Cayman Islands |
6770 |
98-1586159 | ||
(State or other jurisdiction of incorporation or organization) |
(Primary Standard Industrial Classification Code Number) |
(I.R.S. Employer Identification Number) |
Raaj S. Narayan, Esq. Wachtell, Lipton, Rosen & Katz 51 West 52nd Street New York, New York 10019 (212) 403-1000 |
Jacqueline Studer, Esq. Chief Legal Officer Akili Interactive Labs, Inc. 125 Broad Street, Fifth Floor Boston, Massachusetts 02110 (617) 313-8853 |
Daniel J. Espinoza, Esq. Arthur R. McGivern, Esq. Sarah Ashfaq, Esq. Goodwin Procter LLP 100 Northern Avenue Boston, Massachusetts 02210 (617) 570-1000 |
Large accelerated filer | ☐ | Accelerated filer | ☐ | |||
Non-accelerated filer |
☒ | Smaller reporting company | ☒ | |||
Emerging growth company | ☒ |
* | Prior to the consummation of the Merger described herein, the registrant intends to effect a deregistration under the Cayman Islands Companies Act (2020 Revision) and a domestication under Section 388 of the Delaware General Corporation Law, pursuant to which the registrant’s jurisdiction of incorporation will be changed from the Cayman Islands to the State of Delaware. All securities being registered will be issued by Social Capital Suvretta Holdings Corp. I (after its domestication as a corporation incorporated in the State of Delaware), the continuing entity following the Domestication, which will be renamed “Akili, Inc.” |
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each share of Akili common stock will be canceled and converted into the right to receive a number of shares of Akili, Inc. common stock equal to the quotient obtained by dividing (i) the Aggregate Merger Consideration by (ii) the aggregate fully diluted number of shares of Akili common stock issued and outstanding immediately prior to the Merger as calculated pursuant to the Merger Agreement (such quotient, the “Merger Consideration Per Fully Diluted Share”); |
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each share of Akili Series A-1 Preferred Stock, Akili Series A-2 Preferred Stock, Akili Series B Preferred Stock, Akili Series C Preferred Stock and Akili Series D Preferred Stock (collectively, the “Akili preferred stock”) will be canceled, converted into shares of Akili common stock and converted into the right to receive a pro rata portion of the Aggregate Merger Consideration, after giving effect to the appropriate conversion ratios; and |
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if not previously paid, any dividend accrued on the Akili Series D Preferred Stock for a partial period will convert or be paid, as applicable, in additional shares of Akili Series D Perferred Stock at the Akili Series D Preferred Stock purchase price upon the consummation of the Merger. Dividends accrue on the Akili Series D Preferred at an annual rate of 10% and are to be paid annually in additional shares of Akili Series D Preferred Stock at the Series D Preferred Stock purchase price. |
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each share of Akili common stock will be canceled and converted into the right to receive a number of shares of Akili, Inc. common stock equal to the quotient obtained by dividing (i) the Aggregate Merger Consideration by (ii) the aggregate fully diluted number of shares of Akili common stock issued and outstanding immediately prior to the Merger as calculated pursuant to the Merger Agreement (such quotient, the “Merger Consideration Per Fully Diluted Share”); |
• |
each share of Akili Series A-1 Preferred Stock, Akili Series A-2 Preferred Stock, Akili Series B Preferred Stock, Akili Series C Preferred Stock and Akili Series D Preferred Stock (collectively, the “Akili preferred stock”) will be canceled, converted into shares of Akili common stock and converted |
into the right to receive a pro rata portion of the Aggregate Merger Consideration, after giving effect to the appropriate conversion ratios; and |
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if not previously paid, any dividend accrued on the Akili Series D Preferred Stock for a partial period will convert or be paid, as applicable, in additional shares of Akili Series D Perferred Stock at the Akili Series D Preferred Stock purchase price upon the consummation of the Merger. Dividends accrue on the Akili Series D Preferred at an annual rate of 10% and are to be paid annually in additional shares of Akili Series D Preferred Stock at the Series D Preferred Stock purchase price. |
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Proposal No. 1—The Business Combination Proposal— |
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Proposal No. 2—The Domestication Proposal— |
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Organizational Documents Proposals— |
(A) |
Proposal No. 3—Organizational Documents Proposal A— |
(B) |
Proposal No. 4—Organizational Documents Proposal B— |
(C) |
Proposal No. 5—Organizational Documents Proposal C— |
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Proposal No. 6—The Director Appointment Proposal— |
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Proposal No. 7—The Stock Issuance Proposal— |
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Proposal No. 8—The Incentive Plan Proposal— |
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Proposal No. 9—The ESPP Proposal— |
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Proposal No. 10—The Auditor Ratification Proposal— |
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Proposal No. 11—The Adjournment Proposal— |
(i) |
hold public shares; |
(ii) |
submit a written request to Continental Stock Transfer & Trust Company (“Continental”), SCS’s transfer agent, that Akili, Inc. redeem all or a portion of your public shares for cash; |
(iii) |
deliver your share certificates (if any) and any other redemption forms to Continental, SCS’s transfer agent, physically or electronically through The Depository Trust Company (“DTC”); and |
(iv) |
provide the full name and shares of the beneficial holder. |
• | “2011 Plan” are to Akili Interactive Labs, Inc. Amended and Restated 2011 Stock Incentive Plan, as amended from time to time; |
• | “2022 Incentive Plan” or “2022 Plan” are to the 2022 Stock Option and Incentive Plan for Akili, Inc. (following the Domestication) attached to this proxy statement/prospectus as Annex G; |
• | “2022 ESPP” are to the 2022 Employee Stock Purchase Plan for Akili Interactive Labs, Inc. (following the Domestication) attached to this proxy statement/prospectus as Annex H; |
• | “Akili common stock” are to common stock, par value $0.00001 per share, of Akili; |
• | “Akili Options” are to options to purchase shares of Akili common stock; |
• | “Akili, Inc.” are to SCS after the Domestication and its name change from Social Capital Suvretta Corp. I; |
• | “Akili, Inc. common stock” are to common stock, par value $0.0001 per share, of Akili, Inc.; |
• | “Akili, Inc. Options” are to options to purchase shares of Akili, Inc. common stock; |
• | “Akili, Inc. Restricted Stock” are to restricted shares of Akili, Inc. common stock; |
• | “Akili Stockholders” are to the stockholders of Akili, holders of Akili Options and holders of warrants to acquire Akili common stock, in each case prior to the Business Combination; |
• | “ASC” are to Accounting Standards Codification; |
• | “Available Cash” are to the amount calculated by adding the Trust Amount and the PIPE Investment Amount; |
• | “Black-Scholes Model” are to the Black-Scholes Option Pricing Model; |
• | “Business Combination” are to the Domestication together with the Merger; |
• | “CARES Act” are to the Coronavirus Aid, Relief and Economic Security Act; |
• | “Cayman Constitutional Documents” are to SCS’s amended and restated memorandum and articles of association, as amended from time to time; |
• | “Cayman Islands Companies Act” are to the Cayman Islands Companies Act (As Revised); |
• | “Closing” are to the closing of the Business Combination; |
• | “Company,” “we,” “us” and “our” are to SCS prior to its domestication as a corporation in the State of Delaware and to Akili, Inc. after its domestication as a corporation incorporated in the State of Delaware, including after its change of name to Akili, Inc.; |
• | “Condition Precedent Approvals” are to approval at the extraordinary general meeting of each of the Condition Precedent Proposals; |
• | “Condition Precedent Proposals” are to the Business Combination Proposal, the Domestication Proposal, the Organizational Documents Proposals, the Director Appointment Proposal, the Stock Issuance Proposal, the Incentive Plan Proposal and the ESPP Proposal, collectively; |
• | “Continental” are to Continental Stock Transfer & Trust Company; |
• | “COVID-19” are to the novel coronavirus pandemic; |
• | “DGCL” are to the General Corporation Law of the State of Delaware; |
• | “Domestication” are to the domestication of Social Capital Suvretta Holdings Corp. I as a corporation incorporated in the State of Delaware; |
• | “Exchange Act” are to the Securities Exchange Act of 1934, as amended; |
• | “Federal Reserve” are to the Board of Govenors of the Federal Reserve System; |
• | “founder shares” are to the SCS Class B ordinary shares purchased by the Sponsor in a private placement prior to the initial public offering, and the SCS Class A ordinary shares that will be issued upon the conversion thereof; |
• | “GAAP” are to accounting principles generally accepted in the United States of America; |
• | “HSR Act” are to the Hart-Scott-Rodino Antitrust Improvements Act of 1976, as amended; |
• | “initial public offering” are to SCS’s initial public offering that was consummated on July 2, 2021; |
• | “IPO registration statement” are to the Registration Statements on Form S-1 (333-256723 and 333-257543) filed by SCS in connection with its initial public offering, which became effective on June 29, 2021 and June 30, 2021, respectively; |
• | “IRS” are to the U.S. Internal Revenue Service; |
• | “JOBS Act” are to the Jumpstart Our Business Startups Act of 2012; |
• | “LIBOR” are to the London Inter-Bank Offered Rate; |
• | “Merger” are to the merger of Merger Sub with and into Akili, with Akili surviving the merger as a wholly owned subsidiary of Akili, Inc.; |
• | “Merger Sub” are to a Delaware corporation and subsidiary of SCS; |
• | “Minimum Cash Condition” are to the Trust Amount and the PIPE Investment Amount, in the aggregate, being equal to or greater than $150 million; |
• | “Nasdaq” are to the Nasdaq Capital Market; |
• | “ordinary shares” are to the SCS Class A ordinary shares and the SCS Class B ordinary shares, collectively; |
• | “Person” are to 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” are to the purchase of shares of Akili, Inc. common stock pursuant to the Subscription Agreements; |
• | “PIPE Investment Amount” are to the aggregate gross purchase price received by SCS prior to or substantially concurrently with Closing for the shares in the PIPE Investment; |
• | “PIPE Investors” are to those certain investors participating in the PIPE Investment pursuant to the Subscription Agreements; |
• | “private placement shares” are to the Class A ordinary shares issued to Sponsor in a private placement that was consummated concurrently with the closing of the initial public offering and the shares of common stock of Akili, Inc. issued as a matter of law upon the conversion thereof at the time of the Domestication; |
• | “pro forma” are to giving pro forma effect to the Business Combination; |
• | “Proposed Bylaws” are to the proposed bylaws of Akili, Inc. upon the effective date of the Domestication attached to this proxy statement/prospectus as Annex K; |
• | “Proposed Certificate of Incorporation” are to the proposed certificate of incorporation of Akili, Inc. upon the effective date of the Domestication attached to this proxy statement/prospectus as Annex J; |
• | “Proposed Organizational Documents” are to the Proposed Certificate of Incorporation and the Proposed Bylaws; |
• | “public shareholders” are to holders of public shares, whether acquired in SCS’s initial public offering or acquired in the secondary market; |
• | “public shares” are to the SCS Class A ordinary shares that were offered and sold by SCS in its initial public offering and registered pursuant to the IPO registration statement or the shares of Akili, Inc. common stock issued as a matter of law upon the conversion thereof at the time of the Domestication, as the context requires; |
• | “redemption” are to each redemption of public shares for cash pursuant to the Cayman Constitutional Documents; |
• | “Registration Rights Agreement” are to the Amended and Restated Registration Rights Agreement to be entered into at the Closing, by and among Akili, Inc. (following the Domestication), the Sponsor, certain affiliates of the Sponsor, certain directors and advisors of SCS and certain former stockholders of Akili; |
• | “Sarbanes-Oxley Act” are to the Sarbanes-Oxley Act of 2002; |
• | “SCS” are to Social Capital Suvretta Holdings Corp. I, prior to its domestication as a corporation in the State of Delaware; |
• | “SCS Class A ordinary shares” are to SCS’s Class A ordinary shares, par value $0.0001 per share; |
• | “SCS Class B ordinary shares” are to SCS’s Class B ordinary shares, par value $0.0001 per share; |
• | “SEC” are to the United States Securities and Exchange Commission; |
• | “Securities Act” are to the Securities Act of 1933, as amended; |
• | “SPE” are to special-purpose entity; |
• | “Sponsor” are to SCS Sponsor I LLC, a Cayman Islands limited liability company, the sponsor of SCS; |
• | “Sponsor Related PIPE Investor” are to a PIPE Investor that is an affiliate of the Sponsor (together with its permitted transferees); |
• | “Sponsor Support Agreement” are to that certain Sponsor Support Agreement, dated January 26, 2022, by and among the Sponsor, SCS, each director of SCS and Akili, as amended and modified from time to time; |
• | “Subscription Agreements” are to the subscription agreements pursuant to which the PIPE Investment will be consummated; |
• | “Third-Party PIPE Investment” are to any PIPE Investment made by a Third-Party PIPE Investor; |
• | “Third-Party PIPE Investment Amount” are to the aggregate gross purchase price received by SCS prior to or substantially concurrently with Closing for the shares in the Third-Party PIPE Investment; |
• | “Third-Party PIPE Investor” are to any PIPE Investor who is not a Sponsor Related PIPE Investor; |
• | “trust account” are to the trust account established at the consummation of SCS’s initial public offering and maintained by Continental, acting as trustee; |
• | “Trust Agreement” are to the Investment Management Trust Agreement, dated June 29, 2021, by and between SCS and Continental, as trustee; |
• | “Trust Amount” are to the amount of cash available in the trust account, after deducting the amount required to satisfy SCS’s obligations to its shareholders (if any) that exercise their rights to redeem their public shares pursuant to the Cayman Constitutional Documents (but prior to the payment of any |
(i) deferred underwriting commissions being held in the trust account and (ii) transaction expenses of Akili or SCS); and |
• | “VIEs” are to variable interest entities. |
• | our ability to complete the Business Combination with Akili or, if we do not consummate such Business Combination, any other initial business combination; |
• | satisfaction or waiver of the conditions to the Business Combination including, among others: (i) obtaining the approval of the Business Combination and related agreements and transactions by the respective shareholders of SCS and Akili; (ii) effectiveness of the registration statement on Form S-4 of which this proxy statement/prospectus forms a part; (iii) expiration or termination of the applicable waiting period under the Hart-Scott-Rodino Antitrust Improvements Act, as amended; (iv) receipt of approval for listing on Nasdaq, the shares of Akili, Inc. common stock to be issued in connection with the Merger; (v) that we have at least $5,000,001 of net tangible assets upon Closing; (vi) the satisfaction of the Minimum Cash Condition; (vii) that the size and composition of the Board shall be as contemplated in the Merger Agreement; (viii) the completion of the Domestication as contemplated by the Merger Agreement; and (ix) the absence of any injunctions; |
• | the occurrence of any event, change or other circumstances, including the outcome of any legal proceedings that may be instituted against SCS and/or Akili following the announcement of the Merger Agreement and/or the transactions contemplated therein, that could give rise to the termination of the Merger Agreement; |
• | the prospective financial information with respect to, and market opportunity of, Akili, Inc.; |
• | the ability to obtain and/or maintain the listing of Akili, Inc. common stock on Nasdaq, and the potential liquidity and trading of such securities; |
• | the risk that the proposed Business Combination disrupts current plans and operations of Akili as a result of the announcement and consummation of the proposed Business Combination; |
• | the ability to recognize the anticipated benefits of the proposed Business Combination, which may be affected by, among other things, competition, and the ability of the Akili, Inc. to grow and manage growth profitably and retain its key employees; |
• | costs related to the proposed Business Combination; |
• | Akili’s success in retaining or recruiting its officers, key employees or directors following the completion of the Business Combination; |
• | Akili’s officers and directors allocating their time to other businesses and potentially having conflicts of interest with our business; |
• | SCS’s officers and directors allocating their time to other businesses and potentially having conflicts of interest with our business; |
• | The ability to achieve and maintain market acceptance and adoption of Akili’s EndeavorRx and other prescription digital therapeutics by patients and physicians; |
• | Akili’s ability to obtain or maintain adequate insurance coverage and reimbursement for EndeavorRx and its other products; |
• | Akili’s ability to accurately forecast demand for EndeavorRx and its other products; |
• | Akili’s ability to maintain access for EndeavorRx and its other products via the Apple Store and the Google Play Store; |
• | Akili’s ability to achieve or maintain profitability; |
• | Akili’s ability to maintain or obtain patent protection and/or the patent rights relating to EndeavorRx and its other product candidates and Akili’s ability to prevent third parties from competing against Akili; |
• | Akili’s ability to successfully commercialize EndeavorRx and its other products; |
• | Akili’s ability to obtain and maintain regulatory approval for EndeavorRx and its other product candidates, in the U.S. and in foreign markets, and any related restrictions or limitations of an approved product candidate; |
• | Akili’s ability to obtain funding for its operations, including funding necessary to complete further development of EndeavorRx and further development, approval and, if approved, commercialization of Akili’s other product candidates; |
• | Akili’s ability to identify, in-license or acquire additional technology or product candidates; |
• | Akili’s ability to successfully protect against security breaches and other disruptions to Akili’s information technology structure; |
• | the impact of applicable laws and regulations, whether in the United States or foreign jurisdictions, and any changes thereof; |
• | Akili’s ability to successfully compete against other companies developing similar products to Akili’s current and future product offerings; |
• | Akili’s estimates regarding expenses, future revenue, capital requirements and needs for additional financing; |
• | Akili’s financial performance and ability to respond to general economic conditions; |
• | the effect of COVID-19 on the foregoing, including our ability to consummate the Business Combination due to the continuing uncertainty resulting from the COVID-19 pandemic; and |
• | other factors detailed under the section entitled “ Risk Factors |
Q: |
Why am I receiving this proxy statement/prospectus? |
A: | SCS shareholders are being asked to consider and vote upon, among other proposals, a proposal to approve and adopt the Merger Agreement and approve the Business Combination. The Merger Agreement provides for, among other things, the merger of Merger Sub with and into Akili, with Akili surviving the merger as a wholly owned subsidiary of Akili, Inc., in accordance with the terms and subject to the conditions of the Merger Agreement as more fully described elsewhere in this proxy statement/prospectus. See the section entitled “ Business Combination Proposal |
Q: |
What proposals are shareholders of SCS being asked to vote upon? |
A: | At the extraordinary general meeting, SCS is asking holders of ordinary shares to consider and vote upon: |
• | a proposal to approve by ordinary resolution and adopt the Merger Agreement; |
• | a proposal to approve by special resolution the Domestication; |
• | the following three separate proposals to approve by special resolution the following material differences between the Cayman Constitutional Documents and the Proposed Organizational Documents: |
• | to authorize the change in the authorized share capital of SCS from (i) 500,000,000 SCS Class A ordinary shares, 50,000,000 SCS Class B ordinary shares and 5,000,000 preference shares, par value $0.0001 per share, to (ii) shares of Akili, Inc. common stock, and shares of Akili, Inc. preferred stock; |
• | to authorize the board of directors of Akili, Inc. (the “Board”) to issue any or all shares of Akili, Inc. preferred stock in one or more classes or series, with such terms and conditions as may be expressly determined by the Board and as may be permitted by the DGCL; and |
• | to authorize all other changes in connection with the replacement of the Cayman Constitutional Documents with the Proposed Certificate of Incorporation and Proposed Bylaws as part of the Domestication, including, (1) changing the corporate name from “Social Capital Suvretta Holdings Corp. I” to “Akili, Inc.,” (2) making Akili, Inc.’s corporate existence perpetual, (3) adopting Delaware as the exclusive forum for certain stockholder litigation and the United States Federal District Courts as the exclusive forum for litigation arising out of the Securities Act, (4) being subject to the provisions of Section 203 of DGCL and (5) removing certain provisions related to SCS’s status as a blank check company that will no longer be applicable upon consummation of the Business Combination, all of which SCS’s board of directors believes is necessary to adequately address the needs of Akili, Inc. after the Business Combination; |
• | a proposal to approve by ordinary resolution the appointment to a staggered board of seven directors, who, upon consummation of the Business Combination, will be the directors of Akili, Inc.; |
• | a proposal to approve by ordinary resolution, for purposes of complying with applicable listing rules of Nasdaq, the issuance of (a) shares of Akili, Inc. common stock to the PIPE Investors, including the Sponsor Related PIPE Investors, pursuant to the PIPE Investment and (b) shares of Akili, Inc. common stock to the Akili Stockholders pursuant to the Merger Agreement; |
• | a proposal to approve by ordinary resolution the 2022 Plan; |
• | a proposal to approve by ordinary resolution the 2022 ESPP; |
• | a proposal to approve by ordinary resolution the appointment of Marcum LLP as the independent registered public accoutnants of SCS to audit and report upon SCS’s consolidated financial statements for the year ending December 31, 2022; and |
• | a proposal to approve by ordinary resolution 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. |
Q: |
Are the proposals conditioned on one another? |
A: | Yes. The Business Combination is conditioned on the approval of each of the Condition Precedent Proposals at the extraordinary general meeting. Unless waived by the parties to the Merger Agreement, each of the Condition Precedent Proposals is cross-conditioned on the approval of each other. The Auditor Ratification Proposal and Adjournment Proposal are not conditioned upon the approval of any other proposal. |
Q: |
Why is SCS proposing the Business Combination? |
A: | SCS was organized to effect a merger, share exchange, asset acquisition, share purchase, reorganization or similar business combination, with one or more businesses or entities. |
Q: |
What will Akili Stockholders receive in return for SCS’s acquisition of all of the issued and outstanding equity interests of Akili? |
A: | At the effective time of the Merger, among other things, (i) each share of Akili common stock and preferred stock outstanding as of immediately prior to the effective time of the Merger will be converted into Akili, |
Inc. common stock as described further below, (ii) each Akili common stock warrant outstanding as of immediately prior to the effective time of the Merger (other than warrants that will be deemed automatically exercised in accordance with their terms) will be converted into a warrant to purchase shares of Akili, Inc. common stock, and the exercise price thereof shall be adjusted, in each case, as set forth in the applicable Akili common stock warrant and described herein and (iii) each option to purchase shares of Akili common stock (an “Akili Option”) outstanding as of immediately prior to the effective time of the Merger will be converted into an option to purchase shares of Akili, Inc. common stock (an “Akili, Inc. Option”) (and the exercise price thereof shall be adjusted) as described herein, with clauses (i) through (iii) representing an aggregate of 60,000,000 shares of Akili, Inc. common stock (the “Aggregate Merger Consideration”), and a pre-transaction equity value of Akili of $600 million (the “Base Purchase Price”). The portion of the Aggregate Merger Consideration reserved for the conversion of the Akili Options and Akili warrants is calculated using the treasury stock method so that all Akili Options and Akili warrants are deemed net-settled (although Akili, Inc. Options and Akili, Inc. warrants may by their terms be cash-settled, resulting in additional dilution). For further details, see “Business Combination Proposal—The Merger Agreement—Consideration—Aggregate Merger Consideration |
Q: |
What equity stake will current SCS shareholders and Akili Stockholders hold in Akili, Inc. immediately after the consummation of the Business Combination? |
A: | As of the date of this proxy statement/prospectus, there are 31,890,000 ordinary shares issued and outstanding, which include the 6,250,000 founder shares held by the Sponsor (together with SCS’s independent directors), the 640,000 private placement shares held by the Sponsor and 25,000,000 public shares. It is anticipated that, following the Business Combination, (i) SCS’s public shareholders are expected to own approximately 25% of outstanding Akili, Inc. common stock, (ii) Akili stockholders are expected to own approximately 55% of outstanding Akili, Inc. common stock (including shares purchased by certain existing Akili stockholders in the PIPE Investment), (iii) the Sponsor and related parties (including the Sponsor Related PIPE Investors) are expected to collectively own approximately 20% of outstanding Akili, Inc. common stock, and (iv) the Third-Party PIPE Investors (excluding existing Akili stockholders purchasing shares in the PIPE Investment) are expected to own approximately 1% of outstanding Akili, Inc. common stock. These percentages (i) assume that no public shareholders exercise their redemption rights in connection with the Business Combination, (ii) assume that Akili Options and Akili common stock warrants shall be treated as set forth in the Merger Agreement and as further described herein, (iii) assume that Akili, Inc. issues shares of Akili, Inc. common stock as the Aggregate Merger Consideration pursuant to the Merger Agreement, which in the aggregate equals 60,000,000 shares of Akili, Inc. common stock (assuming that all Akili, Inc. Options and Akili, Inc. warrants are net-settled), (iv) assume that Akili, Inc. issues 16,200,000 shares of Akili, Inc. common stock to the PIPE Investors pursuant to the PIPE Investment and (v) exclude the Earnout Shares. If the actual facts are different from these assumptions, the percentage ownership retained by SCS’s existing shareholders in the combined company will be different. |
Share Ownership in Akili, Inc. |
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Assuming No Redemption |
Assuming 50% Redemption (1) |
Assuming Maximum Redemption (2) |
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Number of Shares |
Percentage of Outstanding |
Number of Shares |
Percentage of Outstanding |
Number of Shares |
Percentage of Outstanding |
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Akili stockholders |
62,060,000 | (3) |
57.4 | % | 62,060,000 | (3) |
64.9 | % | 62,060,000 | (3) |
74.7 | % | ||||||||||||
SCS public shareholders |
25,000,000 | 23.1 | % | 12,500,000 | 13.1 | % | — | 0.0 | % | |||||||||||||||
Sponsor and related party |
20,430,000 | 18.9 | % | 20,430,000 | 21.4 | % | 20,430,000 | 24.6 | % | |||||||||||||||
Third-party PIPE investors |
600,000 | 0.6 | % | 600,000 | 0.6 | % | 600,000 | 0.7 | % | |||||||||||||||
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Total |
108,090,000 | 100.0 | % | 95,590,000 | 100.0 | % | 83,090,000 | 100.0 | % | |||||||||||||||
Total Pro Forma Book Value |
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Post-Redemptions ($’000) (4) |
$ | 374,041 | $ | 258,049 | $ | 142,057 | ||||||||||||||||||
Pro Forma Book Value Per Share (5) |
$ | 3.46 | $ | 2.70 | $ | 1.71 |
(1) | Assumes redemptions of 12,500,000 of Class A public shares of SCS in connection with the Business Combination. |
(2) | Assumes redemptions of 25,000,000 of Class A public shares of SCS in connection with the Business Combination. |
(3) | Includes 54,077,514 shares expected to be issued to existing Akili common and preferred shareholders and 5,922,486 shares of Akili common stock underlying options and warrants, in each case, that are included as part of the consideration and 2,060,000 shares expected to be issued to existing Akili common and preferred shareholders in the PIPE Investment. All awards issued are assumed to be issued assuming treasury stock method. |
(4) | See “Unaudited Pro Forma Condensed Combined Financial Information” for pro forma book value in the no redemption scenario and the maximum redemption scenario. Pro forma book value for the 50% redemption scenario, is the result of (a) the no redemption scenario pro forma book value less (b) 50/100th of the difference between the no redemption scenario pro forma book value and the maximum redemptions scenario pro forma book value. |
(5) | Pro forma book value per share is a result of pro forma book value divided by total shares outstanding. |
Q: |
How has the announcement of the Business Combination affected the trading price of the SCS Class A ordinary shares? |
A: | On January 25, 2022, the trading date before the public announcement of the Business Combination, SCS’s Class A ordinary shares closed at $9.62. On , 2022, the most recent practicable date prior to the date of this proxy statement/prospectus, the Company’s Class A ordinary shares closed at $ . |
Q: |
Will the Company obtain new financing in connection with the Business Combination? |
A: | Yes. The PIPE Investors have agreed to purchase in the aggregate approximately 16,200,000 shares of Akili, Inc. common stock, for approximately $162,000,000 of gross proceeds, in the PIPE Investment, a portion of which is expected to be funded by the Sponsor Related PIPE Investors. The PIPE Investment is contingent upon, among other things, the closing of the Business Combination. See “ Business Combination Proposal—Related Agreements—PIPE Subscription Agreements |
Q: |
Why is SCS proposing the Domestication? |
A: | SCS’s board of directors believes that there are significant advantages to us that will arise as a result of a change of SCS’s domicile to Delaware. Further, SCS’s board of directors believes that any direct benefit |
that the DGCL provides to a corporation also indirectly benefits its stockholders, who are the owners of the corporation. SCS’s board of directors believes that there are several reasons why a reincorporation in Delaware is in the best interests of the Company 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. Each of the foregoing are discussed in greater detail in the section entitled “ Domestication Proposal—Reasons for the Domestication |
Q: |
What amendments will be made to the current constitutional documents of SCS? |
A: | The consummation of the Business Combination is conditioned, among other things, on the Domestication. Accordingly, in addition to voting on the Business Combination, SCS’s shareholders are also being asked to consider and vote upon a proposal to approve the Domestication and replace SCS’s Cayman Constitutional Documents, in each case, under the Cayman Islands Companies Act, with the Proposed Organizational Documents, in each case, under the DGCL, which differ materially from the Cayman Constitutional Documents in the following respects: |
Cayman Constitutional Documents |
Proposed Organizational Documents | |||
Authorized Shares (Organizational Documents Proposal A) | The Cayman Constitutional Documents authorize 555,000,000 shares, consisting of 500,000,000 SCS Class A ordinary shares, 50,000,000 SCS Class B ordinary shares and 5,000,000 preference shares. | The Proposed Organizational Documents authorize shares, consisting of shares of Akili, Inc. common stock and shares of Akili, Inc. preferred stock. | ||
See paragraph 5 of the Existing Memorandum. |
See Article IV of the Proposed Certificate of Incorporation | |||
Authorize the Board of Directors to Issue Preferred Stock Without Stockholder Consent (Organizational Documents Proposal B) | The Cayman Constitutional Documents authorize the issuance of 5,000,000 preference shares with such designation, rights and preferences as may be determined from time to time by SCS’s board of directors. Accordingly, SCS’s board of directors is empowered under the Cayman Constitutional Documents, without shareholder approval, to issue preference shares with dividend, liquidation, redemption, voting or other rights which could adversely affect the voting power or other rights of the holders of ordinary shares (except to the extent it may affect the ability of SCS to carry out a | The Proposed Organizational Documents authorize the Board to issue all or any shares of preferred stock in one or more series and to fix for each such series such voting powers, full or limited, and such designations, preferences and relative, participating, optional or other special rights and such qualifications, limitations or restrictions thereof, as the Board may determine. |
Q: |
How will the Domestication affect my ordinary shares? |
A: | As a result of and upon the effective time of the Domestication, (i) each of the then issued and outstanding SCS Class A ordinary shares will convert automatically, on a one-for-one one-for-one Domestication Proposal |
Q: |
What are the U.S. federal income tax consequences of the Domestication? |
A: | As discussed more fully under “ U.S. Federal Income Tax Considerations U.S. Federal Income Tax Considerations |
• | A U.S. Holder whose SCS Class A ordinary shares have a fair market value of less than $50,000 on the date of the Domestication will not recognize any gain or loss and will not be required to include any part of SCS’s earnings in income; |
• | A U.S. Holder whose SCS Class A ordinary shares have a fair market value of $50,000 or more 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 SCS stock entitled to vote and less than 10% of the total value of all classes of SCS stock will generally recognize gain (but not loss) on the exchange of SCS Class A ordinary shares for Akili, Inc. 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 the “all earnings and profits amount” (as defined in the Treasury Regulations under Section 367 of the Code) attributable to its SCS 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 SCS stock entitled to vote or 10% or more of the total value of all classes of SCS stock will generally be required to include in income as a deemed dividend the all earnings and profits amount attributable to its SCS Class A ordinary shares. |
Q: |
Do I have redemption rights? |
A: | If you are a holder of public shares, you have the right to request that we 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. Public shareholders may elect to redeem all or a portion of the public shares held by them regardless of if or how they vote in respect of any proposal, including the Business Combination Proposal How do I exercise my redemption rights? |
Q: |
How do I exercise my redemption rights? |
A: | If you are a public shareholder and wish to exercise your right to redeem the public shares, you must: |
(i) | hold public shares; |
(ii) | submit a written request to Continental, SCS’s transfer agent, that Akili, Inc. redeem all or a portion of your public shares for cash; |
(iii) | deliver your share certificates (if any) and any other redemption forms to Continental, SCS’s transfer agent, physically or electronically through The Depository Trust Company (“DTC”); and |
(iv) | provide the full name and shares of the beneficial holder. |
Q: |
What are the U.S. federal income tax consequences of exercising my redemption rights? |
A: | It is expected that a U.S. Holder (as defined in “ U.S. Federal Income Tax Considerations U.S. Federal Income Tax Considerations |
Q: |
What happens to the funds deposited in the trust account after consummation of the Business Combination? |
A: | Following the closing of SCS’s initial public offering, an amount equal to $250.0 million ($10.00 per unit) was placed in the trust account. As of December 31, 2021, funds in the trust account totaled $250.0 million and were comprised entirely of U.S. government treasury obligations with a maturity of 185 days or less or of money market funds meeting certain conditions under Rule 2a-7 under the Investment Company Act of 1940, as amended (the “Investment Company Act”), which invest only in direct U.S. government treasury obligations. These funds will remain in the trust account, except for the withdrawal of interest to pay taxes, if any, until the earliest of (1) the completion of a business combination (including the Closing), (2) the redemption of any public shares properly submitted in connection with a shareholder vote to amend the Cayman Constitutional Documents (i) to modify the substance or timing of SCS’s obligation to redeem 100% of the public shares if it does not complete a business combination by July 2, 2023 or (ii) with respect to any other material provisions relating to shareholders’ rights or pre-business combination activity and (3) the redemption of all of the public shares if SCS is unable to complete a business combination by July 2, 2023 (or if such date is further extended at a duly called extraordinary general meeting, such later date), subject to applicable law. |
Q: |
What happens if a substantial number of the public shareholders vote in favor of the Business Combination Proposal and exercise their redemption rights? |
A: | Our public shareholders are not required to vote in respect of the Business Combination in order to exercise their redemption rights. Accordingly, the Business Combination may be consummated even though the funds available from the trust account and the number of public shareholders are reduced as a result of redemptions by public shareholders. |
Q: |
What conditions must be satisfied to complete the Business Combination? |
A: | The Merger Agreement is subject to the satisfaction or waiver of certain customary closing conditions, including, among others, (i) approval of the Business Combination and related agreements and transactions by the respective shareholders of SCS and Akili, (ii) effectiveness of the registration statement of which this proxy statement/prospectus forms a part of, (iii) expiration or termination of the waiting period under the Hart-Scott-Rodino Antitrust Improvements Act, as amended, (iv) receipt of approval for listing on Nasdaq, the shares of Akili, Inc. common stock to be issued in connection with the Merger, (v) that we have at least $5,000,001 of net tangible assets upon Closing, (vi) the Minimum Cash Condition, (vii) the size and composition of the Board shall be as contemplated in the Merger Agreement, (viii) the completion of the Domestication as contemplated by the Merger Agreement; and (ix) the absence of any injunctions. |
Q: |
When do you expect the Business Combination to be completed? |
A: | It is currently expected that the Business Combination will be consummated in mid-2022. This date depends, among other things, on the approval of the proposals to be put to SCS shareholders at the extraordinary general meeting. However, such meeting could be adjourned if the Adjournment Proposal is adopted by SCS’s shareholders at the extraordinary general meeting and SCS elects to adjourn 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. For a description of the conditions for the completion of the Business Combination, see “Business Combination Proposal—The Merger Agreement |
Q: |
What happens if the Business Combination is not consummated? |
A: | SCS will not complete the Domestication to Delaware unless all other conditions to the consummation of the Business Combination have been satisfied or waived by the parties in accordance with the terms of the Merger Agreement. If SCS is not able to complete the Business Combination with Akili by July 2, 2023 and is not able to complete another business combination by such date, in each case, as such date may be extended pursuant to the Cayman Constitutional Documents, SCS will: (1) cease all operations except for the purpose of winding up; (2) 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 (less up to $100,000 of interest to pay dissolution expenses and which interest shall be net of taxes payable), 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), subject to applicable law; and (3) as promptly as reasonably possible following such redemption, subject to the approval of our remaining shareholders and our board, dissolve and liquidate, subject in each case to our obligations under Cayman Islands law to provide for claims of creditors and the requirements of other applicable law. |
Q: |
Do I have appraisal rights in connection with the proposed Business Combination and the proposed Domestication? |
A: | SCS’s shareholders do not have appraisal rights in connection with the Business Combination or the Domestication under the Cayman Islands Companies Act or under the DGCL. |
Q: |
What do I need to do now? |
A: | SCS urges you to read this proxy statement/prospectus, including the Annexes and the documents referred to herein, carefully and in their entirety and to consider how the Business Combination will affect you as a shareholder. SCS’s shareholders should then vote as soon as possible in accordance with the instructions provided in this proxy statement/prospectus and on the enclosed proxy card. |
Q: |
How do I vote? |
A: | If you are a holder of record of ordinary shares on the record date for the extraordinary general meeting, you may vote in person at the extraordinary general meeting or by submitting a proxy for the extraordinary general meeting. You may submit your proxy by completing, signing, dating and returning the enclosed proxy card in the accompanying pre-addressed postage-paid envelope. 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, bank or nominee 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, if you wish to attend the extraordinary general meeting and vote in person, obtain a valid proxy from your broker, bank or nominee. |
Q: |
If my shares are held in “street name,” will my broker, bank or nominee automatically vote my shares for me? |
A: | No. If your shares are held in a stock brokerage account or by a bank or other nominee, you are considered the “beneficial holder” of the shares held for you in what is known as “street name.” If this is the case, this proxy statement/prospectus may have been forwarded to you by your brokerage firm, bank or other nominee, or its agent, and you may need to obtain a proxy form from the institution that holds your shares and follow the instructions included on that form regarding how to instruct your broker, bank or nominee as to how to vote your shares. Under the rules of various national and regional securities exchanges, your broker, bank, or nominee cannot vote your shares with respect to non-discretionary matters unless you provide instructions on how to vote in accordance with the information and procedures provided to you by your broker, bank, or nominee. We believe all the proposals presented to the shareholders will be considered non-discretionary and therefore your broker, bank, or nominee cannot vote your shares without your instruction. Your bank, broker, or other nominee can vote your shares only if you provide instructions on how to vote. As the beneficial holder, you have the right to direct your broker, bank or other nominee as to how to vote your shares and you should instruct your broker to vote your shares in accordance with directions you provide. If you do not provide voting instructions to your broker on a particular proposal on which your broker does not have discretionary authority to vote, your shares will not be voted on that proposal. This is called a “broker non-vote” to the extent your broker is able to vote on another proposal, otherwise your shares will not be counted as voted or present for the purposes of determining a quorum. 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, and otherwise will have no effect on a particular proposal. |
Q: |
When and where will the extraordinary general meeting be held? |
A: | The extraordinary general meeting will be held on , 2022, at [a.m./p.m.] at , or at such other time, on such other date and at such other place to which the meeting may be adjourned or postponed. |
Q: |
Who is entitled to vote at the extraordinary general meeting? |
A: | SCS has fixed , 2022 as the record date for the extraordinary general meeting. If you were a shareholder of SCS at the close of business on the record date, you are entitled to vote on matters that come before the extraordinary general meeting. However, a shareholder may only vote his or her shares if he or she is present in person or is represented by proxy at the extraordinary general meeting. |
Q: |
How many votes do I have? |
A: | SCS shareholders are entitled to one vote at the extraordinary general meeting for each ordinary share held of record as of the record date. As of the close of business on the record date for the extraordinary general meeting, there were 31,890,000 ordinary shares issued and outstanding, of which 25,000,000 were issued and outstanding public shares. |
Q: |
What constitutes a quorum? |
A: | A quorum of SCS shareholders is necessary to hold a valid meeting. A quorum will be present at the extraordinary general meeting if the holders of a majority of the issued and outstanding ordinary shares entitled to vote at the extraordinary general meeting are represented in person or by proxy. As of the record date for the extraordinary general meeting, 15,945,001 ordinary shares would be required to achieve a quorum. Except for the Director Appointment Proposal, which may only be voted by holders of SCS Class B ordinary shares, Class A ordinary shares and Class B ordinary shares are entitled to vote together as a single class on all matters to be considered at the extraordinary general meeting. Voting on all resolutions at the extraordinary general meeting will be conducted by way of a poll vote. Shareholders will have one vote for each ordinary share owned at the close of business on the record date. |
Q: |
What vote is required to approve each proposal at the extraordinary general meeting? |
A: | The following votes are required for each proposal at the extraordinary general meeting: |
(i) | Business Combination Proposal: |
(ii) | Domestication Proposal: two-thirds of the ordinary shares represented in person or by proxy and entitled to vote thereon and who vote at the extraordinary general meeting. |
(iii) | Organizational Documents Proposals: two-thirds of the ordinary shares represented in person or by proxy and entitled to vote thereon and who vote at the extraordinary general meeting. |
(iv) | Director Appointment Proposal: |
(v) | Stock Issuance Proposal: |
(vi) | Incentive Plan Proposal : |
(vii) | ESPP Proposal : |
(viii) | Auditor Ratification Proposal: |
(ix) | Adjournment Proposal: |
Q: |
What are the recommendations of SCS’s board of directors? |
A: | SCS’s board of directors believes that the Business Combination Proposal and the other proposals to be presented at the extraordinary general meeting are in the best interest of SCS’s shareholders and unanimously recommends that its shareholders vote “FOR” the Business Combination Proposal, “FOR” the Domestication Proposal, “FOR” each of the separate Organizational Documents Proposals, “FOR” the Director Appointment Proposal, “FOR” the Stock Issuance Proposal, “FOR” the Incentive Plan Proposal, “FOR” the ESPP Proposal, “FOR” the Auditor Ratification Proposal and “FOR” the Adjournment Proposal, in each case, if presented to the extraordinary general meeting. |
Q: |
How does the Sponsor intend to vote their shares? |
A: | Unlike some other blank check companies in which the initial shareholders agree to vote their shares in accordance with the majority of the votes cast by the public shareholders in connection with an initial business combination, the Sponsor has agreed to vote all the founder shares, the private placement shares and any public shares they may hold in favor of all the proposals being presented at the extraordinary general meeting. As of the date of this proxy statement/prospectus, the Sponsor (together with SCS’s independent directors) owns 21.61% of the issued and outstanding ordinary shares. None of the proposals is conditioned on the approval by the holders of a majority of the SCS ordinary shares held by shareholders other than the Sponsor or its affiliates. |
Q: |
What happens if I sell my SCS ordinary shares before the extraordinary general meeting? |
A: | The record date for the extraordinary general meeting is earlier than the date of the extraordinary general meeting and earlier than the date that the Business Combination is expected to be completed. If you transfer your public shares after the applicable record date, but before the extraordinary general meeting, unless you grant a proxy to the transferee, you will retain your right to vote at such general meeting but the transferee, and not you, will have the ability to redeem such shares. |
Q: |
May I change my vote after I have mailed my signed proxy card? |
A: | Yes. Shareholders may send a later-dated, signed proxy card to SCS’s Chief Financial Officer at SCS’s address set forth below so that it is received by SCS’s Chief Financial Officer prior to the vote at the extraordinary general meeting (which is scheduled to take place on , 2022) or attend the extraordinary general meeting in person and vote. Shareholders also may revoke their proxy by sending a notice of revocation to SCS’s Chief Financial Officer, which must be received by SCS’s Chief Financial Officer prior to the vote at the extraordinary general meeting. However, if your shares are held in “street name” by your broker, bank or another nominee, you must contact your broker, bank or other nominee to change your vote. |
Q: |
What happens if I fail to take any action with respect to the extraordinary general meeting? |
A: | If you fail to take any action with respect to the extraordinary general meeting and the Business Combination is approved by shareholders and the Business Combination is consummated, you will become a stockholder of Akili, Inc. If you fail to take any action with respect to the extraordinary general meeting and the Business Combination is not approved, you will remain a shareholder of SCS. However, if you fail to vote with respect to the extraordinary general meeting, you will nonetheless be able to elect to redeem your public shares in connection with the Business Combination. |
Q: |
What should I do with my share certificates? |
A: | Our shareholders who exercise their redemption rights must deliver (either physically or electronically) their share certificates to Continental, SCS’s transfer agent, prior to the extraordinary general meeting. |
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 ordinary shares. |
Q: |
Who will solicit and pay the cost of soliciting proxies for the extraordinary general meeting? |
A: | SCS will pay the cost of soliciting proxies for the extraordinary general meeting. SCS has engaged Morrow Sodali LLC (“Morrow”) to assist in the solicitation of proxies for the extraordinary general meeting. SCS has agreed to pay Morrow Sodali LLC a fee of $32,500, plus disbursements (to be paid with non-trust account funds). SCS will also reimburse banks, brokers and other custodians, nominees and fiduciaries representing beneficial owners of SCS Class A ordinary shares for their expenses in forwarding soliciting materials to beneficial owners of SCS Class A ordinary shares and in obtaining voting instructions from those owners. SCS’s directors and officers 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: |
Where can I find the voting results of the extraordinary general meeting? |
A: | The preliminary voting results will be expected to be announced at the extraordinary general meeting. SCS will publish final voting results of the extraordinary general meeting in a Current Report on Form 8-K within four business days after the extraordinary general meeting. |
Q: |
Who can help answer my questions? |
A: | If you have questions about the Business Combination or if you need additional copies of the proxy statement/prospectus, any document incorporated by reference in this proxy statement/prospectus or the enclosed proxy card, you should contact: |
• | Targeted treatments that are personalized to patients’ needs |
• | Clinically validated therapeutics like drugs and medical devices. |
• | Therapeutics that are experienced as entertainment |
• | Patient focused and adaptive |
* | Estimated timeframes in figure above correspond to applicable milestone start times, and are subject to change. |
• | Establishing a commercial foothold in pediatric ADHD. |
• | Leveraging our initial success to expand into other ADHD populations. |
• | Applying our clinically-validated technology to other mental health and neurology conditions. |
• | Simultaneously pursuing new technologies designed to address other cognitive impairments. |
• | Further evolving the treatment paradigm by creating new methods of cognitive assessment. |
(A) | Organizational Documents Proposal A |
(B) | Organizational Documents Proposal B |
(C) | Organizational Documents Proposal C |
• | Akili’s Large Addressable Market. |
• | Akili’s Strong Clinical Validation. The American Journal of Psychiatry The Lancet Digital Health Nature: Digital Medicine |
• | Akili’s Highly Attractive Business Model |
• | Akili’s Future Opportunities |
Akili will launch EndeavorRX commercially for patients aged 8-12 years old in the second half of 2022, and age-expansion studies are currently underway to explore bringing Akili’s digital therapeutic solutions to ADHD patients in the 3-7 year old, 13-17 year old and adult categories. Beyond ADHD, Akili’s SSME technology, which underpins its EndeavorRX product, is currently in clinical trials in three other disease areas: post-operative cognitive dysfunction, chemotherapy induced cognitive impairment and cognitive dysfunction following COVID-19 infection. Further, Akili has developed a pipeline of development programs focused on additional indications, including multiple sclerosis, major depressive disorder and autism spectrum disorder, among others. |
• | Experienced and Proven Management Team Management of Akili, Inc. Following the Business Combination—Executive Officers |
Share Ownership in Akili, Inc. |
||||||||||||||||
No Redemptions |
Maximum Redemptions (1) |
|||||||||||||||
Number of Shares |
Percentage of Outstanding |
Number of Shares |
Percentage of Outstanding |
|||||||||||||
Akili stockholders |
62,060,000 | (2) |
57.4 | % | 62,060,000 | (2) |
74.7 | % | ||||||||
SCS public shareholders |
25,000,000 | 23.1 | % | – | 0.0 | % | ||||||||||
Sponsor and related party |
20,430,000 | 18.9 | % | 20,430,000 | 24.6 | % | ||||||||||
Third-party PIPE investors |
600,000 | 0.6 | % | 600,000 | 0.7 | % | ||||||||||
|
|
|
|
|
|
|
|
|||||||||
Total |
108,090,000 | 100.0 | % | 83,090,000 | 100.0 | % |
(1) | Assumes redemptions of 25,000,000 of Class A public shares of SCS in connection with the Business Combination. |
(2) | Includes 54,077,514 shares expected to be issued to existing Akili common and preferred shareholders and 5,922,486 shares of Akili common stock underlying options and warrants, in each case, that are included as part of the consideration and 2,060,000 shares expected to be issued to existing Akili common and preferred |
shareholders in the PIPE Investment. All awards issued are assumed to be issued assuming treasury stock method. |
• | Business Combination Proposal: |
• | Domestication Proposal: two-thirds majority of the holders of the ordinary shares represented in person or by proxy and entitled to vote thereon and who vote at the extraordinary general meeting. |
• | Organizational Documents Proposals: two-thirds majority of the ordinary shares represented in person or by proxy and entitled to vote thereon and who vote at the extraordinary general meeting. |
• | Director Appointment Proposal: |
• | Stock Issuance Proposal: |
represented in person or by proxy and entitled to vote thereon and who vote at the extraordinary general meeting. |
• | Incentive Plan Proposal: |
• | ESPP Proposal : . |
• | Auditor Ratification Proposal: |
• | Adjournment Proposal: |
• | hold public shares; |
• | (i) submit a written request to Continental Stock Transfer & Trust Company (“Continental”), SCS’s transfer agent, that Akili, Inc. redeem all or a portion of your public shares for cash; (ii) identify yourself as the beneficial holder of the public shares and provide your legal name, phone number and address; and |
• | deliver your share certificates (if any) and any other redemption forms to Continental, SCS’s transfer agent, physically or electronically through DTC. |
• | Prior to SCS’s initial public offering, the Sponsor purchased 5,750,000 SCS Class B ordinary shares for an aggregate purchase price of $25,000. In June 2021, the Sponsor transferred 30,000 SCS Class B ordinary shares to Vladimir Coric (an independent director of SCS, and with the Sponsor, “SCS’s initial shareholders”). On June 29, 2021, SCS effected a share capitalization with respect to the SCS Class B ordinary shares of 575,000 shares thereof, resulting in SCS’s initial shareholders holding an aggregate of 6,325,000 founder shares (up to 825,000 of which were subject to forfeiture depending on the extent to which the underwriter’s over-allotment option in the initial public offering was exercised), resulting in an effective purchase price per SCS Class B ordinary share of approximately $0.004. As a result of the underwriters’ election to partially exercise their over-allotment option, a total of 750,000 SCS Class B ordinary shares are no longer subject to forfeiture and 75,000 SCS Class B ordinary shares were forfeited, resulting in an aggregate of 6,250,000 SCS Class B ordinary shares outstanding. If SCS does not consummate a business combination by July 2, 2023 (or if such date is extended at a duly called extraordinary general meeting, such later date), it would cease all operations except for the purpose of winding up, redeeming all of the outstanding public shares for cash and, subject to the approval of its remaining shareholders and its board of directors, dissolving and liquidating, subject in each case to its obligations under the Cayman Islands Companies Act to provide for claims of creditors and the requirements of other applicable law. In such event, the 6,250,000 SCS Class B ordinary shares collectively owned by SCS’s initial shareholders and the 640,000 private placement shares held by the Sponsor would be worthless because following the redemption of the public shares, SCS would likely have few, if any, net assets and because the Sponsor and SCS’s directors and officers have agreed to waive their respective rights to liquidating distributions from the trust account in respect of any private placement shares and SCS Class B ordinary shares held by it or them, as applicable, if SCS fails to complete a business combination within the required period. The 640,000 private placement shares were purchased by the Sponsor simultaneously with the consummation of SCS’s initial public offering for an aggregate purchase price of $6,400,000. The Sponsor and each officer and director of SCS did not receive any compensation in exchange for their agreement to waive these redemption rights. |
• | As described above, in June 2021, the Sponsor transferred 30,000 SCS Class B ordinary shares to Vladimir Coric, which shares would be worthless if SCS does not consummate a business combination by July 2, 2023 (or if such date is extended at a duly called extraordinary general meeting, such later date). The 30,000 shares of Akili, Inc. common stock into which the 30,000 SCS Class B ordinary |
shares held by Mr. Coric will automatically convert in connection with the Merger (including after giving effect to the Domestication), if unrestricted and freely tradable, would have had an aggregate market value of $ million based upon the closing price of $ per public share on Nasdaq on , 2022, the most recent practicable date prior to the date of this proxy statement/prospectus. |
• | On September 24, 2021, SCS entered into a director restricted stock unit award agreement (the “Director RSU Award”), with Mr. Sundaram, providing for the grant of 30,000 restricted stock units to Mr. Sundaram, which grant is contingent on both the consummation of an initial business combination with SCS and a shareholder approved equity plan. The Director RSU Award will vest at the Closing but will not settle into shares of Akili, Inc. common stock until a date, selected by Akili, Inc., that occurs between the Closing and March 15 of the year following the Closing. The 30,000 shares of Akili, Inc. common stock underlying the Director RSU, if unrestricted and freely tradable, would have had an aggregate market value of $ million based upon the closing price of $ per public share on Nasdaq on , 2022, the most recent practicable date prior to the date of this proxy statement/prospectus. |
• | The Sponsor (including its representatives and affiliates) and SCS’s directors and officers, are, or may in the future become, affiliated with entities that are engaged in a similar business to SCS. Additionally, all of our officers and certain of our directors have fiduciary and contractual duties to either Social Capital or Suvretta and, as applicable, their underlying clients, and to certain companies in which either of them has invested or which either of them has sponsored. For example, Mr. Palihapitiya and Mr. Mehta, each of whom serves as an officer and director of SCS and may be considered an affiliate of the Sponsor, are also affiliated with DNAB, DNAC and DNAD, all of which are blank check companies incorporated as Cayman Islands exempted companies for the purpose of effecting their respective initial business combinations. Mr. Palihapitiya is the Chief Executive Officer and Chairman of the Board of Directors of DNAB, DNAC and DNAD, Mr. Mehta is the President and a director of DNAB, DNAC and DNAD, and each of our other officers is also an officer of DNAB, DNAC and DNAD, and each owes fiduciary duties under Cayman Islands law to DNAB, DNAC and DNAD. Mr. Palihapitiya is also the Chief Executive Officer and Chairman of the Board of Directors of IPOD and IPOF and owes fiduciary duties under Cayman Islands law to IPOD and IPOF. The Sponsor and SCS’s directors and officers are not prohibited from sponsoring, or otherwise becoming involved with, any other blank check companies prior to SCS completing its initial business combination. Moreover, certain of SCS’s directors and officers have time and attention requirements for investment funds of which affiliates of the Sponsor are the investment managers. SCS’s directors and officers also may become aware of business opportunities which may be appropriate for presentation to SCS, and the other entities to which they owe certain fiduciary or contractual duties, including DNAB, DNAC and DNAD, IPOD and IPOF, as applicable. Accordingly, they may have had conflicts of interest in determining to which entity a particular business opportunity should be presented. These conflicts may not be resolved in SCS’s favor and such potential business opportunities may be presented to other entities prior to their presentation to SCS, subject to applicable fiduciary duties under Cayman Islands law. SCS’s Cayman Constitutional Documents provide that SCS renounces its interest in any corporate opportunity offered to any director or officer of SCS unless such opportunity is expressly offered to such person solely in his or her capacity as a director or officer of SCS and it is an opportunity that SCS is able to complete on a reasonable basis. |
• | SCS’s existing directors and officers will be eligible for continued indemnification and continued coverage under SCS’s directors’ and officers’ liability insurance after the Merger and pursuant to the Merger Agreement. The Sponsor, for which Mr. Palihapitiya and Mr. Mehta serve as managers and officers and in which they have an indirect ownership interest, will also be entitled to certain indemnification from SCS after the Merger pursuant to the Merger Agreement. |
• | The Sponsor Related PIPE Investors have subscribed for $135,400,000 of the PIPE Investment, for which they will receive up to 13,540,000 shares of Akili, Inc. common stock. The 13,540,000 shares of Akili, Inc. common stock which the Sponsor Related PIPE Investors have subscribed for in the PIPE Investment, if unrestricted and freely tradable, would have had an aggregate market value of $ million based upon the closing price of $ per public share on Nasdaq on , 2022, the most recent practicable date prior to the date of this proxy statement/prospectus. See “ Certain Relationships and Related Person Transactions—SCS—Subscription Agreements |
• | In the event that SCS fails to consummate a business combination within the prescribed time frame (pursuant to the Cayman Constitutional Documents), or upon the exercise of a redemption right in connection with the Business Combination, SCS will be required to provide for payment of claims of creditors that were not waived that may be brought against SCS within the ten years following such redemption. In order to protect the amounts held in SCS’s trust account, the Sponsor has agreed that it will be liable to SCS if and to the extent any claims by a third party (other than SCS’s independent auditors) for services rendered or products sold to SCS, or a prospective target business with which SCS has discussed entering into a transaction agreement, reduce the amount of funds in the trust account to below (i) $10.00 per public share or (ii) such lesser amount per public share held in the trust account as of the date of the liquidation of the trust account, due to reductions in value of the trust assets, in each case, net of the amount of interest which may be withdrawn to pay taxes, except as to any claims by a third party who executed a waiver of any and all rights to seek access to the trust account and except as to any claims under the indemnity of the underwriters of SCS’s initial public offering against certain liabilities, including liabilities under the Securities Act. |
• | SCS’s officers and directors, and their affiliates are entitled to reimbursement of all out-of-pocket |
• | Pursuant to the Registration Rights Agreement, the Sponsor and the Sponsor Related PIPE Investors will have customary registration rights, including shelf, demand and piggy-back rights, subject to cooperation and cut-back provisions, with respect to the shares of Akili, Inc. common stock held by such parties following the consummation of the Business Combination. |
• | On April 20, 2022, SCS issued the SCS Promissory Note (as defined below) to the Sponsor, pursuant to which SCS may borrow up to an aggregate principal amount of $1,500,000, which is payable upon the earlier of July 2, 2023 and the effective date of a business combination, and as of May 12, 2022, $250,000 was outstanding under the SCS Promissory Note. |
Agreement, Arrangement or Understanding |
Restrictions |
Expiration Date |
Natural Persons and Entities Subject |
Exceptions | ||||
Letter Agreement, dated as of June 29, 2021, by and among SCS, the Sponsor, Chamath Palihapitiya, Kishen Mehta, James Ryans, Shoney Katz and Vladimir Coric | Agreement by the Sponsor and SCS’s initial directors and officers not to transfer, assign or sell any founder shares or private placement shares. | For the founder shares, the earlier to occur of: (A) one year after the completion of SCS’s initial business combination; and (B) subsequent to SCS’s initial business combination (x) if the last reported sale price of the SCS Class A ordinary shares equals or exceeds $12.00 per share (as adjusted for share sub-divisions, share dividends, rights issuances, consolidations, reorganizations, recapitalizations and other similar transactions) for any 20 trading days within any 30-trading day period commencing at least 150 days after SCS’s initial business combination or (y) the date on which SCS completes a liquidation, merger, share exchange, reorganization or other similar transaction that results in all of the SCS public shareholders having the right to exchange their SCS ordinary shares for cash, securities or other property. For the private placement shares, 30 days after the completion of SCS’s initial business combination. |
Sponsor Chamath Palihapitiya Kishen Mehta James Ryans Shoney Katz Vladimir Coric |
Transfers, assignments or sales to certain permitted transferees. Any permitted transferees would be subject to the same restrictions and other agreements with respect to any founder shares. |
Agreement, Arrangement or Understanding |
Restrictions |
Expiration Date |
Natural Persons and Entities Subject |
Exceptions | ||||
This Letter Agreement will be superseded at the Closing by the Lock-Up Agreement. | ||||||||
Letter Agreement, dated as of September 24, 2021, by and between SCS and Senthil Sundaram | Agreement by Mr. Sundaram not to transfer, assign or sell any founder shares or shares underlying restricted stock awards granted to Mr. Sundaram. | The earlier to occur of: (A) one year after the completion of SCS’s initial business combination; and (B) subsequent to SCS’s initial business combination (x) if the last reported sale price of the SCS Class A ordinary shares equals or exceeds $12.00 per share (as adjusted for share sub-divisions, share dividends, rights issuances, consolidations, reorganizations, recapitalizations and other similar transactions) for any 20 trading days within any 30-trading day period commencing at least 150 days after SCS’s initial business combination or (y) the date on which SCS completes a liquidation, merger, share exchange, reorganization or other similar transaction that results in all of the SCS public shareholders having the right to exchange their SCS ordinary shares for cash, securities or other property. | Senthil Sundaram | Transfers, assignments or sales to certain permitted transferees. Any permitted transferees would be subject to the same restrictions and other agreements with respect to any founder shares or restricted stock awards. | ||||
This Letter Agreement will be superseded at the Closing by the Lock-Up Agreement. | ||||||||
Lock-Up Agreement (to be entered into at Closing) | Agreement by the Sponsor, Vladimir Coric and Senthil Sundaram (among | The earlier of (i) the date on which the SEC declares effective the first registration statement on | Sponsor Vladimir Coric Senthil Sundaram Certain Equityholders of Akili | Transfers, assignments or sales to certain permitted |
Agreement, Arrangement or Understanding |
Restrictions |
Expiration Date |
Natural Persons and Entities Subject |
Exceptions | ||||
other parties) not to (i) transfer, assign or sell, (ii) enter into any arrangement transferring the economic consequences of security ownership or (iii) make a public announcement of the intention to effect (i) or (ii) with respect to Akili, Inc. common stock (other than PIPE Shares or SCS ordinary shares acquired in the public market), subject to certain exceptions. | Form S-1 filed by Akili, Inc. to register the resale of the PIPE Shares (as defined in the Lock-Up Agreement) and (ii) (a) in the case of the Private Placement Shares, the last day of the Private Placement Shares Lock-Up Period (each as defined in the Lock-Up Agreement) and (b) in the case of Lock-Up Shares other than the Private Placement Shares, (x) for 33% of the Lock-Up Shares (other than the Private Placement Shares) held by each of the parties thereto (and their respective permitted transferees), the date which the last reported sale price of Akili, Inc. common stock equals or exceeds $12.50 per share (subject to adjustment) for any 20 trading days within any 30-trading day period commencing at least 30 days after the Closing Date and (y) for an additional 50% of the Lock-Up Shares (other than the Private Placement Shares) held by each of the parties thereto (and their respective permitted transferees), the date which the last reported sale price of Akili, Inc. common stock equals or exceeds $15.00 per share (subject to adjustment) for any 20 trading days within any 30-trading day period commencing at least 30 days after the Closing Date. The Lock-Up Period for any Lock-Up Shares for which the Lock-Up Period has not | transferees. Any permitted transferees would be subject to the same restrictions and other agreements with respect to any Akili, Inc. common stock. The lock-up provisions may be waived, amended or modified upon (i) the approval of a majority of the total number of directors serving on the Akili, Inc. Board and (ii) the written consent of the holders of a majority of the total shares subject to the Lock-Up Agreement, subject to certain restrictions. |
Agreement, Arrangement or Understanding |
Restrictions |
Expiration Date |
Natural Persons and Entities Subject |
Exceptions | ||||
ended on the date that is 180 days after the Closing Date shall end on such 180th day after the Closing Date. | ||||||||
Amended and Restated Registration Rights Agreement (to be entered into at Closing) | During the 90-day period beginning on the date of the pricing of an underwritten offering of any equity securities of Akili, Inc., agreement not to (i) transfer, assign or sell, (ii) enter into any arrangement transferring the economic consequences of security ownership or (iii) public announcement of intention to effect (i) or (ii) with respect to Akili, Inc. ordinary shares or other equity securities of Akili, Inc., subject to certain exceptions. | N/A | Each participating holder in such underwritten offering of any equity securities of Akili, Inc. and each beneficial holder (together with its affiliates) of greater than five percent of the outstanding Akili, Inc. common stock. | If expressly permitted by a lock-up agreement or in the event the managing underwriters otherwise agree by written consent. |
Agreement, Arrangement or Understanding |
Restrictions |
Expiration Date |
Natural Persons and Entities Subject |
Exceptions | ||||
Letter Agreement, dated as of June 29, 2021, by and among SCS, the Sponsor, Chamath Palihapitiya, Kishen Mehta, James Ryans, Shoney Katz and Vladimir Coric | Agreement by the Sponsor and SCS’s initial directors and officers not to transfer, assign or sell any founder shares or private placement shares. | For the founder shares, the earlier to occur of: (A) one year after the completion of SCS’s initial business combination; and (B) subsequent to SCS’s initial business combination (x) if the last reported sale price of the SCS Class A ordinary shares equals or exceeds $12.00 per share (as adjusted for share sub-divisions, share dividends, rights issuances, consolidations, reorganizations, recapitalizations and other similar transactions) for any 20 trading days within any 30-trading day period commencing at least 150 days after SCS’s initial business combination or (y) the date on which SCS completes a liquidation, merger, share exchange, reorganization or other similar transaction that results in all of the SCS public shareholders having the right to exchange their SCS ordinary shares for cash, | Sponsor Chamath Palihapitiya Kishen Mehta James Ryans Shoney Katz Vladimir Coric | Transfers, assignments or sales to certain permitted transferees. Any permitted transferees would be subject to the same restrictions and other agreements with respect to any founder shares. |
Agreement, Arrangement or Understanding |
Restrictions |
Expiration Date |
Natural Persons and Entities Subject |
Exceptions | ||||
securities or other property. For the private placement shares, 30 days after the completion of SCS’s initial business combination. |
||||||||
This Letter Agreement will be superseded at the Closing by the Lock-Up Agreement. | ||||||||
Letter Agreement, dated as of September 24, 2021, by and between SCS and Senthil Sundaram | Agreement by Mr. Sundaram not to transfer, assign or sell any founder shares or shares underlying restricted stock awards granted to Mr. Sundaram. | The earlier to occur of: (A) one year after the completion of SCS’s initial business combination; and (B) subsequent to SCS’s initial business combination (x) if the last reported sale price of the SCS Class A ordinary shares equals or exceeds $12.00 per share (as adjusted for share sub-divisions, share dividends, rights issuances, consolidations, reorganizations, recapitalizations and other similar transactions) for any 20 trading days within any 30-trading day period commencing at least 150 days after SCS’s initial business combination or (y) the date on which SCS completes a liquidation, merger, share exchange, reorganization or other similar | Senthil Sundaram | Transfers, assignments or sales to certain permitted transferees. Any permitted transferees would be subject to the same restrictions and other agreements with respect to any founder shares or restricted stock awards. |
Agreement, Arrangement or Understanding |
Restrictions |
Expiration Date |
Natural Persons and Entities Subject |
Exceptions | ||||
transaction that results in all of the SCS public shareholders having the right to exchange their SCS ordinary shares for cash, securities or other property. | ||||||||
This Letter Agreement will be superseded at the Closing by the Lock-Up Agreement. | ||||||||
Lock-Up Agreement (to be entered into at Closing) | Agreement by the Sponsor, Vladimir Coric and Senthil Sundaram (among other parties) not to (i) transfer, assign or sell, (ii) enter into any arrangement transferring the economic consequences of security ownership or (iii) make a public announcement of the intention to effect (i) or (ii) with respect to Akili, Inc. common stock (other than PIPE Shares or SCS ordinary shares acquired in the public market), subject to certain exceptions. | The earlier of (i) the date on which the SEC declares effective the first registration statement on Form S-1 filed by Akili, Inc. to register the resale of the PIPE Shares (as defined in the Lock-Up Agreement) and (ii) (a) in the case of the Private Placement Shares, the last day of the Private Placement Shares Lock-Up Period (each as defined in the Lock- Up Agreement) and (b) in the case of Lock-Up Shares other than the Private Placement Shares, (x) for 33% of the Lock-Up Shares (other than the Private Placement Shares) held by each of the parties thereto (and their respective permitted transferees), the date which the last reported sale price of | Sponsor Vladimir Coric Senthil Sundaram Certain Equityholders of Akili | Transfers, assignments or sales to certain permitted transferees. Any permitted transferees would be subject to the same restrictions and other agreements with respect to any Akili, Inc. common stock. The lock-up provisions may be waived, amended or modified upon (i) the approval of a majority of the total number of directors serving on the Akili, Inc. Board and (ii) the written consent of the holders of a majority of the total shares subject to the Lock-Up Agreement, subject to certain restrictions. |
Agreement, Arrangement or Understanding |
Restrictions |
Expiration Date |
Natural Persons and Entities Subject |
Exceptions | ||||
Akili, Inc. common stock equals or exceeds $12.50 per share (subject to adjustment) for any 20 trading days within any 30-trading day period commencing at least 30 days after the Closing Date and (y) for an additional 50% of the Lock-Up Shares (other than the Private Placement Shares) held by each of the parties thereto (and their respective permitted transferees), the date which the last reported sale price of Akili, Inc. common stock equals or exceeds $15.00 per share (subject to adjustment) for any 20 trading days within any 30-trading day period commencing at least 30 days after the Closing Date. The Lock-Up Period for any Lock-Up Shares for which the Lock- Up Period has not ended on the date that is 180 days after the Closing Date shall end on such 180th day after the Closing Date. | ||||||||
Amended and Restated Registration Rights Agreement (to be entered into at Closing) | During the 90-day period beginning on the date of the | N/A | Each participating holder in such underwritten | If expressly permitted by a lock-up agreement or in the event the managing |
Agreement, Arrangement or Understanding |
Restrictions |
Expiration Date |
Natural Persons and Entities Subject |
Exceptions | ||||
pricing of an underwritten offering of any equity securities of Akili, Inc., agreement not to (i) transfer, assign or sell, (ii) enter into any arrangement transferring the economic consequences of security ownership or (iii) public announcement of intention to effect (i) or (ii) with respect to Akili, Inc. ordinary shares or other equity securities of Akili, Inc., subject to certain exceptions. | offering of any equity securities of Akili, Inc. and each beneficial holder (together with its affiliates) of greater than five percent of the outstanding Akili, Inc. common stock. | underwriters otherwise agree by written consent. |
• | Treatment of Akili Equity Awards in the Business Combination. Business Combination Proposal—The Merger Agreement—Consideration—Treatment of Akili Options |
• | The amounts listed in the table below represent the number of stock options to be held by each existing executive officer and director of Akili immediately following consummation of the Business Combination. Stock options are stated as total outstanding stock options with the estimated intrinsic value of each executive officer’s and director’s stock options calculated as to the total outstanding stock options for each individual award multiplied by the difference between |
(i) the $10 fair value of Akili common stock under the Merger Agreement and (ii) the stock option exercise price. |
Name (1) |
Dollar Value ($) |
Number of Shares |
||||||
W. Edward Martucci |
12,061,856 | 1,884,924 | ||||||
Santosh Shanbhag |
2,907,936 | 497,395 | ||||||
Jacqueline Studer |
2,258,250 | 389,114 | ||||||
Anil S. Jina |
2,258,250 | 401,274 | ||||||
Jonathan David |
— | — | ||||||
Robert Perez |
7,225,898 | 1,129,041 | ||||||
Bharatt Chowrira |
— | — | ||||||
Kenneth Ehlert |
— | 81,066 | ||||||
James Gates |
— | — | ||||||
Adam Gazzaley |
579,040 | 86,856 | ||||||
Christine Lemke |
486,396 | 81,066 | ||||||
John Spinale |
268,672 | 33,584 |
(1) | This table does not include any Earnout Shares that Akili’s officers and directors may have the right to receive. |
• | Director Compensation non-employee director compensation policy (“Director Compensation Policy”). We intend that the Director Compensation Policy will provide for compensation in the form of cash, equity awards or a combination of both. For more information on the Director Compensation Policy we intend to adopt, see the section entitled “—Director Compensation |
• | 2022 Plan |
Sources |
Uses |
|||||||||
($ in millions) |
||||||||||
Cash and investments held in trust (1) |
$ | 251 | Cash on balance sheet |
$ | 385 | |||||
PIPE Investment (2) |
$ | 162 | Transaction fees and expenses (3) |
$ | 28 | |||||
Total Sources |
$ | 413 | Total Uses |
$ | 413 |
(1) | Calculated as of December 31, 2021. |
(2) | Shares issued in the PIPE Investment are at a deemed value of $10.00 per share. |
(3) | Includes deferred underwriting commission of $7.7 million and estimated transaction expenses. |
• | Akili has a history of significant losses, anticipates losses increasing expenses in the future, and may not be able to achieve or maintain profitability. |
• | The failure of Akili’s prescription digital therapeutics to achieve and maintain market acceptance and adoption by patients and physicians could have a material adverse effect on Akili’s business, prospects, results of operation and financial condition. |
• | The market for prescription digital therapeutics is new, rapidly evolving, and increasingly competitive, as the healthcare industry in the United States is undergoing significant structural change, which makes it difficult to forecast demand for Akili’s products. As a result, all prospective financial information included herein are subject to change. |
• | Akili’s development programs represent novel and innovative potential therapeutic areas, and negative perception of any product or product candidate that Akili develops could adversely affect its ability to conduct its business, obtain marketing authorizations or identify alternate regulatory pathways to market for such product candidate. |
• | Akili faces competition, and new products may emerge that provide different or better alternatives for treatment of the conditions that EndeavorRx or Akili’s future products, if granted marketing authorization, are authorized to treat. |
• | If Akili fails to achieve and maintain clearance, de novo classification or approval to market its product candidates, including EndeavorRx for expanded indications, or if Akili is delayed in obtaining such marketing authorizations, its business, prospects, results of operations and financial condition could be materially and adversely affected. |
• | Clinical trials of any of Akili’s products or product candidates may fail to produce results necessary to support marketing authorization. |
• | EndeavorRx is made available via the Apple App Store ® and on Google PlayTM, and supported by third-party infrastructure. If Akili’s ability to access these markets or access necessary third-party infrastructure was stopped or otherwise restricted or limited, it could have a material adverse effect on Akili’s business, prospects, results of operations and financial condition. |
• | If Akili is not able to develop and release new products, or successful enhancements, new features and modifications to EndeavorRx or any future products, Akili’s business, prospects, results of operations and financial condition could be materially and adversely affected. |
• | Akili relies on a single third party digital pharmacy for the fulfillment of prescriptions. This reliance on a single third party increases the risk that Akili could have disruption in the fulfillment of prescriptions, which could have a material and adverse effect on Akili’s reputation, business, results of operations and financial condition. |
• | Akili operates in a highly regulated industry and are subject to a wide range of federal, state, and local laws, rules, and regulations, including FDA regulatory requirements and laws pertaining to fraud and abuse in healthcare, that affect nearly all aspects of Akili’s operations. Failure to comply with these laws, rules, and regulations, or to obtain and maintain required licenses, could subject Akili to enforcement actions, including substantial civil and criminal penalties, and might require Akili to recall or withdraw a product from the market or cease operations. |
• | Akili’s commercialization efforts to date have focused almost exclusively on the U.S. Akili’s ability to enter other foreign markets will depend, among other things, on its ability to navigate various regulatory regimes with which Akili does not have experience, which could delay or prevent the growth of its operations outside of the U.S. |
• | The insurance coverage and reimbursement status of products that recently obtained marketing authorization is uncertain. Failure to obtain or maintain adequate coverage and reimbursement for EndeavorRx or any other of Akili’s product candidates, if granted marketing authorization, could limit Akili’s ability to market those products and materially and adversely affect its ability to generate revenue. |
• | Akili is subject to data privacy and security laws and regulations governing its collection, use, disclosure or storage of personally identifiable information, including protected health information and payment card data, which may impose restrictions on Akili and its operations. Any actual or perceived noncompliance with such laws and regulations may result in penalties, regulatory action, loss of business or unfavorable publicity. |
• | If Akili is unable to adequately protect and enforce its intellectual property and proprietary technology, obtain and maintain patent protection for its technology and products where appropriate or if the scope of the patent protection obtained is not sufficiently broad, or if Akili is unable to protect the confidentiality of its trade secrets and know-how, its competitors could develop and commercialize technology and products similar or identical to Akili’s products, and its ability to successfully commercialize its technology and products may be impaired. |
• | If Akili fails to comply with obligations in the agreements under which it collaborates with or license intellectual property rights from third parties, or otherwise experience disruptions to its business relationships with collaborators or licensors, Akili could lose rights that are important to its business. |
• | Akili will need substantial additional funding, and if it is unable to raise capital when needed or on terms favorable to Akili, Akili’s business, financial condition and results of operation could be materially and adversely affected. |
• | The amount of Akili’s future losses is uncertain and its quarterly and annual operating results may fluctuate significantly or fall below the expectations of investors or securities analysists, each of which may cause its stock price to fluctuate or decline. |
• | Since the Sponsor and SCS’s directors and executive officers have interests that are different, or in addition to (and which may conflict with), the interests of our shareholders, a conflict of interest may have existed in determining whether the Business Combination with Akili is appropriate as our initial business combination. |
• | SCS’s independent registered public accounting firm’s report contains an explanatory paragraph that expresses substantial doubt about SCS’s ability to continue as a going concern. |
(in thousands, except share and per share data) |
||||
Income Statement Data: |
For the Period from February 25, 2021 (Inception) Through December 31, 2021 |
|||
Revenue |
$ | — | ||
Loss from operations |
(2,447 | ) | ||
Interest income |
8 | |||
Net loss |
(2,439 | ) | ||
Basic and diluted weighted average shares outstanding, Class A ordinary shares |
15,101,877 | |||
Basic and diluted net loss per share, Class A ordinary shares |
(0.12 | ) | ||
Basic and diluted weighted average shares outstanding, Class B ordinary shares |
5,852,751 | |||
Basic and diluted net loss per share, Class B ordinary shares |
(0.12 | ) |
Balance Sheet Data: |
As of December 31, 2021 |
|||
Total current assets |
$ | 932 | ||
Trust account |
250,008 | |||
Total assets |
251,188 | |||
Total liabilities |
9,690 | |||
Value of ordinary shares subject to possible redemption |
250,008 | |||
Permanent deficit |
(8,510 | ) |
December 31, |
||||||||
(in thousands) | 2021 |
2020 |
||||||
Balance Sheet Data: |
||||||||
Cash and cash equivalents |
$ | 76,899 | $ | 18,528 | ||||
Working capital, net (1) |
71,692 | 15,230 | ||||||
Total assets |
80,937 | 20,181 | ||||||
Total liabilities |
15,175 | 8,197 | ||||||
Redeemable convertible preferred stock |
291,876 | 116,886 | ||||||
Total stockholders’ equity (deficit) |
(226,114 | ) | (104,902 | ) | ||||
Statement of Cash Flows Data: |
||||||||
Net cash used in operating activities |
$ | (53,982 | ) | $ | (24,551 | ) | ||
Net cash used in investing activities |
(492 | ) | (116 | ) | ||||
Net cash provided by financing activities |
112,845 | 1,998 |
Year Ended December 31, |
||||||||
(dollars in thousands, except per share data) | 2021 |
2020 |
||||||
Statement of Operations Data: |
||||||||
Total revenue |
$ | 538 | $ | 3,939 | ||||
Total cost of revenues and operating expenses |
61,257 | 29,375 | ||||||
|
|
|
|
|||||
Loss from operations |
(60,719 | ) | (25,436 | ) | ||||
Other income (expense): |
||||||||
Other income |
17 | 124 | ||||||
Interest expense |
(465 | ) | (333 | ) | ||||
Loss on extinguishment of debt |
(181 | ) | — | |||||
|
|
|
|
|||||
Net loss before income taxes |
$ | (61,348 | ) | $ | (25,645 | ) | ||
Income tax expense |
$ | — | $ | 1 | ||||
|
|
|
|
|||||
Net loss |
$ | (61,348 | ) | $ | (25,646 | ) | ||
|
|
|
|
|||||
Dividends on Series D convertible preferred stock |
$ | (6,660 | ) | $ | — | |||
Redemption value of Series D convertible preferred stock |
(58,649 | ) | — | |||||
|
|
|
|
|||||
Net loss attributable to common shareholders |
$ | (126,657 | ) | $ | (25,646 | ) | ||
|
|
|
|
|||||
Net loss per share - basic and diluted |
$ | (105.77 | ) | $ | (22.20 | ) | ||
|
|
|
|
(1) | Working capital, net is defined as current assets less current liabilities. |
• | Assuming No Redemptions (Scenario 1) |
• | Assuming Maximum Redemptions (Scenario 2) |
Combined Pro Forma |
||||||||
Year Ended December 31, 2021 |
||||||||
Assuming No Redemptions |
Assuming Maximum Redemptions |
|||||||
(in thousands, except share and per share amounts) |
||||||||
Summary Unaudited Pro Forma Combined Statement of Operations Data |
||||||||
Loss from operations |
$ | (76,734 | ) | $ | (73,509 | ) | ||
Net loss attributable to common stockholders, basic and diluted |
$ | (142,672 | ) | $ | (139,447 | ) | ||
Net loss per common share, basic and diluted |
$ | (1.40 | ) | $ | (1.81 | ) | ||
Weighted-average common shares outstanding, basic and diluted |
102,167,514 | 77,167,514 | ||||||
Combined Pro Forma |
||||||||
December 31, 2021 |
||||||||
Assuming No Redemptions |
Assuming Maximum Redemptions |
|||||||
(in thousands) |
||||||||
Summary Unaudited Pro Forma Combined Balance Sheet Data |
||||||||
Total assets |
$ | 460,202 | $ | 212,402 | ||||
Total liabilities |
$ | 86,161 | $ | 70,345 | ||||
Total stockholders’ equity |
$ | 374,041 | $ | 142,057 |
• | Assuming No Redemptions (Scenario 1): |
• | Assuming Maximum Redemptions (Scenario 2): |
Year Ended December 31, 2021 (1) |
||||||||||||||||
Historical SCS |
Historical Akili |
Pro Forma Combined (No Redemptions) |
Pro Forma Combined (Maximum Redemptions) |
|||||||||||||
Net loss attributable to common stockholders, basic and diluted |
$ | (2,439 | ) | $ | (126,657 | ) | $ | (142,672 | ) | $ | (139,447 | ) | ||||
Stockholders’ equity (deficit) |
$ | (8,510 | ) | $ | (226,114 | ) | $ | 374,041 | $ | 142,057 | ||||||
Shares subject to redemption |
25,000,000 | — | — | — | ||||||||||||
Outstanding shares classified in permanent equity |
6,890,000 | 1,454,239 | 102,167,514 | 77,167,514 | ||||||||||||
Weighted-average common shares outstanding, basic and diluted |
n/a | 1,197,489 | 102,167,514 | 77,167,514 | ||||||||||||
Weighted-average shares outstanding of Class A, basic and diluted |
15,101,877 | n/a | n/a | n/a | ||||||||||||
Weighted-average shares outstanding of Class B, basic and diluted |
5,852,751 | n/a | n/a | n/a | ||||||||||||
