or in part, without the prior written consent of other party, such consent to not be unreasonably withheld or delayed, except that either Party may make such assignment without the prior written consent of the other Party to an Affiliate, as defined below (so long as such Party shall remain jointly and severally liable with such Affiliate with respect to all obligations so assigned and so long as such Affiliate is not a direct competitor of the other party). Subject to Customer’s right to terminate this

Agreement in connection with a Specified Change in Control, either party may assign this Agreement without consent to the relevant acquiring entity in connection with a merger or sale of such party or of substantially all of the assets to which this Agreement applies; [***] For purposes of this Agreement, “Affiliate” shall mean any company or entity controlled by, controlling, or under common control with a party hereto, where “control” shall mean (i) the beneficial ownership (direct or indirect) of at least fifty percent (50%) or more of the voting stock or other ownership interest of the subject entity entitled to vote in the election of directors (or, in the case of an entity that is not a corporation, for the election of the corresponding managing authority), or (ii) the power (direct or indirect) to direct or cause the direction of the management and policies of the subject entity, whether through the ownership or control of voting securities, by contract or otherwise.

[Signature Page to Follow On Next Page]


In witness whereof, the parties have caused this Agreement to be duly executed as of the date first written above.

 

Twist Bioscience Corporation      Ginkgo Bioworks, Inc.
By:  

/s/ William Banyai

              By:   

/s/ Barry Canton

Name: William Banyai      Name: Barry Canton
Title: Chief Operating Officer      Title: Founder

Exhibit 10.37

Execution Version

COLLABORATION AGREEMENT

This COLLABORATION AGREEMENT (this “Agreement”), effective as of September 13th, 2019 (“Effective Date”), is between Ginkgo Bioworks, Inc., a Delaware corporation with offices located at 27 Drydock Avenue, 8th floor, Boston, Massachusetts 02210 (“Ginkgo”), and Berkeley Lights, Inc., a Delaware corporation with offices located at 5858 Horton Street, Suite 320, Emeryville, California 94608 (“BLI”). Ginkgo and BLI may each be referred to herein as a “Party” or, collectively, as the “Parties.”

WHEREAS, BLI and Ginkgo are committed to the goal of developing and deploying workflows on the Beacon Platform to accelerate the engineering of microbial organisms and mammalian cell lines, including by developing new Workflows (as defined below) for use on the Beacon Platform for the Parties’ mutual benefit (the “Purpose”); and

WHEREAS, in furtherance of the Purpose, BLI and Ginkgo have decided to enter into this Agreement, including mutually agreed upon Workflow Development Plans, which establish the terms by which Ginkgo and BLI will work together to bring their unique resources and experiences to bear on the Purpose.

NOW THEREFORE, in consideration of the above premises and the mutual covenants contained herein, the Parties hereby agree as follows:

1. DEFINITIONS

1.1 “Affected Party” has the meaning set forth Section 14.8 (Force Majeure).

1.2 “Affiliate” means with respect to a Party, any Person that, directly or indirectly, through one or more intermediaries, controls, is controlled by, or is under common control with that Party, for so long as such control exists. For purposes of this definition only, “control” and, with correlative meanings, the terms “controlled by” and “under common control with” means: (a) in the case of Persons that are corporate entities, direct or indirect ownership of more than fifty percent (50%) of the stock or shares (or such lesser percentage which is the maximum allowed to be owned by a foreign corporation in a particular jurisdiction) entitled to vote for the election of directors, or otherwise having the power to control or direct the affairs of such corporate entity; and (b) in the case of Persons that are non-corporate entities, direct or indirect ownership of at least fifty percent (50%) of the equity interest or the power to direct the management and policies of such non-corporate entity.

1.3 “Agreement” has the meaning set forth in the Preamble.

1.4 “[***]” means [***]. These include [***]. For clarity, [***] does not include [***].

1.5 “Alliance Manager” has the meaning set forth in Section 3.7 (Alliance Managers).

1.6 “Antibody” means a soluble protein derived exclusively from an immunoglobulin protein that includes at least one hyper-variable antigen-binding region, including any fragment or [***] of such protein, but, for clarity, excluding (i) [***] and (ii) [***].

1.7 “Applicable Law” means federal, state, local, national and supra-national laws, statutes, rules and regulations, including any rules, regulations, regulatory guidelines or other requirements of Regulatory Authorities, major national securities exchanges or major securities listing organizations, that may be in effect from time to time during the Term and applicable to a particular activity or country hereunder.

1.8 “Arbitration Notice” has the meaning set forth in Section 14.5.2 (Dispute Resolution).

 

Certain confidential information contained in this Exhibit has been omitted because it is (i) not material and (ii) of the type that the registrant treats as private or confidential.


1.9 “Beacon Optofluidic Machine Improvement” means any improvement or modification to the Beacon Optofluidic Machine conceived, developed, generated or reduced to practice during the Term (a) solely by a Party, its Affiliates or Persons acting on behalf of such Party or (b) jointly by, on one hand, Ginkgo, its Affiliates or Persons acting on behalf of Ginkgo and, on the other hand, BLI, its Affiliates or Persons acting on behalf of BLI, in each case of clauses (a) and (b) of this Section 1.9 (“Beacon Optofluidic Machine Improvement definition) through the conduct of activities under a Workflow Development Plan or otherwise arising out of the Parties’ performance of activities under this Agreement.

1.10 “Beacon Optofluidic Machine” means (i) the machine with the Specifications set forth, as of the Effective Date, on Schedule 1.10 (Beacon Optofluidic Machine) and (ii) [***] and, with respect to (i)-(ii), any [***] of such machines, developed during the Term by BLI or its Affiliates that [***].

1.11 “Beacon Platform” means, collectively, (a) the Beacon Optofluidic Machine, (b) the OptoSelect Chips, (c) Consumables related to the Beacon Optofluidic Machine or the OptoSelect Chips and (d) any Software.

1.12 “BLI” has the meaning set forth in the Preamble.

1.13 “BLI Background IP” means any Intellectual Property (a) Controlled by BLI or its Affiliates as of the Effective Date, (b) that comes into the Control of BLI after the Effective Date other than by means of this Agreement or the activities performed hereunder or (c) developed during the Term by BLI outside and independently of this Agreement.

1.14 “BLI Indemnitee” has the meaning set forth in Section 12.2 (Indemnification by Ginkgo).

1.15 “BLI Inventions” has the meaning set forth in Section 8.2.2 (Ownership of Materials and Data—BLI Inventions).

1.16 “BLI Proprietary Workflow” means any workflow on the Beacon Platform that was developed by or on behalf of BLI prior to the Effective Date or is developed during the Term in the conduct of activities outside and independent of this Agreement (including, for clarity, outside of any Workflow Development Plan), in each case whether solely by BLI or jointly by BLI and a Third Party.

1.17 “BLI Subcontractor” means a Person to whom BLI has subcontracted any of its activities under this Agreement pursuant to Section 2.7 (Subcontracting).

1.18 “BLI Terms and Conditions” means those terms and conditions set forth in Schedule 1.18 (BLI Terms and Conditions) and the Product Warranty, as such may be amended from time to time by BLI, [***].

1.19 “Budget” means, with respect to a Workflow Development Plan, an itemized budget broken down on a [***] and high-level task-by-high-level task basis [***], that sets forth the following internal and out-of-pocket costs anticipated to be incurred in the conduct of activities under such Workflow Development Plan, to the extent applicable and mutually agreed upon by the Parties:

1.19.1 the FAS Support Costs for services provided by any FAS under such Workflow Development Plan;

1.19.2 other FTE Costs for BLI’s personnel in the conduct of activities under, or [***] under, such Workflow Development Plan, including BLI personnel conducting development of Software for the Workflow under such Workflow Development Plan; provided that, with respect to the FTE Costs for BLI’s personnel providing [***] under a Workflow Development Plan, such FTE Costs shall not exceed [***] percent ([***]%) of the total FTE Costs charged to Ginkgo with respect to any invoice;

1.19.3 the out-of-pocket development ([***]) costs paid by BLI to Third Parties to purchase finished Consumables that are developed and designated as a deliverable under a Workflow Development Plan or raw materials necessary to manufacture Consumables that are developed and designated as a deliverable under a Workflow Development Plan , in each case from such Third Parties for the Beacon Platform, subject to a [***] percent ([***]%) mark-up;


1.19.4 with respect to any then-existing Consumables (i.e. not Consumables for which development or manufacture is ongoing as described in Section 1.19.3), an amount equal to the number of units used in the performance of the Workflow Development Plan, multiplied by a price per unit of Consumables as set forth in Section 5.2.2(b) (Adjustments); and

1.19.5 other out-of-pocket costs paid by BLI to permitted Third Party subcontractors and vendors attributable to the development of the Workflow or Hardware under such Workflow Development Plan, [***].

1.20 “Business Day” means any day, other than a Saturday, Sunday or a day on which commercial banks located in Boston, Massachusetts or San Francisco, California are authorized or required by Applicable Law or regulation or otherwise to close.

1.21 “Buy-Down Amount” means, at any given time of a Buy-Down Election, an amount equal to:

1.21.1 if, at such time, [***], [***] ([***]%) of the difference between (a) the Full Purchase Target and (b) the sum of all the Development Purchases and Production Purchases made or incurred by Ginkgo;

1.21.2 if, at such time, [***], [***] percent ([***]%) of the difference between (a) the Full Purchase Target and (b) the sum of all the Development Purchases and Production Purchases made or incurred by Ginkgo as of such time;

1.21.3 if, at such time, [***], [***] percent ([***]%) of the difference between (a) the Full Purchase Target and (b) the sum of all the Development Purchases and Production Purchases made or incurred by Ginkgo as of such time; and

1.21.4 if, at such time, [***], [***].

For illustrative purposes only, Schedule 1.21 (Buy-Down Examples) sets forth a table showing the calculated Buy-Down Amounts assuming [***] and [***].

1.22 “Buy-Down Election” has the meaning set forth in Section 7.3 (Buy-Down Election).

1.23 “Calendar Quarter” means the respective periods of three (3) consecutive calendar months ending on March 31, June 30, September 30 and December 31; provided thatthe first Calendar Quarter of the Term shall begin on the Effective Date and end on the last day of the then current Calendar Quarter and the last Calendar Quarter of the Term shall begin on the first day of such Calendar Quarter and end on the last day of the Term.

1.24 “[***]” means [***] that [***], including [***], by [***], whose [***].

1.25 “[***]” means the offering or performance of any services using the Beacon Platform, [***], to [***]:

1.25.1 [***];

1.25.2 [***]; or

1.25.3 [***];

provided that in no event shall [***] include the use of the Beacon Platform to (i) [***] or (ii) [***] but, for clarity, are not in any manner or form used as described in Sections 1.25.1, 1.25.2 or 1.25.3 above.

1.26 “Change in Control” means, with respect to a Person, (a) the acquisition, directly or indirectly, by a Person or “group” (whether in a single transaction or multiple transactions) of fifty percent (50%) or more of the voting power of such Person or of beneficial ownership of (or the right to acquire such beneficial ownership) fifty percent (50%) or more of the outstanding equity or convertible securities of such Person (including by tender offer or exchange offer); (b) any merger, consolidation, share exchange, business combination, recapitalization or similar corporate transaction involving such Person (whether or not including one or more wholly owned subsidiaries of such Person) or (c) such Person sells or transfers to any Third Party, in one or more related transactions, properties or assets representing all or substantially all of such Person’s consolidated total assets to which this Agreement relates.

1.27 “Claims” is defined in Section 12.1 (Indemnification by BLI).


1.28 “Clinical Trial” means a human clinical study conducted on sufficient numbers of human subjects that is designed to (a) establish that a product is reasonably safe for continued testing, (b) investigate the safety and efficacy of the product for its intended use, and to define warnings, precautions and adverse reactions that may be associated with the product in the dosage range to be prescribed or (c) support Regulatory Approval of such product or label expansion of such product. Without limiting the foregoing, Clinical Trial includes any Phase II Clinical Trial or Phase III Clinical Trial conducted by or on behalf of one or both Parties in connection with this Agreement.

1.29 “Collaboration Data” has the meaning set forth in Section 8.5.1 (Disclosure).

1.30 “Collaboration Intellectual Property” means [***], that is conceived, developed, generated or reduced to practice during the Term (a) solely by a Party, its Affiliates or Persons acting on behalf of such Party or (b) jointly by, on one hand, Ginkgo, its Affiliates or Persons acting on behalf of Ginkgo and, on the other hand, BLI, its Affiliates or Persons acting on behalf of BLI, in each case of clauses (a) and (b) of this Section 1.30 (“Collaboration Intellectual Property definition) through the conduct of activities under this Agreement.

1.31 “Collaboration Workflow” means any Workflow on the Beacon Platform that [***] and is (a) developed jointly by the Parties (or on their behalf) or (b) developed solely by BLI (or on behalf of BLI) for Ginkgo, in each case of clause (a) and (b) of this Section 1.31 (“Collaboration Workflow definition), pursuant to a Workflow Development Plan. For the avoidance of doubt, Collaboration Workflows shall not include [***].

1.32 “Commercial Services” means any [***] activities conducted by Ginkgo or any sublicensee under the rights granted to Ginkgo by BLI in Section 9.1.1 (Scope of Grants) in the Licensed Field (a) under an agreement or arrangement of Ginkgo or any such sublicensee with a Third Party or (b) for [***] that [***] by Ginkgo, an Affiliate or a Third Party; provided that, notwithstanding the foregoing, with respect to Third Parties, Workflows may only be [***] by Ginkgo permitted (under Section 9.1 (Grants to Ginkgo)) sublicensees, but no other Third Parties.

1.33 “Completed Workflow” means any Key Collaboration Workflow that the JRC or the Expert Panel, as applicable, determines has been Substantially Completed.

1.34 “Confidential Information” has the meaning set forth in Section 10.1 (Confidential Information).

1.35 “Conforming Product” means, with respect to a Beacon Optofluidic Machine or Consumable delivered by BLI to Ginkgo under this Agreement, that such Beacon Optofluidic Machine or Consumable meets the Product Warranty at the time of delivery.

1.36 “Consumables” means those certain OptoSelect Chips and reagents set forth on Schedule 1.36 (Consumables) or that, during the Term, [***] for the use of the Beacon Platform and are sold by BLI.

1.37 “Contract Year” means (a) with respect to the first Contract Year, the period of time commencing on the Effective Date and ending on September 30, 2020 and (b) with respect to each subsequent Contract Year, commencing on October 1 of such Contract Year and continuing for a period of twelve (12) consecutive calendar months; provided that the last Contract Year of the Term shall end on the last day of the Term.

1.38 “Control” means, with respect to any item of Intellectual Property or material, the possession (whether by ownership or license, other than by a license granted pursuant to this Agreement) by a Party or its Affiliates of the ability to grant to the other Party access, ownership, a license or a sublicense as required herein to such item, without: (a) violating the terms of any agreement or other arrangement with any Third Party in existence as of the time such Party or its Affiliates would be required hereunder to grant the other Party such access, ownership, license or sublicense; (b) violating any Applicable Law, or (c) incurring payment obligations by reason of providing access, ownership, a license or a sublicense to the other Party with respect thereto (unless such other Party agrees in writing to bear such payment obligations [***] to providing access, ownership, a license or a sublicense to such item by such other Party).

1.39 “Development Purchase Commitment” means, for a given Contract Year, the amount in the column named “Development Purchase Commitment” in Table 7.2.2 for such Contract Year, as may be amended from time to time under this Agreement.


1.40 “Development Purchases” means, during any period of time, the aggregate amount paid by Ginkgo to BLI for the conduct of activities under any Workflow Development Plan or otherwise under Section 2.4.2 (Costs under Workflow Development Plan – Payment) during such period of time.

1.41 “Disclosing Party” is defined in Section 10.1 (Confidential Information).

1.42 “Discovered Antibody” has the meaning set forth in Section 7.4.2 (Milestone Events).

1.43 “Dollars” means United States dollars ($).

1.44 “Drug Approval Application” means any New Drug Application (“NDA”), as defined in the FFDCA, or any corresponding foreign applications in the Territory, including (a) with respect to the European Union, a Marketing Authorization Application (a “MAA”) filed with the EMA pursuant to the Centralized Approval Procedure or with the applicable Regulatory Authority of a country in Europe with respect to the mutual recognition or any other regional or national approval procedure or (b) with respect to Japan, an MAA filed with the PMDA.

1.45 “Effective Date” has the meaning set forth in the Preamble.

1.46 “EMA” means the European Medicines Agency and any successor agency(ies) or authority having substantially the same function.

1.47 “European Union” or “E.U.” means the economic, scientific and political organization of member states known as the European Union, as its membership may be altered from time to time, and any successor thereto, except that, for purposes of this Agreement, the E.U. will be deemed to include [***] the United Kingdom, irrespective of whether any such country leaves the European Union.

1.48 “Excluded Fields” means the use of the Beacon Platform for:

1.48.1 [***];

1.48.2 [***];

1.48.3 [***];

1.48.4 [***];

1.48.5 [***]; and

1.48.6 [***].

1.49 “Expert Panel” has the meaning set forth in Section 3.5.3 (Decision-Making).

1.50 “Expiration” has the meaning set forth in Section 13.3.1 (General).

1.51 “Extended Force Majeure Event” has the meaning set forth Section 14.8 (Force Majeure).

1.52 “Failure to Supply” has the meaning set forth in Section 5.4.3(a) (Remedial Efforts).

1.53 “FAS” means a BLI Field Application Scientist providing [***] to Ginkgo related to a Workflow Development Plan or a Workflow either (a) at Ginkgo’s facilities or (b) [***]; provided that, in the case of clause (b) of this Section 1.50 (“FAS definition), such BLI Field Application Scientist must be specifically dedicated to development of Workflows on at least a part-time basis and identified as such in the Workflow Development Plan under this Agreement (such identification to include, in the case of part-time FAS, a specified percentage of dedication to Ginkgo [***]).

1.54 “FAS Support Cost” shall mean, with respect to any services provided by one or more FAS(s) to Ginkgo over a specified period of time, the amount equal to the aggregate of the applicable FAS Support Rates for such services during such period of time.


1.55 “FAS Support Rate” means, with respect to any services provided by a FAS pursuant to this Agreement to Ginkgo, the applicable rate (dependent on the length of support) for such services set forth in Schedule 5.2.1 (Pricing Schedule), subject to adjustment as set forth in Section 5.2.2(c) (Adjustments).

1.56 “FDA” means the United States Food and Drug Administration and any successor agency(ies) or authority having substantially the same function.

1.57 “FFDCA” means the United States Federal Food, Drug, and Cosmetic Act, 21 U.S.C. § 301 et seq., as amended from time to time, together with any rules, regulations and requirements promulgated thereunder (including all additions, supplements, extensions, and modifications thereto).

1.58 “Force Majeure Event” has the meaning set forth in Section 14.8 (Force Majeure).

1.59 “FOU License Fee” has the meaning set forth in Section 7.4.1 (License Fees).

1.60 “FTE” means (a) with respect to any full-time employee of BLI, [***], who is [***] dedicated to the development of Workflows under this Agreement, a total of twelve (12) months of [***] work conducted by such employee or (b) with respect to any full-time employee of BLI that is not [***] dedicated to the development of Workflows under this Agreement, a full time equivalent effort consisting of a minimum of a total of [***] ([***]) hours per year of work [***] a Workflow Development Plan by such employee of a Party. In no event shall the work of one (1) employee exceed 1 full FTE.

1.61 “FTE Costs” means, with respect to any given activity or activities over any specified period of time, the number of FTEs conducting such activity or activities multiplied by the FTE Rate.

1.62 “FTE Rate” means the rates per annum, listed in Schedule 1.62 (FTE Rate), which rate includes certain allowable allocations and subject to increase on an annual basis as of January 1 of each year, beginning in 2020, by a factor which reflects the increase, if any, in the Consumer Price Index for [***], as reported by the U.S. Bureau of Labor Statistics, for January 1 of such year when compared to the comparable statistic for January 1 of the preceding year. For clarity, if there is no such increase in the CPI-[***], the FTE Rate shall remain the same and shall not decrease.

1.63 “Full Purchase Target” has the meaning set forth in Section 7.2.1 (Purchase Commitments – Generally).

1.64 “Generalized Workflow” means any Collaboration Workflow or component thereof that is designated as a “Generalized Workflow” by the Parties in a Workflow Development Plan or, if the Parties have made no designation, is not a Specific Implementation. By way of non-limiting example, Generalized Workflows would encompass Workflows or components thereof that are not Specific Implementations and are generally directed to and required to enable:

1.64.1 [***],

1.64.2 [***];

1.64.3 [***];

1.64.4 [***];

1.64.5 [***]; or

1.64.6 [***].

For the purposes of Section 1.64.3 and Section 1.128, the following examples serve to illustrate the concept of a “[***]” (a) [***] (b) [***] and (c) [***]


1.65 “Ginkgo” has the meaning set forth in the Preamble.

1.66 “Ginkgo Background IP” means any Intellectual Property provided or otherwise disclosed to BLI under this Agreement or otherwise [***] for the performance of any activities allocated to BLI under a Workflow Development Plan that is (a) Controlled by Ginkgo or its Affiliates as of the Effective Date, (b) that comes into the Control of Ginkgo after the Effective Date other than by means of this Agreement or the activities performed hereunder, or (c) developed during the Term by Ginkgo [***].

1.67 “Ginkgo Excluded Use” has the meaning set forth in Section 9.1.6 (Use in Excluded Fields).

1.68 “Ginkgo Indemnitee” has the meaning set forth in Section 12.1 (Indemnification by BLI).

1.69 “Ginkgo Inventions” has the meaning set forth in Section 8.2 (Ownership of Ginkgo Inventions and BLI Inventions).

1.70 “Ginkgo Licensed IP” has the meaning set forth in Section 9.2 (Grants to BLI).

1.71 “Ginkgo Materials” has the meaning set forth in Section 8.2.1(d) (Ownership of Ginkgo Inventions and BLI Inventions).

1.72 “Ginkgo Subcontractor” means a Person to whom Ginkgo has subcontracted any of its activities under this Agreement pursuant to Section 2.7 (Subcontracting).

1.73 “Ginkgo Workflows” means Workflows on the Beacon Platform that are developed by [***]. For clarity, [***].

1.74 “Go/No-Go Criteria” has the meaning set forth in Section 2.2.1(g) (Workflow Development Plans – Generally).

1.75 “Hardware” means any and all hardware, equipment, devices, tools, apparatus, machinery, and electronics including, but not limited to, the Beacon Optofluidic Machine, computer and computer-related hardware, servers, networking equipment, interfaces, databases, support equipment, power supplies, wiring and associated equipment.

1.76 “Headstart Invention” means any (a) specific part or component of a [***] (other than any [***], including any [***]) or (b) [***] in its entirety, including [***], in each case, either (i) designated as a “Headstart Invention” in the applicable Workflow Development Plan or (ii) for which Ginkgo has provided, or is slated to provide, by reference to the applicable category of the Workflow Development Plan(s) as further described in Section 2.2.1(f) and Section 2.2.1(h), Development Purchase funding of greater than [***] percent ([***]%) of the Budget set forth in the applicable Workflow Development Plan(s). For clarity, in no event shall any improvements, modifications or other changes to the [***], whether [***] based, [***] or [***], deemed to be a Headstart Invention or be subject to a Headstart Period.

1.77 “[***]” means, [***] and [***] that [***] and (b) [***].

1.78 “Headstart Period” has the meaning set forth in Section 6.1.1 (BLI Standstill).

1.79 “[***]” means the offering or performance of any [***] services using the Beacon Platform, for commercial sale or otherwise, to [***]; provided that in no event shall [***] include (a) use of the Beacon Platform to [***] if the same does not [***] or (b) the [***] outside of the Beacon Platform.

1.80 “[***]” means the offering or performance of any [***] services using the Beacon Platform, for commercial sale or otherwise, for [***] applications to the extent specifically related to [***]; provided that in no event shall [***] include using the Beacon Platform to [***] if the same does not [***].

1.81 “Incremental Withholding Taxes” has the meaning set forth in Section 7.6 (Taxes).


1.82 “IND” means an application filed with a Regulatory Authority for authorization to commence Clinical Trials, including: (a) an Investigational New Drug Application as defined in the FFDCA or any successor application or procedure filed with the FDA; (b) any equivalent of a United States IND in other countries or regulatory jurisdictions (i.e., clinical trial application); and (c) all supplements, amendments, variations, extensions and renewals thereof that may be filed with respect to any of the foregoing.

1.83 “Independent Development” has the meaning set forth in Section 8.9 (Specific Implementation Restrictions).

1.84 “Initial Workflows” has the meaning set forth in Section 2.2.2 (Committed Workflows).

1.85 “Initiation” or “Initiate” means, with respect to a Clinical Trial, the first dosing of the first human subject or patient in such Clinical Trial.

1.86 “Intellectual Property” means all intellectual and industrial property, and all rights therein and thereto, including registration rights thereto, of any kind throughout the world, including Patent Rights, Software, ideas, data, inventions, discoveries, algorithms, formulas, compositions, configurations, specifications, sequences, product applications, formulations, assays, techniques, sketches, drawings, models, works of authorship, copyrights, recordings, moral rights, mask works, design rights, trademarks, trade names, trade dress, service marks, logos, trade secrets, methods, processes, techniques, developments, know-how, and all other similar rights, whether or not registered or capable of being registered in any jurisdiction.

1.87 “Intended End of Term” means the later of (a) the seventh (7th) anniversary of the Effective Date and (b) the date determined to be the “Intended End of Term” under Section 7.2.2(d) (Effects of Tolling).

1.88 “[***]” has the meaning set forth in Section 14.5.2 (Dispute Resolution).

1.89 “JRC” or “Joint Review Committee” is defined in Section 3.1 (Joint Review Committee).

1.90 “Key Collaboration Workflow” means a Collaboration Workflow designated as a “Key Collaboration Workflow” by the JRC pursuant to Section 3.2.11 (JRC Responsibilities).

1.91 “Key Person” has the meaning set forth in Section 5.4.1(b) (Dedicated FTEs; Key Persons).

1.92 “Lead Time” means, with respect to a Beacon Optofluidic Machine (including related Hardware and Software), Consumable or Service, the “Lead Time” for such Beacon Optofluidic Machine, Consumable or Service as set forth in Schedule 1.92 (Lead Time) or as otherwise mutually agreed upon by the Parties in writing.

1.93 “Licensed Field” means any and all organisms, products, fields and uses other than the Excluded Fields.

1.94 “Licensed Product” means a [***] product within the Licensed Field, including (a) [***] or (b) [***] by such [***] described in clause (a) of this Section 1.94, in each case of ((a)-(b)), initially produced on the Beacon Platform or, if not initially produced on the Beacon Platform, is later [***] through use of the Beacon Platform, with respect to each, in the conduct of activities [***] to produce such a product.

1.95 “List Price” means, at any given time and for any Beacon Optofluidic Machine, Consumable or Service, the price for such Optofluidic Machine, Consumable or Service [***] at such time.

1.96 “Losses” has the meaning set forth in Section 12.1 (Indemnification by BLI).

1.97 “MAA” has the meaning set forth in Section 1.44 (“Drug Approval Application”).

1.98 “[***]” means [***].

1.99 “Maximum Amount” has the meaning set forth in Section 5.3.1 (Issuance).


1.100 “Milestone Event” has the meaning set forth in Section 7.4.2 (Milestone Payments).

1.101 “Milestone Payment” has the meaning set forth in Section 7.4.2 (Milestone Payments).

1.102 “Minimum Cumulative Purchase Commitment” means, with respect to a Contract Year, the amount set forth in the column “Minimum Cumulative Purchase Commitment” in Table 7.2.2 for such Contract Year, as such Minimum Cumulative Purchase Commitment may be amended from time to time under this Agreement.

1.103 “NDA” has the meaning set forth in Section 1.44 (“Drug Approval Application”).

1.104 “OptoSelect Chips” means those BLI microfluidic chips described in Schedule 1.104 (OptoSelect Chips) and any other BLI chip used on the Beacon Optofluidic Machine that is developed to execute Workflows.

1.105 “Party” and “Parties” has the meaning set forth in the Preamble.

1.106 “Patent Rights” means any and all (a) issued patents, (b) pending patent applications, including all provisional applications, substitutions, continuations, continuations-in-part, divisions and renewals, and all patents granted thereon, (c) patents-of-addition, reissues, reexaminations and extensions or restorations by existing or future extension or restoration mechanisms, including patent term adjustments, patent term extensions, supplementary protection certificates or the equivalent thereof, (d) inventor’s certificates, (e) other forms of government-issued rights substantially similar to any of the foregoing and (f) United States and foreign counterparts of any of the foregoing.

1.107 “Performance Service Plan” shall mean the plan set forth in Schedule 1.107 (Performance Service Plan).

1.108 “Permitted Subcontractor(s)” means, individually or collectively, BLI Subcontractor(s) and Ginkgo Subcontractor(s).

1.109 “Person” means any natural person, corporation, unincorporated organization, partnership, association, joint stock company, joint venture, limited liability company, trust or government or any agency or administrative or political subdivision of any government, or any other entity.

1.110 “Phase II Clinical Trial” means a Clinical Trial, the principal purpose of which is to make a preliminary determination as to whether a pharmaceutical product is safe for it intended use and to obtain sufficient information about such product’s efficacy, in a manner that is generally consistent with 21 CFR § 312.21(b), as amended (or its successor regulation), to permit the design of further Clinical Trials. For clarity, A “Phase II Clinical Trial” shall include any clinical trial that would or does satisfy the requirements of 21 C.F.R. § 312.21(b) or any comparable regulation outside the United States whether or not it is designated a Phase II Clinical Trial.

1.111 “Phase III Clinical Trial” means a pivotal Clinical Trial with a defined dose or a set of defined doses of a pharmaceutical product designed to ascertain efficacy and safety of such product, in a manner that is generally consistent with 21 CFR § 312.21(c), as amended (or its successor regulation), for the purpose of enabling the preparation and submission of a Drug Approval Application. A “Phase III Clinical Trial” shall include any clinical trial that would or does satisfy requirements of 21 C.F.R. § 312.21(c) or any comparable regulation outside the United States., whether or not it is designated a Phase III Clinical Trial.

1.112 “PMDA” means Japan’s Pharmaceuticals and Medical Devices Agency and any successor agency(ies) or authority having substantially the same function.

1.113 “Preamble” means the first, unnumbered paragraph of this Agreement.


1.114 “Product Warranty” means, with respect to any Beacon Optofluidic Machine or Consumable, that (a) the representations, warranties and covenants of BLI set forth in the applicable BLI Terms and Conditions (including the product warranties therein) are true with respect to such Beacon Optofluidic Machine or Consumable, (b) with respect to a Beacon Optofluidic Machine, installation and qualification of such Beacon Optofluidic Machines are in accordance with, and meet the standards of, BLI’s then-existing [***], such standards to be at least as stringent as those set forth in [***] and (c) BLI does not have knowledge of any defect that would result in a [***] other than those defects [***] or the [***] or any reason that such Beacon Optofluidic Machine or each Consumable is [***].

1.115 “Production Purchases” means the sum of payments made by Ginkgo to BLI for:

1.115.1 purchases of Beacon Optofluidic Machines together with any associated freight, insurance, customs charges, tariffs or other transportation charges;

1.115.2 purchases of OptoSelect Chips and other Consumables used by the Beacon Platform outside of a Workflow Development Plan together with any associated freight, insurance, customs charges, tariffs or other transportation charges;

1.115.3 FAS or other BLI [***] personnel, as requested by Ginkgo, for general support services (including all payments for a Performance Service Plan), including [***] with respect to activities performed outside of a Workflow Development Plan;

1.115.4 [***];

1.115.5 [***]; and

1.115.6 any other amounts, including for [***] (including for Beacon Optofluidic Machines or any Consumable as applicable, properly charged and invoiced to Ginkgo and paid by Ginkgo under this Agreement in connection with the supply or provision of goods and services by BLI, which are not Development Purchases.

1.116 “Purchase Order” has the meaning set forth in Section 5.3.1 (Issuance).

1.117 “Purpose” shall have the meaning set forth in the first WHEREAS clause of this Agreement.

1.118 “Receiving Party” has the meaning set forth in Section 10.1 (Confidential Information).

1.119 “Regulatory Approval” means, with respect to a country in the Territory, any and all approvals (including Drug Approval Applications that have been approved by a Regulatory Authority), licenses, registrations or authorizations of any Regulatory Authority necessary to commercialize a product in such country[***].

1.120 “Regulatory Authority” means any applicable supra-national, federal, national, regional, state, provincial or local governmental or regulatory authority, agency, department, bureau, commission, council or other entities (e.g., the FDA, EMA and PMDA) regulating or otherwise exercising authority with respect to activities contemplated in this Agreement.

1.121 “Remedial Plan” has the meaning set forth in Section 5.4.3(a) (Remedial Efforts).

1.122 “Responsible Tax Party” has the meaning set forth in Section 7.6 (Taxes).

1.123 “Rolling Forecast” has the meaning set forth in Section 5.1 (Forecasts).

1.124 “Senior Officers” means, (a) with respect to Ginkgo, [***] and (b) with respect to BLI, [***].

1.125 “Services” means services to be provided by or on behalf of BLI to Ginkgo under this Agreement, including with respect to Beacon Platform Software development services, installation services, support services and general training services, but excluding those services provided under a Workflow Development Plan.

1.126 “Service Level Standards” means, with respect to any service at any given time, the standards for the performance of such service most recently agreed upon by the Parties at such time or if no such standards have been previously agreed upon by the Parties, the standards for the performance of such service then in effect for BLI’s other [***] customers.


1.127 “Software” means full applications or programs as well as partial applications, programs or sections of software code, whether source code, object code or other form, in each case incorporated in or otherwise used by the Beacon Optofluidic Machine.

1.128 “Specific Implementation” means any individual component of any Collaboration Workflow that is designated as a “Specific Implementation” by the Parties in a Workflow Development Plan or, if the Parties have made no designation, (a) is [***] for a particular [***] pursuant to a Workflow Development Plan or [***]; or (b) incorporates [***] proprietary to Ginkgo that [***], provided that, to the extent such [***] provided by Ginkgo [***].

1.129 “Specifications” means, (a) with respect to any Beacon Optofluidic Machine (including related Hardware and Software), BLI’s specifications set forth in Schedule 1.10 (Beacon Optofluidic Machine), along with any other specifications mutually agreed upon by the Parties in writing, in each case for such Beacon Optofluidic Machine (including related Hardware and Software) or (b) with respect to any Consumable, the specifications set forth in Schedule 1.36 (Consumables), along with any other specifications mutually agreed upon by the Parties in writing, in each case for such Consumable.

1.130 “Substantially Completed” means, with respect to a Workflow, that such Workflow (a) [***] and (b) is judged by the JRC (or Expert Panel, if applicable) to be substantially complete based upon [***]. For clarity, [***] will be considered by the JRC (or Expert Panel, if applicable) to be [***] of substantial completion.

1.131 “Term” has the meaning set forth in Section 13.1 (Term).

1.132 “Territory” means worldwide except for any and all embargoed and sanctioned countries as identified by the U.S. government.

1.133 “Third Party” means any Person other than Ginkgo and its Affiliates and BLI and its Affiliates.

1.134 “United States” or “U.S.” means the United States of America, including its territories and possessions.

1.135 “Upfront Payment” has the meaning set forth in Section 7.1 (Upfront Payment).

1.136 “VAT” has the meaning set forth in Section 7.6 (Taxes).

1.137 “Workflow” means a defined set of tasks performed using the Beacon Platform in a certain order utilizing specific Consumables to [***], including to load, culture, assay and export cells.

1.138 “Workflow Development Plan(s)” has the meaning set forth in Section 2.2 (Workflow Development Plans).

1.139 “Working Group” has the meaning set forth in Section 3.8 (Working Groups).

 

2.

DEVELOPMENT

2.1 Collaboration in General. The Parties will undertake this Agreement in furtherance of the Purpose and under the guidance of the JRC pursuant to Article 3 (Joint Review Committee). During the Term, each Party will use diligent efforts to implement and perform (itself or through its Permitted Subcontractors) its respective obligations under and in accordance with (a) this Agreement and (b) each Workflow Development Plan in accordance with the timelines set forth in such Workflow Development Plan. Each Party will reasonably cooperate with each other in the performance of their responsibilities under this Agreement and each Workflow Development Plan, including (i) responding to reasonable requests by the other Party submitted in accordance with this Agreement to provide information reasonably necessary for the performance of such requesting Party’s obligations under this Agreement (including any Workflow Development Plan) and (ii) causing its personnel, agents and representatives, while at the other Party’s facility, to abide by the written work rules and facility regulations applicable to such facility as provided in advance by such other Party.


2.2 Workflow Development Plans.

2.2.1 Generally. Subject to the requirements of Section 2.2.2 (Committed Workflows), from time to time during the Term, the Parties shall discuss in good faith entering into work plans setting forth the activities to be undertaken by the Parties to develop a specific Collaboration Workflow in furtherance of the Purpose (each such work plan that is consistent with the terms of this Agreement and approved by the JRC, and as may be amended from time to time in accordance with this Agreement, a “Workflow Development Plan”); provided that the Parties and the JRC will manage the pipeline of Collaboration Workflows such that [***]. If the Parties mutually agree that a new Workflow Development Plan should be undertaken by the Parties in order to further the Purpose, then the Parties shall work together in good faith to prepare an initial draft of the proposed Workflow Development Plan on commercially reasonable terms. Once the proposed Workflow Development Plan has been drafted, such proposed Workflow Development Plan will be submitted to the JRC and the JRC shall review such proposed Workflow Development Plan and either (a) reject the proposed Workflow Development Plan, (b) accept the proposed Workflow Development Plan or (c) amend the proposed Workflow Development Plan prior to approving such plan. If the JRC approves a proposed Workflow Development Plan, such proposed plan shall be deemed a “Workflow Development Plan” under this Agreement and attached to this Agreement as an Exhibit (the first approved Workflow Development Plan to be attached as Exhibit A-1 and subsequently approved Workflow Development Plans to be sequentially numbered as Exhibit A-2, Exhibit A-3, etc.) and, through such attachment, made a part of this Agreement. BLI hereby acknowledges and agrees that in no event will BLI perform any work for Ginkgo in connection with this Agreement other than pursuant to a JRC-approved Workflow Development Plan, other than with respect to BLI providing Ginkgo with any FAS support or other standard service and support pursuant to the terms of this Agreement. At a minimum, each Workflow Development Plan will include the following information:

(a) defined objective and scope of the relevant Collaboration Workflow;

(b) a detailed description of the work to be performed under such Workflow Development Plan and which components of the Collaboration Workflow shall be deemed a Generalized Workflow or a Specific Implementation;

(c) a detailed description of each Party’s roles and responsibilities with respect to the work to be performed under such Workflow Development Plan;

(d) the Budget[***] and the allocation of responsibility between the Parties for the funding of such Budget;

(e) timelines for performing and completing work under such Workflow Development Plan;

(f) identification of deliverables to be created by a Party in connection with the work to be performed, including (i) any operating protocol, Software, Hardware, consumable, Beacon Optofluidic Machine Improvement or Workflow to be created and (ii) categories (e.g., [***]) of Headstart Inventions (and specific Headstart Inventions) that the JRC reasonably believes, during the drafting of the Workflow Development Plan, will result from the work to be performed by the Parties under the Workflow Development Plan;

(g) (i) [***] descriptions of one or more go/no-go criteria, if any, at which time the JRC shall specifically determine whether to continue work under such Workflow Development Plan (each such criteria, a “Go/No-Go Criteria”); (ii) [***] metrics associated with such Collaboration Workflow being Substantially Completed; (iii) additional [***] criteria for the work to be performed and (iv) [***] criteria for any deliverables to be created, including any Workflows (such criteria with respect to Collaboration Workflows to include any additional criteria to be used when determining if a Collaboration Workflow has been Substantially Completed); and

(h) (i) the anticipated Development Purchase amounts associated with any Collaboration Workflow that is the subject of such Workflow Development Plan and (ii) with respect to any Headstart Invention, the anticipated Development Purchase amounts (based on the Budget) to be paid by Ginkgo for [***] a Headstart Invention and each category of Headstart Inventions set forth in the applicable Workflow Development Plan.

2.2.2 Committed Workflows. With respect to the Workflow Development Plans to be proposed to the JRC for approval and conducted by the Parties during the [***] Contract Years, subject to the requirement set forth in Section 7.2.2(b)(i) (Development Purchase Commitments) that not less than [***] ([***]%) of the Development Purchases made in the [***] Contract Years be for the development of Workflows for [***], the Parties agree that such Workflow Development Plans shall focus on yeast and mammalian cells and the [***] ([***]) initial Workflow Development Plans shall be directed toward the categories of Workflows set forth in Schedule 2.2.2 (Initial Workflow Development Plans) hereto (collectively, the “Initial Workflows”). At least [***] ([***]) of the Initial


Workflows shall also be deemed to be Key Collaboration Workflows by the JRC (including as indicated on Schedule 2.2.2 (Initial Workflow Development Plans)). A draft outline of the first [***] ([***]) Workflow Development Plans for Initial Workflows are attached hereto as Exhibit B. Promptly following the Effective Date and in no event later than [***] ([***]) days after the Effective Date, the Parties shall finalize the Workflow Development Plans for such first [***] ([***]) Initial Workflows and begin implementation of such Initial Workflows. Promptly thereafter, the Parties shall develop a Workflow Development Plan for each such Initial Workflow to be submitted to the JRC for rejection or approval pursuant to Section 2.2.1 (Workflow Development Plans – Generally).

2.2.3 Retooling and Development Costs. If, pursuant to Section 3.2.6, the JRC determines that Hardware or Consumables will need to be developed, retooled or modified in order to create Collaboration Workflows, then Ginkgo and BLI shall discuss and negotiate in good faith the sharing of the costs associated therewith, which, once mutually agreed by the Parties, will be proposed to the JRC in the form of an amendment to the applicable Workflow Development Plan pursuant to Section 2.3.2 (Amendments by the Parties); provided thatin all events the Intellectual Property in such developed, retooled or modified Hardware or Consumables will be [***].

2.3 Amendments to Workflow Development Plans.

2.3.1 Amendments Raised by the JRC. The JRC will periodically review (at least once per [***]) each approved Workflow Development Plan and each Party’s performance thereunder to determine whether amendments are needed with respect to such Workflow Development Plan in order to more efficiently develop the relevant Workflow, which review will include [***]. If the JRC determines that an amendment is needed with respect to any approved Workflow Development Plan, then the JRC shall amend and restate the applicable Workflow Development Plan to reflect such amendment with such amended and restated Workflow Development Plan to replace the previously attached Workflow Development Plan and, through such attachment and, after signature by each of the Parties, made a part of this Agreement.

2.3.2 Amendments Raised by the Parties. Notwithstanding anything in Section 2.3.1 (Amendments by the JRC) to the contrary, either Party may, at any time, propose amendments to a Workflow Development Plan for the JRC’s consideration and such Party shall submit the proposed amendment to the JRC for consideration. Following submission of a proposed amendment to the JRC, the JRC shall review such proposed amendment and either (a) reject the proposed amendment to such Workflow Development Plan, (b) accept the proposed amendment to such Workflow Development Plan or (c) further amend the proposed amendment to such Workflow Development Plan for approval by the JRC. If the JRC approves a proposed amendment to a Workflow Development Plan, then the JRC shall amend and restate the applicable Workflow Development Plan to reflect such amendment with such amended and restated Workflow Development Plan to replace the previously attached Workflow Development Plan and, after signature by each of the Parties, be made a part of this Agreement.

2.4 Costs under Workflow Development Plans.

2.4.1 Reporting. Within [***] ([***]) days following the end of each [***], [***], BLI shall provide a detailed report to Ginkgo setting forth the activities conducted by BLI [***] during such [***] and the costs for such activities [***]. If Ginkgo disputes any costs set forth in BLI’s report, it shall so notify BLI in writing within [***] ([***]) days of receiving such report and provide the specific reasons for the dispute and the Parties will attempt to resolve such dispute in good faith for [***] ([***]) days following such notice. In the event the Parties are unable to resolve such dispute in such [***] ([***]) day period, then either Party may initiate dispute resolution in accordance with Section 14.5.2 (Dispute Resolution) and [***]; provided that, during the pendency of any such dispute, if [***], [***] and, if any such disputed costs paid by Ginkgo are finally determined, pursuant to Section 14.5.2 (Dispute Resolution) or by mutual agreement of the Parties, to not have been owed to BLI at the time of payment, BLI will provide a credit against future purchases made by Ginkgo in the amount of the overpayment; provided further that, in the event that there are not sufficient future purchases made by Ginkgo during the Term to fully so credit, BLI will promptly refund any remaining amount of the overpayment to Ginkgo.

2.4.2 Payment. [***], after generating and delivering a report as set forth in Section 2.4.1 (Reporting) or at such other time as may be specified [***], BLI shall issue an invoice to Ginkgo within [***] ([***]) days of Ginkgo receiving such report or, if any costs under BLI’s report are disputed pursuant to Section 2.4.1 (Reporting), within [***] ([***]) days of resolution of such dispute, such invoice to be for the amount of costs owed by Ginkgo, if any,


to effect the appropriate cost allocation [***] in such [***]. Notwithstanding anything to the contrary in this Agreement, in no event shall BLI provide an invoice (a) requesting payment, nor shall Ginkgo be responsible, in any given [***], for any costs incurred by BLI for any activity in excess of [***] percent ([***]%) of the costs of such activity as set forth in the applicable Workflow Development Plan’s Budget for such [***] or (b) for any Development work performed outside the Workflow Development Plan. Ginkgo shall pay all undisputed amounts under an invoice received from BLI under this Section 2.4.2 (Payment) within [***] ([***]) days after receipt of such BLI invoice, and any overdue payments on undisputed amounts shall be subject to payment of interest pursuant to Section 7.10 (Late Payment). All amounts received by BLI in connection with the performance of each Workflow Development Plan shall be non-refundable except as otherwise set forth in Section 7.8 (Audits) and Section 6.1 (Headstart Period).

2.5 Termination of Workflow Development Plans. A Workflow Development Plan, once approved by the JRC, may be terminated by the JRC, including, by way of example, if: (a) both Parties provide notice to the JRC requesting such termination or (b) the JRC finds that (i) termination is [***] or (ii) that [***]. In the event of termination of a Workflow Development Plan under this Section 2.5 (Termination of Workflow Development Plans), BLI will cease working on the Workflow Development Plan and [***] cancel orders or stop the work of a Permitted Subcontractor or any other supplier. Notwithstanding termination of a Workflow Development Plan, Ginkgo shall pay BLI for Ginkgo’s share, if any, of the reasonable costs associated with [***] incurred in accordance with this Agreement prior to the decision to terminate such Workflow Development Plan to the extent that BLI could not, after using [***], (A) stop or cancel such or (B) relocate or reassign to any work to be performed for another Person.

2.6 Limitations. Notwithstanding anything to the contrary in this Agreement, neither Party will be required to conduct any activity to develop a Workflow other than those activities allocated to it in a Workflow Development Plan and no proposed Workflow Development Plan (or, subject to Section 2.3 (Amendments to Workflow Development Plans), any amendment thereto) shall become binding on the Parties until approved by the JRC.

2.7 Subcontracting. Each Party may only subcontract its activities under this Agreement (including under a Workflow Development Plan) with the other Party’s consent; provided that such consent shall not be necessary if (a) such subcontracting of activities is [***] of such subcontracting Party (e.g. [***]) or (b) [***] (e.g. [***]) in order for a Party to [***]. In any event, prior to any subcontracting by a Party to a Permitted Subcontractor, the subcontracting Party shall obtain a written undertaking from the Permitted Subcontractor that it will be subject to the applicable terms and conditions of this Agreement, including the confidentiality provisions of Article 10 (Confidentiality). Subcontracting will not relieve a Party of its obligations under this Agreement and each Party will remain directly liable for the acts and omissions of its Permitted Subcontractors. Any breach of this Agreement by a Permitted Subcontractor will be deemed to be a breach by the Party that subcontracted its activities to such breaching Permitted Subcontractor.