Book value per share (2) |
$ | (1.24 | ) | $ | (155.49 | ) | $ | 3.66 | $ | 1.84 | ||||||
Net loss per common share, basic and diluted (3) |
n/a | $ | (105.77 | ) | $ | (1.40 | ) | $ | (1.81 | ) | ||||||
Net loss per Class A share, basic and diluted (3) |
$ | (0.12 | ) | n/a | n/a | n/a | ||||||||||
Net loss per Class B share, basic and diluted (3) |
$ | (0.12 | ) | n/a | n/a | n/a |
(1) | There were no cash dividends for either SCS or Akili in the period presented. |
(2) | Historical book value per share for SCS and Akili calculated as permanent equity divided by the total number of outstanding shares classified in permanent equity. Pro forma book value per share is calculated as pro forma total stockholders’ equity divided by the total shares of the Post-Combination Company immediately after the Transactions under each scenario. |
(3) | Calculated based on weighted-average shares outstanding. |
• | the failure of EndeavorRx to achieve wide acceptance among patients, self-insured employers, commercial and government payers, health plans, physicians and other government entities, and key opinion leaders in the treatment community; |
• | lack of additional evidence of peer-reviewed publication of clinical or real world evidence supporting the effectiveness, safety, cost-savings or other advantages of our products over competitive products or other currently available methodologies; |
• | perceived risks associated with the use of our product or similar products or technologies generally; |
• | our ability to maintain U.S. Food and Drug Administration, or FDA, marketing authorization and other marketing authorizations for EndeavorRx; |
• | our ability to secure and maintain other regulatory clearance, authorization or approval for EndeavorRx for expanded indications and our other product candidates; |
• | the introduction of competitive products and the rate of acceptance of those products as compared to our products; and |
• | results of clinical, real world and health economics and outcomes research studies relating to chronic condition products or similar competitive products. |
• | lack of availability of adequate third-party payer coverage or reimbursement; |
• | lack of experience with our products; |
• | our inability to convince key opinion leaders to recommend our products; |
• | perceived inadequacy of evidence supporting clinical benefits, safety or cost-effectiveness of our products; |
• | liability risks generally associated with the use of new products; and |
• | the training required to use new products. |
• | restrictions on the marketing or manufacturing of the product, withdrawal of the product from the market, or voluntary or mandatory product recalls; |
• | clinical trial holds; |
• | fines, warning letters or other regulatory enforcement action; |
• | refusal by the FDA or comparable foreign regulatory authorities to clear or approve pending submissions filed by us; |
• | product seizure or detention, or refusal to permit the import or export of products; and |
• | injunctions or the imposition of civil or criminal penalties. |
• | We may not be able to demonstrate to the FDA’s satisfaction that our product candidates meet the applicable regulatory standards for clearance, de novo classification, or approval, as applicable; |
• | The FDA may disagree that our clinical data supports the label and use that we are seeking; and |
• | The FDA may disagree that the data from our preclinical or pilot studies and clinical trials is sufficient to support marketing authorization. |
• | the possible breach of the manufacturing agreement by the third party; and |
• | the possible termination or nonrenewal of the agreement by the third party at a time that is costly or inconvenient for us. |
• | we may lose marketing authorization of such product; |
• | regulatory authorities may require additional warnings on the product’s label; |
• | we may be required to issue safety communications to patients or healthcare providers that outline the risks of such side effects; |
• | we could be sued and held liable for harm caused to patients; and |
• | our reputation may suffer. |
• | multiple, conflicting and changing laws and regulations such as tax laws, privacy and data protection laws and regulations, export and import restrictions, employment laws, regulatory requirements and other governmental approvals, permits and licenses; |
• | requirements to maintain data and the processing of that data on servers located within the United States or in such countries; |
• | protecting and enforcing our intellectual property rights; |
• | converting our products as well as the accompanying instructional and marketing materials to conform to the language and customs of different countries; |
• | complexities associated with managing multiple payer reimbursement regimes, and government payers; |
• | competition from companies with significant market share in our market and with a better understanding of user preferences; |
• | financial risks, such as longer payment cycles, difficulty collecting accounts receivable, the effect of local and regional financial pressures on demand and payment for our products and services and exposure to foreign currency exchange rate fluctuations; |
• | natural disasters, political and economic instability, including wars, terrorism, political unrest, outbreak of disease (including the recent coronavirus outbreak), boycotts, curtailment of trade, and other market restrictions; and |
• | regulatory and compliance risks that relate to maintaining accurate information and control over activities subject to regulation under the U.S. Foreign Corrupt Practices Act (the “FCPA”), and comparable laws and regulations in other countries. |
• | a covered benefit under its health plan; |
• | safe, effective and medically necessary; |
• | supported by robust clinical data from well-controlled clinical research; |
• | appropriate for the specific patient; |
• | cost-effective; and |
• | neither experimental nor investigational. |
• | the scope of rights granted under the license agreement and other interpretation-related issues; |
• | the extent to which our technology and processing infringe on intellectual property of the licensor that is not subject to the licensing agreement; |
• | the sublicensing of patent and other rights under our collaborative development relationships; |
• | our diligence obligations under the license agreement and what activities satisfy those diligence obligations; |
• | the inventorship and ownership of inventions and know-how resulting from the joint creation or use of intellectual property by our licensors and us and our partners; and |
• | the priority of invention of patented technology. |
• | the scope of rights granted under the license agreement and other interpretation-related issues; |
• | amount of royalty payments under the license agreement; |
• | whether and to what extent our technology and processes infringe on intellectual property of the licensor that is not subject to the licensing agreement; |
• | our right to sublicense patent and other rights to collaborators and other third parties; |
• | our diligence obligations with respect to the use of the licensed technology in relation to our development and commercialization of our products, and what activities satisfy those diligence obligations; and |
• | the ownership of inventions and know-how resulting from the joint creation or use of intellectual property by our licensors and us and our collaborators. |
• | the scope, progress, results and costs of researching and developing our current product candidates, as well as other additional product candidates we may develop and pursue in the future; |
• | the timing of, and the costs involved in, obtaining marketing authorization for our product candidates and any other additional product candidates we may develop and pursue in the future; |
• | the number of future product candidates that we may pursue and their development requirements; |
• | the costs of commercialization activities for our product candidates, including the costs and timing of establishing product sales, marketing, and distribution capabilities; |
• | revenue received from commercial sales of our current products and, subject to receipt of authorization, revenue, if any, received from commercial sales of our product candidates; |
• | the extent to which we in-license or acquires rights to other products, product candidates or technologies; |
• | our investment in our human capital required to grow the business and the associated costs as we expand our research and development and establishes a commercial infrastructure; |
• | the costs of preparing, filing and prosecuting patent applications, maintaining and protecting our intellectual property rights, including enforcing and defending intellectual property-related claims; and |
• | the cost of operating a public company. |
• | the timing and success or failure of clinical trials for our product candidates or competing product candidates, or any other change in the competitive landscape of our industry, including consolidation among our competitors or partners or as a result of COVID-19; |
• | our ability to successfully recruit and retain subjects for clinical trials, and any delays caused by difficulties in such efforts, including as a result of COVID-19; |
• | our ability to obtain marketing authorization for our product candidates and the timing and scope of any such marketing authorizations we may receive; |
• | the timing and cost of, and level of investment in, research and development activities relating to our product candidates, which may change from time to time; |
• | our ability to attract, hire and retain qualified personnel; |
• | expenditures that we will or may incur to develop additional product candidates; |
• | the level of demand for EndeavorRx and our other product candidates should such product candidates receive marketing authorizations, which may vary significantly; |
• | the risk/benefit profile, cost and reimbursement policies with respect to EndeavorRx and our other product candidates, if granted marketing authorization, and existing and potential future therapeutics that compete with our product candidates; |
• | the changing and volatile U.S. and global economic environments including global inflationary pressures; and |
• | future accounting pronouncements or changes in our accounting policies. |
• | On March 2, 2021, the Sponsor paid $25,000 to cover certain offering and formation costs of SCS in consideration for which the Sponsor received 5,750,000 Class B ordinary shares. On June 29, 2021, the Company effected a share capitalization with respect to its Class B ordinary shares of 575,000 shares thereof, resulting in the Company’s initial shareholders holding an aggregate of 6,325,000 founder shares. All share and per-share amounts have been retroactively restated to reflect the share capitalization. The founder shares included an aggregate of up to 825,000 shares that were subject to forfeiture depending on the extent to which the underwriters’ over-allotment option was exercised. As a result of the underwriters’ election to partially exercise their over-allotment option, a total of 750,000 founder shares are no longer subject to forfeiture and 75,000 founder shares were forfeited, resulting in an aggregate of 6,250,000 founder shares outstanding. If SCS does not consummate a business combination by July 2, 2023 (or if such date is extended at a duly called extraordinary general meeting, such later date), it would cease all operations except for the purpose of winding up, redeeming all of the outstanding public shares for cash and, subject to the approval of its remaining shareholders and its board of directors, dissolving and liquidating, subject in each case to its obligations under the Cayman Islands Companies Act to provide for claims of creditors and the requirements of other applicable law. In such event, the 6,250,000 SCS Class B ordinary shares collectively owned by SCS’s initial shareholders would be worthless because following the redemption of the public shares, SCS would likely have few, if any, net assets and because the Sponsor and SCS’s directors and officers have agreed to waive their respective rights to liquidating distributions from the trust account in respect of any private placement shares and SCS Class B ordinary shares held by it or them, as applicable, if SCS fails to complete a business combination within the required period. In such event, the 6,250,000 SCS Class B ordinary shares collectively owned by SCS’s initial shareholders and the 640,000 private placement shares held by the Sponsor would be worthless because following the redemption of the public shares, SCS would likely have few, if any, net assets and because the Sponsor and SCS’s directors and officers have agreed to waive their respective rights to liquidating distributions from the trust account in respect of any private placement shares and SCS Class B ordinary shares held by it or them, as applicable, if SCS fails to complete a business combination within the required period. The 640,000 private placement shares were purchased by the Sponsor simultaneously with the |
consummation of SCS’s initial public offering for an aggregate purchase price of $6,400,000. The Sponsor and each officer and director of SCS did not receive any compensation in exchange for their agreement to waive these redemption rights. Certain of SCS’s directors and executive officers, including Chamath Palihapitiya and Kishen Mehta, also have an economic interest in the 640,000 private placement shares purchased by the Sponsor simultaneously with the consummation of SCS’s initial public offering and in the 6,250,000 SCS Class B ordinary shares owned by the Sponsor. The 6,250,000 shares of Akili, Inc. common stock into which the 6,250,000 SCS Class B ordinary shares collectively held by the Sponsor will automatically convert in connection with the Merger (including after giving effect to the Domestication), if unrestricted and freely tradable, would have had an aggregate market value of $ million based upon the closing price of $ per public share on Nasdaq on , 2022, the most recent practicable date prior to the date of this proxy statement/prospectus. However, given that such shares of Akili, Inc. common stock will be subject to certain restrictions, including those described above, SCS believes such shares have less value. |
• | The Sponsor (including its representatives and affiliates) and SCS’s directors and officers, are, or may in the future become, affiliated with entities that are engaged in a similar business to SCS. Additionally, all of our officers and certain of our directors have fiduciary and contractual duties to either Social Capital or Suvretta and, as applicable, their underlying clients, and to certain companies in which either of them has invested or which either of them has sponsored. For example, Mr. Palihapitiya and Mr. Mehta, each of whom serves as an officer and director of SCS and may be considered an affiliate of the Sponsor, have also recently incorporated DNAB, DNAC and DNAD, all of which are blank check companies incorporated as Cayman Islands exempted companies for the purpose of effecting their respective initial business combinations. Mr. Palihapitiya is the Chief Executive Officer and Chairman of the Board of Directors of DNAB, DNAC and DNAD, Mr. Mehta is the President and a director of DNAB, DNAC and DNAD, and each of our other officers is also an officer of DNAB, DNAC and DNAD and owe fiduciary duties under Cayman Islands law to DNAB, DNAC and DNAD. The Sponsor and SCS’s directors and officers are not prohibited from sponsoring, or otherwise becoming involved with, any other blank check companies prior to SCS completing its initial business combination. Moreover, certain of SCS’s directors and officers have time and attention requirements for investment funds of which affiliates of the Sponsor are the investment managers. SCS’s directors and officers also may become aware of business opportunities which may be appropriate for presentation to SCS, and the other entities to which they owe certain fiduciary or contractual duties, including DNAB, DNAC and DNAD. Accordingly, they may have had conflicts of interest in determining to which entity a particular business opportunity should be presented. These conflicts may not be resolved in SCS’s favor and such potential business opportunities may be presented to other entities prior to their presentation to SCS, subject to applicable fiduciary duties under Cayman Islands law. SCS’s Cayman Constitutional Documents provide that SCS renounces its interest in any corporate opportunity offered to any director or officer of SCS unless such opportunity is expressly offered to such person solely in his or her capacity as a director or officer of SCS and it is an opportunity that SCS is able to complete on a reasonable basis. |
• | SCS’s existing directors and officers will be eligible for continued indemnification and continued coverage under SCS’s directors’ and officers’ liability insurance after the Merger and pursuant to the Merger Agreement. |
• | The Sponsor Related PIPE Investors have subscribed for $135,400,00 of the PIPE Investment, for which they will receive up to 13,540,000 shares of Akili, Inc. common stock. The 135,400,000 shares of Akili, Inc. common stock which the Sponsor Related PIPE Investors have subscribed for in the PIPE Investment, if unrestricted and freely tradable, would have had an aggregate market value of $ million based upon the closing price of $ per public share on Nasdaq on , 2022, the most recent practicable date prior to the date of this proxy statement/prospectus. See “ Certain Relationships and Related Person Transactions—SCS—Subscription Agreements. |
• | In the event that SCS fails to consummate a business combination within the prescribed time frame (pursuant to the Cayman Constitutional Documents), or upon the exercise of a redemption right in connection with the Business Combination, SCS will be required to provide for payment of claims of |
creditors that were not waived that may be brought against SCS within the ten years following such redemption. In order to protect the amounts held in SCS’s trust account, the Sponsor has agreed that it will be liable to SCS if and to the extent any claims by a third party (other than SCS’s independent auditors) for services rendered or products sold to SCS, or a prospective target business with which SCS has discussed entering into a transaction agreement, reduce the amount of funds in the trust account to below (i) $10.00 per public share or (ii) such lesser amount per public share held in the trust account as of the date of the liquidation of the trust account, due to reductions in value of the trust assets, in each case, net of the amount of interest which may be withdrawn to pay taxes, except as to any claims by a third party who executed a waiver of any and all rights to seek access to the trust account and except as to any claims under the indemnity of the underwriters of SCS’s initial public offering against certain liabilities, including liabilities under the Securities Act. |
• | SCS’s officers and directors, and their affiliates are entitled to reimbursement of all out-of-pocket |
• | Pursuant to the Registration Rights Agreement, the Sponsor and the Sponsor Related PIPE Investors will have customary registration rights, including demand and piggy-back rights, subject to cooperation and cut-back provisions with respect to the shares of Akili, Inc. common stock held by such parties following the consummation of the Business Combination. |
• | On April 20, 2022, SCS issued the SCS Promissory Note (as defined below) to the Sponsor, pursuant to which SCS may borrow up to an aggregate principal amount of $1,500,000, which is payable upon the earlier of July 2, 2023 and the effective date of a business combination, and as of May 12, 2022, $250,000 was outstanding under the SCS Promissory Note. |
Agreement, Arrangement or Understanding |
Restrictions |
Expiration Date |
Natural Persons and Entities Subject |
Exceptions | ||||
Letter Agreement, dated as of June 29, 2021, by and among SCS, the Sponsor, Chamath Palihapitiya, Kishen Mehta, James Ryans, Shoney Katz and Vladimir Coric | Agreement by the Sponsor and SCS’s initial directors and officers not to transfer, assign or sell any founder shares or private placement shares. | For the founder shares, the earlier to occur of: (A) one year after the completion of SCS’s initial business combination; and (B) subsequent to SCS’s initial business combination (x) if the last reported sale price of the SCS Class A ordinary shares equals or exceeds $12.00 per share (as | Sponsor Chamath Palihapitiya Kishen Mehta James Ryans Shoney Katz Vladimir Coric |
Transfers, assignments or sales to certain permitted transferees. Any permitted transferees would be subject to the same restrictions and other agreements |
Agreement, Arrangement or Understanding |
Restrictions |
Expiration Date |
Natural Persons and Entities Subject |
Exceptions | ||||
adjusted for share sub-divisions, share dividends, rights issuances, consolidations, reorganizations, recapitalizations and other similar transactions) for any 20 trading days within any 30-trading day period commencing at least 150 days after SCS’s initial business combination or (y) the date on which SCS completes a liquidation, merger, share exchange, reorganization or other similar transaction that results in all of the SCS public shareholders having the right to exchange their SCS ordinary shares for cash, securities or other property. For the private placement shares, 30 days after the completion of SCS’s initial business combination. This Letter Agreement will be superseded at the Closing by the Lock-Up Agreement. |
with respect to any founder shares. | |||||||
Letter Agreement, dated as of September 24, 2021, by and between SCS and Senthil Sundaram | Agreement by Mr. Sundaram not to transfer, assign or sell any founder shares or shares underlying restricted stock awards granted to Mr. Sundaram. | The earlier to occur of: (A) one year after the completion of SCS’s initial business combination; and (B) subsequent to SCS’s initial business combination (x) if the last reported sale price of the SCS Class A ordinary shares equals or exceeds $12.00 per share (as adjusted for share sub-divisions, share dividends, rights issuances, consolidations, reorganizations, recapitalizations and other similar transactions) for any 20 trading days within any | Senthil Sundaram | Transfers, assignments or sales to certain permitted transferees. Any permitted transferees would be subject to the same restrictions and other agreements with respect to any founder shares or restricted stock awards. |
Agreement, Arrangement or Understanding |
Restrictions |
Expiration Date |
Natural Persons and Entities Subject |
Exceptions | ||||
30-trading day period commencing at least 150 days after SCS’s initial business combination or (y) the date on which SCS completes a liquidation, merger, share exchange, reorganization or other similar transaction that results in all of the SCS public shareholders having the right to exchange their SCS ordinary shares for cash, securities or other property. This Letter Agreement will be superseded at the Closing by the Lock-Up Agreement. |
||||||||
Lock-Up Agreement (to be entered into at Closing) | Agreement by the Sponsor, Vladimir Coric and Senthil Sundaram (among other parties) not to (i) transfer, assign or sell, (ii) enter into any arrangement transferring the economic consequences of security ownership or (iii) make a public announcement of the intention to effect (i) or (ii) with respect to Akili, Inc. common stock (other than PIPE Shares or SCS ordinary shares acquired in the public market), subject to certain exceptions. | The earlier of (i) the date on which the SEC declares effective the first registration statement on Form S-1 filed by Akili, Inc. to register the resale of the PIPE Shares (as defined in the Lock-Up Agreement) and (ii) (a) in the case of the Private Placement Shares, the last day of the Private Placement Shares Lock-Up Period (each as defined in the Lock-Up Agreement) and (b) in the case of Lock-Up Shares other than the Private Placement Shares, (x) for 33% of the Lock-Up Shares (other than the Private Placement Shares) held by each of the parties thereto (and their respective permitted transferees), the date which the last reported sale price of Akili, Inc. common stock equals or exceeds $12.50 per share (subject to adjustment) for any 20 trading days within | Sponsor Vladimir Coric Senthil Sundaram Certain Equityholders of Akili | Transfers, assignments or sales to certain permitted transferees. Any permitted transferees would be subject to the same restrictions and other agreements with respect to any Akili, Inc. common stock. The lock-up provisions may be waived, amended or modified upon (i) the approval of a majority of the total number of directors serving on the Akili, Inc. Board and (ii) the written consent of the holders of |
Agreement, Arrangement or Understanding |
Restrictions |
Expiration Date |
Natural Persons and Entities Subject |
Exceptions | ||||
any 30-trading day period commencing at least 30 days after the Closing Date and (y) for an additional 50% of the Lock-Up Shares (other than the Private Placement Shares) held by each of the parties thereto (and their respective permitted transferees), the date which the last reported sale price of Akili, Inc. common stock equals or exceeds $15.00 per share (subject to adjustment) for any 20 trading days within any 30-trading day period commencing at least 30 days after the Closing Date. The Lock-Up Period for any Lock-Up Shares for which the Lock-Up Period has not ended on the date that is 180 days after the Closing Date shall end on such 180th day after the Closing Date. | a majority of the total shares subject to the Lock-Up Agreement, subject to certain restrictions. | |||||||
Amended and Restated Registration Rights Agreement (to be entered into at Closing) | During the 90-day period beginning on the date of the pricing of an underwritten offering of any equity securities of Akili, Inc., agreement not to (i) transfer, assign or sell, (ii) enter into any arrangement transferring the economic consequences of security ownership or (iii) public announcement of intention to effect (i) or (ii) with | N/A | Each participating holder in such underwritten offering of any equity securities of Akili, Inc. and each beneficial holder (together with its affiliates) of greater than five percent of the outstanding Akili, Inc. common stock. | If expressly permitted by a lock-up agreement or in the event the managing underwriters otherwise agree by written consent. |
Agreement, Arrangement or Understanding |
Restrictions |
Expiration Date |
Natural Persons and Entities Subject |
Exceptions | ||||
respect to Akili, Inc. ordinary shares or other equity securities of Akili, Inc., subject to certain exceptions. |
• | its employees may experience uncertainty about their future roles, which might adversely affect Akili, Inc.’s ability to retain and hire key personnel and other employees; |
• | members, business partners, customers, and other parties with which Akili, Inc. maintains business relationships may experience uncertainty about its future and seek alternative relationships with third parties, seek to alter their business relationships with Akili or fail to re-enroll or extend an existing relationship with Akili; and |
• | Akili has expended and Akili will continue to expend significant costs, fees and expenses for professional services and transaction costs in connection with the proposed Business Combination. |
• | a limited availability of market quotations for Akili, Inc.’s securities; |
• | reduced liquidity for Akili, Inc.’s securities; |
• | a determination that Akili, Inc. common stock is a “penny stock” which will require brokers trading in Akili, Inc. common stock to adhere to more stringent rules and possibly result in a reduced level of trading activity in the secondary trading market for Akili, Inc.’s securities; |
• | a limited amount of news and analyst coverage; and |
• | a decreased ability to issue additional securities or obtain additional financing in the future. |
• | the ability of the board of directors of Akili, Inc. to issue shares of preferred stock, including “blank check” preferred stock and to determine the price and other terms of those shares, including preferences and voting rights, without stockholder approval, which could be used to significantly dilute the ownership of a hostile acquirer; |
• | the division of the board of directors into three classes of directors, with each class serving a staggered three-year term, and this classified board provision could have the effect of making the replacement of incumbent directors more time consuming and difficult; |
• | the proposed certificate of incorporation will prohibit cumulative voting in the election of directors, which limits the ability of minority stockholders to elect director candidates; |
• | the limitation of the liability of, and the indemnification of, the directors and officers of Akili, Inc.; |
• | the ability of the board of directors of Akili, Inc. to amend the bylaws, which may allow the board of directors of Akili, Inc. to take additional actions to prevent an unsolicited takeover and inhibit the ability of an acquirer to amend the bylaws to facilitate an unsolicited takeover attempt; and |
• | advance notice procedures with which stockholders must comply to nominate candidates to the board of directors of Akili, Inc. or to propose matters to be acted upon at a stockholders’ meeting, which could preclude stockholders from bringing matters before annual or special meetings of stockholders and delay changes in the board of directors of Akili, Inc. and also may discourage or deter a potential acquirer from conducting a solicitation of proxies to elect the acquirer’s own slate of directors or otherwise attempting to obtain control of Akili, Inc. |
• | changes in the industries in which we and our customers operate; |
• | developments involving our competitors; |
• | changes in laws and regulations affecting our business; |
• | variations in our operating performance and the performance of our competitors in general; |
• | actual or anticipated fluctuations in our quarterly or annual operating results; |
• | publication of research reports by securities analysts about our or our competitors or our industry; |
• | the public’s reaction to our press releases, our other public announcements and our filings with the SEC; |
• | actions by stockholders, including the sale by the Third-Party PIPE Investors of any of their shares of our common stock; |
• | additions and departures of key personnel; |
• | commencement of, or involvement in, litigation involving Akili, Inc.; |
• | changes in our capital structure, such as future issuances of securities or the incurrence of additional debt; |
• | the volume of shares of our common stock available for public sale; and |
• | general economic and political conditions, such as the effects of the COVID-19 pandemic, recessions, interest rates, local and national elections, fuel prices, international currency fluctuations, corruption, political instability and acts of war or terrorism. |
• | consider and vote upon a proposal to approve by ordinary resolution and adopt the Merger Agreement attached to this proxy statement/prospectus statement as Annex A, pursuant to which, among other things, following the Domestication of SCS to Delaware, the Merger of Merger Sub with and into Akili, with Akili surviving the merger as a wholly-owned subsidiary of Akili, Inc. in accordance with the terms and subject to the conditions of the Merger Agreement as more fully described elsewhere in this proxy statement/prospectus (the “Business Combination Proposal”); |
• | consider and vote upon a proposal to approve by special resolution, assuming the Business Combination Proposal is approved and adopted, the change of SCS’s jurisdiction of incorporation by deregistering as an exempted company in the Cayman Islands and continuing and domesticating as a corporation incorporated under the laws of the State of Delaware (the “Domestication Proposal”); |
• | consider and vote upon the following three separate proposals (collectively, the “Organizational Documents Proposals”) to approve by special resolution, assuming the Business Combination Proposal and the Domestication Proposal are approved and adopted, the following material differences between the Cayman Constitutional Documents and the Proposed Organizational Documents: |
• | to authorize the change in the authorized share capital of SCS from 500,000,000 Class A ordinary shares, par value $0.0001 per share (the “SCS Class A ordinary shares”), 50,000,000 Class B ordinary shares, par value $0.0001 per share (the “SCS Class B ordinary shares” and, together with the SCS Class A ordinary shares, the “ordinary shares”), and 5,000,000 preference shares, par value $0.0001 per share (the “SCS preference shares”), to shares of common stock, par value $0.0001 per share, of Akili, Inc. (the “Akili, Inc. common stock”) and shares of preferred stock, par value $0.0001 per share, of Akili, Inc. (the “Akili, Inc. preferred stock”) (“Organizational Documents Proposal A”); |
• | to authorize the board of directors of Akili, Inc. to issue any or all shares of Akili, Inc. preferred stock in one or more classes or series, with such terms and conditions as may be expressly determined by Akili, Inc.’s board of directors and as may be permitted by the DGCL (“Organizational Documents Proposal B”); |
• | to authorize all other changes in connection with the replacement of Cayman Constitutional Documents with the Proposed Certificate of Incorporation and Proposed Bylaws in connection with the consummation of the Business Combination (copies of which are attached to this proxy |
statement/prospectus as Annex J and Annex K, respectively), including (1) changing the corporate name from “Social Capital Suvretta Holdings Corp. I” to “Akili Interactive Labs, Inc.,” (2) making Akili, Inc.’s corporate existence perpetual, (3) adopting Delaware as the exclusive forum for certain stockholder litigation and the United States Federal District Courts as the exclusive forum for litigation arising out of the Securities Act, (4) being subject to the provisions of Section 203 of DGCL and (5) removing certain provisions related to SCS’s status as a blank check company that will no longer be applicable upon consummation of the Business Combination, all of which SCS’s board of directors believes is necessary to adequately address the needs of Akili, Inc. after the Business Combination (“Organizational Documents Proposal C”); |
• | consider and vote upon a proposal to approve by ordinary resolution of the holders of the SCS Class B ordinary shares, to appoint to a staggered board seven directors who, upon consummation of the Business Combination, will be the directors of Akili, Inc. (the “Director Appointment Proposal”); |
• | consider and vote upon a proposal to approve by ordinary resolution for purposes of complying with the applicable provisions of Nasdaq Listing Rule 5635, the issuance of Akili, Inc. common stock to (a) the PIPE Investors, including the Sponsor Related PIPE Investors, pursuant to the PIPE Investment and (b) the Akili Stockholders pursuant to the Merger Agreement (the “Stock Issuance Proposal”); |
• | consider and vote upon a proposal to approve by ordinary resolution, the 2022 Plan (the “Incentive Plan Proposal”); |
• | consider and vote upon a proposal to approve by ordinary resolution, the 2022 ESPP (the “ESPP Proposal”); |
• | consider and vote upon a proposal to approve by ordinary resolution, the ratification of the appointment of Marcum LLP as the independent registered public accountants of SCS to audit and report upon SCS’s consolidated financial statements for the fiscal year ending December 31, 2022 (the “Auditor Ratification Proposal”); and |
• | consider and vote upon a proposal to approve by ordinary resolution 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 Condition Precedent Proposals at the extraordinary general meeting (the “Adjournment Proposal”). |
• | You can vote by signing and returning the enclosed proxy card. If you vote by proxy card, your “proxy,” whose name is listed on the proxy card, will vote your shares as you instruct on the proxy card. If you sign and return the proxy card but do not give instructions on how to vote your shares, your shares will be voted as recommended by SCS’s board “FOR” the Business Combination Proposal, “FOR” the Domestication Proposal, “FOR” each of the separate Organizational Documents Proposals, “FOR” the Director Appointment Proposal, “FOR” the Stock Issuance Proposal, “FOR” the Incentive Plan Proposal, “FOR” the ESPP Plan, “FOR” the Auditor Ratification Proposal and “FOR” the Adjournment Proposal, in each case, if presented to the extraordinary general meeting. Votes received after a matter has been voted upon at the extraordinary general meeting will not be counted. |
• | You can attend the extraordinary general meeting and vote in person. You will receive a ballot when you arrive. However, if your shares are held in the name of your broker, bank or another nominee, you must get a valid legal proxy from the broker, bank or other nominee. That is the only way SCS can be sure that the broker, bank or nominee has not already voted your shares. |
• | you may send another proxy card with a later date; |
• | you may notify SCS’s Chief Financial Officer in writing before the extraordinary general meeting that you have revoked your proxy; or |
• | you may attend the extraordinary general meeting, revoke your proxy, and vote online, as indicated above. |
(i) | hold public shares; |
(ii) | submit a written request to Continental, SCS’s transfer agent, that Akili, Inc. redeem all or a portion of your public shares for cash; |
(iii) | deliver your share certificates (if any) and any other redemption forms to Continental, SCS’s transfer agent, physically or electronically through DTC; and |
(iv) | provide the full name and shares of the beneficial holder. |
• | each share of Akili common stock will be canceled and converted into the right to receive a number of shares of Akili, Inc. common stock equal to the quotient obtained by dividing (i) the Aggregate Merger Consideration by (ii) the aggregate fully diluted number of shares of Akili common stock issued and outstanding immediately prior to the Merger as calculated pursuant to the Merger Agreement (such quotient, the “Merger Consideration Per Fully Diluted Share”); |
• | each share of Akili Series A-1 Preferred Stock, Akili Series A-2 Preferred Stock, Akili Series B Preferred Stock, Akili Series C Preferred Stock and Akili Series D Preferred Stock (collectively, the “Akili preferred stock”) will be canceled and converted into the right to receive a number of shares of Akili, Inc. common stock equal to the product obtained by multiplying the Merger Consideration Per Fully Diluted Share by the number of shares of Akili common stock held by the holder thereof with respect to such preferred stockas of immediately prior to the Merger (after giving effect to the conversion of all Akili preferred stock into Akili common stock in accordance with the Amended and Restated Certificate of Incorporation of Akili, dated as of May 25, 2021) with fractional shares rounded down to the nearest whole share; and |
• | all Akili Options outstanding as of immediately prior to the Merger will be converted into Akili, Inc. Options and the exercise price thereof shall be adjusted. See “ —Treatment of Akili Options —Treatment of Akili Warrants |
a) | when the volume weighted average price of Akili, Inc. common stock has exceeded $15.00 for 20 trading days within any 30 consecutive trading day period prior to the fifth anniversary of the Closing Date, a one-time release of one-third of the Earnout Shares; |
b) | when the volume weighted average price of Akili, Inc. common stock has exceeded $20.00 for 20 trading days within any 30 consecutive trading day period prior to the fifth anniversary of the Closing Date, a one-time release of one-third of the Earnout Shares; and |
c) | when the volume weighted average price of Akili, Inc. common stock has exceeded $30.00 for 20 trading days within any 30 consecutive trading day period prior to the fifth anniversary of the Closing Date, a one-time release of one-third of the Earnout Shares (each of the events in clauses (a)—(c) above, a “Triggering Event”). |
a) | any change in applicable laws or GAAP or any interpretation thereof following the date of the Merger Agreement; |
b) | any change in interest rates or economic, political, business or financial market conditions generally; |
c) | the taking of any action required by the Merger Agreement; |
d) | any natural disaster (including hurricanes, storms, tornados, flooding, earthquakes, volcanic eruptions or similar occurrences) or change in climate; |
e) | any epidemic, pandemic or other disease outbreak (including COVID-19 and any COVID-19 Measures); |
f) | any acts of terrorism or war, the outbreak or escalation of hostilities, geopolitical conditions, local, national or international political conditions; |
g) | any failure of Akili to meet any projections or forecasts (provided that this clause would not prevent a determination that any Event not otherwise excluded from the definition of Akili Material Adverse Effect underlying such failure to meet projections or forecasts has resulted in a Akili Material Adverse Effect); |
h) | any Events generally applicable to the industries or markets in which Akili and its subsidiaries operate (including increases in the cost of products, services, supplies, materials or other goods or services purchased from third party suppliers); |
i) | the announcement of the Merger Agreement and consummation of the transactions contemplated thereby, including any termination of, reduction in or similar adverse impact on relationships, contractual or otherwise, with any landlords, customers, suppliers, distributors, partners or employees of Akili and its subsidiaries (it being understood that this clause will be disregarded for purposes of the representation and warranty in Section 4.4 of the Merger Agreement and the corresponding condition to Closing); |
j) | any matter set forth on Akili’s disclosure letter; |
k) | any Events to the extent actually known by certain individuals identified in SCS’s disclosure letter on or prior to the date of the Merger Agreement; or |
l) | any action taken by, or at the request of, SCS or Merger Sub. |
• | change or amend the governing documents of Akili or any of Akili’s subsidiaries or form or cause to be formed any new subsidiary of Akili; |
• | make or declare any dividend or distribution to stockholders of Akili or make any other distributions in respect of any of Akili’s capital stock or equity interests, except dividends and distributions by a wholly-owned Subsidiary of Akili to Akili or another wholly-owned subsidiary of Akili; |
• | split, combine, reclassify, recapitalize or otherwise amend any terms of any shares or series of Akili’s or any of its subsidiaries’ capital stock or equity interests, except for any such transaction by a wholly owned subsidiary of Akili that remains a wholly owned subsidiary of Akili after consummation of such transaction; |
• | purchase, repurchase, redeem or otherwise acquire any issued and outstanding share capital, outstanding shares of capital stock, membership interests or other equity interests of Akili or its subsidiaries, except for (i) the acquisition by Akili or any of its subsidiaries of any shares of capital stock, membership interests or other equity interests of Akili or its subsidiaries in connection with the forfeiture or cancellation of such interests without payment of any consideration by Akili or its subsidiaries, (ii) the withholding of shares of Akili Common Stock to satisfy tax obligations with respect to Akili Options or (iii) transactions between Akili and any wholly-owned subsidiary of Akili or between wholly owned subsidiaries of Akili; |
• | enter into, modify in any material respect or terminate (other than expiration in accordance with its terms) any material contracts or any real property lease, other than in the ordinary course of business consistent with past practice; |
• | sell, assign, transfer, convey, lease or otherwise dispose of any material tangible assets or properties of Akili or its subsidiaries, except for (i) dispositions of obsolete or worthless equipment (ii) transactions among Akili and its wholly owned subsidiaries or among its wholly owned subsidiaries and (iii) transactions in the ordinary course of business consistent with past practice; |
• | acquire any ownership interest in any real property, other than in the ordinary course of business; |
• | except as required by an existing benefit plan, or certain contractual obligations, (i) grant any severance, retention, change in control or termination or similar pay, except in connection with the promotion, hiring or termination of employment of any employee with an annual base compensation of less than $200,000 in the ordinary course of business consistent with past practice, (ii) make any material change in the key management structure of Akili or any of Akili’s subsidiaries or hire, promote, demote or terminate the employment of employees of Akili or any of Akili’s subsidiaries with an annual base compensation of $200,000 or above, other than terminations for cause or due to death or disability, (iii) terminate, adopt, enter into or materially amend any benefit plan, (iv) materially increase the cash compensation or bonus opportunity of any employee, officer, director or other individual service provider, except in the ordinary course of business consistent with past practice, (v) establish any trust or take any other action to secure the payment of any compensation payable by Akili or any of Akili’s subsidiaries or (vi) take any action to amend or waive any performance or vesting criteria or to accelerate the time of payment of vesting of any compensation or benefit payable by Akili or any of Akili’s subsidiaries, except in the ordinary course of business consistent with past practice; |
• | 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, other than any such transaction (i) in which the aggregate |
consideration does not exceed, individually or in the aggregate, $10,000,000 and (ii) that is not reasonably expected to, individually or in the aggregate, materially impair the ability of Akili to perform its obligations under the Merger Agreement; |
• | make any material loans or material advances to any person, except for (i) advances to employees, officers or independent contractors of Akili or any of Akili’s subsidiaries for indemnification, attorneys’ fees, travel and other expenses incurred in the ordinary course of business consistent with past practice, (ii) loans or advances among Akili and its wholly owned subsidiaries or among the wholly-owned subsidiaries and (iii) extended payment terms for customers in the ordinary course of business; |
• | (i) make, change or revoke any material tax election, (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 for tax purposes or change any tax accounting period in respect of material taxes, (iv) enter into any “closing agreement” as described in Section 7121 of the Code (or any similar provision of state, local or foreign law) with any governmental authority, (v) seek or apply for any tax ruling, (vi) settle any claim or assessment in respect of any material taxes, (vii) knowingly surrender or allow to expire any right to claim a refund of any material taxes or (viii) consent to any extension or waiver of the limitation period applicable to any claim or assessment in respect of any material taxes or in respect to any material tax attribute that would give rise to any claim or assessment of taxes; |
• | take 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; |
• | (i) incur or assume any indebtedness or guarantee any indebtedness of another person, issue or sell any debt securities or warrants or other rights to acquire any debt securities of Akili or any of Akili’s subsidiaries or guaranty any debt securities of another person, other than any indebtedness or guarantee (A) incurred in the ordinary course of business pursuant to interest rate protection agreements and currency obligation swaps, hedges or similar arrangements, or letters of credit, bank guarantees, bankers’ acceptances and other similar instruments entered into in connection with leased real property, or (B) incurred between Akili and any of its wholly owned subsidiaries or between any of such wholly-owned subsidiaries; or (ii) discharge any secured or unsecured obligation or liability (whether accrued, absolute, contingent or otherwise) which individually or in the aggregate exceed $1,000,000, except as otherwise contemplated by the Merger Agreement or as such obligations become due; |
• | issue any additional shares of Akili Capital Stock or securities exercisable for or convertible into Akili Capital Stock, or grant any additional equity or equity-based compensation (including Akili Options), other than (i) shares of Akili common stock issuable upon exercise of Akili Options outstanding on the date of the Merger Agreement in accordance with their terms as in effect as of the date of the Merger Agreement, or the exercise of warrants to purchase Akili Capital Stock or the conversion of any Akili Capital Stock in accordance with its terms as in effect as of the date of the Merger Agreement, in each case, that are outstanding as of the date of the Merger Agreement; |
• | adopt a plan of, or otherwise enter into or effect a, complete or partial liquidation, dissolution, restructuring, recapitalization or other reorganization of Akili or its subsidiaries (other than the Merger); |
• | waive, release, settle, compromise or otherwise resolve any inquiry, investigation, claim, action, litigation or other legal proceedings, except where such waivers, releases, settlements or compromises involve only the payment of monetary damages in an amount less than $1,000,000 individually and in the aggregate; |
• | grant to, or agree to grant to, any person a license, covenant not to sue or other right under any intellectual property that is material to Akili and its subsidiaries, or sell, transfer, assign or otherwise dispose of, abandon or permit to lapse any rights to any such intellectual property (other than |
nonexclusive licenses entered into in the ordinary course of business), except for the expiration of Akili’s registered intellectual property in accordance with the applicable statutory term (or in the case of domain names, applicable registration period); |
• | disclose or agree to disclose to any person (other than SCS or any of its representatives) any material trade secret or any other material confidential or proprietary information, know-how or process of Akili or any of its subsidiaries other than in the ordinary course of business or pursuant to written obligations to maintain the confidentiality thereof; |
• | make or commit to make capital expenditures other than in an amount not in excess of the amount set forth in the Akili Disclosure Letter, in the aggregate; |
• | enter into, modify, amend, renew or extend any collective bargaining agreement or similar labor agreement, other than as required by applicable law, or recognize or certify any labor union, labor organization, or group of employees of Akili or its subsidiaries as the bargaining representative for any employees of Akili or its subsidiaries; |
• | waive the restrictive covenant obligations of any current or former employee of Akili or any of Akili’s subsidiaries; |
• | limit the right of Akili or any of Akili’s subsidiaries to engage in any line of business or in any geographic area, to develop, market or sell products or services, or to compete with any person, in each case, except where such limitation does not, and would not be reasonably likely to, individually or in the aggregate, materially and adversely affect, or materially disrupt, the operation of the businesses of Akili and its subsidiaries, taken as a whole, in the ordinary course of business consistent with past practice; |
• | amend in a manner materially detrimental to Akili or any of Akili’s subsidiaries, terminate, permit to lapse or fail to use reasonable best efforts to maintain any material governmental approval or material permit required for the conduct of the business of Akili or any of Akili’s subsidiaries to be conducted in all material respects as conducted on the date of the Merger Agreement or as contemplated as of the date of the Merger Agreement; or |
• | enter into any agreement to do any of the above actions prohibited under the Merger Agreement. |
• | seek any approval from SCS’s shareholders to change, modify or amend the Trust Agreement or the governing documents of SCS or Merger Sub, except as contemplated by the transaction proposals; |
• | (x) make or declare any dividend or distribution to the shareholders of SCS or make any other distributions in respect of any of SCS’s or Merger Sub’s Capital Stock, share capital or equity interests, (y) split, combine, reclassify or, except as contemplated by the Condition Precedent Proposals, otherwise amend any terms of any shares or series of SCS’s or Merger Sub’s Capital Stock or equity interests or (z) purchase, repurchase, redeem or otherwise acquire any issued and outstanding share capital, outstanding shares of capital stock, share capital or membership interests, warrants or other equity interests of SCS or Merger Sub other than a redemption of shares of SCS Common Stock required to be made in connection with the Merger; |
• | (i) make, change or revoke any material tax election, (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 for tax purposes, (iv) enter into any “closing agreement” as described in Section 7121 of the Code (or any similar provision of state, local or foreign law) with any governmental authority, (v) settle any claim or assessment in respect of a material amount of taxes, (vi) knowingly surrender or allow to expire any right to claim a refund of a material amount of taxes or (vii) consent to any extension or waiver of the limitation period applicable to any claim or assessment in respect of a material amount of taxes or in respect to any material tax attribute that would give rise to any claim or assessment of taxes; |
• | take 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; |
• | enter into, renew or amend in any material respect, any transaction or material contract with an affiliate of SCS or Merger Sub (including, for the avoidance of doubt, (x) the Sponsor and (y) any person in which the Sponsor has a direct or indirect legal, contractual or beneficial ownership interest of 5% or greater); |
• | incur, guarantee or otherwise become liable for (whether directly, contingently or otherwise) any indebtedness or otherwise incur, guarantee or otherwise become liable for (whether directly, contingently or otherwise) any other material liabilities, debts or obligations other than (x) in support of the ordinary course operations of SCS, or incident to the consummation of the transactions contemplated by the Merger Agreement or any of the Ancillary Agreements (as defined below), which are not, individually or in the aggregate, material to SCS, (y) pursuant to any material contract set forth on the SCS disclosure letter or (z) incurred between SCS and Merger Sub; |
• | waive, release, compromise, settle or satisfy any pending or threatened material claim (which shall include any pending or threatened action); |
• | (i) issue any securities of SCS or any option, warrant, right or security (including debt securities) convertible, exchangeable or exercisable into, or for, securities of SCS, other than the issuance of the Aggregate Merger Consideration or in respect of the PIPE Investment substantially concurrently with the Closing, or (ii) grant any options, warrants or other equity-based awards with respect to securities of SCS not outstanding on the date of the Merger Agreement; or |
• | enter into any agreement to do any of the above actions prohibited under the Merger Agreement. |
• | prior to the Closing Date, obtain approval for and adopt an equity incentive plan in the form attached to the Merger Agreement (the “Incentive Equity Plan”), which Incentive Equity Plan will become effective upon the Closing Date with any changes or modifications thereto as Akili and SCS may mutually agree (such agreement not to be unreasonably withheld, conditioned or delayed by any of Akili or SCS, as applicable); |
• | prior to the Closing Date, obtain approval for and adopt an employee stock purchase plan in the form attached to the Merger Agreement (the “ESPP”), which ESPP shall become effective upon the Closing Date with any changes or modifications thereto as Akili and SCS may mutually agree (such agreement not to be unreasonably withheld, conditioned or delayed by any of Akili or SCS, as applicable); |
• | within two business days following the expiration of the sixty-day period after SCS has filed current Form 10 information with the SEC, file a registration statement on Form S-8 (or other applicable form) with respect to the Akili, Inc. common stock issuable under the Incentive Equity Plan and ESPP and use reasonable efforts to maintain the effectiveness of such registration statement(s) (and the current status of the prospectus or prospectuses contained therein) for so long as awards granted thereunder remain outstanding; |
• | take certain actions so that the Trust Amount will be released from the trust account and so that the trust account will terminate thereafter, in each case, pursuant to the terms and subject to the terms and conditions of the Trust Agreement; |
• | during the Interim Period, ensure that SCS remains listed as a public company on Nasdaq and prepare and submit to Nasdaq a listing application in connection with the transactions contemplated by the Merger Agreement, and use its reasonable best efforts to cause: (a) such listing application to have been approved by Nasdaq: (b) SCS to satisfy all applicable continuing listing requirements of Nasdaq; and (c) the securities covered by this registration statement to be approved for listing on NASDAQ with the trading ticker “AKLI,” in each case, as promptly as reasonably practicable after the date of the Merger Agreement; |
• | during the Interim Period, not, and cause its subsidiaries not to, and instruct its and their representatives not to, initiate any negotiations or enter into any agreements for certain alternative transactions and to terminate any such negotiations ongoing as of the date of the Merger Agreement; |
• | subject to the terms of SCS’s governing documents, take all such action within its power as may be necessary or appropriate such that immediately following the effective time of the Merger: |
• | the board of directors of SCS shall consist of three classes, each holding three-year terms, with the term of the first class of directors expiring at the first annual meeting of stockholders of SCS following the Closing, the term of the second class of directors expiring at the second annual meeting of stockholders of SCS following the Closing and the term of the third class of directors expiring at the third annual meeting of stockholders of SCS following the Closing (such third class, “Class III”); and |
• | the board of directors shall consist of a number of directors determined by the board of directors of Akili, a majority of whom shall be “independent” directors for the purposes of Nasdaq rules, and shall include one (1) independent director nominated by the Sponsor, who shall be Chamath Palihapitiya (who shall serve as chairman of the board of directors of Akili, Inc.) or another individual to be nominated by the Sponsor (provided that any such other individual shall be subject to the prior approval of the Company, such approval not to be unreasonably withheld, conditioned or delayed, and shall be qualified to serve on the audit committee of the board of directors of Akili, Inc. as an “audit committee financial expert” (as defined under applicable SEC rules)), and which independent director nominated by the Sponsor shall serve in Class III; subject to approval of SCS’s shareholders, cause the Domestication to become effective prior to the effective time of the Merger (see “ Domestication Proposal |
• | after the effective time of the Merger, indemnify and hold harmless (i) each present and former director and officer of Akili and each of its subsidiaries and (ii) the Sponsor, each present and former director, officer and affiliate of the Sponsor, SCS and each of their respective subsidiaries against any costs, expenses, damages or liabilities incurred in connection with any legal proceeding, to the fullest extent that would have been permitted under applicable law and the applicable governing documents to indemnify such person, subject to the right to indemnification in favor of each of the Sponsor and each |
present and former director, officer and affiliate of Sponsor, being subject to the same limitations as if such person were an officer or director of Akili, Inc. as of the applicable time; |
• | maintain, and cause its subsidiaries to maintain for a period of not less than six years from the effective time of the Merger (i) provisions in its governing documents and those of its subsidiaries concerning the indemnification and exoneration of its subsidiaries and their subsidiaries’ former and current officers, directors and employees and agents, no less favorable than as contemplated by the applicable governing documents of Akili immediately prior to the effective time of the Merger and (ii) a directors’ and officers’ liability insurance policy covering those persons who are currently covered by SCS’s, Akili’s or their respective subsidiaries’ directors’ and officers’ liability insurance policies on terms not less favorable than the terms of such current insurance coverage; |
• | on the Closing Date, enter into customary indemnification agreements reasonably satisfactory to each of Akili and SCS with the post-Closing directors and officers of Akili, Inc., which indemnification agreements will continue to be effective following the Closing; |
• | from the date of the Merger Agreement through the effective time of the Merger, keep current and timely file all reports required to be filed or furnished with the SEC and otherwise comply in all material respects with its reporting obligations under applicable law; |
• | except as otherwise approved by Akili (which approval shall not be unreasonably withheld, conditioned or delayed) SCS shall not (other than changes that are solely ministerial and other de minimis changes) permit any amendment or modification to be made to, permit 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, in each case, other than any assignment or transfer expressly permitted thereby (without any further amendment, modification or waiver to such permitted assignment or transfer provision) and so long as the initial party to such Subscription Agreement remains bound by its obligations with respect thereto in the event that the transferee or assignee, as applicable, does not comply with its obligations to consummate the purchase of shares of Akili, Inc. common stock contemplated thereby; |
• | use its reasonable best efforts to take, or to cause to be taken, all actions required, necessary or that it deems to be proper or advisable to consummate the transaction 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) SCS the applicable purchase price under each PIPE Investor’s applicable Subscription Agreement in accordance with its terms; and |
• | during the interim period, use its reasonable best efforts to keep Akili reasonably informed with respect to the PIPE investment and consider in good faith any feedback from Akili with respect to such matters, including that SCS shall give Akili prompt written notice: (i) of any requested amendment to any Subscription Agreement; (ii) of any breach or default to the knowledge of SCS (or any event or circumstance that, to the knowledge of SCS, with or without notice, lapse of time or both, would give rise to any breach or default) by any party to any Subscription Agreement known to SCS; (iii) of the receipt of any written notice or other written communication from any party to any Subscription Agreement with respect to any actual, or to the knowledge of SCS, potential, threatened or claimed expiration, lapse, withdrawal, breach, default, termination or repudiation by any party to any Subscription Agreement or any provisions of any Subscription Agreement; and (iv) if SCS does not expect to receive all or any portion of the applicable purchase price under any Subscription Agreement in accordance with its terms. |
• | subject to confidentiality obligations that may be applicable to information furnished to Akili or any of its subsidiaries by third parties and except for any information that is subject to attorney-client privilege, and to the extent permitted by applicable law (including any applicable COVID-19 Measures), afford SCS and its accountants, counsel and other representatives reasonable access during the Interim Period to their properties, books, contracts, commitments, tax returns, records and appropriate officers and employees and furnish such representatives with all financial and operating data and other information concerning the affairs of Akili and its subsidiaries that are in the possession of Akili or its subsidiaries as such representatives may reasonably request; |
• | as soon as reasonably practicable following the date of the Merger Agreement. Akili shall deliver to SCS (i) the unaudited condensed consolidated balance sheet and statements of operations and comprehensive loss, cash flows and stockholders’ equity of Akili and its subsidiaries as of and for the nine-month periods ended September 30, 2021 and 2020, (ii) the audited consolidated balance sheets and statements of operations and comprehensive loss, cash flows and stockholders’ equity of Akili and its subsidiaries as of and for the twelve (12) month period ended December 31, 2021, together with the auditor’s reports thereon and (iii) for any quarterly period ending at least 45 days prior to the Closing Date, the unaudited consolidated balance sheets and statements of operations and comprehensive loss, cash flows and stockholders’ equity of Akili and its subsidiaries as of and for such quarter, in each case, which 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 applicable to a registrant; |
• | at or prior to Closing, terminate and settle all Affiliate Agreements (as defined in the Merger Agreement) set forth in the applicable section of Akili’s disclosure letter without further liability to SCS, Akili or any of its subsidiaries; and |
• | during the Interim Period, not, and to use reasonable best efforts to cause its representatives to not, (i) initiate any negotiations with any person with respect to certain alternative transactions, (ii) enter into an agreement with respect to any such alternative transactions or proposed transactions, (iii) grant any waiver, amendment or release under any confidentiality agreement or the anti-takeover laws of any state, in each case, in connection with an alternative transaction or (iv) otherwise knowingly facilitate any inquiries, proposals, discussions, or negotiations or any effort or attempt by any person to make a proposal with respect to any such alternative transaction. |
• | Each of SCS and Akili will (and, to the extent required, will cause its affiliates to) comply promptly, but in no event later than ten business days after the date of the Merger Agreement, with the notification and reporting requirements of the HSR Act and (ii) as soon as practicable, make such other filings with any foreign governmental authorities as may be required under any applicable similar foreign law. |
• | Each of SCS and Akili will substantially comply with any information or document requests with respect to antitrust matters as contemplated by the Merger Agreement. |
• | Each of SCS and Akili will (x) request early termination (if available) of any waiting period or periods 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 legal proceeding 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 by the Merger Agreement and (y) take certain other actions to cooperate to avoid any governmental order from an antitrust authority |
that would delay, enjoin, prevent, restrain or otherwise prohibit the consummation of the Merger, including sharing relevant information with the other parties thereto for such purposes (subject to, as applicable, a requirement to obtain Akili’s prior written consent with respect to certain such actions identified above as contemplated by the Merger Agreement). |
• | SCS and Akili will jointly prepare and SCS will file with the SEC the proxy statement/registration statement in connection with the registration under the Securities Act of (i) the shares of Akili, Inc. common stock to be issued in connection with the Domestication and (ii) the shares of Akili, Inc. common stock that constitute the Aggregate Merger Consideration and the Earnout Shares. |
• | Each of SCS and Akili will 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 (as defined below) 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 by the Merger Agreement and otherwise ensure that the information contained therein contains no untrue statement of material fact or material omission. |
• | SCS will, as promptly as practicable after the registration statement is declared effective under the Securities Act, (i) disseminate the proxy statement to shareholders of SCS, (ii) give notice, convene and hold a meeting of the shareholders to vote on the Condition Precedent Proposals, in each case in accordance with its governing documents then in effect and the Nasdaq Listing Rules for a date no later than 30 business days following the date the registration statement is declared effective, (iii) solicit proxies from the holders of public shares of SCS to vote in favor of each of the Condition Precedent Proposals, and (iv) provide its shareholders (including the holders of SCS Class A ordinary shares) with the opportunity to elect to effect a Redemption. |
• | Akili will use its reasonable best efforts to obtain the requisite stockholder approval necessary to consummate the Merger Agreement and the transactions contemplated thereby, including the Merger (the “Akili Stockholder Approvals”), by written consent of collective holders of shares of Akili Capital Stock sufficient to obtain Akili Stockholder Approval promptly following the time at which the registration statement shall have been declared effective under the Securities Act and delivered or otherwise made available to stockholders, and in any event within one business day after the registration statement shall have been declared effective. |
• | SCS and Akili will each, and will each cause their respective subsidiaries to use reasonable best efforts to obtain all material consents and approvals of third parties that any of SCS, Akili, or their respective affiliates are required to obtain in order to consummate the Merger. |
• | Each of Akili and SCS will, prior to the Closing, use all reasonable efforts to approve in advance in accordance with the applicable requirements of Rule 16b-3 promulgated under the Exchange Act, any dispositions of the Akili capital stock (including derivative securities with respect to the Akili capital stock) or Akili, Inc. common stock and acquisitions of Akili, Inc. common stock (including derivative securities with respect to Akili, Inc. common stock) resulting from the transactions contemplated by the Merger Agreement by each officer or director of SCS or Akili who is subject to Section 16 of the Exchange Act (or who will become subject to Section 16 of the Exchange Act) as a result of the transactions contemplated by the Merger Agreement. |
• | Each of Akili and SCS will, and will cause their respective subsidiaries and its and their controlled affiliates and representatives to, prior to the Closing, reasonably cooperate in a timely manner in connection with any additional financing arrangement the parties mutually agree to seek in connection with the transactions contemplated by the Merger Agreement. |
• | Until the earlier of the Closing or termination of the Merger Agreement, each of SCS and Akili will notify the other promptly after learning of any shareholder demand (or threat thereof) or other shareholder claim, action, suit, audit, examination, arbitration, mediation, inquiry, legal proceeding, or investigation, whether or not before any governmental authority (including derivative claims), relating |
to the Merger Agreement, or any of the transactions contemplated thereby (collectively, “Transaction Litigation”) commenced or to the knowledge of SCS or Akili, as applicable, threatened in writing against (x) in the case of SCS, SCS, any of SCS’s controlled affiliates or any of their respective officers, directors, employees or shareholders (in their capacity as such) or (y) in the case of Akili, Akili, any of Akili’s Subsidiaries or controlled affiliates or any of their respective officers, directors, employees or shareholders (in their capacity as such). SCS and Akili have also agreed to (i) keep the other reasonably informed regarding any Transaction Litigation, (ii) give the other the opportunity to, at its own cost and expense, participate in the defense, settlement and compromise of any such Transaction Litigation and reasonably cooperate with the other in connection with the defense, settlement and compromise of any such Transaction Litigation, (iii) consider in good faith the other’s advice with respect to any such Transaction Litigation and (iv) reasonably cooperate with each other with respect to any Transaction Litigation; provided, however, that in no event will (x) Akili, any of Akili’s affiliates or any of their respective officers, directors, employees or shareholders settle or compromise any Transaction Litigation without the prior written consent of SCS (not to be unreasonably withheld, conditioned or delayed) or (y) SCS, any of SCS’s affiliates or any of their respective officers, directors, employees or shareholders settle or compromise any Transaction Litigation without Akili’s prior written consent (not to be unreasonably withheld, conditioned or delayed). |
• | the approval of the Condition Precedent Proposals by SCS’s shareholders will have been obtained (the “SCS Shareholder Approval”); |
• | the Akili Stockholder Approvals will have been obtained; |
• | the waiting period or periods under the HSR Act applicable to the transactions contemplated by the Merger Agreement, or the (i) Earnout Escrow Agreement, (ii) the Lock-Up Agreement, (iii) the Sponsor Support Agreement, and (iv) Company Holders Support Agreement (clauses (i)—(iv), collectively, the “Ancillary Agreements”) will have expired or been terminated; |
• | there will not be in force any order, judgment, injunction, decree, writ, stipulation, determination or award (entered by or with 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 (a “Governmental Order”), in each case, to the extent such governmental authority has jurisdiction over the parties to the Merger Agreement and the transactions contemplated thereby), statute, rule or regulation enjoining or prohibiting the consummation of the Merger; |
• | SCS will 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 the PIPE Investment and satisfaction of SCS’s obligations to its shareholders (if any) that exercise their rights to redeem their public shares pursuant to the Cayman Constitutional Documents; |
• | as of immediately following the effective time of the Merger, the Board of Directors of Akili, Inc. shall consist of the number of directors, and be otherwise constituted in accordance with the Merger Agreement (assuming that each such director then satisfies the applicable Nasdaq requirements and is willing to serve); provided that Akili will have performed the covenants of Akili in the Merger Agreement with respect to nomination of directors; |
• | the shares of Akili, Inc. common stock to be issued in connection with the Domestication and Merger will have been approved for listing by Nasdaq (subject to official notice of issuance) and, as of immediately following the effective time of the Merger, SCS shall be in compliance, in all material respects, with applicable continuing listing requirements of Nasdaq, and SCS shall not have received any notice of non-compliance therewith from Nasdaq that has not been cured or would not be cured at or immediately following the effective time of the Merger; and |
• | the registration statement of which this proxy statement/prospectus forms a part (the “Registration Statement”) will have become effective under the Securities Act and no stop order suspending the effectiveness of the Registration Statement will have been issued and no proceedings for that purpose will have been initiated or threatened by the SEC and not withdrawn. |
• | (i) each of the fundamental representations and warranties of Akili contained in the Merger Agreement (disregarding any qualifications and exceptions contained therein relating to materiality, material adverse effect or any similar qualification or exception) will be true and correct in all material respects as of the Closing Date, except with respect to such representations and warranties that are made as of an earlier date, which representations and warranties will be true and correct in all material respects at and as of such earlier date and (ii) each of the representations and warranties of Akili contained in the Merger Agreement other than the fundamental representations and warranties (disregarding any qualifications and exceptions contained therein relating to materiality, material adverse effect or any similar qualification or exception) will be true and correct as of the Closing Date, except with respect to such representations and warranties that are made as of an earlier date, which representations and warranties will be true and correct at and as of such date, except for, in the case of this clause (ii), inaccuracies or omissions that would not, individually or in the aggregate, reasonably be expected to have a Akili Material Adverse Effect; and |
• | each of the covenants of Akili to be performed as of or prior to the Closing will have been performed in all material respects. |
• | (i) the representations and warranties of SCS contained in the Merger Agreement relating to the capitalization of SCS (disregarding any qualifications and exceptions contained therein relating to materiality, material adverse effect or any similar qualification or exception) will be true and correct in all material respects as of the Closing Date, except with respect to such representations and warranties that are made as of an earlier date, which representations and warranties will be true and correct in all material respects at and as of such date and (ii) each of the other representations and warranties of SCS contained in the Merger Agreement (disregarding any qualifications and exceptions contained therein relating to materiality, material adverse effect or any similar qualification or exception) will be true and correct, in each case as of the Closing Date, except with respect to such representations and warranties that are made as of an earlier date, which representations and warranties will be true and correct at and as of such date, except for, in the case of this clause (ii), inaccuracies or omissions that would not, individually or in the aggregate, reasonably be expected to have a material adverse effect on SCS’s ability to consummate the transactions contemplated by the Merger Agreement; |
• | each of the covenants of SCS to be performed as of or prior to the Closing will have been performed in all material respects; |
• | SCS will have filed a certificate of incorporation with the Secretary of State of Delaware and adopted bylaws in substantially the forms attached to the Merger Agreement; |
• | the Domestication will have been completed as contemplated by the Merger Agreement and a time-stamped copy of the certificate issued by the Delaware Secretary of State in relation thereto will have been delivered to Akili (for additional information, see “ Domestication Proposal |
• | the Minimum Cash Condition. For more information, see “— The Merger Agreement— Consideration—Closing Conditions Minimum Cash Condition above. |
• | by written consent of Akili and SCS; |
• | by Akili or SCS if any Governmental Order has become final and nonappealable which has the effect of making consummation of the Merger illegal or otherwise preventing or prohibiting consummation of the Merger; |
• | by Akili if the SCS Shareholder Approval has not been obtained by reason of the failure to obtain the required vote at a meeting of SCS’s shareholders duly convened therefor or at any adjournment thereof; |
• | by Akili if there has been a modification in recommendation of the board of directors of SCS with respect to any of the Condition Precedent Proposals; |
• | prior to the Closing, by written notice to Akili from SCS in the event of certain uncured breaches on the part of Akili or if the Closing has not occurred on or before September 26, 2022, (such date, the “Agreement End Date”), unless SCS is in material breach of the Merger Agreement; |
• | by SCS, if Akili shall not have obtained the requisite approval from its stockholders of the Merger Agreement and the transactions contemplated within two business days after the Registration Statement is declared effective under the Securities Act and delivered or otherwise made available to Akili’s stockholders; or |
• | prior to the Closing, by written notice to SCS from Akili in the event of certain uncured breaches on the part of SCS or Merger Sub or if the Closing has not occurred on or before the Agreement End Date, unless Akili is in material breach of the Merger Agreement. |
(i) | are in the biotechnology industry and can benefit from the extensive networks and insights SCS has built (SCS also expected to evaluate targets in related industries that can leverage advancements in biotechnology to improve outcomes for patients); |
(ii) | are ready to operate in the scrutiny of public markets, with strong management, corporate governance and reporting policies in place; |
(iii) | have a profile that will be attractive to investors in public companies and are likely to be supported by investors in the public markets after the business combination; |
(iv) | are at an inflection point, such as those requiring additional expertise, resources or capital; |
(v) | exhibit unrecognized value or other characteristics that we believe have been misevaluated by the market based on our company-specific analysis and due diligence review; and |
(vi) | will offer attractive risk-adjusted equity returns for our shareholders. Financial returns will be evaluated based on, among other factors, the potential for achieving clinical and commercial success and for creating value through business development initiatives. |
• | Akili and the Business Combination. |
• | Akili’s Large Addressable Market. all-time high, and the SCS board believes that digital therapeutic solutions are beginning to disrupt more traditional pharmaceutical treatments in this large and growing patient population. The SCS board of directors believes that Akili, with EndeavorRX, its first-of-its-kind, FDA-cleared and CE-marked prescription digital therapeutic for pediatric ADHD, is uniquely positioned to be a leading digital therapeutic platform that combines science and technology to address cognitive impairments in patients across various indications through a scalable, consumer-driven model. |
• | Akili’s Strong Clinical Validation. The American Journal of Psychiatry The Lancet Digital Health Nature: Digital Medicine |
• | Akili’s Highly Attractive Business Model |
• | Akili’s Future Opportunities go-to-market 8-12 years old in the second half of 2022, and age-expansion studies are currently underway to explore bringing Akili’s digital |
therapeutic solutions to ADHD patients in the 3-7 year old, 13-17 year old and adult categories. Beyond ADHD, Akili’s SSME technology, which underpins its EndeavorRX product, is currently in clinical trials in three other disease areas: post-operative cognitive dysfunction, chemotherapy induced cognitive impairment and cognitive dysfunction following COVID-19 infection. Further, Akili has developed a pipeline of digital therapeutic product candidates which, together with SSME, will be focused on additional indications, including multiple sclerosis, major depressive disorder and autism spectrum disorder, among others. |
• | Experienced and Proven Management Team co-founder and Chief Executive Officer, Eddie Martucci, who previously helped launch PureTech Health’s digital health initiative. Akili’s management team also includes Chief Financial Officer Santosh Shanbhag, who has over 20 years of experience leading financial operations for U.S. and international organizations, including senior finance leadership roles at Vertex Pharmaceuticals, as well as other former officers and managers of Pfizer, GE Healthcare IT, LucasArts and Cubist. Under their leadership, Akili has pioneered a new digital approach to cognitive medicine. For additional information regarding Akili, Inc.’s executive officers, see the section entitled “Management of Akili, Inc. Following the Business Combination - Executive Officers |
• | Best Available Opportunity. |
• | Continued Ownership by Existing Investors. |
• | Investment by Third Parties. |
• | Results of Due Diligence. |
• | extensive meetings and calls with Akili’s management team regarding its business, operations, technology, intellectual property and the proposed transaction; and |
• | review of materials related to Akili and its business made available by Akili, including financial statements, corporate documents, material contracts, clinical and scientific data, benefit plans, employee compensation and labor matters, intellectual property matters, information technology, privacy and personal data, litigation information, and other regulatory and compliance matters and other legal and business diligence. |
• | Terms of the Merger Agreement. Business Combination Proposal - Related Agreements |
• | The Role of the Independent Directors Business Combination Proposal - Interests of SCS’s Directors and Executive Officers in the Business Combination |
• | Potential Inability to Complete the Merger. |
• | Akili’s Business Risks . |
and the ability to protect intellectual property used in Akili’s business and products, among others) and Akili, Inc. realizing the anticipated benefits of the Business Combination on the timeline expected or at all, including due to factors outside of the parties’ control such as new regulatory requirements or changes to existing regulatory requirements, changes in the stock market or the market for biotechnology generally and the potential negative impact of the COVID-19 pandemic and related macroeconomic uncertainty. The SCS board of directors considered that the failure of any of these activities to be completed successfully may decrease the actual benefits of the Business Combination and that SCS shareholders may not fully realize these benefits to the extent that they expected to retain the public shares following the completion of the Business Combination. For additional description of these risks, please see the section entitled “Risk Factors |
• | Post-Business Combination Corporate Governance. |
• | Limitations of Review. |
• | No Survival of Remedies for Breach of Representations, Warranties or Covenants of Akili . |
• | Litigation . |
• | Fees and Expenses. |
• | Diversion of Management. |
• | Interests of SCS’s Directors and Executive Officers. Business Combination Proposal - Interests of SCS’s Directors and Executive Officers in the Business Combination Business Combination Proposal - Interests of SCS’s Directors and Executive Officers in the Business Combination |
• | Prior to SCS’s initial public offering, the Sponsor purchased 5,750,000 SCS Class B ordinary shares for an aggregate purchase price of $25,000, or approximately $0.004 per share. In June 2021, the Sponsor transferred 30,000 SCS Class B ordinary shares to Vladimir Coric (an independent director of SCS, and with the Sponsor, “SCS’s initial shareholders”). On June 29, 2021, SCS effected a share capitalization with respect to the SCS Class B ordinary shares of 575,000 shares thereof, resulting in SCS’s initial shareholders holding an aggregate of 6,325,000 founder shares (up to 825,000 of which were subject to forfeiture depending on the extent to which the underwriter’s over-allotment option in the initial public offering was exercised), resulting in an effective purchase price per SCS Class B ordinary share of approximately $0.004. As a result of the underwriters’ election to partially exercise their over-allotment option, a total of 750,000 SCS Class B ordinary shares are no longer subject to forfeiture and 75,000 SCS Class B ordinary shares were forfeited, resulting in an aggregate of 6,250,000 SCS Class B ordinary shares outstanding. If SCS does not consummate a business combination by July 2, 2023 (or if such date is extended at a duly called extraordinary general meeting, such later date), it would cease all operations except for the purpose of winding up, redeeming all of the outstanding public shares for cash and, subject to the approval of its remaining shareholders and its board of directors, dissolving and liquidating, subject in each case to its obligations under the Cayman Islands Companies Act to provide for claims of creditors and the requirements of other applicable law. In such event, the 6,250,000 SCS Class B ordinary shares collectively owned by SCS’s initial shareholders would be worthless because following the redemption of the public shares, SCS would likely have few, if any, net assets and because the Sponsor and SCS’s directors and officers have agreed to waive their respective rights to liquidating distributions from the trust account in respect of any private placement shares and SCS Class B ordinary shares held by it or them, as applicable, if SCS fails to complete a business combination within the required period. Additionally, in such event, the 640,000 private placement shares purchased by the Sponsor simultaneously with the consummation of SCS’s initial public offering for an aggregate purchase price of $6,400,000, will also expire worthless. The Sponsor and each officer and director of SCS did not receive any compensation in exchange for their agreement to waive these redemption rights. Lock-Up Agreement, SCS believes such shares have less value. The 640,000 shares of Akili, Inc. common stock into which the 640,000 private placement shares held by the Sponsor will automatically convert in connection with the Merger (including after giving effect to the Domestication), if unrestricted and freely tradeable, would have had an aggregate market value of $ million based upon the closing price of $ per public share on Nasdaq on , 2022, the most recent practicable date prior to the date of this proxy statement/prospectus. |
• | As described above, in June 2021, the Sponsor transferred 30,000 SCS Class B ordinary shares to Vladimir Coric, which shares would be worthless if SCS does not consummate a business combination by July 2, 2023 (or if such date is extended at a duly called extraordinary general meeting, such later |
date). The 30,000 shares of Akili, Inc. common stock into which the 30,000 SCS Class B ordinary shares held by Mr. Coric will automatically convert in connection with the Merger (including after giving effect to the Domestication), if unrestricted and freely tradable, would have had an aggregate market value of $ million based upon the closing price of $ per public share on Nasdaq on , 2022, the most recent practicable date prior to the date of this proxy statement/prospectus. However, given that such 30,000 shares of Akili, Inc. common stock will be subject to certain transfer restrictions, including those described above pursuant to the Lock-Up Agreement, SCS believes such shares have less value. |
• | On September 24, 2021, SCS entered into a director restricted stock unit award agreement (the “Director RSU Award”), with Mr. Sundaram, providing for the grant of 30,000 restricted stock units to Mr. Sundaram, which grant is contingent on both the consummation of an initial business combination with SCS and a shareholder approved equity plan. The Director RSU Award will vest at the Closing but will not settle into shares of Akili, Inc. common stock until a date, selected by Akili, Inc., that occurs between the Closing and March 15 of the year following the Closing. The 30,000 shares of Akili, Inc. common stock underlying the Director RSU, if unrestricted and freely tradable, would have had an aggregate market value of $ million based upon the closing price of $ per public share on Nasdaq on , 2022, the most recent practicable date prior to the date of this proxy statement/prospectus. |
• | The Sponsor (including its representatives and affiliates) and SCS’s directors and officers, are, or may in the future become, affiliated with entities that are engaged in a similar business to SCS. Additionally, all of our officers and certain of our directors have fiduciary and contractual duties to either Social Capital or Suvretta and, as applicable, their underlying clients, and to certain companies in which either of them has invested or which either of them has sponsored. For example, Mr. Palihapitiya and Mr. Mehta, each of whom serves as an officer and director of SCS and may be considered an affiliate of the Sponsor, are also affiliated with DNAB, DNAC and DNAD, all of which are blank check companies incorporated as Cayman Islands exempted companies for the purpose of effecting their respective initial business combinations. Mr. Palihapitiya is the Chief Executive Officer and Chairman of the Board of Directors of DNAB, DNAC and DNAD, Mr. Mehta is the President and a director of DNAB, DNAC and DNAD, and each of our other officers is also an officer of DNAB, DNAC and DNAD, and each owes fiduciary duties under Cayman Islands law to DNAB, DNAC and DNAD. Mr. Palihapitiya is also the Chief Executive Officer and Chairman of the Board of Directors of IPOD and IPOF and owes fiduciary duties under Cayman Islands law to IPOD and IPOF. The Sponsor and SCS’s directors and officers are not prohibited from sponsoring, or otherwise becoming involved with, any other blank check companies prior to SCS completing its initial business combination. Moreover, certain of SCS’s directors and officers have time and attention requirements for investment funds of which affiliates of the Sponsor are the investment managers. SCS’s directors and officers also may become aware of business opportunities which may be appropriate for presentation to SCS, and the other entities to which they owe certain fiduciary or contractual duties, including DNAB, DNAC and DNAD, IPOD and IPOF, as applicable. Accordingly, they may have had conflicts of interest in determining to which entity a particular business opportunity should be presented. These conflicts may not be resolved in SCS’s favor and such potential business opportunities may be presented to other entities prior to their presentation to SCS, subject to applicable fiduciary duties under Cayman Islands law. SCS’s Cayman Constitutional Documents provide that SCS renounces its interest in any corporate opportunity offered to any director or officer of SCS unless such opportunity is expressly offered to such person solely in his or her capacity as a director or officer of SCS and it is an opportunity that SCS is able to complete on a reasonable basis. |
Individual |
Entity |
Entity’s Business |
Affiliation | |||
Chamath Palihapitiya |
Social Capital (1) |
Investment Firm | Founder and Chief Executive Officer | |||
Social Capital Hedosophia Holdings Corp. IV | Special Purpose Acquisition Company | Chief Executive Officer and Chairman of the Board of Directors | ||||
Social Capital Hedosophia Holdings Corp. VI | Special Purpose Acquisition Company | Chief Executive Officer and Chairman of the Board of Directors | ||||
Social Capital Suvretta Holdings Corp. II | Special Purpose Acquisition Company | Chief Executive Officer and Chairman of the Board of Directors | ||||