2.8 Records. Each Party shall, and shall cause its Affiliates and Permitted Subcontractors to, maintain records in sufficient detail for the other Party to confirm compliance with this Agreement and in good scientific manner appropriate for patent and regulatory purposes under Applicable Law, which shall [***] properly reflect all activities conducted and results achieved by such Party under this Agreement. Such records shall be retained by such Party, its Affiliates or Permitted Subcontractors until [***] ([***]) years after the end of the period to which such books and records pertain or for such longer period as may be required by Applicable Law. Each Party shall have the right, during normal business hours and upon reasonable notice, to inspect all such records of the other Party, its Affiliates or Permitted Subcontractors. The reviewing Party shall be responsible for all costs of the inspection but shall have no right to copy or retain records. All disclosed records and the information disclosed therein shall be treated as Confidential Information in accordance with Article 10 (Confidentiality).

 

3.

JOINT REVIEW COMMITTEE

3.1 Formation; Chairperson. Within [***] ([***]) days of the Effective Date (or such other date as may be mutually agreed to by the Parties), the Parties will establish a Joint Review Committee (“JRC”) comprised of two (2) representatives of Ginkgo and two (2) representatives of BLI, each of whom must have the requisite experience and seniority to enable such Person to make decisions on behalf of the Party it represents with respect to the issues falling within the jurisdiction of the JRC. Each Party may replace its representatives to the JRC at any time upon


prior written notice to the other Party; provided thatsuch replacement representatives must have the experience and seniority required under this Section 3.1 (Formation; Chairperson). [***] will select from its representatives the chairperson for the JRC, whose role shall be to call the periodic meetings, and publish meeting minutes. From time to time during the Term, [***] may change the representative who will serve as chairperson upon written notice to [***].

3.2 JRC Responsibilities. The JRC will have that specific decision-making authority expressly enumerated in this Agreement and will provide oversight and a forum for discussing all matters arising in connection with this Agreement, including with respect to planning, reviewing and coordinating the various activities to be undertaken by the Parties pursuant to a Workflow Development Plan. In particular, the JRC will be responsible for:

3.2.1 rejecting or approving proposed Workflow Development Plans submitted to it by a Party or as amended by the JRC pursuant to Section 2.2.1 (Workflow Development Plans – Generally);

3.2.2 pursuant to Section 2.2.1 (Workflow Development Plans – Generally), managing the pipeline of anticipated Collaboration Workflows so that [***] including in the event a Workflow Development Plan is terminated early by the JRC;

3.2.3 pursuant to Section 2.3.1 (Amendments by the JRC), periodically reviewing (at least once per [***]) each Workflow Development Plan and each Party’s performance thereunder in order to determine whether amendments are needed with respect to such Workflow Development Plan and, if amendments are needed, revising the Workflow Development Plan as necessary;

3.2.4 rejecting, prioritizing, approving or amending proposed amendments to Workflow Development Plans submitted to it by a Party pursuant to Section 2.3.2 (Amendments by the Parties);

3.2.5 deciding whether [***] are at issue and whether to terminate a Workflow Development Plan as further described in Section 2.5 (Termination of Workflow Development Plans);

3.2.6 in connection with each Workflow Development Plan, determining whether Hardware or Consumables will need to be developed or retooled in order to create Collaboration Workflows such that the Parties should discuss sharing of the costs associated therewith pursuant to Section 2.2.3 (Retooling and Development Costs);

3.2.7 in connection with each Workflow Development Plan, designating (a) which components of Workflows are BLI Proprietary Workflows, which are Generalized Workflows, and which are Specific Implementations and (b) (i) which categories (e.g., [***]) of Headstart Inventions (and specific Headstart Inventions within such categories) that the JRC reasonably believes, during the drafting of the Workflow Development Plan, will result from the work to be performed by the Parties under the Workflow Development Plan and (ii) a reasonable estimation of the Development Purchase funding to be paid by Ginkgo with respect to the development of such categories of Headstart Inventions, which estimation will be set forth in the Budget for the applicable Workflow Development Plan; provided that, in no event will failure by the JRC to list (A) specific parts or components of Generalized Workflows or Collaboration Workflows or (B) Consumables, including OptoSelect Chips, with respect to (A)-(B), as Headstart Inventions in a Workflow Development Plan be given any significance in determining whether such invention constitutes a Headstart Invention;

3.2.8 determining whether or not a Collaboration Workflow has been Substantially Completed based on the metrics for such Collaboration Workflow as set forth in the applicable Workflow Development Plan;

3.2.9 pursuant to Section 7.2.1 (Purchase Commitments – Generally), determining whether additional development work is necessary in order to enable Ginkgo to deploy the Beacon Platform as specified in a Workflow Development Plan and if so, then determining how to adjust the Development Purchase Commitments and Production Purchase Targets for the then-current and future Contract Years (with the understanding the JRC has no power to modify the Maximum Amount or the Term);

3.2.10 upon determination by the JRC or the Expert Panel that a Collaboration Workflow has not been Substantially Completed, discussing if and how to address the Production Purchase amounts that would have been relevant to such Collaboration Workflow;

3.2.11 designating at least [***] ([***]) Collaboration Workflows as Key Collaboration Workflows within [***] ([***]) years of the Effective Date and at least [***] ([***]) Collaboration Workflows as Key Collaboration Workflows within [***] ([***]) years of the Effective Date; and


3.2.12 performing such other functions as expressly set forth in this Agreement as being under the purview of the JRC or as the Parties may mutually agree in writing, except where in conflict with any provision of this Agreement.

3.3 Meetings and Minutes. Unless otherwise mutually agreed to by the Parties, the JRC will meet each [***] by audio or video teleconference and, at a minimum, [***] each Contract Year in person, with the location for such meetings alternating between Ginkgo and BLI facilities (or such other locations as are mutually agreed by the Parties). Meetings of the JRC will be effective only if a quorum of the JRC (as defined in Section 3.4 (Procedural Rules)) is present or participating by videoconferencing. The chairperson of the JRC will be responsible for calling meetings on no less than [***] ([***]) Business Days’ notice, unless exigent circumstances require shorter notice. Each Party will make all proposals for agenda items and will provide all appropriate information with respect to such proposed items at least [***] ([***]) Business Days in advance of the applicable meeting; provided that under exigent circumstances requiring input by the JRC, a Party may provide its agenda items to the other Party within a shorter period of time in advance of the meeting, or may propose that there not be a specific agenda for a particular meeting, so long as the other Party consents to such later addition of such agenda items or the absence of a specific agenda for such meeting, such consent not to be unreasonably withheld, conditioned or delayed. The JRC will designate an individual to prepare and circulate for review and approval of the Parties minutes of each meeting [***] ([***]) Business Days after the meeting. The Parties will agree on the minutes of each meeting promptly, but in no event later than the next meeting of the JRC.

3.4 Procedural Rules. The JRC will have the right to adopt such standing rules as will be necessary for its work, to the extent that such rules are not inconsistent with this Agreement. A quorum of the JRC will exist whenever there is present at a meeting at least one (1) representative appointed by each Party. The JRC will take action by consensus of the representatives present at a meeting at which a quorum exists, with each Party having a single vote irrespective of the number of representatives of such Party in attendance, or by a written resolution signed by at least one representative appointed by each Party. From time to time during the Term, a Party may invite non-voting employees (including its Alliance Manager), consultants and other advisors, experts and specialists to attend meetings of the JRC; provided that such attendees (a) will not vote in the decision-making process of the JRC, (b) are bound by obligations of confidentiality and non-use that are at least as protective of the Parties as set forth in this Agreement and that restrict use and disclosure of information learned while attending JRC meetings and (c) can be required to depart the meeting upon the request of the other (non-inviting) Party, in its sole discretion, due to confidentiality or business reasons.

3.5 Decision-Making. If the JRC cannot, or does not, reach consensus on an issue at any JRC meeting or within a period of [***] ([***]) Business Days thereafter (or such other period of time as mutually agreed by the Parties or by consensus of the JRC), then upon the request of either Party, the disagreement will first be referred to the Senior Officers of the Parties, who will confer in good faith on the resolution of the issue. Any final decision mutually agreed to by the Senior Officers will be conclusive and binding on the Parties. If the Senior Officers are not able to agree on the resolution of any such issue within [***] ([***]) days after such issue was first referred to them, then, if such decision is [***], [***] and, for all other decisions, shall be resolved consistent with the provisions of this Section 3.5 (Decision-Making):

3.5.1 subject to Section 3.5.3, if the matter concerns (a) [***], including any [***] or (b) the [***], the final decision shall be made by the Senior Officer of Ginkgo; provided that, in no event may Ginkgo exercise its final-decision making authority, including in connection with amending an approved Workflow Development Plan, in any manner that would (i) [***] BLI’s obligations under such Workflow Development Plan, (ii) obligate or require BLI to increase its spending under such Workflow Development Plan by more than [***] percent ([***]%) of BLI’s spending obligation under such Workflow Development Plan or (iii) modify the Minimum Cumulative Purchase Commitment or the Full Purchase Target;

3.5.2 subject to Section 3.5.3, if the matter concerns [***], including any [***] (provided that any [***] shall not affect decision-making authority under this Section 3.5 (Decision-Making)), the final decision shall be made by the Senior Officer of BLI; provided that, in no event may BLI exercise its final-decision making authority, including in connection with amending an approved Workflow Development Plan, in any manner that would (a) [***] Ginkgo’s obligations under such Workflow Development Plan [***] or (b) obligate or require Ginkgo to increase its spending under such Workflow Development Plan by more than [***] percent ([***]%) of Ginkgo’s spending obligation under such Workflow Development Plan, or (c) modify the Minimum Cumulative Purchase Commitment or the Full Purchase Target;


3.5.3 if the matter is determining (a) whether [***] or (b) whether [***] (including with respect to [***]), with respect to each, at either Party’s request, the dispute shall be resolved in an accelerated manner by a panel of three (3) independent Third Parties, each having expertise with respect to the subject matter of the applicable Workflow Development Plan (such panel, an “Expert Panel”), subject to the following process: (i) each Party will engage one independent Third Party expert for the Expert Panel [***] after [***] to serve on the Expert Panel, (ii) within [***] ([***]) days of any request to refer the matter to an Expert Panel or, if earlier, as promptly as reasonably practicable after each Party’s engagement of its Third Party Expert, the Parties’ two (2) Third Party experts shall mutually agree on a third (3rd) independent Third Party expert who will serve on such panel and as chairperson of the panel, (iii) the Expert Panel will reach a decision as to such matter (including whether [***]) as promptly as practicable, which may include having the JRC or Parties submit information in support of the Expert Panel making a determination, but within no greater than [***] ([***]) days of the third (3rd) expert being chosen and (iv) [***] the Parties will be bound by the determination of the Expert Panel. Each Party shall bear its own costs of participating in the proceeding, including the costs incurred by its Third Party expert, and shall equally share the costs incurred by the third (3rd) Third Party expert selected jointly by the Parties’ two (2) Third Party Experts, except that, with respect to [***]. The Expert Panel shall be and is empowered to request additional information or materials from one or both Parties as reasonably necessary for the Expert Panel to investigate and render a decision, [***]. The Parties shall [***] with all such requests and decisions.

3.6 Limitations on Authority. Each Party will retain the rights, powers and discretion granted to it under this Agreement and, unless expressly provided in this Agreement, no rights, powers or discretion will be delegated to or vested in the JRC. The JRC will not have the power to accept, amend, modify, waive or determine compliance with this Agreement; provided that, for clarity, the JRC may reject, accept or amend proposed Workflow Development Plans pursuant to Section 2.2.1 (Workflow Development Plans – Generally) or review, amend or restate an approved Workflow Development Plan pursuant to Section 2.3 (Amendments to Workflow Development Plans) or terminate an approved Workflow Development Plan but, for clarity, in no event may the JRC amend or restate any Workflow Development Plan so it includes work in any Excluded Field. Notwithstanding anything to the contrary, no decision by the JRC or by a Party within the JRC will: (a) require the other Party to breach any obligation or agreement that such other Party may have with or to a Third Party [***] or (b) amend, modify, or waive a Party’s compliance with, this Agreement (by way of example, a decision to [***]), any of which shall require mutual written agreement of the Parties.

3.7 Alliance Managers. Each Party will appoint one employee of such Party who will oversee contact between the Parties for all matters between meetings of each JRC and will have such other responsibilities as the Parties may agree in writing after the Effective Date (each, an “Alliance Manager”). Each Party may replace its Alliance Manager at any time by notice in writing to the other Party. The Alliance Managers will work together to manage and facilitate the communication between the Parties under this Agreement, including the resolution (in accordance with the terms of this Agreement) of issues between the Parties that arise in connection with this Agreement.

3.8 Working Groups. From time to time, the JRC may establish and delegate duties to sub-committees or directed teams (each, a “Working Group”) on an “as-needed” basis to oversee particular projects or activities. Each such Working Group will be constituted and will operate as the JRC determines; provided that each Working Group will have equal representation from each Party, unless otherwise mutually agreed. Working Groups may be established on an ad hoc basis for purposes of a specific project or on such other basis as the JRC may determine. Each Working Group and its activities will be subject to the oversight, review and approval of, and will report to, the JRC. In no event will the authority of the Working Group exceed that specified by the JRC for such Working Group. All decisions of a Working Group will be by consensus. Any disagreement between the designees of Ginkgo and BLI with respect to a Working Group will be referred to the JRC for resolution.

3.9 Expenses. Each Party will be responsible for all travel and related costs and expenses for its members and other representatives to attend meetings of, and otherwise participate in, the JRC or other Working Group.

4. APPLICABILITY OF BLI TERMS AND CONDITIONS.

 

With respect to Beacon Optofluidic Machines (including related Hardware and Software), Consumables and Services for which Ginkgo has placed a Purchase Order pursuant to this Agreement, the Parties agree to the BLI Terms and Conditions that apply with respect to Beacon Optofluidic Machines (including related Hardware and


Software), Consumables and Services, unless, notwithstanding anything to the contrary set forth in the BLI Terms and Conditions (including any language regarding the treatment of additional or different terms set forth therein), a term in such BLI Terms and Conditions is inconsistent with a term in this Agreement, in which case this Agreement shall control, including as follows:

4.1.1 this Agreement, and not the BLI Terms and Conditions, shall solely set forth the fields in which Ginkgo has and does not have the ability to use the Beacon Optofluidic Machines (including related Hardware and Software), Consumables and Services for certain purposes (e.g., the Excluded Field);

4.1.2 BLI’s liability with respect to any Failure to Supply, penalties for late delivery and obligations with respect to short supply shall be as set forth in this Agreement, including Section 5.4.3 (Failure to Supply) of this Agreement;

4.1.3 any right of BLI to use Ginkgo’s data, including Collaboration Data, is solely set forth in this Agreement, including Section 8.5 (Use of Collaboration Data) and the BLI Terms and Conditions shall give BLI no right to use any data of Ginkgo or its Affiliates, including Collaboration Data;

4.1.4 each Party’s indemnification obligations and matters relating to the extent of its liability (e.g. consequential damages waiver) shall solely be determined under the terms of this Agreement (including Section 11.6 (No Consequential Damages) and Section 12 (Indemnification; Insurance));

4.1.5 any disputes between the Parties related to Beacon Optofluidic Machines (including related Hardware and Software), Consumables, Services or the activities under this Agreement (including the performance of the Workflow Development Plans) shall be governed by Section 14.5 (Governing Law; Dispute Resolution; Equitable Remedies) of this Agreement, including disputes as to whether (a) [***], (b) [***] or (c) (i) [***], (ii) [***] or (iii) [***], and, with respect to each of (a), (b) and (c), which Ginkgo shall be entitled to dispute in writing in good faith irrespective of whether BLI is given sole or final decision-making authority with respect thereto under the applicable BLI Terms and Conditions;

4.1.6 all payment provisions between the Parties related to the subject matter hereunder shall solely be under this Agreement and not any of the BLI Terms and Conditions;

4.1.7 each of the BLI Terms and Conditions shall be freely assignable solely to the applicable assignee in connection with any assignment permitted under the terms of Section 14.4 (Assignment) of this Agreement;

4.1.8 no activities by BLI under this Agreement may be terminated or suspended under any of the BLI Terms and Conditions if such termination or suspension is not permitted under the terms of this Agreement;

4.1.9 Ginkgo may elect, at any time in its sole discretion, to terminate the Software License Agreement that comprises part of the BLI Terms and Conditions and, upon such termination, Ginkgo’s right to use such underlying Software shall terminate; and

4.1.10 the BLI Terms and Conditions that apply with respect to any Beacon Optofluidic Machines (including related Hardware and Software), Consumables or Services for which Ginkgo has placed a Purchase Order pursuant to this Agreement shall not terminate absent mutual written consent of the Parties, unless this Agreement has been terminated early (e.g. prior to its Expiration) in which case such BLI Terms and Conditions shall survive only for so long and to the extent as Ginkgo continues to have the right to use Beacon Optofluidic Machines or Consumables or receive Services pursuant to Section 13.3 (Effects of Termination).

5. FORECASTS; ORDERS; SERVICE STANDARDS AND RELATED OBLIGATIONS

 

5.1 Forecasts of Production Purchases. Within [***] ([***]) days following the Effective Date and on or before the first Business Day of each [***] thereafter, Ginkgo shall furnish BLI with a rolling forecast of the quantities of Beacon Optofluidic Machines (including related Hardware and Software) and Consumables (on a Consumable-by-Consumable basis) that Ginkgo expects to require from BLI under this Agreement during the ensuing [***] ([***]) month period on a [***] basis (each such forecast, a “Rolling Forecast”). Subject to the limitations set forth in this Agreement, Ginkgo may, in its sole discretion, update its estimated requirements of Beacon Optofluidic Machines (including related Hardware and Software) and Consumables in the next Rolling Forecast delivered; provided that (a) the [***] of each Rolling Forecast shall be binding upon the Parties with respect to Beacon Optofluidic Machines and with respect to Consumables, Ginkgo’s Purchase Orders for Consumables during the [***] may fluctuate by +/- [***] percent ([***]%) of the amount of Consumables set forth in the Rolling Forecast for the [***]; (b) the [***] of


each Rolling Forecast shall include binding amounts forecasted for Beacon Optofluidic Machines and Consumables within (i) [***] percent ([***]%) of the number of units of Beacon Optofluidic Machines or (ii) [***] percent ([***]%) of the number of units of any Consumable; and (c) the [***] of each Rolling Forecast shall be non-binding, good faith estimates of Ginkgo’s demand for Beacon Optofluidic Machines and Consumables. The foregoing, along with any other relevant provisions in this Agreement, shall be the sole forecasting mechanics for Ginkgo’s requirements of Beacon Optofluidic Machines (including related Hardware and Software) or Consumables expressly notwithstanding anything to the contrary in the BLI Terms and Conditions with respect to forecasting.

5.2 Pricing. Notwithstanding anything to the contrary in the BLI Terms and Conditions with respect to pricing for Beacon Optofluidic Machines (including related Hardware and Software), Consumables or Services, the following shall apply:

5.2.1 General. The pricing as of the Effective Date for Beacon Optofluidic Machines, Consumables and certain services (including Services) are set forth in Schedule 5.2.1 (Pricing Schedule). Such pricing shall be adjusted pursuant to this Section 5.2 (Pricing). For any Consumable or service not listed in Schedule 5.2.1 (Pricing Schedule), BLI shall provide the price for such to Ginkgo upon Ginkgo’s request during the Term, such price to be consistent with this Section 5.2 (Pricing). BLI represents and warrants that the pricing set forth in Schedule 5.2.1 (Pricing Schedule) are BLI’s List Prices for the described Beacon Optofluidic Machines, Consumables and services (including Services) as of the Effective Date. BLI shall discount List Prices for Ginkgo by [***] percent ([***]%) or such higher amount as agreed by the Parties, and subject to pricing adjustments as set forth in Section 5.2.2 (Adjustments). For clarity, with respect to Consumables to be purchased under a Workflow Development Plan, Ginkgo will be responsible for costs for such Consumables as set forth in the Budget for such Workflow Development Plan.

5.2.2 Adjustments. Notwithstanding anything else to the contrary in this Agreement, and [***], with respect to the prices charged by BLI to Ginkgo under Section 5.3.2 (Purchase Orders – Acceptance and Rejection):

(a) With respect to any [***], (i) there will be no increases from the per unit pricing set forth in Schedule 5.2.1 (Pricing Schedule) for at least the first [***] and (ii) the per unit pricing charged by BLI to Ginkgo at any time shall be no greater than the lowest of the (A) lowest price per unit charged by BLI or its Affiliates to any similarly situated Third Party customer (i.e. taking into account [***]) for such unit at any time in the [***] ([***]) months prior to the delivery of the applicable Purchase Order by Ginkgo or (B) the then-current List Price; provided, however, that in no event shall BLI be required to charge a price less than the cost of goods sold for such unit, as determined in accordance with United States generally accepted accounting principles, consistently applied.

(b) With respect to any [***], (i) there will be no increases from the per unit pricing set forth in Schedule 5.2.1 (Pricing Schedule) for at least the first [***], (ii) subject to subclause (iii), the per unit pricing charged by BLI to Ginkgo shall be no greater than [***] percent ([***]%) of the lowest List Price for such unit at any time between the delivery of the applicable Purchase Order by Ginkgo and delivery of such OptoSelect Chip or Consumable and (iii) the per unit pricing charged by BLI to Ginkgo for such unit that is [***] shall be no greater than [***] percent ([***]%) of the lowest List Price for such unit.

(c) With respect to any [***], there will be no increases from the per unit [***] set forth in Schedule 5.2.1 (Pricing Schedule) for at least the [***] and after such [***], BLI may adjust pricing for [***] for a Contract Year within the first [***] ([***]) days of such Contract Year by written notice to Ginkgo; provided that such adjustment [***] for such [***] and in no event will the [***] charged to Ginkgo for any [***] under this Agreement be higher than the then-current List Price for the applicable [***].

(d) With respect to any [***], there will be no increases from the rates set forth in Schedule 5.2.1 (Pricing Schedule), except that, on an annual basis, upon written notice to Ginkgo, BLI may increase the rates set forth in Schedule 5.2.1 (Pricing Schedule) by a percentage [***], not to exceed [***] percent ([***]%) per calendar year.

(e) With respect to any other Beacon Optofluidic Machines, Consumables and services (including Services) not listed on Schedule 5.2.1 (Pricing Schedule), the per unit pricing charged by BLI to Ginkgo shall be no greater than the then-current List Price, [***].


5.3 Purchase Orders; Delivery and Payment.

5.3.1 Issuance. Ginkgo shall submit orders for Beacon Optofluidic Machines (including related Hardware and Software), Consumables (on a Consumable-by-Consumable basis) and Services pursuant to written purchase orders (each, a “Purchase Order”) issued to BLI in a form consistent with this Agreement. Purchase Orders shall be provided by Ginkgo, shall specify (a) the quantity of Beacon Optofluidic Machines (including related Hardware and Software), Consumables (on a Consumable-by-Consumable basis) or Services ordered and (b) the requested delivery date or service date and location. The requested delivery dates or service dates set forth in a Purchase Order shall be no earlier than the Lead Time for such delivery or service. BLI shall not be obligated to supply in any [***] (i) a quantity of the [***] in excess of the amount designated in such [***] in the binding portion of the Rolling Forecast or (ii) a quantity of [***] that is greater than [***] percent ([***]%) of the amount designated for such item or service in such [***] in the binding portion of the Rolling Forecast (such amount, the “Maximum Amount”); provided that notwithstanding the provisions set forth in this Section 5.3.1 (Issuance) or Section 5.3.2 (Acceptance and Rejection) to the contrary, BLI shall use [***] to accept and fulfill Purchase Orders for quantities of [***] in excess of the Maximum Amount in any [***]. The foregoing shall apply and, along with any applicable provisions of the Agreement, be the exclusive terms and conditions for Ginkgo’s Purchase Orders under this Agreement, notwithstanding anything to the contrary in the BLI Terms and Conditions with respect to Ginkgo’s orders for or ability to order (and have orders fulfilled for) [***].

5.3.2 Acceptance and Rejection. BLI shall, by written notice to Ginkgo, accept or, subject to the terms of this Agreement, reject, each Purchase Order (a) with respect to orders for [***], within [***] ([***]) days of receipt and (b) with respect to orders for [***], within [***] ([***]) days of receipt, with respect to each, by written notice to Ginkgo. Any failure of BLI to accept or reject a Purchase Order within such [***] day period shall be deemed an acceptance by BLI of such Purchase Order. Any express acceptance of a Purchase Order by BLI shall confirm the quantity of Beacon Optofluidic Machines (including related Hardware and Software), Consumables (on a Consumable-by-Consumable basis) and Services requested to be supplied or performed, the prices, pursuant to Section 5.2 (Pricing), associated with such Beacon Optofluidic Machines (including related Hardware and Software), Consumables (on a Consumable-by-Consumable basis) and Services and that delivery or performance of such Optofluidic Machines (including related Hardware and Software), Consumables and Services shall occur [***]; provided that (i) BLI shall not have the right to reject, and shall be deemed to have accepted, any Purchase Order meeting the requirements of this Section 5.3 (Purchase Orders; Delivery and Payment) and (ii) if any Purchase Order contains quantities in excess of the Maximum Amount for such month and otherwise meets the requirements of this Section 5.3 (Purchase Orders; Delivery and Payment), then such Purchase Order shall be deemed accepted except with respect to such excess quantities and, subject to Section 5.3.1 (Issuance), BLI shall confirm to Ginkgo within [***] ([***]) days of receipt of such Purchase Order if BLI can supply such excess and if so, such Purchase Order shall be deemed accepted with respect to such excess quantities as well. The foregoing shall apply notwithstanding anything to the contrary in the BLI Terms and Conditions with respect to BLI’s ability to accept or reject Ginkgo’s orders for Beacon Optofluidic Machines (including related Hardware and Software), Consumables or Services.

5.3.3 Delivery and Payment. Notwithstanding anything to the contrary in the BLI Terms and Conditions with respect to the delivery of Beacon Optofluidic Machines (including related Hardware and Software) or Consumables, the performance of Services and rights and responsibilities arising in connection with such delivery or performance, the following shall apply:

(a) Machines and Consumables. With respect to Beacon Optofluidic Machines and Consumables for which Ginkgo has placed a Purchase Order under this Agreement:

(i) such items shall be shipped by BLI (A) [***] or (B) [***], with respect to (A)-(B), to the delivery point set forth on the Purchase Order; [***];

(ii) a BLI employee will install the Beacon Optofluidic Machines at such delivery point and, within [***] ([***]) Business Days of installation, will deliver to Ginkgo a completed BLI field service report confirming installation and qualification of the relevant Beacon Optofluidic Machines in accordance with Schedule 5.3.3 (Qualification Standards);

(iii) title and risk of loss to (A) [***] or (B) [***];

(iv) BLI shall invoice Ginkgo for any Beacon Optofluidic Machine or Consumable at a price calculated in accordance with Section 5.2 (Pricing) [***];


(v) Ginkgo shall be deemed to have accepted delivery of any Beacon Optofluidic Platform upon [***] unless Ginkgo delivers, within [***] ([***]) Business Days a written statement detailing the reasons why the item delivered is not a Conforming Product and, if BLI disputes Ginkgo’s allegation of non-conformance, the matter shall be resolved pursuant to Section 14.5.2 (Dispute Resolution); and

(vi) Ginkgo shall pay BLI for all delivered quantities of Conforming Product within [***] ([***]) days from Ginkgo’s [***] under this Agreement[***].

(b) Services. With respect to Services for which Ginkgo has placed a Purchase Order under this Agreement:

(i) such Services shall be provided at the time and location set forth on an accepted Purchase Order, unless otherwise mutually agreed by the Parties in writing;

(ii) BLI shall invoice Ginkgo for any Services at a price calculated in accordance with Section 5.2 (Pricing) [***] except [***], which shall be paid [***] and the Terms and Conditions except to the extent such conflicts with the terms of this Agreement, in which case this Agreement shall supersede with respect to the conflicting terms; and

(iii) Ginkgo shall pay BLI for all performed Services that meet the applicable Service Standards within [***] ([***]) days from receipt of invoice[***].

(c) Payments. All Production Purchase amounts paid by Ginkgo to BLI for Beacon Optofluidic Machines, for Consumables and for Services are non-creditable and non-refundable except as set forth in expressly set forth in this Agreement (including Section 7.8 (Audits)) and the BLI Terms and Conditions.

5.4 Capacity; Failure to Supply.

5.4.1 Personnel. Notwithstanding anything to the contrary in the BLI Terms and Conditions for Services:

(a) Generally. With respect to any [***] in the Term, to [***] continuity of supply with respect to services (including Services) rendered under this Agreement (including Workflow Development Plans) to Ginkgo, BLI shall [***] employs a sufficient number of personnel so that it [***] satisfy, with respect to the then-current [***], Ginkgo’s requirements for Services during such [***], as specified in the then-applicable Rolling Forecast. BLI shall (a) use qualified personnel in connection with performing Services for Ginkgo and perform such Services in a competent and workmanlike manner consistent with prevailing industry standards and in material conformance with Applicable Laws, the terms of this Agreement (which shall include the terms of any Workflow Development Plans) and (b) obtain and maintain all material licenses, permits or approvals required by Applicable Laws, the terms of this Agreement (which shall include the terms of any approved Workflow Development Plans) in connection with performing Services for Ginkgo.

(b) Dedicated FTEs; Key Persons. In addition to its obligations set forth in Section 5.4.1(a) (Personnel – Generally), during the period beginning [***] ([***]) Business Days after the Effective Date and ending on the [***] ([***]) anniversary of the Effective Date, BLI shall [***] provide Ginkgo with [***] ([***]) FTEs to work on-site at Ginkgo to aid in [***]. Following the [***] ([***]) anniversary of the Effective Date, unless otherwise agreed by the Parties, BLI shall provide Ginkgo with [***] to work on-site at Ginkgo to aid in [***]. [***] shall designate up to [***] ([***]) BLI employees or personnel as key persons (individually, a “Key Person” and collectively, “Key Persons”). [***] to the percentage of any such Key Person’s time that shall be dedicated to activities performed under this Agreement. No Key Person shall be reassigned, nor shall the time dedicated to activities under this Agreement be reduced, without [***], but if such Key Person (i) is no longer employed by BLI, (ii) [***] or (iii) [***], with respect to (i)-(iii), then the Parties shall work together to mutually identify in writing a new employee as a replacement for such Key Person and, upon such mutual identification, such employee shall be deemed a Key Person for all purposes of this Agreement. For clarity, [***] shall be [***] if [***], that [***] and [***] or [***]. In the event of a termination of employment at BLI of any Key Person, BLI shall notify Ginkgo of such circumstance as promptly as practicable. Ginkgo shall have the right, but not the obligation, at any time, to request that BLI replace such Key Person with another BLI employee reasonably acceptable to Ginkgo. In such event, BLI shall replace such person [***]. Ginkgo will provide each BLI FTE that is on-site at Ginkgo with (I) access to Ginkgo’s facility to the extent required to perform each FTE’s obligations as set forth in each approved Workflow Development Plan and (II) [***].


(c) Conduct on Site. BLI acknowledges and agrees that BLI FTEs (including Key Persons) are not employees or agents of Ginkgo, that Ginkgo has no responsibility to provide worker’s compensation or other liability coverage, insurance, benefits or, other than as expressly provided in this Agreement, compensation for BLI FTEs. BLI further acknowledges and agrees that BLI FTEs are acting solely as representatives of BLI during any work performed at Ginkgo’s facilities. BLI shall (a) comply, and shall cause each BLI FTE to comply, with all Applicable Laws; (b) abide, and shall cause each on-site BLI FTE to abide, by [***] guidelines and procedures related to Ginkgo’s facilities and use of its foundries that are [***] (e.g., [***]) made available to BLI or BLI’s FTEs; and (c) cause on-site BLI FTEs to execute a confidentiality agreement with Ginkgo in the form attached hereto as Exhibit C. Each BLI FTE will be required to complete training offered by Ginkgo regarding the guidelines and procedures referred to in Section 5.4.1(b) (Dedicated FTEs; Key Persons). Without limitation of the foregoing, each BLI FTE shall be responsible for performing work in such a manner as to [***].

5.4.2 Safety Stock Inventory. At any given time during the Term, to ensure continuity of supply with respect to [***], BLI shall maintain an inventory of [***] sufficient to fulfill orders by Ginkgo for [***] for the next [***], such amount of [***] to be based on the then-applicable Rolling Forecast.

5.4.3 Failure to Supply.

(a) Remedial Efforts. If, for any reason, including [***], BLI [***] fails to provide Conforming Product or Service that conforms with this Agreement and the Service Level Standards for such Service, in each case in accordance with one or more accepted Purchase Orders for a period of [***] ([***]) consecutive days or more (each, a “Failure to Supply”), BLI shall notify Ginkgo promptly, including details of the reasons for the Failure to Supply and BLI’s estimate of when the Failure to Supply shall be corrected. BLI shall [***] minimize any shortage or delay in delivery of Beacon Optofluidic Machines (including related Hardware and Software), Consumables or Services to Ginkgo as a result of a Failure to Supply. Within [***] ([***]) days of written notification by BLI to Ginkgo under this Section 5.4.3(a) (Remedial Efforts) of a Failure to Supply, the Parties shall hold a JRC meeting at which BLI’s representatives will explain [***] the cause of such Failure to Supply and present BLI’s remedial plan to [***] Beacon Optofluidic Machines (including related Hardware and Software), Consumables or Services to be supplied to Ginkgo in accordance with this Agreement and the accepted Purchase Orders, which plan [***] (the “Remedial Plan”). BLI shall consider [***] in good faith any reasonable changes proposed by Ginkgo to the Remedial Plan. If the JRC approves the Remedial Plan, BLI will execute such Remedial Plan [***].

(b) Fees for Late Delivery. [***], the following discounts on the amounts owed by Ginkgo to BLI under an accepted Purchase Order shall be in effect for any [***] not delivered in accordance with this Agreement until after the applicable delivery date set forth in such Purchase Order: (a) for deliveries made more than [***] ([***]) days and less than [***] ([***]) days after such delivery date, a [***] percent ([***]%) discount; and (b) for deliveries made after [***] ([***]) days after such delivery date, a [***] percent ([***]%) discount, in each case of clauses (a) through (b), from the price for the Consumable delivered late; provided that, any discount shall only apply if the Purchase Order at issue was for a quantity of [***] at or below the binding forecasted quantity ([***]) provided pursuant to Section 5.1 (Forecasts of Production Purchases). Any discount in effect under this Section 5.4.3(b) (Fees for Late Delivery) shall be incorporated under any invoice presented by BLI to Ginkgo; provided that [***]. For purposes of counting towards Ginkgo’s Production Purchases and Minimum Cumulative Purchase Commitments under this Agreement, Ginkgo shall be deemed to have paid any invoice as if no discount for delayed delivery was in effect.

(c) Short Supply. Without limiting anything to the contrary in this Agreement, in the event that any Beacon Optofluidic Machines (including related Hardware and Software), Consumables or the Services are in short supply, i.e., [***], BLI shall notify Ginkgo in writing of such circumstances as soon as possible, including the underlying reasons for such shortage, the date such inability is expected to end and the amount of Beacon Optofluidic Machines (including related Hardware and Software), Consumables or Services to be allocated to Ginkgo. BLI shall allocate Beacon Optofluidic Machines (including related Hardware and Software), Consumables and Services in short supply to Ginkgo [***], with such [***] allocation applicable only up to the number of units of such item set forth in the binding portions of the then-current Rolling Forecast.

(d) Tolling. Without limiting Ginkgo’s rights under this Agreement or under Applicable Law, in the event of a Failure to Supply, [***] obligations of Ginkgo that are [***] by such Failure to Supply, including [***], shall be excused by an amount [***] to the Failure to Supply, which excused amount, in ensuring that such amount is [***] to the Failure to Supply, will include amounts [***] to such Failure to Supply. In addition, Ginkgo will submit to BLI a good faith proposal with respect to [***], taking into consideration the [***] that are attributable to such Failure to Supply. BLI shall promptly review such proposal and send written confirmation to Ginkgo of its [***] or, alternatively, inform Ginkgo in writing of and discuss with Ginkgo [***]. If [***], BLI will [***].


(e) Material Failure to Supply. If for reasons [***], over the course of any consecutive [***] period during the Term, BLI fails to provide Ginkgo with at least [***] percent ([***]%) of (a) a given [***] or (b) the cumulative total of [***], with respect to each of clauses (a) and (b), in accordance with accepted Purchase Orders and this Agreement (including, with respect to [***]) over such [***] period, then, such Failure to Supply shall be deemed a material breach of this Agreement and Ginkgo shall have the right to terminate this Agreement pursuant to Section 13.2.1 (Material Breach), subject to BLI’s right to cure such material breach.

6. RESTRICTIONS

6.1 Headstart Period.

6.1.1 BLI Standstill. Unless otherwise expressly agreed to in writing by the Parties, on a Headstart Invention-by-Headstart Invention basis, beginning on the date that a Workflow Development Plan is commenced and ending on the earlier of (a) the [***] anniversary of the date on which [***] under this Agreement or (b) subject to the last sentence of this Section 6.1.1 (BLI Standstill), if [***], then the [***] anniversary of the date on which [***] under this Agreement (for each such Headstart Invention, with respect to (a)-(b), the “Headstart Period”): (i) as between the Parties, Ginkgo will have the sole right to use, practice and exploit such Headstart Invention, and (ii) BLI shall not, and shall cause its Affiliates to not, directly or indirectly, itself or with or through a Third Party, use, practice or otherwise exploit such Headstart Invention in any way or grant any right, title or license to any Third Party to use, practice or otherwise exploit such Headstart Invention; provided that, for clarity, BLI shall retain the right to use, practice and otherwise exploit such Headstart Invention in accordance with the terms of this Agreement to perform BLI’s obligations under this Agreement. For further clarity, nothing in this Section 6.1.1 (BLI Standstill) is intended to prevent a Third Party BLI customer or partner from using, practicing or otherwise exploiting any independently developed improvement, invention, process or workflow even if similar to a Headstart Invention as long as BLI and its Affiliates are in compliance with this Section 6.1.1 (BLI Standstill) [***]. If a Workflow Development Plan is cancelled under the terms of this Agreement, then the Headstart Period with respect to Headstart Inventions under such Workflow Development Plan shall be deemed to have immediately accelerated to conclusion, unless Ginkgo (x) identifies in writing one or more Headstart Inventions under the Workflow Development Plan within [***] ([***]) Business Days of cancellation of the Workflow Development Plan and (y) [***], in which case such Headstart Invention(s) shall be subject to the applicable Headstart Period under this Section 6.1.1 (BLI Standstill); provided that, Ginkgo’s right to identify [***] under clauses (x) and (y) shall not exist if the cancellation of a Workflow Development Plan is [***].

6.1.2 [***]. Notwithstanding anything to the contrary in Section 6.1.1 (BLI Standstill), on a Headstart Invention-by-Headstart Invention basis, BLI may provide written notice to Ginkgo [***] (i.e. [***]), with respect to a Headstart Invention, such notice to specify (a) the applicable Headstart Invention [***], (b) the [***] and (c) whether BLI would prefer to [***] or, to the extent [***], [***] (which may, [***]); provided that to the extent the [***], BLI may only submit such a notice (and [***]) for [***]. Ginkgo shall have [***] ([***]) Business Days following delivery of notice to Ginkgo to [***] by written notice to BLI. If the Parties [***] within [***] ([***]) Business Days of such written notice by Ginkgo, [***]. Following BLI’s delivery of notice to Ginkgo [***], BLI shall [***] (i) if Ginkgo does not [***] within the [***] ([***]) Business Day period after notice delivery, within [***] ([***]) Business Days following the expiration of such [***] ([***]) Business Day period and (ii) if Ginkgo does [***] within the [***] ([***]) Business Day period after notice delivery, within [***] ([***]) Business Days following the [***]. Immediately upon [***] for a Headstart Invention, [***]. For clarity, [***]. For the avoidance of doubt, following the end of the Headstart Period for a Headstart Invention, Ginkgo shall still have the right to use, practice and exploit such Headstart Invention under this Agreement.

6.2 Restrictions on the Parties.

6.2.1 Restrictions on BLI. During the Term and for a period of [***] ([***]) months following the Term of this Agreement, other than pursuant to Sections 13.3.2 (Effects of Termination Based Upon Ginkgo’s Buy-Down Election) or 13.3.3 (Effects of Termination Based Upon an Uncured Ginkgo Breach, Insolvency or Force Majeure Event), BLI shall not, and shall cause its Affiliates not to, directly or indirectly, itself or with or through a Third Party, develop, configure, customize, license, sell, provide or otherwise give access to the Beacon Platform or any


[***] to, [***] or its Affiliates for any use; provided that this restriction shall terminate as set forth in Section 13.3 (Effects of Expiration or Termination) or if Ginkgo has not satisfied its Minimum Cumulative Purchase Commitments (as such may be adjusted under this Agreement) for a full Contract Year, including [***] as permitted under Section 7.2.2(a) (Minimum Cumulative Purchase Commitments) or Section 7.2.2(b)(iii) (Development Purchase Commitments); provided that BLI will provide written notice to Ginkgo within [***] ([***]) days of the end of any Contract Year with respect to which BLI believes that Ginkgo has not satisfied its Minimum Cumulative Purchase Commitment. Notwithstanding the foregoing, in the event that a Change in Control of an existing (as of the Effective Date or at any time during the Term) Third Party BLI customer results in such customer being controlled [***] following the date such Third Party became a BLI customer, BLI shall promptly notify Ginkgo in writing of such Change in Control (in no event later than [***] ([***]) days after BLI first learns of such Change in Control, [***] (in which case such notice will be provided by BLI no later than [***] ([***]) days after the earlier of [***] or [***]) and, in such written notice, provide Ginkgo with information regarding [***] and, if BLI does [***], the [***]. Within [***] ([***]) days of Ginkgo’s receipt of such written notice, Ginkgo will have the option, at its sole discretion, (a) if [***], to [***] and to [***] and, if Ginkgo makes such election, BLI shall promptly [***] and (i) Ginkgo will [***] (but in no event [***]) and (ii) in the event [***], Ginkgo and BLI will [***] and (b) if [***], then [***], to (i) [***], (ii) [***] and (iii) [***]. In the event BLI notifies Ginkgo as aforesaid and Ginkgo fails to make such election within the [***] ([***]) day period, then, in the case of (A) or (B), BLI will not be deemed to be in breach of this Section 6.2.1 (Restrictions on BLI) solely on account of a Third Party customer [***]. Nothing in this Section 6.2.1 (Restrictions on BLI) will require or oblige BLI [***], then [***]. In the event [***], [***] in a manner that (x) [***], (y) [***] or (z) [***]. For clarity, the foregoing sentence shall not [***]. Except as provided in this Section 6.2.1 (Restrictions on BLI) and the scope of rights granted to Ginkgo under this Agreement (including under Section 6.1 (Headstart Period) and Section 9.1 (Licenses to Ginkgo)), nothing in this Agreement shall otherwise limit, prohibit or preclude BLI from developing, configuring, customizing, licensing, selling or providing the Beacon Platform or Collaboration Workflows for itself or to a Third Party for any uses or otherwise entering into a business or advisory arrangement with any Third Party. As used in this Section 6.2.1 (Restrictions on BLI), “control” has the meaning set forth in Section 1.2 (“Affiliate definition). For clarity, [***].

6.2.2 No Further Restrictions by Ginkgo. During the Term, Ginkgo shall not [***] prohibit (i.e. by [***]), as part of any [***] arrangement with a Third Party, a Third Party from purchasing a Beacon Platform or other BLI products or services, or otherwise using or utilizing such Beacon Platforms for [***], including [***]. For clarity, such obligation shall not prohibit or limit Ginkgo from entering into generally exclusive relationships with Third Parties (e.g., [***]).

7. ECONOMICS

 

7.1 Upfront Payment. No later than [***] ([***]) days following the Effective Date, Ginkgo will pay to BLI a non-refundable upfront amount equal to Ten Million Dollars ($10,000,000) (the “Upfront Payment”). Such amount will be fully creditable against all Development Purchases and Production Purchases owed by Ginkgo to BLI [***] and will be fully creditable against the Full Purchase Target and, [***], the Minimum Purchase Commitment, Development Purchase Commitment and Production Purchase Target [***]. [***].

7.2 Purchase Commitments.

7.2.1 Generally. Subject to the terms of this Agreement, during the Term, the Parties’ target is for Ginkgo to make a total of One Hundred Fifty Million Dollars ($150,000,000) in Development Purchases and Production Purchases from BLI (as amended from time to time under this Agreement and as more fully set forth in this Section 7.2 (Purchase Commitments), the “Full Purchase Target”), which Full Purchase Target is divided into Contract Year purchase commitment targets with respect to Development Purchase Commitment and Production Purchase Targets, as more fully set forth in Section 7.2.2 (Contract Year Purchase Targets and Commitments).

7.2.2 Contract Year Purchase Targets and Commitments. Subject to the terms of this Agreement (including the remainder of this Section 7.2.2 (Contract Year Purchase Targets and Commitments)), for each Contract Year, Ginkgo shall [***] make Development Purchases and Production Purchases from BLI in the amounts set forth in the “Development Purchase Commitment” and “Production Purchase Target” columns respectively in Table 7.2.2 with respect to such Contract Year:


Table 7.2.2

 

     Development
Purchase
Commitment
     Production
Purchase Target
     Total Targeted
Purchase
     Minimum
Cumulative
Purchase
Commitment
 

Contract Year 1

   $ [***]    $ [***]    $ [***]    $ [***]

Contract Year 2

   $ [***]    $ [***]    $ [***]    $ [***]

Contract Year 3

   $ [***]    $ [***]    $ [***]    $ [***]

Contract Year 4

   $ [***]    $ [***]    $ [***]    $ [***]

Contract Year 5

   $ [***]    $ [***]    $ [***]    $ [***]

Contract Year 6

   $ [***]    $ [***]    $ [***]    $ [***]

Contract Year 7

     [***]    $ [***]    $ [***]    $ 109,000,000  

Total

   $ [***]    $ [***]    $ 150,000,000        N/A  

(a) Minimum Cumulative Purchase Commitments. With respect to each Contract Year, by no later than [***], Ginkgo shall have incurred (including all credits and offsets permitted under this Agreement) at least, in the aggregate since the beginning of the Term, the Minimum Cumulative Purchase Commitment amount for such Contract Year. The Minimum Cumulative Purchase Commitments for each of Contract Years [***] are binding commitments. Any amounts paid by Ginkgo to BLI in excess of the Minimum Cumulative Purchase Commitment amount for a given Contract Year in Contract Years [***], regardless of whether such excess constitutes a Development Purchase or Production Purchase, will be creditable towards the Minimum Cumulative Purchase Commitment in subsequent Contract Year(s) until such excess amount has been fully credited. Ginkgo covenants to pay the Minimum Cumulative Purchase Commitments for each Contract Year by the [***] Business Day after the end of the [***]. If BLI has Substantially Completed at least [***] ([***]) [***] Workflows within the first [***] ([***]) Contract Years, then the Minimum Cumulative Purchase Commitment as of the Contract Year (which may include a portion of a full Contract Year) that is the last Contract Year during the Term pursuant to the terms of this Agreement shall change from $109 million (as currently reflected in Table 7.2.2) to $150 million.

(b) Development Purchase Commitments.