Social Capital Suvretta Holdings Corp. III | Special Purpose Acquisition Company | Chief Executive Officer and Chairman of the Board of Directors | ||||
Social Capital Suvretta Holdings Corp. IV | Special Purpose Acquisition Company | Chief Executive Officer and Chairman of the Board of Directors | ||||
Kishen Mehta |
Suvretta (2) |
Investment Firm | Portfolio Manager | |||
Social Capital Suvretta Holdings Corp. II | Special Purpose Acquisition Company | President and Member of the Board of Directors | ||||
Social Capital Suvretta Holdings Corp. III | Special Purpose Acquisition Company | President and Member of the Board of Directors | ||||
Social Capital Suvretta Holdings Corp. IV | Special Purpose Acquisition Company | President and Member of the Board of Directors | ||||
Biohaven Pharmaceutical Holding Company Ltd. | Pharmaceutical Company | Member of the Board of Directors | ||||
Vladimir Coric |
Biohaven Pharmaceutical Holding Company Ltd. | Pharmaceutical Company | Chief Executive Officer and Member of the Board of Directors | |||
Pyramid Biosciences | Biotechnology Company | Member of the Board of Directors | ||||
Vita Therapeutics, Inc. | Cell Engineering Company | Member of the Board of Directors | ||||
James Ryans |
Social Capital (1) |
Investment Firm | Chief Financial Officer | |||
Social Capital Hedosophia Holdings Corp. IV | Special Purpose Acquisition Company | Chief Financial Officer | ||||
Social Capital Hedosophia Holdings Corp. VI | Special Purpose Acquisition Company | Chief Financial Officer |
(1) | Includes certain venture capital funds managed by, and other affiliates of, The Social+Capital Partnership, L.L.C. and their respective portfolio companies. |
(2) | Includes Suvretta Capital Management, LLC and certain of its funds and other affiliates including affiliated portfolio companies. |
• | SCS’s existing directors and officers will be eligible for continued indemnification and continued coverage under SCS’s directors’ and officers’ liability insurance after the Merger and pursuant to the Merger Agreement. The Sponsor, for which Mr. Palihapitiya and Mr. Mehta serve as managers and officers and in which they have an indirect ownership interest, will also be entitled to certain indemnification from SCS after the Merger pursuant to the Merger Agreement. |
• | The Sponsor Related PIPE Investors have subscribed for $135,400,000 of the PIPE Investment, for which they will receive up to 13,540,000 shares of Akili, Inc. common stock. The 13,540,000 shares of Akili, Inc. common stock which the Sponsor Related PIPE Investors have subscribed for in the PIPE Investment, if unrestricted and freely tradable, would have had an aggregate market value of $ million based upon the closing price of $ per public share on Nasdaq on , 2022, the most recent practicable date prior to the date of this proxy statement/prospectus. See “ Certain Relationships and Related Person Transactions—SCS—Subscription Agreements |
• | In the event that SCS fails to consummate a business combination within the prescribed time frame (pursuant to the Cayman Constitutional Documents), or upon the exercise of a redemption right in connection with the Business Combination, SCS will be required to provide for payment of claims of creditors that were not waived that may be brought against SCS within the ten years following such redemption. In order to protect the amounts held in SCS’s trust account, the Sponsor has agreed that it will be liable to SCS if and to the extent any claims by a third party (other than SCS’s independent auditors) for services rendered or products sold to SCS, or a prospective target business with which SCS has discussed entering into a transaction agreement, reduce the amount of funds in the trust account to below (i) $10.00 per public share or (ii) such lesser amount per public share held in the trust account as of the date of the liquidation of the trust account, due to reductions in value of the trust assets, in each case, net of the amount of interest which may be withdrawn to pay taxes, except as to any claims by a third party who executed a waiver of any and all rights to seek access to the trust account and except as to any claims under the indemnity of the underwriters of SCS’s initial public offering against certain liabilities, including liabilities under the Securities Act. |
• | SCS’s officers and directors, and their affiliates are entitled to reimbursement of all out-of-pocket |
extended at a duly called extraordinary general meeting, such later date), they will not have any claim against the trust account for reimbursement. Accordingly, SCS may not be able to reimburse these expenses if the Business Combination or another business combination is not completed by such date. As of December 31, 2021, our officers and directors and their affiliates had not incurred any reimbursable out-of-pocket expenses, but SCS had $10,000 of expenses payable to an affiliate of the Sponsor under the Administrative Services Agreement. |
• | Pursuant to the Registration Rights Agreement, the Sponsor and the Sponsor Related PIPE Investors will have customary registration rights, including shelf, demand and piggy-back rights, subject to cooperation and cut-back provisions, with respect to the shares of Akili, Inc. common stock held by such parties following the consummation of the Business Combination. |
• | On April 20, 2022, SCS issued the SCS Promissory Note (as defined below) to the Sponsor, pursuant to which SCS may borrow up to an aggregate principal amount of $1,500,000, which is payable upon the earlier of July 2, 2023 and the effective date of a business combination, and as of May 12, 2022, $250,000 was outstanding under the SCS Promissory Note. |
Agreement, Arrangement or Understanding |
Restrictions |
Expiration Date |
Natural Persons and Entities Subject |
Exceptions | ||||
Letter Agreement, dated as of June 29, 2021, by and among SCS, the Sponsor, Chamath Palihapitiya, Kishen Mehta, James Ryans, Shoney Katz and Vladimir Coric | Agreement by the Sponsor and SCS’s initial directors and officers not to transfer, assign or sell any founder shares or private placement shares. | For the founder shares, the earlier to occur of: (A) one year after the completion of SCS’s initial business combination; and (B) subsequent to SCS’s initial business combination (x) if the last reported sale price of the SCS Class A ordinary shares equals or exceeds $12.00 per share (as adjusted for share sub-divisions, share dividends, rights issuances, consolidations, reorganizations, recapitalizations and other similar transactions) for any 20 trading days within any 30-trading day period commencing at least 150 days after SCS’s initial business combination or | Sponsor Chamath Palihapitiya Kishen Mehta James Ryans Shoney Katz Vladimir Coric |
Transfers, assignments or sales to certain permitted transferees. Any permitted transferees would be subject to the same restrictions and other agreements with respect to any founder shares. |
Agreement, Arrangement or Understanding |
Restrictions |
Expiration Date |
Natural Persons and Entities Subject |
Exceptions | ||||
(y) the date on which SCS completes a liquidation, merger, share exchange, reorganization or other similar transaction that results in all of the SCS public shareholders having the right to exchange their SCS ordinary shares for cash, securities or other property. For the private placement shares, 30 days after the completion of SCS’s initial business combination. |
||||||||
This Letter Agreement will be superseded at the Closing by the Lock-Up Agreement. | ||||||||
Letter Agreement, dated as of September 24, 2021, by and between SCS and Senthil Sundaram | Agreement by Mr. Sundaram not to transfer, assign or sell any founder shares or shares underlying restricted stock awards granted to Mr. Sundaram. | The earlier to occur of: (A) one year after the completion of SCS’s initial business combination; and (B) subsequent to SCS’s initial business combination (x) if the last reported sale price of the SCS Class A ordinary shares equals or exceeds $12.00 per share (as adjusted for share sub-divisions, share dividends, rights issuances, consolidations, reorganizations, recapitalizations and other similar transactions) for any 20 trading days within any 30-trading day period commencing at least 150 days after SCS’s initial business combination or (y) the date on which SCS completes a liquidation, merger, share exchange, | Senthil Sundaram | Transfers, assignments or sales to certain permitted transferees. Any permitted transferees would be subject to the same restrictions and other agreements with respect to any founder shares or restricted stock awards. |
Agreement, Arrangement or Understanding |
Restrictions |
Expiration Date |
Natural Persons and Entities Subject |
Exceptions | ||||
reorganization or other similar transaction that results in all of the SCS public shareholders having the right to exchange their SCS ordinary shares for cash, securities or other property. | ||||||||
This Letter Agreement will be superseded at the Closing by the Lock-Up Agreement. | ||||||||
Lock-Up Agreement (to be entered into at Closing) | Agreement by the Sponsor, Vladimir Coric and Senthil Sundaram (among other parties) not to (i) transfer, assign or sell, (ii) enter into any arrangement transferring the economic consequences of security ownership or (iii) make a public announcement of the intention to effect (i) or (ii) with respect to Akili, Inc. common stock (other than PIPE Shares or SCS ordinary shares acquired in the public market), subject to certain exceptions. | The earlier of (i) the date on which the SEC declares effective the first registration statement on Form S-1 filed by Akili, Inc. to register the resale of the PIPE Shares (as defined in the Lock-Up Agreement) and (ii) (a) in the case of the Private Placement Shares, the last day of the Private Placement Shares Lock-Up Period (each as defined in the Lock-Up Agreement) and (b) in the case of Lock-Up Shares other than the Private Placement Shares, (x) for 33% of the Lock-Up Shares (other than the Private Placement Shares) held by each of the parties thereto (and their respective permitted transferees), the date which the last reported sale price of Akili, Inc. common stock equals or exceeds $12.50 per share (subject to adjustment) for any 20 trading days within any 30-trading day period commencing at least 30 days after the Closing Date and (y) for an | Sponsor Vladimir Coric Senthil Sundaram Certain Equityholders of Akili |
Transfers, assignments or sales to certain permitted transferees. Any permitted transferees would be subject to the same restrictions and other agreements with respect to any Akili, Inc. common stock. The lock-up provisions may be waived, amended or modified upon (i) the approval of a majority of the total number of directors serving on the Akili, Inc. Board and (ii) the written consent of the holders of a majority of the total shares subject to the |
Agreement, Arrangement or Understanding |
Restrictions |
Expiration Date |
Natural Persons and Entities Subject |
Exceptions | ||||
additional 50% of the Lock-Up Shares (other than the Private Placement Shares) held by each of the parties thereto (and their respective permitted transferees), the date which the last reported sale price of Akili, Inc. common stock equals or exceeds $15.00 per share (subject to adjustment) for any 20 trading days within any 30-trading day period commencing at least 30 days after the Closing Date. The Lock-Up Period for any Lock-Up Shares for which the Lock-Up Period has not ended on the date that is 180 days after the Closing Date shall end on such 180th day after the Closing Date. | Lock-Up Agreement, subject to certain restrictions. | |||||||
Amended and Restated Registration Rights Agreement (to be entered into at Closing) | During the 90-day period beginning on the date of the pricing of an underwritten offering of any equity securities of Akili, Inc., agreement not to (i) transfer, assign or sell, (ii) enter into any arrangement transferring the economic consequences of security ownership or (iii) public announcement of intention to effect (i) or (ii) with | N/A |
Each participating holder in such underwritten offering of any equity securities of Akili, Inc. and each beneficial holder (together with its affiliates) of greater than five percent of the outstanding Akili, Inc. common stock. | If expressly permitted by a lock-up agreement or in the event the managing underwriters otherwise agree by written consent. |
Agreement, Arrangement or Understanding |
Restrictions |
Expiration Date |
Natural Persons and Entities Subject |
Exceptions | ||||
respect to Akili, Inc. ordinary shares or other equity securities of Akili, Inc., subject to certain exceptions. |
• | Prominence, Predictability, and Flexibility of Delaware Law |
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 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 |
• | Increased Ability to Attract and Retain Qualified Directors |
The Cayman Constitutional Documents |
The Proposed Organizational Documents | |||
Authorized Shares (Organizational Documents Proposal A) |
The Cayman Constitutional Documents authorize 555,000,000 shares, consisting of 500,000,000 SCS Class A ordinary shares, 50,000,000 SCS Class B ordinary shares and 5,000,000 preference shares. See paragraph 5 of the Existing Memorandum. |
The Proposed Organizational Documents authorize shares, consisting of shares of Akili, Inc. common stock and shares of Akili, Inc. preferred stock. See Article IV of the Proposed Certificate of Incorporation. | ||
Authorize the Board of Directors to Issue Preferred Stock Without Stockholder Consent (Organizational Documents Proposal B) |
The Cayman Constitutional Documents authorize the issuance of 5,000,000 preference shares with such designation, rights and preferences as may be determined from time to time by SCS’s board of directors. Accordingly, SCS’s board of directors is empowered | The Proposed Organizational Documents authorize the Board to issue all or any shares of preferred stock in one or more series and to fix for each such series such voting powers, full or limited, and such designations, preferences and relative participating, optional or |
The Cayman Constitutional Documents |
The Proposed Organizational Documents | |||
Takeovers by Interested Stockholders (Organizational Documents Proposal C) |
The Cayman Constitutional Documents do not provide restrictions on takeovers of SCS by a related shareholder following a business combination. | The Proposed Organizational Documents do not opt out of Section 203 of the DGCL, and therefore, Akili, Inc. will be subject to Section 203 of the DGCL relating to takeovers by interested stockholders. Default rule under the DGCL. | ||
Provisions Related to Status as Blank Check Company (Organizational Documents Proposal C) |
The Cayman Constitutional Documents include various provisions related to SCS’s status as a blank check company prior to the consummation of a business combination. See Article 49 of the Existing Articles. |
The Proposed Organizational Documents do not include such provisions related to SCS’s status as a blank check company, which no longer will apply upon consummation of the Business Combination, as SCS will cease to be a blank check company at such time. |
• | One of whom will be W. Edward Martucci, Ph.D., the Chief Executive Officer of Akili, and will be the Chief Executive Officer of Akili, Inc., who will be designated as a Class III Director; |
• | One of whom will be Chamath Palihapitiya, the Chairman and Chief Executive Officer of SCS until the Closing, who will serve as the initial Chairman of Akili, Inc., and who will be designated as a Class III Director; |
• | One of whom will be Kenneth Ehlert, who will be designated as a Class I Director; |
• | One of whom will be Christine Lemke, who will be designated as a Class II Director; |
• | One of whom will be William “BJ” Jones, Jr., who will be designated as a Class II Director; |
• | One of whom will be Adam Gazzaley, M.D., Ph.D., who will be designated as a Class III Director; |
Name and Position |
Dollar Value ($) |
Number of Shares |
||||||
W. Edward Martucci |
— | — | ||||||
Chief Executive Officer |
||||||||
Santosh Shanbhag |
— | — | ||||||
Chief Financial Officer |
||||||||
Jacqueline Studer |
— | — | ||||||
Chief Legal Officer |
||||||||
Anil S. Jina |
— | — | ||||||
Chief Medical Offier |
||||||||
Jonathan David |
— | — | ||||||
Chief Product Offier |
||||||||
All current directors who are not executive officers as a group |
— | — | ||||||
All current executive officers as a group |
— | — | ||||||
All employees, including all current officers who are not executive officers, as a group |
— | — |
• | financial institutions or financial services entities; |
• | broker-dealers; |
• | taxpayers that are subject to the mark-to-market |
• | tax-exempt entities; |
• | governments or agencies or instrumentalities thereof; |
• | insurance companies; |
• | mutual funds; |
• | individual retirement accounts and other tax-deferred accounts; |
• | regulated investment companies or real estate investment trusts; |
• | expatriates or former long-term residents of the United States; |
• | persons that actually or constructively own five percent or more of our voting shares or five percent or more of the total value of all classes of our shares; |
• | persons that acquired our securities pursuant to an exercise of employee share options, in connection with employee share incentive plans or otherwise as compensation; |
• | persons that hold our securities as part of a straddle, constructive sale, hedging, conversion or other integrated or risk reduction transaction; |
• | persons required to accelerate the recognition of any item of gross income as a result of such income being recognized on an applicable financial statement; |
• | persons whose functional currency is not the U.S. dollar; |
• | controlled foreign corporations; or |
• | passive foreign investment companies. |
• | an individual citizen or resident of the United States, |
• | a corporation (or other entity or arrangement that is treated as a corporation for U.S. federal income tax purposes) 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 U.S. persons have the authority to control all substantial decisions of the trust or (2) it has a valid election in place under applicable Treasury Regulations to be treated as a U.S. person. |
(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 SCS establishing and substantiating the U.S. Holder’s all earnings and profits amount with respect to the U.S. Holder’s SCS Class A ordinary shares and (B) a representation that the U.S. Holder has notified SCS (or Akili, Inc.) 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. |
(i) | SCS were classified as a PFIC at any time during such U.S. Holder’s holding period in such SCS Class A ordinary shares; 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 SCS Class A ordinary shares or in which SCS was a PFIC, whichever is later (or a QEF Election along with a purging election), or (b) a mark-to-market |
• | the U.S. Holder’s gain will be allocated ratably over the U.S. Holder’s holding period for such U.S. Holder’s SCS Class A ordinary shares; |
• | 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 SCS 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 of such U.S. Holder. |
(i) | such non-U.S. Holder is an individual who was present in the United States for 183 days or more in the taxable year of such disposition and certain other requirements are met, in which case any gain realized will be subject to a flat 30% U.S. federal income tax; |
(ii) | the gain is effectively connected with a trade or business of such non-U.S. Holder in the United States (and, if required by an applicable income tax treaty, attributable to a U.S. permanent establishment or fixed base maintained by such non-U.S. Holder), in which case such gain will be subject to U.S. federal income tax, net of certain deductions, at the same graduated individual or corporate rates applicable to U.S. Holders, and any such gain of a non-U.S. Holder that is a corporation may be subject to an additional “branch profits tax” at a rate of 30% (or such lower rate as may be specified by an applicable income tax treaty) on such effectively connected gain, as adjusted for certain items; or |
(iii) | Akili, Inc. is or has been a U.S. real property holding corporation at any time during the shorter of the five-year period preceding such disposition and such non-U.S. Holder’s holding period and either (A) Akili, Inc.’s common stock has ceased to be regularly traded on an established securities market or (B) such non-U.S. Holder has owned or is deemed to have owned, at any time during the shorter of the five-year period preceding such disposition and such non-U.S. Holder’s holding period, more than 5% of outstanding Akili, Inc. common stock. |
• | the accompanying notes to the unaudited pro forma condensed combined financial statements; |
• | the historical audited financial statements of SCS as of December 31, 2021 and for the period from February 25, 2021 (inception) through December 31, 2021 and the related notes included elsewhere in this proxy statement/prospectus; |
• | the historical audited consolidated financial statements of Akili as of December 31, 2021 and for the year ended December 31, 2021 and the related notes included elsewhere in this proxy statement/prospectus; and |
• | the sections entitled “ SCS’s Management’s Discussion and Analysis of Financial Condition and Results of Operations Akili’s Management’s Discussion and Analysis of Financial Condition and Results of Operations |
• | Assuming No Redemptions (Scenario 1): |
• | Assuming Maximum Redemptions (Scenario 2): |
• | each SCS Class A ordinary share and each SCS Class B ordinary share issued and outstanding immediately prior to the effective time of Domestication will be converted into one share of Akili, Inc. common stock; |
• | each share of Akili common stock and preferred stock outstanding as of immediately prior to the effective time of the Merger will be canceled, converted into shares of Akili common stock and converted into the right to receive a pro rata portion of the Aggregate Merger Consideration, after giving effect to the appropriate conversion ratios; |
• | all Akili Options outstanding as of immediately prior to the effective time of the Merger will be converted into an option to purchase shares of Akili, Inc. common stock (and the exercise price thereof will be adjusted); |
• | all Akili warrants (other than those that are deemed automatically exercised as a result of the Business Combination) will be converted into a warrant to purchase shares of Akili, Inc. common stock, and the exercise price thereof shall be adjusted, in each case, as set forth in the applicable Akili common stock warrant agreement; and |
• | SCS will be renamed “Akili, Inc.”. |
(in thousands) |
Purchase price |
Shares Issued |
||||||
Share consideration to Akili (a)(b)(c) |
$ | 600,000 | 60,000,000 |
(a) | The value of common stock issued to Akili included in the consideration is reflected at $10.00 per share as defined in the Merger Agreement. |
(b) | The total 60,000,000 consideration shares to be issued for all outstanding Akili common and preferred stock includes unexercised vested stock options of 2,679,442, unvested stock options of 3,095,333 and warrants to purchase 147,711 shares of Akili, Inc. common stock, converted using the treasury stock method. These share amounts are based on the anticipated number of shares outstanding as of the estimated Closing date of the Merger. The impact of the conversion is such that the number of shares issuable under the modified awards and the related exercise prices are adjusted using the Merger Consideration Per Fully Diluted Share ratio with all other terms remaining unchanged. The adjustment to the number of shares issuable and the related exercise prices is without substance (akin to a stock split). |
(c) | Amount excludes the issuance of 9,686,696 Earnout Shares, assuming no redemptions, and 7,528,494 Earnout Shares, assuming maximum redemptions, to certain eligible Akili equity holders as a result of Akili, Inc. satisfying certain conditions described above within the Earnout Period. |
Assuming No Redemption |
Assuming Maximum Redemption |
|||||||||||||||
Shares |
% |
Shares |
% |
|||||||||||||
SCS Public Stockholders |
25,000,000 | 24.5 | % | — | 0 | % | ||||||||||
SCS Sponsor and Independent Director |
6,890,000 | 6.7 | % | 6,890,000 | 8.9 | % | ||||||||||
|
|
|
|
|
|
|
|
|||||||||
Total SCS |
31,890,000 | 31.2 | % | 6,890,000 | 8.9 | % | ||||||||||
Akili Stockholders (a) |
54,077,514 | 52.9 | % | 54,077,514 | 70.1 | % | ||||||||||
PIPE Investors |
16,200,000 | 15.9 | % | 16,200,000 | 21.0 | % | ||||||||||
|
|
|
|
|
|
|
|
|||||||||
Total Shares at Closing (excluding Akili—Remaining Consideration Shares) |
102,167,514 |
100 |
% |
77,167,514 |
100 |
% | ||||||||||
Akili—Remaining Consideration Shares (a)(b) |
5,922,486 | 5,922,486 | ||||||||||||||
|
|
|
|
|||||||||||||
Total Shares at Closing (including Akili—Remaining Consideration Shares) |
108,090,000 |
83,090,000 |
||||||||||||||
|
|
|
|
(a) | Total consideration issued to Akili is $600.0 million or 60,000,000 shares ($10 per share price with no fractional shares). The total shares issued includes those in respect of Akili common and preferred stock and stock options and warrants to purchase common stock, converted using the treasury stock method. For the purpose of this calculation, the Series D redeemable convertible preferred stock continues to accrue dividends through the estimated Closing date of the Merger and the adjusted total of Series D redeemable convertible preferred stock is multiplied by 150% to determine the number of shares issuable upon conversion. Accordingly, the consideration shares outstanding in the above table have been adjusted to exclude the portion of consideration shares that will be unissued at Closing. The Akili—Remaining Consideration Shares reflect a conversion ratio of 1.16. |
(b) | Amount excludes the issuance of 9,686,696 Earnout Shares, assuming no redemptions, and 7,528,494 Earnout Shares, assuming max redemptions, to certain eligible Akili equity holders as a result of Akili, Inc. satisfying certain performance conditions described above with the Earnout Period. |
Historical |
Scenario 1 Assuming No Redemptions into Cash |
Scenario 2 Assuming Maximum Redemptions into Cash |
||||||||||||||||||||||
Social Capital |
Akili |
Transaction Accounting Adjustments |
Pro Forma Balance Sheet |
Transaction Accounting Adjustments |
Pro Forma Balance Sheet |
|||||||||||||||||||
ASSETS |
||||||||||||||||||||||||
Current assets: |
||||||||||||||||||||||||
Cash and cash equivalents |
$ | 428 | $ | 76,899 | $ | 250,008 | 3(a) |
$ | 455,412 | $ | (250,000 | ) 3(k) |
$ | 207,612 | ||||||||||
(8,927 | ) 3(d) |
1,452 | 3(m) |
|||||||||||||||||||||
(9,318 | ) 3(g) |
748 | 3(r) |
|||||||||||||||||||||
162,000 | 3(j) |
|||||||||||||||||||||||
(3,540 | ) 3(l) |
|||||||||||||||||||||||
(1,990 | ) 3(n) |
|||||||||||||||||||||||
(7,700 | ) 3(e) |
|||||||||||||||||||||||
(2,448 | ) 3(q) |
|||||||||||||||||||||||
Restricted cash |
— | 305 | 305 | — | 305 | |||||||||||||||||||
Account receivable, net |
— | 29 | 29 | — | 29 | |||||||||||||||||||
Prepaid expenses and other current assets |
504 | 2,500 | 3,004 | — | 3,004 | |||||||||||||||||||
|
|
|
|
|
|
|
|
|
|
|
|
|||||||||||||
Total current assets |
932 | 79,733 | 378,085 | 458,750 | (247,800 | ) | 210,950 | |||||||||||||||||
Property and equipment, net |
— | 1,193 | — | 1,193 | — | 1,193 | ||||||||||||||||||
Deposits |
— | — | — | — | — | — | ||||||||||||||||||
Prepaid expenses and other long-term assets |
248 | 11 | — | 259 | — | 259 | ||||||||||||||||||
Marketable Securities held in Trust Account |
250,008 | — | (250,008 | ) 3(a) |
— | — | — | |||||||||||||||||
|
|
|
|
|
|
|
|
|
|
|
|
|||||||||||||
Total assets |
$ | 251,188 | $ | 80,937 | $ | 128,077 | $ | 460,202 | $ | (247,800 | ) | $ | 212,402 | |||||||||||
|
|
|
|
|
|
|
|
|
|
|
|
|||||||||||||
LIABILITIES, REDEEMABLE CONVERTIBLE PREFERRED STOCK AND STOCKHOLDERS’ DEFICIT |
||||||||||||||||||||||||
Current liabilities: |
||||||||||||||||||||||||
Accounts payable |
5 | 2,345 | (5 | ) 3(n) |
2,345 | — | 2,345 | |||||||||||||||||
Accrued expenses and other current liabilities |
1,975 | 5,477 | (1,975 | ) 3(n) |
5,477 | — | 5,477 | |||||||||||||||||
Advance from related party |
10 | — | (10 | ) 3(n) |
— | — | — | |||||||||||||||||
Deferred revenue |
— | 96 | — | 96 | 96 | |||||||||||||||||||
Deferred rent, short term |
— | 123 | — | 123 | — | 123 | ||||||||||||||||||
|
|
|
|
|
|
|
|
|
|
|
|
|||||||||||||
Total current liabilities |
1,990 | 8,041 | (1,990 | ) | 8,041 | — | 8,041 | |||||||||||||||||
Deferred underwriting fee payable |
7,700 | — | (7,700 | ) 3(e) |
— | — | — | |||||||||||||||||
Note payable, long term |
— | 4,784 | — | 4,784 | — | 4,784 | ||||||||||||||||||
Corporate bond, net of bond discount |
— | 1,638 | — | 1,638 | — | 1,638 | ||||||||||||||||||
Deferred rent, long term |
— | 712 | — | 712 | — | 712 | ||||||||||||||||||
Earnout liability |
— | — | 70,986 | 3(o) |
70,986 | (15,816 | ) 3(p) |
55,170 | ||||||||||||||||
Other long-term liabilities |
— | — | — | — | — | — | ||||||||||||||||||
|
|
|
|
|
|
|
|
|
|
|
|
|||||||||||||
Total liabilities |
$ | 9,690 | $ | 15,175 | $ | 61,296 | $ | 86,161 | $ | (15,816 | ) | $ | 70,345 | |||||||||||
|
|
|
|
|
|
|
|
|
|
|
|
Historical |
Scenario 1 Assuming No Redemptions into Cash |
Scenario 2 Assuming Maximum Redemptions into Cash |
||||||||||||||||||||||
Social Capital |
Akili Interactive Labs, Inc. |
Transaction Accounting Adjustments |
Pro Forma Statement of Operations |
Transaction Accounting Adjustments |
Pro Forma Statement of Operations |
|||||||||||||||||||
Revenue |
$ | — | $ | 538 | $ | — | $ | 538 | $ | — | $ | 538 | ||||||||||||
Operating expenses: |
||||||||||||||||||||||||
Cost of revenue |
— | 355 | — | 355 | — | 355 | ||||||||||||||||||
Research and development |
— | 18,234 | 4,085 | 4(c) |
22,319 | (910 | ) 4(d) |
21,409 | ||||||||||||||||
Selling, general and administrative |
— | 42,668 | 9,483 | 4(c) |
54,598 | (2,113 | ) 4(d) |
52,485 | ||||||||||||||||
2,447 | 4(b) |
|||||||||||||||||||||||
2,448 | 4(e) |
(202 | ) 4(f) |
|||||||||||||||||||||
Operating and formation costs |
2,447 | — | (2,447 | ) 4(b) |
— | — | — | |||||||||||||||||
|
|
|
|
|
|
|
|
|
|
|
|
|||||||||||||
Total operating expenses |
2,447 | 61,257 | 16,016 | 77,272 | (3,225 | ) | 74,047 | |||||||||||||||||
|
|
|
|
|
|
|
|
|
|
|
|
|||||||||||||
Loss from operations |
(2,447 | ) | (60,719 | ) | (16,016 | ) | (76,734 | ) | 3,225 | (73,509 | ) | |||||||||||||
Interest earned on marketable securities held in Trust Account |
8 | — | (8 | ) 4(a) |
— | — | — | |||||||||||||||||
Loss on extinguishment of debt |
— | (181 | ) | — | (181 | ) | — | (181 | ) | |||||||||||||||
Interest expense |
— | (465 | ) | — | (465 | ) | — | (465 | ) | |||||||||||||||
Other income |
— | 17 | — | 17 | — | 17 | ||||||||||||||||||
|
|
|
|
|
|
|
|
|
|
|
|
|||||||||||||
Loss before provision for income taxes |
(2,439 | ) | (61,348 | ) | (16,024 | ) | (77,363 | ) | 3,225 | (74,138 | ) | |||||||||||||
|
|
|
|
|
|
|
|
|
|
|
|
|||||||||||||
Provision for income taxes |
— | — | — | — | — | — | ||||||||||||||||||
|
|
|
|
|
|
|
|
|
|
|
|
|||||||||||||
Net loss and comprehensive loss |
(2,439 | ) | (61,348 | ) | (16,024 | ) | (77,363 | ) | 3,225 | (74,138 | ) | |||||||||||||
Dividends on Series D convertible preferred stock |
— | (6,660 | ) | — | (6,660 | ) | — | (6,660 | ) | |||||||||||||||
Accretion of Series D convertible preferred stock |
— | (58,649 | ) | — | (58,649 | ) | — | (58,649 | ) | |||||||||||||||
|
|
|
|
|
|
|
|
|
|
|
|
|||||||||||||
Net loss attributable to common stockholders, basic and diluted |
$ | (2,439 | ) | $ | (126,657 | ) | $ | (16,024 | ) | $ | (142,672 | ) | $ | 3,225 | $ | (139,447 | ) | |||||||
|
|
|
|
|
|
|
|
|
|
|
|
|||||||||||||
Net loss per share, basic and diluted |
5,852,751 | $ | (105.77 | ) | $ | (1.40 | ) | $ | (1.81 | ) | ||||||||||||||
|
|
|
|
|
|
|
|
|||||||||||||||||
Weighted-average common shares outstanding: Basic and diluted |
(0.12 | ) | 1,197,489 | 102,167,514 | 77,167,514 | |||||||||||||||||||
|
|
|
|
|
|
|
|
(1) | For the period from February 25, 2021 (date of inception) to December 31, 2021. |
1. |
Basis of Pro Forma Presentation |
2. |
Accounting Policies |
3. |
Adjustments to Unaudited Pro Forma Condensed Combined Balance Sheet |
a. | To reflect the release of cash from the trust account to cash and cash equivalents, assuming no SCS public shareholders exercise their right to have their SCS Class A ordinary shares redeemed for their pro rata share of the trust account. |
b. | To reflect the conversion of SCS’s Class A ordinary shares and Class B ordinary shares into Akili, Inc. common stock upon the Domestication. |
c. | To reflect the conversion of SCS’s 6,250,000 Class B ordinary shares into shares of Akili, Inc. common stock concurrent with the Closing. |
d. | To reflect the payment of SCS’s total estimated advisory, legal, accounting and auditing fees and other professional fees of $8.9 million that are deemed to be direct and incremental costs of the Business Combination. The payment of $8.9 million of costs directly attributable to the Business Combination has been recorded as a reduction to additional paid-in capital of $8.9 million. |
e. | To reflect the settlement of $7.7 million of deferred underwriters’ fees incurred during SCS’s initial public offering that are payable upon completion of the Business Combination. |
f. | To reflect the reclassification of SCS Class A ordinary shares subject to redemption of $250 million to Akili, Inc. common stock of $8 thousand and additional paid in capital of $250 million, in Scenario 1, which assumes no SCS public shareholders exercise their redemption rights. |
g. | To reflect the payment of Akili’s total estimated advisory, legal, accounting and auditing fees and other professional fees of $9.3 million that are deemed to be direct and incremental costs of the Business Combination. The payment of $9.3 million of costs directly attributable to the Business Combination has been recorded as a reduction to additional paid-in capital of $9.3 million. |
h. | To reflect the conversion of Akili Convertible Preferred Stock of $291.9 million into Akili common stock of $5 thousand and additional paid in capital of $291.9 million. |
i. | To reflect the recapitalization of Akili through the contribution of all outstanding common stock of Akili to SCS and the issuance of 54,077,514 shares of Akili, Inc. common stock and the elimination of the accumulated deficit of SCS, the accounting acquiree. As a result of the recapitalization, Akili common stock of $5 thousand and SCS’s accumulated deficit of $8.5 million were derecognized. The shares of Akili, Inc. common stock issued in exchange for Akili’s capital were recorded as an increase to common stock of $5 thousand and a decrease to additional paid-in capital of $8.5 million. |
j. | To reflect the issuance of an aggregate of 16,200,000 shares of Akili, Inc. common stock in the PIPE Investment at a price of $10.00 per share, for an aggregate purchase price of $162.0 million. |
k. | To reflect, in Scenario 2, the assumption that SCS’s public shareholders exercise their redemption rights with respect to a maximum of 25,000,000 SCS Class A ordinary shares prior to the consummation of the Business Combination at a redemption price of approximately $10.00 per share, or $250.0 million in cash. The $250.0 million or 25,000,000 SCS Class A ordinary shares represent the maximum possible contractual redemption amount which assuming the completion of the PIPE Investment, would still provide SCS with an amount of cash at the closing of the Business Combination of no less than $150 million pursuant to the minimum cash condition in the Merger Agreement. |
l. | Represents payment of the estimated PIPE Financing transactions costs. The unaudited pro forma condensed combined balance sheet reflects these costs as a reduction of cash, with a corresponding decrease in additional paid-in capital. |
m. | To adjust the estimated transaction costs related to the redemption of the SCS Class A shares with respect to a maximum redemption of 25,000,000 SCS Class A ordinary shares in Scenario 2. |
n. | Represents payment of historical SCS accounts payable and accrued expenses upon Closing. |
o. | To reflect recognition of the approximately 8,105,776 Earnout Shares issuable to non-employee holders of Akili Common Stock and Akili Convertible Preferred Stock and warrantholders which are not indexed to Akili, Inc.’s stock pursuant to ASC Subtopic 815-40 as of Closing. Therefore, such amount is classified as a liability and recognized at its preliminary estimated fair value. The earnout liability will be remeasured to its fair value at the end of each reporting period and subsequent changes in the fair value will be recognized in Akili, Inc.’s statement of operations within other income/expense. Refer to Note 5– Earnout Shares, for additional information. |
p. | To adjust the Earnout liability recorded in adjustment 3(o) above, to the lower preliminary estimated fair of $55.2 million, assuming max redemptions of Class A ordinary shares of SCS into cash. Refer to Note 5 – Earnout Shares, for additional information. |
q. | The Company has allocated $2.5 million of transaction costs, assuming no redemptions, to the liability classified Earnout Shares based on the relative fair value of these instruments as compared to the total Merger consideration. The portion of transaction costs allocated to these instruments is reflected as a reduction to cash and retained earnings. The costs are determined to relate to future share issuances and not to the initial recapitalization and therefore they are expensed at the Closing. |
r. | To adjust the estimated transaction costs allocated to the liability classified Earnout Shares, as discussed in adjustment 3(q), assuming a maximum redemption of 25,000,000 SCS Class A ordinary shares in Scenario 2. |
4. |
Adjustments to Unaudited Pro Forma Condensed Combined Statements of Operations for the Year Ended December 31, 2021 |
a. | To eliminate interest income earned on the Trust Account which will be released upon closing of the Business Combination. |
b. | To reclassify the historical formation costs of SCS to conform to Akili’s financial statement presentation. |
c. | The Company has preliminarily concluded that the contingent issuance of Earnout Shares to Earnout Service Providers and employee common stockholders represents a grant of a compensatory award under ASC 718, Compensation – Stock Compensation |
award. As there is no future service condition for employee common stockholders, the grant date fair value of such Earnout Shares is recognized as expense upon close of the Merger. The time to reach a Triggering Event was estimated using the median vesting dates produced by a simulation model, which was restricted to consider only iterations/outcomes where the market conditions are achieved. The material assumptions and estimates employed in these calculations are consistent with those described in Note 5 below. This adjustment reflects recognition of approximately $13.6 million of share-based compensation expense associated with the Earnout Shares issuable to Earnout Service Providers and employee common stockholders for the year ended December 31, 2021, of which $9.5 million and $4.1 million was recognized as selling, general and administrative expense and research and development expense, respectively, based on the holder’s employment classification. On a pro forma basis, as of December 31, 2021, there was approximately $267 thousand of total unrecognized compensation cost related to the Earnout Shares issuable to the option holders. Upon the date of any forfeiture, any Earnout Shares that have been forfeited will be reallocated pro rata to the other holders of Earnout Shares. The forfeiture and subsequent redistribution of the awards are accounted for as (1) the forfeiture of the original award and (2) the grant of a new award. Upon reallocation, the Company will reverse any compensation previously recognized for the forfeited award and recognize compensation for the new award, based on the fair value on the date of redistribution, over the remaining requisite service period. |
d. | To reflect the lower share-based compensation expense of approximately $10.5 million, associated with the Earnout Shares issuable to Earnout Service Providers and employee common stockholders for the year ended December 31, 2021, assuming max redemptions of Class A ordinary shares of SCS into cash. Of the $10.5 million, approximately $7.4 million and $3.2 million was recognized as selling, general and administrative expense and research and development expense, respectively, based on the holder’s employment classification. On a pro forma basis, as of December 31, 2021, there was approximately $208 thousand of total unrecognized compensation cost related to the Earnout Shares issuable to the option holders, assuming max redemptions. |
e. | To reflect $2.5 million of transaction costs related to the liability classified Earnout Shares, assuming no redemptions, based on the relative fair value of these instruments as compared to the total Merger consideration. These costs are determined to relate to future share issuances and not to the initial recapitalization and therefore are expensed at the Closing Date. |
f. | To adjust the estimated transaction costs allocated to the liability classified Earnout Shares, as discussed in adjustment 4(e), assuming a maximum redemption of 25,000,000 SCS Class A ordinary shares in Scenario 2. |
5. |
Earnout Shares |
• | Triggering Event I is $15.00 |
• | Triggering Event II is $20.00 |
• | Triggering Event III is $30.00 |
6. |
Net Loss Per Share |
Year Ended December 31, 2021 |
||||||||
Scenario 1 (Assuming No Redemptions into Cash) |
Scenario 2 (Assuming Maximum Redemptions into Cash) |
|||||||
Pro forma net loss |
$ | (142,672 | ) | $ | (139,447 | ) | ||
Pro forma weighted average shares outstanding—basic and diluted |
102,167,514 | 77,167,514 | ||||||
Pro forma net loss per share-basic and diluted |
$ | (1.40 | ) | $ | (1.81 | ) | ||
Pro Forma weighted average shares calculation—basic and diluted |
||||||||
SCS Sponsors |
6,890,000 | 6,890,000 | ||||||
SCS common stock subject to redemption |
25,000,000 | — | ||||||
|
|
|
|
|||||
Total SCS |
31,890,000 | 6,890,000 | ||||||
Issuance of SCS common stock in connection with closing of the PIPE Transaction |
16,200,000 | 16,200,000 | ||||||
Issuance of SCS common stock to Akili shareholders in connection with Business Combination (a)(b) |
54,077,514 | 54,077,514 | ||||||
|
|
|
|
|||||
Pro forma weighted average shares outstanding—basic and diluted (c) |
102,167,514 | 77,167,514 | ||||||
|
|
|
|
a. | Excludes 5,922,486 Akili consideration shares that will be issued upon the occurrence of future events (i.e., exercise of stock options and warrants). Total consideration to be issued to Akili is $600.0 million or 60,000,000 shares ($10 per share price with no fractional shares issued). The total shares to be issued includes those in respect of all issued and outstanding Akili common and preferred stock and shares underlying stock options and warrants. Accordingly, the weighted average pro forma shares outstanding at Closing has been adjusted to exclude the portion of consideration shares that were unissued at Closing. |
b. | Amount excludes the issuance of approximately 9,686,696 Earnout Shares, assuming no redemptions, and 7,528,494 Earnout Shares, assuming maximum redemptions, to certain eligible Akili equity holders as a result of Akili, Inc. satisfying certain conditions described above within the Earnout Period. |
c. | For the purposes of applying the if converted method for calculating diluted earnings per share, it was assumed that all Akili common stock options are exchanged for common stock. However, since this results in anti-dilution, the effect of such exchange was not included in the calculation of diluted loss per share. Shares underlying these instruments include 5,922,486 Akili consideration shares for unexercised stock options and warrants. |
Name |
Age |
Position | ||
Chamath Palihapitiya | 45 | Chief Executive Officer and Chairman of the Board of Directors | ||
Kishan (a/k/a Kishen) Mehta | 36 | President and Director | ||
Vladimir Coric | 51 | Director | ||
Senthil Sundaram | 43 | Director | ||
James Ryans | 46 | Chief Financial Officer |
• | may significantly dilute the equity interest of investors, which dilution would increase if the anti-dilution provisions in the SCS Class B ordinary shares resulted in the issuance of SCS Class A ordinary shares on a greater than one-to-one |
• | may subordinate the rights of holders of ordinary shares if preferred stock are issued with rights senior to those afforded our ordinary shares; |
• | could cause a change of control if a substantial number of our ordinary shares is issued, which may affect, among other things, our ability to use our net operating loss carry forwards, if any, and could result in the resignation or removal of our present directors and officers; |
• | may have the effect of delaying or preventing a change of control of us by diluting the share ownership or voting rights of a person seeking to obtain control of us; and |
• | may adversely affect prevailing market prices for our ordinary shares. |
• | default and foreclosure on our assets if our operating revenues after an initial business combination are insufficient to repay our debt obligations; |
• | acceleration of our obligations to repay the indebtedness even if we make all principal and interest payments when due if we breach certain covenants that require the maintenance of certain financial ratios or reserves without a waiver or renegotiation of that covenant; |
• | our immediate payment of all principal and accrued interest, if any, if the debt is payable on demand; |
• | our inability to obtain necessary additional financing if the debt contains covenants restricting our ability to obtain such financing while the debt is outstanding; |
• | our inability to pay dividends on our ordinary shares; |
• | using a substantial portion of our cash flow to pay principal and interest on our debt, which will reduce the funds available for dividends on our ordinary shares if declared, expenses, capital expenditures, acquisitions and other general corporate purposes; |
• | limitations on our flexibility in planning for and reacting to changes in our business and in the industry in which we operate; |
• | increased vulnerability to adverse changes in general economic, industry and competitive conditions and adverse changes in government regulation; and |
• | limitations on our ability to borrow additional amounts for expenses, capital expenditures, acquisitions, debt service requirements, execution of our strategy and other purposes and other disadvantages compared to our competitors who have less debt. |
• | Targeted treatments that are personalized to patients’ needs de-identified, aggregate level view of each patient’s activity, informing our product development. The therapeutics’ mechanics, algorithms and designs are protected by patents, trade secrets and copyrights, combining protections typically seen in both the medicine and technology industries to create a robust intellectual property portfolio. |
• | Clinically validated therapeutics like drugs and medical devices The American Journal of Psychiatry, The Lancet Digital Health and Nature: Digital Medicine |
• | Therapeutics that are experienced as entertainment |
different patient populations by developing and testing product candidates in clinical trials. We believe we have the potential to offer the first treatments that both rival the experience of consumer entertainment products and can be utilized as part of a treatment plan. |
• | Patient focused and adaptive |
• | pivotal study in adolescents with ADHD |
• | pivotal study in adults with ADHD |
• | Weill Cornell Medicine/NewYork-Presbyterian Hospital in acute cognitive dysfunction in COVID-19 survivors |
• | Vanderbilt University Medical Center in acute cognitive dysfunction in COVID-19 survivors |
• | pivotal study in pediatric ADHD in Japan by Shionogi & Co., Ltd (“Shionogi”) |
• | proof of concept study in early childhood (3-8 year olds) ADHD by TALi Digital Limited (“TALi”) |
• | post-operative cognitive dysfunction by Vanderbilt University Medical Center |
• | chemotherapy-related cognitive impairment by the University of California San Francisco (“UCSF”) |
• | cognitive monitoring in a healthy aging population |
• | proof of concept and/or pivotal study in inattention in ASD |
• | pivotal study in cognitive dysfunction in MS |
• | pivotal study in cognitive dysfunction in MDD |
Core Mechanic |
Description |
Targeted Physiology | ||
SSME |
Targets attentional control |
| ||
SNAV |
Targets spatial navigation and episodic memory |
| ||
BBT |
Targets attentional control, goal management and working memory |
|
• | Navigation: Steering over gates and/or avoiding obstacles |
• | Targeting: Tap for targets and ignore non-targets |
• | Multitasking: Simultaneous navigation and targeting |
Disease Area |
Total U.S. Population with Disease Diagnosis |
Initial Target Population Subset with applicable cognitive impairment, as noted | ||
Attention-deficit/hyperactivity disorder (“ADHD”), all ages | 10.8M | 8.1M (ADHD + inattention) | ||
Autism spectrum disorder (“ASD”) | 1.3M | 410k (ASD + inattention) |
Disease Area |
Total U.S. Population with Disease Diagnosis |
Initial Target Population Subset with applicable cognitive impairment, as noted | ||
Multiple sclerosis (“MS”) | 900K | 180K (MS + cognitive dysfunction) | ||
Major depressive disorder (“MDD”) | 19M | 2.1M (MDD + cognitive dysfunction) | ||
Acute cognitive dysfunction | 81M | 3.3M (COVID fog, ICU-related, TBI, cancer-related) |
* | Figures in table above are based on our management’s good faith estimates based on various publications, public health data and national health statistics including from the NIH and CDC. |
* | Estimated timeframes in figure above correspond to applicable milestone start times, and are subject to change. Please refer to the section entitled “ Risk Factors Risks Related to Our Business and Industry—Enrollment and retention of patients in clinical trials is an expensive and time- |
consuming process and could be made more difficult or rendered impossible by multiple factors outside of our control. If we experience delays or difficulties in the enrollment or retention of patients in clinical trials, our ability to obtain necessary marketing authorizations for our product candidates could be delayed or prevented Risks Related to Our Products—Our current product candidates are in various stages of development. Our product candidates may fail in development or suffer delays that adversely affect their commercial viability. If we fail to maintain clearance, de novo classification or approval to market our product candidates, including EndeavorRx for expanded indications, or if we are delayed in obtaining such marketing authorizations, our business, prospects, results of operations and financial condition could be materially and adversely affected |
The pivotal STARS-ADHD study was a 4-week multi-center, randomized, blinded, controlled trial conducted between July 2016 and November 2017 in 348 children aged 8-12 years and diagnosed with ADHD. Children enrolled into the study were instructed to use EndeavorRx (AKL-T01) or an educational-style video game control for approximately 25 minutes a day for 28 days. The predefined primary endpoint of the study was the change from baseline in the TOVA Attention Performance Index (TOVA API), a measure of objective attention for which the study was statistically powered. TOVA is a computerized test cleared by the FDA to assess attention deficits and evaluate the effects of interventions in ADHD; the API is a composite measure of attention functioning. This objective attention endpoint was the primary endpoint for which the study was statistically powered. The control condition used in this study was specifically designed to enable the assessment of changes in the primary endpoint of objective attention. The control was in the form of an educational style word search digital game matched to EndeavorRx for expectation of benefit and time on task. EndeavorRx showed a statistically significant improvement on the TOVA API compared to the control (p=0.006). |
|
The study demonstrated statistically significant improvement in the IRS from baseline after one month as well as to the end of the three-month trial in both the children on-stimulants and off-stimulants (both cohorts: p<0.001). The second period of EndeavorRx treatment resulted in further increases in efficacy on this primary outcome measure, beyond the effects already seen after the first period of treatment. The magnitude of improvement in IRS throughout the study was similar for children independent of their ADHD medication use. Responder rates for IRS (improvement of greater than 1 point or more on the IRS scale) were 41% and 55% at the end of the first period of treatment with EndeavorRx in the off-stimulant and on-stimulant groups respectively. This increased to 69% and 68% respectively by the end of the second period of treatment. The treatment was well-tolerated. There were no serious adverse events and the total reported adverse events were in 18% of patients. The most common treatment-related adverse events reported were frustration (13.1%), headache (1.9%), irritiability (1.5%), dizziness (1%), agitation (0.5%), anxiety (0.5%), asthenopia (0.5%), nausea (0.5%), feeling abnormal (0.5%) and pruritis (0.5%). |
|
• | Australia, in which the technology does not require a medical prescription; and |
• | India, in which the technology does not require a medical prescription. |
• | U.S. commercial launch of EndeavorRx in 8-12 year-old patients with primarily inattentive or combined-type ADHD, who have a demonstrated attention issue: Expected H2 2022 |
• | Initiation of TALi technology study in 3-8 year-old children with ADHD: Expected H1 2022 |
• | Initiation of Shionogi pivotal study in Japan: Expected H2 2022 |
• | Pivotal trial data in adolescent ADHD patients: Expected H2 2023 |
• | Pivotal trial data in adult ADHD patients: Expected H2 2023 |
The study was conducted at the Children’s Hospital of Philadelphia Center for Autism Research, which enrolled 19 children with autism, aged 9-13 years old and with an average age of 10 years old. Patients received either our investigational treatment (AKL-T02) or a control educational style video game based on a word challenge game. Patients were asked to play the game for 30 minutes a day, five days a week, for four weeks. |
| |
This pilot study found that not only did the child participants like and engage with our investigational treatment, their attention on the TOVA test of attention improved similar to what was seen in our studies of children with only an ADHD diagnosis. The control video game did not demonstrate improvement in the mean TOVA score. There was one adverse event (decreased frustration tolerance) in the AKL-T02 group; no serious adverse events were reported. |
Our proof of concept study in MDD was a multi-center, randomized, controlled trial of our SSME technology engine, utilizing the AKL-T03 variation of our treatment software, in 74 adult patients diagnosed with mild-to-moderate mild-to-moderate | ||
were randomized 1:1 to AKL-T03 or a control game. Both groups used the treatment/control at home, five days per week for 25 minutes per day, on a tablet device for six weeks. Following the treatment period, an in-clinic assessment was conducted to assess key outcomes. The primary outcome of the study assessed sustained attention as measured by TOVA, an FDA-cleared objective measure of attention.In the study, AKL-T03 showed a statistically significant improvement in sustained attention compared to control (p=0.002) on the predefined primary endpoint, as measured by the TOVA |
|
• | SDMT: No difference between group, p=0.21. Both the AKL-T03 and control groups showed statistically significant improvements, p<0.001 and p=0.024, respectively. |
• | At 8 weeks follow up, responders analysis (clinically meaningful +4 point increase in SDMT relative to baseline SDMT score) was statistically significant favoring AKL-T03, p=0.038. |
• | PASAT: No difference between group, p=0.93. Both the AKL-T03 and control groups showed statistically significant improvements, p=0.002 and p=0.07 (marginally significant), respectively. |
Clinical evidence in acute cognitive function Evaluating the ability of our SSME technology to improve impairments related to acute cognitive dysfunction, we conducted a pilot study between September 2015 and April 2019 of 84 patients with TBI, including 60–85-year-old |
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We also conducted a pilot study in 54 healthy older adults in collaboration with Pfizer. The study showed the potential for SSME assessment to detect cognitive differences between amyloid positive and amyloid negative status, where amyloid is a protein biomarker associated with a higher risk of progression to dementia, in otherwise healthy individuals (graph on right). |
1) | increasing awareness and activation of caregivers, and |
2) | directly educating and activating physicians, using a therapeutic sales model with telemedicine integration. Since obtaining FDA authorization for EndeavorRx, we have built an infrastructure that |
includes patient connectivity via telehealth, digital first fulfillment and additional scalable commercial capabilities. Our strategy is based on a digital first, e-commerce experience and our approach focuses on three main stakeholders: consumers, prescribing physicians and payers. |
• | Consumer-driven model: |
• | Active participation by a physician: |
• | Delivered as a comprehensive care program: |
• | Coverage by formulary decision-makers: self-pay/reimbursement model to enable growth in the short term with potential to track toward expanded access via insurance coverage over time. |
• | Power of data to inform and adapt: |
• | families with children not well-managed on ADHD drugs due to side effects or lack of efficacy, |
• | families choosing to not put their children on ADHD drugs, and |
• | families with children actively taking ADHD drugs but looking for additional options to add to their treatment. |
1) | We are building meaningful relationships with caregivers and patients, offering products they enjoy that help improve their health. |
2) | We are developing products that can span a person’s lifetime, from childhood through adulthood—supporting their cognitive health through chronic conditions, acute illness and aging. |
3) | Our products can be continually iterated for long-term engagement. |
4) | We have rich data infrastructure that can enable patients to engage with doctors in a new way. |
5) | We also have the ability to offer premium content and services, like our recently launched EndeavorRx Insight, a companion app for parents to participate in and support their child’s treatment journey. This has the potential to provide additional revenue streams alongside the treatment. |
* | Estimated timeframes in figure above correspond to applicable milestone start times, and are subject to change—please refer to the section entitled “ Risk Factors Risks Related to Our Business and Industry—Enrollment and retention of patients in clinical trials is an expensive and time-consuming process and could be made more difficult or rendered impossible by multiple factors outside of our control. If we experience delays or difficulties in the enrollment or retention of patients in clinical trials, our ability to obtain necessary marketing authorizations for our product candidates could be delayed or prevented Risks Related to Our Products—Our current product candidates are in various stages of development. Our product candidates may fail in development or suffer delays that adversely affect their commercial viability. If we fail to maintain clearance, de novo classification or approval to market our product candidates, including EndeavorRx for expanded indications, or if we are delayed in obtaining such marketing authorizations, our business, prospects, results of operations and financial condition could be materially and adversely affected |
** | Population data in table above are estimates based on our management’s good faith estimates based on various publications, public health data, national health statistics including from the NIH and CDC and partner research data. |
• | An exclusive license from UCSF to a patent family directed to software and methods for enhancing cognition via a task performed in the presence of interferences (distractions and/or interrupters) (see |
“Agreements/Third Parties—UCSF Neuroracer Agreement” below for a description of this exclusive license agreement). Two U.S. patents, five Japanese patents and one Canadian patent have been allowed in this family, the patents expiring as early as 2031 (Japan and Canada) and 2032 (U.S.). Additional applications are pending in this family in Australia, Canada, and Europe. |
• | An exclusive license from UCSF to a patent family directed to software and methods for enhancing cognition via a task with both a physical and cognitive component. One Japanese patent has been allowed in this family, expiring as early as 2035. Additional applications are pending in this family in the U.S., Australia, Canada, Europe, Hong Kong and Japan. |
• | A patent family directed to a personalized cognitive training regimen through difficulty progression. One U.S. patent, one Japanese patent and one South Korean patent have been allowed in this family and will expire as early as 2035. Additional applications are pending in this family in Australia, Canada, Europe and Hong Kong. |
• | A patent family directed to processor-implemented systems and methods for measuring cognitive abilities. One U.S. patent has been allowed in this family and will expire as early as 2036. Additional applications are pending in this family in Australia, Canada, Europe, Japan and South Korea. |
• | A patent family directed to signal detection metrics in adaptive response-deadline procedures. One Chinese patent has been allowed in this family and will expire as early as 2037. Additional applications are pending in this family in the U.S., Australia, Canada, Europe, Japan and South Korea. |
• | A patent family directed to audio-only interference training for cognitive disorder screening and treatment. One U.S. patent has been allowed in this family and will expire as early as 2039. Additional applications are pending in this family in China, Hong Kong, South Korea, Canada, Europe, Australia and Japan. |
• | A patent family directed to facial expression detection for screening and treatment of affective disorders. One U.S. patent has been allowed in this family and will expire as early as 2039. Additional applications are pending in this family in China, Hong Kong, South Korea, Canada, Europe, Australia and Japan. |
• | A patent family directed to a platform configured to render computerized emotional/affective elements for use as stimuli in computerized tasks. One South Korean patent has been allowed in this family and will expire as early as 2037. Additional applications are pending in this family in Australia, Canada, China, Europe, Japan, the U.S, and Hong Kong. |
• | A patent family directed to a cognitive platform coupled with a physiological component. One U.S. patent has been allowed in this family and will expire as early as 2037. Additional applications are pending in this family in Australia, Canada, China, Europe, Japan, Korea and Hong Kong. |
• | A pending patent family directed to a cognitive platform for deriving effort metric for optimizing cognitive treatment, with applications pending in the U.S., Canada, Europe, Australia, Japan, South Korea, China and Hong Kong. If any patents are allowed in this family, they could expire as early as 2039. |
• | A pending patent family directed to a distributed network for the secured collection, analysis, and sharing of data across platforms, with applications pending in the U.S., Canada, Europe, Australia, Japan and China. If any patents are allowed in this family, they could expire as early as 2038. |
• | A pending patent family directed to systems and methods for scientific evaluation of program code outputs, with applications pending in the U.S. and pursuant to the international Patent Cooperation Treaty. If any patents are allowed in this family, they could expire as early as 2040. |
• | A pending patent family directed to systems and methods for software design control and quality assurance, with applications pending in the U.S., Taiwan, and pursuant to the international Patent Cooperation Treaty. If any patents are allowed in this family, they could expire as early as 2040. |
• | A pending patent family directed to a system and method for adaptive configuration of computerized cognitive training programs, with an application pending in the U.S. If any patents are allowed in this family, they could expire as early as 2041. |
• | A pending patent family directed to a method for algorithmic rendering of graphical user interface elements, with a provisional application pending in the U.S. If any patents are allowed in this family, they could expire as early as 2041. |
• | A pending patent family directed to a method and system for determining equitable benefit in digital products and services, with a provisional application pending in the U.S. If any patents are allowed in this family, they could expire as early as 2042. |
• | A pending patent family directed to a cognitive platform including computerized evocative elements in modes, with applciations pending in the U.S., Australia, Canada, China, Europe, Hong Kong, Japan, and South Korea. If any patents are allowed in this family, they could expire as early as 2037. |
• | A pending patent family directed to a cognitive platform including computerized elements, with applications pending in the U.S., Canada, Europe, Japan, Australia, China, and Hong Kong. If any patents are allowed in this family, they could expire as early as 2038. |
• | A pending patent family directed to a cognitive platform for identification of biomarkers and other types of markers, with applications pending in the U.S., Europe, Canada, Australia, and Japan. If any patents are allowed in this family, they could expire as early as 2037. |
• | A pending patent family directed to a platform for identification of biomarkers using navigation tasks and treatments using navigation tasks, with applications pending in the U.S., Australia, Canada, China, Europe, Japan, and Korea. If any patents are allowed in this family, they could expire as early as 2037. |
• | A pending patent family directed to cognitive screens, monitor and cognitive treatments targeting immune-mediated and neuro-degenerative disorders, with applications pending in the U.S., Taiwan, Canada, Europe, Australia, Japan, China, Hong Kong, and South Korea. If any patents are allowed in this family, they could expire as early as 2039. |
• | the federal Anti-Kickback Statute, which prohibits, among other things, persons from knowingly and willfully soliciting, receiving, offering or paying any remuneration (including any kickback, bribe, or rebate), directly or indirectly, overtly or covertly, in cash or in kind, to induce, or in return for, either the referral of an individual, or the purchase, lease, order or recommendation of any good, facility, item or service for which payment may be made, in whole or in part, under a federal healthcare program, such as the Medicare and Medicaid programs. 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 civil and criminal false claims laws, including the False Claims Act (“FCA”), which can be enforced through civil “qui tam” or “whistleblower” actions and civil monetary penalty laws, impose criminal and civil penalties against individuals or entities for, among other things, knowingly presenting, or causing to be presented, claims for payment or approval from Medicare, Medicaid or other federal health care programs that are false or fraudulent; knowingly making or causing a false statement material to a false or fraudulent claim or an obligation to pay money to the federal government; or knowingly concealing or knowingly and improperly avoiding or decreasing such an obligation. Manufacturers can be held liable under the FCA even when they do not submit claims directly to government payers if they are deemed to “cause” the submission of false or fraudulent claims. In addition, the government may assert that a claim including items or services resulting from a violation of the federal Anti-Kickback Statute constitutes a false or fraudulent claim for purposes of the FCA. The FCA also permits a private individual acting as a “whistleblower” to bring actions on behalf of the federal government alleging violations of the FCA and to share in the proceeds of any monetary recovery; |
• | the federal Health Insurance Portability and Accountability Act of 1996 (“HIPAA”), which created new federal criminal statutes that prohibit knowingly and willfully executing, or attempting to execute, a scheme to defraud any healthcare benefit program or obtain, by means of false or fraudulent |
pretenses, representations or promises, any of the money or property owned by, or under the custody or control of, any healthcare benefit program, regardless of the payer (e.g., public or private) and knowingly and willfully falsifying, concealing or covering up by any trick or device a material fact or making any materially false statements in connection with the delivery of, or payment for, healthcare benefits, items or services relating to healthcare matters. Similar to the federal Anti-Kickback Statute, a person or entity can be found guilty of violating these statutes without actual knowledge of the statutes or specific intent to violate them in order to have committed a violation; |
• | the federal Physician Payment Sunshine Act, created under the ACA and its implementing regulations, which require manufacturers of drugs, devices, biologicals and medical supplies for which payment is available under Medicare, Medicaid or the Children’s Health Insurance Program (with certain exceptions) to report annually to the US Department of Health and |
• | Human Services (“HHS”) information related to payments or other transfers of value made to physicians (defined to include doctors, dentists, optometrists, podiatrists and chiropractors) and teaching hospitals, as well as ownership and investment interests held by physicians and their immediate family members. Effective January 1, 2022, these reporting obligations will extend to include payments and transfers of value made to physician assistants, nurse practitioners, clinical nurse specialists, anesthesiologist assistants, certified registered nurse anesthetists and certified nurse midwives during the previous year; |
• | federal government price reporting laws, which require us to calculate and report complex pricing metrics in an accurate and timely manner to government programs; |
• | federal consumer protection and unfair competition laws, which broadly regulate marketplace activities and activities that potentially harm consumers; and |
• | analogous state and foreign laws and regulations, such as state and foreign anti-kickback, false claims, consumer protection and unfair competition laws which may apply to pharmaceutical business practices, including but not limited to, research, distribution, sales and marketing arrangements as well as submitting claims involving healthcare items or services reimbursed by any third-party payer, including commercial insurers; state laws that require pharmaceutical companies to comply with the pharmaceutical industry’s voluntary compliance guidelines and the relevant compliance guidance promulgated by the federal government that otherwise restricts payments that may be made to healthcare providers and other potential referral sources; state laws that require drug manufacturers to file reports with states regarding pricing and marketing information, such as the tracking and reporting of gifts, compensations and other remuneration and items of value provided to healthcare professionals and entities; and state and local laws requiring the registration of pharmaceutical sales representatives. |
• | increased the minimum level of Medicaid rebates payable by manufacturers of brand name drugs from 15.1% to 23.1% of the average manufacturer price; |
• | required collection of rebates for drugs paid by Medicaid managed care organizations; |
• | required manufacturers to participate in a coverage gap discount program, under which they must agree to offer 70 percent point-of-sale |
• | imposed a non-deductible annual fee on pharmaceutical manufacturers or importers who sell “branded prescription drugs” to specified federal government programs. |
• | On January 2, 2013, the U.S. American Taxpayer Relief Act of 2012 was signed into law, which, among other things, further reduced Medicare payments to several types of providers. |
• | On April 13, 2017, CMS published a final rule that gives states greater flexibility in setting benchmarks for insurers in the individual and small group marketplaces, which may have the effect of relaxing the essential health benefits required under the ACA for plans sold through such marketplaces. |
• | On May 30, 2018, the Right to Try Act, was signed into law. The law, among other things, provides a federal framework for certain patients to access certain investigational new drug products that have completed a Phase 1 clinical trial and that are undergoing investigation for FDA approval. Under certain circumstances, eligible patients can seek treatment without enrolling in clinical trials and without obtaining FDA permission under the FDA expanded access program. There is no obligation for a pharmaceutical manufacturer to make its drug products available to eligible patients as a result of the Right to Try Act. |
• | On May 23, 2019, CMS published a final rule to allow Medicare Advantage Plans the option of using step therapy for Part B drugs beginning January 1, 2020. |
• | On December 20, 2019, former President Trump signed into law the Further Consolidated Appropriations Act (H.R. 1865), which repealed the Cadillac tax, the health insurance provider tax and the medical device excise tax. It is impossible to determine whether similar taxes could be instated in the future. |
• | establishment registration and device listing; |
• | compliance with FDA’s QSR requirements; |
• | labeling regulations; |
• | medical device reporting regulations, which, for example, require that manufacturers report to the FDA if a device may have caused or contributed to a death or serious injury or malfunctioned in a way that would likely cause or contribute to a death or serious injury if it were to recur; |
• | voluntary and mandatory device recalls to address problems when a device is defective and/or could be a risk to health; and |
• | corrections and removal reporting regulations, which require that manufacturers report to the FDA field corrections and product recalls or removals if undertaken to reduce a risk to health posed by the device or to remedy a violation of the FDCA that may present a risk to health. |
• | warning letters or untitled letters that require corrective action; |
• | fines, injunctions and civil penalties; |
• | recall or seizure of products; |
• | operating restrictions, partial suspension or total shutdown of production; |
• | withdrawing PMA approvals already granted; and; |
• | criminal prosecution. |
• | expenses incurred in connection with the development of our pipeline of products; |
• | personnel-related expenses, including salaries, bonuses, benefits and stock-based compensation for employees engaged in R&D functions; |
• | cost of clinical trials |
• | cost of regulatory submissions, reviews, external consultants; |
• | expenses incurred in connection with the discovery and development of our products, including under agreements with third parties, such as consultants; |
• | expenses incurred under agreements with consultants who supplement our internal capabilities, including software development; and |
• | facilities, depreciation and other expenses, which include direct and allocated expenses, such as rent and maintenance of facilities, insurance and other operating costs. |
• | attention in ASD: pilot study completed and planning on an FDA Q-submission meeting in the second half of 2022 to discuss our next planned development phase; |
• | cognitive dysfunction in MS: POC completed and planning on an FDA Q-submission meeting in the first half of 2023 to discuss our next planned development phase; and |
• | cognitive dysfunction in MDD: POC completed and planning on an FDA Q-submission meeting in the second half of 2023 to discuss our next planned development phase. |
Year Ended December 31, |
$ Change |
% Change |
||||||||||||||
(dollars in thousands, except percentages) |
2021 |
2020 |
||||||||||||||
Revenues |
$ | 538 | $ | 3,939 | $ | (3,401 | ) | -86 | % | |||||||
Cost of revenues |
355 | 416 | (61 | ) | -15 | % | ||||||||||
|
|
|
|
|
|
|
|
|||||||||
Net margin |
183 | 3,523 | (3,340 | ) | -95 | % | ||||||||||
Operating expenses: |
||||||||||||||||
Research and development |
18,234 | 15,418 | 2,816 | 18 | % | |||||||||||
Selling, general and administrative |
42,668 | 13,541 | 29,127 | 215 | % | |||||||||||
|
|
|
|
|
|
|
|
|||||||||
Total operating expenses |
60,902 | 28,959 | 31,943 | 110 | % | |||||||||||
|
|
|
|
|
|
|
|
|||||||||
Operating loss |
(60,719 |
) |
(25,436 |
) |
(35,283 |
) |
139 |
% | ||||||||
|
|
|
|
|
|
|
|
|||||||||
Other income (expense): |
||||||||||||||||
Other income |
17 | 124 | (107 | ) | -86 | % | ||||||||||
Interest expense |
(465 | ) | (333 | ) | (132 | ) | 40 | % | ||||||||
Loss on extinguishment of debt |
(181 | ) | — | (181 | ) | * | ||||||||||
|
|
|
|
|
|
|
|
|||||||||
Total other income (expense) |
(629 | ) | (209 | ) | (420 | ) | 201 | % | ||||||||
|
|
|
|
|
|
|
|
|||||||||
Loss before income taxes |
(61,348 |
) |
(25,645 |
) |
(35,703 |
) |
139 |
% | ||||||||
Expense from income taxes |
— | 1 | (1 | ) | -100 | % | ||||||||||
|
|
|
|
|
|
|
|
|||||||||
Net loss |
$ |
(61,348 |
) |
$ |
(25,646 |
) |
$ |
(35,702 |
) |
139 |
% | |||||
|
|
|
|
|
|
|
|
* |
Percentage change not meaningful. |
• | an increase of $1.6 million of personnel related expenses from $11.4 million in 2020 to $13.0 million in 2021 due to an increase in R&D personnel headcount; |
• | a decrease of $0.9 million of external consulting fees from $1.6 million in 2020 to $0.7 million in 2021 due to an increase in R&D personnel headcount, which allowed more projects to be performed internally; |
• | a decrease of $0.2 million of facilities and overhead allocation from $1.0 million in 2020 to $0.8 million in 2021 due to a lower allocation to R&D expenses as the SG&A headcount increased at a faster rate; |
• | an increase of $2.3 million of clinical studies and expenses incurred in discovery and development from $0.6 million in 2020 to $2.9 million in 2021 primarily due to age expansion studies for ADHD patients in the 13-17 year old and adult categories as well as collaborative studies to treat acute cognitive dysfunction in COVID-19 survivors; and |
• | an increase of $0.2 million of computer and software equipment expense from $0.6 million in 2020 to $0.8 million in 2021. |
• | an increase of $18.9 million in marketing and advertising costs; |
• | an increase of $4.2 million in consulting, legal, accounting and other professional service costs; |
• | an increase of $5.0 million in personnel-related costs, primarily due to the build-out of our HR, marketing and sales departments; and |
• | an increase of $1.1 million related to various other expenses such as software subscriptions and rent expense. |
• | our revenue growth; |
• | the ability of our patients to obtain third-party payer reimbursement for our current product; |
• | the amount and timing of sales and other revenues from our product candidates, if approved, including the sales price and the availability of coverage and adequate third-party payer reimbursement; |
• | our sales and marketing activities; |
• | our R&D efforts; |
• | the emergence and effect of competing or complementary products; |
• | the outcome, timing and cost of meeting regulatory requirements established by the FDA, or comparable foreign regulatory authorities; |
• | the progress, timing, scope and costs of our preclinical studies, clinical trials, potential future clinical trials and other related activities; |
• | the costs of commercialization activities for any of our product candidates that receive marketing authorization, including the costs and timing of establishing product sales, marketing and hosting capabilities, or entering into strategic collaborations with third parties to leverage or access these capabilities; |
• | the cash requirements of any future discovery of product candidates; |
• | our ability to retain our current employees and the need to hire additional management and sales, technical and medical personnel; |
• | the extent to which we acquire or invest in business, products or technology; and |
• | the impact of the COVID-19 pandemic. |
Year Ended December 31, |
||||||||
2021 |
2020 |
|||||||
(in thousands) |
||||||||
Net cash used in operating activities |
$ | (53,982 | ) | $ | (24,551 | ) | ||
Net cash used in investing activities |
(492 | ) | (116 | ) | ||||
Net cash provided by financing activities |
112,845 | 1,998 | ||||||
|
|
|
|
|||||
Net increase (decrease) in cash |
$ | 58,371 | $ | (22,669 | ) | |||
|
|
|
|
• | the prices at which we sold our preferred stock to outside investors in arms-length transactions; |
• | our results of operations, financial position, and capital resources; |
• | contemporaneous third-party valuations common stock; |
• | rights, preferences, and privileges of convertible preferred stock relative to common stock; |
• | the lack of marketability of common stock; |
• | stage and development of Akili’s business; |
• | the history and nature of our business, industry trends and competitive environment, |
• | general economic conditions; and |
• | the likelihood of achieving a liquidity event, such as an initial public offering or sale of Akili, given prevailing market conditions. |
Name |
Age |
Title | ||||
Executive Officers: |
||||||
W. Edward Martucci, Ph.D. |
40 | Chief Executive Officer and Director Nominee | ||||
Santosh Shanbhag |
45 | Chief Financial Officer | ||||
Anil Jina, MB, BCh, BAO |
51 | Chief Medical Officer | ||||
Jacqueline Studer, J.D. |
63 | Chief Legal Officer | ||||
Jonathan David |
43 | Chief Product Officer | ||||
Non-Executive Directors: |
||||||
Chamath Palihapitiya |
45 | Executive Chairman and Director Nominee | ||||
Kenneth Ehlert |
52 | Director Nominee | ||||
Adam Gazzaley, M.D., Ph.D. |
53 | Director Nominee | ||||
William Jones, Jr. |
59 | Director Nominee | ||||
Christine Lemke |
45 | Director Nominee |
• | the Class I directors will be Kenneth Ehlert and , their terms will expire at the annual meeting of stockholders to be held in 2023; |
• | the Class II directors will be Christine Lemke and William “BJ” Jones, Jr., and their terms will expire at the annual meeting of stockholders to be held in 2024; and |
• | the Class III directors will be W. Edward Martucci, Ph.D., Chamath Palihapitiya and Adam Gazzaley, M.D., Ph.D., and their terms will expire at the annual meeting of stockholders to be held in 2025. |
• | selecting a qualified firm to serve as the independent registered public accounting firm to audit the financial statements of the post-Business Combination company; |
• | helping to ensure the independence and performance of the independent registered public accounting firm; |
• | discussing the scope and results of the audit with the independent registered public accounting firm, and reviewing, with management and the independent accountants, the annual audited financial statements and quarterly financial statements of the post-Business Combination company; |
• | developing procedures for employees to submit concerns anonymously about questionable accounting or audit matters; |
• | reviewing policies on risk assessment and risk management; |
• | reviewing related party transactions; |
• | obtaining and reviewing a report by the independent registered public accounting firm at least annually that describes the internal quality-control procedures, any material issues with such procedures, and any steps taken to deal with such issues when required by applicable law; and |
• | approving (or, as permitted, pre-approving) all audit and all permissible non-audit service to be performed by the independent registered public accounting firm. |
• | recommending to the post-Business Combination company board goals and objectives, non-equity compensation, and equity grants of all senior officers; |
• | recommending to the post-Business Combination company board goals and objectives, non-equity compensation, and equity grants for the Chief Executive Officer; |
• | recommending to the post-Business Combination board non-equity compensation and equity grants for the directors and the Executive Chiarman; |
• | selecting independent compensation consultants and assessing whether there are any conflicts of interest with any of the committee’s compensation advisors; |
• | reviewing and approving employment agreements, severance arrangements and change-of-control agreements or provisions for executive officers (other than the Chief Executive Officer) and other senior management, as appropriate; and |
• | reviewing the policies relating to compensation and benefits of employees. |
• | identify individuals qualified to become board members, consistent with criteria approved by the board of directors; |
• | recommend that the board of directors select the nominees for election as directors at each annual meeting of stockholders; |
• | develop and recommend to the board of directors corporate governance guidelines and periodically review those guidelines and recommend any changes; and |
• | oversee an annual evaluation of the board of directors, its committees and management. |
• | W. Edward Martucci, Ph.D., Chief Executive Officer; |
• | Jacqueline Studer, J.D., Chief Legal Officer; and |
• | Santosh Shanbhag, Chief Financial Officer. |
Year |
Salary |
Option Awards |
Non-Equity Incentive Plan Compensation |
All Other Compensation |
Total |
|||||||||||||||||||
Name and Principal Position |
($) |
($) (1) |
($) (2) |
($) (3) |
($) |
|||||||||||||||||||
W. Edward Martucci |
2021 | 400,000 | 2,221,997 | 171,000 | 9,800 | 2,802,797 | ||||||||||||||||||
Chief Executive Officer |
— | |||||||||||||||||||||||
Jacqueline Studer |
2021 | 367,800 | 394,380 | 104,823 | 9,800 | 876,803 | ||||||||||||||||||
Chief Legal Officer |
||||||||||||||||||||||||
Santosh Shanbhag |
2021 | 343,419 | 379,024 | 97,874 | 9,800 | 830,118 | ||||||||||||||||||
Chief Financial Officer |
(1) | The amounts reported represent the aggregate grant date fair value of stock option awards granted to Akili’s named executive officers during the fiscal year ended December 31, 2021, computed in accordance with FASB ASC Topic 718. Such grant date fair values do not take into account any estimated forfeitures related to service-based vesting. A discussion of the assumptions used in determining grant date fair value may be found in Note 9 to Akili’s financial statements for the year ended December 31, 2021, included elsewhere in this proxy statement/prospectus. These amounts also include the incremental fair value of certain modified stock options associated with a stock option repricing in 2021(determined as of such repricing date in accordance with FASB ASC Topic 718). These amounts do not correspond to the actual value that may be recognized by the named executive officers upon exercise of the applicable award or sale of the underlying shares of stock. |
(2) | The amounts in the “Non-Equity Incentive Plan Compensation” column reflects the actual payout of the 2021 cash bonus, as describe in more details below. |
(3) | The amounts reported represent matching contributions contributed by the Company to each named executive’s account in the Company’s 401(k) plan. |
Name |
Base Salary |
|||
W. Edward Martucci |
$ | 400,000 | ||
Jacqueline Studer |
$ | 380,000 | ||
Santosh Shanbhag |
$ | 350,000 |
Name |
Target Bonus Percentage |
Actual Payout |
||||||
W. Edward Martucci |
45 | % | 171,000 | |||||
Jacqueline Studer |
30 | % | 104,823 | |||||
Santosh Shanbhag |
30 | % | 97,874 |
Option Awards (1) |
||||||||||||||||||||
Name |
Number of Securities Underlying Unexercised Options (#) Exercisable |
Number of Securities Underlying Unexercised Options (#) Unexercisable |
Vesting Commencement Date (“VCD”) |
Option Exercise Price ($) |
Option Expiration Date |
|||||||||||||||
W. Edward Martucci |
75,271 | (2) |
— | 4/3/2015 | 2.38 | 8/26/2025 | ||||||||||||||
276,540 | (3) |
— | 5/6/2016 | 2.46 | 5/20/2026 | |||||||||||||||
470,112 | (4) |
156,705 | (4) |
4/2/2019 | 4.40 | 10/2/2028 | ||||||||||||||
9,375 | (5) |
5,625 | (5) |
3/15/2020 | 4.40 | 5/21/2030 | ||||||||||||||
2,500 | (6) |
2,500 | (6) |
11/18/2020 | 4.40 | 5/21/2030 | ||||||||||||||
90,416 | (7) |
529,584 | (7) |
6/25/2021 | 4.40 | 9/29/2031 | ||||||||||||||
Jacqueline Studer |
125,000 | (8) |
75,000 | (8) |
3/26/2020 | 4.40 | 6/12/2029 | |||||||||||||
9,375 | (5) |
5,625 | (5) |
3/15/2020 | 4.40 | 5/21/2030 | ||||||||||||||
2,500 | (6) |
2,500 | (6) |
11/18/2020 | 4.40 | 5/21/2030 | ||||||||||||||
15,312 | (7) |
89,688 | (7) |
6/25/2021 | 4.40 | 9/29/2031 | ||||||||||||||
Santosh Shanbhag |
189,687 | (9) |
113,813 | (9) |
3/12/2020 | 4.40 | 6/12/2029 | |||||||||||||
9,375 | (5) |
5,625 | (5) |
3/15/2020 | 4.40 | 5/21/2030 | ||||||||||||||
2,500 | (6) |
2,500 | (6) |
11/18/2020 | 4.40 | 5/21/2030 | ||||||||||||||
13,854 | (7) |
81,146 | (7) |
6/25/2021 | 4.40 | 9/29/2031 |
(1) | Each equity award was granted under the Company’s Amended and Restated 2011 Stock Incentive Plan (the “2011 Plan”). |
(2) | Represents an option to purchase shares of Akili’s common stock granted on April 3, 2015. The shares underlying this option vested as follows: 50% of the shares vested on the vesting commencement date (the “VCD”) and 16.67% vested on each 12 month anniversary of the VCD, subject to continued service through the applicable vesting date. |
(3) | Represents an option to purchase shares of common stock granted on May 6, 2016. The shares underlying this option vest as follows: 28.6% of the shares vested on the VCD and 8.925% vests at the end of each 6 month period, subject to continued service through the applicable vesting date. |
(4) | Represents an option to purchase shares of common stock granted on April 2, 2019. The shares underlying this option vest as follows: 12.5% of the shares vested on the VCD and 12.5% vested at the end of each 6 month period, subject to continued service through the applicable vesting date. |
(5) | Represents an option to purchase shares of common stock granted on March 15, 2020. The shares underlying this option vest as follows: 25% of the shares vested on the VCD and 12.5% vests at the end of each 6 month period, subject to continued service through the applicable vesting date. |
(6) | Represents an option to purchase shares of common stock granted on November 18, 2020. The shares underlying this option vest as follows: 16.67% of the shares vested on the VCD and 16.67% vests at the end of each 6 month period, subject to continued service through the applicable vesting date. |
(7) | Represents an option to purchase shares of common stock granted on June 25, 2021. The shares underlying this option vest and become exercisable in 48 equal monthly installments over four years, subject to continued service through the applicable vesting date. |
(8) | Represents an option to purchase shares of common stock granted on March 26, 2020. The shares underlying this option vest as follows: 25% of the shares vested on the VCD and 12.5% vests at the end of each 6 month period, subject to continued service through the applicable vesting date. |
(9) | Represents an option to purchase shares of common stock granted on March 12, 2020. The shares underlying this option vest as follows: 25% of the shares vested on the VCD and 12.5% vested at the end of each 6 month period, subject to continued service through the applicable vesting date. |
Name |
Fees Earned or Paid in Cash ($) |
Option Awards ($) (1) |
All Other Compensation ($) |
Total ($) |
||||||||||||
Robert Perez* (2) |
100,000 | 589,841 | — | 689,841 | ||||||||||||
Adam Gazzaley (3) |
— | 89,411 | 100,000 | 189,411 | ||||||||||||
Christine Lemke (4) |
13,125 | 237,623 | — | 250,748 | ||||||||||||
James Gates* (5) |
— | — | — | — | ||||||||||||
John Spinale* (6) |
— | — | — | — | ||||||||||||
Bharatt Chowrira* (7) |
— | — | — | — | ||||||||||||
Ken Ehlert (8) |
3,646 | — | — | 3,646 |
* | Not expected to serve as a director of Akili, Inc. following the business combination. |
(1) | The amounts reported represent the aggregate grant date fair value of the stock option awards granted to Akili’s directors during 2021, calculated in accordance with FASB ASC Topic 718. Such grant date fair values do not take into account any estimated forfeitures related to service-based vesting. A discussion of the assumptions used in determining grant date fair value may be found in Note 9 to Akili’s financial statements for the year ended December 31, 2021, included elsewhere in this proxy statement/prospectus. These amounts also include the incremental fair value of certain modified stock options associated with a stock option repricing in 2021(determined as of such repricing date in accordance with FASB ASC Topic 718). The amounts reported in this column reflect the accounting cost for these stock option awards and do not correspond to the actual economic value that may be received by such directors upon the exercise of the stock option awards or any sale of the underlying shares. |
(2) | Mr. Perez has entered into an agreement with Akili, pursuant to which he is entitled to receive a fee of $8,333.33 per month for certain services provided to the Company. For more information, see “Certain Relationships and Related Person Transactions.” As of December 31, 2021, Mr. Perez held options to purchase an aggregate of 974,925 shares of our common stock. |
(3) | Dr. Gazzaly has entered into an advisor agreement with Akili, pursuant to which he is entitled to receive a consulting fee of $8,333.33 per month for certain services provided to the Company. For more information, see “Certain Relationships and Related Person Transactions.” As of December 31, 2021, Mr. Gazzaley held options to purchase an aggregate of 75,000 shares of our common stock. |
(4) | As of December 31, 2021, Ms. Lemke held options to purchase an aggregate of 70,000 shares of our common stock. |
(5) | As of December 31, 2021, Mr. Gates did not hold any outstanding equity awards. |
(6) | As of December 31, 2021, Mr. Spinale held options to purchase an aggregate of 29,000 shares of our common stock. |
(7) | As of December 31, 2021, Mr. Chowrira did not hold any outstanding equity awards. |
(8) | As of December 31, 2021, Mr. Ehlert did not hold any outstanding equity awards. |
• | each person who is known to be the beneficial owner of more than 5% of SCS ordinary shares and is expected to be the beneficial owner of more than 5% of shares of Akili, Inc. common stock post-Business Combination; |
• | each of SCS’s current executive officers and directors; |
• | each person who will become an executive officer or director of Akili, Inc. post-Business Combination; and |
• | all executive officers and directors of SCS as a group pre-Business Combination, and all executive officers and directors of Akili, Inc. as a group post-Business Combination. |
(i) | a “no redemptions” scenario where (i) no public shareholders exercise their redemption rights in connection with the Business Combination or our extension proposal and (ii) Akili, Inc. issues 63,764,210 shares of Akili, Inc. common stock, including the Earnout Shares; |
(ii) | a “redemptions” scenario where (i) all 25,000,000 of SCS’s outstanding public shares are redeemed in connection with the Business Combination and (ii) Akili, Inc. issues 61,606,008 shares of Akili, Inc. common stock, including the Earnout Shares. |