(i) Subject to Section 7.2.2(a) (Minimum Cumulative Purchase Commitments), unless the Parties otherwise mutually agree in writing, the Development Purchase Commitment for the [***] Contract Years shall constitute a binding obligation on Ginkgo, and, subject to Ginkgo exercising its Buy-Down Option pursuant to Section 7.3 (Buy-Down Election), the Development Purchase Commitment for the [***] Contract Years shall also constitute binding obligations on Ginkgo. No less than [***] percent ([***]%) of the Development Purchases made in the [***] Contract Years will be used by the Parties to develop Workflows for [***].

(ii) At any time during a Contract Year, upon written notice to the JRC, Ginkgo may accelerate its Development Purchases in such Contract Year to include Development Purchases anticipated to be made in upcoming Contract Year(s). Such additional Development Purchases in excess of the Development Purchase Commitment for such Contract Year will be creditable towards Ginkgo’s Development Purchases in subsequent Contract Year(s) until such excess amount has been exhausted and will count towards the Minimum Cumulative Purchase Commitment for the Contract Year in which it is paid, subject to allocation to subsequent Contract Year(s) as set forth in Section 7.2.2(a) (Minimum Cumulative Purchase Commitments).

(iii) Notwithstanding anything to the contrary in this Agreement, in the event that Ginkgo’s Development Purchases in a given Contract Year after [***] are less than the Development Purchase Commitment for such Contract Year, respectively, Ginkgo shall be able to apply the Development Purchases made in the first [***] of the next Contract Year to satisfy the previous Contract Year’s Development Purchase Commitment; provided that(i) Ginkgo may only be able to satisfy [***] percent ([***]%) of the relevant Development Purchase Commitment for the previous Contract Year pursuant to this Section 7.2.2(b)(iii) (Development Purchase Commitments) and (ii) any amount of Development Purchases credited towards satisfying the previous Contract Year’s Development Purchase Commitment shall not count towards satisfying such targets for the then-current Contract Year.


(iv) Notwithstanding anything to the contrary in this Agreement, in the event that a Workflow Development Plan is terminated prior to completion by the JRC, including (A) [***], (B) [***], (C) [***] or (D) [***], then, subject to Section 3.5.1 (Decision-Making), the JRC shall, in good faith, discuss and approve [***]; provided, however, that such [***] (Term).

(c) Production Purchase Commitments.

(i) Subject to this Section 6.2.2(c) (Production Purchase Commitments), unless the Parties otherwise mutually agree in writing, the Production Purchase Target for the [***] shall constitute a binding obligation on Ginkgo and, in partial satisfaction of its Production Purchase commitment for the [***], Ginkgo shall purchase [***] ([***]) [***] within [***] ([***]) days of the Effective Date, the cost of which, for clarity, shall be offset by the upfront payment paid by Ginkgo pursuant to Section 7.1 (Upfront Payment). Subject to Ginkgo’s obligation to satisfy the Minimum Cumulative Purchase Commitment for a Contract Year, with respect to the second [***] Contract Years), Ginkgo’s Production Purchase Targets for the [***] Contract Years as set forth in Table 7.2.2 are [***], and the Parties expressly acknowledge and agree that [***].

(ii) At any time during a Contract Year, upon written notice to the JRC, Ginkgo may accelerate its Production Purchases in such Contract Year to include Production Purchases anticipated to be made in upcoming Contract Year(s). Such additional Production Purchases in excess of the Production Purchase Target for such Contract Year will be creditable towards Ginkgo’s Production Purchases in subsequent Contract Year(s) until such excess amount has been exhausted and will count towards the Minimum Cumulative Purchase Commitment.

(d) Effects of Tolling. Notwithstanding anything to the contrary in this Agreement, Ginkgo’s obligations to satisfy Development Purchase Commitments and Production Purchase Commitments at all times during the Term (including any Intended End of Term) are subject to Section 5.4.3(d) (Tolling) and this Section 7.2.2(d) (Effects of Tolling). In the event that, at any time during the Term, there is a Failure to Supply, then the duration of this Agreement will automatically be extended for additional calendar months (rounded to the nearest whole calendar month) equal to [***] (the seventh (7th) anniversary of the Effective Date plus such additional calendar months, the “Intended End of Term”).

7.3 Buy-Down Election. During the Term following the end of the second (2nd) Contract Year, Ginkgo may elect, upon written notice to BLI, to buy-down its remaining financial obligations under the Full Purchase Target (the “Buy-Down Election”) by making a one-time payment to BLI in the amount of the Buy-Down Amount. In the event Ginkgo notifies BLI of its Buy-Down Election as set forth in this Section 7.3 (Buy-Down Election), then, upon Ginkgo’s payment of the Buy-Down Amount to BLI within [***] ([***]) days of Ginkgo’s Buy-Down Election, this Agreement shall automatically terminate, with the applicable effects of termination set forth in Section 13.3.2 (Effects of Termination Based Upon Ginkgo’s Buy-Down Election).

7.4 Additional Payments.

7.4.1 License Fees. During the Term, and in consideration for the rights granted herein, Ginkgo shall pay field of use license fees (“FOU License Fees”) as follows: (a) with respect to any calendar year, no FOU License Fees will be due until [***] and (b) [***] ($[***]) per calendar year per Beacon Optofluidic Machine [***] up to a maximum of [***] ($[***]) per calendar year per Beacon Optofluidic Machine; provided that, in no event will the FOU License Fees paid by Ginkgo for use of a Beacon Optofluidic Machine [***]. FOU License Fees shall be applied to Ginkgo’s use of all Beacon Optofluidic Machines, [***]. Notwithstanding anything to the contrary in this Agreement and without limiting any of Ginkgo’s rights and remedies under Applicable Law and this Agreement, [***],

7.4.2 Milestone Payments. In the event that Ginkgo uses any of the BLI Proprietary Workflows identified in Exhibit D to conduct Commercial Services for a Third Party customer and such Commercial Services [***] result in the discovery of an Antibody to be used as the active ingredient in a therapeutic product for which a Third Party [***] (each such Antibody subject to this Section 7.4.2 (Milestone Payments), a “Discovered Antibody”), then, on a Discovered Antibody-by-Discovered Antibody basis, in the event such Third Party (a) achieves any of the milestone events noted below in Table 7.4.2 (each, a “Milestone Event”) with respect to a Discovered Antibody and (b) makes a payment to Ginkgo in connection with such Milestone Event, then Ginkgo will pay BLI [***] percent ([***]%) of such payment received by Ginkgo from such Third Party up to the amount of the corresponding


“Maximum Milestone Payment” for such milestone event set forth below in Table 7.4.2 (each, a “Milestone Payment”. Notwithstanding anything to the contrary in this Agreement, in no event shall a Discovered Antibody include (x) an Antibody [***] (e.g. [***]) through the conduct of Commercial Services by Ginkgo or (y) an Antibody [***].

 

Table 7.4.2

 

Milestone Event

   Maximum Milestone
Payment
 

[***]

   $ [ ***]

[***]

   $ [ ***]

[***]

   $ [ ***]

[***]

   $ [ ***]

Each Milestone Payment shall be payable only once for each and every Discovered Antibody. If any Milestone Event is achieved for any Discovered Antibody before any of the preceding Milestone Events are achieved for such Discovered Antibody, then all the Milestone Payments for such unachieved preceding Milestone Events will be due and payable with the Milestone Payment for the Milestone Event that was achieved. For example, [***].

7.5 Manner of Payments. Each payment under this Agreement to a Party will be made in Dollars and by electronic transfer in immediately available funds via either a bank wire transfer, an ACH (automated clearing house) mechanism, or any other means of electronic funds transfer, at such receiving Party’s election, to such bank account as the receiving Party will designate in writing to the other Party at least [***] ([***]) Business Days before the payment is due.

7.6 Taxes. It is understood and agreed between the Parties that any payments made by a Party to the other Party under this Agreement are exclusive of any sales tax, value added tax (if any) or similar tax (“VAT”) upon such payments. Where VAT is properly added to a payment made under this Agreement, the Party making the payment will pay the amount of VAT only on receipt of a valid tax invoice issued in accordance with the laws and regulations of the country in which the VAT is chargeable. If a Party is required to deduct or withhold from any payment due hereunder any taxes in the nature of a tax upon or measured by income, then the Parties shall work together to ensure, subject to this Section 7.6 (Taxes), that the withholding Party is able to comply with its obligations under Applicable Law and that the non-withholding Party still receives the net amount due to it following payment of such tax by the withholding Party. [***]. The Parties will reasonably cooperate to provide sufficient documentation to receive any credits available under Applicable Law. Notwithstanding the foregoing, to the extent that, due to (a) [***], (b) [***], (c) [***], (d) [***] or (e) [***], with respect to each, VAT or other taxes are imposed on payments made by Ginkgo or BLI, as applicable, to the other Party that were not otherwise applicable (“Incremental Withholding Taxes”), the Party that took such action resulting in Incremental Withholding Taxes (together with any subsequent successor or assign, “Responsible Tax Party”) shall be solely responsible for and shall solely bear the amount of such Incremental Withholding Taxes. If the other Party receives a refund or tax credit in connection with the Incremental Withholding Taxes, then such other Party shall promptly pay the Responsible Tax Party an amount equal to the amount of such refund or tax credit.

7.7 Financial and Other Records. Each Party shall, and shall cause its Affiliates to, keep complete and accurate books and records pertaining to its activities conducted and costs incurred under this Agreement (including each approved Workflow Development Plan), including with respect to Budget spending, Development Purchases, Production Purchases, FOU License Fees and Milestone Payments, in sufficient detail to calculate all amounts payable hereunder and to verify compliance with its obligations under this Agreement. Such books and records shall be retained by such Party and its Affiliates until [***] ([***]) years after the end of the period to which such books and records pertain or for such longer period as may be required by Applicable Law.

7.8 Audits. At the request of the other Party, each Party will, and will cause its Affiliates to, permit an independent public accounting firm of nationally recognized standing designated by the other Party and reasonably acceptable to the audited Party, at reasonable times during normal business hours and upon reasonable notice, to audit the books and records maintained pursuant to Section 7.7 (Financial and Other Records) solely to confirm the accuracy of all financial reports, invoices and payments made hereunder or Budget spending under an approved Workflow


Development Plan. Such examinations may not (a) be conducted more than once in any [***] month period (unless a previous audit during such [***] month period revealed an overpayment (or an underpayment of a Milestone Payment, FOU License Fees, or royalty for Licensed Products) of at least [***] percent ([***]%) of the amount actually due with respect to such period) or (b) [***]. The accounting firm will execute a reasonable written confidentiality agreement with the audited Party and will disclose to the auditing Party only such information as is reasonably necessary to provide the auditing Party with information regarding any actual or potential discrepancies between the amounts actually paid and the amounts payable under this Agreement. The accounting firm’s report will [***] be delivered to each Party at the same time and will be deemed final [***] ([***]) business days after it is received by both Parties. The auditing Party shall bear the full cost of any such audit, unless the accounting firm’s report discloses an overpayment (or underpayment) by the auditing Party of more than [***] percent ([***]%) of the amount due for any Calendar Quarter, in which case the audited Party shall bear the full cost of such audit. The audited Party shall pay the amount of any overpayment (or underpayment) disclosed in the accounting firm’s report, together with interest thereon from the date such payment was originally due, within [***] ([***]) days after delivery to the Parties of the accounting firm’s report.

7.9 Confidentiality. All books and records audited by a Party pursuant to Section 7.8 (Audits) will be maintained in confidence by such auditing Party in accordance with Article 10 (Confidentiality).

7.10 Late Payment. If any payment due is not paid by the due date, BLI may (a) charge interest on any outstanding amount of such payment, accruing as of the original due date, at an annual rate equal to the rate of prime (as reported in The Wall Street Journal, Eastern U.S. Edition) plus [***] percentage points or the maximum rate allowable by Applicable Law, whichever is less.

8. INTELLECTUAL PROPERTY OWNERSHIP; USE OF DATA

 

8.1 Ownership of Background IP; Efforts to Control. As between the Parties, and subject to the licenses granted under this Agreement, Ginkgo shall own and retain all rights, title, and interests in, to and under Ginkgo Background IP, and BLI shall own and retain all rights, title, and interests in, to and under BLI Background IP. With respect to any Intellectual Property developed by BLI or its Affiliates in collaboration or on behalf of a Third Party during the Term of this Agreement that is [***] for (a) [***] or (b) [***], with respect to each, BLI and its Affiliates shall [***] to [***] that BLI or its Affiliates Control such Intellectual Property so that BLI may grant a license to Ginkgo with respect to such Intellectual Property as set forth in Section 9.1 (Grants to Ginkgo).

8.2 Ownership of Ginkgo Inventions and BLI Inventions.

8.2.1 Ginkgo Inventions. Unless otherwise agreed to in writing by the Parties, as between the Parties, Ginkgo shall own:

(a) all biological entities, including all organisms, cells, strains, enzymes and other proteins, nucleic acids and other biomaterials (that are not BLI-provided biological entities listed in Section 8.2.2(f) (BLI Inventions)) [***], in each case that Ginkgo loads onto the Beacon Platform or provides to BLI [***];

(b) all [***];

(c) any assays [***];

(d) all chemical entities other than [***], developed, generated, created, used or otherwise exploited in connection with the use of the Beacon Platform (clauses (a) through (d) of this Section 8.2.1 (Ginkgo Inventions) collectively, with the exception of [***], the “Ginkgo Materials”);

(e) all [***];

(f) the [***];

(g) the Ginkgo Workflows, with the exception of any BLI Inventions; and

(h) all rights to the Intellectual Property contained or otherwise embodied in the inventions, discoveries, improvements, materials, chemical entities, Ginkgo Materials, [***], [***], or Ginkgo Workflows, described in clauses (a) through (g) of this Section 8.2.1 (Ginkgo Inventions) (clauses (a) through (g) collectively, the “Ginkgo Inventions”).


For clarity, Ginkgo’s ability to use Ginkgo Inventions are subject to the limitations set forth in Section 9.1 (Grants to Ginkgo).

8.2.2 BLI Inventions. Unless otherwise agreed to in writing by the Parties, as between the Parties, BLI shall own:

(a) all inventions or discoveries [***]related to, or improvements or modifications to, the Beacon Platform that are developed, generated, created, used or otherwise exploited in connection with the use of the Beacon Platform under a Workflow Development Plan;

(b) any materials or chemical entities that are not Ginkgo Materials that are developed, generated, created, used or otherwise exploited in connection with the use of the Beacon Platform under a Workflow Development Plan, with the exception of any materials that are publicly available for purchase or are otherwise rightfully in the public domain;

(c) all BLI Proprietary Workflows;

(d) Generalized Workflows, with the exception of any Ginkgo Inventions;

(e) all Consumables provided by BLI related to the Beacon Platform and [***], in each case (i) developed, generated, created, used or otherwise exploited in connection with the use of the Beacon Platform under a Workflow Development Plan and (ii) [***];

(f) although generally not expected during the Term, any [***]; and

(g) all rights to the Intellectual Property contained or otherwise embodied in the inventions, discoveries, improvements, materials, chemical entities, Beacon Platform or Consumables described in clauses (a) through (f) of this Section 8.2.2 (BLI Inventions) (collectively, clauses (a) through (f) of this Section 8.2.2 (BLI Inventions), the “BLI Inventions”).

8.3 Ownership of Remaining Collaboration Intellectual Property. Subject to Section 8.2 (Ownership of Ginkgo Inventions and BLI Inventions), as between the Parties, BLI shall solely own all right, title and interest to all Collaboration Intellectual Property [***].

8.4 Prosecution and Enforcement Rights. Ginkgo shall have the sole and exclusive right, but not the obligation, to protect, seek registration for, defend and enforce, in its sole and entire discretion, the Ginkgo Inventions. BLI shall have the sole and exclusive right, but not the obligation, to protect, seek registration for, defend and enforce in its sole and entire discretion, the BLI Inventions and Collaboration Intellectual Property (other than the Ginkgo Inventions). In no event shall Ginkgo, and Ginkgo shall cause its Affiliates to not, file any patent applications covering (or support existing patent applications covering) the [***] and, in the event Ginkgo (or its Affiliates) do file one or more of such patent applications, Ginkgo will and hereby does assign, and shall cause its employees, agents and contractors to assign, to BLI all rights, title and interests in, to and under such patent applications. Other than as permitted under Section 8.5.2 (Use of Collaboration Data), in no event shall BLI, and BLI shall cause its Affiliates to not, file any patent applications covering (or support existing patent applications covering) [***] and, in the event that BLI (or its Affiliates) do file one or more of such patent applications, BLI will and hereby does assign, and shall cause its employees, agents and contractors to assign, to Ginkgo all rights, title and interests in, to and under such patent applications.

8.5 Use of Collaboration Data.

8.5.1 Disclosure. With respect to any data or results that are generated in connection with activities under a Workflow Development Plan (such data and results (but not Collaboration Workflows), “Collaboration Data”), each Party shall provide the other Party any Collaboration Data in its possession; provided that [***] shall provide any such Collaboration Data in its possession to [***] to the extent permitted under obligations of confidentiality owed by [***] to Third Parties with respect to such Collaboration Data. Notwithstanding the foregoing, [***] shall have the right to anonymize any Collaboration Data for disclosure to [***] or use by [***] under Section 8.5.2 (Use of Collaboration Data) and shall be permitted to remove from such Collaboration Data (a) any Third Party confidential information, (b) the identity of any [***] and (c) proprietary information regarding [***] Inventions or Intellectual Property Controlled, possessed or owned by [***] or its Affiliates.


8.5.2 Use of Collaboration Data. BLI will have the right to use any Collaboration Data provided to it for disclosure pursuant to Section 8.5.1 (Disclosure) solely for the purposes of (a) [***], (b) [***], (c) [***], and (d) [***]. For clarity, with respect to clause (d) of this Section 8.5.2 (Use of Collaboration Data), [***].

8.6 Notification of New Products; [***].

8.6.1 Access to New Products. During the Term, BLI shall promptly notify Ginkgo of any upcoming or then-current commercial availability of any new Beacon Optofluidic Machine or Consumable that, at that time, is not listed in Schedule 1.10 (Beacon Optofluidic Machine) or Schedule 1.36 (Consumables) and the Parties shall[***].

8.6.2 [***]. During the Term, BLI shall provide Ginkgo with [***] (a) [***], (b) [***] and (c) BLI [***], with respect to each, [***] and [***]. As used in this Section, “[***]” means [***].

8.7 Inventor’s Remuneration. Each Party will be solely responsible for any remuneration that may be due to such Party’s inventors under any applicable inventor remuneration laws.

8.8 [***]. If, at any time during the Term, Ginkgo has purchased from BLI, in the aggregate, [***] ([***]) or more Beacon Optofluidic Machines, then:

8.8.1 Non-Exclusive [***] License. To ensure that, [***], BLI shall, and hereby does, automatically grant to Ginkgo, as of the date Ginkgo purchases an aggregate of [***] ([***]) Beacon Optofluidic Machine from BLI, a non-exclusive, non-royalty bearing and sublicensable (through multiple tiers) worldwide license in any Intellectual Property Controlled by BLI that is necessary to [***], solely for Ginkgo’s [***] own internal use so that Ginkgo (or its Affiliates or permitted sublicensees) may [***]. Notwithstanding the foregoing, Ginkgo hereby represents, warrants and covenants to BLI that, as of the date BLI grants such license to Ginkgo and throughout the Term and thereafter, it shall not, directly or indirectly, conduct any activities under the rights granted to it in this Section 8.8.1 ([***]) unless and until (a) (i) [***] or (ii) [***], with respect to (i)-(ii), and such [***] or (b) [***]; provided that, after the event(s) sufficient to trigger sub-sections (i) or (ii) of this sentence occur, Ginkgo must provide BLI with written notice of its intent to conduct activities under rights granted pursuant to this Section 8.8.1 [***]. In the event Ginkgo has the right to conduct activities under the rights granted to it in this Section 8.8.1 ([***]), Ginkgo shall [***]. BLI shall [***].

8.8.2 [***]. Upon Ginkgo’s written request at any time after [***], BLI shall [***] and will [***] so that [***]. Notwithstanding the foregoing, Ginkgo hereby represents, warrants and covenants to BLI as of the Effective Date, throughout the Term that it shall not, directly or indirectly, [***] unless and until (a) (i) [***] or (ii) [***] or (b) [***]; provided that, after the event(s) sufficient to trigger sub-sections (i) or (ii) of this sentence occur, Ginkgo must provide BLI with written notice of its intent to conduct activities under rights granted pursuant to this Section 8.8.2 [***]. In the event Ginkgo has the right to so [***], Ginkgo shall [***].

8.8.3 [***]. Upon Ginkgo’s written request to BLI at any time if (a) there is (i) [***] or (ii) [***], or (b) [***], BLI shall [***] and [***] and shall [***], including by [***]; provided further that, if [***] either (A) [***] or (B) [***], then [***]. In the event Ginkgo [***], Ginkgo hereby represents, warrants and covenants to BLI as of the Effective Date, throughout the Term and thereafter that it shall [***]. BLI shall [***].

8.8.4 Any obligation of Ginkgo to [***] shall be [***].

8.9 Specific Implementation Restrictions. For clarity, this Agreement does not prohibit BLI or its Affiliates, alone or in combination with a Third Party, from independently developing a Workflow or a part or component thereof; or a derivative, modification, replication or progeny of a biological entity; that is the [***] to a Specific Implementation (each such independently developed item, an “Independent Development”); provided that the Independent Development does not use any [***]; and further provided that BLI and its Affiliates do not [***] any [***] to [***] any Independent Development. Without limiting any other provision of this Agreement or Ginkgo’s rights or remedies under this Agreement or Applicable Law, any use of [***] by BLI or its Affiliates, alone or in combination with a Third Party to develop a Workflow or a part or component thereof; or a derivative, modification, replication or progeny of a biological entity that is [***] a Specific Implementation shall be deemed a material breach of this Agreement by BLI and shall give rise to Ginkgo’s right to terminate this Agreement pursuant to Section 13.2.1 (Material Breach).


9. LICENSE GRANTS

9.1 Grants to Ginkgo.

9.1.1 Scope of Grants. Subject to the terms and conditions of this Agreement, and in consideration for the payments to BLI under this Agreement, during the Term, BLI, on behalf of itself and its Affiliates, hereby grants and shall grant to Ginkgo a non-exclusive, sublicensable (solely in accordance with Section 9.1.4 (Consent to Sublicense)), non-transferable, non-royalty-bearing (subject to Section 13.3.2 (Effects of Termination Based Upon Ginkgo Buy-Down Election)) worldwide license in, to and under (i) BLI Background IP, and (ii) other Intellectual Property that is Controlled by BLI and that is [***] BLI Inventions, with both of (i) and (ii) being limited to what is necessary for Ginkgo to [***] and (iii) the Collaboration Intellectual Property solely to:

(a) perform research [***] on biological entities, including organisms, cells and strains (and sub-components thereof);

(b) (i) design and develop (A) Collaboration Workflows as generally contemplated under a Workflow Development Plan and (B) Ginkgo Workflows as permitted under this Agreement and (ii) use [***] Workflows to conduct the activities set forth in clause (a) and clause (c) of this Section 9.1.1 (Scope of Grants);

(c) perform commercial research [***] and other Commercial Services for Third Parties; and

(d) in each case of clauses (a) through (c) of this Section 9.1.1 (Scope of Grants), the license granted is for activities solely within the Licensed Field.

9.1.2 License Grant to Exploit [***]. Subject to the terms and conditions of this Agreement, during the Term BLI, on behalf of itself and its Affiliates, hereby grants and shall grant to Ginkgo a [***] license within the Licensed Field in, to and under any Intellectual Property Controlled by BLI that is necessary to make, have made, sell, have sold, import or use any [***] to make, have made, sell, have sold, import or use such [***].

9.1.3 No Consumable License. For clarity and without limiting Section 8.8.1 (Non-Exclusive Manufacturing License; Covenant), the licenses granted to Ginkgo in Section 9.1.1 (Scope of Grants) and Section 9.1.2 (License Grant to Exploit [***]) do not include the right to make, have made, offer to sell or sell Consumables, [***], to or for Third Parties or any Ginkgo Affiliate or Ginkgo Subcontractor that are [***] on the Beacon Platform [***].

9.1.4 Consent to Sublicense. Ginkgo may grant sublicenses of the license granted to Ginkgo under Section 9.1.1 (Scope of Grants) and Section 9.1.2 (License Grant to Exploit [***]) with the prior written consent of BLI[***]; provided that such prior written consent of BLI shall not be needed for any sublicense granted by Ginkgo to (a) a Permitted Subcontractor of Ginkgo under Section 2.7 (Subcontracting) to the extent such sublicense relates to the subcontracted activities, (b) any wholly-owned subsidiary of Ginkgo existing as of the Effective Date or (c) any other Person, including other Affiliates and any Third Party, under Section 9.1.2 (License Grant to Exploit [***]) so long as, in the case of this clause (c), the sublicense [***]. Each sublicense of the license granted to Ginkgo under Section 9.1.1 will (i) be in writing, (ii) be consistent with the terms and conditions of this Agreement and (iii) require each sublicensee thereunder to comply with all terms of this Agreement applicable to a sublicensee. Notwithstanding the grant of any sublicense, Ginkgo shall remain [***] liable to BLI for the performance of all of Ginkgo’s obligations under, and Ginkgo’s compliance with all provisions of, this Agreement.

9.1.5 Responsibility. Ginkgo shall not (and Ginkgo shall ensure that its Affiliates and [***] sublicensees do not) use any Intellectual Property of BLI’s that is licensed under Section 9.1 (Grants to Ginkgo), any BLI Confidential Information or any Beacon Platforms that may be transferred to Ginkgo by BLI under this Agreement, in each case for a purpose other than as expressly permitted under this Agreement.

9.1.6 Use in Excluded Fields. In the event BLI [***] that Ginkgo is using [***] in the Excluded Fields (“Ginkgo Excluded Use”), BLI shall send Ginkgo a written notice indicating that it believes Ginkgo is using [***] in an Excluded Field and, within [***] ([***]) Business Days after Ginkgo’s receipt of BLI’s written notice, Ginkgo shall investigate such claim internally and shall either (a) [***], or (b) [***], and the Parties will resolve such dispute pursuant to Section 14.5.2 (Dispute Resolution). If, following the dispute resolution process set forth in Section 14.5.2 (Dispute Resolution), it is determined that Ginkgo is using [***] in an Excluded Field, then BLI may either (i) [***], (ii) [***] or (iii) [***]; provided that, following determination that Ginkgo is using [***] in an Excluded Field pursuant to Section 14.5.2 (Dispute Resolution), if BLI wishes to make any election under clause (i), (ii) or (iii), it must notify Ginkgo within [***] ([***]) Business Days of such determination. [***].


9.2 Grants to BLI. Subject to the terms and conditions of this Agreement, during the Term, Ginkgo hereby grants and shall grant to BLI:

9.2.1 a [***] and this Section 9.2 (Grants to BLI)), [***] license in, to and under any Intellectual Property (a) Controlled by Ginkgo, (b) used by Ginkgo in the conduct of a Workflow Development Plan and (c) necessary for BLI to perform its obligations under this Agreement ((a)-(c) collectively, “Ginkgo Licensed IP”), solely to perform BLI’s obligations under such Workflow Development Plan; and

9.2.2 after any applicable Headstart Period, with respect to any [***], a [***] license in, to and under any Ginkgo Licensed IP [***] necessary for the performance of, such [***], to make, have made, offer to sell, sell, have sold, import, use, commercialize or perform such [***] to or for Third Parties and to license such Third Parties to do the same.

Except as permitted under Sections 9.2.1 and 9.2.2, BLI may not sublicense, assign or otherwise transfer the rights granted to it in this Section 9.2 (Grants to BLI) without first obtaining the prior written consent of Ginkgo[***]. Each sublicense of any license granted to BLI under this Section 9.2 (Grants to BLI) will (i) be in writing, (ii) be consistent with the terms and conditions of this Agreement and (iii) require each sublicensee thereunder to comply with all terms of this Agreement applicable to a sublicensee; provided that, subject to Section 6.2.1, such prior written consent of Ginkgo shall not be needed for any sublicense granted by BLI (a) under Section 9.2.1, to a Permitted Subcontractor of BLI under Section 2.7 (Subcontracting) to the extent such sublicense relates to the subcontracted activities, (b) any wholly-owned subsidiary of BLI existing as of the Effective Date, or (c) any other Person, including other Affiliates and any Third Party, under Section 9.2.2. Notwithstanding the grant of any sublicense, BLI shall remain liable to Ginkgo for the performance of all of BLI’s obligations under, and BLI’s compliance with, all provisions of, this Agreement. BLI shall not (and BLI shall ensure that any of its Affiliates and sublicensees do not) use any Intellectual Property or Confidential Information of Ginkgo that is licensed under this Section 9.2 or otherwise disclosed to BLI under this Agreement for any purpose not expressly permitted under this Agreement. [***].

9.3 No Implied Rights. Except as expressly provided in this Agreement, neither Party will be deemed to have granted the other Party (by implication, estoppel or otherwise) any right, title, license or other interest in or with respect to any Intellectual Property or information Controlled by such Party.

10. CONFIDENTIALITY

10.1 Confidential Information. Each Party may disclose (“Disclosing Party”) to the other Party (“Receiving Party”), and Receiving Party may acquire during the course and conduct of activities under the Agreement, certain non-public or confidential information of Disclosing Party in connection with this Agreement. The term “Confidential Information” means all non-public or confidential information or material in tangible form that one Party discloses to the other Party hereunder, or proprietary or confidential information disclosed in non-tangible form that a Disclosing Party identifies to the Receiving Party as confidential information or that, from the nature of such information, the Receiving Party should reasonably know is the Confidential Information of the Disclosing Party, including all technical and non-technical information conveyed from one Party to the other or otherwise accessed or observed by a Party in any form, electronic data and other proprietary information, data, samples, products, materials, compounds, sequences, compositions, configurations, methods, formulas, formulations, processes, protocols, specifications, designs, recordings, drawings, sketches, models, technologies, equipment, information relating to quality assurance or control, laboratory notebooks, techniques, inventions, know-how, apparatuses, formulae, customer lists, pricing information, strategies, business or marketing plans and other information related to the Disclosing Party’s current, future and proposed products, business, customers, Software or technology. The Parties agree that the terms of this Agreement will be treated as Confidential Information of each Party. Without limitation of the foregoing, (i) Ginkgo Background IP, Ginkgo Inventions, Collaboration Data, Specific Implementations, and Ginkgo Workflows will be treated as the Confidential Information of Ginkgo and (ii) BLI Background IP, BLI Inventions, Generalized Workflows and BLI Proprietary Workflows will be treated as the Confidential Information of BLI. Notwithstanding any other provisions herein, Confidential Information does not include information that:

10.1.1 was known to Receiving Party or any of its Affiliates prior to the time of disclosure other than under an obligation of confidentiality with respect to such information;


10.1.2 is at the time of disclosure hereunder or later becomes public knowledge through no fault or omission of Receiving Party or any of its Affiliates;

10.1.3 is obtained by Receiving Party or any of its Affiliates from a Third Party having the right to disclose such information (e.g. not under an obligation of confidentiality to the Disclosing Party or its Affiliates) to such Receiving Party or its Affiliates;

10.1.4 has been independently developed by employees, Permitted Subcontractors, consultants or agents of Receiving Party or any of its Affiliates without the aid, application, or use of or reliance upon Disclosing Party’s Confidential Information, as evidenced by contemporaneous written records; or

10.1.5 Receiving Party obtains written consent from Disclosing Party to disclose.

Specific aspects or details of Confidential Information will not be deemed to be within the public domain or in the possession of Receiving Party merely because the Confidential Information is embraced by more general information in the public domain or in the possession of Receiving Party. Further, any combination of Confidential Information will not be considered in the public domain or in the possession of Receiving Party merely because individual elements of such Confidential Information are in the public domain or in the possession of Receiving Party unless the combination and its principles are in the public domain or in the possession of Receiving Party.

10.2 Confidential Treatment. At all times during the Term and for a period of [***] ([***]) years following the end of the Term, or with respect to trade secrets (with such trade secrets either (i) having been specifically identified in writing to the Receiving Party by the Disclosing Party claiming ownership of the same or (ii) reasonably distinguishable by its nature or content as a trade secret of the Disclosing Party), until such time that such information is no longer a trade secret (including pursuant to Sections 10.1.1—10.1.5), Receiving Party will, and will cause its Affiliates and its and their respective officers, directors, employees, Permitted Subcontractors, permitted sublicensees and agents to, keep confidential and not publish or otherwise disclose to a Third Party and not use for any purpose, any Confidential Information furnished or otherwise made known to it by the Disclosing Party, except to the extent such disclosure or use is expressly permitted by the terms of this Agreement or is reasonably necessary for the performance of, or the exercise of such Party’s rights under, this Agreement; provided that such parties to which the Confidential Information is disclosed are bound by written obligations of confidentiality at least as stringent as those set forth in this Agreement. Notwithstanding the foregoing, a Receiving Party will remain liable for any breach of this Article 10 (Confidentiality) by any party to whom the Receiving Party has disclosed the Disclosing Party’s Confidential Information under this Section 10.2 (Confidential Treatment).

10.3 Permitted Disclosures. Receiving Party may disclose the Confidential Information of the Disclosing Party in the following instances:

10.3.1 in order to comply with Applicable Law (including any securities law or regulation or the rules of a securities exchange) or with a legal or administrative proceeding; provided that(a) to the extent legally permitted, Receiving Party gives written notice of such required disclosure to Disclosing Party prior to disclosing such Confidential Information and (b) Disclosing Party shall have the opportunity to take appropriate measures to assure confidential treatment of such Confidential Information to the extent practicable and consistent with Applicable Law and Receiving Party agrees to reasonably cooperate with the Disclosing Party in connection with such measures at Disclosing Party’s expense;

10.3.2 in connection with (a) prosecuting or defending litigation or (b) obtaining Regulatory Approval, making other regulatory filings and communications, and filing, prosecuting, enforcing, and defending patent rights, in each case, in connection with Receiving Party’s rights and obligations pursuant to this Agreement; provided, however, that, where reasonably possible, Receiving Party will notify Disclosing Party of Receiving Party’s intent to make any such disclosure sufficiently prior to making such disclosure so as to allow Disclosing Party adequate time to take whatever action it may deem appropriate to protect the confidentiality of the information to be disclosed; and


10.3.3 with respect to the terms of this Agreement, after having been reasonably redacted by the Receiving Party, to the extent such disclosure is reasonably required, to a bona fide potential licensee, investor, investment banker, acquirer, merger partner or other potential financial partner, and their respective attorneys, professional advisors and agents; provided that each such Person to whom such information is to be disclosed is informed of the confidential nature of such information and has entered into a written agreement with the Party requiring such Person to keep such information confidential.

10.4 Use of Names. Except as expressly provided herein, neither Party will mention or otherwise use the name, logo or trademark of the other Party or any of its Affiliates (or any abbreviation or adaptation thereof) in any publication, press release, website or marketing and promotional materials, or other form of publicity, without the prior written approval of such other Party in each instance; [***]. The restrictions imposed by this Section 10.4 (Use of Name) will not prohibit either Party from making any disclosure identifying the other Party that, in the reasonable opinion of the disclosing Party’s counsel, is required by Applicable Law; provided that such Party will submit the proposed disclosure identifying the other Party in writing to the other Party as far in advance as reasonably practicable (and in no event less than [***] ([***]) Business Days prior to the anticipated date of disclosure) so as to provide a reasonable opportunity to comment thereon.

10.5 Publicity. Within [***] ([***]) days of the Effective Date (or such other period as mutually agreed to by the Parties), the Parties shall issue a press release in the form set forth in Schedule 10.5 (Press Release). After such initial press release, neither Party shall issue a press release or public announcement relating to this Agreement without the prior written approval of the other Party, which approval shall not be unreasonably withheld, conditioned or delayed, except that a Party may (a) once a press release or other public statement is approved in writing by both Parties, make subsequent public disclosure of the information contained in such press release or other written statement without the further approval of the other Party and (b) issue a press release or public announcement, including without limitation, the disclosure of this Agreement (or a summary thereof) in filings, as required, in the reasonable opinion of the publishing Party’s counsel, by Applicable Law (including by the rules or regulations of the United States Securities and Exchange Commission or any stock exchange on which the equity interests of such Party or its Affiliates (or any successor entity) are listed), provided, however, that such Party seeking disclosure will prepare such summary and a proposed redacted version of this Agreement as far in advance as reasonably practicable (and in no event less than [***] ([***]) Business Days prior to the anticipated date of disclosure) so as to provide a reasonable opportunity to comment thereon, and the other Party shall within such [***] ([***]) Business Day period, provide its comments, if any, which may be incorporated, in the reasonable discretion of the Party seeking disclosure.

10.6 Destruction or Return of Confidential Information. Upon the end of the Term, whether in its entirety or with respect to a specific Workflow Development Plan, Disclosing Party may request in writing to Receiving Party, and Receiving Party will, as requested by Disclosing Party except as and if necessary for such Receiving Party to exercise surviving rights under this Agreement following such expiration or termination, (a) at the Disclosing Party’s request, destroy, as soon as reasonably practicable, specific Confidential Information identified by the Disclosing Party in writing to the Receiving Party that are in Receiving Party’s possession and confirm such destruction in writing to Disclosing Party or (b) deliver to Disclosing Party, as soon as reasonably practicable, at Disclosing Party’s expense, all copies of such Confidential Information in the possession of Receiving Party; provided that the Receiving Party will be permitted to retain one copy of such Confidential Information for the sole purpose of performing any continuing obligations hereunder, as required by Applicable Law or for archival purposes. Notwithstanding the foregoing, Receiving Party also will be permitted to retain such additional copies of or any computer records or files containing such Confidential Information that have been created solely by Receiving Party’s automatic archiving and back-up procedures, to the extent created and retained in a manner consistent with Receiving Party’s standard archiving and back-up procedures, but not for any other use or purpose.

11. WARRANTIES AND DISCLAIMER; LIMITATION OF LIABILITY

11.1 Mutual Representations. Each Party hereby represents and warrants to the other Party, as of the Effective Date, as follows:

11.1.1 such Party is a corporation or limited liability company duly organized, validly existing and in good standing under the laws of the state in which it is incorporated;


11.1.2 such Party (a) has the corporate power and authority and legal right to enter into this Agreement, to perform its obligations and to grant the licenses hereunder and (b) has taken all necessary corporate action on its part to authorize the execution and delivery of this Agreement and the performance of its obligations hereunder;

11.1.3 this Agreement has been duly executed and delivered on behalf of such Party and constitutes a legal and valid obligation binding upon such Party and enforceable against it in accordance with its terms;

11.1.4 such Party has the right to grant the rights and licenses granted to the other Party pursuant to this Agreement; and

11.1.5 it has not entered into an agreement with a Third Party, or granted any right or license to any Third Party that conflicts with any of the rights, obligations or licenses granted to the other Party hereunder.

11.2 Mutual Covenants. Each Party hereby covenants to the other Party, as of the Effective Date, that:

11.2.1 all of its and its Affiliates’ employees who conduct any work under this Agreement will be, during the conduct of all such work, bound to a written agreement with such Party or its Affiliate to automatically assign all right, title and interest in and to their inventions and discoveries, whether or not patentable, to such Party as the sole owner thereof;

11.2.2 to the best of its knowledge, without further duty of inquiry, such Party will not

(a) employ or use any contractor or consultant that employs any Person debarred by the FDA (or subject to similar sanction of the EMA or other Regulatory Authority) or (b) employ any Person that is the subject of an FDA debarment investigation or proceeding (or similar proceeding of the EMA or other Regulatory Authority), in each of (a)-(b), in the conduct of its activities under this Agreement;

11.2.3 it will perform or cause to be performed the obligations assigned to it under this Agreement in good scientific manner and in compliance with all Applicable Laws; and

11.2.4 it shall not, during the Term, enter into an agreement with a Third Party, or grant any right or license to any Third Party relating to any of the intellectual property rights it Controls, or otherwise encumber such intellectual property rights it Controls, that would conflict with any of the rights, obligations or licenses granted to the other Party hereunder.

11.3 Additional Representations, Warranties and Covenants of BLI. As of the Effective Date, BLI further represents, warrants and, as applicable, covenants to Ginkgo that:

11.3.1 BLI has, as of the Effective Date, and to its current knowledge will have during the Term, the full right, power and authority to (a) grant all of the right, title and interest in the licenses and other rights granted or to be granted to Ginkgo under this Agreement and (b) perform its obligations under this Agreement;

11.3.2 neither BLI nor its Affiliates have granted, and BLI and its Affiliates will not grant, any liens or security interest on any assets, including Intellectual Property, that would limit the scope of any rights or licenses granted to Ginkgo hereunder;

11.3.3 neither BLI nor its Affiliates have knowledge of or have received any written notice of any claim that any Intellectual Property Controlled by a Third Party would be infringed or misappropriated by the activities contemplated under this Agreement, including Ginkgo’s use of the Beacon Platform to perform a general Workflow under this Agreement;

11.3.4 the Beacon Optofluidic Machines (including related Hardware and Software) and Consumables, at the time of delivery to Ginkgo, (a) shall have been manufactured, stored, shipped and delivered in accordance with Applicable Law and this Agreement; (b) to BLI’s knowledge, [***] and (c) shall be free from all liens, charges, encumbrances and security interests;

11.3.5 all services, including Services, shall be performed by or on behalf of BLI with requisite care, skill and diligence, by individuals who are appropriately trained and qualified, and in accordance with Applicable Law and industry standards;

11.3.6 to BLI’s knowledge [***], the use of the Beacon Platform as contemplated under this Agreement, but without any representation or warranty regarding [***] (a) [***] or (b) [***];


11.3.7 to BLI’s knowledge [***], (a) the use of the Beacon Platform as contemplated under this Agreement and (b) the performance of the activities Ginkgo is granted the right to conduct under Section 9.1 (Grants to Ginkgo) (but for both (a) and (b) no representation, warranty or covenant is given by BLI for Ginkgo Materials, Ginkgo Workflows or for Collaboration Workflows) [***]; and

11.3.8 BLI has independently developed all BLI Background IP or otherwise has a valid right to use and, as applicable, to permit Ginkgo and its permitted sublicensees to use, the BLI Background IP for all permitted purposes under this Agreement.

11.4 Additional Representations, Warranties and Covenants of Ginkgo. As of the Effective Date, Ginkgo further represents, warrants and, as applicable, covenants to BLI that:

11.4.1 Ginkgo has, as of the Effective Date, and will have during the Term, the full right, power and authority to (a) grant all of the right, title and interest in the licenses and other rights granted or to be granted to BLI under this Agreement and (b) perform its obligations under this Agreement;

11.4.2 Ginkgo has independently developed all Ginkgo Background IP or otherwise has a valid right to use, and, as applicable, to permit BLI and its permitted sublicensees to use, the Ginkgo Background IP for all permitted purposes under this Agreement; and

11.4.3 neither Ginkgo nor its Affiliates have granted, and Ginkgo and its Affiliates will not grant, any liens or security interest on any assets, including Intellectual Property, that would limit the scope of any rights or licenses granted to BLI hereunder.

11.5 DISCLAIMERS.

11.5.1 EXCEPT AS SPECIFICALLY SET FORTH IN THIS AGREEMENT, NEITHER PARTY MAKES ANY REPRESENTATIONS OR WARRANTIES OF ANY KIND CONCERNING ITS ACTIVITIES UNDER THIS AGREEMENT OR RESULTS OF ANY WORK PLAN AND HEREBY DISCLAIMS ALL REPRESENTATIONS AND WARRANTIES, EXPRESS OR IMPLIED, INCLUDING WARRANTIES OF MERCHANTABILITY, FITNESS FOR A PARTICULAR PURPOSE, NON-INFRINGEMENT OF INTELLECTUAL PROPERTY RIGHTS OF ITSELF OR THIRD PARTIES, VALIDITY, ENFORCEABILITY AND SCOPE OF PATENT RIGHTS, VALIDITY OF PATENT RIGHTS CLAIMS, WHETHER ISSUED OR PENDING, AND THE ABSENCE OF LATENT OR OTHER DEFECTS WHETHER OR NOT DISCOVERABLE.

11.5.2 BEACON PLATFORMS ARE SOLD “FOR RESEARCH USE ONLY. NOT FOR USE IN DIAGNOSTIC PROCEDURES.” GINKGO ACKNOWLEDGES THAT (I) BEACON PLATFORMS HAVE NOT BEEN APPROVED, CLEARED OR LICENSED BY THE UNITED STATES FOOD AND DRUG ADMINISTRATION OR ANY OTHER REGULATORY ENTITY WHETHER FOREIGN OR DOMESTIC FOR ANY SPECIFIC INTENDED USE, WHETHER RESEARCH, COMMERCIAL, DIAGNOSTIC OR OTHERWISE AND (II) GINKGO MUST ENSURE IT HAS ANY REGULATORY APPROVALS THAT ARE NECESSARY FOR GINKGO’S INTENDED USES OF BEACON PLATFORMS. GINKGO FURTHER AGREES TO COMPLY WITH ALL APPLICABLE LAWS AND REGULATIONS WHEN USING, MAINTAINING AND DISPOSING OF BEACON PLATFORMS.

11.6 No Consequential Damages. EXCEPT TO THE EXTENT ARISING (A) FROM A PARTY’S BREACH OF ARTICLE 10 (CONFIDENTIALITY), (B) [***] (E) FROM A PARTY’S FRAUD, GROSS NEGLIGENCE OR WILLFUL MISCONDUCT OR (F) IN CONNECTION WITH A PARTY’S INDEMNIFICATION OBLIGATIONS UNDER ARTICLE 12 (INDEMNIFICATION; INSURANCE), IN NO EVENT WILL EITHER PARTY BE LIABLE TO THE OTHER PARTY FOR ANY LOST PROFITS, INDIRECT, SPECIAL, INCIDENTAL, EXEMPLARY OR CONSEQUENTIAL DAMAGES OF ANY KIND ARISING OUT OF OR IN CONNECTION WITH THIS AGREEMENT, HOWEVER CAUSED AND ON ANY THEORY OF LIABILITY (WHETHER IN CONTRACT, TORT (INCLUDING NEGLIGENCE), STRICT LIABILITY OR OTHERWISE). THE LIMITATIONS SET FORTH IN THIS SECTION WILL APPLY EVEN IF A PARTY HAS BEEN ADVISED OF THE POSSIBILITY OF SUCH DAMAGES, AND NOTWITHSTANDING ANY FAILURE OF ESSENTIAL PURPOSE OF ANY LIMITED REMEDY.


11.7 Liability Limit. TO THE GREATEST EXTENT PERMITTED UNDER APPLICABLE LAW, IN NO EVENT WILL A PARTY’S AGGREGATE LIABILITY (ABOVE AMOUNTS ACTUALLY PAID OR REIMBURSED BY SUCH PARTY’S INSURER (TO THE EXTENT NOT SELF-INSURED)) FOR A CLAIM ARISING OUT OF OR RELATED TO THIS AGREEMENT UNDER ANY LEGAL OR EQUITABLE THEORY, INCLUDING BREACH OF CONTRACT, TORT (INCLUDING NEGLIGENCE), STRICT LIABILITY, AND OTHERWISE EXCEED [***], EXCEPT THAT (A) SUCH LIMITATION SHALL NOT APPLY TO (I) A PARTY’S BREACH OF ARTICLE 10 (CONFIDENTIALITY), [***], (V) A PARTY’S FRAUD, GROSS NEGLIGENCE OR WILLFUL MISCONDUCT OR (VI) A PARTY’S INDEMNIFICATION OBLIGATIONS UNDER ARTICLE 12 (INDEMNIFICATION; INSURANCE) AND (B) SUCH LIMITATION ON LIABILITY SHALL NOT INCLUDE ANY AMOUNTS ACCRUED AND ACTUALLY OWED PURSUANT TO THE TERMS OF THIS AGREEMENT.