Pre-Business Combination and PIPEInvestment |
Post-Business Combination and PIPE Investment |
|||||||||||||||||||||||||||||||
Number of SCS Ordinary Shares (2) |
% of SCS Class A Ordinary Shares** |
% of SCS Class B Ordinary Shares |
% of SCS Ordinary Shares |
Assuming No Redemptions |
Assuming Redemptions |
|||||||||||||||||||||||||||
Name and Address of Beneficial Owner (1) |
Number of Shares of Akili Common Stock |
% |
Number of Shares of Akili Common Stock |
% |
||||||||||||||||||||||||||||
5% Holders |
||||||||||||||||||||||||||||||||
SCS Sponsor I LLC (3) |
6,860,000 | 21.5 | 99.5 | 21.5 | 6,860,000 | 6.1 | 6,860,000 | 8.1 | ||||||||||||||||||||||||
Citadel Advisors LLC and affiliates (4) |
2,126,853 | 8.3 | — | 6.7 | 2,126,853 | 1.9 | — | (5) |
— | |||||||||||||||||||||||
Adage Capital Partners, L.P. and affiliates (6) |
1,750,000 | 6.8 | — | 5.5 | 1,750,000 | 1.6 | — | (5) |
— | |||||||||||||||||||||||
SC Master Holdings, LLC (7) |
— | — | — | — | 10,000,000 | 8.9 | 10,000,000 | 11.8 | ||||||||||||||||||||||||
Directors and Executive Officers Pre-Business Combination |
||||||||||||||||||||||||||||||||
Chamath Palihapitiya (3)(7) |
6,860,000 | 21.5 | 99.5 | 21.5 | 16,860,000 | 15.1 | 16,860,000 | 19.9 | ||||||||||||||||||||||||
Kishan (a/k/a Kishen) Mehta (3) |
6,860,000 | 21.5 | 99.5 | 21.5 | 6,860,000 | 6.1 | 6,860,000 | 8.1 | ||||||||||||||||||||||||
James Ryans |
— | — | — | — | — | — | — | — | ||||||||||||||||||||||||
Vladimir Coric |
30,000 | — | * | * | 30,000 | * | 30,000 | * | ||||||||||||||||||||||||
Senthil Sundaram (8) |
— | — | — | — | — | — | — | — | ||||||||||||||||||||||||
All SCS directors and executive officers as a group (five individuals) (7) |
6,890,000 | 21.6 | 100 | 21.6 | 16,890,000 | 15.1 | 16,890,000 | 19.9 | ||||||||||||||||||||||||
Directors, Nominees and Executive Officers Post-Business Combination |
||||||||||||||||||||||||||||||||
Chamath Palihapitiya (3) (7) |
6,860,000 | 21.5 | 99.5 | 21.5 | 16,860,000 | 15.1 | 16,860,000 | 19.9 | ||||||||||||||||||||||||
W. Edward Martucci (9) |
— | — | — | — | 1,260,209 | 1.1 | 1,260,209 | 1.5 | ||||||||||||||||||||||||
Santosh Shanbhag (10) |
— | — | — | — | 317,982 | * | 317,982 | * | ||||||||||||||||||||||||
Jacqueline Studer (11) |
— | — | — | — | 231,224 | * | 231,224 | * | ||||||||||||||||||||||||
Kenneth Ehlert (12) |
— | — | — | — | 11,821 | * | 11,821 | * | ||||||||||||||||||||||||
Adam Gazzaley, M.D., Ph.D (13) |
— | — | — | — | 1,161,552 | 1.0 | 1,161,552 | 1.4 | ||||||||||||||||||||||||
William Jones, Jr. |
— | — | — | — | — | — | — | — | ||||||||||||||||||||||||
Christine Lemke (14) |
— | — | — | — | 16,888 | * | 16,888 | * | ||||||||||||||||||||||||
All Akili, Inc. directors and executive officers as a group ( individuals) |
* | Indicates beneficial ownership of less than 1%. |
** | Includes all SCS Class B ordinary shares convertible by such holder into SCS Class A ordinary shares. |
(1) | Unless otherwise noted, the business address of each of those listed in the table above pre-Business Combination is 2850 W. Horizon Ridge Parkway, Suite 200, Henderson, NV 89052 and post-Business Combination is 125 Broad Street, 5th Floor, Boston, MA 02110. |
(2) | Prior to the Closing, holders of record of SCS Class A ordinary shares and SCS Class B ordinary shares are entitled to one vote for each share held on all matters to be voted on by SCS shareholders and vote together as a single class, except as required by law; provided, that holders of SCS Class B ordinary shares have the right to elect all of SCS’s directors prior to the Closing, and holders of SCS’s Class A ordinary shares are not entitled to vote on the election of directors during such time. SCS Class B ordinary shares may be converted into SCS Class A ordinary shares at any time, at the option of the holder, on a one-for-one basis. As a result of and upon the effective time of the Domestication, (a) each of the then issued and outstanding SCS Class A ordinary shares will convert automatically, on a one-for-one one-for-one |
(3) | SCS Sponsor I LLC, our Sponsor, is the record holder of the Class B ordinary shares reported herein. Messrs. Palihapitiya and Mehta may be deemed to beneficially own (within the meaning of Rule 13d-3 under the Exchange Act) securities held by SCS Sponsor I LLC by virtue of their shared control over SCS Sponsor I LLC. |
(4) | Represents 2,126,853 SCS Class A ordinary shares beneficially held by Citadel Advisors LLC (“Citadel Advisors”), Citadel Advisors Holdings LP (“CAH”), Citadel GP LLC (“CGP”), Citadel Securities LLC (“Citadel Securities”), Citadel Securities Group LP (“CALC4”), Citadel Securities GP LLC (“CSGP”) and Kenneth Griffin (“Mr. Griffin”), based solely on the Schedule 13G filed jointly by Citadel Advisors, CAH, CGP, Citadel Securities, CALC4, CSGP and Mr. Griffin with the SEC on January 26, 2022. The business address of each of Citadel Advisors, CAH, CGP, Citadel Securities, CALC4, CSGP and Mr. Griffin is 131 S. Dearborn Street, 32nd Floor, Chicago, Illinois 60603. |
(5) | In the redemption scenario, the number of outstanding public shares is reduced to zero, and, consequently, no public shares can be beneficially owned in such a scenario, notwithstanding the amount of SCS Class A ordinary shares beneficially owned prior to the consummation of the Business Combination. |
(6) | Represents 2,126,853 SCS Class A ordinary shares beneficially held by Adage Capital Partners, L.P. (“ACP”), Adage Capital Partners GP, L.L.C. (“ACPGP”), Adage Capital Advisors, L.L.C. (“ACA”), Robert Atchinson (“Mr. Atchinson”) and Phillip Gross (“Mr. Gross”), based solely on the Schedule 13G filed jointly by ACP, ACPGP, ACA, Mr. Atchinson and Mr. Gross with the SEC on July 2, 2021. The business address of each of ACP, ACPGP, ACA, Mr. Atchinson and Mr. Gross is 200 Clarendon Street, 52nd Floor, Boston, Massachusetts 02116. |
(7) | Post-Business Combination interest shown includes 10,000,000 Akili, Inc. Class A ordinary shares to be purchased by SC Master Holdings, LLC in the PIPE Investment. Mr. Palihapitiya may be deemed to beneficially own shares to be purchased by SC Master Holdings, LLC by virtue of his control over such entity. |
(8) | In September 2021, pursuant to a Director Restricted Stock Unit Award Agreement, dated September 24, 2021, between SCS and Mr. Sundaram, SCS granted 30,000 restricted stock units (“RSUs”) to Mr. Sundaram, which grant is contingent on both the consummation of SCS’s initial business combination and a shareholder approved equity plan. The RSUs will vest upon the consummation of the Business Combination and represent 30,000 SCS Class A ordinary shares that will settle on a date SCS selects determined in the sole discretion of SCS that shall occur between the vesting date and March 15 of the year following the year in which such Business Combination vesting occurs. |
(9) | Includes 31,315 shares of Akili, Inc. common stock issuable upon the exercise of options exercisable as of or within 60 days of May 1, 2022. |
(10) | Includes 6,080 shares of Akili, Inc. common stock issuable upon the exercise of options exercisable as of or within 60 days of May 1, 2022. |
(11) | Includes 6,562 shares of Akili, Inc. common stock issuable upon the exercise of options exercisable as of or within 60 days of May 1, 2022. |
(12) | Includes 3,378 shares of Akili, Inc. common stock issuable upon the exercise of options exercisable as of or within 60 days of May 1, 2022. |
(13) | Includes (i) 1,095,809 shares of common stock and (ii) 1,206 shares of Akili, Inc. common stock issuable upon the exercise of options exercisable as of or within 60 days of May 1, 2022. |
(14) | Includes 3,378 shares of Akili, Inc. common stock issuable upon the exercise of options exercisable as of or within 60 days of May 1, 2022. |
Name |
Akili Series D Preferred Shares |
Total Purchase Price |
||||||
TLS Beta Pte. Ltd. (1) |
2,966,706 | $ | 24,999,998.32 | |||||
Neuberger Berman Principal Strategies PRIMA Fund LP (2) |
1,201,813 | $ | 10,127,502.69 | |||||
PRIMA MLP Fund LP (2) |
1,186,682 | $ | 9,999,995.95 | |||||
Neuberger Berman Principal Strategies PRIMA Co-Invest Fund VI LP (2) |
578,211 | $ | 4,872,499.68 | |||||
JAZZ Human Performance Technology Fund, L.P. (3) |
534,007 | $ | 4,499,999.02 | |||||
JAZZ Human Performance Opportunity Fund, L.P. (3) |
356,005 | $ | 3,000,002.16 |
(1) | TLS Beta Pte. Ltd. (“Temasek”) was a holder of more than 5% of Akili’s outstanding capital stock. |
(2) | Neuberger Berman Principal Strategies PRIMA Fund LP and its affiliated entities, PRIMA MLP Fund LP and Neuberger Berman Principal Strategies PRIMA Co-Invest Fund VI LP (collectively, “Neuberger”), was a holder of more than 5% of Akili’s outstanding capital stock. |
(3) | John Spinale is a member of the board of directors of Akili and an affiliate of JAZZ Human Performance Technology Fund, L.P. and JAZZ Human Performance Opportunity Fund, L.P. |
Name |
Akili Series D Preferred Shares |
Total Purchase Price |
||||||
TLS Beta Pte. Ltd. (1) |
3,526,383 | $ | 29,999,998.10 | |||||
JAZZ Human Performance Technology Fund, L.P. (2) |
587,731 | $ | 5,000,003.94 |
(1) | Temasek was a holder of more than 5% of Akili’s outstanding capital stock. |
(2) | John Spinale is a member of the board of directors of Akili and an affiliate of JAZZ. JAZZ was a holder of more than 5% of Akili’s outstanding capital stock. |
• | The audit committee will review the material facts of all related person transactions. |
• | In reviewing any related person transaction, the audit committee will take into account, among other factors that it deems appropriate, whether the related person transaction is on terms no less favorable to Akili, Inc. than terms generally available in a transaction with an unaffiliated third-party under the same or similar circumstances and the extent of the related person’s interest in the transaction. |
• | In connection with its review of any related person transaction, Akili, Inc. will provide the audit committee with all material information regarding such related person transaction, the interest of the related person and any potential disclosure obligations of Akili, Inc. in connection with such related person transaction. |
• | If a related person transaction will be ongoing, the audit committee may establish guidelines for the management of Akili, Inc. to follow in its ongoing dealings with the related person. |
Delaware |
Cayman Islands | |||
Stockholder/Shareholder Approval of Business Combinations |
Mergers generally require approval of a majority of all outstanding shares. Mergers in which less than 20% of the acquirer’s stock is issued generally do not require acquirer stockholder approval. Mergers in which one corporation owns 90% or more of a second corporation may be completed without the vote of the second corporation’s board of directors or stockholders. | Mergers require a special resolution, and any other authorization as may be specified in the relevant articles of association. Parties holding certain security interests in the constituent companies must also consent. All mergers (other than parent/subsidiary mergers) require shareholder approval—there is no exception for smaller mergers. Where a bidder has acquired 90% or more of the shares in a Cayman Islands company, it can compel the acquisition of the shares of the remaining shareholders and thereby become the sole shareholder. A Cayman Islands company may also be acquired through a “scheme of arrangement” sanctioned by a Cayman Islands court and approved by 50%+1 in number and 75% in value of shareholders in attendance and voting at a shareholders’ meeting. | ||
Stockholder/Shareholder Votes for Routine Matters |
Generally, approval of routine corporate matters that are put to a | Under the Cayman Islands Companies Act and SCS’s |
Delaware |
Cayman Islands | |||
stockholder vote require the affirmative vote of the majority of shares present in person or represented by proxy at the meeting and entitled to vote on the subject matter. | amended and restated memorandum and articles of association law, routine corporate matters may be approved by an ordinary resolution (being a resolution passed by a simple majority of the shareholders as being entitled to do so). | |||
Appraisal Rights |
Generally, a stockholder of a publicly traded corporation does not have appraisal rights in connection with a merger. | Minority shareholders that dissent from a merger are entitled to be paid the fair market value of their shares, which if necessary may ultimately be determined by the court. | ||
Inspection of Books and Records |
Any stockholder may inspect the corporation’s books and records for a proper purpose during the usual hours for business. | Shareholders generally do not have any rights to inspect or obtain copies of the register of members or other corporate records of a company. | ||
Stockholder/Shareholder Lawsuits |
A stockholder may bring a derivative suit subject to procedural requirements (including adopting Delaware as the exclusive forum as per Organizational Documents Proposal C). | In the Cayman Islands, the decision to institute proceedings on behalf of a company is generally taken by the company’s board of directors. A shareholder may be entitled to bring a derivative action on behalf of the company, but only in certain limited circumstances. | ||
Fiduciary Duties of Directors |
Directors must exercise a duty of care and duty of loyalty and good faith to the company and its stockholders. | A director owes fiduciary duties to a company, including to exercise loyalty, honesty and good faith to the company as a whole. In addition to fiduciary duties, directors of SCS owe a duty of care, diligence and skill. Such duties are owed to the company but may be owed direct to creditors or shareholders in certain limited circumstances. | ||
Indemnification of Directors and Officers |
A corporation is generally permitted to indemnify its directors and officers acting in good faith and in a manner the person reasonably believed to be in or not opposed to the best interests of the corporation. | A Cayman Islands company generally may indemnify its directors or officers except with regard to fraud or willful default. |
Delaware |
Cayman Islands | |||
Limited Liability of Directors |
Permits limiting or eliminating the monetary liability of a director to a corporation or its stockholders, except with regard to breaches of duty of loyalty, intentional misconduct, unlawful repurchases or dividends, or improper personal benefit. | Liability of directors may be unlimited, except with regard to their own fraud or willful default. | ||
Business Combination or Antitakeover Statutes |
Section 203 is a default provision of the DGCL that prohibits a publicly held Delaware corporation from engaging in a business combination, such as a merger, with “interested stockholders” (a person or group owning 15% or more of the corporation’s voting stock) for three years following the date that person becomes an interested stockholder, unless: (i) before such stockholder becomes an “interested stockholder,” the board of directors approves the Business Combination or the transaction that results in the stockholder becoming an interested stockholder; (ii) upon consummation of the transaction which resulted in the stockholder becoming an interested stockholder, the interested stockholder owned at least 85% of the outstanding voting stock of the corporation at the time of the transaction (excluding stock owned by certain persons); or (iii) at the time or after the stockholder became an interested stockholder, the board of directors and at least two-thirds of the disinterested outstanding voting stock of the corporation approves the transaction.Akili Interactive has not opted out of the protections of Section 203 of the DGCL. As a result, the statute applies to Akili, Inc. |
There are none. |
• | 1% of the total number of shares of Akili, Inc. common stock then outstanding; or |
• | the average weekly reported trading volume of Akili, Inc. common stock during the four calendar weeks preceding the filing of a notice on Form 144 with respect to the sale. |
• | 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 Current Reports on Form 8-K; 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. |
• | not earlier than the 90th day; and |
• | not later than the 120th day, before the one-year anniversary of the preceding year’s annual meeting. |
Page |
||||
Report of Independent Registered Public Accounting Firm (PCAOB ID # 688) |
F-2 | |||
F-3 | ||||
F-4 | ||||
F-5 | ||||
F-6 | ||||
F-7 |
ASSETS |
||||
Current Assets |
||||
Cash |
$ | 428,189 | ||
Prepaid expenses |
504,034 | |||
|
|
|||
Total Current Assets |
932,223 | |||
No n -current prepaid i nsurance |
247,500 | |||
Marketable securities held in Trust Account |
250,008,324 | |||
|
|
|||
TOTAL ASSETS |
$ |
251,188,047 |
||
|
|
|||
LIABILITIES, TEMPORARY EQUITY AND PERMANENT DEFICIT |
||||
Current liabilities |
||||
Accounts payable |
$ | 5,000 | ||
Accrued expense |
1,974,837 | |||
Advances from related party |
10,000 | |||
|
|
|||
Total Current Liabilities |
1,989,837 | |||
Deferred underwriting fee payable |
7,700,000 | |||
|
|
|||
TOTAL LIABILITIES |
9,689,837 |
|||
|
|
|||
Commitments and Contingencies (Note 6) |
||||
Temporary Equity |
||||
Class A ordinary shares subject to possible redemption, 25,000,000 shares at redemption value |
250,008,324 | |||
|
|
|||
Permanent Deficit |
||||
Preference shares, $0.0001 par value; 5,000,000 shares authorized; no shares issued and outstanding |
— | |||
Class A ordinary shares, $0.0001 par value; 500,000,000 shares authorized; 640,000 shares issued and outstanding (excluding 25,000,000 shares subject to possible redemption) |
64 | |||
Class B ordinary shares, $0.0001 par value; 50,000,000 shares authorized; 6,250,000 shares issued and outstanding |
625 | |||
Additional paid-in capital |
— | |||
Accumulated deficit |
(8,510,803 | ) | ||
|
|
|||
Total Permanent Deficit |
(8,510,114 |
) | ||
|
|
|||
TOTAL LIABILITIES, TEMPORARY EQUITY AND PERMANENT DEFICIT |
$ |
251,188,047 |
||
|
|
Operating and formation costs |
$ | 2,446,924 | ||
|
|
|||
Loss from operations |
(2,446,924 |
) | ||
Other income: |
||||
Interest earned on marketable securities held in Trust Account |
8,324 | |||
|
|
|||
Net loss |
$ |
(2,438,600 |
) | |
|
|
|||
Basic and diluted weighted average shares outstanding, Class A ordinary shares |
15,101,877 | |||
|
|
|||
Basic and diluted net loss per share, Class A ordinary shares |
$ |
(0.12 |
) | |
|
|
|||
Basic and diluted weighted average shares outstanding, Class B ordinary shares |
5,852,751 | |||
|
|
|||
Basic and diluted net loss per share, Class B ordinary shares |
$ |
(0.12 |
) | |
|
|
Temporary Equity |
Class A Ordinary Shares |
Class B Ordinary Shares |
Additional Paid-in |
Accumulated |
Total Permanent |
|||||||||||||||||||||||||||||||
Shares |
Amount |
Shares |
Amount |
Shares |
Amount |
Capital |
Deficit |
Deficit |
||||||||||||||||||||||||||||
Balance – February 25, 2021 (inception) |
— |
$ | — |
— |
$ | — |
— |
$ | — |
$ | — |
$ | — |
$ | — |
|||||||||||||||||||||
Issuance of Class B ordinary shares to Sponsor |
— |
— |
— |
— |
6,325,000 | 633 | 24,367 | — |
25,000 | |||||||||||||||||||||||||||
Sale of 25,000,000 Public Shares, net of underwriting discounts and offering expenses |
25,000,000 | 237,511,810 | — |
— |
— |
— |
— |
— |
— |
|||||||||||||||||||||||||||
Remeasurement of Class A ordinary shares to redemption value |
— |
12,496,514 | — | — |
— |
— |
(6,424,311 | ) |
(6,072,203 | ) |
(12,496,514 | ) | ||||||||||||||||||||||||
Sale of 640,000 Private Placement Shares |
— |
— |
640,000 | 64 | — |
— |
6,399,936 | — |
6,400,000 | |||||||||||||||||||||||||||
Forfeiture of Founder Shares |
— |
— |
— |
— |
(75,000 | ) |
(8 | ) |
8 | — |
— | |||||||||||||||||||||||||
Net loss |
— |
— |
— |
— |
— |
— |
— |
(2,438,600 | ) |
(2,438,600 | ) | |||||||||||||||||||||||||
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|||||||||||||||||||
Balance – December 31, 2021 |
25,000,000 |
$ |
250,008,324 |
640,000 |
$ |
64 |
6,250,000 |
$ |
625 |
$ |
— |
$ |
(8,510,803 |
) |
$ |
(8,510,114 |
) | |||||||||||||||||||
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Cash Flows from Operating Activities: |
||||
Net loss |
$ | (2,438,600 | ) | |
Adjustments to reconcile net loss to net cash used in operating activities: |
||||
Formation costs paid by Sponsor in exchange for issuance of Founder Shares |
5,000 | |||
Interest earned on marketable securities held in Trust Account |
(8,324 | ) | ||
Changes in operating assets and liabilities: |
||||
Prepaid expenses |
(751,534 | ) | ||
Accounts payable and accrued expenses |
1,979,837 | |||
Net cash used in operating activities |
(1,213,621 |
) | ||
|
|
|||
Cash Flows from Investing Activities: |
||||
Investment of cash into Trust Account |
(250,000,000 | ) | ||
|
|
|||
Net cash used in investing activities |
$ |
(250,000,000 |
) | |
|
|
|||
Cash Flows from Financing Activities: |
||||
Proceeds from sale of Public Shares, net of underwriting discounts paid |
245,600,000 | |||
Proceeds from sale of Private Placement Shares |
6,400,000 | |||
Advances from related party |
97,640 | |||
Repayment of advances from related party |
(87,640 | ) | ||
Proceeds from promissory note – related party |
300,000 | |||
Repayment of promissory note – related party |
(300,000 | ) | ||
Payment of offering costs |
(368,190 | ) | ||
|
|
|||
Net cash provided by financing activities |
$ |
251,641,810 |
||
|
|
|||
Net Change in Cash |
428,189 |
|||
Cash – Beginning of period (inception) |
— | |||
|
|
|||
Cash – End of period |
$ |
428,189 |
||
|
|
|||
Non-Cash Investing and Financing Activities: |
||||
Offering costs paid by Sponsor in exchange for issuance of Founder Shares |
$ | 20,000 | ||
Remeasurement of Class A ordinary share subject to possible redemption |
|
$ |
12,496,514 |
|
|
|
|||
Deferred underwriting fee payable |
$ | 7,700,000 | ||
|
|
|||
Forfeiture of Founder Shares |
$ | (8 | ) | |
|
|
Gross proceeds |
$ | 250,000,000 | ||
Less: |
||||
Class A ordinary shares issuance costs |
(12,488,190 | ) | ||
Plus: |
||||
Accretion of carrying value to redemption value |
12,496,514 | |||
|
|
|||
Class A ordinary shares subject to possible redemption |
$ |
250,008,324 |
||
|
|
For the Period from February 25, 2021 (Inception) Through December 31, 2021 |
||||||||
Class A |
Class B |
|||||||
Basic and diluted net loss per ordinary share |
||||||||
Numerator: |
||||||||
Allocation of net loss |
$ | (1,757,485 | ) | $ | (681,115 | ) | ||
Denominator: |
||||||||
Basic and diluted weighted average shares outstanding |
15,101,877 | 5,852,751 | ||||||
|
|
|
|
|||||
Basic and diluted net loss per ordinary share |
$ | (0.12 | ) | $ | (0.12 | ) |
Level 1: |
Quoted prices in active markets for identical assets or liabilities. An active market for an asset or liability is a market in which transactions for the asset or liability occur with sufficient frequency and volume to provide pricing information on an ongoing basis. |
Level 2: |
Observable inputs other than Level 1 inputs. Examples of Level 2 inputs include quoted prices in active markets for similar assets or liabilities and quoted prices for identical assets or liabilities in markets that are not active. | |
Level 3: |
Unobservable inputs based on our assessment of the assumptions that market participants would use in pricing the asset or liability. |
Description |
Level |
December 31, 2021 |
||||||
Assets: |
||||||||
Marketable securities held in Trust Account |
1 | $ | 250,008,324 |
PAGE |
||||
F-21 |
||||
F-22 |
||||
F-23 |
||||
F-24 |
||||
F-25 |
||||
F-26 |
December 31, |
||||||||
Assets |
2021 |
2020 |
||||||
Current assets: |
||||||||
Cash and cash equivalents |
$ | 76,899 | $ | 18,528 | ||||
Restricted cash |
305 | 305 | ||||||
Accounts receivable |
29 | 8 | ||||||
Prepaid expenses and other current assets |
2,500 | 314 | ||||||
|
|
|
|
|||||
Total current assets |
79,733 | 19,155 | ||||||
Property and equipment, net |
1,193 | 1,004 | ||||||
Deposits |
— | 22 | ||||||
Prepaid expenses and other long-term assets |
11 | — | ||||||
|
|
|
|
|||||
Total assets |
$ |
80,937 |
$ |
20,181 |
||||
|
|
|
|
|||||
Liabilities, redeemable convertible preferred stock and stockholders’ deficit |
||||||||
Current liabilities: |
||||||||
Note payable |
$ | — | $ | 114 | ||||
Accounts payable |
2,345 | 876 | ||||||
Accrued expenses and other current liabilities |
5,477 | 2,445 | ||||||
Deferred revenue |
96 | 369 | ||||||
Deferred rent, short term |
123 | 121 | ||||||
|
|
|
|
|||||
Total current liabilities |
8,041 | 3,925 | ||||||
Note payable, long term |
4,784 | 1,814 | ||||||
Corporate bond, net of bond discount |
1,638 | 1,462 | ||||||
Deferred rent, long term |
712 | 774 | ||||||
Other long-term liabilities |
— | 222 | ||||||
|
|
|
|
|||||
Total liabilities |
15,175 |
8,197 |
||||||
|
|
|
|
|||||
Commitments and contingencies (Note 11) |
||||||||
Redeemable convertible preferred stock, $0.0001 par value—authorized 41,785,202 shares: |
||||||||
Series A-1: designated, 4,000,000 shares; issued and outstanding shares, 4,000,000 at December 31, 2021 and 2020 (liquidation value of $4,000 at December 31, 2021 and 2020) |
— | — | ||||||
Series A-2: designated 4,427,072 shares; issued and outstanding shares, 4,427,072 at December 31, 2021 and 2020 (liquidation value of $8,832 at December 31, 2021 and 2020) |
7,128 | 7,128 | ||||||
Series B: designated 7,341,485 shares; issued and outstanding shares, 7,341,485 at December 31, 2021 and 2020 (liquidation value of $42,360 at December 31, 2021 and 2020) |
41,854 | 41,854 | ||||||
Series C: designated 8,016,645 shares; issued and outstanding shares, 8,016,645 at December 31, 2021 and 2020 (liquidation value of $68,200 at December 31, 2021 and 2020) |
67,904 | 67,904 | ||||||
Series D: designated 18,000,000 shares; issued and outstanding shares, 13,843,858 at December 31, 2021 (liquidation value of $174,990 at December 31, 2021) |
174,990 | — | ||||||
Stockholders’ deficit: |
||||||||
Common shares, $0.0001 par value: 55,000,000 and 32,000,000 shares authorized at December 31, 2021 and 2020, respectively; 1,454,239 and 1,157,868 shares issued and outstanding at December 31, 2021 and 2020, respectively |
— | — | ||||||
Additional paid-in capital |
— | 9,905 | ||||||
Accumulated deficit |
(226,114 | ) | (114,807 | ) | ||||
|
|
|
|
|||||
Total stockholders’ deficit |
(226,114 |
) |
(104,902 |
) | ||||
|
|
|
|
|||||
Total liabilities, redeemable convertible preferred stock and stockholders’ deficit |
$ |
80,937 |
$ |
20,181 |
||||
|
|
|
|
Years Ended December 31, |
||||||||
2021 |
2020 |
|||||||
Revenues |
$ | 538 | $ | 3,939 | ||||
Cost of revenues |
355 | 416 | ||||||
|
|
|
|
|||||
Gross profit |
183 | 3,523 | ||||||
Operating expenses: |
||||||||
Research and development |
18,234 | 15,418 | ||||||
Selling, general and administrative |
42,668 | 13,541 | ||||||
|
|
|
|
|||||
Total operating expenses |
60,902 | 28,959 | ||||||
|
|
|
|
|||||
Operating loss |
(60,719 | ) | (25,436 | ) | ||||
|
|
|
|
|||||
Other income (expense): |
||||||||
Other income |
17 | 124 | ||||||
Interest expense |
(465 | ) | (333 | ) | ||||
Loss on extinguishment of debt |
(181 | ) | — | |||||
|
|
|
|
|||||
Total other income (expense) |
(629 | ) | (209 | ) | ||||
|
|
|
|
|||||
Loss before income taxes |
(61,348 | ) | (25,645 | ) | ||||
Income tax expense |
— | 1 | ||||||
|
|
|
|
|||||
Net loss and comprehensive loss |
$ | (61,348 | ) | $ | (25,646 | ) | ||
|
|
|
|
|||||
Dividends on Series D convertible preferred stock |
$ | (6,660 | ) | — | ||||
Redemption value of Series D convertible preferred stock |
(58,649 | ) | — | |||||
|
|
|
|
|||||
Net loss attributable to common stockholders |
$ | (126,657 | ) | $ | (25,646 | ) | ||
|
|
|
|
|||||
Net loss per share: |
||||||||
Basic and diluted |
$ | (105.77 | ) | $ | (22.20 | ) | ||
|
|
|
|
|||||
Weighted average common shares outstanding: |
||||||||
Basic and diluted |
1,197,489 | 1,155,319 | ||||||
|
|
|
|
Series A-1 Redeemable Convertible Preferred Stock |
Series A-2 Redeemable Convertible Preferred Stock |
Series B Redeemable Convertible Preferred Stock |
Series C Redeemable Convertible Preferred Stock |
Series D Redeemable Convertible Preferred Stock |
Common Stock |
Additional Paid-in Capital |
Accumulated Deficit |
Total Stockholders’ Deficit |
||||||||||||||||||||||||||||||||||||||||||||||||||||
Shares | Value | Shares | Value | Shares | Value | Shares | Value | Shares | Value | Shares | Value | |||||||||||||||||||||||||||||||||||||||||||||||||
Balance at December 31, 2019 |
4,000,000 |
$ |
— |
4,427,072 |
$ |
7,128 |
7,341,485 |
$ |
41,854 |
8,016,645 |
$ |
67,904 |
— |
$ |
— |
1,153,368 |
$ |
— |
$ |
6,913 |
$ |
(89,161 |
) |
$ |
(82,248 |
) | ||||||||||||||||||||||||||||||||||
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|||||||||||||||||||||||||||||||
Stock-based compensation expense |
— | — | — | — | — | — | — | — | — | — | — | — | 2,898 | — | 2,898 | |||||||||||||||||||||||||||||||||||||||||||||
Exercise of stock options |
— | — | — | — | — | — | — | — | — | — | 4,500 | — | 19 | — | 19 | |||||||||||||||||||||||||||||||||||||||||||||
Issuance of common stock warrants |
— | — | — | — | — | — | — | — | — | — | — | — | 75 | — | 75 | |||||||||||||||||||||||||||||||||||||||||||||
Net loss |
— | — | — | — | — | — | — | — | — | — | — | — | — | (25,646 | ) | (25,646 | ) | |||||||||||||||||||||||||||||||||||||||||||
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|||||||||||||||||||||||||||||||
Balance at December 31, 2020 |
4,000,000 |
$ |
— |
4,427,072 |
$ |
7,128 |
7,341,485 |
$ |
41,854 |
8,016,645 |
$ |
67,904 |
— |
$ |
— |
1,157,868 |
$ |
— |
$ |
9,905 |
$ |
(114,807 |
) |
$ |
(104,902 |
) | ||||||||||||||||||||||||||||||||||
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|||||||||||||||||||||||||||||||
Stock-based compensation expense |
— | — | — | — | — | — | — | — | — | — | — | — | 4,913 | — | 4,913 | |||||||||||||||||||||||||||||||||||||||||||||
Exercise of stock options |
— | — | — | — | — | — | — | — | — | — | 296,371 | — | 264 | — | 264 | |||||||||||||||||||||||||||||||||||||||||||||
Issuance of common stock warrants |
— | — | — | — | — | — | — | — | — | — | — | — | 268 | — | 268 | |||||||||||||||||||||||||||||||||||||||||||||
Issuance of convertible preferred stock, net of issuance costs |
— | — | — | — | — | — | — | — | 13,053,508 | 109,681 | — | — | — | — | — | |||||||||||||||||||||||||||||||||||||||||||||
Stock divdend |
— | — | — | — | — | — | — | — | 790,350 | 6,660 | — | — | (4,661 | ) | (1,999 | ) | (6,660 | ) | ||||||||||||||||||||||||||||||||||||||||||
Redemption value |
— | — | — | — | — | — | — | — | — | 58,649 | — | — | (10,689 | ) | (47,960 | ) | (58,649 | ) | ||||||||||||||||||||||||||||||||||||||||||
Net loss |
— | — | — | — | — | — | — | — | — | — | — | — | — | (61,348 | ) | (61,348 | ) | |||||||||||||||||||||||||||||||||||||||||||
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|||||||||||||||||||||||||||||||
Balance at December 31, 2021 |
4,000,000 |
$ |
— |
4,427,072 |
$ |
7,128 |
7,341,485 |
$ |
41,854 |
8,016,645 |
$ |
67,904 |
13,843,858 |
$ |
174,990 |
1,454,239 |
$ |
— |
$ |
— |
$ |
(226,114 |
) |
$ |
(226,114 |
) | ||||||||||||||||||||||||||||||||||
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Years Ended December 31, |
||||||||
2021 |
2020 |
|||||||
Cash flows from operating activities: |
||||||||
Net loss |
$ | (61,348 | ) | $ | (25,646 | ) | ||
Adjustments to reconcile net loss to net cash used in operating activities: |
||||||||
Depreciation and amortization of property and equipment |
279 | 300 | ||||||
Stock-based compensation expense |
4,913 | 2,898 | ||||||
Loss on disposal of fixed assets |
13 | 6 | ||||||
Loss on extinguishment of debt |
181 | — | ||||||
Non cash interest expense |
219 | 294 | ||||||
Premium of end of term payment |
— | 12 | ||||||
Changes in operating assets and liabilities: |
||||||||
Accounts receivable |
(21 | ) | (8 | ) | ||||
Prepaid expenses and other current assets |
(2,186 | ) | 311 | |||||
Deposits |
22 | — | ||||||
Prepaid expenses and other long-term assets |
(11 | ) | — | |||||
Accounts payable |
1,480 | (38 | ) | |||||
Accrued expenses and other current liabilities |
3,032 | 637 | ||||||
Deferred rent, short term |
2 | — | ||||||
Deferred rent and other long term liabilities |
(284 | ) | 133 | |||||
Deferred revenue |
(273 | ) | (3,450 | ) | ||||
|
|
|
|
|||||
Net cash used in operating activities |
(53,982 | ) | (24,551 | ) | ||||
|
|
|
|
|||||
Cash flows from investing activities: |
||||||||
Acquisition of property and equipment |
(65 | ) | (116 | ) | ||||
Capitalized software development costs |
(427 | ) | — | |||||
|
|
|
|
|||||
Net cash used in investing activities |
(492 | ) | (116 | ) | ||||
|
|
|
|
|||||
Cash flows from financing activities: |
||||||||
Proceeds from note payable |
5,000 | 2,000 | ||||||
Proceeds from issuance of preferred stock, net issuance costs |
109,681 | — | ||||||
Payment of debt issuance costs |
(74 | ) | (21 | ) | ||||
Payment of premium on note payable |
(26 | ) | — | |||||
Repayment of principal on note payable |
(2,000 | ) | — | |||||
Proceeds from exercise of stock options |
264 | 19 | ||||||
|
|
|
|
|||||
Net cash provided by financing activities |
112,845 | 1,998 | ||||||
|
|
|
|
|||||
Net increase (decrease) in cash, cash equivalents, and restricted cash |
58,371 | (22,669 | ) | |||||
Cash, cash equivalents, and restricted cash at beginning of period |
18,833 | 41,502 | ||||||
|
|
|
|
|||||
Cash, cash equivalents, and restricted cash at end of period |
$ | 77,204 | $ | 18,833 | ||||
|
|
|
|
|||||
Supplementary Information: |
||||||||
Cash paid for income taxes |
$ | — | $ | 15 | ||||
Cash paid for interest |
217 | 20 | ||||||
Noncash investing and financing activities: |
||||||||
Purchase of property and equipment included in accounts payable and accrued expenses |
7 | 18 | ||||||
Common stock warrants issued related to note payable |
268 | 75 | ||||||
Redemption value of Series D preferred stock |
58,649 | — | ||||||
Dividends accrued for Series D preferred stock |
6,660 | — |
1. |
Nature of the Business and Basis of Presentation |
2. |
Summary of Significant Accounting Policies |
Level 1: |
Inputs are quoted prices (unadjusted) in active markets for identical assets or liabilities that the reporting entity has the ability to access at the measurement date. |
Level 2: |
Valuations based on quoted prices in markets that are not active or for which all significant inputs are observable, either directly or indirectly. |
Level 3: |
Prices or valuations that require inputs that are both significant to the fair value measurement and unobservable. |
Furniture and fixtures |
5-7 years | |
Computer equipment and software |
3 years | |
Office equipment |
3 years | |
Leasehold improvements |
3-7 years (Or remaining term of the lease, if shorter) | |
Internal-use software |
2-5 years |
Years Ended December 31, |
||||||||
2021 |
2020 |
|||||||
Product revenue |
$ | 186 | $ | 12 | ||||
Collaboration revenue |
352 | 3,927 | ||||||
|
|
|
|
|||||
Total |
$ | 538 | $ | 3,939 | ||||
|
|
|
|
Contract Liabilities |
Product |
Collaboration |
||||||
Balance at December 31, 2019 |
$ | — | $ | 3,819 | ||||
Revenue recognized |
(12 | ) | (3,928 | ) | ||||
Revenue deferred |
29 | 461 | ||||||
|
|
|
|
|||||
Balance at December 31, 2020 |
17 | 352 | ||||||
Revenue recognized |
(186 | ) | (352 | ) | ||||
Revenue deferred |
265 | — | ||||||
|
|
|
|
|||||
Balance at December 31, 2021 |
$ | 96 | $ | — | ||||
|
|
|
|
3. |
Option and Collaboration Agreements |
Payment associated with option period |
$ | 10,000 | ||
Payment to exercise agreement |
10,000 | |||
Discount on issuance on corporate bond (see Note 6) |
3,805 | |||
Contract modification |
387 | |||
|
|
|||
Total transaction price |
24,192 | |||
Less: Revenue recognized |
(24,192 | ) | ||
|
|
|||
Deferred revenue at December 31, 2021 |
$ | — | ||
|
|
4. |
Property and Equipment |
December 31, |
||||||||
2021 |
2020 |
|||||||
Furniture and fixtures |
$ | 184 | $ | 184 | ||||
Computer equipment and software |
443 | 390 | ||||||
Office equipment |
60 | 60 | ||||||
Leasehold improvements |
975 | 1,020 | ||||||
Capitalized internal-use software costs |
427 | — | ||||||
|
|
|
|
|||||
Total property and equipment |
2,089 | 1,654 | ||||||
Less: accumulated depreciation and amortization |
(896 | ) | (650 | ) | ||||
|
|
|
|
|||||
Property and equipment, net |
$ | 1,193 | $ | 1,004 | ||||
|
|
|
|
5. |
Accrued Expenses and Other Current Liabilities |
December 31, |
||||||||
2021 |
2020 |
|||||||
Accrued bonus |
$ | 2,516 | $ | 1,715 | ||||
Accrued royalties |
106 | 101 | ||||||
Accrued wages and benefits |
421 | 287 | ||||||
Accrued clinical study expenses |
363 | 9 | ||||||
Accrued consulting service expenses |
766 | 100 | ||||||
Other accrued expenses |
1,305 | 233 | ||||||
|
|
|
|
|||||
Total |
$ | 5,477 | $ | 2,445 | ||||
|
|
|
|
6. |
Corporate Bond |
December 31, |
||||||||
2021 |
2020 |
|||||||
Corporate bond |
5,000 | $ | 5,000 | |||||
Unamortized discount on corporate bond |
(3,362 | ) | (3,538 | ) | ||||
|
|
|
|
|||||
Corporate bond, net of discount |
$ | 1,638 | $ | 1,462 | ||||
|
|
|
|
7. |
Note Payable |
• | Tranche 2—$5,000, is available following the achievement of a certain revenue milestone, the occurrence of which must be on or prior to December 31, 2022 or prior to an event of default. |
• | Tranche 3—$10,000, is available based on the satisfaction of certain conditions, including a certain revenue milestone, and at sole discretion of the Lenders, the occurrence of which must be on or prior to December 31, 2022 or prior to an event of default. |
Note payable |
$ | 5,000 | ||
Final Payment |
250 | |||
Unamortized debt issuance costs |
(466 | ) | ||
|
|
|||
Note payable, net of debt issuance costs |
$ | 4,784 | ||
|
|
8. |
Redeemable Convertible Preferred Stock |
9. |
Common Stock |
First Loan Modification Agreement Warrants |
||||
Fair value of common stock |
$ | 6.84 | ||
Expected volatility |
67.70 | % | ||
Expected term (in years) |
9.95 | |||
Risk-free interest rate |
0.72 | % | ||
Expected dividend yield |
0.00 | % | ||
Amended and Restated Loan and Security Agreement Warrants |
||||
Fair value of common stock |
$ | 4.40 | ||
Expected volatility |
95.00 | % | ||
Expected term (in years) |
10.00 | |||
Risk-free interest rate |
1.56 | % | ||
Expected dividend yield |
0.00 | % |
Years Ended December 31, |
||||||||
2021 |
2020 |
|||||||
Research and development |
$ | 1,340 | $ | 988 | ||||
Selling, general and administrative |
3,573 | 1,910 | ||||||
|
|
|
|
|||||
Total |
$ | 4,913 | $ | 2,898 | ||||
|
|
|
|
Number of Options |
Weighted- Average Exercise Price Per Share |
Weighted- Average Remaining Contractual Term (Years) |
Aggregate Intrinsic Value |
|||||||||||||
Balance, December 31, 2020 |
6,020,392 | $ | 4.53 | 7.25 | $ | 13,878 | ||||||||||
Granted |
5,783,942 | $ | 4.40 | |||||||||||||
Cancelled |
(3,978,900 | ) | $ | 5.85 | ||||||||||||
Exercised |
(296,371 | ) | $ | 0.89 | ||||||||||||
|
|
|||||||||||||||
Balance, December 31, 2021 |
7,529,063 | $ | 3.89 | 7.28 | $ | 4,020 | ||||||||||
|
|
|||||||||||||||
Exercisable, December 31, 2021 |
|
4,366,874 |
|
$ | 3.52 | 6.11 | $ | 4,020 | ||||||||
Options vested and expected to vest, December 31, 2021 |
7,529,063 | $ | 3.89 | 7.28 | $ | 4,020 |
Years Ended December 31, |
||||||||
2021 |
2020 |
|||||||
Fair value of common stock |
$ | 4.40 | $ | 6.29 | ||||
Expected volatility |
98.73 | % | 93.50 | % | ||||
Expected term (in years) |
4.88 | 5.94 | ||||||
Risk-free interest rate |
0.81 | % | 0.46 | % | ||||
Expected dividend yield |
0.00 | % | 0.00 | % |
10. |
Fair Value of Financial Assets and Liabilities |
Fair Value Measurements as of December 31, 2021 | ||||||||||||||||
Description |
Level 1 | Level 2 | Level 3 | Total | ||||||||||||
Assets |
||||||||||||||||
Cash equivalents: |
||||||||||||||||
Money market funds |
$ | 61,510 | $ | — | $ | — | $ | 61,510 | ||||||||
|
|
|
|
|
|
|
|
|||||||||
Fair Value Measurements as of December 31, 2020 | ||||||||||||||||
Description |
Level 1 | Level 2 | Level 3 | Total | ||||||||||||
Assets |
||||||||||||||||
Cash equivalents: |
||||||||||||||||
Money market funds |
$ | 17,508 | $ | — | $ | — | $ | 17,508 | ||||||||
|
|
|
|
|
|
|
|
11. |
Commitments and Contingencies |
2022 |
$ | 1,118 | ||
2023 |
878 | |||
2024 |
914 | |||
2025 |
950 | |||
2026 |
904 | |||
|
|
|||
Total |
$ | 4,764 | ||
|
|
12. |
Income Taxes |
Years Ended December 31, |
||||||||
2021 |
2020 |
|||||||
Current |
||||||||
Federal |
$ | — | $ | — | ||||
State |
— | 1 | ||||||
|
|
|
|
|||||
Total current expense (benefit) |
— | 1 | ||||||
Deferred |
||||||||
Federal |
— | — | ||||||
State |
— | — | ||||||
|
|
|
|
|||||
Total deferred expense (benefit) |
— | — | ||||||
|
|
|
|
|||||
Total tax recognized |
$ | — | $ | 1 | ||||
|
|
|
|
Years Ended December 31, |
||||||||
2021 |
2020 |
|||||||
Benefit at federal statutory rate |
21.00 | % | 21.00 | % | ||||
State taxes |
3.41 | % | 2.70 | % | ||||
Credits |
1.20 | % | 2.61 | % | ||||
Share-based payment measurement |
(0.57 | %) | (1.01 | %) | ||||
Other |
(1.90 | %) | 0.18 | % | ||||
Change in valuation allowance |
(23.14 | %) | (25.49 | %) | ||||
|
|
|
|
|||||
Effective tax rate |
0.00 | % | (0.01 | %) | ||||
|
|
|
|
2021 |
2020 |
|||||||
Deferred tax assets: |
||||||||
Operating tax losses |
$ | 38,084 | $ | 26,016 | ||||
Research credits |
5,920 | 4,810 | ||||||
Temporary differences |
981 | 773 | ||||||
Share based payments |
1,902 | 1,099 | ||||||
|
|
|
|
|||||
Gross deferred tax assets |
46,887 | 32,698 | ||||||
Valuation Allowace |
(46,287 | ) | (32,090 | ) | ||||
|
|
|
|
|||||
Deferred tax assets, Less: valuation allowance |
600 | 608 | ||||||
Deferred tax liabilities: |
||||||||
Other temporary differences |
(600 | ) | (608 | ) | ||||
|
|
|
|
|||||
Deferred tax liabilities |
(600 | ) | (608 | ) | ||||
|
|
|
|
|||||
Total |
$ | — | $ | — | ||||
|
|
|
|
13. |
Net Loss Per Share |
Years Ended December 31, |
||||||||
2021 |
2020 |
|||||||
Numerator: |
||||||||
Net loss |
$ | (61,348 | ) | $ | (25,646 | ) | ||
Dividends on Series D convertible preferred stock |
(6,660 | ) | — | |||||
Redemption value of Series D convertible preferred stock |
(58,649 | ) | — | |||||
|
|
|
|
|||||
Net loss attributable to common stockholders—basic and diluted |
$ | (126,657 | ) | $ | (25,646 | ) | ||
Denominator: |
||||||||
Weighted-average common stock outstanding |
1,197,489 | 1,155,319 | ||||||
|
|
|
|
|||||
Net loss per share attributable to common stockholders—basic and diluted |
$ | (105.77 | ) | $ | (22.20 | ) | ||
|
|
|
|
Years Ended December 31, |
||||||||
2021 |
2020 |
|||||||
Series A-1 convertible preferred stock (as converted to common stock) |
4,000,000 | 4,000,000 | ||||||
Series A-2 convertible preferred stock (as converted to common stock) |
4,427,072 | 4,427,072 | ||||||
Series B convertible preferred stock (as converted to common stock) |
7,341,485 | 7,341,485 | ||||||
Series C convertible preferred stock (as converted to common stock) |
8,016,645 | 8,016,645 | ||||||
Series D convertible preferred stock (as converted to common stock) |
20,765,787 | — | ||||||
Warrants to purchase common stock |
226,196 | 77,672 | ||||||
Stock options to purchase common stock |
7,529,063 | 6,020,392 | ||||||
|
|
|
|
|||||
Total |
52,306,248 | 29,883,266 | ||||||
|
|
|
|
14. |
Employee Benefit Plan |
15. |
Subsequent Events |
Page |
||||||
Article I | ||||||
CERTAIN DEFINITIONS | ||||||
Section 1.1. |
Definitions | A-3 | ||||
Section 1.2. |
Other Defined Terms | A-14 | ||||
Section 1.3. |
Construction | A-16 | ||||
Section 1.4. |
Knowledge | A-17 | ||||
Article II | ||||||
THE MERGER; CLOSING | ||||||
Section 2.1. |
The Merger | A-17 | ||||
Section 2.2. |
Effects of the Merger | A-17 | ||||
Section 2.3. |
Closing; Effective Time | A-17 | ||||
Section 2.4. |
Closing Deliverables | A-18 | ||||
Section 2.5. |
Governing Documents | A-19 | ||||
Section 2.6. |
Directors and Officers | A-19 | ||||
Section 2.7. |
U.S. Tax Treatment | A-19 | ||||
Section 2.8. |
Earnout | A-20 | ||||
Section 2.9. |
Earnout Pro Rata Share; Earnout Award Agreements | A-21 | ||||
Section 2.10. |
Escrow | A-21 | ||||
Article III | ||||||
EFFECTS OF THE MERGER ON THE COMPANY CAPITAL STOCK AND EQUITY AWARDS | ||||||
Section 3.1. |
Conversion of Securities | A-22 | ||||
Section 3.2. |
Exchange Procedures | A-23 | ||||
Section 3.3. |
Treatment of Company Options | A-24 | ||||
Section 3.4. |
Withholding | A-24 | ||||
Section 3.5. |
Dissenting Shares | A-24 | ||||
Article IV | ||||||
REPRESENTATIONS AND WARRANTIES OF THE COMPANY | ||||||
Section 4.1. |
Company Organization | A-25 | ||||
Section 4.2. |
Subsidiaries | A-25 | ||||
Section 4.3. |
Due Authorization | A-25 | ||||
Section 4.4. |
No Conflict | A-26 | ||||
Section 4.5. |
Governmental Authorities; Approvals | A-26 | ||||
Section 4.6. |
Capitalization of the Company | A-27 | ||||
Section 4.7. |
Capitalization of Subsidiaries | A-28 | ||||
Section 4.8. |
Financial Statements | A-28 | ||||
Section 4.9. |
Undisclosed Liabilities | A-29 | ||||
Section 4.10. |
Litigation and Proceedings | A-29 | ||||
Section 4.11. |
Legal Compliance | A-29 | ||||
Section 4.12. |
Contracts; No Defaults | A-29 | ||||
Section 4.13. |
Company Benefit Plans | A-31 | ||||
Section 4.14. |
Labor Relations; Employees | A-33 | ||||
Section 4.15. |
Taxes | A-34 |
Page |
||||||
Section 11.8. |
Headings; Counterparts | A-72 | ||||
Section 11.9. |
Company and Acquiror Disclosure Letters | A-72 | ||||
Section 11.10. |
Entire Agreement | A-73 | ||||
Section 11.11. |
Amendments | A-73 | ||||
Section 11.12. |
Publicity | A-73 | ||||
Section 11.13. |
Severability | A-73 | ||||
Section 11.14. |
Jurisdiction; Waiver of Jury Trial | A-74 | ||||
Section 11.15. |
Enforcement | A-74 | ||||
Section 11.16. |
Non-Recourse | A-74 | ||||
Section 11.17. |
Non-Survival of Representations, Warranties and Covenants | A-74 | ||||
Section 11.18. |
Legal Representation | A-75 | ||||
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 Registration Rights Agreement | |||||
Exhibit D | Form of Lock-Up Agreement |
|||||
Exhibit E | Form of Incentive Equity Plan | |||||
Exhibit F | Form of Employee Stock Purchase Plan |
Terms |
Section |
|||
2021 Audited Financial Statements |
6.3 | |||
2022 Financial Statements |
6.3 | |||
Acquiror |
Preamble | |||
Acquiror Cure Period |
10.1(g) | |||
Acquiror Disclosure Letter |
Article V | |||
Acquiror Financial Statements |
5.6(d) | |||
Acquiror Indemnified Parties |
7.8(a) | |||
Acquiror Option |
3.3(a) | |||
Acquiror SEC Filings |
5.5 | |||
Acquiror Securities |
5.12(a) | |||
Acquiror Shareholders’ Meeting |
8.2(b) | |||
Affiliate Agreements |
4.12(a)(vi) | |||
Agreement |
Preamble | |||
Agreement End Date |
10.1(e) | |||
Ancillary Agreements |
11.10 | |||
Available Acquiror Cash |
7.2(a) | |||
Class III |
7.6(a) | |||
Closing |
2.3(a) | |||
Closing Date |
2.3(a) | |||
Code |
Recitals | |||
Company |
Preamble | |||
Company Benefit Plan |
4.13(a) | |||
Company Cure Period |
10.1(e) | |||
Company Disclosure Letter |
Article IV | |||
Company Indemnified Parties |
7.8(a) | |||
Company Registered Intellectual Property |
4.22(a) | |||
Confidentiality Agreement |
11.10 | |||
Constituent Corporations |
2.1(a) |
Terms |
Section |
|||
Continental |
5.8 | |||
D&O Indemnified Parties |
7.8(a) | |||
DGCL |
Recitals | |||
Dissenting Shares |
3.5 | |||
Domesticated Acquiror Certificate of Incorporation |
7.7 | |||
Domesticated Acquiror Common Stock |
Recitals | |||
Domestication |
Recitals | |||
Earnout Award Agreement |
2.9(b) | |||
Earnout Escrow Agreement |
2.10(a) | |||
Earnout Recipients |
2.8(a) | |||
Effective Time |
2.3(b) | |||
ERISA |
4.13(a) | |||
ESPP |
7.1(a) | |||
Exchange Agent |
3.2(a) | |||
Exchange Agent Termination Date |
3.2(d) | |||
Export Approvals |
4.27(a) | |||
Financial Statements |
4.8(a)(ii) | |||
Goodwin |
11.18(a) | |||
Goodwin Privileged Communications |
11.18(a) | |||
Goodwin Waiving Parties |
11.18(a) | |||
Goodwin WP Group |
11.18(a) | |||
Government Contract |
4.30 | |||
Governmental Approval |
4.5 | |||
Health Care Program Laws |
4.19(c) | |||
Incentive Equity Plan |
7.1(a) | |||
Independent Director |
7.6(b) | |||
Interim Period |
6.1 | |||
JOBS Act |
5.6(a) | |||
Legal Proceedings |
4.10 | |||
Letter of Transmittal |
3.2(b) | |||
Listing Application |
7.3 | |||
Lock-Up Agreement |
Recitals | |||
Merger |
Recitals | |||
Merger Certificate |
2.1(a) | |||
Merger Sub |
Preamble | |||
Minimum Available Acquiror Cash Amount |
7.2(a) | |||
Minimum PIPE Investment Amount |
5.12(e) | |||
Modification in Recommendation |
8.2(b) | |||
Multiemployer Plan |
4.13(c) | |||
Nasdaq |
5.6(c) | |||
Offer Documents |
8.2(a)(i) | |||
Other Indemnitors |
7.8(e) | |||
Owned Land |
4.21(b) | |||
Personal Information Laws and Policies |
4.23(a) | |||
Prospectus |
11.1 | |||
Proxy Statement |
8.2(a)(i) | |||
Proxy Statement/Registration Statement |
8.2(a)(i) | |||
Q3 Financial Statements |
6.3 | |||
Real Property Leases |
4.21(a)(iii) | |||
Registration Rights Agreement |
Recitals | |||
Registration Statement Securities |
8.2(a)(i) |
Terms |
Section |
|||
Release Notice |
2.10(b) | |||
Surviving Corporation |
2.1(b) | |||
Tax Opinion |
2.7(b) | |||
Terminating Acquiror Breach |
10.1(g) | |||
Terminating Company Breach |
10.1(e) | |||
Title IV Plan |
4.13(c) | |||
Top Customers |
4.29(a) | |||
Top Vendors |
4.29(a) | |||
Transaction Litigation |
7.11 | |||
Transaction Proposals |
8.2(b) | |||
Treasury Share |
3.1(a) | |||
Trust Account |
11.1 | |||
Trust Agreement |
5.8 | |||
U.S. Tax Treatment |
2.7(a) | |||
Wachtell Lipton |
11.18(b) | |||
Wachtell Lipton Privileged Communications |
11.18(b) | |||
Wachtell Lipton Waiving Parties |
11.18(b) | |||
Wachtell Lipton WP Group |
11.18(b) |
(a) | If to Acquiror or Merger Sub: |
Attention: | James Ryans, Chief Financial Officer |
Email: | legal@socialcapital.com |
(b) | If to the Company: |
SOCIAL CAPITAL SUVRETTA HOLDINGS CORP. I | ||
By: | /s/ Chamath Palihapitiya | |
Name: Chamath Palihapitiya | ||
Title: Chief Executive Officer | ||
KARIBU MERGER SUB, INC. | ||
By: | /s/ Kishan Mehta | |
Name: Kishan Mehta | ||
Title: President | ||
AKILI INTERACTIVE LABS, INC. | ||
By: | /s/ W. Edward Martucci, Ph.D. | |
Name: W. Edward Martucci, Ph.D. | ||
Title: Chief Executive Officer |
Attention: | James Ryans, Chief Financial Officer |
Email: | legal@socialcapital.com |
Attention: | Raaj S. Narayan |
Email: | rsnarayan@wlrk.com |
Attention: | Eddie Martucci, Chief Executive Officer |
Email: | martucci@akiliinteractive.com |
Attention: | Arthur R. McGivern |
Daniel J. Espinoza |
Sarah Ashfaq |
Email: | amcgivern@goodwinlaw.com |
despinoza@goodwinlaw.com |
sashfaq@goodwinlaw.com |
Attention: | Arthur R. McGivern |
Daniel J. Espinoza |
Sarah Ashfaq |
Email: | amcgivern@goodwinlaw.com |
despinoza@goodwinlaw.com |
sashfaq@goodwinlaw.com |
COMPANY STOCKHOLDERS: | ||
By: | /s/ W. Edward Martucci, Ph.D. | |
Name: W. Edward Martucci, Ph.D. | ||
By: | /s/ Santosh Shanbag | |
Name: Santosh Shanbag | ||
By: | /s/ Anil Jina | |
Name: Anil Jina | ||
By: | /s/ Jacqueline Studer | |
Name: Jacqueline Studer | ||
PURETECH HEALTH LLC | ||
By: | /s/ Bharatt Chowrira | |
Name: Bharatt Chowrira | ||
Title: President and Chief of Business and Strategy | ||
TLS BETA PTE. LTD. | ||
By: | /s/ Fidah Alsagoff | |
Title: Authorised Signatory | ||
JAZZ HUMAN PERFORMANCE TECHNOLOGY FUND, LP | ||
By: | JAZZ Human Performance Technology GP, LLC, its general partner | |
By: | /s/ John Spinale | |
Title: Managing Member | ||
JAZZ HUMAN PERFORMANCE OPPORTUNITY FUND, LP | ||
By: | JAZZ Human Performance Opportunity GP, LLC, its general partner | |
By: | /s/ John Spinale | |
Title: Managing Member | ||
By: | /s/ Adam Gazzaley, MD, PhD | |
Name: Adam Gazzaley, MD, PhD |
By: | /s/ Robert Perez | |
Name: Robert Perez | ||
By: | /s/ James Gates | |
Name: James Gates | ||
NEUBERGER BERMAN PRINCIPAL STRATEGIES PRIMA FUND LP | ||
By: | Neuberger Berman Investment Advisers LLC, its investment manager | |
By: | /s/ Gabe Cahill | |
Name: Gabe Cahill | ||
Title: Managing Director | ||
NEUBERGER BERMAN PRINCIPAL STRATEGIES PRIMA CO-INVEST FUND VI LP | ||
By: | Neuberger Berman Investment Advisers LLC, its investment manager. | |
By: | /s/ Gabe Cahill | |
Name: Gabe Cahill | ||
Title: Managing Director | ||
PRIMA MLP FUND LP | ||
By: | Neuberger Berman Investment Advisers LLC, its investment manager | |
By: | /s/ Gabe Cahill | |
Name: Gabe Cahill | ||
Title: Managing Director |
ACQUIROR: | ||
SOCIAL CAPITAL SUVRETTA HOLDINGS CORP. I | ||
By: | /s/ Chamath Palihapitiya | |
Name: Chamath Palihapitiya | ||
Title: Chief Executive Officer |
COMPANY: | ||
AKILI INTERACTIVE LABS, INC. | ||
By: | /s/ W. Edward Martucci, Ph.D. | |
Name: W. Edward Martucci, Ph.D. | ||
Title: Chief Executive Officer |
Holder |
Common |
Series A-1 Preferred Outstanding |
Series A-2 Preferred Outstanding |
Series B Preferred Outstanding |
Series C Preferred Outstanding |
Series D Preferred Outstanding |
Notice Information | |||||||||||||||||||
PureTech Health, LLC |
4,000,000 | 2,115,029 | 4,332,830 | 6 Tide Street, Suite 400 Boston, MA 02210 | ||||||||||||||||||||||
TLS Beta Pte. Ltd. |
3,526,383 | 2,966,706 | 60B Orchard Road #06-18 Tower 2The Atrium @ Orchard Singapore 238891 | |||||||||||||||||||||||
Jazz Human Performance Technology Fund, L.P. |
1,083,170 | 587,731 | 534,007 | 548 Market Street #27799 San Francisco, CA 94104 | ||||||||||||||||||||||
Jazz Human Performance Opportunity Fund, L.P. |
356,005 | 548 Market Street #27799 San Francisco, CA 94104 | ||||||||||||||||||||||||
Neuberger Berman Principal Strategies PRIMA Fund LP |
1,201,813 | 190 S. LaSalle Street, 24 th FloorChicago, IL 60603 | ||||||||||||||||||||||||
PRIMA MLP Fund LP |
|
1,186,682 |
|
190 S. LaSalle Street, 24 th FloorChicago, IL 60603 | ||||||||||||||||||||||
Neuberger Berman Principal Strategies PRIMA Co-Invest Fund VI LP |
578,211 | 190 S. LaSalle Street, 24 th FloorChicago, IL 60603 | ||||||||||||||||||||||||
W. Edward Martucci |
c/o Akili Interactive Labs, Inc. 125 Broad Street, 5th Floor Boston, MA 02110 | |||||||||||||||||||||||||
Adam Gazzaley |
946,250 | c/o Akili Interactive Labs, Inc. 125 Broad Street, 5th Floor Boston, MA 02110 | ||||||||||||||||||||||||
James Gates |
c/o Akili Interactive Labs, Inc. 125 Broad Street, 5th Floor Boston, MA 02110 | |||||||||||||||||||||||||
Robert Perez |
c/o Akili Interactive Labs, Inc. 125 Broad Street, 5th Floor Boston, MA 02110 | |||||||||||||||||||||||||
Anil Jina |
c/o Akili Interactive Labs, Inc. 125 Broad Street, 5th Floor Boston, MA 02110 | |||||||||||||||||||||||||
Jacqueline Studer |
c/o Akili Interactive Labs, Inc. 125 Broad Street, 5th Floor Boston, MA 02110 | |||||||||||||||||||||||||
Santosh Shanbhag |
c/o Akili Interactive Labs, Inc. 125 Broad Street, 5th Floor Boston, MA 02110 | |||||||||||||||||||||||||
|
|
|
|
|
|
|
|
|
|
|
|
|||||||||||||||
Total: |
946,250 |
4,000,000 |
2,982,494 |
5,692,810 |
4,190,519 |
6,823,424 |
||||||||||||||||||||
|
|
|
|
|
|
|
|
|
|
|
|
1. | PureTech Health, LLC |
2. | TLS Beta Pte. Ltd. |
3. | Jazz Human Performance Technology Fund, L.P. |
4. | Jazz Human Performance Opportunity Fund, L.P. |
5. | Neuberger Berman Principal Strategies PRIMA Fund LP |
6. | PRIMA MLP Fund LP |
7. | Neuberger Berman Principal Strategies PRIMA Co-Invest Fund VI LP |
8. | John Spinale |
9. | Bharatt Chowrira |
10. | W. Edward Martucci |
11. | Adam Gazzaley |
12. | Robert Perez |
13. | Kenneth Ehlert |
14. | Christine Lemke |
15. | Anil Jina |
16. | Jacqueline Studer |
17. | Santosh Shanbhag |
1. | Jazz Human Performance Opportunity Fund, L.P. |
2. | Jazz Human Performance Technology Fund, L.P. |
3. | Neuberger Berman Principal Strategies PRIMA Co-Invest Fund VI LP |
4. | PRIMA MLP Fund LP |
5. | Neuberger Berman Principal Strategies PRIMA Fund LP |
6. | PureTech Health, LLC |
7. | TLS Beta Pte. Ltd. |
8. | John Spinale |
9. | Bharatt Chowrira |
10. | W. Edward Martucci |
11. | Adam Gazzaley |
12. | Robert Perez |
13. | Kenneth Ehlert |
14. | Christine Lemke |
15. | Anil Jina |
16. | Jacqueline Studer |
17. | Santosh Shanbhag |
By: |
||
Name: | ||
Title: | ||
Address for Notices: | ||
With copies to: |
Attention: | James Ryans, Chief Financial Officer |
Email: | legal@socialcapital.com |
Attention: | Raaj S. Narayan |
Email: | rsnarayan@wlrk.com |
Attention: | Eddie Martucci, Chief Financial Officer |
Email: | martucci@akiliinteractive.com |
Attention: | Jacqueline Studer, General Counsel |
Email: | legal@akiliinteractive.com; jstuder@akiliinteractive.com |
Attention: | Arthur R. McGivern |
Daniel J. Espinoza |
Sarah Ashfaq |
Email: | amcgivern@goodwinlaw.com |
despinoza@goodwinlaw.com |
SAshfaq@goodwinlaw.com |
Attention: | Raaj S. Narayan |
Email: | rsnarayan@wlrk.com |
SPONSORS: | ||
SCS SPONSOR I LLC | ||
By: | /s/ Chamath Palihapitiya | |
Name: Chamath Palihapitiya | ||
Title: Chief Executive Officer |
/s/ Chamath Palihapitiya | ||
Name: | Chamath Palihapitiya | |
/s/ Kishan Mehta | ||
Name: | Kishan Mehta | |
/s/ James Ryans | ||
Name: | James Ryans | |
/s/ Vladimir Coric | ||
Name: | Vladimir Coric | |
/s/ Senthil Sundaram | ||
Name: | Senthil Sundaram |
ACQUIROR: | ||
SOCIAL CAPITAL SUVRETTA HOLDINGS CORP. I | ||
By: | /s/ Chamath Palihapitiya | |
Name: Chamath Palihapitiya | ||
Title: Chief Executive Officer |
COMPANY: | ||
AKILI INTERACTIVE LABS, INC. | ||
By: | /s/ W. Edward Martucci, Ph.D. | |
Name: W. Edward Martucci, Ph.D. | ||
Title: Chief Executive Officer |
Sponsor |
Acquiror Common Shares |
|||
SCS Sponsor I LLC c/o Social Capital Suvretta Holdings Corp. I 2850 W. Horizon Ridge Parkway Suite 200, Henderson, NV 89052 |
6,860,000 | (1) | ||
Chamath Palihapitiya c/o Social Capital Suvretta Holdings Corp. I 2850 W. Horizon Ridge Parkway Suite 200, Henderson, NV 89052 |
— | (2) | ||
Kishan Mehta c/o Social Capital Suvretta Holdings Corp. I 2850 W. Horizon Ridge Parkway Suite 200, Henderson, NV 89052 |
— | (2) | ||
James Ryans c/o Social Capital Suvretta Holdings Corp. I 2850 W. Horizon Ridge Parkway Suite 200, Henderson, NV 89052 |
— | |||
Vladimir Coric c/o Social Capital Suvretta Holdings Corp. I 2850 W. Horizon Ridge Parkway Suite 200, Henderson, NV 89052 |
30,000 | (3) | ||
Senthil Sundaram c/o Social Capital Suvretta Holdings Corp. I 2850 W. Horizon Ridge Parkway Suite 200, Henderson, NV 89052 |
30,000 | (4) |
(1) | Includes 640,000 shares of Acquiror Class A Common Stock and 6,220,000 shares of Acquiror Class B Common Stock. |
(2) | Messrs. Palihapitiya and Mehta may be deemed to beneficially own securities held by SCS Sponsor I LLC by virtue of their shared control over SCS Sponsor I LLC. Each of Messrs. Palihapitiya and Mehta disclaims beneficial ownership of securities held by SCS Sponsor I LLC. |
(3) | Includes 30,000 shares of Acquiror Class B Common Stock. |
(4) | Includes 30,000 restricted stock units (“ RSUs ”), granted to Mr. Sundaram pursuant to a Director Restricted Stock Unit Award Agreement, dated as of September 24, 2021, between Acquiror and Mr. Sundaram, which grant is contingent on (i) the Acquiror’s consummation of an initial business combination and (ii) a shareholder approved equity plan. The RSUs will vest upon the consummation of such initial business combination and represent 30,000 Class A ordinary shares of Acquiror that will settle on a date determined in the sole discretion of the Acquiror that shall occur between the vesting date and March 15 of the year following the year in which vesting occurs. |
1. | Letter Agreement, dated as of June 29, 2021, among Acquiror, the Sponsor, Chamath Palihapitiya, Kishan Mehta, James Ryans, Shoney Katz and Vladimir Coric. |
2. | Registration Rights Agreement, dated as of June 29, 2021, among Acquiror, the Sponsor and Vladimir Coric. |
3. | Administrative Services Agreement, dated as of June 29, 2021, between Acquiror and Social + Capital Partnership, LLC. |
4. | Private Placement Shares Purchase Agreement, dated as of June 29, 2021, between Acquiror and the Sponsor. |
5. | Indemnity Agreement, dated as of June 29, 2021, between Acquiror and Chamath Palihapitiya. |
6. | Indemnity Agreement, dated as of June 29, 2021, between Acquiror and Kishan Mehta. |
7. | Indemnity Agreement, dated as of June 29, 2021, between Acquiror and James Ryans. |
8. | Indemnity Agreement, dated as of June 29, 2021, between Acquiror and Vladimir Coric. |
9. | Letter Agreement, dated as of September 24, 2021, between Acquiror and Senthil Sundaram. |
10. | Indemnity Agreement, dated as of September 24, 2021, between Acquiror and Senthil Sundaram. |
11. | Director Restricted Stock Unit Award Agreement, dated as of September 24, 2021, between Acquiror and Senthil Sundaram. |
By: | ||
Name: | ||
Title: | ||
Address for Notices: | ||
With copies to: |
Name of Investor: | State/Country of Formation or Domicile: |
By: | ||
Name: | ||
Title: |
Name in which Shares are to be registered (if different): | ||
Investor’s EIN: | ||
Business Address-Street: | Mailing Address-Street (if different): | |
City, State, Zip: | City, State, Zip: | |
Attn: |
Attn: | |
Telephone No.: | Telephone No.: | |
Facsimile No.: | Facsimile No.: | |
Email: | Email: | |
Number of Shares subscribed for: | ||
Aggregate Subscription Amount: $ | Price Per Share: $10.00 |
SOCIAL CAPITAL SUVRETTA HOLDINGS CORP. I | ||
By: | ||
Name: | ||
Title: |
A. | QUALIFIED INSTITUTIONAL BUYER STATUS |
☐ | We are a “qualified institutional buyer” (as defined in Rule 144A under the Securities Act). |
B. | ACCREDITED INVESTOR STATUS |
1. | ☐ We are an “accredited investor” (within the meaning of Rule 501(a) under the Securities Act) and have marked and initialed the appropriate box on the following page indicating the provision under which we qualify as an “accredited investor.” |
2. | ☐ We are not a natural person. |
☐ | Any bank, registered broker or dealer, insurance company, registered investment company, business development company, or small business investment company; |
☐ | Any plan established and maintained by a state, its political subdivisions, or any agency or instrumentality of a state or its political subdivisions for the benefit of its employees, if such plan has total assets in excess of $5,000,000; |
☐ | Any employee benefit plan, within the meaning of the Employee Retirement Income Security Act of 1974, if a bank, insurance company, or registered investment adviser makes the investment decisions, or if the plan has total assets in excess of $5,000,000; |
☐ | Any organization described in Section 501(c)(3) of the Internal Revenue Code, corporation, similar business trust, or partnership, not formed for the specific purpose of acquiring the securities offered, with total assets in excess of $5,000,000; |
☐ | Any director, executive officer, or general partner of the issuer of the securities being offered or sold, or any director, executive officer, or general partner of a general partner of that issuer; |
☐ | Any natural person whose individual net worth, or joint net worth with that person’s spouse, exceeds $1,000,000. For purposes of calculating a natural person’s net worth: (a) the person’s primary residence shall not be included as an asset; (b) indebtedness that is secured by the person’s primary residence, up to the estimated fair market value of the primary residence at the time of the sale of securities, shall not be included as a liability (except that if the amount of such indebtedness outstanding at the time of sale of securities exceeds the amount outstanding 60 days before such time, other than as a result of the acquisition of the primary residence, the amount of such excess shall be included as a liability); and (c) indebtedness that is secured by the person’s primary residence in excess of the estimated fair market value of the primary residence at the time of the sale of securities shall be included as a liability; |
☐ | Any natural person who had an individual income in excess of $200,000 in each of the two most recent years or joint income with that person’s spouse in excess of $300,000 in each of those years and has a reasonable expectation of reaching the same income level in the current year; |
☐ | Any trust with assets in excess of $5,000,000, not formed to acquire the securities offered, whose purchase is directed by a sophisticated person; |
☐ | Any entity in which all of the equity owners are accredited investors; |
☐ | Any natural person holding in good standing one or more professional certifications or designations or credentials from an accredited educational institution that the Securities and Exchange Commission has designated as qualifying an individual for accredited investor status; |
☐ | Any “family office,” as defined in rule 202(a)(11)(g)-1 under the Investment Advisers Act of 1940, as amended, with assets under management in excess of $5,000,000, not formed to acquire the securities offered, and whose prospective investment is directed by a person who has such knowledge and experience in financial and business matters that such family office is capable of evaluating the merits and risks of the prospective investment; or |
☐ | Any “family client,” as defined in rule 202(a)(11)(G)-1 under the Investment Advisers Act of 1940, as amended, of a family office meeting the requirements set forth above and whose prospective investment in the issuer is directed by such family office pursuant to the requirements set forth above. |
COMPANY: | ||
AKILI, INC. | ||
By: | ||
Name: |
||
Title: |
HOLDER: | ||
[NAME] | ||
By: | ||
Name: | ||
Title: |
1. | PureTech Health, LLC |
2. | TLS Beta Pte. Ltd. |
3. | Jazz Human Performance Technology Fund, L.P. |
4. | Jazz Human Performance Opportunity Fund, L.P. |
5. | Neuberger Berman Principal Strategies Prima Fund LP |
6. | Neuberger Berman Prima MLP Fund LP |
7. | Neuberger Berman PRIMA Co-Invest Fund VI LP |
8. | John Spinale |
9. | Bharatt Chowrira |
10. | W. Edward Martucci |
11. | Adam Gazzaley |
12. | Robert Perez |
13. | Kenneth Ehlert |
14. | Christine Lemke |
15. | Anil Jina |
16. | Jacqueline Studer |
17. | Santosh Shanbhag |
18. | Carl Gottlieb |
1. | SC Master Holdings, LLC |
2. | Averill Master Fund, Ltd. |
Signature of Stockholder |
Print Name of Stockholder |
Its: |
Address: |
, 20 | ||
AKILI, INC. | ||
By: |
||
Name: |
||
Its: |
COMPANY: | ||
Akili, Inc. | ||
By: | ||
Name: | ||
Title: |
HOLDER: | ||
SCS Sponsor I LLC | ||
By: | ||
Name: | Chamath Palihapitiya | |
Title: | Chief Executive Officer |
HOLDER: |
Vladimir Coric |
HOLDER: |
Senthil Sundaram |
HOLDER: | ||
[NAME] | ||
By: | ||
Name: | ||
Title: |
1. | Vladimir Coric |
2. | Senthil Sundaram |
1. | Jazz Human Performance Opportunity Fund, L.P. |
2. | Jazz Human Performance Technology Fund, L.P. |
3. | Neuberger Berman Principal Strategies PRIMA Co-Invest Fund VI LP |
4. | PRIMA MLP Fund LP |
5. | Neuberger Berman Principal Strategies PRIMA Fund LP |
6. | PureTech Health, LLC |
7. | TLS Beta Pte. Ltd. |
8. | John Spinale |
9. | Bharatt Chowrira |
10. | W. Edward Martucci |
11. | Adam Gazzaley |
12. | Robert Perez |
13. | Kenneth Ehlert |
14. | Christine Lemke |
15. | Anil Jina |
16. | Jacqueline Studer |
17. | Santosh Shanbhag |
1 |
Note to Draft: as-converted basis (excluding any shares reserved for issuance under equity-based plans of the Company, including this Plan and the Employee Stock Purchase Plan), 4% of such 15% shall be reserved for grants to the CEO and 2% of such 15% shall be reserved for grants for the Executive Team (excluding the CEO). Initial share reserve shall also include a number of shares underlying Earnout RSUs plus the number of shares needed to satisfy the obligations under the Director Restricted Stock Unit Agreement dated September 24, 2021. |
1 |
Note to Draft: as-converted basis (excluding any shares reserved for issuance under the 2020 Stock Option and Incentive Plan and this Plan). |
1 | The name of the Company is Social Capital Suvretta Holdings Corp. I. |
2 | 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. |
3 | 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. |
4 | The liability of each Member is limited to the amount unpaid on such Member’s shares. |
5 | The share capital of the Company is US$55,500 divided into 500,000,000 Class A ordinary shares of a par value of US$0.0001 each, 50,000,000 Class B ordinary shares of a par value of US$0.0001 each and 5,000,000 preference shares of a par value of US$0.0001 each. |
6 | 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. |
7 | 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. |
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 father-in-law sisters-in-law, | |
“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, share exchange, asset acquisition, share purchase, reorganisation or similar business combination involving the Company, with one or more businesses or entities (each, a “ target business |
“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. | |
“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. | |
“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. | |
“Company” |
means the above named company. | |
“Company’s Website” |
means the website of the Company and/or its web-address or domain name (if any). | |
“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 Nasdaq Capital Market. | |
“Directors” |
means each of the members of the board of directors 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 (As Revised) 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. | |
“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. |
“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, which Officers may consist of a chairman, a chief executive officer, a president, a chief operating officer, a chief financial officer, a director of research, vice presidents, a secretary, assistant secretaries, a treasurer and such other offices as may be determined by the board of directors of 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 Underwriter(s) to purchase up to an additional 15 per cent of the Class A Shares issued in the IPO at a price equal to US$10.00 per share, less any applicable commission or discount. | |
“Preference Share” |
means a preference share of a par value of US$0.0001 in the share capital of the Company. | |
“Private Placement Shares” |
means the Class A Shares issued to the Sponsor in a private placement to occur concurrently with the closing of the IPO. | |
“Public Share” |
means a Class A Share issued in the IPO. | |
“Redemption Notice” |
means a notice in a form approved by the Company by which a holder of Public Shares is entitled to require the Company to redeem its Public Shares, subject to any conditions contained therein. | |
“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. | |
“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. | |
“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 29.4, has the same meaning as in the Statute, and includes a unanimous written resolution. | |
“Sponsor” |
means SCS Sponsor I LLC, a Cayman Islands 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 the 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 Shares, 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; |
(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 order to make a determination of Members for any other purpose, the Directors may provide that the Register of Members shall be closed for transfers for a stated period which shall not in any case exceed 40 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. |
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, warrants or units 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 right, option, warrant or unit. |
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 on a pro-rata basis to the extent that the Over-Allotment Option is not exercised in full so that the Class B Shares in issue will equal 20 per cent of the Company’s issued Shares after the IPO (excluding the Private Placement Shares) or 25 per cent of the number of Public Shares issued in the IPO; and |
(c) | Public Shares shall be repurchased by the Company, 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 this Article 8 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. |
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 |
be one or more persons 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 |
12 |
Non Recognition of Trusts |
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. |
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 14 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 14 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 14 clear days’ notice requiring payment of the 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 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 90 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 the Class A Shares and Class B Shares shall rank pari passu |
17.2 | Class B Shares shall automatically convert into Class A Shares on a one-for-one Initial Conversion Ratio |
17.3 | Notwithstanding the Initial Conversion Ratio, in the case that additional (in excess of the amounts issued in the IPO) Class A Shares or any other Equity-linked Securities, are issued, or deemed issued in connection with a Business Combination, the ratio at which all Class B Shares in issue shall automatically convert into Class A Shares at the time of the consummation of a Business Combination will be adjusted (unless the holders of a majority of the Class B Shares in issue agree to waive such anti-dilution adjustment with respect to any such issuance or deemed issuance pursuant to Article 17.4) so that the number of Class A Shares issuable upon conversion of all Class B Shares will equal, in the aggregate, 20 per cent of the total number of Class A Shares outstanding after such conversion (after giving effect to any redemptions of Public Shares pursuant to the Business Combination Article, and excluding the Private Placement Shares), including any Class A Shares issued or deemed issued, or issuable upon the conversion or exercise of any Equity-linked Securities or rights issued or deemed issued, by the Company in connection with a Business Combination, excluding (x) any Class A Shares or Equity-linked Securities exercisable for or convertible into Class A Shares issued, or to be issued, to any seller in a Business Combination and (y) any Shares issued to the Sponsor or its Affiliates upon conversion of working capital loans. |
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 subdivision, exchange, capitalisation, rights issue, reclassification, recapitalisation or otherwise) or combination (by 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 one 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. |
17.7 | References in this Article to “ converted conversion exchange |
17.8 | Notwithstanding anything to the contrary in this Article, in no event may any Class B Share convert into Class A Shares at a ratio that is less than one-for-one. |
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) | 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 this Article 18 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 29.4, the Company may by Special Resolution: |
(a) | change its name; |
(b) | alter or add to the Articles; |
(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. |
19 |
Offices and Places of Business |
20 |
General Meetings |
20.1 | All general meetings other than annual general meetings shall be called extraordinary general meetings. |
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 of the Company may call general meetings, and, for the avoidance of doubt, Members shall not have the ability to call general meetings. |
20.4 | Members seeking to bring business before the annual general meeting or to nominate candidates for appointment as Directors at the annual general meeting must deliver notice to the principal executive offices of the Company not less than 120 calendar days before the date of the Company’s proxy statement released to Members in connection with the previous year’s annual general meeting or, if the Company did not hold an annual general meeting the previous year, or if the date of the current year’s annual general meeting has been changed by more than 30 days from the date of the previous year’s annual general meeting, then the deadline shall be set by the board of directors of the Company with such deadline being a reasonable time before the Company begins to print and send its related proxy materials. |
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 95 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 |
Proceedings at General Meetings |
22.1 | 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. |
22.2 | 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. |
22.3 | 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. |
22.4 | If a quorum is not present within half an hour from the time appointed for the meeting to commence, the meeting 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. |
22.5 | 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 of the Company 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. |
22.6 | 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. |
22.7 | 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. |
22.8 | When a general meeting is adjourned for 30 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. |
22.9 | 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. |
22.10 | When a general meeting is postponed for 30 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. |
22.11 | A resolution put to the vote of the meeting shall be decided on a poll. |
22.12 | 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. |
22.13 | 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. |
22.14 | In the case of an equality of votes the chairman shall be entitled to a second or casting vote. |
23 |
Votes of Members |
23.1 | Subject to any rights or restrictions attached to any Shares, including as set forth in Article 29.4, every Member present in any such manner shall have one vote for every Share of which he is the holder. |
23.2 | 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. |
23.3 | 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. |
23.4 | 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. |
23.5 | 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. |
23.6 | 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. |
23.7 | 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 |
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. |
24 |
Proxies |
24.1 | 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. |
24.2 | 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. |
24.3 | 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. |
24.4 | 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. |
24.5 | 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. |
25 |
Corporate Members |
25.1 | 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. |
25.2 | 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)). |
26 |
Shares that May Not be Voted |
27 |
Directors |
27.1 | There shall be a board of directors of the Company consisting of not less than one person provided however that the Company may by Ordinary Resolution increase or reduce the limits in the number of Directors. |
28 |
Powers of Directors |
28.1 | 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. |
28.2 | 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. |
28.3 | 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. |
28.4 | 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. |
29 |
Appointment and Removal of Directors |
29.1 | Prior to the consummation of a Business Combination, the Company may by Ordinary Resolution of the holders of the Class B Shares 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 consummation of a Business Combination, holders of Class A Shares shall have no right to vote on the appointment or removal of any Director. |
29.2 | 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. |
29.3 | After the consummation 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. |
29.4 | Prior to the consummation of a Business Combination, Article 29.1 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. |
30 |
Vacation of Office of Director |
(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 of the Company 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, 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. |
31 |
Proceedings of Directors |
31.1 | 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. |
31.2 | 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. |
31.3 | 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. |
31.4 | 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. |
31.5 | 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. |
31.6 | 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. |
31.7 | 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. |
31.8 | 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. |
31.9 | A Director may be represented at any meetings of the board of directors of the Company 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. |
32 |
Presumption of Assent |
33 |
Directors’ Interests |
33.1 | 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. |
33.2 | 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. |
33.3 | 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. |
33.4 | 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. |
33.5 | 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. |
34 |
Minutes |
35 |
Delegation of Directors’ Powers |
35.1 | 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. |
35.2 | 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. |
35.3 | 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 its charter 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). For so long as any class of Shares is listed on the Designated Stock Exchange, the Audit Committee, the Compensation Committee and the Nominating and Corporate Governance Committee shall be made up of such number of Independent Directors as is 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. |
35.4 | 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. |
35.5 | 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. |
35.6 | 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. |
36 |
No Minimum Shareholding |
37 |
Remuneration of Directors |
37.1 | 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. |
37.2 | 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. |
38 |
Seal |
38.1 | 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. |
38.2 | 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. |
38.3 | 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. |
39 |
Dividends, Distributions and Reserve |
39.1 | 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. |
39.2 | 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. |
39.3 | 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. |
39.4 | 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. |
39.5 | 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. |
39.6 | 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. |
39.7 | 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. |
39.8 | No Dividend or other distribution shall bear interest against the Company. |
39.9 | 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. |
40 |
Capitalisation |
41 |
Books of Account |
41.1 | 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. |
41.2 | 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. |
41.3 | 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. |
42 |
Audit |
42.1 | The Directors may appoint an Auditor of the Company who shall hold office on such terms as the Directors determine. |
42.2 | 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. |
42.3 | 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. |
42.4 | The remuneration of the Auditor shall be fixed by the Audit Committee (if one exists). |
42.5 | 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. |
42.6 | 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. |
42.7 | 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 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. |
43 |
Notices |
43.1 | 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. |
43.2 | 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. |
43.3 | 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. |
43.4 | 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. |
44 |
Winding Up |
44.1 | 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. |
44.2 | 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. |
45 |
Indemnity and Insurance |
45.1 | 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 |
45.2 | 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. |
45.3 | 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. |
46 |
Financial Year |
47 |
Transfer by Way of Continuation |
48 |
Mergers and Consolidations |
49 |
Business Combination |
49.1 | 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. |
49.2 | 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 (which interest shall be 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 following such repurchases. Such obligation to repurchase Shares is subject to the completion of the proposed Business Combination to which it relates. |
49.3 | If the Company initiates any tender offer in accordance with Rule 13e-4 and Regulation 14E of the Exchange Act in connection with a proposed 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 a general meeting to approve a proposed 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. |
49.4 | 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. |
49.5 | Any Member holding Public Shares who is not the Sponsor, Officer or Director may, at least two business days’ prior to any vote on a Business Combination, elect to have their Public Shares redeemed for cash, in accordance with any applicable requirements provided for in the related proxy materials (the “ IPO Redemption |
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 (such interest shall be net of taxes payable) 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 Redemption Limitation |
49.6 | 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). |
49.7 | In the event that the Company does not consummate a 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 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 the Company (less taxes payable on such interest and excluding 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, |
49.8 | In the event that any amendment is made to the Articles: |
(a) | to modify the substance or timing of the Company’s obligation to allow redemption in connection with a Business Combination or redeem 100 per cent of the Public Shares if the Company does not consummate a 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 Members’ rights or pre-Business Combination activity, |
49.9 | 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. |
49.10 | After the issue of Public Shares, and prior to the consummation of a Business Combination, the Company shall not issue additional Shares or any other securities that would entitle the holders thereof to: |
(a) | receive funds from the Trust Account; or |
(b) | vote as a class with Public Shares on a Business Combination. |
49.11 | 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. |
49.12 | As long as the securities of the Company are listed on The Nasdaq Capital Market, the Company must complete one or more Business Combinations having an aggregate fair market value of at least 80 per cent of the assets held in the Trust Account (net of any deferred underwriting commissions and taxes payable on the interest earned on the Trust Account) at the time of the Company’s signing a definitive agreement in connection with a Business Combination. A Business Combination must not be solely effectuated with another blank cheque company or a similar company with nominal operations. |
49.13 | The Company may enter into a Business Combination with a target business that is Affiliated with the Sponsor, a Director or an Officer. In the event the Company seeks to consummate a Business Combination with a target that is Affiliated with the Sponsor, a Director or an Officer, the Company, or a committee of Independent Directors, will obtain an opinion from an independent investment banking firm that is a member of the United States Financial Industry Regulatory Authority or another valuation or appraisal firm that regularly renders fairness opinions on the type of target business the Company is seeking to acquire that such a Business Combination is fair to the Company from a financial point of view. |
49.14 | A committee of Independent Directors shall approve any transaction or transactions between the Company and any of the following parties: |
(a) | any Member owning an interest in the voting power of the Company that gives such Member a significant influence over the Company; and |
(b) | any Director or Officer and any Affiliate of such Director or Officer. |
50 |
Certain Tax Filings |
51 |
Business Opportunities |
51.1 | To the fullest extent permitted by Applicable Law, no individual serving as a Director or an Officer (“ Management |
51.2 | Except as provided elsewhere in this Article, the Company hereby 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 both the Company and Management, about which a Director and/or Officer who is also a member of Management acquires knowledge. |
51.3 | To the extent a court might hold that the conduct of any activity related to a corporate opportunity that is renounced in this Article is 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. |
(a) | Exhibits. |
Exhibit Number |
Description | |
2.1 + |
Agreement and Plan of Merger, dated as of January 26, 2022, by and among the Registrant, Karibu Merger Sub, Inc., and Akili Interactive Labs, Inc. (included as | |
2.2** | Form of Plan of Domestication. | |
3.1 | Amended and Restated Memorandum and Articles of Association of the Registrant (included as | |
3.2 | Form of Certificate of Incorporation of Akili, Inc. to become effective upon Domestication (included as | |
3.3 | Form of By-Laws | |
4.1 | Specimen Class A Ordinary Share Certificate of Social Capital Suvretta Holdings Corp. I (incorporated by reference to Exhibit 4.1 filed with the Form S-1 filed by the Registrant on June 2, 2021). | |
4.2 * |
Specimen Common Stock Certificate of Akili, Inc. | |
4.3** | Form of Certificate of Corporate Domestication of Akili, Inc., to be filed with the Secretary of the State of Delaware. | |
5.1** | Form of Opinion of Wachtell, Lipton, Rosen & Katz. | |
8.1 | Form of Opinion of Wachtell, Lipton, Rosen & Katz. |
101.CAL | Inline XBRL Taxonomy Extension Calculation Linkbase Document. | |
101.DEF | Inline XBRL Taxonomy Extension Definition Linkbase Document. | |
101.LAB | Inline XBRL Taxonomy Extension Label Linkbase Document. | |
101.PRE | Inline XBRL Taxonomy Extension Presentation Linkbase Document. | |
104 | Cover Page Interactive Data File (formatted as Inline XBRL and contained in Exhibit 101) | |
107** |
* | To be filed by amendment. |
** | Previously filed. |
+ | Schedules and exhibits have been omitted pursuant to Item 601(b)(2) of Regulation S-K. The Registrant agrees to furnish supplementally a copy of any omitted schedule or exhibit to the SEC upon request. |
† | Portions of this exhibit (indicated by asterisks) have been omitted in accordance with Item 601(b)(10) of Regulation S-K. The Registrant agrees to furnish supplementally a copy of any omitted schedule or exhibit to the SEC upon request. |
1. | The undersigned Registrant hereby undertakes: |
2. | 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 of 1933 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 them is against public policy as expressed in the Securities Act of 1933 and will be governed by the final adjudication of such issue. |
3. | The undersigned registrant hereby undertakes as follows: 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. |
4. | The registrant undertakes that every prospectus: (1) that is filed pursuant to the immediately preceding paragraph, or (2) 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 will be deemed to be a new registration statement relating to the securities offered therein, and the offering of such securities at that time will be deemed to be the initial bona fide offering thereof. |
5. | The undersigned Registrant hereby undertakes to respond to requests for information that is incorporated by reference into the prospectus pursuant to Items 4, 10(b), 11, or 13 of this Form S-4, 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. |
6. | 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. |
SOCIAL CAPITAL SUVRETTA HOLDINGS CORP. I | ||
By: | /s/ Chamath Palihapitiya | |
Name: Chamath Palihapitiya | ||
Title: Chief Executive Officer |
Signature |
Title |
Date | ||
/s/ Chamath Palihapitiya Chamath Palihapitiya |
Chief Executive Officer and Chairman of the Board of Directors (Principal Executive Officer) | May 12, 2022 | ||
/s/ Kishan Mehta Kishan Mehta |
President and Director | May 12, 2022 | ||
* James Ryans |
Chief Financial Officer (Principal Financial and Accounting Officer) |
May 12, 2022 | ||
* Vladimir Coric |
Director | May 12, 2022 | ||
* Senthil Sundaram |
Director | May 12, 2022 |
By: | /s/ Chamath Palihapitiya | |
Name: | Chamath Palihapitiya | |
Title: | Attorney-in-fact |
Exhibit 8.1
[Form of Tax Opinion]
[], 2022
Social Capital Suvretta Holdings Corp. I
2850 W. Horizon Ridge Parkway, Suite 200
Henderson, NV 89052
Ladies and Gentlemen:
We have acted as special counsel to Social Capital Suvretta Holdings Corp. I, a Cayman Islands exempted company (SCS), in connection with the domestication of SCS as a Delaware corporation (the Domestication) and the proposed merger of Karibu Merger Sub, Inc. (Merger Sub), a Delaware corporation and a direct wholly owned subsidiary of SCS, with and into Akili Interactive Labs, Inc. (Akili), a Delaware corporation (the Merger) pursuant to the Agreement and Plan of Merger (as amended or supplemented through the date hereof, the Agreement), entered into as of January 26, 2022, by and among SCS, Merger Sub and Akili. Capitalized terms used but not defined herein shall have the meanings ascribed to them in the Agreement. At your request, and in connection with the filing of the Form S-4 (including the joint proxy statement/prospectus contained therein, as amended or supplemented through the date hereof, the Registration Statement), we are rendering our opinion concerning certain United States federal income tax matters.
In providing our opinion, we have examined the Agreement, the Registration Statement, and such other documents as we have deemed necessary or appropriate for purposes of our opinion. In addition, we have assumed that (i) the Domestication will be consummated in accordance with the provisions of the Agreement and as described in the Registration Statement (and no transaction or condition described therein and affecting this opinion will be waived by any party), (ii) the statements concerning the transaction and the parties thereto set forth in the Agreement are true, complete and correct, and the Registration Statement is true, complete and correct, (iii) the factual statements and representations made by SCS in an officers certificate dated as of the date hereof and delivered to us for
purposes of this opinion (the Officers Certificate) are true, complete and correct as of the date hereof and will remain true, complete and correct at all times up to and including the effective time of the Domestication, (iv) any such statements and representations made in the Officers Certificate to the knowledge of any person or similarly qualified are and will be true, complete and correct without such qualification, and (v) SCS and its respective subsidiaries will treat the Domestication for United States federal income tax purposes in a manner consistent with the opinion set forth below. If any of the above described assumptions are untrue for any reason or if the transaction is consummated in a manner that is different from the manner described in the Agreement or the Registration Statement, our opinion as expressed below may be adversely affected.
Based upon and subject to the foregoing, and the limitations, qualifications, exceptions and assumptions set forth herein and in the Registration Statement under the heading U.S. Federal Income Tax Considerations, we are of the opinion that, under currently applicable United States federal income tax law, the Domestication should qualify as a reorganization within the meaning of Section 368(a)(1)(F) of the Code, and we hereby confirm to you that the statements set forth under the caption U.S. Federal Income Tax ConsiderationsEffects of the Domestication to U.S. Holders in the Registration Statement, subject to the limitations and qualifications set forth herein and therein, constitute our opinion as to the material United States federal income tax consequences of the Domestication to U.S. holders of SCS Class A ordinary shares. We express no opinion on the potential U.S. federal income tax consequences of the Domestication pursuant to Section 367 of the Code or the passive foreign investment company rules.
We express no opinion on any issue relating to the tax consequences of the transactions contemplated by the Registration Statement other than the opinion set forth above. Our opinion is based on current provisions of the Code, Treasury Regulations promulgated thereunder, published pronouncements of the Internal Revenue Service and case law, any of which may be changed at any time with retroactive effect. Any change in applicable laws or the facts and circumstances surrounding the transaction, or any inaccuracy in the statements, facts, assumptions or representations upon which we have relied, may affect the continuing validity of our opinion as set forth herein. We assume no responsibility to inform SCS of any such change or inaccuracy that may occur or come to our attention.
We are furnishing this opinion in connection with the filing of the Registration Statement and this opinion is not to be relied upon for any other purpose without our prior written consent. 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,
Exhibit 10.14
CERTAIN CONFIDENTIAL INFORMATION, MARKED BY [***] HAS BEEN EXCLUDED FROM THIS EXHIBIT BECAUSE IT IS BOTH NOT MATERIAL AND IS THE TYPE THAT THE REGISTRANT TREATS AS PRIVATE OR CONFIDENTIAL.
THE SECURITIES REPRESENTED HEREBY HAVE NOT BEEN REGISTERED UNDER THE SECURITIES ACT OF 1933, AS AMENDED (THE ACT), OR UNDER THE SECURITIES LAWS OF APPLICABLE STATES. THESE SECURITIES ARE SUBJECT TO RESTRICTIONS ON TRANSFERABILITY AND RESALE AND MAY NOT BE TRANSFERRED OR RESOLD EXCEPT AS PERMITTED UNDER THE ACT AND APPLICABLE STATE SECURITIES LAWS, PURSUANT TO REGISTRATION UNDER SUCH LAWS OR AN EXEMPTION FROM SUCH REGISTRATION REQUIREMENT. INVESTORS SHOULD BE AWARE THAT THEY MAY BE REQUIRED TO BEAR THE FINANCIAL RISKS OF THIS INVESTMENT FOR AN INDEFINITE PERIOD OF TIME. THE ISSUER OF THESE SECURITIES MAY REQUIRE AN OPINION OF COUNSEL IN FORM AND SUBSTANCE SATISFACTORY TO THE ISSUER TO THE EFFECT THAT ANY PROPOSED TRANSFER OR RESALE IS IN COMPLIANCE WITH THE ACT AND ALL APPLICABLE STATE SECURITIES LAWS.
UNDER THE FINANCIAL INSTRUMENTS AND SECURITIES ACT OF JAPAN, AS AMENDED, THE TRANSFER OF THE BOND IS PROHIBITED EXCEPT WHERE THE ENTIRE BOND REPRESENTED HEREIN IS TRANSFERRED TO ONE TRANSFEREE.
THIS CORPORATE BOND (INCLUDING ALL OBLIGATIONS OF ISSUER HEREUNDER) IS SUBORDINATED WITH RESPECT TO PRIORITY AND RIGHT OF REPAYMENT TO THE OBLIGATIONS OF ISSUER UNDER INDEBTEDNESS FOR BORROWED MONEY OWED BY ISSUER TO ANY BANK OR OTHER FINANCIAL INSTITUTION AS SET FORTH BELOW.
CORPORATE BOND
$5,000,000 | March 26, 2019 |
Subject to the terms and conditions of this corporate bond (the Bond), for value received, Akili Interactive Labs, Inc., a Delaware corporation (Issuer), hereby promises to pay to Shionogi & Co., Ltd (Subscriber), the principal sum of Five Million Dollars ($5,000,000) (the Principal Amount). The Principal Amount shall accrue interest at a fixed per annum rate equal to zero percent (0%) per annum.
This Bond is one of several bonds of similar tenor issued or issuable by Issuer pursuant to that certain Corporate Bond Subscription Agreement dated as of December 19, 2018 (the Subscription Agreement), entered into between Issuer and Subscriber, and is subject to, and Issuer and Subscriber shall be bound by, all the terms, conditions and provisions of the Subscription Agreement. Unless otherwise repaid as set forth below, this Bond shall become due and payable on November 10, 2031 (the Maturity Date). Capitalized terms used herein but not defined herein shall have the meanings ascribed to them in the Subscription Agreement. This Bond will be subject to payment on a pari passu basis with any other Bonds issued under the Subscription Agreement.
The following is a statement of the rights of Subscriber and the terms and conditions to which this Bond is subject and to which Subscriber, by acceptance of this Bond, agrees:
1. Payment. If this Bond has not been previously repaid, then the entire Principal Amount under this Bond shall, on or after the Maturity Date, be payable in cash. All payments hereunder shall be made in lawful money of the United States of America at the principal office of Subscriber, or such other place as the holder hereof may from time to time designate in writing to Issuer.
2. Application of Payments. All payments will be applied first to the repayment of accrued fees and expenses under this Bond, then to the repayment of principal until all principal has been paid in full. After all applications of such payments have been made as provided in this paragraph, the remaining amount of such payments that are in excess of the aggregate Principal Amount of all outstanding Bonds shall be returned to Issuer.
3. Prepayment. Issuer may prepay this Bond, without premium or penalty, in whole or in part.
4. Early Repayment. If the Subscriber terminates the Collaboration Agreement pursuant to Section 12.3 of the Collaboration Agreement for any reason other than Section 6(d), Issuer shall pay the entire Principal Amount under this Bond within twelve (12) months from the termination date of the Collaboration Agreement.
5. New Bond. Upon receipt of evidence reasonably satisfactory to Issuer of the loss, theft, destruction or mutilation of the Bond, Issuer will issue a new Bond, of like tenor and amount, in lieu of such lost, stolen, destroyed or mutilated Bond, and in such event Subscriber agrees to indemnify and hold harmless Issuer in respect of any such lost, stolen, destroyed or mutilated Bond.
6. Events of Default. Each of the following shall constitute an Event of Default hereunder:
(a) a failure to pay any amounts under the Subscription Agreement or this Bond when due;
(b) any representation or warranty of Issuer in the Subscription Agreement is incorrect in any material respect;
(c) a material breach by Issuer of the terms or provisions of the Subscription Agreement or this Bond;
(d) Subscriber terminates the Collaboration Agreement (as defined in the Subscription Agreement) due to a material breach by Issuer of the Collaboration Agreement pursuant to Section 12.5.1.2 of the Collaboration Agreement;
(e) (i) any present or future indebtedness in the form of bonds or notes (other than the Bonds) of Issuer is accelerated by reason of any default, event of default or the like (howsoever described), (ii) any present or future indebtedness of Issuer for or in respect of moneys borrowed or raised (other than any bonds or notes (including the Bonds) issued by Issuer) is accelerated by reason of any default, event of default or the like (howsoever described), where such indebtedness exceeds in the aggregate $1,000,000 or its equivalent (on the basis of the middle spot rate for the relevant currency against US dollar as quoted by any leading bank on the day on which this paragraph operates), or (iii) Issuer fails to pay when due any amount payable by it under any present or future guarantee for, or indemnity in respect of, any bonds or notes issued (other than those issued by Issuer) or moneys borrowed or raised (other than those borrowed or raised by Issuer), where such amount due under such guarantee or indemnity exceeds in the aggregate $1,000,000 or its equivalent (on the basis of the middle spot rate for the relevant currency against US dollar as quoted by any leading bank on the day on which this paragraph operates);
(f) (i) a case is commenced by or against Issuer under Title 11, United States Code, as amended, or analogous provisions of applicable law outside the United States (the Bankruptcy Code) and, in the event of an involuntary case under the Bankruptcy Code, such case is not dismissed or stayed within sixty (60) days after the filing thereof, (ii) Issuer files or has filed against it a bankruptcy, liquidation or receivership proceeding (other than a case under the Bankruptcy Code), (iii) Issuer assigns all or a substantial portion of its assets for the benefit of creditors, (iv) a receiver or custodian is appointed for Issuers business, or (v) a substantial portion of Issuers business is subject to attachment or similar process;
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(g) any final, unappealable order is made by any competent court or resolution passed for the winding up or dissolution of Issuer; or
(h) Issuer ceases to carry on the whole or a substantial part of its business; or Issuer stops payment of, or is unable to, or admits in writing its inability to, pay, its debts (or any class of its debts) as they fall due, or is deemed unable to pay its debts pursuant to or for the purposes of any applicable law.
If any Event of Default under Sections 6(b) or 6(c) shall occur, then Issuer shall have 30 days to cure (the Cure Period) such Event of Default. If any Event of Default under Sections 6(a) or 6(d)-(h) shall occur, or if Issuer has not cured any Event of Default under Sections 6(b) or 6(c) within the Cure Period, then at any time thereafter while such Event of Default is continuing, Subscriber by written notice to Issuer may declare the entire Principal Amount of this Bond to be due and payable immediately, and may pursue any legal or equitable remedies that Subscriber has available to it.
7. Unsecured and Subordinated. The indebtedness represented by this Bond is unsecured and Subscriber acknowledges and agrees that the obligation of Issuer to make payment on this Bond prior to the Maturity Date is expressly subordinated in right of payment to the obligations of Issuer under indebtedness for borrowed money owed by Issuer to any bank or other financial institution (a Senior Lender). As a condition to the issuance of the Bonds, Subscriber hereby agrees to enter into a customary Subordination Agreement as a subordinated creditor if reasonably requested by a Senior Lender.
8. No Rights or Liabilities as Stockholder; No Personal Liability. This Bond does not entitle Subscriber to any voting rights or other rights as a stockholder of Issuer. No provisions of this Bond, and no enumeration herein of the rights or privileges of Subscriber, shall cause Subscriber to be a stockholder of Issuer for any purpose. Subscriber agrees that no stockholder, director or officer of Issuer shall have any personal liability for the repayment of this Bond.
9. Governing Law. This Bond and the obligations of Issuer hereunder shall be governed by and construed in accordance with the substantive laws of the State of New York, without reference to principles of conflict of laws or choice of law.
10. Collection Expenses. Issuer further agrees, subject only to any limitation imposed by applicable law, to pay all expenses, including reasonable attorneys fees, incurred by the holder of this Bond in endeavoring to collect any amounts payable hereunder which are not paid when due.
11. Amendment. Any provision of this Bond may be amended or waived with the written consent of Issuer and Subscriber. Notwithstanding the foregoing, any provision hereof may be waived by the waiving party on such partys own behalf, without the consent of any other party.
12. Waiver. Issuer hereby waives presentment, protest, demand for payment, notice of dishonor, and any and all other notices or demands in connection with the delivery, acceptance, performance, default or enforcement of this Bond.
13. Transfer. This Bond shall not be sold, assigned, transferred, pledged, hypothecated, given away or in any other manner disposed of or encumbered by Subscriber, whether voluntarily or by operation of law, without the prior written consent of Issuer, except to an Affiliate (as defined in the Collaboration Agreement) of Subscriber, in which case Subscriber shall give Issuer prior written notice of such transfer and the transferee shall agree in writing to be bound by all of the terms and conditions of this Bond and the Subscription Agreement.
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14. Termination of Rights. All rights with respect to this Bond shall terminate upon the repayment of the entire Principal Amount of the Bond, whether or not this Bond has been surrendered to Issuer for cancellation.
15. Interest. Issuer shall pay Subscriber interest on the Principal Amount that is not paid on or before the date such payments are due hereunder at a rate of one percent (1.0%) per month or the maximum applicable legal rate, if less, calculated on the total number of days payment is delinquent.
16. Severability. The invalidity or unenforceability of any provision hereof shall in no way affect the validity or enforceability of any other provision.
17. Addresses for Notices, etc. All notices, instructions and other communications required or permitted hereunder or in connection herewith shall be in writing and shall be deemed effectively given: (a) upon personal delivery to the party to be notified, (b) when sent by confirmed electronic mail, telex or facsimile if sent during normal business hours of the recipient, if not, then on the next Business Day, (c) five (5) days after having been sent by registered or certified mail, return receipt requested, postage prepaid, or (d) one (1) day for domestic deliveries and two (2) days for international deliveries after deposit with a reputable courier, specifying the appropriate type of delivery, with written verification of receipt. All communications shall be sent to Issuer and Subscriber at the applicable address as set forth on such partys signature page hereto or at such other address or electronic mail address as Issuer or Subscriber may designate by giving notice to the other party in the manner provided above. For purposes of this Section 17, a Business Day has the meaning set forth in the Collaboration Agreement.
18. Headings; Interpretation. In this Bond, (a) the meaning of defined terms shall be equally applicable to both the singular and plural forms of the terms defined, (b) the captions and headings are used only for convenience and are not to be considered in construing or interpreting this Bond and (c) the words including, includes and include shall be deemed to be followed by the words without limitation. All references in this Bond to sections, paragraphs, exhibits and schedules shall, unless otherwise provided, refer to sections and paragraphs hereof and exhibits and schedules attached hereto, all of which exhibits and schedules are incorporated herein by this reference.
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IN WITNESS WHEREOF, the undersigned has caused this instrument to be executed by its duly authorized officer as of the date first above written.
ISSUER: | ||
AKILI INTERACTIVE LABS, INC. | ||
By: | /s/ W. Edward Martucci | |
Name: W. Edward Martucci, Ph.D. | ||
Title: Chief Executive Officer | ||
Address: | ||
125 Broad Street, 4th Floor Boston, MA 02110 Attention: Chief Executive Officer Email: [***] | ||
With a copy to: | ||
Goodwin Procter LLP 100 Northern Avenue Boston, MA 02210 Attention: Arthur R. McGivern, Esq. Email: [***] |
[SIGNATURE PAGE TO CORPORATE BOND]
Acknowledged and agreed by Subscriber: | ||
SHIONOGI & CO., LTD. | ||
By: | /s/ Isao Teshirogi | |
Name: | Isao Teshirogi, Ph.D. | |
Title: | President and Representative Director |
[SIGNATURE PAGE TO CORPORATE BOND]
Exhibit 10.17
CERTAIN CONFIDENTIAL INFORMATION, MARKED BY [***] HAS BEEN EXCLUDED FROM THIS EXHIBIT BECAUSE IT IS BOTH NOT MATERIAL AND IS THE TYPE THAT THE REGISTRANT TREATS AS PRIVATE OR CONFIDENTIAL.
AMENDED AND RESTATED LOAN AND SECURITY AGREEMENT
THIS AMENDED AND RESTATED LOAN AND SECURITY AGREEMENT (this Agreement) dated as of May 25, 2021 (the Effective Date) among (a) SILICON VALLEY BANK, a California corporation (SVB), in its capacity as administrative agent and collateral agent (Agent), (b) SILICON VALLEY BANK, a California corporation, as a lender, (c) SVB INNOVATION CREDIT FUND VIII, L.P., a Delaware limited partnership (SVB Innovation Fund), as a lender (SVB and SVB Innovation Fund and each of the other Lenders from time to time a party hereto are referred to herein collectively as the Lenders and each individually as a Lender), and (d) AKILI INTERACTIVE LABS, INC., a Delaware corporation (Borrower), provides the terms on which Agent and the Lenders shall lend to Borrower, and Borrower shall repay Agent and the Lenders.
A. SVB and Borrower have previously entered into that certain Loan and Security Agreement dated as of December 21, 2018, as amended by a certain First Loan Modification Agreement dated as of August 10, 2020 (the Prior Loan Agreement).
B. Agent, the Lenders and Borrower have agreed to amend and restate, and replace, the Prior Loan Agreement in its entirety. Agent, the Lenders and Borrower hereby agree that the Prior Loan Agreement is amended and restated in its entirety as follows:
1 ACCOUNTING AND OTHER TERMS
Accounting terms not defined in this Agreement shall be construed following GAAP. Calculations and determinations must be made following GAAP. Notwithstanding the foregoing, all financial covenant calculations shall be computed with respect to Borrower only, and not on a consolidated basis. Capitalized terms not otherwise defined in this Agreement shall have the meanings set forth in Section 14 of this Agreement. All other terms contained in this Agreement, unless otherwise indicated, shall have the meaning provided by the Code to the extent such terms are defined therein.
2 LOAN AND TERMS OF PAYMENT
2.1 Promise to Pay. Borrower hereby unconditionally promises to pay to Agent, for the ratable benefit of each Lender, the outstanding principal amount of all Credit Extensions advanced to Borrower by such Lender and accrued and unpaid interest thereon, together with any fees as and when due in accordance with this Agreement.
2.2 Term Loan Advances.
(a) Availability. Subject to the terms and conditions of this Agreement, upon Borrowers request, during the Term A Loan Draw Period, the Lenders, severally and not jointly, shall make term loan advances available to Borrower in an original principal amount of up to Thirty-Five Million Dollars ($35,000,000.00) according to each Lenders Term A Loan Commitment as set forth on Schedule 1 hereto (each, a Term A Loan Advance and, collectively, the Term A Loan Advances); provided, however, that Borrower shall request on the Effective Date, and the Lenders, severally and not jointly, shall make one (1) term loan advance to Borrower on or about the Effective Date in an original principal amount of at least Five Million Dollars ($5,000,000.00) according to each Lenders Term A Loan Commitment as set forth on Schedule 1 hereto (the Initial Term A Loan Advance). Borrower shall be required to use the proceeds of the Initial Term A Loan Advance to pay in full all obligations and liabilities of Borrower to SVB in connection with 2020 Growth Capital Advances (as defined in the Prior Loan Agreement) outstanding (including, without limitation, the accrued portion of the 2020 Growth Capital Final Payment (as defined in the Prior Loan Agreement), in the amount of Twenty-Seven Thousand Two Hundred Fifty-
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Eight and 41/100 Dollars ($27,258.41) but excluding the unaccrued portion of the 2020 Growth Capital Final Payment (as defined in the Prior Loan Agreement) in the amount of Seventy-Two Thousand Seven Hundred Forty-One and 59/100 Dollars ($72,741.59) (the Unaccrued Final Payment) and excluding the 2020 Growth Capital Prepayment Fee (as defined in the Prior Loan Agreement)), and Borrower hereby authorizes Agent to apply the proceeds of the Initial Term A Loan Advance (internally, without actually providing such funds to Borrower) to such obligations and liabilities in connection therewith as part of the funding process. Subject to the terms and conditions of this Agreement, upon Borrowers request, during the Term B Loan Draw Period, the Lenders, severally and not jointly, shall make one (1) term loan advance available to Borrower in an original principal amount of Five Million Dollars ($5,000,000.00) according to each Lenders Term B Loan Commitment as set forth on Schedule 1 hereto (the Term B Loan Advance). Subject to the terms and conditions of this Agreement, upon Borrowers request, during the Term C Loan Draw Period, the Lenders, severally and not jointly, shall make term loan advances available to Borrower in an original principal amount of up to Ten Million Dollars ($10,000,000.00) according to each Lenders Term C Loan Commitment as set forth on Schedule 1 hereto (each, a Term C Loan Advance and, collectively, the Term C Loan Advances). The Term A Loan Advances, the Term B Loan Advance and the Term Loan C Advances are hereinafter referred to singly as a Term Loan Advance and collectively as the Term Loan Advances. Each Term Loan Advance must be in an original principal amount equal to at least Five Million Dollars ($5,000,000.00). After repayment, no Term Loan Advance (or any portion thereof) may be reborrowed.
(b) Interest Period. Commencing on the first (1st) Payment Date of the month following the month in which the Funding Date of the applicable Term Loan Advance occurs, and continuing on the Payment Date of each month thereafter, Borrower shall make monthly payments of interest to Agent, for the account of the Lenders, in arrears, on the principal amount of each Term Loan Advance, at the rate set forth in Section 2.3(a).
(c) Repayment. Commencing on the Term Loan Amortization Date, and continuing on each Payment Date thereafter, Borrower shall repay the aggregate outstanding Term Loan Advances to Agent, for the account of the Lenders, in (i) equal monthly installments of principal over the number of months for the period commencing on the Term Loan Amortization Date and ending on the Term Loan Maturity Date, plus (ii) monthly payments of accrued interest at the rate set forth in Section 2.3(a). All outstanding principal and accrued and unpaid interest with respect to the Term Loan Advances, and all other outstanding Obligations under the Term Loan Advances, are due and payable in full on the Term Loan Maturity Date.
(d) Permitted Prepayment. Borrower shall have the option to prepay all, but not less than all, of the Term Loan Advances advanced by the Lenders under this Agreement, provided Borrower (i) provides written notice to Agent of its election to prepay the Term Loan Advances at least five (5) Business Days prior to such prepayment, and (ii) pays to Agent, for the account of the Lenders in accordance with their respective Pro Rata Share, on the date of such prepayment (A) all outstanding principal plus accrued and unpaid interest, (B) the Final Payment, (C) the Prepayment Premium and (D) all other sums, if any, that shall have become due and payable hereunder with respect to the Term Loan Advances, including Lenders Expenses and interest at the Default Rate with respect to any past due amounts.
(e) Mandatory Prepayment Upon an Acceleration. If the Term Loan Advances are accelerated by Agent, following the occurrence and during the continuance of an Event of Default, Borrower shall immediately pay to Agent, for the account of the Lenders in accordance with their respective Pro Rata Share, an amount equal to the sum of (i) all outstanding principal plus accrued and unpaid interest with respect to the Term Loan Advances, (ii) the Final Payment, (iii) the Prepayment Premium and (iv) all other sums, if any, that shall have become due and payable hereunder with respect to the Term Loan Advances, including Lenders Expenses and interest at the Default Rate with respect to any past due amounts.
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2.3 Payment of Interest on the Credit Extensions.
(a) Interest Rate. Subject to Section 2.3(b), the principal amount outstanding under the Term Loan Advances shall accrue interest at a floating per annum rate equal to the greater of (i) seven percent (7.0%) and (ii) three and three-quarters of one percent (3.75%) above the Prime Rate, which interest shall be payable monthly in accordance with Section 2.3(d) below.
(b) Default Rate. Immediately upon the occurrence and during the continuance of an Event of Default, Obligations shall bear interest at a rate per annum which is five percent (5.0%) above the rate that is otherwise applicable thereto (the Default Rate) unless Agent otherwise elects from time to time in its sole discretion to impose a smaller increase. Fees and expenses which are required to be paid by Borrower pursuant to the Loan Documents (including, without limitation, Lenders Expenses) but are not paid when due shall bear interest until paid at a rate equal to the highest rate applicable to the Obligations. Payment or acceptance of the increased interest rate provided in this Section 2.3(b) is not a permitted alternative to timely payment and shall not constitute a waiver of any Event of Default or otherwise prejudice or limit any rights or remedies of Agent or any Lender.
(c) Adjustment to Interest Rate. Changes to the interest rate of any Credit Extension based on changes to the Prime Rate shall be effective on the effective date of any change to the Prime Rate and to the extent of any such change.
(d) Payment; Interest Computation. Interest is payable monthly in arrears on the Payment Date and shall be computed on the basis of a 360-day year for the actual number of days elapsed. In computing interest, (i) all payments received after 1:00 p.m. Eastern time on any day shall be deemed received at the opening of business on the next Business Day, and (ii) the date of the making of any Credit Extension shall be included and the date of payment shall be excluded; provided, however, that if any Credit Extension is repaid on the same day on which it is made, such day shall be included in computing interest on such Credit Extension.
2.4 Fees. Borrower shall pay to Agent:
(a) Final Payment. The Final Payment, when due hereunder, to be shared between the Lenders pursuant to their respective Term Loan Commitment Percentage;
(b) Prepayment Premium. The Prepayment Premium, when due hereunder; and
(c) Lenders Expenses. All Lenders Expenses (including reasonable and documented attorneys fees and expenses for documentation and negotiation of this Agreement) incurred through and after the Effective Date, when due (or, if no stated due date, upon demand by Agent).
Borrower has paid to Agent a deposit of Fifty Thousand Dollars ($50,000.00) (the Good Faith Deposit) to initiate Agents due diligence review process. The Good Faith Deposit shall be utilized to pay Lenders Expenses, pursuant to Section 2.4(c) above, with any excess (if any) refunded to Borrower.
Unless otherwise provided in this Agreement or in a separate writing by Agent, Borrower shall not be entitled to any credit, rebate, or repayment of any fees earned by Agent or any Lender pursuant to this Agreement notwithstanding any termination of this Agreement or the suspension or termination of any Lenders obligation to make loans and advances hereunder. Agent may deduct amounts owing by Borrower under the clauses of this Section 2.4 pursuant to the terms of Section 2.5(e). Agent shall provide Borrower written notice of deductions made from the Designated Deposit Account pursuant to the terms of the clauses of this Section 2.4.
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2.5 Payments; Pro Rata Treatment; Application of Payments; Debit of Accounts.
(a) All payments (including prepayments) to be made by Borrower under any Loan Document shall be made to Agent for the account of Lenders, in immediately available funds in Dollars, without setoff or counterclaim, before 1:00 p.m. Eastern time on the date when due. Agent shall distribute such payments to Lenders in like funds as set forth in Section 2.6. Payments of principal and/or interest received after 1:00 p.m. Eastern time are considered received at the opening of business on the next Business Day. When a payment is due on a day that is not a Business Day, the payment shall be due the next Business Day, and additional fees or interest, as applicable, shall continue to accrue until paid.
(b) Each borrowing by Borrower from Lenders hereunder shall be made according to the respective Term Loan Commitment Percentage of the relevant Lenders.
(c) Except as otherwise provided herein, each payment (including each prepayment) by Borrower on account of principal or interest on the Term Loan Advances shall be applied according to each Lenders Pro Rata Share of the outstanding principal amount of the Term Loan Advances. The amount of each principal prepayment of the Term Loan Advances shall be applied to reduce the then remaining installments of the Term Loan Advances based upon each Pro Rata Share of Term Loan Advances.
(d) Agent has the exclusive right to determine the order and manner in which all payments with respect to the Obligations may be applied. Borrower shall have no right to specify the order or the accounts to which Agent shall allocate or apply any payments required to be made by Borrower to Agent or otherwise received by Agent or any Lender under this Agreement when any such allocation or application is not specified elsewhere in this Agreement.
(e) Agent may debit any of Borrowers deposit accounts, including the Designated Deposit Account, for principal and interest payments or any other amounts Borrower owes Agent or any Lender under the Loan Documents when due. These debits shall not constitute a set-off.
(f) Unless Agent shall have been notified in writing by Borrower prior to the date of any payment due to be made by Borrower hereunder that Borrower will not make such payment to Agent, Agent may assume that Borrower is making such payment, and Agent may, but shall not be required to, in reliance upon such assumption, make available to Lenders their respective Pro Rata Share of a corresponding payment amount. If such payment is not made to Agent by Borrower within three (3) Business Days after such due date, Agent shall be entitled to recover, on demand, from each Lender to which any amount which was made available pursuant to the preceding sentence, such amount with interest thereon at the rate per annum equal to the daily average Federal Funds Effective Rate. Nothing herein shall be deemed to limit the rights of Agent or any Lender against Borrower.
2.6 Settlement Procedures. If Agent receives any payment for the account of Lenders on or prior to 1:00 p.m. (Eastern time) on any Business Day, Agent shall pay to each applicable Lender such Lenders Pro Rata Share of such payment on such Business Day. If Agent receives any payment for the account of Lenders after 1:00 p.m. (Eastern time) on any Business Day, Agent shall pay to each applicable Lender such Lenders Pro Rata Share of such payment on the next Business Day.
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2.7 Withholding by Borrower. Payments received by Agent from Borrower under this Agreement will be made free and clear of and without deduction for any and all present or future taxes, levies, imposts, duties, deductions, withholdings, assessments, fees or other charges imposed by any Governmental Authority (including any interest, additions to tax or penalties applicable thereto). Specifically, however, if at any time any Governmental Authority, applicable law, regulation or international agreement requires Borrower to make any withholding or deduction from any such payment or other sum payable hereunder to Agent, Borrower hereby covenants and agrees that the amount due from Borrower with respect to such payment or other sum payable hereunder will be increased to the extent necessary to ensure that, after the making of such required withholding or deduction, Agent receives a net sum equal to the sum which it would have received had no withholding or deduction been required, and Borrower shall pay the full amount withheld or deducted to the relevant Governmental Authority. Borrower will, upon request, furnish Agent with proof reasonably satisfactory to Agent indicating that Borrower has made such withholding payment; provided, however, that Borrower need not make any withholding payment if the amount or validity of such withholding payment is contested in good faith by appropriate and timely proceedings and as to which payment in full is bonded or reserved against by Borrower. The agreements and obligations of Borrower contained in this Section 2.7 shall survive the termination of this Agreement.
3 CONDITIONS OF LOANS
3.1 Conditions Precedent to Initial Credit Extension. Each Lenders obligation to make the initial Credit Extension hereunder is subject to the condition precedent that Agent shall have received, in form and substance satisfactory to Agent and the Lenders, such documents, and completion of such other matters, as Agent may have reasonably requested, including, without limitation:
(a) duly executed signatures to the Loan Documents;
(b) duly executed signatures to the Warrants, together with a capitalization table;
(c) stock power forms (5 originals) executed by Borrower with respect to the Securities Corp. and delivery of stock certificates evidencing ownership interest in the Securities Corp.;
(d) the Operating Documents and (i) a long-form good standing certificate of Borrower certified by the Secretary of State of Delaware and (ii) a good standing/foreign qualification certificate of Borrower certified by the Secretary of State (or equivalent agency) of Massachusetts, each dated as of a date no earlier than thirty (30) days prior to the Effective Date;
(e) a secretarys corporate borrowing certificate of Borrower with respect to Borrowers Operating Documents, incumbency and resolutions authorizing the execution and delivery of this Agreement and the other Loan Documents;
(f) duly executed signatures to the completed Borrowing Resolutions for Borrower;
(g) a subordination agreement by SHIONOGI & CO., LTD. in favor of Agent and the Lenders, together with the duly executed original signatures thereto and copies of the underlying documents evidencing Borrowers Indebtedness with such Person;
(h) certified copies, dated as of a recent date, of Lien searches (including without limitation, UCC searches), as Agent may request, accompanied by written evidence (including any UCC termination statements and other Lien releases) that the Liens indicated in any such financing statements or other filings either constitute Permitted Liens or have been or, in connection with the initial Credit Extension hereunder, will be terminated or released;
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(i) the Perfection Certificate of Borrower, together with the duly executed signature thereto;
(j) a legal opinion (authority and enforceability) of Borrowers counsel dated as of the Effective Date, together with the duly executed signature thereto;
(k) evidence satisfactory to Agent that the insurance policies and endorsements required by Section 6.5 hereof are in full force and effect, together with appropriate evidence showing lender loss payable and/or additional insured clauses or endorsements in favor of Agent;
(l) evidence satisfactory to Agent that Borrower has received, on or after the Effective Date, at least One Hundred Million Dollars ($100,000,000.00) in net proceeds from the sale of Borrowers Series D equity securities to investors acceptable to Agent in its sole discretion; and
(m) payment of the fees and Lenders Expenses then due as specified in Section 2.4 hereof.
3.2 Conditions Precedent to all Credit Extensions. Each Lenders obligation to make each Credit Extension, including the initial Credit Extension, is subject to the following conditions precedent:
(a) timely receipt by the Lenders of (i) an executed Disbursement Letter; and (ii) an executed Payment/Advance Form and any materials and documents required by Section 3.4;
(b) the representations and warranties in this Agreement shall be true, accurate, and complete in all material respects on the date of the Disbursement Letter (and the Payment/Advance Form) and on the Funding Date of each Credit Extension; provided, however, that such materiality qualifier shall not be applicable to any representations and warranties that already are qualified or modified by materiality in the text thereof; and provided, further that those representations and warranties expressly referring to a specific date shall be true, accurate and complete in all material respects as of such date, and no Event of Default shall have occurred and be continuing or result from the Credit Extension. Each Credit Extension is Borrowers representation and warranty on that date that the representations and warranties in this Agreement are true, accurate, and complete in all material respects as of such date; provided, however, that such materiality qualifier shall not be applicable to any representations and warranties that already are qualified or modified by materiality in the text thereof; and provided, further that those representations and warranties expressly referring to a specific date shall be true, accurate and complete in all material respects as of such date; and
(c) Agent and each Lender determine to its satisfaction that there has not been any material impairment in the general affairs, management, results of operation, financial condition or the prospect of repayment of the Obligations when due, or any material adverse deviation by Borrower from the most recent business plan of Borrower presented to and accepted by Agent and the Lenders.
3.3 Covenant to Deliver. Borrower agrees to deliver to Agent and each Lender each item required to be delivered to Agent and each Lender under this Agreement as a condition precedent to any Credit Extension. Borrower expressly agrees that a Credit Extension made prior to the receipt by Agent and each Lender of any such item shall not constitute a waiver by Agent or Lenders of Borrowers obligation to deliver such item, and the making of any Credit Extension in the absence of a required item shall be in each Lenders sole discretion.
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3.4 Procedures for Borrowing.
(a) Term Loan Advances. Subject to the prior satisfaction of all other applicable conditions to the making of a Credit Extension set forth in this Agreement, to obtain a Credit Extension, Borrower shall notify Agent (which notice shall be irrevocable) by electronic mail, facsimile, or telephone by 1:00 p.m. Eastern time at least three (3) Business Days before the proposed Funding Date of such Credit Extension. Together with any such electronic or facsimile notification, Borrower shall deliver to Agent by electronic mail or facsimile a completed Disbursement Letter (and Payment/Advance Form) executed by an Authorized Signer. Agent may rely on any telephone notice given by a person whom Agent reasonably believes is an Authorized Signer. On the Funding Date, Agent shall credit the Credit Extensions to the Designated Deposit Account. Agent may make Credit Extensions under this Agreement based on instructions from an Authorized Signer or without instructions if the Credit Extensions are necessary to meet Obligations which have become due.
(b) Funding. In determining compliance with any condition hereunder to the making of a Credit Extension that, by its terms, must be fulfilled to the satisfaction of a Lender, Agent may presume that such condition is satisfactory to such Lender unless Agent shall have received notice to the contrary from such Lender prior to the making of such Credit Extension. Unless Agent shall have been notified in writing by any Lender prior to the date of any Credit Extension, that such Lender will not make the amount that would constitute its share of such borrowing available to Agent, Agent may assume that such Lender is making such amount available to Agent, and Agent may, in reliance upon such assumption, make available to Borrower a corresponding amount. If such amount is not made available to Agent by the required time on the Funding Date therefor, such Lender shall pay to Agent, on demand, such amount with interest thereon, at a rate equal to the greater of (i) the Federal Funds Effective Rate or (ii) a rate determined by Agent in accordance with banking industry rules on interbank compensation, for the period until such Lender makes such amount immediately available to Agent. If such Lenders share of such Credit Extension is not made available to Agent by such Lender within three (3) Business Days after such Funding Date, Agent shall also be entitled to recover such amount with interest thereon at the rate per annum applicable to the Term Loan Advances, on demand, from Borrower.
4 CREATION OF SECURITY INTEREST
4.1 Grant of Security Interest. Borrower hereby grants Agent, for the ratable benefit of the Lenders, to secure the payment and performance in full of all of the Obligations, a continuing security interest in, and pledges to Agent, for the ratable benefit of the Lenders, the Collateral, wherever located, whether now owned or hereafter acquired or arising, and all proceeds and products thereof. For clarity, any reference to Agents Lien or any granting of collateral to Agent in this Agreement or any Loan Document means the Lien granted to Agent for the ratable benefit of the Lenders.
Borrower acknowledges that it previously has entered, and/or may in the future enter, into Bank Services Agreements with SVB. Regardless of the terms of any Bank Services Agreement, Borrower agrees that any amounts Borrower owes SVB thereunder shall be deemed to be Obligations hereunder and that it is the intent of Borrower and SVB to have all such Obligations secured by the first priority perfected security interest in the Collateral granted herein (subject only to Permitted Liens that are permitted pursuant to the terms of this Agreement to have superior priority to Agents Lien in this Agreement), and by any and all other security agreements, mortgages or other collateral granted to Agent by Borrower as security for the Obligations, now or in the future.
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If this Agreement is terminated, Agents Lien in the Collateral shall continue until the Obligations (other than inchoate indemnity obligations) are repaid in full in cash. Upon payment in full in cash of the Obligations (other than inchoate indemnity obligations) and at such time as the Lenders obligation to make Credit Extensions has terminated, Agent shall, at the sole cost and expense of Borrower, release its Liens in the Collateral and all rights therein shall revert to Borrower. In the event (x) all Obligations (other than inchoate indemnity obligations), except for Bank Services, are satisfied in full, and (y) this Agreement is terminated, Agent shall terminate the security interest granted herein upon Borrower providing to SVB cash collateral acceptable to SVB in its good faith business judgment for Bank Services, if any. In the event such Bank Services consist of outstanding Letters of Credit, Borrower shall provide to SVB cash collateral in an amount equal to (x) if such Letters of Credit are denominated in Dollars, then at least one hundred five percent (105.0%); and (y) if such Letters of Credit are denominated in a Foreign Currency, then at least one hundred ten percent (110.0%), of the Dollar Equivalent of the face amount of all such Letters of Credit plus, in each case, all interest, fees, and costs due or to become due in connection therewith (as estimated by SVB in its good faith business judgment), to secure all of the Obligations relating to such Letters of Credit.
4.2 Priority of Security Interest. Borrower represents, warrants, and covenants that the security interests granted herein are and shall at all times continue to be a first priority perfected security interests in the Collateral (subject only to Permitted Liens that are permitted pursuant to the terms of this Agreement to have superior priority to Agents Lien under this Agreement). If Borrower shall acquire a commercial tort claim, Borrower shall promptly notify Agent in a writing signed by Borrower of the general details thereof and grant to Agent, for the ratable benefit of the Lenders, in such writing a security interest therein and in the proceeds thereof, all upon the terms of this Agreement, with such writing to be in form and substance reasonably satisfactory to Agent.
4.3 Authorization to File Financing Statements. Borrower hereby authorizes Agent, on behalf of the Lenders, to file financing statements, without notice to Borrower, with all appropriate jurisdictions to perfect or protect Agents and Lenders interest or rights hereunder, including a notice that any disposition of the Collateral, by Borrower or any other Person, shall be deemed to violate the rights of Agent under the Code. Such financing statements may indicate the Collateral as all assets of the Debtor or words of similar effect, or as being of an equal or lesser scope, or with greater detail, all in Agents discretion.
5 REPRESENTATIONS AND WARRANTIES
Borrower represents and warrants as follows:
5.1 Due Organization, Authorization; Power and Authority. Borrower is duly existing and in good standing as a Registered Organization in its jurisdiction of formation and is qualified and licensed to do business and is in good standing in any jurisdiction in which the conduct of its business or its ownership of property requires that it be qualified except where the failure to do so could not reasonably be expected to have a material adverse effect on Borrowers business. In connection with this Agreement, Borrower has delivered to Agent and each Lender a completed certificate signed by Borrower, entitled Perfection Certificate (the Perfection Certificate). Borrower represents and warrants to Agent and each Lender that: (a) Borrowers exact legal name is that indicated on the Perfection Certificate and on the signature page hereof; (b) Borrower is an organization of the type and is organized in the jurisdiction set forth in the Perfection Certificate; (c) the Perfection Certificate accurately sets forth Borrowers organizational identification number or accurately states that Borrower has none; (d) the Perfection Certificate accurately sets forth Borrowers place of business, or, if more than one, its chief executive office as well as Borrowers mailing address (if different than its chief executive office); (e) Borrower (and each of its predecessors) has not, in the past five (5) years, changed its jurisdiction of formation, organizational structure or type, or any organizational number assigned by its jurisdiction; and (f) all other information set forth on the Perfection Certificate pertaining to Borrower and each of its Subsidiaries is accurate and complete (it being understood and agreed that Borrower may from time to time update certain information
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in the Perfection Certificate after the Effective Date to the extent permitted by one or more specific provisions in this Agreement). If Borrower is not now a Registered Organization but later becomes one, Borrower shall promptly notify Agent of such occurrence and provide Agent with Borrowers organizational identification number.
The execution, delivery and performance by Borrower of the Loan Documents to which it is a party have been duly authorized, and do not (i) conflict with any of Borrowers organizational documents, (ii) contravene, conflict with, constitute a default under or violate any material Requirement of Law, (iii) contravene, conflict or violate any applicable order, writ, judgment, injunction, decree, determination or award of any Governmental Authority by which Borrower or any of its Subsidiaries or any of their property or assets may be bound or affected, (iv) require any action by, filing, registration, or qualification with, or Governmental Approval from, any Governmental Authority (except such Governmental Approvals which have already been obtained and are in full force and effect, filings and registrations contemplated by this Agreement), or (v) conflict with, contravene, constitute a default or breach under, or result in or permit the termination or acceleration of, any material agreement by which Borrower is bound. Borrower is not in default under any agreement to which it is a party or by which it is bound in which the default could reasonably be expected to have a material adverse effect on Borrowers business.
5.2 Collateral. Borrower has good title to, rights in, and the power to transfer each item of the Collateral upon which it purports to grant a Lien under this Agreement and other Loan Documents, free and clear of any and all Liens except Permitted Liens. Borrower has no Collateral Accounts at or with any bank or financial institution other than SVB or SVBs Affiliates except for the Collateral Accounts described in the Perfection Certificate and which Borrower has given Agent notice and taken such actions as are necessary to give Agent, for the ratable benefit of the Lenders, a perfected security interest therein, pursuant to the terms of Section 6.6(c). The Accounts are bona fide, existing obligations of the Account Debtors.
The Collateral is not in the possession of any third party bailee (such as a warehouse) except as otherwise provided in the Perfection Certificate. None of the components of the Collateral (other than mobile equipment such as laptop computers in the possession of Borrowers employees or agents) shall be maintained at locations other than as provided in the Perfection Certificate or as permitted pursuant to Section 7.2.
All Inventory is in all material respects of good and marketable quality, free from material defects.
Borrower is the sole owner of the Intellectual Property which it owns or purports to own except for (a) nonexclusive licenses granted to its customers in the ordinary course of business, (b) over-the-counter software that is commercially available to the public, and (c) material Intellectual Property licensed to Borrower and noted on the Perfection Certificate. Each Patent which it owns or purports to own and which is material to Borrowers business is valid and enforceable, and no part of the Intellectual Property which Borrower owns or purports to own and which is material to Borrowers business has been judged invalid or unenforceable, in whole or in part. To Borrowers knowledge, no claim has been made that any part of the Intellectual Property violates the rights of any third party except to the extent such claim would not reasonably be expected to have a material adverse effect on Borrowers business.
Except as noted on the Perfection Certificate, Borrower is not a party to, nor is it bound by, any Restricted License.
5.3 Litigation. There are no actions or proceedings pending or, to the knowledge of any Responsible Officer, threatened in writing by or against Borrower or any of its Subsidiaries involving more than, individually or in the aggregate, Five Hundred Thousand Dollars ($500,000.00).
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5.4 Financial Statements; Financial Condition. All consolidated financial statements for Borrower and any of its Subsidiaries delivered to Agent or any Lender by submission to the Financial Statement Repository or otherwise submitted to Agent or any Lender fairly present in all material respects Borrowers consolidated financial condition and Borrowers consolidated results of operations. There has not been any material deterioration in Borrowers consolidated financial condition since the date of the most recent financial statements submitted to the Financial Statement Repository or otherwise submitted to Agent or any Lender.
5.5 Solvency. The fair salable value of Borrowers consolidated assets (including goodwill minus disposition costs) exceeds the fair value of Borrowers liabilities; Borrower is not left with unreasonably small capital after the transactions in this Agreement; and Borrower is able to pay its debts (including trade debts) as they mature.
5.6 Regulatory Compliance. Borrower is not an investment company or a company controlled by an investment company under the Investment Company Act of 1940, as amended. Borrower is not engaged as one of its important activities in extending credit for margin stock (under Regulations X, T and U of the Federal Reserve Board of Governors). Borrower (a) has complied in all material respects with all Requirements of Law, and (b) has not violated any Requirements of Law the violation of which could reasonably be expected to have a material adverse effect on its business. None of Borrowers or any of its Subsidiaries properties or assets has been used by Borrower or any Subsidiary or, to Borrowers knowledge, by previous Persons, in disposing, producing, storing, treating, or transporting any hazardous substance other than legally. Borrower and each of its Subsidiaries have obtained all consents, approvals and authorizations of, made all declarations or filings with, and given all notices to, all Governmental Authorities that are necessary to continue their respective businesses as currently conducted.
5.7 Subsidiaries; Investments. Borrower does not own any stock, partnership, or other ownership interest or other equity securities except for Permitted Investments.
5.8 Tax Returns and Payments; Pension Contributions. Borrower has timely filed all required tax returns and reports, and Borrower has timely paid all foreign, federal, state and local taxes, assessments, deposits and contributions owed by Borrower except (a) to the extent such taxes are being contested in good faith by appropriate proceedings promptly instituted and diligently conducted, so long as such reserve or other appropriate provision, if any, as shall be required in conformity with GAAP shall have been made therefor, or (b) if such taxes, assessments, deposits and contributions do not, individually or in the aggregate, exceed Ten Thousand Dollars ($10,000.00).
To the extent Borrower defers payment of any contested taxes, Borrower shall (i) notify Agent in writing of the commencement of, and any material development in, the proceedings, and (ii) post bonds or take any other steps required to prevent the Governmental Authority levying such contested taxes from obtaining a Lien upon any of the Collateral that is other than a Permitted Lien. Borrower is unaware of any claims or adjustments proposed for any of Borrowers prior tax years which could result in additional taxes becoming due and payable by Borrower in excess of Ten Thousand Dollars ($10,000.00). Borrower has paid all amounts necessary to fund all present pension, profit sharing and deferred compensation plans in accordance with their terms, and Borrower has not withdrawn from participation in, and has not permitted partial or complete termination of, or permitted the occurrence of any other event with respect to, any such plan which could reasonably be expected to result in any liability of Borrower, including any liability to the Pension Benefit Guaranty Corporation or its successors or any other governmental agency.
5.9 Use of Proceeds. Borrower shall use the proceeds of the Credit Extensions as working capital and to fund its general business requirements and not for personal, family, household or agricultural purposes.
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5.10 Full Disclosure. No written representation, warranty or other statement of Borrower in any report, certificate or written statement submitted to the Financial Statement Repository or otherwise given to Agent or any Lender in connection with the Loan Documents, or the transactions contemplated thereby, as of the date such representation, warranty, or other statement was made, taken together with all such written reports, written certificates and written statements submitted to the Financial Statement Repository or otherwise given to Agent or any Lender, contains any untrue statement of a material fact or omits to state a material fact necessary to make the statements contained in the reports, certificates or statements, in light of the circumstances in which they were made, not misleading (it being recognized by Agent and each Lender that the projections and forecasts provided by Borrower in good faith and based upon reasonable assumptions are not viewed as facts and that actual results during the period or periods covered by such projections and forecasts may differ from the projected or forecasted results).
5.11 Definition of Knowledge. For purposes of the Loan Documents, whenever a representation or warranty is made to Borrowers knowledge or awareness, to the best of Borrowers knowledge, or with a similar qualification, knowledge or awareness means the actual knowledge, after reasonable investigation, of any Responsible Officer.
6 AFFIRMATIVE COVENANTS
Borrower shall do all of the following:
6.1 Government Compliance.
(a) Maintain its and (except as permitted by Section 7.3) all its Subsidiaries legal existence and good standing in their respective jurisdictions of formation and maintain qualification in each jurisdiction in which the failure to so qualify would reasonably be expected to have a material adverse effect on Borrowers business or operations. Borrower shall comply, and have each Subsidiary comply, in all material respects, with all laws, ordinances and regulations to which it is subject.
(b) Obtain all of the Governmental Approvals necessary for the performance by Borrower of its obligations under the Loan Documents to which it is a party and the grant of a security interest to Agent, for the ratable benefit of the Lenders, in all of its property. Borrower shall promptly provide copies of any such obtained Governmental Approvals to Agent.
6.2 Financial Statements, Reports. Provide Agent and each Lender with the following by posting to the Financial Statement Repository:
(a) Monthly Financial Statements. As soon as available, but no later than thirty (30) days after the last day of each month, a company prepared consolidated balance sheet, and income statement covering Borrowers consolidated operations for such month in a form acceptable to Agent (the Monthly Financial Statements);
(b) Monthly Compliance Statement. Within thirty (30) days after the last day of each month and together with the Monthly Financial Statements, a completed Compliance Statement confirming that, as of the end of such month, Borrower was in compliance with all of the terms and conditions of this Agreement, and setting forth calculations showing compliance with the financial covenants set forth in this Agreement and such other information as Agent or the Lenders may reasonably request;
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(c) Board Projections. As soon as available, at least annually, and in any event no later than sixty (60) days after the last day of Borrowers fiscal year, and contemporaneously with any Board approved updates or changes thereto, annual Board-approved operating budget and financial projections, in a form reasonably acceptable to Agent;
(d) Annual Audited Financial Statements. As soon as available, but no later than one hundred eighty (180) days after the last day of Borrowers fiscal year, audited consolidated financial statements prepared under GAAP, consistently applied, together with an unqualified opinion on the financial statements from an independent certified public accounting firm reasonably acceptable to Agent;
(e) Other Statements. Within five (5) days of delivery, copies of all statements, reports and notices made available to Borrowers security holders or to any holders of Subordinated Debt;
(f) SEC Filings. In the event that Borrower becomes subject to the reporting requirements under the Exchange Act, within five (5) days of filing, copies of all periodic and other reports, proxy statements and other materials filed by Borrower with the SEC, any Governmental Authority succeeding to any or all of the functions of the SEC or with any national securities exchange, or distributed to its shareholders, as the case may be. Documents required to be delivered pursuant to the terms hereof (to the extent any such documents are included in materials otherwise filed with the SEC) may be delivered electronically and if so delivered, shall be deemed to have been delivered on the date on which Borrower posts such documents, or provides a link thereto, on Borrowers website on the internet at Borrowers website address; provided, however, Borrower shall promptly notify Agent and the Lenders in writing (which may be by electronic mail) of the posting of any such documents;
(g) Legal Action Notice. A prompt report of any legal actions pending or threatened in writing against Borrower or any of its Subsidiaries that could result in damages or costs to Borrower or any of its Subsidiaries of, individually or in the aggregate, Five Hundred Thousand Dollars ($500,000.00) or more;
(h) Beneficial Ownership Information. Prompt written notice of any changes to the beneficial ownership information set out in Section 14 of the Perfection Certificate. Borrower understands and acknowledges that each Lender relies on such true, accurate and up-to-date beneficial ownership information to meet such Lenders regulatory obligations to obtain, verify and record information about the beneficial owners of its legal entity customers; and
(i) Other Financial Information. Other financial information reasonably requested by Agent or any Lender.
Any submission by Borrower of a Compliance Statement, or any other financial statement submitted to the Financial Statement Repository pursuant to this Section 6.2 or otherwise submitted to Agent or either Lender shall be deemed to be a representation by Borrower that (a) as of the date of such Compliance Statement, or other financial statement, the information and calculations set forth therein are true, accurate and correct, (b) as of the end of the compliance period set forth in such submission, Borrower is in complete compliance with all required covenants except as noted in such Compliance Statement or other financial statement, as applicable; (c) as of the date of such submission, no Events of Default have occurred or are continuing; (d) all representations and warranties other than any representations or warranties that are made as of a specific date in Article 5 remain true and correct in all material respects as of the date of such submission except as noted in such Compliance Statement, or other financial statement, as applicable; (e) as of the date of such submission, Borrower and each of its Subsidiaries has timely filed all required tax returns and reports, and Borrower has timely paid all foreign, federal, state and local taxes, assessments, deposits and contributions owed by Borrower except as otherwise permitted pursuant to the terms of Section 5.8; and (f) as of the date of such submission, no Liens have been levied or claims made against Borrower or any of its Subsidiaries relating to unpaid employee payroll or benefits of which Borrower has not previously provided written notification to Agent or either Lender.
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6.3 Taxes; Pensions. Timely file and require each of its Subsidiaries to timely file, all required tax returns and reports and timely pay, and require each of its Subsidiaries to timely pay, all foreign, federal, state and local taxes, assessments, deposits and contributions owed by Borrower and each of its Subsidiaries, except for deferred payment of any taxes contested pursuant to the terms of Section 5.8 hereof, and shall deliver to Agent, on demand, appropriate certificates attesting to such payments, and pay all amounts necessary to fund all present pension, profit sharing and deferred compensation plans in accordance with their terms.
6.4 Inventory; Returns. Keep all Inventory in good and marketable condition, free from material defects. Returns and allowances between Borrower and its Account Debtors shall follow Borrowers customary practices as they exist at the Effective Date. Borrower must promptly notify Agent and the Lenders of all returns, recoveries, disputes and claims that involve more than Five Hundred Thousand Dollars ($500,000.00).
6.5 Insurance.
(a) Keep its business and the Collateral insured for risks and in amounts standard for companies in Borrowers industry and location and as Agent may reasonably request. Insurance policies shall be in a form, with financially sound and reputable insurance companies that are not Affiliates of Borrower, and in amounts that are satisfactory to Agent. All property policies shall have a lenders loss payable endorsement showing Agent as the sole lender loss payee. All liability policies shall show, or have endorsements showing, Agent as an additional insured. Agent shall be named as lender loss payee and/or additional insured with respect to any such insurance providing coverage in respect of any Collateral.
(b) Ensure that proceeds payable under any property policy are, at Agents option, payable to Agent for the ratable benefit of the Lenders on account of the Obligations. Notwithstanding the foregoing, (i) so long as no Event of Default has occurred and is continuing, Borrower shall have the option of applying the proceeds of any casualty policy up to Two Hundred Fifty Thousand Dollars ($250,000.00) with respect to any loss, but not exceeding Five Hundred Thousand Dollars ($500,000.00) in the aggregate for all losses under all casualty policies in any one year, toward the replacement or repair of destroyed or damaged property; provided that any such replaced or repaired property (A) shall be of equal or like value as the replaced or repaired Collateral and (B) shall be deemed Collateral in which Agent has been granted a first priority security interest (subject only to Permitted Liens that are permitted pursuant to the terms of this Agreement to have superior priority to Agents Lien under this Agreement), and (ii) after the occurrence and during the continuance of an Event of Default, all proceeds payable under such casualty policy shall, at the option of Agent, be payable to Agent for the ratable benefit of the Lenders on account of the Obligations.
(c) At Agents request, Borrower shall deliver certified copies of insurance policies and evidence of all premium payments. Each provider of any such insurance required under this Section 6.5 shall agree, by endorsement upon the policy or policies issued by it or by independent instruments furnished to Agent, that it will give Agent thirty (30) days prior written notice before any such policy or policies shall be materially altered or canceled. If Borrower fails to obtain insurance as required under this Section 6.5 or to pay any amount or furnish any required proof of payment to third persons and Agent, Agent may make all or part of such payment or obtain such insurance policies required in this Section 6.5, and take any action under the policies Agent deems prudent.
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6.6 Operating Accounts.
(a) Maintain its and all of its Subsidiaries (other than the Securities Corp.) operating and other deposit accounts and excess cash with SVB and SVBs Affiliates; provided, however, that (i) Borrower may maintain its account with Wells Fargo Advisors existing on the Effective Date and disclosed in the Perfection Certificate (the Wells Fargo Account), so long as the aggregate amount of funds in the Wells Fargo Account does not exceed One Hundred Thousand Dollars ($100,000.00) at any time and (ii) at all times from and after the Effective Date, Borrower (individually and not on a consolidated basis) shall at all times have on deposit in an operating account in the name of Borrower maintained with SVB, cash in an amount equal to the lesser of (A) one hundred percent (100.0%) of the Dollar value of all of Borrowers consolidated cash, including any Subsidiaries, Affiliates, or related entities cash, in the aggregate at all financial institutions, and (B) one hundred five percent (105.0%) of the then-outstanding Obligations of Borrower to the Lenders. SVB may restrict withdrawals or transfers by or on behalf of Borrower that would violate this Section 6.6(a), regardless of whether an Event of Default exists at such time.
(b) In addition to the foregoing, Borrower and any Subsidiary of Borrower shall conduct all of its business credit cards and letters of credit banking exclusively with SVB; provided, however, that Borrower may maintain credit cards with financial institutions other than Bank pursuant to the terms of clause (g) of Permitted Indebtedness.
(c) Provide Agent five (5) days prior written notice before establishing any Collateral Account at or with any bank or financial institution other than SVB or SVBs Affiliates. In addition, for each account that the Lenders in their sole discretion permit Borrower at any time to open or maintain (other than accounts at SVB), Borrower shall cause the applicable bank or financial institution (other than SVB) at or with which any such Collateral Account is opened or maintained to execute and deliver a Control Agreement or other appropriate instrument with respect to such Collateral Account to perfect Agents Lien in such Collateral Account in accordance with the terms hereunder, which Control Agreement may not be terminated without the prior written consent of the Lenders. The provisions of the previous sentence shall not apply to (i) deposit accounts exclusively used for payroll, payroll taxes and other employee wage and benefit payments to or for the benefit of Borrowers employees and identified to Agent and the Lenders by Borrower as such or (ii) the Wells Fargo Account.
6.7 Financial CovenantMinimum EndeavorRX Revenue. Maintain at all times, to be tested as of the last day of each calendar quarter, EndeavorRx Revenue for the three (3) month period ending on the last day of such calendar quarter in an amount equal to at least the amount set forth in the table below corresponding to such period:
Quarter Ending |
EndeavorRX Revenue | |||
June 30, 2021 |
$ | 268,450.00 | ||
September 30, 2021 |
$ | 898,275.00 | ||
December 31, 2021 |
$ | 2,106,300.00 | ||
March 31, 2022 |
$ | 4,206,285.00 | ||
June 30, 2022 |
$ | 6,231,108.00 | ||
September 30, 2022 |
$ | 8,312,740.00 | ||
December 31, 2022 |
$ | 10,820,696.00 |
14
March 31, 2023 June 30, 2023 September 30, 2023 December 31, 2023 With respect to the any calendar quarter ending after December 31, 2023, the Lenders will set the
EndeavorRX Revenue levels for each such calendar quarter in their sole discretion after good faith efforts to consult with Borrower, based upon, among other factors, budgets, sales projections, operating plans and other financial information with
respect to Borrower that the Lenders deem relevant, including, without limitation Borrowers annual financial projections approved by the Board. With respect thereto: (i) for the 2024 calendar year, Borrowers failure to agree in writing (which agreement shall be set forth in a written
amendment to this Agreement) on or before December 31, 2023 to any such covenant levels proposed by Lenders with respect to the 2024 calendar year, shall result in an immediate Event of Default for which there shall be no grace or cure period;
and (ii) for the 2025 calendar year, Borrowers failure to agree in writing (which agreement shall be set forth in a
written amendment to this Agreement) on or before December 31, 2024 to any such covenant levels proposed by the Lenders with respect to the 2025 calendar year, shall result in an immediate Event of Default for which there shall be no grace or
cure period. Notwithstanding the foregoing, the financial covenant set forth in this Section 6.7 shall not be tested for any
calendar quarter (such quarter, a Tested Quarter) (a) with respect to which Borrower maintained the Minimum Cash Balance at all times during the period commencing on the first day of such Tested Quarter through and including the
date that is thirty (30) days after the last day of such Tested Quarter, or (b) ending prior to the Funding Date of the first Term B Loan Advance. 6.8 Protection of Intellectual Property Rights. (a) (i) Protect, defend and maintain the validity and enforceability of its Intellectual Property; (ii) promptly advise Agent in writing
of material infringements or any other event that could reasonably be expected to materially and adversely affect the value of its Intellectual Property; and (iii) not allow any Intellectual Property material to Borrowers business to be
abandoned, forfeited or dedicated to the public without Agents written consent. (b) Provide written notice to Agent within ten
(10) days of entering or becoming bound by any Restricted License (other than over-the-counter software that is commercially available to the public). Borrower
shall take such steps as Agent reasonably requests to obtain the consent of, or waiver by, any person whose consent or waiver is necessary for (i) any Restricted License to be deemed Collateral and for Agent to have a security
interest in it that might otherwise be restricted or prohibited by law or by the terms of any such Restricted License, whether now existing or entered into in the future, and (ii) Agent to have the ability in the event of a liquidation of any
Collateral to dispose of such Collateral in accordance with Agents and the Lenders rights and remedies under this Agreement and the other Loan Documents. 15
6.9 Litigation Cooperation. From the date hereof and continuing through the
termination of this Agreement, make available to Agent, without expense to Agent or any Lender and upon one (1) Business Days notice (provided no notice is required if an Event of Default has occurred and is continuing), Borrower and its
officers, employees and agents and Borrowers books and records, to the extent that Agent and/or the Lenders may deem them reasonably necessary to prosecute or defend any third-party suit or proceeding instituted by or against Agent and/or any
Lender with respect to any Collateral or relating to Borrower. 6.10 Access to Collateral; Books and Records. Allow Agent or
its agents, at reasonable times, on five (5) Business Days notice (provided no notice is required if an Event of Default has occurred and is continuing), to inspect the Collateral and audit and copy Borrowers Books. Such inspections
or audits shall be conducted no more often than once every twelve (12) months unless an Event of Default has occurred and is continuing in which case such inspections and audits shall occur as often as Agent shall determine is necessary. The
foregoing inspections and audits shall be at Borrowers expense and the charge therefor shall be One Thousand Dollars ($1,000.00) per person per day (or such higher amount as shall represent Agents then-current standard charge for the
same), plus reasonable out-of-pocket expenses. In the event Borrower and Agent schedule an audit more than eight (8) days in advance, and Borrower cancels or
reschedules the audit with less than eight (8) days written notice to Agent, then (without limiting any of Agents or any Lenders rights or remedies) Borrower shall pay Agent a fee of Two Thousand Dollars ($2,000.00) plus any out-of-pocket expenses incurred by Agent to compensate Agent for the anticipated costs and expenses of the cancellation or rescheduling. 6.11 Further Assurances. Execute any further instruments and take further action as Agent and the Lenders reasonably request to
perfect or continue Agents Lien in the Collateral or to effect the purposes of this Agreement. Deliver to Agent and the Lenders, within five (5) days after the same are sent or received, copies of all correspondence, reports, documents
and other filings with any Governmental Authority regarding compliance with or maintenance of Governmental Approvals or Requirements of Law or that could reasonably be expected to have a material effect on any of the Governmental Approvals or
otherwise on the operations of Borrower or any of its Subsidiaries. 7 NEGATIVE COVENANTS Borrower shall not do any of the following without the prior written consent of the Lenders: 7.1 Dispositions. Convey, sell, lease, transfer, assign, or otherwise dispose of (including, without limitation, pursuant to a
Division) (collectively, Transfer), or permit any of its Subsidiaries to Transfer, all or any part of its business or property, except for Transfers (a) of Inventory in the ordinary course of business; (b) of worn- out,
obsolete or surplus Equipment that is, in the reasonable judgment of Borrower, no longer economically practicable to maintain or useful in the ordinary course of business of Borrower; (c) by a Subsidiary to Borrower; (d) consisting of
Permitted Liens and Permitted Investments; (e) consisting of the sale or issuance of any stock of Borrower permitted under Section 7.2 of this Agreement; (f) consisting of Borrowers use or transfer of money or Cash Equivalents
in a manner that is not prohibited by the terms of this Agreement or the other Loan Documents; and (g) non-exclusive licenses for the use of the property of Borrower or its Subsidiaries in the ordinary
course of business and licenses that could not result in a legal transfer of title of the licensed property but that may be exclusive in respects other than territory and that may be exclusive as to territory only as to discrete geographical areas
outside of the United States. 7.2 Changes in Business, Management, Control, or Business Locations. (a) Engage in or
permit any of its Subsidiaries to engage in any business other than the businesses currently engaged in by Borrower and such Subsidiary, as applicable, or reasonably related thereto; (b) liquidate or dissolve; (c) fail to provide notice to
Agent and Lenders of any Key Person departing from or ceasing to be employed by Borrower within five (5) Business Days after such Key Persons departure from Borrower; or (d) permit or suffer any Change in Control. 16
Borrower shall not, without at least thirty (30) days prior written notice to Agent:
(1) add any new offices or business locations, including warehouses (unless each such new office or business location contains less than One Hundred Thousand Dollars ($100,000.00) in Borrowers assets or property) or deliver any portion of
the Collateral valued, individually or in the aggregate, in excess of Five Hundred Thousand Dollars ($500,000.00) to a bailee at a location other than to a bailee and at a location already disclosed in the Perfection Certificate, (2) change its
jurisdiction of organization, (3) change its organizational structure or type, (4) change its legal name, or (5) change any organizational number (if any) assigned by its jurisdiction of organization. If Borrower intends to add any
new offices or business locations, including warehouses, containing in excess of Five Hundred Thousand Dollars ($500,000.00) of Borrowers assets or property, then Borrower will first receive the written consent of Agent, and the landlord of
any such new offices or business locations, including warehouses, shall execute and deliver a landlord consent in form and substance reasonably satisfactory to Agent. If Borrower intends to deliver any portion of the Collateral valued, individually
or in the aggregate, in excess of Five Hundred Thousand Dollars ($500,000.00) to a bailee, and Agent and such bailee are not already parties to a bailee agreement governing both the Collateral and the location to which Borrower intends to deliver
the Collateral, then Borrower will first receive the written consent of Agent, and such bailee shall execute and deliver a bailee agreement in form and substance reasonably satisfactory to Agent. 7.3 Mergers or Acquisitions. Merge or consolidate, or permit any of its Subsidiaries to merge or consolidate, with any other
Person, or acquire, or permit any of its Subsidiaries to acquire, all or substantially all of the capital stock or property of another Person (including, without limitation, by the formation of any Subsidiary or pursuant to a Division), except for
Permitted Acquisitions. A Subsidiary may merge or consolidate into another Subsidiary or into Borrower. In the event that Borrower sends a request to the Lenders requesting the Lenders consent to a proposed acquisition that is not a Permitted
Acquisition (which request shall specifically state that such request is being made pursuant to Section 7.3 of this Agreement), if each Lender does not respond to such request within ten (10) Business Days after delivery to such Lender of
summary information (including (i) any final term sheet, letter of intent, memorandum of understanding or similar summary of the principal terms of the proposed acquisition, (ii) the most recent draft purchase agreement or acquisition
agreement for the proposed acquisition, (iii) updated pro forma financial projections (on a quarterly basis) for the remainder of Borrowers fiscal year and (iv) any other information requested by the Lenders with respect to such
transaction) regarding the proposed acquisition, then such request for consent shall be deemed to be denied, and such proposed acquisition shall not be permitted hereunder. 7.4 Indebtedness. Create, incur, assume, or be liable for any Indebtedness, or permit any Subsidiary to do so, other than
Permitted Indebtedness. 7.5 Encumbrance. Create, incur, allow, or suffer any Lien on any of its property, or assign or
convey any right to receive income, including the sale of any Accounts, or permit any of its Subsidiaries to do so, except for Permitted Liens, permit any Collateral not to be subject to the first priority security interest granted herein, or enter
into any agreement, document, instrument or other arrangement (except with or in favor of Agent, for the ratable benefit of the Lenders) with any Person which directly or indirectly prohibits or has the effect of prohibiting Borrower or any
Subsidiary from assigning, mortgaging, pledging, granting a security interest in or upon, or encumbering any of Borrowers or any Subsidiarys Intellectual Property, except as is otherwise permitted in Section 7.1 hereof and the
definition of Permitted Liens herein. 7.6 Maintenance of Collateral Accounts. Maintain any Collateral Account
except pursuant to the terms of Section 6.6(c) hereof. 17
7.7 Distributions; Investments. (a) Pay any dividends or make any
distribution or payment or redeem, retire or purchase any capital stock, provided that Borrower may (i) convert any of its convertible securities into other securities pursuant to the terms of such convertible securities or otherwise in
exchange thereof, (ii) pay dividends solely in common stock, and (iii) repurchase the stock of former employees or consultants pursuant to stock repurchase agreements so long as an Event of Default does not exist at the time of any such
repurchase and would not exist after giving effect to any such repurchase, provided that the aggregate amount of all such repurchases does not exceed One Hundred Thousand Dollars ($100,000.00) per fiscal year; or (b) directly or indirectly make
any Investment (including, without limitation, by the formation of any Subsidiary) other than Permitted Investments, or permit any of its Subsidiaries to do so. 7.8 Transactions with Affiliates. Directly or indirectly enter into or permit to exist any material transaction with any
Affiliate of Borrower, except for (a) transactions that are in the ordinary course of Borrowers business, upon fair and reasonable terms that are no less favorable to Borrower than would be obtained in an arms length transaction
with a non-affiliated Person and (b) equity financings of Borrower that do not result in a Change in Control. 7.9 Subordinated Debt. (a) Make or permit any payment on any Subordinated Debt, except under the terms of the
subordination, intercreditor, or other similar agreement to which such Subordinated Debt is subject, or (b) amend any provision in any document relating to the Subordinated Debt which would increase the amount thereof, provide for earlier or
greater principal, interest, or other payments thereon, or adversely affect the subordination thereof to Obligations owed to Agent and the Lenders. 7.10 Compliance. Become an investment company or a company controlled by an investment company, under
the Investment Company Act of 1940, as amended, or undertake as one of its important activities extending credit to purchase or carry margin stock (as defined in Regulation U of the Board of Governors of the Federal Reserve System), or use the
proceeds of any Credit Extension for that purpose; fail to (a) meet the minimum funding requirements of ERISA, (b) prevent a Reportable Event or Prohibited Transaction, as defined in ERISA, from occurring, or (c) comply with the
Federal Fair Labor Standards Act, the failure of any of the conditions described in clauses (a) through (c) which could reasonably be expected to have a material adverse effect on Borrowers business; or violate any other law or
regulation, if the violation could reasonably be expected to have a material adverse effect on Borrowers business, or permit any of its Subsidiaries to do so; withdraw or permit any Subsidiary to withdraw from participation in, permit partial
or complete termination of, or permit the occurrence of any other event with respect to, any present pension, profit sharing and deferred compensation plan which could reasonably be expected to result in any liability of Borrower, including any
liability to the Pension Benefit Guaranty Corporation or its successors or any other governmental agency. 8 EVENTS OF DEFAULT
Any one of the following shall constitute an event of default (an Event of Default) under this Agreement: 8.1 Payment Default. Borrower fails to (a) make any payment of principal or interest on any Credit Extension when due, or
(b) pay any other Obligations within three (3) Business Days after such Obligations are due and payable (which three (3) Business Day cure period shall not apply to payments due on the Term Loan Maturity Date). During the cure period,
the failure to make or pay any payment specified under clause (b) hereunder is not an Event of Default (but no Credit Extension will be made during the cure period); 18
8.2 Covenant Default. (a) Borrower fails or neglects to perform any obligation in Sections 6.2, 6.3, 6.4, 6.5, 6.6, 6.7, 6.8, or 6.10 or violates any covenant in
Section 7; or (b) Borrower fails or neglects to perform, keep, or observe any other term, provision, condition, covenant or
agreement contained in this Agreement or any Loan Documents, and as to any default (other than those specified in this Section 8) under such other term, provision, condition, covenant or agreement that can be cured, has failed to cure the
default within ten (10) days after the occurrence thereof; provided, however, that if the default cannot by its nature be cured within the ten (10) day period or cannot after diligent attempts by Borrower be cured within such ten
(10) day period, and such default is likely to be cured within a reasonable time, then Borrower shall have an additional period (which shall not in any case exceed thirty (30) days) to attempt to cure such default, and within such
reasonable time period the failure to cure the default shall not be deemed an Event of Default (but no Credit Extensions shall be made during such cure period). Cure periods provided under this section shall not apply, among other things, to
financial covenants or any other covenants set forth in clause (a) above; 8.3 Material Adverse Change. A Material
Adverse Change occurs; 8.4 Attachment; Levy; Restraint on Business. (a) (i) The service of process seeking to attach, by trustee or similar process, any funds of Borrower or of any entity under the control of
Borrower (including a Subsidiary), or (ii) a notice of lien or levy is filed against any of Borrowers assets by any Governmental Authority, and the same under subclauses (i) and (ii) hereof are not, within ten (10) days after
the occurrence thereof, discharged or stayed (whether through the posting of a bond or otherwise); provided, however, no Credit Extensions shall be made during any ten (10) day cure period; or (b) (i) any material portion of Borrowers assets is attached, seized, levied on, or comes into possession of a trustee or receiver, or
(ii) any court order enjoins, restrains, or prevents Borrower from conducting all or any material part of its business; 8.5
Insolvency. (a) Borrower or any of its Subsidiaries is unable to pay its debts (including trade debts) as they become due or otherwise becomes insolvent; (b) Borrower or any of its Subsidiaries begins an Insolvency Proceeding; or
(c) an Insolvency Proceeding is begun against Borrower or any of its Subsidiaries and is not dismissed or stayed within forty-five (45) days (but no Credit Extensions shall be made while any of the conditions described in clause
(a) exist and/or until any Insolvency Proceeding is dismissed); 8.6 Other Agreements. There is, under any agreement to
which Borrower is a party with a third party or parties, (a) any default resulting in a right by such third party or parties, whether or not exercised, to accelerate the maturity of any Indebtedness in an amount individually or in the aggregate
in excess of Five Hundred Thousand Dollars ($500,000.00); or (b) any breach or default by Borrower, the result of which could have a material adverse effect on Borrowers business; 8.7 Judgments; Penalties. One or more fines, penalties or final judgments, orders or decrees for the payment of money in an
amount, individually or in the aggregate, of at least Five Hundred Thousand Dollars ($500,000.00) (not covered by independent third-party insurance as to which liability has been accepted by such insurance carrier) shall be rendered against Borrower
by any Governmental Authority, and the same are not, within ten (10) days after the entry, assessment or issuance thereof, discharged, satisfied, or paid, or after execution thereof, stayed or bonded pending appeal, or such judgments are not
discharged prior to the expiration of any such stay (provided that no Credit Extensions will be made prior to the satisfaction, payment, discharge, stay, or bonding of such fine, penalty, judgment, order or decree); 19
8.8 Misrepresentations. Borrower or any Person acting for Borrower makes any
representation, warranty, or other statement now or later in this Agreement, any Loan Document or in any writing delivered to Agent or any Lender or to induce Agent or any Lender to enter this Agreement or any Loan Document, and such representation,
warranty, or other statement is incorrect in any material respect when made; 8.9 Subordinated Debt. Any document,
instrument, or agreement evidencing any Subordinated Debt shall for any reason be revoked or invalidated or otherwise cease to be in full force and effect, any Person shall be in breach thereof or contest in any manner the validity or enforceability
thereof or deny that it has any further liability or obligation thereunder, or the Obligations shall for any reason be subordinated or shall not have the priority contemplated by this Agreement or any applicable subordination or intercreditor
agreement; or 8.10 Governmental Approvals. Any Governmental Approval shall have been (a) revoked, rescinded,
suspended, modified in an adverse manner or not renewed in the ordinary course for a full term or (b) subject to any decision by a Governmental Authority that designates a hearing with respect to any applications for renewal of any of such
Governmental Approval or that could result in the Governmental Authority taking any of the actions described in clause (a) above, and such decision or such revocation, rescission, suspension, modification or
non-renewal (i) causes, or could reasonably be expected to cause, a Material Adverse Change, or (ii) adversely affects the legal qualifications of Borrower or any of its Subsidiaries to hold such
Governmental Approval in any applicable jurisdiction and such revocation, rescission, suspension, modification or non-renewal could reasonably be expected to affect the status of or legal qualifications of
Borrower or any of its Subsidiaries to hold any Governmental Approval in any other jurisdiction. 9 RIGHTS AND REMEDIES 9.1 Rights and Remedies. Upon the occurrence and during the continuance of an Event of Default, Agent, in accordance with the
Lender Intercreditor Agreement or, if such rights and remedies are not addressed in the Lender Intercreditor Agreement, as directed by Lenders having a majority of the Obligations, may, without notice or demand, do any or all of the following, to
the extent not prohibited by applicable law: (a) declare all Obligations immediately due and payable (but if an Event of Default described
in Section 8.5 occurs all Obligations are immediately due and payable without any action by Agent or any Lender); (b) stop advancing
money or extending credit for Borrowers benefit under this Agreement or under any other agreement among Borrower, Agent, and/or any Lenders; (c) demand that Borrower (i) deposit cash with SVB in an amount equal to at least (A) one hundred five percent (105.0%) of the
Dollar Equivalent of the aggregate face amount of all Letters of Credit denominated in Dollars remaining undrawn, and (B) one hundred ten percent (110.0%) of the Dollar Equivalent of the aggregate face amount of all Letters of Credit
denominated in a Foreign Currency remaining undrawn (plus, in each case, all interest, fees, and costs due or to become due in connection therewith (as estimated by SVB in its good faith business judgment)), to secure all of the Obligations relating
to such Letters of Credit, as collateral security for the repayment of any future drawings under such Letters of Credit, and Borrower shall forthwith deposit and pay such amounts, and (ii) pay in advance all letter of credit fees scheduled to
be paid or payable over the remaining term of any Letters of Credit; 20
(d) terminate any FX Contracts; (e) verify the amount of, demand payment of and performance under, and collect any Accounts and General Intangibles, settle or adjust disputes
and claims directly with Account Debtors for amounts on terms and in any order that Agent and/or the Lenders consider advisable, and notify any Person owing Borrower money of Agents security interest in such funds. Borrower shall collect all
payments in trust for Agent, for the ratable benefit of the Lenders and, if requested by Agent, immediately deliver the payments to Agent, for the ratable benefit of the Lenders in the form received from the Account Debtor, with proper endorsements
for deposit; (f) make any payments and do any acts Agent or any Lender considers necessary or reasonable to protect the Collateral and/or
its security interest in the Collateral. Borrower shall assemble the Collateral if Agent requests and make it available as Agent designates at any location that is reasonably convenient to Agent and Borrower. Agent may peaceably enter premises where
the Collateral is located, take and maintain possession of any part of the Collateral, and pay, purchase, contest, or compromise any Lien which appears to be prior or superior to its security interest or charges and pay all expenses incurred.
Borrower grants Agent a license to enter and occupy any of its premises, without charge by Borrower, to exercise any of Agents rights or remedies; (g) apply to the Obligations then due (i) any balances and deposits of Borrower it holds, or (ii) any amount held by Agent owing to
or for the credit or the account of Borrower; (h) ship, reclaim, recover, store, finish, maintain, repair, prepare for sale, advertise
for sale, and sell the Collateral. Agent, for the benefit of the Lenders is hereby granted a non-exclusive, royalty-free license or other right to use, without charge, Borrowers labels, Patents,
Copyrights, mask works, rights of use of any name, trade secrets, trade names, Trademarks, and advertising matter, or any similar property as it pertains to the Collateral, in completing production of, advertising for sale, and selling any
Collateral and, in connection with Agents exercise of its rights under this Section 9.1, Borrowers rights under all licenses and all franchise agreements inure to Agent, for the ratable benefit of the Lenders; (i) place a hold on any account maintained with Agent or Lenders and/or deliver a notice of exclusive control, any entitlement
order, or other directions or instructions pursuant to any Control Agreement or similar agreements providing control of any Collateral; (j) demand and receive possession of Borrowers Books; and (k) exercise all rights and remedies available to Agent and the Lenders under the Loan Documents or at law or equity, including all remedies
provided under the Code (including disposal of the Collateral pursuant to the terms thereof). 9.2 Power of Attorney.
Borrower hereby irrevocably appoints Agent, for the benefit of the Lenders, as its lawful attorney-in-fact, exercisable upon the occurrence and during the continuance of
an Event of Default, to: (a) endorse Borrowers name on any checks or other forms of payment or security; (b) sign Borrowers name on any invoice or bill of lading for any Account or drafts against Account Debtors;
(c) settle and adjust disputes and claims about the Accounts directly with Account Debtors, for amounts and on terms Agent determines reasonable; (d) make, settle, and adjust all claims under Borrowers insurance policies;
(e) pay, contest or settle any Lien, charge, encumbrance, security interest, and adverse claim in or to the Collateral, or any judgment based thereon, or otherwise take any action to terminate or
21
discharge the same; and (f) transfer the Collateral into the name of Agent or a third party as the Code permits. Borrower hereby appoints Agent as its lawful
attorney-in-fact to sign Borrowers name on any documents necessary to perfect or continue the perfection of Agents security interest in the Collateral
regardless of whether an Event of Default has occurred until all Obligations (other than inchoate indemnity obligations) have been satisfied in full and Lenders are under no further obligation to make Credit Extensions hereunder. Agents
foregoing appointment as Borrowers attorney in fact, and all of Agents rights and powers, coupled with an interest, are irrevocable until all Obligations (other than inchoate indemnity obligations) have been fully repaid and performed
and each Lenders obligation to provide Credit Extensions terminates. 9.3 Protective Payments. If Borrower fails to
obtain the insurance called for by Section 6.5 or fails to pay any premium thereon or fails to pay any other amount which Borrower is obligated to pay under this Agreement or any other Loan Document or which may be required to preserve the
Collateral, Agent may obtain such insurance or make such payment, and all amounts so paid by Agent are Lenders Expenses and immediately due and payable, bearing interest at the then highest rate applicable to the Obligations, and secured by
the Collateral. Agent will make reasonable efforts to provide Borrower with notice of Agent obtaining such insurance at the time it is obtained or within a reasonable time thereafter. No payments by Agent are deemed an agreement to make similar
payments in the future or Agents and/or Lenders waiver of any Event of Default. 9.4 Application of Payments and
Proceeds Upon Default. If an Event of Default has occurred and is continuing, Agent shall have the right to apply in any order any funds in its possession, whether from Borrowers account balances, payments, proceeds realized as the result
of any collection of Accounts or other disposition of the Collateral, or otherwise, to the Obligations. Agent shall pay any surplus to Borrower by credit to the Designated Deposit Account or to other Persons legally entitled thereto; Borrower shall
remain liable to Agent and the Lenders for any deficiency. If Agent, directly or indirectly, enters into a deferred payment or other credit transaction with any purchaser at any sale of Collateral, Agent shall have the option, exercisable at any
time, of either reducing the Obligations by the principal amount of the purchase price or deferring the reduction of the Obligations until the actual receipt by Agent of cash therefor. 9.5 Liability for Collateral. So long as Agent and Lenders comply with reasonable banking practices regarding the safekeeping of
the Collateral in their possession or under the control of Agent and/or Lenders, Agent and Lenders shall not be liable or responsible for: (a) the safekeeping of the Collateral; (b) any loss or damage to the Collateral; (c) any
diminution in the value of the Collateral; or (d) any act or default of any carrier, warehouseman, bailee, or other Person. Borrower bears all risk of loss, damage or destruction of the Collateral. 9.6 No Waiver; Remedies Cumulative. Agents and any Lenders failure, at any time or times, to require strict
performance by Borrower of any provision of this Agreement or any other Loan Document shall not waive, affect, or diminish any right of Agent or any Lender thereafter to demand strict performance and compliance herewith or therewith. No waiver
hereunder shall be effective unless signed by the party granting the waiver and then is only effective for the specific instance and purpose for which it is given. Agents and each Lenders rights and remedies under this Agreement and the
other Loan Documents are cumulative. Agent and each Lender have all rights and remedies provided under the Code, by law, or in equity. Agents or any Lenders exercise of one right or remedy is not an election and shall not preclude Agent
or any Lender from exercising any other remedy under this Agreement or any other Loan Document or other remedy available at law or in equity, and Agents or any Lenders waiver of any Event of Default is not a continuing waiver.
Agents or any Lenders delay in exercising any remedy is not a waiver, election, or acquiescence. 22
9.7 Demand Waiver. Borrower waives demand, notice of default or dishonor,
notice of payment and nonpayment, notice of any default, nonpayment at maturity, release, compromise, settlement, extension, or renewal of accounts, documents, instruments, chattel paper, and guarantees held by Agent on which Borrower is liable.