12. INDEMNIFICATION; INSURANCE

12.1 Indemnification by BLI. BLI will indemnify, defend and hold Ginkgo and its Affiliates, and its and their officers, directors, employees, licensees, sublicensees, Permitted Subcontractors and agents (each, a “Ginkgo Indemnitee”) harmless from and against any and all suits, claims, proceedings and causes of action brought by a Third Party (collectively, “Claims”) and all associated damages, liabilities, expenses and losses, including reasonable legal expenses and reasonable attorneys’ fees (collectively, “Losses”), to the extent caused by or arising as a result of (a) the breach by BLI of this Agreement or material inaccuracy in any representation or warranty made by BLI under this Agreement, (b) the negligence, gross negligence, fraud or willful misconduct by a BLI Indemnitee in connection with this Agreement, (c) [***], and (d) any Claims by BLI’s employees, Permitted Subcontractors or agents for worker’s compensation or other liability coverage, insurance, benefits, and other employee-related claims, in each case of clauses (a)-(d) of this Section 12.1 (Indemnification by BLI), except to the extent Ginkgo has an obligation to indemnify an BLI Indemnitee in connection with such Claims and Losses pursuant to Section 12.2 (Indemnification by Ginkgo).

12.2 Indemnification by Ginkgo. Ginkgo will indemnify, defend and hold BLI and its Affiliates, and its and their officers, directors, employees, Permitted Subcontractors and agents (each, an “BLI Indemnitee”) harmless from and against any and all Claims and Losses, to the extent caused by or arising as a result of (a) the breach by Ginkgo of this Agreement or material inaccuracy in any representation or warranty made by Ginkgo under this Agreement, (b) the negligence, gross negligence, fraud or willful misconduct by a Ginkgo Indemnitee in connection with this Agreement, (c) [***] and (d) any Claims by Ginkgo’s employees, Permitted Subcontractors or agents for worker’s compensation or other liability coverage, insurance, benefits, and other employee-related claims, and (e) the development, manufacture, use, handling, storage, importation, distribution, sale or other commercialization of Ginkgo Inventions by Ginkgo or its Affiliates, agents, licensees, sublicensees or customers, in each case of clauses (a)-(e) of this Section 12.2 (Indemnification by Ginkgo) except to the extent BLI has an obligation to indemnify a Ginkgo Indemnitee in connection with such Claims and Losses pursuant to Section 12.1 (Indemnification by BLI).

12.3 Procedure. Any Party seeking indemnification under this Article 12 (Indemnification; Insurance) will promptly notify the indemnifying Party in writing after the Party seeking indemnification has received notice of any Claim. The Party seeking indemnification will reasonably cooperate with the indemnifying Party in the defense of any such Claim at the cost of the indemnifying Party. An indemnifying Party will not be obligated to defend, indemnify and hold harmless the Party seeking indemnification if, and only to the extent, the Party seeking indemnification delays providing notice of a Claim to the indemnifying Party and the delay in notice substantively prejudices the ability of the indemnifying Party to successfully defend the Claim. The indemnifying Party may not make any admission on behalf of the Party seeking indemnification [***]. Notwithstanding the foregoing, the Party seeking indemnification may at any time choose to be represented by its own counsel at its expense (or at the indemnifying Party’s expense if the indemnifying Party’s defense is inadequate as determined by a reasonableness standard).

12.4 Insurance. Each Party will obtain and carry in full force and effect the minimum insurance requirements set forth below. Such insurance (i) will be primary insurance with respect to each Party’s own participation under this Agreement and (ii) will be issued by a recognized insurer rated by A.M. Best “A-VII” (or its equivalent) or better, or an insurer pre-approved in writing by the other Party.


12.4.1 Types and Minimum Limits. The types of insurance, and minimum limits will be: (i) any insurance policy that is required by any Applicable Law, including [***] and [***] policies where applicable; and (ii) [***] insurance with a minimum limit of [***] Dollars ($[***]) per occurrence and [***] Dollars ($[***]) in the aggregate. For clarity, [***].

12.4.2 Certificates of Insurance. Upon request by a Party, the other Party will provide Certificates of Insurance evidencing compliance with this Section 12.4 (Insurance). The insurance policies will be under an occurrence form, but if only a claims-made form is available to a Party, then such Party will continue to maintain such insurance after Expiration or the termination of this Agreement for a period of [***] ([***]) years following the end of the Term.

13. TERM AND TERMINATION

13.1 Term.

13.1.1 General. This Agreement shall commence on the Effective Date and, unless sooner terminated in accordance with its terms, including by Ginkgo pursuant to Section 7.3 (Buy-Down Election) or extended by the mutual written agreement of the Parties, shall continue until the Intended End of Term (such time period, as may be extended pursuant to this Section 13.3.1 (Term – General), the “Term”); provided that, if, at the expiration of the Intended End of Term, Ginkgo has paid the Minimum Cumulative Purchase Commitment, but will not have paid to BLI the Full Purchase Target, then the Term of this Agreement shall automatically extend for an additional [***] ([***]) year period from the date of the expiration of the then-Intended End of Term so that, among other things, BLI may potentially receive the benefit of the Full Purchase Target and Ginkgo may receive the continuing benefit of royalty-free licenses.

13.1.2 Effects of Expiration. Upon Expiration of this Agreement: (i) the licenses granted to BLI from Ginkgo pursuant to Section 9.2 (Grants to BLI) and the licenses granted to Ginkgo from BLI in Section 9.1.1 (Scope of Grants) and 9.1.2 (License Grant to Exploit [***]) shall survive and become perpetual, irrevocable, and royalty-free, (ii) no royalties shall be payable by Ginkgo on the sale or transfer of a Licensed Product, (iii) the pricing terms for Beacon Optofluidic Machines, Consumables, and services (including Services) set forth in Section 5.2.2 (Pricing – Adjustments) shall [***], (iv) the restrictions on BLI set forth in Section 6.2.1 (Restrictions on BLI) shall survive to the extent set forth therein and (v) [***].

13.2 Termination With Cause.

13.2.1 Material Breach. If either Party commits a material breach of any of its obligations under this Agreement, then the other Party may give the breaching Party written notice of such material breach. If the breaching Party fails to cure such breach within sixty (60) days after such notice, then the non-breaching Party may terminate this Agreement upon written notice to the breaching Party in its entirety. Notwithstanding the foregoing, if the breaching Party has a bona fide dispute as to whether such breach has occurred or has been cured, it will so notify the non-breaching Party in writing and the cure period will be tolled until such dispute is resolved pursuant to Section 14.5.2 (Dispute Resolution). Upon a final determination of breach or failure to cure, the breaching Party will have the remainder of the cure period to cure such breach. [***].

13.2.2 Bankruptcy. Each Party will have the right to terminate this Agreement immediately in its entirety by giving written notice of termination to the other Party, if the other Party files a voluntary petition, or if an involuntary petition is granted in respect of the other Party and appeal proceedings are not commenced within [***] ([***]) Business Days from the date of such petition under the bankruptcy provisions of Applicable Law, or the other Party is declared insolvent, undergoes voluntary or involuntary dissolution, or makes an assignment for the benefit of its creditors, or suffers the appointment of a receiver or trustee over all, or substantially all, of its assets or properties. All rights and licenses under or to Intellectual Property granted under or pursuant to this Agreement by one Party to the other are, and will otherwise be deemed to be, for purposes of Section 365(n) of the U.S. Bankruptcy Code, licenses of rights to “intellectual property” as defined under Article 101 (52) of the U.S. Bankruptcy Code. The Parties agree that each Party will retain and may fully exercise all of its rights and elections under the U.S. Bankruptcy Code or such similar laws in a jurisdiction outside the United States.


13.3 Effects Termination.

13.3.1 General. As of the effective date of any early termination of this Agreement, (a) neither Party shall be relieved of any obligation that accrued prior to such effective date of termination; (b) except as otherwise expressly provided herein, all rights and obligations of each Party hereunder will cease and (c) each Party shall return or destroy all Confidential Information of the other Party that is in its possession, subject to and as more fully set forth in Section 10.6 (Destruction or Return of Confidential Information). BLI shall fulfill any Production Purchase orders placed by Ginkgo prior to the effective date of termination and Ginkgo shall pay for such orders pursuant to Section 5.3.3 (Delivery and Payment). For all Development Purchases, BLI shall deliver to Ginkgo all works-in-progress and any report or analysis prepared prior to the effective date of termination within [***] ([***]) days after the effective date of termination. “Expiration” of this Agreement occurs only when[***].

13.3.2 Effects of Termination Based Upon Ginkgo’s Buy-Down Election. In the event that termination is the result of Ginkgo exercising the Buy-Down Election (including payment of the Buy-Down Amount), then, as of the effective date of termination: (a) any and all existing Headstart Periods shall immediately be deemed to have accelerated to conclusion, (b) the restrictions on BLI set forth in Section 6.2.1 (Restrictions on BLI) shall terminate; (c) the licenses granted to Ginkgo from BLI in Section 9.1.1 (Scope of Grants) and 9.1.2 (License Grant to Exploit [***]) shall survive and become perpetual and irrevocable; (d) the licenses granted to BLI from Ginkgo pursuant to Section 9.2 (Grants to BLI) shall survive; (e) any Licensed Products arising from Collaboration Workflows or Ginkgo Workflows developed and used by Ginkgo to good effect prior to the effective date of termination shall be [***] on any sale or transfer of such Licensed Product, (f) (i) for any Licensed Products arising from Workflows other than those set forth in subclause (e) of this Section 13.3.2 (Effects of Termination Based on Ginkgo’s Buy-Down Election), Ginkgo shall pay [***] and (ii) Ginkgo shall pay [***] for as long as one or more Beacon Optofluidic Machines are in operation at Ginkgo, (g) the pricing terms for Beacon Optofluidic Machines, Consumables, and services (including Services) shall be consistent with then-current BLI List Prices, and (h) Ginkgo shall pay BLI for any amounts due for work performed by BLI under and in accordance with this Agreement prior to the effective date of termination to the extent that BLI cannot reasonably cancel or reallocate such work.

13.3.3 Effects of Termination Based Upon an Uncured Ginkgo Breach, Insolvency or Extended Force Majeure Event affecting Ginkgo. In the event that termination is the result of an uncured, material Ginkgo breach of the Agreement under Section 13.2.1 (Material Breach), for Ginkgo’s insolvency pursuant to Section 13.2.2 (Bankruptcy) or for an Extended Force Majeure Event with respect to Ginkgo pursuant to Section 14.8 (Force Majeure), then, as of the effective date of termination: (a) any and all existing Headstart Periods shall immediately be deemed to have accelerated to conclusion, (b) the restrictions on BLI set forth in Section 6.2.1 (Restrictions on BLI) shall immediately deemed to have terminated; (c) the licenses granted to BLI from Ginkgo pursuant to Section 9.2 (Grants to BLI) shall survive, (d) the licenses granted to Ginkgo under Sections 9.1.1(c) (Grants to Ginkgo – Commercial License) and 9.1.2 (License Grant to Exploit [***]) shall survive, but shall convert immediately into royalty-bearing licenses as set forth in subclause (e) hereof, (e) Ginkgo shall to pay to BLI [***]; provided that in the event such uncured material breach is [***], Ginkgo, at its election to be made on or before the [***] ([***]th) day following the effective date of termination (or, if later, within [***] ([***]) days of learning of the relevant royalties for Licensed Products), may elect, in lieu of royalties, to pay to BLI [***]; (f) the pricing terms for Beacon Optofluidic Machines, Consumables, and services (including Services) shall be consistent with then-current BLI List Prices; and (g) Ginkgo shall pay BLI for any amounts due for work performed by BLI under and in accordance with this Agreement prior to the effective date of termination or materials ordered prior to the effective date of termination to the extent that BLI cannot reasonably cancel or reallocate such work or materials.

13.3.4 Effects of Termination Based Upon an Uncured BLI Breach or Insolvency. In the event that termination is the result of an uncured material BLI breach of the Agreement under Section 13.2.1 (Material Breach) or for BLI’s insolvency pursuant to Section 13.2.2 (Bankruptcy), then: (a) Ginkgo’s obligations to pay to BLI the Minimum Cumulative Purchase Commitment under Section 7.2.2(a) (Contract Year Purchase Targets and Commitments) shall terminate, (b) BLI shall grant royalty-free status on all Licensed Products developed using the Beacon Platform and no royalties shall be payable by Ginkgo on any sale or transfer of such Licensed Products, (c) Ginkgo’s obligations to pay to BLI the FOU License Fees pursuant to Section 7.4.1 (License Fees) shall terminate, (d) the licenses granted to Ginkgo from BLI in Section 9.1.1 (Scope of Grants) and 9.1.2 (License Grant to Exploit [***]) shall


survive [***], (e) the licenses granted to BLI from Ginkgo pursuant to Section 9.2 (Grants to BLI) shall terminate, except with respect to any sublicenses granted by BLI under Section 9.2.2 for products and processes that were sold, commercialized or performed by BLI or to or for Third Parties prior to termination, which shall survive and such termination, but only if such sublicenses were granted in accordance with this Agreement, (f) the pricing terms for Beacon Optofluidic Machines, Consumables, and services (including Services) set forth in Section 5.2.2 (Pricing – Adjustments) shall survive for a period of [***] from the effective date of termination, (g) the restrictions on BLI set forth in Section 6.2.1 (Restrictions on BLI) shall survive to the extent set forth therein and (h) any and all existing Headstart Periods shall survive for their duration. If any such uncured, material BLI breach is solely due to BLI’s material failure to perform its supply-related obligations under this Agreement, Section 13.4 (Rights in Lieu of Termination for BLI’s Material Breach of Supply Obligations) may apply in Ginkgo’s sole discretion.

13.3.5 Effects of Termination Based Upon Ginkgo’s Election to Terminate based on a BLI Extended Force Majeure Event. In the event that termination is elected by Ginkgo based upon an Extended Force Majeure Event with respect to BLI pursuant to Section 13.2.1 (Force Majeure), then, as of the effective date of termination: (a) any and all existing Headstart Periods shall survive for their duration as if this Agreement had not been terminated, (b) the restrictions on BLI set forth in Section 6.2.1 (Restrictions on BLI) shall survive to the extent set forth therein as if this Agreement had not been terminated; (c) the licenses granted to Ginkgo from BLI in Section 9.1.1 (Scope of Grants) and 9.1.2 (License Grant to Exploit [***]) shall survive and become perpetual, irrevocable and, subject to clause (f) of this Section 13.3.2, royalty-free; (d) the licenses granted to BLI from Ginkgo pursuant to Section 9.2 (Grants to BLI) shall survive; (e) any Licensed Products arising from Collaboration Workflows or Ginkgo Workflows developed or used by Ginkgo to good effect prior to the effective date of termination shall be royalty-free and no royalties shall be payable by Ginkgo on any sale or transfer of such Licensed Product; provided that, if [***], if [***], then, in order for the sale or transfer of Licensed Products arising from Collaboration Workflows or Ginkgo Workflows developed or used by Ginkgo to good effect prior to the effective date of termination to be royalty-free, Ginkgo must pay to BLI [***], but Ginkgo will have [***] ([***]) days following the effective date of termination to decide whether to make such payment to BLI or to pay royalties for such Licensed Products under subclause (f) of this Section 13.3.5 (Effects of Termination Based Upon Ginkgo’s Election to Terminate based on a BLI Extended Force Majeure Event), (f) (i) for any Licensed Products arising from Workflows other than as set forth in subclause (e) of this Section 13.3.5 (Effects of Termination Based Upon Ginkgo’s Election to Terminate based on a BLI Extended Force Majeure Event), Ginkgo shall pay [***] and (ii) Ginkgo shall pay [***]; provided that, if [***], then [***], (g) the pricing terms for Beacon Optofluidic Machines, Consumables, and services (including Services) shall be consistent with then-current BLI List Prices and (h) Ginkgo shall pay BLI for any amounts due for work performed by BLI under and in accordance with this Agreement prior to the effective date of termination to the extent that BLI cannot reasonably cancel or reallocate such work.

13.3.6 Non-Limitation of Remedies. Nothing in this Section 13.3 (Effects of Expiration and Termination) limits or precludes any other remedies available to a Party, including for example, the seeking and obtaining of injunctive relief.

13.3.7 Annual Royalty Update. The Parties hereby acknowledge that, if this Agreement is terminated, then, depending on the manner of termination, Ginkgo may, as more fully set forth in Section 13.3 (Effects of Termination), be required to pay royalties to BLI with respect to Licensed Product, which royalties will be in line with BLI’s then-standard commercial terms. In order for Ginkgo to more fully understand the royalty that may be owed to BLI in the event this Agreement is terminated, on an annual basis, starting at the end of the [***] Contract Year, BLI will provide Ginkgo, in writing, its then-current commercial terms with respect to royalties for the Licensed Products.

13.4 Rights in Lieu of Termination for BLI’s Material Breach of Supply Obligations. In the event that Ginkgo has the right to terminate this Agreement under Section 13.2.1 (Material Breach) due to a material breach of BLI to perform its supply-related obligations under this Agreement (for clarity, this shall not include (a) [***] or (b) [***], Ginkgo may elect by written notice to BLI to, instead of terminating this Agreement, keep this Agreement and, without limiting any other right or remedy under Applicable Law or this Agreement, to decrease the amount of the Minimum Cumulative Purchase Commitment for the current and future Contract Years, as well as the Full Purchase Target, in each case in amounts reasonably mutually agreed upon by the Parties in good faith in accordance with this Section 13.4 (Rights in Lieu of Termination for BLI’s Material Breach of Supply Obligations). Following any notice by Ginkgo to BLI under this Section 13.4 (Rights in Lieu of Termination for BLI’s Material Breach of Supply Obligations), the Parties shall (i) discuss and implement in good faith a plan to address the supply breach by BLI


and shall discuss in good faith potential approaches to prevent such breach from reoccurring, including a modification to Ginkgo’s forecasts and BLI’s obligation to meet a certain percentage of such forecasts and (ii) discuss and implement reductions to the Minimum Cumulative Purchase Commitment for the current and future Contract Years, as well as reductions to the Full Purchase Target, which reductions will be made based on [***].

13.5 Determination of Use of Workflow to Good Effect. In the event the Parties disagree as to whether a Collaboration Workflow or Ginkgo Workflow has been developed and used by Ginkgo to good effect prior to termination pursuant to Section 13.3.2 (Effects of Termination Based Upon Ginkgo’s Buy-Down Election) or Section 13.3.5 (Effects of Termination Based upon Ginkgo’s Election to Terminate based on a BLI Extended Force Majeure Event), with respect to each, at either Party’s request, the dispute shall be resolved in an accelerated manner by an Expert Panel subject to the process and cost allocation set forth in Section 3.5.3.

13.6 Surviving Provisions. In addition to this Section 13.6 (Surviving Provisions), the following Sections and Articles will survive Expiration and any termination of this Agreement: Article 1 (Definitions), Section 2.2.3 (Retooling and Development Costs) (solely with respect to (i) [***] and (ii) [***]), Section 2.4 (Costs Under Workflow Development Plans) (solely with respect to costs incurred prior to the end of the Term), Section 2.5 (Termination of Workflow Development Plans) (solely with respect to the effects of termination of a Workflow Development Plan as set forth therein), Section 2.8 (Records) (solely for [***] ([***]) years following the end of the Term or for such longer period as required by Applicable Law), Section 3.9 (Expenses) (solely with respect to expenses incurred prior to the end of the Term), Section 4.1.10 (solely to the extent the BLI Terms and Conditions need to survive in order to give effect to the surviving terms of this Agreement), Section 6.1 (Headstart Period) solely to the extent any Headstart Periods extend beyond the Term) and further subject to each of Section 13.3.2 (Effects of Termination Based Upon Ginkgo’s Buy-Down Election), Section 13.3.3 (Effects of Termination Based Upon an Uncured Ginkgo Breach, Insolvency or Extended Force Majeure Event affecting Ginkgo) or Section 13.3.5 (Effects of Termination Based upon Ginkgo’s Election to Terminate based on a BLI Extended Force Majeure Event), as applicable), Section 6.2.1 (Restrictions on BLI) (solely for the [***] ([***]) month period following the end of the Term), Section 7.5 (Manner of Payments) through Section 7.10 (Late Payments) (solely with respect to any unpaid amounts that accrued prior to the end of the Term or that accrue at any time under Section 7.4.2 (Milestone Payments)), Article 8 (Intellectual Property Ownership; Use of Data), but excluding Section 8.4 (Prosecution and Enforcement Rights), Section 8.5.1 (Disclosure), and Section 8.6 (Notification of New Products; Early Access), Article 10 (Confidentiality), Section 11.5 (Disclaimers), Section 11.6 (No Consequential Damages), Section 11.7 (Liability Limit, Section 12.1 (Indemnification by BLI) through Section 12.3 (Procedure), Section 13.1.2 (Effects of Expiration) (solely for Expiration of this Agreement and only for [***] ([***]) years for under clause (iii) thereof), Section 13.3 (Effects of Termination) (solely for termination of this Agreement), Section 13.5 (Determination of Use of Workflow to Good Effect), Section 14.5 (Governing Law; Dispute Resolution; Equitable Remedies), Section 14.9 (Further Assurances) and Section 14.15 (Interpretation).

 

14.

MISCELLANEOUS

14.1 Notice. Any notice given under this Agreement must be in writing and delivered either to the addresses set forth below in person or via overnight courier (or to such other addresses of which the Parties may from time to time be notified in writing) and each such notice will be effective upon actual receipt:

If to Ginkgo:

Ginkgo Bioworks, Inc.

27 Drydock Avenue, 8th Floor

Boston, MA 02210

Attn: [***]

With a copy to:

Ginkgo Bioworks, Inc.

27 Drydock Avenue, 8th Floor

Boston, MA 02210

Attn: [***]


with an electronic copy to [***]

With a copy to:

[***]

If to BLI:

Berkeley Lights, Inc.

5858 Horton Street, Suite 320

Emeryville, CA 94608

Attn: [***]

With a copy to:

Berkeley Lights, Inc.

5858 Horton Street, Suite 320

Emeryville, CA 94608

Attn: [***]

With an electronic copy to: [***]

With a copy to:

[***]

Such notice will be deemed to have been given as of the date delivered by hand or on the second business day (at the place of delivery) after deposit with an internationally recognized overnight delivery service.

14.2 Independent Contractors. It is understood that both Parties hereto are independent contractors and are engaged in the operation of their own respective businesses, and neither Party is to be considered the agent of the other. Neither Party has any authority to enter into any contracts or assume any obligations for the other.

14.3 Severability. If any provision of this Agreement is held illegal, invalid or unenforceable by a court of competent jurisdiction, such decision will in no way affect the validity or enforceability of any other provisions, which will remain in full force and effect, and the Agreement will be interpreted as if such provision were not included in this Agreement; provided that the Parties will negotiate in good faith an amendment to this Agreement that replaces the unenforceable provision with an enforceable provision (to the extent possible) that reflects their initial intent.

14.4 Assignment.

14.4.1 Permitted Assignments. Neither Party may assign or otherwise transfer this Agreement or any rights hereunder, without the prior written consent of the other Party; provided that either Party may assign or otherwise transfer this Agreement or any rights hereunder (a) to a wholly-owned subsidiary of such Party or (b) in connection with the transfer or sale of all or substantially all of the business or assets of such Party related to the subject matter of this Agreement, whether by merger, consolidation, divestiture, restructure, sale of stock sale of assets or otherwise its successor, whether in a merger, sale of stock or sale of assets or any other transaction, in each case (a)-(b), without first obtaining the prior written consent of the other Party, so long as the non-assigning Party is notified in writing of such assignment within [***] ([***]) days following such assignment; provided further that, in no event may BLI assign this Agreement, in whole or in part, to any Person [***] without first obtaining Ginkgo’s prior written consent. Any purported assignment of this Agreement by a Party in contradiction to this Section 14.4 (Assignment) will be void and of no effect.