9.8 Erroneous Payments. (a) If Agent notifies a Lender or any Person who has received funds on behalf of another Lender (any such Lender or other recipient, a
Payment Recipient) that Agent has determined in its sole discretion (whether or not after receipt of any notice under immediately succeeding clause (b)) that any funds received by such Payment Recipient from Agent or any of its
Affiliates were erroneously transmitted to, or otherwise erroneously or mistakenly received by, such Payment Recipient (whether or not known to such Lender or other Payment Recipient on its behalf) (any such funds, whether received as a payment,
prepayment or repayment of principal, interest, fees, distribution or otherwise, individually and collectively, an Erroneous Payment) and demands the return of such Erroneous Payment (or a portion thereof), such Erroneous Payment
shall at all times remain the property of Agent and shall be segregated by the Payment Recipient and held in trust for the benefit of Agent, and such Lender or other Person (or, with respect to any Payment Recipient who received such funds on its
behalf, shall cause such Payment Recipient to) promptly, but in no event later than two Business Days thereafter, return to Agent the amount of any such Erroneous Payment (or portion thereof) as to which such a demand was made, in same day funds (in
the currency so received), together with interest thereon in respect of each day from and including the date such Erroneous Payment (or portion thereof) was received by such Payment Recipient to the date such amount is repaid to Agent in same day
funds at the greater of the Federal Funds Effective Rate and a rate determined by Agent in accordance with banking industry rules on interbank compensation from time to time in effect. A notice of Agent to any Payment Recipient under this clause
(a) shall be conclusive, absent manifest error. (b) Without limiting immediately preceding clause (a), each Lender or any Person who
has received funds on behalf of a Lender, hereby further agrees that if it receives a payment, prepayment or repayment (whether received as a payment, prepayment or repayment of principal, interest, fees, distribution or otherwise) from Agent (or
any of its Affiliates) (x) that is in a different amount than, or on a different date from, that specified in a notice of payment, prepayment or repayment sent by Agent (or any of its Affiliates) with respect to such payment, prepayment or
repayment, (y) that was not preceded or accompanied by a notice of payment, prepayment or repayment sent by Agent (or any of its Affiliates), or (z) that such Lender or other such recipient, otherwise becomes aware was transmitted, or
received, in error or by mistake (in whole or in part) in each case: (1) (A) in the case of immediately preceding clauses
(x) or (y), an error shall be presumed to have been made (absent written confirmation from Agent to the contrary) or (B) an error has been made (in the case of immediately preceding clause (z)), in each case, with respect to such payment,
prepayment or repayment; and (2) such Lender shall (and shall cause any other recipient that receives funds on its
respective behalf to) promptly (and, in all events, within one (1) Business Day of its knowledge of such error) notify Agent of its receipt of such payment, prepayment or repayment, the details thereof (in reasonable detail) and that it is so
notifying Agent pursuant to this Section 9.8(b). (c) Each Lender hereby authorizes Agent to set off, net and apply any and all
amounts at any time owing to such Lender under any Loan Document, or otherwise payable or distributable by Agent to such Lender from any source, against any amount due to Agent under clause (a) hereof or under the indemnification provisions of
this Agreement. 23
(d) In the event that an Erroneous Payment (or portion thereof) is not recovered by Agent
for any reason, after demand therefor by Agent in accordance with clause (a) hereof, from any Lender that has received such Erroneous Payment (or portion thereof) (and/or from any Payment Recipient who received such Erroneous Payment (or
portion thereof) on its respective behalf) (such unrecovered amount, an Erroneous Payment Return Deficiency), upon Agents notice to such Lender at any time, (i) such Lender shall be deemed to have assigned its Credit
Extensions (but not its Term Loan Commitments) with respect to which such Erroneous Payment was made in an amount equal to the Erroneous Payment Return Deficiency (or such lesser amount as Agent may specify) (such assignment of the Credit Extensions
(but not Commitments), the Erroneous Payment Deficiency Assignment) at par plus any accrued and unpaid interest (with the assignment fee to be waived by Agent in such instance), and such Lender shall deliver any notes evidencing
such Credit Extensions to Borrower or Agent, (ii) Agent as the assignee Lender shall be deemed to acquire the Erroneous Payment Deficiency Assignment, and (iii) upon such deemed acquisition, Agent as the assignee Lender shall become a
Lender, as applicable, hereunder with respect to such Erroneous Payment Deficiency Assignment and the assigning Lender shall cease to be a Lender, as applicable, hereunder with respect to such Erroneous Payment Deficiency Assignment, excluding, for
the avoidance of doubt, its obligations under the indemnification provisions of this Agreement and its applicable Term Loan Commitments which shall survive as to such assigning Lender. Agent may, in its discretion, sell any Credit Extensions
acquired pursuant to an Erroneous Payment Deficiency Assignment and upon receipt of the proceeds of such sale, the Erroneous Payment Return Deficiency owing by the applicable Lender shall be reduced by the net proceeds of the sale of such Credit
Extension (or portion thereof), and Agent shall retain all other rights, remedies and claims against such Lender (and/or against any recipient that receives funds on its respective behalf). For the avoidance of doubt, no Erroneous Payment Deficiency
Assignment will reduce the Term Loan Commitments of any Lender and such Term Loan Commitments shall remain available in accordance with the terms of this Agreement. In addition, each party hereto agrees that, except to the extent that Agent has sold
a Credit Extension (or portion thereof) acquired pursuant to an Erroneous Payment Deficiency Assignment, and irrespective of whether Agent may be equitably subrogated, Agent shall be contractually subrogated to all the rights and interests of the
applicable Lender under the Loan Documents with respect to each Erroneous Payment Return Deficiency (the Erroneous Payment Subrogation Rights). (e) The parties hereto agree that an Erroneous Payment shall not pay, prepay, repay, discharge or otherwise satisfy any Obligations owed by
Borrower or another Borrower, except, in each case, to the extent such Erroneous Payment is, and solely with respect to the amount of such Erroneous Payment that is, comprised of funds received by Agent from Borrower or any other Borrower for the
purpose of making such Erroneous Payment. (f) To the extent permitted by applicable law, no Payment Recipient shall assert any right or
claim to an Erroneous Payment, and hereby waives, and is deemed to waive, any claim, counterclaim, defense or right of set-off or recoupment with respect to any demand, claim or counterclaim by Agent for the
return of any Erroneous Payment received, including without limitation any defense based on discharge for value or any similar doctrine (g) Each partys obligations, agreements and waivers under this Section 9.8 shall survive the resignation or replacement of Agent,
any transfer of rights or obligations by, or the replacement of, a Lender, the termination of the Term Loan Commitments and/or the repayment, satisfaction or discharge of all Obligations (or any portion thereof) under any Loan Document. 24
10 AGENT 10.1 Appointment and Authority. (a) Each Lender hereby irrevocably appoints SVB to act on its behalf as Agent hereunder and under the other Loan Documents and authorizes
Agent to take such actions on its behalf and to exercise such powers as are delegated to Agent by the terms hereof or thereof, together with such actions and powers as are reasonably incidental thereto. (b) The provisions of this Section 10 are solely for the benefit of Agent and Lenders, and Borrower shall not have rights as a third
party beneficiary of any of such provisions. Notwithstanding any provision to the contrary elsewhere in this Agreement, Agent shall not have any duties or responsibilities to any Lender or any other Person, except those expressly set forth herein,
or any fiduciary relationship with any Lender, and no implied covenants, functions, responsibilities, duties, obligations or liabilities shall be read into this Agreement or any other Loan Document or otherwise exist against Agent. 10.2 Delegation of Duties. Agent may perform any and all of its duties and exercise its rights and powers hereunder or under any
other Loan Document by or through any one or more sub-agents appointed by Agent. Agent and any such sub-agent may perform any and all of its duties and exercise its
rights and powers by or through their respective Indemnified Persons. The exculpatory provisions of this Section 10.2 shall apply to any such sub-agent and to the Indemnified Persons of Agent and any such
sub-agent, and shall apply to their respective activities in connection with the syndication of the credit facilities provided for herein as well as activities as Agent. 10.3 Exculpatory Provisions. Agent shall have no duties or obligations except those expressly set forth herein and in the other
Loan Documents. Without limiting the generality of the foregoing, Agent shall not: (a) be subject to any fiduciary, trust, agency or other
similar duties, regardless of whether any Event of Default has occurred and is continuing; (b) have any duty to take any discretionary
action or exercise any discretionary powers, except discretionary rights and powers expressly contemplated hereby or by the other Loan Documents that Agent is required to exercise as directed in writing by the Lenders, as applicable; provided that
Agent shall not be required to take any action that, in its opinion or the opinion of its counsel, may expose Agent to liability or that is contrary to any Loan Document or applicable law; and (c) except as expressly set forth herein and in the other Loan Documents, have any duty to disclose, and Agent shall not be liable for the
failure to disclose, any information relating to Borrower or any of its Affiliates that is communicated to or obtained by any Person serving as Agent or any of its Affiliates in any capacity. Agent shall not be liable for any action taken or not taken by it (i) with the consent or at the request of the Lenders (or as Agent
shall believe in good faith shall be necessary, under the circumstances as provided in Section 13.7) or (ii) in the absence of its own gross negligence or willful misconduct. Agent shall not be responsible for or have any duty to ascertain or inquire into (i) any statement, warranty or representation made in or
in connection with this Agreement or any other Loan Document, (ii) the contents of any certificate, report or other document delivered hereunder or thereunder or in connection herewith or therewith, (iii) the performance or observance of
any of the covenants, agreements or other terms or conditions set forth herein or therein or the occurrence of any Event of Default, (iv) the validity, enforceability, effectiveness or genuineness of this Agreement, any other Loan Document or
any other agreement, instrument or document or (v) the satisfaction of any condition set forth in Section 3 or elsewhere herein, other than to confirm receipt of items expressly required to be delivered to Agent. 25
10.4 Reliance by Agent. Agent shall be entitled to rely upon, and shall not
incur any liability for relying upon, any notice, request, certificate, consent, statement, instrument, document or other writing (including any electronic message, internet or intranet website posting or other distribution) believed by it to be
genuine and to have been signed, sent or otherwise authenticated by the proper Person. Agent also may rely upon any statement made to it orally or by telephone and believed by it to have been made by the proper Person, and shall not incur any
liability for relying thereon. Agent may consult with legal counsel (who may be counsel for Borrower), independent accountants and other experts selected by it, and shall not be liable for any action taken or not taken by it in accordance with the
advice of any such counsel, accountants or experts. In determining compliance with any condition hereunder to the making of a Credit Extension that, by its terms, must be fulfilled to the satisfaction of a Lender, Agent may presume that such
condition is satisfactory to such Lender unless Agent shall have received notice to the contrary from such Lender prior to the making of such Credit Extension. Agent shall in all cases be fully protected in acting, or in refraining from acting,
under this Agreement and the other Loan Documents in accordance with a request of the Lenders, and such request and any action taken or failure to act pursuant thereto shall be binding upon Lenders and all future holders of the Credit Extensions.
10.5 Notice of Default. Agent shall not be deemed to have knowledge or notice of the occurrence of any Event of Default
(except with respect to defaults in the payment of principal, interest or fees required to be paid to Agent for the account of Lenders), unless Agent has received notice from a Lender or Borrower referring to this Agreement, describing such Event of
Default and stating that such notice is a notice of default. In the event that Agent receives such a notice, Agent shall give notice thereof to Lenders. Agent shall take such action with respect to such Event of Default as shall be
reasonably directed by the Lenders. 10.6 Non-Reliance on Agent and Other Lenders.
Each Lender expressly acknowledges that neither Agent nor any of its officers, directors, employees, agents, attorneys in fact or affiliates has made any representations or warranties to it and that no act by Agent hereafter taken, including any
review of the affairs of a Group Member or any Affiliate of a Group Member, shall be deemed to constitute any representation or warranty by Agent to any Lender. Each Lender represents to Agent that it has, independently and without reliance upon
Agent or any other Lender, and based on such documents and information as it has deemed appropriate, made its own appraisal of, and investigation into, the business, operations, property, financial and other condition and creditworthiness of the
Group Members and their Affiliates and made its own decision to make its Credit Extensions hereunder and enter into this Agreement. Each Lender also represents that it will, independently and without reliance upon Agent or any other Lender, and
based on such documents and information as it shall deem appropriate at the time, continue to make its own credit analysis, appraisals and decisions in taking or not taking action under this Agreement and the other Loan Documents, and to make such
investigation as it deems necessary to inform itself as to the business, operations, property, financial and other condition and creditworthiness of the Group Members and their Affiliates. Except for notices, reports and other documents expressly
required to be furnished to Lenders by Agent hereunder, Agent shall have no duty or responsibility to provide any Lender with any credit or other information concerning the business, operations, property, condition (financial or otherwise),
prospects or creditworthiness of any Group Member or any Affiliate of a Group Member that may come into the possession of Agent or any of its officers, directors, employees, agents, attorneys in fact or Affiliates. 26
10.7 Indemnification. Each Lender agrees to indemnify Agent in its capacity as
such (to the extent not reimbursed by Borrower and without limiting the obligation of Borrower to do so in accordance with the terms hereof, according to its Term Loan Commitment Percentage in effect on the date on which indemnification is sought
under this Section 10.7 (or, if indemnification is sought after the date upon which the Commitments shall have terminated and the Obligations shall have been paid in full, in accordance with its Term Loan Commitment Percentage immediately prior
to such date), from and against any and all liabilities, obligations, losses, damages, penalties, actions, judgments, suits, costs, expenses or disbursements of any kind whatsoever that may at any time (whether before or after the payment of the
Credit Extensions) be imposed on, incurred by or asserted against Agent in any way relating to or arising out of, the Commitments, this Agreement, any of the other Loan Documents or any documents contemplated by or referred to herein or therein or
the transactions contemplated hereby or thereby or any action taken or omitted by Agent under or in connection with any of the foregoing; provided that no Lender shall be liable for the payment of any portion of such liabilities, obligations,
losses, damages, penalties, actions, judgments, suits, costs, expenses or disbursements that are found by a final and non-appealable decision of a court of competent jurisdiction to have resulted primarily
from Agents gross negligence or willful misconduct. The agreements in this Section shall survive the payment of the Credit Extensions and all other amounts payable hereunder. 10.8 Agent in Its Individual Capacity. The Person serving as Agent hereunder shall have the same rights and powers in its
capacity as a Lender as any other Lender and may exercise the same as though it were not Agent and the term Lender or Lenders shall, unless otherwise expressly indicated or unless the context otherwise requires, include each
such Person serving as Agent hereunder in its individual capacity. Such Person and its Affiliates may accept deposits from, lend money to, act as the financial advisor or in any other advisory capacity for and generally engage in any kind of
business with Borrower, or any Subsidiary or other Affiliate thereof as if such Person were not Agent hereunder and without any duty to account therefor to Lenders. 10.9 Successor Agent. Agent may at any time give notice of its resignation to Lenders and Borrower, which resignation shall not
be effective until the time at which the majority of the Lenders have delivered to Agent their written consent to such resignation. Upon receipt of any such notice of resignation, the Lenders shall have the right, in consultation with Borrower, to
appoint a successor, which shall be a financial institution with an office in the State of California, or an Affiliate of any such bank with an office in the State of California. If no such successor shall have been so appointed by the Lenders and
shall have accepted such appointment within thirty (30) days after the retiring Agent has received the written consent of the majority of the Lenders to such resignation, then the retiring Agent may on behalf of Lenders, appoint a successor
Agent meeting the qualifications set forth above; provided that in no event shall any such successor Agent be a Defaulting Lender and provided further that if the retiring Agent shall notify Borrower and Lenders that no qualifying Person has
accepted such appointment, then such resignation shall nonetheless become effective in accordance with such notice and (1) the retiring Agent shall be discharged from its duties and obligations hereunder and under the other Loan Documents
(except that in the case of any collateral security held by Agent on behalf of the Lenders under any of the Loan Documents, the retiring Agent shall continue to hold such collateral security until such time as a successor Agent is appointed and such
collateral security is assigned to such successor Agent) and (2) all payments, communications and determinations provided to be made by, to or through Agent shall instead be made by or to each Lender directly, until such time as the Lenders
appoint a successor Agent as provided for above in this Section 10.9. Upon the acceptance of a successors appointment as Agent hereunder, such successor shall succeed to and become vested with all of the rights, powers, privileges and
duties of the retiring (or retired) Agent, and the retiring Agent shall be discharged from all of its duties and obligations hereunder or under the other Loan Documents (if not already discharged therefrom as provided above in this
Section 10.9). The fees payable by Borrower to a successor Agent shall be the same as those payable to its predecessor unless otherwise agreed between Borrower and such successor. After the retiring Agents resignation hereunder and under
the other Loan Documents, the provisions of this Section 10 shall continue in effect for the benefit of such retiring Agent, its sub-agents and their respective Indemnified Persons in respect of any
actions taken or omitted to be taken by any of them while the retiring Agent was acting as Agent. 27
10.10 Defaulting Lender. (a) Defaulting Lender Adjustments. Notwithstanding anything to the contrary contained in this Agreement, if any Lender becomes a
Defaulting Lender, then, until such time as such Lender is no longer a Defaulting Lender, to the extent permitted by applicable law: (i) Waivers and Amendments. Such Defaulting Lenders right to approve or disapprove any amendment, waiver or
consent with respect to this Agreement shall be restricted as long as said Lender is a Defaulting Lender. (ii)
Defaulting Lender Waterfall. Any payment of principal, interest, fees or other amounts received by the Agent for the account of such Defaulting Lender (whether voluntary or mandatory, at maturity, pursuant to Section 8 or otherwise, and
including any amounts made available to the Agent by such Defaulting Lender pursuant to Section 13.10), shall be applied at such time or times as may be determined by the Agent as follows: first, to the payment of any amounts owing by such
Defaulting Lender to the Agent hereunder; second, as Borrower may request (so long as no Event of Default exists), to the funding of any Term Loan Advance in respect of which such Defaulting Lender has failed to fund its portion thereof as required
by this Agreement, as determined by the Agent; third, if so determined by the Agent and Borrower, to be held in a Deposit Account and released pro rata to satisfy such Defaulting Lenders potential future funding obligations with respect to the
Term Loan Advances under this Agreement; fourth, so long as no Event of Default has occurred and is continuing, to the payment of any amounts owing to Borrower as a result of any judgment of a court of competent jurisdiction obtained by Borrower
against such Defaulting Lender as a result of such Defaulting Lenders breach of its obligations under this Agreement; and fifth, to such Defaulting Lender or as otherwise directed by a court of competent jurisdiction; provided that if
(A) such payment is a payment of the principal amount of any Term Loan Advance in respect of which such Defaulting Lender has not fully funded its appropriate share and (B) such Term Loan Advance was made at a time when the conditions set
forth in Section 3.1 were satisfied or waived, such payment shall be applied solely to pay the Term Loan Advance of all non-Defaulting Lenders on a pro rata basis prior to being applied to the
payment of any Term Loan Advance of such Defaulting Lender until such time as the Term Loan Advance is held by the Lenders pro rata in accordance with their respective Term Loan Commitment under this Agreement. Any payments, prepayments or other
amounts paid or payable to a Defaulting Lender that are applied (or held) to pay amounts owed by a Defaulting Lender pursuant to this Section 10.10(a)(ii) shall be deemed paid to and redirected by such Defaulting Lender, and each Lender
irrevocably consents hereto. (iii) Certain Fees. No Defaulting Lender shall be entitled to receive any fee
pursuant to Section 2.4(a) or Section 2.4(b) for any period during which such Lender is a Defaulting Lender (and Borrower shall not be required to pay any such fee that otherwise would have been required to have been paid to such
Defaulting Lender). (b) Defaulting Lender Cure. If Borrower and Agent agree in writing that a Lender is no longer a Defaulting
Lender, Agent will so notify the parties hereto, whereupon as of the effective date specified in such notice and subject to any conditions set forth therein, such Lender will, to the extent applicable, purchase at par that portion of outstanding
Term Loan Advances of the other Lenders or take 28
such other actions as Agent may determine to be necessary to cause the Term Loan Advances to be held on a pro rata basis by the Lenders in accordance with their respective Term Loan
Commitment Percentages, whereupon such Lender will cease to be a Defaulting Lender; provided that no adjustments will be made retroactively with respect to fees accrued or payments made by or on behalf of Borrower while such Lender was a Defaulting
Lender; and provided further that, except to the extent otherwise expressly agreed by the affected parties, no change hereunder from Defaulting Lender to Lender will constitute a waiver or release of any claim of any party hereunder arising
from such Lender having been a Defaulting Lender. (c) Termination of Defaulting Lender. Borrower may terminate the unused amount
of the Term Loan Commitment of any Lender that is a Defaulting Lender upon not less than ten (10) Business Days prior notice to Agent (which shall promptly notify the Lenders thereof), and in such event the provisions of
Section 10.10(a)(ii) will apply to all amounts thereafter paid by Borrower for the account of such Defaulting Lender under this Agreement (whether on account of principal, interest, fees, indemnity or other amounts); provided that
(i) no Event of Default shall have occurred and be continuing, and (ii) such termination shall not be deemed to be a waiver or release of any claim Borrower, Agent or any Lender may have against such Defaulting Lender. (d) If the Person serving as Agent is a Defaulting Lender pursuant to clause (d) of the definition thereof, the non-Defaulting Lenders may, to the extent permitted by applicable law, by notice in writing to Borrower and such Person, remove such Person as Agent and, in consultation with Borrower, appoint a successor. If no
such successor shall have been so appointed by the non-Defaulting Lenders and shall have accepted such appointment within thirty (30) days (or such earlier day as shall be agreed by the non-Defaulting Lenders) (the Removal Effective Date), then such removal shall nonetheless become effective in accordance with such notice on the Removal Effective Date. 11 NOTICES All
notices, consents, requests, approvals, demands, or other communication by any party to this Agreement or any other Loan Document must be in writing and shall be deemed to have been validly served, given, or delivered: (a) upon the earlier of
actual receipt and three (3) Business Days after deposit in the U.S. mail, first class, registered or certified mail return receipt requested, with proper postage prepaid; (b) upon transmission, when sent by electronic mail or facsimile
transmission; (c) one (1) Business Day after deposit with a reputable overnight courier with all charges prepaid; or (d) when delivered, if hand-delivered by messenger, all of which shall be addressed to the party to be notified and sent
to the address, facsimile number, or email address indicated below. Agent or Borrower may change its mailing or electronic mail address or facsimile number by giving the other party written notice thereof in accordance with the terms of this
Section 11. If to Borrower: Akili Interactive Labs, Inc. 125 Broad Street,
4th Floor Boston, Massachusetts 02110 Attn: Santosh Shanbhag Email: [***] with a copy to: Goodwin Procter LLP 100 Northern Avenue Boston, Massachusetts 02210 Attn: Mark D. Smith Fax:
(617) 801-8835 Email: [***] 29
If to Agent or SVB: Silicon Valley Bank 275 Grove Street, Suite 2-200 Newton, Massachusetts 02466 Attn: Sam Subilia Email: [***] with a copy to: Morrison & Foerster LLP 200 Clarendon Street, 20th Floor Boston, Massachusetts 02116 Attn: David
A. Ephraim, Esquire Email: [***] If to SVB Innovation Fund: SVB Innovation Credit Fund VIII, L.P. c/o SVB Capital 2770 Sand Hill Road Menlo Park, CA 94025 Attention: SVB
Capital Finance and Operations Email: [***]
[***] 12 CHOICE OF LAW, VENUE AND JURY TRIAL WAIVER Except as otherwise expressly provided in any of the Loan Documents, Massachusetts law governs the Loan Documents without regard to principles
of conflicts of law. Except to the extent otherwise set forth in the Loan Documents, Borrower, Agent and Lenders each submit to the exclusive jurisdiction of the State and Federal courts in Boston, Massachusetts; provided, however,
that nothing in this Agreement shall be deemed to operate to preclude Agent or Lenders from bringing suit or taking other legal action in any other jurisdiction to realize on the Collateral or any other security for the Obligations, or to enforce a
judgment or other court order in favor of Agent or any Lender. Borrower expressly submits and consents in advance to such jurisdiction in any action or suit commenced in any such court, and Borrower hereby waives any objection that it may have based
upon lack of personal jurisdiction, improper venue, or forum non conveniens and hereby consents to the granting of such legal or equitable relief as is deemed appropriate by such court. Borrower hereby waives personal service of the summons,
complaints, and other process issued in such action or suit and agrees that service of such summons, complaints, and other process may be made by registered or certified mail addressed to Borrower at the address set forth in, or subsequently
provided by Borrower in accordance with, Section 11 of this Agreement and that service so made shall be deemed completed upon the earlier to occur of Borrowers actual receipt thereof or three (3) days after deposit in the U.S. mails,
proper postage prepaid. TO THE FULLEST EXTENT PERMITTED BY APPLICABLE LAW, BORROWER, AGENT AND EACH LENDER EACH WAIVE THEIR RIGHT TO A
JURY TRIAL OF ANY CLAIM OR CAUSE OF ACTION ARISING OUT OF OR BASED UPON THIS AGREEMENT, THE LOAN DOCUMENTS OR ANY CONTEMPLATED TRANSACTION, INCLUDING CONTRACT, TORT, BREACH OF DUTY AND ALL OTHER CLAIMS. THIS WAIVER IS A MATERIAL INDUCEMENT FOR ALL
PARTIES TO ENTER INTO THIS AGREEMENT. EACH PARTY HAS REVIEWED THIS WAIVER WITH ITS COUNSEL. This Section 12 shall survive the
termination of this Agreement. 30
13 GENERAL PROVISIONS 13.1 Termination Prior to Term Loan Maturity Date; Survival. All covenants, representations and warranties made in this
Agreement continue in full force until this Agreement has terminated pursuant to its terms and all Obligations (other than inchoate indemnity obligations, any other obligations which by their terms are to survive the termination of this Agreement,
and any Obligations under Bank Services Agreements that are cash collateralized in accordance with Section 4.1 of this Agreement) have been satisfied. So long as Borrower has satisfied the Obligations (other than inchoate indemnity obligations,
any other obligations which, by their terms, are to survive the termination of this Agreement, and any Obligations under Bank Services Agreements that are cash collateralized in accordance with Section 4.1 of this Agreement), this Agreement may
be terminated prior to the Term Loan Maturity Date by Borrower, effective three (3) Business Days after written notice of termination is given to Agent. Those obligations that are expressly specified in this Agreement as surviving this
Agreements termination shall continue to survive notwithstanding this Agreements termination. No termination of this Agreement or any Bank Services Agreement shall in any way affect or impair any right or remedy of Agent or any Lender,
nor shall any such termination relieve Borrower of any Obligation to any Lender, until all of the Obligations have been paid and performed in full. Those Obligations that are expressly specified in this Agreement as surviving this Agreements
termination shall continue to survive notwithstanding this Agreements termination and payment in full of the Obligations then outstanding. 13.2 Successors and Assigns. This Agreement binds and is for the benefit of the successors and permitted assigns of each party.
Borrower may not assign this Agreement or any rights or obligations under it without Agent and Lenders prior written consent (which may be granted or withheld in Agents and Lenders sole discretion). Agent and each Lender has the
right, without the consent of or notice to Borrower, to sell, transfer, assign, negotiate, or grant participation in all or any part of, or any interest in, such Lenders obligations, rights, and benefits under this Agreement and the other Loan
Documents (other than the Warrant, as to which assignment, transfer and other such actions are governed by the terms thereof). 13.3 Indemnification. Borrower agrees to indemnify, defend and hold Agent, each Lender and their respective directors, officers,
employees, agents, attorneys, or any other Person affiliated with or representing Agent or any Lender (each, an Indemnified Person) harmless against: (i) all obligations, demands, claims, and liabilities (collectively,
Claims) claimed or asserted by any other party in connection with the transactions contemplated by the Loan Documents; and (ii) all losses or expenses (including Lenders Expenses) in any way suffered, incurred, or paid
by such Indemnified Person as a result of, following from, consequential to, or arising from transactions between Agent, Lenders and Borrower contemplated by the Loan Documents (including reasonable attorneys fees and expenses), except for
Claims and/or losses directly caused by such Indemnified Persons gross negligence or willful misconduct. This Section 13.3
shall survive until all statutes of limitation with respect to the Claims, losses, and expenses for which indemnity is given shall have run. 13.4 Time of Essence. Time is of the essence for the performance of all Obligations in this Agreement. 13.5 Severability of Provisions. Each provision of this Agreement is severable from every other provision in determining the
enforceability of any provision. 13.6 Correction of Loan Documents. Agent may correct patent errors and fill in any blanks
in the Loan Documents consistent with the agreement of the parties so long as Agent provides Borrower with written notice of such correction and allows Borrower at least ten (10) days to object to such correction. In the event of such objection, such correction shall not be made except by an amendment signed by Agent, the Lenders and Borrower. 31
13.7 Amendments in Writing; Waiver; Integration. No purported amendment or
modification of any Loan Document, or waiver, discharge or termination of any obligation under any Loan Document, or release, or subordinate Lenders security interest in, or consent to the transfer of, any Collateral shall be enforceable or
admissible unless, and only to the extent, expressly set forth in a writing signed by Agent, with the consent of the Lenders in accordance with the Lender Intercreditor Agreement or, if such item is not addressed in the Lender Intercreditor
Agreement, as consented to by a majority of the Lenders, and Borrower. Without limiting the generality of the foregoing, no oral promise or statement, nor any action, inaction, delay, failure to require performance or course of conduct shall operate
as, or evidence, an amendment, supplement or waiver or have any other effect on any Loan Document. Any waiver granted shall be limited to the specific circumstance expressly described in it, and shall not apply to any subsequent or other
circumstance, whether similar or dissimilar, or give rise to, or evidence, any obligation or commitment to grant any further waiver. The Loan Documents represent the entire agreement about this subject matter and supersede prior negotiations or
agreements. All prior agreements, understandings, representations, warranties, and negotiations between the parties about the subject matter of the Loan Documents merge into the Loan Documents. In the event any provision of any other Loan Document
is inconsistent with the provisions of this Agreement, the provisions of this Agreement shall exclusively control. 13.8
Counterparts. This Agreement may be executed in any number of counterparts and by different parties on separate counterparts, each of which, when executed and delivered, is an original, and all taken together, constitute one Agreement. 13.9 Confidentiality. Agent and each Lender agrees to maintain the confidentiality of Information (as defined below), except
that Information may be disclosed (a) to Agent and/or any Lenders subsidiaries or Affiliates, and their respective employees, directors, investors, potential investors, agents, attorneys, accountants and other professional advisors
(collectively, Representatives and, together with Agent and the Lenders, collectively, Lender Entities) provided that such Lender Entities are bound by the provisions substantially the same as this
Section 13.9; (b) to prospective transferees, assignees, credit providers or purchasers of any of Agents or Lenders interests under or in connection with this Agreement and their Representatives (provided, however, Agent and the
Lenders shall use their best efforts to obtain any such prospective transferees, assignees, credit providers, or purchasers or their Representatives agreement to the terms of this provision); (c) as required by law,
regulation, subpoena, or other order; (d) to Agents or any Lenders regulators or as otherwise required in connection with Agents or any Lenders examination or audit; (e) as Agent or any Lender considers appropriate
in exercising remedies under the Loan Documents; and (f) to third-party service providers of Agent and/or any Lender so long as such service providers have executed a confidentiality agreement with Agent or the Lenders, as applicable, with
terms no less restrictive than those contained herein. The term Information means all information received from Borrower regarding Borrower or its business, in each case other than information that is either: (i) in the
public domain or in Agents or any Lenders possession when disclosed to Agent or such Lender, or becomes part of the public domain (other than as a result of its disclosure by Agent or a Lender in violation of this Agreement) after
disclosure to Agent and/or the Lenders; or (ii) disclosed to Agent and/or a Lender by a third party, if Agent or such Lender, as applicable, does not know that the third party is prohibited from disclosing the information. Lender Entities may use anonymous forms of confidential information for aggregate datasets, for analyses or reporting, and for any other uses
not expressly prohibited in writing by Borrower. The provisions of the immediately preceding sentence shall survive the termination of this Agreement. 32
13.10 Right of Setoff. Borrower hereby grants to Agent, for the ratable
benefit of the Lenders, a Lien, security interest, and a right of setoff as security for all Obligations to Agent and the Lenders, whether now existing or hereafter arising upon and against all deposits, credits, collateral and property, now or
hereafter in the possession, custody, safekeeping or control of Agent or any entity under the control of Agent (including a subsidiary of Agent) or in transit to any of them. At any time after the occurrence and during the continuance of an Event of
Default, without demand or notice, Agent or any Lender may setoff the same or any part thereof and apply the same to any Obligation of Borrower then due regardless of the adequacy of any other collateral securing the Obligations. ANY AND ALL RIGHTS
TO REQUIRE AGENT OR ANY LENDER TO EXERCISE ITS RIGHTS OR REMEDIES WITH RESPECT TO ANY OTHER COLLATERAL WHICH SECURES THE OBLIGATIONS, PRIOR TO EXERCISING ITS RIGHT OF SETOFF WITH RESPECT TO SUCH DEPOSITS, CREDITS OR OTHER PROPERTY OF BORROWER, ARE
HEREBY KNOWINGLY, VOLUNTARILY AND IRREVOCABLY WAIVED. 13.11 Electronic Execution of Documents. The words
execution, signed, signature and words of like import in any Loan Document shall be deemed to include electronic signatures or the keeping of records in electronic form, each of which shall be of the same legal
effect, validity and enforceability as a manually executed signature or the use of a paper-based recordkeeping systems, as the case may be, to the extent and as provided for in any applicable law, including, without limitation, any state law based
on the Uniform Electronic Transactions Act. 13.12 Captions. The headings used in this Agreement are for convenience only
and shall not affect the interpretation of this Agreement. 13.13 Construction of Agreement. The parties mutually
acknowledge that they and their attorneys have participated in the preparation and negotiation of this Agreement. In cases of uncertainty this Agreement shall be construed without regard to which of the parties caused the uncertainty to exist. 13.14 Relationship. The relationship of the parties to this Agreement is determined solely by the provisions of this Agreement.
The parties do not intend to create any agency, partnership, joint venture, trust, fiduciary or other relationship with duties or incidents different from those of parties to an arms-length contract.
13.15 Third Parties. Nothing in this Agreement, whether express or implied, is intended to: (a) confer any benefits,
rights or remedies under or by reason of this Agreement on any persons other than the express parties to it and their respective permitted successors and assigns; (b) relieve or discharge the obligation or liability of any person not an express
party to this Agreement; or (c) give any person not an express party to this Agreement any right of subrogation or action against any party to this Agreement. 13.16 Patriot Act. Each Lender hereby notifies Borrower that pursuant to the requirements of the USA PATRIOT Act, it is required
to obtain, verify and record information that identifies Borrower and each of its Subsidiaries, which information includes the names and addresses of Borrower and each of its Subsidiaries and other information that will allow Lender, as applicable,
to identify Borrower and each of its Subsidiaries in accordance with the USA PATRIOT Act. 13.17 Amended and Restated
Agreement. This Agreement amends and restates, in its entirety, and replaces, the Prior Loan Agreement. This Agreement is not intended to, and does not, novate the Prior Loan Agreement and Borrower reaffirms that the existing security interest
created by the Prior Loan Agreement is and remains in full force and effect. In addition, the amendment and restatement of the Prior Loan Agreement pursuant to this Agreement is not intended to amend the existing terms of any other Loan Document
delivered in connection with the Prior Loan Agreement nor to terminate any such Loan Document, and no amendment or termination of any such Loan Document shall be deemed to have occurred unless set forth in a separate agreement or other document
between Borrower, Agent, and the Lenders. 33
14 DEFINITIONS 14.1 Definitions. As used in the Loan Documents, the word shall is mandatory, the word may is
permissive, the word or is not exclusive, the words includes and including are not limiting, the singular includes the plural, and numbers denoting amounts that are set off in brackets are negative. As used in
this Agreement, the following capitalized terms have the following meanings: Account is any account
as defined in the Code with such additions to such term as may hereafter be made, and includes, without limitation, all accounts receivable and other sums owing to Borrower. Account Debtor is any account debtor as defined in the Code with such additions to such term as may
hereafter be made. Affiliate is, with respect to any Person, each other Person that owns or controls directly or
indirectly the Person, any Person that controls or is controlled by or is under common control with the Person, and each of that Persons senior executive officers, directors, partners and, for any Person that is a limited liability company,
that Persons managers and members. Agent is defined in the preamble hereof. Agreement is defined in the preamble hereof. Average EBDA is, as of any date of determination, expressed as a positive number, the average monthly EBDA during the
immediately preceding three (3) month period (as calculated by adding the EBDA of Borrower for each month during such three (3) month period and then dividing such amount by three (3)) (provided, however, if such amount is greater than
zero (0) (independent of the proviso set forth in the beginning of this definition providing that such number will be positive), then such amount shall be deemed to be one (1)). Authorized Signer is any individual listed in Borrowers Borrowing Resolution who is authorized to execute the Loan
Documents, including making (and executing if applicable) any Credit Extension request, on behalf of Borrower. Bank
Services are any products, credit services, and/or financial accommodations previously, now, or hereafter provided to Borrower or any of its Subsidiaries by SVB or any SVB Affiliate, including, without limitation, any letters of credit,
cash management services (including, without limitation, merchant services, direct deposit of payroll, business credit cards, and check cashing services), interest rate swap arrangements, and foreign exchange services as any such products or
services may be identified in SVBs various agreements related thereto (each, a Bank Services Agreement). Bank Services Agreement is defined in the definition of Bank Services. Board means Borrowers board of directors. Borrower is defined in the preamble hereof. 34
Borrowers Books are all Borrowers books and records including
ledgers, federal and state tax returns, records regarding Borrowers assets or liabilities, the Collateral, business operations or financial condition, and all computer programs or storage or any equipment containing such information. Borrowing Resolutions are, with respect to any Person, those resolutions adopted by such Persons board of directors
(and, if required under the terms of such Persons Operating Documents, stockholders) and delivered by such Person to Agent approving the Loan Documents to which such Person is a party and the transactions contemplated thereby, together with a
certificate executed by its secretary on behalf of such Person certifying (a) such Person has the authority to execute, deliver, and perform its obligations under each of the Loan Documents to which it is a party, (b) that set forth as a
part of or attached as an exhibit to such certificate is a true, correct, and complete copy of the resolutions then in full force and effect authorizing and ratifying the execution, delivery, and performance by such Person of the Loan Documents to
which it is a party, (c) the name(s) of the Person(s) authorized to execute the Loan Documents, including making (and executing if applicable) any Credit Extension request, on behalf of such Person, together with a sample of the true
signature(s) of such Person(s), and (d) that Agent and the Lenders may conclusively rely on such certificate unless and until such Person shall have delivered to Agent and the Lenders a further certificate canceling or amending such prior
certificate. Business Day is any day that is not a Saturday, Sunday or a day on which Agent is closed. Cash Equivalents means (a) marketable direct obligations issued or unconditionally guaranteed by the United States or
any agency or any State thereof having maturities of not more than one (1) year from the date of acquisition; (b) commercial paper maturing no more than one (1) year after its creation and having the highest rating from either
Standard & Poors Ratings Group or Moodys Investors Service, Inc.; (c) SVBs certificates of deposit issued maturing no more than one (1) year after issue; and (d) money market funds at least ninety-five percent
(95.0%) of the assets of which constitute Cash Equivalents of the kinds described in clauses (a) through (c) of this definition. Change in Control means (a) at any time, any person or group (as such terms are used in
Sections 13(d) and 14(d) of the Exchange Act), shall become, or obtain rights (whether by means of warrants, options or otherwise) to become, the beneficial owner (as defined in Rules 13(d)-3 and 13(d)-5 under the Exchange Act), directly or indirectly, of forty percent (40.0%) or more of the ordinary voting power for the election of directors of Borrower (determined on a fully diluted basis) other than by
the sale of Borrowers equity securities in a public offering or to venture capital or private equity investors so long as Borrower identifies to the Agent and the Lenders the venture capital or private equity investors at least seven
(7) Business Days prior to the closing of the transaction and provides to Agent and the Lenders a description of the material terms of the transaction; (b) during any period of twelve (12) consecutive months, a majority of the members
of the board of directors or other equivalent governing body of Borrower cease to be composed of individuals (i) who were members of that board or equivalent governing body on the first day of such period, (ii) whose election or nomination
to that board or equivalent governing body was approved by individuals referred to in clause (i) above constituting at the time of such election or nomination at least a majority of that board or equivalent governing body or (iii) whose
election or nomination to that board or other equivalent governing body was approved by individuals referred to in clauses (i) and (ii) above constituting at the time of such election or nomination at least a majority of that board or
equivalent governing body; or (c) at any time, Borrower shall cease to own and control, of record and beneficially, directly or indirectly, one hundred percent (100.0%) of each class of outstanding capital stock of each Subsidiary of Borrower
free and clear of all Liens (except Liens created by this Agreement). Claims is defined in Section 13.3. 35
Code is the Uniform Commercial Code, as the same may, from time to time,
be enacted and in effect in the Commonwealth of Massachusetts; provided, that, to the extent that the Code is used to define any term herein or in any Loan Document and such term is defined differently in different Articles or Divisions of the Code,
the definition of such term contained in Article or Division 9 shall govern; provided further, that in the event that, by reason of mandatory provisions of law, any or all of the attachment, perfection, or priority of, or remedies with respect to,
Agents Lien on any Collateral is governed by the Uniform Commercial Code in effect in a jurisdiction other than the Commonwealth of Massachusetts, the term Code shall mean the Uniform Commercial Code as enacted and in effect in
such other jurisdiction solely for purposes of the provisions thereof relating to such attachment, perfection, priority, or remedies and for purposes of definitions relating to such provisions. Collateral is any and all properties, rights and assets of Borrower described on Exhibit A. Collateral Account is any Deposit Account, Securities Account, or Commodity Account. Commitment and Commitments means the Term Loan Commitment(s). Commodity Account is any commodity account as defined in the Code with such additions to such term as may
hereafter be made. Compliance Statement is that certain statement in the form attached hereto as Exhibit B.
Contingent Obligation is, for any Person, any direct or indirect liability, contingent or not, of that Person for
(a) any indebtedness, lease, dividend, letter of credit or other obligation of another such as an obligation, in each case, directly or indirectly guaranteed, endorsed, co-made, discounted or sold with
recourse by that Person, or for which that Person is directly or indirectly liable; (b) any obligations for undrawn letters of credit for the account of that Person; and (c) all obligations from any interest rate, currency or commodity
swap agreement, interest rate cap or collar agreement, or other agreement or arrangement designated to protect a Person against fluctuation in interest rates, currency exchange rates or commodity prices; but Contingent Obligation does
not include endorsements in the ordinary course of business. The amount of a Contingent Obligation is the stated or determined amount of the primary obligation for which the Contingent Obligation is made or, if not determinable, the maximum
reasonably anticipated liability for it determined by the Person in good faith; but the amount may not exceed the maximum of the obligations under any guarantee or other support arrangement. Control Agreement is any control agreement entered into among the depository institution at which Borrower maintains a
Deposit Account or the securities intermediary or commodity intermediary at which Borrower maintains a Securities Account or a Commodity Account, Borrower, and Agent pursuant to which Agent obtains control (within the meaning of the Code) for the
benefit of the Lenders over such Deposit Account, Securities Account, or Commodity Account. Copyrights are any and all
copyright rights, copyright applications, copyright registrations and like protections in each work of authorship and derivative work thereof, whether published or unpublished and whether or not the same also constitutes a trade secret. Credit Extension is any Term Loan Advance or any other extension of credit by any Lender for Borrowers benefit. Default Rate is defined in Section 2.3(b). 36
Defaulting Lender is, subject to Section 10.10(b), any Lender that
(a) has failed to (i) fund all or any portion of its Term Loan Advances within two (2) Business Days of the date such Term Loan Advances were required to be funded hereunder unless such Lender notifies Agent and Borrower in writing
that such failure is the result of such Lenders reasonable determination that one or more conditions precedent to funding (each of which conditions precedent, together with any applicable default, shall be specifically identified in such
writing) has not been satisfied, or (ii) pay to Agent or any other Lender any other amount required to be paid by it hereunder within two (2) Business Days of the date when due, (b) has notified Borrower or Agent in writing that it
does not intend to comply with its funding obligations hereunder, or has made a public statement to that effect (unless such writing or public statement relates to such Lenders obligation to fund a Term Loan Advance hereunder and states that
such position is based on such Lenders reasonable determination that a condition precedent to funding (which condition precedent, together with any applicable default, shall be specifically identified in such writing or public statement)
cannot be satisfied), (c) has failed, within three (3) Business Days after written request by Agent or Borrower, to confirm in writing to Agent and Borrower that it will comply with its prospective funding obligations hereunder (provided that
such Lender shall cease to be a Defaulting Lender pursuant to this clause (c) upon receipt of such written confirmation by Agent and Borrower), or (d) has, or has a direct or indirect parent company that has, (i) become the subject of
an Insolvency Proceeding, or (ii) had appointed for it a receiver, custodian, conservator, trustee, administrator, assignee for the benefit of creditors or similar Person charged with reorganization or liquidation of its business or assets,
including the Federal Deposit Insurance Corporation or any other state or federal regulatory authority acting in such a capacity; provided that a Lender shall not be a Defaulting Lender solely by virtue of the ownership or acquisition of any equity
interest in that Lender or any direct or indirect parent company thereof by a Governmental Authority so long as such ownership interest does not result in or provide such Lender with immunity from the jurisdiction of courts within the United States
or from the enforcement of judgments or writs of attachment on its assets or permit such Lender (or such Governmental Authority) to reject, repudiate, disavow or disaffirm any contracts or agreements made with such Lender. Any determination by Agent
that a Lender is a Defaulting Lender under any one or more of clauses (a) through (d) above shall be conclusive and binding absent manifest error, and such Lender shall be deemed to be a Defaulting Lender (subject to Section 10.10(b)) upon
delivery of written notice of such determination to Borrower and each Lender. Deposit Account is any deposit
account as defined in the Code with such additions to such term as may hereafter be made. Designated Deposit
Account is the account number ending 988 (last three digits) maintained by Borrower with SVB (provided, however, if no such account number is included, then the Designated Deposit Account shall be any deposit account of Borrower maintained
with SVB as chosen by the Lenders). Disbursement Letter is that certain form attached hereto as Exhibit D. Division means, in reference to any Person which is an entity, the division of such Person into two (2) or more
separate Persons, with the dividing Person either continuing or terminating its existence as part of such division, including, without limitation, as contemplated under Section 18-217 of the Delaware
Limited Liability Company Act for limited liability companies formed under Delaware law, or any analogous action taken pursuant to any other applicable law with respect to any corporation, limited liability company, partnership or other entity. Dollars, dollars or use of the sign $ means only lawful money of the United States and not
any other currency, regardless of whether that currency uses the $ sign to denote its currency or may be readily converted into lawful money of the United States. 37
Dollar Equivalent is, at any time, (a) with respect to any amount
denominated in Dollars, such amount, and (b) with respect to any amount denominated in a Foreign Currency, the equivalent amount therefor in Dollars as determined by Agent at such time on the basis of the then-prevailing rate of exchange in San
Francisco, California, for sales of the Foreign Currency for transfer to the country issuing such Foreign Currency. EBDA shall mean (a) Net Income, plus (b) to the extent deducted in the calculation of Net Income, depreciation
expense and amortization expense. Effective Date is defined in the preamble hereof. EndeavorRX Revenue means Borrowers revenue (calculated in accordance with GAAP) from Borrowers EndeavorRx
product. Equipment is all equipment as defined in the Code with such additions to such term as may
hereafter be made, and includes without limitation all machinery, fixtures, goods, vehicles (including motor vehicles and trailers), and any interest in any of the foregoing. Equity Consideration is defined in the definition of Permitted Acquisition. ERISA is the Employee Retirement Income Security Act of 1974, and its regulations. Erroneous Payment has the meaning assigned to it in Section 9.8(a). Erroneous Payment Deficiency Assignment has the meaning assigned to it in Section 9.8(d). Erroneous Payment Impacted Class has the meaning assigned to it in Section 9.8(d). Erroneous Payment Return Deficiency has the meaning assigned to it in Section 9.8(d). Erroneous Payment Subrogation Rights has the meaning assigned to it in Section 9.8(d). Event of Default is defined in Section 8. Exchange Act is the Securities Exchange Act of 1934, as amended. Federal Funds Effective Rate means, for any day, the weighted average of the rates on overnight federal funds transactions
with members of the Federal Reserve System arranged by federal funds brokers, as published on the next succeeding Business Day by the Federal Reserve Bank of New York, or, if such rate is not so published for any day that is a Business Day, the
average of the quotations for the day of such transactions received by SVB from three federal funds brokers of recognized standing selected by it. Final Payment is a payment (in addition to and not a substitution for the regular monthly payments of principal plus
accrued interest) due on the earliest to occur of (a) the Term Loan Maturity Date, (b) when required by Section 2.2(d) or 2.2(e), (c) payment in full of the principal amount of the Term Loan Advances, or (d) the termination of
this Agreement, in an amount equal to the aggregate original principal amount of the Term Loan Advances multiplied by five percent (5.0%). Financial Statement Repository is [***] or such other means of collecting information approved and designated by Agent
after providing notice thereof to Borrower from time to time. 38
Foreign Currency means lawful money of a country other than the United
States. Funding Date is any date on which a Credit Extension is made to or for the account of Borrower which shall be
a Business Day. FX Contract is any foreign exchange contract by and between Borrower and SVB under which Borrower
commits to purchase from or sell to SVB a specific amount of Foreign Currency on a specified date. GAAP is generally
accepted accounting principles set forth in the opinions and pronouncements of the Accounting Principles Board of the American Institute of Certified Public Accountants and statements and pronouncements of the Financial Accounting Standards Board or
in such other statements by such other Person as may be approved by a significant segment of the accounting profession, which are applicable to the circumstances as of the date of determination. General Intangibles is all general intangibles as defined in the Code in effect on the date hereof with such
additions to such term as may hereafter be made, and includes without limitation, all Intellectual Property, claims, income and other tax refunds, security and other deposits, payment intangibles, contract rights, options to purchase or sell real or
personal property, rights in all litigation presently or hereafter pending (whether in contract, tort or otherwise), insurance policies (including without limitation key man, property damage, and business interruption insurance), payments of
insurance and rights to payment of any kind. Good Faith Deposit is defined in Section 2.4(d). Governmental Approval is any consent, authorization, approval, order, license, franchise, permit, certificate,
accreditation, registration, filing or notice, of, issued by, from or to, or other act by or in respect of, any Governmental Authority. Governmental Authority is any nation or government, any state or other political subdivision thereof, any agency,
authority, instrumentality, regulatory body, court, central bank or other entity exercising executive, legislative, judicial, taxing, regulatory or administrative functions of or pertaining to government, any securities exchange and any
self-regulatory organization. Group Member means Borrower and its Subsidiaries. Indebtedness is (a) indebtedness for borrowed money or the deferred price of property or services, such as
reimbursement and other obligations for surety bonds and letters of credit, (b) obligations evidenced by notes, bonds, debentures or similar instruments, (c) capital lease obligations, and (d) Contingent Obligations. Indemnified Person is defined in Section 13.3. Information is defined in Section 13.9. Initial Term A Loan Advance is defined in Section 2.2(a). Insolvency Proceeding is any proceeding by or against any Person under the United States Bankruptcy Code, or any other
bankruptcy or insolvency law, including assignments for the benefit of creditors, compositions, extensions generally with its creditors, or proceedings seeking reorganization, arrangement, or other relief. 39
Intellectual Property means, with respect to any Person, all of such
Persons right, title, and interest in and to the following: (a) its Copyrights, Trademarks and Patents; (b) any and all trade secrets and trade secret rights, including, without limitation, any rights to unpatented inventions, know-how and operating manuals; (c) any and all source code; (d) any and all design rights which may be available to such Person; (e) any and all claims for damages by way of past, present and future infringement of any of the foregoing, with the right, but not the
obligation, to sue for and collect such damages for said use or infringement of the Intellectual Property rights identified above; and (f) all amendments, renewals and extensions of any of the Copyrights, Trademarks or Patents. Inventory is all inventory as defined in the Code in effect on the date hereof with such additions to
such term as may hereafter be made, and includes without limitation all merchandise, raw materials, parts, supplies, packing and shipping materials, work in process and finished products, including without limitation such inventory as is temporarily
out of Borrowers custody or possession or in transit and including any returned goods and any documents of title representing any of the above. Investment is any beneficial ownership interest in any Person (including stock, partnership interest or other securities),
and any loan, advance or capital contribution to any Person. Key Person is Borrowers Chief Executive Officer.
Lender and Lenders is defined in the preamble. Lender Entities is defined in Section 13.9. Lender Intercreditor Agreement is, collectively, any and all intercreditor agreement, master arrangement agreement or
similar agreement by and between SVB Innovation Fund and SVB, as each may be amended from time to time in accordance with the provisions thereof. Lenders Expenses are all of Agents and the Lenders audit fees and expenses, costs, and expenses
(including reasonable attorneys fees and expenses) for preparing, amending, negotiating, administering, defending and enforcing the Loan Documents (including, without limitation, those incurred in connection with appeals or Insolvency
Proceedings) or otherwise incurred with respect to Borrower. Letter of Credit is a standby or commercial letter of
credit issued by SVB upon request of Borrower based upon an application, guarantee, indemnity, or similar agreement. Lien is a claim, mortgage, deed of trust, levy, charge, pledge, security interest or other encumbrance of any kind, whether
voluntarily incurred or arising by operation of law or otherwise against any property. 40
Liquidity is, at any time, the sum of (a) the aggregate amount of
unrestricted and unencumbered cash and Cash Equivalents held at such time by Borrower in accounts maintained with SVB and (b) the currently available but undrawn Term Loan Advances. Loan Documents are, collectively, this Agreement and any schedules, exhibits, certificates, notices, and any other
documents related to this Agreement, the Warrant, the Perfection Certificate, each Disbursement Letter, the Lender Intercreditor Agreement, the Amended and Restated Stock Pledge Agreement, any Bank Services Agreement, any Control Agreement, any
subordination agreement, any note, or notes or guaranties executed by Borrower, and any other present or future agreement by Borrower with or for the benefit of Agent and the Lenders in connection with this Agreement or Bank Services, all as
amended, restated, or otherwise modified. Material Adverse Change is (a) a material impairment in the perfection
or priority of Agents, for the ratable benefit of the Lenders, Lien in the Collateral or in the value of such Collateral; (b) a material adverse change in the business, operations, or condition (financial or otherwise) of Borrower;
(c) a material impairment of the prospect of repayment of any portion of the Obligations; or (d) Agent or any Lender determines, based upon information available to it and in its reasonable judgment, that there is a reasonable likelihood
that Borrower shall fail to comply with one or more of the financial covenants in Section 6 during the next succeeding financial reporting period. In determining whether a Material Adverse Change has occurred under clause
(b) or (c) above, Agent and the Lenders primary, though not sole, consideration will be whether Borrower has or will have sufficient cash resources to repay the Obligations as and when due. Agent and the Lenders recognize that, as a pre-profit company, Borrowers cash resources will decline over time, and Borrower will periodically require additional infusions of equity capital. The clear intention of Borrowers investors to continue
to fund Borrower in the amounts and timeframe necessary, in Agent and the Lenders judgment, to enable Borrower to satisfy the Obligations as they become due and payable is the most significant criterion Agent and the Lenders shall consider in
making any such determination. Minimum Cash Balance means unrestricted and unencumbered cash of Borrower maintained in
accounts of Borrower at SVB, in an amount equal to at least Sixty Million Dollars ($60,000,000.00). Monthly Financial
Statements is defined in Section 6.2(a). Net Income means, as calculated for Borrower for any period as
at any date of determination, the net profit (or loss), after provision for taxes, of Borrower for such period taken as a single accounting period, determined in accordance with GAAP. Obligations are Borrowers obligations to pay when due any debts, principal, interest, fees, Lenders Expenses,
the Final Payment, the Prepayment Premium, and other amounts Borrower owes Agent or any Lender now or later, whether under this Agreement, the other Loan Documents (other than the Warrant), or otherwise, including, without limitation, all
obligations relating to Bank Services, if any, and including any interest accruing after Insolvency Proceedings begin and debts, liabilities, or obligations of Borrower assigned to Agent and/or the Lenders, and to perform Borrowers duties
under the Loan Documents (other than the Warrant). Operating Documents are, for any Person, such Persons
formation documents, as certified by the Secretary of State (or equivalent agency) of such Persons jurisdiction of organization on a date that is no earlier than thirty (30) days prior to the Effective Date, and, (a) if such Person
is a corporation, its bylaws in current form, (b) if such Person is a limited liability company, its limited liability company agreement (or similar agreement), and (c) if such Person is a partnership, its partnership agreement (or similar
agreement), each of the foregoing with all current amendments or modifications thereto. 41
Patents means all patents, patent applications and like protections
including without limitation improvements, divisions, continuations, renewals, reissues, extensions and continuations-in-part of the same. Payment/Advance Form is that certain form attached hereto as Exhibit C. Payment Date is the first (1st) calendar day of each month. Payment Recipient has the meaning assigned to it in Section 9.8(a). Perfection Certificate is defined in Section 5.1. Performance Milestone occurs if and when (if ever) Agent confirms in writing that the Lenders have received evidence,
satisfactory to the Lenders in their sole discretion, on or prior to December 31, 2022, that Borrower achieved, for any three (3) month period ending after the Effective Date but on or prior to December 31, 2022, EndeavorRx Revenue of
at least Twelve Million Five Hundred Thousand Dollars ($12,500,000.00). Permitted Acquisition means a transaction
whereby Borrower acquires, or permits any of its Subsidiaries to acquire, all or substantially all of the capital stock or property of another Person, which satisfies each of the following conditions: (a) such transaction shall only involve assets located in the United States and the party or parties being acquired is in the same or a
substantially similar line of business as Borrower; (b) no Event of Default has occurred and is continuing or would exist after giving
effect to the transaction and Agent and the Lenders have each received satisfactory evidence that Borrower is in compliance with all terms and conditions of this Agreement (and that it will be in compliance after giving effect to the transaction);
(c) the acquisition is approved by the board of directors (or equivalent control group) of all parties to the transaction; (d) the total consideration to be paid by Borrower for each such transaction does not exceed (i) Seven Million Five Hundred Thousand
Dollars ($7,500,000.00) in cash and the value of non-cash consideration (excluding, however, the value of Borrowers or its Subsidiaries stock and/or equity interests issued by Borrower or its
Subsidiaries in connection with such transaction (collectively, the Equity Consideration)) or (ii) Fifty Million Dollars ($50,000,000.00) in cash and the value of non-cash consideration
(including Equity Consideration); (e) Borrower provides Agent and the Lenders (i) written notice of the transaction at least twenty
(20) days before the closing of the transaction and (ii) copies of the acquisition agreement and other material documents relative to the contemplated transaction and such other financial information, financial analysis, documentation or
other information relating to such transaction as Agent and the Lenders shall reasonably request at least thirty (30) days before the closing of the transaction; (f) Borrower provides Agent and the Lenders, at least twenty (20) days before the closing of the contemplated transaction, written
confirmation, supported by reasonably detailed calculations, that on a pro forma basis (immediately after giving effect to such transaction) Borrower will have Remaining Months Liquidity equal to at least nine (9); 42
(g) Borrower is a surviving legal entity after completion of the contemplated transaction;
(h) the contemplated transaction is consensual and non-hostile; (i) no Indebtedness will be incurred, assumed, or would exist with respect to Borrower or its Subsidiaries as a result of the contemplated
transaction, other than Permitted Indebtedness, and no Liens will be incurred, assumed, or would exist with respect to the assets of Borrower or its Subsidiaries as a result of the contemplated transaction, other than Permitted Liens; (j) the acquisition and the company being acquired is accretive in all respects; (k) any Person the capital stock of which is acquired or any Subsidiary that acquires assets in such contemplated transaction shall, within
thirty (30) days of the consummation of the transaction, become a coborrower or guarantor (as determined by Agent in its sole discretion) hereunder and shall grant a first priority Lien in all of its assets to Agent for the ratable benefit of
the Lenders, all on documentation acceptable to Agent in its sole discretion; and (l) Borrower shall have delivered to Agent and the
Lenders, at least twenty (20) days prior to the date on which any such acquisition is to be consummated (or such later date as is agreed by Agent in its sole discretion), a certificate of a Responsible Officer of Borrower, in form and substance
reasonably satisfactory to Agent, certifying that all of the requirements set forth in this definition have been satisfied or will be satisfied on or prior to the consummation of such purchase or other acquisition. Permitted Indebtedness is: (a) Borrowers Indebtedness to Agent and the Lenders under this Agreement and the other Loan Documents; (b) Indebtedness existing on the Effective Date which is shown on the Perfection Certificate; (c) Subordinated Debt; (d)
unsecured Indebtedness to trade creditors incurred in the ordinary course of business; (e) Indebtedness incurred as a result of endorsing
negotiable instruments received in the ordinary course of business; (f) Indebtedness secured by Liens permitted under clauses
(a) and (c) of the definition of Permitted Liens hereunder; (g) unsecured Indebtedness pursuant to credit card
obligations in an aggregate amount outstanding at any time not to exceed Five Hundred Thousand Dollars ($500,000.00); and (h) extensions,
refinancings, modifications, amendments and restatements of any items of Permitted Indebtedness (a) through (g) above, provided that the principal amount thereof is not increased or the terms thereof are not modified to impose more burdensome
terms upon Borrower or its Subsidiary, as the case may be. 43
Permitted Investments are: (a) Investments (including, without limitation, Subsidiaries) existing on the Effective Date which are shown on the Perfection Certificate;
and (b) (i) Investments consisting of Cash Equivalents; and (ii) any Investments permitted by Borrowers investment policy, as
amended from time to time, provided that such investment policy (and any such amendment thereto) has been approved in writing by Agent and the Lenders (but specifically excluding any Investments in any Subsidiaries unless otherwise permitted
hereunder); (c) Investments consisting of the endorsement of negotiable instruments for deposit or collection or similar transactions in
the ordinary course of Borrower; (d) Investments consisting of deposit accounts (but only to the extent that Borrower is permitted to
maintain such accounts pursuant to Section 6.6 of this Agreement) in which Agent has a first priority perfected security interest for the ratable benefit of the Lenders; (e) Investments accepted in connection with Transfers permitted by Section 7.1; (f) Investments consisting of (i) travel advances and employee relocation loans and other employee loans and advances in the ordinary
course of business, and (ii) loans to employees, officers or directors relating to the purchase of equity securities of Borrower or its Subsidiaries pursuant to employee stock purchase plans or agreements approved by the Board; (g) Investments (including debt obligations) received in connection with the bankruptcy or reorganization of customers or suppliers and in
settlement of delinquent obligations of, and other disputes with, customers or suppliers arising in the ordinary course of business; (h)
Investments consisting of notes receivable of, or prepaid royalties and other credit extensions, to customers and suppliers who are not Affiliates, in the ordinary course of business; provided that this paragraph (h) shall not apply to
Investments of Borrower in any Subsidiary; and (i) Permitted Acquisitions. Permitted Liens are: (a) Liens existing on the Effective Date which are shown on the Perfection Certificate or arising under this Agreement and the other Loan
Documents; (b) Liens for taxes, fees, assessments or other government charges or levies, either (i) not due and payable or
(ii) being contested in good faith and for which Borrower maintains adequate reserves on Borrowers Books, provided that no notice of any such Lien has been filed or recorded under the Internal Revenue Code of 1986, as amended, and
the Treasury Regulations adopted thereunder; (c) purchase money Liens or capital leases (i) on Equipment acquired or held by
Borrower incurred for financing the acquisition of the Equipment securing no more than Five Hundred Thousand Dollars ($500,000.00) in the aggregate amount outstanding, or (ii) existing on Equipment when acquired, if the Lien is confined to the
property and improvements and the proceeds of the Equipment; 44
(d) Liens of carriers, warehousemen, suppliers, or other Persons that are possessory in
nature arising in the ordinary course of business so long as such Liens attach only to Inventory, securing liabilities in the aggregate amount not to exceed Fifty Thousand Dollars ($50,000.00) and which are not delinquent or remain payable without
penalty or which are being contested in good faith and by appropriate proceedings which proceedings have the effect of preventing the forfeiture or sale of the property subject thereto; (e) Liens to secure payment of workers compensation, employment insurance, old-age pensions,
social security and other like obligations incurred in the ordinary course of business (other than Liens imposed by ERISA); (f) Liens
incurred in the extension, renewal or refinancing of the indebtedness secured by Liens described in (a) through (e), but any extension, renewal or replacement Lien must be limited to the property encumbered by the existing Lien and the
principal amount of the indebtedness may not increase; (g) leases or subleases of real property granted in the ordinary course of
Borrowers business (or, if referring to another Person, in the ordinary course of such Persons business), and leases, subleases, nonexclusive licenses or sublicenses of personal property (other than Intellectual Property) granted in the
ordinary course of Borrowers business (or, if referring to another Person, in the ordinary course of such Persons business), if the leases, subleases, licenses and sublicenses do not prohibit granting Agent a security interest therein;
(h) non-exclusive licenses of Intellectual Property granted to third parties in the ordinary
course of business, and licenses of Intellectual Property that could not result in a legal transfer of title of the licensed property that may be exclusive in respects other than territory and that may be exclusive as to territory only as to
discrete geographical areas outside of the United States; and (i) Liens arising from attachments or judgments, orders, or decrees in
circumstances not constituting an Event of Default under Sections 8.4 and 8.7. Person is any individual, sole
proprietorship, partnership, limited liability company, joint venture, company, trust, unincorporated organization, association, corporation, institution, public benefit corporation, firm, joint stock company, estate, entity or government agency.
Prepayment Premium shall be an additional fee, payable to Agent, for the ratable benefit of the Lenders based on their
Pro Rata Share, with respect to the Term Loan Advances (provided, however, that the Unaccrued Final Payment shall be payable solely to SVB), in an amount equal to: (a) for a prepayment of the Term Loan Advances made on or prior to the first (1st)
anniversary of the Effective Date, the sum of (i) the Unaccrued Final Payment plus (ii) three percent (3.0%) of the outstanding principal balance of the Term Loan Advances immediately prior to such prepayment; (b) for a prepayment of the Term Loan Advances made after the first (1st) anniversary of
the Effective Date but on or prior to the second (2nd) anniversary of the Effective Date, the sum of (i) the Unaccrued Final Payment plus (ii) two percent (2.0%) of the outstanding
principal balance of the Term Loan Advances immediately prior to such prepayment; and (c) for a prepayment of the Term Loan Advances made
after the second (2nd) anniversary of the Effective Date, the sum of (i) the Unaccrued Final Payment plus (ii) one percent (1.0%) of the outstanding principal balance of the Term Loan
Advances immediately prior to such prepayment. 45
Notwithstanding the foregoing, Lenders agree to waive the Prepayment Premium, and no
Prepayment Premium is due, if Lenders close on a refinance and redocumentation of the Term Loan Advances (in their sole and absolute discretion) on or prior to the Term Loan Maturity Date. Prime Rate is the rate of interest per annum from time to time published in the money rates section of The Wall Street
Journal or any successor publication thereto as the prime rate then in effect; provided that, in the event such rate of interest is less than zero, such rate shall be deemed to be zero for purposes of this Agreement; and provided further
that if such rate of interest, as set forth from time to time in the money rates section of The Wall Street Journal, becomes unavailable for any reason as determined by Agent, the Prime Rate shall mean the rate of interest per annum
announced by SVB as its prime rate in effect at its principal office in the State of California (such SVB announced Prime Rate not being intended to be the lowest rate of interest charged by SVB in connection with extensions of credit to debtors);
provided that, in the event such rate of interest is less than zero, such rate shall be deemed to be zero for purposes of this Agreement. Prior Loan Agreement is defined in Recital A of this Agreement. Pro Rata Share is, as of any date of determination, with respect to each Lender, a percentage (expressed as a decimal,
rounded to the ninth decimal place) determined by dividing the outstanding principal amount of Term Loan Advances held by such Lender by the aggregate outstanding principal amount of all Term Loan Advances. Registered Organization is any registered organization as defined in the Code with such additions to such term
as may hereafter be made. Remaining Months Liquidity means as of a date of determination (a) Liquidity on such
date divided by (b) Average EBDA for the period ending on such date. Removal Effective Date is defined in
Section 10.10(d). Representatives is defined in Section 13.9. Requirement of Law is as to any Person, the organizational or governing documents of such Person, and any law (statutory or
common), treaty, rule or regulation or determination of an arbitrator or a court or other Governmental Authority, in each case applicable to or binding upon such Person or any of its property or to which such Person or any of its property is
subject. Responsible Officer is any of the Chief Executive Officer, President, Chief Financial Officer, and Controller
of Borrower. Restricted License is any material license or other agreement with respect to which Borrower is the
licensee (a) that prohibits or otherwise restricts Borrower from granting a security interest in Borrowers interest in such license or agreement or any other property, or (b) for which a default under or termination of could
interfere with the Agents right to sell any Collateral. SEC shall mean the Securities and Exchange Commission,
any successor thereto, and any analogous Governmental Authority. Securities Account is any securities
account as defined in the Code with such additions to such term as may hereafter be made. 46
Securities Corp. is AKILI SECURITIES CORP., a Delaware corporation. Subordinated Debt is indebtedness incurred by Borrower subordinated to all of Borrowers now or hereafter indebtedness
to Agent and the Lenders (pursuant to a subordination, intercreditor, or other similar agreement in form and substance satisfactory to Agent and the Lenders entered into between Agent, the Lenders and the other creditor), on terms acceptable to
Agent and the Lenders. Subsidiary is, as to any Person, a corporation, partnership, limited liability company or other
entity of which shares of stock or other ownership interests having ordinary voting power (other than stock or such other ownership interests having such power only by reason of the happening of a contingency) to elect a majority of the board of
directors or other managers of such corporation, partnership or other entity are at the time owned, or the management of which is otherwise controlled, directly or indirectly through one or more intermediaries, or both, by such Person. Unless the
context otherwise requires, each reference to a Subsidiary herein shall be a reference to a Subsidiary of Borrower. SVB is defined in the preamble hereof. SVB Innovation Fund is defined in the preamble hereof. Term A Loan Advance and Term A Loan Advances are defined in Section 2.2(a). Term A Loan Draw Period is the period of time commencing upon the Effective Date and continuing through the earlier to
occur of (a) June 30, 2022; provided, however, that such date shall be September 30, 2022 if the aggregate original principal amount of Term A Loan Advances made by the Lenders on or prior to June 30, 2022 is equal to at least
Fifteen Million Dollars ($15,000,000.00) or (b) an Event of Default. Term B Loan Advance is defined in
Section 2.2(a). Term B Loan Draw Period is the period of time commencing upon the occurrence of the Performance
Milestone and continuing through the earlier to occur of (a) December 31, 2022 or (b) an Event of Default. Term C
Loan Advance and Term C Loan Advances are defined in Section 2.2(a). Term C Loan Draw
Period is the period of time commencing upon the occurrence of the Third Tranche Availability Event and continuing through the earlier to occur of (a) December 31, 2022 or (b) an Event of Default. Term Loan Advance and Term Loan Advances are defined in Section 2.2(a). Term Loan Amortization Date is June 1, 2023; provided, however, if the Performance Milestone occurs on or prior to
December 31, 2022, the Term Loan Amortization Date shall be June 1, 2024. Term Loan Commitment means, for
any Lender, the obligation of such Lender to make a Term Loan Advance as and when available, up to the principal amount shown on Schedule 1. Term Loan Commitments means the aggregate amount of such commitments of all Lenders. 47
Term Loan Commitment Percentage means, as to any Lender at any time, the
percentage (carried out to the fourth decimal place) of the Term Loan Commitments represented by such Lenders Term Loan Commitment at such time. The initial Term Loan Commitment Percentage of each Lender is set forth opposite the name of such
Lender on Schedule 1. Term Loan Maturity Date is May 1, 2025. Tested Quarter is defined in Section 6.7. Third Tranche Availability Event means the occurrence of all of the following: (a) Borrower has provided a written
request to Agent requesting that the Term C Loan Draw Period commence; (b) each Lender has received all necessary internal and credit approvals for the Term C Loan Draw Period to commence; (c) Agent has inspected Borrowers Accounts,
the Collateral, and Borrowers Books pursuant to Section 6.10 of this Agreement, with results satisfactory to each Lender in its sole and absolute discretion; (d) no Event of Default exists at the time the Term C Loan Draw Period is
to commence or would exist as a result of the Term C Loan Draw Period commencing; (e) the Performance Milestone has occurred; and (f) each Lender has provided written approval in its sole discretion that the Term C Loan Draw Period will
commence. For clarity, upon satisfaction of each of the conditions in (a) through (e), the determination of whether to commence the Term C Loan Draw Period shall be in the Lenders sole discretion and shall in no event occur automatically.
Trademarks means any trademark and servicemark rights, whether registered or not, applications to register and
registrations of the same and like protections, and the entire goodwill of the business of Borrower connected with and symbolized by such trademarks. Transfer is defined in Section 7.1. Unaccrued Final Payment is defined in Section 2.2(a). Warrant means, collectively, (a) that certain warrant to purchase stock dated as of December 21, 2018 between
Borrower and SVB, (b) that certain warrant to purchase stock dated as of December 21, 2018 between Borrower and WestRiver Innovation Lending Fund VIII, L.P., (c) that certain warrant to purchase stock dated as of August 10, 2020
between Borrower and SVB, (d) that certain warrant to purchase stock dated as of the Effective Date between Borrower and SVB and (e) that certain warrant to purchase stock dated as of the Effective Date between Borrower and SVB Innovation
Fund, in each case, as may be amended, modified, supplemented and/or restated from time to time. Wells Fargo Account
is defined in Section 6.6(a). [Signature Page Follows.] 48
IN WITNESS WHEREOF, the parties hereto have caused this Agreement to be executed as a
sealed instrument under the laws of the Commonwealth of Massachusetts as of the Effective Date. By. Name: Santosh Shanbhag Title: Chief Financial Officer By. Name: Sam Subilia Title: Director LENDERS: By. Name: Sam Subilia Title: Director SVB INNOVATION CREDIT FUND VIII, L.P., as Lender By: SVB Innovation Credit Partners VIII, LLC, a Delaware limited liability company, its General Partner [Signature Page to
Amended and Restated Loan and Security Agreement]
SCHEDULE 1 LENDERS AND COMMITMENTS TERM A LOAN COMMITMENT Lender Silicon Valley Bank SVB Innovation Credit Fund VIII, L.P. TOTAL TERM B LOAN COMMITMENT Lender Silicon Valley Bank SVB Innovation Credit Fund VIII, L.P. TOTAL TERM C LOAN COMMITMENT Lender Silicon Valley Bank SVB Innovation Credit Fund VIII, L.P. TOTAL
EXHIBIT A - COLLATERAL DESCRIPTION The Collateral consists of all of Borrowers right, title and interest in and to the following personal property: All goods, Accounts (including health-care receivables), Equipment, Inventory, contract rights or rights to payment of money, leases, license
agreements, franchise agreements, General Intangibles (except as provided below), commercial tort claims, documents, instruments (including any promissory notes), chattel paper (whether tangible or electronic), cash, deposit accounts, certificates
of deposit, fixtures, letters of credit rights (whether or not the letter of credit is evidenced by a writing), securities, and all other investment property, supporting obligations, and financial assets, whether now owned or hereafter acquired,
wherever located; and all Borrowers Books relating to the foregoing, and any and all claims, rights and interests in any of the above and all substitutions for, additions, attachments, accessories, accessions and improvements to and
replacements, products, proceeds and insurance proceeds of any or all of the foregoing. Notwithstanding the foregoing, the Collateral
does not include any Intellectual Property; provided, however, the Collateral shall include all Accounts and all proceeds of Intellectual Property. If a judicial authority (including a U.S. Bankruptcy Court) would hold that a security interest in
the underlying Intellectual Property is necessary to have a security interest in such Accounts and such property that are proceeds of Intellectual Property, then the Collateral shall automatically, and effective as of the Effective Date, include the
Intellectual Property to the extent necessary to permit perfection of Agents, for the ratable benefit of the Lenders, security interest in such Accounts and such other property of Borrower that are proceeds of the Intellectual Property. Pursuant to the terms of a certain negative pledge arrangement with Agent and the Lenders, Borrower has agreed not to encumber any of its
Intellectual Property without Agent and the Lenders prior written consent.
EXHIBIT B COMPLIANCE STATEMENT TO: SILICON VALLEY BANK, as Agent, SVB, and SVB Innovation Fund FROM: AKILI INTERACTIVE LABS, INC. Under the terms and conditions of the Amended and Restated Loan and Security Agreement by and among Borrower,
Agent and the Lenders (the Agreement), Borrower is in complete compliance for the period ending ___________ with all required covenants except as noted below. Attached are the required documents supporting the certification.
Attached are the required documents evidencing such compliance, setting forth calculations prepared in accordance with GAAP consistently applied from one period to the next except as explained in an accompanying letter or footnotes. Capitalized
terms used but not otherwise defined herein shall have the meanings given them in the Agreement. Please indicate compliance status by
circling Yes/No under Complies column. Reporting Covenants Required Complies Financial Covenant Maintain as indicated: Minimum EndeavorRX Revenue (trailing three month)(tested quarterly) As set forth in Section 6.7. Not tested for any Tested Quarter (a) with respect to which Borrower
maintained the Minimum Cash Balance at all times during the period commencing on the first day of such Tested Quarter through and including the date that is 30 days after the last day of such Tested Quarter, or (b) ending prior to the Funding
Date of the first Term B Loan Advance. Other Matters Yes No Yes No
The following financial covenant analyses and information set forth in Schedule 1 attached
hereto are true and accurate as of the date of this Compliance Statement. The following are the exceptions with respect to the statements
above: (If no exceptions exist, state No exceptions to note.) 2
Schedule 1 to Compliance Certificate Financial Covenants of Borrower In
the event of a conflict between this Schedule and the Agreement, the terms of the Agreement shall govern. Dated: _____________ Minimum EndeavorRX Revenue (Section 6.7) (tested quarterly for the trailing three month period ending on
the last day of each quarter ending on and after the Funding Date of the first Term B Loan Advance) Required: __________
(see chart below) Quarter Ending June 30, 2021 September 30, 2021 December 31, 2021 March 31, 2022 June 30, 2022 September 30, 2022 December 31, 2022 March 31, 2023 June 30, 2023 September 30, 2023 December 31, 2023* See Section 6.7 for periods ending after December 31, 2023. Actual: A. Revenue (calculated in accordance
with GAAP) from Borrowers EndeavorRx product $_____ Is line A equal to or greater than the amount
set forth above? _____ No, not in
compliance _____ Yes, in
compliance _____ N/A* Not tested for any Tested Quarter (a) with respect to which Borrower maintained the Minimum Cash Balance
at all times during the period commencing on the first day of such Tested Quarter through and including the date that is 30 days after the last day of such Tested Quarter, or (b) ending prior to the Funding Date of the first Term B Loan
Advance.
Exhibit 10.17 EXHIBIT C LOAN
PAYMENT/ADVANCE REQUEST FORM DEADLINE FOR SAME DAY
PROCESSING IS 1:00 P.M. EASTERN TIME LOAN PAYMENT: AKILI INTERACTIVE LABS, INC. From Account #
(Deposit Account #) Principal $
Authorized Signature:
Print Name/Title:
LOAN ADVANCE: Complete Outgoing Wire Request section below if all or a portion of the funds from this loan advance are for
an outgoing wire. From Account #
(Loan Account #) Amount of Term Loan Advance $
All Borrowers representations and warranties in the Amended and Restated Loan and Security
Agreement are true, correct and complete in all material respects on the date of the request for an advance; provided, however, that such materiality qualifier shall not be applicable to any representations and warranties that already are qualified
or modified by materiality in the text thereof; and provided, further that those representations and warranties expressly referring to a specific date shall be true, accurate and complete in all material respects as of such date. Authorized Signature:
Print Name/Title:
EXHIBIT D Form of Disbursement Letter [see attached]
DISBURSEMENT LETTER [DATE] The undersigned,
being the duly elected and acting ______________________ of AKILI INTERACTIVE LABS, INC. a Delaware corporation (Borrower), does hereby certify to (a) SILICON VALLEY BANK, a California corporation
(SVB), in its capacity as administrative agent and collateral agent (Agent), (b) SILICON VALLEY BANK, a California corporation, as a lender, (c) SVB INNOVATION CREDIT FUND VIII, L.P., a
Delaware limited partnership (SVB Innovation Fund), as a lender (SVB and SVB Innovation Fund and each of the other Lenders from time to time a party hereto are referred to herein collectively as the
Lenders and each individually as a Lender) in connection with that certain Loan and Security Agreement dated as of [ ], by and among Borrower, Agent and the Lenders from time to time party thereto
(the Loan Agreement; with other capitalized terms used below having the meanings ascribed thereto in the Loan Agreement) that: 1. The representations and warranties made by Borrower in Section 5 of the Loan Agreement and in the other Loan Documents are true and
correct in all material respects as of the date hereof. 2. No event or condition has occurred that would constitute an Event of Default
under the Loan Agreement or any other Loan Document. 3. Borrower is in compliance with the covenants and requirements contained in
Sections 4, 6 and 7 of the Loan Agreement. 4. All conditions referred to in Section 3 of the Loan Agreement to the making of a
Credit Extension to be made on or about the date hereof have been satisfied or waived by Agent. 5. No Material Adverse Change has
occurred. 6. The undersigned is an Authorized Signer. [Balance of Page Intentionally Left Blank]
7. The proceeds of the Term Loan Advance shall be disbursed as follows: Disbursement from SVB: Loan Amount Plus: Deposit Received Less: Existing Debt Payoff [Interim Interest] Lenders Legal Fees Net Proceeds due from SVB: Disbursement from SVB Innovation Fund: Loan Amount: Net Proceeds due from SVB Innovation Fund: TOTAL TERM LOAN ADVANCE NET PROCEEDS FROM LENDERS [Disbursement from AGENT:] [Cumulative and not duplicative of the amount set forth
above] Loan Amount Plus: Deposit Received Less: Commitment Fee Existing Debt Payoff [Interim Interest] Lenders Legal Fees Net Proceeds due from Agent 8. The aggregate net proceeds of the Term Loan Advance shall be transferred to the Designated Deposit Account
as follows: 3003 Tasman Drive Santa Clara, California
95054
Dated as of the date first set forth above. SVB INNOVATION CREDIT FUND VIII, L.P., By: SVB Innovation Credit Partners VIII, LLC, a Delaware limited
liability company, its General Partner [Signature page to
Disbursement Letter]
$
13,669,909.00
$
17,355,925.00
$
21,411,268.00
$
25,873,779.00
BORROWER:
AKILI INTERACTIVE LABS, INC.
/s/ Santosh Shanbhag
AGENT:
SILICON VALLEY BANK, as Agent
/s/ Sam Subilia
SILICON VALLEY BANK
/s/ Sam Subilia
By.
/s/ Ryan Grammar
Name: Ryan Grammar
Title: Senior Managing Director
Term A Loan Commitment
Term A Loan
Commitment Percentage
$
17,500,000.00
50.0
%
$
17,500,000.00
50.0
%
$
35,000,000.00
100.0
%
Term B Loan Commitment
Term B Loan Commitment
Percentage
$
2,500,000.00
50.0
%
$
2,500,000.00
50.0
%
$
5,000,000.00
100.0
%
Term C Loan Commitment
Term C Loan Commitment
Percentage
$
5,000,000.00
50.0
%
$
5,000,000.00
50.0
%
$
10,000,000.00
100.0
%
Date: ___________
Monthly financial statements with Compliance Statement
Monthly within 30 days
Yes No
Annual financial statement (CPA Audited)
FYE within 180 days
Yes No
Filed 10-Q, 10-K and 8-K
Within 5 days after filing with SEC
Yes No
Board-Approved Projections
Within 60 days of Borrowers FYE, and amended/updated
Yes No
Required
Actual
Complies
≥ $___ *
$___
Yes No N/A
*
Have there been any amendments of or other changes to the capitalization table of Borrower and to the Operating Documents of Borrower or any of its Subsidiaries? If yes, provide copies of any such amendments or changes with this
Compliance Statement.
Has Borrower maintained unrestricted cash at SVB equal to the lesser of (i) 100.0% of the Dollar value of all of Borrowers consolidated cash, including any Subsidiaries, Affiliates, or related entities
cash, in the aggregate at all financial institutions, and (ii) 105.0% of the then-outstanding Obligations of Borrower to Agent and the Lenders, at all times during the month ending on the date set forth above?
I.
EndeavorRX Revenue
$
268,450.00
$
898,275.00
$
2,106,300.00
$
4,206,285.00
$
6,231,108.00
$
8,312,740.00
$
10,820,696.00
$
13,669,909.00
$
17,355,925.00
$
21,411,268.00
$
25,873,779.00
*
*
Fax To:
Date: ______________
To Account #
(Loan Account #)
and/or Interest $
Phone Number:
To Account #
(Deposit Account #)
Phone Number:
$
______________
$
______________
($
______________
)
($
______________
)
($
______________
)*
$
______________
$
______________
$
______________
$
______________
$
______________
$
______________
($
______________
)
($
______________
)
($
______________
)
($
______________
)
$
______________
Account Name:
Bank Name:
Silicon Valley Bank
Bank Address:
Account Number:
ABA Number:
BORROWER:
AKILI INTERACTIVE LABS, INC.
By
Name:
Title:
AGENT:
SILICON VALLEY BANK, as Agent
By
Name:
Title:
LENDER:
SILICON VALLEY BANK
By
Name:
Title:
LENDER:
By
Name:
Title:
Exhibit 10.24
CERTAIN CONFIDENTIAL INFORMATION, MARKED BY [***] HAS BEEN EXCLUDED FROM THIS EXHIBIT BECAUSE IT IS BOTH NOT MATERIAL AND IS THE TYPE THAT THE REGISTRANT TREATS AS PRIVATE OR CONFIDENTIAL.
STANDARD INDUSTRIAL/COMMERCIAL MULTI-TENANT LEASE - GROSS
1. Basic Provisions (Basic Provisions).
1.1 Parties. This Lease (Lease), dated for reference purposes only June 15, 2018 , is made by and between Remillard Brick Kiln, LLC a California Limited Liability Company (Lessor) and Akili Interactive Labs, Inc. (Lessee), (collectively the Parties, or individually a Party).
1.2(a) Premises: That certain real property, including all improvements therein or to be provided by Lessor under the terms of this Lease, commonly known as (street address, unit/suite, city, state): 125 E. Sir Francis Drake Boulevard, Suite 300 & 301, Larkspur, CA 94939 (Premises). The Premises are located in the County of Marin ,and are generally described as (describe briefly the nature of the Premises and the Project): Suite 300 & Suite 301 which are approximately 14,131 total rentable sq. ft. located within the 29,500 sq. ft. office building. The Brick Kiln is a historical landmark built in approximately 1887. In addition to Lessees rights to use and occupy the Premises as hereinafter specified, Lessee shall have non-exclusive rights to any utility raceways of the building containing the Premises (Building) and to the Common Areas (as defined in Paragraph 2.7 below), but shall not have any rights to the roof, or exterior walls of the Building or to any other buildings in the Project. The Premises, the Building, the Common Areas, the land upon which they are located, along with all other buildings and improvements thereon, are herein collectively referred to as the Project. (See also Paragraph 2)
1.2(b) Parking: 42 unreserved vehicle parking spaces. (See also Paragraph 2.6)
1.3 Term: 7 years and 6 months (Original Term) commencing November 1, 2018 (See Paragraph 62) (Commencement Date) and ending April 30, 2026 (Expiration Date). (See also Paragraph 3)
1.4 Early Possession: If the Premises are available Lessee may have non-exclusive possession of the Premises commencing See paragraph 51 (Early Possession Date). (See also Paragraphs 3.2 and 3.3)
1.5 Base Rent: See paragraph 50 per month (Base Rent), payable on the 1st day of each month commencing See Paragraph 50 . (See also Paragraph 4)
☒ If this box is checked, there are provisions in this Lease for the Base Rent to be adjusted. See Paragraph 52 .
1.6 Lessees Share of Common Area Operating Expenses: None percent ( N/A %) (Lessees Share). In the event that the size of the Premises and/or the Project are modified during the term of this Lease, Lessor shall recalculate Lessees Share to reflect such modification.
1.7 Base Rent and Other Monies Paid Upon Execution:
(a) | Base Rent: See Paragraph 50 for the period . |
(b) | Common Area Operating Expenses: None for the period N/A . |
(c) | Security Deposit: See Paragraph 53 (Security Deposit). (See also Paragraph 5) |
(d) | Other: None for N/A . |
(e) | Total Due Upon Execution of this Lease: $63,590.00 . |
1.8 Agreed Use: General and administrative office along with any other legally permitted uses. . (See also Paragraph 6)
1.9 Insuring Party. Lessor is the Insuring Party. (See also Paragraph 8)
1.10 Real Estate Brokers. (See also Paragraph 15 and 25)
(a) | Representation: The following real estate brokers (the Brokers) and brokerage relationships exist in this transaction (check applicable boxes): |
☒ Cushman & Wakefield U.S. Inc. represents Lessor exclusively (Lessors Broker);
☒ Jones Lang LaSalle Brokerage, Inc. represents Lessee exclusively (Lessees Broker); or
☐ represents both Lessor and Lessee (Dual Agency).
(b) Payment to Brokers. Upon execution and delivery of this Lease by both Parties, Lessor shall pay to the Brokers the brokerage
fee agreed to in a separate written agreement (or if there is no such agreement, the sum of or
% of the total Base Rent) for the brokerage services rendered by the Brokers
1.11 Guarantor. The obligations of the Lessee under this Lease are to be guaranteed by N/A (Guarantor). (See also Paragraph 37)
1.12 Attachments. Attached hereto are the following, all of which constitute a part of this Lease:
☒ an Addendum consisting of Paragraphs 50 through 62 ;
☒ a site plan depicting the Premises;
☐ a site plan depicting the Project;
☒ a current set of the Rules and Regulations for the Project;
☐ a current set of the Rules and Regulations adopted by the owners association;
☐ a Work Letter;
☐ other (specify): .
2. Premises.
2.1 Letting. Lessor hereby leases to Lessee, and Lessee hereby leases from Lessor, the Premises, for the term, at the
rental, and upon all of the terms, covenants and conditions set forth in this Lease. While the approximate square footage of the Premises may have been used in the marketing of the Premises for purposes of comparison, the Base Rent stated
herein is NOT tied to square footage and is not subject to adjustment should the actual size be determined to be different. NOTE: Lessee is advised to verify the actual size prior to executing this Lease.
2.2 Condition. Lessor shall deliver that portion of the Premises contained within the Building (Unit) to Lessee broom clean and free of debris on the Commencement Date or the Early Possession Date, whichever first occurs (Start Date), and, so long as the required service contracts described in Paragraph 7.1(b) below are obtained by Lessee and in effect within thirty days following the Start Date, warrants that the existing electrical, plumbing, fire sprinkler, lighting, heating, ventilating and air conditioning systems (HVAC), loading doors, sump pumps, if any, and all other such elements in the Unit, other than those constructed by Lessee, shall be in good operating condition on said date, that the structural elements of the roof, bearing walls and foundation of the Unit shall be free of material defects, and that the Unit does not contain hazardous levels of any mold or fungi defined as toxic under applicable state or federal law. If a non-compliance with such warranty exists as of the Start Date, or if one of such systems or elements should malfunction or fail within the appropriate warranty period, Lessor shall, as Lessors sole obligation with respect to such matter, except as otherwise provided in this Lease, promptly after receipt of written notice from Lessee setting forth with specificity the nature and extent of such non-compliance, malfunction or failure, rectify same at Lessors expense. The warranty periods shall be as follows: (i) 6 months as to the HVAC systems, and (ii) 30 days as to the remaining systems and other elements of the Unit. If Lessee does not give Lessor the required notice within the appropriate warranty period, correction of any such non-compliance, malfunction or failure shall be the obligation of Lessee at Lessees sole cost and expense (except for the repairs to the fire sprinkler systems, roof, foundations, and/or bearing wallssee Paragraph 7). Lessor also warrants, that unless otherwise specified in writing, Lessor is unaware of (i) any recorded Notices of Default affecting the Premise; (ii) any delinquent amounts due under any loan secured by the Premises; and (iii) any bankruptcy proceeding affecting the Premises.
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2.3 Compliance. Lessor warrants that to the best of its knowledge the improvements on the Premises and the Common Areas comply with the building codes, applicable laws, covenants or restrictions of record, regulations, and ordinances (Applicable Requirements) that were in effect at the time that each improvement, or portion thereof, was constructed. Said warranty does not apply to the use to which Lessee will put the Premises, modifications which may be required by the Americans with Disabilities Act or any similar laws as a result of Lessees use (see Paragraph 49) other than Lessors Improvements (Paragraph 55),or to any Alterations or Utility Installations (as defined in Paragraph 7.3(a)) made or to be made by Lessee. NOTE: Lessee is responsible for determining whether or not the Applicable Requirements, and especially the zoning are appropriate for Lessees intended use, and acknowledges that past uses of the Premises may no longer be allowed. If the Premises do not comply with said warranty, Lessor shall, except as otherwise provided, promptly after receipt of written notice from Lessee setting forth with specificity the nature and extent of such non-compliance, rectify the same at Lessors expense. If Lessee does not give Lessor written notice of a non-compliance with this warranty within 6 months following the Start Date, correction of that non-compliance shall be the obligation of Lessee at Lessees sole cost and expense. If the Applicable Requirements are hereafter changed so as to require during the term of this Lease the construction of an addition to or an alteration of the Unit, Premises and/or Building, the remediation of any Hazardous Substance, or the reinforcement or other physical modification of the Unit, Premises and/or Building (Capital Expenditure), Lessor and Lessee shall allocate the cost of such work as follows:
(a) Subject to Paragraph 2.3(c) below, if such Capital Expenditures are required as a result of the specific and unique use of the Premises by Lessee as compared with uses by tenants in general, Lessee shall be fully responsible for the cost thereof, provided, however, that if such Capital Expenditure is required during the last 2 years of this Lease and the cost thereof exceeds 6 months Base Rent, Lessee may instead terminate this Lease unless Lessor notifies Lessee, in writing, within 10 days after receipt of Lessees termination notice that Lessor has elected to pay the difference between the actual cost thereof and the amount equal to 6 months Base Rent. If Lessee elects termination, Lessee shall immediately cease the use of the Premises which requires such Capital Expenditure and deliver to Lessor written notice specifying a termination date at least 90 days thereafter. Such termination date shall, however, in no event be earlier than the last day that Lessee could legally utilize the Premises without commencing such Capital Expenditure.
(b) If such Capital Expenditure is not the result of the specific and unique use of the Premises by Lessee (such as, governmentally mandated seismic modifications), then Lessor shall pay for such Capital Expenditure and Lessee shall only be obligated to pay, each month during the remainder of the term of this Lease or any extension thereof, on the date that on which the Base Rent is due, an amount equal to 1/144th of the portion of such costs reasonably attributable to the Premises. Lessee shall pay Interest on the balance but may prepay its obligation at any time. If, however, such Capital Expenditure is required during the last 2 years of this Lease or if Lessor reasonably determines that it is not economically feasible to pay its share thereof, Lessor shall have the option to terminate this Lease upon 90 days prior written notice to Lessee unless Lessee notifies Lessor, in writing, within 10 days after receipt of Lessors termination notice that Lessee will pay for such Capital Expenditure. If Lessor does not elect to terminate, and fails to tender its share of any such Capital Expenditure, Lessee may advance such funds and deduct same, with Interest, from Rent until Lessors share of such costs have been fully paid. If Lessee is unable to finance Lessors share, or if the balance of the Rent due and payable for the remainder of this Lease is not sufficient to fully reimburse Lessee on an offset basis, Lessee shall have the right to terminate this Lease upon 30 days written notice to Lessor.
(c) Notwithstanding the above, the provisions concerning Capital Expenditures are intended to apply only to non-voluntary, unexpected, and new Applicable Requirements. If the Capital Expenditures are instead triggered by Lessee as a result of an actual or proposed change in use, change in intensity of use, or modification to the Premises then, and in that event, Lessee shall either: (i) immediately cease such changed use or intensity of use and/or take such other steps as may be necessary to eliminate the requirement for such Capital Expenditure, or (ii) complete such Capital Expenditure at its own expense. Lessee shall not have any right to terminate this Lease.
2.4 Acknowledgements. Lessee acknowledges that: (a) it has
been given an opportunity to inspect and measure the Premises;; (b) it has been advised by Lessor and/or Brokers to satisfy itself with respect to the size and condition of the Premises (including but not limited to the electrical, HVAC and
fire sprinkler systems, security, environmental aspects, and compliance with Applicable Requirements and the Americans with Disabilities Act), and their suitability for Lessees intended use; (c) Lessee has made such investigation as it
deems necessary with reference to such matters and assumes all responsibility therefor as the same relate I to its occupancy of the Premises; (d) it is not relying on any representation as to the size of the Premises made by Brokers or
Lessor; (e) the square footage of the Premises was not material to Lessees decision to lease the Premises and pay the Rent stated herein, and (f) neither Lessor, Lessors agents, nor Brokers have made any oral or
written representations or warranties with respect to said matters other than as set forth in this Lease. In addition, Lessor acknowledges that: (i) Brokers have made no representations, promises or warranties concerning Lessees ability
to honor the Lease or suitability to occupy the Premises, and (ii) it is Lessors sole responsibility to investigate the financial capability and/or suitability of all proposed tenants.
2.5 Lessee as Prior Owner/Occupant. The warranties made by Lessor in Paragraph 2 shall be of no force or effect if immediately
prior to the Start Date Lessee was the owner or occupant of the Premises. In such event, Lessee shall be responsible for any necessary corrective work.
2.6 Vehicle Parking. Lessee shall be entitled to use the number of Parking Spaces specified in Paragraph 1.2(b) on those portions of the Common Areas designated from time to time by Lessor for parking. Lessee shall not use more parking spaces than said number. Said parking spaces shall be used for parking by vehicles no larger than full-size passenger automobiles or pick-up trucks, herein called Permitted Size Vehicles. Lessor may regulate the loading and unloading of vehicles by adopting Rules and Regulations as provided in Paragraph 2.9. No vehicles other than Permitted Size Vehicles may be parked in the Common Area without the prior written permission of Lessor. In addition:
(a) Lessee shall not permit or allow any vehicles that belong to or are controlled by Lessee or Lessees employees, suppliers, shippers, customers, contractors or invitees to be loaded, unloaded, or parked in areas other than those designated by Lessor for such activities.
(b) Lessee shall not service or store any vehicles in the Common Areas.
(c) If Lessee permits or allows any of the prohibited activities described in this Paragraph 2.6, then Lessor shall have the right, without notice, in addition to such other rights and remedies that it may have, to remove or tow away the vehicle involved and charge the cost to Lessee, which cost shall be immediately payable upon demand by Lessor.
2.7 Common AreasDefinition. The term Common Areas is defined as all areas and facilities outside the Premises and within the exterior boundary line of the Project and interior utility raceways and installations within the Unit that are provided and designated by the Lessor from time to time for the general non-exclusive use of Lessor, Lessee and other tenants of the Project and their respective employees, suppliers, shippers, customers, contractors and invitees, including parking areas, loading and unloading areas, trash areas, roofs, roadways, walkways, driveways and landscaped areas.
2.8 Common AreasLessees Rights. Lessor grants to Lessee, for the benefit of Lessee and its employees, suppliers, shippers, contractors, customers and invitees, during the term of this Lease, the non-exclusive right to use, in common with others entitled to such use, the Common Areas as they exist from time to time, subject to any rights, powers, and privileges reserved by Lessor under the terms hereof or under the terms of any rules and regulations or restrictions governing the use of the Project. Under no circumstances shall the right herein granted to use the Common Areas be deemed to include the right to store any property, temporarily or permanently, in the Common Areas. Any such storage shall be permitted only by the prior written consent of Lessor or Lessors designated agent, which consent may be revoked at any time. In the event that any unauthorized storage shall occur, then Lessor shall have the right, without notice, in addition to such other rights and remedies that it may have, to remove the property and charge the cost to Lessee, which cost shall be immediately payable upon demand by Lessor.
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2.9 Common AreasRules and Regulations. Lessor or such other person(s) as Lessor may appoint shall have the exclusive control and management of the Common Areas and shall have the right, from time to time, to establish, modify, amend and enforce reasonable rules and regulations (Rules and Regulations) for the management, safety, care, and cleanliness of the grounds, the parking and unloading of vehicles and the preservation of good order, as well as for the convenience of other occupants or tenants of the Building and the Project and their invitees. Lessee agrees to abide by and conform to all such Rules and Regulations, and shall use its best efforts to cause its employees, suppliers, shippers, customers, contractors and invitees to so abide and conform. Lessor shall not be responsible to Lessee for the non-compliance with said Rules and Regulations by other tenants of the Project but shall enforce said Rules and Regulations uniformly.
2.10 Common AreasChanges. Lessor shall have the right, in Lessors sole discretion, from time to time, provided it shall not unreasonably interfere with Lessees access to or use of the Premises:
(a) To make changes to the Common Areas, including, without limitation, changes in the location, size, shape and number of driveways, entrances, parking spaces, parking areas, loading and unloading areas, ingress, egress, direction of traffic, landscaped areas, walkways and utility raceways;
(b) To close temporarily any of the Common Areas for maintenance purposes so long as reasonable access to the Premises remains available;
(c) To designate other land outside the boundaries of the Project to be a part of the Common Areas;
(d) To add additional buildings and improvements to the Common Areas;
(e) To use the Common Areas while engaged in making additional improvements, repairs or alterations to the Project, or any portion thereof; and (f) To do and perform such other acts and make such other changes in, to or with respect to the Common Areas and Project as Lessor may, in the exercise of sound business judgment, deem to be appropriate.
3. Term.
3.1 Term. The Commencement Date, Expiration Date and Original Term of this Lease are as specified in Paragraph 1.3.
3.2 Early Possession. Any provision herein granting Lessee Early Possession of the Premises is subject to and conditioned upon the Premises being available for such possession prior to the Commencement Date. Any grant of Early Possession only conveys a non-exclusive right to occupy the Premises. If Lessee totally or partially occupies the Premises prior to the Commencement Date, the obligation to pay Base Rent shall be abated for the period of such Early Possession. All other terms of this Lease (including but not limited to the obligations to pay Lessees Share of Common Area Operating Expenses, Real Property Taxes and insurance premiums and to maintain the Premises) shall be in effect during such period. Any such Early Possession shall not affect the Expiration Date.
3.3 Delay In Possession. Lessor agrees to use its best commercially reasonable efforts to deliver possession of the Premises to Lessee by the Commencement Date. If, despite said efforts, Lessor is unable to deliver possession by such date, Lessor shall not be subject to any liability therefor, nor shall such failure affect the validity of this Lease or change the Expiration Date. Lessee shall not, however, be obligated to pay Rent or perform its other obligations until Lessor delivers possession of the Premises and any period of rent abatement that Lessee would otherwise have enjoyed shall run from the date of delivery of possession and continue for a period equal to what Lessee would otherwise have enjoyed under the terms hereof, but minus any days of delay caused by the acts or omissions of Lessee. If possession is not delivered within 60 days after the Commencement Date, as the same may be extended under the terms of any Work Letter executed by Parties, Lessee may, at its option, by notice in writing within 10 days after the end of such 60 day period, cancel this Lease, in which event the Parties shall be discharged from all obligations hereunder. If such written notice is not received by Lessor within said 10 day period, Lessees right to cancel shall terminate. If possession of the Premises is not delivered within 120 days after the Commencement Date, this Lease shall terminate unless other agreements are reached between Lessor and Lessee, in writing.
3.4 Lessee Compliance. Lessor shall not be required to tender possession of the Premises to Lessee until Lessee complies with its obligation to provide evidence of insurance (Paragraph 8.5). Pending delivery of such evidence, Lessee shall be required to perform all of its obligations under this Lease from and after the Start Date, including the payment of Rent, notwithstanding Lessors election to withhold possession pending receipt of such evidence of insurance. Further, if Lessee is required to perform any other conditions prior to or concurrent with the Start Date, the Start Date shall occur but Lessor may elect to withhold possession until such conditions are satisfied.
4. Rent.
4.1 Rent Defined. All monetary obligations of Lessee to Lessor under the terms of this Lease (except for the Security Deposit) are deemed to be rent (Rent).
4.2 Common Area Operating Expenses. Lessee shall pay to Lessor during the term hereof, in addition to the Base Rent,
Lessees Share (as specified in Paragraph 1.6) of all Common Area Operating Expenses, as hereinafter defined, during each calendar year of the term of this Lease, in accordance with the following provisions:
(a) The following costs relating to the ownership and operation of the Project are defined as Common Area Operating
Expenses:
(i) Costs relating to the operation, repair and maintenance, in neat, clean, good order and
condition, but not the replacement (see subparagraph (e)), of the following:
(aa) The Common Areas and Common Area
improvements, including parking areas, loading and unloading areas, trash areas, roadways, parkways, walkways, driveways, landscaped areas, bumpers, irrigation systems, Common Area lighting facilities, fences and gates, elevators, roofs, exterior
walls of the buildings, building systems and roof drainage systems.
(bb) Exterior signs and any tenant
directories.
(cc) Any fire sprinkler systems.
(dd) All other areas and improvements that are within the exterior boundaries of the Project but outside of the Premises and/or any
other space occupied by a tenant.
(ii) The cost of water, gas, electricity and telephone to service the Common Areas and
any utilities not separately metered.
(iii) The cost of trash disposal, pest control services, property management,
security services, owners association dues and fees, the cost to repaint the exterior of any structures and the cost of any environmental inspections.
(iv) Reserves set aside for maintenance and repair of Common Areas and Common Area equipment.
(v) Any increase above the Base Real Property Taxes (as defined in Paragraph 10).
(vi) Any Insurance Cost Increase (as defined in Paragraph 8).
(vii) Any deductible portion of an insured loss concerning the Building or the Common Areas.
(viii) Auditors, accountants and attorneys fees and costs related to the operation, maintenance, repair and
replacement of the Project.
(ix) The cost of any capital improvement to the Building or the Project not covered under
the provisions of Paragraph 2.3 provided; however, that Lessor shall allocate the cost of any such capital improvement over a 12 year period and Lessee shall not be required to pay more than Lessees Share of 1/144th of the cost of such capital
improvement in any given month. Lessee shall pay Interest on the unamortized balance but may prepay its obligation at any time
(x) The cost of any other services to be provided by Lessor that are stated elsewhere in this Lease to be a Common Area Operating
Expense.
(b) Any Common Area Operating Expenses and Real Property Taxes that are specifically attributable to the Unit,
the Building or to any other building in the Project or to the operation, repair and maintenance thereof, shall be allocated entirely to such Unit, Building, or other building. However, any Common Area Operating Expenses and Real Property Taxes that
are not specifically attributable to the Building or to any other building or to the operation, repair and maintenance thereof, shall be equitably allocated by Lessor to all buildings in the Project.
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(c) The inclusion of the improvements, facilities and services set forth in
Subparagraph 4.2(a) shall not be deemed to impose an obligation upon Lessor to either have said improvements or facilities or to provide those services unless the Project already has the same, Lessor already provides the services, or Lessor has
agreed elsewhere in this Lease to provide the same or some of them.
(d) Lessees Share of Common Area Operating
Expenses is payable monthly on the same day as the Base Rent is due hereunder. The amount of such payments shall be based on Lessors estimate of the annual Common Area Operating Expenses. Within 60 days after written request (but not more than
once each year) Lessor shall deliver to Lessee a reasonably detailed statement showing Lessees Share of the actual Common Area Operating Expenses for the preceding year. If Lessees payments during such year exceed Lessees Share,
Lessor shall credit the amount of such over payment against Lessees future payments. If Lessees payments during such year were less than Lessees Share, Lessee shall pay to Lessor the amount of the deficiency within 10 days after
delivery by Lessor to Lessee of the statement.
(e) Common Area Operating Expenses shall not include the cost of replacing
equipment or capital components such as the roof, foundations, exterior walls or Common Area capital improvements, such as the parking lot paving, elevators, fences that have a useful life for accounting purposes of 5 years or more.
(f) Common Area Operating Expenses shall not include any expenses paid by any tenant directly to third parties, or as to which Iessor
is otherwise reimbursed by any third party, other tenant, or insurance proceeds
4.3 Payment. Lessee shall cause payment of Rent to be received by Lessor in lawful money of the United States, without offset or deduction (except as specifically permitted in this Lease), on or before the day on which it is due. All monetary amounts shall be rounded to the nearest whole dollar. In the event that any statement or invoice prepared by Lessor is inaccurate such inaccuracy shall not constitute a waiver and Lessee shall be obligated to pay the amount set forth in this Lease. Rent for any period during the term hereof which is for less than one full calendar month shall be prorated based upon the actual number of days of said month. Payment of Rent shall be made to Lessor at its address stated herein or to such other persons or place as Lessor may from time to time designate in writing. Acceptance of a payment which is less than the amount then due shall not be a waiver of Lessors rights to the balance of such Rent, regardless of Lessors endorsement of any check so stating. In the event that any check, draft, or other instrument of payment given by Lessee to Lessor is dishonored for any reason, Lessee agrees to pay to Lessor the sum of $25 in addition to any Late Charge and Lessor, at its option, may require all future Rent be paid by cashiers check or ACH transfer. Payments will be applied first to accrued late charges and attorneys fees, second to accrued interest, then to Base Rent and Common Area Operating Expenses, and any remaining amount to any other outstanding charges or costs.
5. Security Deposit. Lessee shall deposit with Lessor upon execution hereof the Security Deposit as security for
Lessees faithful performance of its obligations under this Lease. If Lessee fails to pay Rent, or otherwise Defaults under this Lease, Lessor may use, apply or retain all or any portion of said Security Deposit for the | payment of any amount
already due Lessor, for Rents which will be due in the future, and/ or to reimburse or compensate Lessor for any liability, expense, loss or damage which Lessor may suffer or incur by reason thereof. If Lessor uses or applies all or
any portion of the Security Deposit, Lessee shall within 10 days after written request therefor deposit monies with Lessor sufficient to restore said Security Deposit to the full amount required by this Lease. If the Base Rent increases
during the term of this Lease, Lessee shall, upon written request from Lessor, deposit additional monies with Lessor so that the total amount of the Security Deposit shall at all times bear the same proportion to the increased Base Rent as the
initial Security Deposit bore to the initial Base Rent. Should the Agreed Use be amended to accommodate a material change in the business of Lessee or to accommodate a sublessee or assignee, Lessor shall have the right to increase the
Security Deposit to the extent necessary, in Lessors reasonable judgment, to account for any increased wear and tear that the Premises may suffer as a result thereof. If a change in control of Lessee occurs during this Lease and following such
change the financial condition of Lessee is, in Lessors reasonable judgment, significantly reduced, Lessee shall deposit such additional monies with Lessor as shall be sufficient to cause the Security Deposit to be at a commercially reasonable
level based on such change in | financial condition. Lessor shall not be required to keep the Security Deposit separate from its general accounts. Within 9 30 days after the expiration or termination of this Lease, Lessor shall return that portion
of the Security Deposit not used or applied by Lessor. Lessor shall upon written request provide Lessee with an accounting showing how that portion of the Security Deposit that was not returned was applied. No part of the Security Deposit shall be
considered to be held in trust, to bear interest or to be prepayment for any monies to be paid by Lessee under this Lease. THE SECURITY DEPOSIT SHALL NOT BE USED BY LESSEE IN LIEU OF PAYMENT OF THE LAST MONTHS RENT.
6. Use.
6.1 Use. Lessee shall use and occupy the Premises only for the Agreed Use, or any other legal use which is reasonably comparable thereto, and for no other purpose. Lessee shall not use or permit the use of the Premises in a manner that is unlawful, creates damage, waste or a nuisance, or that disturbs occupants of or causes damage to neighboring premises or properties. Other than guide, signal and seeing eye dogs, Lessee shall not keep or allow in the Premises any pets, animals, birds, fish, or reptiles. Lessor shall not unreasonably withhold or delay its consent to any written request for a modification of the Agreed Use, so long as the same will not impair the structural integrity of the Building or the mechanical or electrical systems therein, and/or is not significantly more burdensome to the Project. If Lessor elects to withhold consent, Lessor shall within 7 days after such request give written notification of same, which notice shall include an explanation of Lessors objections to the change in the Agreed Use.
6.2 Hazardous Substances.
(a) Reportable Uses Require Consent. The term Hazardous Substance as used in this Lease shall mean any product, substance, or waste whose presence, use, manufacture, disposal, transportation, or release, either by itself or in combination with other materials expected to be on the Premises, is either: (i) potentially injurious to the public health, safety or welfare, the environment or the Premises; (ii) regulated or monitored by any governmental authority, or (iii) a basis for potential liability of Lessor to any governmental agency or third party under any applicable statute or common law theory. Hazardous Substances shall include, but not be limited to, hydrocarbons, petroleum, gasoline, and/or crude oil or any products, by-products or fractions thereof. Lessee shall not engage in any activity in or on the Premises which constitutes a Reportable Use of Hazardous Substances without the express prior written consent of Lessor and timely compliance (at Lessees expense) with all Applicable Requirements. Reportable Use shall mean (i) the installation or use of any above or below ground storage tank; (ii) the generation, possession, storage, use, transportation, or disposal of a Hazardous Substance that requires a permit from, or with respect to which a report, notice, registration or business plan is required to be filed with, any governmental authority, and/or (iii) the presence at the Premises of a Hazardous Substance with respect to which any Applicable Requirements requires that a notice be given to persons entering or occupying the Premises or neighboring properties. Notwithstanding the foregoing, Lessee may use any ordinary and customary materials reasonably required to be used in the normal course of the Agreed Use, ordinary office supplies (copier toner, liquid paper, glue, etc.) and common household cleaning materials, so long as such use is in compliance with all Applicable Requirements, is not a Reportable Use, and does not expose the Premises or neighboring property to any meaningful risk of contamination or damage or expose Lessor to any liability therefor. In addition, Lessor may condition its consent to any Reportable Use upon receiving such additional assurances as Lessor reasonably deems necessary to protect itself, the public, the Premises and/or the environment against damage, contamination, injury and/or liability, including, but not limited to, the installation (and removal on or before Lease expiration or termination) of protective modifications (such as concrete encasements) and/or increasing the Security Deposit.
(b) Duty to Inform Lessor. If Lessee knows, or has reasonable cause to believe, that a Hazardous Substance has come to be located in, on, under or about the Premises, other than as previously consented to by Lessor, Lessee shall immediately give written notice of such fact to Lessor, and provide Lessor with a copy of any report, notice, claim or other documentation which it has concerning the presence of such Hazardous Substance.
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(c) Lessee Remediation. Lessee shall not cause or permit any Hazardous Substance to
be spilled or released in, on, under, or about the Premises (including through the plumbing or sanitary sewer system) and shall promptly, at Lessees expense, comply with all Applicable Requirements and take all investigatory | and/or remedial
action reasonably recommended, whether or not formally ordered or required, for the cleanup of any contamination of, and for the maintenance, security and/or monitoring of the Premises or neighboring properties, that was caused or
materially contributed to by Lessee, or pertaining to or involving any Hazardous Substance brought onto the Premises during the term of this Lease, by or for Lessee, or any third party.
(d) Lessee Indemnification. Lessee shall indemnify, defend and hold Lessor, its agents, employees, lenders and ground lessor, if any, harmless from and against any and all loss of rents and/or damages, liabilities, judgments, claims, expenses, penalties, and attorneys and consultants fees arising out of or involving any Hazardous Substance brought onto the Premises by or for Lessee, or any third party (provided, however, that Lessee shall have no liability under this Lease with respect to underground migration of any Hazardous Substance under the Premises from areas outside of the Project not caused or contributed to by Lessee). Lessees obligations shall include, but not be limited to, the effects of any contamination or injury to person, property or the environment created or suffered by Lessee, and the cost of investigation, removal, remediation, restoration and/or abatement, and shall survive the expiration or termination of this Lease. No termination, cancellation or release agreement entered into by Lessor and Lessee shall release Lessee from its obligations under this Lease with respect to Hazardous Substances, unless specifically so agreed by Lessor in writing at the time of such agreement.
(e) Lessor Indemnification. Except as otherwise provided in paragraph 8.7, Lessor and its successors and assigns shall indemnify, defend, reimburse and hold Lessee, its employees and lenders, harmless from and against any and all environmental damages, including the cost of remediation, which are suffered as a direct result of Hazardous Substances on the Premises prior to Lessee taking possession or which are caused by the gross negligence or willful misconduct of Lessor, its agents or employees. Lessors obligations, as and when required by the Applicable Requirements, shall include, but not be limited to, the cost of investigation, removal, remediation, restoration and/or abatement, and shall survive the expiration or termination of this Lease.
(f) Investigations and Remediations. Lessor shall retain the responsibility and pay for any investigations or remediation measures required by governmental entities having jurisdiction with respect to the existence of Hazardous Substances on the Premises prior to the Lessee taking possession, unless such remediation measure is required as a result of Lessees use (including Alterations, as defined in paragraph 7.3(a) below) of the Premises, in which event Lessee shall be responsible for such payment. Lessee shall cooperate fully in any such activities at the request of Lessor, including allowing Lessor and Lessors agents to have reasonable access to the Premises at reasonable times in order to carry out Lessors investigative and remedial responsibilities.
(g) Lessor Termination Option. If a Hazardous Substance Condition (see Paragraph 9.1(e)) occurs during the term of this Lease, unless
Lessee is legally responsible therefor (in which case Lessee shall make the investigation and remediation thereof required by the Applicable Requirements and this Lease shall continue | in full force and effect, but subject to Lessors rights
under Paragraph 6.2(d) and Paragraph 13), Lessor shall may, at Lessors option, either (i) investigate and remediate such Hazardous Substance Condition, if required, as soon as reasonably possible at Lessors expense,
in which event this Lease shall continue in full force and effect. ,or (ii)if the estimated cost to remediate such condition exceeds 12 times the then monthly Base Rent or $100,000, whichever is greater, give written notice
to Lessee, within 30 days after receipt by Lessor of knowledge of the occurrence of such Hazardous Substance Condition, of Lessors desire to terminate this Lease as of the date 60 days following the date of such notice. In the event Lessor
elects to give a termination notice, Lessee may, within 10 days thereafter, give written notice to Lessor of Lessees commitment to pay the amount by which the cost of the remediation of such Hazardous Substance Condition exceeds an amount
equal to 12 times the then monthly Base Rent or $100,000, whichever is greater. Lessee shall provide Lessor with said funds or satisfactory assurance thereof within 30 days following such commitment. In such event, this Lease shall continue in full
force and effect, and Lessor shall proceed to make such remediation as soon as reasonably possible after the required funds are available. If Lessee does not give such notice and provide the required funds or assurance thereof within the time
provided, this Lease shall terminate as of the date specified in Lessors notice of termination.
6.3 Lessees Compliance with Applicable Requirements. Except as otherwise provided in this Lease, Lessee shall, at Lessees sole expense, fully, diligently and in a timely manner, materially comply with all Applicable Requirements, the requirements of any applicable fire insurance underwriter or rating bureau, and the recommendations of Lessors engineers and/or consultants which relate in any manner to the Premises, without regard to whether said Applicable Requirements are now in effect or become effective after the Start Date. Lessee shall, within 10 days after receipt of Lessors written request, provide Lessor with copies of all permits and other documents, and other information evidencing Lessees compliance with any Applicable Requirements specified by Lessor, and shall immediately upon receipt, notify Lessor in writing (with copies of any documents involved) of any threatened or actual claim, notice, citation, warning, complaint or report pertaining to or involving the failure of Lessee or the Premises to comply with any Applicable Requirements. Likewise, Lessee shall immediately give written notice to Lessor of: (i) any water damage to the Premises and any suspected seepage, pooling, dampness or other condition conducive to the production of mold; or (ii) any mustiness or other odors that might indicate the presence of mold in the Premises.
6.4 Inspection; Compliance. Lessor and Lessors Lender(as defined in Paragraph 30) and consultants authorized
by Lessor shall have the right to enter into Premises at any time in the case of an emergency, and otherwise at reasonable times after reasonable notice, for the purpose of inspecting and/or testing the condition of the Premises and/or for verifying
compliance by Lessee with this Lease. The cost of any such inspections shall be paid by Lessor, unless a material Lessee violation of Applicable Requirements, or a Hazardous Substance Condition (see Paragraph 9.1) is found to exist or be imminent,
or the inspection is requested or ordered by a governmental authority and is related to Lessees specific use of the Premises. In such case, Lessee shall upon request reimburse Lessor for the cost of such inspection, so long as such inspection
is reasonably related to the violation or contamination. In addition, Lessee shall provide copies of all relevant material safety data sheets (MSDS)to Lessor within 10 days of the receipt of written request therefor. Lessee
acknowledges that any failure on its part to allow such inspections or testing will expose Lessor to risks and potentially cause Lessor to incur costs not contemplated by this Lease, the extent of which will be extremely difficult to ascertain.
Accordingly, should the Lessee fail to allow such inspections and/or testing in a timely fashion the Base Rent shall be automatically increased, without any requirement for notice to Lessee, by an amount equal to 10% of the then existing Base Rent
or $100, whichever is greater for the remainder to the Lease. The Parties agree that such increase in Base Rent represents fair and reasonable compensation for the additional risk/costs that Lessor will incur by reason of Lessees failure to
allow such inspection and/or testing. Such increase in Base Rent shall in no event constitute a waiver of Lessees Default or Breach with respect to such failure nor prevent the exercise of any of the other rights and remedies granted
hereunder. Lessee acknowledges that any failure on its part to allow such inspections or testing will expose Lessor to risks and potentially cause Lessor to incur costs not contemplated by this Lease, the extent of which will be extremely difficult
to ascertain. Accordingly, should the Lessee fail to allow such inspections and/or testing in a timely fashion the Base Rent shall be automatically increased, without any requirement for notice to Lessee, by an amount equal to 10% of the then
existing Base Rent or $100, whichever is greater for the remainder to the Lease. The Parties agree that such increase in Base Rent represents fair and reasonable compensation for the additional risk/costs that Lessor will incur by reason of
Lessees failure to allow such inspection and/or testing. Such increase in Base Rent shall in no event constitute a waiver of Lessees Default or Breach with respect to such failure nor prevent the exercise of any of the other rights and
remedies granted hereunder.
7. Maintenance; Repairs; Utility Installations; Trade Fixtures and Alterations.
7.1 Lessees Obligations.
(a) In General. Subject to the provisions of Paragraph 2.2 (Condition), 2.3 (Compliance), 6.3 (Lessees Compliance with Applicable Requirements), 7.2 (Lessors Obligations), 9 (Damage or Destruction), and 14 (Condemnation), Lessee shall, at Lessees sole expense, keep the Premises, Utility Installations (intended for Lessees exclusive use, no matter where located), and Alterations in good order, condition and repair (whether or not the portion of the Premises requiring repairs, or the means of repairing the same, are reasonably or readily accessible to Lessee, and whether or not the need for such repairs occurs as a result of Lessees use, any |
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prior use, the elements or the age of such portion of the Premises), including, but not limited to, all equipment or facilities, such as plumbing, server room HVAC equipment, electrical, lighting facilities, boilers, pressure vessels, fixtures, interior walls, interior surfaces of exterior walls, ceilings, floors, windows, doors, plate glass, and skylights but excluding any items which are the responsibility of Lessor pursuant to Paragraph 7.2. Lessee, in keeping the Premises in good order, condition and | repair, shall exercise and perform good maintenance practices, specifically including the procurement and maintenance of the service contracts required by Paragraph 7.1(b) below. Lessees obligations shall include restorations, replacements or renewals when necessary to keep the Premises and all improvements thereon or apart thereof in good order, condition and state of repair.
(b) Service Contracts. Lessee shall, at Lessees sole expense, procure and maintain contracts, with copies to Lessor, in customary form and substance for, and with contractors specializing and experienced in the maintenance of the following equipment and improvements, if any, if and when installed on the Premises: (i) HVAC equipment, (ii) boiler and pressure vessels, and (iii) clarifiers. However, Lessor reserves the right, upon notice to Lessee, to procure and maintain any or all of such service contracts, and Lessee shall reimburse Lessor, upon demand, for the cost thereof.
(c) Failure to Perform. If Lessee fails to perform Lessees obligations under this Paragraph 7.1, Lessor may enter upon the Premises after 10 days prior written notice to Lessee (except in the case of an emergency, in which case no notice shall be required), perform such obligations on Lessees behalf, and put the Premises in good order, condition and repair, and Lessee shall promptly pay to Lessor a sum equal to 115% of the cost thereof.
(d) Replacement. Subject to Lessees indemnification of Lessor as set forth in Paragraph 8.7 below, and without relieving Lessee of liability resulting from Lessees failure to exercise and perform good maintenance practices, if an item described in Paragraph 7.1(b) cannot be repaired other than at a cost which is in excess of 50% of the cost of replacing such item, then such item shall be replaced by Lessor, and the cost thereof shall be prorated between the Parties and Lessee shall only be obligated to pay, each month during the remainder of the term of this Lease, on the date on which Base Rent is due, an amount equal to the product of multiplying the cost of such replacement by a fraction, the numerator of which is one, and the denominator of which is 144 (ie. 1/144th of the cost per month). Lessee shall pay Interest on the unamortized balance but may prepay its obligation at any time.
7.2 Lessors Obligations. Subject to the provisions of Paragraphs 2.2 (Condition), 2.3 (Compliance), 4.2 (Common Area Operating Expenses), 6(Use), 7.1 | (Lessees Obligations), 9 (Damage or Destruction) and 14 (Condemnation), Lessor, subject to reimbursement pursuant to Paragraph 4.2, shall keep in good order, condition and repair the foundations, exterior walls, structural condition of interior bearing walls, exterior roof, fire sprinkler system, Common Area fire alarm and/or smoke detection systems, fire hydrants, parking lots, walkways, parkways, driveways, landscaping, fences, signs and utility systems serving the Common Areas and all parts thereof, as well as providing the services for which there is a Common Area Operating Expense pursuant to Paragraph 4.2. Lessor shall not be obligated to paint the exterior or interior surfaces of exterior walls nor shall Lessor be obligated to maintain, repair or replace windows, doors or plate glass of the Premises.
7.3 Utility Installations; Trade Fixtures; Alterations.
(a) Definitions. The term Utility Installations refers to all floor and window coverings, air and/or vacuum lines, power panels, electrical distribution, security and fire protection systems, communication cabling, lighting fixtures, HVAC equipment, plumbing, and fencing in or on the Premises. The term Trade Fixtures shall mean Lessees machinery and equipment that can be removed without doing material damage to the Premises. The term Alterations shall mean any modification of the improvements, other than Utility Installations or Trade Fixtures, whether by addition or deletion. Lessee Owned Alterations and/or Utility Installations are defined as Alterations and/or Utility Installations made by Lessee that are not yet owned by Lessor pursuant to Paragraph 7.4(a).
(b) Consent. Lessee shall not make any Alterations or Utility Installations to the Premises without Lessors prior written consent. Lessee may, however, make non-structural Alterations or Utility Installations to the interior of the Premises (excluding the roof) without such consent but upon notice to Lessor, as long as they are not visible from the outside, do not involve puncturing, relocating or removing the roof or any existing walls, will not affect the electrical, plumbing, HVAC, and/or life safety systems, do not trigger the requirement for additional modifications and/or improvements to the Premises resulting from Applicable Requirements, such as compliance with Title 24, and the cumulative cost thereof during this Lease as extended does not exceed a sum equal to 3 months Base Rent in the aggregate or a sum equal to one months Base Rent in any one year. Notwithstanding the foregoing, Lessee shall not make or permit any roof penetrations and/or install anything on the roof without the prior written approval of Lessor. Lessor may, as a precondition to granting such approval, require Lessee to utilize a contractor chosen and/or approved by Lessor. Any Alterations or Utility Installations that Lessee shall desire to make and which require the consent of the Lessor shall be presented to Lessor in written form with detailed plans. Consent shall be deemed conditioned upon Lessees: (i) acquiring all applicable governmental permits, (ii) furnishing Lessor with copies of both the permits and the plans and specifications prior to commencement of the work, and (iii) compliance with all conditions of said permits and other Applicable Requirements in a prompt and expeditious manner. Any Alterations or Utility Installations shall be performed in a workmanlike manner with good and sufficient materials. Lessee shall promptly upon completion furnish Lessor with as-built plans and specifications. For work which costs an amount in excess of one months Base Rent, Lessor may condition its consent upon Lessee providing alien and completion bond in an amount equal to 150% of the estimated cost of such Alteration or Utility Installation and/or upon Lessees posting an additional Security Deposit with Lessor.
(c) Liens; Bonds. Lessee shall pay, when due, all claims for labor or materials furnished or alleged to have been furnished to or for Lessee at or for use on the Premises, which claims are or may be secured by any mechanics or materialmens lien against the Premises or any interest therein. Lessee shall give Lessor not less than 10 days notice prior to the commencement of any work in, on or about the Premises, and Lessor shall have the right to post notices of non-responsibility. If Lessee shall contest the validity of any such lien, claim or demand, then Lessee shall, at its sole expense defend and protect itself, Lessor and the Premises against the same and shall pay and satisfy any such adverse judgment that may be rendered thereon before the enforcement thereof. If Lessor shall require, Lessee shall furnish a surety bond in an amount equal to 150% of the amount of such contested lien, claim or demand, indemnifying Lessor against liability for the same. If Lessor elects to participate in any such action, Lessee shall pay Lessors attorneys fees and costs.
7.4 Ownership; Removal; Surrender; and Restoration.
(a) Ownership. Subject to Lessors right to require removal or elect ownership as hereinafter provided, all Alterations and Utility Installations made by Lessee shall be the property of Lessee, but considered a part of the Premises. Lessor may, at any time, elect in writing to be the owner of all or any specified part of the Lessee Owned Alterations and Utility Installations. Unless otherwise instructed per paragraph 7.4(b) hereof, all Lessee Owned Alterations and Utility Installations shall, at the expiration or termination of this Lease, become the property of Lessor and be surrendered by Lessee with the Premises.
(b) Removal. By delivery to Lessee of written notice from Lessor at the time Lessee seeks Lessors consent not earlier than
90 and not later than 30 days prior to the end of the term of this Lease, Lessor may require that any or all Lessee Owned Alterations or Utility Installations be removed by the expiration or termination of this Lease. Lessor may require the
removal at any time of all or any part of any Lessee Owned Alterations or Utility Installations made without the required consent.
(c) Surrender; Restoration. Lessee shall surrender the Premises by the Expiration Date or any earlier termination date, with all of the improvements, parts and surfaces thereof broom clean and free of debris, and in good operating order, condition and state of repair, ordinary wear and tear excepted. Ordinary wear and tear shall not include any damage or deterioration that would have been prevented by good maintenance practice. Notwithstanding the foregoing, if the Lessee occupies the Premises for 12 months or less, then Lessee shall surrender the Premises in the same condition as delivered to Lessee on the Start Date with NO allowance for ordinary wear and tear. Lessee shall repair any damage occasioned by the installation, maintenance or removal of Trade Fixtures, Lessee owned Alterations and/or Utility Installations, furnishings, and equipment as well as the removal of any storage tank installed by or for Lessee. Lessee shall also remove from the Premises any and all Hazardous Substances brought onto the Premises by or for Lessee, or any third party (except Hazardous Substances which were deposited via underground migration from areas outside of the Premises) to the level specified in Applicable Requirements. Trade Fixtures shall remain the property of Lessee
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and shall be removed by Lessee. Any personal property of Lessee not removed on or before the Expiration Date or any earlier termination date shall be deemed to have been abandoned by Lessee and may be disposed of or retained by Lessor as Lessor may desire. The failure by Lessee to timely vacate the Premises pursuant to this Paragraph 7.4(c) without the express written consent of Lessor shall constitute a holdover under the provisions of Paragraph 26 below.
8. Insurance; Indemnity.
8.1 Payment of Premium Increases.
(a) As used herein, the term Insurance Cost Increase is defined as any increase in the actual cost of the insurance
applicable to the Building and/or the Project and required to be carried by Lessor, pursuant to Paragraphs 8.2(b), 8.3(a) and 8.3(b), over and above the Base Premium, as hereinafter defined, calculated on an annual basis. Insurance Cost Increase
shall include, but not be limited to, requirements of the holder of a mortgage or deed of trust covering the Premises, Building and/or Project, increased valuation of the Premises, Building and/or Project, and/or a general premium rate increase. The
term Insurance Cost Increase shall not, however, include any premium increases resulting from the nature of the occupancy of any other tenant of the Building The Base Premium shall be the annual premium applicable to the 1? month
period immediately preceding the Start Date If, however, the Project was not insured for the entirety of such 1? month period, then the Base Premium shall be the lowest annual premium reasonably obtainable for the Required Insurance as of the Start
Date, assuming the most nominal use possible of the Building. In no event, however, shall Lessee be responsible for any portion of the premium cost attributable to liability insurance coverage in excess of $2,000,000 procured under Paragraph
8.2(b).
(b) Lessee shall pay any Insurance Cost Increase to Lessor pursuant to Paragraph 4.2. Premiums for policy periods
commencing prior to, or extending beyond, the term of this Lease shall be prorated to coincide with the corresponding Start Date or Expiration Date.
8.2 Liability Insurance.
(a) Carried by Lessee. Lessee shall obtain and keep in force a Commercial General Liability policy of insurance protecting Lessee and Lessor as an additional insured against claims for bodily injury, personal injury and property damage based upon or arising out of the ownership, use, occupancy or maintenance of the Premises and all areas appurtenant thereto. Such insurance shall be on an occurrence basis providing single limit coverage in an amount not less than $1,000,000 per occurrence with an annual aggregate of not less than $2,000,000. Lessee shall add Lessor as an additional insured by means of an endorsement at least as broad as the Insurance Service Organizations Additional Insured-Managers or Lessors of Premises Endorsement. The policy shall not contain any intra-insured exclusions as between insured persons or organizations, but shall include coverage for liability assumed under this Lease as an insured contract for the performance of Lessees indemnity obligations under this Lease. The limits of said insurance shall not, however, limit the liability of Lessee nor relieve Lessee of any obligation hereunder. Lessee shall provide an endorsement on its liability policy(ies) which provides that its insurance shall be primary to and not contributory with any similar insurance carried by Lessor, whose insurance shall be considered excess insurance only.
(b) Carried by Lessor. Lessor shall maintain liability insurance as described in Paragraph 8.2(a), in addition to, and not in lieu of, the insurance required to be maintained by Lessee. Lessee shall not be named as an additional insured therein.
8.3 Property Insurance - Building, Improvements and Rental Value.
(a) Building and Improvements. Lessor shall obtain and keep in force a policy or policies of insurance in the name of Lessor, with loss payable to Lessor, any ground-lessor, and to any Lender insuring loss or damage to the Premises. The amount of such insurance shall be equal to the full insurable replacement cost of the Premises, as the same shall exist from time to time, or the amount required by any Lender, but in no event more than the commercially reasonable and available insurable value thereof. Lessee Owned Alterations and Utility Installations, Trade Fixtures, and Lessees personal property shall be insured by Lessee not by Lessor. If the coverage is available and commercially appropriate, such policy or policies shall insure against all risks of direct physical loss or damage (except the perils of flood and/or earthquake unless required by a Lender), including coverage for debris removal and the enforcement of any Applicable Requirements requiring the upgrading, demolition, reconstruction or replacement of any portion of the Premises as the result of a covered loss. Said policy or policies shall also contain an agreed valuation provision in lieu of any coinsurance clause, waiver of subrogation, and inflation guard protection causing an increase in the annual property insurance coverage amount by a factor of not less than the adjusted U.S. Department of Labor Consumer Price Index for All Urban Consumers for the city nearest to where the Premises are located. If such insurance coverage has a deductible clause, the deductible amount shall not exceed $5,000 per occurrence.
(b) Rental Value. Lessor shall also obtain and keep in force a policy or policies in the name of Lessor with loss payable to Lessor and any Lender, insuring the loss of the full Rent for one year with an extended period of indemnity for an additional 180 days (Rental Value insurance). Said insurance shall contain an agreed valuation provision in lieu of any coinsurance clause, and the amount of coverage shall be adjusted annually to reflect the projected Rent otherwise payable by Lessee, for the next 12 month period.
(c) Adjacent Premises. Lessee shall pay for any increase in the premiums for the property insurance of the Building and for the Common Areas or other buildings in the Project if said increase is caused by Lessees acts, omissions, use or occupancy of the Premises.
(d) Lessees Improvements. Since Lessor is the Insuring Party, Lessor shall not be required to insure Lessee Owned Alterations and Utility Installations unless the item in question has become the property of Lessor under the terms of this Lease.
8.4 Lessees Property; Business Interruption Insurance; Workers Compensation Insurance.
(a) Property Damage. Lessee shall obtain and maintain insurance coverage on all of Lessees personal property, Trade Fixtures, and Lessee Owned Alterations and Utility Installations. Such insurance shall be full replacement cost coverage with a deductible of not to exceed $1,000 per occurrence. The proceeds from any such insurance shall be used by Lessee for the replacement of personal property, Trade Fixtures and Lessee Owned Alterations and Utility Installations.
(b) Business Interruption. Lessee shall obtain and maintain loss of income and extra expense insurance in amounts as will reimburse Lessee for direct or indirect loss of earnings attributable to all perils commonly insured against by prudent lessees in the business of Lessee or attributable to prevention of access to the Premises as a result of such perils.
(c) Workers Compensation Insurance. Lessee shall obtain and maintain Workers Compensation Insurance in such amount as may be required by Applicable Requirements. Such policy shall include a Waiver of Subrogation endorsement. Lessee shall provide Lessor with a copy of such endorsement along with the certificate of insurance or copy of the policy required by paragraph 8.5.
(d) No Representation of Adequate Coverage. Lessor makes no representation that the limits or forms of coverage of insurance specified herein are adequate to cover Lessees property, business operations or obligations under this Lease.
8.5 Insurance Policies. Insurance required herein shall be by companies maintaining during the policy term a General Policyholders Rating of at least A-,VII, as set forth in the most current issue of Bests Insurance Guide, or such other rating as may be required by a Lender. Lessee shall not do or permit to be done anything which invalidates the required insurance policies. Lessee shall, prior to the Start Date, deliver to Lessor certified copies of policies of such insurance or certificates with copies of the required endorsements evidencing the existence and amounts of the required insurance. No such policy shall be cancelable or subject to modification except after 30 days prior written notice to Lessor. Lessee shall, at least 10 days prior to the expiration of such policies, furnish Lessor with evidence of renewals or insurance binders evidencing renewal thereof, or Lessor may increase his liability insurance coverage and charge the cost thereof to Lessee, which amount shall be payable by Lessee to Lessor upon demand. Such policies shall be for a term of at least one year, or the length of the remaining term of this Lease, whichever is less. If either Party shall fail to procure and maintain the insurance required to be carried by it, the other Party may, but shall not be required to, procure and maintain the same.
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8.6 Waiver of Subrogation. Without affecting any other rights or remedies, Lessee and Lessor each hereby release and relieve the other, and waive their entire right to recover damages against the other, for loss of or damage to its property arising out of or incident to the perils required to be insured against herein. The effect of such releases and waivers is not limited by the amount of insurance carried or required, or by any deductibles applicable hereto. The Parties agree to have their respective property damage insurance carriers waive any right to subrogation that such companies may have against Lessor or Lessee, as the case may be, so long as the insurance is not invalidated thereby.
8.7 Indemnity. Except for Lessors gross negligence or willful misconduct, Lessee shall indemnify, protect, defend and hold harmless the Premises, Lessor and its agents, Lessors master or ground lessor, partners and Lenders, from and against any and all claims, loss of rents and/or damages, liens, judgments, penalties, attorneys and consultants fees, expenses and/or liabilities arising out of, involving, or in connection with, a Breach of the Lease by Lessee and/or the use and/or occupancy of the Premises and/or Project by Lessee and/or by Lessees employees, contractors or invitees. If any action or proceeding is brought against Lessor by reason of any of the foregoing matters, Lessee shall upon notice defend the same at Lessees expense by counsel reasonably satisfactory to Lessor and Lessor shall cooperate with Lessee in such defense. Lessor need not have first paid any such claim in order to be defended or indemnified.
8.8 Exemption of Lessor and its Agents from Liability. Notwithstanding the negligence or breach of this Lease by Lessor or its agents, neither Lessor nor its agents shall be liable under any circumstances for: (i) injury or damage to the person or goods, wares, merchandise or other property of Lessee, Lessees employees, contractors, invitees, customers, or any other person in or about the Premises, whether such damage or injury is caused by or results from fire, steam, electricity, gas, water or rain, indoor air quality, the presence of mold or from the breakage, leakage, obstruction or other defects of pipes, fire sprinklers, wires, appliances, plumbing, HVAC or lighting fixtures, or from any other cause, whether the said injury or damage results from conditions arising upon the Premises or upon other portions of the Building, or from other sources or places; (ii) any damages arising from any act or neglect of any other tenant of Lessor or from the failure of Lessor or its agents to enforce the provisions of any other lease in the Project; or (iii) injury to Lessees business or for any loss of income or profit therefrom. Instead, it is intended that Lessees sole recourse in the event of such damages or injury be to file a claim on the insurance policy(ies) that Lessee is required to maintain pursuant to the provisions of paragraph 8.
8.9 Failure to Provide Insurance. Lessee acknowledges that any failure on its part to obtain or
maintain the insurance required herein will expose Lessor to risks and potentially cause Lessor to incur costs not contemplated by this Lease, the extent of which will be extremely difficult to ascertain. Accordingly, for any month or portion
thereof that Lessee does not maintain the required insurance and/or does not provide Lessor with the required binders or certificates evidencing the existence of the required insurance, Lessor may obtain the required insurances and Lessee shall pay
Lessor the cost thereof upon invoicing. - the Base Rent shall be automatically increased, without any requirement for notice to Lessee, by an amount equal to 10% of the then existing Base Rent or $100, whichever is greater.
The parties agree that such increase in Base Rent represents fair and reasonable compensation for the additional risk/costs that Lessor will incur by reason of Lessees failure to maintain the required insurance. Such increase in Base
Rent shall in no event constitute a waiver of Lessees Default or Breach with respect to the failure to maintain such insurance, prevent the exercise of any of the other rights and remedies granted hereunder, nor relieve Lessee of its
obligation to maintain the insurance specified in this Lease.
9. Damage or Destruction.
9.1 Definitions.
(a) Premises Partial Damage shall mean damage or destruction to the improvements on the Premises, other than Lessee Owned Alterations and Utility Installations, which can reasonably be repaired in 3 months or less from the date of the damage or destruction, and the cost thereof does not exceed a sum equal to 6 months Base Rent. Lessor shall notify Lessee in writing within 30 days from the date of the damage or destruction as to whether or not the damage is Partial or Total.
(b) Premises Total Destruction shall mean damage or destruction to the improvements on the Premises, other than Lessee Owned Alterations and Utility Installations and Trade Fixtures, which cannot reasonably be repaired in 3 months or less from the date of the damage or destruction and/or the cost thereof exceeds a sum equal to 6 months Base Rent. Lessor shall notify Lessee in writing within 30 days from the date of the damage or destruction as to whether or not the damage is Partial or Total.
(c) Insured Loss shall mean damage or destruction to improvements on the Premises, other than Lessee Owned Alterations and Utility Installations and Trade Fixtures, which was caused by an event required to be covered by the insurance described in Paragraph 8.3(a), irrespective of any deductible amounts or coverage limits involved.
(d) Replacement Cost shall mean the cost to repair or rebuild the improvements owned by Lessor at the time of the occurrence to their condition existing immediately prior thereto, including demolition, debris removal and upgrading required by the operation of Applicable Requirements, and without deduction for depreciation.
(e) Hazardous Substance Condition shall mean the occurrence or discovery of a condition involving the presence of, or a contamination by, a Hazardous Substance, in, on, or under the Premises which requires restoration.
9.2 Partial Damage - Insured Loss. If a Premises Partial Damage that is an Insured Loss occurs, then Lessor shall, at Lessors expense, repair such damage (but not Lessees Trade Fixtures or Lessee Owned Alterations and Utility Installations) as soon as reasonably possible and this Lease shall continue in full force and effect; provided, however, that Lessee shall, at Lessors election, make the repair of any damage or destruction the total cost to repair of which is $10,000 or less, and, in such event, Lessor shall make any applicable insurance proceeds available to Lessee on a reasonable basis for that purpose. Notwithstanding the foregoing, if the required insurance was not in force or the insurance proceeds are not sufficient to effect such repair, the Insuring Party shall promptly contribute the shortage in proceeds as and when required to complete said repairs. In the event, however, such shortage was due to the fact that, by reason of the unique nature of the improvements, full replacement cost insurance coverage was not commercially reasonable and available, Lessor shall have no obligation to pay for the shortage in insurance proceeds or to fully restore the unique aspects of the Premises unless Lessee provides Lessor with the funds to cover same, or adequate assurance thereof, within 10 days following receipt of written notice of such shortage and request therefor. If Lessor receives said funds or adequate assurance thereof within said 10 day period, the party responsible for making the repairs shall complete them as soon as reasonably possible and this Lease shall remain in full force and effect. If such funds or assurance are not received, Lessor may nevertheless elect by written notice to Lessee within 10 days thereafter to: (i) make such restoration and repair as is commercially reasonable with Lessor paying any shortage in proceeds, in which case this Lease shall remain in full force and effect, or (ii) have this Lease terminate 30 days thereafter. Lessee shall not be entitled to reimbursement of any funds contributed by Lessee to repair any such damage or destruction. Premises Partial Damage due to flood or earthquake shall be subject to Paragraph 9.3, notwithstanding that there may be some insurance coverage, but the net proceeds of any such insurance shall be made available for the repairs if made by either Party.
9.3 Partial Damage - Uninsured Loss. If a Premises Partial Damage that is not an Insured Loss occurs, unless caused by a negligent or willful act of Lessee (in which event Lessee shall make the repairs at Lessees expense), Lessor may either: (i) repair such damage as soon as reasonably possible at Lessors expense (subject to reimbursement pursuant to Paragraph 4.2), in which event this Lease shall continue in full force and effect, or (ii) terminate this Lease by giving written notice to Lessee within 30 days after receipt by Lessor of knowledge of the occurrence of such damage. Such termination shall be effective 60 days following the date of such notice. In the event Lessor elects to terminate this Lease, Lessee shall have the right within 10 days after receipt of the termination notice to give written notice to Lessor of Lessees commitment to pay for the repair of such damage without reimbursement from Lessor. Lessee shall provide Lessor with said funds or satisfactory assurance thereof within 30 days after making such commitment. In such event this Lease shall continue in full force and effect, and Lessor shall proceed to make such repairs as soon as reasonably possible after the required funds are available. If Lessee does not make the required commitment, this Lease shall terminate as of the date specified in the termination notice.
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9.4 Total Destruction. Notwithstanding any other provision hereof, if a Premises Total Destruction occurs, this Lease shall terminate 60 days following such Destruction. If the damage or destruction was caused by the gross negligence or willful misconduct of Lessee, Lessor shall have the right to recover Lessors damages from Lessee, except as provided in Paragraph 8.6.
9.5 Damage Near End of Term. If at any time during the last 6 months of this
Lease there is damage for which the cost to repair exceeds one months Base I Rent, whether or not an Insured Loss, Lessor or Lessee may terminate this Lease effective 60 days following the date of occurrence of such damage by giving a written
| termination notice to the other party Lessee within 30 days after the date of occurrence of such damage. Notwithstanding the foregoing, if Lessee at that time has an exercisable option to extend this Lease or to purchase the
Premises, then Lessee may preserve this Lease by (a) exercising such option and (b) providing Lessor with any shortage in insurance proceeds (or adequate assurance thereof) needed to make the repairs on or before the earlier of
(i) the date which is 10 days after Lessees receipt of Lessors written notice purporting to terminate this Lease, or (ii) the day prior to the date upon which such option expires. If Lessee duly exercises such option during
such period and provides Lessor with funds (or adequate assurance thereof) to cover any shortage in insurance proceeds, Lessor shall, at Lessors commercially reasonable expense, repair such damage as soon as reasonably possible and this Lease
shall continue in full force and effect. If Lessee fails to exercise such option and provide such funds or assurance during such period, then this Lease shall terminate on the date specified in the termination notice and Lessees option shall
be extinguished.
9.6 Abatement of Rent; Lessees Remedies.
(a) Abatement. In the event of Premises Partial Damage or Premises Total Destruction or a Hazardous Substance Condition for which Lessee
is not responsible under this Lease, the Rent payable by Lessee for the period required for the repair, remediation or restoration of such damage shall be abated in | proportion to the degree to which Lessees use of the Premises is
impaired., but not to exceed the proceeds received from the Rental Value insurance. All other obligations of Lessee hereunder shall be performed by Lessee, and Lessor shall have no liability for any such damage, destruction,
remediation, repair or restoration except as provided herein.
(b) Remedies. If Lessor is obligated to repair or restore the Premises and does not commence, in a substantial and meaningful way, such repair or restoration within 90 days after such obligation shall accrue, Lessee may, at any time prior to the commencement of such repair or restoration, give written notice to Lessor and to any Lenders of which Lessee has actual notice, of Lessees election to terminate this Lease on a date not less than 60 days following the giving of such notice. If Lessee gives such notice and such repair or restoration is not commenced within 30 days thereafter, this Lease shall terminate as of the date specified in said notice. If the repair or restoration is commenced within such 30 days, this Lease shall continue in full force and effect. Commence shall mean either the unconditional authorization of the preparation of the required plans, or the beginning of the actual work on the Premises, whichever first occurs.
9.7 Termination; Advance Payments. Upon termination of this Lease pursuant to Paragraph 6.2(g) or Paragraph 9, an equitable adjustment shall be made concerning advance Base Rent and any other advance payments made by Lessee to Lessor. Lessor shall, in addition, return to Lessee so much of Lessees Security Deposit as has not been, or is not then required to be, used by Lessor.
10. Real Property Taxes.
10.1 Definitions.
(a) Real Property Taxes. As used herein, the term Real Property Taxes shall include any form of assessment; real estate, general, special, ordinary or extraordinary, or rental levy or tax (other than inheritance, personal income or estate taxes); improvement bond; and/or license fee imposed upon or levied against any legal or equitable interest of Lessor in the Project, Lessors right to other income therefrom, and/or Lessors business of leasing, by any authority having the direct or indirect power to tax and where the funds are generated with reference to the Project address. The term Real Property Taxes shall also include any tax, fee, levy, assessment or charge, or any increase therein: (i) imposed by reason of events occurring during the term of this Lease, including but not limited to, a change in the ownership of the Project; (ii) a change in the improvements thereon; and/or (iii) levied or assessed on machinery or equipment provided by Lessor to Lessee pursuant to this Lease.
(b) Base Real Property Taxes. As used herein, the term Base Real Property Taxes shall be the
amount of Real Property Taxes, which are assessed against the Project, during the entire calendar year in which the Lease is executed.
10.2 Payment of Taxes. Except as otherwise provided in Paragraph 10.3, Lessor shall pay the Real Property Taxes applicable to
the Project, and said payments shall be included in the calculation of Common Area Operating Expenses in accordance with the provisions of Paragraph 4.2.
10.3 Additional Improvements. Common Area Operating Expenses shall not include Real Property Taxes specified in the tax
assessors records and work sheets as being caused by additional improvements placed upon the Project by other tenants or by Lessor for the exclusive enjoyment of such other Tenants. Notwithstanding Paragraph 10.2 hereof, Lessee shall, however,
pay to Lessor at the time Common Area Operating Expenses are payable under Paragraph 4.2, the entirety of any increase in Real Property Taxes if assessed solely by reason of Alterations, Trade Fixtures or Utility Installations placed upon the
Premises by Lessee or at Lessees request or by reason of any alterations or improvements to the Premises made by Lessor subsequent to the execution of this Lease by the Parties.
10.4 Joint Assessment. If the Building is not separately assessed, Real Property Taxes allocated to the Building shall be an
equitable proportion of the Real Property Taxes for all of the land and improvements included within the tax parcel assessed, such proportion to be determined by Lessor from the respective valuations assigned in the assessors work sheets or
such other information as may be reasonably available. Lessors reasonable determination thereof, in good faith, shall be conclusive.
10.5 Personal Property Taxes. Lessee shall pay prior to delinquency all taxes assessed against and levied upon Lessee Owned Alterations and Utility Installations, Trade Fixtures, furnishings, equipment and all personal property of Lessee contained in the Premises. When possible, Lessee shall cause its Lessee Owned Alterations and Utility Installations, Trade Fixtures, furnishings, equipment and all other personal property to be assessed and billed separately from the real property of Lessor. If any of Lessees said property shall be assessed with Lessors real property, Lessee shall pay Lessor the taxes attributable to Lessees property within 10 days after receipt of a written statement setting forth the taxes applicable to Lessees property.
11.
Utilities and Services. Lessee shall pay for all water, gas, heat, light, power, telephone, trash disposal and other utilities and services supplied to the Premises, | together with any taxes thereon.
Notwithstanding the provisions of Paragraph 4.2, if at any time in Lessors reasonable sole judgment, Lessor determines that Lessee is using a disproportionate amount of water, electricity or other commonly metered utilities,
or that Lessee is generating such a large volume of trash as to require an increase in the size of the trash receptacle and/or an increase in the number of times per month that it is emptied, then Lessor may increase Lessees Base Rent by an
amount equal to such increased costs. There shall be no abatement of Rent and Lessor shall not be liable in any respect whatsoever for the inadequacy, stoppage, interruption or discontinuance of any utility or service due to riot, strike, labor
dispute, breakdown, accident, repair or other cause beyond Lessors reasonable control or in cooperation with governmental request or directions.
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12. Assignment and Subletting.
12.1 Lessors Consent Required.
(a) Lessee shall not voluntarily or by operation of law assign, transfer, mortgage or encumber (collectively, assign or assignment) or sublet all or any | part of Lessees interest in this Lease or in the Premises without Lessors prior written consent, which consent shall not be unreasonably withheld or delayed.
(b) Unless Lessee is a corporation and its stock is publicly traded on a national stock exchange, a change in the control of Lessee shall constitute an | assignment requiring consent. The transfer, on a cumulative basis, of 2 50% or more of the voting control of Lessee shall constitute a change in control for this purpose.
(c) The involvement of Lessee or its assets in any transaction, or series of transactions (byway of merger, sale, acquisition, financing, transfer, leveraged buy-out or otherwise), whether or not a formal assignment or hypothecation of this Lease or Lessees assets occurs, which results or will result in a reduction of the Net Worth of Lessee by an amount greater than 25% of such Net Worth as it was represented at the time of the execution of this Lease or at the time of the most recent assignment to which Lessor has consented, or as it exists immediately prior to said transaction or transactions constituting such reduction, whichever was or is greater, shall be considered an assignment of this Lease to which Lessor may withhold its consent. Net Worth of Lessee shall mean the net worth of Lessee (excluding any guarantors) established under generally accepted accounting principles.
(d) An assignment or subletting without consent shall, at Lessors option, be a Default curable after notice per Paragraph 13.1(d), or a non-curable Breach without the necessity of any notice and grace period. If Lessor elects to treat such unapproved assignment or subletting as a non-curable Breach, Lessor may either: (i) terminate this Lease, or (ii) upon 30 days written notice, increase the monthly Base Rent to 110% of the Base Rent then in effect. Further, in the event of such Breach and rental adjustment, (i) the purchase price of any option to purchase the Premises held by Lessee shall be subject to similar adjustment to 110% of the price previously in effect, and (ii) all fixed and non-fixed rental adjustments scheduled during the remainder of the Lease term shall be increased to 110% of the scheduled adjusted rent.
(e) Lessees remedy for any breach of Paragraph 12.1 by Lessor shall be limited to compensatory damages and/or injunctive relief.
(f) Lessor may reasonably withhold consent to a proposed assignment or subletting if Lessee is in Default at the time consent is requested.
(g) Notwithstanding the foregoing, allowing a de minimis portion of the Premises, ie. 20 square feet or less, to be used by a third party vendor in connection with the installation of a vending machine or pay phone shall not constitute a subletting.
(h) Lessee may assign the Lease (a Permitted Assignment) without Lessors consent (i) to any entity which controls, is controlled by or is under common control with Lessee or (ii) pursuant to a transaction in which Lessee is merged or consolidated with any other entity or pursuant to which all or substantially all assets or stock of Lessee are sold or transferred as a going concern; provided, however, that (A) the transfer shall be made in good faith and for a legitimate business purpose other than circumventing the restrictions on transfer in this Lease, and (B) immediately following the Permitted Assignment the entity comprising Lessee shall have a tangible net worth at least equal to that of Lessee at the time of execution of this Lease or immediately prior to the Permitted Assignment, whichever is greater.
12.2 Terms and Conditions Applicable to Assignment and Subletting.
(a) Regardless of Lessors consent, no assignment or subletting shall: (i) be effective without the express written assumption by such assignee or sublessee of the obligations of Lessee under this Lease, (ii) release Lessee of any obligations hereunder, or (iii) alter the primary liability of Lessee for the payment of Rent or for the performance of any other obligations to be performed by Lessee.
(b) Lessor may accept Rent or performance of Lessees obligations from any person other than Lessee pending approval or disapproval of an assignment. Neither a delay in the approval or disapproval of such assignment nor the acceptance of Rent or performance shall constitute a waiver or estoppel of Lessors right to exercise its remedies for Lessees Default or Breach.
(c) Lessors consent to any assignment or subletting shall not constitute a consent to any subsequent assignment or subletting.
(d) In the event of any Default or Breach by Lessee, Lessor may proceed directly against Lessee, any Guarantors or anyone else responsible for the performance of Lessees obligations under this Lease, including any assignee or sublessee, without first exhausting Lessors remedies against any other person or entity responsible therefor to Lessor, or any security held by Lessor.
(e) Each request for consent to an assignment or subletting shall be in writing, accompanied by information relevant to Lessors determination as to the financial and operational responsibility and appropriateness of the proposed assignee or sublessee, including but not limited to the intended use and/or required modification of the Premises, if any, together with a fee of $500 as consideration for Lessors considering and processing said request. Lessee agrees to provide Lessor with such other or additional information and/or documentation as may be reasonably requested. (See also Paragraph 36)
(f) Any assignee of, or sublessee under, this Lease shall, by reason of accepting such assignment, entering into such sublease, or entering into possession of the Premises or any portion thereof, be deemed to have assumed and agreed to conform and comply with each and every term, covenant, condition and obligation herein to be observed or performed by Lessee during the term of said assignment or sublease, other than such obligations as are contrary to or inconsistent with provisions of an assignment or sublease to which Lessor has specifically consented to in writing.
(g) Lessors consent to any assignment or subletting shall not transfer to the assignee or sublessee any Option granted to the original Lessee by this Lease unless such transfer is specifically consented to by Lessor in writing. (See Paragraph 39.2)
12.3 Additional Terms and Conditions Applicable to Subletting. The following terms and conditions shall apply to any subletting by Lessee of all or any part of the Premises and shall be deemed included in all subleases under this Lease whether or not expressly incorporated therein:
(a) Lessee hereby assigns and transfers to Lessor all of Lessees interest in all Rent payable on any sublease, and Lessor may collect such Rent and apply same toward Lessees obligations under this Lease; provided, however, that until a Breach shall occur in the performance of Lessees obligations, Lessee may collect said Rent. In the event that the amount collected by Lessor exceeds Lessees then outstanding obligations any such excess shall be refunded to Lessee. Lessor shall not, by reason of the foregoing or any assignment of such sublease, nor by reason of the collection of Rent, be deemed liable to the sublessee for any failure of Lessee to perform and comply with any of Lessees obligations to such sublessee. Lessee hereby irrevocably authorizes and directs any such sublessee, upon receipt of a written notice from Lessor stating that a Breach exists in the performance of Lessees obligations under this Lease, to pay to Lessor all Rent due and to become due under the sublease. Sublessee shall rely upon any such notice from Lessor and shall pay all Rents to Lessor without any obligation or right to inquire as to whether such Breach exists, notwithstanding any claim from Lessee to the contrary.
(b) In the event of a Breach by Lessee, Lessor may, at its option, require sublessee to attorn to Lessor, in which event Lessor shall undertake the obligations of the sublessor under such sublease from the time of the exercise of said option to the expiration of such sublease; provided, however, Lessor shall not be liable for any prepaid rents or security deposit paid by such sublessee to such sublessor or for any prior Defaults or Breaches of such sublessor.
(c) Any matter requiring the consent of the sublessor under a sublease shall also require the consent of Lessor.
(d) No sublessee shall further assign or sublet all or any part of the Premises without Lessors prior written consent.
(e) Lessor shall deliver a copy of any notice of Default or Breach by Lessee to the sublessee, who shall have the right to cure the Default of Lessee within the grace period, if any, specified in such notice. The sublessee shall have a right of reimbursement and offset from and against Lessee for any such Defaults cured by the sublessee.
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13. Default; Breach; Remedies.
13.1 Default; Breach. A Default is defined as a failure by the Lessee to comply with or perform any of the terms, covenants, conditions or Rules and Regulations under this Lease. A Breach is defined as the occurrence of one or more of the following Defaults, and the failure of Lessee to cure such Default within any applicable grace period:
(a) The abandonment of the Premises; or the vacating of the Premises without providing a commercially reasonable level of security, or where the coverage of the property insurance described in Paragraph 8.3 is jeopardized as a result thereof, or without providing reasonable assurances to minimize potential vandalism.
(b) The failure of Lessee to make any payment of Rent or any Security Deposit required to be made by Lessee hereunder, whether to Lessor or to a third party, when due, to provide reasonable evidence of insurance or surety bond, or to fulfill any obligation under this Lease which endangers or threatens life or | property, where such failure continues for a period of 3 5 business days following written notice to Lessee. THE ACCEPTANCE BY LESSOR OF A PARTIAL PAYMENT OF RENT OR SECURITY DEPOSIT SHALL NOT CONSTITUTE A WAIVER OF ANY OF LESSORS RIGHTS, INCLUDING LESSORS RIGHT TO RECOVER POSSESSION OF THE PREMISES.
(c) The failure of Lessee to allow Lessor and/or its agents access to the Premises or the commission of waste, actor acts constituting public or private nuisance, and/or an illegal activity on the Premises by Lessee, where such actions continue for a period of 3 business days following written notice to Lessee. In the event that Lessee commits waste, a nuisance or an illegal activity a second time then, the Lessor may elect to treat such conduct as a non-curable Breach rather than a Default.
(d) The failure by Lessee to provide (i) reasonable written evidence of compliance with Applicable Requirements, (ii) the service contracts, (iii) the rescission of an unauthorized assignment or subletting, (iv) an Estoppel Certificate or financial statements, (v) a requested subordination, (vi) evidence concerning any guaranty and/or Guarantor, (vii) any document requested under Paragraph 41, (viii) material safety data sheets (MSDS), or (ix) any other documentation or information which Lessor may reasonably require of Lessee under the terms of this Lease, where any such failure continues fora period of 10 days following written notice to Lessee.
(e) A Default by Lessee as to the terms, covenants, conditions or provisions of this Lease, or of the rules adopted under Paragraph 2.9 hereof, other than those described in subparagraphs 13.1(a), (b), (c) or (d), above, where such Default continues fora period of 30 days after written notice; provided, however, that if the nature of Lessees Default is such that more than 30 days are reasonably required for its cure, then it shall not be deemed to be a Breach if Lessee commences such cure within said 30 day period and thereafter diligently prosecutes such cure to completion.
(f) The occurrence of any of the following events: (i) the making of any general arrangement or assignment for the benefit of creditors; (ii) becoming a debtor as defined in 11 U.S.C. § 101 or any successor statute thereto (unless, in the case of a petition filed against Lessee, the same is dismissed within 60 days); (iii) the appointment of a trustee or receiver to take possession of substantially all of Lessees assets located at the Premises or of Lessees interest in this Lease, where possession is not restored to Lessee within 30 days; or (iv) the attachment, execution or other judicial seizure of substantially all of Lessees assets located at the Premises or of Lessees interest in this Lease, where such seizure is not discharged within 30 days; provided, however, in the event that any provision of this subparagraph is contrary to any applicable law, such provision shall be of no force or effect, and not affect the validity of the remaining provisions.
(g) The discovery that any financial statement of Lessee or of any Guarantor given to Lessor was materially false.
(h) If the performance of Lessees obligations under this Lease is guaranteed: (i) the death of a Guarantor, (ii) the termination of a Guarantors liability with respect to this Lease other than in accordance with the terms of such guaranty, (iii) a Guarantors becoming insolvent or the subject of a bankruptcy filing, (iv) a Guarantors refusal to honor the guaranty, or (v) a Guarantors breach of its guaranty obligation on an anticipatory basis, and Lessees failure, within 60 days following written notice of any such event, to provide written alternative assurance or security, which, when coupled with the then existing resources of Lessee, equals or exceeds the combined financial resources of Lessee and the Guarantors that existed at the time of execution of this Lease.
13.2 Remedies. If Lessee fails to perform any of its affirmative duties or obligations, within 10 days after written notice (or in case of an emergency, without notice), Lessor may, at its option, perform such duty or obligation on Lessees behalf, including but not limited to the obtaining of reasonably required bonds, insurance policies, or governmental licenses, permits or approvals. Lessee shall pay to Lessor an amount equal to 115% of the costs and expenses incurred by Lessor in such performance upon receipt of an invoice therefor. In the event of a Breach, Lessor may, with or without further notice or demand, and without limiting Lessor in the exercise of any right or remedy which Lessor may have by reason of such Breach:
(a) Terminate Lessees
right to possession of the Premises by any lawful means, in which case this Lease shall terminate and Lessee shall immediately surrender possession to Lessor. In such event Lessor shall be entitled to recover from Lessee: (i) the unpaid Rent
which had been earned at the time of termination; (ii) the worth at the time of award of the amount by which the unpaid rent which would have been earned after termination until the time of award exceeds the amount of such rental loss that the
Lessee proves could have been reasonably avoided; (iii) the worth at the time of award of the amount by which the unpaid rent for I the balance of the term after the time of award exceeds the fair market value of the Premises the amount
of such rental loss that the Lessee proves could be reasonably avoided; and (iv) any other amount necessary to compensate Lessor for all the detriment proximately caused by the Lessees failure to perform its obligations under
this Lease or which in the ordinary course of things would be likely to result therefrom, including but not limited to the cost of recovering possession of the Premises, expenses of reletting, including necessary renovation and alteration of the
Premises, reasonable attorneys fees, and that portion of any leasing commission paid by Lessor in connection with this Lease applicable to the unexpired term of this Lease. The worth at the time of award of the amount referred to in provision
(iii) of the immediately preceding sentence shall be computed by discounting such amount at the discount rate of the Federal Reserve Bank of the District within which the Premises are located at the time of award plus one percent. Efforts by
Lessor to mitigate damages caused by Lessees Breach of this Lease shall not waive Lessors right to recover any damages to which Lessor is otherwise entitled. If termination of this Lease is obtained through the provisional remedy of
unlawful detainer, Lessor shall have the right to recover in such proceeding any unpaid Rent and damages as are recoverable therein, or Lessor may reserve the right to recover all or any part thereof in a separate suit. If a notice and grace period
required under Paragraph 13.1 was not previously given, a notice to pay rent or quit, or to perform or quit given to Lessee under the unlawful detainer statute shall also constitute the notice required by Paragraph 13.1. In such case, the applicable
grace period required by Paragraph 13.1 and the unlawful detainer statute shall run concurrently, and the failure of Lessee to cure the Default within the greater of the two such grace periods shall constitute both an unlawful detainer and a Breach
of this Lease entitling Lessor to the remedies provided for in this Lease and/or by said statute.
(b) Continue the Lease and Lessees right to possession and recover the Rent as it becomes due, in which event Lessee may sublet or assign, subject only to reasonable limitations. Acts of maintenance, efforts to relet, and/or the appointment of a receiver to protect the Lessors interests, shall not constitute a termination of the Lessees right to possession.
(c) Pursue any other remedy now or hereafter available under the laws or judicial decisions of the state wherein the Premises are located. The expiration or termination of this Lease and/or the termination of Lessees right to possession shall not relieve Lessee from liability under any indemnity provisions of this Lease as to matters occurring or accruing during the term hereof or by reason of Lessees occupancy of the Premises.
13.3 Inducement Recapture. Any agreement for free or abated rent or other charges, the cost of tenant improvements for Lessee paid for or performed by Lessor, or for the giving or paying by Lessor to or for Lessee of any cash or other bonus, inducement or consideration for Lessees entering into this Lease, all of which concessions are hereinafter referred to as Inducement Provisions, shall be deemed conditioned upon Lessees full and faithful performance of all of the terms, covenants and conditions of this Lease. Upon Breach of this Lease by Lessee, any such Inducement Provision shall automatically be deemed deleted from this Lease |
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and of no further force or effect, and the unamortized value (amortized over the initial term) of any rent, other charge, bonus, inducement or consideration theretofore abated, given or paid by Lessor under such an Inducement Provision shall be immediately due and payable by Lessee to Lessor, notwithstanding any subsequent cure of said Breach by Lessee. The acceptance by Lessor of rent or the cure of the Breach which initiated the operation of this paragraph shall not be deemed a waiver by Lessor of the provisions of this paragraph unless specifically so stated in writing by Lessor at the time of such acceptance.
13.4 Late Charges. Lessee hereby acknowledges that late payment by Lessee of Rent will cause Lessor to incur costs not contemplated by this Lease, the exact amount of which will be extremely difficult to ascertain. Such costs include, but are not limited to, processing and accounting charges, and late charges which may be imposed upon Lessor by any Lender. Accordingly, if any Rent shall not be received by Lessor within 5 days after such amount shall be due, then, without any requirement for notice to Lessee, Lessee shall immediately pay to Lessor a one-time late charge equal to 10% of each such overdue amount or $100, whichever is greater. The parties hereby agree that such late charge represents a fair and reasonable estimate of the costs Lessor will incur by reason of such late payment. Acceptance of such late charge by Lessor shall in no event constitute a waiver of Lessees Default or Breach with respect to such overdue amount, nor prevent the exercise of any of the other rights and remedies granted hereunder. In the event that a late charge is payable hereunder, whether or not collected, for 3 consecutive installments of Base Rent, then notwithstanding any provision of this Lease to the contrary, Base Rent shall, at Lessors option, become due and payable quarterly in advance.
13.5 Interest. Any monetary payment due Lessor hereunder, other than late charges, not received by Lessor, when due shall bear interest from the 31st day after it was due. The interest (Interest) charged shall be computed at the rate of 10% per annum but shall not exceed the maximum rate allowed by law. Interest is payable in addition to the potential late charge provided for in Paragraph 13.4.
13.6 Breach by Lessor.
(a) Notice of Breach. Lessor shall not be deemed in breach of this Lease unless Lessor fails within a reasonable time to perform an obligation required to be performed by Lessor. For purposes of this Paragraph, a reasonable time shall in no event be less than 30 days after receipt by Lessor, and any Lender whose name and address shall have been furnished to Lessee in writing for such purpose, of written notice specifying wherein such obligation of Lessor has not been performed; provided, however, that if the nature of Lessors obligation is such that more than 30 days are reasonably required for its performance, then Lessor shall not be in breach if performance is commenced within such 30 day period and thereafter diligently pursued to completion.
(b) Performance by Lessee on Behalf of Lessor. In the event that neither Lessor nor Lender cures said breach within 30 days after receipt of said notice, or if having commenced said cure they do not diligently pursue it to completion, then Lessee may elect to cure said breach at Lessees expense and offset from Rent the actual and reasonable cost to perform such cure, provided however, that such offset shall not exceed an amount equal to the greater of one months Base Rent or the Security Deposit, reserving Lessees right to reimbursement from Lessor for any such expense in excess of such offset. Lessee shall document the cost of said cure and supply said documentation to Lessor.