14.4.2 Transferee. Notwithstanding anything to the contrary set forth herein, if a Party (the “Assigning Party”) assigns or transfers this Agreement to a permitted Third Party pursuant to Section 14.4.1 (Permitted Assignments) (any such Third Party, a “Transferee”), then the Intellectual Property that was held or developed by such Transferee prior to or after such assignment or transfer (other than Intellectual Property developed by such Transferee in the course of conducting the Assigning Party’s activities under this Agreement to the extent such Intellectual Property would have been so included had it been discovered, created, made, developed, conceived or reduced to practice by such Assigning Party) shall not be deemed to be Intellectual Property Controlled by such Assigning Party, and shall also not be affected or otherwise encumbered in any manner, including without limitation, by being subject to any rights of or licenses under this Agreement. Furthermore, such Transferee (and Affiliates of such Transferee: (i) existing immediately prior to such merger, acquisition, assignment or transfer; or (ii) formed on or after such merger, acquisition, assignment or transfer, which are not controlled by (as defined under the Affiliate definition in Section 1.2 (“Affiliate definition)) the Assigning Party) shall be excluded from the Affiliate definition for purposes of determining Intellectual Property that is subject to this Agreement.

14.5 Governing Law; Dispute Resolution; Equitable Remedies.

14.5.1 Governing Law. This Agreement will be construed and interpreted in accordance with the laws of the State of Delaware, without regard to any choice of law provision.

14.5.2 Dispute Resolution. Except with respect to those disputes in which a Party seeks equitable relief pursuant to Section 14.5.3 (Equitable Remedies) or for which a Party or Person is expressly given final decision-making authority as set forth in Section 3.5 (Decision-Making), the Parties, through their Senior Officers, will make a good faith effort to settle any disputes that may arise between them with respect to this Agreement. If the Parties do not settle the matter within [***] ([***]) days after the delivery by one Party of written notice (the “Arbitration Notice”) to the other Party involved, then the Parties will submit the matter to binding arbitration in Wilmington, Delaware. All matters so submitted to arbitration will be settled by three (3) arbitrators in accordance with the [***], or its successor (the “[***] Rules”). In the event of a conflict between [***] Rules and this Agreement, this Agreement shall govern. Each Party will designate an arbitrator and the Parties will cause the designated arbitrators to mutually agree upon and to designate a third arbitrator who will serve as chairperson; provided, however, that failing such agreement within [***] ([***]) days of delivery of the Arbitration Notice, the third (3rd) arbitrator will be appointed in accordance with [***] Rules within an additional [***] ([***]) days. The Parties shall arrange for a hearing to occur and be completed within [***] ([***]) days after the appointment of the third (3rd) arbitrator, which hearing shall last no longer than [***], unless the arbitral panel believes a longer period is required, in which case the hearing may last [***]. The Parties will cause the arbitrators to decide the matter to be arbitrated within [***] ([***]) days after the close of evidence unless the chairperson arbitrator determines, at the request of any Party or on his or her own initiative, that such time period should be extended, in which case such time period may not be extended beyond an additional [***] ([***]) day period. Each of Ginkgo and BLI will be permitted to serve one set of document production requests with no more than [***] ([***]) requests; no more than [***] ([***]) interrogatories, including subparts, no more than [***] ([***]) requests for admissions; no more than [***] ([***]) subpoenas to Third Parties; and no more than [***] ([***]) notices of deposition per side, in each case, unless the arbitral panel directs otherwise. Any documents not in English that are produced by a Party will be accompanied by a translation into English, which translation will not be binding upon the other Party or the arbitrators. Each Party covenants and agrees that (a) it will produce documents as required by this Section 14.5.2 (Dispute Resolution), and (b) it will make its employees, and will use commercially reasonable efforts to make its former employees, available for depositions and hearing testimony as requested by the other Party. The final decision of the majority of the arbitrators shall be in writing, in all events follow governing law and will be furnished to all the Parties in such dispute. Judgment on such decision may be entered in any court having jurisdiction. Such decision may be used in a court of law only for the purpose of seeking enforcement of the arbitrators’ award. Except as required by Applicable Law or to enforce an arbitrators’ award, neither Party may disclose the existence, contents or results of an arbitration brought in accordance with this Agreement, or the evidence produced by its opposing Parties, or any analysis or summaries derived from such evidence. The Parties agree that all applicable statutes of limitation and time-based defenses (such as estoppel and laches) will be tolled while the procedures set forth in this Section 14.5.2 (Dispute Resolution) are pending. The Parties will cooperate in taking any actions necessary to achieve this result. Except as may be determined by the arbitrators, neither Party shall be penalized for delays resulting from dispute resolution conducted pursuant to this Section 14.5.2 (Dispute Resolution).


14.5.3 Equitable Remedies; Single Forum. Notwithstanding any other terms of this Agreement, either Party may seek a preliminary injunction or other provisional equitable relief in any court of competent jurisdiction as permitted by Applicable Law. At all times while any claim, action, suit or other proceeding between the Parties and/or any of their Affiliates (or among the Parties and/or any of their Affiliates and one or more Third Parties) arising out of or relating to this Agreement is pending in any court of competent jurisdiction, no dispute that is justiciable and can be joined to such pending claim, action, suit or other proceeding shall be submitted to arbitration pursuant to Section 14.5.2 (Dispute Resolution) without both Parties’ mutual consent and, instead, either Party may join such dispute to the pending claim, action, suit or other proceeding by including such dispute in its pleadings or amending its pleadings. In the event that a motion to amend is required to achieve such joinder, the non-moving Party shall consent to such motion.

14.6 Entire Agreement; Amendment and Waiver. This Agreement, together with the Exhibits and Schedules attached hereto, sets forth and constitutes the entire agreement and understanding between the Parties with respect to the subject matter hereof and all prior agreements, understandings, promises and representations, whether written or oral, with respect thereto are superseded hereby. This Agreement may not be amended except by a writing signed by authorized representatives of both Parties. The failure of a Party at any time or times to require performance of any provision hereof will in no manner affect its rights at a later time to enforce the same. To be valid, a waiver must be in writing and signed by an authorized representative of the Party having the right that is waived or to whom the obligation to be waived is owed.

14.7 English Language. This Agreement will be written and executed in, and all other communications under or in connection with this Agreement will be in, the English language. Any translation into any other language will not be an official version thereof, and in the event of any conflict in interpretation between the English version and such translation, the English version will control.

14.8 Force Majeure. Any delay in the performance of any of the duties or obligations (other than payment obligations) of either Party hereto caused by a Force Majeure Event (defined below) shall not be considered a breach of this Agreement and the time required for performance shall be extended for a period equal to the period of such delay. “Force Majeure Event” shall mean acts of God, acts of the public enemy, war, terrorism, insurrections, riots, injunctions, embargoes, fires, explosions, floods, or other unforeseeable causes beyond the reasonable control and without the fault or negligence of the Party who is so prevented or delayed from fulfilling its obligations under this Agreement by such Force Majeure Event (the “Affected Party”). The Affected Party shall give prompt written notice to the other Party of such cause and shall take whatever reasonable steps are appropriate in the other Party’s discretion to relieve the effect of such cause as rapidly as possible. The Party not directly affected by the Force Majeure Event shall have the right to terminate this Agreement with written notice effective upon receipt if Force Majeure Event continues to prevent performance or compliance in any material respect by the other Party for a period of more than [***] ([***]) days or should [***] ([***]) Force Majeure Events apply to the performance of such other Party during any [***] (each a “Extended Force Majeure Event”).

14.9 Further Assurances. Each Party will duly execute and deliver, or cause to be duly executed and delivered, such further instruments and do and cause to be done such further acts and things, including the filing of such assignments, agreements, documents, and instruments, as may be necessary or as the other Party may reasonably request in connection with this Agreement or to carry out more effectively the provisions and purposes hereof, or to better assure and confirm unto such other Party its rights and remedies under this Agreement.

14.10 Third Party Beneficiaries. There are no Third Party beneficiaries under this Agreement, except to the extent a Third Party is indemnified pursuant to Article 12 (Indemnification; Insurance); provided that, in no event will any Third Party entitled to indemnification pursuant to Article 12 (Indemnification; Insurance) be allowed to enforce the terms thereof against a Party.

14.11 Export Control. This Agreement is made subject to any restrictions concerning the export of products or technical information from the United States or other countries which may be imposed upon the Parties from time to time. Each Party agrees that it will not export, directly or indirectly, any technical information acquired from the other Party under this Agreement or any products using such technical information to a location or in a manner that at the time of export requires an export license or other governmental approval, without first obtaining the applicable license, approval, or written consent to do so from the appropriate agency or other governmental entity.


14.12 References. Unless otherwise specified, (a) references in this Agreement to any Article, Section, Exhibit or Schedule will mean references to such Article, Section, Exhibit or Schedule of this Agreement, (b) references in any Section to any clause are references to such clause of such Section and (c) references to any agreement, instrument or other document in this Agreement refer to such agreement, instrument or other document as originally executed or, if subsequently amended, replaced or supplemented from time to time, as so amended, replaced or supplemented and in effect at the relevant time of reference thereto.

14.13 Attachments. In the event of any inconsistencies between this Agreement and any Exhibits, Schedules or other attachments hereto, the terms of this Agreement will control, unless the relevant Exhibit, Schedule or other attachment explicitly references its inconsistency with this Agreement and states that it shall control.

14.14 Non-Solicit. Neither Party will, [***], directly or indirectly with or through any Person, solicit for employment any Person who is an employee of the other Party; provided, however, that general solicitation of the public for employment shall not constitute a solicitation hereunder so long as such general solicitation is not designed to target any such Person. In the event that a Party solicits and then hires an employee of the other Party in violation of this Section 14.4 (Non-Solicit), the hiring Party shall, [***], within [***] ([***]) days of such hire, pay the other Party an amount equal to the [***] cash compensation actually paid to the individual ([***]) by the non-hiring Party in the immediately prior calendar year and, further, if the individual solicited and then hired in violation of this is a Key Person under Section 5.4.1(b) (Dedicated FTEs; Key Persons), then BLI shall have [***] ([***]) months to identify an employee as the individual to replace such Key Person and any (a) [***] or (b) [***], in each case (a)-(b), to the extent due to the absence of such Key Person performing a Workflow Development Plan upon which the Key Person was engaged, shall be deemed waived for that [***] month period.

14.15 Interpretation. All headings are for convenience only and will not affect the meaning of any provision of this Agreement. The Parties acknowledge that each Party has read and negotiated the language used in this Agreement. Because both Parties participated in negotiating and drafting this Agreement, no rule of construction will apply to this Agreement which construes ambiguous language in favor of or against either Party by reason of that Party’s role in drafting this Agreement. Except where the context expressly requires otherwise, (a) the use of any gender herein will be deemed to encompass references to either or both genders, and the use of the singular will be deemed to include the plural (and vice versa), (b) the words “include,” “includes” and “including” will be deemed to be followed by the phrase “without limitation,” whether or not so appearing herein, (c) the word “will” will be construed to have the same meaning and effect as the word “shall,” (d) any reference herein to any Person will be construed to include the Person’s successors and permitted assigns, (e) the words “herein,” “hereof” and “hereunder,” and words of similar import, will be construed to refer to this Agreement in its entirety and not to any particular provision hereof, (f) references to any Applicable Law, rule or regulation, or article, section or other division thereof, will be deemed to include the then-current amendments thereto or any replacement or successor Applicable Law, rule or regulation thereof and (g) the term “or” will be interpreted in the inclusive sense commonly associated with the term “and/or.”

14.16 Counterparts. This Agreement may be executed in one or more counterparts, each of which, when executed and delivered by facsimile, electronic transmission or by mail delivery, will be deemed an original and all of which will constitute one and the same instrument.

[Signature Page Directly Follows]


IN WITNESS WHEREOF, the Parties hereto have caused this Agreement to be executed as of the Effective Date by their respective duly authorized representatives.

 

GINKGO BIOWORKS, INC.     BERKELEY LIGHTS, INC.
By:  

/s/ Barry Canton

    By:  

/s/ Keith Breinlinger

Name:   Barry Canton     Name:   Keith Breinlinger
Title:   CTO     Title:   CTO

Exhibit 10.38

 

  LOGO
 

http://ginkgobioworks.com/

27 Drydock Ave, Floor 8

  Boston, MA 02210
  Phone: 1-877-422-5362

October 7, 2020

Mark Dmytruk

Boston, MA

Dear Mark:

On behalf of Ginkgo Bioworks, Inc. (“Ginkgo”), I am pleased to confirm our employment offer to you as Chief Financial Officer, reporting to Jason Kelly. You will be employed on a full-time basis starting on 11/9/2020 or at another mutually agreed upon date. The expected responsibilities of your position are highlighted on the description page enclosed with this letter; however, your responsibilities and/or supervisor may change over time as Ginkgo’s needs evolve. As an employee of Ginkgo, you will be entitled to compensation and benefits as set forth below:

 

  1.

Your base salary, to be paid in accordance with the salary payment procedures of Ginkgo, will be $425,000 per year. Your salary may be adjusted by Ginkgo at any time in accordance with normal business practice and at Ginkgo’s sole discretion.

 

  2.

Subject to the approval of Ginkgo’s Board of Directors, you may be granted a Restricted Stock Unit (RSU) for 45,000 shares of Ginkgo’s common stock under Ginkgo’s 2014 Stock Incentive Plan (the “Plan”). The vesting terms for the RSU will be four years with 25% vesting on the first anniversary of your start date, and the remaining vesting on a pro rata basis each month over the next three years thereafter for so long as you are employed by Ginkgo. The RSU will be subject to the terms of the Plan and an RSU agreement to be entered into between you and Ginkgo.

 

  3.

In the event Ginkgo terminates your employment without Cause (as defined below), contingent upon your execution and non-revocation of a severance agreement and release acceptable to Ginkgo and in accordance with Ginkgo’s policies, you will receive severance benefits consisting of (i) continuation of your base salary for a period of 12 months, and (ii) if you timely elect to receive COBRA benefits, payment of your COBRA premiums for a period of 12 months or until the date on which you obtain alternative health insurance coverage, whichever is earlier. For purposes of this paragraph, the term Cause shall mean a good faith finding by the Board of Directors of Ginkgo that (a) you willfully failed to perform your assigned duties for Ginkgo, (b) your material breach of any agreement to which you and Ginkgo are both parties, (c) any act (other than retirement) or omission to act by you which may have a material and adverse effect on Ginkgo’s business or on your ability to perform services for Ginkgo, including, without limitation, the commission of any crime (other than minor traffic violations), or (d) any material misconduct or material neglect of duties by you in connection with the business or affairs of Ginkgo.

 

  4.

You will also be eligible to participate in all of Ginkgo’s employee benefit programs, including health insurance, retirement benefits (currently, an employer contribution to your 401(k) equal to 5% of your total wages that vests upon your two year anniversary), and other benefits in accordance with Ginkgo’s policies.


  5.

Your work location will be Ginkgo Bioworks’ facilities in Boston, MA.

Finally, please note that this letter does not constitute an employment contract and your employment with Ginkgo will be “at-will” meaning that Ginkgo retains the right to terminate your employment at any time and for any reason and you retain a similar right.

If this letter correctly sets forth the terms of your employment with Ginkgo, please sign this letter in the space provided below and return it to me as soon as possible. This offer is in effect for 7 days.

By signing below, you are also confirming to us that your employment by Ginkgo will not conflict with the terms of any employment, non-competition, confidentiality or similar agreements that you may have with any third parties. Also, a condition of your employment will be your execution on or prior to your first day of employment of Ginkgo’s standard employee agreement regarding assignment of inventions, confidentiality, non-solicitation and non-competition, which is attached hereto. Additionally, this offer is conditioned upon your right to work in the United States. This letter supersedes any prior agreements, understandings or representations concerning the terms of your employment with the Company.

I am confident that you will make a strong contribution to Ginkgo’s success and look forward to welcoming you to our team. Should you have any questions, please feel free to contact me at any time. If you agree to these conditions of your employment, please acknowledge by signing below. We look forward to building a great company together.

 

Sincerely,
/s/ Austin Che

Austin Che

Founder

austin@ginkgobioworks.com

Ginkgo Bioworks, Inc.

The foregoing correctly sets forth the terms of my employment by Ginkgo Bioworks, Inc.:

 

/s/ Mark Dmytruk

Name

10 / 07 / 2020

Date


Chief Financial Officer

In your role as Chief Financial Officer at Ginkgo, we expect your responsibilities to include:

 

  1.

Support business strategy development and execution

 

  2.

Strategically partner with the CEO, providing insight and counsel to drive corporate strategy, allocate resources effectively, and position the company for growth. Possess experience and understanding of business models.

 

  3.

Oversee finance and governance of joint ventures, operating companies and minority equity interests including Joyn Bio, Motif FoodWorks, Genomatica, and Synlogic

 

  4.

Provide analytical and planning support to enable development and achievement of performance targets. Lead benchmarking and opportunity assessment.

 

  5.

Provide FP&A support for alliance management with customers and partners.

 

  6.

Support the CEO in fundraising by developing financial models, diligence materials and reports on key operating metrics.

 

  7.

Ensure adequate funding to support business initiatives. Understand the sources and uses for cash. Effectively manage working capital and control the cash flow position.

 

  8.

Corporate development / M&A

 

  9.

Possess the ability to lead and evaluate with a financial lens all joint venture and operating company prospects as well as structure all collaboration agreements and stock purchase agreements.

 

  10.

Oversee investment activity including identification, due diligence, valuation, contract strategy and negotiations.

 

  11.

Proactively lead performance management

 

  12.

Effectively support a high growth business and drive increase in margins by identifying KPIs, establishing clear and credible reporting and forecasting metrics.

 

  13.

Track performance against targets and variance analysis.

 

  14.

Iterate on and improving pricing and contract strategies for partners, joint ventures and operating companies to maximize usage of the Ginkgo platform

 

  15.

Clearly articulate operating performance in reporting, forecasting, and development of contingency plans.

 

  16.

Develop and implement oversight and compensation incentive structures for joint ventures and operating companies’ executive leadership

 

  17.

Team leadership and capability development

 

  18.

Possess a record of demonstrated success building and managing a high performance finance function, with proven experience attracting, developing and retaining A+’ Players to meet the demands of a fast growing business.

 

  19.

Financial stewardship and reporting

 

  20.

Ensure compliance with financial regulations and standards, such as Sarbanes-Oxley, the IRS Tax Code, and GAAP.


  21.

Significant expertise in structuring internal controls, compliance with financial regulations & standards, upgrading systems, evaluating risk, and managing Canadian, US and international tax implications.

 

  22.

Safeguard company assets with prudent balance sheet management. Understand and control the company’s liabilities legal contracts, statutory & tax obligations, contingencies, leases, or insurance summaries, and expectations from loan covenants and/or the Board of Directors.

 

  23.

Establish and execute programs for the provision of capital required by the company, including negotiating the procurement of debt and equity capital and maintaining the required financial arrangements. Coordinate the long-range plans of the company, assess the financial requirements and develop alternative ways in which financial requirements can be met.

 

  24.

Analyze shareholder relations policies, procedures, and information programs, including the annual and interim reports to shareholders and the Board of Directors.

 

  25.

Coordinate annual financial audits.

Ginkgo’s most important goal is to build a sustainable business that advances our mission to make biology easier to engineer. Thus, in addition to the above, we expect that you will also help to shape Ginkgo’s overall direction as a company, and be willing to support evolving needs, where appropriate, as they emerge.

Exhibit 23.1

CONSENT OF INDEPENDENT REGISTERED PUBLIC ACCOUNTING FIRM

We hereby consent to the use in the Prospectus constituting a part of this Registration Statement on Form S-4, Amendment No. 1, of our report dated February 11, 2021, relating to the financial statements of Soaring Eagle Acquisition Corp, which is contained in that Prospectus. We also consent to the reference to us under the caption “Experts” in the Prospectus.

/s/ WithumSmith+Brown, PC

New York, New York

June 28, 2021

Exhibit 23.2

Consent of Independent Registered Public Accounting Firm

We consent to the reference to our firm under the caption “Experts” and to the use of our report dated May 14, 2021, with respect to the consolidated financial statements of Ginkgo Bioworks, Inc. included in the Proxy Statement of Soaring Eagle Acquisition Corp. that is made a part of Amendment No. 1 to the Registration Statement (Form S-4 No. 333-256121) and Prospectus of Soaring Eagle Acquisition Corp. for the registration of shares of its common stock and warrants to purchase shares of its common stock.

/s/ Ernst & Young LLP

Boston, Massachusetts

June 28, 2021

Exhibit 99.4

Consent to be Named as a Director Nominee

In connection with the filing by Soaring Eagle Acquisition Corp. of the Registration Statement on Form S-4 with the Securities and Exchange Commission under the Securities Act of 1933, as amended (the “Securities Act”), I hereby consent, pursuant to Rule 438 of the Securities Act, to being named in the Registration Statement and any and all amendments and supplements thereto as a member of the board of directors of Soaring Eagle Acquisition Corp. following the consummation of the business combination, which will be renamed Ginkgo Bioworks Holdings, Inc. I also consent to the filing of this consent as an exhibit to such Registration Statement and any amendments thereto.

Dated: June 28, 2021

 

By:  

/s/ Marijn Dekkers

  Signature

Exhibit 99.5

Consent to be Named as a Director Nominee

In connection with the filing by Soaring Eagle Acquisition Corp. of the Registration Statement on Form S-4 with the Securities and Exchange Commission under the Securities Act of 1933, as amended (the “Securities Act”), I hereby consent, pursuant to Rule 438 of the Securities Act, to being named in the Registration Statement and any and all amendments and supplements thereto as a member of the board of directors of Soaring Eagle Acquisition Corp. following the consummation of the business combination, which will be renamed Ginkgo Bioworks Holdings, Inc. I also consent to the filing of this consent as an exhibit to such Registration Statement and any amendments thereto.

Dated: June 28, 2021

 

By:  

/s/ Christian Henry

  Signature

Exhibit 99.6

Consent to be Named as a Director Nominee

In connection with the filing by Soaring Eagle Acquisition Corp. of the Registration Statement on Form S-4 with the Securities and Exchange Commission under the Securities Act of 1933, as amended (the “Securities Act”), I hereby consent, pursuant to Rule 438 of the Securities Act, to being named in the Registration Statement and any and all amendments and supplements thereto as a member of the board of directors of Soaring Eagle Acquisition Corp. following the consummation of the business combination, which will be renamed Ginkgo Bioworks Holdings, Inc. I also consent to the filing of this consent as an exhibit to such Registration Statement and any amendments thereto.

Dated: June 28, 2021

 

By:  

/s/ Shyam Sankar

  Signature

Exhibit 99.7

Consent to be Named as a Director Nominee

In connection with the filing by Soaring Eagle Acquisition Corp. of the Registration Statement on Form S-4 with the Securities and Exchange Commission under the Securities Act of 1933, as amended (the “Securities Act”), I hereby consent, pursuant to Rule 438 of the Securities Act, to being named in the Registration Statement and any and all amendments and supplements thereto as a member of the board of directors of Soaring Eagle Acquisition Corp. following the consummation of the business combination, which will be renamed Ginkgo Bioworks Holdings, Inc. I also consent to the filing of this consent as an exhibit to such Registration Statement and any amendments thereto.

Dated: June 28, 2021

 

By:  

/s/ Harry E. Sloan

Name:   Harry E. Sloan

Exhibit 99.8

Consent to be Named as a Director Nominee

In connection with the filing by Soaring Eagle Acquisition Corp. of the Registration Statement on Form S-4 with the Securities and Exchange Commission under the Securities Act of 1933, as amended (the “Securities Act”), I hereby consent, pursuant to Rule 438 of the Securities Act, to being named in the Registration Statement and any and all amendments and supplements thereto as a member of the board of directors of Soaring Eagle Acquisition Corp. following the consummation of the business combination, which will be renamed Ginkgo Bioworks Holdings, Inc. I also consent to the filing of this consent as an exhibit to such Registration Statement and any amendments thereto.

Dated: June 28, 2021

 

By:  

/s/ Arie Belldegrun

  Signature