14. Condemnation. If the Premises or any portion thereof are
taken under the power of eminent domain or sold under the threat of the exercise of said power (collectively Condemnation), this Lease shall terminate as to the part taken as of the date the condemning authority takes title or
possession, whichever first occurs. If more than 10% of the floor area of the Premises, Unit, or more than 25% of the parking spaces is taken by Condemnation, Lessee may, at Lessees option, to be exercised in writing within 10
days after Lessor shall have given Lessee written notice of such taking (or in the absence of such notice, within 10 days after the condemning authority shall have taken possession) terminate this Lease as of the date the condemning authority takes
such possession. If Lessee does not terminate this Lease in accordance with the foregoing, this Lease shall remain in full force and effect as to the portion of the Premises remaining, except that the Base Rent shall be reduced in proportion to the
reduction in utility of the Premises caused by such Condemnation. Condemnation awards and/or payments shall be the property of Lessor, whether such award shall be made as compensation for diminution in value of the leasehold, the value of the part
taken, or for severance damages; provided, however, that Lessee shall be entitled to any compensation paid by the condemn or for Lessees relocation expenses, loss of business goodwill and/or Trade Fixtures, without regard to whether or not
this Lease is terminated pursuant to the provisions of this Paragraph. All Alterations and Utility Installations made to the Premises by Lessee, for purposes of Condemnation only, shall be considered the property of the Lessee and Lessee shall be
entitled to any and all compensation which is payable therefor. In the event that this Lease is not terminated by reason of the Condemnation, Lessor shall repair any damage to the Premises caused by such Condemnation.
15. Brokerage Fees.
15.1 Additional Commission. In addition to the payments owed pursuant to Paragraph 1.10 above, Lessor agrees that: (a) if
Lessee exercises any Option, (b) if Lessee or anyone affiliated with Lessee acquires from Lessor any rights to the Premises or other premises owned by Lessor and located within the Project, (c) if Lessee remains in possession of the
Premises, with the consent of Lessor, after the expiration of this Lease, or (d) if Base Rent is increased, whether by agreement or operation of an escalation clause herein, then, Lessor shall pay Brokers a fee in accordance with the fee
schedule of the Brokers in effect at the time the Lease was executed.
15.2 Assumption of Obligations. Any buyer or
transferee of Lessors interest in this Lease shall be deemed to have assumed Lessors obligation hereunder. Brokers shall be third party beneficiaries of the provisions of Paragraphs 1.10, 15, 22 and 31. If Lessor fails to pay to Brokers
any amounts due as and for brokerage fees pertaining to this Lease when due, then such amounts shall accrue Interest. In addition, if Lessor fails to pay any amounts to Lessees Broker when due, Lessees Broker may send written
notice to Lessor and Lessee of such failure and if Lessor fails to pay such amounts within 10 days after said notice, Lessee shall pay said monies to its Broker and offset such amounts against Rent. In addition, Lessees Broker shall
be deemed to be a third party beneficiary of any commission agreement entered into by and/or between Lessor and Lessors Broker for the limited purpose of collecting any brokerage fee owed.
15.3 Representations and Indemnities of Broker Relationships. Lessee and Lessor each represent and warrant to the other that it has had no dealings with any person, firm, broker or finder (other than the Brokers, if any) in connection with this Lease, and that no one other than said named Brokers is entitled to any commission or finders fee in connection herewith. Lessee and Lessor do each hereby agree to indemnify, protect, defend and hold the other harmless from and against liability for compensation or charges which may be claimed by any such unnamed broker, finder or other similar party by reason of any dealings or actions of the indemnifying Party, including any costs, expenses, attorneys fees reasonably incurred with respect thereto.
16. Estoppel Certificates.
(a) Each Party (as Responding Party) shall within 10 business days after written notice from the other Party (the Requesting Party) execute, acknowledge and deliver to the Requesting Party a statement in writing in form similar to the then most current Estoppel Certificate form published BY AIR CRE, plus such additional information, confirmation and/or statements as may be reasonably requested by the Requesting Party.
(b) If the Responding
Party shall fail to execute or deliver the Estoppel Certificate within such 10 business day period, the Requesting Party may execute an Estoppel Certificate stating that: (i) the Lease is in full force and effect without modification except as
may be represented by the Requesting Party, (ii) there are no uncured defaults in the Requesting Partys performance, and (iii) if Lessor is the Requesting Party, not more than one months rent has been paid in advance.
Prospective purchasers and encumbrancers may rely upon the Requesting Partys Estoppel Certificate, and the Responding Party shall be estopped from denying the truth of the facts contained in said Certificate. In addition, Lessee
acknowledges that any failure on its part to provide such an Estoppel Certificate will expose Lessor to risks and potentially cause Lessor to incur costs not contemplated by this Lease, the extent of which will be extremely difficult to ascertain.
Accordingly, should the
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Lessee fail to execute and/or deliver a requested Estoppel Certificate in a timely fashion the monthly Base Rent shall be automatically increased, without any requirement
for notice to Lessee, by an amount equal to 10% of the then existing Base Rent or $100, whichever is greater for remainder of the Lease. The Parties agree that such increase in Base Rent represents fair and reasonable compensation for the additional
risk/costs that Lessor will incur by reason of Lessees failure to provide the Estoppel Certificate. Such increase in Base Rent shall in no event constitute a waiver of Lessees Default or Breach with respect to the failure to provide the
Estoppel Certificate nor prevent the exercise of any of the other rights and remedies granted hereunder.
(c) If Lessor desires to
finance, refinance, or sell the Premises, or any part thereof, Lessee and all Guarantors shall within 10 days after written notice from Lessor deliver to any potential lender or purchaser designated by Lessor such financial statements as may be
reasonably required by such lender or purchaser, including but not limited to Lessees financial statements for the past 3 2 years. All such financial statements shall be received by Lessor and such lender or purchaser in
confidence and shall be used only for the purposes herein set forth.
17. Definition of Lessor. The term Lessor as used herein shall mean the owner or owners at the time in question of the fee title to the Premises, or, if this is a sublease, of the Lessees interest in the prior lease. In the event of a transfer of Lessors title or interest in the Premises or this Lease, Lessor shall deliver to the transferee or assignee (in cash or by credit) any unused Security Deposit held by Lessor. Upon such transfer or assignment and delivery of the Security Deposit, as aforesaid, the prior Lessor shall be relieved of all liability with respect to the obligations and/or covenants under this Lease thereafter to be performed by the Lessor. Subject to the foregoing, the obligations and/or covenants in this Lease to be performed by the Lessor shall be binding only upon the Lessor as hereinabove defined.
18. Severability. The invalidity of any provision of this Lease, as determined by a court of competent jurisdiction, shall in no way affect the validity of any other provision hereof.
19. Days. Unless otherwise specifically indicated to the contrary, the word days as used in this Lease shall mean and refer to calendar days.
20. Limitation on Liability. The obligations of Lessor under this Lease shall not constitute personal obligations of Lessor, or its partners, members, directors, officers or shareholders, and Lessee shall look to the Premises, and to no other assets of Lessor, for the satisfaction of any liability of Lessor with respect to this Lease, and shall not seek recourse against Lessors partners, members, directors, officers or shareholders, or any of their personal assets for such satisfaction.
21. Time of Essence. Time is of the essence with respect to the performance of all obligations to be performed or observed by the Parties under this Lease.
22. No Prior or Other Agreements; Broker Disclaimer. This Lease contains all agreements between the Parties with respect to any matter mentioned herein, and no other prior or contemporaneous agreement or understanding shall be effective. Lessor and Lessee each represents and warrants to the Brokers that it has made, and is relying solely upon, its own investigation as to the nature, quality, character and financial responsibility of the other Party to this Lease and as to the use, nature, quality and character of the Premises. Brokers have no responsibility with respect thereto or with respect to any default or breach hereof by either Party.
23. Notices.
23.1 Notice Requirements. All notices required or permitted by this Lease or applicable law shall be in writing and may be delivered in person (by hand or by courier) or may be sent by regular, certified or registered mail or U.S. Postal Service Express Mail, with postage prepaid, or by facsimile transmission, or by email, and shall be deemed sufficiently given if served in a manner specified in this Paragraph 23. The addresses noted adjacent to a Partys signature on this Lease shall be that Partys address for delivery or mailing of notices. Either Party may by written notice to the other specify a different address for notice, except that upon Lessees taking possession of the Premises, the Premises shall constitute Lessees address for notice. A copy of all notices to Lessor shall be concurrently transmitted to such party or parties at such addresses as Lessor may from time to time hereafter designate in writing.
23.2 Date of Notice. Any notice sent by registered or certified mail, return receipt requested, shall be deemed given on the date of delivery shown on the receipt card, or if no delivery date is shown, the postmark thereon. If sent by regular mail the notice shall be deemed given 72 hours after the same is addressed as required herein and mailed with postage prepaid. Notices delivered by United States Express Mail or overnight courier that guarantees next day delivery shall be deemed given 24 hours after delivery of the same to the Postal Service or courier. Notices delivered by hand, or transmitted by facsimile transmission or by email shall be deemed delivered upon actual receipt. If notice is received on a Saturday, Sunday or legal holiday, it shall be deemed received on the next business day.
24. Waivers.
(a) No waiver by Lessor of the Default or Breach of any term, covenant or condition hereof by Lessee, shall be deemed a waiver of any other term, covenant or condition hereof, or of any subsequent Default or Breach by Lessee of the same or of any other term, covenant or condition hereof. Lessors consent to, or approval of, any act shall not be deemed to render unnecessary the obtaining of Lessors consent to, or approval of, any subsequent or similar act by Lessee, or be construed as the basis of an estoppel to enforce the provision or provisions of this Lease requiring such consent.
(b) The acceptance of Rent by Lessor shall not be a waiver of any Default or Breach by Lessee. Any payment by Lessee may be accepted by Lessor on account of monies or damages due Lessor, notwithstanding any qualifying statements or conditions made by Lessee in connection therewith, which such statements and/or conditions shall be of no force or effect whatsoever unless specifically agreed to in writing by Lessor at or before the time of deposit of such payment.
(c) THE PARTIES AGREE THAT THE TERMS OF THIS LEASE SHALL GOVERN WITH REGARD TO ALL MATTERS RELATED THERETO AND HEREBY WAIVE THE PROVISIONS OF ANY PRESENT OR FUTURE STATUTE TO THE EXTENT THAT SUCH STATUTE IS INCONSISTENT WITH THIS LEASE.
25. Disclosures Regarding The Nature of a Real Estate Agency Relationship.
(a) When entering into a discussion with a real estate agent regarding a real estate transaction, a Lessor or Lessee should from the outset understand what type of agency relationship or representation it has with the agent or agents in the transaction. Lessor and Lessee acknowledge being advised by the Brokers in this transaction, as follows:
(i) Lessors Agent. A Lessors agent under a listing agreement with the Lessor acts as the agent for the Lessor only. A Lessors agent or subagent has the following affirmative obligations: To the Lessor: A fiduciary duty of utmost care, integrity, honesty, and loyalty in dealings with the Lessor. To the Lessee and the Lessor: (a) Diligent exercise of reasonable skills and care in performance of the agents duties. (b) A duty of honest and fair dealing and good faith. (c) A duty to disclose all facts known to the agent materially affecting the value or desirability of the property that are not known to, or within the diligent attention and observation of, the Parties. An agent is not obligated to reveal to either Party any confidential information obtained from the other Party which does not involve the affirmative duties set forth above.
(ii) Lessees Agent. An agent can agree to act as agent for the Lessee only. In these situations, the agent is not the Lessors agent, even if by agreement the agent may receive compensation for services rendered, either in full or in part from the Lessor. An agent acting only for a Lessee has the following affirmative obligations. To the Lessee: A fiduciary duty of utmost care, integrity, honesty, and loyalty in dealings with the Lessee. To the Lessee and the Lessor: (a) Diligent exercise of reasonable skills and care in performance of the agents duties. (b) A duty of honest and fair dealing and good faith. (c) A duty to disclose all facts known to the agent materially affecting the value or desirability of the property that are not known to, or within the diligent attention and observation of, the Parties. An agent is not obligated to reveal to either Party any confidential information obtained from the other Party which does not involve the affirmative duties set forth above.
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(iii) Agent Representing Both Lessor and Lessee. A real estate agent, either acting directly or through one or more associate licenses, can legally be the agent of both the Lessor and the Lessee in a transaction, but only with the knowledge and consent of both the Lessor and the Lessee. In a dual agency situation, the agent has the following affirmative obligations to both the Lessor and the Lessee: (a) A fiduciary duty of utmost care, integrity, honesty and loyalty in the dealings with either Lessor or the Lessee. (b) Other duties to the Lessor and the Lessee as stated above in subparagraphs (i) or (ii). In representing both Lessor and Lessee, the agent may not without the express permission of the respective Party, disclose to the other Party that the Lessor will accept rent in an amount less than that indicated in the listing or that the Lessee is willing to pay a higher rent than that offered. The above duties of the agent in a real estate transaction do not relieve a Lessor or Lessee from the responsibility to protect their own interests. Lessor and Lessee should carefully read all agreements to assure that they adequately express their understanding of the transaction. A real estate agent is a person qualified to advise about real estate. If legal or tax advice is desired, consult a competent professional.
(b) Brokers have no responsibility with respect to any default or breach hereof by either
Party. The Parties agree that no lawsuit or other legal proceeding involving any breach of duty, error or omission relating to this lease may be brought against Broker more than one year after the Start Date and that the liability (including
court costs and attorneys fees), of any Broker with respect to any such lawsuit and/or legal proceeding shall not exceed the fee received by such Broker pursuant to this Lease; provided, however, that the foregoing limitation on each
Brokers liability shall not be applicable to any gross negligence or willful misconduct of such Broker.
(c) Lessor and Lessee agree to identify to Brokers as Confidential any communication or information given Brokers that is considered by such Party to be confidential.
26. No Right To Holdover. Lessee has no right to retain possession of the Premises or any part thereof beyond the expiration or termination of this Lease. In the event that Lessee holds over, then the Base Rent shall be increased to 150% of the Base Rent applicable immediately preceding the expiration or termination. Holdover Base Rent shall be calculated on monthly basis. Nothing contained herein shall be construed as consent by Lessor to any holding over by Lessee.
27. Cumulative Remedies. No remedy or election hereunder shall be deemed exclusive but shall, wherever possible, be cumulative with all other remedies at law or in equity.
28. Covenants and Conditions; Construction of Agreement. All provisions of this Lease to be observed or performed by Lessee are both covenants and conditions. In construing this Lease, all headings and titles are for the convenience of the Parties only and shall not be considered a part of this Lease. Whenever required by the context, the singular shall include the plural and vice versa. This Lease shall not be construed as if prepared by one of the Parties, but rather according to its fair meaning as a whole, as if both Parties had prepared it.
29. Binding Effect; Choice of Law. This Lease shall be binding upon the parties, their personal representatives, successors and assigns and be governed by the laws of the State in which the Premises are located. Any litigation between the Parties hereto concerning this Lease shall be initiated in the county in which the Premises are located.
30. Subordination; Attornment; Non-Disturbance.
30.1 Subordination. This Lease and any Option granted hereby shall be subject and subordinate to any ground lease, mortgage, deed of trust, or other hypothecation or security device (collectively, Security Device), now or hereafter placed upon the Premises, to any and all advances made on the security thereof, and to all renewals, modifications, and extensions thereof. Lessee agrees that the holders of any such Security Devices (in this Lease together referred to as Lender) shall have no liability or obligation to perform any of the obligations of Lessor under this Lease. Any Lender may elect to have this Lease and/or any Option granted hereby superior to the lien of its Security Device by giving written notice thereof to Lessee, whereupon this Lease and such Options shall be deemed prior to such Security Device, notwithstanding the relative dates of the documentation or recordation thereof.
30.2 Attornment. In the event that Lessor transfers title to the
Premises, or the Premises are acquired by another upon the foreclosure or termination of a Security Device to which this Lease is subordinated (i) Lessee shall, subject to the non-disturbance provisions of Paragraph 30.3, attorn to such new
owner, and upon request, enter into a new lease, containing all of the terms and provisions of this Lease, with such new owner for the remainder of the term hereof, or, at the election of the new owner, this Lease will automatically become a new
lease between Lessee and such new owner, and (ii) Lessor shall thereafter be relieved of any further obligations hereunder and such new owner shall assume all of Lessors obligations, except that such new owner shall not:
(a) be liable for any act or omission of any prior lessor or with respect to events occurring prior to acquisition of ownership; (b) be subject to any offsets or defenses which Lessee might have against any prior lessor,
(c) be bound by prepayment of more than one months rent., or (d) be liable for the return of any security deposit paid to any prior lessor which was not paid or credited to such new owner.
30.3 Non-Disturbance. With respect to Security Devices entered into by Lessor after the execution of this Lease, Lessees subordination of this Lease shall be subject to receiving a commercially reasonable non-disturbance agreement (a Non-Disturbance Agreement) from the Lender which Non-Disturbance Agreement provides that Lessees possession of the Premises, and this Lease, including any options to extend the term hereof, will not be disturbed so long as Lessee is not in Breach hereof and attorns to the record owner of the Premises. Further, within 60 days after the execution of this Lease, Lessor shall, if requested by Lessee, use its commercially reasonable efforts to obtain a Non-Disturbance Agreement from the holder of any pre-existing Security Device which is secured by the Premises. In the event that Lessor is unable to provide the Non-Disturbance Agreement within said 60 days, then Lessee may, at Lessees option, directly contact Lender and attempt to negotiate for the execution and delivery of a Non-Disturbance Agreement.
30.4 Self-Executing. The agreements contained in this Paragraph 30 shall be effective without the execution of any further documents; provided, however, that, upon written request from Lessor or a Lender in connection with a sale, financing or refinancing of the Premises, Lessee and Lessor shall execute such further writings as may be reasonably required to separately document any subordination, attornment and/or Non-Disturbance Agreement provided for herein.
31. Attorneys Fees. If any Party or Broker brings an action or proceeding involving the Premises whether founded in tort, contract or equity, or to declare rights hereunder, the Prevailing Party (as hereafter defined) in any such proceeding, action, or appeal thereon, shall be entitled to reasonable attorneys fees. Such fees may be awarded in the same suit or recovered in a separate suit, whether or not such action or proceeding is pursued to decision or judgment. The term, Prevailing Party shall include, without limitation, a Party or Broker who substantially obtains or defeats the relief sought, as the case may be, whether by compromise, settlement, judgment, or the abandonment by the other Party or Broker of its claim or defense. The attorneys fees award shall not be computed in accordance with any court fee schedule, but shall be such as to fully reimburse all attorneys fees reasonably incurred. In addition, Lessor shall be entitled to attorneys fees, costs and expenses incurred in the preparation and service of notices of Default and consultations in connection therewith, whether or not a legal action is subsequently commenced in connection with such Default or resulting Breach ($200 is a reasonable minimum per occurrence for such services and consultation).
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32. Lessors Access; Showing Premises; Repairs. Lessor and Lessors agents shall have the right to enter the Premises at any time, in the case of an emergency, and otherwise at reasonable times after reasonable prior notice for the purpose of showing the same to prospective purchasers, lenders, or tenants, and making such alterations, repairs, improvements or additions to the Premises as Lessor may deem necessary or desirable and the erecting, using and maintaining of utilities, services, pipes and conduits through the Premises and/or other premises as long as there is no material adverse effect on Lessees use of the Premises. All such activities shall be without abatement of rent or liability to Lessee.
33. Auctions. Lessee shall not conduct, nor permit to be conducted, any auction upon the Premises without Lessors prior written consent. Lessor shall not be obligated to exercise any standard of reasonableness in determining whether to permit an auction.
34. Signs. Lessor may place on the Premises ordinary For Sale signs at any time and ordinary For Lease signs during the last 6 months of the term hereof. Except for ordinary For Sublease signs which may be placed only on the Premises, Lessee shall not place any sign upon the Project without Lessors prior written consent. All signs must comply with all Applicable Requirements.
35. Termination; Merger. Unless specifically stated otherwise in writing by Lessor, the voluntary or other surrender of this Lease by Lessee, the mutual termination or cancellation hereof, or a termination hereof by Lessor for Breach by Lessee, shall automatically terminate any sublease or lesser estate in the Premises; provided, however, that Lessor may elect to continue any one or all existing subtenancies. Lessors failure within 10 days following any such event to elect to the contrary by written notice to the holder of any such lesser interest, shall constitute Lessors election to have such event constitute the termination of such interest.
36. Consents. All requests for consent shall be in writing. Except as otherwise provided herein, wherever in this Lease the consent of a Party is required to an act by or for the other Party, such consent shall not be unreasonably withheld or delayed. Lessors actual reasonable costs and expenses (including but not limited to architects, attorneys, engineers and other consultants fees) incurred in the consideration of, or response to, a request by Lessee for any Lessor consent, including but not limited to consents to an assignment, a subletting or the presence or use of a Hazardous Substance, shall be paid by Lessee upon receipt of an invoice and supporting documentation therefor. Lessors consent to any act, assignment or subletting shall not constitute an acknowledgment that no Default or Breach by Lessee of this Lease exists, nor shall such consent be deemed a waiver of any then existing Default or Breach, except as may be otherwise specifically stated in writing by Lessor at the time of such consent. The failure to specify herein any particular condition to Lessors consent shall not preclude the imposition by Lessor at the time of consent of such further or other conditions as are then reasonable with reference to the particular matter for which consent is being given. In the event that either Party disagrees with any determination made by the other hereunder and reasonably requests the reasons for such determination, the determining party shall furnish its reasons in writing and in reasonable detail within 10 business days following such request.
37. Guarantor.
37.1 Execution. The Guarantors, if any, shall each execute a guaranty in the form most recently published BY AIR CRE.
37.2 Default. It shall constitute a Default of the Lessee if any Guarantor fails or refuses, upon request to provide: (a) evidence of the execution of the guaranty, including the authority of the party signing on Guarantors behalf to obligate Guarantor, and in the case of a corporate Guarantor, a certified copy of a resolution of its board of directors authorizing the making of such guaranty, (b) current financial statements, (c) an Estoppel Certificate, or (d) written confirmation that the guaranty is still in effect.
38. Quiet Possession. Subject to payment by Lessee of the Rent and performance of all of the covenants, conditions and provisions on Lessees part to be observed and performed under this Lease, Lessee shall have quiet possession and quiet enjoyment of the Premises during the term hereof.
39. Options. If Lessee is granted any option, as defined below, then the following provisions shall apply.
39.1 Definition. Option shall mean: (a) the right to extend or reduce the term of or renew this Lease or to extend or reduce the term of or renew any lease that Lessee has on other property of Lessor; (b) the right of first refusal or first offer to lease either the Premises or other property of Lessor; (c) the right to purchase, the right of first offer to purchase or the right of first refusal to purchase the Premises or other property of Lessor.
39.2 Options Personal To Original Lessee. Any Option granted to Lessee in this Lease is personal to the original Lessee, and cannot be assigned or exercised by anyone other than said original Lessee and only while the original Lessee is in full possession of the Premises or Permitted Assignee (see 12.1(h)) and, if requested by Lessor, with Lessee certifying that Lessee has no intention of thereafter assigning or subletting.
39.3 Multiple Options. In the event that Lessee has any multiple Options to extend or renew this Lease, a later Option cannot be exercised unless the prior Options have been validly exercised.
39.4 Effect of Default on Options.
(a) Lessee shall have no right to exercise an Option: (i) during the period commencing with the giving of any notice of Default and continuing until said Default is cured, (ii) during the period of time any Rent is unpaid (without regard to whether notice thereof is given Lessee), (iii) during the time Lessee is in Breach of this Lease, or (iv) in the event that Lessee has been given 3 or more notices of separate Default, whether or not the Defaults are cured, during the 12 month period immediately preceding the exercise of the Option.
(b) The period of time within which an Option may be exercised shall not be extended or enlarged by reason of Lessees inability to exercise an Option because of the provisions of Paragraph 39.4(a).
(c) An Option shall terminate and be of no further force or effect, notwithstanding Lessees due and timely exercise of the Option, if, after such exercise and prior to the commencement of the extended term or completion of the purchase, (i) Lessee fails to pay Rent for a period of 30 days after such Rent becomes due (without any necessity of Lessor to give notice thereof), or (ii) if Lessee commits a Breach of this Lease.
40. Security Measures. Lessee hereby acknowledges that the Rent payable to Lessor hereunder does not include the cost of guard service or other security measures, and that Lessor shall have no obligation whatsoever to provide same. Lessee assumes all responsibility for the protection of the Premises, Lessee, its agents and invitees and their property from the acts of third parties.
41. Reservations. Lessor reserves the right: (i) to grant, without the consent or joinder of Lessee, such easements, rights and dedications that Lessor deems necessary, (ii) to cause the recordation of parcel maps and restrictions, and (iii) to create and/or install new utility raceways, so long as such easements, rights, dedications, maps, restrictions, and utility raceways do not unreasonably interfere with the access to or use of the Premises or Common Areas by Lessee. Lessee agrees to sign any documents reasonably requested by Lessor to effectuate such rights.
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42. Performance Under Protest. If at any time a dispute shall arise as to any amount or sum of money to be paid by one Party to the other under the provisions hereof, the Party against whom the obligation to pay the money is asserted shall have the right to make payment under protest and such payment shall not be regarded as a voluntary payment and there shall survive the right on the part of said Party to institute suit for recovery of such sum. If it shall be adjudged that there was no legal obligation on the part of said Party to pay such sum or any part thereof, said Party shall be entitled to recover such sum or so much thereof as it was not legally required to pay. A Party who does not initiate suit for the recovery of sums paid under protest within 6 months shall be deemed to have waived its right to protest such payment.
43. Authority; Multiple Parties; Execution.
(a) If either Party hereto is a corporation, trust, limited liability company, partnership, or similar entity, each individual executing this Lease on behalf of such entity represents and warrants that he or she is duly authorized to execute and deliver this Lease on its behalf. Each Party shall, within 30 days after request, deliver to the other Party satisfactory evidence of such authority.
(b) If this Lease is executed by more than one person or entity as Lessee, each such person or entity shall be jointly and severally liable hereunder. It is agreed that any one of the named Lessees shall be empowered to execute any amendment to this Lease, or other document ancillary thereto and bind all of the named Lessees, and Lessor may rely on the same as if all of the named Lessees had executed such document.
(c) This Lease maybe executed by the Parties in counterparts, each of which shall be deemed an original and all of which together shall constitute one and the same instrument.
44. Conflict. Any conflict between the printed provisions of this Lease and the typewritten or handwritten provisions shall be controlled by the typewritten or handwritten provisions.
45. Offer. Preparation of this Lease by either party or their agent and submission of same to the other Party shall not be deemed an offer to lease to the other Party. This Lease is not intended to be binding until executed and delivered by all Parties hereto.
46. Amendments. This Lease may be modified only in writing, signed by the Parties in interest at the time of the modification. As long as they do not materially change Lessees obligations hereunder, Lessee agrees to make such reasonable non-monetary modifications to this Lease as may be reasonably required by a Lender in connection with the obtaining of normal financing or refinancing of the Premises.
47. Waiver of Jury Trial. THE PARTIES HEREBY WAIVE THEIR RESPECTIVE RIGHTS TO TRIAL BY JURY IN ANY ACTION OR PROCEEDING INVOLVING THE PROPERTY OR ARISING OUT OF THIS AGREEMENT.
48. Arbitration of Disputes. An Addendum requiring the Arbitration of all disputes between the Parties and/or Brokers arising out of this Lease ☒ is ☐ is not attached to this Lease.
49. Accessibility; Americans with Disabilities Act.
(a) The Premises:
☒ have not undergone an inspection by a Certified Access Specialist (CASp). Note: A Certified Access Specialist (CASp) can inspect the subject premises and determine whether the subject premises comply with all of the applicable construction-related accessibility standards under state law. Although state law does not require a CASp inspection of the subject premises, the commercial property owner or lessor may not prohibit the lessee or tenant from obtaining a CASp inspection of the subject premises for the occupancy or potential occupancy of the lessee or tenant, if requested by the lessee or tenant. The parties shall mutually agree on the arrangements for the time and manner of the CASp inspection, the payment of the fee for the CASp inspection, and the cost of making any repairs necessary to correct violations of construction-related accessibility standards within the premises.
☐ have undergone an inspection by a Certified Access Specialist (CASp) and it was determined that the Premises met all applicable construction-related accessibility standards pursuant to California Civil Code §55.51 et seq. Lessee acknowledges that it received a copy of the inspection report at least 48 hours prior to executing this Lease and agrees to keep such report confidential.
☐ have undergone an inspection by a Certified Access Specialist (CASp) and it was determined that the Premises did not meet all applicable construction-related accessibility standards pursuant to California Civil Code §55.51 et seq. Lessee acknowledges that it received a copy of the inspection report at least 48 hours prior to executing this Lease and agrees to keep such report confidential except as necessary to complete repairs and corrections of violations of construction related accessibility standards.
In the event that the Premises have been issued an inspection report by a CASp the Lessor shall provide a copy of the disability access inspection certificate to Lessee within 7 days of the execution of this Lease.
(b) Since compliance with the Americans with Disabilities Act (ADA) and other state and local accessibility statutes are dependent upon Lessees specific use of the Premises, Lessor makes no warranty or representation as to whether or not the Premises comply with ADA or any similar legislation other than Lessor Improvements which shall comply. In the event that Lessees use of the Premises requires modifications or additions to the Premises in order to be in compliance with ADA or other accessibility statutes, Lessee agrees to make any such necessary modifications and/or additions at Lessees expense.
LESSOR AND LESSEE HAVE CAREFULLY READ AND REVIEWED THIS LEASE AND EACH TERM AND PROVISION CONTAINED HEREIN, AND BY THE EXECUTION OF THIS LEASE SHOW THEIR INFORMED AND VOLUNTARY CONSENT THERETO. THE PARTIES HEREBY AGREE THAT, AT THE TIME THIS LEASE IS EXECUTED, THE TERMS OF THIS LEASE ARE COMMERCIALLY REASONABLE AND EFFECTUATE THE INTENT AND PURPOSE OF LESSOR AND LESSEE WITH RESPECT TO THE PREMISES.
ATTENTION: NO REPRESENTATION OR RECOMMENDATION IS MADE BY AIR CRE OR BY ANY BROKER AS TO THE LEGAL SUFFICIENCY, LEGAL EFFECT, OR TAX CONSEQUENCES OF THIS LEASE OR THE TRANSACTION TO WHICH IT RELATES. THE PARTIES ARE URGED TO:
1. | SEEK ADVICE OF COUNSEL AS TO THE LEGAL AND TAX CONSEQUENCES OF THIS LEASE. |
2. | RETAIN APPROPRIATE CONSULTANTS TO REVIEW AND INVESTIGATE THE CONDITION OF THE PREMISES. SAID INVESTIGATION SHOULD INCLUDE BUT NOT BE LIMITED TO: THE POSSIBLE PRESENCE OF HAZARDOUS SUBSTANCES, THE ZONING OF THE PREMISES, THE STRUCTURAL INTEGRITY, THE CONDITION OF THE ROOF AND OPERATING SYSTEMS, COMPLIANCE WITH THE AMERICANS WITH DISABILITIES ACT AND THE SUITABILITY OF THE PREMISES FOR LESSEES INTENDED USE. |
WARNING: IF THE PREMISES ARE LOCATED INA STATE OTHER THAN CALIFORNIA, CERTAIN PROVISIONS OF THE LEASE MAY NEED TO BE REVISED TO COMPLY WITH THE LAWS OF THE STATE IN WHICH THE PREMISES ARE LOCATED.
Page 16 of 17 | ||||
INITIALS | INITIALS |
The parties hereto have executed this Lease at the place and on the dates specified above their respective signatures.
Executed at: Larkspur, CA On: |
Executed at: Larkspur, CA On: | |||||||
By LESSOR: Remillard Brick Kiln, LLC a California Limited Liability Company |
By LESSEE: Akili Interactive Labs, Inc. | |||||||
By: | /s/ Richard M. Hall |
By: | /s/ Matt Omernick | |||||
Name Printed: Richard M. Hall | Name Printed: Matt Omernick | |||||||
Title: Managing Partner | Title: Chief Creative Officer | |||||||
Phone: [***] | Phone: [***] | |||||||
Fax: [***] | Fax: | |||||||
Email: [***] | Email: [***] | |||||||
PO Box 633 Ross, CA 94957 Federal ID No.: 200264412 |
By: Name Printed: Title: Phone: Fax: | |||||||
By: |
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|||||||
Name Printed: Title: Phone: Fax: Email:
Address: Federal ID No.: |
Email:
Address: Federal ID No.: | |||||||
BROKER
Cushman & Wakefield U.S. Inc.
Attn: Steve Easely Title: Senior Director
Address: 900 Larkspur Landing Circle, #295, Larkspur, CA 94939 Phone: [***] Fax: Email: [***] Federal ID No.: 77-0187787 Broker/Agent BRE License #: 01880493/00378205 |
BROKER
Jones Lang LaSalle Brokerage, Inc.
Attn: Chris Tewhill Title: Associate
Address: 1000 Fourth Street, Suite 400, San Rafael, CA 94901 Phone: [***] Fax: Email: [***] Federal ID No.: Broker/Agent BRE License #: 01856260/02034376 |
AIR CRE. 500 North Brand Blvd, Suite 900, Glendale, CA 91203, Tel 213-687-8777, Email contracts@aircre.com
NOTICE: No part of these works may be reproduced in any form without permission in writing.
Page 17 of 17 | ||||
INITIALS | INITIALS |
COMMENCEMENT DATE MEMORANDUM
Date: May 29, 2019
By and Between
Lessor: Remillard Brick Kiln, LLC a California Limited Liability Company
Lessee: Akili Interactive Labs, Inc.
Property Address: 125 E. Sir Francis Drake Boulevard, Suite 300 & 301, Larkspur, CA 94939
(street address, city, state, zip)
THIS MEMORANDUM, made as of May 29,2019 by and between Remillard Brick Kiln, LLC a California Limited Liability Company (Lessor) and Akili Interactive Labs, Inc. (Lessee).
Recitals:
Lessor and Lessee are parties to that certain Lease, dated for reference purposes 6/15/2018 (the Lease) for certain premises (the Premises) commonly known as (street address, city, state, zip) 125 E. Sir Francis Drake Boulevard, Suite 300 & 301, Larkspur, CA 94939 .
Lessee is now in possession of the Premises and the Term of the Lease has commenced.
Lessor and Lessee desire to enter into this Memorandum confirming the Commencement Date, the Expiration Date and other matters under the Lease.
NOW, THEREFORE, Lessor and Lessee agree as follows:
1. The actual Commencement Date is June 1, 2019 .
2. The actual Expiration Date is November 30, 2026 .
3. The Base Rent shall be adjusted on the dates indicated as follows: Fully Serviced Rent shall be increased by four percent ( 4%) following the expiration of the Twelfth (12th) month from the Lease commencement date and at every twelfth (12) month interval thereafter by the same percentage. (strike if not applicable)
4. Other:
Clarification of Addendum:
- Paragraph 50 - First months rent of $63,590 was paid upon lease execution.
- Paragraph 54 - Rent Abatement Suite 300 is 3 months and Suite 301 is 6 months;
Rent Schedule - Monies due reflecting pre-paid first months rent:
06/01/2019 - 09/30/2019 = $0.00 | 06/01/2022 - 05/31/2023 = $71,530.00 | |
10/01/2019 - 12/31/2019 = $37,868.00 | 06/01/2023 - 05/31/2024 = $74,391.00 | |
01/01/2020 - 05/31/2020 = $63,590.00 | 06/01/2024 - 05/31/2025 = $77,366,00 | |
06/01/2020 - 05/31/2021 = $66.133.00 | 06/01/2025 - 05/31/2026 = $80.461.00 | |
06/01/2021 - 05/31/2022 = $68,778.00 | 06/01/2026 - 11/30/2026 = $83,678.00 (strike if not applicable) |
5. Capitalized terms not defined herein shall have the same meaning as set forth in the Lease.
IN WITNESS WHEREOF, the parties hereto have caused this Agreement to be executed as of the date and year first above written.
By Lessor
Remillard Brick Kiln, LLC a California Limited Liability Company
|
By Lessee
Akili Interactive Labs, Inc.
| |||||||
By: |
/s/ Richard M. Hall |
By: |
/s/ Matt Omernick | |||||
Name Printed: Richard M. Hall Title: Managing Partner Phone: [***] Fax: [***] Email: [***] |
Name Printed: Matt Omernick Title: Chief Creative Officer Phone [***] Fax: Email: [***] | |||||||
By: |
|
By: |
| |||||
Name Printed: Title: Phone: Fax: Email:
Address: Federal ID No.: |
Name Printed: Title: Phone: Fax: Email:
Address: Federal ID No.: |
INITIALS | INITIALS |
Exhibit 10.26
SUBSCRIPTION AGREEMENT
This SUBSCRIPTION AGREEMENT (this Subscription Agreement) is entered into on January 26, 2022 by and between Social Capital Suvretta Holdings Corp. I, a Cayman Islands exempted company (SCS), and the undersigned subscriber (the Investor).
WHEREAS, this Subscription Agreement is being entered into in connection with the Agreement and Plan of Merger, dated as of the date hereof (as may be amended, supplemented or otherwise modified from time to time, the Transaction Agreement), by and among SCS, Akili Interactive Labs, Inc., a Delaware corporation (the Company), and Karibu Merger Sub, Inc., a Delaware corporation (Merger Sub), pursuant to which, among other things, Merger Sub will merge with and into the Company, the separate corporate existence of Merger Sub will cease and the Company will be the surviving corporation and a wholly owned subsidiary of SCS, and SCS will change its name to Akili, Inc., on the terms and subject to the conditions therein (collectively, the Transaction);
WHEREAS, prior to the closing of the Transaction (and as more fully described in the Transaction Agreement), SCS will migrate to and domesticate as a Delaware corporation in accordance with Section 388 of the Delaware General Corporation Law, as amended, and the Cayman Islands Companies Act (As Revised) (the Domestication);
WHEREAS, in connection with the Transaction, SCS is seeking commitments from interested investors to purchase, following the Domestication and prior to the closing of the Transaction, SCSs Class A ordinary shares, par value $0.0001 per share, as such shares will exist as shares of SCSs common stock, par value $0.0001 per share, following the Domestication (the Shares), in a private placement for a purchase price of $10.00 per share;
WHEREAS, the aggregate purchase price to be paid by the Investor for the subscribed Shares (as set forth on the signature page hereto) is referred to herein as the Subscription Amount; and
WHEREAS, in connection with the foregoing, the Investor and certain other investors that are existing directors, officers or equityholders of SCS, SCS Sponsor I LLC, a Cayman Islands limited liability company, and/or their respective affiliates (the Affiliate Purchasers) are entering into Subscription Agreements (including this Subscription Agreement) to subscribe for an aggregate of thirteen million five hundred and forty thousand (13,540,000) Shares with an aggregate purchase price of $135,400,000.
NOW, THEREFORE, in consideration of the foregoing and the mutual representations, warranties and covenants, and subject to the conditions, set forth herein, and intending to be legally bound hereby, each of the Investor and SCS acknowledges and agrees as follows:
1. Subscription. The Investor hereby irrevocably subscribes for, and agrees to purchase from SCS, and SCS hereby agrees to issue and sell to the Investor, the number of Shares set forth on the signature page of this Subscription Agreement on the terms and subject to the conditions provided for herein. The Investor acknowledges and agrees that, as a result of the Domestication, the Shares that will be issued pursuant hereto shall be shares of common stock in a Delaware corporation (and not shares in a Cayman Islands exempted company).
2. Closing. The closing of the sale of the Shares contemplated hereby (the Closing) shall occur on a closing date (the Closing Date) specified in the Closing Notice (as defined below), and be conditioned upon the prior or substantially concurrent consummation of the Transaction (the closing date of the Transaction, the Transaction Closing Date). Upon delivery of written notice from (or on behalf of) SCS to the Investor (the Closing Notice) that SCS reasonably expects all conditions to the closing of the Transaction to be satisfied or waived on an expected Transaction Closing Date that is not less than five (5) business days from the date on which the Closing Notice is delivered to the Investor, the Investor shall deliver the Subscription Amount on the Closing Date by wire transfer of United States dollars in immediately available funds to the account(s) specified by SCS in the Closing Notice. On the Closing Date, SCS shall issue the Shares to the Investor and subsequently cause the Shares to be registered in book entry form in the name of the Investor on the SCS share register. For purposes of this Subscription Agreement, business day shall mean a day, other than a Saturday, Sunday or other day on which commercial banks
in New York, New York or governmental authorities in the Cayman Islands (for so long as SCS remains domiciled in Cayman Islands) are authorized or required by law to close. Prior to the Closing, Investor shall deliver to SCS a duly completed and executed Internal Revenue Service Form W-9 or appropriate Form W-8. In the event the Transaction Closing Date does not occur within two (2) business days after the Closing Date under this Subscription Agreement, the Subscription Amount will be returned to the Investor by wire transfer of U.S. dollars in immediately available funds to the account specified by the Investor, and any book-entries for the Shares shall be deemed repurchased and cancelled; provided that, unless this Subscription Agreement has been terminated pursuant to Section 8 hereof, such return of funds shall not terminate this Subscription Agreement or relieve the Investor of its obligation to purchase the Shares at the Closing, and the Investor shall remain obligated (i) to redeliver funds to SCS following SCSs delivery to the Investor of a new Closing Notice and (ii) to consummate the Closing substantially concurrently with the consummation of the Transaction in accordance with this Section 2.
3. Closing Conditions. The obligation of the parties hereto to consummate the purchase and sale of the Shares pursuant to this Subscription Agreement is subject to the satisfaction (or valid waiver in writing by each party entitled to the benefit thereof) of the following conditions: (a) there shall not be in force any injunction or order enjoining or prohibiting the issuance and sale of the Shares under this Subscription Agreement; (b) the terms of the Transaction Agreement (including the conditions thereto) shall not have been amended in a manner that is materially adverse to the Investor (in its capacity as such); (c) solely with respect to SCSs obligation to close, the Investor shall have delivered to SCS the requested information set forth on Schedule A hereto; and (d) (i) solely with respect to the Investors obligation to close, the representations and warranties made by SCS, and (ii) solely with respect to SCSs obligation to close, the representations and warranties made by the Investor, in each case, in this Subscription Agreement shall be true and correct in all material respects as of the Closing Date other than (x) those representations and warranties qualified by materiality, Material Adverse Effect (as defined below) or similar qualification, which shall be true and correct in all respects as of the Closing Date, and (y) those representations and warranties expressly made as of an earlier date, which shall be true and correct in all material respects (or, if qualified by materiality, Material Adverse Effect or similar qualification, all respects) as of such date, in each case without giving effect to the consummation of the Transactions.
4. Further Assurances. At the Closing, the parties hereto shall execute and deliver such additional documents and take such additional actions as the parties reasonably may deem to be practical and necessary in order to consummate the subscription as contemplated by this Subscription Agreement.
5. SCS Representations and Warranties. SCS represents and warrants to the Investor that:
(a) SCS is an exempted company duly incorporated, validly existing and in good standing under the laws of the Cayman Islands (to the extent such concept exists in such jurisdiction). SCS has all power (corporate or otherwise) and authority to own, lease and operate its properties and conduct its business as presently conducted and to enter into, deliver and perform its obligations under this Subscription Agreement. As of the Closing Date, following the Domestication, SCS will be duly incorporated, validly existing as a corporation and in good standing under the laws of the State of Delaware.
(b) As of the Closing Date, the Shares will be duly authorized and, when issued and delivered to the Investor against full payment therefor in accordance with the terms of this Subscription Agreement, the Shares will be validly issued, fully paid and non-assessable, free and clear of all liens or other encumbrances (other than those arising under this Agreement or applicable securities laws or those imposed by the Investor) and will not have been issued in violation of or subject to any preemptive or similar rights created under SCSs organizational documents (as in effect at such time of issuance) or under the Delaware General Corporation Law or the laws of the Cayman Islands, as the case may be.
(c) This Subscription Agreement has been duly authorized, executed and delivered by SCS and, assuming that this Subscription Agreement constitutes the valid and binding agreement of the Investor, this Subscription Agreement is enforceable against SCS in accordance with its terms, except as may be limited or otherwise affected by (i) bankruptcy, insolvency, fraudulent conveyance, reorganization, moratorium or other laws relating to or affecting the rights of creditors generally, or (ii) principles of equity, whether considered at law or equity.
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(d) The issuance and sale by SCS of the Shares pursuant to this Subscription Agreement 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 SCS or any of its subsidiaries pursuant to the terms of: (i) any indenture, mortgage, deed of trust, loan agreement, lease, license or other agreement or instrument to which SCS or any of its subsidiaries is a party or by which SCS or any of its subsidiaries is bound or to which any of the property or assets of SCS is subject that would reasonably be expected to have a material adverse effect on the business, financial condition or results of operations of SCS and its subsidiaries, taken as a whole (a Material Adverse Effect), or materially affect the validity of the Shares or the legal authority of SCS to comply in all material respects with its obligations under this Subscription Agreement; (ii) result in any violation of the provisions of the organizational documents of SCS; or (iii) result in any violation of any statute or any judgment, order, rule or regulation of any court or governmental agency or body, domestic or foreign, having jurisdiction over SCS or any of its properties that would reasonably be expected to have a Material Adverse Effect or materially affect the validity of the Shares or the legal authority of SCS to comply in all material respects with its obligations under this Subscription Agreement.
(e) As of their respective filing dates, all reports required to be filed by SCS with the U.S. Securities and Exchange Commission (the SEC) since July 2, 2021 (the SEC Reports) complied in all material respects with the applicable requirements of the Securities Exchange Act of 1934, as amended (the Exchange Act), and the rules and regulations of the SEC promulgated thereunder. None of the SEC Reports filed under the Exchange Act included, when filed or, if amended, as of the date of such amendment with respect to those disclosures that are amended, any untrue statement of a material fact or omitted to state a material fact necessary to make the statements therein, in the light of the circumstances under which they were made, not misleading; provided, that SCS makes no such representation or warranty with respect to any registration statement or any proxy statement/prospectus to be filed by SCS with respect to the Transaction or any other information relating to the Transaction or to the Company or any of its affiliates included in any SEC Report or filed as an exhibit thereto. As of the date hereof, there are no material outstanding or unresolved comments in comment letters received by SCS from the staff of the Division of Corporation Finance of the SEC with respect to any of the SEC Reports. Notwithstanding the foregoing, this representation and warranty shall not apply to any statement or information in the SEC Reports that relates to changes to historical accounting policies of SCS in connection with any order, directive, guideline, comment or recommendation from the SEC or SCSs auditors or accountants that is applicable to SCS or SCSs auditor or accountants (collectively, the Guidance), nor shall any correction, amendment or restatement of SCSs financial statements resulting from or relating to the Guidance result in a breach of any representation or warranty by SCS.
(f) SCS 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 or other person in connection with the issuance of the Shares pursuant to this Subscription Agreement, other than (i) filings with the SEC, (ii) filings required by applicable state securities laws, (iii) the filings required in accordance with Section 12 of this Subscription Agreement, (iv) those required by The Nasdaq Capital Market (Nasdaq), including with respect to obtaining approval of SCSs shareholders, and (v) the failure of which to obtain would not reasonably be expected to have, individually or in the aggregate, a Material Adverse Effect.
(g) As of the date hereof, SCS has not received any written communication from a governmental authority that alleges that SCS is not in compliance with or is in default or violation of any applicable law, except where such non-compliance, default or violation would not reasonably be expected to have, individually or in the aggregate, a Material Adverse Effect.
(h) Assuming the accuracy of the Investors representations and warranties set forth in Section 6 of this Subscription Agreement, no registration under the Securities Act of 1933, as amended (the Securities Act), is required for the offer and sale of the Shares by SCS to the Investor.
(i) Neither SCS nor any person acting on its behalf has offered or sold the Shares by any form of general solicitation or general advertising in violation of the Securities Act.
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(j) As of the date hereof, the issued and outstanding Class A ordinary shares of SCS are registered pursuant to Section 12(b) of the Exchange Act and are listed for trading on Nasdaq. Following the Domestication, the Shares are expected to be registered under the Exchange Act. There is no suit, action, proceeding or investigation pending or, to the knowledge of SCS, threatened against SCS by Nasdaq or the SEC, respectively, with respect to any intention by such entity to deregister the Shares or prohibit or terminate the listing of the Shares on Nasdaq, excluding, for the purposes of clarity, the customary ongoing review by Nasdaq in connection with the Transaction and any action in connection with the Domestication. SCS has taken no action that is designed to terminate the registration of the Shares under the Exchange Act other than as contemplated in connection with the Transaction.
(k) SCS is not under any obligation to pay any brokers fee or commission in connection with the sale of the Shares other than to the Placement Agents (as defined below).
(l) SCS acknowledges and agrees that, notwithstanding anything herein to the contrary, the Shares may be pledged by Investor in connection with a bona fide margin agreement, which shall not be deemed to be a transfer, sale or assignment of the Shares hereunder, provided that such pledge shall be (i) pursuant to an available exemption from the registration requirements of the Securities Act or (ii) pursuant to, and in accordance with, a registration statement that is effective under the Securities Act at the time of such pledge. Investor effecting a pledge of Shares shall not be required to provide SCS with any notice thereof, unless such pledge is required to be disclosed by the Company pursuant to applicable law or stock exchange rules; provided, however, that neither SCS nor its counsel shall be required to take any action (or refrain from taking any action) in connection with any such pledge, other than providing any such lender of such margin agreement with an acknowledgment that the Shares are not subject to any contractual lock up or prohibition on pledging, the form of such acknowledgment to be subject to review and comment and approval by SCS in all respects.
6. Investor Representations and Warranties. The Investor represents and warrants to SCS that:
(a) If the Investor is a U.S. person (as defined in Regulation S under the Securities Act), the Investor (i) is a qualified institutional buyer (as defined in Rule 144A under the Securities Act) or an accredited investor (within the meaning of Rule 501(a) under the Securities Act), in each case, satisfying the applicable requirements set forth on Schedule A hereto, (ii) is acquiring the Shares only for its own account and not for the account of others, or if the Investor is subscribing for the Shares as a fiduciary or agent for one or more investor accounts, the Investor has full investment discretion with respect to each such account, and 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 Shares with a view to, or for offer or sale in connection with, any distribution thereof in violation of the Securities Act (and shall provide the requested information set forth on Schedule A hereto). The Investor, if such Investor is not a natural person, is not an entity formed for the specific purpose of acquiring the Shares and is an institutional account as defined by FINRA Rule 4512(c). If the Investor is not a U.S. person (as defined in Regulation S under the Securities Act), the Investor is not within the United States and is not being issued the Shares for the account or benefit of a U.S. person. The Investor further acknowledges that he, she or it is aware that the sale of the Shares is being made in reliance on a private placement exemption from registration under the Securities Act and is acquiring the Shares for the Investors own account or for an account over which it exercises sole discretion for another qualified institutional buyer or accredited investor. The Investor understands that this offering of the Shares meets (i) the exemptions from filing under FINRA Rule 5123(b)(1)(A), (C) or (J) and (ii) the institutional customer exemption under FINRA Rule 2111(b).
(b) The Investor acknowledges and agrees that the Shares are being offered in a transaction not involving any public offering within the meaning of the Securities Act, that the Shares have not been registered under the Securities Act and that SCS is not required to register the Shares except as set forth in Section 7 of this Subscription Agreement. The Investor acknowledges and agrees that the Shares may not be offered, resold, transferred, pledged or otherwise disposed of by the Investor absent an effective registration statement under the Securities Act except (i) to SCS or a subsidiary thereof, (ii) to non-U.S. persons pursuant to offers and sales that occur outside the United States within the meaning of Regulation S under the Securities Act or (iii) pursuant to another applicable exemption from the registration requirements of the Securities Act, and, in each case, in accordance with any applicable securities laws of the states of the United States and other applicable jurisdictions, and that any certificates or book entries representing the Shares shall contain a restrictive legend to such effect (provided that such legend may be subject to removal in accordance with Section 7(d)). The Investor acknowledges and agrees that the Shares will be subject to these securities law transfer restrictions and, as a result of these transfer restrictions, the Investor may not be able to readily offer, resell, transfer, pledge or otherwise dispose of the Shares and may be required to bear the financial risk of an investment in the Shares for an indefinite period of time. The Investor acknowledges and agrees that the Shares will not immediately be eligible for offer, resale, transfer, pledge or disposition pursuant to Rule 144 promulgated under the Securities Act, and that the provisions of Rule 144(i) will apply to the Shares. The Investor acknowledges and agrees that it has been advised to consult legal, tax and accounting prior to making any offer, resale, transfer, pledge or disposition of any of the Shares.
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(c) The Investor acknowledges and agrees that the Investor is purchasing the Shares from SCS, and that SCS, the Company, and/or the Placement Agents and/or their respective affiliates may now or in the future own securities of SCS and may purchase Shares. The Investor further acknowledges that there have been no representations, warranties, covenants and agreements made to the Investor by or on behalf of SCS, the Company, any of their respective affiliates or any control persons, officers, directors, employees, agents or representatives of any of the foregoing or any other person or entity, expressly or by implication, other than those representations, warranties, covenants and agreements of SCS expressly set forth in Section 5 of this Subscription Agreement.
(d) The Investor acknowledges and agrees that the Investor has received or had access to such information as the Investor deems necessary in order to make an investment decision with respect to the Shares, including, with respect to SCS, the Transaction and the business of the Company and its subsidiaries. The Investor acknowledges that the Investor has consulted with the Investors own legal, accounting, financial, regulatory and tax advisors, to the extent the Investor deemed appropriate to make an investment decision with respect to the Shares. Without limiting the generality of the foregoing, the Investor acknowledges that it has reviewed SCSs filings with the SEC as the Investor deems necessary in order to make an investment decision with respect to the Shares. The Investor acknowledges and agrees that the Investor and the Investors professional advisor(s), if any, have had the full opportunity to review financial and other information as the Investor and such Investors professional advisor(s), if any, have deemed necessary to make an investment decision with respect to the Shares, and ask such questions, receive such answers and obtain such information as the Investor and such Investors professional advisor(s), if any, have deemed necessary to make an investment decision with respect to the Shares.
(e) The Investor acknowledges and agrees that certain information provided to the Investor 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. The Investor acknowledges and agrees that such information and projections were prepared without the participation of the Placement Agents and that the Placement Agents, SCS and the Company do not assume responsibility for independent verification of, or the accuracy or completeness of, such information or projections.
(f) The Investor became aware of this offering of the Shares solely by means of direct contact between the Investor and SCS, the Company or a representative of SCS or the Company, and the Shares were offered to the Investor solely by direct contact between the Investor and SCS, the Company or a representative of SCS or the Company. The Investor did not become aware of this offering of the Shares, nor were the Shares offered to the Investor, by any other means. The Investor acknowledges that the 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. The Investor acknowledges that it is not relying upon, and has not relied upon, any statement, representation or warranty made by any person, firm or corporation (including, without limitation, SCS, the Company, the Placement Agents, any of their respective affiliates or any control persons, officers, directors, employees, agents or representatives of any of the foregoing), other than the representations and warranties of SCS contained in Section 5 of this Subscription Agreement, in making its investment or decision to invest in SCS.
(g) The Investor acknowledges that it is aware that there are substantial risks incident to the purchase and ownership of the Shares, including those set forth in SCSs filings with the SEC. The Investor 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 Shares, and the Investor has sought such accounting, legal and tax advice as the Investor has considered necessary to make an informed investment decision. The Investor acknowledges that Investor shall be responsible for any of the Investors tax liabilities that may arise as a result of the transactions contemplated by this Subscription Agreement, and that neither SCS nor the Company has provided any tax advice or any other representation or guarantee regarding the tax consequences of the transactions contemplated by the Subscription Agreement.
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(h) Alone, or together with any professional advisor(s), the Investor has adequately analyzed and fully considered the risks of an investment in the Shares and determined that the Shares are a suitable investment for the Investor and that the Investor is able at this time and in the foreseeable future to bear the economic risk of a total loss of the Investors investment in SCS. The Investor acknowledges specifically that a possibility of total loss exists.
(i) In making its decision to purchase the Shares, the Investor has relied solely upon independent investigation made by the Investor and the representations and warranties of SCS in Section 5. Without limiting the generality of the foregoing, the Investor has not relied on any statements or other information provided by or on behalf of the Placement Agents or any of their respective affiliates or any control persons, officers, directors, employees, agents or representatives of any of the foregoing concerning SCS, the Company, the Transaction, the Transaction Agreement, this Subscription Agreement or the transactions contemplated hereby or thereby, the Shares or the offer and sale of the Shares.
(j) The Investor acknowledges and agrees that no federal or state agency has passed upon or endorsed the merits of the offering of the Shares or made any findings or determination as to the fairness of this investment.
(k) The Investor has been duly formed or incorporated and is validly existing and is in good standing under the laws of its jurisdiction of formation or incorporation, with power and authority to enter into, deliver and perform its obligations under this Subscription Agreement.
(l) The execution, delivery and performance by the Investor of this Subscription Agreement are within the powers of the Investor, have been duly authorized and will not constitute or result in a breach or default under or conflict with any order, ruling or regulation of any court or other tribunal or of any governmental commission or agency, or any agreement or other undertaking, to which the Investor is a party or by which the Investor is bound, and will not violate any provisions of the Investors organizational documents, including, without limitation, its incorporation or formation papers, bylaws, indenture of trust or partnership or operating agreement, as may be applicable. The signature of the Investor on this Subscription Agreement is genuine, and the signatory has legal competence and capacity to execute the same or the signatory has been duly authorized to execute the same, and, assuming that this Subscription Agreement constitutes the valid and binding agreement of SCS, this Subscription Agreement constitutes a legal, valid and binding obligation of the Investor, enforceable against the Investor in accordance with its terms except as may be limited or otherwise affected by (i) bankruptcy, insolvency, fraudulent conveyance, reorganization, moratorium or other laws relating to or affecting the rights of creditors generally, and (ii) principles of equity, whether considered at law or equity.
(m) Neither the Investor nor any of its officers, directors, managers, managing members, general partners or any other person acting in a similar capacity or carrying out a similar function, is: (i) a person named on the Specially Designated Nationals and Blocked Persons List, the Foreign Sanctions Evaders List, the Sectoral Sanctions Identification List, or any other similar list of sanctioned persons administered by the U.S. Treasury Departments Office of Foreign Assets Control, or any similar list of sanctioned persons administered by the European Union, any individual European Union member state or the United Kingdom (collectively, Sanctions Lists); (ii) directly or indirectly owned or controlled by, or acting on behalf of, one or more persons on a Sanctions List; (iii) organized, incorporated, established, located, resident or born in, or a citizen, national, or the government, including any political subdivision, agency, or instrumentality thereof, of, Cuba, Iran, North Korea, Syria, Venezuela, the Crimea region of Ukraine, or any other country or territory embargoed or subject to substantial trade restrictions by the United States, the European Union, any individual European Union member state or the United Kingdom; (iv) a Designated National as defined in the Cuban Assets Control Regulations, 31 C.F.R. Part 515; or (v) a non-U.S. shell bank or providing banking services indirectly to a non-U.S. shell bank (collectively, a Prohibited Investor). The Investor 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 the Investor, directly or indirectly through a third-party administrator, maintains policies and procedures reasonably designed to comply with applicable obligations under the BSA/PATRIOT Act. The Investor also represents that it, directly or indirectly through a third-party administrator, maintains policies and procedures reasonably designed to ensure compliance with sanctions administered by the United States, the European Union, any individual European Union member state or the United Kingdom, to the extent applicable to it. The Investor further represents that the funds held by the Investor and used to purchase the Shares were legally derived and were not obtained, directly or indirectly, from a Prohibited Investor.
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(n) If the Investor is or is acting on behalf of (i) an employee benefit plan that is subject to Title I of the Employee Retirement Income Security Act of 1974, as amended (ERISA), (ii) a plan, an individual retirement account or other arrangement that is subject to Section 4975 of the Internal Revenue Code of 1986, as amended (the Code), (iii) an entity whose underlying assets are considered to include plan assets of any such plan, account or arrangement described in clauses (i) and (ii) (each, an ERISA Plan), or (iv) 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 clauses (i), (ii) or (iii) 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 Code (collectively, Similar Laws, and together with ERISA Plans, Plans), the Investor represents and warrants that (A) neither SCS nor any of its affiliates has provided investment advice or has otherwise acted as the Plans fiduciary, with respect to its decision to acquire and hold the Shares, and none of the parties to the Transaction is or shall at any time be the Plans fiduciary with respect to any decision in connection with the Investors investment in the Shares; and (B) its purchase of the Shares will not result in a non-exempt prohibited transaction under Section 406 of ERISA or Section 4975 of the Code, or any applicable Similar Law.
(o) No disclosure or offering document has been prepared by Morgan Stanley & Co. LLC, Credit Suisse Securities (USA) LLC and Cowen and Company, LLC (collectively, the Placement Agents) or any of their respective affiliates in connection with the offer and sale of the Shares.
(p) None of the Placement Agents, nor any of their respective affiliates, nor any control persons, officers, directors, employees, agents or representatives of any of the foregoing has made any independent investigation with respect to SCS, the Company or its subsidiaries or any of their respective businesses, or the Shares or the accuracy, completeness or adequacy of any information supplied to the Investor by SCS.
(q) In connection with the issue and purchase of the Shares, none of the Placement Agents, nor any of their respective affiliates, has acted as the Investors underwriter, initial purchaser, financial advisor, fiduciary or in any other such capacity.
(r) The Investor, when required to deliver payment to SCS pursuant to Section 2 above, will have sufficient funds to pay the Subscription Amount and consummate the purchase and sale of the Shares pursuant to this Subscription Agreement.
(s) The Investor (for itself and for each account for which such Investor is acquiring the Shares) acknowledges that such Investor is aware that each of Morgan Stanley & Co. LLC, Credit Suisse Securities (USA) LLC and Cowen and Company, LLC is acting as one of SCSs Placement Agents and that Morgan Stanley & Co. LLC is acting as a financial advisor, and each of Credit Suisse Securities (USA) LLC and Cowen and Company, LLC is acting as a financial and capital markets advisor, to the Company in connection with the Transaction.
(t) The Investor acknowledges that (i) the Placement Agents are not participating in the sale of Shares to the Affiliate Purchasers and are not making any recommendation to the Affiliate Purchasers in respect of the Shares and (ii) the Affiliate Purchasers are not deemed to be retail investors or retail customers of the Placement Agents for purposes of either SEC Form CRS or Regulation Best Interest.
7. Registration Rights. On the Closing Date, certain parties will enter into the Registration Rights Agreement (as defined in the Transaction Agreement) which shall provide the Investor certain registration rights as set forth therein.
8. 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 Transaction Agreement is terminated in accordance with its terms, (b) upon the mutual written agreement of each of the parties hereto (and the
7
Company) to terminate this Subscription Agreement, (c) if the conditions to Closing set forth in Section 3 of this Subscription Agreement are not satisfied at the Closing and, as a result thereof, the transactions contemplated by this Subscription Agreement will not be or are not consummated at the Closing; and (d) September 26, 2022, if the closing of the Transaction has not occurred on or before such date; provided that nothing herein will relieve any party from liability for any willful breach hereof prior to the time of termination, and each party will be entitled to any remedies at law or in equity to recover losses, liabilities or damages arising from any such willful breach. SCS shall notify the Investor of the termination of the Transaction Agreement promptly after the termination thereof. Upon the termination of this Subscription Agreement in accordance with this Section 8, any monies paid by the Investor to SCS to purchase Shares hereunder shall be promptly (and in any event within one (1) business day after such termination) returned to the Investor.
9. Trust Account Waiver. The Investor acknowledges that SCS is a blank check company with the powers and privileges to effect a merger, asset acquisition, reorganization or similar business combination involving SCS and one or more businesses or assets. The Investor further acknowledges that, as described in SCSs prospectus relating to its initial public offering dated June 29, 2021 (the IPO Prospectus) available at www.sec.gov, substantially all of SCSs assets consist of the cash proceeds of SCSs initial public offering and private placement of its securities, and substantially all of those proceeds have been deposited in a trust account (the Trust Account) for the benefit of SCS, its public shareholders and the underwriter of SCSs initial public offering. Except with respect to interest earned on the funds held in the Trust Account that may be released to SCS to pay its tax obligations, if any, the cash in the Trust Account may be disbursed only for the purposes set forth in the IPO Prospectus. For and in consideration of SCS entering into this Subscription Agreement, the receipt and sufficiency of which are hereby acknowledged, the Investor hereby irrevocably waives any and all right, title and interest, or any claim of any kind it has or may have in the future, in or to any monies held in the Trust Account, and agrees not to seek recourse against the Trust Account, in each case, as a result of, or arising out of, this Subscription Agreement; provided that nothing in this Section 9 shall be deemed to limit the Investors right, title, interest or claim to the Trust Account by virtue of the Investors record or beneficial ownership of Class A ordinary shares of SCS acquired by any means other than pursuant to this Subscription Agreement.
10. Miscellaneous.
(a) Neither this Subscription Agreement nor any rights that may accrue to the Investor hereunder (other than the Shares acquired hereunder, if any) may be transferred or assigned, other than the transfer or assignment of any or all of the Investors rights and obligations under this Subscription Agreement to the Investors Affiliates, subject to, if such transfer or assignment is prior to the Closing, such Affiliate executing a joinder to this Subscription Agreement or a separate subscription agreement in substantially the same form as this Subscription Agreement, including with respect to the Subscription Amount and other terms and conditions. Affiliates of the Investor for the purpose of this Section 10(a) means any persons directly or indirectly controlling, controlled by or under common control with the Investor; provided that the foregoing shall not include operating companies of the Investor or any of its Affiliates. Neither this Subscription Agreement nor any rights that may accrue to SCS hereunder or any of SCSs obligations may be transferred or assigned other than pursuant to the Transaction.
(b) SCS may request from the Investor such additional information as SCS may deem necessary to evaluate the eligibility of the Investor to acquire the Shares and in connection with the inclusion of the Shares in the Registration Statement (as defined in the Registration Rights Agreement), and the Investor shall promptly provide such information as may reasonably be requested, to the extent readily available and to the extent consistent with its internal policies and procedures, provided that SCS agrees to keep any such information provided by Investor confidential, except as required by laws, rules or regulations, at the request of the staff of the SEC or another regulatory agency or by the regulations of Nasdaq. The Investor acknowledges that SCS may file a copy of the form of this Subscription Agreement with the SEC as an exhibit to or within a current or periodic report or a registration statement of SCS.
(c) The Investor acknowledges that SCS will rely on the acknowledgments, understandings, agreements, representations and warranties of the Investor contained in this Subscription Agreement. Prior to the Closing, the Investor agrees to promptly notify SCS and the Company if any of the acknowledgments, understandings, agreements, representations and warranties of the Investor set forth herein are no longer accurate.
8
(d) SCS and the Investor are each entitled to rely upon this Subscription Agreement and each 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) All of the representations and warranties contained in this Subscription Agreement shall survive the Closing, and all of the covenants and agreements made by each party hereto in this Subscription Agreement shall survive the Closing, in each case, until the applicable statute of limitations or in accordance with their respective terms, if a shorter period.
(f) This Subscription Agreement may not be modified, waived or terminated (other than pursuant to the terms of Section 8 above) except by an instrument in writing, signed by each of the parties hereto. No failure or delay of either party in exercising any right or remedy hereunder shall operate as a waiver thereof, nor shall any single or partial exercise of any such right or power, or any abandonment or discontinuance of steps to enforce such right or power, or any course of conduct, preclude any other or further exercise thereof or the exercise of any other right or power. The rights and remedies of the parties and third party beneficiaries hereunder are cumulative and are not exclusive of any rights or remedies that they would otherwise have hereunder.
(g) This Subscription Agreement (including the schedule hereto) constitutes the entire agreement, and supersedes all other prior agreements, understandings, representations and warranties, both written and oral, among the parties, with respect to the subject matter hereof. This Subscription Agreement shall not confer any rights or remedies upon any person other than the parties hereto, and their respective successor and assigns.
(h) 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.
(i) If any provision of this Subscription Agreement shall be adjudicated by a court of competent jurisdiction to 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.
(j) Without limiting any remedies of a party hereunder for a breach of this Subscription Agreement by the other party, each party shall pay its own costs and expenses incurred in connection with the negotiation and execution of this Subscription Agreement and consummation of the transactions contemplated hereby, whether or not such transactions are consummated.
(k) This Subscription Agreement may be executed in one or more counterparts (including by electronic mail or in .pdf) 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.
(l) The parties hereto acknowledge and 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 shall be entitled to an injunction or injunctions to prevent breaches of this Subscription Agreement and to specific enforcement of this Subscription Agreement, in addition to any other remedy to which any party is entitled at law, in equity, in contract, in tort or otherwise. In the event that any claim, action, suit or proceeding shall be brought in equity to enforce the provisions of this Subscription Agreement, no party hereto shall allege, and each party hereto hereby waives the defense, that there is an adequate remedy at law, and each party hereto agrees to waive any requirement for the securing or posting of any bond in connection therewith.
9
(m) Any claim, action, suit or proceeding based upon, arising out of or related to this Subscription Agreement or the transactions contemplated hereby must be brought in the Court of Chancery of the State of Delaware (or, only to the extent such 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 hereto irrevocably and unconditionally (i) consents and submits to the exclusive jurisdiction of each such court in any such claim, action, suit or proceeding, (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 such action, suit or proceeding shall be heard and determined only in any such court and (iv) agrees not to bring any claim, action, suit or proceeding arising out of or relating to this Subscription 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 legal proceedings or otherwise proceed against any other party in any other jurisdiction to enforce judgments obtained in any claim, action, suit or proceeding brought in accordance with this Section 10(m), provided that service of process with respect to any such claim, action, suit or proceeding may also be made upon any party hereto by mailing a copy thereof by registered or certified mail, postage prepaid, to such party at its address as provided in Section 13.
(n) 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 State.
(o) EACH PARTY ACKNOWLEDGES AND AGREES THAT ANY CONTROVERSY WHICH MAY ARISE UNDER THIS SUBSCRIPTION AGREEMENT OR THE TRANSACTIONS CONTEMPLATED HEREBY IS LIKELY TO INVOLVE COMPLICATED AND DIFFICULT ISSUES, AND THEREFORE EACH SUCH PARTY HEREBY IRREVOCABLY AND UNCONDITIONALLY WAIVES ANY RIGHT SUCH PARTY MAY HAVE TO A TRIAL BY JURY IN RESPECT OF ANY LITIGATION DIRECTLY OR INDIRECTLY ARISING OUT OF OR RELATING TO THIS SUBSCRIPTION AGREEMENT OR THE TRANSACTIONS CONTEMPLATED BY THIS SUBSCRIPTION AGREEMENT. EACH PARTY CERTIFIES AND ACKNOWLEDGES THAT (I) NO REPRESENTATIVE, AGENT OR ATTORNEY OF ANY OTHER PARTY HAS REPRESENTED, EXPRESSLY OR OTHERWISE, THAT SUCH OTHER PARTY WOULD NOT, IN THE EVENT OF LITIGATION, SEEK TO ENFORCE THE FOREGOING WAIVER; (II) SUCH PARTY UNDERSTANDS AND HAS CONSIDERED THE IMPLICATIONS OF THE FOREGOING WAIVER; (III) SUCH PARTY MAKES THE FOREGOING WAIVER VOLUNTARILY; AND (IV) SUCH PARTY HAS BEEN INDUCED TO ENTER INTO THIS SUBSCRIPTION AGREEMENT BY, AMONG OTHER THINGS, THE MUTUAL WAIVER AND CERTIFICATIONS IN THIS SECTION 10(O).
11. Non-Reliance and Exculpation. The Investor acknowledges that it is not relying upon, and has not relied upon, any statement, representation or warranty made by any person, firm or corporation (including, without limitation, the Placement Agents, any of their respective affiliates or any control persons, officers, directors, employees, partners, agents or representatives of any of the foregoing), other than the statements, representations and warranties of SCS expressly contained in Section 5 of this Subscription Agreement, in making its investment or decision to invest in SCS. The Investor acknowledges and agrees that, to the maximum extent permitted by law, none of (i) any other investor pursuant to this Subscription Agreement or any other subscription agreement related to the private placement of the Shares (including any such investors respective affiliates or any control persons, officers, directors, employees, partners, agents or representatives of any of the foregoing), (ii) the Placement Agents, their respective affiliates or any control persons, officers, directors, employees, partners, agents or representatives of any of the foregoing, (iii) any other party to the Transaction Agreement (other than SCS) or (iv) any affiliates, or any control persons, officers, directors, employees, partners, agents or representatives of any of SCS, the Company or any other party to the Transaction Agreement shall be liable to the Investor, or to any other person claiming through the Investor pursuant to this Subscription Agreement or any other subscription agreement related to the private placement of the Shares, the negotiation hereof or thereof or the subject matter hereof or thereof, or the transactions contemplated hereby or thereby, for any action heretofore or hereafter taken or omitted to be taken by any of them in connection with the purchase of the Shares.
12. Press Releases. SCS shall, by 9:00 a.m., New York City time, on the first business day immediately following the date of this Subscription Agreement, issue one or more press releases or furnish or file with the SEC a Current Report on Form 8-K, registration statement or proxy statement for the Transaction (collectively, the Disclosure Document) disclosing, to the extent not previously publicly disclosed, the PIPE Investment, all material
10
terms of the Transaction and any other material, non-public information about SCS or the Transaction that SCS has provided to the Investor at any time prior to the filing of the Disclosure Document. From and after the disclosure of the Disclosure Document, to the knowledge of SCS, the Investor shall not be in possession of any material, non-public information about SCS or the Transaction received from SCS, unless otherwise agreed by such Investor. All press releases or other public communications relating to the transactions contemplated hereby between SCS and the Investor, and the method of the release for publication thereof, shall be subject to the prior approval of (i) SCS and (ii) to the extent such press release or public communication references the Investor or its affiliates or investment advisers by name, the Investor; provided that neither SCS nor the Investor shall be required to obtain consent pursuant to this Section 12 to the extent any proposed release or statement is substantially equivalent to the information that has previously been made public without breach of the obligation under this Section 12. The restriction in this Section 12 shall not apply to the extent the public announcement is required by applicable securities law, any governmental authority or stock exchange rule; provided that in such an event, the applicable party shall use its commercially reasonable efforts to consult with the other party in advance as to its form, content and timing.
13. Notices. All notices and other communications among the parties shall be in writing and shall be deemed to have been duly given (i) when delivered in person, (ii) when delivered after posting in the United States 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 (in each case in this clause (iv), solely if receipt is confirmed, but excluding any automated reply, such as an out-of-office notification), addressed as follows:
If to the Investor, to the address provided on the Investors signature page hereto.
If to SCS, to:
Social Capital Suvretta Holdings Corp. I
2850 W. Horizon Ridge Parkway, Suite 200
Henderson, NV 89052
Attention: James Ryans, Chief Financial Officer
Email: legal@socialcapital.com
with copies (which shall not constitute notice) to:
Wachtell, Lipton, Rosen & Katz
51 W. 52nd Street
New York, New York 10019
Attention: Raaj S. Narayan
Email: rsnarayan@wlrk.com
and
Akili Interactive Labs, Inc.
125 Broad Street
5th Floor
Attention: Santosh Shanbhag
Email: sshanbhag@akiliinteractive.com
and
Goodwin Proctor LLP
100 Northern Avenue
Boston, Massachusetts 02210
Attention: Arthur R McGivern
Email: AMcGivern@goodwinlaw.com
or to such other address or addresses as the parties may from time to time designate in writing. Copies delivered solely to outside counsel shall not constitute notice.
[SIGNATURE PAGES FOLLOW]
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IN WITNESS WHEREOF, the Investor has executed or caused this Subscription Agreement to be executed by its duly authorized representative as of the date first written above.
Name of Investor: | State/Country of Formation or Domicile: | |
By: ______________________________________ | ||
Name: ___________________________________ | ||
Title: ____________________________________ | ||
Name in which Shares are to be registered (if different): | ||
Investors EIN: | ||
Business Address-Street: | Mailing Address-Street (if different): | |
City, State, Zip: | City, State, Zip: | |
Attn: ______________________________________ | Attn: ______________________________________ | |
Telephone No.: | Telephone No.: | |
Facsimile No.: | Facsimile No.: | |
Email: | Email: | |
Number of Shares subscribed for: | ||
Aggregate Subscription Amount: $ | Price Per Share: $10.00 |
You must pay the Subscription Amount by wire transfer of United States dollars in immediately available funds to the account specified by SCS in the Closing Notice.
[Signature Page to Subscription Agreement]
IN WITNESS WHEREOF, SCS has accepted this Subscription Agreement as of the date first written above.
SOCIAL CAPITAL SUVRETTA HOLDINGS CORP. I | ||
By: |
| |
Name: | ||
Title: |
Date:
[Signature Page to Subscription Agreement]
SCHEDULE A
ELIGIBILITY REPRESENTATIONS OF THE INVESTOR
A. | QUALIFIED INSTITUTIONAL BUYER STATUS |
(Please check the applicable subparagraphs):
☐ | We are a qualified institutional buyer (as defined in Rule 144A under the Securities Act). |
B. | ACCREDITED INVESTOR STATUS |
(Please check the applicable subparagraphs):
1. | ☐ We are an accredited investor (within the meaning of Rule 501(a) under the Securities Act) and have marked and initialed the appropriate box on the following page indicating the provision under which we qualify as an accredited investor. |
2. | ☐ We are not a natural person. |
Rule 501(a), in relevant part, states that an accredited investor shall mean any person who comes within any of the below listed categories, or who the issuer reasonably believes comes within any of the below listed categories, at the time of the sale of the securities to that person. The Investor has indicated, by marking and initialing the appropriate box below, the provision(s) below which apply to the Investor and under which the Investor accordingly qualifies as an accredited investor.
☐ | Any bank, registered broker or dealer, insurance company, registered investment company, business development company, or small business investment company; |
☐ | Any plan established and maintained by a state, its political subdivisions, or any agency or instrumentality of a state or its political subdivisions for the benefit of its employees, if such plan has total assets in excess of $5,000,000; |
☐ | Any employee benefit plan, within the meaning of the Employee Retirement Income Security Act of 1974, if a bank, insurance company, or registered investment adviser makes the investment decisions, or if the plan has total assets in excess of $5,000,000; |
☐ | Any organization described in Section 501(c)(3) of the Internal Revenue Code, corporation, similar business trust, or partnership, not formed for the specific purpose of acquiring the securities offered, with total assets in excess of $5,000,000; |
☐ | Any director, executive officer, or general partner of the issuer of the securities being offered or sold, or any director, executive officer, or general partner of a general partner of that issuer; |
☐ | Any natural person whose individual net worth, or joint net worth with that persons spouse, exceeds $1,000,000. For purposes of calculating a natural persons net worth: (a) the persons primary residence shall not be included as an asset; (b) indebtedness that is secured by the persons primary residence, up to the estimated fair market value of the primary residence at the time of the sale of securities, shall not be included as a liability (except that if the amount of such indebtedness outstanding at the time of sale of securities exceeds the amount outstanding 60 days before such time, other than as a result of the acquisition of the primary residence, the amount of such excess shall be included as a liability); and (c) indebtedness that is secured by the persons primary residence in excess of the estimated fair market value of the primary residence at the time of the sale of securities shall be included as a liability; |
[Schedule A to Subscription Agreement]
☐ | Any natural person who had an individual income in excess of $200,000 in each of the two most recent years or joint income with that persons spouse in excess of $300,000 in each of those years and has a reasonable expectation of reaching the same income level in the current year; |
☐ | Any trust with assets in excess of $5,000,000, not formed to acquire the securities offered, whose purchase is directed by a sophisticated person; |
☐ | Any entity in which all of the equity owners are accredited investors; |
☐ | Any natural person holding in good standing one or more professional certifications or designations or credentials from an accredited educational institution that the Securities and Exchange Commission has designated as qualifying an individual for accredited investor status; |
☐ | Any family office, as defined in rule 202(a)(11)(g)-1 under the Investment Advisers Act of 1940, as amended, with assets under management in excess of $5,000,000, not formed to acquire the securities offered, and whose prospective investment is directed by a person who has such knowledge and experience in financial and business matters that such family office is capable of evaluating the merits and risks of the prospective investment; or |
☐ | Any family client, as defined in rule 202(a)(11)(G)-1 under the Investment Advisers Act of 1940, as amended, of a family office meeting the requirements set forth above and whose prospective investment in the issuer is directed by such family office pursuant to the requirements set forth above. |
C. | NON-U.S. PERSON STATUS |
The Investor certifies that it is not a U.S. Person (U.S. Person) for purposes of Regulation S under the Securities Act, because it is (Please check the applicable subparagraphs):
☐ | A natural person who is not a resident of the United States; |
☐ | A partnership, corporation, or other entity, other than an entity organized principally for passive investment, organized under the laws of a non-U.S. jurisdiction and which has its principal place of business in a non-U.S. jurisdiction; |
☐ | An entity, organized under the laws of a non-U.S. jurisdiction and which has its principal place of business in a non-U.S. jurisdiction, organized principally for passive investment such as a pool, investment company, or other similar entity, provided that: (a) units of participation in the entity held by persons who do not qualify as non-U.S. Persons or otherwise as qualified eligible persons under the U.S. Commodity Futures Trading Commission (CFTC) rules represent in the aggregate less than 10% of the beneficial interest in the entity; (b) such entity was not formed principally for the purpose of facilitating investments by U.S. Persons in a pool with respect to which the operator is exempt from certain requirements of Part 4 of the CFTCs regulations by virtue of its participants being non-U.S. Persons; and (c) such entity was not formed by a U.S. Person principally for the purpose of investing in securities not registered under the Securities Act (unless it was organized or incorporated and is owned exclusively by accredited investors, as defined in U.S. Securities and Exchange Commission (SEC) rules, who are not natural persons, estates, or trusts); |
☐ | An estate or trust, the income of which is not subject to U.S. federal income tax regardless of source, provided that no executor or administrator of such an estate or trustee of such a trust, as the case may be, is a U.S. Person; or |
☐ | a pension plan for the employees, officers, or principals of an entity organized and with its principal place of business outside the United States, provided that such plan is established and administered in accordance with the laws of a country other than the United States and the customary practices and documentation of such country. For purposes of this paragraph, the term United States means the United States, its states, territories, and possessions, and any enclave of the United States government, its agencies, or instrumentalities. |
[Schedule A to Subscription Agreement]
☐ | Any natural person whose individual net worth, or joint net worth with that persons spouse, exceeds $1,000,000. For purposes of calculating a natural persons net worth: (a) the persons primary residence shall not be included as an asset; (b) indebtedness that is secured by the persons primary residence, up to the estimated fair market value of the primary residence at the time of the sale of securities, shall not be included as a liability (except that if the amount of such indebtedness outstanding at the time of sale of securities exceeds the amount outstanding 60 days before such time, other than as a result of the acquisition of the primary residence, the amount of such excess shall be included as a liability); and (c) indebtedness that is secured by the persons primary residence in excess of the estimated fair market value of the primary residence at the time of the sale of securities shall be included as a liability. |
This page should be completed by the Investor
and constitutes a part of the Subscription Agreement.
[Schedule A to Subscription Agreement]
Exhibit 23.1
Consent of Independent Registered Public Accounting Firm
We consent to the use of our report dated April 4, 2022, with respect to the consolidated financial statements of Akili Interactive Labs, Inc., included herein and to the reference to our firm under the heading Experts in the proxy statement/prospectus.
/s/ KPMG LLP
Boston, Massachusetts
May 12, 2022
Exhibit 23.2
INDEPENDENT REGISTERED PUBLIC ACCOUNTING FIRMS CONSENT
We consent to the inclusion in this Registration Statement of Social Capital Suvretta Holdings Corp. I (the Company) on Form S-4 Amendment No. 2 (File No. 333-262706), of our report dated March 23, 2022, which includes an explanatory paragraph as to the Companys ability to continue as a going concern, with respect to our audit of the financial statements of Social Capital Suvretta Holdings Corp. I as of December 31, 2021 and for the period from February 25, 2021 (inception) through December 31, 2021, which report appears in the Prospectus, which is part of this Registration Statement. We also consent to the reference to our Firm under the heading Experts in such Prospectus.
/s/ Marcum LLP
Marcum LLP
New York, NY
May 12, 2022
Exhibit 99.3
Consent to be Named as a Director
In connection with the filing by Social Capital Suvretta Holdings Corp. I 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 Social Capital Suvretta Holdings Corp. I following the consummation of the business combination, which will be renamed Akili, Inc. I also consent to the filing of this consent as an exhibit to such Registration Statement and any amendments thereto.
Dated: May 9, 2022 | /s/ Kenneth Ehlert | |||||
Name: Kenneth Ehlert |
Exhibit 99.4
Consent to be Named as a Director
In connection with the filing by Social Capital Suvretta Holdings Corp. I 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 Social Capital Suvretta Holdings Corp. I following the consummation of the business combination, which will be renamed Akili, Inc. I also consent to the filing of this consent as an exhibit to such Registration Statement and any amendments thereto.
Dated: May 6, 2022 | /s/ Christine Lemke | |||||
Name: Christine Lemke |
Exhibit 99.5
Consent to be Named as a Director
In connection with the filing by Social Capital Suvretta Holdings Corp. I 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 Social Capital Suvretta Holdings Corp. I following the consummation of the business combination, which will be renamed Akili, Inc. I also consent to the filing of this consent as an exhibit to such Registration Statement and any amendments thereto.
Dated: May 4, 2022 | /s/ William A. Jones, Jr. | |||||
Name: William A. Jones, Jr. |
Exhibit 99.6
Consent to be Named as a Director
In connection with the filing by Social Capital Suvretta Holdings Corp. I 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 Social Capital Suvretta Holdings Corp. I following the consummation of the business combination, which will be renamed Akili, Inc. I also consent to the filing of this consent as an exhibit to such Registration Statement and any amendments thereto.
Dated: May 5, 2022 | /s/ Adam Gazzaley | |||||
Name: Adam Gazzaley |